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Exhibit 10-v
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AMENDED AND RESTATED MASTER LOAN AND SECURITY AGREEMENT
DATED AS OF AUGUST 21, 1998
------------------------------
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
MORGAN STANLEY MORTGAGE CAPITAL INC.
AS LENDER
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TABLE OF CONTENTS
RECITALS ..................................................................................................1
Section 1. Definitions and Accounting Matters....................................................................1
1.01 Certain Defined Terms..................................................................................1
1.02 Accounting Terms and Determinations...................................................................10
Section 2. Loans, Note and Prepayments..........................................................................10
2.01 Loans ...............................................................................................10
2.02 Notes ...............................................................................................10
2.03 Procedure for Borrowing...............................................................................11
2.04 Limitation on Types of Loans; Illegality..............................................................12
2.05 Repayment of Loans; Interest..........................................................................12
2.06 Mandatory Prepayments or Pledge.......................................................................13
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.......................................................................17
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..............................................................................................19
4.08 Limitation on Duties Regarding Preservation 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..........................................................................21
Section 6. Representations and Warranties.......................................................................22
6.01 Existence.............................................................................................22
6.02 Financial Condition...................................................................................23
6.03 Litigation............................................................................................23
6.04 No Breach.............................................................................................23
6.05 Action................................................................................................23
6.06 Approvals.............................................................................................23
6.07 Margin Regulations....................................................................................24
6.08 Taxes.................................................................................................24
6.09 Investment Company Act................................................................................24
6.10 Collateral; Collateral Security.......................................................................24
6.11 Chief Executive Office................................................................................25
6.12 Location of Books and Records.........................................................................25
6.13 Hedging...............................................................................................25
6.14 True and Complete Disclosure..........................................................................25
6.15 ERISA.................................................................................................25
6.16 Pass-Through Certificates.............................................................................25
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Section 7. Covenants of the Borrowers...........................................................................26
7.01 Financial Statements..................................................................................26
7.02 Litigation............................................................................................28
7.03 Existence, etc........................................................................................28
7.04 Prohibition of Fundamental Changes....................................................................28
7.05 Borrowing Base Deficiency.............................................................................28
7.06 Notices...............................................................................................29
7.07 Hedging...............................................................................................29
7.08 Reports...............................................................................................29
7.09 Underwriting Guidelines...............................................................................29
7.10 Transactions with Affiliates..........................................................................29
7.11 Limitation on Liens...................................................................................30
7.12 Servicing Tape........................................................................................30
7.13 Pooling and Servicing Agreement.......................................................................30
Section 8. Events of Default....................................................................................30
Section 9. Remedies Upon Default................................................................................32
Section 10. No Duty of Lender...................................................................................32
Section 11. Miscellaneous.......................................................................................33
11.01 Waiver...............................................................................................33
11.02 Notices..............................................................................................33
11.03 Indemnification and Expenses.........................................................................33
11.04 Amendments...........................................................................................34
11.05 Successors and Assigns...............................................................................34
11.06 Survival.............................................................................................34
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............................................................................................36
11.15 Periodic Due Diligence Review........................................................................36
11.16 Intent...............................................................................................37
11.17 Joint and Several Liability..........................................................................37
11.18 Conflict.............................................................................................37
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SCHEDULES
SCHEDULE 1 Representations and Warranties re: Mortgage Loans
EXHIBITS
EXHIBIT A Form of Promissory Note
EXHIBIT B Amendment #1 to 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 Officer's Certificate - Pooling and Servicing Agreement
EXHIBIT G Mortgage Loan Tape Fields
EXHIBIT H Amended and Restated Affiliate Guaranty
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AMENDED AND RESTATED MASTER LOAN AND SECURITY AGREEMENT
AMENDED AND RESTATED MASTER LOAN AND SECURITY AGREEMENT, dated
as of August 21, 1998, 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 (collectively, the "Borrowers") and Morgan Stanley Mortgage Capital
Inc., a New York corporation (the "Lender").
RECITALS
The Borrowers entered into the Loan and Security Agreement,
dated May 1, 1997 (the "Existing Agreement") with the Lender to finance the
purchase by the Borrower of certain Mortgage Loans (as defined herein) on the
terms and conditions as set forth in the Existing Agreement.
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. The Borrower and the Lender desire to amend and
restate the Existing Agreement to provide terms and conditions under which the
Lender is prepared to make further loans to the Borrower from and after the date
hereof.
The Borrowers are also party (as Pledgors thereunder) to that
certain Master Repurchase Agreement dated as of August 21, 1998 between Advanta
National Bank (as Seller thereunder) the Lender (as Buyer thereunder) and the
Borrowers (the "Repurchase Agreement").
The Lender is prepared to make loans to the Borrowers upon the
terms and conditions hereof, provided it obtains a first lien security interest
in the Mortgage Loans.
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). Terms otherwise not defined
herein shall have the meanings set forth in the Repurchase Agreement.
"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 Guaranty" shall mean the Amended and Restated
Affiliate Guaranty, by Advanta Corp. dated as of the date hereof.
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"Applicable Collateral Percentage" shall mean (a) with respect
to all Eligible Mortgage Loans other than Delinquent Mortgage Loans and High LTV
Mortgage Loans, 96%; (b) with respect to all High LTV Mortgage Loans, 94%; (c)
with respect to all Eligible Mortgage Loans that are Delinquent Mortgage Loans,
90%;
"Applicable Margin" shall mean 60 basis points (0.60%).
"Appraised Value" shall mean the value of the Mortgaged
Property as set forth in an appraisal, prepared in accordance with the
Underwriting Guidelines, made in connection with the origination of the related
Mortgage Loan.
"Available Committed Loan Amount" shall mean the Maximum
Committed Loan Amount, minus the sum of (i) the aggregate amount of Loans
outstanding hereunder and (ii) the aggregate amount of Transactions outstanding
under the Repurchase Agreement.
