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EXHIBIT 4.2
SALE AND SERVICING AGREEMENT
Among
ADVANTA MORTGAGE LOAN TRUST ____-_,
as Issuer,
ADVANTA CONDUIT RECEIVABLES, INC.,
as Sponsor,
ADVANTA MORTGAGE CORP. USA,
as Master Servicer,
and
[INDENTURE TRUSTEE]
as Indenture Trustee
Dated as of [DATE]
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TABLE OF CONTENTS
(Not a Part of this Agreement)
Page
Parties..................................................................................................1
Recitals.................................................................................................1
ARTICLE I DEFINITIONS; RULES OF CONSTRUCTION.............................................................2
Section 1.1. Definitions............................................................................2
Section 1.2. Use of Words and Phrases..............................................................15
Section 1.3. Captions; Table of Contents...........................................................15
Section 1.4. Opinions..............................................................................15
ARTICLE II CONVEYANCE OF MORTGAGE LOANS.................................................................15
Section 2.1. Conveyance of the Initial Mortgage Loans..............................................15
Section 2.2. Acceptance by the Issuer; Certain Substitutions of Mortgage Loans;
Certification by Indenture Trustee.................................................17
Section 2.3. Cooperation Procedures................................................................19
Section 2.4. Conveyance of the Subsequent Mortgage Loans...........................................19
Section 2.5. Retransfers of Mortgage Loans at Election of Sponsor..................................21
ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SPONSOR AND THE MASTER SERVICER............22
Section 3.1. Representations and Warranties of the Sponsor.........................................22
Section 3.2. Representations and Warranties of the Master Servicer................................24
Section 3.3. Representations and Warranties of the Sponsor with Respect to the Mortgage
Loans..............................................................................26
Section 3.4. Covenants of Sponsor to Take Certain Actions with Respect to the Mortgage
Loans In Certain Situations........................................................27
ARTICLE IV SERVICING AND ADMINISTRATION OF MORTGAGE LOANS...............................................28
Section 4.1. Master Servicer and Sub-Servicers.....................................................28
Section 4.2. Collection of Certain Mortgage Loan Payments..........................................30
Section 4.3. Sub-Servicing Agreements Between Master Servicer and Sub-Servicers....................30
Section 4.4. Successor Sub-Servicers...............................................................30
Section 4.5. Liability of Master Servicer..........................................................31
Section 4.6. No Contractual Relationship Between Sub-Servicer and Indenture Trustee or the
Noteholders........................................................................31
Section 4.7. Assumption or Termination of Sub-Servicing Agreement by Indenture Trustee.............31
Section 4.8. Principal and Interest Account........................................................31
Section 4.9. Delinquency Advances, Compensating Interest and Servicing Advances....................33
Section 4.10. Purchase of Mortgage Loans...........................................................34
Section 4.11. Maintenance of Insurance.............................................................34
Section 4.12. Due-on-Sale Clauses; Assumption and Substitution Agreements..........................35
Section 4.13. Realization Upon Defaulted Mortgage Loans............................................36
Section 4.14. Indenture Trustee to Cooperate; Release of Files.....................................37
Section 4.15. Servicing Compensation...............................................................38
Section 4.16. Annual Statement as to Compliance....................................................38
Section 4.17. Annual Independent Certified Public Accountants' Reports.............................38
Section 4.18. Access to Certain Documentation and Information Regarding the Mortgage Loans.........39
Section 4.19. Assignment of Agreement..............................................................39
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ARTICLE V SERVICING TERMINATION.........................................................................39
Section 5.1. Events of Servicer Termination........................................................39
Section 5.2. Inspections by the Note Insurer and the Indenture Trustee; Errors and
Omissions Insurance................................................................44
Section 5.3. Merger, Conversion, Consolidation or Succession to Business of Master Servicer........44
Section 5.4. Notices of to Noteholders.............................................................44
ARTICLE VI ADMINISTRATIVE DUTIES OF THE MASTER SERVICER.................................................44
Section 6.1. Administrative Duties with Respect to the Indenture...................................44
Section 6.2. Records...............................................................................46
Section 6.3. Additional Information to be Furnished to the Issuer..................................46
ARTICLE VII MISCELLANEOUS...............................................................................46
Section 7.1. Compliance Certificates and Opinions..................................................46
Section 7.2. Form of Documents Delivered to the Indenture Trustee..................................47
Section 7.3. Acts of Noteholders...................................................................47
Section 7.4. Notices, etc., to Indenture Trustee...................................................48
Section 7.5. Notices and Reports to Noteholders; Waiver of Notices.................................48
Section 7.6. Rules by Indenture Trustee and Sponsor................................................49
Section 7.7. Successors and Assigns................................................................49
Section 7.8. Severability..........................................................................49
Section 7.9. Benefits of Agreement.................................................................49
Section 7.10. Legal Holidays.......................................................................49
Section 7.11. Governing Law........................................................................49
Section 7.12. Counterparts.........................................................................49
Section 7.13. Usury................................................................................49
Section 7.14. Amendment............................................................................50
Section 7.15. The Note Insurer.....................................................................50
Section 7.16. Notices..............................................................................51
Section 7.17. Limitation of Liability..............................................................51
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SCHEDULE I -- Schedules of Mortgage Loans
EXHIBIT A -- Form of Contents of Mortgage Loan File
EXHIBIT B -- Form of Certificate Re: Mortgage Loans Prepaid in Full
EXHIBIT C -- Form of Indenture Trustee's Acknowledgement of Receipt
EXHIBIT D -- Form of Certification
EXHIBIT E -- Form of Delivery Order
EXHIBIT F -- Form of Monthly Report
EXHIBIT G -- Form of Master Servicer's Trust Receipt
EXHIBIT H -- Form of Subsequent Transfer Agreement
EXHIBIT I -- Form of Addition Notice
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SALE AND SERVICING AGREEMENT, relating to ADVANTA MORTGAGE
LOAN TRUST ____-_ (the "Trust" or "Issuer"), dated as of [DATE], by and among
ADVANTA CONDUIT RECEIVABLES, INC., a Nevada corporation, in its capacity as
sponsor of the Trust (the "Sponsor"), ADVANTA MORTGAGE CORP. USA, a Delaware
corporation, in its capacity as master servicer (the "Master Servicer"), and
[INDENTURE TRUSTEE], a national banking association, in its capacity as
indenture trustee (the "Indenture Trustee").
WHEREAS, the Trust desires to purchase a portfolio of the
Mortgage Loans (as defined herein) originated by the Originators (as defined
herein);
WHEREAS, the Sponsor has purchased such Mortgage Loans from
the Originators and is willing to sell such Mortgage Loans to the Trust;
WHEREAS, the Trust desires to purchase Subsequent Mortgage
Loans (as defined herein) to be originated by the Originators.
WHEREAS, the Sponsor is willing to sell such Subsequent
Mortgage Loans to the Trust and to direct or request the Trust to acquire such
Subsequent Mortgage Loans;
WHEREAS, the Master Servicer has agreed to service the
Mortgage Loans, which constitute the principal assets of the trust estate; and
WHEREAS, ______________________________ (the "Note Insurer")
is intended to be a third party beneficiary of this Agreement and is hereby
recognized by the parties hereto to be a third-party beneficiary of this
Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained, the Sponsor, the Master Servicer, the Trust
and the Indenture Trustee hereby agree as follows:
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ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
SECTION 1.1. DEFINITIONS.
For all purposes of this Agreement, the following terms shall have the
meanings set forth below, unless the context clearly indicates otherwise. In
addition, capitalized terms used herein and not defined herein shall have their
respective meanings as set forth in the Indenture:
"Accepted Servicing Practices": The Master Servicer's normal
servicing practices in servicing and administering mortgage loans for its own
account, which in general will conform to the mortgage servicing practices of
prudent mortgage lending institutions which service for their own account
mortgage loans of the same type as the Mortgage Loans in the jurisdictions in
which the related Properties are located and will give due consideration to the
Noteholders' reliance on the Master Servicer.
"Addition Notice": With respect to the transfer of Subsequent
Mortgage Loans to the Trust pursuant to Section 2.4(a) of this Agreement, a
notice in the form of Exhibit J hereto, which shall be given not later than five
Business Days prior to the related Subsequent Transfer Date, of the Sponsor's
designation of Subsequent Mortgage Loans to be sold to the Trust and the
aggregate Loan Balance and the weighted average Coupon Rate of such Subsequent
Mortgage Loans. Such Addition Notice shall include an electronic data file in a
form agreeable to the Indenture Trustee, the Note Insurer and the Master
Servicer.
"Advanta Mortgage Files": For any Mortgage Loan identified on
the related Schedule of Mortgage Loans with an "A" code, the items listed as
below:
(a) the original Mortgage Note, or a certified copy thereof,
bearing all intervening endorsements, endorsed either (i) "Pay to the order of
Bankers Trust Company of California, N.A., as custodian or trustee under the
applicable custody or trust agreement, without recourse" or (ii) "Pay to the
order of Bankers Trust Company of California, N.A., as custodian or trustee
under the applicable custody or trust agreement, without recourse, Advanta as
Master Servicer," or (iii) "Pay to the order of Bankers Trust Company of
California, N.A., as custodian or trustee" by [Seller, signature, name, title]
and signed in the name of the previous owner by an authorized officer (in the
event that the Mortgage Loan was acquired by the previous owner in a merger the
signature must be in the following form: "[the previous owner], successor by
merger to [name of predecessor]", in the event that the Mortgage Loan was
acquired or originated while doing business under another name, the signature
must be in the following form: "[the previous owner], formerly known as
[previous name]". The original Mortgage Note should be accompanied by any rider
made in connection with the origination of the related Mortgage Loan;
(b) the original of any guarantee executed in connection with
the Mortgage Note (if any);
(c) the original Mortgage with evidence of recording thereon
or copies certified by the related recording office or if the original Mortgage
has not yet been returned from the recording office, a certified copy of the
Mortgage;
(d) the originals of all assumption, modification,
consolidation or extension agreements; and
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(e) the originals of all intervening assignments of Mortgage,
showing a complete chain of assignment from origination to the related Seller,
including warehousing assignments, with evidence of recording thereon (or, if an
original intervening assignment has not been returned from the recording office,
a certified copy thereof.
"Affiliated Originators": Advanta Mortgage Corp. USA, a
Delaware corporation, Advanta Mortgage Corp. Midatlantic, a Pennsylvania
corporation, Advanta Mortgage Corp. Midatlantic II, a Pennsylvania corporation,
Advanta Mortgage Corp. Midwest, a Pennsylvania corporation, Advanta Mortgage
Corp. of New Jersey, a New Jersey corporation, Advanta Mortgage Corp. Northeast,
a New York corporation, Advanta National Bank, a national banking association,
Advanta Bank Corp., a Utah industrial loan corporation, Advanta Finance Corp., a
Nevada corporation.
"Agreement": This Sale and Servicing Agreement, as it may be
amended from time to time, and including the Exhibits and Schedules attached
hereto.
"AMHC": Advanta Mortgage Holding Company, a Delaware
corporation and the corporate parent of Advanta Mortgage Corp. USA, and the
indirect corporate parent of Advanta Conduit Receivables, Inc.
"Appraised Value": The appraised value of any Property based
upon the appraisal or other valuation made at the time of the origination of the
related Mortgage Loan, or, in the case of a Mortgage Loan which is a purchase
money mortgage, the sales price of the Property at such time of origination, if
such sales price is less than such appraised value.
"Authorized Officer": With respect to any Person, any person
who is authorized to act for such Person in matters relating to this Agreement,
and whose action is binding upon such Person and, with respect to the Indenture
Trustee, the Sponsor, the Trust and the Master Servicer, initially including
those individuals whose names appear on the lists of Authorized Officers
delivered on the Closing Date.
"Balloon Loan": Any Mortgage Loan which has an amortization
schedule which extends beyond its maturity date, resulting in a relatively large
unamortized principal balance due in a single payment at maturity.
"Business Day": Any day that is not a Saturday, Sunday or
other day on which commercial banking institutions in the State of New York, the
State of California or in the city in which the principal corporate trust office
of the Indenture Trustee is located, are authorized or obligated by law or
executive order to be closed.
"Capitalized Interest Account": The Capitalized Interest
Account established in accordance with Section 8.3 of the Indenture and
maintained by the Indenture Trustee.
"Capitalized Interest Requirement": As defined in the
Indenture.
"Certificate": As defined in the Trust Agreement.
"Closing Date": [DATE].
"Code": The Internal Revenue Code of 1986, as amended and any
successor statute.
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"Combined Loan-to-Value Ratio": With respect to any First
Mortgage Loan, the percentage equal to the Original Principal Amount of the
related Note divided by the Appraised Value of the related Property and with
respect to any Junior Mortgage Loan, the percentage equal to (a) the sum of (i)
the remaining principal balance, as of origination of the Junior Mortgage Loan
of the Senior Lien note(s) relating to such Junior Mortgage Loan and (ii) the
Original Principal Amount of the Note relating to such Junior Mortgage Loan
divided by (b) the Appraised Value.
"Compensating Interest": As defined in Section 4.9(b) hereof.
"Conduit Mortgage Files": For any Mortgage Loan identified on
the related Schedule of Mortgage Loans with a "B" code, the items listed below:
(a) the original Mortgage Note, or a certified copy thereof,
bearing all intervening endorsements, endorsed either (i) "Pay to the order of
Bankers Trust Company of California, N.A., as custodian or trustee under the
applicable custody or trust agreement, without recourse" or (ii) "Pay to the
order of Bankers Trust Company of California, N.A., as custodian or trustee
under the applicable custody or trust agreement, without recourse, Advanta as
Master Servicer," or (iii) "Pay to the order of Bankers Trust Company of
California, N.A., as custodian or trustee" by [Seller, signature, name, title]
and signed in the name of the previous owner by an authorized officer (in the
event that the Mortgage Loan was acquired by the previous owner in a merger the
signature must be in the following form: "[the previous owner], successor by
merger to [name of predecessor]", in the event that the Mortgage Loan was
acquired or originated while doing business under another name, the signature
must be in the following form: "[the previous owner], formerly known as
[previous name]". The original Mortgage Note should be accompanied by any rider
made in connection with the origination of the related Mortgage Loan;
(b) the original of any guarantee executed in connection with
the Mortgage Note (if any);
(c) the original Mortgage with evidence of recording thereon
or copies certified by the related recording office or if the original Mortgage
has not yet been returned from the recording office, a certified copy of the
Mortgage;
(d) the originals of all assumption, modification,
consolidation or extension agreements;
(e) the original assignment of Mortgage of each Mortgage Loan
to "Bankers Trust Company of California, N.A., as custodian or trustee". In the
event that the Mortgage Loan was acquired by the previous owner in a merger, the
assignment of Mortgage must be the "(previous owner), successor by merger to
(names of predecessor)"; and in the event that the Mortgage Loan was acquired or
originated by the previous owner while doing business under another name, the
Assignment of Mortgage must be by the "(previous owner), formerly known as
(previous name)"; and
(f) the originals of all intervening assignments of Mortgage,
showing a complete chain of assignment from origination to the related Seller,
including warehousing assignments, with evidence of recording thereon (or, if an
original intervening assignment has not been returned from the recording office,
a certified copy thereof.
"Control Party": Until the last sentence of Section 7.15
hereof is applicable and so long as no Note Insurer Default has occurred and is
continuing, the Note Insurer, and thereafter, the Indenture Trustee.
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"Coupon Rate": The rate of interest borne by each Mortgage
Note.
"Cut-Off Date": The date as of which Initial Mortgage Loans
are transferred and assigned to the Trust, the opening of business, [DATE].
"Deficiency Amount": As defined in the Indenture.
"Definitive Notes": Notes issued in definitive form without
coupons.
"Delinquency Advance": As defined in Section 4.9(a) hereof.
"Delinquent": A Mortgage Loan is "delinquent" if any payment
due thereon is not made by the close of business on the day such payment is
scheduled to be due. A Mortgage Loan is "30 days delinquent" if such payment has
not been received by the close of business on the corresponding day of the month
immediately succeeding the month in which such payment was due, or, if there is
no such corresponding day (e.g., as when a 30-day month follows a 31-day month
in which a payment was due on the 31st day of such month) then on the last day
of such immediately succeeding month. Similarly for "60 days delinquent," "90
days delinquent" and so on.
"Delivery Order": The delivery order in the form set forth as
Exhibit E hereto and delivered by the Trust to the Indenture Trustee on the
Closing Date pursuant to Section 2.2 of the Indenture.
"Depository": The Depository Trust Company, ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ and any successor Depository hereafter named.
"Designated Depository Institution": With respect to the
Principal and Interest Account, an institution whose deposits are insured by the
Bank Insurance Fund or the Savings Association Insurance Fund of the FDIC, the
long-term deposits of which shall be rated A2 or better by Moody's or A or
better by Standard & Poor's and in the highest short-term rating category for
Moody's, and Standard & Poor's unless otherwise approved in writing by the
Indenture Trustee. The Note Insurer, Moody's and Standard & Poor's, and which is
any of the following: (i) a federal savings and loan association duly organized,
validly existing and in good standing under the federal banking laws, (ii) an
institution duly organized, validly existing and in good standing under the
applicable banking laws of any state, (iii) a national banking association duly
organized, validly existing and in good standing under the federal banking laws,
(iv) a principal subsidiary of a bank holding company, or (v) approved in
writing by the Indenture Trustee, the Note Insurer, Moody's and Standard &
Poor's and, in each case acting or designated by the Master Servicer as the
depository institution for the Principal and Interest Account; provided,
however, that any such institution or association shall have combined capital,
surplus and undivided profits of at least $100,000,000. Notwithstanding the
foregoing, a Principal and Interest Account may be held by an institution
otherwise meeting the preceding requirements except that the only applicable
rating requirement shall be that the unsecured and uncollateralized debt
obligations thereof shall be rated Baa3 or better by Moody's or BBB or better by
Standard & Poor's if such institution has trust powers and the Principal and
Interest Account is held by such institution in its corporate trust department.
"Determination Date": As to each Payment Date, the third
Business Day preceding such Payment Date or such earlier day as shall be agreed
to by the Note Insurer and the Indenture Trustee.
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"Direct Participant" or "DTC Participant" means any
broker-dealer, bank or other financial institution for which the Depository
holds Notes from time to time as a securities depository.
"Document Delivery Requirements": The Sponsor's obligations to
deliver certain legal documents, to prepare and record certain Mortgage
assignments or to deliver certain opinions relating to Mortgage assignments, in
each case with respect to the Mortgage Loans and as set forth in Section 2.1(b)
hereof.
"Eligible Investments": Those investments so designated
pursuant to Section 8.9 of the Indenture.
"Event of Servicer Termination": Any event described in clause
(a) of Section 5.1 hereof.
"FDIC": The Federal Deposit Insurance Corporation, or any
successor thereto.
"File": The documents delivered to the Indenture Trustee
pursuant to Section 2.1 hereof pertaining to a particular Mortgage Loan and any
additional documents required to be added to the Advanta Mortgage File or
Conduit Mortgage File, as appropriate, pursuant to this Agreement.
"First Mortgage Loan": A Mortgage Loan which constitutes a
first priority mortgage lien with respect to any Property.
"Indemnification Agreement": The Indemnification Agreement
dated as of [DATE] between the Note Insurer and the Underwriter as may be
amended from time to time.
"Indenture": The Indenture dated as of [DATE] between the
Trust and the Indenture Trustee, as the same may be amended and supplemented
from time to time.
"Indenture Trustee": [INDENTURE TRUSTEE], located on the date
of execution of this Agreement at [ADDRESS], a national banking association, not
in its individual capacity but solely as Indenture Trustee under this Agreement,
and any successor hereunder.
