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MASTER LOAN AND SECURITY AGREEMENT
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DATED AS OF MAY 1, 1997
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ADVANTA MORTGAGE HOLDING COMPANY AS A BORROWER
AND
ADVANTA MORTGAGE CORP. USA, AS A BORROWER
AND
ADVANTA MORTGAGE CORP. MIDATLANTIC, AS A BORROWER
AND
ADVANTA MORTGAGE CORP. MIDATLANTIC II, AS A BORROWER
AND
ADVANTA MORTGAGE CORP. MIDWEST, AS A BORROWER
AND
ADVANTA MORTGAGE CORP. OF NEW JERSEY, AS A BORROWER
AND
ADVANTA MORTGAGE CORP. NORTHEAST, AS A BORROWER
AND
ADVANTA MORTGAGE CONDUIT SERVICES, INC., AS A BORROWER
AND
ADVANTA FINANCE CORP., AS A BORROWER
COLLECTIVELY, THE BORROWERS
AND
XXXXXX XXXXXXX MORTGAGE CAPITAL INC.
AS LENDER
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TABLE OF CONTENTS
RECITALS I
Section 1. Definitions and Accounting Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.01 Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Accounting Terms and Determinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2. Loans, Note and Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.01 Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.02 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.03 Procedure for Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.04 Limitation on Types of Loans; Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.05 Repayment of Loans; Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.06 Mandatory Prepayments or Pledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.07 Optional Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.08 Release of Excess Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3. Payments; Computations; Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.01 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.02 Computations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.03 U.S. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4. Collateral Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.01 Collateral; Security Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.02 Further Documentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.03 Changes in Locations, Name, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.04. Lender's Appointment as Attorney-in-Fact . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.05. Performance by Lender of Borrowers' Obligations . . . . . . . . . . . . . . . . . . . . . . 18
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4.06. Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.07 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.08. Limitation on Duties Regarding Presentation of Collateral . . . . . . . . . . . . . . . . . 19
4.09. Powers Coupled with an Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.10 Release of Security Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 5. Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.01 Initial Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.02 Initial and Subsequent Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 6. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.01 Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.02 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.03 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.04 No Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.05 Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.06 Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.07 Margin Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.08 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.09 Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.10 Collateral; Collateral Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.11 Chief Executive Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.12 Location of Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.13 Hedging . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.14 True and Complete Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.15 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.16 Pass-Through Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
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Section 7. Covenants of the Borrowers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.01 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.02 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.03 Existence, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.04 Prohibition of Fundamental Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.05 Borrowing Base Deficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.06 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.07 Hedging . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.08 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.09 Underwriting Guidelines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.10 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.11 Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.12 Maintenance of Profitability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.13 Servicing Tape . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 8. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 9. Remedies Upon Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 10. No Duty of Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 11. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.01 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.02 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.03 Indemnification and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.04 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.05 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.06 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.07 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
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11.08 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.09 Loan Agreement Constitutes Security Agreement; Governing Law . . . . . . . . . . . . . . . 34
11.10 Submission to Jurisdiction; Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.11 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.12 Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.13 Hypothecation or Pledge of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.14 Servicing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.15 Periodic Due Diligence Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
11.16 Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
11.17 Joint and Several Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
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SCHEDULES
SCHEDULE 1 Representations and Warranties re: Mortgage Loans
SCHEDULE 2 Filing Jurisdictions and Offices
EXHIBITS
EXHIBIT A Form of Promissory Note
EXHIBIT B Form of Pooling and Servicing Agreement
EXHIBIT C Form of Opinion of Counsel to Borrower
EXHIBIT D Form of Request for Borrowing
EXHIBIT E Underwriting Guidelines
EXHIBIT F Form of Affiliate Guarantee
EXHIBIT G Mortgage Loan Tape Fields
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MASTER LOAN AND SECURITY AGREEMENT
MASTER LOAN AND SECURITY AGREEMENT, dated as of May 1, 1997,
among Advanta Mortgage Holding Company a Delaware corporation, as a Borrower;
Advanta Mortgage Corp. USA a Delaware corporation, as a Borrower; Advanta
Mortgage Corp. Midatlantic a Pennsylvania corporation, as a Borrower; Advanta
Mortgage Corp. Midatlantic II a Pennsylvania corporation, as a Borrower;
Advanta Mortgage Corp. Midwest a Pennsylvania corporation, as a Borrower;
Advanta Mortgage Corp. of New Jersey a New Jersey corporation, as a Borrower;
Advanta Mortgage Corp. Northeast a New York corporation, as a Borrower; Advanta
Mortgage Conduit Services, Inc. a Delaware corporation, as a Borrower; Advanta
Finance Corp. a Nevada corporation, as a Borrower (each a "Borrower"
collectively, the "Borrowers"); and Xxxxxx Xxxxxxx Mortgage Capital Inc., a
Delaware corporation (the "Lender").
RECITALS
The Borrowers have requested that the Lender from time to time
make revolving credit loans to it to finance certain mortgage loans owned or to
be acquired by the Borrowers, and the Lender is prepared to make such loans
upon the terms and conditions hereof. Accordingly, the parties hereto agree as
follows:
Section 1. Definitions and Accounting Matters.
1.01 Certain Defined Terms. As used herein, the following
terms shall have the following meanings (all terms defined in this Section 1.01
or in other provisions of this Loan Agreement in the singular to have the same
meanings when used in the plural and vice versa):
"Affiliate" shall mean with respect to each Borrower, any
"affiliate" of such Borrower as such term is defined in the United States
Bankruptcy Code in effect from time to time.
"Affiliate Guarantee" shall mean a guarantee in substantially
the form of Exhibit F hereto, executed by Guarantor in favor of Lender.
"AMHC" shall mean Advanta Mortgage Holding Company
"Applicable Collateral Percentage" shall mean (a) with respect
to all Eligible Mortgage Loans other than Delinquent Mortgage Loans, 96% and
(b) with respect to all Eligible Mortgage Loans that are Delinquent Mortgage
Loans, 90%.
"Applicable Margin" shall mean 70 basis points (0.70%) per
annum.
"Appraised Value" shall mean the value set forth in an
appraisal made in connection with the origination of the related Mortgage Loan
as the value of the Mortgaged Property.
"Bankruptcy Code" shall mean the United States Bankruptcy Code
of 1978, as amended from time to time.
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"Bailee" shall mean a Person, other than the Trustee,
acceptable to the Lender, who holds Mortgage Loans for the benefit of the
Lender pursuant to a Bailee Agreement and its successors and permitted assigns
thereunder.
"Bailee Agreement" shall mean a Bailee Agreement, among the
Borrower, the Lender and a Bailee, acceptable to the Lender in its sole
discretion.
"Balloon Mortgage Loan" shall mean any Mortgage Loan for which
the related monthly payments, other than the monthly payment due on the
maturity date thereof, are computed on the basis of a period to full
amortization ending on a date that is later than such maturity date.
"Borrower" and "Borrowers" shall have the meaning provided in
the heading hereof.
"Borrowing Base" shall mean the aggregate Collateral Value of
all Eligible Mortgage Loans.
"Borrowing Base Deficiency" shall have the meaning provided in
Section 2.06 hereof.
"Business Day" shall mean any day other than (i) a Saturday or
Sunday or (ii) a day on which the New York Stock Exchange, the Federal Reserve
Bank of New York or the Trustee is authorized or obligated by law or executive
order to be closed or (iii) a day in which banks are authorized or obligated by
law or executive order to be closed in the Commonwealth of Pennsylvania, the
State of California or the State of Delaware.
"Capital Lease Obligations" shall mean, for any Person, all
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) Property to the extent such
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP, and, for purposes of this Loan
Agreement, the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with GAAP.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Collateral" shall have the meaning provided in Section
4.01(b) hereof.
"Collateral Value" shall mean, with respect to each Eligible
Mortgage Loan, the lesser of (a) the Applicable Collateral Percentage of the
Market Value of such Mortgage Loan, and (b) the outstanding principal balance
of such Mortgage Loan; provided, that,
(i) the Collateral Value shall be deemed to be zero with respect
to each Mortgage Loan (1) in respect of which there is a
material breach of a representation and warranty set forth on
Schedule 1 (assuming each representation and warranty is made
as of the date Collateral Value is determined), (2) in respect
of which there is a delinquency in the payment of principal
and/or interest which continues for a period in excess of 59
days (without regard to any applicable grace periods), (3)
which remains pledged to the Lender hereunder later than 180
days after the date on which it is first included in the
Collateral, (4) which has been released from the possession of
the Trustee under the Pooling and Servicing Agreement to the
Borrowers for a period in excess of 14 days, (5) which has
been subject to a Bailee Agreement and which has not been
delivered to the Trustee by the applicable Bailee within 3
Business Days following the applicable Funding Date, (6)
subject to clauses (ii) and (iii) below, which is a Wet-Ink
Mortgage
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Loan and for which the Trustee has failed to receive the
related Mortgage Loan Documents by the tenth Business Day
following the applicable Funding Date (it being understood
that the Collateral Value of any such Wet-Ink Mortgage Loan
shall be reinstated upon receipt by the Trustee of the related
Mortgage Loan Documents) or (7) which is a Delinquent Mortgage
Loan and remains pledged to the Lender hereunder upon removal
of some or all of the Mortgage Loans pledged to the Lender
hereunder (in accordance with the terms of this Agreement) for
the purpose of issuing securities backed by such Mortgage
Loans;
(ii) subject to clause (i)(6) above, the aggregate Collateral Value
of Eligible Mortgage Loans which are Wet-Ink Mortgage Loans
may not exceed 10% of Maximum Credit;
(iii) the aggregate Collateral Value of Eligible Mortgage Loans
which are Wet-Ink Mortgage Loans and with respect to which the
Trustee has failed to receive the related Mortgage Loan
Documents by the fifth Business Day following the applicable
Funding Date may not exceed 5% of Maximum Credit;
(iv) subject to clause (i)(5) above, the aggregate Collateral Value
of Eligible Mortgage Loans which are in the possession of a
Bailee may not exceed 10% of Maximum Credit;
(v) the aggregate Collateral Value of Eligible Mortgage Loans
which are Second Lien Mortgage Loans may not exceed 20% of the
aggregate principal amount outstanding under the Loans;
(vi) the aggregate Collateral Value of Eligible Mortgage Loans
which are secured by a Manufactured Dwelling may not exceed 5%
of the Maximum Credit;
(vii) the aggregate Collateral Value of Eligible Mortgage Loans
which are Mixed Use Mortgage Loans may not exceed 1% of the
Maximum Credit;
(viii) the aggregate Collateral Value of Eligible Mortgage Loans
which are Balloon Mortgage Loans may not exceed 25% of the
Maximum Credit; and
(ix) the aggregate Collateral Value of Eligible Mortgage Loans
which are Delinquent Mortgage Loans may not exceed 3% of the
aggregate principal amount outstanding under the Loans.
"Combined LTV" or "CLTV" shall mean with respect to any
Mortgage Loan, the ratio of (a) the outstanding principal balance as of the
related date of origination of such Mortgage Loan of (i) the Mortgage Loan plus
(ii) the mortgage loan constituting the first lien (if any) to (b) the
Appraised Value of the Mortgaged Property.
"Committed Loan" shall have the meaning assigned thereto in
Section 2.01(a) hereof.
"Default" shall mean an Event of Default or an event that with
notice or lapse of time or both would become an Event of Default.
"Delinquent Mortgage Loan" shall mean a Mortgage Loan made by
the Borrower to a Mortgagor and underwritten substantially in accordance with
the Underwriting Guidelines, a copy of
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the current version of which is attached hereto as Exhibit E and which is at
least 30 days, but not more than 59 days, delinquent with respect to the
payment of principal or interest (without regard to any applicable grace
period).
"Dollars" and "$" shall mean lawful money of the United
States of America.
"Due Diligence Review" shall mean the performance by the
Lender of any or all of the reviews permitted under Section 11.15 hereof with
respect to any or all of the Mortgage Loans, as desired by the Lender from time
to time.
"Effective Date" shall mean the date upon which the
conditions precedent set forth in Section 5.01 shall have been satisfied.
"Eligible Mortgage Loan" shall mean a Mortgage Loan secured by
a first or second mortgage lien (as reflected on the Mortgage Loan Tape) on a
one-to-four family residential property (a) as to which the representations and
warranties in Section 6.10 and Part I of Schedule 1 hereof are correct in all
material respects and (b) which is underwritten substantially in accordance
with the Borrowers' Underwriting Guidelines, a copy of which is attached hereto
as Exhibit E.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time.
"ERISA Affiliate" shall mean any corporation or trade or
business that is a member of any group of organizations (i) described in
Section 414(b) or (c) of the Code of which any Borrower is a member and (ii)
solely for purposes of potential liability under Section 302(c)(11) of ERISA
and Section 412(c)(11) of the Code and the lien created under Section 302(f) of
ERISA and Section 412(n) of the Code, described in Section 414(m) or (o) of the
Code of which any Borrower is a member.
"Eurocurrency Reserve Requirements" shall mean, for any day as
applied to a Loan, the aggregate (without duplication) of the rates (expressed
as a decimal fraction) of reserve requirements applicable to the Lender in
effect on such day (including without limitation basic, supplemental, marginal
and emergency reserves under any regulations of the Board of Governors of the
Federal Reserve System or other Governmental Authority having jurisdiction with
respect thereto), dealing with reserve requirements prescribed for eurocurrency
funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of
such Board) maintained by a member bank of such Governmental Authority.
"Eurodollar Base Rate" shall mean, with respect to each day a
Loan is outstanding (or if such day is not a Business Day, the next succeeding
Business Day), the rate per annum equal to the rate appearing at page 5 of the
Telerate Screen as one-month LIBOR on such date, and if such rate shall not be
so quoted, the arithmetic average determined in good faith by the Lender, of
the rate per annum at which the Lender is offered Dollar deposits at or about
10:00 A.M., New York City time, on such date by at least three unaffiliated
prime banks in the interbank eurodollar market where the eurodollar and foreign
currency exchange operations in respect of its Loans are then being conducted
for delivery on such day for a period of 30 days and in an amount comparable to
the amount of the Loans to be outstanding on such day.
"Eurodollar Rate" shall mean, with respect to each day a Loan
is outstanding, a rate per annum determined by the Lender in its sole
discretion in accordance with the following formula
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(rounded upwards to the nearest 1/100th of one percent), which rate as
determined by the Lender shall be conclusive absent manifest error by the
Lender:
Eurodollar Base Rate
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1.00 - Eurocurrency Reserve Requirements
"Event of Default" shall have the meaning provided in Section
8 hereof.
"Federal Funds Rate" shall mean, for any day, the weighted
average of the rates on overnight federal funds transactions with members of
the Federal Reserve System arranged by federal funds brokers, as published on
the next succeeding Business Day by the Board of Governors of the Federal
Reserve System in "Statistical Release H.15(519), Selected Interest Rates" or
any successor publication, or, if such rate is not so published for any day
which is a Business Day, the average of the quotations for the day of such
transactions received by the Lender from three unaffiliated federal funds
brokers of recognized standing selected by it.
"Funding Date" shall mean the date on which a Loan is made
hereunder.
"GAAP" shall mean generally accepted accounting principles as
in effect from time to time in the United States.
"Governmental Authority" shall mean any nation or government,
any state or other political subdivision thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government and any court or arbitrator having jurisdiction over
any Borrower, any of its Subsidiaries or any of their properties.
"Guarantor": shall mean Advanta Corp., a Delaware corporation.
"Interest Rate Protection Agreement" shall mean, with respect
to any or all of the Mortgage Loans, any short sale of US Treasury Security, or
futures contract, or mortgage related security, or Eurodollar futures contract,
or options related contract, or interest rate swap, cap or collar agreement or
similar arrangements providing for protection against fluctuations in interest
rates or the exchange of nominal interest obligations, either generally or
under specific contingencies, entered into by any Borrower or the Guarantor.
"Lender" shall have the meaning provided in the heading
hereto.
"Lien" shall mean any mortgage, lien, pledge, charge, security
interest or similar encumbrance.
"Loan" shall mean any Committed Loan or Uncommitted Loan, as
applicable, and collectively "Loans" shall mean the sum of all Committed Loans
and Uncommitted Loans.
"Loan Agreement" shall mean this Master Loan and Security
Agreement, as the same may be amended, supplemented or otherwise modified from
time to time.
"Loan Documents" shall mean, collectively, this Loan
Agreement, the Note and the Pooling and Servicing Agreement and Affiliate
Guarantee.
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"Loan-to-Value Ratio" or "LTV" shall have the meaning assigned
thereto in Schedule 1 of this Loan Agreement.
"Manufactured Dwelling" shall mean a fully attached
manufactured home which is considered and treated as "real estate" under
applicable state law.
"Market Value" shall mean, as of any date in respect of an
Eligible Mortgage Loan, the price at which such Eligible Mortgage Loan could
readily be sold as reasonably determined in good faith by the Lender, which
price may be determined to be zero. The Lender's determination of Market Value
shall be conclusive upon the parties absent manifest error on the part of the
Lender.
"Material Adverse Effect" shall mean a material adverse effect
on (a) the Property, business, operations or financial condition of any of the
Borrowers, (b) the ability of any of the Borrowers to perform their
obligations under any of the Loan Documents to which they are a party, (c) the
validity or enforceability of any of the Loan Documents, (d) the practical
realization of the Lender's rights and remedies under the Loan Documents, taken
as a whole, (e) the timely payment of the principal of or interest on the Loans
or other amounts payable in connection therewith or (f) the value of the
Collateral taken as a whole.
"Maximum Committed Amount" shall mean $250,000,000.
"Maximum Credit" shall mean the sum of the Maximum Committed
Amount and the Maximum Uncommitted Amount, which shall equal $500,000,000.
"Maximum Uncommitted Amount" shall mean $250,000,000.
"Misclassified Mortgage Loan" shall have the meaning assigned
thereto in Section 2.05(c) hereof.
"Mixed Use Mortgage Loan" shall mean a Mortgage Loan secured
by a Mortgaged Property that is used primarily for residential purposes, but
which is also used for non-residential purposes.
"Mortgage" shall mean with respect to a Mortgage Loan, the
mortgage, deed of trust or other instrument securing a Mortgage Note, which
creates a first or second lien (as indicated on the Mortgage Loan Tape) on the
fee in real property securing the Mortgage Note.
"Mortgage File" shall have the meaning assigned thereto in the
Pooling and Servicing Agreement.
"Mortgage Loan" shall mean a mortgage loan pledged to the
Lender hereunder and which (a) the Trustee has been instructed to hold for the
Lender pursuant to the Pooling and Servicing Agreement, or (b) a Bailee has
been instructed to hold for the Lender pursuant to a Bailee Agreement, and
which Mortgage Loan includes, without limitation, (i) a Mortgage Note and
related Mortgage and (ii) all right, title and interest of any Borrower in and
to the Mortgaged Property covered by such Mortgage.