"Available Loan Amount" shall mean the Non-Transaction Amount
minus the aggregate amount of Loans outstanding hereunder.
"Bankruptcy Code" shall mean the United States Bankruptcy Code
of 1978, as amended from time to time.
"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.
"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 (i) the Applicable Collateral Percentage of the
Market Value of such Mortgage Loan, and (ii) 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) which is a
Mortgage Loan of the type specified in
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subparagraphs (ii)-(viii) hereof, which is in excess of the
limits permitted under subparagraphs (ii)-(viii) hereof, (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 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 Loan Agreement) for the purpose of issuing securities
backed by such Mortgage Loans and (6) for which the Trustee
does not have in its possession the original Mortgage Note,
unless such possession has been otherwise waived by the Lender
in writing;
(ii) 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;
(iii) the aggregate Collateral Value of Eligible Mortgage Loans
which are secured by a Manufactured Dwelling may not exceed 5%
of the Maximum Credit;
(iv) the aggregate Collateral Value of Eligible Mortgage Loans
which are Mixed Use Mortgage Loans may not exceed 1% of the
Maximum Credit;
(v) the aggregate Collateral Value of Eligible Mortgage Loans
which are Balloon Mortgage Loans may not exceed 25% of the
Maximum Credit;
(vi) the aggregate Collateral Value of first lien Eligible Mortgage
Loans that are High LTV Mortgage Loans may not exceed 10% of
the Maximum Credit;
(vii) the aggregate Collateral Value of Eligible Mortgage Loans
which are 59-Day Delinquent Mortgage Loans may not exceed 3%
of the aggregate principal amount outstanding under the Loans;
and
(viii) the aggregate Collateral Value of Eligible Loans which are
89-Day Delinquent Mortgage Loans may not exceed 1% of the
aggregate principal amount outstanding under the Loans.
"Collection Account" shall have the meaning set forth in
Section 6.01 of the Pooling and Servicing Agreement.
"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.
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"Delinquent Mortgage Loan" shall mean 59-Day Delinquent
Mortgage Loans and 89-Day Delinquent Mortgage Loans.
"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.
"89-Day Delinquent Mortgage Loan" shall mean a Mortgage Loan
made by the Borrower to a Mortgagor or acquired by the Borrower and underwritten
substantially in accordance with the Underwriting Guidelines, a copy of the
current version of which is attached hereto as Exhibit E, and which is at least
60 days, but not more than 89 days, delinquent with respect to the payment of
principal or interest (without regard to any applicable grace period).
"Eligible Mortgage Loan" shall mean (a) 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 (i) 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 (ii) which is underwritten
substantially in accordance with the Borrowers' Underwriting Guidelines, a copy
of which is attached hereto as Exhibit E, provided that, notwithstanding the
foregoing, a mortgage loan that is purchased from an Affiliate shall only be an
Eligible Mortgage Loan if such Affiliate is a Borrower hereunder.
"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
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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 (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
----------------------------------------
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.
"59-Day Delinquent Mortgage Loan" shall mean a Mortgage Loan
made by the Borrower to a Mortgagor or acquired by the Borrower and underwritten
substantially in accordance with the Underwriting Guidelines, a copy of 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).
"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.
"High LTV Mortgage Loans" shall mean first and second lien
Eligible Mortgage Loans with an LTV greater than 90% and less than or equal to
100%.
"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.
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"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 Amended and Restated Master
Loan and Security Agreement, as the same may be further amended, supplemented or
otherwise modified in accordance with the terms hereof.
"Loan Documents" shall mean, collectively, this Loan
Agreement, the Note, the Pooling and Servicing Agreement and the Affiliate
Guaranty.
"Loan Parties" shall mean each of the Borrowers and the
Guarantor.
"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 the Loan
Parties taken as a whole, (b) the ability of the Loan Parties 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 Loan Amount" shall mean $375,000,000.
"Maximum Credit" shall mean the sum of the Maximum Committed
Loan Amount and the Maximum Uncommitted Loan Amount, which shall equal
$500,000,000.
"Maximum Combined Amount" shall equal $750,000,000.
"Maximum Uncommitted Loan Amount" shall mean $125,000,000.
"Misclassified Mortgage Loan" shall have the meaning assigned
thereto in Section 2.05(c) hereof.
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"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 the Trustee has been instructed to hold for the
Lender pursuant to the Pooling and Servicing 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.
"Mortgage Loan Schedule" shall have the meaning assigned
thereto in the Pooling and Servicing Agreement.
"Mortgage Loan Schedule and Collateral 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.
"Non-Transaction Amount" shall mean the Maximum Combined
Amount minus the aggregate amount of Transactions outstanding under the
Repurchase Agreement; provided, however, that if such calculation results in an
amount greater than $500,000,000, the Non-Transaction Amount shall equal
$500,000,000.
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"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.
"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.
"Pledged Certificate" shall mean a certificate substantially
in the form of Exhibit C to the Pooling and Servicing Agreement authenticated by
the Trustee, issued in the name of the Lender and pledged and delivered to the
Lender, representing a 100% interest in a Pledged Series Pool of Eligible
Mortgage Loans 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.
"Pledged Series Pool" shall mean, as of any date and with
respect to any Borrower, all Mortgage Loans pledged to the Lender hereunder and
held by the Trustee under the Pooling and Servicing Agreement.
"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 Mortgage Corp. USA as "Master Servicer",
the Borrowers and the Trustee, as amended by Amendment # 1 to the Pooling and
Servicing Agreement, dated as of the date hereof, 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.
"Repurchase Agreement" shall mean that certain Master
Repurchase Agreement for purchases of mortgage loans between Advanta National
Bank as Seller, Lender as Buyer and the Borrowers as Pledgors, dated as of
August 21, 1998.
"Repurchase Documents" shall mean the Repurchase Agreement,
the Affiliate Guaranty and the Pooling and Servicing Agreement.
