1
SALE AND SERVICING AGREEMENT
among
ADVANTA REVOLVING HOME EQUITY LOAN TRUST 2000-A,
Trust,
ADVANTA CONDUIT RECEIVABLES, INC.,
as Sponsor,
ADVANTA MORTGAGE CORP. USA,
as Master Servicer,
and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as Indenture Trustee
Dated as of April 1, 2000
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TABLE OF CONTENTS
(Not a Part of this Agreement)
Page
Parties .......................................................................... 1
Recitals ......................................................................... 1
ARTICLE 1
DEFINITIONS; RULES OF CONSTRUCTION ............................................... 1
Section 1.1. Definitions ................................................ 1
Section 1.2. Use of Words and Phrases ................................... 1
Section 1.3. Captions; Table of Contents ................................ 1
Section 1.4. Opinions ................................................... 2
ARTICLE 2
CONVEYANCE OF MORTGAGE LOANS ..................................................... 2
Section 2.1. Conveyance of the Mortgage Loans ........................... 2
Section 2.2. Acceptance of Mortgage Files by Indenture Trustee; Certain
Substitutions of Mortgage Loans; Certification by
Indenture Trustee ......................................... 6
Section 2.3. Qualified Replacement Mortgage Loans ....................... 8
Section 2.4. Cooperation Procedures ..................................... 9
Section 2.5. Retransfers of Mortgage Loans at Election of Sponsor
or the Related Originator ................................. 9
Section 2.6. Conveyance of the Subsequent Mortgage Loans ................ 10
ARTICLE 3
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE SPONSOR AND THE MASTER SERVICER ........................................... 13
Section 3.1. Representations and Warranties of the Sponsor .............. 13
Section 3.2. Representations and Warranties of the Master Servicer ...... 14
Section 3.3. Representations and Warranties of the Sponsor with Respect
to the Mortgage Loans; Retransfer of Certain Mortgage Loans 17
Section 3.4. Covenants of Sponsor to Take Certain Actions with Respect
to the Mortgage Loans In Certain Situations ............... 22
ARTICLE 4
SERVICING AND ADMINISTRATION OF MORTGAGE LOANS ................................... 23
Section 4.1. Master Servicer and Sub-Servicers .......................... 23
Section 4.2. Modifications .............................................. 25
Section 4.3. Servicer Report ............................................ 27
Section 4.4. Liability of Master Servicer ............................... 27
Section 4.5. Sub-Servicing Agreements Between Master Servicer
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and Sub-Servicers ......................................... 28
Section 4.6. Successor Sub-Servicers .................................... 29
Section 4.7. No Contractual Relationship Between Sub-Servicer and
Indenture Trustee or the Noteholders ..................... 29
Section 4.8. Assumption or Termination of Sub-Servicing Agreement
by Indenture Trustee ..................................... 29
Section 4.9. Principal and Interest Account ............................ 29
Section 4.10. Servicing Advances ........................................ 31
Section 4.11. Maintenance of Insurance .................................. 31
Section 4.12. Due-on-Sale Clauses; Assumption and Substitution Agreements 33
Section 4.13. Realization Upon Defaulted Mortgage Loans ................. 34
Section 4.14. Indenture Trustee to Cooperate; Release of Mortgage Files . 35
Section 4.15. Servicing Compensation .................................... 36
Section 4.16. Annual Statement as to Compliance ......................... 36
Section 4.17. Annual Independent Certified Public Accountants' Reports .. 37
Section 4.18. Access to Certain Documentation and Information
Regarding the Mortgage Loans ............................. 37
Section 4.19. Assignment of Agreement ................................... 38
Section 4.20. Resignation of the Master Servicer ........................ 38
ARTICLE 5
SERVICING TERMINATION ............................................................ 38
Section 5.1. Events of Servicing Termination ............................ 38
Section 5.2. Inspections by Insurer; Errors and Omissions Insurance ..... 42
Section 5.3. Merger, Conversion, Consolidation or Succession to
Business of Master Servicer ............................... 42
Section 5.4. Notification to Noteholders ................................ 42
Section 5.5. Notices of Material Events ................................. 42
ARTICLE 6
ADMINISTRATIVE DUTIES OF THE MASTER SERVICER ..................................... 43
Section 6.1. Administrative Duties with Respect to the Indenture ........ 43
Section 6.2. Records .................................................... 45
Section 6.3. Additional Information to be Furnished to the Trust ........ 45
ARTICLE 7
MISCELLANEOUS .................................................................... 45
Section 7.1. Compliance Certificates and Opinions ...................... 45
Section 7.2. Form of Documents Delivered to the Indenture Trustee ...... 46
Section 7.3. Acts of Noteholders ....................................... 46
Section 7.4. Notices, etc. to Indenture Trustee ........................ 47
Section 7.5. Notices and Reports to Noteholders; Waiver of Notices ..... 47
Section 7.6. Successors and Assigns .................................... 48
Section 7.7. Severability .............................................. 48
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Section 7.8. Benefits of Agreement ..................................... 48
Section 7.9. Legal Holidays ............................................ 48
Section 7.10. Governing Law ............................................. 48
Section 7.11. Counterparts .............................................. 49
Section 7.12. Usury ..................................................... 49
Section 7.13. Amendment ................................................. 49
Section 7.14. The Insurer ............................................... 50
Section 7.16. Limitation of Liability ................................... 52
SCHEDULE I -- Schedule of Mortgage Loans
EXHIBIT A -- Defined Terms (Copy of Annex 1 to the Indenture)
EXHIBIT B -- [Reserved]
EXHIBIT C -- [Reserved]
EXHIBIT D -- Form of Trustee's Acknowledgment of Receipt
EXHIBIT E -- Form of Pool Certification
EXHIBIT F -- Form of Master Servicer's Trust Receipt
EXHIBIT G -- Form of Power of Attorney
EXHIBIT H -- Form of Subsequent Transfer Agreement
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SALE AND SERVICING AGREEMENT (the "Agreement"), dated as of April 1,
2000, by and among ADVANTA REVOLVING HOME EQUITY LOAN TRUST 2000-A, a Delaware
business trust (the "Trust"), ADVANTA CONDUIT RECEIVABLES, INC., a Nevada
corporation, in its capacity as sponsor of the Trust (the "Sponsor"), ADVANTA
MORTGAGE CORP. USA, a Delaware corporation, in its capacity as master servicer
(the "Master Servicer"), and BANKERS TRUST COMPANY OF CALIFORNIA, N.A., a
national banking association, in its capacity as Indenture Trustee (the
"Indenture Trustee").
WHEREAS, the Trust desires to purchase a portfolio of Mortgage Loans
(as defined in Annex 1 to the Indenture) originated by the Originators (as
defined in Annex 1 to the Indenture);
WHEREAS, the Sponsor has purchased such Mortgage Loans from the
Originators and is willing to sell such Mortgage Loans to the Trust;
WHEREAS, the Master Servicer has agreed to service such Mortgage Loans,
which constitute the principal assets of the Trust Estate (as defined in Annex 1
to the Indenture);
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Trust, the Sponsor, the Master Servicer and the
Indenture Trustee hereby agree as follows:
ARTICLE 1
DEFINITIONS; RULES OF CONSTRUCTION
Section 1.1. Definitions.
Except as otherwise specified herein, capitalized terms used in this
Agreement are defined in Annex 1 to the Indenture, dated as of April 1, 2000
(the "Indenture"), between the Trust and the Indenture Trustee. A copy of Annex
1 to the Indenture is attached to this Agreement as Exhibit A. Defined terms
that are used only in one section or only in another definition may be omitted
from the list of defined terms in Annex 1. Defined terms include, as
appropriate, all genders and the plural as well as the singular.
Section 1.2. Use of Words and Phrases.
"Herein," "hereby," "hereunder," "hereof," "hereinbefore,"
"hereinafter" and other equivalent words refer to this Agreement as a whole and
not solely to the particular section of this Agreement in which any such word is
used. Whenever used in this Agreement, any pronoun shall be deemed to include
both singular and plural and to cover all genders. As used herein, any form of
the word "include" shall be deemed to be followed by the words "without
limitation."
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Section 1.3. Captions; Table of Contents.
The captions or headings in this Agreement and the Table of Contents
are for convenience only and in no way define, limit or describe the scope and
intent of any provisions of this Agreement.
Section 1.4. Opinions.
Each opinion with respect to the validity, binding nature and
enforceability of documents or Notes may be qualified to the extent that the
same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity (whether considered in a
proceeding or action in equity or at law) and may state that no opinion is
expressed on the availability of the remedy of specific enforcement, injunctive
relief or any other equitable remedy. Any opinion required to be furnished by
any Person hereunder must be delivered by counsel upon whose opinion the
addressee of such opinion may reasonably rely, and such opinion may state that
it is given in reasonable reliance upon an opinion of another, a copy of which
must be attached, concerning the laws of a foreign jurisdiction.
ARTICLE 2
CONVEYANCE OF MORTGAGE LOANS
Section 2.1. Conveyance of the Mortgage Loans.
(a) The Sponsor, concurrently with the execution and delivery
hereof, hereby sells, assigns, transfers, sets over and otherwise conveys or
shall request or cause to be transferred, sold, assigned, set over and otherwise
conveyed to the Trust, and the Trust hereby purchases and acquires, without
recourse (subject to the Sponsor's obligations herein), all right, title and
interest of the Sponsor in and to: (i) all Mortgage Loans listed on the Schedule
of Mortgage Loans, and their respective Principal Balances (including all
Additional Balances) and all principal and interest collected in respect thereof
on or after the respective Cut-Off Date; (ii) all Mortgaged Properties to the
extent that they are acquired by foreclosure or deed in lieu of foreclosure;
(iii) all of the Sponsor's rights under any Mortgage Insurance Policies covering
the Mortgaged Properties; (iv) all of the Sponsor's rights and benefits, but
none of its obligations or burdens, under Sections 2.03, 2.05, 4.01, 4.02 and
4.04 (other than the fourth paragraph thereof) of the Purchase Agreement,
including all of the Sponsor's rights and remedies in the event of certain
breaches by the Originators of their respective representations and warranties
under Sections 4.01 and 4.02 of the Purchase Agreement; (v) all Mortgage Files
and other documents relating to the foregoing; (vi) all amounts held in the
Accounts (excluding net investment earnings on the Principal and Interest
Account, the Note Account and the Capitalized Interest Account); (vii) all
proceeds with respect to the foregoing; and (viii) all other assets included or
to be included in the Trust Estate created under the Indenture for the benefit
of the Noteholders and the Insurer; provided, however, that neither the Trust
nor any of its Assignees (including the Indenture Trustee) shall assume any
obligation under any Credit Line Agreement that provides for the funding of
future advances to the Mortgagor thereunder, it being understood that neither
the Trust nor any of its Assignees (including the Indenture Trustee) shall be
required or permitted to fund any such future advances.
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On or before the Closing Date, the Sponsor will cause the Insurer to
deliver the Policy to the Indenture Trustee for the benefit of the Noteholders.
As full consideration for the Sponsor's sale, assignment, transfer,
set-over and conveyance to the Trust of all of its right, title and interest in
and to the Mortgage Loans and the other rights and properties specified above,
the Trust shall (A) pay to or upon the order of the Sponsor that amount in
immediately available funds equal to the proceeds of the sale of the Notes, net
of any underwriting discounts and other transaction costs (including the cost of
obtaining the Policy as described above and the expenses referred to in Section
2.01 of the Purchase Agreement), and (B) direct the issuance of one or more
Certificates evidencing in the aggregate 100% of the beneficial ownership
interest in the Trust to or upon the order of the Sponsor or its designees, all
in such amounts as the Sponsor shall determine on or before the Closing Date.
(b) It is the express intent of the parties hereto that the
conveyance of the Mortgage Loans (including the related Mortgage Files and the
other rights and properties described in Section 2.1(a) above) by the Sponsor to
the Trust as contemplated by Section 2.1(a) be construed as a sale of the
Mortgage Loans by the Sponsor to the Trust for certain non-tax purposes. It is
not the intent of the parties that such conveyance be deemed a pledge of the
Mortgage Loans by the Sponsor to the Trust or any of the Trust's Assignees
(including the Indenture Trustee) to secure a debt or other obligation of the
Sponsor or any Assignor of the Sponsor. However, in the event and to the extent
that, notwithstanding the intent of the parties hereto, any or all of the
Mortgage Loans (including the related Mortgage Files and the other rights and
properties described in Section 2.1(a) above) are held to be property of the
Sponsor or its Assignors, then:
(i) this Agreement shall also be deemed to be a security
agreement within the meaning of Article 9 of the Uniform Commercial Code
("UCC");
(ii) the conveyance provided for herein shall be deemed to be
a grant by the Sponsor to the Trust of a first priority security interest in all
of the Sponsor's right, title and interest in and to the Mortgage Loans
(including the related Mortgage Files and the other rights and properties
described in Section 2.1(a) above) and all amounts payable to the holder of the
Mortgage Loans and/or such rights or properties in accordance with the terms
thereof and all proceeds of the conversion, voluntary or involuntary, of the
foregoing into cash, instruments, securities or other property, including all
amounts from time to time held or invested in the Accounts (excluding net
investment earnings on the Principal and Interest Account, the Note Account and
the Capitalized Interest Account), whether in the form of cash, instruments,
securities or other property;
(iii) the possession by the Trust or any of its Assignees or
their respective bailees or agents of items of property that constitute
instruments, money, negotiable documents or chattel paper shall be deemed to be
"possession by the secured party" for purposes of perfecting the security
interest pursuant to Section 9-305 of the California UCC;
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(iv) notifications to persons holding such property, and
acknowledgments, receipts or confirmations from persons holding such property,
shall be deemed notifications to, or acknowledgments, receipts or confirmations
from, financial intermediaries, bailees or agents (as applicable) of the Trust
for the purpose of perfecting such security interest under applicable law; and
(v) the obligations secured by the first priority security
interest described in clause (ii) above shall be deemed to include any and all
obligations of the Trust or any of its Assignees to pay the principal of and
interest on the Notes to the Noteholders and to pay the fees, expenses and other
amounts required to be paid to the Master Servicer, the Indenture Trustee, the
Owner Trustee, the Insurer and the Certificateholders, all in accordance with
and otherwise subject to the Operative Documents (including the Indenture).
Any assignment or other transfer of the interest of the Trust under any
provision hereof shall also be deemed to be an assignment of any security
interest created hereby. Each of the Sponsor and the Trust shall, to the extent
consistent with this Agreement, take such actions as may be necessary to ensure
that, if this Agreement were deemed to create a security interest in the
Mortgage Loans, such security interest would be deemed to be a perfected
security interest of first priority under applicable law and would be maintained
as such throughout the terms of this Agreement and the Indenture. The Sponsor
also covenants not to pledge, assign or grant any security interest to any third
party in any Mortgage Loan conveyed to the Trust hereunder.
(c) Upon the Trust's request, the Sponsor shall perform (or
cause to be performed) such further acts and execute, acknowledge and deliver
(or cause to be executed, acknowledged and delivered) to the Trust such further
documents as the Trust shall deem necessary or advisable in order to evidence,
establish, maintain, protect, enforce or defend its rights in and to the
Mortgage Loans and other rights and properties transferred hereunder or
otherwise to carry out the intent and accomplish the purposes of this Agreement
(including filing UCC-1 financing statements naming the Sponsor as debtor and
the Trust as secured party and any continuation statements relating thereto).
(d) In connection with the transfer and assignment of the
Mortgage Loans, the Sponsor agrees to:
(i) cause to be delivered without recourse to the Indenture
Trustee, on the Closing Date with respect to the Initial Mortgage Loans, on the
Transfer Date with respect to any Qualified Replacement Mortgage Loan, and on
the Subsequent Transfer Date with respect to any Subsequent Mortgage Loans, the
items listed in the definition of "Mortgage Files";
(ii) cause, within seventy-five (75) Business Days following
the Closing Date, the Subsequent Transfer Date or the Transfer Date (as
applicable), (x) Assignments of Mortgages to be prepared, (y) copies of
Assignments of Mortgages to be delivered to the Indenture Trustee and (z)
originals of Assignments of Mortgages to be submitted for recording in the
appropriate jurisdictions wherein such recordation is necessary to perfect the
lien of the Indenture Trustee against creditors of or purchasers from the
Sponsor; provided, however, that an Assignment of Mortgage shall not be required
to be submitted for recording with respect to any Mortgage Loan as to which the
recordholder is an
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Originator unless (A) the related Mortgaged Property is not located in a
jurisdiction in which, as evidenced by an Opinion of Counsel acceptable to the
Rating Agencies and the Insurer and delivered to the Indenture Trustee and the
Insurer within thirty (30) Business Days following the Closing Date, recordation
of such Assignment of Mortgage is not necessary to perfect the lien of the
Indenture Trustee in the related Mortgage Loan, (B) an Event of Servicing
Termination or a Rapid Amortization Event shall have occurred, (C) the long-term
unsecured debt of Advanta Corp. shall have been assigned a rating of less than
BBB by S&P or less than Baa2 by ▇▇▇▇▇'▇, (D) the circumstances discussed in
Section 2.1(j) below shall exist, or (E) the Insurer otherwise directs the
Sponsor in writing; and
(iii) cause, within one (1) year after the Closing Date, the
Subsequent Transfer Date or the Transfer Date (as applicable), to be delivered
to the Indenture Trustee and the Insurer evidence of the recording of such
Assignments of Mortgage (provided that such recording is required pursuant to
clause (ii) above).
All recording, if required pursuant to this Section 2.1, shall be
accomplished at the expense of the Sponsor. Notwithstanding anything to the
contrary contained in this Section 2.1, in those instances where the public
recording office retains the original Mortgage or assignment of a 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 or such assignment of a Mortgage, as the case may be, certified by the
public recording office to be a true copy of the recorded original thereof.
Copies of all Mortgage assignments and any Assignment of Mortgage in
recordable form received by the Indenture Trustee shall be kept in the related
Mortgage File.
Within thirty (30) days after the Closing Day, the Master Servicer
shall deliver to the Indenture Trustee for execution powers of attorney,
substantially in the form of Exhibit G, authorizing the Master Servicer on
behalf of the Indenture Trustee to record the Assignments of Mortgage as
provided in clause (ii) above.
(e) If an Assignment of Mortgage is lost during the process of
recording, or is returned from the recorder's office unrecorded due to a defect
therein, the Sponsor shall prepare or cause to be prepared a substitute
assignment or cure such defect, as the case may be, and thereafter cause each
such assignment to be duly recorded.
(f) The Sponsor shall reflect on its records that the Mortgage
Loans have been sold to the Trust.
(g) If (i) the amount of shareholders' equity of the Master
Servicer and the ultimate consolidating parent of the Master Servicer,
calculated pursuant to generally accepted accounting principles, as evidenced by
the Financial Statements (as defined in the Insurance Agreement, and which the
Master Servicer hereby agrees to provide to the Insurer on a quarterly basis as
requested by the Insurer) falls below $5,000,000 and (ii) the amount of
shareholders' equity of Advanta National Bank, calculated pursuant to applicable
regulatory accounting principles, as evidenced by the financial statements of
Advanta National Bank, falls below $25,000,000, then the Sponsor shall promptly
prepare and deliver
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to the Indenture Trustee an Assignment of Mortgage for each Mortgage Loan for
which an Assignment of Mortgage was not previously prepared. Upon the direction
of the Insurer, the Indenture Trustee shall submit such Assignments of Mortgages
with respect to all of the Mortgage Loans for recording in the appropriate
jurisdictions. The Master Servicer shall pay the anticipated recording costs to
the Indenture Trustee on the date of delivery of such Assignments of Mortgages
to the Indenture Trustee, and if the Master Servicer fails to do so or the
actual recording costs exceed the anticipated recording costs then the Indenture
Trustee shall pay such costs and shall be entitled to reimbursement therefor,
pursuant to Section 6.7 of the Indenture, from amounts otherwise distributable
to the Certificateholders.
(h) To the extent that the ratings, if any, then assigned to
the unsecured debt of Advanta National Bank or of its ultimate corporate parent
are satisfactory to the Insurer, ▇▇▇▇▇'▇ and S&P, then any of the Document
Delivery Requirements described above may be waived by an instrument signed by
the Insurer, S&P and ▇▇▇▇▇'▇ (and any documents theretofore delivered to the
Indenture Trustee shall be returned to Advanta National Bank or its designee) on
such terms and subject to such conditions as the Insurer, ▇▇▇▇▇'▇ and S&P may
require.
Section 2.2. Acceptance of Mortgage Files by Indenture Trustee; Certain
Substitutions of Mortgage Loans; Certification by
Indenture Trustee.
(a) The Indenture Trustee hereby acknowledges its receipt of
the Policy and agrees to execute and deliver on the Closing Date and each
Subsequent Transfer Date and each Transfer Date an acknowledgment of receipt of
the Mortgage Files delivered to it by the Sponsor and declares that it will hold
such documents and any amendments, replacements or supplements thereto, as well
as any other assets of the Trust Estate delivered to the Indenture Trustee, as
Indenture Trustee in trust upon and subject to the conditions set forth herein,
for the benefit of the Noteholders and the Insurer.
(b) The Indenture Trustee further agrees to review any
documents delivered to it by the Sponsor within ninety (90) days after the
Closing Date, the Subsequent Transfer Date or the Transfer Date, as applicable,
and to deliver to the Sponsor, the Master Servicer, the Insurer and the Owner
Trustee a certification, in the form of Exhibit E hereto (a "Pool
Certification"), to the effect that, as to each Mortgage Loan listed in the
Schedule of Mortgage Loans (other than any Mortgage Loan paid in full), (i) all
documents described in the definition of "Mortgage Files" and required to be
delivered to it pursuant to this Agreement are in its possession and (ii) such
documents have been reviewed by it and have not been damaged, torn or physically
altered (except where such alteration has been acknowledged and accepted by the
Mortgagor) and on their face appear to relate to such Mortgage Loan. The Pool
Certification shall be delivered to the Sponsor, the Master Servicer, the
Insurer and the Owner Trustee within one-hundred twenty (120) days, but is not
required to be delivered prior to ninety (90) days, after the Closing Date. The
Indenture Trustee shall be under no duty or obligation to inspect, review or
examine any such documents, instruments, certificates or other papers to verify
the validity, legality, enforceability, sufficiency, due authorization,
recordability or genuineness of same or to determine that they are genuine,
enforceable, or appropriate for the represented purpose or that they are other
than what they purport to be on their face, nor shall the Indenture Trustee be
under any duty to determine independently whether there are any intervening
assignments or assumption or modification agreements with respect to any
Mortgage Loan.
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(c) If the Indenture Trustee during such 90-day period from
the Closing Date, the Subsequent Transfer Date or the Transfer Date, as
applicable, finds (i) any document constituting a part of a Mortgage File which
(A) is not properly executed, (B) has not been received within the specified
period, or (C) is unrelated to the Mortgage Loans identified in the Schedule of
Mortgage Loans, or (ii) that any Mortgage Loan does not conform in a material
respect to the description thereof as set forth in the Schedule of Mortgage
Loans, the Indenture Trustee shall promptly notify the Sponsor and the Insurer.
In performing any such review, the Indenture Trustee may conclusively rely on
the Sponsor as to the purported genuineness of any such document and any
signature thereon. It is understood that the scope of the Indenture Trustee's
review of the Mortgage File delivered by the Sponsor is limited solely to
confirming that the documents listed in the definition of Mortgage File have
been executed and received and, on their face, appear to relate to the Mortgage
Loans identified in the Schedule of Mortgage Loans and conform materially to the
description thereof in the Schedule of Mortgage Loans with regard to Mortgagor
name and original Credit Limit.
The Sponsor agrees to use reasonable efforts to remedy a material
defect in a document constituting part of a Mortgage File of which it is so
notified by the Indenture Trustee. If, however, within thirty (30) days after
the Indenture Trustee's notice (which may be in the form of a Pool
Certification) to it respecting such defect, the Sponsor has not remedied or
caused to be remedied the defect and the defect materially and adversely affects
the interest in the related Mortgage Loan of the Indenture Trustee, the
Noteholders or the Insurer, the Sponsor will then, within five (5) Business Days
(i) substitute in lieu of such Mortgage Loan a Qualified Replacement Mortgage
Loan pursuant to Section 2.3 and, deliver the Substitution Amount applicable
thereto to the Master Servicer for deposit in the Principal and Interest Account
or (ii) reacquire such Mortgage Loan at a purchase price equal to the Loan
Reacquisition Price thereof, which reacquisition price shall be delivered to the
Master Servicer for deposit in the Principal and Interest Account.