"Mortgage Loan Documents" shall mean, with respect to a
Mortgage Loan, the documents comprising the Mortgage File for such Mortgage
Loan.
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"Mortgage Loan Schedule" shall have the meaning assigned
thereto in the Pooling and Servicing Agreement.
"Mortgage Loan Schedule and Exception Report" shall mean the
mortgage loan schedule and exception report prepared by the Trustee pursuant to
the Pooling and Servicing Agreement.
"Mortgage Loan Tape" shall mean a computer readable magnetic
tape containing the fields set forth on Exhibit G hereto.
"Mortgage Note" shall mean the original executed promissory
note or other evidence of the indebtedness of a mortgagor/borrower with respect
to a Mortgage Loan.
"Mortgaged Property" shall mean the real property (including
all improvements, buildings, fixtures, building equipment and personal property
thereon and all additions, alterations and replacements made at any time with
respect to the foregoing) and all other collateral securing repayment of the
debt evidenced by a Mortgage Note.
"Mortgagor" shall mean the obligor on a Mortgage Note.
"Multiemployer Plan" shall mean a multiemployer plan defined
as such in Section 3(37) of ERISA to which contributions have been or are
required to be made by any Borrower or any ERISA Affiliate and that is covered
by Title IV of ERISA.
"Net Income" shall mean, for any period, the consolidated net
income as reflected in the consolidated financial statements of AMHC, which
such financial statements shall include all of the Borrowers, for such period
as determined in accordance with GAAP.
"Note" shall mean the promissory note provided for by Section
2.02(a) hereof for Loans and any promissory note delivered in substitution or
exchange therefor, in each case as the same shall be modified and supplemented
and in effect from time to time.
"Pass-Through Certificate" shall mean a certificate pledged
and delivered to the Lender hereunder, issued in the name of the Lender
pursuant to the Pooling and Servicing Agreement, representing a 100% ownership
interest in certain Eligible Mortgage Loans which Eligible Mortgage Loans are
held by Trustee for the benefit of the Lender as to which the representations
and warranties in Section 6.16 and Part II of Schedule 1 hereof are correct in
all material respects.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any entity succeeding to any or all of its functions under ERISA.
"Person" shall mean any individual, corporation, company,
voluntary association, partnership, joint venture, limited liability company,
trust, unincorporated association or government (or any agency, instrumentality
or political subdivision thereof).
"Plan" shall mean an employee benefit or other plan
established or maintained by any Borrower or any ERISA Affiliate and covered by
Title IV of ERISA, other than a Multiemployer Plan.
"Pooling and Servicing Agreement" shall mean the Pooling and
Servicing Agreement, dated as of May 1, 1997, among Advanta Mortgage Conduit
Services, Inc. as "Sponsor", Advanta
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Mortgage Corp. USA as "Master Servicer", the Borrowers and the Trustee, as the
same shall be modified and supplemented and in effect from time to time.
"Post-Default Rate" shall mean, in respect of any principal of
any Loan or any other amount under this Loan Agreement, the Note or any other
Loan Document that is not paid when due to the Lender (whether at stated
maturity, by acceleration, by mandatory prepayment or otherwise), a rate per
annum during the period from and including the due date to but excluding the
date on which such amount is paid in full equal to 2% per annum plus the
Eurodollar Base Rate then in effect.
"Property" shall mean any right or interest in or to property
of any kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Regulations G, T, U and X" shall mean Regulations G, T, U and
X of the Board of Governors of the Federal Reserve System (or any successor),
as the same may be modified and supplemented and in effect from time to time.
"Responsible Officer" shall mean, as to any Person, the chief
executive officer, the president, any vice president or the treasurer of such
Person.
"Second Lien Mortgage Loan" shall mean any Mortgage Loan
underwritten substantially in accordance with the Underwriting Guidelines with
respect to which the lien of the mortgage, deed of trust or other instrument
securing a mortgage note creates a second lien on the Mortgaged Property.
"Secured Obligations" shall have the meaning provided in
Section 4.01(c) hereof.
"Servicer" shall have the meaning provided in Section 11.14(c)
hereof.
"Servicing Agreement" shall have the meaning provided in
Section 11.14(c) hereof.
"Servicing Records" shall have the meaning provided in Section
11.14(b) hereof.
"Settlement Agent" shall mean, with respect to any Loan, the
entity selected by the applicable Borrower in the ordinary course of business
in the exercise of reasonably prudent business judgment, subject to Lender's
right to review and approve such entity such approval not to be unreasonably
withheld or delayed (which may be a title company, escrow company or attorney
in accordance with local law and practice in the jurisdiction where the related
Wet-Ink Mortgage Loan is being originated) to which the proceeds of such Loan
are to be distributed by the Trustee pursuant to the instructions of the
Borrower.
"Subsidiary" shall mean, with respect to any Person, any
corporation, partnership or other entity of which at least a majority of the
securities or other ownership interests having by the terms thereof ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions of such corporation, partnership or other entity
(irrespective of whether or not at the time securities or other ownership
interests of any other class or classes of such corporation, partnership or
other entity shall have or might have voting power by reason of the happening
of any contingency) is at the time directly or indirectly owned or controlled
by such Person or one or more Subsidiaries of such Person or by such Person and
one or more Subsidiaries of such Person.
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"Termination Date" shall mean May 1, 1998 or such earlier date
on which this Loan Agreement shall terminate in accordance with the provisions
hereof or by operation of law.
"Test Period" shall have the meaning provided in Section 7.13
hereof.
"Trustee" shall mean Bankers Trust Company of California,
N.A., a national banking corporation.
"Uncommitted Loan" shall have the meaning assigned thereto in
Section 2.01(b) hereof.
"Underwriting Guidelines" shall mean the underwriting
guidelines delivered by the Borrowers to the Lender on or prior to the
Effective Date and as may be supplemented from time to time thereafter.
"Uniform Commercial Code" shall mean the Uniform Commercial
Code as in effect on the date hereof in the State of New York; provided that if
by reason of mandatory provisions of law, the perfection or the effect of
perfection or non-perfection of the security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than New York, "Uniform Commercial Code" shall mean the Uniform Commercial Code
as in effect in such other jurisdiction for purposes of the provisions hereof
relating to such perfection or effect of perfection or non-perfection.
"Wet-Ink Mortgage Loan" shall mean a Mortgage Loan which is
pledged to the Lender simultaneously with the origination thereof by the
Borrowers, which origination is financed in part or in whole with proceeds of
Loans distributed to a Settlement Agent by the Trustee, it being understood
that a Wet-Ink Mortgage Loan shall cease being a Wet-Ink Mortgage Loan upon
receipt by the Trustee of the related Mortgage Loan Documents.
1.02 Accounting Terms and Determinations. Except as
otherwise expressly provided herein, all accounting terms used herein shall be
interpreted, and all financial statements and certificates and reports as to
financial matters required to be delivered to the Lender hereunder shall be
prepared, in accordance with GAAP.
Section 2. Loans, Note and Prepayments.
2.01 Loans.
a) Subject to fulfillment of the conditions precedent
set forth in Sections 5.01 and 5.02 hereof, and provided that no Default shall
have occurred and be continuing hereunder, the Lender agrees from time to time,
on the terms and conditions of this Agreement, to make loans (individually, a
"Committed Loan"; collectively, the "Committed Loans") to the Borrowers in
Dollars, from and including the Effective Date to and including the Termination
Date in an aggregate principal amount at any one time outstanding up to but not
exceeding the Maximum Committed Amount as in effect from time to time.
(b) In addition to the foregoing, the Lender may from time to
time in its sole discretion, on the terms and conditions of this Agreement,
make loans (individually, an "Uncommitted Loan"; collectively, the "Uncommitted
Loans") to the Borrowers in Dollars during the period from and including the
Effective Date to and including the Termination Date in an aggregate principal
amount at
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any one time outstanding up to but not exceeding the Maximum Uncommitted Amount
as in effect from time to time.
(c) In determining whether Loans outstanding secured by
Pass-Through Certificates and Eligible Mortgage Loans are Committed Loans or
Uncommitted Loans, such Loans shall first be deemed Committed Loans up to the
Maximum Committed Amount, and then the remainder shall be deemed Uncommitted
Loans.
(d) Subject to the terms and conditions of this
Agreement, during such period the Borrower may borrow, repay and reborrow
hereunder.
(e) In no event shall a Loan be made when any Default or
Event of Default has occurred and is continuing.
2.02 Notes.
(a) The Loans made by the Lender shall be evidenced by a
single promissory note of the Borrowers substantially in the form of Exhibit A
hereto (the "Note"), dated the date hereof, payable to the Lender in a
principal amount equal to the amount of the Maximum Credit as originally in
effect and otherwise duly completed. The Lender shall have the right to have
its Note subdivided, by exchange for promissory notes of lesser denominations
or otherwise.
(b) The date, amount, interest rate, and whether such
Loan is a Committed Loan or Uncommitted Loan made by the Lender to the
Borrowers, and each payment made on account of the principal thereof, shall be
recorded by the Lender on its books and, prior to any transfer of the Note,
endorsed by the Lender on the schedule attached to the Note or any continuation
thereof; provided, that the failure of the Lender to make any such recordation
or endorsement shall not affect the obligations of the Borrowers to make a
payment when due of any amount owing hereunder or under the Note in respect of
the Loans.
2.03 Procedure for Borrowing.
(a) The Borrowers may request a borrowing hereunder, on
any Business Day during the period from and including the Effective Date to and
including the Termination Date, by delivering to the Lender, with a copy to
the Trustee, an irrevocable written request for borrowing, substantially in the
form of Exhibit D attached hereto (a "Request for Borrowing"), which request
must be received by the Lender prior to 2:00 p.m., New York City time, on the
requested Funding Date. Such request for borrowing shall (i) attach a schedule
identifying the Eligible Mortgage Loans that the applicable Borrower proposes
to pledge to the Lender and to be included in the Borrowing Base in connection
with such borrowing, (ii) specify the requested Funding Date, (iii) include a
Mortgage Loan Tape containing information with respect to the Eligible Mortgage
Loans that the applicable Borrower proposes to pledge to the Lender and to be
included in the Borrowing Base in connection with such borrowing, and (iv)
attach an officer's certificate signed by a Responsible Officer of the
respective Borrower as required by Section 5.02(b) hereof.
(b) Upon any Borrower's Request for Borrowing (which, for
purposes hereof shall be deemed a request by all of the Borrowers hereunder)
pursuant to Section 2.03(a), the Lender shall, assuming all conditions
precedent set forth in Section 5.01 and 5.02 have been met and provided no
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Default shall have occurred and be continuing, make a Committed Loan to the
Borrowers on the requested Funding Date, in the amount so requested.
(c) Upon any Borrower's Request for Borrowing (which, for
purposes hereof shall be deemed a request by all of the Borrowers hereunder)
pursuant to Section 2.03(a), the Lender may at its sole option, assuming all
conditions precedent set forth in Section 5.01 and 5.02 have been met and
provided no Default shall have occurred and be continuing, make an Uncommitted
Loan to the Borrowers on the requested Funding Date, in the amount so
requested.
(d) No later than 12:00 p.m., New York time, on the
requested Funding Date, (i) the Borrower shall deliver to the Trustee the
Mortgage File pertaining to each Eligible Mortgage Loan (other than a Wet-Ink
Mortgage Loan or a Mortgage Loan held by a Bailee to be pledged to the Lender
and (ii) the Trustee shall issue and deliver the relevant Pass-Through
Certificate to the Lender, to be included in the Borrowing Base on such
requested Funding Date, in accordance with the terms and conditions of the
Pooling and Servicing Agreement.
(e) Pursuant to the Pooling and Servicing Agreement, the
Trustee shall deliver to the Lender and the Borrowers, by no later than 2:00
p.m. New York City time on a Funding Date, a Mortgage Loan Schedule and
Exception Report in respect of all Mortgage Loans pledged to the Lender on such
Funding Date, and a Mortgage Loan Schedule and Exception Report. Such Mortgage
Loan Schedule and Exception Report shall identify those Mortgage Loans that are
Wet-Ink Mortgage Loans and those Mortgage Loans that are being held by a Bailee
(as indicated by the applicable Borrower). Subject to Section 5 hereof, such
borrowing will then be made available to the Borrowers by the Lender
transferring, via wire transfer, in the aggregate amount of such borrowing in
funds immediately available pursuant to Wire Instructions set forth in the
Request for Borrowing.
2.04 Limitation on Types of Loans; Illegality. Anything
herein to the contrary notwithstanding, if, on or prior to the determination of
any Eurodollar Base Rate:
(a) the Lender determines, which determination shall be
conclusive, that quotations of interest rates for the relevant
deposits referred to in the definition of "Eurodollar Base Rate" in
Section 1.01 hereof are not being provided in the relevant amounts or
for the relevant maturities for purposes of determining rates of
interest for Loans as provided herein; or
(b) the Lender determines, which determination shall be
conclusive, that the relevant rate of interest referred to in the
definition of "Eurodollar Base Rate" in Section 1.01 hereof upon the
basis of which the rate of interest for Loans is to be determined is
not likely adequately to cover the cost to the Lender of making or
maintaining Loans; or
(c) it becomes unlawful for the Lender to honor its
obligation to make or maintain Loans hereunder using a Eurodollar
Rate;
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then the Lender shall give the Borrowers prompt notice thereof
and, so long as such condition remains in effect, the Lender shall be under no
obligation to make additional Loans, and the Borrowers shall, at their option,
within 5 Business Days following receipt of such notice either prepay, without
penalty or premium, all such Loans as may be outstanding or pay interest on
such Loans at a rate per annum equal to the Federal Funds Rate plus 1%.
2.05 Repayment of Loans; Interest.
(a) The Borrowers hereby promise to repay in full on the
Termination Date the then aggregate outstanding principal amount of the Loans.
(b) The Borrowers hereby promise to pay to the Lender
interest on the unpaid principal amount of each Loan for the period from and
including the date of such Loan to but excluding the date such Loan shall be
paid in full, at a rate per annum equal to the Eurodollar Rate plus the
Applicable Margin. Notwithstanding the foregoing, the Borrowers hereby promise
to pay to the Lender interest at the applicable Post-Default Rate on any
principal of any Loan and on any other amount payable by the Borrower hereunder
or under the Note that shall not be paid in full when due (whether at stated
maturity, by acceleration or by mandatory prepayment or otherwise) for the
period from and including the due date thereof to but excluding the date the
same is paid in full. Accrued interest on each Loan shall be payable monthly
in arrears on the first Business Day of each month and for the last month of
the Loan Agreement on the first Business Day of such last month and on the
Termination Date, except that interest payable at the Post-Default Rate shall
accrue daily and shall be payable upon such accrual. Promptly after the
determination of any interest rate provided for herein or any change therein,
the Lender shall give notice thereof to the Borrowers.
(c) Following each Funding Date and from time to time (as
further described in Section 11.15 hereof) the Lender shall have the right to
perform a Due Diligence Review with respect to any or all of the Mortgage
Loans. In the event that the Lender discovers any discrepancy between the
information set forth on the Mortgage Loan Tape and the information discovered
as a result of the Lender's Due Diligence Review, in all cases, based upon the
Underwriting Guidelines and the Borrower's credit classification criteria (in
each case, a "Discrepancy"), then the Lender shall give notice thereof to the
applicable Borrower and such Borrower shall promptly correct the information
set forth on the related Mortgage Loan Tape. In the event that any Discrepancy
affects the classification of a Mortgage Loan (in each case, a "Misclassified
Mortgage Loan"), then such Mortgage Loan shall be re-classified.
(d) It is understood and agreed that, unless and until an
Event of Default shall have occurred and be continuing and Lender shall have
exercised its remedies under Section 9(a) hereof, the Borrower shall be
entitled to the proceeds of the Collateral pledged to the Lender hereunder.
2.06 Mandatory Prepayments or Pledge.
If at any time the aggregate outstanding principal amount of
Loans exceeds the Borrowing Base (a "Borrowing Base Deficiency"), as determined
by the Lender and notified to the Borrowers on any Business Day, the Borrowers
shall no later than one Business Day after receipt of such notice, either
prepay the Loans in part or in whole, without penalty or premium, or include
additional Eligible Mortgage Loans in the trust represented by the Pass-Through
Certificate and pledge such additional Eligible Mortgage Loans (which
Collateral shall be in all respects acceptable to the
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Lender) to the Lender, such that after giving effect to such prepayment or
pledge the aggregate outstanding principal amount of the Loans does not exceed
the Borrowing Base.
2.07 Optional Prepayments.
The Borrowers may prepay the Loans, without penalty or
premium, on any date. Any amounts prepaid shall be applied to repay the
outstanding principal amount of the Loan or Loans specified by the Borrowers
(together with accrued interest thereon) until paid in full. Amounts repaid
may be reborrowed in accordance with the terms of this Loan Agreement. If such
Borrower intends to prepay a Loan in whole or in part, such Borrower shall give
one (1) Business Day's prior written notice thereof to the Lender. If such
notice is given, the amount specified in such notice shall be due and payable
on the date specified therein, together with accrued interest to such date on
the amount prepaid.
2.08 Release of Excess Collateral .
On any day on which the Borrowing Base exceeds the aggregate
outstanding principal amount of the Loans, so long as no Default or Event of
Default has occurred and is continuing:
(a) The Borrower may prepare a Request for Release of
Mortgage Loans in the form of Exhibit F to the Pooling and Servicing Agreement
("Request for Release-Overcollateralization"), specifying (1) the Eligible
Mortgage Loans to be released and the requested release date, (2) the Borrowing
Base with respect to such Eligible Mortgage Loans pledged hereunder, (3) the
remaining Borrowing Base after giving effect to the release of the Eligible
Mortgage Loans to be released, (4) the unpaid principal balance of the Loans,
and (5) a certification from the Borrower that, upon release of the Eligible
Mortgage Loans to be released, the Borrowing Base would be equal to or greater
than the unpaid principal balance of the Loans.
(b) The Borrower shall transmit the Request for
Release-Overcollateralization by facsimile transmission to the Lender. Upon
confirming that the Request for Release-Overcollateralization correctly
reflects the information set forth in Section 2.08(a) and that, after giving
effect to the requested release the amount of the Borrowing Base would be equal
to or greater than the unpaid principal balance of the Loans, the Lender shall
countersign the Request for Release-Overcollateralization and transmit the
countersigned Request for Release-Overcollateralization to the Trustee. In the
event that the Lender's assessment of the Borrowing Base would alter the
information set forth in any Request for Release, the Lender shall promptly
notify the Borrower in writing of such assessment.