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"Responsible Officer" shall mean, as to any Person, the chief
executive officer, the president, any vice president or the treasurer of such
Person.
"Restricted Transaction" shall mean any transaction of merger
or consolidation or amalgamation by the Borrowers or the Guarantor; or any
voluntary or involuntary liquidation, winding up or dissolution of the Borrowers
or the Guarantor; or sale of all or substantially all of the Borrowers' or the
Guarantor's assets (it being understood that a securitization of loan assets, a
sale of mortgage loans subject to a repurchase agreement or a pledge of mortgage
loans subject to a conduit warehouse line shall not be deemed a sale of all or
substantially all assets).
"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 and shall include but not be limited to the Pooling and
Servicing Agreement.
"Servicing Records" shall have the meaning provided in Section
11.14(b) hereof.
"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.
"Termination Date" means the date which shall be 364 days from
the date hereof, which shall be August 20, 1999.
"Transaction Documents" shall mean the Loan Documents and the
Repurchase Documents.
"Transaction Party" shall mean each of the Borrowers, the
Guarantor and Advanta National Bank.
"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.
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"Underwriting Guidelines" shall mean the underwriting
guidelines delivered by the Loan Parties 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.
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 Loan 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 Available Committed Loan 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 Loan 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 any one time outstanding up to but not exceeding the Available Loan
Amount as in effect from time to time.
(c) In determining whether Loans outstanding are Committed
Loans or Uncommitted Loans, such Loans shall first be deemed Committed Loans up
to the Available Committed Loan Amount, and then the remainder shall be deemed
Uncommitted Loans.
(d) Subject to the terms and conditions of this Loan
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,
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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 4:00 p.m., New York City time, one day prior to
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 Default shall
have occurred and be continuing, make a Committed Loan on the requested Funding
Date, on the terms and conditions of this Loan Agreement, to the Borrowers in
Dollars, from and including the Effective Date to and including the Termination
Date, in an aggregate principal amount up to but not exceeding the Available
Committed Loan Amount as in effect from time to time.
(c) In addition to the foregoing, 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 in Dollars on the requested Funding
Date, during the period from and including the Effective Date to and including
the Termination Date, on the requested Funding Date, in an aggregate principal
amount up to but not exceeding the Available Loan Amount.
(d) No later than 4:00 p.m., New York City time, one day prior
to the requested Funding Date, the Borrower shall deliver to the Trustee the
Mortgage File pertaining to each Eligible Mortgage Loan to be pledged to the
Lender. Not later than 12:00 noon, New York City time, on the requested Funding
Date, the Trustee shall issue and deliver the relevant Pledged 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.
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(e) Pursuant to the Pooling and Servicing Agreement, the
Trustee shall deliver to the Lender and the Borrowers, by no later than 3:00
p.m. New York City time on a Funding Date, a Mortgage Loan Schedule and
Collateral Report in respect of all Mortgage Loans pledged to the Lender on such
Funding Date. 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;
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 on the date such Loan shall be repaid in full, 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
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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 Pledged Certificate and
pledge such additional Eligible Mortgage Loans (which Collateral shall be in all
respects acceptable to the 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 K to the Pooling and Servicing Agreement ("Notice
of Release of Pledge"), 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.
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(b) The Borrower shall transmit the Notice of Release of
Pledge by facsimile transmission to the Lender. Upon confirming that the Notice
of Release of Pledge 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 Notice of Release of Pledge and
transmit the countersigned Notice of Release of Pledge 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 Notice of Release of
Pledge and upon approval of the Notice of Release of Pledge by the Lender, the
Trustee shall take the actions set forth in the Pooling and Servicing Agreement
with respect to the Eligible Mortgage Loan to be released.
(d) The Lender shall not be obligated to countersign a Notice
of Release of Pledge (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 Loan Agreement, or (ii) which does not reflect
the Lender's current determination of Market Value.
Section 3. Payments; Computations; Etc.
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 Loan 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. 40615114, For the
A/C of MSMCI, Citibank, N.A., ABA# 021000089, 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:
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(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.
(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 Pledged 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 Collateral Report (in the
form of Exhibit I to the Pooling and Servicing Agreement) as so reviewed.
(b) All of each Borrowers' 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;
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(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 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;
(iv) all other insurance policies and insurance proceeds
relating to any Mortgage Loan or the related Mortgaged Property;
(v) all purchase agreements or other agreements or contracts,
(other than Interest Rate Protection Agreements, which are expressly
excluded herefrom) and the rights relating to, constituting, or
otherwise governing, any or all of the foregoing to the extent they
relate to the Mortgage Loans, including the right to receive principal
and interest payments and the right to enforce such payments;
(vi) all Collection Accounts and any 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 Pledged Certificates 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", "accounts", and "chattel
paper" as defined in the Uniform Commercial Code relating to or
constituting any and all of the foregoing;
(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, whether now owned or hereafter acquired, now existing
or hereafter created and wherever located, to secure the repayment of principal
of and interest on all Loans and all other amounts owing by the Borrowers to the
Lender hereunder, under the Note and under the other Loan Documents and the
Transactions entered into under the Repurchase Documents (collectively, the
"Secured Obligations"). Each Borrower agrees to mark 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
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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 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, as
applicable, 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 in 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
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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 Borrowers hereby ratify 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 authorize the Lender, if an Event of
Default shall 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.
(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 Borrowers 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.
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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 the Pooling and Servicing
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 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 Preservation 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.
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(a) 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.
(b) 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 Notice of Release of
Pledge.
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) The following Loan Documents delivered to the Lender:
(i) Loan Agreement, duly completed and executed by
the parties thereto. In 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 this Loan Agreement, including
execution of UCC-1 and UCC-3 financing statements in form and substance
satisfactory to the Lender.
(ii) Note, duly completed and executed by the parties
thereto.