(d) As to any Qualified Replacement Mortgage Loan, the Sponsor
shall, if required to deliver any such Qualified Replacement Mortgage Loan to
the Indenture Trustee, provide the Indenture Trustee with the information set
forth in the Schedule of Mortgage Loans with respect to such Qualified
Replacement Mortgage Loan, and deliver to the Indenture Trustee such documents
and agreements as are required to be held by the Indenture Trustee in accordance
with this Section 2.2. Upon receipt of the Mortgage File for a Qualified
Replacement Mortgage Loan and written notification signed by a Servicing Officer
to the effect that the related Substitution Amount, if any, has been deposited
into the Principal and Interest Account or of written notification signed by a
Servicing Officer to the effect that the Loan Reacquisition Price in respect of
an Unqualified Mortgage Loan has been deposited into the Principal and Interest
Account, then (i) on the date of conveyance of such Qualified Replacement
Mortgage Loan or deposit of the Loan Reacquisition Price, as the case may be,
the Indenture Trustee shall deliver to the Sponsor the Mortgage File for the
related Unqualified Mortgage Loan, properly endorsed without recourse to the
Sponsor and (ii) within ten (10) Business Days, the Indenture Trustee shall
execute such other documents and instruments of transfer including preparing an
endorsement and assignment of documents, in each case without recourse,
representation or warranty, and take such other actions as shall reasonably be
requested by the Sponsor to effect a transfer by the Trust of such Unqualified
Mortgage Loan to the Sponsor or its designee.
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It is understood and agreed that the obligation of the Sponsor to
accept a transfer of an Unqualified Mortgage Loan and to either convey a
Qualified Replacement Mortgage Loan (together with a deposit of the related
Substitution Amount, if any, into the Principal and Interest Account) or to make
a deposit of any related Loan Reacquisition Price into the Principal and
Interest Account shall constitute the sole remedy available to the Noteholders,
the Insurer and the Indenture Trustee against the Sponsor.
The Sponsor, promptly following the transfer of an Unqualified Mortgage
Loan from the Trust pursuant to this Section, shall deliver an amended Schedule
of Mortgage Loans to the Indenture Trustee and the Insurer and shall make
appropriate entries in its general account records to reflect such transfer. The
Master Servicer shall, following such transfer, appropriately ▇▇▇▇ its records
to indicate that it is no longer servicing such Mortgage Loan on behalf of the
Trust.
Section 2.3. Qualified Replacement Mortgage Loans.
(a) A "Qualified Replacement Mortgage Loan" is a Mortgage Loan
that substitutes for another pursuant to Section 2.2(c), 3.3 or 3.4 hereof,
which with respect to the Mortgage Loan being replaced and as of the Replacement
Cut-Off Date (i) has the same interest rate index as, and a margin over such
index and a maximum interest rate at least equal to, the Mortgage Loan being
replaced, (ii) is secured by property of the same or better type and with the
same or better occupancy status as the replaced Mortgage Loan, (iii) is of the
same or better credit quality classification (determined in accordance with the
related Originator's credit underwriting guidelines), (iv) shall mature no later
than the Payment Date occurring in September, 2023, (v) has a Combined
Loan-to-Value Ratio no higher than that of the replaced Mortgage Loan, (vi) has
a Principal Balance equal to or less than that of the replaced Mortgage Loan,
(vii) is in the same lien position or better, (viii) is not more than 30 days
delinquent, and (ix) complies with the representations and warranties set forth
in Section 3.3(a). Except with respect to clause (ix) above, in the event that
one or more mortgage loans are proposed to be substituted for one or more
Mortgage Loans, the Insurer may allow the foregoing tests to be met on a
weighted average basis or other aggregate basis acceptable to the Insurer, as
evidenced by a written approval delivered to the Indenture Trustee and the
Sponsor by the Insurer.
(b) Each Unqualified Mortgage Loan that is required to be
repurchased or substituted pursuant to the provisions of this Agreement or the
Purchase Agreement shall, upon such reacquisition or substitution in accordance
with the provisions hereof, be released from the Trust and from the lien created
by the Indenture. As to each Mortgage Loan released from the Trust in connection
with its reacquisition or the conveyance of a Qualified Replacement Mortgage
Loan, the Indenture Trustee will transfer, assign, set over and otherwise convey
without recourse, to or upon the order of the Sponsor, all of its right, title
and interest in and to such released Mortgage Loan and all the Trust's right,
title and interest to principal and interest collected on such released Mortgage
Loan on and after the first day of the calendar month in which such Mortgage
Loan is released; as applicable; provided, however, that the Trust shall reserve
and retain all right, title and interest in and to payments of principal and
interest collected on such released Mortgage Loan prior to such date.
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(c) For any Remittance Period during which the Sponsor
substitutes one or more Qualified Replacement Mortgage Loans, the Master
Servicer shall determine the Substitution Amount, which the Sponsor shall
deposit in the Principal and Interest Account at the time of substitution. All
amounts received in respect of the Qualified Replacement Mortgage Loan during
the Remittance Period in which the circumstances giving rise to such
substitution occur shall not be a part of the Trust Estate and shall not be
deposited by the Master Servicer in the Principal and Interest Account. All
amounts received by the Master Servicer during the Remittance Period in which
the circumstances giving rise to such substitution occur in respect of any
Unqualified Mortgage Loan so removed by the Trust Estate shall be deposited by
the Master Servicer in the Principal and Interest Account. Upon such
substitution, the Qualified Replacement Mortgage Loan shall be subject to the
terms of this Agreement in all respects, and the Sponsor shall be deemed (i) to
have made with respect to such Qualified Replacement Mortgage Loan or Loans, as
of the date of substitution, the covenants, representations and warranties set
forth in Section 3.3 and (ii) to have certified that such Mortgage Loan(s)
is/are Qualified Replacement Mortgage Loan(s). The procedures applied by the
Sponsor in selecting each Qualified Replacement Mortgage Loan shall not be
materially adverse to the interests of the Indenture Trustee, the Noteholders or
the Insurer.
Section 2.4. Cooperation Procedures.
The Sponsor, the Master Servicer and the Indenture Trustee covenant to
provide each other with all data and information required to be provided by them
hereunder at the times required hereunder, and additionally covenant reasonably
to cooperate with each other in providing any additional information required by
any of them in connection with their respective duties hereunder.
Section 2.5. Retransfers of Mortgage Loans at Election of Sponsor or
the Related Originator.
Subject to the conditions set forth below, the Sponsor or the related
Originator, may, but shall not be obligated to (except the Sponsor or the
related Originator shall be obligated upon a breach of a representation or
warranty), accept the reassignment of Mortgage Loans held by the Trust as of the
close of business on a Payment Date (the "Transfer Date"). On the fifth Business
Day (the "Transfer Notice Date") prior to the Transfer Date designated in such
notice, the Sponsor or the related Originator shall give the Indenture Trustee,
the Insurer and the Master Servicer a notice of the proposed reassignment that
contains a list of the Mortgage Loans to be reassigned, to which the Insurer
must consent. Such reassignment of Mortgage Loans shall be permitted upon
satisfaction of the following conditions:
(i) No Rapid Amortization Event has occurred or will occur as
a result of such reassignment;
(ii) On the Transfer Notice Date the Overcollateralization
Amount (after giving effect to the removal from the Trust of the
Mortgage Loans proposed to be retransferred) is at least equal to the
Specified Overcollateralization Amount;
(iii) On or before the Transfer Date, the Sponsor or the
related Originator shall have delivered to the Indenture Trustee and
the Insurer a revised Schedule of Mortgage Loans, reflecting
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the proposed retransfer (including any Qualified Replacement Mortgage
Loans proposed to be transferred) and the Transfer Date, and the Master
Servicer shall have marked its servicing records to show that the
Mortgage Loans reassigned to the Sponsor or the related Originator are
no longer owned by the Trust;
(iv) The Sponsor or the related Originator shall represent and
warrant that random selection procedures were used in selecting the
Mortgage Loans to be removed from the Trust and no other selection
procedures which are adverse to the interests of the Noteholders or the
Insurer were utilized in selecting the Mortgage Loans to be removed
from the Trust; and
(v) The Sponsor or the related Originator shall have delivered
to the Indenture Trustee and the Insurer an Officer's Certificate
certifying that the items set forth in subparagraphs (i) through (v) of
this Section 2.5, inclusive, have been performed or are true and
correct, as the case may be. The Indenture Trustee may conclusively
rely on such Officer's Certificate, shall have no duty to make
inquiries with regard to the matters set forth therein and shall incur
no liability in so relying.
Upon receiving the requisite information from the Sponsor or the
related Originator, the Master Servicer shall perform in a timely manner those
acts required of it, as specified above. Upon satisfaction of the above
conditions, on the Transfer Date the Indenture Trustee shall deliver, or cause
to be delivered, to the Sponsor or the related Originator (or their designee)
the Mortgage File for each Mortgage Loan being so reassigned, and the Indenture
Trustee shall execute and deliver (at the Sponsor's or the related Originator's
direction) to the Sponsor or the related Originator such other documents as
shall be reasonably necessary to reassign such Mortgage Loans to the Sponsor or
the related Originator. Any such transfer of the Trust's right, title and
interest in and to Mortgage Loans shall be without recourse, representation or
warranty by or of the Indenture Trustee or the Trust to the Sponsor or the
related Originator.
Section 2.6. Conveyance of the Subsequent Mortgage Loans.
(a) On any Subsequent Transfer Date, subject to the conditions
set forth in paragraph (b) below in consideration of the Indenture Trustee's
delivery of all or a portion of the balance of funds on deposit in the
Pre-Funding Account, the Sponsor shall sell, transfer, assign, set over and
otherwise convey, all right, title and interest in and to each Subsequent
Mortgage Loan listed on the Schedule of Mortgage Loans delivered by the Sponsor
to the Indenture Trustee on such Subsequent Transfer Date. In addition, the
Sponsor shall transfer, assign and set over all right, title and interest in and
to principal and interest collected on each such Subsequent Mortgage Loan on and
after the related Subsequent Cut-Off Date and all right, title and interest in
and to all Mortgage Insurance Policies; provided, however, that the Sponsor
reserves and retains all its right, title and interest in and to principal and
interest collected on each such Subsequent Mortgage Loan prior to the related
Subsequent Cut-Off Date. The transfer to the Trust of the Subsequent Mortgage
Loans set forth on the Schedule of Mortgage Loans shall be absolute and shall be
intended by the Sponsor and all parties hereto to be treated as a sale by the
Sponsor. The amount released from the Pre-Funding Account shall be equal to
94.8% of the aggregate Principal Balances of the Subsequent Mortgage Loans so
transferred.
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(b) The Sponsor shall transfer or cause to be transferred to
the Trust the Subsequent Mortgage Loans and the other property and rights
related thereto described in paragraph (a) above only upon the satisfaction of
each of the following conditions on or prior to the related Subsequent Transfer
Date:
(i) the Sponsor shall have provided the Indenture Trustee, the
Insurer and the Rating Agencies with an Addition Notice and shall have provided
information with respect to the Subsequent Mortgage Loans in an electronic data
file and in a form agreeable to the foregoing parties;
(ii) the Sponsor shall have delivered to the Indenture Trustee
a duly executed written assignment in substantially the form of Exhibit H (the
"Subsequent Transfer Agreement"), which shall include a Schedule of Mortgage
Loans listing the Subsequent Mortgage Loans and any other exhibits listed
thereon;
(iii) as of each Subsequent Transfer Date, none of the related
Originator, the Master Servicer or the Sponsor was insolvent nor will any of
them have been made insolvent by such transfer nor is any of them aware of any
pending insolvency;
(iv) such addition will not result in a material adverse tax
consequence to the Trust or the Noteholders;
(v) the Pre-Funding Period shall not have terminated;
(vi) 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), (d) and (e) below, and in
the related Subsequent Transfer Agreement;
(vii) the Sponsor shall have delivered to the Rating Agencies,
the Insurer and the Indenture Trustee, Opinions of Counsel with respect to
bankruptcy, corporate and tax matters relating to the Subsequent Mortgage Loans
(which opinions may have already been delivered on the Closing Date); and
(viii) the Insurer shall have approved the transfer.
(c) The obligation of the Trust to purchase a Subsequent
Mortgage Loan on any Subsequent Transfer Date is subject to the following
requirements:
(i) with respect to any individual Subsequent Mortgage Loan:
a. such Subsequent Mortgage Loan may not be 30 or
more days contractually delinquent as of the related
Subsequent Cut-Off Date;
b. the maturity date of such Subsequent Mortgage
Loan may not be later than September 30, 2023;
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c. such Subsequent Mortgage Loan may not have a
Combined Loan-To-Value Ratio ("CLTV") in excess of 125%;
d. the Coupon Rate of such Subsequent Mortgage
Loan may not be below 8.00% per annum; and
e. such Subsequent Mortgage Loan may not have a
Principal Balance in excess of $300,000;
(ii) following the purchase of Subsequent Mortgage Loans, the
Mortgage Loans in the aggregate will satisfy the following criteria:
a. the Mortgage Loans will have a weighted
average Coupon Rate of at least 13.35%;
b. the Mortgage Loans will have a weighted
average CLTV of not more than 99.50%;
c. no more than 34.0% by aggregate Principal
Balance of the Mortgage Loans will have a CLTV of 100% or
greater;
d. no more than 0.5% by aggregate Principal
Balance of the Mortgage Loans will be secured by Mortgaged
Properties within a single zip code;
e. no more than 15.0% by aggregate Principal
Balance of the Mortgage Loans will be secured by Mortgaged
Properties in California;
f. no more than 96.0% by aggregate Principal
Balance of the Mortgage Loans will be in a second lien
position;
g. the Mortgage Loans will have a weighted
average FICO score of not less than 625;
h. the weighted average Margin will not be less
than 4.80% per annum;
i. the weighted average remaining term to
scheduled maturity of the Mortgage Loans will be not more than
275 months; and
j. no more than 45.0% by aggregate Principal
Balance of the Mortgage Loans will have FICO scores of less
than 620.
k. no more than 25% by Pool Principal Balance of
the Mortgage Loans will have been underwritten utilizing a
statistical property evaluation.
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The Insurer may waive or modify any of the above requirements or specify any
additional criteria provided that any such modification shall not materially and
adversely affect the Sponsor.
(d) In connection with the transfer and assignment of the
Subsequent Mortgage Loans, the Sponsor agrees to satisfy the conditions set
forth in Sections 2.1(d)-(g).
(e) On each Subsequent Transfer Date, the Sponsor shall
deposit in the Principal and Interest Account all principal and interest
collections in respect of the related Subsequent Mortgage Loans received on or
after the related Subsequent Cut-Off Date.
(f) In connection with each Subsequent Transfer Date and on
the Payment Dates occurring in May 2000, June 2000, July 2000 and August 2000,
the Master Servicer and the Indenture Trustee shall co-operate in determining
(i) the amount and correct dispositions of the Capitalized Interest Requirement,
the Pre-Funding Earnings and the amount then on deposit in the Pre-Funding
Account, and (ii) any other necessary matters in connection with the
administration of the Pre-Funding Account and of the Capitalized Interest
Account.
ARTICLE 3
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE SPONSOR AND THE MASTER SERVICER
Section 3.1. Representations and Warranties of the Sponsor.
The Sponsor hereby represents, warrants and covenants to the Indenture
Trustee, the Master Servicer, the Insurer and the Noteholders as of the Closing
Date that:
(a) The Sponsor is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada and is in
good standing as a foreign corporation in each jurisdiction in which the nature
of its respective business, or the properties owned or leased by it make such
qualification necessary. The Sponsor has all requisite corporate power and
authority to own and operate its respective properties, to carry out its
respective business as presently conducted and as proposed to be conducted and
to enter into and discharge its respective obligations under this Agreement and
the other Operative Documents to which it is a party.
(b) The execution and delivery of this Agreement and the other
Operative Documents to which the Sponsor is a party by the Sponsor and its
performance and compliance with the terms of this Agreement and of the other
Operative Documents to which it is a party have been duly authorized by all
necessary corporate action on the part of the Sponsor and will not violate the
Sponsor's Articles of Incorporation or Bylaws or constitute a default (or an
event which, with notice or lapse of time, or both, would constitute a default)
under, or result in the breach of, any material contract, agreement or other
instrument to which the Sponsor is a party or by which the Sponsor is bound, or
violate any statute or any order, rule or regulation of any court, governmental
agency or body or other tribunal having jurisdiction over the Sponsor or any of
its properties.
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(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 might have consequences that would
materially and adversely affect its performance hereunder and under the other
Operative Documents to which it is a party.
(f) No certificate of an officer, statement furnished in
writing or report delivered pursuant to the terms hereof by the Sponsor contains
any untrue statement of a material fact or omits to state any material fact
necessary to make the certificate, statement or report not misleading.
(g) The statements contained in the Registration Statement
which describe the Sponsor, or matters or activities for which the Sponsor is
responsible in accordance with the Operative Documents or which are attributed
to the Sponsor therein are true and correct in all material respects, and such
statements do not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make such statements not misleading. Other than with respect to the statements
referred to in the preceding sentence, to the best of the Sponsor's knowledge
and belief, the Registration Statement does not contain any untrue statement of
a material fact required to be stated therein or omit to state any material fact
required to be stated therein or necessary to make the statements contained
therein not misleading.
(h) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and licenses
required to be taken, given or obtained, as the case may be, by or from any
federal, state or other governmental authority or agency (other than any such
actions, approvals, etc. under any state securities laws, real estate
syndication or "Blue Sky" statutes, as to which the Sponsor makes no such
representation or warranty), that are necessary or advisable in connection with
the purchase and sale of the Notes and the execution and delivery by the Sponsor
of the Operative Documents to which it is a party, have been duly taken, given
or obtained, as the case may be, are in full force and effect on the date
hereof, are not subject to any pending proceedings or appeals (administrative,
judicial or other) 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
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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 respective obligations under this Agreement and such of
the other Operative Documents to which it is a party.
It is understood and agreed that the representations and warranties set
forth in this Section 3.1 shall survive delivery of the Initial Mortgage Loans,
any Qualified Replacement Mortgage Loans and the Subsequent Mortgage Loans to
the Indenture Trustee.
Section 3.2. Representations and Warranties of the Master Servicer.
The Master Servicer hereby represents, warrants and covenants to the
Indenture Trustee, the Sponsor, the Insurer and the Noteholders as of the
Closing Date that:
(a) The Master Servicer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
is in compliance with the laws of each state in which any Mortgaged Property is
located to the extent necessary to enable it to perform its obligations
hereunder and is in good standing as a foreign corporation in each jurisdiction
in which the nature of its business, or the properties owned or leased by it
make such qualification necessary. The Master Servicer has all requisite
corporate power and authority to own and operate its properties, to carry out
its business as presently conducted and as proposed to be conducted and to enter
into and discharge its obligations under this Agreement and the other Operative
Documents to which it is a party. The amount of shareholders' equity of the
Master Servicer or the ultimate consolidating parent of the Master Servicer,
calculated pursuant to generally accepted accounting principles, is at least
$5,000,000 or the amount of shareholders' equity of Advanta National Bank is at
least $25,000,000.
(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 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).
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(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 might have consequences
that would materially and adversely affect its performance hereunder and under
the other Operative Documents to which the Master Servicer is a party.
(f) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and licenses
required to be taken, given or obtained, as the case may be, by or from any
federal, state or other governmental authority or agency (other than any such
actions, approvals, etc. under any state securities laws, real estate
syndication or "Blue Sky" statutes, as to which the Master Servicer makes no
such representation or warranty), that are necessary or advisable in connection
with the execution and delivery by the Master Servicer of the Operative
Documents to which it is a party, have been duly taken, given or obtained, as
the case may be, are in full force and effect on the date hereof, are not
subject to any pending proceedings or appeals (administrative, judicial or
other) and either the time within which any appeal therefrom may be taken or
review thereof may be obtained has expired or no review thereof may be obtained
or appeal therefrom taken, and are adequate to authorize the consummation of the
transactions contemplated by this Agreement and the other Operative Documents on
the part of the Master Servicer and the performance by the Master Servicer of
its obligations under this Agreement and such of the other Operative Documents
to which it is a party.
(g) No certificate of an officer, statement furnished in
writing or report delivered pursuant to the terms hereof by the Master Servicer
contains any untrue statement of a material fact or omits to state any material
fact necessary to make the certificate, statement or report not misleading.
(h) The statements contained in the Registration Statement
which describe the Master Servicer or matters or activities for which the Master
Servicer is responsible in accordance with the Operative Documents or which are
attributed to the Master Servicer therein are true and correct in all material
respects, and the Registration Statement does not contain any untrue statement
of a material fact with respect to the Master Servicer or omit to state a
material fact required to be stated therein or necessary to make the statement
contained therein with respect to the Master Servicer not misleading.
(i) The Servicing Fee is a "current (normal) servicing fee
rate" as that term is used in Statement of Financial Accounting Standards No. 65
issued by the Financial Accounting Standards Board. Neither the Master Servicer
nor any affiliate thereof will report on any financial statements any part of
the Servicing Fee as an adjustment to the sales price of the Mortgage Loans.
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(j) The collection practices used by the Master Servicer with
respect to the Mortgage Loans directly serviced by it have been, in all material
respects, legal, proper, prudent and customary in the mortgage loan servicing
business.
(k) The transactions contemplated by this Agreement are in the
ordinary course of business of the Master Servicer.
(l) The terms of each existing Sub-Servicing Agreement and
each designated Sub-Servicer are acceptable to the Master Servicer and any new
Sub-Servicing Agreements or Sub-Servicers will comply with the provisions of
Section 4.1.
It is understood and agreed that the representations and warranties set
forth in this Section 3.2 shall survive delivery of the Initial Mortgage Loans,
any Qualified Replacement Mortgage Loans and the Subsequent Mortgage Loans to
the Indenture Trustee.
Upon discovery by the Master Servicer, the Sponsor or the Indenture
Trustee of a breach of any of the representations and warranties set forth in
this Section 3.2 which materially and adversely affects the interests of the
Noteholders or the Insurer, the party discovering such breach shall give prompt
written notice to the other parties. Within thirty (30) days of its discovery or
its receipt of notice of such breach, the Master Servicer shall cure such breach
in all material respects; provided, however, that if the Master Servicer can
demonstrate to the reasonable satisfaction of the Insurer that it is diligently
pursuing remedial action, then the cure period may be extended with the written
approval of the Insurer.
Section 3.3. Representations and Warranties of the Sponsor with Respect
to the Mortgage Loans; Retransfer of Certain Mortgage
Loans.
(a) The Sponsor makes the following representations and
warranties as to each Mortgage Loan, on which the Trust relies in accepting the
Mortgage Loan and on which the Insurer relies in issuing the Policy. Such
representations and warranties speak as of the Closing Date, in the case of the
Initial Mortgage Loans, the Subsequent Transfer Date, in the case of the
Subsequent Mortgage Loans, and the Transfer Date, in the case of the Qualified
Replacement Mortgage Loans, but shall survive the transfer of the Mortgage Loans
to the Trust and the pledge thereof to the Indenture Trustee pursuant to the
Indenture:
(i) All of the original or certified documentation set forth
in the definition of Mortgage File with respect to each Mortgage Loan
has been or will be delivered to the Indenture Trustee on the Closing
Date, the Subsequent Transfer Date or the Transfer Date, as applicable,
except as otherwise provided in Section 2.1. All such documentation is
true and accurate in all material respects. Each of the documents and
instruments specified to be included therein has been duly executed, is
in due and proper form, and each such document or instrument is in a
form generally acceptable to prudent mortgage lenders that regularly
originate, purchase or sell mortgage loans comparable to the Mortgage
Loans.
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(ii) Each Mortgage Loan is being serviced by the Master
Servicer or a Master Servicer Affiliate.
(iii) The information set forth in the Schedule of Mortgage
Loans (as amended for Qualified Replacement Mortgage Loans and
Subsequent Mortgage Loans) for each Mortgage Loan listed is true and
correct in all material respects.
(iv) Immediately prior to the transfers and assignments herein
contemplated, the Sponsor held good and indefeasible title to, and was
the sole owner of, each Mortgage Loan conveyed by the Sponsor to the
Trust pursuant to Section 2.1 hereof, all monies due or to become due
with respect thereto, and all proceeds of such Cut-Off Date Principal
Balances with respect to such Mortgage Loans subject to no liens,
charges, mortgages, encumbrances or rights of others except liens which
will be released simultaneously with such transfers and assignments;
and immediately upon the transfers and assignments herein contemplated,
the Trust will hold good and indefeasible title to, and be the sole
owner of, each Mortgage Loan subject to no liens, charges, mortgages,
encumbrances or rights of others except liens which will be released
simultaneously with such transfers and assignments.
(v) There is no valid offset, defense or counterclaim of any
Mortgagor under any Credit Line Agreement or Mortgage. Neither the
operation of any of the terms of any such Credit Line Agreement or any
such Mortgage nor the exercise of any right thereunder will render
either such Credit Line Agreement or such Mortgage unenforceable, in
whole or in part, or subject to any right of rescission, set-off,
claim, counterclaim or defense, including, without limitation, the
defense of usury and no such right of rescission, set-off, counterclaim
or defense has been asserted with respect thereto.