(c) Upon receipt of the countersigned Request for
Release-Overcollateralization and upon approval of the Request for
Release-Overcollateralization by the Lender, the Trustee shall take the actions
set forth in the Custodial Agreement with respect to the Eligible Mortgage Loan
to be released.
(d) The Lender shall not be obligated to countersign a
Request for Release-Overcollateralization (i) which the Lender reasonably
determines is based on erroneous information or would result in a release of
Collateral other than in accordance with the terms of this Agreement, or (ii)
which does not reflect the Lender's current determination of Market Value.
Section 3. Payments; Computations; Etc.
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3.01 Payments.
(a) Except to the extent otherwise provided herein, all
payments of principal, interest and other amounts to be made by the Borrowers
under this Agreement and the Note shall be made in Dollars, in immediately
available funds, without deduction, set-off or counterclaim, to the Lender at
the following account maintained by the Lender: Account No. 00000000, For the
A/C of MSMCI, Citibank, N.A., ABA# 000000000, not later than 3:00 p.m., New
York City time, on the date on which such payment shall become due (each such
payment made after such time on such due date to be deemed to have been made on
the next succeeding Business Day). Each Borrower acknowledges that it has no
rights of withdrawal from the foregoing account.
(b) Except to the extent otherwise expressly provided
herein, if the due date of any payment under this Loan Agreement or the Note
would otherwise fall on a day that is not a Business Day, such date shall be
extended to the next succeeding Business Day, and interest shall be payable for
any principal so extended for the period of such extension.
3.02 Computations. Interest on the Loans shall be computed
on the basis of a 360-day year for the actual days elapsed (including the first
day but excluding the last day) occurring in the period for which payable.
3.03 U.S. Taxes.
(a) The Borrowers agree to pay to the Lender such
additional amounts as are necessary in order that the net payment of any amount
due to the Lender hereunder after deduction for or withholding in respect of
any U.S. Tax (as defined below) imposed with respect to such payment (or in
lieu thereof, payment of such U.S. Tax by the Lender), will not be less than
the amount stated herein to be then due and payable; provided that the
foregoing obligation to pay such additional amounts shall not apply:
(i) to any payment to the Lender hereunder unless the
Lender is entitled to submit a Form 1001 (relating to the Lender and
entitling it to a complete exemption from withholding on all interest
to be received by it hereunder in respect of the Loans) or Form 4224
(relating to all interest to be received by the Lender hereunder in
respect of the Loans), or
(ii) to any U.S. Tax imposed solely by reason of the
failure by the Lender to comply with applicable certification,
information, documentation or other reporting requirements concerning
the nationality, residence, identity or connections with the United
States of America of the Lender if such compliance is required by
statute or regulation of the United States of America as a
precondition to relief or exemption from such U.S. Tax.
For the purposes of this Section 3.03, (x) "Form 1001" shall mean Form 1001
(Ownership, Exemption, or Reduced Rate Certificate) of the Department of the
Treasury of the United States of America, (y) "Form 4224" shall mean Form 4224
(Exemption from Withholding of Tax on Income Effectively Connected with the
Conduct of a Trade or Business in the United States) of the Department of the
Treasury of the United States of America (or in relation to either such Form
such successor and related form as may from time to time be adopted by the
relevant taxing authorities of the United States of America to document a claim
to which such Form relates), and (z) "U.S. Taxes" shall mean any present or
future tax, assessment or other charge or levy imposed by or on behalf of the
United States of America or any taxing authority thereof or therein.
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(b) Within 30 days after paying any such amount to the
Lender, and within 30 days after it is required by law to remit such deduction
or withholding to any relevant taxing or other authority, the Borrowers shall
deliver to the Lender evidence satisfactory to the Lender of such deduction,
withholding or payment (as the case may be).
(c) The Lender represents and warrants to the Borrowers
that on the date hereof the Lender is either incorporated under the laws of the
United States or a State thereof or is entitled to submit a Form 1001 (relating
to the Lender and entitling it to a complete exemption from withholding on all
interest to be received by it hereunder in respect of the Loans) or Form 4224
(relating to all interest to be received by the Lender hereunder in respect of
the Loans).
Section 4. Collateral Security.
4.01 Collateral; Security Interest.
(a) Pursuant to the Pooling and Servicing Agreement, the
Trustee shall hold the Mortgage Loan Documents delivered to the Trustee as
exclusive bailee and agent for the Lender pursuant to terms of the Pooling and
Servicing Agreement and shall deliver to the Lender Pass-Through Certificates,
each to the effect that it has reviewed such Mortgage Loan Documents in the
manner and to the extent required by the Pooling and Servicing Agreement and
identifying any deficiencies in such Mortgage Loan Documents for the Mortgage
Loans identified in the Mortgage Loan Schedule and Exception Report (in the
form of Exhibit I to the Pooling and Servicing Agreement) as so reviewed.
Pursuant to each Bailee Agreement, the Bailee shall hold the Mortgage Loan
Documents delivered to such Bailee as exclusive bailee and agent for the Lender
pursuant to terms of the applicable Bailee Agreement and shall deliver such
Mortgage Loan Documents to the Trustee in accordance with the terms of the
applicable Bailee Agreement.
(b) All of each Borrower's right, title and interest in,
to and under each of the following items of property, whether now owned or
hereafter acquired, now existing or hereafter created and wherever located, is
hereinafter referred to as the "Collateral":
(i) all Mortgage Loans;
(ii) all Mortgage Loan Documents, including without
limitation all promissory notes, and all Servicing Records (as defined
in Section 11.14(b) below), servicing agreements and any other
collateral pledged or otherwise relating to such Mortgage Loans,
together with all files, documents, instruments, surveys,
certificates, correspondence, appraisals, computer programs, computer
storage media, accounting records and other books and records relating
thereto;
(iii) all purchase agreements relating to, or otherwise
governing, any or all of the Mortgage Loans subject to such purchase
agreements to the extent of the Mortgage Loans;
(iv) all mortgage guaranties and insurance (issued by
governmental agencies or otherwise) and any mortgage insurance
certificate or other document evidencing such mortgage guaranties or
insurance relating to any Mortgage Loan and all claims and payments
thereunder;
(v) all other insurance policies and insurance proceeds
relating to any Mortgage Loan or the related Mortgaged Property;
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(vi) all funds on deposit in Collection Accounts to the
extent such funds represent proceeds from the Mortgage Loans (as
defined in the Pooling and Servicing Agreement), if any;
(vii) all Pass-Through Certificates delivered to the Lender
and/or evidencing any or all of the Mortgage Loans;
(viii) the Pooling and Servicing Agreement as it relates to
or constitutes any or all of the foregoing;
(ix) all "general intangibles" as defined in the Uniform
Commercial Code relating to or constituting any and all of the
foregoing; and
(x) any and all replacements, substitutions,
distributions on or proceeds of any and all of the foregoing.
(c) Each Borrower hereby assigns, pledges and grants a
security interest in all of its right, title and interest in, to and under the
Collateral to the Lender to secure the repayment of principal of and interest
on all Loans and all other amounts owing to the Lender hereunder, under the
Note and under the other Loan Documents (collectively, the "Secured
Obligations"). Each Borrower agrees to xxxx its computer records and tapes to
evidence the interests granted to the Lender hereunder.
4.02 Further Documentation. At any time and from time to
time, upon the written request of the Lender, and at the sole expense of the
Borrowers, the Borrowers will promptly and duly execute and deliver, or will
promptly cause to be executed and delivered, such further instruments and
documents and take such further action as the Lender may reasonably request for
the purpose of obtaining or preserving the full benefits of this Loan Agreement
and of the rights and powers herein granted, including, without limitation, the
filing of any financing or continuation statements under the Uniform Commercial
Code in effect in any jurisdiction with respect to the Liens created hereby.
Each Borrower also hereby authorizes the Lender to file any such financing or
continuation statement without the signature of such Borrower to the extent
permitted by applicable law provided that the Lender shall promptly provide a
copy thereof to the Borrowers. A carbon, photographic or other reproduction of
this Loan Agreement shall be sufficient as a financing statement for filing in
any jurisdiction.
4.03 Changes in Locations, Name, etc. No Borrower shall (i)
change the location of its chief executive office/chief place of business from
that specified in Section 6 hereof or (ii) change its name, identity or
corporate structure (or the equivalent) or change the location where it
maintains its records with respect to the Collateral unless it shall have given
the Lender at least 30 days prior written notice thereof and shall have
delivered to the Lender all Uniform Commercial Code financing statements and
amendments thereto as the Lender shall request and taken all other actions
deemed reasonably necessary by the Lender to continue its perfected status in
the Collateral with the same or better priority.
4.04. Lender's Appointment as Attorney-in-Fact.
(a) Each Borrower hereby irrevocably constitutes and
appoints the Lender and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of such Borrower and in the name of
such
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Borrower or in its own name, from time to time in the Lender's discretion, for
the purpose of carrying out the terms of this Loan Agreement, to take any and
all appropriate action and to execute any and all documents and instruments
which may be reasonably necessary or desirable to accomplish the purposes of
this Loan Agreement, and, without limiting the generality of the foregoing,
each Borrower hereby gives the Lender the power and right, on behalf of each
Borrower, without assent by, but with notice to, such Borrower, if an Event of
Default shall have occurred and be continuing, to do the following:
(i) in the name of such Borrower or its own name, or
otherwise, to take possession of and endorse and collect any checks,
drafts, notes, acceptances or other instruments for the payment of
moneys due under any mortgage insurance or with respect to any other
Collateral and to file any claim or to take any other action or
proceeding in any court of law or equity or otherwise deemed
appropriate by the Lender for the purpose of collecting any and all
such moneys due under any such mortgage insurance or with respect to
any other Collateral whenever payable;
(ii) to pay or discharge taxes and Liens levied or placed
on or threatened against the Collateral;
(iii) (A) to direct any party liable for any payment under
any Collateral to make payment of any and all moneys due or to become
due thereunder directly to the Lender or as the Lender shall direct;
(B) to ask or demand for, collect, receive payment of and receipt for,
any and all moneys, claims and other amounts due or to become due at
any time in respect of or arising out of any Collateral; (C) to sign
and endorse any invoices, assignments, verifications, notices and
other documents in connection with any of the Collateral; (D) to
commence and prosecute any suits, actions or proceedings at law or in
equity in any court of competent jurisdiction to collect the
Collateral or any thereof and to enforce any other right in respect of
any Collateral; (E) to defend any suit, action or proceeding brought
against such Borrower with respect to any Collateral; (F) to settle,
compromise or adjust any suit, action or proceeding described in
clause (E) above and, in connection therewith, to give such discharges
or releases as the Lender may deem appropriate; and (G) generally, to
sell, transfer, pledge and make any agreement with respect to or
otherwise deal with any of the Collateral as fully and completely as
though the Lender were the absolute owner thereof for all purposes,
and to do, at the Lender's option and such Borrower's expense, at any
time, and from time to time, all acts and things which the Lender
deems necessary to protect, preserve or realize upon the Collateral
and the Lender's Liens thereon and to effect the intent of this Loan
Agreement, all as fully and effectively as such Borrower might do; and
(iv) to direct the actions of the Trustee with respect to
the Collateral under the Pooling and Servicing Agreement.
The Borrower hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable.
(b) The Borrowers also authorizes the Lender, if an Event
of Default hall have occurred and be continuing, from time to time, to execute,
in connection with any sale provided for in Section 4.07 hereof, any
endorsements, assignments or other instruments of conveyance or transfer with
respect to the Collateral.
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(c) The powers conferred on the Lender are solely to
protect the Lender's interests in the Collateral and shall not impose any duty
upon the Lender to exercise any such powers. The Lender shall be accountable
only for amounts that it actually receives as a result of the exercise of such
powers, and neither the Lender nor any of its officers, directors, or employees
shall be responsible to the Borrower for any act or failure to act hereunder,
except for its own gross negligence or willful misconduct.
4.05. Performance by Lender of Borrowers' Obligations. If any
Borrower fails to perform or comply with any of its agreements contained in the
Loan Documents and the Lender may itself perform or comply, or otherwise cause
performance or compliance, with such agreement, the reasonable expenses of the
Lender incurred in connection with such performance or compliance, together
with interest thereon at a rate per annum equal to the Post-Default Rate, shall
be payable by the Borrowers to the Lender on demand and shall constitute
Secured Obligations.
4.06. Proceeds. If an Event of Default shall occur and be
continuing, (a) all proceeds of Collateral received by any Borrower consisting
of cash, checks and other near-cash items shall be held by such Borrower in
trust for the Lender, segregated from other funds of such Borrower, and shall
forthwith upon receipt by such Borrower be turned over to the Lender in the
exact form received by such Borrower (duly endorsed by such Borrower to the
Lender, if required) and (b) any and all such proceeds received by the Lender
(whether from a Borrower or otherwise) may, in the sole discretion of the
Lender, be held by the Lender as collateral security for, and/or then or at any
time thereafter may be applied by the Lender against, the Secured Obligations
(whether matured or unmatured), such application to be in such order as the
Lender shall elect. Any balance of such proceeds remaining after the Secured
Obligations shall have been paid in full and this Loan Agreement shall have
been terminated shall be paid promptly over to the Borrowers or to whomsoever
may be lawfully entitled to receive the same. For purposes hereof, proceeds
shall include, but not be limited to, all principal and interest payments, all
prepayments and payoffs, insurance claims, condemnation awards, sale proceeds,
real estate owned rents and any other income and all other amounts received
with respect to the Collateral.
4.07. Remedies. If an Event of Default shall occur and be
continuing, the Lender may exercise, in addition to all other rights and
remedies granted to it in this Loan Agreement and in any other instrument or
agreement securing, evidencing or relating to the Secured Obligations, all
rights and remedies of a secured party under the Uniform Commercial Code.
Without limiting the generality of the foregoing, the Lender without demand of
performance or other demand, presentment, protest, advertisement or notice of
any kind (except any notice required by law referred to below) to or upon the
Borrowers or any other Person (each and all of which demands, presentments,
protests, advertisements and notices are hereby waived), may in such
circumstances forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give
option or options to purchase, or otherwise dispose of and deliver the
Collateral or any part thereof (or contract to do any of the foregoing), in one
or more parcels or as an entirety at public or private sale or sales, at any
exchange, broker's board or office of the Lender or elsewhere upon such terms
and conditions as it may deem advisable and at such prices as it may deem best,
for cash or on credit or for future delivery without assumption of any credit
risk. The Lender shall have the right upon any such public sale or sales, and,
to the extent permitted by law, upon any such private sale or sales, to
purchase the whole or any part of the Collateral so sold, free of any right or
equity of redemption in the Borrowers, which right or equity is hereby waived
or released. The Borrowers further agree, at the Lender's request, to assemble
the Collateral and make it available to the Lender at places which the Lender
shall reasonably select, whether at the Borrowers' premises or elsewhere. The
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Lender shall apply the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable costs and
expenses of every kind incurred therein or incidental to the care or
safekeeping of any of the Collateral or in any way relating to the Collateral
or the rights of the Lender hereunder, including without limitation reasonable
attorneys' fees and disbursements, to the payment in whole or in part of the
Secured Obligations, in such order as the Lender may elect, and only after such
application and after the payment by the Lender of any other amount required or
permitted by any provision of law, including without limitation Section
9-504(1)(c) of the Uniform Commercial Code, need the Lender account for the
surplus, if any, to the Borrowers. To the extent permitted by applicable law,
the Borrowers waive all claims, damages and demands they may acquire against
the Lender arising out of the exercise by the Lender of any of its rights
hereunder, other than those claims, damages and demands arising from the gross
negligence or willful misconduct of the Lender. If any notice of a proposed
sale or other disposition of Collateral shall be required by law, such notice
shall be deemed reasonable and proper if given at least 10 days before such
sale or other disposition. The Borrowers shall remain liable for any
deficiency (plus accrued interest thereon as contemplated pursuant to Section
2.05(b) hereof) if the proceeds of any sale or other disposition of the
Collateral are insufficient to pay the Secured Obligations and the fees and
disbursements of any attorneys employed by the Lender to collect such
deficiency.
4.08. Limitation on Duties Regarding Presentation of
Collateral. The Lender's duty with respect to the custody, safekeeping and
physical preservation of the Collateral in its possession, under Section 9-207
of the Uniform Commercial Code or otherwise, shall be to deal with it in the
same manner as the Lender deals with similar property for its own account.
Neither the Lender nor any of its directors, officers or employees shall be
liable for failure to demand, collect or realize upon all or any part of the
Collateral or for any delay in doing so or shall be under any obligation to
sell or otherwise dispose of any Collateral upon the request of any Borrower or
otherwise.
4.09. Powers Coupled with an Interest. All authorizations
and agencies herein contained with respect to the Collateral are irrevocable
and powers coupled with an interest.
4.10 Release of Security Interest. Upon termination of this
Loan Agreement and repayment to the Lender of all Secured Obligations and the
performance of all obligations under the Loan Documents the Lender shall
release its security interest in any remaining Collateral. So long as no Event
of Default has occurred and is continuing, the Borrower may, subject to the
Pooling and Servicing Agreement, and subject to Section 2.08 hereof, request
the release of one or more Eligible Mortgage Loans constituting Collateral
pursuant to a Request for Release-Overcollateralization.
Section 5. Conditions Precedent.
5.01 Initial Loan. The obligation of the Lender to make its
initial Loan hereunder is subject to the satisfaction, immediately prior to or
concurrently with the making of such Loan, of the condition precedent that the
Lender shall have received all of the following documents, each of which shall
be satisfactory to the Lender and its counsel in form and substance:
(a) Loan Documents.
(i) Note. The Note, duly completed and executed;
(ii) Pooling and Servicing Agreement. The Pooling and
Servicing Agreement, certified as a true, correct and complete copy of
the original, attached hereto as Exhibit B. In
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addition, the Borrowers shall have taken such other action as the
Lender shall have requested in order to perfect the security interests
created pursuant to the Loan Agreement;
(iii) Affiliate Guaranty. The Affiliate Guaranty,
certified as a true, correct and complete copy of the original,
attached hereto as Exhibit F;
(b) Organizational Documents. A good standing
certificate and certified copies of the charter and by-laws (or
equivalent documents) of each Borrower and of all corporate or other
authority for each Borrower with respect to the execution, delivery
and performance of the Loan Documents and each other document to be
delivered by each Borrower from time to time in connection herewith
(and the Lender may conclusively rely on such certificate until it
receives notice in writing from each Borrower to the contrary);
(c) Legal Opinion. A legal opinion of counsel to the
Borrowers, Guarantor and Master Servicer, substantially in the form
attached hereto as Exhibit C;
(d) Mortgage Loan Schedule and Exception Report. A
Mortgage Loan Schedule and Exception Report, dated the Effective Date,
from the Trustee, duly completed;
(e) Pass-Through Certificates. A Pass-Through
Certificate of each Borrower pledged to Lender in consideration for
the Loans, registered in the name of the Lender;
(f) Letter Agreements. The (i) letter agreement from the
Guarantor and the Borrowers to the Lender, dated as of May 1, 1997 and
(ii) letter agreement from PNC Bank, National Association to AMHC and
Advanta Mortgage Corp. USA, dated as of May 1, 1997.