"Indenture Trustee's Fees": With respect to any Payment Date,
the product of (x) one-twelfth of ____% and (y) the aggregate Loan Balance of
the Mortgage Loans as of the beginning of the related Remittance Period.
"Indirect Participant": Any financial institution for whom any
Direct Participant holds an interest in the Notes.
"Initial Mortgage Loans": The Mortgage Loans delivered to the
Trust on the Closing Date.
"Insurance Agreement": The Insurance and Indemnity Agreement
dated as of [DATE] among the Sponsor, the Indenture Trustee, the Master
Servicer, the Trust and the Note Insurer, as it may be amended from time to
time.
"Insurance Policy": Any hazard, title or primary mortgage
insurance policy relating to a Mortgage Loan.
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"Issuer" or "Trust": Advanta Mortgage Loan Trust ____-_, as
created by the Trust Agreement.
"Junior Mortgage Loan": A Mortgage Loan which constitutes a
subordinate priority mortgage lien with respect to the related Property.
"Late Payment Rate": For any Payment Date, means the lesser of
(a) the greater of (x) the per annum rate of interest publicly announced from
time to time by Citibank, N.A. as its prime or base lending rate (any change in
such rate of interest to be effective on the date such change is announced by
Citibank, N.A.), plus 2% per annum and (y) the then applicable highest rate of
interest on the Notes and (b) the maximum rate permissible under applicable
usury or similar laws limiting interest rates. The Late Payment Rate shall be
computed on the basis of the actual number of days elapsed over a year of 360
days.
"Liquidated Mortgage Loan": As defined in Section 4.13(b)
hereof. A Mortgage Loan which is purchased from the Trust pursuant to Section
3.3, 3.4, 2.2(b) or 4.10 hereof is not a "Liquidated Mortgage Loan".
"Liquidation Expenses": Expenses which are incurred by the
Master Servicer or any Sub-servicer in connection with the liquidation of any
defaulted Mortgage Loan, such expenses, including, without limitation, legal
fees and expenses, and any unreimbursed Servicing Advances expended by the
Master Servicer or any Sub-servicer pursuant to Section 4.9 with respect to the
related Mortgage Loan.
"Liquidation Proceeds": With respect to any Liquidated
Mortgage Loan, any amounts (including the proceeds of any Insurance Policy)
recovered by the Master Servicer in connection with such Liquidated Mortgage
Loan, whether through trustee's sale, foreclosure sale or otherwise.
"Loan Balance": With respect to each Mortgage Loan, the
outstanding principal balance thereof as of the Cut-Off Date or Subsequent
Cut-Off-Date, as the case may be, less any related Principal Remittance Amounts
relating to such Mortgage Loan included in previous related Monthly Remittance
Amounts that were transferred by the Master Servicer or any Sub-servicer to the
Indenture Trustee for deposit in the Note Account; provided, however, (x) that
the Loan Balance for any Mortgage Loan which has become a Liquidated Mortgage
Loan shall be zero as of the first day of the Remittance Period following the
Remittance Period in which such Mortgage Loan becomes a Liquidated Mortgage
Loan, and at all times thereafter and (y) the Loan Balance "as of the Cut-Off
Date" for any Mortgage Loan originated during the period from the Cut-Off Date
to the Closing Date shall be the original Loan Balance thereof.
"Loan Purchase Price": With respect to any Mortgage Loan
purchased from the Trust on a Remittance Date pursuant to Section 3.3, 3.4,
2.2(b) or 4.10 hereof, an amount equal to the Loan Balance of such Mortgage Loan
as of the date of purchase, plus one month's interest on the outstanding Loan
Balance thereof as of the beginning of the preceding Remittance Period computed
at the Coupon Rate less the Servicing Fee (expressed as an annual percentage
rate), if any, together with, without duplication, the aggregate amount of (i)
all delinquent interest, all Delinquency Advances and Servicing Advances,
including Nonrecoverable Advances theretofore made with respect to such Mortgage
Loan and not subsequently recovered from the related Mortgage Loan, (ii) all
Delinquency Advances which the Master Servicer or any Sub-servicer has
theretofore failed to remit with respect to such Mortgage Loan and (iii) any
Reimbursement Amount relating to the Trust.
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"Master Servicer": Advanta Mortgage Corp. USA, a Delaware
corporation, and its permitted successors and assigns.
"Master Servicer's Trust Receipt": The Master Servicer's trust
receipt in the form set forth as Exhibit H hereto.
"Master Transfer Agreement": Any one of the Master Loan
Transfer Agreements among the Sponsor and one or more Originators, together with
any related Conveyance Agreements (as defined therein).
"Monthly Remittance Amounts". As defined in the Indenture.
"Moody's": ▇▇▇▇▇'▇ Investors Service, Inc.
"Mortgage": The mortgage, deed of trust or other instrument
creating a first or subordinate lien on an estate in fee simple interest in real
property securing a Mortgage Note.
"Mortgage Loans": Such of the mortgage loans transferred and
assigned to the Trust pursuant to Section 2.1(a) hereof, together with any
Qualified Replacement Mortgages substituted therefor in accordance with this
Agreement, as from time to time are held as a part of the Trust Estate, the
Mortgage Loans originally so held being identified in the Schedule of Mortgage
Loans. The term "Mortgage Loan" includes the terms "First Mortgage Loan" and
"Junior Mortgage Loan". The term "Mortgage Loan" includes any Mortgage Loan
which is Delinquent, which relates to a foreclosure or which relates to a
Property which is REO Property prior to such Property's disposition by the
Trust. Any mortgage loan which, although intended by the parties hereto to have
been, and which purportedly was, transferred and assigned to the Trust, in fact
was not transferred and assigned to the Trust for any reason whatsoever shall
nevertheless be considered a "Mortgage Loan" for all purposes of this Agreement.
The term "Mortgage Loan" includes the terms "Initial Mortgage Loan" and
"Subsequent Mortgage Loan".
"Mortgage Note": The note or other evidence of indebtedness
evidencing the indebtedness of a Mortgagor under a Mortgage Loan.
"Mortgagor": The obligor on a Mortgage Note.
"Net Liquidation Proceeds": As to any Liquidated Mortgage
Loan, Liquidation Proceeds net of, without duplication, Liquidation Expenses and
unreimbursed Servicing Advances, unreimbursed Delinquency Advances and accrued
and unpaid Servicing Fees through the date of liquidation relating to such
Liquidated Mortgage Loan. In no event shall Net Liquidation Proceeds with
respect to any Liquidated Mortgage Loan be less than zero.
"Nonrecoverable Advances": With respect to any Mortgage Loan,
(a) any Delinquency Advance or Servicing Advance previously made and not
reimbursed pursuant to Section 8.7 (b)(xvii) of the Indenture or Section 4.9,
(b) a Delinquency Advance or Servicing Advance proposed to be made in respect of
a Mortgage Loan or REO Property either of which, in the good faith business
judgment of the Master Servicer, as evidenced by an Officer's Certificate
delivered promptly to the Note Insurer and the Indenture Trustee following such
determination would not be ultimately recoverable pursuant to Section
8.7(b)(xvii) of the Indenture or Section 4.9 or (c) any other advance identified
as a Nonrecoverable Advance in subsection 4.8(d).
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"Note": Any note issued by the Trust substantially in the form
of Exhibit A to the Indenture.
"Note Account": The Note Account established in accordance
with Section 8.3 of the Indenture and maintained by the Indenture Trustee.
"Note Insurer": As defined in the recitals.
"Note Insurer Default": Any one of the following events shall
have occurred and be continuing:
(a) The Note Insurer shall have failed to make a payment
required under the Note Policy;
(b) The Note Insurer shall have (i) filed a petition or
commenced any case or proceeding under any provision or chapter of the United
States Bankruptcy Code or any other similar Federal or state law relating to
insolvency, bankruptcy, rehabilitation, liquidation or reorganization, (ii) made
a general assignment for the benefit of its creditors, or (iii) had an order for
relief entered against it under the United States Bankruptcy Code or any other
similar Federal or state law relating to insolvency, bankruptcy, rehabilitation,
liquidation or reorganization which is final and nonappealable; or
(c) A court of competent jurisdiction, the New York Department
of Insurance, or other competent regulatory authority shall have entered a final
and nonappealable order, judgment or decree (i) appointing a custodian, trustee,
agent or receiver for the Note Insurer or for all or any material portion of its
property or (ii) authorizing the taking of possession by a custodian, trustee,
agent or receiver of the Note Insurer (or the taking of possession of all or any
material portion of the property of the Note Insurer).
"Note Policy": The note guaranty insurance policy dated [DATE]
issued by the Note Insurer to the Indenture Trustee for the benefit of the
Noteholders.
"Note Principal Balance": As of the Closing Date,
$___________. As of any Payment Date with respect to the Notes, the Note
Principal Balance as of the Closing Date less any amounts actually distributed
theretofor as principal thereon to the Notes on all prior Payment Dates.
"Noteholders": The holders of the Notes.
"Officer's Certificate": A certificate signed by any
Authorized Officer of any Person delivering such certificate and delivered to
the Indenture Trustee.
"Operative Documents": Collectively, the Master Transfer
Agreements, the Insurance Agreement, the Indemnification Agreement, the Sale and
Servicing Agreement, the Subsequent Transfer Agreements, the Trust Agreement,
the Note Policy, the Indenture and the Notes.
"Original Pool Principal Balance": The Pool Principal Balance
as of the Closing Date.
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"Original Principal Amount": With respect to each Mortgage
Note, the principal amount of such Mortgage Note or the mortgage note relating
to a Senior Lien, as the case may be, on the date of origination thereof.
"Originator": Any entity from which the Sponsor has purchased
(or, in the case of Subsequent Mortgage Loans, will purchase) Mortgage Loans, or
Advanta Mortgage Corp. USA, Advanta Mortgage Corp. Midatlantic, Advanta Mortgage
Corp. Midatlantic II, Advanta Mortgage Corp. Midwest, Advanta Mortgage Corp. of
New Jersey, Advanta Mortgage Corp. Northeast, Advanta National Bank and Advanta
Finance Corp.
"Outstanding": With respect to the Notes, as of any date of
determination, all such Notes theretofore executed and delivered hereunder
except:
(i) Notes theretofore cancelled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation;
(ii) Notes or portions thereof for which full and final
payment money in the necessary amount has been theretofore deposited
with the Indenture Trustee in trust for the Noteholders;
(iii) Notes in exchange for or in lieu of which other Notes
have been executed and delivered pursuant to this Agreement, unless
proof satisfactory to the Indenture Trustee is presented that any such
Notes are held by a bona fide purchaser; and
(iv) Notes alleged to have been destroyed, lost or stolen for
which replacement Notes have been issued as provided for in Section 2.4
of the Indenture.
"Overall Event of Servicer Termination": Any event described
in clause (b) of Section 5.1 hereof.
"Owner Trustee": [OWNER TRUSTEE], not in its individual
capacity but solely as Owner Trustee under the Trust Agreement, its successors
in interest or any successor Owner Trustee under the Trust Agreement.
"Payment Date": Any date on which the Indenture Trustee is
required to make distributions to the Noteholders, which shall be the 25th day
of each month, commencing in the month following the Closing Date or if the 25th
day is not a Business Day, then the next succeeding Business Day.
"Percentage Interest": As to any Note, that percentage,
expressed as a fraction, the numerator of which is the Note Principal Balance of
such Note as of the related Cut-Off Date and the denominator of which is the
Aggregate Note Principal Balance; and as to any Certificate, that Percentage
Interest set forth on such Certificate.
"Person": Any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Pool Cumulative Realized Losses": With respect to any period,
the sum of all Realized Losses with respect to the Mortgage Loans in the Trust
experienced during such period.
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"Pool Delinquency Rate": With respect to any Remittance
Period, the fraction, expressed as a percentage, equal to (x) the aggregate
principal balances of all Mortgage Loans 90 or more days Delinquent (including
all foreclosures and REO Properties) as of the close of business on the last day
of such Remittance Period over (y) the Pool Principal Balance as of the close of
business on the last day of such Remittance Period.
"Pool Principal Balance": The aggregate principal balances of
all Mortgage Loans.
"Pre-Funded Amount": With respect to any Determination Date,
the amount on deposit in the Pre-Funding Account and available for the purchase
of the Subsequent Mortgage Loans.
"Pre-Funding Account": The Pre-Funding Account established in
accordance with Section 8.3 of the Indenture and maintained by the Indenture
Trustee.
"Pre-Funding Earnings": With respect to the ___________
Payment Date, the actual investment earnings earned during the period [DATE]
through ______________ (inclusive) on the Pre-Funding Account during such period
as calculated by the Indenture Trustee pursuant to Section 2.4(g) hereof; with
respect to the _________ Payment Date, the actual investment earnings during the
period ______________ through ____________ (inclusive) on the Pre-Funding
Account during such period as calculated by the Indenture Trustee pursuant to
Section 2.4(g) hereof.
"Pre-Funding Period": The period commencing on the Closing
Date and ending on the earlier to occur of (i) the date on which the Pre-Funded
Amount (exclusive of any investment earnings) is less than $100,000 and (ii)
[DATE].
"Prepaid Installment": With respect to any Mortgage Loan, any
installment of principal thereof and interest thereon received prior to the
scheduled due date for such installment, intended by the Mortgagor as an early
payment thereof and not as a Prepayment with respect to such Mortgage Loan.
"Prepayment": Any payment of principal of a Mortgage Loan in
full which is received by the Master Servicer in advance of the scheduled due
date for the payment of such principal (other than the principal portion of any
Prepaid Installment), and the proceeds of any Insurance Policy which are to be
applied as a payment of principal on the related Mortgage Loan shall be deemed
to be Prepayments for all purposes of this Agreement.
"Preservation Expenses": Expenditures made by the Master
Servicer or any Sub-servicer in connection with a foreclosed Mortgage Loan prior
to the liquidation thereof, including, without limitation, expenditures for real
estate property taxes, hazard insurance premiums, property restoration or
preservation.
"Principal and Interest Account": Collectively, each Principal
and Interest Account created by the Master Servicer or any Sub-servicer pursuant
to Section 4.8(a) hereof, or pursuant to any Sub-Servicing Agreement.
"Property": The underlying property securing a Mortgage Loan.
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"Prospectus": That certain Prospectus dated [DATE] naming
Advanta Conduit Receivables, Inc. as registrant and describing certain
mortgage loan asset-backed securities to be issued from time to time as
described in the related Prospectus Supplement.
"Prospectus Supplement": That certain Prospectus Supplement
dated [DATE], discussing the Notes issued by the Trust.
"Qualified Replacement Mortgage": A Mortgage Loan substituted
for another pursuant to Section 3.3, 3.4 or 2.2(b) hereof, which (i) bears a
fixed rate of interest, (ii) has a Coupon Rate at least equal to the Coupon Rate
of the Mortgage Loan being replaced, , (iii) is of the same or better property
type and the same or better occupancy status as the replaced Mortgage Loan, (iv)
shall be of the same or better credit quality classification (determined in
accordance with the Originators' credit underwriting guidelines) as the Mortgage
Loan being replaced, (v) shall mature no later than the Payment Date in March,
2029, (vi) has a Combined Loan-to-Value Ratio as of the Cut-Off Date or
Subsequent Cut-Off Date no higher than the Combined Loan-to-Value Ratio of the
replaced Mortgage Loan at such time, (vii) has a Loan Balance as of the related
Replacement Cut-Off Date equal to or less than the Loan Balance of the replaced
Mortgage Loan as of such Replacement Cut-Off Date, (viii) satisfies all of the
representations and warranties set forth in Section 3.3, all as evidenced by an
Officer's Certificate of the Sponsor delivered to the Note Insurer and the
Indenture Trustee prior to any such substitution and (ix) is a valid First
Mortgage Loan if the Mortgage Loan to be substituted for is a valid First
Mortgage Loan or, Junior Mortgage Loan if the Mortgage Loan to be substituted
for is a Junior Mortgage Loan. In the event that one or more mortgage loans are
proposed to be substituted for one or more mortgage loans, the Note Insurer may
allow the foregoing tests to be met on a weighted average basis or other
aggregate basis acceptable to the Note Insurer, as evidenced by a written
consent delivered to the Indenture Trustee by the Note Insurer, except that the
requirement of clauses (vi) and (viii) hereof must be satisfied as to each
Qualified Replacement Mortgage.
"Realized Loss": As to any Liquidated Mortgage Loan, the
amount, if any, by which the Loan Balance thereof as of the date of liquidation
is in excess of Net Liquidation Proceeds realized thereon.
"Record Date": With respect to each Payment Date, [the
business day immediately preceding the Payment Date/ the last Business Day of
the calendar month immediately preceding the calendar month in which such
Payment Date occurs]; provided, that, if the Notes revert to Definitive Notes,
the Record Date with respect to each Payment Date thereafter shall be the last
Business Day of the calendar month immediately preceding the calendar month in
which such Payment Date occurs.
"Register": The register maintained by the Indenture Trustee
in accordance with Section 2.3 of the Indenture, in which the names of the
Noteholders are set forth.
"Registrar": The Indenture Trustee, acting in its capacity as
Indenture Trustee appointed pursuant to Section 6.13 of the Indenture, or any
duly appointed and eligible successor thereto.
"Registration Statement": The Registration Statement filed by
the Sponsor with the Securities and Exchange Commission, including all
amendments thereto and including the Prospectus and Prospectus Supplement
relating to the Notes constituting a part thereof.
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"Remittance Date": Any date on which the Master Servicer is
required to remit monies on deposit in the Principal and Interest Account to the
Indenture Trustee, which shall be no later than the 18th day of each month, or,
if such day is not a Business Day, the immediately succeeding Business Day,
commencing in the month following the month in which the Closing Date occurs.
"Remittance Period": The period (inclusive) beginning on the
first day of the calendar month immediately preceding the month in which a
Remittance Date occurs and ending on the last day of such immediately preceding
calendar month.
"REO Property": A Property acquired by the Master Servicer or
any Sub-servicer on behalf of the Trust through foreclosure or deed-in-lieu of
foreclosure in connection with a defaulted Mortgage Loan.
"Replacement Cut-Off Date": With respect to any Qualified
Replacement Mortgage, the first day of the calendar month in which such
Qualified Replacement Mortgage is conveyed to the Trust.
"Schedules of Mortgage Loans": The Schedules of Mortgage
Loans, attached hereto as Schedule I as they may be further supplemented in
connection with Subsequent Transfers. Such Schedules shall also contain one of
the following codes for each Mortgage Loan or Subsequent Mortgage Loan: "C" if
such Mortgage Loan is an Unaffiliated Originator Loan or "A" for all other
Mortgage Loans. The information contained on each Mortgage Loan Schedule shall
be delivered to the Indenture Trustee on a computer readable magnetic tape or
disk.
"Securities Act": The Securities Act of 1933, as amended.
"Senior Lien": With respect to any Junior Mortgage Loan, the
mortgage loan relating to the corresponding Property having a first or senior
priority lien.
"Servicer Affiliate": A Person (i) controlling, controlled by
or under common control with the Master Servicer and (ii) which is qualified to
service residential mortgage loans.
"Servicer Termination Loss Trigger". As defined in the
Insurance Agreement.
"Servicing Advance": As defined in Section 4.9(c) and Section
4.13(a) hereof.
"Servicing Fee": With respect to any Mortgage Loan, an amount
retained by the Master Servicer or by any successor thereto as compensation for
the servicing and administrative duties relating to such Mortgage Loan pursuant
to Section 4.15 hereof and equal to 0.50% per annum of the then outstanding Loan
Balance of such Mortgage Loan as of the opening of business on the first day of
each calendar month on a monthly basis.
"Sponsor": Advanta Conduit Receivables, Inc., a Nevada
corporation.