(vi) As of the Initial Cut-Off Date and with respect to the
Initial Mortgage Loans, no Minimum Monthly Payment is more than 59 days
Delinquent (measured on a contractual basis) and no more than 0.51% (by
aggregate Cut-Off Date Principal Balance) of the Initial Mortgage Loans
were 30-59 days Delinquent (measured on a contractual basis).
(vii) Each Credit Line Agreement and each Mortgage relating to
the Mortgage Loans is the legal, valid, binding and enforceable
obligation of the related Mortgagor and is enforceable in accordance
with its terms, except as the enforceability thereof may be limited by
any 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).
(viii) With respect to each Mortgage Loan, on each date that
the Coupon Rate has been adjusted, such adjustment was made in
compliance with the related Mortgage and Credit Line Agreement and
applicable law.
(ix) Each Mortgaged Property is improved by a single
(one-to-four) family residential dwelling, which may include
manufactured homes, condominiums and townhouses.
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(x) As of the Initial Cut-Off Date, no Initial Mortgage Loan
had a Combined Loan-to-Value Ratio in excess of 125.00%.
(xi) As of the Initial Cut-Off Date with respect to the
Initial Mortgage Loans, as of the Subsequent Cut-Off Date with respect
to the Subsequent Mortgage Loans and as of the applicable Transfer Date
with respect to any Qualified Replacement Mortgage Loan, each Mortgage
is a valid and subsisting first or junior lien of record on the
Mortgaged Property (subject in the case of any Junior Mortgage Loan
only to one or more Senior Liens on such Mortgaged Property) and
subject in all cases to the exceptions to title set forth in the title
insurance policy or title search, with respect to the related Mortgage
Loan, which exceptions are generally acceptable to banking institutions
in connection with their regular mortgage lending activities, and
except for liens for (i) real estate taxes and special assessments not
yet delinquent, (ii) income taxes not yet due, (iii) any covenants,
conditions and restrictions, rights of way, easements, and other
matters of public record and such other exceptions to which similar
properties are commonly subject and which do not individually, or in
the aggregate, materially and adversely affect the benefits of the
security intended to be provided by such Mortgage.
(xii) To the best of the Sponsor's knowledge, there is no
delinquent tax or assessment lien or mechanic's lien on any Mortgaged
Property relating to a Mortgage Loan, and each such Mortgaged Property
is free of substantial damage and is in good repair.
(xiii) Each Mortgage Loan at the time it was made complied in
all material respects with all applicable state and federal laws and
regulations, including, without limitation, the federal
Truth-in-Lending Act, the federal Home Ownership and Equity Protection
Act and other consumer protection laws, real estate settlement
procedure, usury, equal credit opportunity, disclosure and recording
laws.
(xiv) With respect to each Mortgage Loan that is a First
Mortgage Loan, and, to the best of the Sponsor's knowledge, with
respect to each Mortgage Loan that is a Junior Mortgage Loan, (i) a
lender's title insurance policy, issued in standard California Land
Title Association form or American Land Title Association form, or
other form acceptable in a particular jurisdiction by a title insurance
company authorized to transact business in the state in which the
related Mortgaged Property is situated, was issued on the date of
origination of such Mortgage Loan, and as of the Closing Date, the
Subsequent Transfer Date or the Transfer Date, as applicable, each such
policy is valid and remains in full force and effect, or (ii) a title
search or guaranty of title customary in the relevant jurisdiction was
obtained with respect to any Mortgage Loan as to which no title
insurance policy or binder was issued.
(xv) The terms of each Credit Line Agreement and each related
Mortgage have not been impaired, cancelled, subordinated, rescinded,
altered or modified in any material respect (except as reflected in the
Mortgage File and in the Schedule of Mortgage Loans), and the related
Mortgaged Property has not been released from the lien of the related
Mortgage, in whole or in part, and no instrument has been executed that
would effect such release, cancellation,
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subordination or rescission, except by a written instrument which (if
such instrument is secured by real property) has been recorded, if
necessary, to protect the interest of the Noteholders and which has
been delivered to the Indenture Trustee. The substance of any other
alteration or modification of a Credit Line Agreement and related
Mortgaged Property is reflected on the related Schedule of Mortgage
Loans.
(xvi) Except as otherwise required by law or the terms of the
Credit Line Agreement, the related Credit Line Agreement is not and has
not been secured by any collateral, pledged account or other security
except the lien of the corresponding Mortgage.
(xvii) Each Mortgaged Property is located in the state
identified in the Schedule of Mortgage Loans and consists of one or
more parcels of real property with a residential dwelling erected
thereon.
(xviii) To the best of the Sponsor's knowledge, there is no
proceeding pending or threatened for the total or partial condemnation
of any Mortgaged Property, nor is such a proceeding currently
occurring, and each such Mortgaged Property is undamaged by waste,
fire, earthquake or earth movement, flood, tornado or other casualty,
so as to affect adversely the value of such Mortgaged Property as
security for the related Mortgage Loan or the use for which the
premises were intended.
(xix) To the best of the Sponsor's knowledge, with respect to
each Mortgage Loan that is a Junior Mortgage Loan, either (A) no
consent for such Mortgage Loan was required by the holder of the
related Senior Lien(s) prior to the making of such Mortgage Loan or (B)
such consent has been obtained and is contained in the related Mortgage
File or servicing file.
(xx) Each Mortgage contains customary and enforceable
provisions which render the rights and remedies of the holder thereof
adequate for the realization against the related Mortgaged Property of
the benefits of the security, including (A) in the case of a Mortgage
designated as a deed of trust, by trustee's sale and (B) otherwise by
judicial foreclosure. To the best of the Sponsor's knowledge, there is
no homestead or other exemption available which materially interferes
with the right to sell the related Mortgaged Property at a trustee's
sale or the right to foreclose the related Mortgage.
(xxi) There is no default, breach, violation or event of
acceleration existing under any Mortgage or Credit Line Agreement and
no event which, with the passage of time or with notice and the
expiration of any grace or cure period, would constitute a default,
breach, violation or event of acceleration, and the Sponsor has not
waived any default, breach, violation or event of acceleration;
provided, however, that the foregoing shall not apply to the extent
that the relevant default, breach, violation or other event relates to
one or more of the Delinquent Mortgage Loans.
(xxii) To the best of the Sponsor's knowledge, all parties to
each Credit Line Agreement and the related Mortgage had legal capacity
to execute such Credit Line Agreement and the related
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Mortgage and each such Credit Line Agreement and the related Mortgage
have been duly and properly executed by such parties.
(xxiii) No selection procedures reasonably believed by the
Sponsor to be adverse to the interests of the Noteholders or the
Insurer was utilized in selecting the Mortgage Loans.
(xxiv) No Mortgagor has been released, in whole or in part,
except in connection with an assumption agreement which has been
approved by the applicable title insurer (to the extent required by
such title insurer)and which is part of the related Mortgage File
delivered to the Indenture Trustee.
(xxv) To the best of the Sponsor's knowledge, at the time of
origination of each Mortgage Loan that is not a First Mortgage Loan,
the related senior lien was not more than 30 days delinquent.
(xxvi) To the best of the Sponsor's knowledge, all required
inspections, licenses and certificates with respect to the use and
occupancy of all occupied portions of all property securing the
Mortgages have been made, obtained or issued, as applicable.
(xxvii) With respect to each Mortgage Loan that is not a First
Mortgage Loan, the related senior lien does not provide for negative
amortization.
(xxviii) With respect to each Mortgage Loan that is not a
First Mortgage Loan, the maturity date of the Mortgage Loan is prior to
the maturity date of the related senior lien if such senior lien
provides for a balloon payment.
(xxix) With respect to each Mortgage Loan, (A) the
improvements upon each related Mortgaged Property are covered by a
valid and existing hazard insurance policy with a carrier generally
acceptable to the Master Servicer that provides for fire and extended
coverage representing coverage not less than the least of (1) prior to
the end of the draw period, the Credit Limit of such Mortgage Loan, (2)
after the draw period, the unpaid principal balance of the related
Mortgage Loan, or (3) the maximum insurable value of the related
Mortgaged Property, or (B) the Master Servicer has obtained and will
maintain a blanket policy insuring against fire and hazards of extended
coverage with respect to all of the Mortgage Loans.
(xxx) With respect to each Mortgaged Property located in an
area identified in the Federal Register by the Federal Emergency
Management Agency as having special flood hazards, (A) such Mortgaged
Property is covered by a valid and existing flood insurance policy in a
form which meets the requirements of the current guidelines of the
Federal Insurance Administration with a generally acceptable carrier
which provides for coverage not less than the least of (1) prior to the
end of the draw period, the Credit Limit of the related Mortgage Loan,
(2) after the draw period, the unpaid principal balance of the related
Mortgage Loan or (3) the maximum amount of insurance that is available
under the Flood Disaster Protection Act of 1973, or (B) the Master
Servicer has
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obtained a master flood insurance policy insuring against losses due to
flooding on the Mortgaged Properties located in federally designated
flood zones.
(xxxi) With respect to any Mortgage Loan which is a First
Mortgage Loan, the Sponsor has caused and will cause to be performed
any and all acts required to be performed to preserve the rights and
remedies of the Master Servicer and the Indenture Trustee in any
Mortgage Insurance Policies applicable to such Mortgage Loan,
including, without limitation, any necessary notifications of insurers,
assignments of policies or interests therein, and establishments of
co-insured, joint loss payee and mortgagee rights in favor of the Trust
and its assignees in care of the Indenture Trustee.
(xxxii) To the best of the Sponsor's knowledge, each Mortgage
Loan was underwritten in all material respects in accordance with the
credit underwriting guidelines of the related Originator, as in effect
on the date of origination.
(xxxiii) The Sponsor has received no notice of default of any
First Mortgage Loan secured by any Mortgaged Property that also secures
a Mortgage Loan which has not been cured by a party other than the
Sponsor or the Master Servicer.
(xxxiv) As of the respective Cut-Off Date, no Mortgagor had
been identified on the records of the Sponsor as being the subject of a
current bankruptcy proceeding.
(xxxv) To the best of the Sponsor's knowledge, each of the
related Originator, the Master Servicer, and the Sponsor is (or, if
applicable, during the period in which such party held any interest in
a Mortgage Loan, was) in substantial compliance with any and all
applicable licensing requirements of the law of the state wherein the
property securing the Mortgage Loan is located.
(xxxvi) To the best of the Sponsor's knowledge, with respect
to the Mortgage Loans, the documents, instruments and agreements
submitted by each Mortgagor for loan underwriting were not falsified
and contain no untrue statement of a material fact and do not omit to
state a material fact required to be stated therein or necessary to
make the information and the statements contained therein not
misleading.
(xxxvii) Except as previously disclosed in writing to the
Indenture Trustee and the Insurer, there is only one originally
executed Mortgage and Credit Line Agreement not stamped as a duplicate.
(xxxviii) With respect to the Initial Mortgage Loans, as of
the Initial Cut-Off Date, and with respect to the Subsequent Mortgage
Loans on the Subsequent Cut-Off Date, each such Mortgage Loan conforms,
and all the Mortgage Loans, in the aggregate, conform, in all material
respects to the description thereof set forth in the Registration
Statement.
(xxxix) During the period from origination to Closing Date,
each Mortgage Loan has been serviced in accordance with applicable
laws.
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(xl) As of the Cut-Off Date, no more than 0.5% of the
aggregate Cut-Off Date Principal Balance of the Initial Mortgage Loans
is secured by Mortgaged Properties located within any single zip code
area.
(xli) Except as disclosed in the Prospectus Supplement, no
Mortgage Loan had a Combined Loan-to-Value Ratio in excess of 125.00%
at the time of origination.
(b) [Reserved]
(c) Upon the discovery by the Master Servicer, any
Sub-Servicer, the Sponsor or the Indenture Trustee of a breach of any of the
representations and warranties made in respect of any Mortgage Loan which
materially and adversely affects the interests of the Noteholders or the Insurer
in such Mortgage Loan, the party discovering such breach shall give prompt
written notice to the other parties. The Master Servicer shall promptly notify
the Sponsor of such breach and request that the Sponsor cure such breach or take
the actions described in Section 3.4(b) hereof within the time periods required
thereby, and the Sponsor shall cure such breach or take such actions; provided,
however, that the cure for any breach of a representation and warranty relating
to the characteristics of the Mortgage Loans in the aggregate shall be a
reassignment of, or substitution for, only those Mortgage Loans necessary to
cause such characteristics to be in compliance with the related representation
and warranty, unless the Insurer shall waive such breach.
Section 3.4. Covenants of Sponsor to Take Certain Actions with Respect
to the Mortgage Loans In Certain Situations.
(a) With respect to the representations and warranties set
forth in Section 3.3 that are made to the best of the Sponsor's knowledge or as
to which the Sponsor has no knowledge, if it is discovered by the Sponsor, the
Master Servicer, the Indenture Trustee or any Sub-Servicer that the substance of
such representation or warranty is inaccurate and such inaccuracy materially and
adversely affects the value of the related Mortgage Loan then, notwithstanding
the Sponsor's lack of knowledge with respect to the substance of such
representation and warranty being inaccurate at the time the representation or
warranty was made, such inaccuracy shall be deemed a breach of the applicable
representation or warranty and the Sponsor shall cure such breach, repurchase
the related Mortgage Loan at the Loan Reacquisition Price or substitute a
Qualified Replacement Mortgage Loan therefor pursuant to Section 2.2(b), 3.3(c)
or 3.4 hereof.
(b) With the provisos and limitations as to remedies set forth
in this Section 3.4, upon the discovery by the Sponsor, the Master Servicer, the
Insurer, any Sub-Servicer or the Indenture Trustee that the representations and
warranties set forth in Section 3.3 of this Agreement were untrue in any
material respect as of the Closing Date and such breaches of the representations
and warranties materially and adversely affect the interests of the Noteholders
or the Insurer, the party discovering such breach shall give prompt written
notice to the other parties.
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The Sponsor acknowledges that a breach of any representation or
warranty (x) relating to marketability of title sufficient to transfer
unencumbered title to a Mortgage Loan or (y) relating to enforceability of the
Mortgage Loan against the related Mortgagor or Mortgaged Property constitutes a
breach of a representation or warranty which materially and adversely affects
the interests of the Noteholders or of the Insurer in such Mortgage Loan.
(c) Upon the earliest to occur of the Sponsor's discovery of a
breach of any representation and warranty which materially and adversely affects
the interests of the Noteholders or the Insurer, its receipt of notice of such
breach from any one of the other parties hereto or from the Insurer such time as
a breach of any representation and warranty materially and adversely affects the
interests of the Noteholders or the Insurer as set forth above, the Sponsor
hereby covenants and warrants that it shall cure such breach in all material
respects within thirty (30) days or it shall (or shall cause an affiliate of the
Sponsor to), subject to the further requirements of this paragraph, regardless
of whether or not it had knowledge of such breach, at the end of such 30-day
period (i) substitute in lieu of each Mortgage Loan which has given rise to the
requirement for action by the Sponsor a Qualified Replacement Mortgage Loan and
deliver the Substitution Amount, if any, applicable thereto to the Master
Servicer for deposit in the Principal and Interest Account or (ii) purchase such
Mortgage Loan from the Trust at the Loan Reacquisition Price thereof, which
purchase price shall be delivered to the Master Servicer for deposit in the
Principal and Interest Account. It is understood and agreed that the obligation
of the Sponsor to cure the defect, substitute for, or purchase any Mortgage Loan
as to which a representation or warranty is untrue in any material respect and
has not been remedied shall constitute the sole remedy available to the
Noteholders and the Indenture Trustee or the Insurer against the Sponsor, except
as otherwise provided in the Insurance Agreement.
(d) It is understood and agreed that the covenants set forth
in this Section 3.4 shall survive the pledge of the Mortgage Loans (including
the Qualified Replacement Mortgage Loans) to the Indenture Trustee on behalf of
the Trust.
ARTICLE 4
SERVICING AND ADMINISTRATION
OF MORTGAGE LOANS
Section 4.1. Master Servicer and Sub-Servicers.
(a) Advanta Mortgage Corp. USA agrees to act as the Master
Servicer and to perform or cause to be performed all servicing duties under this
Agreement subject to the terms hereof.
(b) The Master Servicer shall service and administer the
Mortgage Loans on behalf of the Indenture Trustee and the Insurer and shall have
full power and authority, acting alone or through one or more Sub-Servicers, to
do any and all things in connection with such servicing and administration which
it may deem necessary or desirable. Without limiting the generality of the
foregoing, the Master Servicer, in its own name or the name of a Sub-Servicer,
may, and is hereby authorized and empowered by the Indenture Trustee to, execute
and deliver, on behalf of itself, the Noteholders, the Insurer and the Indenture
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Trustee or any of them, any and all instruments of satisfaction or cancellation,
or of partial or full release or discharge and all other comparable instruments,
with respect to the Mortgage Loans, the related Mortgaged Properties and the
Mortgage Insurance Policies related thereto in accordance with the terms of this
Agreement. Upon the execution and delivery of this Agreement, and from time to
time as may be required thereafter, the Indenture Trustee shall furnish the
Master Servicer or its Sub-Servicers with any powers of attorney and such other
documents as may be necessary or appropriate to enable the Master Servicer to
carry out its servicing and administrative duties hereunder.
In servicing and administering the Mortgage Loans, the Master Servicer
shall employ procedures consistent with Accepted Servicing Practices and in a
manner consistent with recovery under any Mortgage Insurance Policy required to
be maintained by the Master Servicer pursuant to this Agreement.
Costs incurred by the Master Servicer in effectuating the timely
payment of taxes and assessments on the property securing a Credit Line
Agreement and foreclosure costs may be added by the Master Servicer to the
amount owing under such Credit Line Agreement where the terms of such Credit
Line Agreement so permit; provided, however, that the addition of any such cost
shall not be taken into account for purposes of calculating the principal amount
of the Credit Line Agreement and the Mortgage Loan related thereto or
distributions to be made to Noteholders. Such costs shall be recoverable by the
Master Servicer pursuant to Section 4.10 and 4.13.
(c) [reserved]
(d) The relationship of the Master Servicer (and of any
successor to the Master Servicer as servicer under this Agreement) to the
Indenture Trustee under this Agreement is intended by the parties to be that of
an independent contractor and not that of a joint venturer, partner or agent.
In the event that the rights, duties and obligations of the Master
Servicer are terminated hereunder, any successor to the Master Servicer may
(with the written consent of the Insurer), to the extent permitted by applicable
law, terminate or assume the existing Sub-Servicer arrangements, which
termination or assumption will not violate the terms of such arrangements;
provided, that, in no event shall any successor to the Master Servicer be
permitted to assume any Sub-Servicer arrangements with any Affiliate of the
Master Servicer without such Affiliate's prior written consent.
(e) Subject to Sections 4.13 and 4.14, the Master Servicer, in
its own name, or a Sub-Servicer, in its own name, may be authorized and
empowered by the Indenture Trustee, (i) to institute foreclosure proceedings or
obtain a deed in lieu of foreclosure so as to effect ownership of any Mortgaged
Property on behalf of the Indenture Trustee and (ii) to hold title to any
Mortgaged Property upon such foreclosure or deed in lieu of foreclosure on
behalf of the Indenture Trustee; provided, however, that Section 4.14(a) shall
constitute a power of attorney from the Indenture Trustee to the Master Servicer
to execute an instrument of satisfaction (or assignment of mortgage without
recourse) with respect to any Mortgage Loan paid in full (or with respect to
which payment in full has been escrowed). Subject to Sections 4.13 and 4.14, the
Indenture Trustee shall furnish the Master Servicer and any Sub-Servicer with
any powers of attorney and other documents as the Master Servicer or such
Sub-Servicer shall reasonably
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request to enable the Master Servicer and such Sub-Servicer to carry out their
respective servicing and administrative duties hereunder.
(f) The Master Servicer shall give prompt notice to the
Indenture Trustee of any action, of which the Master Servicer has actual
knowledge, to (i) assert a claim against the Trust or (ii) assert jurisdiction
over the Trust.
(g) Servicing Advances incurred by the Master Servicer or any
Sub-Servicer in connection with the servicing of the Mortgage Loans (including
any penalties in connection with the payment of any taxes and assessments or
other charges) on any Mortgaged Property shall be recoverable by the Master
Servicer or such Sub-Servicer to the extent described in Section 4.10 herein and
in Section 8.6(b)(ix) of the Indenture.
Section 4.2. Modifications.
(a) The Master Servicer may consent to any modification of the
terms of any Mortgage Loan that is not Delinquent (a) which modification is not
expressly prohibited hereby, if the effect of any such modification will not be
to affect materially and adversely the security afforded by the related
Mortgaged Property, the timing of receipt of any payments required hereby or the
interests of the Noteholders or the Insurer, unless the Insurer consents in
writing; provided, however, that, if the Insurer has not given its written
response within five (5) Business Days after notice from the Master Servicer,
the Insurer shall be deemed to have given its consent to such modification;
provided, further, that such notice and consent shall not be required in the
event that the Master Servicer determines, in its reasonable discretion, that
such modification is legally required to be made prior to the lapse of such five
day period, in which case the Master Servicer shall give the Insurer immediate
notice of such action.
(b) In accordance with Accepted Servicing Practices, the
Master Servicer may in its discretion (or shall, to the extent required by
applicable law):
(i) waive any assumption fees, late payment charges, charges
for checks returned for insufficient funds, termination fees, if any,
or the 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 to modify the payment terms, modify the coupon rate or
otherwise modify or amend the related Mortgage Loan if the Master
Servicer believes that such modification will maximize the amount of
proceeds of such Mortgage Loan to the Trust and will not materially and
adversely affect the interests of the Noteholder or the Insurer;
provided, however, that the Master Servicer shall not be permitted to
reschedule the payment of delinquent payments more than one time in any
twelve consecutive months with respect to any Mortgagor and such
modifications shall not be made with respect to Mortgage Loans with
aggregate Principal Balances in excess of 10% of the Cut-Off Date Pool
Balance without the prior written consent of the Insurer; provided,
further, that if the Insurer has not given its written response within
five (5) Business Days after notice from the Master Servicer, the
Insurer shall be deemed to have given its
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consent to such modification or rescheduling; provided, further, that
such notice and consent shall not be required in the event that the
Master Servicer reasonably determines, in its sole discretion, that
such modification or rescheduling is legally required to be made prior
to the lapse of such five day period, in which case the Master Servicer
shall give the Insurer immediate notice of such action;
(iii) modify payments of monthly principal and interest on any
Mortgage Loan becoming subject to the terms of the Civil Relief Act in
accordance with the Master Servicer's general policies of comparable
mortgage loans subject to the Civil Relief Act;
(iv) extend the maturity date of any Mortgage Loan in
connection with the extension of the related Draw Period (provided,
however, that in no event may any such maturity date be extended to a
date which is more than 12 months after the original maturity date
without the Insurer's written approval or to a date which is later than
the Payment Date occurring in August 2024), without the Insurer's
written approval.
(v) without prior approval from the Insurer (but subject to
the 10% limitation described above), increase the Credit Limits on
Mortgage Loans provided that (i) new appraisals are obtained and the
Combined Loan-to-Value Ratios of the Mortgage Loans after giving effect
to such increases are less than or equal to the Combined Loan-to-Value
Ratios of the Mortgage Loans as of the related dates of origination,
(ii) such increases are consistent with the applicable Originator's
underwriting policies, (iii) the related Mortgagors have made Draws on
the Credit Line Agreements in the past twelve months and have made
timely payments and (iv) the Master Servicer receives verbal
verification of employment of the related Mortgagors. In addition, the
Master Servicer may increase the Credit Limits on Mortgage Loans having
aggregate balances of up to 5% of the Cut-Off Date Pool Balance without
obtaining new appraisals provided that (i) the increases in the Credit
Limits do not cause the Combined Loan-to-Value Ratios of such Mortgage
Loans to exceed 100%, (ii) the increases are consistent with the
applicable Originator's underwriting policies, (iii) the related
Mortgagors have used the related Credit Line Agreements in the past
twelve months and have made timely payments and (iv) the Master
Servicer receives verbal verification of employment of the related
Mortgagors.
(vi) for Mortgage Loans that are not Delinquent, without prior
approval from the Insurer, solicit Mortgagors for a reduction in Coupon
Rates of no more than 0.50%; provided that the Master Servicer may only
reduce such Coupon Rates in accordance with the 10% limitation
described above. Alternatively, the related Originators, acting on
behalf of the Master Servicer, may take any action that the Master
Servicer is permitted to take pursuant to this Section 4.2(b)(vi).
(vii) subject to the 10% limitation on modifications described
above, approve applications of Mortgagors for consent to partial
releases of Mortgages (with the written consent of the Insurer),
alterations to Mortgaged Properties, and removal, demolition or
division of Mortgaged Properties. If the Insurer has not given its
written response within five (5) Business Days after notice from the
Master Services, the Insurer shall be deemed to have given its consent
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to such modification; provided, however, that such notice and consent
shall not be required in the event that the Master Services determines,
in its reasonable discretion, that such modification is legally
required to be made prior to the lapse of such five day period, in
which case the Master Servicer shall give the Insurer immediate notice
of such action.