(g) Other Documents. Such other documents as the Lender
may reasonably request.
5.02 Initial and Subsequent Loans. The making of each Loan
to the Borrowers (including the initial Loan) on any Business Day is subject to
the satisfaction of the following further conditions precedent, both
immediately prior to the making of such Loan and also after giving effect
thereto and to the intended use thereof:
(a) no Default or Event of Default shall have occurred
and be continuing;
(b) both immediately prior to the making of such Loan and
also after giving effect thereto and to the intended use thereof, the
representations and warranties made by the Borrowers in Section 6
hereof, and elsewhere in each of the Loan Documents, shall be true and
complete on and as of the date of the making of such Loan in all
material respects (in the case of the representations and warranties
in Section 6.10 and Schedule 1, solely with respect to Mortgage Loans
included in the Borrowing Base) with the same force and effect as if
made on and as of such date (or, if any such representation or
warranty is expressly stated to have been made as of a specific date,
as of such specific date). The Lender shall have received an
officer's certificate signed by a Responsible Officer of each Borrower
certifying as to the truth and accuracy of the above, which
certificate shall specifically include a statement that such Borrower
is in compliance in all material respects with all governmental
licenses and authorizations and is qualified to do business and in
good standing in all required jurisdictions except where the failure
to be so qualified would not have a Material Adverse Effect.
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(c) the aggregate outstanding principal amount of the
Loans shall not exceed the Borrowing Base;
(d) subject to the Lender's right to perform one or more
Due Diligence Reviews pursuant to Section 11.15 hereof, the Lender
shall have completed its due diligence review of the Mortgage Loan
Documents for each Loan and such other documents, records, agreements,
instruments, mortgaged properties or information relating to such
Loans as the Lender in its sole discretion deems appropriate to review
and such review shall be satisfactory to the Lender in its sole
discretion;
(e) the Lender shall have received from the Trustee a
Mortgage Loan Schedule and Exception Report with exceptions acceptable
to the Lender in its sole discretion in respect of Eligible Mortgage
Loans to be pledged hereunder on such Business Day;
(f) the Trustee shall have received a Notice of Pledge
substantially in the form provided in the Pooling and Servicing
Agreement (a copy of which shall be delivered to the Lender);
(g) none of the following shall have occurred and/or be
continuing:
(i) an event or events shall have occurred resulting in
the effective absence of a "repo market" or comparable "lending
market" for financing debt obligations secured by mortgage loans or
securities for a period of (or reasonably expected to be) at least 30
consecutive days or an event or events shall have occurred resulting
in the Lender not being able to finance any Loans through the "repo
market" or "lending market" with traditional counterparties at rates
which would have been reasonable prior to the occurrence of such event
or events, provided that the Lender shall notify the Borrowers
promptly upon the occurrence of any such event, provided further that
this Section 5.02(f)(i) shall not take effect until 5 Business Days
after such notice; or
(ii) an event or events shall have occurred resulting in
the effective absence of a "securities market" for securities backed
by mortgage loans for a period of (or reasonably expected to be) at
least 30 consecutive days or an event or events shall have occurred
resulting in the Lender not being able to sell securities backed by
mortgage loans at prices which would have been reasonable prior to
such event or events, provided that the Lender shall notify the
Borrowers promptly upon the occurrence of any such event, provided
further that this Section 5.02(f)(ii) shall not take effect until 5
Business Days after such notice.
Each request for a borrowing by the Borrowers hereunder shall constitute a
certification by the Borrowers that all the conditions set forth in this
Section 5 have been satisfied (both as of the date of such notice, request or
confirmation and as of the date of such borrowing).
Section 6. Representations and Warranties. The Borrowers
represent and warrant to the Lender that throughout the term of this Loan
Agreement:
6.01 Existence. Each Borrower (a) is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) has all requisite corporate or other
power, and has all governmental licenses, authorizations, consents and
approvals necessary to own its assets and carry on its business as now being or
as proposed to be conducted, except where the
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lack of such licenses, authorizations, consents and approvals would not be
reasonably likely to have a material adverse effect on its Property, business
or financial condition taken as a whole; and (c) is qualified to do business
and is in good standing in all other jurisdictions in which the nature of the
business conducted by it makes such qualification necessary, except where
failure so to qualify would not be reasonably likely (either individually or in
the aggregate) to have a material adverse effect on its Property, business or
financial condition taken as a whole.
6.02 Financial Condition. AMHC has heretofore furnished to
the Lender a copy of (a) its consolidated balance sheet and the consolidated
balance sheets of its consolidated Subsidiaries for the fiscal year of the
Borrowers ended December 31, 1996, and the related consolidated statements of
income and retained earnings and of cash flows for the Borrowers and their
consolidated Subsidiaries for such fiscal year, with the opinion thereon of
Xxxxxx Xxxxxxxx LLP. All such financial statements are complete and correct
and fairly present, in all material respects, the consolidated financial
condition of the Borrowers and their Subsidiaries and the consolidated results
of their operations as at such dates and for such fiscal periods, all in
accordance with GAAP applied on a consistent basis except, in the case of
interim financial statements, for the absence of footnotes and subject to
year-end adjustments. Since April 17, 1997, there has been no material adverse
change in the consolidated business, operations or financial condition of the
Borrowers and their consolidated Subsidiaries taken as a whole from that set
forth in said financial statements.
6.03 Litigation. There are no actions, suits, arbitrations,
investigations or proceedings pending or, to the Borrowers' knowledge,
threatened against any Borrower, the Guarantor or any of their Subsidiaries or
affecting any of the Property of any of them before any Governmental Authority
(i) as to which individually or in the aggregate there is a reasonable
likelihood of an adverse decision which would be reasonably likely to have a
material adverse effect on the Property, business or financial condition of the
Borrowers or (ii) which questions the validity or enforceability of any of the
Loan Documents or any action to be taken in connection with the transactions
contemplated hereby.
6.04 No Breach. Neither (a) the execution and delivery of
the Loan Documents nor (b) the consummation of the transactions therein
contemplated in compliance with the terms and provisions thereof will conflict
with or result in a breach of the charter or by-laws of any Borrower, or any
applicable law, rule or regulation, or any order, writ, injunction or decree of
any Governmental Authority, or any Servicing Agreement or other material
agreement or instrument to which any Borrower or any of its Subsidiaries is a
party or by which any of them or any of their Property is bound or to which any
of them is subject, or constitute a default under any such material agreement
or instrument which breach or conflict will have a Material Adverse Effect or
result in the creation or imposition of any Lien (except for the Liens created
pursuant to this Loan Agreement) upon any Property of the Borrower or any of
its Subsidiaries pursuant to the terms of any such agreement or instrument.
6.05 Action. Each Borrower has all necessary corporate or
other power, authority and legal right to execute, deliver and perform its
obligations under each of the Loan Documents; the execution, delivery and
performance by such Borrower of each of the Loan Documents have been duly
authorized by all necessary corporate or other action on its part; and each
Loan Document has been duly and validly executed and delivered by such Borrower
and constitutes a legal, valid and binding obligation of such Borrower,
enforceable against such Borrower in accordance with its terms except as may be
limited by applicable bankruptcy, moratorium or other laws affecting creditors'
rights generally and by general principles of equity.
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6.06 Approvals. No authorizations, approvals or consents of,
and no filings or registrations with, any Governmental Authority or any
securities exchange are necessary for the execution, delivery or performance by
any Borrower of the Loan Documents or for the legality, validity or
enforceability thereof, except for filings and recordings in respect of the
Liens created pursuant to this Loan Agreement.
6.07 Margin Regulations. Neither the making of any Loan
hereunder, nor the use of the proceeds thereof, will violate or be inconsistent
with the provisions of Regulation G, T, U or X.
6.08 Taxes. The Guarantor has filed all Federal income tax
returns and all other material tax returns that are required to be filed by it,
which tax returns represent all Federal income tax returns and all other
material tax returns that are required to be filed by the Borrowers, and have
paid all taxes due pursuant to such returns or pursuant to any assessment
received by it or any of its Subsidiaries, except for any such taxes as are
being appropriately contested in good faith by appropriate proceedings
diligently conducted and with respect to which adequate reserves have been
provided. The charges, accruals and reserves on the books of the Guarantor and
its Subsidiaries in respect of taxes and other governmental charges are, in the
opinion of the Borrowers, adequate.
6.09 Investment Company Act. Neither the Borrower nor any of
its Subsidiaries is an "investment company", or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
6.10 Collateral; Collateral Security.
(a) The Borrower has not assigned, pledged, or otherwise
conveyed or encumbered any Pass-Through Certificate or Mortgage Loan to any
other Person, and immediately prior to the pledge of such Pass-Through
Certificate or Mortgage Loan to the Lender, the applicable Borrower was the
sole owner of such Pass-Through Certificate or Mortgage Loan and had good and
marketable title thereto, free and clear of all Liens (other than the interest
of the Trustee pursuant to the Pooling and Servicing Agreement), in each case
except for Liens to be released simultaneously with the Liens granted in favor
of the Lender hereunder. No Pass-Through Certificate or Mortgage Loan pledged
to the Lender hereunder was acquired by the applicable Borrower from an
Affiliate of the applicable Borrower
(b) The provisions of this Loan Agreement are effective
to create in favor of the Lender a valid security interest in all right, title
and interest of each Borrower in, to and under the Collateral.
(c) Upon receipt by (i) the Lender of each Pass-Through
Certificate issued in Lender's name and (ii) the Trustee of each Mortgage Note,
endorsed as prescribed in the Pooling and Servicing Agreement by a duly
authorized officer of the applicable Borrower, and the related Pledge Notice
(as defined in the Pooling and Servicing Agreement) the Lender shall have a
fully perfected first priority security interest in, respectively, the
applicable Pass-Through Certificate, and in the Mortgage Loan evidenced by the
Mortgage Note and in such Borrower's interest in the related Mortgaged
Property.
(d) Upon the filing of financing statements on Form UCC-1
naming the Lender as "Secured Party" and each Borrower as "Debtor", and
describing the Collateral, in the jurisdictions and recording offices listed on
Schedule 2 attached hereto, the security interests granted hereunder in the
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Collateral will constitute fully perfected first priority security interests
under the Uniform Commercial Code in all right, title and interest of each
Borrower in, to and under such Collateral which can be perfected by filing
under the Uniform Commercial Code.
6.11 Chief Executive Office. Each Borrower's chief executive
office (other than Advanta Finance Corp.) on the Effective Date is located at
000 Xxxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxx Xxxxxxxxxx, Xxxxxxxxxxxx 00000;
Advanta Finance Corp.'s chief executive office is located at 00000 Xxxx
Xxxxxxxx Xxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000.
6.12 Location of Books and Records. The location where each
Borrower keeps its books and records, including all computer tapes and records
relating to the Collateral is its chief executive office.
6.13 Hedging. The Borrowers or the Guarantor have entered
into Interest Rate Protection Agreements, having a notional amount not less
than 70% of the aggregate unpaid principal amount of the fixed-rate Mortgage
Loans.
6.14 True and Complete Disclosure. The information, reports,
financial statements, exhibits and schedules furnished in writing by or on
behalf of each Borrower to the Lender in connection with the negotiation,
preparation or delivery of this Loan Agreement and the other Loan Documents or
included herein or therein or delivered pursuant hereto or thereto, when taken
as a whole, do not contain any untrue statement of material fact or omit to
state any material fact necessary to make the statements herein or therein, in
light of the circumstances under which they were made, not misleading. All
written information furnished after the date hereof by or on behalf of each
Borrower to the Lender in connection with this Loan Agreement and the other
Loan Documents and the transactions contemplated hereby and thereby will not
contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, or (in the case of projections)
based on reasonable estimates, on the date as of which such information is
stated or certified.
6.15 ERISA. Each Plan to which any Borrower or its
Subsidiaries make direct contributions, and, to the knowledge of such Borrower,
each other Plan and each Multiemployer Plan, is in compliance in all material
respects with, and has been administered in all material respects in compliance
with, the applicable provisions of ERISA, the Code and any other Federal or
State law. To any Borrowers' knowledge, no event or condition has occurred and
is continuing as to which the Borrower would be under an obligation to furnish
a report to the Lender under Section 7.01(d) hereof.
6.16 Pass-Through Certificates. Borrower represents and
warrants to Lender with respect to each Pass-Through Certificate, that (a) such
Pass-Through Certificate is registered in the name of Lender, (b) immediately
prior to the transfer to the Lender of the interest represented by such
Pass-Through Certificate, such interest is owned by a Borrower free from all
liens and encumbrances, (c) prior to or concurrently with such transfer to the
Lender of the interest represented by such Pass-Through Certificate shall have
been issued in the name of and delivered to the Lender, (d) such Pass-Through
Certificate represents a 100% ownership interest in the Eligible Mortgage Loans
referenced therein, (e) the Eligible Mortgage Loans referenced in such
Pass-Through Certificate are being held by the Trustee for the benefit of the
holder of such Pass-Through Certificate, (f) each Borrower has notified the
Trustee or other registrar issuing such Pass-Through Certificate that Lender is
the holder of such Pass-Through Certificate for all purposes and (g) all
representations and warranties set forth in Part II of Schedule 1 are true and
correct.
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Section 7. Covenants of the Borrowers. Each Borrower
covenants and agrees with the Lender that, so long as any Loan is outstanding
and until payment in full of all Secured Obligations:
7.01 Financial Statements. Borrowers shall deliver to the
Lender:
(a) as soon as available and in any event within 60 days
after the end of each of the first three quarterly fiscal periods of
each fiscal year of AMHC and the Guarantor, the unaudited consolidated
balance sheets of AMHC and the Guarantor and their consolidated
Subsidiaries as at the end of such period and the related unaudited
consolidated statements of income and retained earnings and of cash
flows AMHC and the Guarantor and their consolidated Subsidiaries for
such period and the portion of the fiscal year through the end of such
period, accompanied by a certificate of a Responsible Officer of AMHC
and the Guarantor, respectively, which certificate shall state that
said consolidated financial statements fairly present in all material
respects the consolidated financial condition and results of
operations of AMHC and the Guarantor and its consolidated Subsidiaries
in accordance with GAAP, consistently applied, as at the end of, and
for, such period (except for the absence of footnotes thereto and
subject to normal year-end audit adjustments);
(b) as soon as available and in any event within 90 days
after the end of each fiscal year of AMHC and the Guarantor, the
consolidated balance sheets of AMHC and the Guarantor and their
consolidated Subsidiaries as at the end of such fiscal year and the
related consolidated statements of income and retained earnings and of
cash flows for AMHC and the Guarantor and their consolidated
Subsidiaries for such year, setting forth in each case in comparative
form the figures for the previous year, accompanied by an opinion
thereon (but only with respect to the items covering AMHC and its
consolidated Subsidiaries) of independent certified public accountants
of recognized national standing, which opinion shall not be qualified
as to scope of audit or going concern and shall state that said
consolidated financial statements fairly present the consolidated
financial condition and results of operations of AMHC and its
consolidated Subsidiaries as at the end of, and for, such fiscal year
in accordance with GAAP, and a certificate of such accountants stating
that, in making the examination necessary for their opinion, they
obtained no knowledge, except as specifically stated, of any Default
or Event of Default;
(c) from time to time such other information regarding
the financial condition, operations, or business and AMHC and the
Guarantor as the Lender may reasonably request; and
(d) as soon as reasonably possible, and in any event
within thirty (30) days after a Responsible Officer of any Borrower
knows, or with respect to any Plan or Multiemployer Plan to which such
Borrower or any of its Subsidiaries makes direct contributions, has
reason to believe, that any of the events or conditions specified
below with respect to any Plan or Multiemployer Plan has occurred or
exists, a statement signed by a senior financial officer of such
Borrower setting forth details respecting such event or condition and
the action, if any, that such Borrower or its ERISA Affiliate proposes
to take with respect thereto (and a copy of any report or notice
required to be filed with or given to PBGC by such Borrower or an
ERISA Affiliate with respect to such event or condition):
(i) any reportable event, as defined in Section
4043(b) of ERISA and the regulations issued thereunder, with
respect to a Plan, as to which PBGC has not by
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regulation waived the requirement of Section 4043(a) of ERISA
that it be notified within thirty (30) days of the occurrence
of such event (provided that a failure to meet the minimum
funding standard of Section 412 of the Code or Section 302 of
ERISA, including without limitation the failure to make on or
before its due date a required installment under Section
412(m) of the Code or Section 302(e) of ERISA, shall be a
reportable event regardless of the issuance of any waivers in
accordance with Section 412(d) of the Code); and any request
for a waiver under Section 412(d) of the Code for any Plan;
(ii) the distribution under Section 4041(c) of
ERISA of a notice of intent to terminate any Plan or any
action taken by such Borrower or an ERISA Affiliate to
terminate any Plan;
(iii) the institution by PBGC of proceedings under
Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan, or the
receipt by such Borrower or any ERISA Affiliate of a notice
from a Multiemployer Plan that such action has been taken by
PBGC with respect to such Multiemployer Plan;
(iv) the complete or partial withdrawal from a
Multiemployer Plan by any Borrower or any ERISA Affiliate that
results in liability under Section 4201 or 4204 of ERISA
(including the obligation to satisfy secondary liability as a
result of a purchaser default) that would have a Material
Adverse Effect or the receipt by any Borrower or any ERISA
Affiliate of notice from a Multiemployer Plan that it is in
reorganization or insolvency pursuant to Section 4241 or 4245
of ERISA or that it intends to terminate or has terminated
under Section 4041A of ERISA;
(v) the institution of a proceeding by a
fiduciary of any Multiemployer Plan against any Borrower or
any ERISA Affiliate to enforce Section 515 of ERISA, which
proceeding is not dismissed within 30 days; and
(vi) the adoption of an amendment to any Plan
that, pursuant to Section 401(a)(29) of the Code or Section
307 of ERISA, would result in the loss of tax-exempt status of
the trust of which such Plan is a part if such Borrower or an
ERISA Affiliate fails to provide timely security to such Plan
in accordance with the provisions of said Sections.