"Standard & Poor's": Standard & Poor's Ratings Group, a
division of The McGraw Hill Companies.
"Subsequent Cut-Off Date": With respect to any Subsequent
Mortgage Loans, the first day of the month in which such Subsequent Mortgage
Loans are transferred and assigned to the Trust.
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"Subsequent Mortgage Loans": The Mortgage Loans sold to the
Trust pursuant to Section 2.4 hereof, which shall be listed on the Schedule of
Mortgage Loans attached to the Subsequent Transfer Agreement.
"Subsequent Transfer Agreement": Each Subsequent Transfer
Agreement dated as of a Subsequent Transfer Date executed by the Indenture
Trustee and the Sponsor substantially in the form of Exhibit I hereto, by which
Subsequent Mortgage Loans are sold and assigned to the Trust.
"Subsequent Transfer Date": The date specified in each
Subsequent Transfer Agreement.
"Substitution Amount": In connection with the delivery of any
Qualified Replacement Mortgage, if the outstanding principal amount of such
Qualified Replacement Mortgage as of the applicable Replacement Cut-Off Date is
less than the Loan Balance of the Mortgage Loan being replaced as of such
Replacement Cut-Off Date, an amount equal to such difference together with
accrued and unpaid interest on such amount calculated at the Coupon Rate net of
the Servicing Fee of the Mortgage Loan being replaced.
"Sub-Servicer": Any Person with whom the Master Servicer has
entered into a Sub-Servicing Agreement and who satisfies any requirements set
forth in Section 4.3 hereof in respect of the qualification of a Sub-Servicer .
"Sub-Servicing Agreement": The written contract between the
Master Servicer and any Sub-Servicer relating to servicing
"Trust": Advanta Mortgage Loan Trust ____-_, the trust created
under the Trust Agreement.
"Trust Agreement": The Trust Agreement dated as of [DATE]
between the Owner Trustee and the Sponsor.
"Trust Estate": Collectively, all money, instruments and other
property, to the extent such money, instruments and other property are subject
or intended to be held in trust for the benefit of the Noteholders, including
all proceeds thereof, including, without limitation, (i) the Mortgage Loans,
(ii) such amounts including interest accrued and principal collections in
respect of the related Mortgage Loans received on or after the Cut-Off Date and
each Subsequent Cut-Off Date, but excluding any premium recapture, as
applicable, including Eligible Investments, as from time to time may be held in
the Note Account and by the Master Servicer in the Principal and Interest
Account (except as otherwise provided herein), each to be created pursuant to
this Agreement, (iii) any Property, the ownership of which has been effected on
behalf of the Trust as a result of foreclosure or acceptance by the Master
Servicer of a deed in lieu of foreclosure and that has not been withdrawn from
the Trust, (iv) any Insurance Policies relating to the Mortgage Loans (excluding
any non-mortgage related or credit-life insurance policies) and any rights of
the Sponsor or the Affiliated Originators under any Insurance Policies, (v) Net
Liquidation Proceeds with respect to any Liquidated Mortgage Loan.
"Trust Notes": The Note issued by the Trust.
"Unaffiliated Originator Loan": Any Mortgage Loan originated
by an Unaffiliated Originator and sold to the Trust.
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"Unaffiliated Originators": Any Originator who is not
affiliated with the Sponsor.
"Underwriter": _________________________________.
"Warehouse Trust": Any trust established by an affiliate of
the Sponsor to finance the origination of mortgage loans, including, without
limitation, the Conduit Acquisition Trust.
SECTION 1.2. USE OF WORDS AND PHRASES.
"Herein", "hereby", "hereunder", "hereof", "hereinbefore", "hereinafter" and
other equivalent words refer to this Agreement as a whole and not solely to the
particular section of this Agreement in which any such word is used. The
definitions set forth in Section 1.1 hereof include both the singular and the
plural. Whenever used in this Agreement, any pronoun shall be deemed to include
both singular and plural and to cover all genders.
SECTION 1.3. CAPTIONS; TABLE OF CONTENTS.
The captions or headings in this Agreement and the Table of Contents are for
convenience only and in no way define, limit or describe the scope and intent of
any provisions of this Agreement.
SECTION 1.4. OPINIONS.
Each opinion with respect to the validity, binding nature and enforceability
of documents or Certificates may be qualified to the extent that the same may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights generally and
by general principles of equity (whether considered in a proceeding or action in
equity or at law) and may state that no opinion is expressed on the availability
of the remedy of specific enforcement, injunctive relief or any other equitable
remedy. Any opinion required to be furnished by any Person hereunder must be
delivered by counsel upon whose opinion the addressee of such opinion may
reasonably rely, and such opinion may state that it is given in reasonable
reliance upon an opinion of another, a copy of which must be attached,
concerning the laws of a foreign jurisdiction.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS
SECTION 2.1. CONVEYANCE OF THE INITIAL MORTGAGE LOANS.
(a) The Sponsor, concurrently with the execution and delivery
hereof, hereby transfers, assigns, sets over and otherwise conveys without
recourse, to the Trust, and hereby requests or directs the Trust to acquire, for
pledge to the Indenture Trustee on behalf of the Noteholders all right, title
and interest of the Sponsor and the Warehouse Trusts in and to (i) each Initial
Mortgage Loan listed on the Schedule of Mortgage Loans, including its Loan
Balance and all interest accrued and principal collected in respect thereof
received on or after the Cut-Off Date (excluding payments in respect of accrued
interest due prior to the Cut-Off Date and excluding any premium recapture);
(ii) property that secured a Mortgage Loan that is acquired by foreclosure or
deed in lieu of foreclosure; (iii) the Sponsor's rights under the hazard
insurance policies; and (iv) all other assets included or to be included in the
Trust Estate for pledge to the
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Indenture Trustee on behalf of the Noteholders and the Note Insurer. In
addition, on or prior to the Closing Date, the Sponsor shall cause the Note
Insurer to deliver the Note Policy to the Trust for pledge to the Indenture
Trustee on behalf of the Noteholders. The foregoing transfer, assignment,
set-over and conveyance shall be made by the Sponsor to the Trust for pledge to
the Indenture Trustee on behalf of the Noteholders, and each reference in this
Agreement to such transfer, assignment, set-over and conveyance shall be
construed accordingly.
The Sponsor agrees to take or cause to be taken such actions
and execute such documents (including, without limitation, the filing of all
necessary continuation statements for the UCC-1 financing statements filed in
the State of New York (which shall have been filed within 90 days of the Closing
Date) describing the Mortgage Loans and naming the Sponsor and the Warehouse
Trust, as appropriate, as debtor and the Indenture Trustee as secured party and
any amendments to UCC-1 financing statements required to reflect a change in the
name or corporate structure of the Sponsor or the filing of any additional UCC-1
financing statements due to the change in the principal office of the Sponsor
(within 90 days of any event necessitating such filing)) as are necessary to
perfect and protect the Noteholders' and the Note Insurer's interests in each
Mortgage Loan and the proceeds thereof.
(b) In connection with the transfer and assignment of the
Mortgage Loans, the Sponsor agrees to:
(i) cause to be delivered on the Closing Date, without
recourse, to the Indenture Trustee, with respect to the Initial
Mortgage Loans or, the Subsequent Transfer Date with respect to
Subsequent Mortgage Loans, or, the Transfer Date with respect to the
Qualified Replacement Mortgage listed on the Schedule of Mortgage
Loans, the items listed in the definitions of "Advanta Mortgage Files"
and "Conduit Mortgage Files," as appropriate; and
(ii) cause, within 75 Business Days following the Closing Date
or any Subsequent Transfer Date, as applicable, the assignments of
Mortgage to be submitted for recording in the appropriate jurisdictions
wherein such recordation is necessary to perfect the lien thereof as
against creditors of or purchasers from the related Originator to the
Indenture Trustee; provided, however, that for administrative
convenience and facilitation of servicing and to reduce closing costs,
assignments of mortgage shall not be required to be submitted for
recording with respect to any Mortgage Loan which relates to an Advanta
Mortgage File only if the Indenture Trustee has received an Opinion of
Counsel to the effect that the recordation of such assignments in any
specific jurisdiction is not necessary to protect the Indenture
Trustee's interest in the related Mortgagee.
All recording, if required pursuant to this Section 2.1, shall
be accomplished at the expense of the Sponsor. Notwithstanding anything to the
contrary contained in this Section 2.1, in those instances where the public
recording office retains the original Mortgage, the assignment of a Mortgage or
the intervening assignments of the Mortgage after it has been recorded, the
Sponsor shall be deemed to have satisfied its obligations hereunder upon
delivery to the Indenture Trustee of a copy of such Mortgage, such assignment or
assignments of Mortgage certified by the public recording office to be a true
copy of the recorded original thereof.
Copies of all Mortgage assignments and any assignment of
Mortgage in recordable form received by the Indenture Trustee shall be kept in
the related Mortgage File.
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(c) In the case of Initial Mortgage Loans which have been
prepaid in full on or after the Initial Cut-Off Date and prior to the Closing
Date, or with respect to Subsequent Mortgage Loans which have been prepaid in
full on or after the Subsequent Cut-Off Date and prior to the Subsequent
Transfer Date, the Sponsor, in lieu of the foregoing, will deliver within 15
Business Days after the Closing Date, or Subsequent Transfer Date, as
applicable, to the Indenture Trustee a certification of an Authorized Officer in
the form set forth in Exhibit B.
(d) The Sponsor shall transfer, assign, set over and otherwise
convey to the Trust or request or direct the Trust to acquire without recourse,
for pledge to the Indenture Trustee on behalf of the Noteholders all right,
title and interest of the Sponsor in and to any Qualified Replacement Mortgage
delivered to the Trust by the Sponsor pursuant to Section, 2.2, Section 3.3,
Section 3.4 hereof and all its right, title and interest to principal collected
and interest accruing on such Qualified Replacement Mortgage on and after the
applicable Replacement Cut-Off Date; provided, however, that the Sponsor shall
reserve and retain all right, title and interest in and to payments of principal
and interest due on such Qualified Replacement Mortgage prior to the applicable
Replacement Cut-Off Date.
(e) As to each Mortgage Loan released from the Trust in
connection with the conveyance of a Qualified Replacement Mortgage therefor, the
Indenture Trustee will transfer, assign, set over and otherwise convey without
recourse, on the Sponsor's order, all of its right, title and interest in and to
such released Mortgage Loan and all of the Trust's right, title and interest to
principal collected and interest accruing on such released Mortgage Loan on and
after the applicable Replacement Cut-Off Date; provided, however, that the Trust
shall reserve and retain all right, title and interest in and to payments of
principal collected and interest accruing on such released Mortgage Loan prior
to the applicable Replacement Cut-Off Date.
(f) In connection with any transfer and assignment of a
Qualified Replacement Mortgage to the Trust, the Sponsor agrees to cause to be
delivered to the Indenture Trustee the items described in Section 2.1(b) on the
date of such transfer and assignment or, if a later delivery time is permitted
by Section 2.1(b), then no later than such later delivery time.
(g) As to each Mortgage Loan released from the Trust in
connection with the conveyance of a Qualified Replacement Mortgage the Indenture
Trustee shall deliver no later than the date of conveyance of such Qualified
Replacement Mortgage and on the order of the Sponsor (i) the original Mortgage
Note, or the certified copy, relating thereto, endorsed without recourse, to the
Sponsor and (ii) such other documents as constituted the File with respect
thereto.
(h) If a Mortgage assignment is lost during the process of
recording, or is returned from the recorder's office unrecorded due to a defect
therein, the Sponsor shall prepare a substitute assignment or cure such defect,
as the case may be, and thereafter cause each such assignment to be duly
recorded.
(i) The Sponsor shall reflect on its records that the Mortgage
Loans have been sold to the Trust.
(j) To the extent that the ratings, if any, then assigned to
the unsecured debt of the Sponsor or of its ultimate corporate parent are
satisfactory to the Control Party, ▇▇▇▇▇'▇ and Standard & Poor's, then any of
the Document Delivery Requirements described above may be waived by an
instrument signed by the Control Party, Standard & Poor's and ▇▇▇▇▇'▇ (or any
documents theretofore delivered to the Indenture Trustee returned to the
Sponsor) on such terms and subject to such conditions as the Control Party,
▇▇▇▇▇'▇ and Standard & Poor's may permit.
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SECTION 2.2. ACCEPTANCE BY THE TRUST; CERTAIN SUBSTITUTIONS OF
MORTGAGE LOANS; CERTIFICATION BY INDENTURE TRUSTEE.
(a) The Indenture Trustee, on behalf of the Trust, hereby
acknowledges receipt of the Trust Estate and agrees to execute and deliver no
later than the Closing Date, each Subsequent Transfer Date and each Transfer
Date, as applicable, an acknowledgment of receipt of the Files delivered to it
on behalf of the Trust by the Sponsor in the form attached as Exhibit C hereto,
and declares that it will hold such documents and any amendments, replacement or
supplements thereto, as well as any other assets included in the definition of
Trust Estate and pledged to it on behalf of the Noteholders and the Note
Insurer.
The Indenture Trustee agrees to review any documents delivered
by the Sponsor within 90 days after the Closing Date (or within 90 days with
respect to any Subsequent Mortgage Loan or Qualified Replacement Mortgage after
the assignment thereof) and to deliver to the Sponsor, the Master Servicer and
the Note Insurer a Certification in the form attached hereto as Exhibit D
hereto. The Indenture Trustee shall be under no duty or obligation to inspect,
review or examine any such documents, instruments, certificates or other papers
to determine that they are genuine, enforceable, or appropriate for the
represented purpose or that they are other than what they purport to be on their
face, nor shall the Indenture Trustee be under any duty to determine
independently whether there are any intervening assignments or assumption or
modification agreements with respect to any Mortgage Loan.
(b) If the Indenture Trustee during such 90-day period finds
any document constituting a part of a File which is not properly executed, has
not been received within the specified period, or is unrelated to the Mortgage
Loans identified in the Schedules of Mortgage Loans, or that any Mortgage Loan
does not conform in a material respect to the description thereof as set forth
in the Schedules of Mortgage Loans, the Indenture Trustee shall promptly so
notify the Sponsor, the Trust and the Note Insurer. In performing any such
review, the Indenture Trustee may conclusively rely on the Sponsor as to the
purported genuineness of any such document and any signature thereon. The
Sponsor agrees to use reasonable efforts to remedy a material defect in a
document constituting part of a File of which it is so notified by the Indenture
Trustee. If, however, within 60 days after the Indenture Trustee's notice to it
respecting such defect the Sponsor has not remedied or caused to be remedied the
defect and the defect materially and adversely affects the interest in the
related Mortgage Loan of the Noteholders or of the Note Insurer, the Sponsor
will then on the next succeeding Remittance Date (i) substitute in lieu of such
Mortgage Loan a Qualified Replacement Mortgage and, deliver the Substitution
Amount applicable thereto to the Master Servicer for deposit in the Principal
and Interest Account or (ii) purchase such Mortgage Loan at a purchase price
equal to the Loan Purchase Price thereof, which purchase price shall be
delivered to the Master Servicer for deposit in the Principal and Interest
Account. Upon receipt of any Qualified Replacement Mortgage or of written
notification signed by a Servicing Officer to the effect that the Loan Purchase
Price in respect of a Defective Mortgage Loan has been deposited into the
Principal and Interest Account, then as promptly as practicable, the Indenture
Trustee shall execute such documents and instruments of transfer presented by
the Sponsor, in each case without recourse, representation or warranty, and take
such other actions as shall reasonably be requested by the Sponsor to effect
such transfer by the Trust of such Defective Mortgage Loan pursuant to this
Section. It is understood and agreed that the obligation of the Sponsor to
accept a transfer of a Defective Mortgage Loan and to either convey a Qualified
Replacement Mortgage or to make a deposit of any related Loan Purchase Price
into the Principal and Interest Account shall constitute the sole remedy
respecting such defect available to Noteholders, the Indenture Trustee, the
Trust and the Note Insurer against the Sponsor.
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The Sponsor, promptly following the transfer of a Defective
Mortgage Loan from or to the Trust pursuant to this Section, shall deliver an
amended Mortgage Loan Schedule to the Indenture Trustee and the Note Insurer and
shall make appropriate entries in its general account records to reflect such
transfer. The Master Servicer shall, following such retransfer, appropriately
▇▇▇▇ its records to indicate that it is no longer servicing such Mortgage Loan
on behalf of the Trust. The Sponsor, promptly following such transfer, shall
appropriately ▇▇▇▇ its electronic ledger and make appropriate entries in its
general account records to reflect such transfer.
(c) As to any Qualified Replacement Mortgage, the Sponsor
shall, if required to deliver any such Qualified Replacement Mortgage, deliver
to the Indenture Trustee with respect to such Qualified Replacement Mortgage
such documents and agreements as are required to be held by the Indenture
Trustee in accordance with Section 2.2. For any Remittance Period during which
the Sponsor substitutes one or more Qualified Replacement Mortgages, the Master
Servicer shall determine the Substitution Amount which amount shall be deposited
by the Sponsor in the Principal and Interest Account at the time of
substitution. All amounts received in respect of the Qualified Replacement
Mortgage during the Remittance Period in which the circumstances giving rise to
such substitution occur shall not be a part of the Trust Estate and shall not be
deposited by the Master Servicer in the Principal and Interest Account. All
amounts received by the Master Servicer during the Remittance Period in which
the circumstances giving rise to such substitution occur in respect of any
Defective Mortgage Loan so removed by the Trust Estate shall be deposited by the
Master Servicer in the Principal and Interest Account. Upon such substitution,
the Qualified Replacement Mortgage shall be subject to the terms of this
Agreement in all respects, and the Sponsor shall be deemed (i) to have made with
respect to such Qualified Replacement Mortgage or Loans, as of the date of
substitution, the covenants, representations and warranties set forth in Section
3.3 and (ii) to have certified that such Mortgage Loan(s) is/are Qualified
Replacement Loan(s). The procedures applied by the Sponsor in selecting each
Qualified Replacement Mortgage shall not be materially adverse to the interests
of the Indenture Trustee, the Trust, the Noteholders or the Note Insurer.
SECTION 2.3. COOPERATION PROCEDURES.
(a) The Sponsor shall, in connection with the delivery of each
Qualified Replacement Mortgage to the Indenture Trustee, provide the Indenture
Trustee with the information set forth in the Schedules of Mortgage Loans with
respect to such Qualified Replacement Mortgage.
(b) The Sponsor, the Master Servicer and the Indenture Trustee
covenant to provide each other with all data and information required to be
provided by them hereunder at the times required hereunder, and additionally
covenant reasonably to cooperate with each other in providing any additional
information required by any of them in connection with their respective duties
hereunder.
SECTION 2.4. CONVEYANCE OF THE SUBSEQUENT MORTGAGE LOANS.
(a) Subject to the conditions set forth in paragraph (b)
below, in consideration of the Indenture Trustee's delivery on the related
Subsequent Transfer Dates to or upon the order of the Sponsor of all or a
portion of the balance of funds in the Pre-Funding Account, the Sponsor shall,
on Subsequent Transfer Dates, transfer, assign and convey to the Trust or
request or direct the Trust to acquire, without recourse, for pledge to the
Indenture Trustee on behalf of the Noteholders all right, title and interest of
the Sponsor and the Warehouse Trusts in and to each
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Subsequent Mortgage Loan listed on the Schedule of Mortgage Loans delivered by
the Sponsor on such Subsequent Transfer Date, all of the Sponsor's right, title
and interest in and to principal collected and interest accruing on each such
Subsequent Mortgage Loan on and after the related Subsequent Cut-Off Date;
provided, however, that the Sponsor reserves and retains all of its right, title
and interest in and to principal collected and interest accruing on each such
Subsequent Mortgage Loan prior to the related Subsequent Cut-Off Date.