No application for consent to a partial release of Mortgage shall be
considered by the Master Servicer unless: (x) the provisions of the related
Credit Line Agreement and Mortgage have been complied with; (y) the Combined
Loan-to-Value Ratio (which may, for this purpose, be determined at the time of
any such action in a manner reasonably acceptable to the Insurer) and the
Mortgagor's debt-to-income ratio after any release does not exceed the maximum
Combined Loan-to-Value Ratio and debt-to-income ratio specified as the
then-current maximum levels under the related Originator's underwriting
guidelines for a similar credit grade borrower and (z) the lien priority of the
related Mortgage is not adversely affected.
(c) The Master Servicer shall have the right to sell, in
whole-loan, third-party sales, any Delinquent Mortgage Loan if the Master
Servicer believes that such means of disposition will provide the largest
recovery.
Except as otherwise permitted under this Agreement, the Master
Servicer may not, without the prior written consent of the Insurer (which
consent shall not be unreasonably withheld or delayed), forgive any Mortgage
Loan payments, impair any lien position on the Mortgage Loans or extend the
maturity of any Mortgage Loan. In addition, unless the Insurer consents in
writing, the Master Servicer may not modify Mortgage Loans having an aggregate
Principal Balance in excess of 10% of the Cut-Off Date Pool Balance.
Section 4.3. Servicer Report.
On the tenth day of each month, the Master Servicer shall send to the
Indenture Trustee a report (the "Servicer Report"), in the form of a computer
tape, detailing the aggregate payments on the Mortgage Loans during the prior
Remittance Period. Such tape shall be in the form and have the specifications as
may be agreed to between the Master Servicer and the Indenture Trustee from time
to time.
Section 4.4. Liability of Master Servicer.
(a) The Master Servicer shall not be relieved of its
obligations under this Agreement notwithstanding any Sub-Servicing Agreement or
any of the provisions of this Agreement relating to agreements or arrangements
between the Master Servicer and a Sub-Servicer or otherwise, and the Master
Servicer shall be obligated to the same extent and under the same terms and
conditions as if it alone were servicing and administering the Mortgage Loans.
The Master Servicer shall be entitled to enter into any agreement with a
Sub-Servicer for indemnification of the Master Servicer by such Sub-Servicer.
Nothing contained in such Sub-Servicing Agreement shall be deemed to limit or
modify this Agreement. The Trust shall not indemnify the Master Servicer for any
losses due to the Master Servicer's or any Sub-Servicer's negligence.
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(b) The Master Servicer shall defend, indemnify and hold
harmless the Indenture Trustee (including its officers, directors, employees and
agents), the Owner Trustee (including its officers, directors, employees and
agents), the Noteholders and the Trust from and against any and all claims,
damages, liabilities, losses, costs and expenses (including the reasonable fees
and expenses of counsel) to the extent that such claims, damages, liabilities,
losses, costs or expenses arose out of, or were imposed upon the Indenture
Trustee, the Owner Trustee, the Noteholders or the Trust in connection with or
by reason of: (i) any failure by the Master Servicer to perform its duties under
this Agreement or any errors or omissions of the Master Servicer related to such
duties, including the making of any inaccurate representations or warranties
hereunder; or (ii) in the case of the Indenture Trustee or the Owner Trustee,
the performance of its duties hereunder or under the other Operative Documents,
except to the extent that such claim, damage, liability, loss, cost or expense
resulted from the Indenture Trustee's or the Owner Trustee's gross negligence or
willful misconduct. The provisions of this Section 4.4(b) shall run directly to
and be enforceable by each injured party subject to the limitations hereof, and
the indemnification provided by the Master Servicer to the Indenture Trustee,
the Owner Trustee, the Noteholders and the Trust pursuant to this Section 4.4(b)
shall survive the payment in full of the Notes, the termination of the Indenture
and the resignation or removal of the Indenture Trustee or the Owner Trustee.
The Master Servicer shall pay any amounts owing pursuant to this Section 4.4(b)
directly to the indemnified Person, and such amounts shall not be deposited in
either the Principal and Interest Account or the Note Account. Indemnification
under this Section 4.4(b) shall include reasonable fees and expenses of counsel
and expenses of litigation reasonably incurred. If the Master Servicer has made
any indemnity payments to the Indenture Trustee, the Owner Trustee, the
Noteholders or the Trust pursuant to this Section 4.4(b) and such party
thereafter collects any of such amounts from others, such party will promptly
repay such amounts collected to the Master Servicer, without interest.
(c) The Master Servicer shall be the secondary obligor in
respect of any Expenses (as defined in the Trust Agreement) owing to any
Indemnified Party (as defined in the Trust Agreement) under Section 8.2 of the
Trust Agreement.
Section 4.5. Sub-Servicing Agreements Between Master Servicer and
Sub-Servicers.
The Master Servicer may enter into one or more Sub-Servicing Agreements
for any servicing and administration of Mortgage Loans with one or more
institutions (including affiliates) which are acceptable to the Insurer and are
in compliance with the laws of each state necessary to enable them to perform
their obligations under such Sub-Servicing Agreements. By delivery of the
Policy, the Insurer is deemed to have approved the respective Originators as
Sub-Servicers hereunder. The Master Servicer shall give notice to the Indenture
Trustee, the Insurer and the Rating Agencies of the appointment of any
Sub-Servicer and shall furnish to the Insurer and the Rating Agencies a copy of
the Sub-Servicing Agreement (unless the Sub-Servicer is an affiliate of the
Master Servicer). For purposes of this Agreement, the Master Servicer shall be
deemed to have received payments on Mortgage Loans when any Sub-Servicer has
received such payments. Any such Sub-Servicing Agreement shall be consistent
with and not violate the provisions of this Agreement.
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Section 4.6. Successor Sub-Servicers.
The Master Servicer may terminate any Sub-Servicing Agreement in
accordance with the terms and conditions of such Sub-Servicing Agreement and
either directly service the related Mortgage Loans itself or enter into a
Sub-Servicing Agreement with a successor Sub-Servicer that qualifies under
Section 4.5.
Section 4.7. No Contractual Relationship Between Sub-Servicer and
Indenture Trustee or the Noteholders.
Any Sub-Servicing Agreement and any other transactions or services
relating to the Mortgage Loans involving a Sub-Servicer shall be deemed to be
between the Sub-Servicer and the Master Servicer alone and the Insurer, the
Indenture Trustee and the Noteholders shall not be deemed parties thereto and
shall have no claims, rights, obligations, duties or liabilities with respect to
any Sub-Servicer except as set forth in Section 4.8.
Section 4.8. Assumption or Termination of Sub-Servicing Agreement by
Indenture Trustee.
In connection with the assumption of the responsibilities, duties and
liabilities and of the authority, power and rights of the Master Servicer
hereunder by the Indenture Trustee, it is understood and agreed that the Master
Servicer's rights and obligations under any Sub-Servicing Agreement then in
force between the Master Servicer and a Sub-Servicer may be assumed or
terminated by the Indenture Trustee at its option.
The Master Servicer shall, upon request of the Indenture Trustee, but
at the expense of the Master Servicer, deliver to the assuming party documents
and records relating to each Sub-Servicing Agreement and an accounting of
amounts collected and held by it and otherwise use its best reasonable efforts
to effect the orderly and efficient transfer of the Sub-Servicing Agreements to
the assuming party.
Section 4.9. Principal and Interest Account.
(a) The Master Servicer and/or each Sub-Servicer, as
applicable, shall establish in the name of the Trust for the benefit of the
Noteholders and the Insurer and maintain at one or more Designated Depository
Institutions the Principal and Interest Account, which may be separate accounts
or a single account with sub-accounts.
Subject to Subsections (c) and (e) below, the Master Servicer
and any Sub-Servicer shall deposit all receipts related to the Mortgage Loans to
the Principal and Interest Account on a daily basis (but no later than the
second Business Day after receipt). Such receipts shall include Net Liquidation
Proceeds, including net recoveries from the disposition or other turning to
account of Charged-Off Mortgage Loans.
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On the Closing Date, the Sponsor shall cause the Master
Servicer to deposit within five Business Days after the Closing Date to the
Principal and Interest Account all principal and interest collected on the
Mortgage Loans on and after the related Cut-Off Dates.
The Master Servicer shall hold in escrow on behalf of the
related Mortgagor all Prepaid Installments received by it, and shall apply such
Prepaid Installments as directed by such Mortgagor and as set forth in the
related Credit Line Agreement.
(b) All funds in the Principal and Interest Account may only
be held (i) uninvested, up to the limits insured by the FDIC, or (ii) invested
in Eligible Investments (as defined in the Indenture). The Principal and
Interest Account shall be held in trust in the name of the Trust and for the
benefit of the Noteholders and the Insurer. Any investment earnings on funds
held in the Principal and Interest Account shall be for the account of the
Master Servicer. Any references herein to amounts on deposit in the Principal
and Interest Account shall refer to amounts net of such investment earnings. The
Master Servicer shall deposit the amount of any investment losses immediately
into the Principal and Interest Account as realized.
(c) Subject to Subsection (e) below, the Master Servicer shall
deposit to the Principal and Interest Account all principal and interest
collected on the Mortgage Loans received on or after the related Cut-Off Dates,
including any Prepayments and Net Liquidation Proceeds, all Loan Reacquisition
Prices and Substitution Amounts received or paid by the Master Servicer with
respect to the Mortgage Loans and other recoveries or amounts related to the
Mortgage Loans received by the Master Servicer, together with any amounts which
are reimbursable from the Principal and Interest Account, but net of (i) the
Servicing Fee with respect to each Mortgage Loan and other servicing
compensation to the Master Servicer as permitted by Section 4.15 hereof, (ii)
principal (including Prepayments) collected on the Mortgage Loans prior to the
related Cut-Off Dates, (iii) interest collected on the Mortgage Loans prior to
the related Cut-Off Dates and (iv) Foreclosure Profits.
(d) (i) The Master Servicer may make withdrawals from the
Principal and Interest Account only for the following purposes:
a. to effect the timely remittance to the
Indenture Trustee of the Monthly Remittance Amount due on the
Remittance Date;
b. to pay to itself from any funds in the
Principal and Interest Account with respect to the Mortgage
Loans any accrued and unpaid Servicing Fees with respect to
Mortgage Loans and reimburse itself pursuant to Section 4.10
hereof for unreimbursed Servicing Advances and Servicing
Advances which have been deemed Nonrecoverable Advances;
c. to withdraw investment earnings on amounts on
deposit in the Principal and Interest Account;
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d. to withdraw amounts that have been deposited
to the Principal and Interest Account in error;
e. to clear and terminate the Principal and
Interest Account following the termination of the Trust Estate
pursuant to Article X or XII of the Indenture; and
f. to invest in Eligible Investments.
(ii) On each Remittance Date the Master Servicer shall remit
to the Indenture Trustee by wire transfer, or otherwise make funds available in
immediately available funds, the Interest Remittance Amount and the Principal
Remittance Amount.
(e) To the extent that the ratings, if any, then assigned to
the unsecured debt of the Master Servicer or of the Master Servicer's ultimate
corporate parent are satisfactory to the Insurer, ▇▇▇▇▇'▇ and S&P, then the
requirement to maintain the Principal and Interest Account at a Designated
Depository Institution may be waived by an instrument signed by the Insurer, S&P
and ▇▇▇▇▇'▇, and the Master Servicer may be allowed to co-mingle with its
general funds the amounts otherwise required to be deposited to the Principal
and Interest Account and make monthly deposits to the Note Account on such terms
and subject to such conditions as the Insurer, ▇▇▇▇▇'▇ and S&P may permit.
Section 4.10. Servicing Advances.
The Master Servicer will pay all "out-of-pocket" costs and expenses
incurred in the performance of its servicing obligations, including, but not
limited to, the cost of (i) Preservation Expenses, (ii) the cost of any
enforcement or judicial proceedings, including (a) foreclosures, and (b) other
legal actions and costs associated herewith that potentially affect the
existence, validity, priority, enforceability or collectibility of the Mortgage
Loans, including collection agency fees and costs of pursuing or obtaining
personal judgments, garnishments, levies, attachment and similar actions, (iii)
the cost of the conservation, management, liquidation, sale or other disposition
of any Mortgaged Property acquired in satisfaction of the related Mortgage Loan
including reasonable fees paid to any independent contractors in connection
therewith, and (iv) advances to keep senior liens current, unless with respect
to any of the foregoing the Master Servicer has determined that such advance
would constitute a Nonrecoverable Advance. Each such amount so paid will
constitute a "Servicing Advance." The Master Servicer may recover Servicing
Advances (x) from the Mortgagors to the extent permitted by the Mortgage Loans,
from Liquidation Proceeds realized upon the liquidation of the related Mortgage
Loan and from Mortgage Insurance Proceeds, and (y) as provided in Section
8.6(c)(xxiii) of the Indenture.
Section 4.11. Maintenance of Insurance.
(a) The Master Servicer shall cause to be maintained with
respect to each Mortgage Loan a hazard insurance policy with a generally
acceptable carrier that provides for fire and extended coverage which may be in
the form of a blanket policy as described in clause (c) below, and which
provides for a recovery by the Master Servicer on behalf of the Trust of
insurance proceeds relating to such Mortgage Loan in an amount not less than the
least of (i) during the draw period, the Credit Limit of such
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Mortgage Loan, (ii) after the draw period, the unpaid principal balance of such
Mortgage Loan or (iii) the maximum insurable value of the related Mortgaged
Property. The Master Servicer may satisfy it obligation to cause a hazard
insurance policy to be maintained with respect to a Mortgaged Property by
causing the related Mortgagor to obtain, or obtaining on behalf of such
Mortgagor and at the expense of such Mortgagor, a hazard insurance policy
insuring against losses on the related Mortgage Property.
(b) If any Mortgage Loan at the time of origination relates to
a Mortgaged Property in an area identified in the Federal Register by the
Federal Emergency Management Agency as having special flood hazards, the Master
Servicer will cause to be maintained with respect thereto a flood insurance
policy in a form meeting the requirements of the current guidelines of the
Federal Insurance Administration with a generally acceptable carrier (which may
be in the form of a master policy as described in clause (d) below) in an amount
representing coverage, and which provides for a recovery by the Master Servicer
on behalf of the Trust of Mortgage Insurance Proceeds relating to such Mortgage
Loan of not less than the least of (i) during the draw period, the Credit Limit
of such Mortgage Loan, (ii) after the draw period, the unpaid principal balance
of such Mortgage Loan or (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 Insurer out of the Master Servicer's own funds for
any loss to the Trust and the Insurer resulting from the Master Servicer's
failure to maintain the insurance required by this Section; provided, however,
that in no event shall the Master Servicer be required to maintain a flood
insurance policy in an amount greater than 100% of the value of the related
Mortgaged Property. The Master Servicer may satisfy its obligation to cause a
flood insurance policy to be maintained with respect to a Mortgaged Property by
causing the related Mortgagor to obtain, or obtaining on behalf of such
Mortgagor and at the expense of such Mortgagor, a flood insurance policy
insuring against losses on the related Mortgage Property.
It is understood and agreed that such insurance shall be with
insurers approved by the Master Servicer and that no earthquake or other
additional insurance is to be required of any Mortgagor or to be maintained on
property acquired in respect of a defaulted loan, other than pursuant to such
applicable laws and regulations as shall at any time be in force and as shall
require such additional insurance. Any cost incurred by the Master Servicer in
maintaining any such insurance shall be added to the amount owing under the
Mortgage Loan where the terms of the Credit Line Agreement so permit; provided,
however, that the addition of any such cost shall not be taken into account for
purposes of calculating the principal amount of the Credit Line Agreements or
the distributions to be made to the Noteholders. Such costs shall be considered
a Servicing Advance and shall be recoverable by the Master Servicer pursuant to
Section 4.10.
(c) In the event that the Master Servicer shall obtain and
maintain a blanket policy insuring against fire and hazards of extended coverage
on all of the Mortgage Loans as set forth above, then, to the extent such policy
names the Master Servicer as loss payee and provides coverage in an amount equal
to the aggregate Credit Limit on the Mortgage Loans without co-insurance, and
otherwise complies with the requirements of this Section 4.11, the Master
Servicer shall be deemed conclusively to have satisfied its obligations with
respect to fire 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 Mortgaged
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Property a policy complying with the preceding paragraphs of this Section 4.11,
and there shall have been a loss which would have been covered by such policy,
deposit in the Principal and Interest Account from the Master Servicer's own
funds the difference, if any, between the amount that would have been payable
under a policy complying with the preceding paragraphs of this Section 4.11 and
the amount paid under such blanket policy. Upon the request of the Indenture
Trustee or the Insurer, the Master Servicer shall cause to be delivered to the
Indenture Trustee or the Insurer, a certified true copy of such policy.
(d) In the event that the Master Servicer shall obtain and
maintain a master policy insuring against flood on all of the Mortgage Loans
referred to in (b) above, then, to the extent such policy names the Master
Servicer as loss payee 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 flood insurance coverage under this Section
4.11, it being understood that such master policy may contain a deductible
clause, in which case the Master Servicer shall, in the event that there shall
not have been maintained on the related Mortgaged Property a policy complying
with paragraph (b) of this Section 4.11, and there shall have been a loss which
would have been covered by such policy, deposit in the Principal and Interest
Account from the Master Servicer's own funds the difference, if any, between the
amount that would have been payable under a policy complying with paragraph (b)
of this Section 4.11 and the amount paid under such master policy. Upon the
request of the Indenture Trustee or the Insurer, the Master Servicer shall cause
to be delivered to the Indenture Trustee or the Insurer, a certified true copy
of such policy.
Section 4.12. Due-on-Sale Clauses; Assumption and Substitution
Agreements.
Except as provided in Section 4.14(b), when a Mortgaged Property has
been or is about to be conveyed by the Mortgagor, the Master Servicer shall, to
the extent it has knowledge of such conveyance or prospective conveyance,
exercise its rights to accelerate the maturity of the related Mortgage Loan
under any "due-on-sale" clause contained in the related Mortgage or Credit Line
Agreement; provided, however, that the Master Servicer shall not exercise any
such right if (i) the "due-on-sale" clause, in the reasonable belief of the
Master Servicer, is not enforceable under applicable law or (ii) the Master
Servicer reasonably believes that to permit an assumption of the Mortgage Loan
would not materially and adversely affect the interest of the Noteholders or the
Insurer, In such event, the Master Servicer shall enter into an assumption and
modification agreement (the terms of which will be consistent with the 10%
limitation on modifications described in Section 4.2(h) above) with the person
to whom such property has been or is about to be conveyed, pursuant to which
such person becomes liable under the Credit Line Agreements and, unless
prohibited by applicable law or this Agreement or any of the agreements,
guaranties or assignments relating to the Mortgage Loans contained in the
Mortgage Files, the Mortgagor remains liable thereon. If the foregoing is not
permitted under applicable law, the Master Servicer is authorized to enter into
a substitution of liability agreement with such person, pursuant to which the
original Mortgagor is released from liability and such person is substituted as
Mortgagor and becomes liable under the Credit Line Agreement; provided, however,
that to the extent any such substitution of liability agreement would be
delivered by the Master Servicer outside of its usual procedures for mortgage
loans held in its own portfolio, the Master Servicer shall, prior to executing
and delivering such agreement, obtain the prior written consent of the Insurer.
The Mortgage Loan, as assumed, shall conform in all respects to the
requirements, representations and warranties of this Agreement. The Master
Servicer shall notify the
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Indenture Trustee that any such assumption or substitution agreement has been
completed by forwarding to the Indenture Trustee the original copy of such
assumption or substitution agreement, which copy shall be added by the Indenture
Trustee to the related Mortgage File and which shall, for all purposes, be
considered a part of such Mortgage File to the same extent as all other
documents and instruments constituting a part thereof. The Master Servicer shall
be responsible for recording any such assumption or substitution agreements. In
connection with any such assumption or substitution agreement, the required
monthly payment on the related Mortgage Loan shall not be changed but shall
remain as in effect immediately prior to the assumption or substitution, the
stated maturity or outstanding principal amount of such Mortgage Loan shall not
be changed nor shall any required monthly payments of principal or interest be
deferred or forgiven. Any fee collected by the Master Servicer or the
Sub-Servicer for consenting to any such conveyance or entering into an
assumption or substitution agreement shall be retained by or paid to the Master
Servicer as additional servicing compensation.
Notwithstanding anything in this Section 4.12 or any other provision of
this Agreement, the Master Servicer shall not be deemed to be in default, breach
or any other violation of its obligations hereunder by reason of any assumption
of a Mortgage Loan by operation of law or any assumption which the Master
Servicer may be restricted by law from preventing, for any reason whatsoever.
Section 4.13. Realization Upon Defaulted Mortgage Loans.
(a) The Master Servicer shall foreclose upon or otherwise
comparably effect the ownership on behalf of the Trust of the Mortgaged
Properties relating to defaulted Mortgage Loans as to which no satisfactory
arrangements can be made for collection of Delinquent payments, unless the
Master Servicer determines that the costs associated with the foreclosure will
be greater than the recovery received. If the Master Servicer determines not to
bring or to terminate foreclosure proceedings, it will determine in accordance
with the Accepted Servicing Practices whether or not to seek a judgment against
the Mortgagor. In connection with such foreclosure or other conversion, the
Master Servicer shall follow Accepted Servicing Practices. Any amounts advanced
pursuant to this Section 4.13 shall constitute "Servicing Advances" within the
meaning of Section 4.10 hereof.
Notwithstanding the generality of the foregoing provisions,
the Master Servicer shall manage, conserve, protect and operate each REO
Property for the Noteholders solely for the purpose of its prompt disposition
and sale. Pursuant to its efforts to sell such REO Property, the Master Servicer
shall either itself or through an agent selected by the Master Servicer protect
and conserve such REO Property in the same manner and to such extent as is
customary in the locality where such REO Property is located and may, incident
to its conservation and protection of the interests of the Noteholders, rent the
same, or any part thereof, as the Master Servicer deems to be in the best
interest of the Noteholders for the period prior to the sale of such REO
Property. The Master Servicer shall take into account the existence of any
hazardous substances, hazardous wastes or solid wastes, as such terms are
defined in the Comprehensive Environmental Response Compensation and Liability
Act, the Resource Conservation and Recovery Act of 1976, or other federal, state
or local environmental legislation, on a Mortgaged Property in determining
whether to foreclose upon or otherwise comparably convert the ownership of such
Mortgaged Property.
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(b) The Master Servicer shall determine, with respect to each
defaulted Mortgage Loan, when it has recovered, whether through trustee's sale,
sales to third parties, foreclosure sale or otherwise, all amounts it expects to
recover from or on account of such defaulted Mortgage Loan, whereupon such
Mortgage Loan shall become a "Liquidated Mortgage Loan" and shall promptly
deliver to the Insurer a Master Servicer's customary liquidation report (each, a
"Liquidation Report") with respect to such Mortgage Loan. The Master Servicer
will charge-off an HLTV HELOC Mortgage Loan on the earlier to occur of (i) the
date upon which such Mortgage Loan becomes 180 days Delinquent or (ii) the date
upon which the Master Servicer has determined that it has recovered all amounts
it expects to recover from such Mortgage Loan, whereupon such Mortgage Loan
shall become a Liquidated Mortgage Loan. Any net recoveries from a Liquidated
Mortgage Loan shall constitute property of the Trust and shall be deposited by
the Master Servicer in the Principal and Interest Account, all in accordance
with the provisions of this Agreement.
Section 4.14. Indenture Trustee to Cooperate; Release of Mortgage
Files.
(a) Upon the payment in full of the Principal Balance of any
Mortgage Loan (including the repurchase of any Mortgage Loan or any liquidation
of such Mortgage Loan through foreclosure or otherwise), or the receipt by the
Master Servicer of a notification that payment in full will be escrowed in a
manner customary for such purposes, the Master Servicer shall deliver to the
Indenture Trustee a Master Servicer's Trust Receipt. Upon receipt of such Master
Servicer's Trust Receipt, the Indenture Trustee shall promptly release the
related Mortgage File, in trust to (i) the Master Servicer, or (ii) an escrow
agent for the Master Servicer. Upon any such payment in full, or the receipt of
such notification that such funds have been placed in escrow, the Master
Servicer is authorized to give, as attorney-in-fact for the Indenture Trustee
and the mortgagee under the Mortgage which secured the Credit Line Agreement, an
instrument of satisfaction (or assignment of Mortgage without recourse)
regarding the Mortgaged Property relating to such Mortgage, which instrument of
satisfaction or assignment, as the case may be, shall be delivered to the Person
or Persons entitled thereto against receipt therefor of payment in full, it
being understood and agreed that no expense incurred in connection with such
instrument of satisfaction or assignment, as the case may be, shall be
chargeable to the Principal and Interest Account. In lieu of executing any such
satisfaction or assignment, as the case may be, the Master Servicer may prepare
and submit to the Indenture Trustee, a satisfaction (or assignment without
recourse, if requested by the Person or Persons entitled thereto) in form for
execution by the Indenture Trustee with all requisite information completed by
the Master Servicer; in such event, the Indenture Trustee shall execute and
acknowledge such satisfaction or assignment, as the case may be, and deliver the
same with the related Mortgage File, as aforesaid.