(iii) Amendment #1 to the Pooling and Servicing
Agreement, duly completed and executed by the parties thereto.
(iv) Affiliate Guaranty, duly completed and executed
by the Guarantor.
(b) Officer's Certificate. An officer's certificate in the
form attached hereto as Exhibit F certifying that the Pooling and
Servicing Agreement dated as of May 1, 1997 among Bankers Trust Company
of California, N.A., as Trustee, Advanta Mortgage Conduit Services,
Inc., as Sponsor, Advanta Mortgage Corp. USA, as Master Servicer and
the remaining Borrowers, has not been modified or amended, other than
as amended by Amendment # 1 to the Pooling and Servicing Agreement, and
remains in full force and effect as of the date hereof.
(c) Repurchase Documents. The Repurchase Agreement between
Advanta National Bank (as Seller thereunder), Borrowers (as Pledgors
thereunder) and Lender (as Buyer thereunder), duly executed, with all
required documents thereunder delivered to Lender.
(d) 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);
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(e) Legal Opinion. A legal opinion of counsel to the Borrowers
and Guarantor, substantially in the form attached hereto as Exhibit C;
(f) Underwriting Guidelines. A copy of Borrowers' current
Underwriting Guidelines, and any material changes to the Underwriting
Guidelines made since the Underwriting Guidelines were last delivered
to Lender.
(g) Other Documents. Such other documents as the Lender may
reasonably request.
In addition, it shall be a further condition precedent to the
funding of the initial Loan that the Lender shall have received from the
Borrower full and final payment of all fees, disbursements, and expenses of
Lender's counsel incurred in connection with consummation of this loan facility
(the "Legal Fees"), on or before the date hereof, by wire transfer to the
Lender's account as set forth in Section 3.01. However, if the initial Funding
Date is the same date as the date hereof, payment of the Legal Fees shall be
made by deduction of such Legal Fees from the Loan proceeds disbursed by the
Lender to the Borrower on such Funding Date.
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 under the Loan Documents;
(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 in such compliance or so
qualified would not have a Material Adverse Effect.
(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
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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 Collateral 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 Lender shall have received duly authenticated Pledged
Certificates representing the related pledged Mortgage Loans;
(g) the Trustee shall have received a Pledge Notice
substantially in the form provided in the Pooling and Servicing
Agreement (a copy of which shall be delivered to the Lender);
(h) 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(g)(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(g)(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
5.02 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 Loan Party (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 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 the failure so to qualify
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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. Guarantor 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
Guarantor ended December 31, 1997, and the related consolidated statements of
income and retained earnings and of cash flows for the Guarantor and its
consolidated Subsidiaries for such fiscal year, with the opinion thereon of
Arthur Andersen LLP. All such financial statements are complete and correct and
fairly present, in all material respects, the consolidated financial condition
of the Guarantor and its 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 March 31, 1998, there has been no material adverse change in the
consolidated business, operations or financial condition of the Guarantor and
its consolidated Subsidiaries taken as a whole from that set forth in said
financial statements.
6.03 Litigation. Except as (1) previously disclosed to Lender
prior to the date of this Loan Agreement or (2) disclosed and approved in
writing by the Lender, there are no actions, suits, arbitrations, investigations
or proceedings pending or, to the Borrowers' knowledge, threatened against any
Loan Party 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 any Loan Party, 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
applicable 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 Loan Party, 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 Loan Party or any of their 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 any Loan Party, or
any of their Subsidiaries pursuant to the terms of any such agreement or
instrument.
6.05 Action. Each of the Loan Parties has all necessary
corporate or other power, authority and legal right to execute, deliver and
perform its obligations under each of the applicable Loan Documents; the
execution, delivery and performance by such Loan Party of each of the applicable
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 the applicable Loan Party, and constitutes a legal, valid and
binding obligation of such Loan Party enforceable against such Loan Party 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.
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
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execution, delivery or performance by any Loan Party of the applicable Loan
Documents or for the legality, validity or enforceability thereof, except for
filings and recordings in respect of the Liens created pursuant to the Loan
Documents.
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 and its Subsidiaries have 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
Guarantor and its Subsidiaries, 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. No Loan Party or Subsidiary
thereof 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 Borrowers have not assigned, pledged, or otherwise
conveyed or encumbered any Pledged Certificate or Mortgage Loan to any other
Person, and immediately prior to the transfer of such Pledged Certificate or
Mortgage Loan to the Lender, the applicable Borrower was the sole owner of such
Pledged 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 Pledged Certificate or Mortgage Loan pledged to the Lender hereunder was
acquired by the applicable Borrower from an Affiliate of the applicable Borrower
(other than another 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 Pledged 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 Pledged Certificate,
and in the related Mortgage Note and in such Borrower's interest in the related
Mortgaged Property.
(d) The Form UCC-1 filing statements, previously filed on the
dates indicated in Schedule 2 of Exhibit C attached hereto, naming the Lender as
"Secured Party", the Borrowers as "Debtor" and describing the Collateral, filed
in the jurisdictions and recording offices listed on Schedule 2 of Exhibit C
attached hereto, have fully perfected the security interests granted hereunder
in the Collateral to the extent such security interests can be perfected by the
filing of such Form UCC-1
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filing statements, as of the date of their filing, under the Uniform Commercial
Code in all right, title and interest of the Borrowers in, to and under such
Collateral, which security interests continue to be perfected thereto.
6.11 Chief Executive Office. The chief executive offices of
the Guarantor and each Borrower (other than Advanta Finance Corp) on the
Effective Date is located at Welsh & McKean Roads, P.O. Box 844, Spring House,
Pennsylvania 19477; Advanta Finance Corp.'s chief executive office is located at
16875 West Bernardo Drive, San Diego, California 92127; and Advanta National
Bank's chief executive office on the Effective Date is One Righter Parkway,
Wilmington DE 19803.
