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Exhibit 4.1
POOLING AND SERVICING AGREEMENT
Relating to
[TRUST]
Among
ADVANTA CONDUIT RECEIVABLES, INC.,
as Sponsor,
ADVANTA MORTGAGE CORP. USA,
as Master Servicer,
and
[TRUSTEE]
as Trustee
Dated as of [________, ____]
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TABLE OF CONTENTS
(Not a Part of this Agreement)
Page
Parties..................................................................................................1
Recitals.................................................................................................1
ARTICLE I DEFINITIONS; RULES OF CONSTRUCTION.............................................................6
Section 1.1. Definitions.........................................................................6
Section 1.2. Use of Words and Phrases...........................................................36
Section 1.3. Captions; Table of Contents........................................................36
Section 1.4. Opinions...........................................................................36
ARTICLE II ESTABLISHMENT AND ORGANIZATION OF THE TRUST..................................................37
Section 2.1. Establishment of the Trust.........................................................37
Section 2.2. Office.............................................................................37
Section 2.3. Purposes and Powers................................................................37
Section 2.4. Appointment of the Trustee; Declaration of Trust...................................37
Section 2.5. Expenses of the Trust..............................................................37
Section 2.6. Ownership of the Trust.............................................................37
Section 2.7. Situs of the Trust.................................................................38
Section 2.8. [Miscellaneous REMIC Provisions.]..................................................38
ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SPONSOR AND THE MASTER SERVICER;
COVENANT OF SPONSOR TO CONVEY MORTGAGE LOANS.......................................41
Section 3.1. Representations and Warranties of the Sponsor......................................41
Section 3.2. Representations and Warranties of the Master Servicer..............................43
Section 3.3. Representations and Warranties of the Sponsor with Respect to the Mortgage
Loans...........................................................................45
Section 3.4. Covenants of Sponsor to Take Certain Actions with Respect to the Mortgage
Loans In Certain Situations.....................................................47
Section 3.5. Conveyance of the Mortgage Loans...................................................48
Section 3.6. Acceptance by Trustee; Certain Substitutions of Mortgage Loans;
Certification by Trustee........................................................50
Section 3.7. Cooperation Procedures.............................................................51
Section 3.8. Conveyance of the Subsequent Mortgage Loans........................................52
ARTICLE IV ISSUANCE AND SALE OF CERTIFICATES............................................................54
Section 4.1. Issuance of Certificates...........................................................54
Section 4.2. Sale of Certificates...............................................................54
ARTICLE V CERTIFICATES AND TRANSFER OF INTERESTS........................................................55
Section 5.1. Terms..............................................................................55
Section 5.2. Forms..............................................................................55
Section 5.3. Execution, Authentication and Delivery.............................................56
Section 5.4. Registration and Transfer of Certificates..........................................56
Section 5.5. Mutilated, Destroyed, Lost or Stolen Certificates..................................58
Section 5.6. Persons Deemed Owners..............................................................58
Section 5.7. Cancellation.......................................................................59
Section 5.8. Limitation on Transfer of Ownership Rights.........................................59
Section 5.9. Assignment of Rights...............................................................60
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ARTICLE VI COVENANTS ...................................................................................60
Section 6.1. Distributions......................................................................60
Section 6.2. Money for Distributions to be Held in Trust; Withholding...........................60
Section 6.3. Protection of Trust Estate.........................................................61
Section 6.4. Performance of Obligations.........................................................61
Section 6.5. Negative Covenants.................................................................62
Section 6.6. No Other Powers....................................................................62
Section 6.7. Limitation of Suits................................................................62
Section 6.8. Unconditional Rights of Owners to Receive Distributions............................63
Section 6.9. Rights and Remedies Cumulative.....................................................63
Section 6.10. Delay or Omission Not Waiver.......................................................63
Section 6.11. Control by Owners..................................................................63
ARTICLE VII ACCOUNTS, DISBURSEMENTS AND RELEASES........................................................64
Section 7.1. Collection of Money................................................................64
Section 7.2. Establishment of Accounts..........................................................64
Section 7.3. The Certificate Insurance Policy...................................................64
Section 7.4. Pre-Funding Account and Capitalized Interest Account...............................66
Section 7.5. Flow of Funds......................................................................67
Section 7.6. Investment of Accounts.............................................................70
Section 7.7. Eligible Investments...............................................................71
Section 7.8. Reports by Trustee.................................................................72
Section 7.9. Additional Reports by Trustee......................................................75
Section 7.10. Supplemental Interest Payment Account and Supplemental Interest Payments...........75
ARTICLE VIII SERVICING AND ADMINISTRATION OF MORTGAGE LOANS.............................................76
Section 8.1. Master Servicer and Sub-Servicers..................................................76
Section 8.2. Collection of Certain Mortgage Loan Payments.......................................79
Section 8.3. Sub-Servicing Agreements Between Master Servicer and Sub-Servicers.................79
Section 8.4. Successor Sub-Servicers............................................................79
Section 8.5. Liability of Master Servicer.......................................................79
Section 8.6. No Contractual Relationship Between Sub-Servicer and Trustee or the Owners.........79
Section 8.7. Assumption or Termination of Sub-Servicing Agreement by Trustee....................80
Section 8.8. Principal and Interest Account.....................................................80
Section 8.9. Delinquency Advances, Compensating Interest and Servicing Advances.................82
Section 8.10. Purchase of Mortgage Loans.........................................................83
Section 8.11. Maintenance of Insurance...........................................................83
Section 8.12. Due-on-Sale Clauses; Assumption and Substitution Agreements........................84
Section 8.13. Realization Upon Defaulted Mortgage Loans..........................................85
Section 8.14. Trustee to Cooperate; Release of Files.............................................86
Section 8.15. Servicing Compensation.............................................................87
Section 8.16. Annual Statement as to Compliance..................................................88
Section 8.17. Annual Independent Certified Public Accountants' Reports...........................88
Section 8.18. Access to Certain Documentation and Information Regarding the Mortgage
Loans...........................................................................88
Section 8.19. Assignment of Agreement............................................................88
Section 8.20. Removal of Master Servicer; Resignation of Master Servicer.........................89
Section 8.21. Inspections by the Certificate Insurer and the Trustee; Errors and
Omissions Insurance.............................................................93
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Section 8.22. Merger, Conversion, Consolidation or Succession to Business of Master
Servicer........................................................................93
Section 8.23. Notices of Material Events.........................................................93
ARTICLE IX TERMINATION OF TRUST.........................................................................94
Section 9.1. Termination of Trust...............................................................94
Section 9.2. Clean-Up Call Termination..........................................................94
Section 9.3. Termination Upon Loss of REMIC Status..............................................95
Section 9.4. Disposition of Proceeds............................................................96
Section 9.5. Netting of Amounts.................................................................97
ARTICLE X THE TRUSTEE...................................................................................97
Section 10.1. Certain Duties and Responsibilities................................................97
Section 10.2. Removal of Trustee for Cause.......................................................98
Section 10.3. Certain Rights of the Trustee......................................................99
Section 10.4. Not Responsible for Recitals or Issuance of Certificates..........................100
Section 10.5. May Hold Certificates.............................................................100
Section 10.6. Money Held in Trust...............................................................100
Section 10.7. No Lien for Fees..................................................................100
Section 10.8. Corporate Trustee Required; Eligibility...........................................100
Section 10.9. Resignation and Removal; Appointment of Successor.................................101
Section 10.10. Acceptance of Appointment by Successor Trustee....................................102
Section 10.11. Merger, Conversion, Consolidation or Succession to Business of the Trustee........103
Section 10.12. Reporting; Withholding............................................................103
Section 10.13. Liability of the Trustee..........................................................103
Section 10.14. Appointment of Co-Trustee or Separate Trustee.....................................104
ARTICLE XI MISCELLANEOUS...............................................................................105
Section 11.1. Compliance Certificates and Opinions..............................................105
Section 11.2. Form of Documents Delivered to the Trustee........................................105
Section 11.3. Acts of Owners....................................................................106
Section 11.4. Notices, etc., to Trustee.........................................................106
Section 11.5. Notices and Reports to Owners; Waiver of Notices..................................107
Section 11.6. Rules by Trustee and Sponsor......................................................107
Section 11.7. Successors and Assigns............................................................107
Section 11.8. Severability......................................................................107
Section 11.9. Benefits of Agreement.............................................................107
Section 11.10. Legal Holidays....................................................................107
Section 11.11. Governing Law.....................................................................108
Section 11.12. Counterparts......................................................................108
Section 11.13. Usury.............................................................................108
Section 11.14. Amendment.........................................................................108
Section 11.15. REMIC Status; Taxes...............................................................109
Section 11.16. Additional Limitation on Action and Imposition of Tax.............................111
Section 11.17. Appointment of Tax Matters Person.................................................112
Section 11.18. The Certificate Insurer...........................................................112
Section 11.19. Maintenance of Records............................................................112
Section 11.20. Notices...........................................................................112
SCHEDULE I -- Schedules of Mortgage Loans
EXHIBIT A -- Form of Certificates
EXHIBIT B -- Contents of Mortgage Loan File
EXHIBIT C -- Form of Certificate Re: Mortgage Loans Prepaid in Full After the Cut-Off Date
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EXHIBIT D -- Form of Trustee's Acknowledgement of Receipt
EXHIBIT E -- Form of Certification
EXHIBIT F -- Form of Delivery Order
EXHIBIT G -- Form of [Residual Class] Tax Matters Transfer Certificate
EXHIBIT H -- Power of Attorney
EXHIBIT I -- Form of Monthly Report
EXHIBIT J -- Form of Master Servicer's Trust Receipt
EXHIBIT K -- Form of Subsequent Transfer Agreement
EXHIBIT L -- Form of Lost Note Affidavit
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POOLING AND SERVICING AGREEMENT, relating to [TRUST], dated as
of [________, ____], by and among ADVANTA CONDUIT RECEIVABLES, INC., a Nevada
corporation, in its capacity as Sponsor of the Trust (the "Sponsor"), ADVANTA
MORTGAGE CORP. USA, a Delaware corporation, in its capacity as master servicer
(the "Master Servicer"), and [TRUSTEE], a [type of organization], in its
capacity as trustee (the "Trustee").
WHEREAS, the Sponsor wishes to establish a trust, and to
provide for the allocation and sale of the beneficial interests therein and the
maintenance and distribution of the trust estate;
WHEREAS, the Master Servicer has agreed to service the
Mortgage Loans, which constitute the principal assets of the trust estate;
WHEREAS, all things necessary to make the Certificates, when
executed and authenticated by the Trustee valid instruments, and to make this
Agreement a valid agreement, in accordance with their and its terms, have been
done;
WHEREAS,[Trustee] is willing to serve in the capacity of
Trustee hereunder; and
WHEREAS, [Certificate Insurer] (the "Certificate Insurer") is
intended to be a third-party beneficiary of this Agreement and is hereby
recognized by the parties hereto to be a third-party beneficiary of this
Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained, the Sponsor, the Master Servicer and the
Trustee hereby agree as follows:
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
SECTION 1.1. DEFINITIONS.
For all purposes of this Agreement, the following terms shall have the
meanings set forth below, unless the context clearly indicates otherwise:
"Accepted Servicing Practices": The Master Servicer's normal
servicing practices in servicing and administering mortgage loans for its own
account, which in general will conform to the mortgage servicing practices of
prudent mortgage lending institutions which service for their own account
mortgage loans of the same type as the Mortgage Loans in the jurisdictions in
which the related Properties are located and will give due consideration to the
Certificateholders' reliance on the Master Servicer.
"Account": Any account established in accordance with Sections
7.2, 7.4, 7.10 or 8.8 hereof each of which shall be established at a Designated
Depository Institution.
"Accrual Period": On any Payment Date, (x) with respect to the
Group I Certificates, the immediately preceding calendar month and (y) with
respect to the Group II Certificates, the period commencing on the immediately
preceding Payment Date (or the Startup
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Day in the case of the first Payment Date) to and including the day prior to the
current Payment Date. Calculations of interest on the Group I Certificates will
be made on the basis of a 360-day year consisting of twelve thirty-day months
and calculations of interest on the Group II Certificates will be made on the
basis of the actual number of days elapsed in the related Accrual Period in a
year of 360 days.
"Addition Notice": With respect to the transfer of Subsequent
Mortgage Loans to the Trust pursuant to Section 3.8(b) of this Agreement,
notice, which shall be given not later than two Business Days prior to the
related Subsequent Transfer Date, of the Sponsor's designation of Subsequent
Mortgage Loans to be sold to the Trust, such notice shall include the
approximate aggregate Loan Balance and the approximate weighted average Coupon
Rate of such Subsequent Mortgage Loans.
"Advanta Mortgage Files": For any Mortgage Loan identified on
the related Schedule of Mortgage Loans with an "A" code, the items listed below:
(a) the original Note, or , if such Note is lost, a certified
copy thereof along with a Lost Note Affidavit in the form of Exhibit L hereto,
bearing all intervening endorsements, endorsed either (i) "Pay to the order of
[Trustee], as custodian or trustee under the applicable custody or trust
agreement, without recourse" or (ii) "Pay to the order of [Trustee], as
custodian or trustee under the applicable custody or trust agreement, without
recourse, Advanta Mortgage Corp. USA as Master Servicer," or (iii) "Pay to the
order of [Trustee], 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 [Trustee], without recourse". The
original Note should be accompanied by any rider made in connection with the
origination of the related Mortgage Loan;
(b) the original of any guarantee executed in connection with
the Note (if any);
(c) the original Mortgage with evidence of recording thereon
or copies certified by the related recording office or, if the original Mortgage
has not yet been returned from the recording office, a certified copy of the
Mortgage;
(d) the originals of all assumption, modification,
consolidation or extension agreements; and
(e) the originals of all intervening assignments of Mortgage,
showing a complete chain of assignment from origination to the related Seller,
including warehousing assignments, with evidence of recording thereon (or, if an
original intervening assignment has not been returned from the recording office,
a certified copy thereof.
"Affiliated Originators": Advanta Mortgage Corp. USA, a
Delaware corporation, Advanta Bank Corp., a Utah industrial loan corporation,
Advanta Mortgage Corp. Midatlantic, a Pennsylvania corporation, Advanta Mortgage
Corp. Midatlantic II, a Pennsylvania corporation, Advanta Mortgage Corp.
Midwest, a Pennsylvania corporation, Advanta Mortgage Corp. of New Jersey, a New
Jersey corporation, Advanta Mortgage Corp. Northeast, a New York corporation,
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Advanta National Bank, a national banking association, Advanta Finance Corp., a
Nevada corporation.
"Aggregate Certificate Principal Balance": As of any date of
determination thereof, the sum of the then outstanding Certificate Principal
Balance of the Class [A] Certificates.
"Agreement": This Pooling and Servicing Agreement, as it may
be amended from time to time, and including the Exhibits hereto.
"AMHC": Advanta Mortgage Holding Company, a Delaware
corporation and the corporate parent of Advanta Mortgage Corp. USA, and the
indirect corporate parent of Advanta Conduit Receivables, Inc.
"Appraised Value": The appraised value of any Property based
upon the appraisal or other valuation made at the time of the origination of the
related Mortgage Loan, or, in the case of a Mortgage Loan which is a purchase
money mortgage, the sales price of the Property at such time of origination, if
such sales price is less than such appraised value.
"ARM Group Available Funds Cap Rate": As of any Payment Date,
an amount, expressed as a per annum rate, equal to (a) the sum of (i) the
aggregate amount of interest accrued and collected (or advanced) at the Coupon
Rates on all of the Mortgage Loans in the Group II Pool for the related
Remittance Period minus (ii) the aggregate of the Servicing Fee, the Premium
Amount and the Trustee's Fee, in each case relating to the Group II Pool, on
such Payment Date, and minus (iii) commencing on the seventh Payment Date
following the Startup Day, an amount equal to 0.50% per annum times the
aggregate principal balance of the Mortgage Loans in Group II as of the
beginning of such related Remittance Period, divided by (b) the aggregate
principal balance of the Mortgage Loans in Group II as of the beginning of the
related Remittance Period, calculated on the basis of a 360-day year and the
actual number of days elapsed.
"Authorized Officer": With respect to any Person, any person
who is authorized to act for such Person in matters relating to this Agreement,
and whose action is binding upon such Person and, with respect to the Trustee,
the Sponsor and the Master Servicer, initially including those individuals whose
names appear on the lists of Authorized Officers delivered on the Startup Day.
"Available Funds": Group I Available Funds or Group II
Available Funds.
"Available Funds Cap Rate": The Fixed Rate Group Available
Funds Cap Rate or the ARM Group Available Funds Cap Rate, as applicable.
"Available Funds Shortfall": As defined in Section
7.5(b)(D)(1) hereof.
"Balance Ratio": As defined in Section 2.8(b) hereof.
"Balloon Loan": Any Mortgage Loan which has an amortization
schedule which extends beyond its maturity date, resulting in a relatively large
unamortized principal balance due in a single payment at maturity.
"Benefit Plan Entity": As defined in Section 5.8(b) hereof.
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"Business Day": Any day that is not a Saturday, Sunday or
other day on which the Certificate Insurer, the Master Servicer or the Sponsor
is closed or commercial banking institutions in the State of New York, the State
of California or in the city in which the principal corporate trust office of
the 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 7.2 hereof and maintained by the
Trustee.
"Certificate": Any one of the Class [A] Certificates and the
[Residual Class] Certificates, each representing the interests and the rights
described in this Agreement.
"Certificate Account": The Certificate Account established in
accordance with Section 7.2 hereof and maintained by the Trustee.
"Certificate Insurance Policy": The certificate guaranty
insurance policy dated [________, ____] issued by the Certificate Insurer to the
Trustee for the benefit of the Owners of the Class [A] Certificates.
"Certificate Insurer": [Certificate Insurer].
"Certificate Insurer Default": Any one of the following events
shall have occurred and be continuing:
(a) The Certificate Insurer shall have failed to make a
payment required under the Certificate Insurance Policy;
(b) The Certificate Insurer shall have (i) filed a petition or
commenced any case or proceeding under any provision or chapter of the United
States Bankruptcy Code or any other similar Federal or state law relating to
insolvency, bankruptcy, rehabilitation, liquidation or reorganization, (ii) made
a general assignment for the benefit of its creditors, or (iii) had an order for
relief entered against it under the United States Bankruptcy Code or any other
similar Federal or state law relating to insolvency, bankruptcy, rehabilitation,
liquidation or reorganization which is final and nonappealable; or
(c) A court of competent jurisdiction, the New York Department
of Insurance, or other competent regulatory authority shall have entered a final
and nonappealable order, judgment or decree (i) appointing a custodian, trustee,
agent or receiver for the Certificate Insurer or for all or any material portion
of its property or (ii) authorizing the taking of possession by a custodian,
trustee, agent or receiver of the Certificate Insurer (or the taking of
possession of all or any material portion of the property of the Certificate
Insurer).
"Certificate Principal Balance": With respect to any Class [A]
Certificate as of any date of determination, the Original Certificate Principal
Balance less any principal amounts actually distributed on such Class [A]
Certificates with respect to the Principal Distribution Amount pursuant to
Section 7.5(b)(F) hereof on all prior Payment Dates.
As of any Payment Date with respect to the Class [A-1] and the Class [A-2]
Certificates, the Class [A-1] Certificate Principal Balance or the Class [A-2]
Certificate Principal Balance, respectively, as of such Payment Date. The
[Residual Class] Certificates do not have a Certificate Principal Balance.
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"Civil Relief Act": The Soldiers and Sailors' Civil Relief Act
of 1940, as amended from time to time.
"Civil Relief Act Shortfalls": Interest shortfalls resulting
from the application of the Civil Relief Act.
"Class": Any Class of the Class [A] Certificates, the Class
[B] Certificates or the [Residual Class] Certificates.
"Class [A] Certificate": Any one of the Class [A-1]
Certificates or the Class [A-2] Certificates.
"Class [A] Current Interest": With respect to any Payment
Date, the Class [A-1] Current Interest or the Class [A-2] Current Interest.
"Class [A] Distribution Amount": The sum of the Class [A-1]
Distribution Amount and the Class [A-2] Distribution Amount.
"Class [A] Interest Carry Forward Amount": With respect to any
Payment Date, the Class [A-1] Interest Carry Forward Amount or the Class [A-2]
Interest Carry Forward Amount.
"Class [A-1] Certificate": Any one of the Certificates
designated on the face thereof as a Class [A-1] Certificate, substantially in
the form annexed hereto as Exhibit [A-1], authenticated and delivered by the
Trustee, representing the right to distributions as set forth herein.
"Class [A-1] Certificate Principal Balance": As of any date of
determination, the Original Certificate Principal Balance of all Class [A-1]
Certificates less any principal amounts actually distributed with respect to the
Class [A-1] Certificates pursuant to Section 7.5(b)(F) hereof on all prior
Payment Dates.
"Class [A-1] Certificate Termination Date": The Payment Date
on which the Class [A-1] Certificate Principal Balance is reduced to zero.
"Class [A-1] Current Interest": With respect to any Payment
Date, the amount of interest accrued on the Class [A-1] Certificate Principal
Balance immediately prior to such Payment Date during the related Accrual Period
at the Class [A-1] Pass-Through Rate; provided, that such amount will be reduced
by the Class [A-1] Certificates' pro rata share of any Civil Relief Act
Shortfalls relating to Group I during the related Remittance Period.
"Class [A-1] Distribution Amount": With respect to any Payment
Date, the sum of (x) the Class [A-1] Current Interest, (y) the Class [A-1]
Interest Carry Forward Amount, if any, and (z) the Group I Class [A] Principal
Distribution Amount payable to the Owners of Class [A-1] Certificates pursuant
to Section 7.5(b)(F) hereof.
"Class [A-1] Interest Carry Forward Amount": With respect to
any Payment Date, the sum of (x) the amount, if any, by which (i) the sum of (A)
the Class [A-1] Current Interest as of the immediately preceding Payment Date
and (B) in the event of a Certificate Insurer Default, any unpaid Class [A-1]
Interest Carry Forward Amount, as calculated up through the previous Payment
Date and outstanding on such immediately preceding Payment Date,
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exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class [A-1] Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class [A-1]
Pass-Through Rate.
"Class [A-1] Pass-Through Rate": The Class [A-1] Pass-Through
Rate will be equal to, with respect to any Payment Date, [___%] per annum.
"Class [A-2] Certificate": Any one of the Certificates
designated on the face thereof as a Class [A-2] Certificate, substantially in
the form annexed hereto as Exhibit [A-2], authenticated and delivered by the
Trustee, representing the right to distributions as set forth herein.
"Class [A-2] Certificate Principal Balance": As of any date of
determination, the Original Certificate Principal Balance of all Class [A-2]
Certificates less any principal amounts actually distributed with respect to the
Class [A-2] Certificates pursuant to Section 7.5(b)(F) hereof on all prior
Payment Dates.
"Class [A-2] Certificate Termination Date": The Payment Date
on which the Class [A-2] Certificate Principal Balance is reduced to zero.
"Class [A-2] Current Interest": With respect to any Payment
Date, the amount of interest accrued on the Class [A-2] Certificate Principal
Balance immediately prior to such Payment Date during the related Accrual Period
at the Class [A-2] Pass-Through Rate; provided, that such amount will be reduced
by the Class [A-2] Certificates' pro rata share of any Civil Relief Act
Shortfalls relating to Group I during the related Remittance Period.
"Class [A-2] Distribution Amount": With respect to any Payment
Date, the sum of (x) the Class [A-2] Current Interest, (y) the Class [A-2]
Interest Carry Forward Amount, if any, and (z) the Group I Class [A] Principal
Distribution Amount payable to the Owners of Class [A-2] Certificates pursuant
to Section 7.5(b)(F) hereof.
"Class [A-2] Interest Carry Forward Amount": With respect to
any Payment Date, the sum of (x) the amount, if any, by which (i) the sum of (A)
the Class [A-2] Current Interest as of the immediately preceding Payment Date
and (B) in the event of a Certificate Insurer Default, any unpaid Class [A-2]
Interest Carry Forward Amount, as calculated up through the previous Payment
Date and outstanding on such immediately preceding Payment Date, exceeds (ii)
the amount of the actual distribution with respect to interest made to the
Owners of the Class [A-2] Certificates on such immediately preceding Payment
Date and (y) 30 days' interest on such amount at the Class [A-2] Pass-Through
Rate.
"Class [A-2] Pass-Through Rate": The Class [A-2] Pass-Through
Rate will be equal to the lesser of (i)(a) with respect to any Payment Date
which occurs on or prior to the Step-Up Payment Date, LIBOR plus [____%] per
annum or (b) with respect to any Payment Date thereafter, LIBOR plus [____%] per
annum and (ii) the ARM Group Available Funds Cap Rate for such Payment Date.
"Class [A-2] Supplemental Interest Amount": With respect to
any Payment Date, the excess, if any, of (x) the Class [A-2] Current Interest
Amount due on the Class [A-2] Certificates calculated using the Formula
Pass-Through Rate applicable to such Payment Date over (y) the interest due on
such Class calculated at the ARM Group Available Funds Cap Rate applicable to
such Payment Date.
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"Class [A-2] Supplemental Interest Payment Account": The Class
[A-2] Supplemental Interest Payment Account established in accordance with
Section 7.10(a) hereof and maintained by the Trustee.
"Class [A-2] Supplemental Interest Shortfall Amount": As
defined in Section 7.10(b) hereof.
"Class [A-2] Supplemental Interest Shortfall Carry-Forward
Amount": With respect to any Payment Date, the amount, if any, by which (i) the
sum of (A) the Class [A-2] Supplemental Interest Shortfall as of the immediately
preceding Payment Date and (B) any unpaid Class [A-2] Supplemental Interest
Shortfalls, as calculated up through the previous Payment Date and outstanding
on such immediately preceding Payment Date, exceeds (ii) the amount of the
actual distributions made on account of the Supplemental Interest Rights on such
immediately preceding Payment Date.
"Class [B] Certificate": Any one of the Certificates
designated on the face thereof as a Class [B] Certificate, substantially in the
form annexed hereto as Exhibit [A-B], authenticated and delivered by the
Trustee, representing the right to distributions as set forth herein. The Class
[B] Certificates represent a class of "regular interests" in the Upper-Tier
REMIC.
"Class [B] Distribution Amount": With respect to any Payment
Date, the amount payable to Class [B] pursuant to footnotes 4 and 5 of Section
2.8(c).
"Class [B] Pass-Through Rate": With respect to any Payment
Date, the interest payable at the Group I Net Weighted Average Coupon Rate and
the Group II Net Weighted Average Coupon Rate on the Group I and Group II
Mortgage Loans in excess of the interest payable on the Class [A] Certificates,
expressed as a per annum rate on the aggregate Loan Balance of the Mortgage
Loans in Group I and Group II.
"[Residual Class] Certificate": Any one of the Certificates
designated on the face thereof as a [Residual Class] Certificate, substantially
in the form annexed hereto as Exhibit A-R, authenticated and delivered by the
Trustee, representing the right to distributions as set forth herein, and
evidencing an interest designated as the "residual interest" in the Upper-Tier
REMIC for the purposes of the REMIC Provisions.
"Clean-Up Call Date": The Payment Date after the Initial
Clean-Up Call Date on which the Redeeming Party elects to exercise its right to
purchase all of the Mortgage Loans pursuant to Section 9.2 hereof.
"Code": The Internal Revenue Code of 1986, as amended and any
successor statute.
"Combined Loan-to-Value Ratio": With respect to any First
Mortgage Loan, the percentage equal to the Original Principal Amount of the
related Note divided by the Appraised Value of the related Property and with
respect to any Junior Mortgage Loan, the percentage equal to (a) the sum of (i)
the remaining principal balance, as of origination of the Junior Mortgage Loan,
as appropriate, of the Senior Lien note(s) relating to such Junior Mortgage
Loan, as appropriate, and (ii) the Original Principal Amount of the Note
relating to such Junior Mortgage Loan, as appropriate, divided by (b) the
Appraised Value.
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"Commitment": The Commitment to issue a Certificate Guaranty
Insurance Policy dated [__________, _____]and issued by the Certificate Insurer.
"Compensating Interest": As defined in Section 8.9(b) hereof.
"Conduit Acquisition Trust": The trust described in the
Pooling and Servicing Agreement dated as of May 1, 1997 among Advanta Mortgage
Conduit Services, Inc., as sponsor, Bankers Trust Company of California, N.A.,
as trustee, Advanta Mortgage Corp. USA, as the master servicer, and the
"Borrowers" named therein.
"Conduit Mortgage Files": For any Mortgage Loan identified on
the related Schedule of Mortgage Loans with a "B" code, the items listed below:
(a) the original Note, or , if such Note is lost, a certified
copy thereof along with a Lost Note Affidavit in the form of Exhibit L hereto,
bearing all intervening endorsements, endorsed either (i) "Pay to the order of
[Trustee], as custodian or trustee under the applicable custody or trust
agreement, without recourse" or (ii) "Pay to the order of [Trustee], as
custodian or trustee under the applicable custody or trust agreement, without
recourse, Advanta Mortgage Corp. USA as Master Servicer," or (iii) "Pay to the
order of [Trustee], 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 [Trustee], without recourse". The
original Note should be accompanied by any rider made in connection with the
origination of the related Mortgage Loan;
(b) the original of any guarantee executed in connection with
the Note (if any);
(c) the original Mortgage with evidence of recording thereon
or copies certified by the related recording office or, if the original Mortgage
has not yet been returned from the recording office, a certified copy of the
Mortgage;
(d) the originals of all assumption, modification,
consolidation or extension agreements;
(e) the original assignment of Mortgage of each Mortgage Loan
to "[Trustee], as custodian or trustee", "[Trustee], as trustee or custodian on
behalf of the Advanta Conduit Receivables, Inc." or "[Trustee], as trustee". In
the event that the Mortgage Loan was acquired by the previous owner in a merger,
the assignment of Mortgage must be by the "(previous owner), successor by merger
to (names of predecessor)"; and in the event that the Mortgage Loan was acquired
or originated by the previous owner while doing business under another name, the
Assignment of Mortgage must be by the "(previous owner), formerly known as
(previous name)"; and
(f) the originals of all intervening assignments of Mortgage,
showing a complete chain of assignment from origination to the related Seller,
including warehousing assignments, with evidence of recording thereon (or, if an
original intervening assignment has not been returned from the recording office,
a certified copy thereof.
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"Control Party": Until the last sentence of Section 11.18
hereof is applicable and so long as no Certificate Insurer Default has occurred
and is continuing, the Certificate Insurer, and thereafter, the Trustee.
"Coupon Rate": The rate of interest borne by each Note.
"Current Interest": With respect to any Payment Date, the sum
of the Class [A-1] Current Interest and the Class [A-2] Current Interest.
"Date-of-Payment Loan": Any Mortgage Loan as to which,
pursuant to the Note relating thereto, interest is computed and charged to the
Mortgagor at the Coupon Rate on the outstanding principal balance of such Note
based on the number of days elapsed between receipt of the Mortgagor's last
payment through receipt of the Mortgagor's most current payment.
"Definitive Certificate": Certificates issued in definitive
form without coupons.
"Delinquency Advance": As defined in Section 8.9(a) hereof.
"Delinquent": A Mortgage Loan is "delinquent" if any payment
due thereon is not made by the close of business on the day such payment is
scheduled to be due. A Mortgage Loan is "30 days delinquent" if such payment has
not been received by the close of business on the corresponding day of the month
immediately succeeding the month in which such payment was due, or, if there is
no such corresponding day (e.g., as when a 30-day month follows a 31-day month
in which a payment was due on the 31st day of such month) then on the last day
of such immediately succeeding month. Similarly for "60 days delinquent," "90
days delinquent" and so on.
"Delivery Order": The delivery order in the form set forth as
Exhibit F hereto and delivered by the Sponsor to the Trustee on the Startup Day
pursuant to Section 4.1 hereof.
"Depository": The Depository Trust Company, ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ and any successor Depository hereafter named.
"Designated Depository Institution": With respect to each
Account, an institution whose deposits are insured by the Bank Insurance Fund or
the Savings Association Insurance Fund of the FDIC, the long-term deposits of
which shall be rated A2 or better by ▇▇▇▇▇'▇ or better by Standard & Poor's and
the short-term deposits of which shall be rated P-1 or better by ▇▇▇▇▇'▇ and A1
or better by Standard & Poor's, unless otherwise approved in writing by the
Trustee, the Certificate Insurer, ▇▇▇▇▇'▇ and Standard & Poor's , and which is
any of the following: (i) a federal savings and loan association duly organized,
validly existing and in good standing under the federal banking laws, (ii) an
institution duly organized, validly existing and in good standing under the
applicable banking laws of any state, (iii) a national banking association duly
organized, validly existing and in good standing under the federal banking laws,
(iv) a principal subsidiary of a bank holding company, or (v) approved in
writing by the Trustee, the Certificate Insurer, ▇▇▇▇▇'▇ and Standard & Poor's;
provided, however, that any such institution or association shall have combined
capital, surplus and undivided profits of at least $100,000,000. Notwithstanding
the foregoing, an Account may be held by an institution otherwise meeting the
preceding requirements except that the only applicable rating requirement shall
be that the unsecured and uncollateralized debt obligations thereof shall be
rated Baa3 or better by ▇▇▇▇▇'▇ or BBB or better by Standard & Poor's if such
institution has trust powers and such Account is held by such institution in its
corporate trust department.
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"Designated Residual Owner": Advanta Finance Residual
Corporation.
"Determination Date": As to each Payment Date, the third
Business Day preceding such Payment Date or such earlier day as shall be agreed
to by the Certificate Insurer and the Trustee.
"Direct Participant" or "DTC Participant": Any broker-dealer,
bank or other financial institution for which the Depository holds Class [A]
Certificates from time to time as a securities depository.
"Disqualified Organization": Shall have the meaning set forth
from time to time in the definition thereof at Section 860E(e)(5) of the Code
(or any successor statute thereto) and applicable to the Trust.
"Document Delivery Requirements": The Sponsor's obligations to
deliver certain legal documents, to prepare and record certain Mortgage
assignments or to deliver certain opinions relating to Mortgage assignments, in
each case with respect to the Mortgage Loans and as set forth in Section 3.5
hereof.
"Eligible Investments": Those investments so designated
pursuant to Section 7.7 hereof.
"Event of Default": Any event described in clauses (a) or (b)
of Section 8.20 hereof.
"▇▇▇▇▇▇ ▇▇▇": The Federal National Mortgage Association, a
federally-chartered and privately-owned corporation existing under the Federal
National Mortgage Association Charter Act, as amended, or any successor thereof.
"FDIC": The Federal Deposit Insurance Corporation, or any
successor thereto.
"File": The documents delivered to the Trustee pursuant to
Section 3.5 hereof pertaining to a particular Mortgage Loan and any additional
documents required to be added to the Advanta Mortgage File or Conduit Mortgage
File, as appropriate, pursuant to this Agreement.
"Final Determination": As defined in Section 9.3(a) hereof.
"First Mortgage Loan": A Mortgage Loan which constitutes a
first priority mortgage lien with respect to any Property.
"Fixed Rate Group Available Funds Cap Rate": As of any Payment
Date, an amount, expressed as a per annum rate, equal to (A)(i) the aggregate
amount of interest accrued and collected (or advanced) at the Coupon Rates on
all of the Mortgage Loans in the Group I Pool for the related Remittance Period
minus (ii) the aggregate of the Servicing Fee, the Premium Amount and the
Trustee's Fee, in each case relating to Group I on such Payment Date, divided by
(B) the aggregate outstanding principal balance of the Mortgage Loans in Group I
as of the beginning of the related Remittance Period, calculated on the basis of
a 360-day year consisting of twelve thirty-day months.
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"Formula Pass-Through Rate": With respect to the Class [A-2]
Certificates, interest rate resulting from the calculation set forth in clause
(i) in the definition of the Class [A-2] Pass-Through Rate.
"▇▇▇▇▇▇▇ Mac": 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.
"Gross Margin": With respect to each Mortgage Loan with an
adjustable Coupon Rate, the fixed percentage amount set forth in the related
Mortgage Note which amount is added to the Index in accordance with the terms of
the related Mortgage Note to determine, on each Interest Rate Adjustment Date,
the Coupon Rate for such Mortgage Loan, subject to any maximum.
"Group": Group I or Group II.
"Group I" or "Group I Pool": The fixed pool of Mortgage Loans
identified in the related Schedule of Mortgage Loans as having been assigned to
Group I, including any Qualified Replacement Mortgages delivered in replacement
thereof and assigned to Group I.
"Group I Available Funds": As defined in Section 7.3(a)
hereof.
"Group I Capitalized Interest Deposit": [$__________ ].
"Group I Capitalized Interest Requirement": As to any Payment
Date occurring during the Pre-Funding Period, the difference, if any, between
(x) the Group I Interest Distribution Amount for such Payment Date plus the
Premium Amount relating to the Group I Certificates and the Trustee's Fee
relating to the Group I Certificates as of such Payment Date and (y) the sum of
(i) the Group I Interest Remittance Amount as of such Payment Date, and (ii) any
Pre-Funding Earnings relating to Group I to be transferred to the Certificate
Account on such Payment Date pursuant to Section 7.4 hereof.
"Group I Certificate Principal Balance": As of any date of
determination, the aggregate Certificate Principal Balances of all Group I
Certificates.
"Group I Certificates": The Class [A-1] Certificates.