(b) From time to time and as appropriate in the servicing of
any Mortgage Loan, including, without limitation, foreclosure or other
comparable conversion of a Mortgage Loan or collection under any applicable
Mortgage Insurance Policy, the Indenture Trustee shall, upon request of the
Master Servicer and delivery to the Indenture Trustee of a Master Servicer's
Trust Receipt in the form of Exhibit F hereto, release the related Mortgage File
to the Master Servicer and shall execute such documents as shall be necessary to
the prosecution of any such proceedings, including, without limitation, an
assignment without recourse of the related Mortgage to the Master Servicer;
provided, that there shall not be released and unreturned at any one time more
than twenty-five (25) Mortgage Files. The Indenture Trustee shall complete in
the name of the Indenture Trustee any endorsement in blank on any Credit Line
Agreement
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prior to releasing such Credit Line Agreement to the Master Servicer. Such
receipt shall obligate the Master Servicer to return the Mortgage File to the
Indenture Trustee when the need therefor by the Master Servicer no longer exists
unless the Mortgage Loan shall be liquidated, in which case, upon receipt of the
liquidation information, in physical or electronic form, a copy of the Master
Servicer's Trust Receipt shall be released by the Indenture Trustee to the
Master Servicer.
(c) No costs associated with the procedures described in this
Section 4.14 shall be an expense of the Trust.
(d) The provisions set forth in Subsections (a) and (b) may be
superseded by any waiver of the Document Delivery Requirement as may be given by
the Insurer, ▇▇▇▇▇'▇ and S&P pursuant to Section 2.1(k) hereof.
(e) Each Master Servicer's Trust Receipt may be delivered to
the Indenture Trustee (i) via mail or courier, (ii) via facsimile or (iii) by
such other means, including, without limitation, electronic or computer readable
medium, as the Master Servicer and the Indenture Trustee shall mutually agree.
The Indenture Trustee shall promptly release the related Mortgage File(s) within
seven (7) Business Days of receipt of a properly completed Master Servicer's
Trust Receipt or such shorter period as may be agreed upon by the Master
Servicer and the Indenture Trustee. Receipt of a Master Servicer's Trust Receipt
as provided above shall be authorization to the Indenture Trustee to release
such Mortgage Files, provided the Indenture Trustee has determined that such
Master Servicer's Trust Receipt has been executed, or approved, as applicable,
by an Authorized Officer of the Master Servicer or any Sub-servicer, and so long
as the Indenture Trustee complies with its duties and obligations under this
Agreement. If the Indenture Trustee is unable to release the Mortgage Files
within the time frames specified, the Indenture Trustee shall immediately notify
the Master Servicer or any Sub-servicer indicating the reason for such delay,
but in no event shall such notification be later than seven (7) Business Days
after receipt of a Master Servicer's Trust Receipt. If the Master Servicer is
required to pay penalties or damages due solely to the Indenture Trustee's
negligent failure to release the related Mortgage File or the Indenture
Trustee's negligent failure to execute and release documents in a timely manner,
the Indenture Trustee shall be liable for such penalties or damages.
Section 4.15. Servicing Compensation.
As compensation for its activities hereunder, the Master Servicer shall
be entitled to retain the amount of the Servicing Fee with respect to each
Mortgage Loan pursuant to the provisions of this Agreement. Additional servicing
compensation in the form of prepayment charges, termination fees, release fees,
bad check charges, assumption fees, late payment charges, or any other
servicing- related fees, Foreclosure Profits, Net Liquidation Proceeds not
required to be deposited in the Principal and Interest Account pursuant to
Section 4.9(c) and similar items may, to the extent collected from Mortgagors,
be retained by the Master Servicer.
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Section 4.16. Annual Statement as to Compliance.
The Master Servicer, at its own expense, will deliver to the Indenture
Trustee, the Insurer, S&P and ▇▇▇▇▇'▇, on or before the fifteenth of April of
each year, commencing in 2001, an Officer's Certificate stating, as to each
signer thereof, that (i) a review of the activities of the Master Servicer
during such preceding calendar year and of performance under this Agreement has
been made under such officers' supervision, and (ii) to the best of such
officers' knowledge, based on such review, the Master Servicer has fulfilled all
its obligations under this Agreement for such year, or, if there has been a
default in the fulfillment of all such obligations, specifying each such default
known to such officers and the nature and status thereof including the steps
being taken by the Master Servicer to remedy such defaults.
Section 4.17. Annual Independent Certified Public Accountants' Reports.
On or before the fifteenth of April of each year, commencing in 2001,
the Master Servicer, at its own expense, shall cause to be delivered to the
Indenture Trustee, the Insurer, S&P and ▇▇▇▇▇'▇ a letter or letters of a firm of
independent, nationally recognized certified public accountants reasonably
acceptable to the Insurer, stating that such firm has, with respect to the
Master Servicer's overall servicing operations either (i) performed applicable
tests substantially in compliance with the testing procedures as set forth in
Appendix 3 of the Audit Guide for Audits of HUD Approved Nonsupervised
Mortgagees, (ii) examined such operations substantially in compliance with the
requirements of the Uniform Single Attestation Program for Mortgage Bankers, and
in either case stating such firm's conclusions relating thereto or (iii)
examined such operations in accordance with the requirements of SAS 70.
Section 4.18. Access to Certain Documentation and Information Regarding
the Mortgage Loans.
The Master Servicer shall provide to the Indenture Trustee, the
Insurer, and the agents and examiners of each of the foregoing (when accompanied
by each of the foregoing) access to the documentation regarding the Mortgage
Loans required by applicable state and federal regulations, such access being
afforded without charge but only upon reasonable request and during normal
business hours at the offices of the Master Servicer. The Indenture Trustee and
the Insurer shall not use or disclose any information provided pursuant to this
Section 4.18, unless such information is available from public sources or third
parties not, to the knowledge of the Indenture Trustee or the Insurer, as the
case may be, under any obligation of confidentiality with respect thereto, or
except as may be otherwise required by regulation, law or court order or other
legal process or requested by appropriate governmental authorities or as
necessary to preserve its rights or security under or to enforce the Operative
Documents; provided, however, that the foregoing shall not limit the right of
the Insurer to make such information available to its regulators, securities
rating agencies, reinsurers, credit and liquidity providers, counsel and
accountants. If the Insurer is requested or required (by oral questions,
interrogatories, requests for information or documents subpoena, civil
investigative demand or similar process) to disclose any information provided to
the Insurer pursuant to or in connection with this Section 4.18, the Insurer
will, unless otherwise prohibited by law, regulation or legal process, promptly
notify the Master Servicer of such request(s) so that the Master Servicer may
seek an appropriate protective order and/or waive the Insurer's compliance with
the provisions of this Section 4.18. If, in the absence of a protective order or
the receipt
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of a waiver hereunder, the Insurer is, nonetheless, in the opinion of its
counsel (which shall be delivered the Master Servicer), compelled to disclose
such information to any tribunal or else stand liable for contempt or suffer
other censure of significant penalty, the Insurer may disclose such information
to such tribunal that the Insurer is compelled to disclose, provided that unless
otherwise prohibited by law, regulation or legal process, a copy of all
information disclosed is provided to the Master Servicer promptly upon such
disclosure.
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 and the
Insurer at such other times as the Indenture Trustee or the Insurer may
reasonably request.
Section 4.19. Assignment of Agreement.
The Master Servicer may not assign its obligations under this
Agreement, in whole or in part, unless it shall have first obtained the written
consent of the Indenture Trustee and the Insurer, which such consent shall not
be unreasonably withheld; provided, however, that any assignee must meet the
eligibility requirements set forth in Section 5.1(f) hereof for a successor
servicer; and provided, further, that this Section 4.19 does not apply to the
appointment of Sub-Servicers or to the assignment to any affiliate. Notice of
any such assignment shall be given by the Master Servicer to the Indenture
Trustee, the Insurer, ▇▇▇▇▇'▇ and S&P.
Section 4.20. Resignation of the Master Servicer.
Subject to Section 5.1(c), the Master Servicer shall not resign from
the obligations and duties hereby imposed on it except by mutual written consent
of the Sponsor, the Master Servicer, the Insurer, and the Indenture Trustee or
upon determination that its duties hereunder are no longer permissible under
applicable law or are in material conflict by reason of applicable law with any
other activities carried on by it, the other activities of the Master Servicer
so causing such a conflict being of a type and nature carried on by the Master
Servicer at the date of this Agreement. Any such determination permitting the
resignation of the Master Servicer shall be evidenced by an opinion of counsel
to such effect which shall be delivered to the Indenture Trustee and the
Insurer.
ARTICLE 5
SERVICING TERMINATION
Section 5.1. Events of Servicing Termination.
(a) If any one of the following events ("Event of Servicing
Termination") shall occur and be continuing:
(i) The Master Servicer shall fail to deliver to the Indenture
Trustee any proceeds or required payment, which failure continues
unremedied for three (3) Business Days following
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written notice to an Authorized Officer of the Master Servicer from the
Indenture Trustee or from the Insurer or Noteholders holding Percentage
Interests aggregating not less than 25%.
(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.
(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; or
(iv) The Master Servicer shall fail to cure any breach of any
of its representations and warranties set forth in Section 3.2 or fail
to perform any covenants hereunder, which failure materially and
adversely affects the interests of the Noteholders or the Insurer for a
period of 30 days after the Master Servicer's discovery or receipt of
notice thereof from the Indenture Trustee, the Insurer or Noteholders
holding Notes evidencing not less than 25% of the Note Balance;
provided, however, that if the Master Servicer can demonstrate to the
reasonable satisfaction of the Insurer that it is diligently pursuing
remedial action, then the cure period may be extended with the written
consent of the Insurer.
(v) The Master Servicer shall fail to make any required
Servicing Advance which failure continues for thirty (30) days or more
after written notice from the Insurer if such failure has a material
and adverse affect on Net Liquidation Proceeds, in the sole
determination of the Insurer.
then, and in each and every such case, so long as the
Event of Servicing Termination shall not have been remedied by the
Master Servicer, either the Indenture Trustee or Noteholders holding
Notes evidencing not less than 51% of the Note Balance in each case
with the written consent of the Insurer, or the Insurer, by notice then
given in writing to the Master Servicer (and to the Indenture Trustee
if given by the Insurer or the Noteholders) may terminate all of the
rights and obligations of the Master Servicer as servicer under this
Agreement. Any such notice to the
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Master Servicer shall also be given to each Rating Agency and the
Insurer. On and after the receipt by the Master Servicer of such
written notice, all authority and power of the Master Servicer under
this Agreement, whether with respect to the Notes or the Mortgage Loans
or otherwise, shall pass to and be vested in the Indenture Trustee
pursuant to and under this Section 5.1 and, without 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 administration, all cash amounts
that shall at the time be held by the Master Servicer. The Indenture
Trustee will promptly deposit such cash in the Note Account.
Thereafter, any cash received by the Master Servicer with respect to
the Mortgage Loans shall be immediately transferred to the Note
Account. All reasonable costs and expenses (including attorneys' fees)
incurred in connection with amending this Agreement to reflect such
succession as Master Servicer pursuant to this Section 5.1 shall be
paid by the predecessor Master Servicer (or if the predecessor Master
Servicer is the Indenture Trustee, the initial Master Servicer) upon
presentation of reasonable documentation of such costs and expenses.
Nothing herein shall relieve the Master Servicer from
using its best efforts to perform its respective obligations in a
timely manner in accordance with the terms of this Agreement and the
Master Servicer shall provide the Indenture Trustee, the Sponsor, the
Insurer and the Noteholders with an Officer's Certificate giving prompt
notice of any failure or delay by it to perform its obligations,
together with a description of its efforts to so perform its
obligations. The Master Servicer shall immediately notify the Indenture
Trustee and the Insurer in writing of any Events of Servicing
Termination.
(b) In addition to the foregoing, the Insurer may remove the
Master Servicer upon the occurrence of an "Insurance Agreement Event of
Servicing Termination" under the Insurance Agreement.
(c) No removal or resignation of the Master Servicer shall
become effective until the Indenture Trustee or a successor servicer acceptable
to the Insurer shall have assumed the Master Servicer's responsibilities and
obligations in accordance with this Section.
(d) Upon removal or resignation of the Master Servicer, the
Master Servicer also shall promptly deliver or cause to be delivered to a
successor servicer or the Indenture Trustee all the books and records
(including, without limitation, records kept in electronic form) that the Master
Servicer has maintained for the Mortgage Loans, including all tax bills,
assessment notices, insurance premium notices and all other documents as well as
all original documents then in the Master Servicer's possession.
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(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
$5,000,000, as determined in accordance with generally accepted accounting
principles, acceptable to the Insurer, as the successor to the Master Servicer
hereunder in the assumption of all or any part of the responsibilities, duties
or liabilities of the Master Servicer hereunder. The compensation of any
successor servicer (including, without limitation, the Indenture Trustee) so
appointed shall be the aggregate Servicing Fees, together with the other
servicing compensation in the form of assumption fees, late payment charges or
otherwise as provided in Sections 4.9 and 4.15 (but excluding prepayment fees
and termination fees); 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.
(g) In the event the Indenture Trustee solicits bids as
provided above, the Indenture Trustee shall solicit, by public announcement,
bids from housing and home finance institutions, banks and mortgage servicing
institutions meeting the qualifications set forth above. Such public
announcement shall specify that the successor Master Servicer shall be entitled
to the full amount of the aggregate Servicing Fees as servicing compensation,
together with the other servicing compensation in the form of assumption fees,
late payment charges or otherwise as provided in Sections 4.9 and 4.15 (but
excluding prepayment fees and termination fees). Within thirty (30) days after
any such public announcement, the Indenture Trustee shall negotiate and effect
the sale, transfer and assignment of the servicing rights and responsibilities
hereunder to the qualified party submitting the highest satisfactory bid. The
Indenture Trustee shall deduct from any sum received by the Indenture Trustee
from the successor to the Master Servicer in respect of such sale, transfer and
assignment all costs and expenses of any public announcement and of any sale,
transfer and assignment of the servicing rights and responsibilities hereunder.
After such deductions, the remainder of such sum shall be paid by the Indenture
Trustee to the Master Servicer at the time of such sale, transfer and assignment
to the Master Servicer's successor.
(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
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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.
(i) The Master Servicer which is being removed or is resigning
shall give notice to the Mortgagors and to ▇▇▇▇▇'▇ and S&P of the transfer of
the servicing to the successor.
(j) The Indenture Trustee shall give notice to the Insurer,
▇▇▇▇▇'▇ and S&P and to the Noteholders of the occurrence of any event specified
in Section 5.1(a) of which the Indenture Trustee has actual knowledge.
(k) The Indenture Trustee or any other successor Master
Servicer, upon assuming the duties of Master Servicer hereunder, shall
immediately make all Servicing Advances which the Master Servicer has
theretofore failed to pay with respect to the Mortgage Loans; provided, however,
that if the Indenture Trustee is acting as successor Master Servicer, the
Indenture Trustee shall only be required to make Servicing Advances if, in the
Indenture Trustee's reasonable good faith judgment, such Servicing Advances will
ultimately be recoverable from the related Mortgage Loans.
Section 5.2. Inspections by Insurer; Errors and Omissions Insurance.
(a) At any reasonable time and from time to time upon
reasonable notice, the Insurer, or any agents or representatives thereof may
inspect the Master Servicer's servicing operations and discuss the servicing
operations of the Master Servicer with any of its officers or directors.
(b) The Master Servicer agrees to maintain errors and
omissions coverage and a fidelity bond, each at least to the extent generally
maintained by prudent mortgage loan servicers having servicing portfolios of a
similar size.
Section 5.3. Merger, Conversion, Consolidation or Succession to
Business of Master Servicer.
Any corporation into which the Master Servicer may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Master Servicer shall
be a party, or any corporation succeeding to all or substantially all of the
business of the Master Servicer, shall be the successor of the Master Servicer
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto provided that such corporation meets the
qualifications set forth in Section 5.1(f).
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Section 5.4. Notification to Noteholders.
Upon any termination or appointment of a successor to the Master
Servicer pursuant to this Article V, the Indenture Trustee shall give prompt
written notice thereof to the Noteholders at their respective addresses
appearing in the Note Register, the Insurer and each Rating Agency.
Section 5.5. Notices of Material Events.
The Master Servicer shall give prompt notice to the Insurer, the
Indenture Trustee, Moody's and S&P of the occurrence of any of the following
events:
(a) Any default or any fact or event which results in the
occurrence of a default by the Sponsor, any Originator or the Master Servicer
under any Operative Document or would constitute a material breach of a
representation, warranty or covenant under any Operative Document.
(b) The submission of any claim or the initiation of any legal
process, litigation or administrative or judicial investigation against any
Originator, the Sponsor, the Master Servicer or AMHC in any federal, state or
local court or before any governmental body or agency, or before any arbitration
board, or the threatening of any such proceedings by any governmental agency,
which, if adversely determined, would have a material adverse effect upon any of
such Originator's, the Sponsor's, the Master Servicer's or AMHC's ability to
perform its obligations under any Operative Document.
(c) The commencement of any proceedings by or against any
Originator, the Sponsor, the Master Servicer or AMHC under any applicable
bankruptcy, reorganization, liquidation, insolvency or other similar law now or
hereafter in effect or of any proceeding in which a receiver, liquidator,
trustee or other similar official shall have been, or may be, appointed or
requested for such Originator, the Sponsor, the Master Servicer or AMHC; and
(d) The receipt of notice from any agency or governmental body
having authority over the conduct of any Originator's, the Sponsor's, the Master
Servicer's or AMHC's business that such Originator, the Sponsor, the Master
Servicer or AMHC is to cease and desist, or to undertake any practice, program,
procedure or policy employed by such Originator, the Sponsor, the Master
Servicer or AMHC in the conduct of the business of any of them, and such
cessation or undertaking will materially adversely affect the conduct of such
Originator's, the Sponsor's, the Master Servicer's or AMHC's business or its
ability to perform under the Operative Documents or materially adversely affect
the financial affairs of such Originator, the Sponsor, the Master Servicer or
AMHC.
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ARTICLE 6
ADMINISTRATIVE DUTIES OF THE MASTER SERVICER
Section 6.1. Administrative Duties with Respect to the Indenture
The Master Servicer shall perform all its duties and the duties of the
Trust under the Indenture. In addition, the Master Servicer shall consult with
the Owner Trustee as the Master Servicer deems appropriate regarding the duties
of the Trust under the Indenture. The Master Servicer shall monitor the
performance of the Trust and shall advise the Owner Trustee when action is
necessary to comply with the Trust's duties under the Indenture. The Master
Servicer shall prepare for execution by the Trust or shall cause the preparation
by other appropriate Persons of all such documents, reports, filings,
instruments, certificates and opinions as it shall be the duty of the Trust to
prepare, file or deliver pursuant to the Indenture. In furtherance of the
foregoing, the Master Servicer shall take all necessary action that is the duty
of the Trust to take pursuant to the Indenture.
(a) Duties with Respect to the Trust.
(i) In addition to the duties of the Master Servicer set forth
in this Agreement or any of the Operative Documents, the Master
Servicer shall perform such calculations and shall prepare for
execution by the Trust or the Owner Trustee or shall cause the
preparation by other appropriate Persons of all such documents,
reports, filings, instruments, certificates and opinions as it shall be
the duty of the Trust or the Owner Trustee to prepare, file or deliver
pursuant to this Agreement or any of the Operative Documents or under
state and federal tax and securities laws, and at the request of the
Owner Trustee shall take all appropriate action that it is the duty of
the Trust to take pursuant to this Agreement or any of the Operative
Documents. In accordance with the directions of the Trust or the Owner
Trustee, the Master Servicer shall administer, perform or supervise the
performance of such other activities in connection with the Mortgage
Loans (including the Operative Documents) as are not covered by any of
the foregoing provisions and as are expressly requested by the Trust or
the Owner Trustee and are reasonably within the capability of the
Master Servicer.
(ii) Notwithstanding anything in this Agreement or any of the
Operative Documents to the contrary, the Master Servicer shall be
responsible for promptly notifying the Owner Trustee and the Indenture
Trustee in the event that any withholding tax is imposed on the Trust's
payments (or allocations of income) with respect to the
Certificateholders' interest in the Trust as contemplated by this
Agreement. Any such notice shall be in writing and specify the amount
of any withholding tax required to be withheld by the Owner Trustee or
the Indenture Trustee pursuant to such provision.
(iii) Notwithstanding anything in this Agreement or the
Operative Documents to the contrary, the Master Servicer shall be
responsible for performance of the duties of the Trust or the Sponsor
set forth in Section 5.1(a), (b), (c) and (d) of the Trust Agreement
with respect to, among other things, accounting and reports with
respect to the Certificateholders' interest in the Trust.
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(iv) In carrying out the foregoing duties or any of its other
obligations under this Agreement, the Master Servicer may enter into
transactions with or otherwise deal with any of its Affiliates;
provided, however, that the terms of any such transactions or dealings
shall be in accordance with any directions received from the Trust
(with the written consent of the Insurer), and shall be, in the Master
Servicer's opinion, no less favorable to the Trust or the Insurer in
any material respect.
(b) Non-Ministerial Matters. With respect to matters that in
the reasonable judgment of the Master Servicer are non-ministerial, the Master
Servicer shall not take any action pursuant to this Article VI unless within a
reasonable time before the taking of such action, the Master Servicer shall have
notified the Owner Trustee and the Insurer of the proposed action and the Owner
Trustee and the Insurer shall have consented in writing thereto or provided an
alternative direction. For the purpose of the preceding sentence,
"non-ministerial matters" shall include:
(i) the amendment of or any supplement to the Indenture.
(ii) the initiation of any claim or lawsuit by the Trust and
the compromise of any action, claim or lawsuit brought by or against
the Trust (other than in connection with the collection of the Mortgage
Loans).
(iii) the amendment, change or modification of this Agreement
or any of the Operative Documents.
(iv) the appointment of successor Note Registrars, successor
Paying Agents and successor Indenture Trustees pursuant to the
Indenture or the appointment of Successor Servicers or the consent to
the assignment by the Note Registrar, Paying Agent or Indenture Trustee
of its obligations under the Indenture; and
(v) the removal of the Indenture Trustee.
(c) Exceptions. Notwithstanding anything to the contrary in
this Agreement, except as expressly provided herein or in the other Operative
Documents, the Master Servicer, in its capacity hereunder, shall not be
obligated to, and shall not, (1) make any payments to the Noteholders or any
Originator under the Operative Documents, (2) sell the Trust Property pursuant
to Section 5.6 of the Indenture, (3) take any other action that the Trust
directs the Master Servicer not to take on its behalf (unless the Insurer so
directs) or (4) in connection with its duties hereunder assume any
indemnification obligation of any other Person.
(d) Responsibility. The Indenture Trustee or any successor
Master Servicer shall not be responsible for any obligations or duties of the
Master Servicer under this Section 6.1.
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Section 6.2. Records
The Master Servicer shall maintain appropriate books of account and
records relating to services performed under this Agreement, which books of
account and records shall be accessible for inspection by the Trust and the
Indenture Trustee at any time during normal business hours.
Section 6.3. Additional Information to be Furnished to the Trust
The Master Servicer shall furnish to the Trust, the Indenture Trustee
and the Insurer from time to time such additional information regarding the
Mortgage Loans as the Trust, the Indenture Trustee or the Insurer shall
reasonably request.
ARTICLE 7
MISCELLANEOUS
Section 7.1. Compliance Certificates and Opinions.
Upon any application or request by the Sponsor, the Insurer or the
Noteholders to the Indenture Trustee to take any action under any provision of
this Agreement, the Sponsor or the Noteholders, as the case may be, shall
furnish to the Indenture Trustee a certificate stating that all conditions
precedent, if any, provided for in this Agreement relating to the proposed
action have been complied with, except that in the case of any such application
or request as to which the furnishing of any documents is specifically required
by any provision of this Agreement relating to such particular application or
request, no additional certificate need be furnished.
Except as otherwise specifically provided herein, each certificate or
opinion with respect to compliance with a condition or covenant provided for in
this Agreement shall include:
(a) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions herein
relating thereto.
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based; and
(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
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certify or give an opinion with respect to some matters and one or more other
such Persons as to other matters, and any such Person may certify or give an
opinion as to such matters in one or several documents.