6.12 Location of Books and Records. The location where each
Loan Party keeps its books and records is its chief executive office. All
servicing records, including all computer tapes and records relating to the
Collateral, are kept at 16875 West Bernardo Drive, San Diego, California 92127.
6.13 Hedging. The Loan Parties 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 Loan Party to the Lender in connection with the negotiation,
preparation or delivery of the 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 Loan Party 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 Loan Party or any of their
Subsidiaries make direct contributions, and, to the knowledge of the Borrowers,
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 a Loan Party would be under an obligation to furnish a
report to the Lender under Section 7.01(d) hereof.
6.16 Pledged Certificates. Borrower represents and warrants to
Lender with respect to each Pledged Certificate, that (a) such Pledged
Certificate is registered in the name of Lender, (b) immediately prior to the
transfer to the Lender of the interest represented by such Pledged 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 Pledged Certificate shall have been issued in the name of
and delivered to the Lender, (d) such Pledged Certificate represents a 100%
ownership interest in the Eligible Mortgage Loans referenced therein, (e) the
Eligible Mortgage Loans referenced in such Pass-Through Certificate or Pledged
Certificate are being held by the Trustee for the benefit of the holder of such
Pledged Certificate, (f) each Borrower has notified the Trustee or other
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registrar issuing such Pledged Certificate that Lender is the holder of such
Pledged Certificate for all purposes and (g) all representations and warranties
set forth in Part II of Schedule 1 are true and correct.
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 Guarantor, the unaudited consolidated balance sheets of
Guarantor and its consolidated Subsidiaries as at the end of such
period and the related unaudited consolidated statements of income and
retained earnings and of cash flows for Guarantor and its 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 Guarantor, which certificate shall state that said
consolidated financial statements fairly present in all material
respects the consolidated financial condition and results of operations
of 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 95 days after
the end of each fiscal year of Guarantor, the consolidated balance
sheets of Guarantor and its 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 Guarantor and its consolidated
Subsidiaries for such year, setting forth in each case in comparative
form the figures for the previous year, accompanied by an opinion
thereon 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 Guarantor 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 of the Loan Parties 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 the Guarantor knows, or
with respect to any Plan or Multiemployer Plan to which the Guarantor
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 the Guarantor setting
forth details respecting such event or condition and the action, if
any, that the Guarantor 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 the Guarantor or an ERISA Affiliate with
respect to such event or condition):
(i) any reportable event, as defined in Section
4043(c) 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 Loan Party 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 Loan Party 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 the Guarantor 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 the Guarantor 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 the Guarantor 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 the Guarantor or an
ERISA Affiliate fails to provide timely security to such Plan
in accordance with the provisions of said Sections.
Each Loan Party will furnish to the Lender, at the time the Borrowers furnish
each set of financial statements of the Guarantor pursuant to paragraphs (a) and
(b) above, a certificate of a Responsible Officer of such Loan Party to the
effect that, to the best of such Responsible Officer's knowledge, such Loan
Party 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 Loan Party has taken or proposes to take with respect thereto).
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7.02 Litigation. The Loan Parties 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 proceedings affecting any Loan
Party, 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 Loan Party 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. Other than the asset
sales completed and disclosed to the Lender prior to the date of this Loan
Agreement, no Loan Party shall engage in any Restricted Transaction while there
is any amount outstanding under the Loan Documents; provided, that a Loan Party
may merge or consolidate with (a) any wholly owned direct or indirect subsidiary
of Advanta Corp., or (b) any other Person if such Loan Party is the surviving
corporation; and provided further, that if after giving effect thereto, no
Default or Event of Default would exist under any Loan Document. If any Loan
Party has entered into a Restricted Transaction when there was no amount
outstanding under the Loans, the Borrowers must give the Lender notice and such
details as the Lender may request about the Restricted Transaction(s) at least
ten (10) days prior to any Request for Borrowing. The Lender may, in its sole
discretion, cancel its commitment to lend hereunder and terminate this Loan
Agreement and the other Loan Documents without liability, based on its
assessment of the effect of such Restricted Transaction(s).
7.05 Borrowing Base Deficiency. If at any time there exists a
Borrowing Base
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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;
(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, promptly upon 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 the Property, business or
financial condition of any Loan Party.
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 the Loan Party has taken or proposes
to take with respect thereto.
7.07 Hedging. The Loan Parties 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. Each of the Loan Parties
will not (i) 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 not prohibited under
the Loan Documents, and (b) upon fair and reasonable terms no less favorable to
such Loan Party 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 Loan Party from making a capital
contribution of Mortgage Loans to any other Transaction Party provided that such
capital contribution is made subject to the Lender's Lien on any such Mortgage
Loans (under any Transaction Document)
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that are the subject of such capital contribution. In no event shall a Borrower
pledge to the Lender hereunder any Mortgage Loan acquired by the Borrower from
an Affiliate of the Borrower, other than another Borrower.
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 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 Servicing Tape.The Borrowers shall prepare, as of the
15th calendar day (or if such 15th day is not a Business Day, the Business Day
immediately preceding such 15th day) of each month (the "Servicing Cut-Off
Date"), 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 the Borrowers or any Servicer (the "Servicing Tape"). The
Borrowers shall deliver the Servicing Tape to the Lender within 2 Business Days
after the Servicing Cut-off Date.