"Group I Class [A] Principal Distribution Amount": With
respect to the Group I Certificates, as of any Payment Date, the lesser of:
(a) the Group I Available Funds, plus any related Insured
Payment and minus the Group I Interest Distribution
Amount, and
(b) (i) the sum, without duplication of:
(A) the principal actually collected by the
Master Servicer with respect to the Mortgage
Loans in the Group I Pool during the related
Remittance Period;
(B) the Loan Balance of each Mortgage Loan in
the Group I Pool that either was repurchased
by the Sponsor or an Originator
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or purchased by the Master Servicer or any
Sub-Servicer on the Group I Pool on the
related Remittance Date, to the extent such
Loan Balance is actually received by the
Trustee;
(C) any Substitution Amounts delivered by the
Sponsor or an Originator on the related
Remittance Date in connection with a
substitution of a Mortgage Loan in the Group
I Pool, to the extent such Substitution
Amounts are actually received by the
Trustee;
(D) all Net Liquidation Proceeds actually
collected by the Master Servicer with
respect to the Mortgage Loans in the Group I
Pool during the related Remittance Period
(to the extent such Net Liquidation Proceeds
relate to principal);
(E) the amount of any Overcollateralization
Deficit with respect to the Group I Pool for
such Payment Date;
(F) the proceeds received by the Trustee from
any termination of the Group I Pool (to the
extent such proceeds relate to principal);
(G) any amounts remaining in the Pre-Funding
Account relating to Group I at the end of
the Pre-Funding Period;
(H) the amount of any Overcollateralization
Increase Amount with respect to the Group I
Pool for such Payment Date to the extent of
any Net Monthly Excess Cashflow available
for such purpose;
minus
(ii) the amount of any Overcollateralization
Reduction Amount with respect to Group I
Pool for such Payment Date.
In no event will the Group I Principal Distribution Amount for
any class of Class [A] Certificates on any Payment Date (x) be less than zero or
(y) be greater than the then-outstanding principal balance of the related class
of Class [A] Certificates.
"Group I Deficiency Amount": The excess, if any, of the Group
I Required Distributions over the Group I Net Available Distribution Amount.
"Group I Insured Distribution Amount": As to the Group I
Certificates, the sum of (a) as of any Payment Date, the sum of (x) the Group I
Interest Distribution Amount for such Payment Date and (y) the Group I
Overcollateralization Deficit, if any, as of such Payment Date and (b) the Group
I Preference Amount.
"Group I Insured Payment": An amount equal to (a) as of any
Payment Date, the Group I Deficiency Amount and (b) any unpaid Group I
Preference Amount (without duplication).
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"Group I Interest Amount Available": As of any Payment Date,
the Group I Interest Remittance Amount less the sum of the portion of the
Trustee's Fees related to Group I and the Premium Amount related to Group I for
such Payment Date.
"Group I Interest Distribution Amount": As of any Payment
Date, the sum of (i) the Class [A-1] Current Interest and (ii) any Class [A-1]
Interest Carry-Forward Amount.
"Group I Interest Remittance Amount": As of any Remittance
Date with respect to the Mortgage Loans in Group I, the sum, without
duplication, of (i) all interest accrued during the related Remittance Period
(less the Servicing Fee with respect to such Mortgage Loans) and actually
collected prior to such Remittance Date, (ii) all Delinquency Advances and all
Special Advances made by the Master Servicer on such Remittance Date, (iii) all
Compensating Interest paid by the Master Servicer on such Remittance Date, net
of amounts allowed to be retained pursuant to Section 8.8(c), (iv) without
duplication, the portion of the Loan Purchase Price and the Substitution Amount
relating to accrued interest on the Mortgage Loans in Group I, (v) the portion
of any Net Liquidation Proceeds relating to accrued and unpaid interest with
respect to Group I and (vi) the proceeds of any liquidation of the Trust Estate
related to Group I (to the extent such proceeds relate to interest and Group I).
"Group I Monthly Excess Cash Flow Amount": For any Payment
Date, the sum of (x) the Group I Monthly Excess Interest Amount and (y) the
Group I Overcollateralization Reduction amount for such Payment Date.
"Group I Monthly Excess Interest Amount": With respect to any
Payment Date, the excess, if any, of (i) the Group I Interest Amount Available
for the related Remittance Period over (ii) the Group I Interest Distribution
Amount on such Payment Date.
"Group I Monthly Remittance Amount": As of any Remittance
Date, the sum of (i) the Group I Interest Remittance Amount for such Remittance
Date and (ii) the Group I Principal Remittance Amount for such Remittance Date.
"Group I Net Available Distribution Amount": The Group I Total
Available Funds.
"Group I Net Weighted Average Coupon Rate": With respect to
any Payment Date, the weighted average of the Coupon Rates of the Mortgage Loans
in Group I (weighted by the Loan Balances of the Mortgage Loans in Group I),
less the sum of (A) 0.50% per annum, (B) the Trustee Fee Rate related to Group
I, and (c) the Premium Percentage related to Group I.
"Group I Original Balance": The sum of (x) the aggregate
principal balances of the Initial Mortgage Loans in Group I as of the Initial
Cut-Off Date and (y) the Group I Original Pre-Funded Amount, which sum is
[$______________].
"Group I Original Pre-Funded Amount ": The amount deposited in
the Pre-Funding Account on the Startup Day from the proceeds of the sale of the
Group I Certificates, which amount is [$____________].
"Group I Overcollateralization Amount": As of any Payment
Date, the amount, if any, by which (x) the aggregate Loan Balance of the
Mortgage Loans in Group I as of the close of business on the last day of the
immediately preceding Remittance Period exceeds (y) the aggregate Certificate
Principal Balance of the Group I Certificates after taking into account all
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distributions of principal on such Group I Certificates as of such Payment Date
(except for any payment to be made as to principal from the proceeds of the
Certificate Insurance Policy).
"Group I Overcollateralization Deficiency Amount": With
respect to any Payment Date, the excess, if any, of (x) the Group I Specified
Overcollateralization Amount for such Payment Date over (y) the Group I
Overcollateralization Amount for such Payment Date.
"Group I Overcollateralization Deficit": With respect to any
Payment Date, the amount, if any, by which (x) the aggregate Certificate
Principal Balance of the Group I Certificates, after taking into account all
distributions to be made on such Payment Date (except for any payment to be made
as to principal from the proceeds of the Certificate Insurance Policy), exceeds
(y) the sum of (i) aggregate principal balance of the Mortgage Loans in the
Group I Pool as of the close of business on the last day of the preceding
Remittance Period, plus (ii) any amounts remaining in the Pre-Funding Account.
"Group I Overcollateralization Increase Amount": Any Net
Monthly Excess Cashflow actually applied as an accelerated payment of principal
with respect to Group I.
"Group I Overcollateralization Reduction Amount": As of any
Payment Date, the lesser of (x) the Group I Principal Remittance Amount for such
Payment Date and (y) the excess of (i) the Group I Overcollateralization Amount
for such Payment Date, over (ii) the Group I Specified Overcollateralization
Amount for such Payment Date.
"Group I Pre-Funded Amount": With respect to any Determination
Date, the amount on deposit in the Pre-Funding Account relating to Group I and
available for the purchase of the Subsequent Mortgage Loans to be conveyed to
the Group I Pool.
"Group I Preference Amount": Any amount previously distributed
to an Owner of the Group I Certificates that is recoverable and sought to be
recovered as a voidable preference by a trustee in bankruptcy pursuant to the
United States Bankruptcy Code (11 U.S.C.), as amended from time to time, in
accordance with a final nonappealable order of a court having competent
jurisdiction.
"Group I Principal Remittance Amount": As of any Remittance
Date, the sum, without duplication, of (i) the principal actually collected by
the Master Servicer with respect to Mortgage Loans in Group I during the related
Remittance Period, (ii) the Loan Balance of each Mortgage Loan in Group I that
was purchased from the Trust on or prior to such Remittance Date, to the extent
such Loan Balance was actually deposited in the Principal and Interest Account,
(iii) any Substitution Amounts relating to principal delivered by the Sponsor in
connection with a substitution of a Mortgage Loan in Group I, to the extent such
principal portion of the Substitution Amounts were actually deposited in the
Principal and Interest Account on such Remittance Date, (iv) any Net Liquidation
Proceeds relating to principal actually collected by the Master Servicer with
respect to such Mortgage Loans in Group I during the related Remittance Period
net of amounts allowed to be retained pursuant to Section 8.8(c), and (v) the
proceeds of any liquidation of the Trust Estate related to Group I (to the
extent such proceeds related to principal).
"Group I Reimbursement Amount": As of any Payment Date, the
sum of (x)(i) all Group I Insured Payments previously received by the Trustee
and all Group I Preference Amounts previously paid by the Certificate Insurer
and in each case not previously repaid to the Certificate Insurer pursuant to
Section 7.5(b)(D)(3) and (4) hereof plus (ii) interest accrued on
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each such Group I Insured Payment not previously repaid calculated from the date
the Trustee received the related Group I Insured Payment at the Late Payment
Rate applicable to such date and (y)(i) any other amounts then due and owing to
the Certificate Insurer relating to the Group I Certificates under the Insurance
Agreement plus (ii) interest on such amounts at the Late Payment Rate, if
applicable. On each Determination Date, the Certificate Insurer shall notify the
Trustee and the Sponsor of the amount of any Group I Reimbursement Amount if
such amount is greater than zero.
"Group I Required Distributions": An amount equal to the Group
I Insured Distribution Amount.
"Group I Specified Overcollateralization Amount": The
Specified Overcollateralization Amount with respect to Group I.
"Group I Stepdown Date": The later to occur of (x) the 30th
Payment Date from the Startup Day and (y) the Determination Date on which the
outstanding principal balance on the Group I Certificates is equal to 50% of the
Group I Original Balance.
"Group I Total Available Funds": As defined in Section 7.3(a)
hereof.
"Group II" or "Group II Pool": The pool of adjustable rate
Mortgage Loans identified in the related Schedule of Mortgage Loans as having
been assigned to Group II, including any Qualified Replacement Mortgages
delivered in replacement thereof and assigned to Group II.
"Group II Available Funds": As defined in Section 7.3(a)
hereof.
"Group II Capitalized Interest Deposit": $[_________].
"Group II Capitalized Interest Requirement": As to any Payment
Date occurring during the Pre-Funding Period, the difference, if any, between
(x) the Group II Interest Distribution Amount on such Payment Date plus the
Premium Amount relating to the Group II Certificates and the Trustee's Fee
relating to the Group II Certificates as of such Payment Date and (y) the sum of
(i) the Group II Interest Remittance Amount for such Payment Date and (ii) any
Pre-Funding Earnings relating to Group II to be transferred to the Certificate
Account on such Payment Date pursuant to Section 7.4 hereof.
"Group II Certificate Principal Balance": As of any date of
determination, the aggregate Certificate Principal Balances of all Group II
Certificates.
"Group II Certificates": The Class [A-2] Certificates.
"Group II Class [A] Principal Distribution Amount": With
respect to the Group II Certificates, as of any Payment Date, the lesser of:
(a) the Group II Available Funds, plus any related
Insured Payment and minus the Group II Interest
Distribution Amount, and
(b) (i) the sum, without duplication of:
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(A) the principal actually collected by the
Master Servicer with respect to the Mortgage
Loans in the Group II Pool during the
related Remittance Period;
(B) the Loan Balance of each Mortgage Loan in
the Group II Pool that either was
repurchased by the Sponsor or an Originator
or purchased by the Master Servicer or any
Sub-Servicer on the Group II Pool on the
related Remittance Date, to the extent such
Loan Balance is actually received by the
Trustee;
(C) any Substitution Amounts delivered by the
Sponsor or an Originator on the related
Remittance Date in connection with a
substitution of a Mortgage Loan in the Group
II Pool, to the extent such Substitution
Amounts are actually received by the
Trustee;
(D) all Net Liquidation Proceeds actually
collected by the Master Servicer with
respect to the Mortgage Loans in the Group
II Pool during the related Remittance Period
(to the extent such Net Liquidation Proceeds
relate to principal);
(E) the amount of any Overcollateralization
Deficit with respect to the Group II Pool
for such Payment Date;
(F) the proceeds received by the Trustee from
any termination of the Group II Pool (to the
extent such proceeds relate to principal);
(G) any amounts remaining in the Pre-Funding
Account relating to Group II at the end of
the Pre-Funding Period;
(H) the amount of any Overcollateralization
Increase Amount with respect to Group II
Pool for such Payment Date to the extent of
any Net Monthly Excess Cashflow available
for such purpose;
minus
(ii) the amount of any Overcollateralization
Reduction Amount with respect to Group II
Pool for such Payment Date.
In no event will the Group II Principal Distribution Amount
for any Class [A-2] Certificates on any Payment Date (x) be less than zero or
(y) be greater than the then-outstanding principal balance of the Class [A-2]
Certificates.
"Group II Deficiency Amount": The excess, if any, of the Group
II Required Distributions over the Group II Net Available Distribution Amount.
"Group II Insured Distribution Amount": As to the Group II
Certificates, the sum of (a) as of any Payment Date, the sum of (x) the Group II
Interest Distribution Amount for such Payment Date and (y) the Group II
Overcollateralization Deficit, if any, as of such Payment Date and (b) the Group
II Preference Amount.
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"Group II Insured Payment": An amount equal to (a) as of any
Payment Date, the Group II Deficiency Amount and (b) any unpaid Group II
Preference Amount (without duplication).
"Group II Interest Amount Available": As of any Payment Date,
the Group II Interest Remittance Amount less the sum of the portion of the
Trustee's Fees related to Group II and the Premium Amount related to Group II
for such Payment Date.
"Group II Interest Distribution Amount": As of any Payment
Date, the sum of (i) the Class [A-2] Current Interest and (ii) any Class [A-2]
Interest Carry-Forward Amount.
"Group II Interest Remittance Amount": As of any Remittance
Date with respect to the Mortgage Loans in Group II, the sum, without
duplication, of (i) interest accrued during the related Remittance Period (less
the Servicing Fee with respect to such Mortgage Loans) and actually collected
prior to such Remittance Date, (ii) all Delinquency Advances and all Special
Advances made by the Master Servicer on such Remittance Date, (iii) all
Compensating Interest paid by the Master Servicer on such Remittance Date, net
of amounts allowed to be retained pursuant to Section 8.8(c), (iv) without
duplication, the portion of the Loan Purchase Price and the Substitution Amount
relating to interest accrued on the Mortgage Loans in Group II and (v) the
portion of any Net Liquidation Proceeds relating to accrued and unpaid interest
with respect to Group II and (vi) the proceeds of any liquidation of the Trust
Estate related to Group II (to the extent such proceeds relate to interest and
Group II).
"Group II Monthly Excess Cashflow Amount": For any Payment
Date, the sum of (x) the Group II Monthly Excess Interest Amount and (y) the
Group II Overcollateralization Reduction Amount for such Payment Date.
"Group II Monthly Excess Interest Amount": With respect to any
Payment Date, the excess, if any, of (i) the Group II Interest Amount Available
for the related Remittance Period over (ii) the Group II Interest Distribution
Amount on such Payment Date.
"Group II Monthly Remittance Amount": As of any Remittance
Date, the sum of (i) the Group II Interest Remittance Amount for such Remittance
Date and (ii) the Group II Principal Remittance Amount for such Remittance Date.
"Group II Net Available Distribution Amount": The Group II
Total Available Funds.
"Group II Net Weighted Average Coupon Rate": With respect to
any Payment Date, the weighted average of the Coupon Rates of the Mortgage Loans
in Group II (weighted by the Loan Balances of the Mortgage Loans in Group II),
less the sum of (A) 0.50% per annum, (B) the Trustee Fee Rate related to Group
II and (c) the Premium Percentage related to Group II.
"Group II Original Balance": The sum of (x) the aggregate
principal balances of the Initial Mortgage Loans in Group II as of the Initial
Cut-Off-Date and (y) the Group II Original Pre-Funded Amount, which sum is
[$______________].
"Group II Original Pre-Funded Amount": The amount deposited in
the Pre-Funding Account on the Startup Day, from the proceeds of the sale of the
Group II Certificates, which amount is [$_____________].
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"Group II Overcollateralization Amount": As of any Payment
Date, the difference between (x) the aggregate Loan Balance of the Mortgage
Loans in Group II as of the close of business on the last day of the immediately
preceding Remittance Period and (y) the aggregate Certificate Principal Balance
of the Group II Certificates after taking into account all distributions of
principal on such Group II Certificates as of such Payment Date (except for any
payment to be made as to principal from the proceeds of the Certificate
Insurance Policy).
"Group II Overcollateralization Deficiency Amount": With
respect to any Payment Date, the excess, if any, of (x) the Group II Specified
Overcollateralization Amount for such Payment Date over (y) the Group II
Overcollateralization Amount for such Payment Date.
"Group II Overcollateralization Deficit": With respect to any
Payment Date, the amount, if any, by which (x) the aggregate Certificate
Principal Balance of the Group II Certificates, after taking into account all
distributions to be made on such Payment Date (except for any payment to be made
as to principal from the proceeds of the Certificate Insurance Policy), exceeds
(y) the sum of (i) the aggregate principal balance of the Mortgage Loans in the
Group II Pool as of the close of business on the last day of the preceding
Remittance Period plus (ii) any amounts remaining in the Pre-Funding Account.
"Group II Overcollateralization Increase Amount": Any Net
Monthly Excess Cashflow actually applied as an accelerated payment of principal
with respect to Group II.
"Group II Overcollateralization Reduction Amount": As of any
Payment Date, the lesser of (x) the Group II Principal Remittance Amount for
such Payment Date and (y) the excess of (i) the Group II Overcollateralization
Amount for such Payment Date, over (ii) the Group II Specified
Overcollateralization Amount for such Payment Date.
"Group II Preference Amount": Any amount previously
distributed to an Owner on the Group II Certificates that is recoverable and
sought to be recovered as a voidable preference by a trustee in bankruptcy
pursuant to the United States Bankruptcy Code (11 U.S.C.), as amended from time
to time, in accordance with a final nonappealable order of a court having
competent jurisdiction.
"Group II Pre-Funded Amount": With respect to any
Determination Date, the amount on deposit in the Pre-Funding Account and
available for the purchase of the Subsequent Mortgage Loans to be conveyed to
the Group II Pool.
"Group II Principal Remittance Amount": As of any Remittance
Date, the sum, without duplication, of (i) the principal actually collected by
the Master Servicer with respect to Mortgage Loans in Group II during the
related Remittance Period, (ii) the Loan Balance of each Mortgage Loan in Group
II that was purchased from the Trust on or prior to such Remittance Date, to the
extent such Loan Balance was actually deposited in the Principal and Interest
Account, (iii) any Substitution Amounts relating to principal delivered by the
Sponsor in connection with a substitution of a Mortgage Loan in Group II, to the
extent such principal portion of the Substitution Amounts were actually
deposited in the Principal and Interest Account on such Remittance Date, (iv)
any Net Liquidation Proceeds relating to principal actually collected by the
Master Servicer with respect to such Mortgage Loans in Group II during the
related Remittance Period net of amounts allowed to be retained pursuant to
Section 8.8(c), and (v) the proceeds of any liquidation of the Trust Estate
related to Group II (to the extent such proceeds related to principal).
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"Group II Reimbursement Amount": As of any Payment Date, the
sum of (x)(i) all Group II Insured Payments previously received by the Trustee
not previously repaid to the Certificate Insurer pursuant to Section
7.5(b)(D)(3) and (4) hereof plus (ii) interest accrued on each such Group II
Insured Payment not previously repaid calculated from the date the Trustee
received the related Group II Insured Payment at the Late Payment Rate
applicable to such date and (y)(i) any other amounts then due and owing to the
Certificate Insurer relating to the Group II Certificates under the Insurance
Agreement plus (ii) interest on such amounts at the Late Payment Rate, if
applicable. On each Determination Date, the Certificate Insurer shall notify the
Trustee and the Sponsor of the amount of any Group II Reimbursement Amount if
such amount is greater than zero.
"Group II Required Distributions": An amount equal to the
Group II Insured Distribution Amount.
"Group II Specified Overcollateralization Amount": The
Specified Overcollateralization Amount with respect to Group II.
"Group II Stepdown Date": The later to occur of (x) the 36th
Payment Date from the Startup Day and (y) the Determination Date on which the
outstanding principal balance on the Group II Certificates is equal to 50% of
the Group II Original Balance.
"Group II Total Available Funds": An amount defined in Section
7.3(a) hereof.
"Indemnification Agreement": The Indemnification Agreement
dated as of [____________, _____]among the Certificate Insurer, the Sponsor and
the Underwriters as may be amended from time to time.
"Index": With respect to any adjustable rate Note, the
applicable index set forth therein.
"Indirect Participant" shall mean any financial institution
for whom any Direct Participant holds an interest in a Class [A] Certificate.
"Initial Clean-Up Call Date": The first Payment Date following
the date on which the aggregate Loan Balances of all Mortgage Loans has declined
to 10% or less of the aggregate principal balance of all of the Mortgage Loans
acquired by the Trust as of the Startup Day and acquired by the Trust prior to
the end of the Pre-Funding Period.
"Initial Cut-Off Date": The date as of which Initial Mortgage
Loans are transferred and assigned to the Trust, the opening of business on
[____________, _____].
"Initial Mortgage Loans" shall mean Mortgage Loans conveyed,
or caused to be conveyed, to the Trust by the Sponsor on the Startup Day.
"Insurance Agreement": The Insurance Agreement dated as of
[____________, _____] between the Sponsor, the Master Servicer, AMHC, the
Trustee and the Certificate Insurer, as it may be amended from time to time.
"Insurance Policy": Any hazard, title or primary mortgage
insurance policy relating to a Mortgage Loan.
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"Insured Distribution Amount": With respect to Group I, the
Group I Insured Distribution Amount, and with respect to Group II, the Group II
Insured Distribution Amount.
"Insured Payment": The Group I Insured Payment and the Group
II Insured Payment.
"Interest Determination Date": With respect to any Payment
Date for the Class [A-2] Certificates, the second London Business Day preceding
such Payment Date or with respect to the [____________, _____] Payment Date, the
second London Business Day preceding the Startup Day.
"Interest Rate Adjustment Date": The date on which an
adjustment to the Coupon Rate on a Note becomes effective.
"Junior Mortgage Loan": A Mortgage Loan which constitutes a
junior priority mortgage lien with respect to the related Property.
"Late Payment Rate": For any Payment Date, the lesser of (a)
the greater of (x) the per annum rate of interest publicly announced from time
to time by Citibank, N.A. as its prime or base lending rate (any change in such
rate of interest to be effective on the date such change is announced by
Citibank, N.A.), plus 2% per annum and (y) the then applicable highest rate of
interest on the Class [A] Certificates and (b) the maximum rate permissible
under applicable usury or similar laws limiting interest rates. The Late Payment
Rate shall be computed on the basis of the actual number of days elapsed over a
year of 360 days.
"LIBOR": With respect to any Accrual Period for the Class
[A-2] Certificates, the rate determined by the Trustee on the related Interest
Determination Date on the basis of the offered rates of the Reference Banks for
one-month U.S. dollar deposits, as such rates appear on Telerate Page 3750 (or
any successor service thereto), as of 11:00 a.m. (London time) on such Interest
Determination Date. On each Interest Determination Date, LIBOR for the related
Accrual Period will be established by the Trustee as follows:
(x) If on such Interest Determination Date two or more
Reference Banks provide such offered quotations, LIBOR for the related Accrual
Period shall be the arithmetic mean of such offered quotations (rounded to the
nearest whole multiple of 1/16%).
(y) If on such Interest Determination Date fewer than two
Reference Banks provide such offered quotations, LIBOR for the related Accrual
Period shall be the higher of (x) LIBOR as determined on the previous Interest
Determination Date and (y) the Reserve Interest Rate.
"Liquidated Loan": A Mortgage Loan which is purchased from the
Trust as defined in Section 8.13(b) hereof. A Mortgage Loan which is purchased
from the Trust pursuant to Section 3.3, 3.4, 3.6(b) or 8.10 hereof is not a
"Liquidated Loan".
"Liquidation Expenses": Expenses which are incurred by the
Master Servicer or any Sub-Servicer in connection with the liquidation of any
defaulted Mortgage Loan, such expenses, including, without limitation, legal
fees and expenses, and any unreimbursed Servicing Advances expended by the
Master Servicer or any Sub-Servicer pursuant to Section 8.9 with respect to the
related Mortgage Loan.
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"Liquidation Proceeds": With respect to any Liquidated Loan,
any amounts (including the proceeds of any Insurance Policy) recovered by the
Master Servicer in connection with such Liquidated Loan, whether through
trustee's sale, foreclosure sale or otherwise.
"Loan Balance": With respect to each Mortgage Loan, the
outstanding principal balance thereof as of the Initial Cut-Off Date or
Subsequent Cut-Off Date, as the case may be, less any principal amount relating
to such Mortgage Loan included in previous related Monthly Remittance Amounts
that were transferred by the Master Servicer or any Sub-Servicer to the Trustee
for deposit in the Certificate Account; provided, however, that the Loan Balance
for any Mortgage Loan which has become a Liquidated Loan shall be zero as of the
first day of the Remittance Period following the Remittance Period in which such
Mortgage Loan becomes a Liquidated Loan, and at all times thereafter.
"Loan Purchase Price": With respect to any Mortgage Loan
purchased from the Trust on a Remittance Date pursuant to Section 3.3, 3.4,
3.6(b) or 8.10 hereof, an amount equal to the Loan Balance of such Mortgage Loan
as of such Remittance Date, plus one month's accrued interest (if not already
deposited in the Principal and Interest Account) on the outstanding Loan Balance
thereof as of the beginning of the related Remittance Period computed at the
Coupon Rate less the Servicing Fee (expressed as an annual percentage rate), if
any, together with, without duplication, the aggregate amount of (i) all
delinquent interest, all Delinquency Advances and Servicing Advances theretofore
made with respect to such Mortgage Loan and not subsequently recovered from the
related Mortgage Loan, (ii) all Delinquency Advances which the Master Servicer
or any Sub-Servicer has theretofore failed to remit with respect to such
Mortgage Loan and (iii) any Group I Reimbursement Amount or Group II
Reimbursement Amount, as the case may be, relating to such Mortgage Loan
relating to such Group.
"London Business Day": A day on which banks are open for
dealing in foreign currency, and exchange in London and New York City.
"Lower-Tier Balance": As to each Class of Lower-Tier Interests
and any Payment Date, the Initial Lower-Tier Balance as set forth in Section
2.8(a) minus all amounts distributed as principal of such Class on previous
Payment Dates.
"Lower-Tier Interest 1": The interest of that name established
pursuant to Section 2.8(a) hereof.
"Lower-Tier Interest 2": The interest of that name established
pursuant to Section 2.8(a) hereof.
"Lower-Tier Interest 3": The interest of that name established
pursuant to Section 2.8(a) hereof.
"Lower-Tier Interest 4": The interest of that name established
pursuant to Section 2.8(a) hereof.
"Lower-Tier Interest 5": The interest of that name established
pursuant to Section 2.8(a) hereof.
"Lower-Tier Pass-Through Rate": As to each of the respective
Lower-Tier Interests, the applicable "Lower-Tier Pass-Through Rate" set forth in
Section 2.8 hereof.
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"Lower-Tier REMIC": The segregated pool of assets consisting
of the Mortgage Loans, the Accounts (except for the Non-REMIC Estate), any REO
Property and any proceeds of the foregoing.
"Lower-Tier REMIC Interests": As defined in Section 2.8(b)
hereof.
"Lower-Tier REMIC Regular Interests": As defined in Section
2.8(b) hereof.
["Lower-Tier REMIC Residual Interest": The Class RL
Certificate.]
"Master Servicer": Advanta Mortgage Corp. USA, a Delaware
corporation, and its permitted successors and assigns.
"Master Servicer's Trust Receipt": The Master Servicer's trust
receipt in the form set forth as Exhibit J hereto.
"Master Transfer Agreement": Any one of the Master Loan
Transfer Agreements among the Sponsor and/or the Conduit Acquisition Trust, the
Trustee and one or more Originators or any similar agreement designated as a
"Master Transfer Agreement" together, in either case, with any related
Conveyance Agreements (as defined therein).
"Monthly Excess Interest Amount": With respect to Group I, the
Group I Monthly Excess Interest Amount, and with respect to Group II, the Group
II Monthly Excess Interest Amount.
"Monthly Remittance Amount": With respect to Group I, the
Group I Monthly Remittance Amount, and with respect to Group II, the Group II
Monthly Remittance Amount.
"Moody's": ▇▇▇▇▇'▇ Investors Service, Inc.
"Mortgage": The mortgage, deed of trust or other instrument
creating a first or junior lien on an estate in fee simple or leasehold interest
in real property securing a Note.
"Mortgage Loan Group": Either Group I or Group II. References
herein to the related Class of Class [A] Certificates, when used with respect to
a Mortgage Loan Group, shall mean (A) in the case of Group I, the Group I
Certificates and (B) in the case of Group II, the Group II Certificates.
"Mortgage Loans": The mortgage loans transferred and assigned
to the Trust pursuant to Section 3.5(a) hereof, together with any Qualified
Replacement Mortgages substituted therefor in accordance with this Agreement, as
from time to time are held as a part of the Trust Estate, the mortgage loans
originally so held being identified in the Schedule of Mortgage Loans. The term
"Mortgage Loan" includes the terms "First Mortgage Loan" and "Junior Mortgage
Loan". The term "Mortgage Loan" includes any Mortgage Loan which is Delinquent,
which relates to a foreclosure or which relates to a Property which is an REO
Property prior to such Property's disposition by the Trust. Any mortgage loan
which, although intended by the parties hereto to have been, and which
purportedly was, transferred and assigned to the Trust by the Sponsor, in fact
was not transferred and assigned to the Trust for any reason whatsoever shall
nevertheless be considered a "Mortgage Loan" for all purposes of this Agreement.
The term "Mortgage Loan" includes the terms "Initial Mortgage Loan" and
"Subsequent Mortgage Loan".
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"Mortgagor": The obligor on a Note.
"Net Liquidation Proceeds": As to any Liquidated Loan,
Liquidation Proceeds net of, without duplication, Liquidation Expenses,
unreimbursed Servicing Advances, unreimbursed Delinquency Advances and accrued
and unpaid Servicing Fees through the date of liquidation relating to such
Liquidated Loan. In no event shall Net Liquidation Proceeds with respect to any
Liquidated Loan be less than zero.
"Net Monthly Excess Cashflow": An amount as defined in Section
7.5(b)(E).
"Nonrecoverable Advances": With respect to any Mortgage Loan,
(i) any Delinquency Advance or Servicing Advance previously made and not
reimbursed pursuant to Sections 7.5 or 8.9, (ii) a Delinquency Advance or
Servicing Advance proposed to be made in respect of a Mortgage Loan or REO
Property either of which, in the good faith business judgment of the Master
Servicer, as evidenced by an Officer's Certificate delivered no later than 1
Business Day prior to the related Determination Date to the Certificate Insurer
and the Trustee would not be ultimately recoverable pursuant to Sections 7.5 or
8.9 or (iii) any other advance identified as a Nonrecoverable Advance in
subsection 8.9(d).
"Non-REMIC Estate": Collectively, the Supplemental Interest
Trust, the Class [A-2] Supplemental Interest Payment Account, the Capitalized
Interest Account and the Pre-Funding Account.
"Note": The note or other evidence of indebtedness evidencing
the indebtedness of a Mortgagor under a Mortgage Loan.
"Officer's Certificate": A certificate signed by any
Authorized Officer of any Person delivering such certificate.
"Operative Documents": Collectively, this Agreement, the
Master Transfer Agreements, the Subsequent Transfer Agreements, the Certificate
Insurance Policy, the Insurance Agreement, the Indemnification Agreement and
Certificates.
"Original Certificate Principal Balance": As of the Startup
Day as to each of the following Classes of Certificates, the Certificate
Principal Balances thereof, as follows:
Class [A-1] Certificates = [$_________]
Class [A-2] Certificates = [$_________]
"Original Principal Amount": With respect to each Note, the
principal amount of such Note or with respect to Junior Mortgages, the sum of
(i) the principal amount of the mortgage note relating to the Senior Lien plus
(ii) the principal amount of the Note conveyed to the Trust, as the case may be,
on the date of origination thereof.
"Originator": Any entity from which the Sponsor has purchased
(or, in the case of Subsequent Mortgage Loans, will purchase) Mortgage Loans,
including any Affiliated Originator and any Unaffiliated Originator.
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"Outstanding": With respect to all Certificates of a Class, as
of any date of determination, all such Certificates theretofore executed and
delivered hereunder except:
(i) Certificates theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Certificates or portions thereof for which full and final
payment money in the necessary amount has been theretofore deposited
with the Trustee in trust for the Owners of such Certificates;
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to this
Agreement, unless proof satisfactory to the Trustee is presented that
any such Certificates are held by a bona fide purchaser; and
(iv) Certificates alleged to have been destroyed, lost or
stolen for which replacement Certificates have been issued as provided
for in Section 5.5 hereof.
"Overcollateralization Amount": With respect to Group I, the
Group I Overcollateralization Amount and with respect to Group II, the Group II
Overcollateralization Amount.
"Overcollateralization Deficiency Amount": With respect to
Group I, the Group I Overcollateralization Deficiency Amount and with respect to
Group II, the Group II Overcollateralization Deficiency Amount.
"Overcollateralization Deficit": With respect to Group I, the
Group I Overcollateralization Deficit and with respect to Group II, the Group II
Overcollateralization Deficit.
"Overcollateralization Increase Amount": With respect to Group
I, the Group I Overcollateralization Increase Amount and with respect to Group
II, the Group II Overcollateralization Increase Amount.
"Overcollateralization Reduction Amount": With respect to
Group I, the Group I Overcollateralization Reduction Amount and with respect to
Group II, the Group II Overcollateralization Reduction Amount.
"Owner": The Person in whose name a Certificate is registered
in the Register, to the extent described in Section 5.6.
"Pass-Through Rate": As to the each Class of Certificates, the
related Pass-Through Rate.
"Payment Date": Any date on which the Trustee is required to
make distributions to the Owners, which shall be the 25th day of each calendar
month, commencing in the month following the Startup Day, or if the 25th day is
not a Business Day, then the next succeeding Business Day.
"Percentage Interest": As to any Class [A] Certificate, that
percentage, expressed as a fraction, the numerator of which is the Certificate
Principal Balance of such Certificate as of the Startup Day and the denominator
of which is the Certificate Principal Balance of all
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Certificates of the same Class as of the Startup Day; and as to any Class [B] or
[Residual Class] Certificate, that Percentage Interest set forth on such Class
[B] or [Residual Class] Certificate.
"Person": Any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Pool Cumulative Realized Losses": With respect to any period,
the sum of all Realized Losses with respect to the Mortgage Loans experienced
during such period.
"Pool Factor": As defined in Section 7.8(a) hereof.
"Pool Principal Balance": The aggregate principal balances of
all Mortgage Loans.
"Pre-Funding Account": The Pre-Funding Account established in
accordance with Section 7.2 hereof and maintained by the Trustee.
"Pre-Funded Amount": The Group I Pre-Funded Amount and/or the
Group II Pre-Funded Amount, as applicable.
"Pre-Funding Earnings": With respect to the [___________,
_____] Payment Date, the actual investment earnings earned during the period
from [___________, _____] through [___________, _____] (inclusive) on the
Pre-Funding Account during such period as calculated by the Trustee pursuant to
Section 3.8(e) hereof; with respect to the [___________, _____] Payment Date,
the actual investment earnings during the period beginning [___________, _____]
through [___________, _____] (inclusive) on the Pre-Funding Account during such
period as calculated by the Trustee pursuant to Section 3.8(e) hereof; with
respect to the [___________, _____] Payment Date, the actual investment earnings
during the period beginning [___________, _____] through [___________, _____]
(inclusive) on the Pre-Funding Account during such period as calculated by the
Trustee pursuant to Section 3.8(e) hereof.
"Pre-Funding Period": The period commencing on the Startup Day
and ending on the earliest to occur of (i) the date on which the Pre-Funded
Amount (exclusive of any investment earnings) is less than $100,000, (ii) the
date on which any Event of Default occurs and (iii) [___________, _____].
"Premium Amount": With respect to a Group of Mortgage Loans,
as to any Payment Date, the product of (x) one-twelfth of the Premium Percentage
and (y) the Certificate Principal Balance of such Group of Certificates on such
Payment Date (after taking into account any distributions of the related
Principal Distribution Amount for such Group on such Payment Date).
"Premium Percentage": The percentage as defined in the
Insurance Agreement.
"Prepaid Installment": With respect to any Mortgage Loan, any
installment of principal thereof and accrued interest thereon received prior to
the scheduled due date for such installment, intended by the Mortgagor as an
early payment thereof and not as a Prepayment with respect to such Mortgage
Loan.
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"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), and the proceeds of any Insurance Policy which are to be
applied as a payment of principal on the related Mortgage Loan shall be deemed
to be Prepayments for all purposes of this Agreement.
"Preservation Expenses": Expenditures made by the Master
Servicer or any Sub-Servicer in connection with a foreclosed Mortgage Loan prior
to the liquidation thereof, including, without limitation, expenditures for real
estate property taxes, hazard insurance premiums, flood insurance premiums and
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 8.8(a) hereof, or pursuant to any Sub-Servicing Agreement.