Upon assignment of any Subsequent Mortgage Loan, the Indenture
Trustee shall release to the Sponsor an amount equal to the Loan Balance thereof
as of the related Subsequent Cut-Off Date from amounts then on deposit in the
Pre-Funding Account.
(b) The Sponsor shall transfer to the Indenture Trustee the
Subsequent Mortgage Loans and the other property and rights related thereto
described in paragraph (a) above only upon the satisfaction of each of the
following conditions on or prior to the related Subsequent Transfer Date.
(i) the Sponsor shall have provided the Indenture Trustee and
the Note Insurer with a timely Addition Notice and shall have provided
any information reasonably requested by any of the foregoing with
respect to the Subsequent Mortgage Loans;
(ii) the Sponsor shall have delivered to the Indenture Trustee
a duly executed written assignment (including an acceptance by the
Indenture Trustee) in substantially the form of Exhibit I (the
"Subsequent Transfer Agreement"), which shall include Schedules of
Mortgage Loans, listing the Subsequent Mortgage Loans and any other
exhibits listed thereon;
(iii) the Master Servicer shall have deposited in the
Principal and Interest Account all collections in respect of the
Subsequent Mortgage Loans received on or after the related Subsequent
Cut-Off Date;
(iv) as of each Subsequent Transfer Date, neither the Master
Servicer nor the Sponsor was insolvent nor will any of them have been
made insolvent by such transfer nor is any of them aware of any pending
insolvency;
(v) such addition will not result in a material adverse tax
consequence to the Trust or the Noteholders;
(vi) the Pre-Funding Period shall not have terminated; and
(vii) the Sponsor shall have delivered to the Indenture
Trustee an Officer's Certificate confirming the satisfaction of each
condition precedent specified in this paragraph (b) and paragraphs (c)
and (d) below and in the related Subsequent Transfer Agreement;
(c) The obligation of the Trust to accept the assignment of a
Subsequent Mortgage Loan on any Subsequent Transfer Date is subject to the
following requirements: (i) such Subsequent Mortgage Loan may not be more than
30 days contractually delinquent as of the related Subsequent Cut-Off Date.
(d) The obligation of the Trust to accept the assignment of a
Subsequent Mortgage Loan on any Subsequent Transfer Date is subject to the
following additional
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requirements, any of which may be waived or modified in any respect by the
Insurer by a written instrument executed by the Insurer:
(1) (i) No such Subsequent Mortgage Loan may have (i) a
Combined Loan-to-Value Ratio greater than __%; (ii) a Loan Balance in
excess of $_______; (iii) a remaining term to stated maturity in excess
of 360 months; (iv) a Loan Rate (as of the related Subsequent Cut-Off
Date) below _____%; or (v) be more than 30 days Delinquent (as of the
related Subsequent Cut-off Date).
(2) After giving effect to the assignment to the Trust of any
such Subsequent Mortgage Loan (i) the weighted average net Loan Rate of
all Mortgage Loans shall be no less than ____%; (ii) the average Loan
Balance shall not exceed $______; (iii) no more than ____% of the Pool
Principal Balance as of such Subsequent Transfer Date shall relate to
Mortgaged Properties which are non-owner occupied; (iv) the weighted
average Combined Loan-to-Value Ratio of all Mortgage Loans shall be no
greater than __%; (v) at least __% of the Pool Principal Balance as of
such Subsequent Transfer Date shall be "full documentation" loans; (vi)
at least __% of the Pool Principal Balance as of such Subsequent
Transfer Date shall relate to Mortgaged Properties which are
single-family residences; (vii) no more than ___% of the Pool Principal
Balance as of such Subsequent Transfer Date shall relate to Mortgaged
Properties in any one zip code; (viii) no more than ___% of the Pool
Principal Balance as of such Subsequent Transfer Date shall relate to
Mortgaged Properties in any one state; (ix) at least __% of the Pool
Principal Balance as of such Subsequent Transfer Date shall relate to
Mortgage Loans characterized with a credit grade of at least "A-"; (x)
no more than __% of the Pool Principal Balance as of such Subsequent
Transfer Date shall relate to Mortgage Loans characterized with a
credit grade of "B"; (xi) no more than ___% of the Pool Principal
Balance as of such Subsequent Transfer Date shall relate to Mortgage
Loans characterized with a credit grade of "C"; (xii) no more than ___%
of the Pool Principal Balance as of such Subsequent Transfer Date shall
relate to Mortgage Loans characterized with a credit grade of "D"; and
(xiv) no more than ___% of the Pool Principal Balance as of such
Subsequent Transfer Date shall relate to Mortgage Loans secured by
junior liens.
(e) In connection with the transfer and assignment of the
Subsequent Mortgage Loans, the Sponsor agrees to satisfy the conditions set
forth in Sections 2.1(b)-(j), 2.2 and 2.3 hereof.
(f) In connection with the transfer of any Subsequent Mortgage
Loans to the Trust, the Sponsor, the Master Servicer and the Indenture Trustee
may, with the prior written consent of the Insurer, amend the definition of
"Specified Overcollateralization Amount" for the purpose of changing the
Specified Overcollateralization Amount; provided, however, that any such
amendment must comply with the provisions of Section 3.19 of the Indenture.
(g) In connection with each Subsequent Transfer Date and on
the Payment Date occurring in ____________ and __________, the Sponsor and the
Indenture Trustee will cooperate in determining (i) the amount and correct
dispositions of Capitalized Interest Requirement, the Pre-Funding Earnings, and
the amount then on deposit in the Pre-Funding Account and (ii) any other
necessary matters in connection with the administration of the Trust A
Pre-Funding Account and of the Capitalized Interest Account. In the event that
any amounts are incorrectly released to the owners of the Certificates from
either the Pre-Funding Account or the Capitalized Interest Account, such owners
or the Sponsor shall immediately repay such amounts to the Indenture Trustee.
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SECTION 2.5. RETRANSFERS OF MORTGAGE LOANS AT ELECTION OF
SPONSOR.
Subject to the conditions set forth below, the Sponsor may,
but shall not be obligated to (except the Sponsor shall be obligated upon a
breach of a representation or warranty), accept the reassignment of Mortgage
Loans from the Trust as of the close of business on a Payment Date (the
"Transfer Date"). On the fifth Business Day (the "Transfer Notice Date") prior
to the Transfer Date designated in such notice, the Sponsor shall give the
Indenture Trustee, the Note Insurer and the Master Servicer a notice of the
proposed reassignment that contains a list of the Mortgage Loans to be
reassigned. Such reassignment of Mortgage Loans shall be permitted upon
satisfaction of the following conditions:
(i) No Event of Default has occurred or will occur as a result
of such removal;
(ii) the Overcollateralization Amount as of such Payment Date
equals or exceeds the then Specified Overcollateralization Amount.
(iii) On or before the Transfer Date, the Sponsor shall have
delivered to the Indenture Trustee and the Note Insurer a revised
Schedule of Mortgage Loans, reflecting the proposed transfer and the
Transfer Date, and the Master Servicer shall have marked its servicing
records to show that the Mortgage Loans reassigned to the holder of the
Sponsor are no longer owned by the Trust;
(iv) The Sponsor shall represent and warrant that random
selection procedures were used in selecting the Mortgage Loans and no
other selection procedures were used which are adverse to the interests
of the Sponsor or the Noteholders or the Note Insurer were utilized in
selecting the Mortgage Loans to be removed from the Trust;
(v) The Sponsor shall have delivered to the Indenture Trustee
and the Insurer an Officer's Certificate certifying that the items set
forth in subparagraphs (i) through (iv), inclusive, have been performed
or are true and correct, as the case may be. The Indenture Trustee may
conclusively rely on such Officer's Certificate, shall have no duty to
make inquiries with regard to the matters set forth therein and shall
incur no liability in so relying.
Upon receiving the requisite information from the Sponsor, the Master Servicer
shall perform in a timely manner those acts required of it, as specified above.
Upon satisfaction of the above conditions, on the Transfer Date the Indenture
Trustee shall deliver, or cause to be delivered, to the Sponsor the File for
each Mortgage Loan being so reassigned, and the Indenture Trustee shall execute
and deliver to the Sponsor such other documents prepared by the Sponsor as shall
be reasonably necessary to reassign such Mortgage Loans to the Sponsor. Any such
transfer of the Trust's right, title and interest in and to Mortgage Loans shall
be without recourse, representation or warranty by or of the Indenture Trustee
or the Trust to the Sponsor.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE SPONSOR AND THE MASTER SERVICER
SECTION 3.1. REPRESENTATIONS AND WARRANTIES OF THE SPONSOR.
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The Sponsor hereby represents, warrants and covenants to the Indenture
Trustee, the Note Insurer and to the Noteholders as of the Closing Date that:
(a) The Sponsor is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and is in
good standing as a foreign corporation in each jurisdiction in which the nature
of its business, or the properties owned or leased by it make such qualification
necessary. The Sponsor has all requisite corporate power and authority to own
and operate its properties, to carry out its business as presently conducted and
as proposed to be conducted and to enter into and discharge its obligations
under this Agreement and the other Operative Documents to which it is a party.
(b) The execution and delivery of this Agreement and the other
Operative Documents to which the Sponsor is a party by the Sponsor and its
performance and compliance with the terms of this Agreement and of the other
Operative Documents to which it is a party have been duly authorized by all
necessary corporate action on the part of the Sponsor and will not violate the
Sponsor's Articles of Incorporation or Bylaws or constitute a default (or an
event which, with notice or lapse of time, or both, would constitute a default)
under, or result in the breach of, any material contract, agreement or other
instrument to which the Sponsor is a party or by which the Sponsor is bound, or
violate any statute or any order, rule or regulation of any court, governmental
agency or body or other tribunal having jurisdiction over the Sponsor or any of
its properties.
(c) This Agreement and the other Operative Documents to which
the Sponsor is a party, assuming due authorization, execution and delivery by
the other parties hereto and thereto, each constitutes a valid, legal and
binding obligation of the Sponsor, enforceable against it in accordance with the
terms hereof and thereof, except as the enforcement hereof and thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally and by general
principles of equity (whether considered in a proceeding or action in equity or
at law).
(d) The Sponsor is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which might have consequences that would
materially and adversely affect the condition (financial or other) or operations
of the Sponsor or its properties or might have consequences that would
materially and adversely affect its performance hereunder and under the other
Operative Documents to which it is a party.
(e) No litigation is pending or, to the best of the Sponsor's
knowledge, threatened against the Sponsor which litigation might have
consequences that would prohibit its entering into this Agreement or any other
Operative Document to which it is a party or that might have consequences that
would materially and adversely affect its performance hereunder and under the
other Operative Documents to which it is a party.
(f) No certificate of an officer, statement furnished in
writing or report delivered pursuant to the terms hereof by the Sponsor contains
any untrue statement of a material fact or omits to state any material fact
necessary to make the certificate, statement or report not misleading.
(g) The statements contained in the Registration Statement
which describe the Sponsor or matters or activities for which the Sponsor is
responsible in accordance with the Operative Documents or which are attributed
to the Sponsor therein are true and correct in all
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material respects, and the Registration Statement does not contain any untrue
statement of a material fact with respect to the Sponsor or omit to state a
material fact required to be stated therein or necessary in order to make the
statements contained therein with respect to the Sponsor not misleading. To the
best of the Sponsor's knowledge and belief, the Registration Statement does not
contain any untrue statement of a material fact required to be stated therein or
omit to state any material fact required to be stated therein or necessary to
make the statements contained therein not misleading.
(h) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and licenses
required to be taken, given or obtained, as the case may be, by or from any
federal, state or other governmental authority or agency (other than any such
actions, approvals, etc. under any state securities laws, real estate
syndication or "Blue Sky" statutes, as to which the Sponsor makes no such
representation or warranty), that are necessary or advisable in connection with
the purchase and sale of the Notes and the execution and delivery by the Sponsor
of the Operative Documents to which it is a party, have been duly taken, given
or obtained, as the case may be, are in full force and effect on the date
hereof, are not subject to any pending proceedings or appeals (administrative,
judicial or otherwise) and either the time within which any appeal therefrom may
be taken or review thereof may be obtained has expired or no review thereof may
be obtained or appeal therefrom taken, and are adequate to authorize the
consummation of the transactions contemplated by this Agreement and the other
Operative Documents on the part of the Sponsor and the performance by the
Sponsor of its obligations under this Agreement and such of the other Operative
Documents to which it is a party.
(i) The transactions contemplated by this Agreement are in the
ordinary course of business of the Sponsor.
(j) The Sponsor received fair consideration and reasonably
equivalent value in exchange for the sale of the interests in the Mortgage Loans
to the Trust.
(k) The Sponsor did not sell any interest in any Mortgage Loan
with any intent to hinder, delay or defraud any of its respective creditors.
(l) The Sponsor is solvent and the Sponsor will not be
rendered insolvent as a result of the sale of the Mortgage Loans to the Trust.
It is understood and agreed that the representations and
warranties set forth in this Section 3.1 shall survive delivery of the Mortgage
Loans to the Indenture Trustee.
SECTION 3.2. REPRESENTATIONS AND WARRANTIES OF THE MASTER
SERVICER.
The Master Servicer hereby represents, warrants and covenants to the Indenture
Trustee, the Note Insurer and to the Noteholders as of the Closing Date that:
(a) The Master Servicer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
is, and each Sub-Servicer is, in compliance with the laws of each state in which
any Property is located to the extent necessary to enable it to perform its
obligations hereunder and is in good standing as a foreign corporation in each
jurisdiction in which the nature of its business, or the properties owned or
leased by it make such qualification necessary. The Master Servicer and each
Sub-servicer has all requisite corporate power and authority to own and operate
its properties, to carry out its business as
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presently conducted and as proposed to be conducted and to enter into and
discharge its obligations under this Agreement and the other Operative Documents
to which it is a party. The Master Servicer has, on a consolidated basis with
its parent, AMHC, equity of at least $5,000,000, as determined in accordance
with generally accepted accounting principles.
(b) The execution and delivery of this Agreement by the Master
Servicer and its performance and compliance with the terms of this Agreement and
the other Operative Documents to which it is a party have been duly authorized
by all necessary corporate action on the part of the Master Servicer and will
not violate the Master Servicer's Articles of Incorporation or Bylaws or
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or result in the breach of, any material
contract, agreement or other instrument to which the Master Servicer is a party
or by which the Master Servicer is bound or violate any statute or any order,
rule or regulation of any court, governmental agency or body or other tribunal
having jurisdiction over the Master Servicer or any of its properties.
(c) This Agreement and the other Operative Documents to which
the Master Servicer is a party, assuming due authorization, execution and
delivery by the other parties hereto and thereto, each constitutes a valid,
legal and binding obligation of the Master Servicer, enforceable against it in
accordance with the terms hereof, except as the enforcement hereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally and by general
principles of equity (whether considered in a proceeding or action in equity or
at law).
(d) The Master Servicer is not in default with respect to any
order or decree of any court or any order, regulation or demand of any federal,
state, municipal or governmental agency, which might have consequences that
would materially and adversely affect the condition (financial or other) or
operations of the Master Servicer or its properties or might have consequences
that would materially and adversely affect its performance hereunder and under
the other Operative Documents to which the Master Servicer is a party.
(e) No litigation is pending or, to the best of the Master
Servicer's knowledge, threatened against the Master Servicer which litigation
might have consequences that would prohibit its entering into this Agreement or
any other Operative Document to which it is a party or that would materially and
adversely affect its performance hereunder and under the other Operative
Documents to which the Master Servicer is a party.
(f) The statements contained in the Registration Statement
which describe the Master Servicer or matters or activities for which the Master
Servicer is responsible in accordance with the Operative Documents or which are
attributed to the Master Servicer therein are true and correct in all material
respects, and the Registration Statement does not contain any untrue statement
of a material fact with respect to the Master Servicer or omit to state a
material fact required to be stated therein or necessary to make the statements
contained therein with respect to the Master Servicer not misleading.
(g) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and licenses
required to be taken, given or obtained, as the case may be, by or from any
federal, state or other governmental authority or agency (other than any such
actions, approvals, etc. under any state securities laws, real estate
syndication or "Blue Sky" statutes, as to which the Master Servicer makes no
such representation or warranty), that are necessary or advisable in connection
with the execution and delivery by the Master Servicer of the Operative
Documents to which it is a party, have been duly taken, given or obtained, as
the
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case may be, are in full force and effect on the date hereof, are not subject to
any pending proceedings or appeals (administrative, judicial or otherwise) and
either the time within which any appeal therefrom may be taken or review thereof
may be obtained has expired or no review thereof may be obtained or appeal
therefrom taken, and are adequate to authorize the consummation of the
transactions contemplated by this Agreement and the other Operative Documents on
the part of the Master Servicer and the performance by the Master Servicer of
its obligations under this Agreement and such of the other Operative Documents
to which it is a party.
(h) The collection practices used by the Master Servicer with
respect to the Mortgage Loans directly serviced by it have been, in all material
respects, legal, proper, prudent and customary in the mortgage loan servicing
business.
(i) The transactions contemplated by this Agreement are in the
ordinary course of business of the Master Servicer.
(j) The terms of each existing Sub-Servicing Agreement and
each designated Sub-servicer are acceptable to the Master Servicer and any new
Sub-Servicing Agreements or Sub-servicers will comply with the provisions of
Section 4.3.
It is understood and agreed that the representations and
warranties set forth in this Section 3.2 shall survive delivery of the Mortgage
Loans to the Indenture Trustee.
Upon discovery by any of the Master Servicer, the Sponsor, any
Sub-Servicer, the Note Insurer or the Indenture Trustee of a breach of any of
the representations and warranties set forth in this Section 3.2 which
materially and adversely affects the interests of the Noteholders or of the Note
Insurer, the party discovering such breach shall give prompt written notice to
the other parties. Within 60 days of its discovery or its receipt of notice of
breach, the Master Servicer shall cure such breach in all material respects;
provided, however, that, if the Master Servicer can demonstrate to the
reasonable satisfaction of the Note Insurer and the Indenture Trustee that it is
diligently pursuing remedial action, then the cure period may be extended with
the written approval of the Note Insurer.
SECTION 3.3. REPRESENTATIONS AND WARRANTIES OF THE SPONSOR
WITH RESPECT TO THE MORTGAGE LOANS.
(a) The Sponsor makes the following representations and
warranties as to the Mortgage Loans on which the Note Insurer relies and the
Indenture Trustee relies in accepting the Mortgage Loans in trust and executing
and authenticating the Noteholders. Such representations and warranties speak as
of the Closing Date with respect to the Initial Mortgage Loans, as of the
related Subsequent Transfer Date with respect to any Subsequent Mortgage Loan,
or as of the Transfer Date upon which any Qualified Replacement Mortgage is
added to the Trust, but shall in each case survive the pledge of the Mortgage
Loans to the Indenture Trustee pursuant to the Indenture:
(i) The information with respect to each Mortgage Loan set
forth in the Schedules of Mortgage Loans is true and correct as of the
Cut-Off Date or the Subsequent Cut-Off Date, as the case may be;
(ii) All of the original or certified documentation set forth
in Section 2.1 (including all material documents related thereto) with
respect to each Mortgage Loan
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has been or will be delivered to the Indenture Trustee on the Closing
Date or the related Subsequent Transfer Date, as the case may be, or as
otherwise provided in Section 2.1;
(iii) Except for any Unaffiliated Originator Loans being
serviced by a servicer other than the Master Servicer, each Mortgage
Loan is being serviced by the Master Servicer or a Person controlling,
controlled by or under common control with the Master Servicer and
qualified to service mortgage loans;
(iv) The Mortgage Note related to each Mortgage Loan in the
Trust bears a Coupon Rate of at least ____% per annum;
(v) As of the Cut-Off Date, none of the Initial Mortgage Loans
are more than 59 days Delinquent; as of the related Subsequent Cut-Off
Date, no Subsequent Mortgage Loan shall be more than 30 days
Delinquent;
(vi) As of the Closing Date and any Subsequent Transfer Date,
no more than ___% of the aggregate Loan Balances of the Initial
Mortgage Loans or the Subsequent Mortgage Loans, as applicable, is
secured by Properties located within any single zip code area;
(vii) Each Mortgage Loan conforms, and all such Mortgage Loans
in the aggregate conform, in all material respects to the description
thereof set forth in the Registration Statement; and
(viii) The credit underwriting guidelines applicable to each
Mortgage Loan conform in all material respects to the description
thereof set forth in the Prospectus.