7.13 Pooling and Servicing Agreement. The parties to the
Pooling and Servicing Agreement shall maintain such Pooling and Servicing
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 any payment due hereunder
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 Loan Party 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 Loan Party 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 7.13 hereof; or any Loan Party 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 Loan Party
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shall otherwise fail to comply with any of the requirements of Section
7.03 (b) through (f), 7.06 (b) through (d), 7.09, 7.10 hereof and such
default shall continue unremedied for a period of five Business Days;
or any Loan Party 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
(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
Loan Party or any of their respective Affiliates 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 Loan Party or any such Affiliate 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 Loan Party shall admit in writing its inability to pay
its debts as such debts become due; or
(g) any Loan Party, or any of their respective Affiliates
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 the FDIC Act, 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 Loan Party, or any of their respective
Affiliates 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 Loan Party or any of their
Affiliates or of all or any substantial part of its property, or (iii)
similar relief in respect of any Loan Party, or any such Affiliate
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
Loan Party or any such Affiliate 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
Loan Party; or
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(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
pursuant to a Due Diligence Review of Mortgage Loans pledged to the
Lender hereunder on any three consecutive Funding Dates; 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; or
(m) any material adverse change in the Property, business or
financial condition of the Loan Parties taken as a whole shall occur,
which, constitutes a material impairment of the ability of (i) any Loan
Party with Loans outstanding hereunder or (ii) Guarantor to perform
their obligations under any Loan Document; as determined by the Lender
in its sole good faith discretion; or
(n) the Lender determines, after receipt of notice provided
pursuant to Section 7.04, that it wishes to cancel its commitment to
lend hereunder and terminate this Loan Agreement; or
(o) there shall have occurred an "Event of Default" under the
Repurchase Agreement.
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) and (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 Loan Party or any third party acting for any Loan Party and
such Loan Party 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 Loan Parties contained in the Loan Documents, and to the rights conferred
on Lender under Section 4.07 of the Pooling and Servicing 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
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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 Loan Parties 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
at such other address as shall be designated by a party in writing; or, as to
any party, at such other address as shall be designated 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. 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 Loan Party 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 Loan Party. 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.
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(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, 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 all the reasonable fees, disbursements and
expenses of counsel to the Lender which amount shall be deducted from the first
Loan disbursement. Subject to the limitations set forth in Section 11.15 hereof,
the Borrowers agree to pay the Lender 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 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 the Loan Documents. 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-
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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 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 SUE 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 Loan
Documents;
(b) the Lender has no fiduciary relationship to the Loan
Parties, 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 Loan
Parties.
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
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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 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,
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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, the sum of (i) the aggregate reimbursement obligation of the Borrowers
under this Loan Agreement, and (ii) the reimbursement obligation of the Buyer
pursuant to Section 27 of the Repurchase Agreement, 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 Loan Agreement.
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.
11.18 Conflict. In the event of any conflict between the terms
of this Loan Agreement and any other Loan Document, the terms of this Loan
Agreement shall prevail.
[SIGNATURE PAGE FOLLOWS]
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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.
Lender MORGAN STANLEY MORTGAGE CAPITAL INC.
1585 Broadway
New York, New York 10036
By:/s/
-------------------------------
Name:
Title:
Borrowers: ADVANTA MORTGAGE HOLDING COMPANY
Welsh & McKean Roads,
P.O. Box 844,
Spring House, Pennsylvania 19477
By:/s/
-------------------------------
Name:
Title:
ADVANTA MORTGAGE CORP. USA
Welsh & McKean Roads,
P.O. Box 844,
Spring House, Pennsylvania 19477
By:/s/
-------------------------------
Name:
Title:
ADVANTA MORTGAGE CORP. MIDATLANTIC
Welsh & McKean Roads,
P.O. Box 844,
Spring House, Pennsylvania 19477
By:/s/
-------------------------------
Name:
Title:
-38-
45
ADVANTA MORTGAGE CORP. MIDATLANTIC II
Welsh & McKean Roads,
P.O. Box 844,
Spring House, Pennsylvania 19477
By:/s/
----------------------------
Name:
Title:
ADVANTA MORTGAGE CORP. MIDWEST
Welsh & McKean Roads,
P.O. Box 844,
Spring House, Pennsylvania 19477
By:/s/
----------------------------
Name:
Title:
ADVANTA MORTGAGE CORP. OF NEW JERSEY
Welsh & McKean Roads,
P.O. Box 844,
Spring House, Pennsylvania 19477
By:/s/
----------------------------
Name:
Title:
ADVANTA MORTGAGE CORP. NORTHEAST
Welsh & McKean Roads,
P.O. Box 844,
Spring House, Pennsylvania 19477
By:/s/
----------------------------
Name:
Title:
-39-
46
ADVANTA MORTGAGE CONDUIT SERVICES, INC.
Welsh & McKean Roads,
P.O. Box 844,
Spring House, Pennsylvania 19477
By:/s/
----------------------------
Name:
Title:
ADVANTA FINANCE CORP.
16875 West Bernardo
San Diego, California 92127
By:/s/
----------------------------
Name:
Title:
-40-
47
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 59-Day
Delinquent Mortgage Loan, no payment required under the Mortgage Loan is
delinquent in excess of 59 days (without regard to any grace period) and with
respect to each 89-Day Delinquent Loan, no payment required under the Mortgage
Loan is delinquent in excess of 89 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 1-1
48
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 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 other than in cases in which the Mortgage Loan was originated in
connection with a Mortgagor emerging from a bankruptcy and such Mortgage Loan
was approved by the trustee in bankruptcy. 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 required by the Federal Emergency Management Agency, 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
(unless the Underwriting Guidelines provide that such insurance is not necessary
if the portion of the Mortgaged Property in the flood area is limited to the
lot, and does not include the location of any structures), 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
Schedule 1-2
49
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 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;
Schedule 1-3
50
(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
(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 place 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
Schedule 1-4
51
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 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 100% or a
CLTV greater than 125%.
(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. 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 59-Day Delinquent Mortgage Loans for which payments are
delinquent for no more than fifty-nine (59) days and 89-Day Delinquent Mortgage
Loans for which payments are delinquent for no more than eighty-nine (89) days)
Schedule 1-5
52
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 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
Schedule 1-6
53
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.
(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 other than collateral which is not
included in any calculation of the LTV of such Mortgage Loan.
(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
Schedule 1-7
54
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 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.
Schedule 1-8
55
(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.