"Principal Remittance Amount": As applicable, the Group I
Principal Remittance Amount or the Group II Principal Amount.
"Prohibited Transaction": "Prohibited transaction" shall have
the meaning set forth from time to time in the definition thereof contained in
Section 860F(a)(2) of the Code (or any successor statute thereto) and applicable
to the Trust.
"Property": The underlying property securing a Mortgage Loan.
"Prospectus": Such final prospectus dated March __, 1999, as
supplemented by a prospectus supplement dated [___________, _____] relating to
the Class [A] Certificates.
"Purchase Option Period": As defined in Section 9.3(b) hereof.
"Qualified Liquidation": "Qualified Liquidation" shall have
the meaning set forth from time to time in the definition thereof at Section
860F(a)(4) of the Code (or any successor statute thereto) and applicable to the
Trust.
"Qualified Mortgage": "Qualified Mortgage" shall have the
meaning set forth from time to time in the definition thereof at Section
860G(a)(3) of the Code (or any successor statute thereto) and applicable to the
Trust and the Mortgage Loan Groups.
"Qualified Replacement Mortgage": A Mortgage Loan substituted
for another pursuant to Section 3.3, 3.4 or 3.6(b) hereof, which (i) bears a
fixed rate of interest if the Mortgage Loan being replaced is in Group I and
bears an adjustable rate of interest if the Mortgage Loan to be replaced is in
Group II, (ii) has a Coupon Rate at least equal to the Coupon Rate of the
Mortgage Loan being replaced, (which, in the case of a Mortgage Loan in Group
II, shall mean a Mortgage Loan having the same interest rate index, a margin
over such index and a maximum interest rate equal to or greater than those
applicable to the Mortgage Loan being replaced), (iii) is of the same or better
property type and the same or better occupancy status as the replaced Mortgage
Loan, (iv) shall be of the same or better credit quality classification
(determined in accordance with the Originators' credit underwriting guidelines)
as the Mortgage Loan being replaced, (v) shall mature no later than
[___________, _____], (vi) has a Combined Loan-to-Value Ratio as of the
Replacement Cut-Off Date no higher than the Combined Loan-to-Value Ratio of the
replaced Mortgage Loan at such time, (vii) has a Loan Balance as of the related
Replacement Cut-Off Date equal to or less than the Loan Balance of the replaced
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Mortgage Loans as of such Replacement Cut-Off Date, (viii) satisfies all of the
representations and warranties set forth in Section 3.3 and the criteria set
forth from time to time in the definition thereof at Section 860G(a)(4) of the
Code (or any successor statute thereto) and applicable to the Trust, all as
evidenced by an Officer's Certificate of the Sponsor delivered to the
Certificate Insurer and the Trustee prior to any such substitution and (ix) is a
valid First Mortgage Loan if the Mortgage Loan to be substituted for is a valid
First Mortgage Loan or, Junior Mortgage Loan of equal or better priority if the
Mortgage Loan to be substituted for is a Junior Mortgage Loan. In the event that
one or more mortgage loans are proposed to be substituted for one or more
mortgage loans, the Certificate Insurer may allow the foregoing tests to be met
on a weighted average basis with respect to the Mortgage Loans only or other
aggregate basis acceptable to the Certificate Insurer, as evidenced by a written
consent delivered to the Trustee by the Certificate Insurer, except that the
requirement of clause (viii) hereof must be satisfied as to each Qualified
Replacement Mortgage.
"Rating Agency": [Rating Agency/Agencies].
"Realized Loss": As to any Liquidated Loan, the amount, if
any, by which the Loan Balance thereof as of the date of liquidation exceeds the
Net Liquidation Proceeds realized thereon.
"Record Date": With respect to each Payment Date and (x) with
respect to the Group I Certificates, the last Business Day of the calendar month
immediately preceding the calendar month in which such Payment Date occurs and
(y) with respect to the Group II Certificates, the Business Day immediately
preceding such Payment Date (unless the Certificates become definitive, in which
event the Record Date shall be the last Business Day of the calendar month
immediately preceding the calendar month in which such Payment Date occurs).
"Reference Banks": Bankers Trust Company, ▇▇▇▇▇▇▇'▇ Bank PLC,
The Bank of Tokyo and National Westminster Bank PLC; provided that if any of the
foregoing banks are not suitable to serve as a Reference Bank, then any leading
banks selected by the Trustee which are engaged in transactions in Eurodollar
deposits in the international Eurocurrency market (i) with an established place
of business in London, (ii) which is not controlling, under the control of or
under common control with the Sponsor or any affiliate thereof, (iii) whose
quotations appear on the Telerate Page 3750 on the relevant Interest
Determination Date and (iv) which have been designated as such by the Trustee.
"Register": The register maintained by the Trustee in
accordance with Section 5.4 hereof, in which the names of the Owners are set
forth.
"Registrar": The Trustee, acting in its capacity as Registrar
appointed pursuant to Section 5.4 hereof, or any duly appointed and eligible
successor thereto.
"Registration Statement": The Registration Statement (No.
333-______) filed by the Sponsor with the Securities and Exchange Commission,
including all amendments thereto and including the Prospectus relating to the
Class [A] Certificates constituting a part thereof.
"Reimbursement Amount": With respect to Group I, the Group I
Reimbursement Amount and with respect to Group II, the Group II Reimbursement
Amount.
"REMIC": A "real estate mortgage investment conduit" within
the meaning of Section 860D of the Code.
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"REMIC Provisions": Provisions of the federal income tax law
relating to real estate mortgage investment conduits, which appear at Sections
860A through 860G of the Code, and related provisions, and regulations and
rulings promulgated thereunder, as the foregoing may be in effect from time to
time.
"REMIC Trust": The segregated pool of assets consisting of the
Trust Estate, except for the Supplemental Interest Trust, the Class [A-2]
Supplemental Interest Payment Account, the Capitalized Interest Account and the
Pre-Funding Account.
"Remittance Date": Any date on which the Master Servicer is
required to remit monies on deposit in the Principal and Interest Account to the
Trustee, which shall be no later than the 18th day of each month, or, if such
day is not a Business Day, the immediately succeeding Business Day, commencing
in the month following the month in which the Startup Day occurs.
"Remittance Period": The period beginning on the first day of
the calendar month immediately preceding the month in which a Remittance Date
occurs and ending on the last day of such immediately preceding calendar month.
"REO Property": A Property acquired by the Master Servicer or
any Sub-Servicer on behalf of the Trust through foreclosure or grant of a
deed-in-lieu of foreclosure in connection with a defaulted Mortgage Loan.
"Replacement Cut-Off Date": With respect to any Qualified
Replacement Mortgage, the first day of the calendar month in which such
Qualified Replacement Mortgage is transferred and assigned to the Trust.
"Representation Letter": The letters to, or agreements with,
the Depository to effectuate a book entry system with respect to the Class [A]
Certificates registered in the Register under the nominee name of the
Depository.
"Representative": [Representative Underwriter], as
representative of the Underwriters.
"Required Distributions": The Group I Required Distributions
or the Group II Required Distributions, as applicable.
"Reserve Interest Rate": The rate per annum that the Trustee
determines to be either (i) 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 Trustee, are quoting on the relevant Interest
Determination Date to the principal London offices of leading banks in the
London interbank market or, in the event that the Trustee can determine no such
arithmetic mean, (ii) the lowest one-month U.S. dollar lending rate which New
York City banks selected by the Trustee are quoting on such Interest
Determination Date to leading European banks.
"Schedule of Mortgage Loans": The Schedule of Mortgage Loans,
attached hereto as Schedule I as may be further supplemented in connection with
the transfer of Subsequent Mortgage Loans. Such Schedule shall also contain one
of the following codes for each Mortgage Loan or Subsequent Mortgage Loan: "C"
if such Mortgage Loan is an Unaffiliated Originator Loan or "A" for all other
Mortgage Loans. The information contained on each Schedule of Mortgage Loans
shall be delivered to the Trustee in an electronic media.
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"Securities Act": The Securities Act of 1933, as amended.
"Senior Lien": With respect to any Junior Mortgage Loan, the
mortgage loan relating to the corresponding Property having a priority lien.
"Servicer Affiliate": A Person (i) controlling, controlled by
or under common control with the Master Servicer and (ii) which is qualified to
service residential mortgage loans.
"Servicing Advance": As defined in Section 8.9(c) and Section
8.13 hereof.
"Servicing Fee": As to any Payment Date the product of (x)
one-twelfth of 0.50% and (y) the aggregate Loan Balances of the Mortgage Loans
as of the opening of business on the first day of the Remittance Period
preceding such Payment Date.
"Servicer Termination Loss Trigger": As defined in the
Insurance Agreement.
"Special Advance": Any advance made by the Master Servicer
pursuant to Section 8.9(d) hereof.
"Specified Overcollateralization Amount": As defined in the
Insurance Agreement.
"Sponsor": Advanta Conduit Receivables, Inc., a Nevada
corporation.
"Standard & Poor's": Standard & Poor's Ratings Services, a
division of The McGraw Hill Companies.
"Startup Day": [___________, _____].
"Step-Up Payment Date": The Payment Date following the
calendar month in which the Initial Clean-Up Call Date occurs.
"Subsequent Cut-Off Date": With respect to any Subsequent
Mortgage Loans, the opening of business on the first day of the calendar month
in which such Subsequent Mortgage Loans are transferred and assigned to the
Trust.
"Subsequent Mortgage Loans": The Mortgage Loans sold to the
Trust pursuant to Section 3.8 hereof, which shall be listed on the Schedule of
Mortgage Loans attached to the Subsequent Transfer Agreement.
"Subsequent Transfer Agreement": Each Subsequent Transfer
Agreement dated as of a Subsequent Transfer Date executed by the Trustee and the
Sponsor substantially in the form of Exhibit M hereto, by which Subsequent
Mortgage Loans are sold and assigned to the Trust.
"Subsequent Transfer Date": The date specified in each
Subsequent Transfer Agreement.
"Substitution Amount": In connection with the delivery of any
Qualified Replacement Mortgage, if the outstanding principal amount of such
Qualified Replacement Mortgage as of the applicable Replacement Cut-Off Date is
less than the Loan Balance of the Mortgage Loan being replaced as of such
Replacement Cut-Off Date, an amount equal to such
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difference together with accrued and unpaid interest on such amount calculated
at the Coupon Rate (net of the Servicing Fee) of the Mortgage Loan being
replaced.
"Sub-Servicer": Any Person with whom the Master Servicer has
entered into a Sub-Servicing Agreement and who satisfies any requirements set
forth in Section 8.3 hereof in respect of the qualification of a Sub-Servicer .
"Sub-Servicing Agreement": The written contract between the
Master Servicer and any Sub-Servicer relating to servicing and/or administration
of certain Mortgage Loans as permitted by Section 8.3.
"Supplemental Interest Payment Amount Available": As defined
in Section 7.10(b) hereof.
"Supplemental Interest Right": As defined in Section 7.10(e)
hereof.
"Supplemental Interest Trust": The [Supplemental Interest
Trust] created pursuant to Section 7.10(a) hereof.
"Tax Matters Person": The Tax Matters Person appointed
pursuant to Section 11.17 hereof.
"Tax Matters Person Residual Interest": The 100% interest in
the [Residual Class] Certificate which shall be issued to and held by [Holder]
or certain affiliates throughout the term hereof unless another person that is
not a Disqualified Organization shall accept an assignment of such interest and
the designation of Tax Matters Person pursuant to Section 11.17 hereof.
"Termination Notice": As defined in Section 9.3(b) hereof.
"Termination Price": As defined in Section 9.2(a) hereof.
"Total Monthly Excess Cashflow": With respect to a Mortgage
Loan Group and any Payment Date, an amount equal to the sum of (x) the Monthly
Excess Interest Amount with respect to such Mortgage Loan Group plus (y) any
Overcollateralization Reduction Amount with respect to such Mortgage Loan Group.
"Transaction Documents": Collectively this Agreement, the
Insurance Agreement, the Underwriting Agreement relating to the Class [A]
Certificates, the Master Transfer Agreements, any Sub-Servicing Agreement, the
Indemnification Agreement, any Subsequent Transfer Agreements, the Registration
Statement relating to the Class [A] Certificates and the Certificates.
"Trust": [Trust], the trust created under this Agreement.
"Trust Estate": Collectively, all money, instruments and other
property, to the extent such money, instruments and other property are subject
or intended to be held in trust, and in the subtrusts, for the benefit of the
Owners, including all proceeds thereof, including, without limitation, (i) the
Mortgage Loans, (ii) such amounts including principal collections in respect of
the related Mortgage Loans received on or after the Initial Cut-Off Date and
each Subsequent Cut-Off date, including Eligible Investments, as from time to
time may be held in all Accounts
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(except as otherwise provided herein), except any premium recapture and interest
accrued prior to the Initial Cut-Off Date and each Subsequent Cut-Off Date,
(iii) any Property, the ownership of which has been effected on behalf of the
Trust as a result of foreclosure or acceptance by the Master Servicer of a deed
in lieu of foreclosure and that has not been withdrawn from the Trust, (iv) any
Insurance Policies relating to the Mortgage Loans and any rights of the Sponsor
or any Affiliated Originator under any Insurance Policies (excluding any
non-mortgage related or credit life insurance policies), (v) Net Liquidation
Proceeds with respect to any Liquidated Loan, (vi) the rights of the Trustee
under the Certificate Insurance Policy, (vii) the rights of the Sponsor against
any Originator pursuant to the related Master Transfer Agreement and (viii) the
amounts on deposit in the Pre-Funding Account and the Capitalized Interest
Account.
"Trustee": [Trustee], located on the date of execution of this
Agreement at [Trustee's Address], a national banking association, not in its
individual capacity but solely as Trustee under this Agreement, and any
successor hereunder.
"Trustee's Fees": With respect to any Payment Date and
Mortgage Loan Group, the product of (x) one-twelfth of the Trustee Fee Rate and
(y) the aggregate Loan Balance of the Mortgage Loan in the related Mortgage Loan
Group as of the beginning of the related Remittance Period.
"Trustee Fee Rate": [____%] per annum.
"Unaffiliated Originator Loan": Any Mortgage Loan purchased by
the Sponsor from an Unaffiliated Originator and sold to the Trust by the
Sponsor.
"Unaffiliated Originators": Any Originator who is not
affiliated with the Sponsor.
"Uncertificated Interest": As defined in Section 2.8(b)
hereof.
"Underwriters": [Underwriters].
"Upper-Tier REMIC": The REMIC established pursuant to Section
2.8 hereof. The assets of the Upper-Tier REMIC shall be the Lower-Tier REMIC
Regular Interests.
"Upper-Tier REMIC Regular Interests": As defined in Section
2.8(c) hereof.
"Warehouse Trust": Any trust established by an affiliate of
the Sponsor to finance the origination of mortgage loans, including, without
limitation, the Conduit Acquisition Trust.
SECTION 1.2. USE OF WORDS AND PHRASES.
"Herein", "hereby", "hereunder", "hereof", "hereinbefore", "hereinafter" and
other equivalent words refer to this Agreement as a whole and not solely to the
particular section of this Agreement in which any such word is used. The
definitions set forth in Section 1.1 hereof include both the singular and the
plural. Whenever used in this Agreement, any pronoun shall be deemed to include
both singular and plural and to cover all genders.
SECTION 1.3. CAPTIONS; TABLE OF CONTENTS.
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The captions or headings in this Agreement and the Table of Contents are for
convenience only and in no way define, limit or describe the scope and intent of
any provisions of this Agreement.
SECTION 1.4. OPINIONS.
Each opinion with respect to the validity, binding nature and enforceability
of documents or Certificates may be qualified to the extent that the same may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights generally and
by general principles of equity (whether considered in a proceeding or action in
equity or at law) and may state that no opinion is expressed on the availability
of the remedy of specific enforcement, injunctive relief or any other equitable
remedy. Any opinion required to be furnished by any Person hereunder must be
delivered by counsel upon whose opinion the addressee of such opinion may
reasonably rely, and such opinion may state that it is given in reasonable
reliance upon an opinion of another, a copy of which must be attached,
concerning the laws of a foreign jurisdiction.
ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST
SECTION 2.1. ESTABLISHMENT OF THE TRUST.
The parties hereto do hereby create and establish, pursuant to the laws of the
State of New York and this Agreement, the Trust, which, for convenience, shall
be known as "[Trust]". Each Mortgage Loan Group shall constitute a subtrust of
the Trust.
SECTION 2.2. OFFICE.
The office of the Trust shall be in care of the Trustee, addressed to
[Trustee], [Trustee Address], or at such other address as the Trustee may
designate by notice to the Sponsor, the Master Servicer, the Owners and the
Certificate Insurer.
SECTION 2.3. PURPOSES AND POWERS.
The purpose of the Trust is to engage in the following activities, and only
such activities: (i) the issuance of the Certificates and the acquiring, owning
and holding of Mortgage Loans and the Trust Estate in connection therewith; (ii)
activities that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith, including the
investment of monies in accordance with this Agreement; and (iii) such other
activities as may be required in connection with conservation of the Trust
Estate and distributions to the Owners; provided, however, that nothing
contained herein shall permit the Trustee to take any action which would result
in the loss of REMIC status for the REMIC Trust.
SECTION 2.4. APPOINTMENT OF THE TRUSTEE; DECLARATION OF TRUST.
The Sponsor hereby appoints the Trustee as trustee of the Trust effective as
of the Startup Day, to have all the rights, powers and duties set forth herein.
The Trustee hereby acknowledges and accepts such appointment, represents and
warrants its eligibility as of the Startup Day to serve as Trustee pursuant to
Section 10.8 hereof and declares that it will hold the Trust Estate in trust
upon
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and subject to the conditions set forth herein for the benefit of the Owners and
the Certificate Insurer, as their interests may appear.
SECTION 2.5. EXPENSES OF THE TRUST.
Any expenses of the Trust that have been reviewed and approved by the Sponsor
(which approval shall not be unreasonably withheld), including the reasonable
expenses of the Trustee shall be paid by the Sponsor to the Trustee or to such
other Person to whom such amounts may be due. Failure by the Sponsor to pay any
such fees or other expenses shall not relieve the Trustee of its obligations
hereunder. The Trustee hereby covenants with the Owners that every material
contract or other material agreement entered into by the Trustee on behalf of
the Trust shall expressly state therein that no Owner shall be personally liable
in connection with such contract or agreement.
SECTION 2.6. OWNERSHIP OF THE TRUST.
On the Startup Day the ownership interests in the Trust and the subtrusts
shall be transferred as set forth in Section 4.2 hereof, such transfer to be
evidenced by sale of the Certificates as described therein. Thereafter, transfer
of any ownership interest shall be governed by Sections 5.4 and 5.8 hereof.
SECTION 2.7. SITUS OF THE TRUST.
It is the intention of the parties hereto that the Trust constitute a trust
under the laws of the State of New York. The Trust will be created in, and all
Accounts maintained by the Trustee on behalf of the Trust will be located in,
the State of New York. The Trust will not have any employees and will not have
any real or personal property (other than property acquired pursuant to Section
8.13 hereof) located in any state other than in the State of New York and
payments will be received by the Trust only in the State of New York and
payments from the Trust will be made only from the State of New York. The
Trust's only office will be at the office of the Trustee as set forth in Section
2.2 hereof.
SECTION 2.8. MISCELLANEOUS REMIC PROVISIONS.
(a) The Trustee shall elect that each of the Lower-Tier REMIC
and the Upper-Tier REMIC shall be treated as a REMIC under Section 860D of the
Code. Any inconsistencies or ambiguities in this Agreement or in the
administration of this Agreement shall be resolved in a manner that preserves
the validity of such REMIC elections. The assets of the Lower-Tier REMIC shall
include the Mortgage Loans, the Accounts (except for the Non-REMIC Estate), any
REO Property, and any proceeds of the foregoing. The Lower-Tier REMIC Regular
Interests (as defined below) shall constitute the assets of the Upper-Tier
REMIC.
(b) The Lower-Tier REMIC will be evidenced by (x) Lower-Tier
Interest 1, Lower-Tier Interest 2, Lower-Tier Interest 3, Lower-Tier Interest 4,
and Lower-Tier Interest 5 (the "Lower-Tier REMIC Regular Interests"), which will
be uncertificated and non-transferable and are hereby designated as the "regular
interests" in the Lower-Tier REMIC and (y) the Lower-Tier REMIC Residual
Interest, which is hereby designated as the single "residual interest" in the
Lower-Tier REMIC (the Lower-Tier REMIC Regular Interests, together with the
Lower-Tier REMIC Residual Interest, the "Lower-Tier REMIC Interests"). The
Lower-Tier REMIC Regular Interests shall be recorded on the records of the
Lower-Tier REMIC as being issued to and held by the Trustee on behalf of the
Upper-Tier REMIC.
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Lower-Tier Interest 1 shall have an initial principal balance
equal to one percent of the sum of the initial principal balances of the Group I
Certificates (that is, [$_________]). Lower-Tier Interest 2 shall have an
initial principal balance equal to one percent of the Group I Original Balance
(that is, [$_________]). Lower-Tier Interest 3 shall have an initial principal
balance equal to one percent of the initial principal balance of the Class [A-2]
Certificates (that is, [$__________]). Lower-Tier Interest 4 shall have an
initial principal balance equal to one percent of the Group II Original Balance
(that is, [$__________]) Lower-Tier Interest 5 shall have an initial principal
balance equal to the excess of (i) the sum of the Group I Original Balance and
the Group II Original Balance over (ii) the sum of the initial principal
balances of Lower-Tier Interest 1, Lower-Tier Interest 2, Lower-Tier Interest 3,
and Lower-tier Interest 4 (that is, [$__________]).
On each Payment Date, principal payments on the Mortgage Loans
shall be allocated 99% to Lower-Tier Interest 2, Lower-Tier Interest 4 and
Lower-Tier Interest 5, and 1% to Lower-Tier Interest 1 and Lower-Tier Interest 3
until paid in full. The aggregate amount of principal allocated to the
Lower-Tier Interest 1 and Lower-Tier Interest 3 shall be apportioned between
such Interests in the same manner in which principal on the Mortgage Loans is
payable with respect to the Group I Certificates and the Class [A-2]
Certificates, respectively. The aggregate amount of principal allocated to
Lower-Tier Interest 2, Lower-Tier Interest 4 and Lower-Tier Interest 5 shall be
allocated and apportioned among such Interests first, to Lower-Tier Interest 2
and Lower-Tier Interest 4 the least amount of principal necessary which when
applied to such Interests can be applied so that the ratio of the principal
balance of Lower-Tier Interest 2 to the principal balance of Lower-Tier Interest
4 equals the ratio of the sum of Loan Balances of the Mortgage Loans in the
Group I to the sum of the Loan Balances of the Mortgage Loans in the Group II
(the "Balance Ratio") and second, to Lower-Tier Interest 5.
Any Overcollateralization Increase Amount will not be paid as
interest to the Lower-Tier REMIC Regular Interests, but instead to the extent
available, a portion of the interest payable with respect to Lower-Tier Interest
5 which equals 1% of the Overcollateralization Increase Amount (and, to the
extent 1% of the Overcollateralization Increase Amount exceeds the interest
payable on Lower-Tier Interest 5, a pro rata portion of the interest payable on
the Lower-Tier Interest 2 and Lower-Tier Interest 4 equal to such excess) will
be payable as a reduction of the principal balances of Lower-Tier Interest 1 and
Lower-Tier Interest 3 in the same manner in which the Overcollateralization
Increase Amount is allocated among the Class [A-1] and [A-2], Certificates,
respectively (and will be accrued and added to principal on Lower-Tier Interest
2, Lower-Tier Interest 4 and Lower-Tier Interest 5 in the same proportion as
interest payable on such Interests is used to reduce principal on other
Interests as just described).
Notwithstanding the above, principal payments on the Mortgage
Loans that are attributable to the Overcollateralization Reduction Amount shall
be allocated to Lower-Tier Interest 2, Lower-Tier Interest 4 and Lower-Tier
Interest 5 (allocated first to Lower-Tier Interest 5 until such certificates are
paid in full, and second to Lower-Tier Interest 2 and Lower-Tier Interest 4 and
apportioned between Lower-Tier Interest 2 and Lower-Tier Interest 4 in such a
manner that the Balance Ratio is maintained until paid in full).
Realized Losses shall be applied such that after all
distributions have been made on such Payment Date the principal balances
Lower-Tier Interest 1 and Lower-Tier Interest 3 are each 1% of the principal
balances of the Group I Certificates and Class [A-2] Certificates, respectively,
and the aggregate principal balance of Lower-Tier Interest 2, Lower-Tier
Interest 4 and Lower-Tier Interest 5 is equal to the sum of the Loan Balances of
the Mortgage Loans less an amount equal to the sum of the principal balances of
Lower-Tier Interest 1 and Lower-Tier
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Interest 3 and is allocated and apportioned first, to Lower-Tier Interest 2 and
Lower-Tier Interest 4 the least amount of Realized Losses necessary which when
applied to such Interests can be applied in such a manner that the Balance Ratio
is maintained, and second, to Lower-Tier Interest 5.
Lower-Tier Interest 1 and Lower-Tier Interest 2 shall each
have Pass-Through Rates equal to the Group I Net Weighted Average Coupon Rate
(the sum expressed as a per annum rate on the sum of the Loan Balances for
Mortgage Loans in Group I). Lower-Tier Interest 3 and Lower-Tier Interest 4
shall each have a Pass-Through Rate equal to the Group II Net Weighted Average
Coupon Rate (the sum expressed as a per annum rate on the sum of the Loan
Balances for the Mortgage Loans in Group II). Lower-Tier Interest 5 shall have a
Pass-Through Rate equal to the weighted average of the Group I Net Weighted
Average Coupon Rate and the Group II Net Weighted Average Coupon Rate (the sum
expressed as a per annum rate on the sum of Loan Balances of the Mortgage
Loans). The Lower-Tier REMIC Residual Interest shall have no principal balance
and no Pass-Through Rate and shall be entitled to only those distributable
assets, if any, remaining in the Lower-Tier REMIC on each Payment Date after all
amounts required to be distributed to Lower-Tier Interest 1, Lower-Tier Interest
2, Lower-Tier Interest 3, Lower-tier Interest 4, and Lower-Tier Interest 5 and
applicable Trust expenses have been paid.
The Lower-Tier REMIC Interests will have the following
designations and Pass-Through Rates, and distributions of principal and interest
thereon shall be allocated to the Certificates in the following manner:
Pass- Allocation Allocation
Lower-Tier REMIC Initial Through of of
Interests Balance Rate Principal Interest
--------- ------- ---- --------- --------
1 [$________] (1) (4) (5)
2 [$________] (1) (4) (5)
3 [$________] (2) (4) (5)
4 [$________] (2) (4) (5)
5 [$________] (3) (4) (5)
Lower-Tier (6) (6) (6)
Residual
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----------------------
(1) The Pass-Through Rate on these Lower-Tier REMIC Regular Interests shall
at any time of determination equal the Group I Net Weighted Average
Coupon Rate.
(2) The Pass-Through Rate on these Lower-Tier REMIC Regular Interest shall
at any time of determination equal the Group II Net Weighted Average
Coupon Rate.
(3) The Pass-Through Rate on this Lower-Tier REMIC Regular Interest shall
at any time of determination equal the weighted average of the Group I
Net Weighted Average Coupon Rate and the Group II Net Weighted Average
Coupon Rate.
(4) Principal will be allocated to and apportioned among the Group I
Certificates and the Class [A-2] Certificates in the same proportion as
principal from the Mortgage Loans is payable with respect to such
Certificates, except that a portion of such principal in an amount
equal to the Overcollateralization Reduction Amount shall first be
allocated as a payment of interest to the Class [B] Certificates, and
all principal will be allocated as a payment of interest to the Class
[B] Certificates after the principal balances of the Class [A]
Certificates have been reduced to zero.
(5) Except as provided in the next sentence, interest will be allocated
among the Group I Certificates and Class [A-2] in the same proportion
as interest is payable on such Certificates.
Any interest with respect to each Lower-Tier REMIC Regular Interest in
excess of the product of (i) 100 times the weighted average coupon of
the Lower-Tier Interest 1, Lower-Tier Interest 2, Lower-Tier Interest
3, Lower-Tier Interest 4 and Lower-Tier Interest 5, where Lower-Tier
Interest 1 and Lower-Tier Interest 3 are first subject to a cap and
floor equal to the Group I Net Weighted Average Coupon Rate and Class
[A-2] Pass-Through Rate, respectively, and Lower-Tier Interest 2,
Lower-Tier Interest 4 and Lower-Tier Interest 5 are each subject to a
cap equal to 0%, and (ii) the principal balance of each such Lower-Tier
Interest, shall not be allocated to the Class [A] Certificates but will
be allocated to the Class B Certificates. However, the Class [B]
Certificates shall be subordinated to the extent provided in Section
7.5. hereof.
(6) On each Distribution Date, available funds, if any, remaining in the
Lower-Tier REMIC after payments of interest and principal, as
designated above, will be distributed to the Lower-Tier Residual
Interest. It is expected that there shall not be any distributions on
the Lower-Tier Residual Interest.
(c) The Class [A-1] and Class [A-2] Certificates are hereby
designated as "regular interests" with respect to the Upper-Tier REMIC (the
"Upper-Tier REMIC Regular Interests") and the [Residual Certificate] is hereby
designated as the single "residual interest" with respect to the Upper-Tier
REMIC. On each Payment Date, available funds, if any, remaining in the
Upper-Tier REMIC after payments of interest and principal as designated herein
shall be distributed to the [Residual Certificates].
(d) For federal income tax purposes, the "latest possible
maturity date" for each of the Lower-Tier REMIC Regular Interests and Upper-Tier
REMIC Regular Interests is hereby set to be the Payment Date of [_________,
_____].
(e) The Startup Day is hereby designated for each of the
Lower-Tier REMIC and Upper-Tier REMIC as the "startup day" within the meaning of
Section 860G(a)(9) of the Code.
(f) The Trustee shall provide to the Internal Revenue Service
and to the persons described in
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Section 860E(e)(3) and (6) of the Code, the information described in Treasury
regulations Section 1.860D-1(b)(5)(ii), or any successor regulation thereto,
with respect to each of the Lower-Tier REMIC and the Upper-Tier REMIC. Such
information will be provided in the manner described in Treasury regulations
Section 1.860E-2(a)(5), or any successor regulation thereto.
(g) The Owner of the Tax Matters Person Residual Interests in
the Upper-Tier REMIC and the Lower-Tier REMIC is hereby designated as "tax
matters person" as defined in the REMIC Provisions with respect to each such
REMIC.
(h) The Trust and each REMIC shall, for federal income tax
purposes, maintain books on a calendar year basis and report income on an
accrual basis.
(i) The final scheduled Payment Date for any Class of
Certificates is hereby established as follows:
CLASS FINAL SCHEDULED PAYMENT DATES
Final Scheduled
Class Payment Date
----- ------------
Class [A-1] [_________, _____]
Class [A-2] [_________, _____]
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE SPONSOR AND THE MASTER SERVICER;
COVENANT OF SPONSOR TO CONVEY MORTGAGE LOANS
SECTION 3.1. REPRESENTATIONS AND WARRANTIES OF THE SPONSOR.
The Sponsor hereby represents, warrants and covenants to the Trustee, the
Certificate Insurer and to the Owners as of the Startup Day 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 business, or the properties owned or leased by it make such qualification
necessary. The Sponsor has all requisite corporate power and authority to own
and operate its properties, to carry out its business as presently conducted and
as proposed to be conducted and to enter into and discharge its obligations
under this Agreement and the other Operative Documents to which it is a party.
(b) The execution and delivery of this Agreement and the other
Operative Documents to which the Sponsor is a party by the Sponsor and its
performance and compliance with the terms of this Agreement and of the other
Operative Documents to which it is a party have been duly authorized by all
necessary corporate action on the part of the Sponsor and will not violate the
Sponsor's Articles of Incorporation or Bylaws or constitute a default (or an
event which, with notice or lapse of time, or both, would constitute a default)
under, or result in the breach of, any material contract, agreement or other
instrument to which the Sponsor is a party or by which the Sponsor is bound, or
violate any statute or any order, rule or regulation of any court,
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governmental agency or body or other tribunal having jurisdiction over the
Sponsor or any of its properties.
(c) This Agreement and the other Operative Documents to which
the Sponsor is a party, assuming due authorization, execution and delivery by
the other parties hereto and thereto, each constitutes a valid, legal and
binding obligation of the Sponsor, enforceable against it in accordance with the
terms hereof and thereof, except as the enforcement hereof and thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally and by general
principles of equity (whether considered in a proceeding or action in equity or
at law).
(d) The Sponsor is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which might have consequences that would
materially and adversely affect the condition (financial or other) or operations
of the Sponsor or its properties or might have consequences that would
materially and adversely affect its performance hereunder and under the other
Operative Documents to which it is a party.
(e) No litigation is pending or, to the best of the Sponsor's
knowledge, threatened against the Sponsor which litigation might have
consequences that would prohibit its entering into this Agreement or any other
Operative Document to which it is a party or 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 the
Registration Statement does not contain any untrue statement of a material fact
with respect to the Sponsor or omit to state a material fact required to be
stated therein or necessary in order to make the statements contained therein
with respect to the Sponsor not misleading. To the best of the Sponsor's
knowledge and belief, the Registration Statement does not contain any untrue
statement of a material fact required to be stated therein or omit to state any
material fact required to be stated therein or necessary to make the statements
contained therein not misleading.
(h) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and licenses
required to be taken, given or obtained, as the case may be, by or from any
federal, state or other governmental authority or agency (other than any such
actions, approvals, etc. under any state securities laws, real estate
syndication or "Blue Sky" statutes, as to which the Sponsor makes no such
representation or warranty), that are necessary or advisable in connection with
the purchase and sale of the Certificates 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 and are not reasonably expected to be subject to any
pending proceedings or appeals (administrative, judicial or otherwise) and
either the time within which any appeal therefrom may be taken or review thereof
may be obtained has expired or no
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review thereof may be obtained or appeal therefrom taken, and are adequate to
authorize the consummation of the transactions contemplated by this Agreement
and the other Operative Documents on the part of the Sponsor and the performance
by the Sponsor of its obligations under this Agreement and such of the other
Operative Documents to which it is a party.
(i) The transactions contemplated by this Agreement are in the
ordinary course of business of the Sponsor.
(j) The Sponsor received fair consideration and reasonably
equivalent value in exchange for the sale of the interests in the Mortgage Loans
evidenced by the Certificates.
(k) The Sponsor did not sell any interest in any Mortgage Loan
evidenced by the Certificates with any intent to hinder, delay or defraud any of
its respective creditors.
(l) The Sponsor is solvent and the Sponsor will not be
rendered insolvent as a result of the sale of the Mortgage Loans to the Trust or
the issuance of the Certificates.
It is understood and agreed that the representations and
warranties set forth in this Section 3.1 shall survive delivery of the Mortgage
Loans to the Trust.
SECTION 3.2. REPRESENTATIONS AND WARRANTIES OF THE MASTER
SERVICER.
The Master Servicer hereby represents, warrants and covenants to the Trustee,
the Certificate Insurer and the Owners as of the Startup Day that:
(a) The Master Servicer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
is, and each Sub-Servicer is, in compliance with the laws of each state in which
any Property is located to the extent necessary to enable it to perform its
obligations hereunder and is in good standing as a foreign corporation in each
jurisdiction in which the nature of its business, or the properties owned or
leased by it make such qualification necessary. The Master Servicer and each
Sub-Servicer has all requisite corporate power and authority to own and operate
its properties, to carry out its business as presently conducted and as proposed
to be conducted and to enter into and discharge its obligations under this
Agreement and the other Operative Documents to which it is a party. The Master
Servicer has, on a consolidated basis with its parent, AMHC, equity of at least
$5,000,000, as determined in accordance with generally accepted accounting
principles.
(b) The execution and delivery of this Agreement by the Master
Servicer and its performance and compliance with the terms of this Agreement and
the other Operative Documents to which it is a party have been duly authorized
by all necessary corporate action on the part of the Master Servicer and will
not violate the Master Servicer's Articles of Incorporation or Bylaws or
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or result in the breach of, any material
contract, agreement or other instrument to which the Master Servicer is a party
or by which the Master Servicer is bound or violate any statute or any order,
rule or regulation of any court, governmental agency or body or other tribunal
having jurisdiction over the Master Servicer or any of its properties.
(c) This Agreement and the other Operative Documents to which
the Master Servicer is a party, assuming due authorization, execution and
delivery by the other parties hereto and thereto, each constitutes a valid,
legal and binding obligation of the Master Servicer, enforceable against it in
accordance with the terms hereof, except as the enforcement hereof may
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be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally and by general
principles of equity (whether considered in a proceeding or action in equity or
at law).
(d) The Master Servicer is not in default with respect to any
order or decree of any court or any order, regulation or demand of any federal,
state, municipal or governmental agency, which might have consequences that
would materially and adversely affect the condition (financial or other) or
operations of the Master Servicer or its properties or might have consequences
that would materially and adversely affect its performance hereunder and under
the other Operative Documents to which the Master Servicer is a party.
(e) No litigation is pending or, to the best of the Master
Servicer's knowledge, threatened against the Master Servicer which litigation
might have consequences that would prohibit its entering into this Agreement or
any other Operative Document to which it is a party or 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) 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.