Each Borrower will furnish to the Lender, at the time AMHC furnishes each set
of financial statements pursuant to paragraphs (a) and (b) above, a certificate
of a Responsible Officer of such Borrower to the effect that, to the best of
such Responsible Officer's knowledge, such Borrower during such fiscal period
or year has observed or performed in all material respects all of its covenants
and other agreements, and satisfied every condition, contained in this Loan
Agreement and the other Loan Documents to be observed, performed or satisfied
by it, and that such Responsible Officer has obtained no knowledge of any
Default or Event of Default except as specified in such certificate (and, if
any Default or Event of Default has occurred and is continuing, describing the
same in reasonable detail and describing the action such Borrower has taken or
proposes to take with respect thereto).
7.02 Litigation. Each Borrower will promptly, and in any
event within 10 days after service of process on any of the following, give to
the Lender notice of all legal or arbitrable
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proceedings affecting the Borrowers, the Guarantor, the Master Servicer or any
of their Subsidiaries that questions or challenges the validity or
enforceability of any of the Loan Documents or as to which there is a
reasonable likelihood of adverse determination which would result in a Material
Adverse Effect.
7.03 Existence, etc. Each Borrower will:
(a) preserve and maintain its legal existence and all of
its material rights, privileges, licenses and franchises necessary for
the operation of its business (provided that nothing in this Section
7.03(a) shall prohibit any transaction expressly permitted under
Section 7.04 hereof);
(b) comply with the requirements of all applicable laws,
rules, regulations and orders of Governmental Authorities (including,
without limitation, all environmental laws) if failure to comply with
such requirements would be reasonably likely (either individually or
in the aggregate) to have a material adverse effect on its Property,
business or financial condition;
(c) keep adequate records and books of account, in which
complete entries will be made in accordance with GAAP consistently
applied;
(d) not move its chief executive office from the address
referred to in Section 6.11 unless it shall have provided the Lender
30 days' prior written notice of such change;
(e) pay and discharge all taxes, assessments and
governmental charges or levies imposed on it or on its income or
profits or on any of its Property prior to the date on which penalties
attach thereto, except for any such tax, assessment, charge or levy
the payment of which is being contested in good faith and by proper
proceedings and against which adequate reserves are being maintained;
and
(f) permit representatives of the Lender, during normal
business hours, to examine, copy and make extracts from its books and
records, to inspect any of its Properties, and to discuss its business
and affairs with its officers, all to the extent reasonably requested
by the Lender.
7.04 Prohibition of Fundamental Changes. None of the
Borrowers nor the Guarantor shall enter into any transaction of merger or
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation, winding up or dissolution) or sell all or substantially
all of their assets (it being understood that a securitization of loan assets
shall not be deemed a sale of all or substantially all assets); provided, that
a Borrower or the Guarantor may merge or consolidate with (a) any wholly owned
direct or indirect subsidiary of Advanta Corp., or (b) any other Person if such
Borrower or the Guarantor is the surviving corporation; and provided further,
that if after giving effect thereto, no Default would exist hereunder.
7.05 Borrowing Base Deficiency. If at any time there exists
a Borrowing Base Deficiency the Borrowers shall cure same in accordance with
Section 2.06 hereof.
7.06 Notices. The Borrowers shall give notice to the Lender:
(a) promptly upon receipt of notice or knowledge of the
occurrence of any Default or Event of Default;
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(b) with respect to any Mortgage Loan pledged to the
Lender hereunder, on a monthly basis, upon receipt of any principal
prepayment (in full or partial) of such pledged Mortgage Loan;
(c) with respect to any Mortgage Loan pledged to the
Lender hereunder, on a monthly basis, receipt of notice or knowledge
that the underlying Mortgaged Property has been damaged by waste,
fire, earthquake or earth movement, flood, tornado or other casualty,
or otherwise damaged so as to affect adversely the Collateral Value of
such pledged Mortgage Loan; and
(d) promptly upon receipt of notice or knowledge of (i)
any default related to any Collateral, (ii) any Lien or security
interest (other than security interests created hereby or by the other
Loan Documents) on, or claim asserted against, any of the Collateral
or (iii) any event or change in circumstances which could reasonably
be expected to have a material adverse effect on any Borrower's
Property, business or financial condition of the Borrower.
Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer of such Borrower setting forth details of the occurrence
referred to therein and stating what action such Borrower has taken or proposes
to take with respect thereto.
7.07 Hedging. The Borrowers or the Guarantor shall at all
times maintain Interest Rate Protection Agreements, having a notional amount
not less than 70% of the aggregate outstanding principal balance of all
fixed-rate Mortgage Loans.
7.08 Reports. The Borrower shall provide the Lender with a
quarterly report, which report shall include, among other items, a summary of
such Borrower's delinquency and loss experience with respect to Mortgage Loans
serviced by the Borrowers in the aggregate, any Servicer or any designee of
either, plus any such additional reports as the Lender may reasonably request
with respect to such Borrower's or any Servicer's servicing portfolio or
pending origination's of Mortgage Loans.
7.09 Underwriting Guidelines. Without the prior written
notice to the Lender, no Borrower shall amend or otherwise modify the
Underwriting Guidelines in a manner that materially and adversely affects the
value of the Collateral.
7.10 Transactions with Affiliates. No Borrower will enter
into any transaction, including without limitation any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate unless
such transaction is (a) otherwise permitted under this Loan Agreement, (b) in
the ordinary course of such Borrower's business and (c) upon fair and
reasonable terms no less favorable to such Borrower than it would obtain in a
comparable arm's length transaction with a Person which is not an Affiliate;
provided, however, that nothing contained herein shall prohibit any Borrower
from making a capital contribution of Mortgage Loans to any other Borrower
provided that such capital contribution is made subject to the Lender's Lien on
any such Mortgage Loans that are the subject of such capital contribution.
7.11 Limitation on Liens. Each Borrower will defend the
Collateral against, and will take such other action as is necessary to remove,
any Lien, security interest or claim on or to the Collateral, other than the
security interests created under this Loan Agreement and Liens for taxes and
similar charges and assessments that are not yet due and payable or which are
being contested in good
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faith by appropriate proceedings, and each Borrower will defend the right,
title and interest of the Lenders in and to any of the Collateral against the
claims and demands of all persons whomsoever.
7.12 Maintenance of Profitability. No Borrower shall permit,
for any period of three consecutive fiscal quarters (each such period, a "Test
Period"), Net Income for such Test Period, after income taxes for such Test
Period and distributions made during such Test Period, to be less than $1.00.
7.13 Servicing Tape. The Borrowers shall provide to the
Lender on (i) the 15th calendar day (or if such 15th day is not a Business Day,
the Business Day immediately preceding such 15th day) of the month and (ii) the
last Business Day of the month, a computer readable magnetic tape containing
servicing information, including without limitation those fields reasonably
requested by the Lender from time to time, on a loan-by-loan basis, with
respect to the Mortgage Loans serviced hereunder by any Borrower or any
Servicer.
7.14 Pooling and Serving Agreement._ The parties to the
Pooling and Servicing Agreement shall maintain such Agreement in full force and
effect and shall not amend or modify the Pooling and Servicing Agreement or
waive compliance with any provisions thereunder without the prior written
consent of the Lender.
Section 8. Events of Default. Each of the following events
shall constitute an event of default (an "Event of Default") hereunder:
(a) the Borrowers shall default in the payment of any
principal of or interest on any Loan when due (whether at stated
maturity, upon acceleration or at mandatory or optional prepayment);
or
(b) the Borrowers shall default in the payment of any
other amount payable by it hereunder or under any other Loan Document
after notification by the Lender of such default, and such default
shall have continued unremedied for five Business Days; or
(c) any representation, warranty or certification made or
deemed made herein or in any other Loan Document by any Borrower or
the Guarantor or any certificate furnished to the Lender pursuant to
the provisions hereof or thereof shall prove to have been false or
misleading in any material respect as of the time made or furnished
(other than the representations and warranties set forth in Schedule
1, which shall be considered solely for the purpose of determining the
Collateral Value of the Mortgage Loans; unless the applicable Borrower
shall have made any such representations and warranties with knowledge
that they were materially false or misleading at the time made); or
(d) any Borrower shall fail to comply with the
requirements of any of Section 7.03(a), Section 7.04, Section 7.06(a),
or Sections 7.11 through 7.12 or Section 7.14 hereof; or any Borrower
shall default in the performance of any of its obligations under
Section 7.05 hereof and such default shall continue unremedied for a
period of one (1) Business Day; or any Borrower shall otherwise fail
to comply with any of the requirements of Section 7.03, 7.06 (b)-(d),
7.09, 7.10, 7.13 hereof and such default shall continue unremedied for
a period of five Business Days; or any Borrower shall fail to observe
or perform any other covenant or agreement contained in this Loan
Agreement or any other Loan Document and such failure to observe or
perform shall continue unremedied for a period of seven Business Days;
or
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(e) a final judgment or judgments for the payment of
money in excess of $10,000,000 in the aggregate shall be rendered
against any Borrower or any of its Subsidiaries or the Guarantor by
one or more courts, administrative tribunals or other bodies having
jurisdiction and the same shall not be discharged (or provision shall
not be made for such discharge) or bonded, or a stay of execution
thereof shall not be procured, within 60 days from the date of entry
thereof, and the applicable Borrower or Borrowers or any such
Subsidiary shall not, within said period of 60 days, or such longer
period during which execution of the same shall have been stayed or
bonded, appeal therefrom and cause the execution thereof to be stayed
during such appeal; or
(f) any Borrower or the Guarantor shall admit in writing
its inability to pay its debts as such debts become due; or
(g) any Borrower or any of its Subsidiaries or the
Guarantor shall (i) apply for or consent to the appointment of, or the
taking of possession by, a receiver, custodian, trustee, examiner or
liquidator or the like of itself or of all or a substantial part of
its property, (ii) make a general assignment for the benefit of its
creditors, (iii) commence a voluntary case under the Bankruptcy Code,
(iv) file a petition seeking to take advantage of any other law
relating to bankruptcy, insolvency, reorganization, liquidation,
dissolution, arrangement or winding-up, or composition or readjustment
of debts, (v) fail to controvert in a timely and appropriate manner,
or acquiesce in writing to, any petition filed against it in an
involuntary case under the Bankruptcy Code or (vi) take any corporate
or other action for the purpose of effecting any of the foregoing; or
(h) a proceeding or case shall be commenced, without the
application or consent of any Borrower or any of its Subsidiaries or
the Guarantor, in any court of competent jurisdiction, seeking (i) its
reorganization, liquidation, dissolution, arrangement or winding-up,
or the composition or readjustment of its debts, (ii) the appointment
of, or the taking of possession by, a receiver, custodian, trustee,
examiner, liquidator or the like of any Borrower or any such
Subsidiary or of all or any substantial part of its property, or (iii)
similar relief in respect of any Borrower or any such Subsidiary under
any law relating to bankruptcy, insolvency, reorganization,
liquidation, dissolution, arrangement or winding-up, or composition or
adjustment of debts, and such proceeding or case shall continue
undismissed, or an order, judgment or decree approving or ordering any
of the foregoing shall be entered and continue unstayed and in effect,
for a period of 60 or more days; or an order for relief against any
Borrower or any such Subsidiary shall be entered in an involuntary
case under the Bankruptcy Code; or
(i) the Pooling and Servicing Agreement or any Loan
Document shall for whatever reason be terminated or cease to be in
full force and effect, or the enforceability thereof shall be
contested by any Borrower; or
(j) any Borrower shall grant, or suffer to exist, any
Lien on any Collateral except the Liens contemplated hereby; or the
Liens contemplated hereby shall cease to be first priority perfected
Liens on any Collateral in favor of the Lender or shall be Liens in
favor of any Person other than the Lender; or
(k) the Lender determines that the number of
Misclassified Mortgage Loans equals at least 5% of the Mortgage Loans
reviewed (based upon a representative sample of at least 50
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Mortgage Loans) pursuant to a Due Diligence Review of Mortgage Loans
pledged to the Lender hereunder; or
(l) there is a material default, breach, violation or
event of default under the Pooling and Servicing Agreement or any
Borrower has waived any such material default, breach, violation or
event of default thereunder.
Section 9. Remedies Upon Default.
(a) Upon the occurrence of one or more Events of Default
other than those referred to in Section 8(g) or (h), the Lender may immediately
declare the principal amount of the Loans then outstanding under the Note to be
immediately due and payable, together with all interest thereon and fees and
expenses accruing under this Loan Agreement. Upon the occurrence of an Event
of Default referred to in Sections 8(g) or (h), such amounts shall immediately
and automatically become due and payable without any further action by any
Person. Upon such declaration or such automatic acceleration, the balance then
outstanding on the Note shall become immediately due and payable, without
presentment, demand, protest or other formalities of any kind, all of which are
hereby expressly waived by the Borrowers.
(b) Upon the occurrence of one or more Events of Default,
the Lender shall have the right to obtain physical possession of the Servicing
Records (subject to the provisions of the Pooling and Servicing Agreement) and
all other files of any Borrower relating to the Collateral and all documents
relating to the Collateral which are then or may thereafter come in to the
possession of any Borrower or any third party acting for any Borrower and such
Borrower shall deliver to the Lender such assignments as the Lender shall
request. The Lender shall be entitled to specific performance of all
agreements of the Borrowers contained in this Loan Agreement.
Section 10. No Duty of Lender. The powers conferred on the
Lender hereunder are solely to protect the Lender's interests in the Collateral
and shall not impose any duty upon it to exercise any such powers. The Lender
shall be accountable only for amounts that it actually receives as a result of
the exercise of such powers, and neither it nor any of its officers, directors,
employees or agents shall be responsible to the Borrowers for any act or
failure to act hereunder, except for its or their own gross negligence or
willful misconduct.
Section 11. Miscellaneous.
11.01 Waiver. No failure on the part of the Lender to
exercise and no delay in exercising, and no course of dealing with respect to,
any right, power or privilege under any Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege under any Loan Document preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The remedies
provided herein are cumulative and not exclusive of any remedies provided by
law.
11.02 Notices. Except as otherwise expressly permitted by
this Loan Agreement, all notices, requests and other communications provided
for herein and under the Pooling and Servicing Agreement (including without
limitation any modifications of, or waivers, requests or consents under, this
Loan Agreement) shall be given or made in writing (including without limitation
by telex or telecopy) delivered to the intended recipient at the "Address for
Notices" specified below its name on the signature pages hereof or thereof);
or, as to any party, at such other address as shall be designated
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by such party in a written notice to each other party. Except as otherwise
provided in this Loan Agreement and except for notices given under Section 2
(which shall be effective only on receipt), all such communications shall be
deemed to have been duly given when transmitted by telex or telecopy or
personally delivered or, in the case of a mailed notice, upon receipt, in each
case given or addressed as aforesaid.
11.03 Indemnification and Expenses.
(a) Each Borrower agrees to hold the Lender harmless from
and indemnify the Lender against all liabilities, losses, damages, judgments,
costs and expenses of any kind which may be imposed on, incurred by or asserted
against the Lender (collectively, "Costs"), relating to or arising out of this
Loan Agreement, the Note, any other Loan Document or any transaction
contemplated hereby or thereby, or any amendment, supplement or modification
of, or any waiver or consent under or in respect of, this Loan Agreement, the
Note, any other Loan Document or any transaction contemplated hereby or
thereby, that, in each case, results from anything other than the Lender's
gross negligence or willful misconduct. Without limiting the generality of the
foregoing, the Borrowers agree to hold the Lender harmless from and indemnify
the Lender against all Costs with respect to Wet-Ink Mortgage Loans relating to
or arising out of any breach, violation or alleged breach or violation of any
consumer credit laws, including without limitation the Truth in Lending Act
and/or the Real Estate Settlement Procedures Act. In any suit, proceeding or
action brought by the Lender in connection with any Mortgage Loan for any sum
owing thereunder, or to enforce any provisions of any Mortgage Loan, the
Borrowers will save, indemnify and hold the Lender harmless from and against
all expense, loss or damage suffered by reason of any defense, set-off,
counterclaim, recoupment or reduction or liability whatsoever of the account
debtor or obligor thereunder, arising out of a breach by any Borrower of any
obligation thereunder or arising out of any other agreement, indebtedness or
liability at any time owing to or in favor of such account debtor or obligor or
its successors from the Borrowers. The Borrowers also agree to reimburse the
Lender as and when billed by the Lender for all the Lender's costs and expenses
incurred in connection with the enforcement or the preservation of the Lender's
rights under this Loan Agreement, the Note, any other Loan Document or any
transaction contemplated hereby or thereby, including without limitation the
reasonable fees and disbursements of its counsel. The Borrowers hereby
acknowledge that, notwithstanding the fact that the Note is secured by the
Collateral, the obligation of the Borrowers under the Note is a recourse
obligation of the Borrowers.
(b) The Borrowers agree to pay as and when billed by the
Lender all of the out-of-pocket costs and expenses incurred by the Lender in
connection with the development, preparation and execution of, and any
amendment (unless requested by Lender), supplement or modification to, this
Loan Agreement, the Note, any other Loan Document or any other documents
prepared in connection herewith or therewith. The Borrowers agree to pay as
and when billed by the Lender all of the out-of-pocket costs and expenses
incurred in connection with the consummation and administration of the
transactions contemplated hereby and thereby including without limitation (i)
all the reasonable fees, disbursements and expenses of counsel to the Lender
and (ii) all the due diligence, inspection, testing and review costs and
expenses incurred by the Lender with respect to Collateral under this Loan
Agreement, including, but not limited to, those costs and expenses incurred by
the Lender pursuant to Sections 11.03(a), 11.14 and 11.15 hereof.
11.04 Amendments. Except as otherwise expressly provided in
this Loan Agreement, any provision of this Loan Agreement may be modified or
supplemented only by an instrument in
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writing signed by each Borrower and the Lender and any provision of this Loan
Agreement may be waived by the Lender.
11.05 Successors and Assigns . This Loan Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
11.06 Survival. The obligations of each Borrower under
Sections 3.03 and 11.03 hereof shall survive the repayment of the Loans and the
termination of this Loan Agreement. In addition, each representation and
warranty made or deemed to be made by a request for a borrowing, herein or
pursuant hereto shall survive the making of such representation and warranty,
and the Lender shall not be deemed to have waived, by reason of making any
Loan, any Default that may arise because any such representation or warranty
shall have proved to be false or misleading, notwithstanding that the Lender
may have had notice or knowledge or reason to believe that such representation
or warranty was false or misleading at the time such Loan was made.