Any certificate of an Authorized Officer of the Indenture Trustee may
be based, insofar as it relates to legal matters, upon an opinion of counsel,
unless such Authorized Officer knows, or in the exercise of reasonable care
should know, that the opinion is erroneous. Any such certificate of an
Authorized Officer of the Indenture Trustee or any opinion of counsel may be
based, insofar as it relates to factual matter upon a certificate or opinion of,
or representations by, one or more Authorized Officers of the Sponsor or of the
Master Servicer, stating that the information with respect to such factual
matters is in the possession of the Sponsor or of the Master Servicer, unless
such Authorized Officer or counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous. Any opinion of counsel may also be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an Authorized Officer of the Indenture Trustee, stating that
the information with respect to such matters is in the possession of the
Indenture Trustee, unless such counsel knows, or in the exercise of reasonable
care should know, that the certificate or opinion or representations with
respect to such matters are erroneous. Any opinion of counsel may be based on
the written opinion of other counsel, in which event such opinion of counsel
shall be accompanied by a copy of such other counsel's opinion and shall include
a statement to the effect that such counsel believes that such counsel and the
Indenture Trustee may reasonably rely upon the opinion of such other counsel.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.
Section 7.3. Acts of Noteholders.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Agreement to be given or taken
by the Noteholders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Noteholders in person or by an
agent duly appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered to the Indenture Trustee and the Insurer has consented thereto in
writing, and, where it is hereby expressly required, to the Sponsor. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "act" of the Noteholders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Agreement and conclusive in favor of the Indenture Trustee and
the Trust, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Whenever
such execution is by an officer of a corporation or a member of a partnership on
behalf of such corporation or partnership, such certificate or affidavit shall
also constitute sufficient proof of his authority.
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(c) The ownership of the Notes shall be proved by the Note
Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by any Noteholder shall bind the Noteholder of
every Note issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof, in respect of anything done, omitted or suffered to
be done by the Indenture Trustee or the Trust in reliance thereon, whether or
not notation of such action is made upon such Notes.
Section 7.4. Notices, etc. to Indenture Trustee.
Any request, demand, authorization, direction, notice, consent, waiver
or act of the Noteholders or other documents provided or permitted by this
Agreement to be made upon, given or furnished to, or filed with the Indenture
Trustee by any Noteholder, the Insurer or by the Sponsor shall be sufficient for
every purpose hereunder if made, given, furnished or filed in writing to or with
and received by the Indenture Trustee at its Corporate Trust Office as set forth
in the Indenture.
Section 7.5. Notices and Reports to Noteholders; Waiver of Notices.
Where this Agreement provides for notice to Noteholders of any event or
the mailing of any report to Noteholders, such notice or report shall be
sufficiently given (unless otherwise herein expressly provided) if mailed,
first-class postage prepaid, to each Noteholder affected by such event or to
whom such report is required to be mailed, at the address of such Noteholder as
it appears on the Note Register, not later than the latest date, and not earlier
than the earliest date, prescribed for the giving of such notice or the mailing
of such report. In any case where a notice or report to Noteholders is mailed in
the manner provided above, neither the failure to mail such notice or report nor
any defect in any notice or report so mailed to any particular Noteholder shall
affect the sufficiency of such notice or report with respect to other
Noteholders, and any notice or report which is mailed in the manner herein
provided shall be conclusively presumed to have been duly given or provided.
Where this Agreement provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Noteholders when such notice is required to be
given pursuant to any provision of this Agreement, then any manner of giving
such notice as shall be satisfactory to the Indenture Trustee shall be deemed to
be a sufficient giving of such notice.
Where this Agreement provides for notice to any rating agency that
rated any Notes, failure to give such notice shall not affect any other rights
or obligations created hereunder.
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Section 7.6. Successors and Assigns.
All covenants and agreements in this Agreement by any party hereto
shall bind its successors and assigns, whether so expressed or not.
Section 7.7. Severability.
In case any provision in this Agreement or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 7.8. Benefits of Agreement.
Nothing in this Agreement or in the Notes, expressed or implied, shall
give to any Person, other than the Noteholders, the Insurer and the parties
hereto and their successors hereunder, any benefit or any legal or equitable
right, remedy or claim under this Agreement.
Section 7.9. Legal Holidays.
In any case where 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 7.10. Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAWS PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
Section 7.11. Counterparts.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
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Section 7.12. Usury.
The amount of interest payable or paid on any Note under the terms of
this Agreement shall be limited to an amount which shall not exceed the maximum
nonusurious rate of interest allowed by the applicable laws of the State of New
York or any applicable law of the United States permitting a higher maximum
nonusurious rate that preempts such applicable New York laws, which could
lawfully be contracted for, charged or received (the "Highest Lawful Rate"). In
the event any payment of interest on any Note exceeds the Highest Lawful Rate,
the Trust stipulates that such excess amount will be deemed to have been paid to
the Noteholder inadvertently in error by the Indenture Trustee acting on behalf
of the Trust and the Noteholder receiving such excess payment shall promptly,
upon discovery of such error or upon notice thereof from the Indenture Trustee
on behalf of the Trust, refund the amount of such excess or, at the option of
such Noteholder, apply the excess to the payment of principal of such Note, if
any, remaining unpaid and, in any event, the Indenture Trustee shall not be
responsible for any repayment of such excess payments. In addition, all sums
paid or agreed to be paid to the Indenture Trustee for the benefit of
Noteholders of Notes for the use, forbearance or detention of money shall, to
the extent permitted by applicable law, be amortized, prorated, allocated and
spread throughout the full term of such Notes.
Section 7.13. Amendment.
(a) The Indenture Trustee, the Sponsor and the Master
Servicer, may at any time and from time to time, with the prior written approval
of the Insurer, but without the giving of notice to or the receipt of the
consent of the Noteholders, amend this Agreement, and the Indenture Trustee
shall consent to such amendment, for the purpose of (i) curing any ambiguity, or
correcting or supplementing any provision hereof which may be inconsistent with
any other provision hereof, or to add provisions hereto which are not
inconsistent with the provisions hereof, or (ii) complying with the requirements
of the Code and the regulations proposed or promulgated thereunder; provided,
however, that any such action shall not, (i) as evidenced in writing from the
Rating Agencies delivered to the Indenture Trustee, reduce the then-current
rating on the Notes or (ii) as evidenced by an opinion of counsel delivered to
the Indenture Trustee, materially and adversely affect the interests of any
Noteholder (without its written consent).
(b) The Indenture Trustee, the Sponsor and the Master Servicer
may, at any time and from time to time, with the prior written approval of the
Insurer, but without the giving of notice to or the receipt of the consent of
the Noteholders, amend this Agreement, and the Indenture Trustee shall consent
to such amendment, for the purpose of changing the definition of "Specified
Overcollateralization Amount" (as defined in the Insurance Agreement) or other
terms related to the Insurer or the Insurance Agreement; provided, however, that
no such change shall affect the weighted average life of the Notes (assuming an
appropriate prepayment speed as determined by the Underwriters as evidenced in
writing) by more than five percent, as determined by the Underwriters.
(c) In addition to (a) and (b) above, this Agreement may also
be amended by the Indenture Trustee, the Sponsor, and the Master Servicer at any
time and from time to time, with the prior written approval of the Insurer and
Noteholders holding Notes evidencing more than 50% of the Note Balance, for the
purpose of adding any provisions or changing in any manner or eliminating any of
the
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provisions of this Agreement or of modifying in any manner the rights of the
Noteholders hereunder; provided, however, that no such amendment shall (a)
change in any manner the amount of, or change the timing of, payments which are
required to be distributed to any Noteholder without the consent of such
Noteholder or (b) reduce the aforesaid percentages of Percentage Interests which
are required to consent to any such amendments, without the consent of all
Noteholders holding Notes then Outstanding.
(d) The Insurer, the Noteholders, Moody's and S&P shall be
provided with copies of any amendments to this Agreement, together with copies
of any opinions or other documents or instruments executed in connection
therewith.
Section 7.14. The Insurer.
The Insurer is a third-party beneficiary of this Agreement. Any right
conferred to the Insurer shall be suspended during any period in which the
Insurer is in default in its payment obligations under the Policy except with
respect to amendments to this Agreement pursuant to Section 7.13. During any
period of suspension the Insurer's rights hereunder shall vest in the
Noteholders of the Notes and shall be exercisable by Noteholders holding Notes
evidencing more than 50% of the Note Balance. At such time as the Notes are no
longer Outstanding hereunder and the Insurer has been reimbursed for all
payments made pursuant to the Policy to which it is entitled hereunder, the
Insurer's rights hereunder shall terminate. Except at such time as an Insurer
Default has occurred and is continuing, the Insurer shall be deemed the 100%
Noteholder for purposes of all voting rights, consents, directions, notices and
waivers hereunder.
Section 7.15. Notices.
All notices hereunder shall be given as follows, until any superseding
instructions are given to all other Persons listed below:
The Indenture Trustee: Bankers Trust Company of California, N.A.
▇▇▇▇ ▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ADVANTA REVOLVING HOME
EQUITY LOAN TRUST 2000-A
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
The Sponsor: Advanta Conduit Receivables, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy addressed to the attention of the General Counsel at the same
address.
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The Master Servicer: Advanta Mortgage Corp. USA
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Senior Vice President,
Loan Service
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
The Insurer: Ambac Assurance Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Structured Finance
Department-MBS
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation: (▇▇▇) ▇▇▇-▇▇▇▇
In each case in which notice or other communication to the Insurer
refers to an Event of Servicing Termination, a claim on the Policy or with
respect to which failure on the part of the Insurer to respond shall be deemed
to constitute consent or acceptance, then a copy of such notice or other
communication should also be sent to the attention of the general counsel (fax
no. ▇▇▇-▇▇▇-▇▇▇▇ and with the same confirmation number as stated above) and
should be marked "URGENT MATERIAL ENCLOSED".
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: The Home Equity Monitoring
Department
S&P: Standard & Poor's Ratings Services, A division
of the ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Mortgage Surveillance Group
The Trust: Advanta Revolving Home Equity Loan Trust
2000-A
c/o Wilmington Trust Company, as Owner Trustee
▇▇▇▇▇▇ Square North
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Section 7.16. Limitation of Liability.
It is expressly understood and agreed by the parties hereto that (a)
this Agreement is executed and delivered by Wilmington Trust Company, not
individually or personally but solely as Owner Trustee of the Trust under the
Trust Agreement, in the exercise of the powers and authority conferred and
vested in it, (b) each of the representations, undertakings and agreements
herein made on the part of the Trust is made
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and intended not as personal representations, undertakings and agreements by
Wilmington Trust Company but is made and intended for the purpose for binding
only the Trust, (c) nothing herein contained shall be construed as creating any
liability on Wilmington Trust Company individually or personally, to perform any
covenant either expressed or implied contained herein, all such liability, if
any, being expressly waived by the parties to this Agreement and by any person
claiming by, through or under them and (d) under no circumstances shall
Wilmington Trust Company be personally liable for the payment of any
indebtedness or expenses of the Trust or be liable for the breach or failure of
any obligation, representation, warranty or covenant made or undertaking by the
Trust under this Agreement or any related documents.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized, all as of
the day and year first above written.
ADVANTA REVOLVING HOME EQUITY LOAN
TRUST 2000-A,
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Owner Trustee
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
ADVANTA CONDUIT RECEIVABLES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇
Title: Vice President
ADVANTA MORTGAGE CORP. USA
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇
Title: Vice President
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
not in its individual capacity but solely as
Indenture Trustee
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Assistant Secretary
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EXHIBIT A
ANNEX 1
TO THE INDENTURE
DEFINED TERMS
"Accelerated Principal Payments": With respect to any Payment Date, a
payment to be paid from Excess Cashflow received as a payment of principal by
the Noteholders, for the purpose of increasing the Overcollateralization Amount
to the Specified Overcollateralization Amount, and equal to the lesser of (x)
the amount of such Excess Cashflow and (y) the Overcollateralization Deficiency
Amount.
"Accepted Servicing Practices": The Master Servicer's normal servicing
practices in servicing and administering mortgage loans for its own account,
which in general will conform to the mortgage servicing practices of prudent
mortgage lending institutions which service for their own account mortgage loans
of the same type as the Mortgage Loans in the jurisdictions in which the related
Mortgaged Properties are located.
"Account": The Note Account, the Principal and Interest Account, the
Pre-Funding Account or the Capitalized Interest Account, each of which shall be
(i) an account maintained at a Designated Depository Institution or (ii) if the
applicable account is a segregated trust account, maintained with the corporate
trust department of a federal depository institution or a state chartered
depository institution subject to regulations regarding fiduciary funds on
deposit similar to Title 12 of the Code of Federal Regulations Section 9.10(b),
which in the case of either clause (i) or (ii), has corporate trust powers,
acting in its fiduciary capacity, and in accordance with Section 8.3 of the
Indenture or, with respect to the Principal and Interest Account, Section 4.9 of
the Sale and Servicing Agreement.
"Act": has the meaning specified in Section 11.3(a) of the Indenture.
"Addition Notice": With respect to the transfer of Subsequent Mortgage
Loans to the Trust pursuant to Section 2.6(b) of the Sale and Servicing
Agreement, the notice (which shall be given not later than two Business Days
prior to the related Transfer Date), of the Sponsor's designation of Subsequent
Mortgage Loans to be sold to the Trust, such notice shall include the aggregate
Principal Balance and the approximate weighted average Coupon Rate of such
Subsequent Mortgage Loans.
"Additional Balance": As to any Mortgage Loan and any day, the
aggregate amount of all Draws by the related Mortgagor conveyed to the Trust
after the Closing Date pursuant to Section 2.1 of the Sale and Servicing
Agreement, it being understood that the Trust shall not be required to fund any
Additional Balances.
"Advanta Bank Corp.": A Utah industrial loan corporation, including any
successors and assigns.
"Advanta Finance Corp.": A Nevada corporation, including any successors
and assigns.
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"Advanta National Bank": A national banking association located in
Delaware.
"Affiliate": Means, with respect to any specified Person, any other
Person controlling, controlled by or under common control with such Person. For
the purposes of this definition, "control" means the power to direct the
management and policies of a Person, directly or indirectly, whether through
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"AMHC": Advanta Mortgage Holding Company, a Delaware corporation and
the corporate parent of Advanta Mortgage Corp. USA, and the indirect corporate
parent of Advanta Conduit Receivables, Inc.
"Appraised Value": As to any Mortgaged Property, the value established
by a drive-by inspection, a full appraisal or a statistical property valuation
of such Mortgaged Property.
"Assignee": With respect to any Person, any direct or indirect
assignee, pledgee or other transferee of such Person.
"Assignment of Mortgage": With respect to each Mortgage Loan, an
assignment of the Mortgage, notice of transfer or equivalent instrument, in
recordable form, sufficient under the laws of the jurisdiction wherein the
related Mortgaged Property is located to reflect the recordation of the pledge
of the Mortgage Loan to the Indenture Trustee.
"Assignor": With respect to any Person, any immediate or mediate
assignor, pledgor or other transferor to such Person of any right, title or
interest in or to any property of any kind whatsoever.
"Authorized Officer": With respect to any Person, any person who is
authorized to act for such Person in matters relating to this Indenture, and
whose action is binding upon such Person and, with respect to the Indenture
Trustee, the Master Servicer and the Sponsor, initially including those
individuals whose names appear on the lists of Authorized Officers delivered on
the Closing Date.
"Available Funds": With respect to any Payment Date, the following
amounts, without duplication of any amount described more than once in the
following clauses (i) through (v):
(i) any Insured Payments;
(ii) the proceeds of any final liquidation of the assets of the
Trust;
(iii) the Monthly Remittance Amount remitted by the Master Servicer
or any Sub- Servicer;
(iv) on each Payment Date occurring during the Pre-Funding Period,
the Pre-Funding Earnings and the Capitalized Interest
Requirement for such Payment Date; and
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(v) at the end of the Pre-Funding Period, any amount remaining in
the Pre-Funding Account in accordance with Section 8.5(d).
"Book Entry Notes": Means a beneficial interest in the Notes, ownership
and transfers of which shall be made through book entries by a Clearing Agency
as described in Section 2.9 of the Indenture.
"Business Day": Any day that is not a Saturday, Sunday or other day on
which any of the Insurer, the Master Servicer or the Sponsor is closed or
commercial banking institutions in the State of New York or Delaware or in the
city in which the principal Corporate Trust Office of the Indenture Trustee is
located, are authorized or obligated by law or executive order to be closed.
"Capitalized Interest Account": The Capitalized Interest Account
established in accordance with Section 8.3 of the Indenture and maintained by
the Indenture Trustee.
"Capitalized Interest Amount": The amount on deposit in the Capitalized
Interest Account, which shall initially be $2,253,543.85.
"Capitalized Interest Requirement": As to any Payment Date, an amount
equal to the product of (x) the sum of the Note Interest Rate and the rate at
which the Insurer premium is calculated, and (y) the amount on deposit in the
Pre-Funding Account as of the preceding Payment Date (or as of the Closing Date,
in the case of the first Payment Date), less investment earnings on the amounts
on deposit in the Pre-Funding Account as of the preceding Payment Date.
"Certificateholders": The holders of the Certificates issued pursuant
to the Trust Agreement.
"Certificates": The trust certificates evidencing the beneficial
ownership interests in the Trust.
"Civil Relief Act": The Soldiers' and Sailors' Civil Relief Act of
1940, as amended.
"Clean-Up Call Date": The first date on which the Notes may be redeemed
pursuant to Section 10.1(b) of the Indenture.
"Clearing Agency Participant": Means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Clearing Agency": Means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
"Closing Date": April 27, 2000.
"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 Mortgage Loan as of
any date, the percentage equivalent of a fraction, the numerator of which is the
sum of (A) the Credit Limit and (B) as of the date of execution of the related
Credit Line Agreement (or as of any subsequent date, in connection with an
increase in the Credit Limit for such Mortgage Loan) the sum of the outstanding
principal balance of any mortgage loan or mortgage loans that are senior in
priority to the Mortgage Loan and which are secured by the same Mortgaged
Property and the denominator of which is the lesser of (C) the Appraised Value
of the related Mortgaged Property as set forth in the Mortgage File on such date
of execution or on such subsequent date, if any, or (D) in the case of a
Mortgaged Property purchased within one year of the date of execution of the
Credit Line Agreement, the purchase price thereof.
"Controlling Party": Means (i) the Insurer, so long as no Insurer
Default shall have occurred and be continuing, or (ii) the Indenture Trustee,
for so long as an Insurer Default shall have occurred and be continuing;
provided, however, that the Insurer's rights as Controlling Party shall be
immediately reinstated following the cure of any Insurer Default.
"Corporate Trust Office": The Indenture Trustee's office at ▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
"Coupon Rate": With respect to any Mortgage Loan and as of any day, the
per annum rate of interest, as specified in the Credit Line Agreement,
applicable to the calculation of interest on the outstanding Principal Balance.
"Credit Limit": As to any Mortgage Loan, the maximum principal balance
stated under the terms of the related Credit Line Agreement.
"Credit Limit Utilization Rate": As to any Mortgage Loan, at any time
during the Draw Period, the percentage equivalent of a fraction, the numerator
of which is the outstanding Principal Balance and the denominator of which is
the related Credit Limit.
"Credit Line Agreement": With respect to any Mortgage Loan, the related
home equity line of credit agreement or promissory note executed by the related
Mortgagor and any amendment or modification thereof.
"Cut-Off Date": With respect to each (i) Initial Mortgage Loan, the
Initial Cut-Off Date, (ii) Qualified Replacement Mortgage Loan, the related
Replacement Cut-Off Date or (iii) Subsequent Mortgage Loan, the related
Subsequent Cut-Off Date.
"Cut-Off Date Pool Balance": The sum of (x) the aggregate Cut-Off Date
Principal Balance of the Initial Mortgage Loans ($302,265,974.63), and (y) the
initial Pre-Funded Amount ($113,451,856.05), which sum is $415,717,830.60.
"Cut-Off Date Principal Balance": With respect to any Mortgage Loan,
(a) the unpaid principal balance thereof as of the related Cut-Off Date and (b)
for Mortgage Loans originated after the Cut-Off
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Date but prior to the Closing Date, the unpaid principal balance of such
Mortgage Loans as of its origination date.
"Debt Service Reduction": With respect to any Mortgage Loan, as
directed by a court of competent jurisdiction, a reduction of the minimum amount
required to be paid by the related Mortgagor.
"Deficiency Amount": As defined in the Policy.
"Deficient Valuation": With respect to any Mortgage Loan, a valuation
of the related Mortgaged Property by a court of competent jurisdiction in an
amount less than the then outstanding Principal Balance of the Mortgage Loan,
which valuation results from a proceeding initiated under the United States
Bankruptcy Code.
"Definitive Notes": Has the meaning specified in Section 2.9 of the
Indenture.
"Delinquent": A Mortgage Loan is "Delinquent" if any payment due
thereon is not made by the close of business on the day such payment is
scheduled to be due. A Mortgage Loan is "30 days Delinquent" if such payment has
not been received by the close of business on the corresponding day of the month
immediately succeeding the month in which such payment was due, or, if there is
no such corresponding day (e.g., as when a 30-day month follows a 31-day month
in which a payment was due on the 31st day of such month), then on the last day
of such immediately succeeding month. Similarly for "60 days Delinquent," "90
days Delinquent" and so on.
"Depository": The Depository Trust Company, ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ and any successor Depository hereafter named.
"Designated Depository Institution": With respect to any Account, a
federal or state chartered depository 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 ▇▇▇▇▇'▇, the
long term debt obligations of which shall be rated at least "AA-" by S&P and the
commercial paper, short term debt obligations or short-term deposits of which
shall be rated "P-1" or better by ▇▇▇▇▇'▇ and "A-1+" or better by S&P, unless
otherwise approved in writing by the Insurer and each of ▇▇▇▇▇'▇ and S&P, and
which is any of the following: (i) a federal savings and loan association duly
organized, validly existing and in good standing under the federal banking laws,
(ii) an institution duly organized, validly existing and in good standing under
the applicable banking laws of any state, (iii) a national banking association
duly organized, validly existing and in good standing under the federal banking
laws, or (iv) a principal subsidiary of a bank holding company, and, in each
case acting or designated by the Master Servicer or the Indenture Trustee as the
depository institution for the any Account; provided, however, that any such
institution or association shall have combined capital, surplus and undivided
profits of at least $100,000,000.
"Determination Date": As to each Payment Date, the third Business Day
next preceding such Payment Date or such earlier day as shall be agreed to by
the Insurer, the Master Servicer and the Indenture Trustee.
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"Document Delivery Requirements": The Sponsor's obligations to deliver
certain legal documents, to prepare and record certain Assignments of Mortgage
or to deliver certain opinions relating to Assignments of Mortgage, in each case
with respect to the Mortgage Loans and upon certain conditions as set forth in
Section 2.1 of the Sale and Servicing Agreement.
"Draw": With respect to any Mortgage Loan, an additional borrowing by
the Mortgagor in accordance with the related Credit Line Agreement.
"Draw Period": With respect to any Mortgage Loan, the period of time
specified in the related Credit Line Agreement whereby a Mortgagor may make a
Draw. The Draw Period may be extended pursuant to the terms of the Credit Line
Agreement (provided that any such extension shall be in accordance with the
provisions set forth herein with respect to Mortgage Loan modifications) and the
Sale and Servicing Agreement, and will be limited by the provisions set forth in
Section 2.2 of the Sale and Servicing Agreement.
"Eligible Investments": Those investments so designated pursuant to
Section 8.8 of the Indenture.
"ERISA": Means the Employee Retirement Income Security Act of 1974, as
amended.
"Event of Default": As defined in Section 5.4 of the Indenture.
"Event of Servicing Termination": As defined in Section 5.1 of the Sale
and Servicing Agreement.
"Excess Cashflow": With respect to any Payment Date, the Available
Funds with respect to such Payment Date which remain on deposit in the Note
Account after taking into account the distributions listed in clauses (i)
through (viii) of Section 8.6(b) of the Indenture on such Payment Date.
"Exchange Act": Means the Securities Exchange Act of 1934, as amended.
"FDIC": The Federal Deposit Insurance Corporation, or any successor
thereto.
"FHLMC": The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created pursuant to the Emergency Home
Finance Act of 1970, as amended, or any successor thereof.
"Final Scheduled Payment Date": The Payment Date in August 2024.
"First Mortgage Loan": A Mortgage Loan the Mortgage of which creates a
first priority mortgage lien with respect to any Mortgaged Property.
"Fixed Allocation Percentage": With respect to the Mortgage Loans,
94.8%.
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"FNMA": The Federal National Mortgage Association, a federally
chartered and privately owned corporation existing under the Federal National
Mortgage Association Charter Act as amended, and any successor thereto.
"Foreclosure Profit": With respect to a Liquidated Mortgage Loan, the
amount, if any, by which (x) the aggregate of its Net Liquidation Proceeds
exceeds (y) the sum of (i) the related Principal Balance and (ii) accrued and
unpaid interest thereon at the applicable Coupon Rate from the date interest was
last paid through the date of receipt of the final Liquidation Proceeds.