(g) The statements contained in the Registration Statement
which describe the Master Servicer or matters or activities for which the Master
Servicer is responsible in accordance with the Operative Documents or which are
attributed to the Master Servicer therein are true and correct in all material
respects, and the Registration Statement does not contain any untrue statement
of a material fact with respect to the Master Servicer or omit to state a
material fact required to be stated therein or necessary to make the statements
contained therein with respect to the Master Servicer not misleading. To the
best of the Master Servicer's knowledge and belief, the Registration Statement
does not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
contained therein not misleading.
(h) [Reserved.]
(i) 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
reasonably expected to be subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and either the time within which any
appeal therefrom may be taken or review thereof may be obtained has expired or
no review thereof may be obtained or appeal therefrom taken, and are adequate to
authorize the consummation of the transactions contemplated by this Agreement
and the other Operative Documents on the part of the Master Servicer and the
performance by the Master Servicer of its obligations under this Agreement and
such of the other Operative Documents to which it is a party.
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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 8.3.
It is understood and agreed that the representations and
warranties set forth in this Section 3.2 shall survive delivery of the Mortgage
Loans to the Trustee.
Upon discovery by any of the Originators, the Master Servicer,
the Sponsor, any Sub-Servicer, the Certificate Insurer or the 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 Owners or of the
Certificate Insurer, the party discovering such breach shall give prompt written
notice to the other parties. Within 30 days of its discovery or its receipt of
notice of breach, the Master Servicer shall cure such breach in all material
respects and, upon the Master Servicer's continued failure to cure such breach,
may thereafter be removed by the Trustee or the Certificate Insurer pursuant to
Section 8.20 hereof; provided, however, that if the Master Servicer can
demonstrate to the reasonable satisfaction of the Certificate Insurer and the
Trustee that it is diligently pursuing remedial action, then the cure period may
be extended with the written approval of the Certificate Insurer and the
Trustee.
SECTION 3.3. REPRESENTATIONS AND WARRANTIES OF THE SPONSOR
WITH RESPECT TO THE MORTGAGE LOANS.
(a) The Sponsor makes the following representations and
warranties as to the Mortgage Loans on which the Certificate Insurer relies and
the Trustee relies in accepting the Mortgage Loans in trust and executing and
authenticating the Certificates. Such representations and warranties speak as of
the Startup Day with respect to the Initial Mortgage Loans, as of the Subsequent
Transfer Date with respect to any Subsequent Mortgage Loan, or as of the date
upon which any Qualified Replacement Mortgage is added to the Trust, but shall
survive the sale, transfer, and assignment of the Mortgage Loans to the Trustee:
(i) The information with respect to each Mortgage Loan set
forth in the Schedules of Mortgage Loans is true and correct as of the
Initial Cut-Off Date, the Replacement Cut-Off Date or the Subsequent
Cut-Off Date, as the case may be;
(ii) All of the original or certified documentation set forth
in Section 3.5 (including all material documents related thereto) with
respect to each Mortgage Loan has been or will be delivered to the
Trustee no later than the Startup Day, the related Subsequent Transfer
Date or the date upon which any Qualified Replacement Mortgage is added
to the Trust, as the case may be, or as otherwise provided in Section
3.5;
(iii) Except for any Unaffiliated Originator Loans being
serviced by a servicer other than the Master Servicer, each Mortgage
Loan is being serviced by the Master Servicer or a Person controlling,
controlled by or under common control with the Master Servicer and
qualified to service mortgage loans;
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(iv) The Note related to each Mortgage Loan in Group I as of
the Initial Cut-Off Date bears a Coupon Rate of at least [____%] per
annum;
(v) As of the Initial Cut-Off Date, no more than [____%] of
the aggregate principal balances of the Initial Mortgage Loans are
30-59 days Delinquent and no Initial Mortgage Loan is 60 or more days'
Delinquent; as of the related Subsequent Cut-Off Date, no Subsequent
Mortgage Loan shall be 60 or more days Delinquent as of the related
Replacement Cut-Off Date, no Qualified Replacement Mortgage shall be 60
or more days Delinquent;
(vi) As of the Initial Cut-Off Date, no more than [____%] of
the aggregate principal balances of the Mortgage Loans is secured by
Properties located within any single zip code area and less than
[____%] of the aggregate Loan Balance of the Mortgage Loans consists of
Date of Payment Loans or "simple interest" Mortgage Loans;
(vii) All of the Mortgage Loans conform, in all material
respects, to the description thereof set forth in the Registration
Statement;
(viii) As of the Initial Cut-Off Date, no more than [____%] of
the Loan Balance of the Mortgage Loans relates to Mortgage Loans
originated under the Originators' non-income verification program for
self-employed borrowers;
(ix) The credit underwriting guidelines applicable to each
Mortgage Loan conform in all material respects to the description
thereof set forth in the Prospectus; and
(x) Each Mortgage Loan is a Qualified Mortgage.
(b) The Sponsor hereby assigns to the Trustee for the benefit
of the Owners of the Certificates and the Certificate Insurer (so long as a
Certificate Insurer Default had not occurred and is continuing) all of its
right, title and interest in respect of each Master Transfer Agreement
applicable to the related Mortgage Loans. Insofar as such Master Transfer
Agreement provides for representations and warranties made by the related
Originator in respect of a Mortgage Loan and any remedies provided thereunder
for any breach of such representations and warranties, such right, title and
interest may be enforced by the Master Servicer or by the Trustee on behalf of
the Owners and the Certificate Insurer. Upon the discovery by the Sponsor, the
Master Servicer, the Certificate Insurer or the Trustee of a breach of any of
the representations and warranties made in a Master Transfer Agreement in
respect of any Mortgage Loan which materially and adversely affects the
interests of the Owners or of the Certificate Insurer in such Mortgage Loan, the
party discovering such breach shall give prompt written notice to the other
parties. The Master Servicer shall promptly notify the related Originator of
such breach and request that such Originator cure such breach or take the
actions described in Section 3.4(b) hereof within the time periods required
thereby, and if such Originator does not cure such breach in all material
respects, the Sponsor shall cure such breach or take such actions. The
obligations of the Sponsor or Master Servicer, as the case may be, set forth
herein with respect to any Mortgage Loan as to which such a breach has occurred
and is continuing shall constitute the sole obligations of the Master Servicer
and of the Sponsor in respect of such breach.
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SECTION 3.4. COVENANTS OF SPONSOR TO TAKE CERTAIN ACTIONS WITH
RESPECT TO THE MORTGAGE LOANS IN CERTAIN SITUATIONS.
(a) With the provisos and limitations as to remedies set forth
in this Section 3.4, upon the discovery by any Originator, the Sponsor, the
Master Servicer, the Certificate Insurer, any Sub-Servicer or the Trustee that
the representations and warranties set forth in Section 3.3 of this Agreement or
in a Master Transfer Agreement were untrue in any material respect as of the
Startup Day (or the Subsequent Transfer Date, as the case may be) and such
breaches of the representations and warranties materially and adversely affect
the interests of the Owners or of the Certificate Insurer, the party discovering
such breach shall give prompt written notice to the other parties.
The Sponsor acknowledges that a breach of any representation
or warranty (x) relating to marketability of title sufficient to transfer
unencumbered title to a Mortgage Loan, (y) relating to enforceability of the
Mortgage Loan against the related Mortgagor or Property or (z) set forth in
clause (ix) of Section 3.3 above constitutes breach of a representation or
warranty which materially and adversely affects the interests of the Owners or
of the Certificate Insurer in such Mortgage Loan.
(b) Upon the earliest to occur of the Sponsor's discovery, its
receipt of notice of breach from any one of the other parties hereto or from the
Certificate Insurer or such time as a breach of any representation and warranty
materially and adversely affects the interests of the Owners or of the
Certificate Insurer as set forth above, the Sponsor hereby covenants and
warrants that it shall promptly cure such breach in all material respects or it
shall (or shall cause an affiliate of the Sponsor to or an Originator to),
subject to the further requirements of this paragraph, on the second Remittance
Date next succeeding such discovery, receipt of notice or such other time (i)
substitute in lieu of each Mortgage Loan in the related Mortgage Loan Group
which has given rise to the requirement for action by the Sponsor a Qualified
Replacement Mortgage and deliver the Substitution Amount applicable thereto,
together with the aggregate amount of all Delinquency Advances and Servicing
Advances theretofore made with respect to such Mortgage Loan, to the Master
Servicer for deposit in the Principal and Interest Account or (ii) purchase such
Mortgage Loan from the REMIC Trust at a purchase price equal to the Loan
Purchase Price thereof, which purchase price shall be delivered to the Master
Servicer for deposit in the Principal and Interest Account. In connection with
any such proposed purchase or substitution, the Sponsor at its expense, shall
cause to be delivered to the Trustee and the Certificate Insurer an opinion of
counsel experienced in federal income tax matters stating whether or not such a
proposed purchase or substitution would constitute a Prohibited Transaction for
the REMIC Trust or would jeopardize the status of the REMIC Trust as a REMIC,
and the Sponsor shall only be required to take either such action to the extent
such action would not constitute a Prohibited Transaction for the REMIC Trust or
would not jeopardize the status of the REMIC Trust as a REMIC. Any required
purchase or substitution, if delayed by the absence of such opinion shall
nonetheless occur upon the earlier of (i) the occurrence of a default or
imminent default with respect to the Mortgage Loan, (ii) the delivery of such
opinion or (iii) at the direction of the Control Party. It is understood and
agreed that the obligation of the Sponsor to cure the defect, or substitute for,
or purchase any Mortgage Loan as to which a representation or warranty is untrue
in any material respect and has not been remedied shall constitute the sole
remedy available to the Owners, the Trustee and the Certificate Insurer.
(c) In the event that any Qualified Replacement Mortgage is
delivered by an Originator or by the Sponsor (or by an affiliate of the Sponsor,
as the case may be) to the Trust pursuant to Section 3.3, Section 3.4 or Section
3.6 hereof, the related Originator and the Sponsor
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shall be obligated to take the actions described in Section 3.4(b) with respect
to such Qualified Replacement Mortgage upon the discovery by any of the Owners,
the Sponsor, the Master Servicer, the Certificate Insurer, any Sub-Servicer or
the Trustee that the representations and warranties set forth in the related
Master Transfer Agreement or in Section 3.3 above are untrue in any material
respect on the date such Qualified Replacement Mortgage is conveyed to the Trust
such that the interests of the Owners or the Certificate Insurer in the related
Qualified Replacement Mortgage are materially and adversely affected.
(d) It is understood and agreed that the covenants set forth
in this Section 3.4 shall survive delivery of the respective Mortgage Loans
(including Qualified Replacement Mortgage Loans) to the Trustee.
SECTION 3.5. CONVEYANCE OF THE MORTGAGE LOANS.
(a) The Sponsor, concurrently with the execution and delivery
hereof, hereby transfers, sells, assigns, sets over and otherwise conveys, or
shall request or cause to be transferred, sold, assigned, set over and otherwise
conveyed, without recourse, for good and valuable consideration, to the Trustee,
all right, title and interest of the Sponsor and the Warehouse Trusts in and to
each Initial Mortgage Loan, including all right, title and interest in and to
principal collected and interest accruing on each such Initial Mortgage Loan on
and after the Initial Cut-Off Date and all right, title and interest in and to
all Insurance Policies and any other assets included or to be included in the
Trust for the benefit of Owners and the Certificate Insurer. The transfer of the
Initial Mortgage Loans set forth on the Schedule of Mortgage Loans to the
Trustee is absolute and is intended by the Owners and all parties hereto to be
treated as a sale by the Sponsor or the Warehouse Trusts.
(b) The Sponsor agrees to take or cause to be taken such
actions and execute such documents (including, without limitation, the filing of
all necessary continuation statements for the UCC-1 financing statements filed
in the State of New York (which shall have been filed within 90 days of the
Startup Day or the Subsequent Transfer Date, as the case may be)) describing the
Mortgage Loans and naming the Sponsor and the appropriate Warehouse Trust, as
applicable, as debtor and the Trustee as the secured party and any amendments to
UCC-1 financing statements required to reflect a change in the name or corporate
structure of the debtor or the filing of any additional UCC-1 financing
statements due to a change in the principal officer of the debtor (within 90
days of any event necessitating such filing) as are necessary to perfect and
protect the Owners' and the Certificate Insurer's interests in each Mortgage
Loan and the proceeds thereof.
(c) In connection with the transfer and assignment of the
Mortgage Loans, the Sponsor agrees to:
(i) cause to be delivered, no later than the Startup Day or
any Subsequent Transfer Date, as applicable, without recourse, to the
Trustee the items listed in the definitions of "Advanta Mortgage Files"
and "Conduit Mortgage Files," as appropriate; provided that the
assignments of mortgage listed in clause (e) of Exhibit B hereto shall
be delivered to the Trustee with respect to the Designated Advanta
Mortgage Files within 75 Business Days of the Startup Day or any
Subsequent Transfer Date, as applicable.
(ii) cause, within 75 Business Days following the Startup Day
or any Subsequent Transfer Date, as applicable, the assignments of
Mortgage to be submitted for recording in the appropriate jurisdictions
wherein such recordation is necessary to perfect
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the lien thereof as against creditors of or purchasers from the related
Originator to the Trustee; provided, however, that, for administrative
convenience and facilitation of servicing and to reduce closing costs,
assignments of mortgage shall not be required to be submitted for
recording with respect to any Mortgage Loan which relates to an Advanta
Mortgage File only if the Trustee, the Certificate Insurer and each
Rating Agency has received an Opinion of Counsel, satisfactory in form
and substance to the Certificate Insurer and to each Rating Agency, to
the effect that the recordation of such assignments in any specific
jurisdiction is not necessary to protect the Trustee's interest in the
related Mortgage.
All recording required pursuant to this Section 3.5 shall be
accomplished at the expense of the Originators or of the Sponsor.
Notwithstanding anything to the contrary contained in this Section 3.5, in those
instances where the public recording office retains the original Mortgage, the
assignment of a Mortgage or the intervening assignments of the Mortgage after it
has been recorded, the Sponsor shall be deemed to have satisfied its obligations
hereunder upon delivery to the Trustee of a copy of such Mortgage, such
assignment or assignments of Mortgage certified by the public recording office
to be a true copy of the recorded original thereof.
Copies of all Mortgage assignments received by the Trustee
shall be kept in the related Mortgage Loan file.
Such assignments of mortgage shall, in addition to the
requirements specified in Exhibit B, be in recordable form. On or before the
Startup Day or any Subsequent Transfer Date, as applicable, the Sponsor shall
deliver to the Trustee original executed powers of attorney, from the current
recordholders of the related Mortgage substantially in the form of Exhibit H,
authorizing the Master Servicer on behalf of the Trustee to record the
assignments of mortgage as provided in clause (ii) above. Pursuant to such power
of attorney, the Trustee also may execute a new assignment of mortgage for any
Mortgage Loan if the original assignment of mortgage delivered by the Sponsor to
the Trustee is not in recordable form at such time as the assignment of mortgage
is to be recorded by the Trustee.
(d) In the case of Mortgage Loans which have been prepaid in
full on or after the Initial Cut-Off Date and prior to the Startup Day, or on or
after any Subsequent Cut-Off Date and prior to the related Subsequent Transfer
Date, as the case may be, the Sponsor, in lieu of the assignment of mortgage,
will deliver within 15 Business Days after the Startup Day or Subsequent
Transfer Date, to the Trustee a certification of an Authorized Officer of the
Sponsor in the form set forth in Exhibit C.
(e) The Sponsor (or any Warehouse Trust, or any affiliate of
the Sponsor) shall transfer, sell, assign, set over and otherwise convey without
recourse, to the Trustee all right, title and interest of the Sponsor (or any
Warehouse Trust or of such affiliate) in and to any Qualified Replacement
Mortgage delivered to the Trustee pursuant to Section 3.3, Section 3.4 or
Section 3.6 hereof and all its right, title and interest to principal collected
and interest accruing on such Qualified Replacement Mortgage on and after the
applicable Replacement Cut-Off Date; provided, however, that the Sponsor (or the
Conduit Acquisition or such affiliate) shall reserve and retain all right, title
and interest in and to payments of principal due and interest accrued on such
Qualified Replacement Mortgage prior to the applicable Replacement Cut-Off Date.
(f) As to each Mortgage Loan released from the Trust in
connection with the conveyance of a Qualified Replacement Mortgage therefor, the
Trustee will transfer, sell, assign, set over and otherwise convey without
recourse, on the Sponsor's order, all of its right, title and
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interest in and to such released Mortgage Loan and all the Trust's right, title
and interest to principal collected and interest accruing on such released
Mortgage Loan on and after the applicable Replacement Cut-Off Date; provided,
however, that the Trust shall reserve and retain all right, title and interest
in and to payments of principal collected and interest accruing on such released
Mortgage Loan prior to the applicable Replacement Cut-Off Date.
(g) In connection with any transfer and assignment of a
Qualified Replacement Mortgage to the Trustee on behalf of the Trust, the
Sponsor agrees to cause to be delivered to the Trustee the items described in
Section 3.5(c) on the date of such transfer and assignment or, if a later
delivery time is permitted by Section 3.5(c), then no later than such later
delivery time.
(h) As to each Mortgage Loan released from the Trust in
connection with the conveyance of a Qualified Replacement Mortgage the Trustee
shall deliver, on the date of conveyance of such Qualified Replacement Mortgage,
on the order of the Sponsor (i) the original Note, or the certified copy,
relating thereto, endorsed without recourse, to the Sponsor and (ii) such other
documents as constituted the File with respect thereto.
(i) If a Mortgage assignment is lost during the process of
recording, or is returned from the recorder's office unrecorded due to a defect
therein, the Sponsor shall prepare a substitute assignment or cure such defect,
as the case may be, and thereafter cause each such assignment to be duly
recorded.
(j) The Sponsor shall cause to be reflected on the applicable
records that the Mortgage Loans have been sold to the Trust.
(k) To the extent that the ratings, if any, then assigned to
the unsecured debt of the Sponsor or of the Sponsor's ultimate corporate parent
are satisfactory to the Control Party and [Rating Agency/Agencies], then any of
the Document Delivery Requirements described above may be waived by an
instrument signed by the Control Party and [Rating Agency/Agencies] (or any
documents theretofore delivered to the Trustee returned to the Sponsor) on such
terms and subject to such conditions as the Control Party, [Rating
Agency/Agencies] may permit.
(l) The Sponsor shall, in connection with the delivery of each
Qualified Replacement Mortgage to the Trustee, provide the Trustee with the
information set forth in the Schedules of Mortgage Loans with respect to such
Qualified Replacement Mortgage.
SECTION 3.6. ACCEPTANCE BY TRUSTEE; CERTAIN SUBSTITUTIONS OF
MORTGAGE LOANS; CERTIFICATION BY TRUSTEE.
(a) The Trustee agrees to execute and deliver on the Startup
Day, on any Subsequent Transfer Date and any day on which a Qualified
Replacement Mortgage is conveyed to the Trust an acknowledgment of receipt in
the form attached as Exhibit D hereto of the Files delivered by the Sponsor, and
declares that it will hold such documents and any amendments, replacement or
supplements thereto, as well as any other assets included in the definition of
Trust Estate and delivered to the Trustee, as Trustee in trust upon and subject
to the conditions set forth herein for the benefit of the Owners and the
Certificate Insurer. On or before the tenth Business Day after the Startup Day,
any Subsequent Transfer Date, and any day on which a Qualified Replacement
Mortgage is conveyed to the Trust, the Trustee shall execute and deliver to the
Certificate Insurer and the Master Servicer an acknowledgment of receipt of the
original Notes
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for each Mortgage Loan. The Trustee further agrees to review any documents
delivered by the Sponsor within 90 days after the Startup Day (or within 90 days
with respect to any Subsequent Mortgage Loan or Qualified Replacement Mortgage
after the assignment thereof) and to deliver to the Sponsor, the Certificate
Insurer and the Master Servicer a Certification in the form attached as Exhibit
E hereto. The Trustee shall be under no duty or obligation to inspect, review or
examine any such documents, instruments, certificates or other papers to
determine that they are genuine, enforceable, or appropriate for the represented
purpose or that they are other than what they purport to be on their face, nor
shall the Trustee be under any duty to determine independently whether there are
any intervening assignments or assumption or modification agreements with
respect to any Mortgage Loan.
(b) If the Trustee during such 90-day period finds any
document constituting a part of a File which is not properly executed, has not
been received within the specified period, or is unrelated to the Mortgage Loans
identified in the Schedules of Mortgage Loans, or that any Mortgage Loan does
not conform in a material respect to the description thereof as set forth in the
Schedules of Mortgage Loans, the Trustee shall promptly so notify the Sponsor
and the Certificate Insurer. In performing any such review, the Trustee may
conclusively rely on the Sponsor as to the purported genuineness of any such
document and any signature thereon. The Sponsor agrees to use reasonable efforts
to remedy a material defect in a document constituting part of a File of which
it is so notified by the Trustee. If, however, within 60 days after the
Trustee's notice to it respecting such defect the Sponsor has not remedied or
caused to be remedied the defect and the defect materially and adversely affects
the interest in the related Mortgage Loan of the Owners or of the Certificate
Insurer, the Sponsor will (or will cause the related Originator or an affiliate
of the Sponsor to) on the next succeeding Remittance Date (i) substitute in lieu
of such Mortgage Loan a Qualified Replacement Mortgage and, deliver the
Substitution Amount applicable thereto to the Master Servicer for deposit in the
Principal and Interest Account or (ii) purchase such Mortgage Loan at a purchase
price equal to the Loan Purchase Price thereof, which purchase price shall be
delivered to the Master Servicer for deposit in the Principal and Interest
Account. In connection with any such proposed purchase or substitution the
Sponsor shall cause at the Sponsor's expense to be delivered to the Trustee and
the Certificate Insurer an opinion of counsel experienced in federal income tax
matters stating whether or not such a proposed purchase or substitution would
constitute a Prohibited Transaction for the Upper-Tier REMIC or Lower-Tier REMIC
or would jeopardize the status of the Upper-Tier REMIC or Lower-Tier REMIC as a
REMIC, and the Sponsor shall only be required to take either such action to the
extent such action would not constitute a Prohibited Transaction for the
Upper-Tier REMIC or Lower-Tier REMIC or would not jeopardize the status of the
Upper-Tier REMIC or Lower-Tier REMIC as a REMIC. Any required purchase or
substitution, if delayed by the absence of such opinion shall nonetheless occur
upon the earlier of (i) the occurrence of a default or imminent default with
respect to the Mortgage Loan or (ii) the delivery of such opinion or (iii) at
the direction of the Control Party.
SECTION 3.7. COOPERATION PROCEDURES.
(a) The Sponsor, the Master Servicer and the Trustee covenant
to provide each other and to the Certificate Insurer 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.
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SECTION 3.8. 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 Trustee's delivery to
or upon the order of the Sponsor of all or a portion of the balance of funds in
the Pre-Funding Account which shall be [$____________] with respect to Group I
Loans and [$___________] with respect to Group II Loans, the Sponsor shall sell,
transfer, assign, set over and otherwise convey, or shall request or cause the
Trust to acquire from such Warehouse Trust all right, title and interest in and
to each Subsequent Mortgage Loan listed on the Schedule of Mortgage Loans
delivered by the Sponsor to the Trustee on such Subsequent Transfer Date, all
right, title and interest in and to principal collected and interest accruing on
each such Subsequent Mortgage Loan on and after the related Subsequent Cut-Off
Date and all right, title and interest in and to all Insurance Policies;
provided, however, that the Sponsor reserves and retains all its right, title
and interest in and to principal collected and interest accruing on each such
Subsequent Mortgage Loan prior to the related Subsequent Cut-Off Date. 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 the
Owners and all parties hereto to be treated as a sale by the Sponsor or the
Warehouse Trust.
The amount released from the Pre-Funding Account shall be
equal to the aggregate Loan Balances of the Subsequent Mortgage Loans so
transferred.
(b) The Sponsor shall transfer or cause to be transferred to
the Trust the Subsequent Mortgage Loans and the other property and rights
related thereto described in paragraph (a) above only upon the satisfaction of
each of the following conditions on or prior to the related Subsequent Transfer
Date.
(i) the Sponsor shall have provided the Trustee, the
Certificate Insurer and [Rating Agency/Agencies] with an Addition
Notice and shall have provided any information in an electronic data
file form as reasonably requested by any of the foregoing and in a form
agreeable to any of the foregoing with respect to the Subsequent
Mortgage Loans;
(ii) the Sponsor shall have delivered to the Trustee
a duly executed written assignment (including an acceptance by the
Trustee) in substantially the form of Exhibit K (the "Subsequent
Transfer Agreement"), which shall include a Schedule of Mortgage Loans
listing the Subsequent Mortgage Loans and any other exhibits listed
thereon;
(iii) as of each Subsequent Transfer Date, the
Sponsor shall have deposited in the Principal and Interest Account all
principal collections and interest accrued (excluding premium recapture
and interest accrued prior to the related Subsequent Cut-Off Date) in
respect of the Subsequent Mortgage Loans received on or after the
related Subsequent Cut-Off Date;
(iv) as of each Subsequent Transfer Date, none of the
related Originator, the Master Servicer or the Sponsor was insolvent
nor will any of them have been made insolvent by such transfer nor is
any of them aware of any pending insolvency;
(v) such addition will not result in a material
adverse tax consequence to the Trust or the Owners of the Certificates;
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(vi) the Pre-Funding Period shall not have
terminated;
(vii) the Sponsor shall have delivered to the Trustee
an Officer's Certificate confirming (A) the satisfaction of each
condition precedent specified in this paragraph (b) and paragraphs (c)
and (d) below, and in the related Subsequent Transfer Agreement and (B)
confirming that (i) neither the sale of the Subsequent Mortgage Loans
by Advanta nor the purchase of the Subsequent Mortgage Loans by the
Trust constitutes a "prohibited transaction", as defined in Section
860F(a)(2) of the Code, and (ii) the Subsequent Mortgage Loans are
Qualified Mortgages;
(viii) the Sponsor shall have delivered to the Rating
Agencies, the Certificate Insurer, and the Trustee, Opinions of Counsel
with respect to the transfer of the Subsequent Mortgage Loans
substantially in the form of the Opinions of Counsel delivered to the
Trustee on the Startup Day (bankruptcy, corporate and tax opinions);
(ix) an independent accountant retained by the
Sponsor provides the Sponsor with a letter (with copies provided to the
Rating Agencies, the Certificate Insurer, the Underwriters and the
Trustee) stating whether or not the characteristics of the Subsequent
Mortgage Loans conform to the characteristics described in the Pooling
and Servicing Agreement. In preparing such letter, the independent
accountant must use the same type of procedures as were applicable to
the Initial Mortgage Loans which were transferred to the Trust as of
the Startup Day;
(x) The Rating Agencies shall have provided
confirmation that the rating of the Certificates will not be adversely
affected by such transfer of Subsequent Mortgage Loans; and
(xi) the Certificate 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) such Subsequent Mortgage Loan may not be 30 or more days
contractually delinquent as of the related Subsequent Cut-Off Date; (ii) the
remaining term to maturity of such Subsequent Mortgage Loan may not exceed 30
years; (iii) such Subsequent Mortgage Loan may not have a combined loan-to-value
ratio ("CLTV") in excess of 100%; (iv) such Subsequent Mortgage Loan may not
have a Loan Balance in excess of $500,000; and (v) following the purchase of
Subsequent Mortgage Loans for Group I by the Trust, the Mortgage Loans in Group
I (including the Subsequent Mortgage Loans) (a) will have a weighted average
Coupon Rate of at least [____%]; (b) will have a weighted average CLTV of not
more than [_____%]; (c) will have not less than [_____%], by aggregate principal
balance, Mortgage Loans that are considered "fully documented" loans; (d) will
have not less than [_____%], by aggregate principal balance, Mortgage Loans that
are related to single family detached residences; (e) will have at least
[_____%], by aggregate principal balance, Mortgage Loans which are first lien
mortgages, (f) will have at least [_____%] by aggregate principal balance of
Mortgage Loans which are "A-" classified or better, (g) will have not more than
[_____%], by aggregate principal balance, Mortgage Loans that are "C"
classified; (h) will have not more than [_____%], by aggregate principal
balance, Mortgage Loans that are "D" classified; (i) no more that [_____%] of
the Subsequent Mortgage Loans will be Unaffiliated Mortgage Loans; (j) no more
than [_____%] by aggregate principal balance of Mortgage Loans will have a CLTV
of [_____%] or greater; (k) no more than [_____%] by aggregate principal balance
of Mortgage Loans will have a CLTV of [_____%] or greater and (vi) following the
purchase of Subsequent Mortgage Loans for Group II by the Trust, the Mortgage
Loans in Group
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II (including the Subsequent Mortgage Loans) (a) will have a weighted average
Coupon Rate by aggregate principal balance of Mortgage Loans of at least
[_____%]; (b) will have a weighted average CLTV of no more than [_____%]; (c)
will not have less than [_____%] by aggregate principal of Mortgage Loans that
are considered "fully documented"; (d) will not have less than [_____%] by
aggregate principal balance of Mortgage Loans that are related to single family
detached residences; (e) will have a weighted average margin of at least
[_____%]; (f) no more than [_____%] of the Subsequent Mortgage Loans will be
Junior Mortgage Loans; (g) will have at least [_____%] by aggregate principal
balance of Mortgage Loans which are "A-" classified or better; (h) will have not
more than [_____%], by aggregate principal balance, Mortgage Loans that are "C"
classified; (i) will have not more than [_____%], by aggregate principal
balance, Mortgage Loans that are "D" classified; (j) no more that [_____%] of
the Subsequent Mortgage Loans will be Unaffiliated Mortgage Loans; (k) no more
than [_____%] by aggregate principal balance of Mortgage Loans will have a CLTV
of [_____%] or greater; (l) no more than [_____%] by aggregate principal balance
of Mortgage Loans will have a CLTV of [_____%] or greater. The Certificate
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 3.5(b)-(j), 3.6, 3.7 and 3.8(b)-(c).
(e) In connection with each Subsequent Transfer Date and on
the Payment Dates occurring in [__________, _____], [__________, _____] and
[__________, _____] the Master Servicer and the Trustee shall co-operate in
determining (i) the amount and correct dispositions of Group I Capitalized
Interest Requirement, the Group II 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. In the event
that any amounts are incorrectly released to the Owners of the [Residual Class]
Certificates from either of the Pre-Funding Account or the Capitalized Interest
Account, such Owners of the [Residual Class] Certificates shall immediately
repay such amounts to the Trustee.
ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES
SECTION 4.1. ISSUANCE OF CERTIFICATES.
On the Startup Day, upon the Trustee's receipt from the Sponsor of an executed
Delivery Order in the form set forth as Exhibit F hereto, the Trustee shall
execute, authenticate and deliver the Certificates on behalf of the Trust in
accordance with the directions set forth in such Delivery Order.
SECTION 4.2. SALE OF CERTIFICATES.
At 11 a.m. New York City time on the Startup Day, at the offices of ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ LLP, 1301 Avenue of the Americas, New York, New York, the Sponsor
will sell and convey the Initial Mortgage Loans and the money, instruments and
other property related thereto to the Trustee on behalf of the Trust, and the
Trustee will (i) deliver to the Representative, the Group I Certificates and the
Group II Certificates with an aggregate Percentage Interest in each Class equal
to 100%,
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registered in the name of Cede & Co. or in such other names as the
Representative shall direct, against payment of the purchase price thereof by
wire transfer of immediately available funds to the Trustee; (ii) deliver to the
Trustee, the Class B Certificate with an aggregate Percentage Interest equal to
100%, registered in the name of the Trustee on behalf of the Class [A-2]
Supplemental Interest Payment Account; (iii) deliver to [Residual Class
Certificateholder], the [Residual Class] Certificates with an aggregate
Percentage Interest equal to 100%, registered in such names as the [Residual
Class Certificateholder] shall request; and (iv) deliver to the Trustee on
behalf of the Owners of the Supplemental Interest Right, the certificate
representing the Supplemental Interest Right. Upon receipt of the proceeds of
the sale of the Certificates, the Trustee shall, from the proceeds of the sale
of the Certificates, pay other fees and expenses identified by the Sponsor,
deposit the Group I Original Pre-Funded Amount and the Group II Original
Pre-Funded Amount into the Pre-Funding Account, deposit the Group I Capitalized
Interest Deposit and the Group II Capitalized Interest Deposit into the
Capitalized Interest Account and pay to the Sponsor the balance after deducting
such amounts.
ARTICLE V
CERTIFICATES AND TRANSFER OF INTERESTS
SECTION 5.1. TERMS.
(a) The Certificates are pass-through securities having the rights described
therein and herein. Notwithstanding references herein or therein with respect to
the Certificates as to "principal" and "interest" no debt of any Person is
represented thereby, nor are the Certificates or the underlying Notes guaranteed
by any Person (except that the Notes may be recourse to the Mortgagors thereof
to the extent permitted by law and except for the rights of the Trustee with
respect to the Certificate Insurance Policy). Distributions on the Certificates
are payable solely from payments received on or with respect to the Mortgage
Loans (other than the Servicing Fees), monies in the Principal and Interest
Account, the Pre-Funding Account, the Capitalized Interest Account and, with
respect to the Class [A-2] Certificate, the Class [A-2] Supplemental Interest
Payment Account, except as otherwise provided herein, from earnings on monies
and the proceeds of property held as a part of the Trust Estate and, from
Insured Payments. Each Certificate entitles the Owner thereof to receive
monthly, on each Payment Date, in order of priority of distributions with
respect to such Class of Certificates, a specified portion of such payments with
respect to the Mortgage Loans in the related Mortgage Loan Group and Insured
Payments, pro rata in accordance with such Owner's Percentage Interest and, with
respect to the Class [A-2] Certificate, certain amounts payable from the Class
[A-2] Supplemental Interest Payment Account.
(b) Each Owner is required, and hereby agrees, to return to
the Trustee any Certificate with respect to which the Trustee has made the final
distribution due thereon. Any such Certificate as to which the Trustee has made
the final distribution thereon shall be deemed cancelled and shall no longer be
Outstanding for any purpose of this Agreement, whether or not such Certificate
is ever returned to the Trustee.
SECTION 5.2. FORMS.
The Certificates shall be in substantially the forms set forth in Exhibit A
hereof with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Agreement or as may in the
Sponsor's judgment be necessary, appropriate or convenient
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to comply, or facilitate compliance, with applicable laws, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
applicable securities laws or as may, consistently herewith, be determined by
the Authorized Officer of the Sponsor executing such Delivery Order, as
evidenced by his execution thereof.
SECTION 5.3. EXECUTION, AUTHENTICATION AND DELIVERY.
Each Certificate shall be executed on behalf of the Trust, by the manual
signature of one of the Trustee's Authorized Officers and shall be authenticated
by the manual signature of one of the Trustee's Authorized Officers.
(a) Certificates bearing the manual signature of individuals
who were at any time the proper officers of the Trustee shall, upon proper
authentication by the Trustee, bind the Trust, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
execution and delivery of such Certificates or did not hold such offices at the
date of authentication of such Certificates.
(b) The initial Certificates shall be dated as of the Startup
Day and delivered at the Closing to the parties specified in Section 4.2 hereof.
(c) No Certificate shall be valid until executed and
authenticated as set forth above.
SECTION 5.4. REGISTRATION AND TRANSFER OF CERTIFICATES.
(a) The Trustee, as registrar, shall cause to be kept a
register (the "Register") in which, subject to such reasonable regulations as it
may prescribe, the Trustee shall provide for the registration of Certificates
and the registration of transfer of Certificates. The Trustee is hereby
appointed registrar for the purpose of registering Certificates and transfers of
Certificates as herein provided. The Owners and the Certificate Insurer shall
have the right to inspect the Register at all reasonable times and to obtain
copies thereof.
(b) Subject to the provisions of Section 5.8 hereof, upon
surrender for registration of transfer of any Certificate at the office
designated as the location of the Register, the Trustee shall execute,
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Certificates of a like Class and in the aggregate
principal amount of the Certificate so surrendered.
(c) At the option of any Owner, Certificates of any Class
owned by such Owner may be exchanged for other Certificates authorized of like
Class, tenor and a like aggregate original principal amount and bearing numbers
not contemporaneously outstanding, upon surrender of the Certificates to be
exchanged at the office designated as the location of the Register. Whenever any
Certificate is so surrendered for exchange, the Trustee shall execute,
authenticate and deliver the Certificate or Certificates which the Owner making
the exchange is entitled to receive.
(d) Certificates issued upon any registration of transfer or
exchange of Certificates shall be valid evidence of the same ownership interests
in the Trust and entitled to the same benefits under this Agreement as the
Certificates surrendered upon such registration of transfer or exchange.
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(e) Any Certificate presented or surrendered for registration
of transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Trustee duly executed by the
Owner thereof or his attorney duly authorized in writing.
(f) No service charge shall be made to an Owner for any
registration of transfer or exchange of Certificates, but the Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Certificates; any other expenses in connection with such transfer or
exchange shall be an expense of the Trust.
(g) It is intended that the Class [A] Certificates be
registered so as to participate in a global book-entry system with the
Depository, as set forth herein. Each Class of Class [A] Certificates shall,
except as otherwise provided in the next paragraph, be initially issued in the
form of a single fully registered Class [A] Certificate with a denomination
equal to the Aggregate Certificate Principal Balance. Upon initial issuance, the
ownership of each such Class [A] Certificate shall be registered in the Register
in the name of Cede & Co., or any successor thereto, as nominee for the
Depository.