11.07 Captions. The table of contents and captions and
section headings appearing herein are included solely for convenience of
reference and are not intended to affect the interpretation of any provision of
this Loan Agreement.
11.08 Counterparts. This Loan Agreement may be executed in
any number of counterparts, all of which taken together shall constitute one
and the same instrument, and any of the parties hereto may execute this Loan
Agreement by signing any such counterpart.
11.09 Loan Agreement Constitutes Security Agreement;
Governing Law. This Loan Agreement shall be governed by New York law without
reference to choice of law doctrine, and shall constitute a security agreement
within the meaning of the Uniform Commercial Code.
11.10 SUBMISSION TO JURISDICTION; WAIVERS. EACH BORROWER
HEREBY IRREVOCABLY AND UNCONDITIONALLY:
(A) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS LOAN AGREEMENT, THE NOTE AND THE
OTHER LOAN DOCUMENTS, OR FOR RECOGNITION AND ENFORCEMENT OF ANY
JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION
OF THE COURTS OF THE STATE OF NEW YORK, THE FEDERAL COURTS OF THE
UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND
APPELLATE COURTS FROM ANY THEREOF;
(B) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE
BROUGHT IN SUCH COURTS AND, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH
ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR
PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO
PLEAD OR CLAIM THE SAME;
(C) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR
PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR
CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM
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OF MAIL), POSTAGE PREPAID, TO ITS ADDRESS SET FORTH UNDER ITS
SIGNATURE BELOW OR AT SUCH OTHER ADDRESS OF WHICH THE LENDER SHALL
HAVE BEEN NOTIFIED; AND
(D) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO
EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
SHALL LIMIT THE RIGHT TO XXX IN ANY OTHER JURISDICTION.
11.11 WAIVER OF JURY TRIAL. EACH OF THE BORROWER AND THE
LENDER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS LOAN AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
11.12 Acknowledgments. Each Borrower hereby acknowledges
that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Loan Agreement, the Note and the other
Loan Documents;
(b) the Lender has no fiduciary relationship to the
Borrowers, and the relationship between the Borrowers and the Lender
is solely that of debtor and creditor; and
(c) no joint venture exists between the Lender and the
Borrowers.
11.13 Hypothecation or Pledge of Loans. The Lender shall
have free and unrestricted use of all Collateral and nothing in this Loan
Agreement shall preclude the Lender from engaging in repurchase transactions
with its interest in the Collateral or otherwise pledging, repledging,
transferring, hypothecating, or rehypothecating its interest in the Collateral.
Nothing contained in this Loan Agreement shall obligate the Lender to segregate
any Collateral delivered to the Lender by the Borrowers. Notwithstanding the
foregoing, Lender agrees to take such actions as are necessary or desirable to
release or cause to be released its lien and security interest in any Mortgage
Loan which is securitized (which release shall be deemed to occur not later
than simultaneously with such securitization) and to promptly deliver or cause
to be delivered to the Borrowers the Mortgage File relating to any such
Mortgage Loan. Upon payment in full of the Secured Obligations, Lender shall
take such actions as are necessary to release or cause to be released its lien
and security interest in the Collateral and to cause all Mortgage Files to be
returned to the Borrowers.
11.14 Servicing.
(a) Each Borrower covenants to maintain or cause the
servicing of the Mortgage Loans to be maintained in conformity with the
requirements set forth in the Pooling and Servicing Agreement.
(b) If the Mortgage Loans are serviced by a Borrower, (i)
each Borrower agrees that the Lender is the collateral assignee of all
servicing records, including but not limited to any and all servicing
agreements, files, documents, records, data bases, computer tapes, copies of
computer tapes, proof of insurance coverage, insurance policies, appraisals,
other closing documentation, payment history records, and any other records
relating to or evidencing the servicing of Mortgage Loans (the "Servicing
Records"), and (ii) each Borrower grants the Lender a security interest in all
-34-
41
servicing fees to which such Borrower is entitled pursuant to the Pooling and
Servicing Agreement and rights relating to the Mortgage Loans and all Servicing
Records to secure the obligation of a Borrower or its designee to service in
conformity with this Section and any other obligation of a Borrower to the
Lender. Each Borrower covenants to safeguard such Servicing Records and to
deliver them promptly to the Lender or its designee (including the Trustee) at
the Lender's request, and subject to the Pooling and Servicing Agreement.
(c) In the event any Borrower or its respective Affiliate
is servicing the Mortgage Loans, such Borrower shall permit the Lender to
inspect the Borrower's or its Affiliate's servicing facilities, as the case may
be, for the purpose of satisfying the Lender that such Borrower or its
Affiliate, as the case may be, has the ability to service the Mortgage Loans as
provided in this Loan Agreement.
11.15 Periodic Due Diligence Review. Each Borrower
acknowledges that the Lender has the right to perform continuing due diligence
reviews with respect to the Mortgage Loans, for purposes of verifying
compliance with the representations, warranties and specifications made
hereunder, or otherwise, and each Borrower agrees that upon reasonable (but no
less than 10 Business Days') prior notice (with no notice being required upon
the occurrence of an Event of Default) to any Borrower, the Lender or its
authorized representatives will be permitted during normal business hours to
examine, inspect, and make copies and extracts of, the Mortgage Files and any
and all documents, records, agreements, instruments or information relating to
such Mortgage Loans in the possession or under the control of such Borrower
and/or the Trustee or any Bailee. The Borrowers also shall make available to
the Lender a knowledgeable financial or accounting officer for the purpose of
answering questions respecting the Mortgage Files and the Mortgage Loans.
Without limiting the generality of the foregoing, each Borrower acknowledges
that the Lender may make Loans to the Borrowers based solely upon the
information provided by the Borrowers to the Lender in the Mortgage Loan Tape
and the representations, warranties and covenants contained herein, and that
the Lender, at its option, has the right at any time to conduct a partial or
complete due diligence review on some or all of the Mortgage Loans securing
such Loan, including without limitation ordering new credit reports and new
appraisals on the related Mortgaged Properties and otherwise re-generating the
information used to originate such Mortgage Loan. The Lender may underwrite
such Mortgage Loans itself or engage a mutually agreed upon third party
underwriter to perform such underwriting. Each Borrower agrees to cooperate
with the Lender and any third party underwriter in connection with such
underwriting, including, but not limited to, providing the Lender and any third
party underwriter with access to any and all documents, records, agreements,
instruments or information relating to such Mortgage Loans in the possession,
or under the control, of the Borrowers. Each Borrower further agrees that the
Borrowers shall reimburse the Lender for any and all reasonable out-of-pocket
costs and expenses incurred by the Lender in connection with the Lender's
activities pursuant to this Section 11.15, provided that, unless a Default
shall occur, such reimbursement obligation shall be limited to $25,000 per
annum. Lender agrees (on behalf of itself and its Affiliates, directors,
officers, employees and representatives) to use reasonable precaution to keep
confidential, in accordance with its customary procedures for handling
confidential information and in accordance with safe and sound practices, and
not to disclose to any third party, any non-public information supplied to it
or otherwise obtained by it hereunder with respect to any of the Borrowers,
Advanta Corp. or any of its Affiliates; provided, however, that nothing herein
shall prohibit the disclosure of any such information to the extent required by
statute, rule, regulation or judicial process; provided, further that, unless
specifically prohibited by applicable law or court order, Lender shall, prior
to disclosure thereof, notify Borrowers of any request for disclosure of any
such non-public information. Lender further agrees not to use any such
non-public information for any purpose unrelated to this Agreement.
-35-
42
11.16 Intent. The parties recognize that each Loan is a
"securities contract" as that term is defined in Section 741 of Title 11 of the
United States Code, as amended.
11.17 Joint and Several Liability. Each Borrower hereby
acknowledged and agrees that such Borrower shall be jointly and severally
liable for all representations, warranties, covenants, obligations and
indemnities of the Borrowers hereunder.
[SIGNATURE PAGE FOLLOWS]
-36-
43
IN WITNESS WHEREOF, the parties hereto have caused this Loan
Agreement to be duly executed and delivered as of the day and year first above
written.
ADVANTA MORTGAGE HOLDING ADVANTA MORTGAGE CORP. USA,
COMPANY, A BORROWER A BORROWER
By /s/ By /s/
------------------------------- -------------------------------
Title: Title:
Address for Notices: Address for Notices:
-------------------- --------------------
000 Xxxxxx Xxxxxx Xxxxx 000 Xxxxxx Xxxxxx Xxxxx
Xxxxx 000 Xxxxx 000
Xxxx Xxxxxxxxxx, Xxxxxxxxxxxx 00000 Xxxx Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Attention:
------------------------ ------------------------
Treasurer Treasurer
Telecopier No.: Telecopier No.:
------------------- -------------------
Telephone No.: Telephone No.:
-------------------- --------------------
ADVANTA MORTGAGE CORP. ADVANTA MORTGAGE CORP.
MIDATLANTIC, A BORROWER MIDATLANTIC II, A BORROWER
By /s/ By /s/
------------------------------- -------------------------------
Title: Title
Address for Notices: Address for Notices:
-------------------- --------------------
000 Xxxxxx Xxxxxx Xxxxx 000 Xxxxxx Xxxxxx Xxxxx
Xxxxx 000 Xxxxx 000
Xxxx Xxxxxxxxxx, Xxxxxxxxxxxx 00000 Xxxx Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Attention:
------------------------ ------------------------
Treasurer Treasurer
Telecopier No.: Telecopier No.:
------------------- -------------------
Telephone No.: Telephone No.:
-------------------- --------------------
ADVANTA MORTGAGE CORP. MIDWEST, ADVANTA MORTGAGE CORP. OF NEW
A BORROWER JERSEY, A BORROWER
By /s/ By /s/
------------------------------- -------------------------------
Title: Vice President and Treasurer Title: Vice President and Treasurer
Address for Notices: Address for Notices:
-------------------- --------------------
000 Xxxxxx Xxxxxx Xxxxx 000 Xxxxxx Xxxxxx Xxxxx
Xxxxx 000 Xxxxx 000
Xxxx Xxxxxxxxxx, Xxxxxxxxxxxx 00000 Xxxx Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxx X. Dunsbeath Attention: Xxxx X. Dunsbeath
------------------------ ------------------------
Treasurer Treasurer
Telecopier No.: (000) 000-0000 Telecopier No.: (000) 000-0000
------------------- -------------------
Telephone No.: (000) 000-0000 Telephone No.: (000) 000-0000
-------------------- --------------------
ADVANTA MORTGAGE CORP. ADVANTA MORTGAGE CONDUIT
NORTHEAST, A BORROWER SERVICES, INC., A BORROWER
By /s/ By /s/
------------------------------- -------------------------------
Title: Vice President and Treasurer Title: Vice President and Treasurer
Address for Notices: Address for Notices:
-------------------- --------------------
000 Xxxxxx Xxxxxx Xxxxx 000 Xxxxxx Xxxxxx Xxxxx
Xxxxx 000 Xxxxx 000
Xxxx Xxxxxxxxxx, Xxxxxxxxxxxx 00000 Xxxx Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: /s/ Attention: /s/
------------------------ ------------------------
Treasurer Treasurer
Telecopier No.: (000) 000-0000 Telecopier No.: (000) 000-0000
------------------- -------------------
Telephone No.: (000) 000-0000 Telephone No.: (000) 000-0000
-------------------- --------------------
ADVANTA FINANCE CORP., XXXXXX XXXXXXX MORTGAGE
A BORROWER CAPITAL INC., AS LENDER
By /s/ By /s/
------------------------------- -------------------------------
Title: Title
Address for Notices: Address for Notices:
-------------------- --------------------
00000 X. Xxxxxxxx Xx. 0000 Xxxxxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000 Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxx Xxxxx
Attention: Xxxxxxx Xxxx Telecopier No.: 000-000-0000
------------------------ Telephone No.: 000-000-0000
Treasurer
Telecopier No.: (000) 000-0000
-------------------
Telephone No.: (000) 000-0000
--------------------
-37-
44
SCHEDULE 1
REPRESENTATIONS AND WARRANTIES RE: MORTGAGE LOANS
Part I. Eligible Mortgage Loans
As to each residential Mortgage Loan included in the Borrowing Base on
a Funding Date (and the related Mortgage, Mortgage Note, Assignment of Mortgage
and Mortgaged Property), the Borrower shall be deemed to make the following
representations and warranties to the Lender as of such date and as of each
date Collateral Value is determined (certain defined terms used herein and not
otherwise defined in the Loan Agreement appearing in Part III to this Schedule
1). With respect to any representations and warranties made to the best of any
Borrower's knowledge, in the event that it is discovered that the circumstances
with respect to the related Mortgage Loan are not accurately reflected in such
representation and warranty notwithstanding the knowledge or lack of knowledge
of such Borrower, then, notwithstanding that such representation and warranty
is made to the best of such Borrower's knowledge, such Mortgage Loan shall be
assigned a Collateral Value of zero:
(a) Mortgage Loans as Described. The information set forth in the
Mortgage Loan Schedule with respect to the Mortgage Loan is complete, true and
correct in all material respects as of the date thereof.
(b) Payments Current. With respect to each Mortgage Loan other
than a Delinquent Mortgage Loan, no payment required under the Mortgage Loan is
delinquent beyond the applicable grace period. With respect to each Delinquent
Mortgage Loan, no payment required under the Mortgage Loan is delinquent in
excess of 59 days (without regard to any grace period).
(c) No Outstanding Charges. There are no material defaults in
complying with the terms of the Mortgage securing the Mortgage Loan, and all
taxes, governmental assessments, insurance premiums, water, sewer and municipal
charges, leasehold payments or ground rents which previously became due and
owing have been paid, or an escrow of funds has been established in an amount
sufficient to pay for every such item which remains unpaid and which has been
assessed but is not yet due and payable. Neither the Borrowers nor the
Qualified Originator from which the Borrowers acquired the Mortgage Loan has
advanced funds, or induced, solicited or knowingly received any advance of
funds by a party other than the Mortgagor, directly or indirectly, for the
payment of any amount required under the Mortgage Loan, except for interest
accruing from the date of the Mortgage Note or date of disbursement of the
proceeds of the Mortgage Loan, whichever is earlier, to the day which precedes
by one month the Due Date of the first installment of principal and interest
thereunder.
(d) Original Terms Unmodified. The terms of the Mortgage Note and
Mortgage have not been impaired, waived, altered or modified in any respect,
from the date of origination (other than those which would not result in a
Material Adverse Effect); except by a written instrument which has been
recorded, if necessary to protect the interests of the Lender, and which has
been delivered to the Trustee or the Bailee, as applicable, and the terms of
which are reflected in the Mortgage Loan Schedule. The substance of any such
waiver, alteration or modification has been approved by the title insurer, to
the extent required, and its terms are reflected on the Mortgage Loan Schedule.
No
Schedule 1-1
45
Mortgagor in respect of the Mortgage Loan has been released, in whole or in
part, except in connection with an assumption agreement approved by the title
insurer, to the extent required by such policy, and which assumption agreement
is part of the Mortgage File delivered to the Trustee and the terms of which
are reflected in the Mortgage Loan Schedule.
(e) Modification of Mortgage Loan. The Mortgage Loan has not been
amended or modified in a manner that would materially and adversely effect the
value of such Mortgage Loan.
(f) No Defenses. The Mortgage Loan is not subject to any valid
and enforceable right of rescission, set-off, counterclaim or defense,
including without limitation the defense of usury, nor will the operation of
any of the terms of the Mortgage Note or the Mortgage, or the exercise of any
right thereunder, render either the Mortgage Note or the Mortgage
unenforceable, in whole or in part and no such right of rescission, set-off,
counterclaim or defense has been asserted with respect thereto, and no, to the
Borrowers' knowledge, Mortgagor in respect of the Mortgage Loan was a debtor in
any state or Federal bankruptcy or insolvency proceeding at the time the
Mortgage Loan was originated. No Borrower has knowledge nor has any Borrower
received any notice that any Mortgagor in respect of the Mortgage Loan is a
debtor in any state or federal bankruptcy or insolvency proceeding.
(g) Hazard Insurance. The improvements upon the Mortgaged
Property is insured by a fire and extended perils insurance policy, issued by a
Qualified Insurer, and such other hazards as are customary in the area where
the Mortgaged Property is located, and to the extent required by the applicable
Borrower as of the date of origination consistent with the Underwriting
Guidelines in an amount not less than the lesser of (i) the outstanding
principal balance of the related Mortgage Loan (together, in the case of a
Second Lien Mortgage Loan, with the outstanding principal balance of the First
Lien), (ii) the minimum amount required to compensate for damage or loss on a
replacement cost basis or, (iii) the full insurable value of the Mortgaged
Property. If any portion of the Mortgaged Property is in an area identified by
any federal Governmental Authority as having special flood hazards, and flood
insurance is available, a flood insurance policy meeting the current guidelines
of the Federal Insurance Administration is in effect with a generally
acceptable insurance carrier, in an amount representing coverage not less than
the least of (1) the outstanding principal balance of the Mortgage Loan, (2)
the full insurable value of the Mortgaged Property, and (3) the maximum amount
of insurance available under the Flood Disaster Protection Act of 1973, as
amended. All such insurance policies (collectively, the "hazard insurance
policy") contain a standard mortgagee clause naming the Borrower, its
successors and assigns (including without limitation, subsequent owners of the
Mortgage Loan), as mortgagee, and may not be reduced, terminated or canceled
without 30 days' prior written notice to the mortgagee. No such notice has
been received by the Borrower. All premiums on such insurance policy have been
paid. The related Mortgage obligates the Mortgagor to maintain all such
insurance and, at such Mortgagor's failure to do so, authorizes the mortgagee
to maintain such insurance at the Mortgagor's cost and expense and to seek
reimbursement therefor from such Mortgagor. Where required by state law or
regulation, the Mortgagor has been given an opportunity to choose the carrier
of the required hazard insurance, provided the policy is not a "master" or
"blanket" hazard insurance policy covering a condominium, or any hazard
insurance policy covering the common facilities of a planned unit development.
The hazard insurance policy is the valid and binding obligation of the insurer
and is in full force and effect. The Borrower has not engaged in, and has no
knowledge of the Mortgagor's having engaged in, any act or omission which would
impair the coverage of any such policy, the benefits of the endorsement
provided for herein, or the validity and binding effect of either including,
without limitation, no unlawful fee, commission, kickback or other unlawful
compensation or value of any kind has been or will be received, retained or
realized by any
Schedule 1-2
46
attorney, firm or other Person, and no such unlawful items have been received,
retained or realized by the Borrower.