(b) The Sponsor hereby assigns to the Indenture Trustee for
the benefit of the Noteholders and the Note Insurer (so long as a Note Insurer
Default has not occurred and is continuing) all of its right, title and interest
in respect of each Master Transfer Agreement applicable to the related Mortgage
Loan. Insofar as such Master Transfer Agreement provides for representations and
warranties made by the related Originator in respect of a Mortgage Loan and any
remedies provided thereunder for any breach of such representations and
warranties, such right, title and interest may be enforced by the Master
Servicer or by the Indenture Trustee on behalf of the Noteholders and the Note
Insurer. Upon the discovery by the Sponsor, the Master Servicer, the Note
Insurer or the Indenture Trustee of a breach of any of the representations and
warranties made in a Master Transfer Agreement in respect of any Mortgage Loan
which materially and adversely affects the interests of the Noteholders or of
the Note Insurer in such Mortgage Loan, the party discovering such breach shall
give prompt written notice to the other parties. The Master Servicer shall
promptly notify the related Originator of such breach and request that such
Originator cure such breach or take the actions described in Section 3.4(b)
hereof within the time periods required thereby, and if such Originator does not
cure such breach in all material respects, the Sponsor shall cure such breach or
take such actions. The obligations of the Sponsor or Master Servicer, as the
case may be, set forth herein with respect to any Mortgage Loan as to which such
a breach has occurred and is continuing shall constitute the sole obligations of
the Master Servicer and of the Sponsor in respect of such breach.
SECTION 3.4. COVENANTS OF SPONSOR TO TAKE CERTAIN ACTIONS WITH
RESPECT TO THE MORTGAGE LOANS IN CERTAIN SITUATIONS.
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(a) With the provisos and limitations as to remedies set forth
in this Section 3.4, upon the discovery by the Sponsor, the Master Servicer, the
Note Insurer, any Sub-Servicer or the Indenture Trustee that the representations
and warranties set forth in Section 3.3 of this Agreement or in the Master
Transfer Agreement were untrue in any material respect as of the Closing Date
(or the Subsequent Transfer Date, as the case may be) and such breaches of the
representations and warranties materially and adversely affect the interests of
the Noteholders or of the Note Insurer, the party discovering such breach shall
give prompt written notice to the other parties.
The Sponsor acknowledges that a breach of any representation
or warranty (x) relating to marketability of title sufficient to transfer
unencumbered title to a Mortgage Loan, (y) relating to enforceability of the
Mortgage Loan against the related Mortgagor or Property or (z) set forth in
clause (viii) of Section 3.3 above constitutes breach of a representation or
warranty which materially and adversely affects the interests of the Noteholders
or of the Note Insurer in such Mortgage Loan.
(b) Upon the earliest to occur of the Sponsor's discovery, its
receipt of notice of breach from any one of the other parties hereto or from the
Note Insurer or such time as a breach of any representation and warranty
materially and adversely affects the interests of the Noteholders or of the Note
Insurer as set forth above, the Sponsor hereby covenants and warrants that it
shall promptly cure such breach in all material respects or it shall (or shall
cause an affiliate of the Sponsor to), subject to the further requirements of
this paragraph, on the second Remittance Date next succeeding such discovery,
receipt of notice or such other time (i) substitute in lieu of each Mortgage
Loan which has given rise to the requirement for action by the Sponsor a
Qualified Replacement Mortgage and deliver the Substitution Amount applicable
thereto, together with the aggregate amount of all Delinquency Advances and
Servicing Advances, including Nonrecoverable Advances, theretofore made with
respect to such Mortgage Loan, to the Master Servicer for deposit in the
Principal and Interest Account or (ii) purchase such Mortgage Loan from the
Trust at a purchase price equal to the Loan Purchase Price thereof, which
purchase price shall be delivered to the Master Servicer for deposit in the
Principal and Interest Account. It is understood and agreed that the obligation
of the Sponsor to cure the defect, or substitute for, or purchase any Mortgage
Loan as to which a representation or warranty is untrue in any material respect
and has not been remedied shall constitute the sole remedy available to the
Noteholders, the Indenture Trustee or the Note Insurer.
(c) In the event that any Qualified Replacement Mortgage is
delivered by an Originator or by the Sponsor (or by an affiliate of the Sponsor,
as the case may be) to the Trust pursuant to Section 3.3, Section 3.4 or Section
2.2 hereof, the related Originator and the Sponsor shall be obligated to take
the actions described in Section 3.4(b) with respect to such Qualified
Replacement Mortgage upon the discovery by any of the Noteholders, the Sponsor,
the Master Servicer, the Note Insurer, any Sub-Servicer or the Indenture Trustee
that the representations and warranties set forth in the related Master Transfer
Agreement or in Section 3.3 above are untrue in any material respect on the date
such Qualified Replacement Mortgage is conveyed to the Trust such that the
interests of the Noteholders or the Note Insurer in the related Qualified
Replacement Mortgage are materially and adversely affected; provided, however,
that for the purposes of this subsection (c) the representations and warranties
in the related Master Transfer Agreement or as set forth in Section 3.3 above
referring to items "as of the Cut-Off Date" or "as of the Subsequent Cut-Off
Date" or "as of the Closing Date" or "as of the Subsequent Transfer Date" shall
be deemed to refer to such items as of the date such Qualified Replacement
Mortgage is conveyed to the Trust.
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(d) It is understood and agreed that the covenants set forth
in this Section 3.4 shall survive delivery of the respective Mortgage Loans
(including Qualified Replacement Mortgage Loans) to the Indenture Trustee on
behalf of the Trust.
ARTICLE IV
SERVICING AND ADMINISTRATION
OF MORTGAGE LOANS
SECTION 4.1. MASTER SERVICER AND SUB-SERVICERS.
(a) Acting directly or through one or more Sub-Servicers as
provided in Section 4.3, the Master Servicer, as master servicer, shall service
and administer the Mortgage Loans in accordance with this Agreement and on
behalf of the Indenture Trustee and the Note Insurer and with reasonable care,
and using that degree of skill and attention that the Master Servicer exercises
with respect to comparable mortgage loans that it services for itself or others,
and shall have full power and authority, acting alone, to do or cause to be done
any and all things in connection with such servicing and administration which it
may deem necessary or desirable.
(b) The duties of the Master Servicer shall include collecting
and posting of all payments, responding to inquiries of Mortgagors or by
federal, state or local government authorities with respect to the Mortgage
Loans, investigating delinquencies, reporting tax information to Mortgagors in
accordance with its customary practices and accounting for collections and
furnishing monthly and annual statements to the Indenture Trustee and the Note
Insurer, as applicable, with respect to distributions, paying Compensating
Interest and making Delinquency Advances and Servicing Advances pursuant hereto.
The Master Servicer shall follow its customary standards, policies and
procedures in performing its duties as Master Servicer. The Master Servicer
shall cooperate with the Indenture Trustee and furnish to the Indenture Trustee
with reasonable promptness information in its possession as may be necessary or
appropriate to enable the Indenture Trustee to perform its tax reporting duties
hereunder. The Indenture Trustee shall furnish the Master Servicer or any
Sub-servicer with any powers of attorney and other documents necessary or
appropriate to enable the Master Servicer or any Sub-servicer to carry out its
servicing and administrative duties hereunder.
(c) The Master Servicer shall have the right using that degree
of skill and attention that the Master Servicer exercises with respect to
comparable mortgage loans that it services for itself or others, to approve
applications of Mortgagors for consent to (i) partial releases of Mortgages,
(ii) alterations to Properties and (iii) removal, demolition or division of
Properties. No application for such approval shall be considered by the Master
Servicer unless: (x) the provisions of the related Note and Mortgage have been
complied with; (y) the Combined Loan-to-Value Ratio and the Mortgagor's
debt-to-income ratio after any release does not exceed the Combined
Loan-to-Value Ratio and debt-to-income ratio applicable to such Mortgage Loan at
origination and (z) the lien priority of the related Mortgage is not adversely
affected; provided, however, that the foregoing requirements (x), (y) and (z)
shall not apply to any such situation described in this paragraph if such
situation results from any condemnation or easement activity by a governmental
entity.
(d) The Master Servicer may, and is hereby authorized to,
perform any of its servicing responsibilities with respect to all or certain of
the Mortgage Loans through a Sub-Servicer as it may from time to time designate,
but no such designation of a Sub-Servicer shall
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serve to release the Master Servicer from any of its obligations under this
Agreement. Such Sub-Servicer shall have all the rights and powers of the Master
Servicer with respect to such Mortgage Loans under this Agreement.
(e) Without limiting the generality of the foregoing, but
subject to Sections 4.13 and 4.14, the Master Servicer in its own name or in the
name of a Sub-Servicer may be authorized and empowered pursuant to a power of
attorney executed and delivered by the Indenture Trustee to execute and deliver,
and may be authorized and empowered by the Indenture Trustee, to execute and
deliver, on behalf of itself, the Noteholders, the Note Insurer and the
Indenture Trustee or any of them, (i) any and all instruments of satisfaction or
cancellation or of partial or full release or discharge and all other comparable
instruments with respect to the Mortgage Loans and with respect to the
Properties, (ii) to institute foreclosure proceedings or obtain a deed in lieu
of foreclosure so as to effect ownership of any Property on behalf of the
Indenture Trustee, (iii) to hold title to any Property upon such foreclosure or
deed in lieu of foreclosure on behalf of the Indenture Trustee, and (iv) to
consent to any modification of the terms of any Note not expressly prohibited
hereby if the effect of any such modification will not be to affect materially
and adversely the security afforded by the related Property and the timing of
the receipt of payments required hereby or the interests of the Note Insurer;
provided, however, that Section 4.14(a) shall constitute a power of attorney
from the Indenture Trustee to the Master Servicer or any Sub-servicer to execute
an instrument of satisfaction (or assignment of mortgage without recourse) with
respect to any Mortgage Loan paid in full (or with respect to which payment in
full has been escrowed).
(f) The Master Servicer shall give prompt notice to the
Indenture Trustee of any action, of which the Master Servicer has actual
knowledge, to (i) assert a claim against the Trust or (ii) assert jurisdiction
over the Trust.
(g) Servicing Advances incurred by the Master Servicer or any
Sub-Servicer in connection with the servicing of the Mortgage Loans (including
any penalties in connection with the payment of any taxes and assessments or
other charges) on any Property shall be recoverable by the Master Servicer or
such Sub-Servicer to the extent described in Section 4.9(c) and in Section
8.7(b)(xvii) of the Indenture.
SECTION 4.2. COLLECTION OF CERTAIN MORTGAGE LOAN PAYMENTS.
(a) The Master Servicer shall, to the extent such procedures
shall be consistent with this Agreement and the terms and provisions of any
applicable Insurance Policies, follow Accepted Servicing Practices. Consistent
with the foregoing, the Master Servicer may in its discretion (i) waive any
assumption fees, late payment charges, charges for checks returned for
insufficient funds, prepayment fees, if any, or other fees which may be
collected in the ordinary course of servicing the Mortgage Loans, (ii) if a
Mortgagor is in default or about to be in default because of a Mortgagor's
financial condition, arrange with the Mortgagor a schedule for the payment of
delinquent payments due on the related Mortgage Loan; provided, however, the
Master Servicer shall not reschedule the payment of delinquent payments more
than one time in any twelve consecutive months with respect to any Mortgagor.
(b) The Master Servicer shall hold in escrow on behalf of the
related Mortgagor all Prepaid Installments received by it, and shall apply such
Prepaid Installments as directed by such Mortgagor and as set forth in the
related Note.
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SECTION 4.3. SUB-SERVICING AGREEMENTS BETWEEN MASTER SERVICER
AND SUB-SERVICERS.
The Master Servicer may enter into Sub-Servicing Agreements for any servicing
and administration of Mortgage Loans with any institution which may be an
Affiliate, and which is in compliance with the laws of each state necessary to
enable it to perform its obligations under such Sub-Servicing Agreement. The
Master Servicer shall give notice to the Note Insurer and the Indenture Trustee
of the appointment of any Sub-Servicer and shall furnish to the Note Insurer and
the Indenture Trustee a copy of the Subservicing Agreement. For purposes of this
Agreement, the Master shall be deemed to have received payments on Mortgage
Loans when any Sub-Servicer has received such payments. Any such Sub-Servicing
Agreement shall be consistent with and not violate the provisions of this
Agreement.
SECTION 4.4. SUCCESSOR SUB-SERVICERS.
The Master Servicer may terminate any Sub-Servicing Agreement in accordance
with the terms and conditions of such Sub-Servicing Agreement and to either
itself directly service the related Mortgage Loans itself or enter into a
Sub-Servicing Agreement with a successor Sub-Servicers that qualifies under
Section 4.3.
SECTION 4.5. LIABILITY OF MASTER SERVICER.
The Master Servicer shall not be relieved of its obligations under this
Agreement notwithstanding any Sub-Servicing Agreement or any of the provisions
of this Agreement relating to agreements or arrangements between the Master
Servicer and a Sub-Servicer or otherwise, and the Master Servicer shall be
obligated to the same extent and under the same terms and conditions as if it
alone were servicing and administering the Mortgage Loans. The Master Servicer
shall be entitled to enter into any agreement with a Sub-Servicer for
indemnification of the Master by such Sub-Servicer and nothing contained in such
Sub-Servicing Agreement shall be deemed to limit or modify this Agreement. The
Trust shall not indemnify the Master Servicer for any losses due to the Master
Servicer's negligence.
SECTION 4.6. NO CONTRACTUAL RELATIONSHIP BETWEEN SUB-SERVICER
AND INDENTURE TRUSTEE OR THE NOTEHOLDERS.
Any Sub-Servicing Agreement and any other transactions or services relating to
the Mortgage Loans involving a Sub-Servicer shall be deemed to be between the
Sub-Servicer and the Master Servicer alone and the Note Insurer, the Indenture
Trustee and the Noteholders shall not be deemed parties thereto and shall have
no claims, rights, obligations, duties or liabilities with respect to any
Sub-Servicer except as set forth in Section 4.7.
SECTION 4.7. ASSUMPTION OR TERMINATION OF SUB-SERVICING
AGREEMENT BY INDENTURE TRUSTEE.
In connection with the assumption of the responsibilities, duties and
liabilities and of the authority, power and rights of the Master Servicer
hereunder by the Indenture Trustee pursuant to Section 5.1, it is understood and
agreed that the Master Servicer's rights and obligations under any Sub-Servicing
Agreement then in force between the Master Servicer and a Sub-Servicer may be
assumed or terminated by the Indenture Trustee at its option. Any termination
fee due under any such Sub-servicing agreement shall be paid by the preceding
Master Servicer but in no event shall the Indenture Trustee be liable for any
such fee.
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The Master Servicer shall, upon request of the Indenture
Trustee, but at the expense of the Master Servicer, deliver to the assuming
party documents and records relating to each Sub-Servicing Agreement and an
accounting of amounts collected and held by it and otherwise use its best
reasonable efforts to effect the orderly and efficient transfer of the
Sub-Servicing Agreements to the assuming party, without the payment of any fee
by the Indenture Trustee, notwithstanding any contrary provision in any
Sub-Servicing Agreement.
SECTION 4.8. PRINCIPAL AND INTEREST ACCOUNT.
(a) The Master Servicer and/or each Sub-servicer, as
applicable, shall establish in the name of the Trust for the benefit of the
Noteholders and the Note Insurer, as their interests may appear, and maintain at
one or more Designated Depository Institutions the Principal and Interest
Account.
Subject to Subsections (c) and (e) below, the Master Servicer
and any Sub-servicer shall deposit all receipts related to the Mortgage Loans to
the Principal and Interest Account on a daily basis (but no later than the
second Business Day after receipt).
Within one Business Day of the Closing Date, on each
Subsequent Transfer Date and each Transfer Date, the Sponsor and/or the Master
Servicer shall deposit to the Principal and Interest Account all receipts
related to the Mortgage Loans which relate to or are received on or after the
Cut-Off Date or the Subsequent Cut-Off Date, as the case may be.
(b) All funds in the Principal and Interest Account may only
be held (i) uninvested, up to the limits insured by the FDIC or (ii) invested in
Eligible Investments. The Principal and Interest Account shall be held in the
Trust in the name of the Trust and for the benefit of the Noteholders and the
Note Insurer. Any investment earnings on funds held in the Principal and
Interest Account shall be for the account of the Master Servicer and may only be
withdrawn from the Principal and Interest Account by the Master Servicer
immediately following the remittance of the Monthly Remittance Amounts by the
Master Servicer. Any references herein to amounts on deposit in the Principal
and Interest Account shall refer to amounts net of such investment earnings. Any
investment losses are at the expense of the Master Servicer and shall be
replaced on or prior to the Remittance Date.
(c) Subject to Subsection (e) below, the Master Servicer shall
deposit to the Principal and Interest Account all principal and interest
collections on the Mortgage Loans received on or after the Cut-Off Date or
related Subsequent Cut-Off Date including any Prepaid Installments, Prepayments
and Net Liquidation Proceeds, all Loan Purchase Prices and Substitution Amounts
received or paid by the Master Servicer with respect to the Mortgage Loans,
other recoveries or amounts related to the Mortgage Loans received by the Master
Servicer, Compensating Interest and Delinquency Advances together with any
amounts which are reimbursable from the Principal and Interest Account, but net
of (i) the Servicing Fee with respect to each Mortgage Loan and other servicing
compensation to the Master Servicer as permitted by Section 4.15 hereof, (ii)
principal (including Prepayments) collected on the related Mortgage Loans prior
to the Cut-Off Date or related Subsequent Cut-Off Date, (iii) interest accruing
on the related Mortgage Loans prior to the Cut-Off Date or related Subsequent
Cut-Off Date and (iv) Net Liquidation Proceeds to the extent such Net
Liquidation Proceeds exceed the Loan Balance of the related Mortgage Loan.
(d) (i) The Master Servicer may make withdrawals from the
Principal and Interest Account only for the following purposes:
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(1) to effect the timely remittance to the Indenture
Trustee of the Monthly Remittance Amounts due on the
Remittance Date;
(2) to reimburse itself for unreimbursed Delinquency
Advances and Servicing Advances and Nonrecoverable Advances;
(3) to withdraw investment earnings on amounts on
deposit in the Principal and Interest Account;
(4) to withdraw amounts that have been deposited to
the Principal and Interest Account in error; and
(5) to clear and terminate the Principal and Interest
Account following the termination of the Trust Estate pursuant
to Article X of the Indenture.
(ii) On the tenth day of each month, the Master Servicer shall
send to the Indenture Trustee a report, in the form of a computer tape,
detailing the payments on the Mortgage Loans during the prior
Remittance Period. Such tape shall be in the form and have the
specifications as may be agreed to between the Master Servicer and the
Indenture Trustee from time to time. The Note Insurer shall have the
right to request this computer tape upon providing 3 Business Days
written notice to the Master Servicer.