The Sponsor and the Trustee are hereby authorized to execute
and deliver the Representation Letter with the Depository.
With respect to Class [A] Certificates registered in the
Register in the name of Cede & Co., as nominee of the Depository, the Sponsor,
the Master Servicer, the Certificate Insurer and the Trustee shall have no
responsibility or obligation to Direct or Indirect Participants or beneficial
owners for which the Depository holds Class [A] Certificates from time to time
as a Depository. Without limiting the immediately preceding sentence, the
Sponsor, the Master Servicer, the Certificate Insurer and the Trustee shall have
no responsibility or obligation with respect to (i) the accuracy of the records
of the Depository, Cede & Co., or any Direct or Indirect Participant with
respect to the ownership interest in the Class [A] Certificates, (ii) the
delivery to any Direct or Indirect Participant or any other Person, other than a
registered Owner of a Class [A] Certificate as shown in the Register, of any
notice with respect to the Class [A] Certificates or (iii) the payment to any
Direct or Indirect Participant or any other Person, other than a registered
Owner of a Class [A] Certificate as shown in the Register, of any amount with
respect to any distribution of principal or interest on the Class [A]
Certificates. No Person other than a registered Owner of a Class [A] Certificate
as shown in the Register shall receive a certificate evidencing such Class [A]
Certificate.
Upon delivery by the Depository to the Trustee of written
notice to the effect that the Depository has determined to substitute a new
nominee in place of Cede & Co., and subject to the provisions hereof with
respect to the payment of interest by the mailing of checks or drafts to the
registered Owners of Class [A] Certificates appearing as registered Owners in
the registration books maintained by the Trustee at the close of business on a
Record Date, the name "Cede & Co." in this Agreement shall refer to such new
nominee of the Depository.
(h) In the event that (i) the Depository or the Sponsor
advises the Trustee and the Certificate Insurer in writing that the Depository
is no longer willing or able to discharge properly its responsibilities as
nominee and depository with respect to the Class [A] Certificates and the
Sponsor or the Trustee is unable to locate a qualified successor or (ii) the
Sponsor at its sole option elects to terminate the book-entry system through the
Depository, the Class [A] Certificates shall no longer be restricted to being
registered in the Register in the name of Cede &
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Co. (or a successor nominee) as nominee of the Depository. At that time, the
Sponsor may determine that the Class [A] Certificates shall be registered in the
name of and deposited with a successor depository operating a global book-entry
system, as may be acceptable to the Sponsor, or such depository's agent or
designee but, if the Sponsor does not select such alternative global book-entry
system, then the Class [A] Certificates may be registered in whatever name or
names registered Owners of Class [A] Certificates transferring Class [A]
Certificates shall designate, in accordance with the provisions hereof;
provided, that the cost of any such re-registration shall be paid by the
Sponsor.
(i) Notwithstanding any other provision of this Agreement to
the contrary, so long as any Class [A] Certificate is registered in the name of
Cede & Co., as nominee of the Depository, all distributions of principal or
interest on such Class [A] Certificates as the case may be and all notices with
respect to such Class [A] Certificates as the case may be shall be made and
given, respectively, in the manner provided in the Representation Letter.
(j) Neither the Sponsor, the Master Servicer, the Certificate
Insurer, nor the Trustee will have any liability for any actions taken by DTC or
its nominee, Euroclear or CEDEL, including, without limitation, actions for any
aspect of the records relating to or payments made on account of beneficial
ownership interests in the Class [A] Certificates held by Euroclear, CEDEL or
Cede & Co., as nominee for DTC, or for maintaining supervising or reviewing any
records relating to such beneficial ownership interests.
SECTION 5.5. MUTILATED, DESTROYED, LOST OR STOLEN
CERTIFICATES.
If (i) any mutilated Certificate is surrendered to the Trustee, or the Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any
Certificate, and (ii) in the case of any mutilated Certificate, such mutilated
Certificate shall first be surrendered to the Trustee, and in the case of any
destroyed, lost or stolen Certificate, there shall be first delivered to the
Trustee such security or indemnity as may be reasonably required by it to hold
the Trustee harmless (provided, that with respect to an Owner which is an
insurance company, a letter of indemnity furnished by it shall be sufficient for
this purpose; provided, that such insurance company possesses at least an
investment grade rating from any of the Rating Agencies), then, in the absence
of notice to the Trustee that such Certificate has been acquired by a bona fide
purchaser, the Trustee shall execute, authenticate and deliver, in exchange for
or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of like Class, tenor and aggregate principal amount, bearing a
number not contemporaneously outstanding.
Upon the issuance of any new Certificate under this Section,
the Trustee may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto; any other
expenses in connection with such issuance shall be an expense of the Trust.
Every new Certificate issued pursuant to this Section in
exchange for or in lieu of any mutilated, destroyed, lost or stolen Certificate
shall constitute evidence of a substitute interest in the Trust, and shall be
entitled to all the benefits of this Agreement equally and proportionately with
any and all other Certificates of the same Class duly issued hereunder and such
mutilated, destroyed, lost or stolen Certificate shall not be valid for any
purpose.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Certificates.
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SECTION 5.6. PERSONS DEEMED OWNERS.
The Trustee and any agent of the Trustee may treat the Person in whose name
any Certificate is registered as the Owner of such Certificate for the purpose
of receiving distributions with respect to such Certificate and for all other
purposes whatsoever, and neither the Trustee nor any agent of the Trustee shall
be affected by notice to the contrary.
SECTION 5.7. CANCELLATION.
All Certificates surrendered for registration of transfer or exchange shall,
if surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly cancelled by it. No Certificate shall be authenticated in
lieu of or in exchange for any Certificate cancelled as provided in this
Section, except as expressly permitted by this Agreement. All cancelled
Certificates may be held by the Trustee in accordance with its standard
retention policy.
SECTION 5.8. LIMITATION ON TRANSFER OF OWNERSHIP RIGHTS.
(a) No sale or other transfer of any Class [A] Certificate
shall be made to the Sponsor, any Originator or any of their respective
affiliates, other than Advanta National Bank or Advanta Bank Corp.
(b) No sale or other transfer of record or beneficial
ownership of a [Residual Class] Certificate (whether pursuant to a purchase, a
transfer resulting from a default under a secured lending agreement or
otherwise) shall be made to a Disqualified Organization or an agent of a
Disqualified Organization. The transfer, sale or other disposition of a
[Residual Class] Certificate (whether pursuant to a purchase, a transfer
resulting from a default under a secured lending agreement or otherwise) to a
Disqualified Organization shall be deemed to be of no legal force or effect
whatsoever and such transferee shall not be deemed to be an Owner for any
purpose hereunder, including, but not limited to, the receipt of distributions
on such [Residual Class] Certificate. Furthermore, in no event shall the Trustee
accept surrender for transfer, registration of transfer, or register the
transfer, of any [Residual Class] Certificate nor authenticate and make
available any new [Residual Class] Certificate unless the Trustee has received
an affidavit from the proposed transferee in the form attached hereto as Exhibit
I. Each holder of a [Residual Class] Certificate by his acceptance thereof,
shall be deemed for all purposes to have consented to the provisions of this
Section 5.08(b).
(c) No other sale or other transfer of record or beneficial
ownership of a [Residual Class] Certificate shall be made unless such transfer
is exempt from the registration requirements of the Securities Act of 1933, as
amended, and any applicable state securities laws or is made in accordance with
said Act and laws. In the event such a transfer is to be made within two years
from the Startup Day, (i) the Trustee or the Sponsor shall require a written
opinion of counsel acceptable to and in form and substance satisfactory to the
Sponsor that such transfer may be made pursuant to an exemption, describing the
applicable exemption and the basis therefor, from said Act and laws or is being
made pursuant to said Act and laws, which opinion of counsel shall not be an
expense of the Trustee or the Sponsor, and (ii) the Trustee shall require the
Transferee to execute an investment letter acceptable to and in form and
substance satisfactory to the Sponsor certifying to the Trustee and the Sponsor
the facts surrounding such transfer, which investment letter shall not be an
expense of the Trustee or the Sponsor. The Owner of a [Residual Class]
Certificate desiring to effect such transfer shall, and does hereby agree to,
indemnify the Trustee and the Sponsor against any liability that may result if
the transfer is not so exempt or is not made in accordance with such federal and
state laws. No [Residual
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Class] Certificate shall be acquired by or transferred to (i) an employee
benefit plan (as defined in section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) subject to the provisions of Title I
of ERISA, (ii) a plan (as defined in Section 4975(e)(1) of the Code) subject to
Section 4975 of the Code, or (iii) an entity whose underlying assets are deemed
to be assets of a plan described in (i) or (ii) above by reason of such plan's
investment in the entity (each, a "Benefit Plan Entity"). Any transferee of a
[Residual Class] Certificate shall deliver to the Trustee a certificate to the
effect that it is not a Benefit Plan Entity.
SECTION 5.9. ASSIGNMENT OF RIGHTS.
An Owner may pledge, encumber, hypothecate or assign all or any part of its
right to receive distributions hereunder, but such pledge, encumbrance,
hypothecation or assignment shall not constitute a transfer of an ownership
interest sufficient to render the transferee an Owner of the Trust without
compliance with the provisions of Section 5.4 and Section 5.8 hereof.
ARTICLE VI
COVENANTS
SECTION 6.1. DISTRIBUTIONS.
The Trustee will duly and punctually pay distributions with respect to the
Certificates in accordance with the terms of the Certificates and this
Agreement. Such distributions shall be made (i) by check mailed on each Payment
Date or (ii) if requested by any Owner, to such Owner by wire transfer to an
account within the United States designated no later than five Business Days
prior to the related Record Date, made on each Payment Date, in each case to
each Owner of record on the immediately preceding Record Date; provided,
however, that an Owner of a Class [A] Certificate shall only be entitled to
payment by wire transfer if such Owner owns Class [A] Certificates in the
aggregate denomination of at least $5,000,000.
SECTION 6.2. MONEY FOR DISTRIBUTIONS TO BE HELD IN TRUST;
WITHHOLDING.
(a) All payments of amounts due and payable with respect to
any Certificate that are to be made from amounts withdrawn from the Certificate
Account pursuant to Section 7.5 hereof or from Insured Payments shall be made by
and on behalf of the Trustee, and no amounts so withdrawn from the Certificate
Account for payments of the Certificates and no Insured Payment shall be paid
over to the Trustee except as provided in this Section.
(b) The Trustee on behalf of the Trust shall comply with all
requirements of the Code and applicable state and local law with respect to the
withholding from any distributions made by it to any Owner of any applicable
withholding taxes imposed thereon and with respect to any applicable reporting
requirements in connection therewith.
(c) Any money held by the Trustee in trust for the payment of
any amount due with respect to any Class [A] Certificate and remaining unclaimed
by the Owner of such Class [A] Certificate for the period then specified in the
escheat laws of the State of New York after such amount has become due and
payable shall be discharged from such trust and be paid first, to the
Certificate Insurer on account of any Reimbursement Amount, and second to the
Owners of the [Residual Class] R Certificates; and the Owner of such Class [A]
Certificate shall thereafter, as an unsecured general creditor, look only to the
Owners of the [Residual Class]
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Certificates, or the Certificate Insurer for payment thereof (but only to the
extent of the amounts so paid to the Certificate Insurer or the Owners of the
[Residual Class] Certificates), and all liability of the Trustee with respect to
such trust money shall thereupon cease; provided, however, that the Trustee,
before being required to make any such payment, shall at the expense of the
Sponsor cause to be published once, in the eastern edition of The Wall Street
Journal, notice that such money remains unclaimed and that, after a date
specified therein, which shall be not fewer than 30 days from the date of such
publication, any unclaimed balance of such money then remaining will be paid to
the Certificate Insurer or the Owners of the [Residual Class] Certificates as
provided above. The Trustee shall, at the direction of the Sponsor, also adopt
and employ, at the expense of the Sponsor, any other reasonable means of
notification of such payment (including but not limited to mailing notice of
such payment to Owners whose right to or interest in monies due and payable but
not claimed is determinable from the Register at the last address of record for
each such Owner).
SECTION 6.3. PROTECTION OF TRUST ESTATE.
(a) The Trustee will hold the Trust Estate in trust for the
benefit of the Owners and the Certificate Insurer as their interests may appear,
and, upon request of the Certificate Insurer, or with the consent of the
Certificate Insurer, at the request and expense of the Sponsor, will from time
to time execute and deliver all such supplements and amendments hereto pursuant
to Section 11.14 hereof and all instruments of further assurance and other
instruments, and will take such other action upon such request as it deems
reasonably necessary or advisable, to:
(i) more effectively hold in trust all or any portion of the
Trust Estate;
(ii) perfect, publish notice of, or protect the validity of
any grant made or to be made by this Agreement;
(iii) enforce any of the Mortgage Loans; or
(iv) preserve and defend title to the Trust Estate and the
rights of the Trustee, and the ownership interests of the Owners
represented thereby, in such Trust Estate against the claims of all
Persons and parties.
The Trustee shall send copies of any request received from the
Certificate Insurer or the Sponsor to take any action pursuant to this Section
6.3 to the other party.
(b) The Trustee shall have the power to enforce, and shall
enforce the obligations of the other parties to this Agreement and of the
Certificate Insurer by action, suit or proceeding at law or equity, and shall
also have the power to enjoin, by action or suit in equity, any acts or
occurrences which may be unlawful or in violation of the rights of the Owners;
provided, however, that nothing in this Section shall require any action by the
Trustee unless the Trustee shall first (i) have been furnished indemnity
satisfactory to it and (ii) when required by this Agreement, have been requested
to take such action by a majority of the Percentage Interests represented by the
affected Class or Classes of Class [A] Certificates then Outstanding or, if
there are no longer any affected Class [A] Certificates then outstanding, by
such majority of the Percentage Interests represented by the [Residual Class]
Certificates.
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(c) The Trustee shall execute any instrument required pursuant
to this Section so long as such instrument does not conflict with this Agreement
or with the Trustee's fiduciary duties.
SECTION 6.4. PERFORMANCE OF OBLIGATIONS.
(a) The Trustee will not take any action that would release
the Sponsor or the Certificate Insurer from any of their respective covenants or
obligations under any instrument or document relating to the Trust Estate or the
Certificates or which would result in the amendment, hypothecation,
subordination, termination or discharge of, or impair the validity or
effectiveness of, any such instrument or document, except as expressly provided
in this Agreement or such other instrument or document.
The Trustee may contract with other Persons to assist it in
performing its duties hereunder.
SECTION 6.5. NEGATIVE COVENANTS.
The Trustee will not, to the extent within the control of the Trustee, take
any of the following actions:
(i) sell, transfer, exchange or otherwise dispose of any of
the Trust Estate except as expressly permitted by this Agreement;
(ii) claim any credit on or make any deduction from the
distributions payable in respect of, the Certificates (other than
amounts properly withheld from such payments under the Code) or assert
any claim against any present or former Owner by reason of the payment
of any taxes levied or assessed upon any of the Trust Estate;
(iii) incur, assume or guaranty on behalf of the Trust any
indebtedness of any Person except pursuant to this Agreement;
(iv) dissolve or liquidate the Trust Estate in whole or in
part, except pursuant to Article IX hereof; or
(v) (A) impair the validity or effectiveness of this
Agreement, or release any Person from any covenants or obligations with
respect to the Trust or to the Certificates under this Agreement,
except as may be expressly permitted hereby or (B) create or extend any
lien, charge, adverse claim, security interest, mortgage or other
encumbrance to or upon the Trust Estate or any part thereof or any
interest therein or the proceeds thereof.
SECTION 6.6. NO OTHER POWERS.
The Trustee will not, to the extent within the control of the Trustee, permit
the Trust to engage in any business activity or transaction other than those
activities permitted by Section 2.3 hereof.
SECTION 6.7. LIMITATION OF SUITS.
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No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to this Agreement or the Certificate Insurance Policy or
for the appointment of a receiver or trustee, or for any other remedy hereunder,
unless:
(A) such Owner has previously given written notice to
the Sponsor, the Certificate Insurer, and the Trustee of such
Owner's intention to institute such proceeding;
(B) the Owners of not less than 25% of the Percentage
Interests represented by the affected Class or Classes of
Certificates then Outstanding or, if there are no affected
Classes of Class [A] or Class [B] Certificates then
Outstanding, by such percentage of the Percentage Interests
represented by the [Residual Class] Certificates, shall have
made written request to the Trustee to institute such
proceeding in respect of such Event of Default;
(C) such Owner or Owners have offered to the Trustee
reasonable indemnity against the costs, expenses and
liabilities to be incurred in compliance with such request;
(D) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute
such proceeding;
(E) as long as any Class [A] Certificate or any
Reimbursement Amount is outstanding, the Certificate Insurer
consented in writing thereto; and
(F) no direction inconsistent with such written
request has been given to the Trustee during such 60-day
period by the Certificate Insurer or by the Owners of a
majority of the Percentage Interests represented by the Class
[A] Certificates or, if there are no Class [A] Certificates
then Outstanding, by such majority of the Percentage Interests
represented by the [Residual Class] Certificates;
it being understood and intended that no one or more Owners shall have any right
in any manner whatever by virtue of, or by availing themselves of, any provision
of this Agreement to affect, disturb or prejudice the rights of any other Owner
of the same Class or to obtain or to seek to obtain priority or preference over
any other Owner of the same Class or to enforce any right under this Agreement,
except in the manner herein provided and for the equal and ratable benefit of
all the Owners of the same Class.
In the event the Trustee shall receive conflicting or inconsistent requests and
indemnity from two or more groups of Owners, each representing less than a
majority of the applicable Class of Certificates, the Trustee shall act at the
direction of the Certificate Insurer, notwithstanding any other provision of
this Agreement.
SECTION 6.8. UNCONDITIONAL RIGHTS OF OWNERS TO RECEIVE
DISTRIBUTIONS.
Notwithstanding any other provision in this Agreement, the Owner of any
Certificate shall have the right, which is absolute and unconditional, to
receive distributions to the extent provided herein and therein with respect to
such Certificate or to institute suit for the enforcement of any such
distribution, and such right shall not be impaired without the consent of such
Owner.
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SECTION 6.9. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided herein, no right or remedy herein conferred upon
or reserved to the Trustee, the Certificate Insurer or to the Owners is intended
to be exclusive of any other right or remedy, and every right and remedy shall,
to the extent permitted by law, be cumulative and in addition to every other
right and remedy given hereunder or now or hereafter existing at law or in
equity or otherwise. Except as otherwise provided herein, the assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
SECTION 6.10. DELAY OR OMISSION NOT WAIVER.
No delay of the Trustee, the Certificate Insurer or any Owner of any
Certificate to exercise any right or remedy under this Agreement to any Event of
Default shall impair any such right or remedy or constitute a waiver of any such
Event of Default or an acquiescence therein. Every right and remedy given by
this Article VI or by law to the Trustee, the Certificate Insurer or to the
Owners may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee, the Certificate Insurer or by the Owners, as the case
may be.
SECTION 6.11. CONTROL BY OWNERS.
The Certificate Insurer (so long as a Certificate Insurer Default has not
occurred and is continuing) or the Owners of a majority of the Percentage
Interests represented by the Class [A] Certificates then Outstanding, with the
consent of the Control Party (which may not be unreasonably withheld) or, if
there are no longer any Class [A] Certificates then Outstanding, by such
majority of the Percentage Interests represented by the [Residual Class]
Certificates then Outstanding, with the consent of the Control Party (which may
not be unreasonably withheld) may direct the time, method and place of
conducting any proceeding for any remedy available to the Control Party with
respect to the Certificates or exercising any trust or power conferred on the
Control Party with respect to the Certificates or the Trust Estate, including,
but not limited to, those powers set forth in Section 6.3 and Section 8.20
hereof; provided that:
(A) such direction shall not be in conflict with any
rule of law or with this Agreement;
(B) the Control Party shall have been provided with
indemnity satisfactory to it; and
(C) the Trustee may take any other action deemed
proper by the Trustee, which is not inconsistent with such
direction; provided, however, that the Trustee need not take
any action which it determines might involve it in liability
or may be unjustly prejudicial to the Owners not so directing;
provided, further, that in the event that any directions
provided by the Trustee and the Certificate Insurer conflict
with each other, the Certificate Insurer's direction shall
prevail.
So long as an Certificate Insurer Default has not occurred and
is continuing, the Certificate Insurer shall act as the Control Party and be
subrogated thereto until all Reimbursement Amounts have been paid.
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ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 7.1. COLLECTION OF MONEY.
Except as otherwise expressly provided herein, the Trustee may demand payment
or delivery of all money and other property payable to or receivable by the
Trustee pursuant to this Agreement, including all payments due on the Mortgage
Loans in accordance with the respective terms and conditions of such Mortgage
Loans and required to be paid over to the Trustee by the Master Servicer or by
any Sub-Servicer. The Trustee shall hold all such money and property received by
it, other than pursuant to or as contemplated by Section 6.2(b) hereof, as part
of the Trust Estate and shall apply it as provided in this Agreement.
SECTION 7.2. ESTABLISHMENT OF ACCOUNTS.
On or prior to the Startup Day, the Sponsor shall cause to be established, and
the Trustee shall maintain, at the corporate trust office of the Trustee, a
Certificate Account, a Pre-Funding Account, and a Capitalized Interest Account,
each of which is to be held by the Trustee in the name of the Trust for the
benefit of the Owners of the Certificates relating to such Mortgage Loan Group
and the Certificate Insurer, as their interests may appear.
SECTION 7.3. THE CERTIFICATE INSURANCE POLICY.
On each Determination Date the Trustee shall determine with respect to the
immediately following Payment Date:
(a) The amounts to be on deposit in the Certificate Account on
such Payment Date with respect to each Mortgage Loan Group (disregarding the
amounts of any Insured Payments with respect to such Mortgage Loan Group) and
equal to the sum of (x) such amounts excluding the amount of any Total Monthly
Excess Cashflow amounts included in such amounts and excluding an amount equal
to the Premium Amount with respect to such Mortgage Loan Group together with any
Servicing Fees and Trustee's Fees with respect to such Mortgage Loan Group for
the related Payment Date plus (y) any amounts of Total Monthly Excess Cashflow
to be applied on account of such Mortgage Loan Group; the amounts described in
the preceding clause (x) with respect to Group I and the related Payment Date,
are the "Group I Available Funds" and with respect to Group II and the related
Payment Date are the "Group II Available Funds"; the sum of the amounts
described in the preceding clauses (x) and (y) are the "Group I Total Available
Funds" with respect to the Mortgage Loans in Group I and "Group II Total
Available Funds" with respect to the Mortgage Loans in Group II; provided,
however, that the amounts which cannot be distributed to the Owners of the Class
[A] Certificates as a result of proceedings under the United States Bankruptcy
Code or similar insolvency laws will not be considered in determining the amount
of Available Funds;
(b) If a Group I Deficiency Amount and/or a Group II
Deficiency Amount exists with respect to any Payment Date, the Trustee shall
complete a Notice in the form of Exhibit A to the Certificate Insurance Policy
and submit such notice to the Certificate Insurer no later than 12:00 noon New
York City time on the second Business Day preceding such Payment Date as a claim
for an Insured Payment in an amount equal to such Group I and/or Group II
Deficiency Amount. Upon receipt of Insured Payments from the Certificate Insurer
under the
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Certificate Insurance Policy, the Trustee shall deposit such Insured Payments in
the Certificate Account.
(c) The Trustee shall distribute all Insured Payments
received, or the proceeds thereof, in accordance with Section 7.5(b)(F) to the
Owners of the related Class of Class [A] Certificates.
(d) The Trustee shall (i) receive Insured Payments as
attorney-in-fact of each Owner of the Class [A] Certificates of the related
Class receiving any Insured Payment from the Certificate Insurer and (ii)
disburse such Insured Payment to the Owners of the related Class [A]
Certificates as set forth in Section 7.5(b)(F). The Certificate Insurer shall be
entitled to receive the related Reimbursement Amount pursuant to Section
7.5(b)(D)(4) hereof with respect to each Insured Payment made by the Certificate
Insurer. The Trustee hereby agrees on behalf of each Owner of Class [A]
Certificates and the Trust for the benefit of the Certificate Insurer that it
recognizes that to the extent the Certificate Insurer makes Insured Payments,
either directly or indirectly (as by paying through the Trustee), to the Owners
of such Class [A] Certificates, the Certificate Insurer will be entitled to
receive the related Reimbursement Amount pursuant to Section 7.5(b)(D)(4)
hereof.
(e) The Trustee shall receive, as attorney-in-fact of each
Owner of a Class [A] Certificate, any Insured Payment from the Certificate
Insurer and disburse the same to each Owner of a Class [A] Certificate in
accordance with the provisions of Section 7.3. Insured Payments disbursed by the
Trustee from proceeds of the Certificate Insurance Policy shall not be
considered payment by the Trust Estate nor shall such payments discharge the
obligation of the Trust Estate with respect to such Class [A] Certificates, and
the Certificate Insurer shall become the owner of such unpaid amounts due from
the Trust Estate in respect of the Class [A] Certificates. The Trustee hereby
agrees on behalf of each Owner of a Class [A] Certificate for the benefit of the
Certificate Insurer that it recognizes that to the extent the Certificate
Insurer makes any Group I Insured Payment or Group II Insured Payment, as
applicable, either directly or indirectly (as by paying through the Trustee), to
the Class [A] Certificateholders, the Certificate Insurer will be subrogated to
the rights of the Class [A] Certificateholders with respect to such Insured
Payment, shall be deemed to the extent of payments so made to be a registered
Class [A] Certificateholder and shall receive all future distributions until all
such Insured Payments by the Certificate Insurer, together with interest thereon
at the interest rate borne by the Class [A] Certificates, have been fully
reimbursed. To evidence such subrogation, the Trustee shall, or shall cause the
Registrar to, note the Certificate Insurer's rights as subrogee on the
registration books maintained by the Trustee or the Registrar upon receipt from
the Certificate Insurer of proof of payment of any Group I Insured Payment or
Group II Insured Payment, as applicable. The effect of the foregoing provisions
is that, to the extent of Insured Payments made by it, the Certificate Insurer
shall be paid before payment of the balance of the distributions are made to the
other Owners of the Class [A] Certificates.
SECTION 7.4. PRE-FUNDING ACCOUNT AND CAPITALIZED INTEREST
ACCOUNT.
(a) On the Startup Day, the Trustee will deposit, on behalf of
the Owners, the Group I Original Pre-Funded Amount and the Group II Original
Pre-Funded Amount in the Pre-Funding Account from the proceeds of the sale of
the Certificates and on the Startup Day, the Trustee shall deposit, on behalf of
the Owners, the Group I Capitalized Interest Deposit and the Group II
Capitalized Interest Deposit in the Capitalized Interest Account from the
proceeds of the sale of the Certificates.
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(b) On any Subsequent Transfer Date, the Sponsor shall
instruct the Trustee in writing to withdraw from the Pre-Funding Account an
amount equal to 100% of the aggregate Loan Balances of the Subsequent Mortgage
Loans sold to the Trust on such Subsequent Transfer Date and pay such amount to
or upon the order of the Sponsor upon satisfaction of the conditions set forth
in Section 3.8 hereof with respect to such transfer.
(c) If (x) the Pre-Funded Amount with respect to the related
Mortgage Loan Group has not been reduced to zero by [__________, _____], or (y)
the Pre-Funded Amount has been reduced to $100,000 or less, or (z) any Event of
Default occurs and is continuing in each case after giving effect to any
reductions in the Pre-Funded Amount on or before the related such Remittance
Date, the Sponsor shall instruct the Trustee to withdraw from the Pre-Funding
Account on such Remittance Date and deposit in the Certificate Account (i) on
behalf of the owners of the Group I Certificates, the difference, if any,
between (A) the Group I Original Pre-Funded Amount and (B) all amounts
theretofore withdrawn from the Pre-Funding Account with respect to Subsequent
Mortgage Loans purchased for Group I and (ii) on behalf of the Owners of the
Group II Certificates, the difference, if any, between (A) the Group II Original
Pre-Funded Amount and (B) all amounts theretofore withdrawn from the Pre-Funding
Account with respect to Subsequent Mortgage Loans purchased for Group II.
(d) On each Payment Date during the Pre-Funding Period, the
Trustee shall transfer the Pre-Funding Earnings, if any, relating to such
Payment Date from the Pre-Funding Account to the Certificate Account.
(e) On the Payment Dates occurring in [__________, _____],
[__________, _____] and [__________, _____], the Trustee shall transfer from the
Capitalized Interest Account to the Certificate Account with respect to Group I,
the Group I Capitalized Interest Requirement, if any, for such Payment Dates and
with respect to Group II, the Group II Capitalized Interest Requirement, if any,
for such Payment Dates.
(f) On the Payment Date immediately following the end of the
Pre-Funding Period, any amounts remaining in the Capitalized Interest Account
after taking into account the transfers on such Payment Date described in clause
(e) above shall be paid to the Owners of the [Residual Class] Certificates, and
the Capitalized Interest Account shall be closed.
SECTION 7.5. FLOW OF FUNDS.
(a) On each Remittance Date, the Trustee shall deposit to the
Certificate Account with respect to each Mortgage Loan Group, without
duplication, (i) upon receipt, any Insured Payments relating to such Mortgage
Loan Group, the proceeds of any liquidation of the assets of the Trust, insofar
as such assets relate to such Mortgage Loan Group, together with the Monthly
Remittance Amount with respect to such Mortgage Loan Group remitted by the
Master Servicer or any Sub-Servicer and (ii) on the Payment Dates occurring in
[__________, _____], [__________, _____] and [__________, _____], as applicable,
(x) the Pre-Funding Earnings transferred by the Trustee pursuant to Section
7.4(d) hereof, (y) the Group I Capitalized Interest Requirement and the Group II
Capitalized Interest Requirement to be transferred on such Payment Dates from
the Capitalized Interest Account, pursuant to Section 7.4(e) hereof with respect
to such Mortgage Loan Group and (z) the portion of the amount, if any, to be
transferred on such Payment Date from the Pre-Funding Account, pursuant to
Section 7.4(c) hereof with respect to such Mortgage Loan Group.
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(b) On each Payment Date the Trustee shall make the following
allocations, disbursements and transfers of amounts then on deposit in the
Certificate Account with respect to each Mortgage Loan Group in the following
order of priority, and each such allocation, transfer and disbursement shall be
treated as having occurred only after all preceding allocations, transfers and
disbursements have occurred:
(A) first, from amounts then on deposit in the
Certificate Account with respect to such Mortgage Loan Group,
to the Trustee, an amount equal to the Trustee's Fees then due
to it with respect to such Mortgage Loan Group;
(B) second, from amounts then on deposit in the
Certificate Account with respect to such Mortgage Loan Group,
to the Certificate Insurer the related Premium Amount for such
Payment Date;
(C) third, from amounts then on deposit in the
Certificate Account to the Master Servicer, an amount equal to
any Servicing Fees then due to it, to the extent not
previously received by the Master Servicer pursuant to
Sections 8.8(c)(i) or 8.9(a) hereof;
(D) fourth, on each Payment Date, the Trustee shall
allocate the Total Monthly Excess Cashflow with respect to
each Mortgage Loan Group in the following order of priority:
1. first, such Total Monthly Excess Cashflow shall be
allocated on such Payment Date with respect to the
related Mortgage Loan Group in an amount equal to the
excess, if any, of (x) the related Insured
Distribution Amount for such Payment Date over (y)
the Available Funds with respect to such Mortgage
Loan Group for such Payment Date (the amount of such
difference being the "Available Funds Shortfall" with
respect to the related Mortgage Loan Group);
2. second, any portion of the Total Monthly Excess
Cashflow with respect to such Mortgage Loan Group
remaining after the application described in clause
(1) above shall be allocated against any Available
Funds Shortfall with respect to the other Mortgage
Loan Group;
3. third, any portion of the Total Monthly Excess
Cashflow with respect to such Mortgage Loan Group
remaining after the allocations described in clauses
(1) and (2) above shall be paid to the Certificate
Insurer in respect of amounts owed on account of any
Reimbursement Amount with respect to the related
Mortgage Loan Group;
4. fourth, any portion of the Total Monthly Excess
Cashflow with respect to such Mortgage Loan Group
remaining after the allocations described in clauses
(1), (2) and (3) above shall be paid to the
Certificate Insurer in respect of any Reimbursement
Amount with respect to the other Mortgage Loan Group;
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(E) fifth, the amount, if any, of the Total Monthly
Excess Cashflow with respect to a Mortgage Loan Group on a
Payment Date remaining after the allocations described in
clause (D) above is the "Net Monthly Excess Cashflow" with
respect to such Mortgage Loan Group for such Payment Date;
such amount is required to be applied in the following order
of priority:
1. first, such Net Monthly Excess Cashflow shall be
used to reduce to zero, through the payment of an
Overcollateralization Increase Amount, any
Overcollateralization Deficiency Amount with respect
to the related Mortgage Loan Group as of such Payment
Date;
2. second, any portion of the Net Monthly Excess
Cashflow remaining after the application described in
clause (1) above shall be used to reduce to zero,
through the payment of an Overcollateralization
Increase Amount, any Overcollateralization Deficiency
Amount with respect to the other Mortgage Loan Group;
3. third, any remaining Net Monthly Excess Cashflow
remaining after the applications described in clauses
(1) and (2) above shall be paid to the Master
Servicer to the extent of any unreimbursed
Delinquency Advances, unreimbursed Servicing Advances
and accrued and unpaid Servicing Fees, in each case
as certified to the Trustee by the Master Servicer to
be owing to it as of such Payment Date;
(F) sixth, following the making by the Trustee of all
allocations, transfers and disbursements described above under
Sections 7.3 and 7.10 hereof and the prior clauses of this
Section 7.5, from amounts (including any related Insured
Payment) then on deposit in the Certificate Account with
respect to each related Mortgage Loan Group, (such amount with
respect to each Mortgage Loan Group, the related "Group
Distribution Amount") shall be applied as follows:
1. with respect to the Group I Pool, the Group
Distribution Amount shall be applied:
(a) first, pro rata, to the Owners of the Group I
Certificates, their respective Class [A] Current
Interest;
(b) second, pro rata, to the Owners of the Group
I Certificates, their respective Class [A]
Interest Carry Forward
Amount;
(c) third, the lesser of (x) the remaining amount
of the Group Distribution Amount with respect to
the Group I Pool and (y) the Group I Class [A]
Principal Distribution Amount shall be applied in
the following order of priority:
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i. first, the Group I Class [A] Principal
Distribution Amount shall be distributed to
the Owners of the Class [A-1] Certificates
in an amount equal to the Class [A-1]
Principal Distribution Amount;
ii. second, to the Owners of the Class [A-1]
Certificates, any remaining amount of the
Group I Class [A] Principal Distribution
Amount for such Payment Date until the
Certificate Principal Balance of the Class
[A-1] Certificates has been reduced to zero.
Notwithstanding the foregoing, on any Payment Date on
which the Overcollateralization Amount related to
Group I is zero and the Certificate Insurer is in
default, the Principal Distribution Amount with
respect to the Group I Certificates shall be
distributed pro rata to the Owners of the Group I
Certificates and not in accordance with the above
priorities.
2. With respect to the Group II Pool, the Group
Distribution Amount shall be applied:
(a) first, pro rata, to the Owners of the Group
II Certificates, their respective Class [A]
Current Interest;
(b) second, pro, rata, to the Owners of the Group
II Certificates, their respective Class [A]
Interest Carry Forward
Amount;
(c) third, the lesser of (x) the remaining amount
of the Group Distribution Amount with respect to
the Group II Pool and (y) the Group II Class [A]
Principal Distribution Amount shall be
distributed to the Owners of the Class [A-2]
Certificates until the Certificate Principal
Balance of Class [A-2] has been reduced to zero;
(G) seventh, on each Payment Date, the Trustee shall
transfer from amounts then on deposit in the Certificate
Account to the Class [A-2] Supplemental Interest Payment
Account, the Class [B] Distribution Amount; such transfer
shall be deemed to be a distribution on the Class [B]
Certificates;
(H) eighth, on each Payment Date, the Trustee shall
transfer all remaining monies then on deposit in the
Certificate Account to the Owners of the [Residual Class]
Certificates.
(c) Notwithstanding paragraph (b) above, on any Payment Date
during the continuance of any Certificate Insurer Default, no Premium Amounts or
Reimbursement Amounts shall be paid to the Certificate Insurer unless the
Certificate Insurer or its custodian, trustee, agent, receiver or similar
official continues to make payment under the Policy, and any amounts otherwise
payable to the Certificate Insurer as Premium Amounts or Reimbursement Amounts
shall be retained in the Certificate Account as the Total Available Funds with
respect to the related Mortgage Loan Group, as appropriate. On any Payment Date
wherein such Certificate
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Insurer Default has been cured, the Premium Amounts or Reimbursement Amount
shall be paid to the Certificate Insurer.
(d) Notwithstanding any of the foregoing provisions, the
aggregate amount distributed to the Owners of any Class [A] Certificates on
account of principal shall not exceed the Certificate Principal Balance for the
related Class.
SECTION 7.6. INVESTMENT OF ACCOUNTS.