(h) Compliance with Applicable Laws. Any and all requirements of
any federal, state or local law including, without limitation, usury,
truth-in-lending, real estate settlement procedures, consumer credit
protection, equal credit opportunity or disclosure laws applicable to the
Mortgage Loan at the time it was originated have been complied with, the
consummation of the transactions contemplated hereby will not involve the
violation of any such laws or regulations.
(i) No Satisfaction of Mortgage. The Mortgage has not been
satisfied, canceled, subordinated or rescinded, in whole or in part, and the
Mortgaged Property has not been released from the lien of the Mortgage, in
whole or in part, nor has any instrument been executed that would effect any
such release, cancellation, subordination or rescission. No Borrower has
waived the performance by the Mortgagor of any action, if the Mortgagor's
failure to perform such action would cause the Mortgage Loan to be in default,
nor has any Borrower waived any default resulting from any action or inaction
by the Mortgagor.
(j) Location and Type of Mortgaged Property. The Mortgaged
Property is located in an Acceptable State as identified in the Mortgage Loan
Schedule and consists of a single parcel of real property with a detached
single family residence erected thereon, or a two- to four-family dwelling, or
an individual condominium unit in a low-rise condominium project, or an
individual unit in a planned unit development or a de minimis planned unit
development, provided, however, that no residence or dwelling is a mobile home.
Other than with respect to Mixed Use Mortgage Loans, no portion of the
Mortgaged Property is used for commercial purposes.
(k) Valid Lien. The Mortgage is a valid, subsisting, enforceable
(except as may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws effecting creditors' rights generally and by general
principles of equity) and perfected (A) first lien and first priority security
interest with respect to each Mortgage Loan which is indicated by such
Borrowers to be a First Lien (as reflected on the Mortgage Loan Tape) or (B)
second lien and second priority security interest with respect to each Mortgage
Loan which is indicated by such Borrowers to be a Second Lien (as reflected on
the Mortgage Loan Tape), in either case, on the real property included in the
Mortgaged Property, including all buildings on the Mortgaged Property located
in or annexed to such buildings, and all additions, alterations and
replacements made at any time with respect to the foregoing. The lien of the
Mortgage is subject only to:
(1) the lien of current real property taxes and assessments not
yet due and payable;
(2) covenants, conditions and restrictions, rights of way,
easements and other exceptions to title acceptable to mortgage lending
institutions generally and specifically referred to in the lender's
title insurance policy delivered to the originator of the Mortgage
Loan and (a) referred to or otherwise considered in the appraisal made
for the originator of the Mortgage Loan or (b) which do not materially
and adversely affect the Appraised Value of the Mortgaged Property set
forth in such appraisal;
(3) other matters to which like properties are commonly subject
which do not materially interfere with the benefits of the security
intended to be provided by the Mortgage or the use, enjoyment, value
or marketability of the related Mortgaged Property; and
Schedule 1-3
47
(4) with respect to each Mortgage Loan which is indicated by the
Borrowers to be a Second Lien Mortgage Loan (as reflected on the
Mortgage Loan Tape) a First Lien on the Mortgaged Property.
Any security agreement, chattel mortgage or equivalent document
related to and delivered in connection with the Mortgage Loan establishes and
creates a valid, subsisting and enforceable (except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
effecting creditors' rights generally and by general principles of equity) (A)
first lien and first priority security interest with respect to each Mortgage
Loan which is indicated by a Borrower to be a First Lien (as reflected on the
Mortgage Loan Tape) or (B) second lien and second priority security interest
with respect to each Mortgage Loan which is indicated by a Borrower to be a
Second Lien Mortgage Loan (as reflected on the Mortgage Loan Tape), in either
case, on the property described therein and such Borrower has full right to
pledge and assign the same to the Lender.
(l) Validity of Mortgage Documents. The Mortgage Note and the
Mortgage and any other agreement executed and delivered by a Mortgagor or
guarantor, if applicable, in connection with a Mortgage Loan are genuine, and
each is the legal, valid and binding obligation of the maker thereof
enforceable (except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws effecting creditors' rights
generally and by general principles of equity) in accordance with its terms.
All parties to the Mortgage Note, the Mortgage and any other such related
agreement had legal capacity to enter into the Mortgage Loan and to execute and
deliver the Mortgage Note, the Mortgage and any such agreement, and the
Mortgage Note, the Mortgage and any other such related agreement have been duly
and properly executed by such related parties. To the Borrowers' knowledge, no
fraud, error, omission, misrepresentation, negligence or similar occurrence
with respect to a Mortgage Loan has taken placed on the part of any Person,
including, without limitation, the Mortgagor, any appraiser, any builder or
developer, or any other party involved in the origination of the Mortgage Loan.
The Borrowers have reviewed all of the documents constituting the Servicing
File and has made such inquiries as they deem necessary to make and confirm the
accuracy of the representations set forth herein.
(m) Full Disbursement of Proceeds. The Mortgage Loan has been
closed and the proceeds of the Mortgage Loan have been fully disbursed and
there is no further requirement for future advances thereunder, and either (i)
any and all requirements as to completion of any on-site or off-site
improvement and as to disbursements of any escrow funds therefor have been
complied with or (ii) an escrow of funds for the completion of any on-site or
off-site improvements has been established in an amount sufficient to make all
repairs required by the Qualified Originator to the Mortgaged Property. All
costs, fees and expenses incurred in making or closing the Mortgage Loan and
the recording of the Mortgage were paid, and the Mortgagor is not entitled to
any refund of any amounts paid or due under the Mortgage Note or Mortgage.
(n) Ownership. A Borrower is the sole owner and holder of the
Mortgage Loan. The Mortgage Loan is not assigned or pledged, and a Borrower
has good, indefeasible and marketable title thereto, and has full right to
transfer, pledge and assign the Mortgage Loan to the Lender free and clear of
any encumbrance, equity, participation interest, lien, pledge, charge, claim or
security interest, and has full right and authority subject to no interest or
participation of, or agreement with, any other party (other than the interest
of the Trustee pursuant to the Pooling and Servicing Agreement), to assign,
transfer and pledge each Mortgage Loan pursuant to this Loan Agreement and
following the pledge of each Mortgage Loan, the Lender will hold such Mortgage
Loan free and clear of any
Schedule 1-4
48
encumbrance, equity, participation interest, lien, pledge, charge, claim or
security interest except any such security interest created pursuant to the
terms of this Loan Agreement.
(o) Doing Business. All parties which have had any interest in
the Mortgage Loan, whether as mortgagee, assignee, pledgee or otherwise, are
(or, during the period in which they held and disposed of such interest, were)
(i) in compliance with any and all applicable licensing requirements of the
laws of the state wherein the Mortgaged Property is located, and (ii) either
(A) organized under the laws of such state, (B) qualified to do business in
such state, (C) a federal savings and loan association, a savings bank or a
national bank having a principal office in such state, or (D) not doing
business in such state.
(p) LTV. No Mortgage Loan has an LTV greater than 90% or a CLTV
greater than 100%.
(q) Title Insurance. The Mortgage Loan is covered by either (i) an
attorney's opinion of title and abstract of title, the form and substance of
which is acceptable to mortgage lending institutions making mortgage loans in
the area wherein the Mortgaged Property is located or (ii) an ALTA lender's
title insurance policy or other generally acceptable form of policy or
insurance and each such title insurance policy is issued by a title insurer
qualified to do business in the jurisdiction where the Mortgaged Property is
located, insuring the Borrowers, their respective successors and assigns, as to
the first priority lien of the Mortgage in the original principal amount of the
Mortgage Loan (or to the extent a Mortgage Note provides for negative
amortization, the maximum amount of negative amortization in accordance with
the Mortgage), subject only to the exceptions contained in clauses (1), (2),
(3), and, with respect to each Mortgage Loan which is indicated by the
Borrowers to be a Second Lien Mortgage Loan (as reflected on the Mortgage Loan
Tape) clause (4) of paragraph (j) of this Part I of Schedule 1, and in the case
of adjustable rate Mortgage Loans, against any loss by reason of the invalidity
or unenforceability of the lien resulting from the provisions of the Mortgage
providing for adjustment to the Mortgage Interest Rate and Monthly Payment.
Where required by state law or regulation, the Mortgagor has been given the
opportunity to choose the carrier of the required mortgage title insurance.
Additionally, such lender's title insurance policy affirmatively insures
ingress and egress and against encroachments by or upon the Mortgaged Property
or any interest therein. The title policy does not contain any special
exceptions (other than the standard exclusions) for zoning and uses and has
been marked to delete the standard survey exception or to replace the standard
survey exception with a specific survey reading. Each Borrower, its respective
successors and assigns, are the sole insureds of such lender's title insurance
policy, and such lender's title insurance policy is valid and remains in full
force and effect and will be in force and effect upon the consummation of the
transactions contemplated by this Loan Agreement. No claims have been made
under such lender's title insurance policy, and, to the best of such Borrower's
knowledge, no prior holder or servicer of the related Mortgage, including any
Borrower, has done, by act or omission, anything which would impair the
coverage of such lender's title insurance policy, including, without
limitation, no unlawful fee, commission, kickback or other unlawful
compensation or value of any kind has been or will be received, retained or
realized by any attorney, firm or other Person, and no such unlawful items have
been received, retained or realized by any Borrower.
(r) No Defaults. There is no default, breach, violation or event
of acceleration existing under the Mortgage or the Mortgage Note (other than
with respect to Delinquent Mortgage Loans for which payments are delinquent for
no more than fifty-nine (59) days) and no event has occurred 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
neither the Borrowers nor
Schedule 1-5
49
their respective predecessors have waived any default, breach, violation or
event of acceleration. With respect to each Mortgage Loan which is indicated by
a Borrower to be a Second Lien Mortgage Loan (as reflected on the Mortgage Loan
Schedule) (i) the prior mortgage is in full force and effect, (ii) there is no
default, breach, violation or event of acceleration existing under such prior
mortgage or the related mortgage note, (iii) 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 thereunder,
and either (A) the prior mortgage contains a provision which allows or (B)
applicable law requires, the mortgagee under the Second Lien Mortgage Loan to
receive notice of, and affords such mortgagee an opportunity to cure any
default by payment in full or otherwise under the prior mortgage.
(s) No Mechanics' Liens. There are no mechanics' or similar liens
or claims which have been filed for work, labor or material (and no rights are
outstanding that under the law could give rise to such liens) affecting the
Mortgaged Property which are or may be liens prior to, or equal or coordinate
with, the lien of the Mortgage.
(t) Location of Improvements; No Encroachments. All improvements
which were considered in determining the Appraised Value of the Mortgaged
Property lie wholly within the boundaries and building restriction lines of the
Mortgaged Property, and no improvements on adjoining properties encroach upon
the Mortgaged Property. No improvement located on or being part of the
Mortgaged Property is in violation of any applicable zoning and building law,
ordinance or regulation.
(u) Origination; Payment Terms. The Mortgage Loan was originated
by or in conjunction with a mortgagee approved by the Secretary of Housing and
Urban Development pursuant to Sections 203 and 211 of the National Housing Act,
a savings and loan association, a savings bank, a commercial bank, credit
union, insurance company or similar banking institution which is supervised and
examined by a federal or state authority. Principal payments on the Mortgage
Loan commenced no more than 60 days after funds were disbursed in connection
with the Mortgage Loan. The Mortgage Interest Rate is adjusted, with respect
to adjustable rate Mortgage Loans, on each Interest Rate Adjustment Date to
equal the Index plus the Gross Margin (rounded up or down to the nearest
.125%), subject to the Mortgage Interest Rate Cap. The Mortgage Note is
payable in equal monthly installments of principal and interest, which
installments of interest, with respect to adjustable rate Mortgage Loans, are
subject to change due to the adjustments to the Mortgage Interest Rate on each
Interest Rate Adjustment Date, with interest calculated and payable in arrears,
sufficient to amortize the Mortgage Loan fully by the stated maturity date,
over an original term of not more than 30 years from commencement of
amortization; provided, however, in the case of a Balloon Mortgage Loan, the
Mortgage Loan matures prior to full amortization thereby requiring a balloon
payment of the then outstanding principal balance prior to full amortization of
the Mortgage Loan. The due date of the first payment under the Mortgage Note
is no more than 60 days from the date of the Mortgage Note.
(v) Customary Provisions. The Mortgage Note has a stated
maturity. The Mortgage contains customary and enforceable provisions such as
to render the rights and remedies of the holder thereof adequate for the
realization against the Mortgaged Property of the benefits of the security
provided thereby, including, (i) in the case of a Mortgage designated as a deed
of trust, by trustee's sale, and (ii) otherwise by judicial foreclosure. Upon
default by a Mortgagor on a Mortgage Loan and foreclosure on, or trustee's sale
of, the Mortgaged Property pursuant to the proper procedures, the holder of the
Mortgage Loan will be able to deliver good and merchantable title to the
Mortgaged Property. There is no homestead or other exemption available to a
Mortgagor which would interfere with the right to sell the Mortgaged Property
at a trustee's sale or the right to foreclose the Mortgage.
Schedule 1-6
50
(w) Conformance with Underwriting Guidelines and Agency Standards.
The Mortgage Loan was underwritten substantially in accordance with the
applicable Underwriting Guidelines. The Mortgage Note and Mortgage are on
forms similar to those used by FHLMC or FNMA and the Borrowers have not made
any representations to a Mortgagor that are inconsistent with the mortgage
instruments used.
(x) Occupancy of the Mortgaged Property. As of the Funding Date
the Mortgaged Property is lawfully occupied under applicable law. All
inspections, licenses and certificates required to be made or issued with
respect to all occupied portions of the Mortgaged Property and, with respect to
the use and occupancy of the same, including but not limited to certificates of
occupancy and fire underwriting certificates, have been made or obtained from
the appropriate authorities. The Borrowers have not received notification from
any governmental authority that the Mortgaged Property is in material
non-compliance with such laws or regulations, is being used, operated or
occupied unlawfully or has failed to have or obtain such inspection, licenses
or certificates, as the case may be. The Borrowers have not received notice of
any violation or failure to conform with any such law, ordinance, regulation,
standard, license or certificate.
(y) No Additional Collateral. The Mortgage Note is not and has
not been secured by any collateral except the lien of the corresponding
Mortgage and the security interest of any applicable security agreement or
chattel mortgage referred to in clause (j) above.
(z) Deeds of Trust. In the event the Mortgage constitutes a deed
of trust, a trustee, authorized and duly qualified under applicable law to
serve as such, has been properly designated and currently so serves and is
named in the Mortgage, and no fees or expenses are or will become payable by
the Trustee or the Lender to the trustee under the deed of trust, except in
connection with a trustee's sale after default by the Mortgagor.
(aa) Delivery of Mortgage Documents. The Mortgage Note, the
Mortgage, the Assignment of Mortgage and any other documents required to be
delivered under the Pooling and Servicing Agreement for each Mortgage Loan have
been delivered to the Trustee. The Borrowers or their respective agents are in
possession of a complete, true and accurate Mortgage File in compliance with
the Pooling and Servicing Agreement, except for such documents the originals of
which have been delivered to the Trustee.
(bb) Transfer of Mortgage Loans. The Assignment of Mortgage is in
recordable form and is acceptable for recording under the laws of the
jurisdiction in which the Mortgaged Property is located.
(cc) Due-On-Sale. The Mortgage contains an enforceable provision
for the acceleration of the payment of the unpaid principal balance of the
Mortgage Loan in the event that the Mortgaged Property is sold or transferred
without the prior written consent of the mortgagee thereunder.
(dd) Consolidation of Future Advances. Any future advances made to
the Mortgagor prior to the Cut-off Date have been consolidated with the
outstanding principal amount secured by the Mortgage, and the secured principal
amount, as consolidated, bears a single interest rate and single repayment
term. The lien of the Mortgage securing the consolidated principal amount is
expressly insured as having (A) first lien priority with
Schedule 1-7
51
respect to each Mortgage Loan which is indicated by the Borrowers to be a First
Lien (as reflected on the Mortgage Loan Tape) or (B) second lien priority with
respect to each Mortgage Loan which is indicated by the Borrowers to be a
Second Lien Mortgage Loan (as reflected on the Mortgage Loan Tape), in either
case, by a title insurance policy, an endorsement to the policy insuring the
mortgagee's consolidated interest or by other title evidence acceptable to FNMA
and FHLMC. The consolidated principal amount does not exceed the original
principal amount of the Mortgage Loan.
(ee) Mortgaged Property Undamaged. To the best of the Borrower's
knowledge, the Mortgaged Property is undamaged by waste, fire, earthquake or
earth movement, flood, tornado or other casualty so as to affect adversely the
value of the Mortgaged Property as security for the Mortgage Loan or the use
for which the premises were intended and each Mortgaged Property is in good
repair. There have not been any condemnation proceedings with respect to the
Mortgaged Property and no Borrower has knowledge of any such proceedings.
(ff) Collection Practices; Escrow Deposits; Interest Rate
Adjustments. The origination and collection practices used by the originator,
each servicer of the Mortgage Loan and any Borrower with respect to the
Mortgage Loan have been in all respects in compliance with applicable laws and
regulations and in all material respects in compliance with Accepted Servicing
Practices, and have been in all respects legal. With respect to escrow
deposits and Escrow Payments (other than with respect to each Mortgage Loan
which is indicated by the Borrowers to be a Second Lien Mortgage Loan and for
which the mortgagee under the First Lien is collecting Escrow Payments (as
reflected on the Mortgage Loan Tape), all such payments are in the possession
of, or under the control of, the Borrowers and there exist no deficiencies in
connection therewith for which customary arrangements for repayment thereof
have not been made. All Escrow Payments have been collected in full compliance
with state and federal law. An escrow of funds is not prohibited by applicable
law and has been established in an amount sufficient to pay for every item that
remains unpaid and has been assessed but is not yet due and payable. No escrow
deposits or Escrow Payments or other charges or payments due the Borrowers have
been capitalized under the Mortgage or the Mortgage Note. All Mortgage
Interest Rate adjustments have been made in strict compliance with state and
federal law and the terms of the related Mortgage Note. Any interest required
to be paid pursuant to state, federal and local law has been properly paid and
credited.
(gg) Other Insurance Policies. No action, inaction or event has
occurred and no state of facts exists or has existed that has resulted or will
result in the exclusion from, denial of, or defense to coverage under any
applicable special hazard insurance policy, PMI Policy or bankruptcy bond,
irrespective of the cause of such failure of coverage. In connection with the
placement of any such insurance, no commission, fee, or other compensation has
been or will be received by the Borrowers or by any officer, director, or
employee of the Borrowers or any designee of the Borrowers or any corporation
in which the Borrowers or any officer, director, or employee had a financial
interest at the time of placement of such insurance.