(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) 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).
(pp) 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.
Schedule 1-9
56
(qq) Qualified Originator. The Mortgage Loan has been
originated by, and, if applicable, purchased by the Borrowers from, a Qualified
Originator.
(rr) 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.
(ss) Securitization. Each Mortgage Loan conforms to the Loan
Parties' Underwriting Guidelines 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,
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.
(tt) Delinquent Loan Sublimit The inclusion of any Mortgage
Loan included in the Borrowing Base shall not cause the aggregate Collateral
Value of Eligible Mortgage Loans (i) which are 59-Day Delinquent Mortgage Loans
to exceed 3% of the aggregate principal amount outstanding under the Loans, or
(ii) which are 89-Day Delinquent Mortgage Loans to exceed 1% of the aggregate
principal amount outstanding under the Loans.
Schedule 1-10
57
Part II. Pledged Certificates
As to each Mortgage Loan which is related to a Pledged
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 Pledged 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 Pledged 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 Pledged
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
58
permits the holder of the Pledged Certificate to
sell, assign, pledge, transfer or rehypothecate the
Pledged Certificates issued pursuant to the Pooling
and Servicing Agreement.
Schedule 1-12
59
Part VI 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
60
"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
61
FORM OF AMENDED AND RESTATED PROMISSORY NOTE
$ 500,000,000.00 Dated May 1, 1997
as amended and restated as of August 21, 1998
New York, New York
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 MORGAN STANLEY MORTGAGE CAPITAL INC. (the
"Lender"), at the principal office of the Lender at 1585 Broadway, New York, New
York, 10036, 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 Amended and Restated Promissory Note is the Note referred
to in the Loan and Security Agreement dated as of May 1, 1997, among the
Borrowers and the Lender as amended by the Amended and Restated Master Loan and
Security Agreement dated as of August 21, 1998 (as so amended and as further
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.
62
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 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 Guaranty, 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.
This Amended and Restated Promissory Note amends and restates
in its entirety the Promissory Note dated May 1, 1997 (the "Existing Promissory
Note") and is given as a continuation, rearrangement and extension, and not a
novation, release or satisfaction, of the Existing Promissory Note. The issuance
and delivery of this Amended and Restated Promissory Note is in substitution for
the Existing Promissory Note. This Amended and Restated Promissory Note does not
create or evidence any principal indebtedness other than the principal
indebtedness evidenced by the Existing Promissory Note. Each Borrower hereby
acknowledges and agrees that simultaneously with such Borrower's execution and
delivery of this Amended and Restated Promissory Note to the Lender, the Lender
has delivered to the Borrowers the Existing Promissory Note.
63
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 THE DISTRICT COURT OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW
YORK.
Borrowers: ADVANTA MORTGAGE HOLDING COMPANY
By:_______________________________
Name:
Title:
ADVANTA MORTGAGE CORP. USA
By:____________________________
Name:
Title:
ADVANTA MORTGAGE CORP. MIDATLANTIC
By:____________________________
Name:
Title:
ADVANTA MORTGAGE CORP. MIDATLANTIC II
By:____________________________
Name:
Title:
ADVANTA MORTGAGE CORP. MIDWEST
By:____________________________
Name:
Title:
64
ADVANTA MORTGAGE CORP. OF NEW JERSEY
By:____________________________
Name:
Title:
ADVANTA MORTGAGE CORP. NORTHEAST
By:____________________________
Name:
Title:
ADVANTA MORTGAGE CONDUIT SERVICES, INC.
By:____________________________
Name:
Title:
ADVANTA FINANCE CORP.
By:____________________________
Name:
Title:
65
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 OF INTEREST AMOUNT PAID UNPAID PRINCIPAL NOTATION
DATE MADE LOAN RATE OR PREPAID AMOUNT MADE BY
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66
AMENDMENT NO. 1
TO AMENDED AND RESTATED MASTER LOAN AND SECURITY AGREEMENT
Amendment No. 1 dated as of September 25, 1998 ("Amendment No.
1"), 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 MORGAN STANLEY MORTGAGE CAPITAL
INC., a New York corporation (the "Lender").
RECITALS
The Borrowers entered into that certain Master Loan and
Security Agreement, dated May 1, 1997 as amended and restated in the Amended and
Restated Master Loan and Security Agreement, dated August 21, 1998, with the
Lender (the "Existing Loan Agreement" as amended by this Amendment No. 1, the
"Loan Agreement") to finance the purchase by the Borrowers of certain mortgage
loans, and to finance the obligations of each of the Borrowers on the terms and
conditions as set forth in the Existing Loan Agreement. Capitalized terms used
but not otherwise defined herein shall have the meanings given to them in the
Existing Loan Agreement or the Sale and Servicing Agreement (as defined below),
each as applicable.
The Borrowers are also party (as Pledgors thereunder) to that
certain Master Repurchase Agreement dated as of August 21, 1998, as amended by
Amendment No. 1 to Master Repurchase Agreement dated as of September 25, 1998,
between Advanta National Bank (as Seller thereunder) and the Lender (as Buyer
thereunder).
The Borrowers and the Lender wish to amend the Existing Loan
Agreement to provide for the existence of the Indenture Notes (as defined
below).
Accordingly, the parties hereby agree, in consideration of the
mutual premises and mutual obligations set forth herein, to the terms and
conditions of the Existing Loan Agreement as amended by this Amendment No. 1.
SECTION 1. Definitions. Section 1.01 of the Existing Loan
Agreement is hereby amended by:
(a) adding the following definitions in proper alphabetical
order therein.
"Indenture" shall mean the Indenture dated as of September 25,
1998 between Advanta Home Equity Loan Owner Trust 1998-MS1 and Bankers Trust
Company of California, N.A.
-2-
67
"Indenture Note" shall mean any note authorized by and
authenticated and delivered under the Indenture.