(a) So long as no event described in Sections 8.20(a) or (b)
hereof shall have occurred and be continuing, and consistent with any
requirements of the Code, all or a portion of the Accounts (other than the
Principal and Interest Account) held by the Trustee shall be invested and
reinvested by the Trustee in the name of the Trustee for the benefit of the
Owners and the Certificate Insurer, as their interests may appear, as directed
in writing by the Master Servicer, in one or more Eligible Investments bearing
interest or sold at a discount, other than the Capitalized Interest Account
which funds shall be invested and reinvested by the Trustee on behalf of the
Master Servicer. The Master Servicer may invest funds held in the Principal and
Interest Account in one or more Eligible Investments. During the continuance of
an event described in Sections 8.20(a) or (b) hereof and following any removal
of the Master Servicer, the Control Party shall direct such investments. No
investment in any Account shall mature later than the Business Day immediately
preceding the next Payment Date.
(b) If any amounts are needed for disbursement from any
Account held by the Trustee or the Master Servicer, as the case may be, and
sufficient uninvested funds are not available to make such disbursement, the
Trustee or the Master Servicer, as the case may be, shall cause to be sold or
otherwise converted to cash a sufficient amount of the investments in such
Account. No investments will be liquidated prior to maturity unless the proceeds
thereof are needed for disbursement.
(c) Subject to Section 10.1 hereof, the Trustee shall not in
any way be held liable by reason of any insufficiency in any Account held by the
Trustee resulting from any loss on any Eligible Investment included therein
(except and only to the extent that the bank serving as Trustee is the obligor
thereon and is otherwise liable).
(d) The Trustee shall hold funds in the Accounts held by the
Trustee uninvested upon the occurrence of either of the following events:
(i) the Master Servicer or the Control Party, as the case may
be, shall have failed to give investment directions to the Trustee
within ten days after receipt of a written request for such directions
from the Trustee; or
(ii) the Master Servicer or the Control Party, as the case may
be, shall have failed to give investment directions to the Trustee
during the ten-day period described in clause (d)(i) preceding, by
11:15 a.m. New York time (or such other time as may be agreed by the
Master Servicer and the Trustee) on any Business Day (any such
investment by the Trustee pursuant to this clause (d)(ii) to mature on
the next Business Day after the date of such investment).
(e) For purposes of investment, the Trustee shall aggregate
all amounts on deposit in the Accounts. All income or other gain from
investments in the Accounts shall be
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deposited, pro rata, in the Accounts immediately on receipt, and any loss
resulting from such investments shall be charged, pro rata, to the Accounts.
SECTION 7.7. ELIGIBLE INVESTMENTS.
The following are Eligible Investments:
(a) Direct general obligations of the United States or the
obligations of any agency or instrumentality of the United States fully and
unconditionally guaranteed, the timely payment or the guarantee of which
constitutes a full faith and credit obligation of the United States.
(b) Federal Housing Administration debentures and rated Aa2 or
higher by Moody's and AA or better by Standard & Poor's.
(c) ▇▇▇▇▇▇▇ Mac senior debt obligations and rated Aa2 or
higher by Moody's and AA or better by Standard & Poor's.
(d) Federal Home Loan Banks' consolidated senior debt
obligations and rated Aa2 or higher by Moody's and AA or better by Standard &
Poor's.
(e) ▇▇▇▇▇▇ ▇▇▇ senior debt obligations and rated Aa2 or higher
by Moody's.
(f) Federal funds, certificates of deposit, time and demand
deposits, and bankers' acceptances (having original maturities of not more than
365 days) of any domestic bank, the short-term debt obligations of which have
been rated A1 or better by Standard & Poor's and P-1 by Moody's.
(g) Investment agreements approved by the Control Party
provided:
1. The agreement is with a bank or insurance company
which has an unsecured, uninsured and unguaranteed obligation
(or claims-paying ability) rated Aa2 or better by Moody's and
AA or better by Standard & Poor's, and
2. Monies invested thereunder may be withdrawn
without any penalty, premium or charge upon not more than one
day's notice (provided such notice may be amended or canceled
at any time prior to the withdrawal date), and
3. The agreement is not subordinated to any other
obligations of such insurance company or bank, and
4. The same guaranteed interest rate will be paid on
any future deposits made pursuant to such agreement, and
5. The Trustee and the Certificate Insurer receive an
opinion of counsel that such agreement is an enforceable
obligation of such insurance company or bank.
(h) Commercial paper (having original maturities of not more
than 365 days) rated A1 or better by Standard & Poor's and P-1 or better by
Moody's.
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(i) Investments in money market funds rated AAAm or AAAM-G by
Standard & Poor's and Aaa or P-1 by Moody's.
(j) Investments approved in writing by the Control Party and
acceptable to the Rating Agencies and the Certificate Insurer;
provided that no instrument described above is permitted to evidence either the
right to receive (a) only interest with respect to obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provided a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations; and provided, further,
that no instrument described above may be purchased at a price greater than par
if such instrument may be prepaid or called at a price less than its purchase
price prior to stated maturity; and provided, further, that, with respect to any
instrument described above, such instrument qualifies as a "permitted
investment" within the meaning of Section 860G(a)(5) of the Code and the
regulations thereunder.
SECTION 7.8. REPORTS BY TRUSTEE.
(a) On each Payment Date the Trustee shall provide to each
Owner, to the Master Servicer, to the Certificate Insurer, to each Underwriter,
to the Sponsor and to each Rating Agency a written report in substantially the
form set forth as Exhibit I hereto with respect to each Mortgage Loan Group, as
such form may be revised by the Trustee and the Master Servicer from time to
time, but in every case setting forth the information requested on Exhibit I
hereto and the following information:
(i) the amount of the distribution with respect to the related
Class of Certificates;
(ii) the amount of such distributions allocable to principal,
separately identifying the aggregate amount of any Prepayments or other
unscheduled recoveries of principal included therein;
(iii) the amount of such distributions allocable to interest;
(iv) the Interest Carry Forward Amount for each Class;
(v) the Certificate Principal Balance for each Class of Class
[A] Certificates as of such Payment Date, together with the principal
amount of such Class of Class [A] Certificates (based on a Certificate
in an original principal amount of $1,000) then outstanding, in each
case after giving effect to any payment of principal on such Payment
Date;
(vi) with respect to the Class [A] Certificates, the amount of
any Class [A] Insured Payment included in the amounts distributed in
respect of the Class [A] Certificates;
(vii) the aggregate Loan Balance of all Mortgage Loans after
giving effect to any payment of principal on such Payment Date both in
the aggregate and in each of the Mortgage Loan Groups;
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(viii) information furnished by the Sponsor pursuant to
Section 6049(d)(7)(C) of the Code and the regulations promulgated
thereunder to assist the Owners in computing their market discount;
(ix) the total of any Substitution Amounts and any Loan
Purchase Price amounts included in such distribution;
(x) the weighted average Coupon Rate of the Mortgage Loans
with respect to each Group;
(xi) the amount of any Class [A-2] Supplemental Interest
Amount;
(xii) the Overcollateralization Amount, for each Mortgage Loan
Group, after giving effect to any payment of principal on such Payment
Date;
(xiii) the aggregate Loan Balances of all Mortgage Loans in
each Mortgage Loan Group that were repurchased during the related
Remittance Period and any repurchases pursuant to Section 8.10;
(xiv) the amounts, if any, of any Realized Losses in each
Mortgage Loan Group for the related Remittance Period;
(xv) the Pool Cumulative Realized Losses (x) as a percentage
of the average Pool Principal Balance as of the close of business on
the last day of each of the twelve preceding Remittance Periods and (y)
as a percentage of the sum of the aggregate Loan Balances of the
Mortgage Loans as of the Initial Cut-Off Date;
(xvi) a number with respect to each Class (the "Pool Factor"
for such Class) computed by dividing the Certificate Principal Balance
for such Class (after giving effect to any distribution of principal to
be made on such Payment Date) by the Certificate Principal Balance for
such Class on the Startup Day;
(xvii) whether a Servicer Termination Loss Trigger has
occurred, as such terms are defined in the Insurance Agreement.
Items (i) through (iii) above shall, with respect to each
Class of Class [A] Certificates, be presented on the basis of a Certificate
having a $1,000 denomination. In addition, by January 31 of each calendar year
following any year during which the Certificates are outstanding, the Trustee
shall furnish a report to each Owner of record at any time during each calendar
year as to the aggregate of amounts reported pursuant to (i), (ii) and (iii)
with respect to the Certificates for such calendar year. If a Class of
Certificates is in book-entry form, DTC will supply such reports to the Owners
of such Class of Certificates as are in accordance with its procedures.
(b) In addition, on each Payment Date the Trustee will
distribute to each Owner, to the Certificate Insurer, to each Underwriter, to
the Master Servicer, to the Sponsor and to each Rating Agency, together with the
information described in Subsection (a) preceding, the following information
with respect to each Mortgage Loan Group as of the close of business on the last
Business Day of the prior calendar month, which is hereby required to be
prepared by the Master Servicer and furnished to the Trustee for such purpose on
or prior to the related Remittance Date:
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(i) the total number and aggregate Loan Balances of Mortgage
Loans in each Mortgage Loan Group and the percentage (based on the
aggregate Loan Balances) of the aggregate Loan Balances of such
Mortgage Loans in the related Mortgage Loan Group which are (a) 30-59
days Delinquent, (b) 60-89 days Delinquent and (c) 90 or more days
Delinquent;
(ii) the number, aggregate Loan Balances and percentage (based
on the aggregate Loan Balances of the Mortgage Loans in such Mortgage
Loan Group) of all Mortgage Loans in the related Mortgage Loan Group in
foreclosure proceedings (and whether any such Mortgage Loans are also
included in any of the statistics described in the foregoing clause
(i));
(iii) the number, aggregate Loan Balances and percentage
(based on the aggregate Loan Balances of the Mortgage Loans in such
Mortgage Loan Group) of all Mortgage Loans in the related Mortgage Loan
Group relating to Mortgagors in bankruptcy proceedings (and whether any
such Mortgage Loans are also included in any of the statistics
described in the foregoing clause (i));
(iv) the number, aggregate Loan Balances and percentage (based
on the aggregate Loan Balances of the Mortgage Loans in such Mortgage
Loan Group) of all Mortgage Loans in the related Mortgage Loan Group
relating to REO Properties (and whether any such Mortgage Loans are
also included in any of the statistics described in the foregoing
clause (i));
(v) the loan number of the Mortgage Loans and the book value
of any REO Property in each Mortgage Loan Group;
(vi) the aggregate Loan Balance of 60+ Day Delinquent Mortgage
Loans with respect to each Group; and
(vii) the book value of any REO Property.
(c) The foregoing reports shall be sent be to an Owner only
insofar as such Owner owns a Certificate with respect to the related Mortgage
Loan Group.
(d) The Sponsor and the Master Servicer, on behalf of
Certificateholders and the Trust (the "Trust Parties") hereby authorize the
Trustee to include the loan level information with respect to the Mortgage
Loans, excluding any information relating to the fees or amounts due to the
Certificate Insurer, contained in reports provided to the Certificate Insurer or
the Trustee by the Master Servicer hereunder and, if so directed by an
Authorized Officer of the Sponsor in writing to the Trustee, the monthly report
to the Owners prepared by the Trustee (the "Information") on The Bloomberg, an
on-line computer based on-line information network maintained by Bloomberg L.P.
("Bloomberg") or on any other on-line computer based on-line information network
or service ("Information Network"), or in other electronic or print information
services deemed acceptable by the Sponsor or the Master Servicer as designated
in writing to the Trustee by an Authorized Officer of the Master Servicer. The
Trust Parties agree not to commence any actions or proceedings, or otherwise
assert any claims, against the Trustee or its affiliates or any of the Trustee's
or its affiliates' respective agents, representatives, directors, officers or
employees (collectively, the "Designated Parties"), arising out of, or related
to or in connection with the dissemination and/or use of any Information by the
Trustee, including, but not limited to, claims based on allegations of
inaccurate or incomplete information by the Trustee
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to Bloomberg or to any Information Network or otherwise (other than in
connection with the Trustee's negligence or willful misconduct). The Trust
Parties waive their rights to assert any such claims against the Designated
Parties and fully and finally release the Designated Parties from any and all
such claims, demands, obligations, actions and liabilities (other than in
connection with such Designated Parties' negligence or willful misconduct). The
Trustee makes no representations or warranties, expressed or implied, of any
kind whatsoever with respect to the accuracy, adequacy, timeliness,
completeness, merchantability or fitness for any particular purpose of any
Information in any form or manner. The authorizations, covenants and obligations
of the Trust Parties under this section shall be irrevocable and shall survive
the termination of this Agreement.
SECTION 7.9. ADDITIONAL REPORTS BY TRUSTEE.
(a) The Trustee shall report to the Sponsor, the Certificate
Insurer and the Master Servicer with respect to the amount then held in each
Account (including investment earnings accrued or scheduled to accrue) held by
the Trustee and the identity of the investments included therein, as the
Sponsor, the Master Servicer or the Certificate Insurer may from time to time
request. Without limiting the generality of the foregoing, the Trustee shall, at
the request of the Sponsor, the Master Servicer or the Certificate Insurer,
transmit promptly to the Sponsor, the Certificate Insurer and the Master
Servicer copies of all accounting of receipts in respect of the Mortgage Loans
furnished to it by the Master Servicer and shall notify the Sponsor, the
Certificate Insurer and the Master Servicer if any such receipts have not been
received by the Trustee.
(b) The Trustee shall immediately report to the Certificate
Insurer, Sponsor and Master Servicer with respect to its actual knowledge,
without independent investigation, of any breach of any of the representations
or warranties relating to individual Mortgage Loans set forth in any Master
Transfer Agreement or in Section 3.3(a) hereof.
SECTION 7.10. SUPPLEMENTAL INTEREST PAYMENT ACCOUNT AND
SUPPLEMENTAL INTEREST PAYMENTS.
(a) The parties hereto do hereby create and establish a trust,
the "[Supplemental Interest Trust]" (the "Supplemental Interest Trust"). The
Supplemental Interest Trust shall hold a trust account (which shall be an
Eligible Account), the "Class [A-2] Supplemental Interest Payment Account" to be
held by the Trustee in its name on behalf of the Supplemental Interest Trust.
None of the assets of the Supplemental Interest Trust shall be considered assets
of the REMIC Trust, and any amounts transferred from the REMIC Trust to the
Supplemental Interest Trust shall be treated as distributions.
(b) The amount, if any, on deposit in the Class [A-2]
Supplemental Interest Payment Account on any Payment Date is the "Supplemental
Interest Payment Amount Available" on such Payment Date.
On each Payment Date, the Trustee shall withdraw from the
Class [A-2] Supplemental Interest Payment Account and pay to the Owners of the
Supplemental Interest Right (which Owners shall, in the absence of contrary
instructions received by the Trustee from the Owners of the Class [A-2]
Certificates, be the Owners of the Class [A-2] Certificates) the lesser of (x)
the sum of (i) the Class [A-2] Supplemental Interest Amount for such Payment
Date plus (ii) any Class [A-2] Supplemental Interest Shortfall Carry-Forward
Amount and (y) the Supplemental Interest Payment Amount Available.
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If, on any Payment Date, the Supplemental Interest Payment
Amount Available is insufficient to pay the Class [A-2] Supplemental Interest
Amount for such Payment Date (such deficiency, the "Class [A-2] Supplemental
Interest Shortfall Amount"), the Trustee shall demand that the Designated
Residual Owner fund such deficiency on the related Payment Date and the
Designated Residual Owner shall be required to fund such deficiency.
(c) Any portion of the Supplemental Interest Payment Amount
Available remaining after application of clause (b) above shall be distributed
to the owners of the Class [___] Certificates pro rata in accordance with their
Percentage Interests.
(d) The Trustee, on behalf of the Supplemental Interest Trust,
shall comply with all requirements of the Code and applicable state and local
law with respect to the withholding from any distributions made by it to any
Person entitled thereto of any applicable withholding taxes imposed thereon and
with respect to any applicable reporting requirements in connection therewith.
(e) Notwithstanding any other provision of this Section 7.10,
the right to receive the Class [A-2] Supplemental Interest Amount plus any Class
[A-2] Supplemental Interest Shortfall Carry-Forward Amounts (such right, the
"Supplemental Interest Right") shall be separately transferable from the Class
[A-2] Certificates, subject to the restrictions on transfer set forth in Article
V hereof.
ARTICLE VIII
SERVICING AND ADMINISTRATION
OF MORTGAGE LOANS
SECTION 8.1. MASTER SERVICER AND SUB-SERVICERS.
(a) Acting directly or through one or more Sub-Servicers as
provided in Section 8.3, the Master Servicer, as master servicer, shall service
and administer the Mortgage Loans in accordance with this Agreement on behalf of
the Trustee, the Owners and the Certificate Insurer in accordance with Accepted
Servicing Practices, and shall have full power and authority, acting alone, to
do or cause to be done any and all things in connection with such servicing and
administration which it may deem necessary or desirable.
(b) The duties of the Master Servicer shall include collecting
and posting of all payments, responding to inquiries of Mortgagors or by
federal, state or local government authorities with respect to the Mortgage
Loans, investigating delinquencies, reporting tax information to Mortgagors in
accordance with its customary practices and accounting for collections and
furnishing monthly and annual statements to the Trustee and the Certificate
Insurer, as applicable, with respect to distributions, paying Compensating
Interest and making Delinquency Advances and Servicing Advances pursuant hereto.
The Master Servicer shall follow its customary standards, policies and
procedures in performing its duties as Master Servicer. The Master Servicer
shall cooperate with the Trustee and furnish to the Trustee with reasonable
promptness information in its possession as may be necessary or appropriate to
enable the Trustee to perform its tax reporting duties hereunder
(c) Subject to clause (e) below, without limiting the
generality of the foregoing, the Master Servicer (i) shall continue, and is
hereby authorized and empowered by the
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Trustee, to execute and deliver, on behalf of itself, the Owners, the
Certificate Insurer and the Trustee or any of them, any and all instruments of
satisfaction or cancellation, or of full release or discharge and all other
comparable instruments, with respect to the Mortgage Loans and with respect to
the related Properties; (ii) may consent to any modification of the terms of any
Note not expressly prohibited hereby if the effect of any such modification (x)
will not be to affect materially and adversely the security afforded by the
related Property, the timing of receipt of any payments required hereby or the
interests of the Certificate Insurer and (y) will not cause the Upper-Tier REMIC
or the Lower-Tier REMIC to fail to qualify as a REMIC.
(d) The Master Servicer shall have the right using that degree
of skill and attention that the Master Servicer exercises with respect to
comparable mortgage loans that it services for itself or others, to approve
applications of Mortgagors for consent to (i) partial releases of Mortgages,
(ii) alterations to Properties and (iii) removal, demolition or division of
Properties. No application for consent may be approved by the Master Servicer
unless: (x) the provisions of the related Note and Mortgage have been complied
with; (y) the Combined Loan-to-Value Ratio (which may, for this purpose, be
determined at the time of any such action in a manner reasonably acceptable to
the Trustee) and the Mortgagor's debt-to-income ratio after any release does not
exceed the Combined Loan-to-Value Ratio and debt-to-income ratio applicable to
such Mortgage Loan at origination and (z) the lien priority of the related
Mortgage is not adversely affected or reduced; provided, however, that the
foregoing requirements (x), (y) and (z) shall not apply to any such situation
described in this paragraph if such situation results from any condemnation or
easement activity by a governmental entity.
(e) The parties intend that each of the Lower-Tier REMIC and
the Upper-Tier REMIC shall constitute a REMIC and that the affairs of each shall
be conducted so as to qualify each as a REMIC. In furtherance of such intention,
the Master Servicer covenants and agrees that it shall act as agent (and the
Master Servicer is hereby appointed to act as agent) on behalf of each such
REMIC and that in such capacity it shall: (i) use its best efforts to conduct
the affairs of each such REMIC at all times that any Class of Certificates are
outstanding so as to maintain the status of each such REMIC as a REMIC under the
REMIC Provisions; (ii) not knowingly or intentionally take any action or omit to
take any action that would cause the termination of the REMIC status of either
such REMIC or that would subject the Trust to tax and (iii) exercise reasonable
care not to allow either such REMIC to receive income from the performance of
services or from assets not permitted under the REMIC Provisions to be held by
each REMIC.
(f) The Master Servicer may in its discretion (i) waive any
assumption fees, late payment charges, charges for checks returned for
insufficient funds, prepayment fees, if any, or 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 or a Mortgagor's financial
condition, arrange with the Mortgagor a schedule for the payment of delinquent
payments due on the related Mortgage Loan; provided, however, the Master
Servicer shall generally not be permitted to reschedule the payment of
delinquent payments more than one time in any twelve consecutive months with
respect to any Mortgagor and such modifications shall not be made in excess of
5% of the aggregate of the Group I Original Balance and the Group II Original
Balance Principal Balance without the prior written consent of the Certificate
Insurer; provided, however, that, if the Certificate Insurer has not given its
consent within five (5) Business Days after notice from the Master Servicer, the
Certificate Insurer shall be deemed to have given its consent to such
modification or rescheduling for payments of delinquent payments; provided,
however, that such notice and consent shall not be required in the event that
the Master Servicer determines, in its sole discretion that such modification is
required to be made prior to such five day period, or (iii)
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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 the comparable mortgage loans subject to the
Civil Relief Act.
(g) Without limiting the generality of the foregoing, but
subject to Sections 8.13 and 8.14, the Master Servicer in its own name or in the
name of a Sub-Servicer may be authorized and empowered pursuant to a power of
attorney executed and delivered by the Trustee to execute and deliver, and may
be authorized and empowered by the Trustee, to execute and deliver, on behalf of
itself, the Owners, the Certificate Insurer and the Trustee or any of them, (i)
any and all instruments of satisfaction or cancellation or of partial or full
release or discharge and all other comparable instruments with respect to the
Mortgage Loans and with respect to the Properties, (ii) and to institute
foreclosure proceedings or obtain a deed in lieu of foreclosure so as to effect
ownership of any Property on behalf of the Trustee, and (iii) to hold title to
any Property upon such foreclosure or deed in lieu of foreclosure on behalf of
the Trustee; provided, however, that Section 8.14(a) shall constitute a power of
attorney from the Trustee to the Master Servicer or any Sub-Servicer to execute
an instrument of satisfaction (or assignment of mortgage without recourse) with
respect to any Mortgage Loan paid in full (or with respect to which payment in
full has been escrowed). Subject to Sections 8.13 and 8.14, the Trustee shall
furnish the Master Servicer and any Sub-Servicer with any powers of attorney and
other documents as the Master Servicer or such Sub-Servicer shall reasonably
request to enable the Master Servicer and such Sub-Servicer to carry out their
respective servicing and administrative duties hereunder.
(h) The Master Servicer shall give prompt notice to the
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.
(i) Servicing Advances incurred by the Master Servicer or any
Sub-Servicer in connection with the servicing of the Mortgage Loans (including
any penalties in connection with the payment of any taxes and assessments or
other charges) on any Property shall be recoverable by the Master Servicer or
such Sub-Servicer to the extent described in Section 8.9(c) and in Section
7.5(b)(E)(3).
SECTION 8.2. COLLECTION OF CERTAIN MORTGAGE LOAN PAYMENTS.
(a) The Master Servicer shall, to the extent such procedures
shall be consistent with this Agreement and the terms and provisions of any
applicable Insurance Policies, follow Accepted Servicing Practices. Consistent
with the foregoing, the Master Servicer may in its discretion (i) waive any
assumption fees, late payment charges, charges for checks returned for
insufficient funds, prepayment fees, if any, or other fees which may be
collected in the ordinary course of servicing the Mortgage Loans, (ii) if a
Mortgagor is in default or about to be in default because of a Mortgagor's
financial condition, arrange with the Mortgagor a schedule for the payment of
delinquent payments due on the related Mortgage Loan; provided, however, the
Master Servicer shall not reschedule the payment of delinquent payments more
than one time in any twelve consecutive months with respect to any Mortgagor.
(b) The Master Servicer shall hold in escrow on behalf of the
related Mortgagor all Prepaid Installments received by it, and shall apply such
Prepaid Installments as directed by such Mortgagor and as set forth in the
related Note.
SECTION 8.3. SUB-SERVICING AGREEMENTS BETWEEN MASTER SERVICER
AND SUB-SERVICERS.
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The Master Servicer may and is hereby authorized to perform any of its
servicing responsibilities with respect to all or certain of the Mortgage Loans
through a Sub-Servicer, which may be an Affiliate. Pursuant to the foregoing,
the Master Servicer may enter into Sub-Servicing Agreements for any servicing
and administration of Mortgage Loans with any institution which is in compliance
with the laws of each state necessary to enable it to perform its obligations
under such Sub-Servicing Agreement. The Master Servicer shall give notice to the
Certificate Insurer and the Trustee of the appointment of any Sub-Servicer. The
Master Servicer shall also furnish to the Certificate Insurer and the Trustee a
copy of the Sub-Servicing Agreement, except when the Sub-Servicer is an
affiliate of the Master Servicer. For purposes of this Agreement, the Master
Servicer shall be deemed to have received payments on Mortgage Loans when any
Sub-Servicer has received such payments. Any such Sub-Servicing Agreement shall
be consistent with and not violate the provisions of this Agreement.
SECTION 8.4. SUCCESSOR SUB-SERVICERS.
The Master Servicer may terminate any Sub-Servicing Agreement in accordance
with the terms and conditions of such Sub-Servicing Agreement and either
directly service the related Mortgage Loans itself or enter into a Sub-Servicing
Agreement with a successor Sub-Servicers that qualifies under Section 8.3.
SECTION 8.5. LIABILITY OF MASTER SERVICER.
The Master Servicer shall not be relieved of its obligations under this
Agreement notwithstanding any Sub-Servicing Agreement or any of the provisions
of this Agreement relating to agreements or arrangements between the Master
Servicer and a Sub-Servicer or otherwise, and the Master Servicer shall be
obligated to the same extent and under the same terms and conditions as if it
alone were servicing and administering the Mortgage Loans. The Master Servicer
shall be entitled to enter into any agreement with a Sub-Servicer for
indemnification of the Master Servicer by such Sub-Servicer and nothing
contained in such Sub-Servicing Agreement shall be deemed to limit or modify
this Agreement. The Trust shall not indemnify the Master Servicer for any losses
due to the Master Servicer's negligence.
SECTION 8.6. NO CONTRACTUAL RELATIONSHIP BETWEEN SUB-SERVICER
AND TRUSTEE OR THE OWNERS.
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 Certificate Insurer, the
Trustee and the Owners 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 8.7.
SECTION 8.7. ASSUMPTION OR TERMINATION OF SUB-SERVICING
AGREEMENT BY 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 Trustee pursuant to Section 8.20, 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 Trustee at its option. Any termination fee due
under any such Sub-Servicing agreement shall be paid by the preceding Master
Servicer but in no event shall the Trustee be liable for any such fee.
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The Master Servicer shall, upon request of the Trustee, but at
the expense of the Master Servicer, deliver to the assuming party documents and
records relating to each Sub-Servicing Agreement and an accounting of amounts
collected and held by it and otherwise use its best reasonable efforts to effect
the orderly and efficient transfer of the Sub-Servicing Agreements to the
assuming party, without the payment of any fee by the Trustee, notwithstanding
any contrary provision in any Sub-Servicing Agreement.
SECTION 8.8. PRINCIPAL AND INTEREST ACCOUNT.
(a) The Master Servicer and/or each Sub-Servicer, as
applicable, shall establish in the name of the Trust for the benefit of the
Owners of the Certificates and the Certificate Insurer, as their interests may
appear, and maintain at one or more Designated Depository Institutions a
Principal and Interest Account.
Subject to Subsections (c) and (e) below, the Master Servicer
and any Sub-Servicer shall deposit all receipts of principal and accrued
interest related to the Mortgage Loans in each such Mortgage Loan Group to the
Principal and Interest Account on a daily basis (but no later than the first
Business Day after receipt).
(b) All funds in the Principal and Interest Account may only
be held (i) uninvested, up to the limits insured by the FDIC or (ii) invested in
Eligible Investments. The Principal and Interest Account shall be held in trust
in the name of the Trust and for the benefit of the Owners of the Certificates
and the Certificate Insurer. Any investment earnings on funds held in the
Principal and Interest Account shall be for the account of the Master Servicer
and may only be withdrawn from the Principal and Interest Account by the Master
Servicer immediately following the remittance of the Monthly Remittance Amounts
by the Master Servicer. Any references herein to amounts on deposit in the
Principal and Interest Account shall refer to amounts net of such investment
earnings. Any investment losses are at the expense of the Master Servicer and
shall be replaced on or prior to the Remittance Date.
(c) Subject to Subsection (e) below, the Master Servicer shall
deposit to the Principal and Interest Account all principal collected and
interest accrued on the Mortgage Loans on or after the Initial Cut-Off Date or
related Subsequent Cut-Off Date including any Prepaid Installments, Prepayments
and Net Liquidation Proceeds, all Loan Purchase Prices and Substitution Amounts
received or paid by the Master Servicer with respect to such Mortgage Loans,
other recoveries or amounts related to such Mortgage Loans received by the
Master Servicer, Compensating Interest and Delinquency Advances together with
any amounts which are reimbursable from such Principal and Interest Account, but
net of (i) the Servicing Fee with respect to each such Mortgage Loan and other
servicing compensation due to the Master Servicer as permitted by Section 8.15
hereof, (ii) principal (including Prepayments) collected on the related Mortgage
Loans prior to the Cut-Off Date, (iii) interest accruing on the related Mortgage
Loans prior to the Cut-Off Date and (iv) Net Liquidation Proceeds to the extent
such Net Liquidation Proceeds exceed the sum of the Loan Balance of the related
Mortgage Loan and accrued and unpaid interest thereon.
(d) (i) The Master Servicer may make withdrawals from the
Principal and Interest Account only for the following purposes:
(1) to effect the timely remittance to the Trustee of
the Monthly Remittance Amounts due on the Remittance Date;
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(2) to reimburse itself pursuant to Section 8.9(a)
hereof for unreimbursed Delinquency Advances and Servicing
Advances and Nonrecoverable Advances;
(3) to withdraw investment earnings on amounts on
deposit in the Principal and Interest Account;
(4) to withdraw amounts that have been deposited to a
Principal and Interest Account in error;
(5) to clear and terminate each Principal and
Interest Account following the termination of the Trust Estate
pursuant to Article X; and
(6) to invest in Eligible Investments.
(ii) On the tenth day of each month, the Master Servicer shall
send to the Trustee a report, in the form of a computer tape, detailing
the payments on the Mortgage Loans during the prior Remittance Period.
Such tape shall be in the form and have the specifications as may be
agreed to between the Master Servicer and the Trustee from time to
time. The Certificate Insurer shall have the right to request this
computer tape upon providing 3 Business Days written notice to the
Master Servicer.
(iii) On each Remittance Date the Master Servicer shall remit
to the Trustee by wire transfer, or otherwise make funds available in
immediately available funds for deposit in the Certificate Account the
amounts specified in Section 7.5(a) of this Agreement, (A) for Group I,
the Group I Interest Remittance Amount and the Group I Principal
Remittance Amount and (B) for Group II, the Group II Interest
Remittance Amount and the Group II 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 Certificate Insurer, the Trustee and
each Rating Agency, then the requirement to maintain the Principal and Interest
Account and deposit of principal collections and accrued interest may be waived
by an instrument signed by the Certificate Insurer, Trustee and each Rating
Agency, and the Master Servicer may be allowed to co-mingle with its general
funds the amounts otherwise required to be deposited to the Principal and
Interest Account, on such terms and subject to such conditions as the
Certificate Insurer, the Trustee and each Rating Agency may permit.
SECTION 8.9. DELINQUENCY ADVANCES, COMPENSATING INTEREST AND
SERVICING ADVANCES.
(a) The Master Servicer is required, not later than each
Remittance Date, to deposit into the Principal and Interest Account an amount
equal to the sum of the interest portions accrued (net of the Servicing Fees and
certain other administrative amounts, if any) with respect to Delinquent
Mortgage Loans during the related Remittance Period but not collected on or
prior to such Remittance Date, but only if, in its good faith business judgment,
the Master Servicer reasonably believes that such amount will ultimately be
recoverable from the related Mortgage Loan. Such amounts are "Delinquency
Advances".
The Master Servicer shall be permitted to fund its payment of
Delinquency Advances on any Remittance Date and to reimburse itself for any
Delinquency Advances paid from the Master Servicer's own funds, from collections
on the related Mortgage Loan. The
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Master Servicer may use funds deposited to the Principal and Interest Account
subsequent to the related Remittance Period and shall deposit into the Principal
and Interest Account with respect thereto (i) late collections from the
Mortgagor whose Delinquency gave rise to the shortfall which resulted in such
Delinquency Advance and (ii) Net Liquidation Proceeds recovered on account of
the related Mortgage Loan to the extent of the amount of aggregate Delinquency
Advances related thereto or (iii) from its own funds. If not therefore recovered
from the related Mortgagor or the related Net Liquidation Proceeds, Delinquency
Advances constituting Nonrecoverable Advances shall be recoverable pursuant to
Section 7.5(b)(E)(3) hereof.
The parties hereto intend the provision of this Section 8.9(a)
to comply with Treasury Regulation Section 1.860G-2(c)(3).
(b) On or prior to each Remittance Date, the Master Servicer
shall deposit in the Principal and Interest Account with respect to any full
Prepayment received on a Mortgage Loan during the related Remittance Period out
of its own funds without any right of reimbursement therefor, an amount equal to
the difference between (x) 30 days' interest at the Mortgage Loan's Coupon Rate
(less the Servicing Fee) on the Loan Balance of such Mortgage Loan as of the
first day of the related Remittance Period and (y) to the extent not previously
advanced, the interest (less the Servicing Fee) paid by the Mortgagor with
respect to the Mortgage Loan during such Remittance Period (any such amount paid
by the Master Servicer, "Compensating Interest"). The Master Servicer shall in
no event be required to pay Compensating Interest with respect to any Remittance
Period in an amount in excess of the aggregate Servicing Fee received by the
Master Servicer with respect to all Mortgage Loans for such Remittance Period
nor shall it be required to pay Compensating Interest due to partial prepayments
or Relief Act Shortfalls.
The parties hereto intend the provisions of this Section
8.9(b) to comply with Treasury Regulation Section 1.860G-2(e).
(c) The Master Servicer will pay all "out-of-pocket" costs and
expenses incurred by the Master Servicer in the performance of its servicing
obligations, including, but not limited to, the cost of (i) Preservation
Expenses (including the payment of flood insurance premiums), (ii) any
enforcement or judicial proceedings, including (a) foreclosures, and (b) other
legal actions and costs associated therewith that potentially affect the
existence, validity, priority, enforceability or collectibility of the Mortgage
Loans, including collection agency fees and costs of pursuing or obtaining
personal judgments, garnishments, levies, attachment and similar actions, (iii)
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 contractor in connection
therewith, and (iv) advances to keep liens current; and with respect to any of
the foregoing, the Master Servicer is only required to pay such costs and
expenses to the extent the Master Servicer reasonably believes such costs and
expenses will be recoverable from the related Mortgage Loan. Each such amount so
paid will constitute a "Servicing Advance". The Master Servicer may recover
Servicing Advances (x) from the Mortgagors to the extent permitted by the
Mortgage Loans, from Liquidation Proceeds realized upon the liquidation of the
related Mortgage Loan and (y) as provided in Section 7.5(b)(E)(3) hereof. In no
case may the Master Servicer recover Servicing Advances from principal and
interest payments on any other Mortgage Loan or from any amounts relating to any
other Mortgage Loan except as provided pursuant to Section 7.5(b)(E)(3) hereof.
The parties intend that the provisions of this Section 8.9(c)
comply with Treasury Regulation Section 1.860G-2(c)(3)(iii).
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(d) On the Remittance Date in [__________, _____], the Master
Servicer shall make an advance (a "Special Advance") with respect to each
Mortgage Loan Group equal to the sum of (x) one-month's interest, calculated at
the weighted average Pass-Through Rate (applicable to the [__________, _____]
Payment Date, as the case may be, for the classes of Class [A] Certificates
related to such Group) with respect to all Mortgage Loans not having a payment
due prior to the [__________, _____] Remittance Date; the amounts of such
advances shall be included in the related Interest Remittance Amount.
Reimbursement of Special Advances shall be made only as provided in Section
7.5(b)(E)(3).
SECTION 8.10. PURCHASE OF MORTGAGE LOANS.
The Master Servicer may, but is not obligated to, purchase for its own account
any Mortgage Loan which becomes Delinquent, in whole or in part, as to four
consecutive monthly installments or any Mortgage Loan as to which enforcement
proceedings have been brought by the Master Servicer or by any Sub-Servicer
pursuant to Section 8.13. Any such Loan so purchased shall be purchased by the
Master Servicer on a Remittance Date at a purchase price equal to the Loan
Purchase Price thereof, which purchase price shall be deposited in the Principal
and Interest Account. Notwithstanding the foregoing, the Master Servicer may not
purchase any such Mortgage Loan unless the Master Servicer has delivered to the
Trustee and the Certificate Insurer an opinion of counsel experienced in federal
income tax matters acceptable to the Trustee to the effect that such a purchase
would not constitute a Prohibited Transaction for the Trust or otherwise subject
the Trust to tax and would not jeopardize the status of either the Upper-Tier
REMIC or the Lower-Tier REMIC as a REMIC.
SECTION 8.11. MAINTENANCE OF INSURANCE.