(iii) On each Remittance Date the Master Servicer shall remit
to the Indenture Trustee by wire transfer, or otherwise make funds
available in immediately available funds for deposit in the Note
Account pursuant to Section 8.7(a) of the Indenture, the Interest
Remittance Amount and the Principal Remittance Amount.
(e) To the extent that the ratings, if any, then assigned to
the unsecured debt of the Master Servicer or of the Master Servicer's ultimate
corporate parent are satisfactory to the Note Insurer, the Indenture Trustee,
▇▇▇▇▇'▇ and Standard & Poor's, then the requirement to maintain the Principal
and Interest Account may be waived by an instrument signed by the Note Insurer,
Standard & Poor's, Indenture Trustee, and ▇▇▇▇▇'▇, and the Master Servicer may
be allowed to co-mingle with its general funds the amounts otherwise required to
be deposited to the Principal and Interest Account, on such terms and subject to
such conditions as the Note Insurer, the Indenture Trustee, ▇▇▇▇▇'▇ and Standard
& Poor's may permit.
SECTION 4.9. DELINQUENCY ADVANCES, COMPENSATING INTEREST AND
SERVICING ADVANCES.
(a) The Master Servicer is required, not later than each
Remittance Date, to deposit into the Principal and Interest Account an amount
equal to the sum of the interest portions (net of the Servicing Fees) due, but
not collected, with respect to Delinquent Mortgage Loans during the prior
Remittance Period, but only if, in its good faith business judgment, the Master
Servicer reasonably believes that such amount will ultimately be recovered from
the related Mortgage Loan. Such amounts are "Delinquency Advances".
The Master Servicer shall be permitted to fund its payment of
Delinquency Advances on any Remittance Date and to reimburse itself for any
Delinquency Advances paid from the Master Servicer's own funds, from collections
on the related Mortgage Loan. The Master Servicer may use funds deposited to the
Principal and Interest Account subsequent to the related Remittance Period to
fund its payment of Delinquency Advances related to a Payment Date. The Master
Servicer shall also fund Delinquency Advances from the deposits into the
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Principal and Interest Account with respect thereto (i) late collections from
the Mortgagor whose Delinquency gave rise to the shortfall which resulted in
such Delinquency Advance and (ii) Net Liquidation Proceeds recovered on account
of the related Mortgage Loan to the extent of the amount of aggregate
Delinquency Advances related thereto or (iii) from its own funds. If not
therefore recovered from the related Mortgagor or the related Net Liquidation
Proceeds, Delinquency Advances constituting Nonrecoverable Advances shall be
recoverable pursuant to Section 8.7(b)(xvii) of the Indenture and Section 4.8(a)
hereof.
(b) On or prior to each Remittance Date, the Master Servicer
shall deposit in the Principal and Interest Account with respect to any full
Prepayment received on a Mortgage Loan during the related Remittance Period out
of its own funds without any right of reimbursement therefor, an amount equal to
the difference between (x) 30 days' interest at the Mortgage Loan's Coupon Rate
(less the Servicing Fee) on the Loan Balance of such Mortgage Loan as of the
first day of the related Remittance Period and (y) to the extent not previously
advanced, the interest (less the Servicing Fee) paid by the Mortgagor with
respect to the Mortgage Loan during such Remittance Period (any such amount paid
by the Master Servicer, "Compensating Interest"). The Master Servicer shall in
no event be required to pay Compensating Interest with respect to any Remittance
Period in an amount in excess of the aggregate Servicing Fee received by the
Master Servicer with respect to all Mortgage Loans for such Remittance Period
nor shall it be required to pay Compensating Interest due to partial prepayments
or Relief Act Shortfalls.
(c) The Master Servicer will pay all "out-of-pocket" costs and
expenses incurred in the performance of its servicing obligations, including,
but not limited to, the cost of (i) Preservation Expenses, (ii) any enforcement
or judicial proceedings, including (a) foreclosures and (b) other legal actions
and costs associated therewith that potentially affect the existence, validity,
priority, enforceability, or collectibility of the Mortgage Loans, including
collection agency fees and costs of pursuing or obtaining personal judgments,
garnishments, levies, attachment and similar actions, and (iii) the costs of the
conservation, management, liquidation, sale or other disposition of any REO
Property, including reasonable fees paid to any independent contractor in
connection therewith, and (iv) advances to keep liens current, unless with
respect to any of the foregoing the Master Servicer has determined that such
advance would not be recoverable. Each such amount so paid will constitute a
"Servicing Advance". The Master Servicer may recover Servicing Advances (x) from
the Mortgagors to the extent permitted by the Mortgage Loans, from Liquidation
Proceeds realized upon the liquidation of the related Mortgage Loan and (y) as
provided in Section 4.8(d) hereof.
(d) On the Remittance Date in ___________, the Master Servicer
shall make a special non-recoverable advance equal to one-month's interest,
calculated at the Note Interest Rate (applicable to the __________ Payment Date)
for the Notes with respect to all Mortgage Loans in the Trust not having a
payment due during __________ and the amounts of such advance shall be included
in the Interest Remittance Amount related to the Trust.
SECTION 4.10. PURCHASE OF MORTGAGE LOANS.
The Master Servicer may, but is not obligated to, purchase for its own account
any Mortgage Loan which becomes Delinquent, in whole or in part, as to four
consecutive monthly installments or any Mortgage Loan as to which enforcement
proceedings have been brought by the Master Servicer or by any Sub-Servicer
pursuant to Section 4.13. Any such Mortgage Loan so purchased shall be purchased
by the Master Servicer on a Remittance Date at a purchase price equal to the
Loan Purchase Price thereof, which purchase price shall be deposited in the
Principal and Interest
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Account; provided, that the Master Servicer may not purchase any Mortgage Loans
pursuant to this Section 4.10 if such purchase will cause the aggregate purchase
price to exceed 10% of the Original Pool Principal Balance.
SECTION 4.11. MAINTENANCE OF INSURANCE.
(a) The Master Servicer shall cause to be maintained with
respect to each Mortgage Loan a hazard insurance policy with a generally
acceptable carrier that provides for fire and extended coverage, and which
provides for a recovery by the Master Servicer on behalf of the Trust of
insurance proceeds relating to such Mortgage Loan in an amount not less than the
least of (i) the outstanding principal balance of the Mortgage Loan, (ii) the
minimum amount required to compensate for damage or loss on a replacement cost
basis and (iii) the full insurable value of the premises.
(b) If the Mortgage Loan at the time of origination relates to
a Property in an area identified in the Federal Register by the Federal
Emergency Management Agency as having special flood hazards, the Master Servicer
will cause to be maintained with respect thereto a flood insurance policy in a
form meeting the requirements of the current guidelines of the Federal Insurance
Administration with a generally acceptable carrier in an amount representing
coverage, and which provides for a recovery by the Master Servicer on behalf of
the Trust of insurance proceeds relating to such Mortgage Loan of not less than
the least of (i) the outstanding principal balance of the Mortgage Loan, (ii)
the minimum amount required to compensate for damage or loss on a replacement
cost basis and (iii) the maximum amount of insurance that is available under the
Flood Disaster Protection Act of 1973. The Master Servicer shall indemnify the
Trust and the Note Insurer out of the Master Servicer's own funds for any loss
to the Trust and the Note Insurer resulting from the Master Servicer's failure
to maintain the insurance required by this Section.
(c) It is understood and agreed that such insurance shall be
with insurers approved by the Master Servicer and that no earthquake or other
additional insurance is to be required of any Mortgagor or to be maintained on
property acquired in respect of a defaulted loan, other than pursuant to such
applicable laws and regulations as shall at any time be in force and as shall
require such additional insurance. Any cost incurred by the Master Servicer in
maintaining any such insurance shall be added to the amount owing under the
Mortgage Loan where the terms of the Mortgage Loan so permit. Such costs shall
be recoverable by the Master Servicer pursuant to Section 4.9.
(d) In the event that the Master Servicer shall obtain and
maintain a blanket policy insuring against fire, flood and hazards of extended
coverage on all of the Mortgage Loans, then, to the extent such policy names the
Master Servicer as loss payee and provides coverage in an amount equal to the
aggregate unpaid principal balance on the Mortgage Loans without co-insurance,
and otherwise complies with the requirements of this Section 4.11, the Master
Servicer shall be deemed conclusively to have satisfied its obligations with
respect to fire and hazard insurance coverage under this Section 4.11, it being
understood and agreed that such blanket policy may contain a deductible clause,
in which case the Master Servicer shall, in the event that there shall not have
been maintained on the related Property a policy complying with the preceding
paragraphs of this Section 4.11, and there shall have been a loss which would
have been covered by such policy, deposit in the Principal and Interest Account
from the Master Servicer's own funds the difference, if any, between the amount
that would have been payable under a policy complying with the preceding
paragraphs of this Section 4.11 and the amount paid under such blanket policy.
Upon the request of the Indenture Trustee or the Note Insurer, the
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Master Servicer shall cause to be delivered to the Indenture Trustee and the
Note Insurer, a certified true copy of such policy.
SECTION 4.12. DUE-ON-SALE CLAUSES; ASSUMPTION AND SUBSTITUTION
AGREEMENTS.
When a Property has been or is about to be conveyed by the Mortgagor, the
Master Servicer shall, to the extent it has knowledge of such conveyance or
prospective conveyance, exercise its rights to accelerate the maturity of the
related Mortgage Loan under any "due-on-sale" clause contained in the related
Mortgage or Note; provided, however, that the Master Servicer shall not exercise
any such right if (i) the "due-on-sale" clause, in the reasonable belief of the
Master Servicer, is not enforceable under applicable law or (ii) the Master
Servicer reasonably believes that to permit an assumption of the Mortgage Loan
would not materially and adversely affect the interest of the Noteholders or of
the Note Insurer. In such event, the Master Servicer shall enter into an
assumption and modification agreement with the person to whom such property has
been or is about to be conveyed, pursuant to which such person becomes liable
under the Note and, unless prohibited by applicable law or the Mortgage
Documents, the Mortgagor remains liable thereon. If the foregoing is not
permitted under applicable law, the Master Servicer is authorized to enter into
a substitution of liability agreement with such person, pursuant to which the
original Mortgagor is released from liability and such person is substituted as
Mortgagor and becomes liable under the Note; provided, however, that to the
extent any such substitution of liability agreement would be delivered by the
Master Servicer outside of its usual procedures for mortgage loans held in its
own portfolio the Master Servicer shall, prior to executing and delivering such
agreement, obtain the prior written consent of the Control Party. The Mortgage
Loan, as assumed, shall conform in all respects to the requirements,
representations and warranties of this Agreement. The Master Servicer shall
notify the Indenture Trustee that any such assumption or substitution agreement
has been completed by forwarding to the Indenture Trustee the original copy of
such assumption or substitution agreement, which copy shall be added by the
Indenture Trustee to the related File and which shall, for all purposes, be
considered a part of such File to the same extent as all other documents and
instruments constituting a part thereof. The Master Servicer shall be
responsible for recording or causing the recordation any such assumption or
substitution agreements. In connection with any such assumption or substitution
agreement, the required monthly payment on the related Mortgage Loan shall not
be changed but shall remain as in effect immediately prior to the assumption or
substitution, the stated maturity or outstanding principal amount of such
Mortgage Loan shall not be changed nor shall any required monthly payments of
principal or interest be deferred or forgiven. Any fee collected by the Master
Servicer or the Sub-Servicer for consenting to any such conveyance or entering
into an assumption or substitution agreement shall be retained by or paid to the
Master Servicer as additional servicing compensation.
Notwithstanding the foregoing paragraph or any other provision
of this Agreement, the Master Servicer shall not be deemed to be in default,
breach or any other violation of its obligations hereunder by reason of any
assumption of a Mortgage Loan by operation of law or any assumption which the
Master Servicer may be restricted by law from preventing, for any reason
whatsoever.
SECTION 4.13. REALIZATION UPON DEFAULTED MORTGAGE LOANS.
(a) The Master Servicer shall foreclose upon or otherwise
comparably effect the ownership on behalf of the Trust of Properties relating to
defaulted Mortgage Loans as to which no satisfactory arrangements can be made
for collection of Delinquent payments and
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which the Master Servicer has not purchased pursuant to Section 4.10. In
connection with such foreclosure or other conversion, the Master Servicer shall
exercise such of the rights and powers vested in it hereunder, and use the same
degree of care and skill in their exercise or use, as prudent mortgage lenders
would exercise or use under the circumstances in the conduct of their own
affairs, including, but not limited to, advancing funds for the payment of
taxes, amounts due with respect to Senior Liens, and insurance premiums. Any
amounts so advanced shall constitute "Servicing Advances" within the meaning of
Section 4.9(c) hereof.
Notwithstanding the generality of the foregoing provisions,
the Master Servicer shall manage, conserve, protect and operate each REO
Property for the Noteholders solely for the purpose of its prompt disposition
and sale. Pursuant to its efforts to sell such REO Property, the Master Servicer
shall either itself or through an agent selected by the Master Servicer protect
and conserve such REO Property in the same manner and to such extent as is
customary in the locality where such REO Property is located and may, incident
to its conservation and protection of the interests of the Noteholders, rent the
same, or any part thereof, as the Master Servicer deems to be in the best
interest of the Noteholders for the period prior to the sale of such REO
Property. The Master Servicer shall take into account the existence of any
hazardous substances, hazardous wastes or solid wastes, as such terms are
defined in the Comprehensive Environmental Response Compensation and Liability
Act, the Resource Conservation and Recovery Act of 1976, or other federal, state
or local environmental legislation, on a Property in determining whether to
foreclose upon or otherwise comparably convert the ownership of such Property.
(b) The Master Servicer shall determine, with respect to each
defaulted Mortgage Loan, when it has recovered, whether through trustee's sale,
foreclosure sale or otherwise, all amounts it expects to recover from or on
account of such defaulted Mortgage Loan, whereupon such Mortgage Loan shall
become a "Liquidated Mortgage Loan" and shall promptly deliver to the Note
Insurer, with a copy to the Indenture Trustee, a related liquidation report with
respect to such Liquidated Mortgage Loan.
SECTION 4.14. INDENTURE TRUSTEE TO COOPERATE; RELEASE OF
FILES.
(a) Upon the payment in full of any Mortgage Loan (including
the repurchase of any Mortgage Loan or any liquidation of such Mortgage Loan
through foreclosure or otherwise), or the receipt by the Master Servicer or any
Sub-servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Master Servicer or any Sub-servicer shall
deliver to the Indenture Trustee a Master Servicer's Trust Receipt attached
hereto as Exhibit G. Upon receipt of such Master Servicer's Trust Receipt, the
Indenture Trustee shall promptly release the related File, in trust to the
applicable party as directed in writing by the Master Servicer on the Master
Servicer's Trust Receipt, in each case pending its release by the such party.
Upon any such payment in full, or the receipt of such notification that such
funds have been placed in escrow, the Master Servicer or any Sub-servicer is
authorized to give, as attorney-in-fact for the Indenture Trustee and the
mortgagee under the Mortgage which secured the Note, an instrument of
satisfaction (or assignment of Mortgage without recourse) regarding the Property
relating to such Mortgage, which instrument of satisfaction or assignment, as
the case may be, shall be delivered to the Person or Persons entitled thereto
against receipt therefor of payment in full, it being understood and agreed that
no expense incurred in connection with such instrument of satisfaction or
assignment, as the case may be, shall be chargeable to the Principal and
Interest Account. In lieu of executing any such satisfaction or assignment, as
the case may be, the Master Servicer or any Sub-servicer may prepare and submit
to the Indenture Trustee, a satisfaction (or assignment without recourse, if
requested by the Person or Persons entitled thereto) in form for execution by
the Indenture Trustee with all requisite information completed
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by the Master Servicer or any Sub-servicer; in such event, the Indenture Trustee
shall execute and acknowledge such satisfaction or assignment, as the case may
be, and deliver the same with the related File, as aforesaid.
(b) From time to time and as appropriate in the servicing of
any Mortgage Loan, including, without limitation, foreclosure or other
comparable conversion of a Mortgage Loan or collection under any applicable
Insurance Policy, the Indenture Trustee shall (except in the case of the payment
or liquidation pursuant to which the related File is released to an escrow agent
or an employee, agent or attorney of the Indenture Trustee), upon request of the
Master Servicer or any Sub-servicer and delivery to the Indenture Trustee of a
Master Servicer's Trust Receipt, release the related File to the Master Servicer
and shall execute such documents as shall be necessary to the prosecution of any
such proceedings, including, without limitation, an assignment without recourse
of the related Mortgage to the Master Servicer. The Indenture Trustee shall
complete in the name of the Indenture Trustee any endorsement in blank on any
Note prior to releasing such Note to the Master Servicer or any Sub-servicer.
Such receipt shall obligate the Master Servicer or any Sub-servicer to return
the File to the Indenture Trustee when the need therefor by the Master Servicer
or any Sub-servicer no longer exists unless the Mortgage Loan shall be
liquidated, in which case, upon receipt of the liquidation information, in
physical or electronic form, the Master Servicer's Trust Receipt shall be
released by the Indenture Trustee to the Master Servicer or any Sub-servicer.
(c) No costs associated with the procedures described in this
Section 4.14 shall be an expense of the Trust.
(d) The provisions set forth in Subsections (a) and (b) may be
superseded by any waiver of the Document Delivery Requirement as may be given by
the Note Insurer, Moody's and Standard & Poor's pursuant to Section 2.1(b)
hereof.
(e) Each Master Servicer's Trust Receipt may be delivered to
the Indenture Trustee (i) via mail or courier, (ii) via facsimile or (iii) by
such other means, including, without limitation, electronic or computer readable
medium, as the Master Servicer and the Indenture Trustee shall mutually agree.
The Indenture Trustee shall promptly release the related File(s) within five (5)
to seven (7) business days of receipt of a properly completed Master Servicer's
Trust Receipt pursuant to clauses (i), (ii) or (iii) above or such shorter
period as may be agreed upon by the Master Servicer and the Indenture Trustee.
Receipt of a Master Servicer's Trust Receipt pursuant to clauses (i), (ii) or
(iii) above shall be authorization to the Indenture Trustee to release such
Files, provided the Indenture Trustee has determined that such Master Servicer's
Trust Receipt has been executed, with respect to clauses (i) or (ii) above, or
approved, with respect to clause (iii) above, by an Authorized Officer of the
Master Servicer or any Sub-servicer, and so long as the Indenture Trustee
complies with its duties and obligations under this Agreement. If the Indenture
Trustee is unable to release the Files within the time frames previously
specified, the Indenture Trustee shall immediately notify the Master Servicer or
any Sub-servicer indicating the reason for such delay, but in no event shall
such notification be later than five business days after receipt of a Master
Servicer's Trust Receipt. If the Master Servicer is required to pay penalties or
damages due solely to the Indenture Trustee's negligent failure to release the
related File or the Indenture Trustee's negligent failure to execute and release
documents in a timely manner, the Indenture Trustee shall be liable for such
penalties or damages.
On each day that the Master Servicer remits to the Indenture
Trustee Master Servicer's Trust Receipts pursuant to clauses (ii) or (iii)
above, the Master Servicer or any Sub-
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servicer shall also submit to the Indenture Trustee a summary of the total
amount of such Master Servicer's Trust Receipts requested on such day by the
same method as described in such clauses (ii) or (iii) above.
SECTION 4.15. SERVICING COMPENSATION.
As compensation for its activities hereunder, the Master Servicer shall be
entitled to retain the amount of the Servicing Fee with respect to each Mortgage
Loan. Additional servicing compensation in the form of prepayment charges,
release fees, bad check charges, assumption fees, late payment charges, or any
other servicing-related fees, Net Liquidation Proceeds not required to be
deposited in the Principal and Interest Account pursuant to Section 4.8(c)(v)
and similar items may, to the extent collected from Mortgagors, be retained by
the Master Servicer.