"Formula Rate ": For any Interest Accrual Period, (x) with respect to
any Payment Date which occurs on or prior to the Clean-Up Call Date, LIBOR plus
0.25% per annum and (y) for any Payment Date thereafter, LIBOR plus 0.50% per
annum.
"Grant": Means mortgage, pledge, bargain, warrant, alienate, remise,
release, convey, assign, transfer, create, ▇▇▇▇▇ ▇ ▇▇▇▇ upon and a security
interest in and right of set-off against, deposit, set over and confirm pursuant
to this Indenture. A Grant of the Trust Estate or of any agreement or instrument
shall include all rights, powers and options (but none of the obligations) of
the Granting party thereunder, including the immediate and continuing right to
claim for, collect, receive and give receipt for principal and interest payments
in respect of the Trust Estate and all other monies payable thereunder, to give
and receive notices and other communications, to make waivers or other
agreements, to exercise all rights and options, to bring proceedings in the name
of the Granting party or otherwise and generally to do and receive anything that
the Granting party is or may be entitled to do or receive thereunder or with
respect thereto.
"Guaranties": The Letter Agreement, dated as of April 27, 2000, among
the Underwriters, the Insurer and AMHC and the Letter Agreement, dated as of
April 27, 2000, among the Insurer, the Indenture Trustee and AMHC.
"HLTV HELOC Mortgage Loan": Any Mortgage Loan with a Combined
Loan-to-Value Ratio of greater than 100%.
"Highest Lawful Rate": As defined in Section 7.12 of the Sale and
Servicing Agreement.
"Indebtedness": With respect to any Person at any time, (a)
indebtedness or liability of such Person for borrowed money whether or not
evidenced by bonds, debentures, notes or other instruments, or for the deferred
purchase price of property or services (including trade obligations); (b)
obligations of such Person as lessee under leases which should have been or
should be, in accordance with generally accepted accounting principles, recorded
as capital leases; (c) current liabilities of such Person in respect of unfunded
vested benefits under plans covered by Title IV of ERISA; (d) obligations issued
for or liabilities incurred on the account of such Person; (e) obligations or
liabilities of such Person arising under acceptance facilities; (f) obligations
of such Person under any guarantees, endorsements (other than for collection or
deposit in the ordinary course of business) and other contingent obligations to
purchase, to provide funds for payment, to supply funds to invest in any Person
or otherwise to assure a creditor against loss; (g) obligations of such Person
secured by any lien on property or assets of such Person, whether or not the
obligations have been
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assumed by such Person; or (h) obligations of such Person under any interest
rate or currency exchange agreement.
"Indemnification Agreement": The Indemnification Agreement, dated as of
April 18, 2000, among the Insurer and the Underwriters.
"Indenture": The Indenture dated as of April 1, 2000 between the Trust
and the Indenture Trustee, as the same may be amended and supplemented from time
to time in accordance with the terms thereof.
"Indenture Trustee": Bankers Trust Company of California, N.A., located
on the date of execution of the Indenture at ▇▇▇▇ ▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, not in its individual capacity but solely as Indenture
Trustee under the Indenture, and any successor thereunder.
"Indenture Trustee Fee": With respect to any Payment Date, the product
of (x) one-twelfth of the Indenture Trustee Fee Rate and (y) the sum of (i) the
Pool Principal Balance as of the opening of business on the first day of the
related Remittance Period and (ii) the Pre-Funded Amount as of the opening of
business on the first day of the related Remittance Period.
"Indenture Trustee Fee Rate": 0.011% (1.1 basis points) per annum.
"Independent": When used with respect to any specified Person, that the
person (a) is in fact independent of the Trust, any other obligor upon the
Notes, the Sponsor and any Affiliate of any of the foregoing persons, (b) does
not have any direct financial interest or any material indirect financial
interest in the Trust, any such other obligor, the Sponsor or any Affiliate of
any of the foregoing Persons and (c) is not connected with the Trust, any such
other obligor, the Sponsor or any Affiliate of any of the foregoing Persons as
an officer, employee, promoter, underwriter, trustee, partner, director or
Person performing similar functions.
"Independent Certificate": A certificate or opinion to be delivered to
the Indenture Trustee under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.1 of the Indenture,
prepared by an Independent appraiser or other expert, and such opinion or
certificate shall state that the signer has read this definition of
"Independent" and that the signer is Independent within the meaning thereof.
"Initial Cut-Off Date": The close of business on March 31, 2000.
"Initial Mortgage Loans": Shall mean the Mortgage Loans conveyed to the
Trust by the Sponsor on the Closing Date.
"Insurance Agreement": The agreement defined in the Preamble of the
Indenture.
"Insurance Agreement Event of Servicing Termination": An Event of
Servicing Termination as defined in the Insurance Agreement.
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"Insured Amounts": With respect to the Notes and any Payment Date, the
Deficiency Amount for such Payment Date.
"Insured Payments": With respect to the Notes and any Payment Date, the
aggregate amount actually paid by the Insurer to the Indenture Trustee in
respect of (i) Insured Amounts for such Payment Date and (ii) Preference Amounts
for any given Business Day.
"Insurer": Ambac Assurance Corporation, a Wisconsin-domiciled stock
insurance corporation, or any successor thereto, as issuer of the Policy.
"Insurer Default": Means the failure and the continuance of such
failure by the Insurer to make a payment required under the Policy in accordance
with the terms thereof.
"Interest Accrual Period": With respect to any Payment Date, the period
from and including the prior Payment Date (or, in the case of the first Payment
Date, from and including the Closing Date) to, but excluding, the current
Payment Date.
"Interest Collections": With respect to the Mortgage Loans during the
related Remittance Period, the sum of (i) all interest payments paid by or on
behalf of Mortgagors and collected by the Master Servicer, except that with
respect to Prepaid Installments, interest payments shall be deemed to be paid by
or on behalf of Mortgagors and collected by the Master Servicer in the
Remittance Period to which such payments relate, (ii) any other amounts
constituting interest collected by the Master Servicer, (iii) with respect to
Mortgage Loans other than HTLV Mortgage Loans, the portion of Net Liquidation
Proceeds allocated to interest and (iv) with respect to HLTV Mortgage Loans, the
total amount of "Net Liquidation Proceeds." The terms of the related Credit Line
Agreement shall determine the portion of each payment that constitutes interest
(other than with respect to Net Liquidation Proceeds).
"Interest Determination Date": With respect to any Interest Accrual
Period, the second LIBOR Business Day preceding the first day of such Interest
Accrual Period.
"Interest Distribution Amount": With respect to any Payment Date, the
product of (i) the Note Interest Rate multiplied by the actual number of days in
the Interest Accrual Period divided by 360 days and (ii) the Note Balance as of
the day immediately prior to such Payment Date.
"Interest Remittance Amount": With respect to any Remittance Date, the
sum, without duplication, of (i) Interest Collections for such Remittance
Period, less the Servicing Fee for the related Remittance Period, (ii) the
portion of the Loan Reacquisition Price and the Substitution Amount relating to
interest on the Mortgage Loans reacquired and (iii) the proceeds of any
liquidation of the Trust Estate (to the extent such proceeds relate to
interest).
"Interest Shortfall Amount": With respect to any payment date, the sum
of (i) the amount by which the Interest Distribution Amount exceeded the actual
amount distributed in respect of interest and (ii) any unreimbursed Interest
Shortfall Amounts from prior payment dates together with interest on such
amounts at the Note Interest Rate.
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"Issuer Order" and "Issuer Request": Means a written order or request
signed in the name of the Trust by any one of its Authorized Officers and
delivered to the Indenture Trustee.
"Junior Mortgage Loan": A Mortgage Loan the Mortgage of which creates a
junior priority mortgage lien with respect to the related Mortgaged Property.
"LIBOR": As defined in Section 2.6(b) of the Indenture.
"LIBOR Business Day": Any day other than (i) a Saturday or a Sunday or
(ii) a day on which banking institutions in the State of New York or in the city
of London, England are required or authorized by law to be closed.
"Lifetime Rate Cap": With respect to each Mortgage Loan for which the
related Credit Line Agreement provides for a lifetime rate cap, the maximum
Coupon Rate permitted at any time under the terms of the related Credit Line
Agreement.
"Liquidated Mortgage Loan": Either (i) any HLTV HELOC Mortgage Loan
that has been Delinquent for a period of 180 consecutive days (irrespective of
any grace periods) or as to which the Master Servicer has determined that it has
recovered all amounts it expects to recover from such Mortgage Loan, whichever
is the first to occur, or (ii) any Mortgage Loan other than an HLTV HELOC
Mortgage Loan as to which the Master Servicer has determined that it has
recovered all amounts it expects to recover from such Mortgage Loan. The Trust
will be entitled to recoveries from any Liquidated Mortgage Loan and any such
recoveries (i) in the case of HLTV Mortgage Loans, shall be treated as Interest
Collections and (ii) in the case of non HLTV Mortgage Loans, shall be treated as
Principal Collections or Interest Collections. A Mortgage Loan which is
reacquired from the Trust pursuant to Section 2.2(b), 3.3(c) or 3.4 of the Sale
and Servicing Agreement shall not be a "Liquidated Mortgage Loan."
"Liquidation Expenses": Expenses which are incurred by the Master
Servicer or any Sub-Servicer in connection with the liquidation of any
defaulted Mortgage Loan, such expenses, include, without limitation, legal fees
and expenses, and any unreimbursed Servicing Advances expended by the Master
Servicer or any Sub-Servicer pursuant to Section 4.10 and 4.13 of the Sale and
Servicing Agreement with respect to the related Mortgage Loan.
"Liquidation Proceeds": With respect to any Liquidated Mortgage Loan,
any amounts (including the proceeds of any Mortgage Insurance Policy but
excluding any amounts drawn on the Policy) recovered by the Master Servicer,
whether through trustee's sale, foreclosure sale, sale to a third party or
otherwise.
"Loan Reacquisition Price": With respect to any Mortgage Loan
reacquired from the Trust on a Remittance Date pursuant to Section 2.2(b),
3.3(c) or 3.4 of the Sale and Servicing Agreement, an amount, without
duplication, equal to (i) the outstanding Principal Balance of such Mortgage
Loan as of the date of reacquisition, (ii) one month's interest on (if not
already deposited in the Principal and Interest Account) the outstanding
Principal Balance thereof as of the beginning of the preceding Remittance Period
computed at the Coupon Rate and (iii) all Servicing Advances theretofore made
with respect to such Mortgage Loan and not subsequently recovered from the
related Mortgage Loan, including Nonrecoverable Advances.
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"Managed Amortization Period": The period commencing on the Closing
Date and ending on the earlier to occur of (x) the end of the Remittance Period
related to the May 2003 Payment Date and (y) the end of the Remittance Period
related to the Payment Date which immediately precedes the occurrence of a Rapid
Amortization Event.
"Margin": With respect to each Mortgage Loan, the fixed percentage
amount set forth in the related Credit Line Agreement which amount is added to
the index specified in the related Credit Line Agreement to determine the Coupon
Rate for such Mortgage Loan, subject to any maximum or minimum.
"Master Servicer": Advanta Mortgage Corp. USA, a Delaware corporation,
and its permitted successors and assigns.
"Master Servicer Affiliate": A Person that is (i) controlling,
controlled by or under common control with the Master Servicer, (ii) qualified
to service residential mortgage loans, and (iii) subservicing the Mortgage
Loans.
"Master Servicer's Trust Receipt": The Master Servicer's trust receipt
in the form set forth as Exhibit F to the Sale and Servicing Agreement.
"Monthly Remittance Amount": With respect to each Remittance Date, the
sum of the Principal Remittance Amount and the Interest Remittance Amount.
"Moody's": ▇▇▇▇▇'▇ Investors Service, Inc.
"Mortgage": The mortgage, deed of trust or other instrument creating a
first or junior lien in real property securing each Credit Line Agreement.
"Mortgage Files": For each Mortgage Loan:
(a) The original Credit Line Agreement, or a certified copy
thereof, bearing all intervening endorsements, endorsed either (i) "Pay to the
order of Bankers Trust Company of California, N.A., as custodian or trustee
under the applicable custody or trust agreement, without recourse" or (ii) "Pay
to the order of Bankers Trust Company of California, N.A., as custodian or
trustee under the applicable custody or trust agreement, without recourse,
Advanta as Master Servicer," or (iii) "Pay to the order of Bankers Trust Company
of California, N.A., as custodian or trustee" by [Seller, signature, name,
title] and signed in the name of the previous owner by an authorized officer (in
the event that the Mortgage Loan was acquired by the previous owner in a merger
the signature must be in the following form: "[the previous owner], successor by
merger to [name of predecessor]," in the event that the Mortgage Loan was
acquired or originated while doing business under another name, the signature
must be in the following form: "[the previous owner], formerly known as
[previous name]", or (iv) "Pay to the order of Bankers Trust Company of
California, N.A., without recourse" or (v)"Pay to the order of _________,
without recourse". The original Credit Line Agreement should be accompanied by
any rider made in connection with the origination of the related Mortgage Loan;
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(b) The original of any guaranty executed in connection with the Credit
Line Agreement;
(c) The original Mortgage with evidence of recording thereon or copies
certified by the related recording office or if the original Mortgage has not
yet been returned from the recording office, a certified copy of the Mortgage;
(d) The originals of any assumption, modification, consolidation or
extension agreements;
(e) The original Assignment of Mortgage of each Mortgage Loan to (1)
"Bankers Trust Company of California, N.A., as custodian or trustee," or (2)
"Bankers Trust Company of California, N.A., as trustee" or (3) in blank. In the
event that the Mortgage Loan was acquired by the previous owner in a merger, the
Assignment of Mortgage must be the "(previous owner), successor by merger to
(names of predecessor)"; and in the event that the Mortgage Loan was acquired or
originated by the previous owner while doing business under another name, the
Assignment of Mortgage must be by the "(previous owner), formerly known as
(previous name)"; and
(f) The originals of all intervening Assignments of Mortgage, if
applicable, showing a complete chain of assignment from origination to the
related Seller, with evidence of recording thereon (or, if an original
intervening assignment has not been returned from the recording office, a
certified copy thereof).
"Mortgage Insurance Policy": Any hazard, title or primary mortgage
insurance policy relating to a Mortgage Loan, but excluding any non-mortgage
related or credit life insurance policy. The term "Mortgage Insurance Policy"
shall not include the Policy.
"Mortgage Insurance Proceeds": Proceeds paid by any insurer pursuant to
any Mortgage Insurance Policy covering a Mortgage Loan, or amounts required to
be paid by the Master Servicer pursuant to the last sentence of the first
paragraph of Section 4.11(b) of the Sale and Servicing Agreement, or the
penultimate sentence of Section 4.11(c) of the Sale and Servicing Agreement, net
of any component thereof (i) covering any Liquidation Expenses incurred by or on
behalf of the Master Servicer in connection with obtaining such proceeds, (ii)
that is applied to the restoration or repair of the related Mortgaged Property,
(iii) released to the Mortgagor in accordance with the Master Servicer's normal
servicing procedures, or (iv) required to be paid to any holder of a mortgage
senior to such Mortgage Loan.
"Mortgage Loan": Each mortgage loan transferred and assigned to the
Trust pursuant to Section 2.1 or Section 2.6 of the Sale and Servicing
Agreement, together with any Subsequent Mortgage Loans and any Qualified
Replacement Mortgage Loans substituted therefor in accordance with the Sale and
Servicing Agreement, which are held as a part of the Trust Estate. The term
"Mortgage Loan" includes any Mortgage Loan which is Delinquent, which relates to
a foreclosure or which relates to a Mortgaged Property that is REO Property
prior to such Mortgaged Property's disposition by the Trust and any Mortgage
Loan the related Mortgagor of which is in bankruptcy. Any mortgage loan which,
although intended by the parties hereto to have been, and which purportedly was,
transferred and assigned to the Trust by the Sponsor, in fact was not
transferred and assigned to the Trust for any reason whatsoever shall
nevertheless be considered a "Mortgage Loan" for all purposes of the Operative
Documents.
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"Mortgaged Property": The underlying property securing a Mortgage Loan.
"Mortgagor": The obligor under a Credit Line Agreement.
"Net Funds Cap Carry-Forward Amount": With respect to any Payment Date,
the sum of (i) the excess of the amount of interest accrued during the related
Interest Accrual Period based on the Formula Rate, over the interest accrued
during the related Interest Accrual Period based on the Net Funds Cap Rate, (ii)
any such amounts described in clause (i) for prior Payment Dates and not
previously paid and (iii) interest on the amounts described in clauses (i) and
(ii) at the then-applicable Formula Rate.
"Net Funds Cap Rate": The per annum rate equal to (x)(A) the product of
(i) twelve and (ii) the interest due on the Mortgage Loans at the applicable
Coupon Rate during the related Remittance Period minus the amount of aggregate
Prepayment Interest Shortfalls for the related Remittance Period and minus the
amount of aggregate Relief Act Shortfalls for the related Remittance Period (net
of the related Servicing Fee, the Indenture Trustee Fee, the Owner Trustee Fee
and the Premium Amount), divided by (B) the Pool Principal Balance as of the
opening of such related Remittance Period, less (y) 0.50%.
"Net Liquidation Proceeds": As to any Liquidated Mortgage Loan,
Liquidation Proceeds net of, without duplication, (i) Liquidation Expenses other
than any such expenses reflected in the calculation of Mortgage Insurance
Proceeds for such Liquidated Mortgage Loan, (ii) unreimbursed Servicing Advances
incurred in connection with such Liquidated Mortgage Loan and (iii) accrued and
unpaid Servicing Fees with respect to such Mortgage Loan through the date of
liquidation. In no event shall Net Liquidation Proceeds with respect to any
Liquidated Mortgage Loan be less than zero.
"Net Principal Collections": With respect to any Remittance Period, the
excess of (i) Principal Collections over (ii) the aggregate amount of all
Additional Balances arising during such Remittance Period; provided, however,
that, in no event will Net Principal Collections be less than zero.
"Nonrecoverable Advance": With respect to any Mortgage Loan, any
Servicing Advance previously made and not reimbursed pursuant to Section 4.10 of
the Sale and Servicing Agreement or any Servicing Advance proposed to be made in
respect of a Mortgage Loan, either of which, in the good faith business judgment
of the Master Servicer would not be ultimately recoverable.
"Note": Any note executed and authenticated by the Indenture Trustee in
substantially the form set forth in Exhibit A to the Indenture.
"Note Account": The Note Account established in accordance with Section
8.3 of the Indenture and maintained by the Indenture Trustee.
"Note Balance": As of any date of determination, the Original Note
Balance, less any amounts actually distributed as principal to the Noteholders
on all prior Payment Dates.
"Note Interest Rate": As to any Payment Date, the lesser of (i) the
Formula Rate and (ii) the Net Funds Cap Rate.
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"Note Interest Shortfall": As of any Payment Date, the sum of (i) the
amount by which the Interest Distribution Amount for such Payment Date exceeds
the amount actually distributed to the Noteholders on such Payment Date and (ii)
any unreimbursed Note Interest Shortfalls from prior Payment Dates together with
interest accrued thereon at the Note Interest Rate for such Payment Date.
"Note Owner": Means, with respect to a Book-Entry Note, the person who
is the owner of such Book-Entry Note or following the issuance of Definitive
Notes, the registered owner of the Notes.
"Note Paying Agent": Means the Indenture Trustee or any other Person
that meets the eligibility standards for the Indenture Trustee specified in
Section 6.11 of the Indenture and is authorized by the Trust to make payments to
and distributions from the Note Account, including payment of principal of or
interest on the Notes on behalf of the Trust.
"Note Register": The register maintained by the Indenture Trustee in
accordance with Section 2.3 of the Indenture, in which the names of the
Noteholders are set forth.
"Note Registrar": The Indenture Trustee, acting in its capacity as Note
Registrar appointed pursuant to Section 2.3 of the Indenture, or any duly
appointed and eligible successor thereto.
"Noteholder": A Person in whose name a Note is registered in the Note
Register.
"Officer's Certificate": A certificate signed by any Authorized Officer
of the Trust, under the circumstances described in, and otherwise complying
with, the applicable requirements of Section 11.1 of the Indenture and TIA
Section 314.
"Operative Documents": Collectively, the Indenture, the Guaranties, the
Trust Agreement, the Sale and Servicing Agreement, the Subsequent Transfer
Agreements, the Policy, the Notes, the Purchase Agreement, the Indemnification
Agreement and the Insurance Agreement.
"Opinion of Counsel": Means one or more opinions of counsel who may,
except as otherwise expressly provided in the Indenture, be employees of or
counsel to the Trust or Sponsor and which shall comply with any applicable
requirements of Section 11.1 of the Indenture.
"Original Note Balance": $400,000,000.00.
"Originators": Advanta Bank Corp., Advanta National Bank and Advanta
Finance Corp.
"Outstanding": As of any date of determination, all Notes theretofore
executed and delivered hereunder except:
(i) Notes theretofore cancelled by the Indenture Trustee or delivered
to the Indenture Trustee for cancellation;
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(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 Indenture, unless proof satisfactory to
the Indenture Trustee is presented that any such Notes are held by a bona fide
purchaser; and
(iv) Notes alleged to have been destroyed, lost or stolen for which
replacement Notes have been issued as provided for in Section 2.4 of the
Indenture;
provided, however, that to the extent of any payments made under the Policy by
the Insurer and not reimbursed, such Notes shall be deemed to be "Outstanding"
for all purposes, not defeased or otherwise satisfied and not be considered paid
by the Trust.
"Overcollateralization Amount": As of any Payment Date, the excess, if
any, of (x) the Pool Principal Balance at the end of the related Remittance
Period plus the Pre-Funded Amount over (y) the Note Balance (after taking into
account the payment of principal to the Noteholders on such Payment Date).
"Overcollateralization Deficiency Amount": With respect to any Payment
Date, the difference, if any, between (i) the Specified Overcollateralization
Amount and (ii) the Overcollateralization Amount.
"Overcollateralization Deficit": With respect to any Payment Date, the
amount, if any, by which (i) the Note Balance, after taking into account the
payment of principal to the Noteholders on such Payment Date, exceeds (ii) the
Pool Principal Balance plus the Pre-Funded Amount at the end of the related
Remittance Period.
"Overcollateralization Reduction Amount": With respect to any Payment
Date, the lesser of (i) the excess of (x) the Overcollateralization Amount,
after taking into account all payments of principal (without taking into account
any Overcollateralization Reduction Amount) that were applied as a reduction in
the Note Balance on such Payment Date, over (y) the Specified
Overcollateralization Amount for such Payment Date and (ii) the Scheduled
Principal Distribution Amount (without taking into account any
Overcollateralization Reduction Amount).
"Owner Trustee": Wilmington Trust Company, not in its individual
capacity but solely as Owner Trustee under the Trust Agreement, its successors
in interest or any successor Owner Trustee under the Trust Agreement.
"Owner Trustee Fee": With respect to any Payment Date, one-twelfth of
$3,000 per annum.
"Payment Date": Any date on which the Indenture Trustee is required to
make distributions to the Noteholders, which shall be the 25th day of each
month, commencing in the month following the Closing Date or, if such day is not
a Business Day, then on the next succeeding Business Day.
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"Percentage Interest": As to any Note and as of any date of
determination, that amount, expressed as a percentage, equal to a fraction, the
numerator of which is the then-outstanding principal balance of such Note and
the denominator of which is the Note Balance; and as to any Certificate, the
percentage interest set forth on such Certificate.
"Person": Any individual, corporation, partnership, joint venture,
limited liability company, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Policy": The certificate guaranty insurance policy (No. AB0358BE) with
respect to the Notes, dated April 27, 2000, issued by the Insurer to the
Indenture Trustee for the benefit of the Noteholders.
"Pool Certification": The certification of the Indenture Trustee as to
receipt of required documents that is required pursuant to Section 2.2 of the
Sale and Servicing Agreement, a form of which is attached thereto as Exhibit E.
"Pool Factor": A seven-digit decimal which the Indenture Trustee shall
compute monthly expressing the Note Balance as of each Payment Date (after
giving effect to any distribution of principal on such Payment Date) as a
proportion of the Original Note Balance. On the Closing Date, the Pool Factor
will be 1.0000000.
"Pool Principal Balance": With respect to any date of determination,
the aggregate of the Principal Balances of the Mortgage Loans as of such date.
"Predecessor Note": means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.4 of the Indenture in lieu of a
mutilated, lost, destroyed or stolen Note shall be deemed to evidence the same
debt as the mutilated, lost, destroyed or stolen Note.
"Preference Amount": As defined in the Policy.
"Pre-Funded Amount": The amount on deposit in the Pre-Funding Account,
which shall initially be $113,451,856.05.
"Pre-Funding Account": The Pre-Funding Account established in
accordance with Section 8.3 of the Indenture and maintained by the Indenture
Trustee.
"Pre-Funding Earnings": With respect to each Payment Date during the
Pre-Funding Period, the investment earnings on the Pre-Funding Account during
the related Interest Accrual Period.