(a) The Master Servicer shall cause to be maintained with
respect to each Mortgage Loan a hazard insurance policy with a generally
acceptable carrier that provides for fire and extended coverage, and which
provides for a recovery by the Master Servicer on behalf of the Trust of
insurance proceeds relating to such Mortgage Loan in an amount not less than the
least of (i) the outstanding principal balance of the Mortgage Loan, (ii) the
minimum amount required to compensate for damage or loss on a replacement cost
basis and (iii) the full insurable value of the premises.
(b) If the Mortgage Loan at the time of origination relates to
a Property in an area identified in the Federal Register by the Federal
Emergency Management Agency as having special flood hazards, the Master Servicer
will cause to be maintained with respect thereto a flood insurance policy in a
form meeting the requirements of the current guidelines of the Federal Insurance
Administration with a generally acceptable carrier in an amount representing
coverage, and which provides for a recovery by the Master Servicer on behalf of
the Trust of insurance proceeds relating to such Mortgage Loan of not less than
the least of (i) the outstanding principal balance of the Mortgage Loan, (ii)
the minimum amount required to compensate for damage or loss on a replacement
cost basis and (iii) the maximum amount of insurance that is available under the
Flood Disaster Protection Act of 1973. The Master Servicer shall indemnify the
Trust and the Certificate Insurer out of the Master Servicer's own funds for any
loss to the Trust and the Certificate Insurer resulting from the Master
Servicer's failure to maintain the insurance required by this Section.
(c) In the event that the Master Servicer shall obtain and
maintain a blanket policy insuring against fire, flood and hazards of extended
coverage on all of the Mortgage Loans, then, to the extent such policy names the
Master Servicer as loss payee and provides
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coverage in an amount equal to the aggregate unpaid principal balance on the
Mortgage Loans without co-insurance, and otherwise complies with the
requirements of this Section 8.11, the Master Servicer shall be deemed
conclusively to have satisfied its obligations with respect to fire and hazard
insurance coverage under this Section 8.11, it being understood and agreed that
such blanket policy may contain a deductible clause, in which case the Master
Servicer shall, in the event that there shall not have been maintained on the
related Property a policy complying with the preceding paragraphs of this
Section 8.11, 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 8.11 and the amount paid under such blanket policy. Upon the request of
the Trustee or the Certificate Insurer, the Master Servicer shall cause to be
delivered to the Trustee and the Certificate Insurer, a certified true copy of
such policy.
The parties hereto intend that the provisions of this Section
8.11 comply with Treasury Regulation Section 1.860G-2(c)(3)(ii).
SECTION 8.12. DUE-ON-SALE CLAUSES; ASSUMPTION AND SUBSTITUTION
AGREEMENTS.
When a Property has been or is about to be conveyed by the Mortgagor, the
Master Servicer shall, to the extent it has knowledge of such conveyance or
prospective conveyance, exercise its rights to accelerate the maturity of the
related Mortgage Loan under any "due-on-sale" clause contained in the related
Mortgage or Note; provided, however, that the Master Servicer shall not exercise
any such right if (i) the "due-on-sale" clause, in the reasonable belief of the
Master Servicer, is not enforceable under applicable law or (ii) the Master
Servicer reasonably believes that to permit an assumption of the Mortgage Loan
would not materially and adversely affect the interest of the Owners or of the
Certificate Insurer. In such event, the Master Servicer shall enter into an
assumption and modification agreement with the person to whom such property has
been or is about to be conveyed, pursuant to which such person becomes liable
under the Note and, unless prohibited by applicable law or the Mortgage
Documents, the Mortgagor remains liable thereon. If the foregoing is not
permitted under applicable law, the Master Servicer is authorized to enter into
a substitution of liability agreement with such person, pursuant to which the
original Mortgagor is released from liability and such person is substituted as
Mortgagor and becomes liable under the Note; provided, however, that to the
extent any such substitution of liability agreement would be delivered by the
Master Servicer outside of its usual procedures for mortgage loans held in its
own portfolio the Master Servicer shall, prior to executing and delivering such
agreement, obtain the prior written consent of the Control Party. The Mortgage
Loan, as assumed, shall conform in all respects to the requirements,
representations and warranties of this Agreement. The Master Servicer shall
notify the Trustee that any such assumption or substitution agreement has been
completed by forwarding to the Trustee the original copy of such assumption or
substitution agreement, which copy shall be added by the Trustee to the related
File and which shall, for all purposes, be considered a part of such File to the
same extent as all other documents and instruments constituting a part thereof.
The Master Servicer shall be responsible for recording or causing the
recordation any such assumption or substitution agreements. In connection with
any such assumption or substitution agreement, the required monthly payment on
the related Mortgage Loan shall not be changed but shall remain as in effect
immediately prior to the assumption or substitution, the stated maturity or
outstanding principal amount of such Mortgage Loan shall not be changed nor
shall any required monthly payments of principal or interest be deferred or
forgiven. Any fee collected by the Master Servicer or the Sub-Servicer for
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consenting to any such conveyance or entering into an assumption or substitution
agreement shall be retained by or paid to the Master Servicer as additional
servicing compensation.
Notwithstanding the foregoing paragraph or any other provision
of this Agreement, the Master Servicer shall not be deemed to be in default,
breach or any other violation of its obligations hereunder by reason of any
assumption of a Mortgage Loan by operation of law or any assumption which the
Master Servicer may be restricted by law from preventing, for any reason
whatsoever.
SECTION 8.13. REALIZATION UPON DEFAULTED MORTGAGE LOANS.
(a) The Master Servicer shall foreclose upon or otherwise
comparably effect the ownership on behalf of the Trust of Properties relating to
defaulted Mortgage Loans as to which no satisfactory arrangements can be made
for collection of Delinquent payments and which the Master Servicer has not
purchased pursuant to Section 8.10. In connection with such foreclosure or other
conversion, the Master Servicer shall exercise such of the rights and powers
vested in it hereunder, and use the same degree of care and skill in their
exercise or use, as prudent mortgage lenders would exercise or use under the
circumstances in the conduct of their own affairs, including, but not limited
to, advancing funds for the payment of taxes, amounts due with respect to Senior
Liens, and insurance premiums. Any amounts so advanced shall constitute
"Servicing Advances" within the meaning of Section 8.9(c) hereof. The Master
Servicer shall sell any REO Property within 35 months of its acquisition by the
Trust, unless the Master Servicer obtains for the Trustee an opinion of counsel
experienced in federal income tax matters, addressed to the Trustee, the
Certificate Insurer and the Master Servicer, to the effect that the holding by
the Trust of such REO Property for any greater period will not result in the
imposition of taxes on "Prohibited Transactions" of the Trust or any REMIC
therein as defined in Section 860F of the Code or cause either the Lower-Tier
REMIC or the Upper-Tier REMIC to fail to qualify as a REMIC under the REMIC
Provisions at any time that any Certificates are outstanding.
Notwithstanding the generality of the foregoing provisions,
the Master Servicer shall manage, conserve, protect and operate each REO
Property for the Owners and the Certificate Insurer solely for the purpose of
its prompt disposition and sale in a manner which does not cause such REO
Property to fail to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code or result in the receipt by the Lower-Tier REMIC
or the Upper Tier REMIC of any "income from non-permitted assets" within the
meaning of Section 860F(a)(2)(B) of the Code or any "net income from foreclosure
property" which is subject to taxation under the REMIC Provisions. 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 Owners, rent the same, or
any part thereof, as the Master Servicer deems to be in the best interest of the
Owners 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 REO Property in determining whether to foreclose upon or
otherwise comparably convert the ownership of such REO Property. With respect to
any Mortgage Loan secured by a mixed use REO Property, the Master Servicer
shall, prior to foreclosing upon or otherwise comparably effecting the ownership
in the name of the
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Master Servicer on behalf of the Trust, either (x) perform a "phase one
environmental study" of such REO Property or (y) repurchase such REO Property at
the Loan Purchase Price.
(b) The Master Servicer shall determine, with respect to each
defaulted Mortgage Loan, when it has recovered, whether through trustee's sale,
foreclosure sale or otherwise, all amounts it expects to recover from or on
account of such defaulted Mortgage Loan (exclusive of any possibility of a
deficiency judgment), whereupon such Mortgage Loan shall become a "Liquidated
Loan" and shall promptly deliver to the Certificate Insurer a related
liquidation report with respect to such Liquidated Loan.
SECTION 8.14. TRUSTEE TO COOPERATE; RELEASE OF FILES.
(a) Upon the payment in full of any Mortgage Loan (including
the repurchase of any Mortgage Loan or any liquidation of such Mortgage Loan
through foreclosure or otherwise), or the receipt by the Master Servicer or any
Sub-Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Master Servicer or any Sub-Servicer shall
deliver to the Trustee a Master Servicer's Trust Receipt. Upon receipt of such
Master Servicer's Trust Receipt, the Trustee shall promptly release the related
File, in trust to the applicable party as directed in writing by the Master
Servicer in the Master Servicer's Trust Receipt, in each case pending its
release by the Master Servicer, such escrow agent or such employee, agent or
attorney of the Trustee, as the case may be. Upon any such payment in full, or
the receipt of such notification that such funds have been placed in escrow, the
Master Servicer or any Sub-Servicer is authorized to give, as attorney-in-fact
for the Trustee and the mortgagee under the Mortgage which secured the Note, an
instrument of satisfaction (or assignment of Mortgage without recourse)
regarding the Property relating to such Mortgage, which instrument of
satisfaction or assignment, as the case may be, shall be delivered to the Person
or Persons entitled thereto against receipt therefor of payment in full, it
being understood and agreed that no expense incurred in connection with such
instrument of satisfaction or assignment, as the case may be, shall be
chargeable to the Principal and Interest Account. In lieu of executing any such
satisfaction or assignment, as the case may be, the Master Servicer or any
Sub-Servicer may prepare and submit to the Trustee, a satisfaction (or
assignment without recourse, if requested by the Person or Persons entitled
thereto) in form for execution by the Trustee with all requisite information
completed by the Master Servicer or any Sub-Servicer; in such event, the Trustee
shall execute and acknowledge such satisfaction or assignment, as the case may
be, and deliver the same with the related File, as aforesaid.
(b) From time to time and as appropriate in the servicing of
any Mortgage Loan, including, without limitation, foreclosure or other
comparable conversion of a Mortgage Loan or collection under any applicable
Insurance Policy, the Trustee shall (except in the case of the payment or
liquidation pursuant to which the related File is released to an escrow agent or
an employee, agent or attorney of the Trustee), upon request of the Master
Servicer or any Sub-Servicer and delivery to the Trustee of a Master Servicer's
Trust Receipt, release the related File to the Master Servicer and shall execute
such documents as shall be necessary to the prosecution of any such proceedings,
including, without limitation, an assignment without recourse of the related
Mortgage to the Master Servicer; provided that the Master Servicer shall not
have received and not returned at any one time more than 10% of the entire
number of Files. The Trustee shall complete in the name of the Trustee any
endorsement in blank on any Note prior to releasing such Note to the Master
Servicer or any Sub-Servicer. Such receipt shall obligate the Master Servicer or
any Sub-Servicer to return the File to the Trustee when the need therefor by the
Master Servicer or any Sub-Servicer no longer exists unless the Mortgage Loan
shall be liquidated, in which case, upon receipt of the liquidation information,
in physical or electronic
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form acceptable to the Master Servicer and the Trustee, a copy of the Master
Servicer's Trust Receipt shall be released by the Trustee to the Master Servicer
or any Sub-Servicer.
(c) No costs associated with the procedures described in this
Section 8.14 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 Certificate Insurer and the Rating Agencies pursuant to Section 3.5(j)
hereof.
(e) Each Master Servicer's Trust Receipt may be delivered to
the 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 Trustee shall mutually agree. The Trustee shall
promptly release the related File(s) no later than seven (7) business days of
receipt of a properly completed Master Servicer's Trust Receipt pursuant to
clauses (i), (ii) or (iii) above or such shorter period as may be agreed upon by
the Master Servicer and the Trustee. Receipt of a Master Servicer's Trust
Receipt pursuant to clauses (i), (ii) or (iii) above shall be authorization to
the Trustee to release such Files, provided the Trustee has determined that such
Master Servicer's Trust Receipt has been executed, with respect to clauses (i)
or (ii) above, or approved, with respect to clause (iii) above, by an Authorized
Officer of the Master Servicer or any Sub-Servicer, and so long as the Trustee
complies with its duties and obligations under this Agreement. If the Trustee is
unable to release the Files within the time frames previously specified, the
Trustee shall immediately notify the Master Servicer or any Sub-Servicer
indicating the reason for such delay, but in no event shall such notification be
later than five business days after receipt of a Master Servicer's Trust
Receipt. If the Master Servicer is required to pay penalties or damages due to
the Trustee's negligent failure to release the related File or the Trustee's
negligent failure to execute and release documents in a timely manner, the
Trustee shall be liable for such penalties or damages.
On each day that the Master Servicer remits to the Trustee
Master Servicer's Trust Receipts pursuant to clauses (ii) or (iii) above, the
Master Servicer or any Sub-Servicer shall also submit to the Trustee a summary
of the total amount of such Master Servicer's Trust Receipts requested on such
day by the same method as described in such clauses (ii) or (iii) above.
SECTION 8.15. SERVICING COMPENSATION.
As compensation for its activities hereunder, the Master Servicer shall be
entitled to retain the amount of the Servicing Fee with respect to each Mortgage
Loan. Additional servicing compensation in the form of investment income on the
Accounts, prepayment charges, release fees, bad check charges, assumption fees,
late payment charges, or any other servicing-related fees, Net Liquidation
Proceeds not required to be deposited in the Principal and Interest Account
pursuant to Section 8.8(c)(v) and similar items may, to the extent collected
from Mortgagors, be retained by the Master Servicer.
SECTION 8.16. ANNUAL STATEMENT AS TO COMPLIANCE.
The Master Servicer, at its own expense, will deliver to the Trustee, the
Certificate Insurer and each Rating Agency, on or before the last day of March
of each year, commencing in [Year], 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
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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 8.17. ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS'
REPORTS.
On or before the last day of March of each year, commencing in [Year], the
Master Servicer, at its own expense, shall cause to be delivered to the Trustee,
the Certificate Insurer and each Rating Agency a letter or letters of a firm of
independent, nationally recognized certified public accountants reasonably
acceptable to the Control Party stating that such firm has, with respect to the
Master Servicer's overall servicing operations (i) performed applicable tests in
accordance with the compliance testing procedures as set forth in Appendix 3 of
the Audit Guide for Audits of HUD Approved Nonsupervised Mortgagees or (ii)
examined such operations in accordance with the requirements of the Uniform
Single 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 8.18. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION
REGARDING THE MORTGAGE LOANS.
The Master Servicer shall provide to the Trustee, the Certificate Insurer, the
FDIC and the supervisory agents and examiners of each of the foregoing access to
the documentation regarding the Mortgage Loans required by applicable state and
federal regulations, such access being afforded without charge but only upon
reasonable request and during normal business hours at the offices of the Master
Servicer designated by it.
Upon any change in the format of the electronic medium
maintained by the Master Servicer in respect of the Mortgage Loans, the Master
Servicer shall deliver a copy of such electronic medium to the Trustee and in
addition shall provide a copy of such computer tape to the Trustee and the
Certificate Insurer at such other times as the Trustee or the Certificate
Insurer may reasonably request.
SECTION 8.19. 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
Trustee and the Certificate Insurer, which such consent shall not be
unreasonably withheld; provided, however, that any assignee must meet the
eligibility requirements set forth in Section 8.20(g) hereof for a successor
servicer; and provided, further, this Section 8.19 does not apply to the
appointment of Sub-Servicers. Notice of any such assignment shall be given by
the Master Servicer to the Trustee, the Certificate Insurer and ▇▇▇▇▇'▇.
SECTION 8.20. REMOVAL OF MASTER SERVICER; RESIGNATION OF
MASTER SERVICER.
(a) The Trustee, with the consent of the Certificate Insurer
(or the Owners pursuant to Section 6.11 hereof) may remove the Master Servicer
upon the occurrence of any of the following events:
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(i) The Master Servicer shall fail to deliver to the Trustee
any proceeds or required payment, which failure continues unremedied
for five Business Days following written notice to an Authorized
Officer of the Master Servicer from the Trustee or from any Owner.
(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 perform any one or more
of its obligations hereunder other than the obligations contemplated by
Subsection 8.20(i) above, and shall continue in default thereof for a
period of sixty (60) days after notice by the Trustee or the
Certificate Insurer of said failure; provided, however, that if the
Master Servicer can demonstrate to the reasonable satisfaction of the
Control Party that it is diligently pursuing remedial action, then the
cure period may be extended with the written approval of the Control
Party; or
(v) The Master Servicer shall fail to cure any breach of any
of its representations and warranties set forth in Section 3.2 which
materially and adversely affects the interests of the Owners or the
Certificate Insurer for a period of thirty (30) days after the Master
Servicer's discovery or receipt of notice thereof; provided, however,
that if the Master Servicer can demonstrate to the reasonable
satisfaction of the Control Party that it is diligently pursuing
remedial action, then the cure period may be extended with the written
approval of the Control Party.
(b) The Certificate Insurer also may remove the Master
Servicer upon the occurrence of any of the following events:
(i) upon the making of any Insured Payment; provided, however,
that the Certificate Insurer shall have no right to remove the Master
Servicer under this clause (i) if the Master Servicer can demonstrate
to the reasonable satisfaction of the Certificate
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Insurer that such event was due to circumstances beyond the control of
the Master Servicer; or
(ii) the failure by the Master Servicer to make any required
Servicing Advance; or
(iii) the failure by the Master Servicer to perform any one or
more of its obligations hereunder or under the Insurance Agreement,
which failure materially and adversely affects the interests of the
Certificate Insurer and the Trustee; or
(iv) the failure by the Master Servicer to make any required
Delinquency Advance, any Special Advance or to pay any Compensating
Interest; or
(v) the occurrence of a Servicer Termination Loss Trigger, as
such term is defined in the Insurance Agreement; or
(vi) the enactment of any law by a legislative body that
declares, or any finding or ruling by a court of competent
jurisdiction, that the Insurance Agreement or this Agreement is not
valid and binding on the Sponsor or the Master Servicer; or
(vii) Advanta National Bank fails to be "adequately
capitalized" as defined in Section 1831(o)(b)(1)(B) of the Federal
Deposit Insurance Corporation Improvement Act of 1991, as amended; or
(viii) The tangible net worth of AMHC, on a consolidated
basis, is less than $10,000,000;
provided, however, with respect to clause (iv), if the Master Servicer can
demonstrate to the reasonable satisfaction of the Control Party that any such
event was due to circumstances beyond the control of the Master Servicer, such
event shall not be considered an event of termination of the Master Servicer;
provided, however, that (x) prior to any removal of the Master Servicer by the
Control Party pursuant to clauses (i) or (ii) of this Section 8.20(b), the
Master Servicer shall first have been given by the Control Party and by
registered or certified mail, notice of the occurrence of one or more of the
events set forth in clauses (i), (ii) or (iii) above and the Master Servicer
shall not have remedied, or shall not have taken actions satisfactory to the
Control Party to remedy, such event or events within 30 days (60 days with
respect to clause (iii)) after the Master Servicer's receipt of such notice
(provided, however, that if the Master Servicer can demonstrate to the
reasonable satisfaction of the Control Party that it is diligently pursuing
remedial action, then the cure period in each case may be extended with the
written approval of the Control Party) and (y) in the event of the refusal or
inability of the Master Servicer to make any required Delinquency Advance or
Special Advance or to pay any Compensating Interest (as described in clause
(iv)) or Monthly Remittance, such removal shall be effective (without the
requirement of any action on the part of the Certificate Insurer or of the
Trustee) at 4 p.m. on the second Business Day following the day on which the
Trustee or the Certificate Insurer notifies an Authorized Officer of the Master
Servicer that a required Delinquency Advance or Special Advance has not been
received by the Trustee. Upon the Trustee's determination that a required
Delinquency Advance or Special Advance or payment of Compensating Interest has
not been made by the Master Servicer, the Trustee shall so notify in writing an
Authorized Officer of the Master Servicer and the Certificate Insurer as soon as
is reasonably practical.
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(c) The Master Servicer shall not resign from the obligations
and duties hereby imposed on it, except upon determination that its duties
hereunder are no longer permissible under applicable law or are in material
conflict by reason of applicable law with any other activities carried on by it,
the other activities of the Master Servicer so causing such a conflict being of
a type and nature carried on by the Master Servicer at the date of this
Agreement. Any such determination permitting the resignation of the Master
Servicer shall be evidenced by an opinion of counsel to such effect which shall
be delivered to the Trustee and the Certificate Insurer.
(d) No removal or resignation of the Master Servicer shall
become effective until the Trustee or a successor servicer shall have assumed
the Master Servicer's responsibilities and obligations in accordance with this
Section. If no successor servicer is available, the Trustee shall act as
successor servicer and perform all of the obligations of this Section,
including, without limitation, making Delinquency Advances and paying
Compensating Interest; provided, however, that the Trustee will not be obligated
to act as successor servicer if it is legally unable to perform its duties
hereunder.
(e) 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 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.
(f) Any collections received by the Master Servicer after
removal or resignation shall be endorsed by it to the Trustee and remitted
directly and immediately to the Trustee or the successor Master Servicer.
(g) Upon removal or resignation of the Master Servicer, the
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 Trustee shall, if it
is unable to obtain a qualifying bid and is prevented by law from acting as
Master Servicer, appoint, or petition a court of competent jurisdiction to
appoint, any housing and home finance institution, bank or mortgage servicing
institution which has shareholders' equity of not less than $10,000,000, as
determined in accordance with generally accepted accounting principles, and
acceptable to the Certificate 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 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 8.8 and 8.15; provided, however, that if the Trustee
acts as successor Master Servicer then the Sponsor agrees to pay to the Trustee
at such time that the 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 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.
(h) In the event the Trustee solicits bids as provided above,
the 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
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compensation set forth in clause (g) above. Within thirty days after any such
public announcement, the 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 Trustee shall
deduct from any sum received by the 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 Trustee to the Master Servicer at the
time of such sale, transfer and assignment to the Master Servicer's successor.
(i) The 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 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
Trustee or such successor Master Servicer, as applicable, all documents and
records reasonably requested by it to enable it to assume the Master Servicer's
functions hereunder and shall promptly also transfer to the 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 Trustee nor any other successor Master Servicer shall be held liable
by reason of any failure to make, or any delay in making, any distribution
hereunder or any portion thereof caused by (i) the failure of the Master
Servicer to deliver, or any delay in delivering, cash, documents or records to
it, or (ii) restrictions imposed by any regulatory authority having jurisdiction
over the Master Servicer or (iii) any breaches of a predecessor Master Servicer.
(j) The Trustee or any other successor Master Servicer, upon
assuming the duties of Master Servicer hereunder, shall immediately make all
Delinquency Advances and pay all Compensating Interest which the Master Servicer
has theretofore failed to remit with respect to the Mortgage Loans; provided,
however, that if the Trustee is acting as successor Master Servicer, the Trustee
shall only be required to make Delinquency Advances (including the Delinquency
Advances described in this clause (j)) if, in the Trustee's reasonable good
faith judgment, such Delinquency Advances will ultimately be recoverable from
the related Mortgage Loans.
(k) The Master Servicer which is being removed or is resigning
shall give notice to the Mortgagors and to each Rating Agency of the transfer of
the servicing to the successor.
(l) The Trustee shall give notice to the Certificate Insurer,
each Rating Agency and to the Owners of the occurrence of any event specified in
Section 8.20(a) of which the Trustee has knowledge.
(m) Notwithstanding anything herein to the contrary, upon
termination of the Master Servicer hereunder, any liabilities of the Master
Servicer which accrued prior to such termination shall survive such termination.
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SECTION 8.21. INSPECTIONS BY THE CERTIFICATE INSURER AND THE
TRUSTEE; ERRORS AND OMISSIONS INSURANCE.
(a) At any reasonable time and from time to time upon
reasonable notice, the Certificate Insurer, the Trustee, or any agents or
representatives thereof may inspect the Master Servicer's servicing operations
and discuss the servicing operations of the Master Servicer with any of its
officers or directors. The reasonable costs and expenses incurred by the Master
Servicer or its agents or representatives in connection with any such
examinations or discussions shall be paid by the Master Servicer.
(b) The Master Servicer agrees to maintain errors and
omissions coverage and a fidelity bond, each at least to the extent generally
maintained by prudent mortgage loan servicers having servicing portfolios of a
similar size.
SECTION 8.22. 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
upon notice to the Certificate Insurer, 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 is a housing and home finance institution, bank or mortgage
servicing institution which has shareholders' equity of not less than
$10,000,000, as determined in accordance with generally accepted accounting
principles.
SECTION 8.23. NOTICES OF MATERIAL EVENTS.
The Master Servicer shall give prompt notice to the Certificate Insurer,
the Trustee, and each Rating Agency of the occurrence of any of the following
events:
(a) Any default or any fact or event which results, or which
with notice or the passage of time, or both, would result in the occurrence of a
default by the Sponsor, any Originator or the Master Servicer under any
Transaction Document or would constitute a material breach of a representation,
warranty or covenant under any Transaction Document;
(b) The submission of any claim or the initiation of any legal
process, litigation or administrative or judicial investigation against the
Sponsor, the Master Servicer or AMHC in any federal, state or local court or
before any governmental body or agency, or before any arbitration board, or any
such proceedings threatened by any governmental agency, which, if adversely
determined, would have a material adverse effect upon any the Sponsor's, the
Master Servicer's or AMHC's ability to perform its obligations under any
Transaction Document;
(c) The commencement of any proceedings by or against 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 the
Sponsor, the Master Servicer or AMHC; and
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(d) The receipt of notice from any agency or governmental body
having authority over the conduct of any of the Sponsor's the Master Servicer's
or the AMHC's business that the Sponsor, the Master Servicer or AMHC is to cease
and desist, or to undertake any practice, program, procedure or policy employed
by 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 the Sponsor's, the Master Servicer's or AMHC's business or its
ability to perform under the Transaction Documents or materially adversely
affect the financial affairs of the Sponsor, the Master Servicer or AMHC.
ARTICLE IX
TERMINATION OF TRUST
SECTION 9.1. TERMINATION OF TRUST.
The Trust created hereunder and all obligations created by this Agreement will
terminate upon the earlier of (i) the payment to the Owners of all Certificates
from amounts other than those available under the Certificate Insurance Policy
of all amounts held by the Trustee and required to be paid to such Owners
pursuant to this Agreement upon the later to occur of (a) the final payment or
other liquidation (or any advance made with respect thereto) of the last
Mortgage Loan in the Trust Estate or (b) the disposition of all property
acquired in respect of any Mortgage Loan remaining in the Trust Estate, (ii) at
any time when a Qualified Liquidation of the REMIC Trust is effected as
described below or (iii) as described in Section 9.2 or 9.3 hereof. To effect a
termination of this Agreement pursuant to clause (ii) above, the Owners of all
Certificates then Outstanding shall (x) unanimously direct the Trustee on behalf
of the Lower-Tier REMIC and the Upper-Tier REMIC to adopt a plan of complete
liquidation with respect to each of the Mortgage Loan Groups as contemplated by
Section 860F(a)(4) of the Code and (y) provide to the Trustee an opinion of
counsel experienced in federal income tax matters to the effect that such
liquidation constitutes a Qualified Liquidation, and the Trustee either shall
sell the Mortgage Loans and distribute the proceeds of the liquidation of the
Trust Estate, or shall distribute equitably in kind all of the assets of the
Trust Estate to the remaining Owners of the Certificates based on their
interests in the Trust, and distribute to the Certificate Insurer any amounts
owed under the Insurance Agreement and return the Certificate Insurance Policy
to the Certificate Insurer, each in accordance with such plan, so that the
liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of this Agreement occur no later
than the close of the 90th day after the date of adoption of the plan of
liquidation and such liquidation qualifies as a Qualified Liquidation. In no
event, however, will the Trust created by this Agreement continue beyond the
expiration of twenty-one (21) years from the death of the last survivor of the
descendants of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the late Ambassador of the United States to
the United Kingdom, living on the date hereof. The Trustee shall give written
notice of termination of the Agreement to each Owner in the manner set forth in
Section 11.5.
SECTION 9.2. CLEAN-UP CALL TERMINATION.
(a) On any Remittance Date on or after the Initial Clean-Up
Call Date, either the Owners of a majority in Percentage Interest of the
[Residual Class] Certificates (the "Redeeming Owners") or the Master Servicer,
acting directly or through one or more of their respective affiliates or, if the
Redeeming Owners or the Master Servicer or their affiliates do not so elect
after having given notice to the Certificate Insurer, the Certificate Insurer
(the Redeeming Owners, the Master Servicer or its affiliates, or the Certificate
Insurer, the "Redeeming Party"),
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may determine to purchase and may cause the purchase from the Trust of all (but
not fewer than all) Mortgage Loans in the Trust Estate and all property
theretofore acquired in respect of any such Mortgage Loan by foreclosure, deed
in lieu of foreclosure, or otherwise then remaining in the Trust Estate at a
price equal to the sum of (v) the greater of (i) 100% of the aggregate Loan
Balances of all of the Mortgage Loans as of the day of purchase minus the amount
actually remitted by the Master Servicer representing the related Monthly
Principal Remittance Amount on such Remittance Date for the related Remittance
Period and (ii) the fair market value of such Mortgage Loans (disregarding
accrued interest), (w) if the Master Servicer is the Redeeming Party, the amount
of any difference between the related Monthly Interest Remittance Amount
actually remitted by the Master Servicer on such Remittance Date and the related
Monthly Interest Remittance Amount due on such Remittance Date, (x) the related
Reimbursement Amount, if any, and (y) if the Master Servicer is the Redeeming
Party, the aggregate amount of any Delinquency Advances and Servicing Advances
remaining unreimbursed, together with any accrued and unpaid Servicing Fees, as
of such Remittance Date (such amount, the "Termination Price"). In connection
with such purchase, the Redeeming Party shall remit to the Trustee all amounts
then on deposit in the Principal and Interest Account for deposit to the
Certificate Account, which deposit shall be deemed to have occurred immediately
preceding such purchase. Notwithstanding the foregoing, the Redeeming Party may
not terminate the Trust pursuant to this Section 9.2 without the consent of the
Certificate Insurer, if termination would result in a draw on the Certificate
Insurance Policy.
(b) In connection with any such purchase, the Redeeming Party
shall provide to the Trustee an opinion of counsel experienced in federal income
tax matters to the effect that such purchase constitutes a Qualified Liquidation
of the Lower-Tier REMIC and Upper-Tier REMIC.
(c) Promptly following any such purchase, the Trustee will
release the Files to the Redeeming Party, or otherwise upon their order, in a
manner similar to that described in Section 8.14 hereof.
(d) Upon such purchase, the Certificate Insurance Policy will
terminate and shall be returned to the Certificate Insurer.
SECTION 9.3. TERMINATION UPON LOSS OF REMIC STATUS.
(a) Following a (x) final determination by the Internal
Revenue Service, or by a court of competent jurisdiction, in either case from
which no appeal is taken within the permitted time for such appeal, or (y) if
any appeal is taken, following a final determination of such appeal from which
no further appeal can be taken, to the effect that either the Upper-Tier REMIC
or Lower-Tier REMIC do not and will no longer qualify as a "REMIC" pursuant to
Section 860D of the Code (the "Final Determination") or (z) following the
delivery of an opinion of counsel ("REMIC Opinion") to the effect that the
effect of the Final Determination is to increase substantially the probability
that either the Upper-Tier REMIC or Lower-Tier REMIC will no longer qualify as a
"REMIC" pursuant to Section 860D of the Code, on any Remittance Date on or after
the date which is 30 calendar days following such Final Determination, the
Certificate Insurer, or if Certificate Insurer Default has occurred and is
continuing, the Owners of a majority in Percentage Interest represented by the
Class [A] Certificates then Outstanding may direct the Trustee to adopt a plan
of complete liquidation with respect to the Trust Estate. In connection with
such purchase, the Master Servicer shall remit to the Trustee all amounts then
on deposit in the Principal and Interest Account for deposit in the Certificate
Account, which deposit shall be deemed to have occurred immediately preceding
such purchase.
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(b) Upon receipt of such direction from the Certificate
Insurer or the Owners of such Class [A] Certificates, as applicable, the Trustee
shall notify the Master Servicer and holders of the [Residual Class]
Certificates of such election to liquidate or such determination to purchase, as
the case may be, (the "Termination Notice"). The Master Servicer or Owner of a
majority of the Percentage Interest of the [Residual Class] Certificates then
Outstanding acting directly or through one or more of their affiliates may, on
any Remittance Date, within 60 days from the date of receipt of the Termination
Notice (the "Purchase Option Period"), at their option, purchase from the Trust
all (but not fewer than all) Mortgage Loans in the Trust Estate, and all
property theretofore acquired by foreclosure, deed in lieu of foreclosure, or
otherwise in respect of any Mortgage Loan then remaining in the Trust Estate at
a purchase price equal to the Termination Price.
(c) If, during the Purchase Option Period, the Master Servicer
or the Owners of the Class R Certificates have not exercised the option
described in the immediately preceding paragraph, then upon the expiration of
the Purchase Option Period in the event that the Owners of the Class [A]
Certificates have given the Trustee the direction described in clause (a)(i)
above, the Trustee shall (with the prior consent of the Certificate Insurer, so
long as no Certificate Insurer Default has occurred and is continuing) sell the
Mortgage Loans and distribute the proceeds of the liquidation of the Trust
Estate, such that, if so directed, the liquidation of the Trust Estate, the
distribution of the proceeds of such liquidation occur no later than the close
of the 60th day, or such later day as the Owner of a majority of the Percentage
Interest of the Class [A] Certificates shall permit or direct in writing, after
the expiration of the Purchase Option Period.
(d) Following a Final Determination, the Owners of a majority
of the Percentage Interest of the [Residual Class] Certificates then Outstanding
may, at their option on any Remittance Date and upon delivery to the Owners of
the Class [A] Certificates and the Trustee of an opinion of counsel experienced
in federal income tax matters selected by the Owners of a majority of the
Percentage Interest of such [Residual Class] Certificates which opinion shall be
reasonably satisfactory in form and substance to a majority of the Percentage
Interests represented by the Class [A] Certificates then Outstanding and the
Trustee, to the effect that the effect of the Final Determination is to increase
substantially the probability that the gross income of either the Upper-Tier
REMIC or Lower-Tier REMIC will be subject to federal taxation, purchase from the
Trust all (but not fewer than all) Mortgage Loans in the Trust Estate, and all
property theretofore acquired by foreclosure, deed in lieu of foreclosure, or
otherwise in respect of any Mortgage Loan then remaining in the Trust Estate at
a purchase price equal to the Termination Price. In connection with such
purchase, the Master Servicer shall remit to the Trustee all amounts then on
deposit in the Principal and Interest Account for deposit to the Certificate
Account, which deposit shall be deemed to have occurred immediately preceding
such purchase. The foregoing opinion shall be deemed satisfactory unless the
Owners of a majority of the Percentage Interest represented by the Class [A]
Certificates then Outstanding or the Trustee give the Owners of a majority of
the Percentage Interest of the [Residual Class] Certificates notice that such
opinion is not satisfactory within thirty days after receipt of such opinion.
SECTION 9.4. DISPOSITION OF PROCEEDS.
The Trustee shall, upon receipt thereof, deposit the proceeds of any liquidation
of the Trust Estate pursuant to this Article IX to the Certificate Account;
provided, however, that any amounts representing Servicing Fees, unreimbursed
Delinquency Advances or unreimbursed Servicing Advances theretofore funded by
the Master Servicer from the Master Servicer's own funds shall be paid by the
Trustee to the Master Servicer.
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SECTION 9.5. NETTING OF AMOUNTS.
If any Person paying the Termination Price would receive a portion of the
amount so paid, such Person may net any such amount against the Termination
Price otherwise payable.
ARTICLE X
THE TRUSTEE
SECTION 10.1. CERTAIN DUTIES AND RESPONSIBILITIES.
(a) The Trustee (i) undertakes to perform such duties and only
such duties as are specifically set forth in this Agreement, and no implied
covenants or obligations shall be read into this Agreement against the Trustee
and (ii) in the absence of bad faith on its part, may conclusively rely, as to
the truth of the statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished pursuant to and conforming to
the requirements of this Agreement; but in the case of any such certificates or
opinions which by any provision hereof are specifically required to be furnished
to the Trustee, shall be under a duty to examine the same to determine whether
or not they conform to the requirements of this Agreement.
(b) Notwithstanding the appointment of the Master Servicer
hereunder, the Trustee is hereby empowered to perform the duties of the Master
Servicer hereunder whether following the failure of the Master Servicer to
perform, pursuant to Section 8.20 hereof or otherwise. Specifically, and not in
limitation of the foregoing, the Trustee shall have the power:
(i) to collect Mortgagor payments;
(ii) to foreclose on defaulted Mortgage Loans;
(iii) to enforce due-on-sale clauses and to enter into
assumption and substitution agreements as permitted by Section 8.12
hereof;
(iv) to deliver instruments of satisfaction pursuant to
Section 8.14;
(v) to make Delinquency Advances and Servicing Advances and to
pay Compensating Interest, and
(vi) to enforce the Mortgage Loans.