SECTION 4.16. ANNUAL STATEMENT AS TO COMPLIANCE.
The Master Servicer, at its own expense, will deliver to the Indenture
Trustee, the Note Insurer, Standard & Poor's, and Moody's, on or before the last
day of March of each year, commencing in ___, an Officer's Certificate stating,
as to each signer thereof, that (i) a review of the activities of the Master
Servicer during such preceding calendar year and of performance under this
Agreement has been made under such officers' supervision, and (ii) to the best
of such officers' knowledge, based on such review, the Master Servicer has
fulfilled all its obligations under this Agreement for such year, or, if there
has been a default in the fulfillment of all such obligations, specifying each
such default known to such officers and the nature and status thereof including
the steps being taken by the Master Servicer to remedy such defaults.
SECTION 4.17. ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS'
REPORTS.
On or before the last day of March of each year, commencing in ___, the Master
Servicer, at its own expense, shall cause to be delivered to the Indenture
Trustee, the Note Insurer, Standard & Poor's and Moody's a letter or letters of
a firm of independent, nationally recognized certified public accountants
reasonably acceptable to the Control Party stating that such firm has, with
respect to the Master Servicer's overall servicing operations (i) performed
applicable tests in accordance with the compliance testing procedures as set
forth in Appendix 3 of the Audit Guide for Audits of HUD Approved Nonsupervised
Mortgagees or (ii) examined such operations in accordance with the requirements
of the Uniform Single Audit Program for Mortgage Bankers, and in either case
stating such firm's conclusions relating thereto.
SECTION 4.18. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION
REGARDING THE MORTGAGE LOANS.
The Master Servicer shall provide to the Indenture Trustee, the Note Insurer,
the FDIC and the supervisory agents and examiners of each of the foregoing
access to the documentation regarding the Mortgage Loans required by applicable
state and federal regulations, such access being afforded without charge but
only upon reasonable request and during normal business hours at the offices of
the Master Servicer designated by it.
Upon any change in the format of the computer tape maintained
by the Master Servicer in respect of the Mortgage Loans, the Master Servicer
shall deliver a copy of such computer tape to the Indenture Trustee and in
addition shall provide a copy of such computer tape to the Indenture Trustee at
such other times as the Indenture Trustee may reasonably request. The
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Note Insurer may request a copy of this computer tape upon three Business Days
prior written notice to the Master Servicer.
SECTION 4.19. ASSIGNMENT OF AGREEMENT.
The Master Servicer may not assign its obligations under this Agreement, in
whole or in part, unless it shall have first obtained the written consent of the
Indenture Trustee and the Note Insurer, which such consent shall not be
unreasonably withheld; provided, however, that any assignee must meet the
eligibility requirements set forth in Section 5.1(g) hereof for a successor
servicer. Notice of any such assignment shall be given by the Master Servicer to
the Indenture Trustee, the Note Insurer and Moody's.
ARTICLE V
SERVICING TERMINATION
SECTION 5.1. EVENTS OF SERVICER TERMINATION.
(a) The Master Servicer may be removed with respect to the
Trust if any one of the following events ("Events of Servicer Termination")
shall occur and be continuing:
(i) The Master Servicer shall fail to deliver to the Indenture
Trustee any proceeds or required payment, which failure continues
unremedied for five Business Days following written notice to an
Authorized Officer of the Master Servicer from the Indenture Trustee or
from Noteholders evidencing Percentage Interest aggregating not less
than 25%.
(ii) The Master Servicer shall fail to perform any one or more
of its obligations hereunder other than the obligations contemplated by
Subsection 5.1(i) above, and shall continue in default thereof for a
period of sixty (60) days after notice by the Indenture Trustee or the
Note Insurer of said failure; provided, however, that if the Master
Servicer can demonstrate to the reasonable satisfaction of the Control
Party that it is diligently pursuing remedial action, then the cure
period may be extended with the written approval of the Control Party;
or
(iii) The Master Servicer shall fail to cure any breach of any
of its representations and warranties set forth in Section 3.2 which
materially and adversely affects the interests of the Noteholders or
the Note Insurer for a period of thirty (30) days after the Master
Servicer's discovery or receipt of notice thereof; provided, however,
that if the Master Servicer can demonstrate to the reasonable
satisfaction of the Control Party that it is diligently pursuing
remedial action, then the cure period may be extended with the written
approval of the Control Party; or
(iv) The failure by the Master Servicer to make any required
Servicing Advance and such failure continues for fifteen days;
provided, however; that if the Master Servicer can demonstrate to the
reasonable satisfaction of the Control Party that any such event was
due to circumstances beyond the control of the Master Servicer, such
event shall not be considered an event of termination of the Master
Servicer; or
(v) The failure by the Master Servicer to make any required
Delinquency Advance or to pay any Compensating Interest; provided,
however, that if the Master
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Servicer can demonstrate to the reasonable satisfaction of the Control
Party that any such event was due to circumstances beyond the control
of the Master Servicer, such event shall not be considered an event of
termination of the Master Servicer;
Then, and in each and every such case, so long as a Event of Servicer
Termination shall not have been remedied by the Master Servicer, either
the Indenture Trustee, the Note Insurer or the Noteholders evidencing
Percentage Interests aggregating not less than 51% in each case with
the consent of the Note Insurer, or the Note Insurer, by notice then
given in writing to the Master Servicer (and to the Indenture Trustee
if given by the Note Insurer of the Noteholders) may terminate all of
the rights and obligations of the Master Servicer as servicer of the
Trust under this Agreement. Any such notice to the Master Servicer
shall also be given to each Rating Agency and the Note Insurer. On and
after the receipt by the Master Servicer of such written notice, all
authority and power of the Master Servicer under this Agreement,
whether with respect to the Notes or the Mortgage Loans or otherwise,
shall pass to and be vested in the Indenture Trustee pursuant to and
under this Section 5.1(a) and, without limitation, the Indenture
Trustee is hereby authorized and empowered to execute and deliver, on
behalf of the Master Servicer, as attorney-in-fact or otherwise, any
and all documents and other instruments, and to do or accomplish all
other acts or things necessary or appropriate to effect the purposes of
such notice of termination, whether to complete the transfer and
endorsement of each Mortgage Loan and related documents, or otherwise.
The Master Servicer agrees to cooperate with the Indenture Trustee in
effecting the termination of the responsibilities and rights of the
Master Servicer hereunder, including, without limitation, the transfer
to the Indenture Trustee for the administration by it of all cash
amounts that shall at the time be held by the Master Servicer and to be
deposited by it in the Note Account, or that have been deposited by the
Master Servicer in the Note Account or thereafter received by the
Master Servicer with respect to the Mortgage Loans. All reasonable
costs and expenses (including attorneys' fees) incurred in connection
with amending this Agreement to reflect such succession as Master
Servicer pursuant to this Section 5.1 shall be paid by the predecessor
Master Servicer (or if the predecessor Master Servicer is the Indenture
Trustee, the initial Master Servicer) upon presentation of reasonable
documentation of such costs and expenses.
Notwithstanding the foregoing, a delay in or failure of performance
under Section 5.1(a)(i) for a period of two Business Days or under
Section 5.1(ii), (iii), (iv), or (v) for a period of 60 days, shall not
constitute a Event of Servicer Termination if such delay or failure
could not be prevented by the exercise of reasonable diligence by the
Master Servicer and such delay or failure was caused by an act of God
or the public enemy, acts of declared or undeclared war, public
disorder, rebellion or sabotage, epidemics, landslides, lightning,
fire, hurricanes, earthquakes, floods or similar causes. The preceding
sentence shall not relieve the Master Servicer from using its best
efforts to perform its respective obligations in a timely manner in
accordance with the terms of this Agreement and the Master Servicer
shall provide the Indenture Trustee, the Sponsor, the Note Insurer and
the Noteholders with an Officer's Certificate giving prompt notice of
such failure or delay by it, together with a description of its efforts
to so perform its obligations. The Master Servicer shall immediately
notify the Indenture Trustee and the Note Insurer in writing of any
Event of Servicer Termination.
(b) The Master Servicer may be removed with respect to the
Trust if any one of the following events ("Overall Events of Servicer
Termination") shall occur and be continuing:
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(i) The occurrence of a Servicer Termination Loss Trigger, as
such terms are defined in the Insurance Agreement; or
(ii) The Master Servicer shall (I) apply for or consent to the
appointment of a receiver, trustee, liquidator or custodian or similar
entity with respect to itself or its property, (II) admit in writing
its inability to pay its debts generally as they become due, (III) make
a general assignment for the benefit of creditors, (IV) be adjudicated
a bankrupt or insolvent, (V) commence a voluntary case under the
federal bankruptcy laws of the United States of America or file a
voluntary petition or answer seeking reorganization, an arrangement
with creditors or an order for relief or seeking to take advantage of
any insolvency law or file an answer admitting the material allegations
of a petition filed against it in any bankruptcy, reorganization or
insolvency proceeding or (VI) take corporate action for the purpose of
effecting any of the foregoing; or
(iii) If, without the application, approval or consent of the
Master Servicer, a proceeding shall be instituted in any court of
competent jurisdiction, under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking in respect of
the Master Servicer an order for relief or an adjudication in
bankruptcy, reorganization, dissolution, winding up, liquidation, a
composition or arrangement with creditors, a readjustment of debts, the
appointment of a trustee, receiver, liquidator or custodian or similar
entity with respect to the Master Servicer or of all or any substantial
part of its assets, or other like relief in respect thereof under any
bankruptcy or insolvency law, and, if such proceeding is being
contested by the Master Servicer in good faith, the same shall (A)
result in the entry of an order for relief or any such adjudication or
appointment or (B) continue undismissed or pending and unstayed for any
period of seventy-five (75) consecutive days.
Then, and in each and every such case, so long as an Overall Event of Servicer
Termination shall not have been remedied by the Master Servicer, either the
Indenture Trustee, the Note Insurer or the Noteholders evidencing Percentage
Interests aggregating not less than 51% with the consent of the Note Insurer, or
the Note Insurer, by notice then given in writing to the Master Servicer (and to
the Indenture Trustee if given by the Note Insurer of the Noteholders) may
terminate all of the rights and obligations of the Master Servicer as servicer
under this Agreement. Any such notice to the Master Servicer shall also be given
to each Rating Agency and the Note Insurer. On and after the receipt by the
Master Servicer of such written notice, all authority and power of the Master
Servicer under this Agreement, whether with respect to the Trust Notes or the
Mortgage Loans or otherwise, shall pass to and be vested in the Indenture
Trustee pursuant to and under this Section 5.1(b) and, without limitation, the
Indenture Trustee is hereby authorized and empowered to execute and deliver, on
behalf of the Master Servicer, as attorney-in-fact or otherwise, any and all
documents and other instruments, and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement of each Mortgage
Loan in the Trust and related documents, or otherwise. The Master Servicer
agrees to cooperate with the Indenture Trustee in effecting the termination of
the responsibilities and rights of the Master Servicer hereunder, including,
without limitation, the transfer to the Indenture Trustee for the administration
by it of all cash amounts that shall at the time be held by the Master Servicer
and to be deposited by it in the Note Account, or that have been deposited by
the Master Servicer in the Note Account or thereafter received by the Master
Servicer with respect to the Mortgage Loans. All reasonable costs and expenses
(including attorneys' fees) incurred in connection with amending this Agreement
to reflect such succession as Master Servicer pursuant to this Section 5.1(b)
shall be paid by the predecessor Master
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Servicer (or if the predecessor Master Servicer is the Indenture Trustee, the
initial Master Servicer) upon presentation of reasonable documentation of such
costs and expenses.
The Master Servicer shall not resign from the obligations and
duties hereby imposed on it, except upon determination that its duties hereunder
are no longer permissible under applicable law or are in material conflict by
reason of applicable law with any other activities carried on by it, the other
activities of the Master Servicer so causing such a conflict being of a type and
nature carried on by the Master Servicer at the date of this Agreement. Any such
determination permitting the resignation of the Master Servicer shall be
evidenced by an opinion of counsel to such effect which shall be delivered to
the Indenture Trustee and the Note Insurer.
(c) No removal or resignation of the Master Servicer shall
become effective until the Indenture Trustee or a successor servicer shall have
assumed the Master Servicer's responsibilities and obligations in accordance
with this Section. If no successor servicer is available, the Indenture Trustee
shall act as successor servicer and perform all of the obligations of this
Section, including, without limitation, making Delinquency Advances and paying
Compensating Interest; provided, however, that the Indenture Trustee will not be
obligated to act as successor servicer if it is legally unable to perform its
duties hereunder.
(d) Upon removal or resignation of the Master Servicer, the
Master Servicer also shall promptly deliver or cause to be delivered to a
successor servicer or the Indenture Trustee all the books and records
(including, without limitation, records kept in electronic form) that the Master
Servicer has maintained for the Mortgage Loans, including all tax bills,
assessment notices, insurance premium notices and all other documents as well as
all original documents then in the Master Servicer's possession.
(e) Any collections received by the Master Servicer after
removal or resignation shall be endorsed by it to the Indenture Trustee and
remitted directly and immediately to the Indenture Trustee or the successor
Master Servicer.
(f) Upon removal or resignation of the Master Servicer, the
Indenture Trustee (x) may solicit bids for a successor servicer as described
below, and (y) pending the appointment of a successor Master Servicer as a
result of soliciting such bids, shall serve as Master Servicer. The Indenture
Trustee shall, if it is unable to obtain a qualifying bid and is prevented by
law from acting as Master Servicer, appoint, or petition a court of competent
jurisdiction to appoint, any housing and home finance institution, bank or
mortgage servicing institution which has shareholders' equity of not less than
$10,000,000, as determined in accordance with generally accepted accounting
principles, and acceptable to the Note Insurer as the successor to the Master
Servicer hereunder in the assumption of all or any part of the responsibilities,
duties or liabilities of the Master Servicer hereunder. The compensation of any
successor servicer (including, without limitation, the Indenture Trustee) so
appointed shall be the aggregate Servicing Fees, together with the other
servicing compensation in the form of assumption fees, late payment charges or
otherwise as provided in Sections 4.8 and 4.15; provided, however, that, if the
Indenture Trustee acts as successor Master Servicer then the Sponsor agrees to
pay to the Indenture Trustee at such time that the Indenture Trustee becomes
such successor Master Servicer a fee of twenty-five dollars ($25.00) for each
Mortgage Loan then included in the Trust Estate. The Indenture Trustee shall be
obligated to serve as successor Master Servicer whether or not the $25.00 fee
described in the preceding sentence is paid by the Sponsor, but shall in any
event be entitled to receive, and to enforce payment of, such fee from the
Sponsor.
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(g) In the event the Indenture Trustee solicits bids as
provided above, the Indenture Trustee shall solicit, by public announcement,
bids from housing and home finance institutions, banks and mortgage servicing
institutions meeting the qualifications set forth above. Such public
announcement shall specify that the successor Master Servicer shall be entitled
to the full amount of the aggregate Servicing Fees as servicing compensation,
together with the other servicing compensation in the form of assumption fees,
late payment charges or otherwise as provided in Sections 4.8 and 4.15. Within
thirty days after any such public announcement, the Indenture Trustee shall
negotiate and effect the sale, transfer and assignment of the servicing rights
and responsibilities hereunder to the qualified party submitting the highest
satisfactory bid. The Indenture Trustee shall deduct from any sum received by
the Indenture Trustee from the successor to the Master Servicer in respect of
such sale, transfer and assignment all costs and expenses of any public
announcement and of any sale, transfer and assignment of the servicing rights
and responsibilities hereunder. After such deductions, the remainder of such sum
shall be paid by the Indenture Trustee to the Master Servicer at the time of
such sale, transfer and assignment to the Master Servicer's successor.
(h) The Indenture Trustee and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession. The Master Servicer agrees to cooperate with the Indenture
Trustee and any successor Master Servicer in effecting the termination of the
Master Servicer's servicing responsibilities and rights hereunder and shall
promptly provide the Indenture Trustee or such successor Master Servicer, as
applicable, all documents and records reasonably requested by it to enable it to
assume the Master Servicer's functions hereunder and shall promptly also
transfer to the Indenture Trustee or such successor Master Servicer, as
applicable, all amounts which then have been or should have been deposited in
the Principal and Interest Account by the Master Servicer or which are
thereafter received with respect to the Mortgage Loans. Neither the Indenture
Trustee nor any other successor Master Servicer shall be held liable by reason
of any failure to make, or any delay in making, any distribution hereunder or
any portion thereof caused by (i) the failure of the Master Servicer to deliver,
or any delay in delivering, cash, documents or records to it, or (ii)
restrictions imposed by any regulatory authority having jurisdiction over the
Master Servicer or (iii) any breaches of a predecessor Master Servicer.
(i) The Indenture Trustee or any other successor Master
Servicer, upon assuming the duties of Master Servicer hereunder, shall
immediately make all Delinquency Advances and pay all Compensating Interest
which the Master Servicer has theretofore failed to remit with respect to the
Mortgage Loans; provided, however, that if the Indenture Trustee is acting as
successor Master Servicer, the Indenture Trustee shall be required to make
Delinquency Advances (including the Delinquency Advances described in this
clause (i)) only if, in the Indenture Trustee's reasonable good faith judgment,
such Delinquency Advances will ultimately be recoverable from the related
Mortgage Loans.
(j) The Master Servicer which is being removed or is resigning
shall give notice to the Mortgagors and to ▇▇▇▇▇'▇ and Standard and & Poor's of
the transfer of the servicing to the successor.
(k) The Indenture Trustee shall give notice to the Note
Insurer, ▇▇▇▇▇'▇, Standard & Poor's and to the Noteholders of the occurrence of
any event specified in Section 5.1(a), 5.1(b) or any other event in which the
Master Servicer is no longer acting as Master Servicer hereunder of which the
Indenture Trustee has actual knowledge.
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SECTION 5.2. INSPECTIONS BY THE NOTE INSURER AND THE INDENTURE
TRUSTEE; ERRORS AND OMISSIONS INSURANCE.
(a) At any reasonable time and from time to time upon
reasonable notice, the Note Insurer, the Indenture Trustee, or any agents or
representatives thereof may inspect the Master Servicer's servicing operations
and discuss the servicing operations of the Master Servicer with any of its
officers or directors. The costs and expenses incurred by the Master Servicer or
its agents or representatives in connection with any such examinations or
discussions shall be paid by the Master Servicer.
(b) The Master Servicer agrees to maintain errors and
omissions coverage and a fidelity bond, each at least to the extent generally
maintained by prudent mortgage loan servicers having servicing portfolios of a
similar size.
SECTION 5.3. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION
TO BUSINESS OF MASTER SERVICER.
Any corporation into which the Master Servicer may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Master Servicer shall be a party, or
any corporation succeeding to all or substantially all of the business of the
Master Servicer, shall be the successor of the Master Servicer hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto provided that such corporation meets the
qualifications set forth in Section 5.1(g).
SECTION 5.4. NOTICES OF TO NOTEHOLDERS.
Upon any termination or appointment of a successor to the Master Servicer
pursuant to this Article V, the Indenture Trustee shall give prompt written
notice thereof to the Noteholders at their respective addresses appearing in the
Note Register, the Note Insurer and each Rating Agency.
ARTICLE VI
ADMINISTRATIVE DUTIES OF THE MASTER SERVICER
SECTION 6.1. ADMINISTRATIVE DUTIES WITH RESPECT TO THE
INDENTURE.