"Indenture Note Principal Balance" means the principal balance
of each Indenture Note as calculated in the Sale and Servicing Agreement.
"Sale and Servicing Agreement" means the Sale and Servicing
Agreement dated as of September 25, 1998, among Advanta Home Equity Loan Owner
Trust 1998-MS1, as Issuer, Advanta Loan Warehouse Corporation, as Depositor,
Advanta Mortgage Corp. USA ("AMCUSA"), as Servicer, Advanta National Bank,
Advanta Bank Corp. and AMCUSA, as Loan Originators, Bankers Trust Company of
California, N.A., as Indenture Trustee on behalf of the Noteholders, and Advanta
Corp. together with AMCUSA, as Transfer Obligors.
(b) deleting the definitions of "Available Committed Loan
Amount" and "Non-Transaction Amount" in their entirety and replacing them with
the following, in proper alphabetical order therein:
"Available Committed Loan Amount" shall mean the Maximum
Committed Loan Amount, minus the sum of (i) the aggregate amount of Loans
outstanding hereunder (ii) the aggregate amount of Transactions outstanding
under the Repurchase Agreement and (iii) the aggregate Indenture Note Principal
Balance of the Indenture Notes.
"Non-Transaction Amount" shall mean the Maximum Combined
Amount minus the sum of (i) the aggregate amount of Transactions outstanding
under the Repurchase Agreement and (ii) the aggregate Indenture Note Principal
Balance of the Indenture Notes; provided, however, that if such calculation
results in an amount greater than $500,000,000, the Non-Transaction Amount shall
equal $500,000,000.
SECTION 2. Conditions Precedent to Amendment Effective Date.
This Amendment No. 1 shall become effective on the date (the "Amendment
Effective Date") on which the following conditions precedent shall have been
satisfied:
2.1 Delivered Documents. On the Amendment Effective Date, the
Lender shall have received the following documents, each of which shall be
satisfactory to the Lender in form and substance:
(a) this Amendment No. 1, executed and delivered by a duly
authorized officer of each of the Borrower and the Lender;
(b) such other documents as the Lender or counsel to the
Lender may reasonably request.
2.2 No Default. On the Amendment Effective Date, (i) the
Borrowers shall be in compliance with all the terms and provisions set forth in
the Loan Agreement on their part to be observed or performed, (ii) the
representations and warranties made and restated by the Borrowers pursuant to
Section 3 of this Amendment No. 1 shall be true and complete on and as of such
date in all material respects with the same force and effect as if made on and
as of such date (or, if such representation or warranty is expressly stated to
have been made as of a specific date, as of such date), and (iii) no Default
shall have occurred and be continuing on such date.
-3-
68
SECTION 3. Representations and Warranties. The Borrowers
hereby represent and warrant to the Lender that they are in compliance with all
the terms and provisions set forth in the Loan Agreement (as amended hereby, if
applicable) on their part to be observed or performed, and that no Default has
occurred or is continuing, and hereby confirm and reaffirm the representations
and warranties contained in Section 6 and Schedule 1, Part I and Part II of the
Loan Agreement.
SECTION 4. Limited Effect. Except as expressly set forth in
this Amendment No. 1, the Existing Loan Agreement shall continue to be, and
shall remain, in full force and effect in accordance with its terms.
SECTION 5. Counterparts. This Amendment No. 1 may be executed
by each of the parties hereto on any number of separate counterparts, each of
which shall be an original and all of which taken together shall constitute one
and the same instrument.
SECTION 6. GOVERNING LAW. THIS AMENDMENT NO. 1 SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK
WITHOUT REFERENCE TO THE CHOICE OF LAW PROVISIONS THEREOF.
[SIGNATURE PAGE FOLLOWS]
-4-
69
IN WITNESS WHEREOF, the parties have caused their names to be
signed hereto by their respective officers thereunto duly authorized as of the
day and year first above written.
Lender MORGAN STANLEY MORTGAGE CAPITAL INC.
1585 Broadway
New York, New York 10036
By:/s/
-------------------------------
Name:
Title:
Borrowers: ADVANTA MORTGAGE HOLDING COMPANY
Welsh & McKean Roads,
P.O. Box 844,
Spring House, Pennsylvania 19477
By:/s/
-------------------------------
Name:
Title:
ADVANTA MORTGAGE CORP. USA
Welsh & McKean Roads,
P.O. Box 844,
Spring House, Pennsylvania 19477
By:/s/
-------------------------------
Name:
Title:
ADVANTA MORTGAGE CORP. MIDATLANTIC
Welsh & McKean Roads,
P.O. Box 844,
Spring House, Pennsylvania 19477
By:/s/
-------------------------------
Name:
Title:
70
ADVANTA MORTGAGE CORP. MIDATLANTIC II
Welsh & McKean Roads,
P.O. Box 844,
Spring House, Pennsylvania 19477
By:/s/
----------------------------
Name:
Title:
ADVANTA MORTGAGE CORP. MIDWEST
Welsh & McKean Roads,
P.O. Box 844,
Spring House, Pennsylvania 19477
By:/s/
----------------------------
Name:
Title:
ADVANTA MORTGAGE CORP. OF NEW JERSEY
Welsh & McKean Roads,
P.O. Box 844,
Spring House, Pennsylvania 19477
By:/s/
----------------------------
Name:
Title:
ADVANTA MORTGAGE CORP. NORTHEAST
Welsh & McKean Roads,
P.O. Box 844,
Spring House, Pennsylvania 19477
By:/s/
----------------------------
Name:
Title:
-6-
71
ADVANTA MORTGAGE CONDUIT SERVICES, INC.
Welsh & McKean Roads,
P.O. Box 844,
Spring House, Pennsylvania 19477
By:/s/
----------------------------
Name:
Title:
ADVANTA FINANCE CORP.
16875 West Bernardo
San Diego, California 92127
By:/s/
----------------------------
Name:
Title:
-7-