(c) No provision of this Agreement shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct, except that:
(i) this subsection shall not be construed to limit the effect
of subsection (a) of this Section;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by an Authorized Officer, unless it shall be proved
that the Trustee was negligent in ascertaining the pertinent facts; and
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(iii) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance
with the direction of the Certificate Insurer or of the Owners of a
majority in Percentage Interest of the Certificates of the affected
Class or Classes and the Certificate Insurer relating to the time,
method and place of conducting any proceeding for any remedy available
to the Trustee, or exercising any trust or power conferred upon the
Trustee, under this Agreement relating to such Certificates.
(d) Whether or not therein expressly so provided, every
provision of this Agreement relating to the conduct or affecting the liability
of or affording protection to the Trustee shall be subject to the provisions of
this Section.
(e) No provision of this Agreement shall require the Trustee
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(f) The permissive right of the Trustee to take actions
enumerated in this Agreement shall not be construed as a duty and the Trustee
shall not be answerable for other than its own negligence or willful misconduct.
(g) The Trustee shall be under no obligation to institute any
suit, or to take any remedial proceeding under this Agreement, or to take any
steps in the execution of the trusts hereby created or in the enforcement of any
rights and powers hereunder until it shall be indemnified to its satisfaction
against any and all costs and expenses, outlays and counsel fees and other
reasonable disbursements and against all liability, except liability which is
adjudicated to have resulted from its negligence or willful misconduct, in
connection with any action so taken. The Trustee shall receive from the Sponsor
promptly upon demand therefor, reimbursement of expenses as are described in the
fee quote letter, dated [__________, _____] and executed by the Sponsor.
SECTION 10.2. REMOVAL OF TRUSTEE FOR CAUSE.
(a) The Trustee may be removed pursuant to paragraph (b)
hereof upon the occurrence of any of the following events (whatever the reason
for such event and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(A) the Trustee shall fail to distribute to the
Owners entitled thereto on any Payment Date amounts available
for distribution in accordance with the terms hereof; or
(B) the Trustee shall fail in the performance of, or
breach, any covenant or agreement of the Trustee in this
Agreement, or if any representation or warranty of the Trustee
made in this Agreement or in any certificate or other writing
delivered pursuant hereto or in connection herewith shall
prove to be incorrect in any material respect as of the time
when the same shall have been made, and such failure or breach
shall continue or not be cured for a period of 30 days after
there shall have been given, by registered or certified mail,
to the
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Trustee by the Sponsor, the Certificate Insurer or by the
Owners of at least 25% of the aggregate Percentage Interests
represented by the Class [A] Certificates then Outstanding a
written notice specifying such failure or breach and requiring
it to be remedied; or
(C) a decree or order of a court or agency or
supervisory authority having jurisdiction for the appointment
of a conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or
similar proceedings, or for the winding-up or liquidation of
its affairs, shall have been entered against the Trustee, and
such decree or order shall have remained in force undischarged
or unstayed for a period of 75 days; or
(D) a conservator or receiver or liquidator or
sequestrator or custodian of the property of the Trustee is
appointed in any insolvency, readjustment of debt, marshalling
of assets and liabilities or similar proceedings of or
relating to the Trustee or relating to all or substantially
all of its property; or
(E) the Trustee shall become insolvent (however
insolvency is evidenced), generally fail to pay its debts as
they come due, file or consent to the filing of a petition to
take advantage of any applicable insolvency or reorganization
statute, make an assignment for the benefit of its creditors,
voluntarily suspend payment of its obligations, or take
corporate action for the purpose of any of the foregoing.
The Sponsor shall give to the Certificate Insurer and each
Rating Agency notice of the occurrence of any such event of which the Sponsor is
aware.
(b) If any event described in Paragraph (a) occurs and is
continuing, then and in every such case (i) the Certificate Insurer or (ii) with
the prior written consent (which shall not be unreasonably withheld) of the
Certificate Insurer (x) the Sponsor or (y) the Owners of a majority of the
Percentage Interests represented by the Class [A] Certificates, or, if there are
no Class [A] Certificates then Outstanding, by such Percentage Interest
represented by any Class of [Residual Class] Certificates then Outstanding may,
whether or not the Trustee resigns pursuant to Section 10.9 hereof, immediately,
concurrently with the giving of notice to the Trustee, and without delaying the
30 days required for notice therein, appoint a successor Trustee pursuant to the
terms of Section 10.9 hereof.
SECTION 10.3. CERTAIN RIGHTS OF THE TRUSTEE.
Except as otherwise provided in Section 10.1 hereof:
(a) the Trustee may request and rely upon and shall be
protected in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, note or other paper or document believed by it to be genuine and to
have been signed or presented by the proper party or parties;
(b) any request or direction of the Sponsor, the Certificate
Insurer or the Owners of any Class of Certificates mentioned herein shall be
sufficiently evidenced in writing;
(c) whenever in the administration of this Agreement the
Trustee shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action
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hereunder, the Trustee (unless other evidence be herein specifically prescribed)
may, in the absence of bad faith on its part, rely upon an Officer's
Certificate;
(d) the Trustee may consult with counsel, and the written
advice of such counsel shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in reasonable reliance thereon;
(e) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Agreement at the request or
direction of any of the Owners pursuant to this Agreement, unless such Owners
shall have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance with
such request or direction;
(f) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
note or other paper or document, but the Trustee in its discretion may make such
further inquiry or investigation into such facts or matters as it may see fit;
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys and the Trustee shall not be responsible for any misconduct
or negligence on the part of any agent or attorney appointed and supervised with
due care by it hereunder; and
(h) the Trustee shall not be liable for any action it takes or
omits to take in good faith which it reasonably believes to be authorized by the
Authorized Officer of any Person or within its rights or powers under this
Agreement other than as to validity and sufficiency of its authentication of the
Certificates.
SECTION 10.4. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF
CERTIFICATES.
The recitals contained herein and in the Certificates, except any such
recitals relating to the Trustee, shall be taken as the statements of the
Sponsor and the Trustee assumes no responsibility for their correctness. The
Trustee makes no representation as to the validity or sufficiency of this
Agreement or of the Certificates other than as to validity and sufficiency of
its authentication of the Certificates.
SECTION 10.5. MAY HOLD CERTIFICATES.
The Trustee or any agent of the Trust, in its individual or any other
capacity, may become an Owner or pledgee of Certificates and may otherwise deal
with the Trust with the same rights it would have if it were not Trustee or such
agent.
SECTION 10.6. MONEY HELD IN TRUST.
Money held by the Trustee in trust hereunder need not be segregated from other
trust funds except to the extent required herein or required by law. The Trustee
shall be under no liability for interest on any money received by it hereunder
except as otherwise agreed with the Sponsor and except to the extent of income
or other gain on investments which are deposits in or certificates of deposit of
the Trustee in its commercial capacity and income or other gain actually
received by the Trustee on Eligible Investments.
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SECTION 10.7. NO LIEN FOR FEES.
The Trustee shall have no lien on the Trust Estate for the payment of any fees
and expenses.
SECTION 10.8. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee hereunder which shall be a corporation
or association organized and doing business under the laws of the United States
of America or of any State authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least $100,000,000,
subject to supervision or examination by the United States of America or any
such State having a rating or ratings acceptable to the Certificate Insurer or,
if the last sentence of Section 11.18 hereof is applicable, the Sponsor and
having (x) long-term, unsecured debt rated at least A-1 by Moody's (or such
lower rating as may be acceptable to Moody's) and (y) a short-term deposit
rating of at least A-1 from Standard & Poor's (or such lower rating as may be
acceptable to Standard & Poor's). If such Trustee publishes reports of condition
at least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such corporation or association shall be deemed
to be its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall, upon the request of
the Sponsor (with the consent of the Certificate Insurer) (which consent shall
not be unreasonably withheld) or of the Certificate Insurer, resign immediately
in the manner and with the effect hereinafter specified in this Article X.
SECTION 10.9. RESIGNATION AND REMOVAL; APPOINTMENT OF
SUCCESSOR.
(a) No resignation or removal of the Trustee and no
appointment of a successor trustee pursuant to this Article X shall become
effective until the acceptance of appointment by the successor trustee under
Section 10.10 hereof.
(b) The Trustee, or any trustee or trustees hereafter
appointed, may resign at any time by giving written notice of resignation to the
Sponsor and by mailing notice of resignation by first-class Mail, postage
prepaid, to the Certificate Insurer and the Owners at their addresses appearing
on the Register. A copy of such notice shall be sent by the resigning Trustee to
each Rating Agency. Upon receiving notice of resignation, the Sponsor shall
promptly appoint a successor trustee or trustees by written instrument, in
duplicate, executed on behalf of the Trust by an Authorized Officer of the
Sponsor, one copy of which instrument shall be delivered to the Trustee so
resigning and one copy to the successor trustee or trustees. If no successor
trustee shall have been appointed and have accepted appointment within 30 days
after the giving of such notice of resignation, the resigning trustee may
petition any court of competent jurisdiction for the appointment of a successor
trustee, or any Owner may, on behalf of himself and all others similarly
situated, petition any such court for the appointment of a successor trustee.
Such court may thereupon, after such notice, if any, as it may deem proper and
prescribe, appoint a successor trustee.
(c) If at any time the Trustee shall cease to be eligible
under Section 10.8 hereof and shall fail to resign after written request
therefor by the Sponsor or by the Certificate Insurer, the Certificate Insurer
or the Sponsor (with the written consent of the Certificate Insurer) may remove
the Trustee and appoint a successor trustee by written instrument, in duplicate,
executed on behalf of the Trust by an Authorized Officer of the Sponsor, one
copy of which instrument shall be delivered to the Trustee so removed and one
copy to the successor trustee.
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(d) The Owners of a majority of the Percentage Interests
represented by the Class [A] Certificates, or, if there are no Class [A]
Certificates then Outstanding, by such majority of the Percentage Interests
represented by [Residual Class] Certificates then Outstanding may at any time,
with the prior written consent of the Certificate Insurer, remove the Trustee
and appoint a successor trustee by delivering to the Trustee to be removed, to
the successor trustee so appointed, to the Sponsor and to the Certificate
Insurer, copies of the record of the act taken by the Owners, as provided for in
Section 11.3 hereof.
(e) If the Trustee fails to perform its duties in accordance
with the terms of this Agreement or becomes ineligible to serve as Trustee, the
Certificate Insurer or, if the last sentence of Section 11.18 hereof is
applicable, the Sponsor may remove the Trustee and appoint a successor trustee
by written instrument, in triplicate, signed by the Certificate Insurer and the
Sponsor duly authorized, one complete set of which instruments shall be
delivered to the Sponsor, one complete set to the Certificate Insurer, one
complete set to the Trustee so removed and one complete set to the successor
Trustee so appointed.
(f) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of the Trustee
for any cause, the Sponsor shall promptly appoint a successor Trustee acceptable
to the Certificate Insurer. If within one year after such resignation, removal
or incapability or the occurrence of such vacancy, a successor Trustee shall be
appointed by act of the Owners of a majority of the Percentage Interests
represented by the Class [A] Certificates then Outstanding or, if there are no
Class [A] Certificates then Outstanding, by such majority of the Percentage
Interest of the [Residual Class] Certificates delivered to the Sponsor and the
retiring Trustee, the successor Trustee so appointed shall forthwith upon its
acceptance of such appointment become the successor Trustee and supersede the
successor Trustee appointed by the Sponsor. If no successor Trustee shall have
been so appointed by the Sponsor or the Owners and shall have accepted
appointment in the manner hereinafter provided, any Owner may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Trustee. Such court may
thereupon, after such notice, if any, as it may deem proper and prescribe,
appoint a successor Trustee.
(g) The Sponsor shall give notice of any removal of the
Trustee by mailing notice of such event by first-class mail, postage prepaid, to
the Certificate Insurer and to the Owners as their names and addresses appear in
the Register. Each notice shall include the name of the successor Trustee and
the address of its corporate trust office.
SECTION 10.10. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR TRUSTEE.
Every successor Trustee appointed hereunder shall execute, acknowledge and
deliver to the Sponsor on behalf of the Trust and to its predecessor Trustee an
instrument accepting such appointment hereunder and stating its eligibility to
serve as Trustee hereunder, and thereupon the resignation or removal of the
predecessor Trustee shall become effective and such successor Trustee, without
any further act, deed or conveyance, shall become vested with all the rights,
powers, trusts, duties and obligations of its predecessor hereunder; but, on
request of the Sponsor or the successor Trustee, such predecessor Trustee shall,
upon payment of its charges then unpaid, execute and deliver an instrument
transferring to such successor Trustee all of the rights, powers and trusts of
the Trustee so ceasing to act, and shall duly assign, transfer and deliver to
such successor Trustee all property and money held by such Trustee so ceasing to
act hereunder. Upon request of any such successor Trustee, the Sponsor on behalf
of the Trust shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Trustee all such rights, powers and
trusts.
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Upon acceptance of appointment by a successor Trustee as
provided in this Section, the Sponsor shall mail notice thereof by first-class
mail, postage prepaid, to the Owners at their last addresses appearing upon the
Register. The Sponsor shall send a copy of such notice to each of the Rating
Agencies and the Certificate Insurer. If the Sponsor fails to mail such notice
within ten days after acceptance of appointment by the successor Trustee, the
successor Trustee shall cause such notice to be mailed at the expense of the
Trust.
No successor Trustee shall accept its appointment unless at
the time of such acceptance such successor shall be qualified and eligible under
this Article X.
SECTION 10.11. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION
TO BUSINESS OF THE TRUSTEE.
Any corporation or association into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation or
association resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation or association succeeding to all or
substantially all of the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, without the execution or filing of any paper
or any further act on the part of any of the parties hereto; provided, however,
that such corporation or association shall be otherwise qualified and eligible
under this Article X. In case any Certificates have been executed, but not
delivered, by the Trustee then in office, any successor by merger, conversion or
consolidation to such Trustee may adopt such execution and deliver the
Certificates so executed with the same effect as if such successor Trustee had
itself executed such Certificates.
SECTION 10.12. REPORTING; WITHHOLDING.
With respect to each of the REMIC Trusts and the Non-REMIC Estate, the Trustee
shall timely provide to the Owners (or other Persons entitled thereto) the
Internal Revenue Service's Form 1099 and any other statement required by
applicable Treasury regulations or analogous provisions of state or local law as
determined by the Sponsor, and shall withhold, as required by applicable law,
federal, state or local taxes, if any, applicable to distributions to the
Owners, including, but not limited to, backup withholding under Section 3406 of
the Code, the withholding tax on distributions to foreign investors under
Sections 1441 and 1442 of the Code and beginning after [__________, _____],
shall report as effectively connected income distributions with respect to
Supplemental Interest Rights held by foreign holders if such holders have not
provided certification that such distributions are not effectively connected
income.
SECTION 10.13. LIABILITY OF THE TRUSTEE.
The Trustee shall be liable in accordance herewith only to the extent of the
obligations specifically imposed upon and undertaken by the Trustee herein.
Neither the Trustee nor any of the directors, officers, employees or agents of
the Trustee shall be under any liability on any Certificate or otherwise to any
Account, the Sponsor, the Master Servicer or any Owner for any action taken or
for refraining from the taking of any action in good faith pursuant to this
Agreement, or for errors in judgment; provided, however, that this provision
shall not protect the Trustee or any such Person against any liability which
would otherwise be imposed by reason of negligent action, negligent failure to
act or bad faith in the performance of duties or by reason of reckless disregard
of obligations and duties hereunder. Subject to the foregoing sentence, the
Trustee shall not be liable for losses on investments of amounts in any Account
(except for any losses on obligations on which the bank serving as Trustee is
the obligor and is otherwise liable).
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In addition, the Sponsor and Master Servicer covenant and agree to indemnify the
Trustee, and its officers, directors, employees and agents, including, without
limitation, when the Trustee is acting as Master Servicer, and hold it harmless
against, any and all losses, liabilities, damages, claims or expenses (including
legal fees and expenses) other than those resulting from the negligence or bad
faith of the Trustee. The indemnification provided in this Section 10.13 shall
survive the termination of this Agreement or the resignation or removal of the
Trustee hereunder. The Trustee and any director, officer, employee or agent of
the Trustee may rely and shall be protected in acting or refraining from acting
in good faith on any certificate, notice or other document of any kind prima
facie properly executed and submitted by the Authorized Officer of any Person
respecting any matters arising hereunder.
SECTION 10.14. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust Estate or Property may at the time be located, the Master Servicer
and the Trustee acting jointly shall have the power and shall execute and
deliver all instruments to appoint one or more Persons approved by the Trustee
and the Certificate Insurer to act as co-Trustee or co-Trustees, jointly with
the Trustee, of all or any part of the Trust Estate or separate Trustee or
separate Trustees of any part of the Trust Estate, and to vest in such Person or
Persons, in such capacity and for the benefit of the Owners, such title to the
Trust Estate, or any part thereof, and, subject to the other provisions of this
Section 10.14, such powers, duties, obligations, rights and trusts as the Master
Servicer and the Trustee may consider necessary or desirable. If the Master
Servicer shall not have joined in such appointment within 15 days after the
receipt by it of a request so to do, or in the case any event indicated in
Sections 8.20(a) or 8.20(b) shall have occurred and be continuing, the Trustee
alone shall have the power to make such appointment with the consent of the
Certificate Insurer. No co-Trustee or separate Trustee hereunder shall be
required to meet the terms of eligibility as a successor Trustee under Section
10.8 and no notice to Owner of the appointment of any co-Trustee or separate
Trustee shall be required under Section 10.8.
Every separate Trustee and co-Trustee shall, to the extent
permitted, be appointed and act subject to the following provisions and
conditions:
(i) All rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate Trustee or
co-Trustee jointly (it being understood that such separate Trustee or
co-Trustee is not authorized to act separately without the Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
(whether as Trustee hereunder or as successor to the Master Servicer
hereunder), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust Estate or any
portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate Trustee or co-Trustee, but solely at
the direction of the Trustee;
(ii) No co-Trustee hereunder shall be held personally liable
by reason of any act or omission of any other co-Trustee hereunder; and
(iii) The Master Servicer and the Trustee acting jointly may
at any time accept the resignation of or remove any separate Trustee or
co-Trustee.
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Any notice, request or other writing given to the Trustee
shall be deemed to have been given to each of the then separate Trustees and
co-Trustees, as effectively as if given to each of them. Every instrument
appointing any separate Trustee or co-Trustee shall refer to this Agreement and
the conditions of this Section 10.14. Each separate Trustee and co-Trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the provisions
of this Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Trustee. Every such instrument shall be filed with the Trustee and a
copy thereof given to the Master Servicer.
Any separate Trustee or co-Trustee may, at any time,
constitute the Trustee, its agent or attorney-in-fact, with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Agreement on its behalf and in its name. If any separate Trustee
or co-Trustee shall die, become incapable of acting, resign or be removed, all
of its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor Trustee.
The Trustee shall give to the Rating Agencies, the Sponsor and
the Certificate Insurer notice of the appointment of any Co-Trustee or separate
Trustee.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Sponsor, the Certificate Insurer or the
Owners to the Trustee to take any action under any provision of this Agreement,
the Sponsor, the Certificate Insurer or the Owners, as the case may be, shall
furnish to the 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 11.2. FORM OF DOCUMENTS DELIVERED TO THE TRUSTEE.
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In any case where several matters are required to be certified by, or covered
by an opinion of, any specified Person, it is not necessary that all such
matters be certified by, or covered by the opinion of, only one such Person, or
that they be so certified or covered by only one document, but one such Person
may certify or give an opinion with respect to some matters and one or more
other such Persons as to other matters, and any such Person may certify or give
an opinion as to such matters in one or several documents.
Any certificate of an Authorized Officer of the 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 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 Trustee, stating that the
information with respect to such matters is in the possession of the 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 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 11.3. ACTS OF OWNERS.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Agreement to be given or taken
by the Owners may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Owners 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 Trustee, and, where it is hereby expressly required, to the Sponsor
and/or the Certificate Insurer. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as the
"act" of the Owners 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
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 Certificates shall be proved by the
Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Owner of any Certificate shall bind the
Owner of every Certificate 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 Trustee or the Trust in reliance thereon, whether or
not notation of such action is made upon such Certificates.
SECTION 11.4. NOTICES, ETC., TO TRUSTEE.
Any request, demand, authorization, direction, notice, consent, waiver or act
of the Owners or other documents provided or permitted by this Agreement to be
made upon, given or furnished to, or filed with the Trustee by any Owner, the
Certificate 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 Trustee at its corporate trust office as set forth in Section 2.2 hereof.
SECTION 11.5. NOTICES AND REPORTS TO OWNERS; WAIVER OF
NOTICES.
Where this Agreement provides for notice to Owners of any event or the mailing
of any report to Owners, such notice or report shall be sufficiently given
(unless otherwise herein expressly provided) if mailed, first-class postage
prepaid, to each Owner affected by such event or to whom such report is required
to be mailed, at the address of such Owner as it appears on the Register, not
later than the latest date, and not earlier than the earliest date, prescribed
for the giving of such notice or the mailing of such report. In any case where a
notice or report to Owners 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 Owner shall affect the sufficiency of such notice or
report with respect to other Owners, 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 Owners shall be filed with the 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 Owners 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 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 Certificates, failure to give such notice shall not affect any
other rights or obligations created hereunder.
SECTION 11.6. RULES BY TRUSTEE AND SPONSOR.
The Trustee may make reasonable rules for any meeting of Owners. The Sponsor
may make reasonable rules and set reasonable requirements for its functions.
SECTION 11.7. SUCCESSORS AND ASSIGNS.
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All covenants and agreements in this Agreement by any party hereto shall bind
its successors and assigns, whether so expressed or not.
SECTION 11.8. SEVERABILITY.
In case any provision in this Agreement or in the Certificates shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 11.9. BENEFITS OF AGREEMENT.
Nothing in this Agreement or in the Certificates, expressed or implied, shall
give to any Person, other than the Owners, the Certificate Insurer and the
parties hereto and their successors hereunder, any benefit or any legal or
equitable right, remedy or claim under this Agreement.
SECTION 11.10. LEGAL HOLIDAYS.
In any case where the date of any Payment Date, any other date on which any
distribution to any Owner 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
Certificates 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 Owner 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 11.11. GOVERNING LAW.
In view of the fact that Owners are expected to reside in many states and
outside the United States and the desire to establish with certainty that this
Agreement will be governed by and construed and interpreted in accordance with
the law of a state having a well-developed body of commercial and financial law
relevant to transactions of the type contemplated herein, this Agreement and
each Certificate shall be construed in accordance with and governed by the laws
of the State of New York applicable to agreements made and to be performed
therein.
SECTION 11.12. COUNTERPARTS.
This instrument may be executed in any number of counterparts, each of which
so executed shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument.
SECTION 11.13. USURY.
The amount of interest payable or paid on any Certificate 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 Certificate exceeds the Highest Lawful
Rate, the Trust stipulates that such excess amount will be deemed to have been
paid to the Owner of such
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Certificate as a result of an error on the part of the Trustee acting on behalf
of the Trust and the Owner receiving such excess payment shall promptly, upon
discovery of such error or upon notice thereof from the Trustee on behalf of the
Trust, refund the amount of such excess or, at the option of such Owner, apply
the excess to the payment of principal of such Certificate, if any, remaining
unpaid. In addition, all sums paid or agreed to be paid to the Trustee for the
benefit of Owners of Certificates 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 Certificates.
SECTION 11.14. AMENDMENT.
(a) The Trustee, the Sponsor and the Master Servicer, may at
any time and from time to time, with the prior written consent of the
Certificate Insurer but without the giving of notice to or the receipt of the
consent of the Owners, amend this Agreement, and the Trustee shall consent to
such amendment, for the purpose of (i) curing any ambiguity, or correcting or
supplementing any provision hereof which may be inconsistent with any other
provision hereof, or to add provisions hereto which are not inconsistent with
the provisions hereof, (ii) upon receipt of an opinion of counsel experienced in
federal income tax matters to the effect that no entity-level tax will be
imposed on the Upper-Tier REMIC or the Lower-Tier REMIC or upon the transferor
of a [Residual Class] Certificate as a result of the ownership of any [Residual
Class] Certificate by a Disqualified Organization, removing the restriction on
transfer set forth in Section 5.8(b) hereof or (iii) complying with the
requirements of the Code and the regulations proposed or promulgated thereunder;
provided, however, that any such action shall not, as evidenced by an opinion of
counsel delivered to the Trustee, materially and adversely affect the interests
of any Owner (without its written consent).
(b) The Trustee, the Sponsor and the Master Servicer may, at
any time and from time to time, with the prior written consent of the
Certificate Insurer but without the giving of notice to or the receipt of the
consent of the Owners, amend this Agreement, and the Trustee shall consent to
such amendment, for the purpose of changing the definitions of "Group I
Specified Overcollateralization Amount," and "Group II Specified
Overcollateralization Amount"; provided, however, that no such change shall
affect the weighted average life of the related Class of Class [A] Certificates
(assuming an appropriate prepayment speed as determined by the Representative)
by more than five percent, as determined by the Representative.
(c) This Agreement may also be amended by the Trustee, the
Sponsor, and the Master Servicer at any time and from time to time, with the
prior written approval of the Certificate Insurer and not less than a majority
of the Percentage Interest represented by each affected Class of Certificates
then Outstanding, for the purpose of adding any provisions or changing in any
manner or eliminating any of the provisions of this Agreement or of modifying in
any manner the rights of the Owners 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 Owner without the consent
of the Owner of such Certificate, (b) change or reduce the aforesaid percentages
of Percentage Interests which are required to consent to any such amendments or
(c) result in a down-rating or withdrawal of any ratings then assigned to the
Class [A] Certificates, without the consent of the Owners of all Certificates of
the Class or Classes affected then Outstanding.
(d) Each proposed amendment to this Agreement shall be
accompanied by an opinion of counsel nationally recognized in federal income tax
matters addressed to the Trustee and to the Certificate Insurer to the effect
that such amendment would not adversely
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affect the status of either the Upper-Tier REMIC or Lower-Tier REMIC as a REMIC.
Neither such opinion of counsel nor any expense of any such proposed amendment
shall be at the Trustee's expense.
(e) The Certificate Insurer, the Owners and each Rating Agency
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 11.15. REMIC STATUS; TAXES.
(a) The Tax Matters Person shall prepare and file or cause to
be filed with the Internal Revenue Service federal tax or information returns
with respect to the Upper-Tier REMIC and Lower-Tier REMIC and the Certificates
containing such information and at the times and in such manner as may be
required by the Code or applicable Treasury regulations, and shall furnish to
Owners such statements or information at the times and in such manner as may be
required thereby. For this purpose, the Tax Matters Person may, but need not,
rely on any proposed regulations of the United States Department of the
Treasury. The Tax Matters Person shall indicate the election to treat each of
the Upper-Tier REMIC and Lower-Tier REMIC as a REMIC (which election shall apply
to the taxable period ending [__________, _____] and each calendar year
thereafter) in such manner as the Code or applicable Treasury regulations may
prescribe. The Trustee, as Tax Matters Person appointed pursuant to Section
11.17 hereof shall sign all tax information returns filed pursuant to this
Section 11.15. The Tax Matters Person shall provide information necessary for
the computation of tax imposed on the transfer of a [Residual Class] Certificate
to a Disqualified Organization, or an agent of a Disqualified Organization, or a
pass-through entity in which a Disqualified Organization is the record holder of
an interest. The Tax Matters Person shall provide the Trustee with copies of any
Federal tax or information returns filed, or caused to be filed, by the Tax
Matters Person with respect to the REMIC Trust or the Certificates.
(b) The Tax Matters Person shall timely file all reports
required to be filed by the Trust with any federal, state or local governmental
authority having jurisdiction over the Trust, including other reports that must
be filed with the Owners, such as the Internal Revenue Service's Form 1066 and
Schedule Q and the form required under Section 6050K of the Code, if applicable
to REMICs. The Trustee shall be liable to the Master Servicer and the Sponsor
for any penalties or interest as a result of its negligence with respect to such
filings. Furthermore, the Tax Matters Person shall report to Owners, if
required, with respect to the allocation of expenses pursuant to Section 212 of
the Code in accordance with the specific instructions to the Tax Matters Person
by the Sponsor with respect to such allocation of expenses. The Tax Matters
Person shall collect any forms or reports from the Owners determined by the
Sponsor to be required under applicable federal, state and local tax laws. The
Trustee shall provide copies of all filings to the Master Servicer within 15
days of the required date of such filing. In addition, the Trustee agrees not to
file more than one extension per required filing without prior consultation
with, and the consent of, the Master Servicer. Further, the Trustee shall
provide to the Sponsor and the Master Servicer access to any documentation
regarding its tax reporting duties hereunder as well as providing access to the
Trustee's officers and personnel in order to discuss the methodology and
preparation of any filings or returns hereunder. Such access shall be provided
to the Master Servicer and the Sponsor without cost or charge.
(c) The Tax Matters Person shall provide to the Internal
Revenue Service and to persons described in Section 860E(e)(3) and (6) of the
Code the information described in Treasury Regulation Section
1.860D-1(b)(5)(ii), or any successor regulation thereto. Such
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information will be provided in the manner described in Treasury Regulation
Section 1.860E-2(a)(5), or any successor regulation thereto.
(d) The Sponsor covenants and agrees that within ten Business
Days after receiving a written request from the Trustee it shall provide to the
Trustee any information necessary to enable the Trustee to meet its obligations
under subsections (b) and (c) above.
(e) The Trustee, the Sponsor and the Master Servicer each
covenants and agrees for the benefit of the Owners (i) to take no action which
would result in the termination of "REMIC" status for the Upper-Tier REMIC and
Lower-Tier REMIC, (ii) not to engage in any "prohibited transaction", as such
term is defined in Section 860F(a)(2) of the Code and (iii) not to engage in any
other action which may result in the imposition on the Upper-Tier REMIC and
Lower-Tier REMIC of any other taxes under the Code.
(f) The Upper-Tier REMIC and Lower-Tier REMIC shall, for
federal income tax purposes, maintain books on a calendar year basis and report
income on an accrual basis.
(g) Except as otherwise permitted by Section 7.6(b), no
Eligible Investment shall be sold prior to its stated maturity (unless sold
pursuant to a plan of liquidation in accordance with Article IX hereof).
(h) Neither the Sponsor nor the Trustee shall enter into any
arrangement by which the Trustee will receive a fee or other compensation for
services rendered pursuant to this Agreement, which fee or other compensation is
paid from the Trust Estate, other than as expressly contemplated by this
Agreement.
(i) Notwithstanding the foregoing clauses (g) and (h), the
Trustee or the Sponsor may engage in any of the transactions prohibited by such
clauses, provided that the Trustee shall have received the prior written consent
of the Certificate Insurer and an opinion of counsel experienced in federal
income tax matters to the effect that such transaction does not result in a tax
imposed on the Trustee or cause a termination of REMIC status for either the
Upper-Tier REMIC or Lower-Tier REMIC; provided, however, that such transaction
is otherwise permitted under this Agreement.
SECTION 11.16. ADDITIONAL LIMITATION ON ACTION AND IMPOSITION
OF TAX.
(a) Any provision of this Agreement to the contrary
notwithstanding, the Trustee shall not, without having obtained, and delivered
to the Certificate Insurer, an opinion of counsel experienced in federal income
tax matters (which opinion shall be at the expense of the Sponsor) to the effect
that such transaction does not result in a tax imposed on the Trust or cause a
termination of REMIC status for either the Upper-Tier REMIC or Lower-Tier REMIC,
(i) sell any assets in the Trust Estate, (ii) accept any contribution of assets
after the Startup Day or (iii) agree to any modification of this Agreement.
(b) In the event that any tax is imposed on "prohibited
transactions" of either the Upper-Tier REMIC or Lower-Tier REMIC as defined in
Section 860F(a)(2) of the Code, on the "net income from foreclosure property" as
defined in Section 860G(c) of the Code, on any contribution to either the
Upper-Tier REMIC or Lower-Tier REMIC after the Startup Day pursuant to Section
860G(d) of the Code, or any other tax, including liability for withholding tax,
(other than any minimum tax imposed by Sections 23151(a) or 23153(a) of the
California
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Revenue and Taxation Code) is imposed on the REMIC Trust or the Non-REMIC
Estate, such tax shall be paid by (i) the Trustee, if such tax arises out of or
results from a breach by the Trustee of any of its obligations under this
Agreement, (ii) the Master Servicer, if such tax arises out of or results from a
breach by the Master Servicer of any of its obligations under this Agreement, or
otherwise (iii) the Owners of the [Residual Class] Certificates in proportion to
their Percentage Interests. To the extent such tax is chargeable against the
Owners of the [Residual Class] Certificates, notwithstanding anything to the
contrary contained herein, the Trustee is hereby authorized to retain from
amounts otherwise distributable to the Owners of the [Residual Class]
Certificates on any Payment Date sufficient funds to reimburse the Trustee for
the payment of such tax (to the extent that the Trustee has not been previously
reimbursed or indemnified therefor).
(c) The Trustee shall pay out of its own funds, without any
right of reimbursement, any and all expenses relating to any tax audit of the
Trust Estate (including, but not limited to, any professional fees or any
administrative or judicial proceedings with respect thereto that involves the
Internal Revenue Service or state tax authorities); provided, however, that if
such audit resulted solely from the negligence of the Master Servicer or the
Sponsor, as the case may be, the Master Servicer or Sponsor shall pay such
expenses. The Trustee shall act on behalf of the Trust Estate in any
administrative or judicial proceeding relating to an examination or audit by any
governmental taxing authority with respect thereto.
(d) On or before April 15 of each calendar year, commencing
April 15, [Year], the Trustee shall deliver to the Master Servicer a Certificate
from a Responsible Officer of the Trustee stating the Trustee's compliance with
its tax reporting duties set forth in this Agreement.
(e) The Trustee agrees to indemnify the Trust Estate, the
Master Servicer and the Sponsor for any taxes and costs, including, without
limitation, any penalties, interest, professional fees and attorneys' fees
imposed on or incurred by the Trust Estate, the Master Servicer or the Sponsor,
as a result of a breach of the Trustee's covenants set forth in this Agreement
or as a result of the Trustee's negligence, willful misconduct or bad faith.
SECTION 11.17. APPOINTMENT OF TAX MATTERS PERSON.
The Owner of the [Residual Class] Certificate shall act as the Tax Matters
Person for the Upper-Tier REMIC and the Owner of the [Residual Class]
Certificate shall act as the Tax Matters Person for the Lower-Tier REMIC. The
Owners of the [Residual Class] Certificates hereby appoint the Trustee as their
agent for all purposes of the Code to perform, or cause to be performed, such
duties and take, or cause to be taken, such actions as are required to be
performed or taken by the Tax Matters Person for each REMIC under the Code.
SECTION 11.18. THE CERTIFICATE INSURER.
The Certificate Insurer is a third-party beneficiary of this Agreement. Any
right conferred to the Certificate Insurer shall be suspended during any period
in which the Certificate Insurer is in default in its payment obligations under
the Certificate Insurance Policy, except with respect to amendments to this
Agreement pursuant to Section 11.14. During the continuance of a Certificate
Insurer Default, the Certificate Insurer's rights hereunder shall vest in the
Trustee on behalf of the Owners of the Class [A] Certificates and shall be
exercisable by the Owners of at least a majority in Percentage Interest of the
Class [A] Certificates then Outstanding. At such time as the Class [A]
Certificates are no longer Outstanding hereunder and the Certificate Insurer
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has been reimbursed for all Reimbursement Amounts to which it is entitled
hereunder and the Certificate Insurance Policy has expired, the Certificate
Insurer's rights hereunder shall terminate.
SECTION 11.19. MAINTENANCE OF RECORDS.
Each Originator and Owner of a [Residual Class] Certificate shall each
continuously keep an original executed counterpart of this Agreement in its
official records.
SECTION 11.20. NOTICES.
All notices hereunder shall be given as follows, until any superseding
instructions are given to all other Persons listed below:
The Trustee: [Trustee]
[Trustee's Address]
Attention: [___________]
Tel: [(___) ___-_____]
Fax: [(___) ___-_____]
The Sponsor: Advanta Conduit Receivables, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Structured Finance
The Master Servicer: Advanta Mortgage Corp. USA
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▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
The Certificate Insurer: [Certificate Insurer]
[Certificate Insurer's Address]
Attention: [_____________]
[Rating Agency]: [Rating Agency]
[Rating Agency Address]
Attention: [______________]
Underwriter(s): [Underwriter/Representative]
[Underwriter's/Representative's Address]
Attention: [_____________]
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IN WITNESS WHEREOF, the Sponsor, the Master Servicer and the
Trustee have caused this Agreement to be duly executed by their respective
officers thereunto duly authorized, all as of the day and year first above
written.
ADVANTA CONDUIT RECEIVABLES, INC.
as Sponsor
By: ________________________________
Name:
Title:
ADVANTA MORTGAGE CORP. USA
as Master Servicer
By: ________________________________
Name:
Title:
[TRUSTEE],
as Trustee
By: ________________________________
[POOLING AND SERVICING AGREEMENT]
▇▇▇
▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇ )
: ss.:
COUNTY OF )
On the ____ day of _________, ____, before me personally came
___________ to me known, who, being by me duly sworn did depose and say that
his/her office is located at [Trustee's Address]; that s/he is ________________
of [Trustee], the national banking corporation described in and that executed
the above instrument as Trustee; and that s/he signed his/her name thereto under
authority granted by the Board of Directors of said national banking
association.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
[NOTARIAL SEAL]
____________________________
Notary Public