The Master Servicer shall perform all its duties and the duties of the Trust
under the Indenture. In addition, the Master Servicer shall consult with the
Owner Trustee as the Master Servicer deems appropriate regarding the duties of
the Trust under the Indenture. The Master Servicer shall monitor the performance
of the Trust and shall advise the Owner Trustee when action is necessary to
comply with the Trust's duties under the Indenture. The Master Servicer shall
prepare for execution by the Trust or shall cause the preparation by other
appropriate Persons of all such documents, reports, filings, instruments,
certificates and opinions as it shall be the duty of the Trust to prepare, file
or deliver pursuant to the Indenture. In furtherance of the foregoing, the
Master Servicer shall take all necessary action that is the duty of the Trust to
take pursuant to the Indenture.
(a) Duties with Respect to the Trust.
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(i) In addition to the duties of the Master Servicer set forth
in this Agreement or any of the Documents, the Master Servicer shall
perform such calculations and shall prepare for execution by the Trust
or the Owner Trustee or shall cause the preparation by other
appropriate Persons of all such documents, reports, filings,
instruments, certificates and opinions as it shall be the duty of the
Trust or the Owner Trustee to prepare, file or deliver pursuant to this
Agreement or any of the Operative Documents or under state and federal
tax and securities laws, and at the request of the Owner Trustee shall
take all appropriate action that it is the duty of the Trust to take
pursuant to this Agreement or any of the Operative Documents. In
accordance with the directions of the Trust or the Owner Trustee, the
Master Servicer shall administer, perform or supervise the performance
of such other activities in connection with the Mortgage Loans
(including the Operative Documents) as are not covered by any of the
foregoing provisions and as are expressly requested by the Trust or the
Owner Trustee and are reasonably within the capability of the Master
Servicer.
(ii) Notwithstanding anything in this Agreement or any of the
Operative Documents to the contrary, the Master Servicer shall be
responsible for promptly notifying the Owner Trustee and the Indenture
Trustee in the event that any withholding tax is imposed on the Trust's
payments (or allocations of income) with respect to the Certificates as
contemplated by this Agreement. Any such notice shall be in writing and
specify the amount of any withholding tax required to be withheld by
the Owner Trustee or the Indenture Trustee pursuant to such provision.
(iii) Notwithstanding anything in this Agreement or the
Operative Documents to the contrary, the Master Servicer shall be
responsible for performance of the duties of the Trust or the Sponsor
set forth in [Section 5.1(a), (b), (c) and (d) of the Trust Agreement]
with respect to, among other things, accounting and reports with
respect to the Certificates.
(iv) In carrying out the foregoing duties or any of its other
obligations under this Agreement, the Master Servicer may enter into
transactions with or otherwise deal with any of its Servicer
Affiliates; provided, however, that the terms of any such transactions
or dealings shall be in accordance with any directions received from
the Trust and shall be, in the Master Servicer's opinion, no less
favorable to the Trust in any material respect.
(b) Non-Ministerial Matters. With respect to matters that in
the reasonable judgment of the Master Servicer are non-ministerial, the Master
Servicer shall not take any action pursuant to this Article VI unless within a
reasonable time before the taking of such action, the Master Servicer shall have
notified the Owner Trustee and the Note Insurer of the proposed action and the
Owner Trustee and the Note Insurer shall not have withheld consent or provided
an alternative direction. For the purpose of the preceding sentence,
"non-ministerial matters" shall include:
(A) the amendment of or any supplement to the
Indenture;
(B) the initiation of any claim or lawsuit by the
Trust and the compromise of any action, claim or lawsuit
brought by or against the Trust (other than in connection with
the collection of the Mortgage Loans);
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(C) the amendment, change or modification of this
Agreement or any of the Operative Documents;
(D) the appointment of successor Note Registrars,
successor Paying Agents and successor Indenture Trustees
pursuant to the Indenture or the appointment of Successor
Servicers or the consent to the assignment by the Note
Registrar, Paying Agent or Indenture Trustee of its
obligations under the Indenture; and
(E) the removal of the Indenture Trustee.
(c) Exceptions. Notwithstanding anything to the contrary in
this Agreement, except as expressly provided herein or in the other Operative
Documents, the Master Servicer, in its capacity hereunder, shall not be
obligated to, and shall not, (1) make any payments to the Noteholders under the
Operative Documents, (2) sell the Trust Property pursuant to Section 5.1 of the
Indenture, (3) take any other action that the Trust directs the Master Servicer
not to take on its behalf or (4) in connection with its duties hereunder assume
any indemnification obligation of any other Person.
(d) The Indenture Trustee or any successor Servicer shall not
be responsible for any obligations or duties of the Master Servicer under
Section 6.1.
SECTION 6.2. RECORDS.
The Master Servicer shall maintain appropriate books of account and records
relating to services performed under this Agreement, which books of account and
records shall be accessible for inspection by the Trust and the Indenture
Trustee at any time during normal business hours.
SECTION 6.3. ADDITIONAL INFORMATION TO BE FURNISHED TO THE
TRUST.
The Master Servicer shall furnish to the Trust and the Indenture Trustee from
time to time such additional information regarding the Mortgage Loans as the
Trust and the Indenture Trustee shall reasonably request.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Sponsor, the Note Insurer or the
Noteholders to the Indenture Trustee to take any action under any provision of
this Agreement, the Sponsor, the Note Insurer or the Noteholders, as the case
may be, shall furnish to the Indenture Trustee a certificate stating that all
conditions precedent, if any, provided for in this Agreement relating to the
proposed action have been complied with, except that in the case of any such
application or request as to which the furnishing of any documents is
specifically required by any provision of this Agreement relating to such
particular application or request, no additional certificate need be furnished.
Except as otherwise specifically provided herein, each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Agreement shall include:
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(a) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions herein
relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based; and
(c) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 7.2. FORM OF DOCUMENTS DELIVERED TO THE INDENTURE
TRUSTEE.
In any case where several matters are required to be certified by, or covered
by an opinion of, any specified Person, it is not necessary that all such
matters be certified by, or covered by the opinion of, only one such Person, or
that they be so certified or covered by only one document, but one such Person
may certify or give an opinion with respect to some matters and one or more
other such Persons as to other matters, and any such Person may certify or give
an opinion as to such matters in one or several documents.
Any certificate of an Authorized Officer of the Indenture
Trustee may be based, insofar as it relates to legal matters, upon an opinion of
counsel, unless such Authorized Officer knows, or in the exercise of reasonable
care should know, that the opinion is erroneous. Any such certificate of an
Authorized Officer of the Indenture Trustee or any opinion of counsel may be
based, insofar as it relates to factual matter upon a certificate or opinion of,
or representations by, one or more Authorized Officers of the Sponsor or of the
Master Servicer, stating that the information with respect to such factual
matters is in the possession of the Sponsor or of the Master Servicer, unless
such Authorized Officer or counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous. Any opinion of counsel may also be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an Authorized Officer of the Indenture Trustee, stating that
the information with respect to such matters is in the possession of the
Indenture Trustee, unless such counsel knows, or in the exercise of reasonable
care should know, that the certificate or opinion or representations with
respect to such matters are erroneous. Any opinion of counsel may be based on
the written opinion of other counsel, in which event such opinion of counsel
shall be accompanied by a copy of such other counsel's opinion and shall include
a statement to the effect that such counsel believes that such counsel and the
Indenture Trustee may reasonably rely upon the opinion of such other counsel.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Agreement, they may, but need not, be consolidated
and form one instrument.
SECTION 7.3. ACTS OF NOTEHOLDERS.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Agreement to be given or taken
by the Noteholders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Noteholders in person or by an
agent duly appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered to the Indenture Trustee, and, where it is hereby expressly
required, to the Sponsor and/or the Note Insurer. Such instrument or instruments
(and the action embodied
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therein and evidenced thereby) are herein sometimes referred to as the "act" of
the Noteholders signing such instrument or instruments. Proof of execution of
any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Agreement and conclusive in favor of the
Indenture Trustee and the Trust, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Whenever
such execution is by an officer of a corporation or a member of a partnership on
behalf of such corporation or partnership, such certificate or affidavit shall
also constitute sufficient proof of his authority.
(c) The ownership of Notes shall be proved by the Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Noteholders shall bind the Noteholders
issued upon the registration of transfer thereof or in exchange therefor or in
lieu thereof, in respect of anything done, omitted or suffered to be done by the
Indenture Trustee or the Trust in reliance thereon, whether or not notation of
such action is made upon such Notes.
SECTION 7.4. NOTICES, ETC., TO INDENTURE TRUSTEE.
Any request, demand, authorization, direction, notice, consent, waiver or act
of the Notes or other documents provided or permitted by this Agreement to be
made upon, given or furnished to, or filed with the Indenture Trustee by any
Notes, the Note Insurer or by the Sponsor shall be sufficient for every purpose
hereunder if made, given, furnished or filed in writing to or with and received
by the Indenture Trustee at its corporate trust office as set forth in the
Indenture.
SECTION 7.5. NOTICES AND REPORTS TO NOTEHOLDERS; WAIVER OF
NOTICES.
Where this Agreement provides for notice to Noteholders of any event or the
mailing of any report to Noteholders, such notice or report shall be
sufficiently given (unless otherwise herein expressly provided) if mailed,
first-class postage prepaid, to each Noteholder affected by such event or to
whom such report is required to be mailed, at the address of such Noteholder as
it appears on the Register, not later than the latest date, and not earlier than
the earliest date, prescribed for the giving of such notice or the mailing of
such report. In any case where a notice or report to Noteholders is mailed in
the manner provided above, neither the failure to mail such notice or report nor
any defect in any notice or report so mailed to any particular Noteholder shall
affect the sufficiency of such notice or report with respect to other
Noteholders, and any notice or report which is mailed in the manner herein
provided shall be conclusively presumed to have been duly given or provided.
Where this Agreement provides for notice in any manner, such
notice may be waived in writing by any Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
In case, by reason of the suspension of regular mail service
as a result of a strike, work stoppage or similar activity, it shall be
impractical to mail notice of any event to
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Noteholders when such notice is required to be given pursuant to any provision
of this Agreement, then any manner of giving such notice as shall be
satisfactory to the Indenture Trustee shall be deemed to be a sufficient giving
of such notice.
Where this Agreement provides for notice to any rating agency
that rated any Notes, failure to give such notice shall not affect any other
rights or obligations created hereunder.
SECTION 7.6. RULES BY INDENTURE TRUSTEE AND SPONSOR.
The Indenture Trustee may make reasonable rules for any meeting of
Noteholders.
SECTION 7.7. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Agreement by any party hereto shall bind
its successors and assigns, whether so expressed or not.
SECTION 7.8. SEVERABILITY.
In case any provision in this Agreement or in the Notes shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
SECTION 7.9. BENEFITS OF AGREEMENT.
Nothing in this Agreement or in the Notes, expressed or implied, shall give to
any Person, other than the Noteholders, the Note Insurer and the parties hereto
and their successors hereunder, any benefit or any legal or equitable right,
remedy or claim under this Agreement.
SECTION 7.10. LEGAL HOLIDAYS.
In any case where the date of any Payment Date, any other date on which any
distribution to any Noteholder is proposed to be paid, or any date on which a
notice is required to be sent to any Person pursuant to the terms of this
Agreement shall not be a Business Day, then (notwithstanding any other provision
of the Notes or this Agreement) payment or mailing need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made or mailed on the nominal date of any such Payment Date, or
such other date for the payment of any distribution to any Noteholder or the
mailing of such notice, as the case may be, and no interest shall accrue for the
period from and after any such nominal date, provided such payment is made in
full on such next succeeding Business Day.
SECTION 7.11. GOVERNING LAW.
In view of the fact that Noteholders are expected to reside in many states and
outside the United States and the desire to establish with certainty that this
Agreement will be governed by and construed and interpreted in accordance with
the law of a state having a well-developed body of commercial and financial law
relevant to transactions of the type contemplated herein, this Agreement and
each Note shall be construed in accordance with and governed by the laws of the
State of New York applicable to agreements made and to be performed therein.
SECTION 7.12. COUNTERPARTS.
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This instrument may be executed in any number of counterparts, each of which
so executed shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument.
SECTION 7.13. USURY.
The amount of interest payable or paid on any Note under the terms of this
Agreement shall be limited to an amount which shall not exceed the maximum
nonusurious rate of interest allowed by the applicable laws of the State of New
York or any applicable law of the United States permitting a higher maximum
nonusurious rate that preempts such applicable New York laws, which could
lawfully be contracted for, charged or received (the "Highest Lawful Rate"). In
the event any payment of interest on any Note exceeds the Highest Lawful Rate,
the Trust stipulates that such excess amount will be deemed to have been paid to
the Noteholder as a result of an error on the part of the Indenture Trustee
acting on behalf of the Trust and the Noteholder receiving such excess payment
shall promptly, upon discovery of such error or upon notice thereof from the
Indenture Trustee on behalf of the Trust, refund the amount of such excess or,
at the option of such Noteholder, apply the excess to the payment of principal
of such Note, if any, remaining unpaid. In addition, all sums paid or agreed to
be paid to the Indenture Trustee for the benefit of Noteholders for the use,
forbearance or detention of money shall, to the extent permitted by applicable
law, be amortized, prorated, allocated and spread throughout the full term of
such Notes.
SECTION 7.14. AMENDMENT.
(a) The Indenture Trustee, the Sponsor and the Master
Servicer, may at any time and from time to time, with the prior written consent
of the Note Insurer but without the giving of notice to or the receipt of the
consent of the Noteholders, amend this Agreement, and the Indenture Trustee
shall consent to such amendment, for the purpose of (i) curing any ambiguity, or
correcting or supplementing any provision hereof which may be inconsistent with
any other provision hereof, or to add provisions hereto which are not
inconsistent with the provisions hereof, (ii) complying with the requirements of
the Code and the regulations proposed or promulgated thereunder; provided,
however, that any such action shall not, as evidenced by an opinion of counsel
delivered to the Indenture Trustee, materially and adversely affect the
interests of any Noteholder (without its written consent).
(b) The Indenture Trustee, the Sponsor and the Master Servicer
may, at any time and from time to time, with the prior written consent of the
Note Insurer but without the giving of notice to or the receipt of the consent
of the Noteholders, amend this Agreement, and the Indenture Trustee shall
consent to such amendment, for the purpose of changing the definitions of
Specified Overcollateralization Amount; provided, however, that no such change
shall affect the weighted average life of the Notes (assuming an appropriate
prepayment speed as determined by the Underwriter by more than five percent, as
determined by the Underwriter.
(c) This Agreement may also be amended by the Indenture
Trustee, the Sponsor, and the Master Servicer at any time and from time to time,
with the prior written approval of the Note Insurer and not less than a majority
of the Percentage Interest represented by each the Notes then Outstanding, for
the purpose of adding any provisions or changing in any manner or eliminating
any of the provisions of this Agreement or of modifying in any manner the rights
of the Noteholders hereunder; provided, however, that no such amendment shall
(a) change in any manner the amount of, or change the timing of, payments which
are required to be distributed to any Noteholder without the consent of the
Noteholder, (b) reduce the aforesaid
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percentages of Percentage Interests which are required to consent to any such
amendments or (c) result in a down-rating or withdrawal of any ratings then
assigned to the Notes, without the consent of the Noteholders of the then
Outstanding Notes.
(d) The Note Insurer, the Noteholders, Moody's and Standard &
Poor's shall be provided with copies of any amendments to this Agreement,
together with copies of any opinions or other documents or instruments executed
in connection therewith.
SECTION 7.15. THE NOTE INSURER.
The Note Insurer is a third-party beneficiary of this Agreement. Any right
conferred to the Note Insurer shall be suspended during any period in which the
Note Insurer is in default in its payment obligations under the Note Policy,
except with respect to amendments to this Agreement pursuant to Section 11.14.
During the continuance of a Note Insurer Default, the Note Insurer's rights
hereunder shall vest in the Indenture Trustee on behalf of the Noteholders and
shall be exercisable by the Noteholders of at least a majority in Percentage
Interest of the Notes then Outstanding or, if there are no Notes then
Outstanding and the Note Policy has expired or a Note Insurer Default has
occurred and is continuing, or if there are no Notes outstanding and any and all
amounts due and owing the Note Insurer under the Insurance Agreement have been
paid in full, and the Note Policy has expired or is unavailable due to a Note
Insurer Default, by at least a majority of the Certificates then Outstanding. At
such time as the Notes are no longer Outstanding hereunder and the Note Insurer
has been reimbursed for all Reimbursement Amounts to which it is entitled
hereunder and the Note Policy has expired, the Note Insurer's rights hereunder
shall terminate.
SECTION 7.16. NOTICES.
All notices hereunder shall be given as follows, until any superseding
instructions are given to all other Persons listed below:
The Indenture Trustee: [ADDRESS]
The Sponsor: Advanta Conduit Receivables, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Tel:(▇▇▇) ▇▇▇-▇▇▇▇
Fax:(▇▇▇) ▇▇▇-▇▇▇▇
Attention: Structured Finance
The Master Servicer: Advanta Mortgage Corp. USA
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
The Note
Insurer: [ADDRESS]
Moody's: ▇▇▇▇▇'▇ Investors Service
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: The Mortgage Monitoring Department
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Standard & Poor's: Standard & Poor's Ratings Group
▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Manager, Structured Finance Operations Group
Underwriter: [ADDRESS]
The Trust: Advanta Mortgage Loan Trust ____-_
c/o [OWNER TRUSTEE], as Owner Trustee
[ADDRESS]
SECTION 7.17. LIMITATION OF LIABILITY.
It is expressly understood and agreed by the parties hereto
that (a) this Agreement is executed and delivered by [OWNER TRUSTEE], not
individually or personally but solely as Owner Trustee of the Trust under the
Trust Agreement, in the exercise of the powers and authority conferred and
vested in it, (b) each of the representations, undertakings and agreements
herein made on the part of the Trust is made and intended not as personal
representations, undertakings and agreements by [OWNER TRUSTEE] but is made and
intended for the purpose for binding only the Trust, (c) nothing herein
contained shall be construed as creating any liability on [OWNER TRUSTEE]
individually or personally, to perform any covenant either expressed or implied
contained herein, all such liability, if any, being expressly waived by the
parties to this Agreement and by any person claiming by, through or under them
and (d) under no circumstances shall [OWNER TRUSTEE] be personally liable for
the payment of any indebtedness or expenses of the Trust or be liable for the
breach or failure of any obligation, representation, warranty or covenant made
or undertaking by the Trust under this Agreement or any related documents.
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IN WITNESS WHEREOF, the Sponsor, the Trust, the Master
Servicer and the Indenture Trustee have caused this Agreement to be duly
executed by their respective officers thereunto duly authorized, all as of the
day and year first above written.
ADVANTA CONDUIT RECEIVABLES, INC.,
as Sponsor
By: __________________________________
ADVANTA MORTGAGE CORP. USA
as Master Servicer
By: __________________________________
ADVANTA MORTGAGE LOAN
TRUST ____-_, as Issuer
By: [OWNER TRUSTEE], not in its individual
capacity but solely as Owner Trustee,
By: ___________________________________
Name:
Title:
[INDENTURE TRUSTEE],
as Indenture Trustee
By: ___________________________________
[SIGNATURE PAGE TO THE SALE AND SERVICING AGREEMENT]
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STATE OF CALIFORNIA )
: ss.:
COUNTY OF )
On the ____ day of _________, ____ before me personally came
___________ to me known, who, being by me duly sworn did depose and say that
his/her office is located at [ADDRESS]; that s/he is ________________ of
[INDENTURE TRUSTEE], the national banking corporation described in and that
executed the above instrument as Indenture Trustee; and that s/he signed his/her
name thereto under authority granted by the Board of Directors of said national
banking association.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
[NOTARIAL SEAL]
______________________________________
Notary Public