"Pre-Funding Period": The period commencing on the Closing Date and
ending on the earliest to occur of (i) the date on which the Pre-Funded Amount
(exclusive of any investment earnings) is less than
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$100,000, (ii) the date on which any Event of Default or Rapid Amortization
Event occurs, and (iii) August 31, 2000.
"Premium Amount": With respect to any Payment Date, the product of (x)
the actual number of days elapsed in the period from the prior Payment Date (or
with respect to the first Payment Date, the Closing Date) to and including the
day prior to the applicable Payment Date, divided by 360, (y) the Premium
Percentage (as defined in the Insurance Agreement) and (z) the Note Balance on
such Payment Date after taking into account any distributions of the Scheduled
Principal Distributions Amount to be made on such Payment 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.
"Prepayment": Any payment of principal of a Mortgage Loan which is
received by the Master Servicer in advance of the scheduled due date for the
payment of such principal (other than the principal portion of any Prepaid
Installment). The proceeds of any Mortgage Insurance Policy or credit life
insurance which are to be applied as a payment of principal on the related
Mortgage Loan in advance of the scheduled payment shall be deemed to be
Prepayments for all purposes of this Agreement.
"Prepayment Interest Shortfalls": With respect to any Payment Date, for
each Mortgage Loan that was the subject of a Prepayment, the amount, if any, by
which (i) one month's interest at the applicable Coupon Rate on the Principal
Balance of such Mortgage Loan immediately prior to such Prepayment exceeds (ii)
the amount of interest paid or collected in connection with such Prepayment.
"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 4.9(a) of the Sale and Servicing Agreement, or pursuant to any
Sub-Servicing Agreement.
"Principal Balance": As to any Mortgage Loan, other than a Liquidated
Mortgage Loan, and as of any date, the related Cut-Off Date Principal Balance,
plus (i) any Additional Balance, minus (ii) all collections credited as
principal against the Principal Balance of any Mortgage Loan prior to such day
in accordance with the Credit Line Agreement. For purposes of this definition, a
Liquidated Mortgage Loan shall be deemed to have a Principal Balance of zero as
of the first day of the Remittance Period following the Remittance Period in
which such Mortgage Loan becomes a Liquidated Mortgage Loan and at all times
thereafter.
"Principal Collections": With respect to any Payment Date and any
Mortgage Loan, the sum of all payments by or on behalf of Mortgagors and any
other amounts constituting principal (including, but not
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limited to, any portion of Mortgage Insurance Proceeds or Net Liquidation
Proceeds allocable to principal, but excluding Foreclosure Profits and any
recoveries in respect of Charged-Off Mortgage Loans) collected by the Master
Servicer during the related Remittance Period. The terms of the related Credit
Line Agreement shall determine the portion of each payment in respect of a
Mortgage Loan that constitutes principal and the priority of payment.
"Principal Remittance Amount": With respect to any Remittance Date, the
sum, without duplication, of (i) Principal Collections for such Remittance
Period, except that with respect to Prepaid Installments, principal shall be
remitted in the scheduled Remittance Period, (ii) the portion of the Loan
Reacquisition Price and the Substitution Amount relating to principal on the
Mortgage Loans reacquired, (iii) the proceeds of any liquidation of the Trust
Estate (to the extent such proceeds relate to principal) and (iv) any Pre-Funded
Amount deposited in the Note Account at the termination of the Pre-Funding
Period.
"Proceeding": Means any suit in equity, action at law or other judicial
or administrative proceeding.
"Prospectus": That certain Prospectus, dated December 28, 1999, naming
Advanta Conduit Receivables, Inc. as registrant and describing certain mortgage
loan asset-backed securities to be issued from time to time as described in
related Prospectus Supplements.
"Prospectus Supplement": That certain Prospectus Supplement dated April
18, 2000, describing the Notes issued by the Trust.
"Purchase Agreement": Means the Purchase Agreement dated as of April 1,
2000 between the Originators and the Sponsor with respect to the Mortgage Loans.
"Qualified Replacement Mortgage Loan": As defined in Section 2.3 of the
Sale and Servicing Agreement.
"Rapid Amortization Period": The period which follows the earlier to
occur of (x) the end of the Managed Amortization Period and (y) the occurrence
of a Rapid Amortization Event.
"Rating Agency": Means Moody's and S&P. If such agency or a successor
is no longer in existence, "Rating Agency" shall be such statistical credit
rating agency, or other comparable Person, designated by the Insurer, notice of
which designation shall be given by the Insurer to the Indenture Trustee, and
the Indenture Trustee shall give such notice to each of the Master Servicer and
the Sponsor. References herein to the highest short term unsecured rating
category of a Rating Agency shall mean A-1+ or better in the case of S&P and P-1
or better in the case of Moody's, and in the case of any other Rating Agency
shall mean the ratings such other Rating Agency deems equivalent to the
foregoing ratings. References herein to the highest long-term rating category of
a Rating Agency shall mean "AAA" in the case of S&P and "Aaa" in the case of
Moody's, and in the case of any other Rating Agency, the rating such other
Rating Agency deems equivalent to the foregoing ratings.
"Realized Loss": As to any Liquidated Mortgage Loan, the amount, if
any, by which the Principal Balance of such Mortgage Loan as of the date of
liquidation is in excess of Net Liquidation Proceeds.
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"Record Date": With respect to each Payment Date, so long as the Notes
are Book Entry Notes, the Business Day preceding such Payment Date, and if the
Notes are maintained as Definitive Notes, the last Business Day of the calendar
month immediately preceding the calendar month in which such Payment Date
occurs.
"Redemption Date": Means, in the case of a redemption of the Notes
pursuant to Section 10.1(a) of the Indenture, the Payment Date specified by the
Master Servicer or the Trust pursuant to Section 10.2(a) of the Indenture.
"Redemption Price": As defined in Section 10.1(b) of the Indenture.
"Reference Banks": Deutsche Bank AG, Barclay's Bank PLC, and National
Westminster Bank PLC; or such banks as are selected by the Indenture Trustee
after consultation with the Master Servicer which are engaged in transactions in
Eurodollar deposits in the international Eurocurrency market (i) with an
established place of business in London, (ii) not controlling, under the control
of or under common control with the Sponsors or any Affiliate thereof, (iii)
whose quotations appear on the Telerate Screen Page 3785 on the relevant
Interest Determination Date and (iv) which have been designated as such by the
Indenture Trustee.
"Registration Statement": The Registration Statement (No. 333-92669)
filed by the Sponsor with the Securities and Exchange Commission, including all
amendments thereto and including the Prospectus, and the Prospectus Supplement
relating to the Notes.
"Reimbursement Amount": As defined in the Policy.
"Relief Act Shortfall": With respect to any Remittance Period and any
Mortgage Loan for which there has been a reduction in the amount of interest
collectible thereon as a result of the application of the Civil Relief Act, the
amount by which (i) interest collectible on such Mortgage Loan is less than (ii)
one month's interest on the Principal Balance of such Mortgage Loan at the
Coupon Rate.
"Remittance Date": With respect to any Payment Date, the date on which
the Master Servicer is required to remit monies on deposit in the Principal and
Interest Account to the Indenture Trustee for deposit into the Note Account,
which shall be the 18th day of each month or, if such day is not a Business Day,
the next succeeding Business Day, commencing in the month following the Closing
Date.
"Remittance Period": As to any Payment Date, the calendar month
preceding the month of such Payment Date.
"REO Property": A Mortgaged Property acquired by the Master Servicer or
any Sub-Servicer on behalf of the Trust through foreclosure or deed-in-lieu of
foreclosure in connection with a defaulted Mortgage Loan.
"Replacement Cut-Off Date": With respect to any Qualified Replacement
Mortgage Loan, the first day of the calendar month in which such Qualified
Replacement Mortgage Loan is conveyed to the Trust.
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"Reserve Interest Rate": Means the rate per annum that the Indenture
Trustee determines to be either the arithmetic mean, rounded to the nearest
whole multiple of 1/16%, of the one-month U.S. dollar lending rates which New
York City banks selected by the Indenture Trustee are quoting on the Interest
Determination Date to the principal London offices of lending banks in the
London interbank market or, in the event that the Indenture Trustee cannot
determine the arithmetic mean, the lowest one-month U.S. dollar lending rate
which New York City banks selected by the Indenture Trustee are quoting on the
Interest Determination Date to leading European banks.
"S&P": Standard & Poor's Ratings Services, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
"Sale and Servicing Agreement": Means the Sale and Servicing Agreement,
including the Exhibits thereto, dated as of April 1, 2000, among the Trust, the
Sponsor, the Master Servicer and the Indenture Trustee, as the same may be
amended or supplemented from time to time in accordance with the terms thereof.
"SAS 70": Means the Statement on Auditing Standards No. 70, Reports on
the Processing of Transactions by Service Organizations as in effect as of the
date hereof, which may be amended from time to time.
"Schedule of Mortgage Loans": The schedule of Mortgage Loans attached
to the Indenture as Schedule I, as the same may be supplemented or amended from
time to time in connection with substitutions of Qualified Replacement Mortgage
Loans and the addition of Subsequent Mortgage Loans. The information contained
on the Schedule of Mortgage Loans may be delivered to the Indenture Trustee in
an electronic medium.
"Scheduled Principal Distribution Amount": On any Payment Date (A)
during the Managed Amortization Period, the excess of (x) the lesser of (i) the
Fixed Allocation Percentage of Principal Collections and (ii) the Net Principal
Collections over (y) the Overcollateralization Reduction Amount, if any, with
respect to such Payment Date and (B) during the Rapid Amortization Period, the
excess of (x) the Fixed Allocation Percentage of Principal Collections over (y)
the Overcollateralization Reduction Amount, if any, with respect to such Payment
Date. In no event will the Scheduled Principal Distribution Amount on any
Payment Date be (x) less than zero or (y) greater than the then outstanding Note
Balance.
"Securities Act": The Securities Act of 1933, as amended.
"Servicing Advance": As defined in Section 4.10 and Section 4.13 of the
Sale and Servicing Agreement.
"Servicing Fee": With respect to any Remittance Period, the product of
(i) Servicing Fee Rate and (ii) the aggregate Principal Balance of the Mortgage
Loans as of the opening of business on the first day of the related Remittance
Period.
"Servicing Fee Rate": 0.75% per annum.
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"Servicing Officer": Any officer of the Master Servicer or a
Sub-Servicer.
"Specified Overcollateralization Amount": The amount specified in the
Insurance Agreement.
"Sponsor": Advanta Conduit Receivables, Inc., a Nevada corporation.
"Subsequent Cut-Off Date": With respect to any Subsequent Mortgage
Loan, the opening of business on the first day of the calendar month in which
such Subsequent Mortgage Loan is transferred and assigned to the Trust.
"Subsequent Mortgage Loans": The Mortgage Loans transferred and
assigned to the Trust pursuant to Section 2.6 of the Sale and Servicing
Agreement, which shall be listed on the Schedule of Mortgage Loans attached to
the Subsequent Transfer Agreement.
"Subsequent Transfer Agreement": Each Subsequent Transfer Agreement
executed by the Owner Trustee and the Sponsor substantially in the form of
Exhibit H to the Sale and Servicing Agreement, by which Subsequent Mortgage
Loans are transferred and assigned to the Trust.
"Subsequent Transfer Date": Means, with respect to any Subsequent
Mortgage Loans transferred to the Trust, the date set forth in the related
Subsequent Transfer Agreement.
"Sub-Servicer": Any Person with whom the Master Servicer has entered
into a Sub-Servicing Agreement in accordance with Section 4.5 of the Sale and
Servicing Agreement.
"Sub-Servicing Agreement": The written contract reasonably acceptable
to the Insurer between the Master Servicer and any Sub-Servicer (other than an
Affiliated Sub-Servicer) relating to the servicing and/or administration of
certain Mortgage Loans as permitted by Section 4.5 of the Sale and Servicing
Agreement.
"Substitution Amount": In connection with the delivery of any Qualified
Replacement Mortgage Loan, if the outstanding principal amount of such Qualified
Replacement Mortgage Loan as of the applicable Replacement Cut-Off Date is less
than the related Principal Balance of the Mortgage Loan being replaced, an
amount equal to such difference together with accrued and unpaid interest on
such amount calculated at the Coupon Rate, net of the Servicing Fee, of the
Mortgage Loan being replaced.
"Telerate Screen Page 3750": The display designated as page 3750 on the
Telerate Service (or such other page as may replace page 3750 on that service
for the purpose of displaying London interbank offered rates of major banks).
"Termination Date": Means the latest of (i) the date on which the
termination of the Policy and the return of the Policy to the Insurer for
cancellation occurs, (ii) the date on which the Insurer shall have received
indefeasible payment of all amounts owed to it under the Insurance Agreement and
(iii) the date on which the Indenture Trustee and the Noteholders shall have
received payment of all amounts owed to them under the Indenture.
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"Transfer Date": With respect to (i) a Qualified Replacement Mortgage
Loan, the date that such Mortgage Loan is delivered to the Indenture Trustee on
behalf of the Trust, (ii) a Mortgage Loan that is reassigned to the Sponsor
pursuant to Section 2.5 of the Sale and Servicing Agreement, the date that is
specified therein, and (iii) a Subsequent Mortgage Loan, the Subsequent Transfer
Date.
"Transfer Notice Date": As defined in Section 2.5 of the Sale and
Servicing Agreement.
"Trust": Advanta Revolving Home Equity Loan Trust 2000-A created by the
Trust Agreement.
"Trust Agreement": The Trust Agreement dated as of April 1, 2000
between the Owner Trustee and the Sponsor relating to the formation of the
Trust.
"Trust Estate": As defined in the Granting Clause of the Indenture.
"Trust Indenture Act" or "TIA": Means the Trust Indenture Act of 1939,
as amended and as in force on the date hereof, unless otherwise specifically
provided.
"UCC": Unless the context otherwise requires, the Uniform Commercial
Code, as in effect in the relevant jurisdiction, as amended from time to time.
"Underwriters": Bear, ▇▇▇▇▇▇▇ & Co. Inc., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
Incorporated, Prudential Securities Incorporated and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc.
"Unqualified Mortgage Loan": A Mortgage Loan which is subject to
repurchase or substitution pursuant to Section 2.1(b) or Section 3.4(b) of the
Sale and Servicing Agreement.
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EXHIBIT B
[Reserved]
B-1
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EXHIBIT C
[Reserved]
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EXHIBIT D
FORM OF TRUSTEE'S ACKNOWLEDGMENT OF RECEIPT
Bankers Trust Company of California, N.A., a national banking
association, in its capacity as indenture trustee (the "Indenture Trustee")
under that certain Sale and Servicing Agreement, dated as of April 1, 2000 (the
"Sale and Servicing Agreement"), by and among Advanta Conduit Receivables, Inc.,
a Nevada corporation, as sponsor (the "Sponsor"), Advanta Mortgage Corp. USA, a
Delaware corporation, as Master Servicer, Advanta Revolving Home Equity Loan
Trust 2000-A, as Trust, and the Indenture Trustee, hereby acknowledges receipt
of the items delivered to it by the Sponsor with respect to the Mortgage Loans.
The Schedule of Mortgage Loans is attached to this Receipt.
The Indenture Trustee hereby additionally acknowledges that it shall
review such items as required by Section 2.2(a) of the Sale and Servicing
Agreement and shall otherwise comply with Section 2.2(b) of the Sale and
Servicing Agreement as required thereby.
Capitalized terms used herein and not otherwise defined shall have the
meanings assigned thereto in Annex A to the Indenture, dated as of April 1,
2000, between the Trust and the Indenture Trustee.
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as Indenture Trustee
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
Dated:
------------------
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EXHIBIT E
FORM OF POOL CERTIFICATION
WHEREAS, the undersigned is an Authorized Officer of Bankers Trust
Company of California, N.A., a national banking association, acting in its
capacity as indenture trustee (the "Indenture Trustee") of a certain pool of
mortgage loans (the "Pool") heretofore conveyed in trust to the Indenture
Trustee, pursuant to that certain Sale and Servicing Agreement, dated as of
April 1, 2000 (the "Sale and Servicing Agreement"), by and among Advanta Conduit
Receivables, Inc., a Nevada corporation, as sponsor (the "Sponsor"), Advanta
Mortgage Corp. USA, a Delaware corporation, as Master Servicer, Advanta
Revolving Home Equity Loan Trust 2000-A, as Trust, and the Indenture Trustee
(Capitalized terms used herein and not otherwise defined shall have the meanings
assigned thereto in Annex A to the Indenture, dated as of April 1, 2000, between
the Trust and the Indenture Trustee); and
WHEREAS, the Indenture Trustee is required, pursuant to Section 2.2(a)
of the Sale and Servicing Agreement, to review the Mortgage Files relating to
the Pool within a specified period following the Closing Date, Subsequent
Transfer Date and Transfer Date and to notify the Sponsor promptly of any
defects with respect to the Pool, and the Sponsor is required to remedy such
defects or take certain other action, all as set forth in Section 2.2(b) of the
Sale and Servicing Agreement; and
WHEREAS, Section 2.2(a) of the Sale and Servicing Agreement requires
the Indenture Trustee to deliver this Certification upon the satisfaction of
certain conditions set forth therein;
NOW, THEREFORE, the Indenture Trustee has determined that as to each
Mortgage Loan listed in the Schedule of Mortgage Loans (other than any Mortgage
Loan paid in full) (i) all documents required to be delivered to it (contained
in a Mortgage File) pursuant to this Agreement are in its possession and (ii)
such documents have been reviewed by it and on their face appear to relate to
such Mortgage Loan. The Indenture Trustee makes no certification hereby,
however, with respect to any intervening assignments or assumption and
modification agreements.
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
Date:
---------------------
▇-▇
▇▇
▇▇▇▇▇▇▇ ▇
FORM OF MASTER SERVICER'S TRUST RECEIPT
To: Bankers Trust Company of California, N.A.
▇▇▇▇ ▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Corporate Trust
Date:
---------------------
In connection with the administration of the mortgage loans held by you
as Indenture Trustee under that certain Sale and Servicing Agreement dated as of
April 1, 2000 by and among Advanta Conduit Receivables, Inc., a Nevada
corporation, as Sponsor, Advanta Mortgage Corp. USA, a Delaware corporation, as
Master Servicer, Advanta Revolving Home Equity Loan Trust 2000-A, as Trust, and
you (the "Agreement"), the Master Servicer hereby requests a release of the
Mortgage File held by you as Indenture Trustee with respect to the following
described Mortgage Loan for the reason indicated below:
Mortgagor's Name:
Loan No.:
Reason for requesting file:
_______ 1. Mortgage Loan paid in full.
(The Master Servicer hereby certifies that all amounts
received in connection with the loan have been or will be
credited to the Note Account pursuant to the Agreement.)
_______ 2. Mortgage Loan reacquired pursuant to Section 3.3(c), 3.4, or
2.2(b) of the Agreement.
(The Master Servicer hereby certifies that the Loan
Reacquisition Price has been or will be paid to the Note
Account pursuant to the Agreement.)
_______ 3. Mortgage Loan substituted.
(The Master Servicer hereby certifies that a Qualified
Replacement Mortgage Loan has been or will be assigned and
delivered to you along with the related Mortgage File pursuant
to the Agreement.)
_______ 4. The Mortgage Loan is being foreclosed.
_______ 5. Other. (Describe)
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The undersigned acknowledges that the above Mortgage File will be held
by the undersigned in accordance with the provisions of the Agreement and will
be returned to you, except if the Mortgage Loan has been paid in full, or
purchased or substituted for by a Qualified Replacement Mortgage Loan (in which
case the Mortgage File will be retained by us permanently) and except if the
Mortgage Loan is being foreclosed (in which case the Mortgage File will be
returned when no longer required by us for such purpose).
Capitalized terms used herein shall have the meanings ascribed to them
in the Agreement.
ADVANTA MORTGAGE CORP. USA
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
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EXHIBIT G
FORM OF POWER OF ATTORNEY
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EXHIBIT H
FORM OF SUBSEQUENT TRANSFER AGREEMENT
Pursuant to this Subsequent Transfer Agreement (this "Agreement"),
dated as of __________, _____, among Advanta Conduit Receivables, Inc., a Nevada
corporation (the "Sponsor), and Advanta Revolving Home Equity Loan Trust 2000-A
(the "Trust"), the Sponsor and the Trust agree to the sale by the Sponsor to the
Trust, of the Mortgage Loans listed on the attached schedule of Mortgage Loans
(the "Subsequent Mortgage Loans").
Capitalized terms are used in this Agreement as defined in Annex 1 of
the Indenture, dated as of April 1, 2000 (the "Indenture"), between the Trust
and Bankers Trust Company of California, N.A., as Indenture Trustee, which
meanings are incorporated by reference herein. All other capitalized terms used
herein shall have the meanings specified herein.
Section 1. Sale of Subsequent Mortgage Loans.
(a) The Sponsor does hereby sell, transfer, assign, set over and convey
to the Trust, without recourse, all of its right, title and interest in and to
the Subsequent Mortgage Loans, and including all principal and interest
collected on the Subsequent Mortgage Loans on and after the Subsequent Cut-Off
Date, and the Mortgage File for each Subsequent Mortgage Loan. The Sponsor,
contemporaneously with the delivery of this Agreement, has delivered or caused
to be delivered to the Trust the Mortgage File for each Subsequent Mortgage
Loan.
The transfer to the Trust of the Subsequent Mortgage Loans identified
on the Schedule of Subsequent Mortgage Loans shall be absolute and is intended
by the parties hereto to constitute a sale by the Sponsor to the Trust on the
Subsequent Transfer Date of all the Sponsor's right, title and interest in and
to the Subsequent Mortgage Loans, and other property as and to the extent
described above. In the event the transactions set forth herein shall be deemed
not to be a sale, the Sponsor hereby grants to the Trust as of the Subsequent
Transfer Date a security interest in all of the Sponsor's right, title and
interest in, to and under the Subsequent Mortgage Loans, and such other
property, to secure all of the Sponsor's obligations hereunder, and this
Agreement shall constitute a security agreement under applicable law. The
Sponsor agrees to take or cause to be taken such actions and to execute such
documents, including without limitation the filing of all necessary UCC- 1
financing statements and any continuation statements with respect thereto as are
necessary to perfect and protect the Trust's interests in each Subsequent
Mortgage Loan and the proceeds thereof.
(b) The expenses and costs relating to the delivery of the Subsequent
Mortgage Loans and this Agreement shall be borne by the Sponsor.
Section 2. Representations and Warranties; Conditions Precedent.
(a) The Sponsor hereby affirms the representations and warranties set
forth in Sections 3.1 and 3.3 of the Sale and Servicing Agreement that relate to
the Sponsor or the Subsequent Mortgage Loans as
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90
of the date hereof. The Sponsor hereby confirms that each of the conditions set
forth in Section 2.6 of the Sale and Servicing Agreement are satisfied as of the
date hereof and further represents and warrants that each Subsequent Mortgage
Loan complies with the requirements of this Agreement and Section 2.6 of the
Sale and Servicing Agreement.
(b) The Sponsor is solvent, is able to pay its debts as they become due
and has capital sufficient to carry on its business and its obligations
hereunder; it will not be rendered insolvent by the execution and delivery of
this Agreement or by the performance of its obligations hereunder nor is it
aware of any pending insolvency; no petition of bankruptcy (or similar
insolvency proceeding) has been filed by or against the Sponsor prior to the
date hereof.
(c) All terms and conditions of the Sale and Servicing Agreement are
hereby ratified and confirmed; provided, however, that in the event of any
conflict the provisions of this Agreement shall control over the conflicting
provisions of the Sale and Servicing Agreement.
Section 3. Recordation of Instrument. To the extent permitted by
applicable law or a memorandum thereof if permitted under applicable law, this
Agreement is subject to recordation in all appropriate public offices for real
property records in all of the counties or other comparable jurisdictions in
which any or all of the properties subject to the related Mortgages are
situated, and in any other appropriate public recording office or elsewhere,
such recordation to be effected by the Master Servicer at the Noteholders'
expense on direction of the Insurer or Noteholders holding Notes evidencing at
least 51% of the Aggregate Note Balance, but only when accompanied by an Opinion
of Counsel to the effect that such recordation materially and beneficially
affects the interests of the Noteholders or the Insurer or is necessary for the
administration or servicing of the Subsequent Mortgage Loans.
Section 4. GOVERNING LAW. THIS INSTRUMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAWS PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 5. Counterparts. This Agreement may be executed in
counterparts, each of which, when so executed, shall be deemed to be an original
and together shall constitute one and the same instrument.
Section 6. Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the Sponsor the Trust and their respective
successors and assigns.
[Signature Page Follows]
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ADVANTA CONDUIT RECEIVABLES, INC.,
as Sponsor
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
ADVANTA REVOLVING HOME EQUITY
LOAN TRUST 2000-A,
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner
Trustee
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
Acknowledged and Accepted:
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as Indenture Trustee
By:
---------------------------
Name:
---------------------------
Title:
---------------------------