(hh) Soldiers' and Sailors' Civil Relief Act. The Mortgagor has
not notified any Borrower, and no Borrower has knowledge, of any relief
requested or allowed to the Mortgagor under the Soldiers' and Sailors' Civil
Relief Act of 1940.
(ii) Appraisal. The Mortgage File contains an appraisal of the
related Mortgaged Property signed prior to the approval of the Mortgage Loan
application by a qualified appraiser, duly appointed by the Borrowers, who had
no interest, direct or indirect in the Mortgaged Property or in any loan made
on the security thereof, and whose compensation is not affected by the approval
or disapproval of the Mortgage Loan.
Schedule 1-8
52
(jj) Disclosure Materials. The Mortgagor has executed a statement
to the effect that the Mortgagor has received all disclosure materials required
by applicable law with respect to the making of adjustable rate mortgage loans,
and the Borrowers maintain such statement in the Mortgage File.
(kk) Construction or Rehabilitation of Mortgaged Property. No
Mortgage Loan was made in connection with the construction or rehabilitation of
a Mortgaged Property or facilitating the trade-in or exchange of a Mortgaged
Property.
(ll) No Defense to Insurance Coverage. No action has been taken or
failed to be taken, no event has occurred and no state of facts exists or has
existed on or prior to the Funding Date (whether or not known to the Borrowers
on or prior to such date) which has resulted or will result in an exclusion
from, denial of, or defense to coverage under any private mortgage insurance
(including, without limitation, any exclusions, denials or defenses which would
limit or reduce the availability of the timely payment of the full amount of
the loss otherwise due thereunder to the insured) whether arising out of
actions, representations, errors, omissions, negligence, or fraud of the
Borrowers, the related Mortgagor or any party involved in the application for
such coverage, including the appraisal, plans and specifications and other
exhibits or documents submitted therewith to the insurer under such insurance
policy, or for any other reason under such coverage, but not including the
failure of such insurer to pay by reason of such insurer's breach of such
insurance policy or such insurer's financial inability to pay.
(mm) Capitalization of Interest. The Mortgage Note does not by its
terms provide for the capitalization or forbearance of interest.
(nn) No Equity Participation. No document relating to the Mortgage
Loan provides for any contingent or additional interest in the form of
participation in the cash flow of the Mortgaged Property or a sharing in the
appreciation of the value of the Mortgaged Property. The indebtedness
evidenced by the Mortgage Note is not convertible to an ownership interest in
the Mortgaged Property or the Mortgagor and the Borrowers have not financed nor
do they own directly or indirectly, any equity of any form in the Mortgaged
Property or the Mortgagor.
(oo) Proceeds of Mortgage Loan. The proceeds of the Mortgage Loan
have not been and shall not be used to satisfy, in whole or in part, any debt
owed or owing by the Mortgagor to the Borrower or any Affiliate or
correspondent of the Borrower.
(pp) Withdrawn Mortgage Loans. If the Mortgage Loan has been
released to any Borrower pursuant to a Request for Release as permitted under
Section 5 of the Pooling and Servicing Agreement, then the promissory note
relating to the Mortgage Loan was returned to the Trustee within 14 days (or if
such fourteenth day was not a Business day, the next succeeding Business Day).
(qq) No Exception. Neither the Trustee nor the Bailee has noted
any material exceptions on an Exception Report (as defined in the Pooling and
Servicing Agreement or the Bailee Agreement) with respect to the Mortgage Loan
which would materially adversely affect the Mortgage Loan or the Lender's
security interest, granted by the Borrower, in the Mortgage Loan.
(rr) Qualified Originator. The Mortgage Loan has been originated
by, and, if applicable, purchased by the Borrowers from, a Qualified
Originator.
Schedule 1-9
53
(ss) Mortgage Submitted for Recordation. The Mortgage either has
been or will promptly be submitted for recordation in the appropriate
governmental recording office of the jurisdiction where the Mortgaged Property
is located.
(tt) Wet-Ink Mortgage Loans. With respect to each Mortgage Loan
that is a Wet-Ink Mortgage Loan, the Settlement Agent has been instructed in
writing by the Borrower to hold the related Mortgage Loan Documents as agent
and bailee for the Lender and to promptly forward such Mortgage Loan Documents
to the Trustee for receipt within a period of time not to exceed ten (10)
Business Days following the applicable Funding Date.
(uu) Securitization. Each Mortgage Loan conforms to the
securitization requirements of the most recent related securitization
transaction underwritten or placed on behalf of Borrower which transaction has
received an investment grade rating by Standard & Poor's Rating Services or
Xxxxx'x Investors Service, Inc. (a "Standard Securitization Transaction") and
otherwise conforms to the current standards of institutional securitization
applicable to loans similar in nature to the Mortgage Loans. All Mortgage
Loans, individually and in the aggregate, will substantially comply with each
related representation and warranty made in (i) the most recent related
Standard Securitization Transaction or (ii) will otherwise substantially comply
with each related representation or warranty customarily required under the
current standards of investment grade institutional securitization applicable
to mortgage loans similar in nature to the Mortgage Loans.
Schedule 1-10
54
Part II. Pass-Through Certificates
As to each Mortgage Loan which is related to a Pass-Through
Certificate, and as to the related Pooling and Servicing Agreement, the
following eligibility criteria shall be met as of the applicable Funding Date
and as of each date Collateral Value is determined:
(a) Validity of Pooling and Servicing Agreement. The
Pooling and Servicing Agreement and any other
agreement executed and delivered by the Trustee in
connection with the Pass-Through Certificates are
genuine, and each is the legal, valid and binding
obligation of the maker thereof enforceable in
accordance with its terms. The Trustee, Sponsor and
Master Servicer (as the last two such terms are
defined in the Pooling and Servicing Agreement) had
legal capacity to execute and deliver the Pooling and
Servicing Agreement and any such other related
agreement to which such Trustee, Sponsor or Master
Servicer are parties have been duly and properly
executed by such Trustee, Sponsor or Master Servicer,
as applicable. The Pooling and Servicing Agreement
is in full force and effect, and the enforceability
of the Pooling and Servicing Agreement has not been
contested by Trustee.
(b) Original Terms Unmodified. The terms of the Pooling
and Servicing Agreement have not been impaired,
altered or modified in any respect.
(c) No Defenses. The Pass-Through Certificates are not
subject to any right of rescission, set-off,
counterclaim or defense nor will the operation of any
of the terms of the Pooling and Servicing Agreement,
or the exercise of any right thereunder, render the
Pooling Servicing Agreement unenforceable in whole or
in part and no such right of rescission, set-off,
counterclaim or defense has been asserted with
respect thereto.
(d) No Waiver. The Borrowers have not waived the
performance by the Trustee or Master Servicer of any
action, if the Trustee's failure to perform such
action would cause any Mortgage Loan or Pass-Through
Certificate to be in default, nor has any Borrower
waived any default resulting from any action or
inaction by the Trustee or Master Servicer.
(e) No Defaults. There is no material default, breach,
violation or event of acceleration existing under the
Pooling and Servicing Agreement and no event has
occurred which, with the passage of time or giving of
notice or both and the expiration of any grace or
cure period, would constitute a material default,
breach, violation or event of acceleration under the
Pooling and Servicing Agreement, and neither such
Borrowers nor their predecessors in interest have
waived any such default, breach, violation or event
of acceleration.
(f) Delivery of Pooling and Servicing Agreement. A copy
of the Pooling and Servicing Agreement has been
delivered to the Lender.
(g) Pooling and Servicing Agreement Assignable. The
Pooling and Servicing Agreement is assignable to the
Lender. The Pooling and Servicing Agreement
Schedule 1-11
55
permits the holder of the Pass-Through Certificate
to sell, assign, pledge, transfer or rehypothecate
the Pass-Through Certificates issued pursuant to the
Pooling and Servicing Agreement.
Schedule 1-12
56
Part III Defined Terms
In addition to terms defined elsewhere in the Loan Agreement,
the following terms shall have the following meanings when used in this
Schedule 1:
"Acceptable State" shall mean any state unless the Borrower
is otherwise notified by the Lender.
"Accepted Servicing Practices" shall mean, with respect to any
Mortgage Loan, those mortgage servicing practices of mortgage lending
institutions which service mortgage loans of the same type as such Mortgage
Loans in the jurisdiction where the related Mortgaged Property is located.
"ALTA" means the American Land Title Association.
"Appraised Value" shall mean the value set forth in an
appraisal made in connection with the origination of the related Mortgage Loan
as the value of the Mortgaged Property.
"Assignment of Mortgage" shall mean, with respect to any
Mortgage, 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 assignment and
pledge of the mortgage.
"Best's" means Best's Key Rating Guide, as the same shall be
amended from time to time.
"Cut-off Date" means the first day of the month in which the
related Funding Date occurs.
"Due Date" means the day of the month on which the Monthly
Payment is due on a Mortgage Loan, exclusive of any days of grace.
"Escrow Payments" means with respect to any Mortgage Loan, the
amounts constituting ground rents, taxes, assessments, water rates, sewer
rents, municipal charges, mortgage insurance premiums, fire and hazard
insurance premiums, condominium charges, and any other payments required to be
escrowed by the Mortgagor with the mortgagee pursuant to the Mortgage or any
other document.
"FHLMC" means the Federal Home Loan Mortgage Corporation, or
any successor thereto.
"FNMA" means the Federal National Mortgage Association, or any
successor thereto.
"Gross Margin" means with respect to each adjustable rate
Mortgage Loan, the fixed percentage amount set forth in the related Mortgage
Note.
"Index" means with respect to each adjustable rate Mortgage
Loan, the index set forth in the related Mortgage Note for the purpose of
calculating the interest rate thereon.
Schedule 1-13
57
"Insurance Proceeds" means with respect to each Mortgage Loan,
proceeds of insurance policies insuring the Mortgage Loan or the related
Mortgaged Property.
"Interest Rate Adjustment Date" means with respect to each
adjustable rate Mortgage Loan, the date, specified in the related Mortgage Note
and the Mortgage Loan Schedule, on which the Mortgage Interest Rate is
adjusted.
"Loan-to-Value Ratio" or "LTV" means with respect to any
Mortgage Loan, the ratio of the original outstanding principal amount of the
Mortgage Loan to the lesser of (a) the Appraised Value of the Mortgaged
Property at origination or (b) if the Mortgaged Property was purchased within
12 months of the origination of the Mortgage Loan, the purchase price of the
Mortgaged Property.
"Monthly Payment" means the scheduled monthly payment of
principal and interest on a Mortgage Loan as adjusted in accordance with
changes in the Mortgage Interest Rate pursuant to the provisions of the
Mortgage Note for an adjustable rate Mortgage Loan.
"Mortgage Interest Rate" means the annual rate of interest
borne on a Mortgage Note, which shall be adjusted from time to time with
respect to adjustable rate Mortgage Loans.
"Mortgage Interest Rate Cap" means with respect to an
adjustable rate Mortgage Loan, the limit on each Mortgage Interest Rate
adjustment as set forth in the related Mortgage Note.
"Mortgagee" means a Borrower or any subsequent holder of a
Mortgage Loan.
"Origination Date" shall mean, with respect to each Mortgage
Loan, the date of the Mortgage Note relating to such Mortgage Loan, unless such
information is not provided by a Borrower with respect to such Mortgage Loan,
in which case the Origination Date shall be deemed to be the date that is 40
days prior to the date of the first payment under the Mortgage Note relating to
such Mortgage Loan.
"PMI Policy" or "Primary Insurance Policy" means a policy of
primary mortgage guaranty insurance issued by a Qualified Insurer.
"Qualified Insurer" means an insurance company duly qualified
as such under the laws of the states in which the Mortgaged Property is
located, duly authorized and licensed in such states to transact the applicable
insurance business and to write the insurance provided, and approved as an
insurer pursuant to the applicable Underwriting Guidelines.
"Qualified Originator" means an originator of Mortgage Loans
reasonably acceptable to the Lender.
"Servicing File" means with respect to each Mortgage Loan, the
file retained by the Borrowers consisting of originals of all documents in the
Mortgage File which are not delivered to a Trustee and copies of the Mortgage
Loan Documents set forth in Section 2 of the Pooling and Servicing Agreement.
Schedule 1-14-
58
FORM OF PROMISSORY NOTE
$ 500,000,000.00 May 1, 0000
Xxx Xxxx, Xxx Xxxx
FOR VALUE RECEIVED, Advanta Mortgage Holding Company a Delaware
corporation, as a Borrower; Advanta Mortgage Corp. USA a Delaware corporation,
as a Borrower; Advanta Mortgage Corp. Midatlantic a Pennsylvania corporation,
as a Borrower; Advanta Mortgage Corp. Midatlantic II a Pennsylvania
corporation, as a Borrower; Advanta Mortgage Corp. Midwest a Pennsylvania
corporation, as a Borrower; Advanta Mortgage Corp. of New Jersey a New Jersey
corporation, as a Borrower; Advanta Mortgage Corp. Northeast a New York
corporation, as a Borrower; Advanta Mortgage Conduit Services, Inc. a Delaware
corporation, as a Borrower; and Advanta Finance Corp. a Nevada corporation, as
a Borrower (each a "Borrower" collectively, the "Borrowers"), hereby promises
to pay to the order of XXXXXX XXXXXXX MORTGAGE CAPITAL INC. (the "Lender"), at
the principal office of the Lender at 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx, 00000,
in lawful money of the United States, and in immediately available funds, the
principal sum of FIVE HUNDRED MILLION DOLLARS ($500,000,000.00) (or such lesser
amount as shall equal the aggregate unpaid principal amount of the Loans made
by the Lender to the Borrowers under the Loan Agreement), on the dates and in
the principal amounts provided in the Loan Agreement, and to pay interest on
the unpaid principal amount of each such Loan, at such office, in like money
and funds, for the period commencing on the date of such Loan until such Loan
shall be paid in full, at the rates per annum and on the dates provided in the
Loan Agreement.
The date, amount and interest rate of each Loan made by the Lender to
the Borrowers, and each payment made on account of the principal thereof, shall
be recorded by the Lender on its books and, prior to any transfer of this Note,
endorsed by the Lender on the schedule attached hereto or any continuation
thereof; provided, that the failure of the Lender to make any such recordation
or endorsement shall not affect the obligations of the Borrowers to make a
payment when due of any amount owing under the Loan Agreement or hereunder in
respect of the Loans made by the Lender.
This Note is the Note referred to in the Master Loan and Security
Agreement dated as of May 1, 1997 (as amended, supplemented or otherwise
modified and in effect from time to time, the "Loan Agreement") between the
Borrowers and the Lender, and evidences Loans made by the Lender thereunder.
Terms used but not defined in this Note have the respective meanings assigned
to them in the Loan Agreement.
The Borrowers agree to pay all the Lender's costs of collection and
enforcement (including reasonable attorneys' fees and disbursements of Lender's
counsel) in respect of this Note when incurred, including, without limitation,
reasonable attorneys' fees through appellate proceedings.
Notwithstanding the pledge of the Collateral, the Borrowers hereby
acknowledge, admit and agree that the Borrowers' obligations under this Note
are recourse obligations of each Borrower to which each Borrower pledges its
full faith and credit.
Each Borrower, and any indorsers or guarantors hereof, (a) severally
waive diligence, presentment, protest and demand and also notice of protest,
demand, dishonor and nonpayments of this
59
Note, (b) expressly agree that this Note, or any payment hereunder, may be
extended from time to time, and consent to the acceptance of further
Collateral, the release of any Collateral for this Note, the release of any
party primarily or secondarily liable hereon, and (c) expressly agree that,
except as expressly otherwise provided in the Affiliate Guarantee, it will not
be necessary for the Lender, in order to enforce payment of this Note, to first
institute or exhaust the Lender's remedies against the Borrowers or any other
party liable hereon or against any Collateral for this Note. No extension of
time for the payment of this Note, or any installment hereof, made by agreement
by the Lender with any person now or hereafter liable for the payment of this
Note, shall affect the liability under this Note of the Borrowers, even if the
Borrowers are not a party to such agreement; provided, however, that the Lender
and the Borrowers, by written agreement among them, may affect the liability of
the Borrowers.
Any reference herein to the Lender shall be deemed to include and
apply to every subsequent holder of this Note. Reference is made to the Loan
Agreement for provisions concerning optional and mandatory prepayments,
Collateral, acceleration and other material terms affecting this Note.
Each Borrower hereby acknowledges and agrees that such Borrower shall
be jointly and severally liable for all representations, warranties, covenants,
obligations and indemnities of the Borrowers under the Loan Documents.
60
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE
STATE OF NEW YORK (WITHOUT REFERENCE TO CHOICE OF LAW DOCTRINE) WHOSE LAWS THE
BORROWERS EXPRESSLY ELECT TO APPLY TO THIS NOTE. THE BORROWERS AGREE THAT ANY
ACTION OR PROCEEDING BROUGHT TO ENFORCE OR ARISING OUT OF THIS NOTE MAY BE
COMMENCED IN THE SUPREME COURT OF THE STATE OF NEW YORK, BOROUGH OF MANHATTAN,
OR IN XXX XXXXXXXX XXXXX XX XXX XXXXXX XXXXXX FOR THE SOUTHERN DISTRICT OF NEW
YORK.
61
SCHEDULE OF LOANS
This Note evidences Loans made under the within-described Loan
Agreement to the Borrowers, on the dates, in the principal amounts and bearing
interest at the rates set forth below, and subject to the payments and
prepayments of principal set forth below:
PRINCIPAL AMOUNT INTEREST AMOUNT PAID UNPAID PRINCIPAL NOTATION
DATE MADE OF LOAN RATE OR PREPAID AMOUNT MADE BY
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62
EXHIBIT D
FORM OF REQUEST FOR BORROWING
-----------------------------
Lender: Xxxxxx Xxxxxxx Mortgage Capital Inc.
Borrower: [ ]
-------------------------------
Requested Fund Date:
-------------------------------------------
Transmission Date:
-------------------------------------------
Transmission Time:
(circle one) 2:00 p.m. 6:00 p.m.
---------------------------------------------
Type of Funding:
(Wet or Dry)
-------------------------------------------
Type of Loan Requested:
(Committed or Uncommitted)
-------------------------------------------
Number of Mortgage
Loans to be Pledged:
-------------------------------------------
UPB: $
------------------------------------------
Requested Wire Amount: $
------------------------------------------
Wire Instructions:
----------------------
----------------------
ABA #:
-------
Credit to:
-------
----------------------
Act #:
-------
Requested by:
Advanta Mortgage Corporation
By:
----------------------------------------
Name:
Title:
