1
Exhibit 10-X
AMENDED AND RESTATED
SALE AND SERVICING AGREEMENT
Dated as of August 31, 1999
among
ADVANTA HOME EQUITY LOAN OWNER TRUST 1998-MS1
(Issuer)
ADVANTA CONDUIT RECEIVABLES INC.
(Depositor)
ADVANTA MORTGAGE CORP. USA
(Servicer)
ADVANTA BANK CORP.,
ADVANTA NATIONAL BANK,
and
ADVANTA MORTGAGE CORP. USA
(Loan Originators)
ADVANTA CORP.,
(Transfer Obligor)
and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
(Indenture Trustee)
ADVANTA HOME EQUITY LOAN OWNER TRUST 1998-MS1
HOME EQUITY LOAN ASSET-BACKED NOTES ISSUABLE IN SERIES
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01 Definitions ................................................................................ 2
Section 1.02 Other Definitional Provisions .............................................................. 32
ARTICLE II
CONVEYANCE OF THE TRUST ESTATE; ADDITIONAL NOTE PRINCIPAL BALANCES
Section 2.01 Conveyance of the Trust Estate; Additional Note Principal Balances ......................... 33
Section 2.02 Ownership and Possession of Loan Files ..................................................... 35
Section 2.03 Books and Records; Intention of the Parties ................................................ 35
Section 2.04 Delivery of Loan Documents ................................................................. 36
Section 2.05 Acceptance by the Indenture Trustee of the Loans; Certain Substitutions and Repurchases;
Certification by the Custodian ........................................................ 38
Section 2.06 Conditions Precedent to Transfer Dates and Collateral Value Excess Dates ................... 39
Section 2.07 Termination of Revolving Period ............................................................ 42
Section 2.08 Correction of Errors ....................................................................... 42
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 Representations and Warranties of the Depositor ............................................ 42
Section 3.02 Representations and Warranties of the Loan Originators ..................................... 44
Section 3.03 Representations, Warranties and Covenants of the Servicer .................................. 48
Section 3.04 Representations and Warranties of the Transfer Obligor ..................................... 50
Section 3.05 Representations and Warranties Regarding Loans ............................................. 52
Section 3.06 Repurchase and Substitution ................................................................ 52
Section 3.07 Dispositions ............................................................................... 54
Section 3.08 Loan Originator Put; Servicer Call ......................................................... 58
Section 3.09 Modification of Underwriting Guidelines .................................................... 58
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ARTICLE IV
ADMINISTRATION AND SERVICING OF THE LOANS
Section 4.01 Duties of the Servicer ..................................................................... 58
Section 4.02 Collection of Certain Loan Payments ........................................................ 60
Section 4.03 Subservicing Agreements Between Servicer and Subservicers .................................. 61
Section 4.04 Successor Subservicers ..................................................................... 61
Section 4.05 Liability of Servicer ...................................................................... 61
Section 4.06 No Contractual Relationship Between Subservicer and Indenture Trustee or the Securityholders 62
Section 4.07 Assumption or Termination of Subservicing Agreement by Successor Servicer .................. 62
Section 4.08 Servicing Advances ......................................................................... 62
Section 4.09 Reserved ................................................................................... 62
Section 4.10 Maintenance of Insurance ................................................................... 62
Section 4.11 Due-on-Sale Clauses; Assumption and Substitution Agreements ................................ 63
Section 4.12 Realization Upon Defaulted Loans ........................................................... 64
Section 4.13 Release of Files ........................................................................... 65
Section 4.14 Access to Information ...................................................................... 66
Section 4.15 Release of Loan Files ...................................................................... 67
Section 4.16 Servicing Compensation ..................................................................... 67
Section 4.17 Statement as to Compliance and Financial Statements ........................................ 68
Section 4.18 Independent Public Accountants' Servicing Report ........................................... 68
Section 4.19 ARMs ....................................................................................... 69
Section 4.20 Year 2000 Compliance ....................................................................... 69
Section 4.21 Inspections by the Majority Noteholders and the Indenture Trustee .......................... 70
Section 4.22 Errors and Omissions Insurance ............................................................. 70
ARTICLE V
ESTABLISHMENT OF TRUST ACCOUNTS; TRANSFER OBLIGATION
Section 5.01 Collection Account and Distribution Account; Reserve Account ............................... 70
Section 5.02 Payments to Securityholders ................................................................ 75
Section 5.03 Trust Accounts; Trust Account Property ..................................................... 76
Section 5.04 Advance Account ............................................................................ 78
Section 5.05 Transfer Obligation Account ................................................................ 78
Section 5.06 Transfer Obligation ........................................................................ 80
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ARTICLE VI
STATEMENTS AND REPORTS; SPECIFICATION OF TAX MATTERS
Section 6.01 Statements ................................................................................. 81
Section 6.02 Specification of Certain Tax Matters ....................................................... 84
Section 6.03 Valuation of Loans, Hedge Value and Retained Securities Value; Market Value Agent .......... 85
ARTICLE VII
HEDGING
Section 7.01 Hedging Instruments ........................................................................ 85
ARTICLE VIII
THE SERVICER
Section 8.01 Indemnification; Third Party Claims......................................................... 86
Section 8.02 Merger or Consolidation of the Servicer..................................................... 89
Section 8.03 Limitation on Liability of the Servicer and Others.......................................... 89
Section 8.04 Servicer Not to Resign; Assignment.......................................................... 89
Section 8.05 Relationship of Servicer to Issuer and the Indenture Trustee................................ 90
Section 8.06 Servicer May Own Securities................................................................. 90
Section 8.07 Indemnification of the Indenture Trustee and Initial Noteholder............................. 90
ARTICLE IX
SERVICER EVENTS OF DEFAULT
Section 9.01 Servicer Events of Default.................................................................. 91
Section 9.02 Appointment of Successor.................................................................... 92
Section 9.03 Waiver of Defaults.......................................................................... 93
Section 9.04 Accounting Upon Termination of Servicer..................................................... 94
ARTICLE X
TERMINATION, PUT OPTION
Section 10.01 Termination................................................................................ 94
Section 10.02 Optional Termination....................................................................... 95
Section 10.03 Notice of Termination...................................................................... 95
Section 10.04 Put Option................................................................................. 95
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ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01 Acts of Securityholders.................................................................... 96
Section 11.02 Amendment.................................................................................. 96
Section 11.03 Recordation of Agreement................................................................... 97
Section 11.04 Duration of Agreement...................................................................... 97
Section 11.05 Governing Law.............................................................................. 97
Section 11.06 Notices.................................................................................... 97
Section 11.07 Severability of Provisions................................................................. 98
Section 11.08 No Partnership............................................................................. 98
Section 11.09 Counterparts............................................................................... 98
Section 11.10 Successors and Assigns..................................................................... 98
Section 11.11 Headings................................................................................... 99
Section 11.12 Actions of Securityholders................................................................. 99
Section 11.13 Non-Petition Agreement..................................................................... 99
Section 11.14 Holders of the Certificates................................................................ 100
Section 11.15 Due Diligence Fees, Due Diligence.......................................................... 100
Section 11.16 Liability.................................................................................. 101
Section 11.17 Confidential Information................................................................... 101
Section 11.18 Servicer to Provide Information to Loan Originator......................................... 102
EXHIBIT A Form of Notice of Additional Note Principal Balance
EXHIBIT B Form of Servicer's Remittance Report to Trustee
EXHIBIT C Form of S&SA Assignment
EXHIBIT D Form of Reserve Account Release Instructions from Initial Noteholder
SCHEDULE A Non-Wet Funded Loan Schedule
SCHEDULE B Wet-Funded Loan Schedule
ANNEX 1 Representations and Warranties Regarding Loans
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This Amended and Restated Sale and Servicing Agreement is
entered into effective as of August 31, 1999, among ADVANTA HOME EQUITY LOAN
OWNER TRUST 1998-MS1, a Delaware business trust (the "Issuer"), ADVANTA CONDUIT
RECEIVABLES INC., ("▇▇▇▇"), a Nevada corporation, as Depositor (in such
capacity, the "Depositor"), ADVANTA MORTGAGE CORP. USA, a Delaware corporation
("AMCUSA"), as Servicer (in such capacity, the "Servicer"), AMCUSA, ADVANTA
NATIONAL BANK, a national banking association ("ANB"), and ADVANTA BANK CORP., a
Utah industrial loan corporation ("ABC"), as Loan Originators (in such capacity,
each a "Loan Originator", or collectively the "Loan Originators"), BANKERS TRUST
COMPANY OF CALIFORNIA, N.A., a national banking association, as Indenture
Trustee on behalf of the Noteholders (in such capacity, the "Indenture Trustee")
and ADVANTA CORP., a Delaware corporation as Transfer Obligor (in such capacity,
the "Transfer Obligor"), amending and restating the Sale and Servicing
Agreement, dated as of September 25, 1998, among the Issuer, ADVANTA LOAN
WAREHOUSE CORPORATION, a Delaware corporation ("ALWC"), as Depositor, the
Servicer, the Loan Originators, the Indenture Trustee and ADVANTA CORP. and
AMCUSA, as Transfer Obligors (the "Original Sale and Servicing Agreement").
WHEREAS, the parties hereto desire to amend and restate the
Original Sale and Servicing Agreement to provide terms and conditions for the
sale of HELOC Mortgage Loans (as defined herein);
WHEREAS, the parties hereto desire to amend and restate the
Original Sale and Servicing Agreement to replace ALWC as depositor with ▇▇▇▇. In
connection with such replacement, ALWC wishes to assign, transfer and set over
to ▇▇▇▇ all the rights, title and interest, powers, privileges and remedies of
ALWC under the Sale and Servicing Agreement, and ▇▇▇▇ wishes to assume all
duties, liabilities and obligations of ALWC under the Sale and Servicing
Agreement;
WHEREAS, upon execution of this Sale and Servicing Agreement
by the parties hereto, ALWC shall be fully released from all of its duties,
liabilities and obligations under the Original Sale and Servicing Agreement;
NOW, THEREFORE, in consideration of the mutual agreements
herein contained, the Issuer, the Depositor, the Loan Originators, the Servicer,
Transfer Obligor and the Indenture Trustee hereby agree as follows for the
benefit of each of them and for the benefit of the holders of the Notes and the
Trust Certificates issued hereunder to amend and restate the Original Sale and
Servicing Agreement in its entirety to read as follows:
W I T N E S S E T H:
In consideration of the mutual agreements herein contained,
the Issuer, the Depositor, the Servicer, the Indenture Trustee, the Loan
Originators and the Transfer Obligor hereby agree as follows for the benefit of
each of them and for the benefit of the holders of Securities:
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ARTICLE I
DEFINITIONS
Section 1.01 Definitions.
Whenever used in this Agreement, the following words and
phrases, unless the context otherwise requires, shall have the meanings
specified in this Article. Unless otherwise specified, all calculations of
interest described herein shall be made on the basis of a 360-day year and the
actual number of days elapsed in each Accrual Period.
ABC: Advanta Bank Corp. and any successor thereto.
Accepted Servicing Practices: The 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 Loans in the jurisdictions in which the related
Mortgaged Properties are located and will give due consideration to the
Noteholders' reliance on the Servicer.
Accrual Period: With respect to the Notes, the period
commencing on and including the preceding Payment Date (or, in the case of the
first Payment Date, the period commencing on and including the first Transfer
Date) and ending on the day preceding the related Payment Date.
Act or Securities Act: The Securities Act of 1933, as amended.
Additional Note Principal Balance:
(a) With respect to each Transfer Date, the aggregate Sales
Prices of all Loans conveyed on such date.
(b) With respect to each Collateral Value Excess Date, an
amount equal to the increase in the Note Principal Balance that the
Issuer sells to the Initial Noteholder pursuant to the Note Purchase
Agreement on such Collateral Value Excess Date.
Adequately Capitalized: Shall mean the maintenance of capital
ratios at or above the required minimum levels for such capital category under
regulations promulgated pursuant to Section 1831(o) of Title 12 of the United
States Code, as amended from time to time.
Administration Agreement: The Administration Agreement, dated
as of September 25, 1998, among the Issuer and Advanta Mortgage Corp. USA, as
Administrator.
Administrator: Advanta Mortgage Corp. USA or any successor in
interest thereto, in its capacity as Administrator under the Administration
Agreement.
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Advance Account: The account established and maintained
pursuant to Section 5.04.
Affiliate: With respect to any specified Person, any
"affiliate" of such Person as such term is defined in the United States
Bankruptcy Code in effect from time to time, and the terms "controlling" and
"controlled" have corresponding meanings.
Agreement: This Agreement, as the same may be amended and
supplemented from time to time.
Allocation Percentage: With respect to ANB, ABC or the
Depositor and as of each Reallocation Date, the fraction (expressed as a
percentage) for which the numerator shall equal the aggregate Principal Balances
(as of the close of business on such date) of all Loans then held by the Issuer
which were conveyed to the Issuer by ANB, ABC or the Depositor, as applicable
and the denominator of which is the aggregate Principal Balance (as of the close
of business on such date) of all Loans then held by the Issuer.
ALTA: The American Land Title Association and its successors
in interest.
Alternate Repurchase Price: With respect to a Loan, the sum of
(i) the Collateral Value thereof as of the date of repurchase, (ii) all accrued
and unpaid interest on such Loan since the last Payment Date to, but not
including the date of repurchase, computed at the applicable Note Interest Rate,
(iii) the amount of any unreimbursed Servicing Advances made by the Servicer
(after deducting therefrom any amounts received in respect of such repurchased
Loan and being held in the Collection Account for future distribution to the
extent such amounts represent recoveries of principal not yet applied to reduce
the related Principal Balance or interest for the period from and after the date
of repurchase). The Alternate Repurchase Price shall be (i) increased by the net
negative value or (ii) decreased by the net positive value of all Hedging
Instruments terminated with respect to the repurchase of such Loan. To the
extent the Servicer does not reimburse itself for amounts, if any, in respect of
the Servicing Advance Reimbursement Amount pursuant to Section 5.01(c)(1)
hereof, with respect to such Loan, the Alternate Repurchase Price shall be
reduced by such amounts.
AMCUSA: Advanta Mortgage Corp. USA, and any successor thereto.
ANB: Advanta National Bank, and any successor thereto.
Appraised Value: The value of the Mortgaged Property as set
forth in an appraisal performed in connection with the origination of the
related Loan.
ARM: Any Loan for which the Loan Interest Rate is subject to
adjustment.
Assignment: A LPA Assignment or S&SA Assignment.
Assignment of Mortgage: With respect to any Loan, an
assignment of the related Mortgage in blank or to Bankers Trust Company of
California, N.A., as custodian or trustee under the applicable custodial
agreement or trust agreement, notice of transfer or
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equivalent instrument in recordable form, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect the
assignment and pledge of such Mortgage.
Balloon Loan: Any Loan for which the related monthly payments,
other than the monthly payment due on the maturity date thereof, are computed on
the basis of a period to full amortization ending on a date that is later than
the maturity date stated in the Promissory Note.
Basic Documents: This Agreement, the Administration Agreement,
the Custodial Agreement, the Indenture, the Loan Purchase Agreement, the Note
Purchase Agreement, the Trust Agreement, each Hedging Instrument and, as and
when required to be executed and delivered, the Assignments.
Borrower: The obligor or obligors on a Promissory Note.
Business Day: Any day other than (i) a Saturday or Sunday, or
(ii) a day on which banking institutions in Delaware, New York City, California
or in the city in which the corporate trust office of the Indenture Trustee is
located or the city in which the Servicer's servicing operations are located are
authorized or obligated by law or executive order to be closed.
Certificateholder: A holder of a Trust Certificate.
Clean-up Call Date: The first Payment Date occurring on or
after the end of the Revolving Period on which the Note Principal Balance
declines to 10% or less of the aggregate Note Principal Balance as of the end of
the Revolving Period.
Closing Date: September 25, 1998, or with respect to a Series
of Notes subsequent to the Series issued on such date, as set forth in the
related Indenture Supplement.
Code: The Internal Revenue Code of 1986, as amended from time
to time, and the regulations promulgated by the United States Treasury
thereunder.
Collateral Percentage: With respect to each Loan and any
Business Day, a percentage determined as follows:
(a) with respect to all Loans (other than HELOC Mortgage
Loans, Loans that are 30 or more days Delinquent and
High LTV Loans), 96%;
(b) with respect to all High LTV Loans, 94%;
(c) with respect to all Loans (other than HELOC Mortgage
Loans) that are 30 or more days Delinquent, 90%;
(d) with respect to all HELOC Mortgage Loans that are
0-29 days Delinquent, 93%;
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(e) with respect to all HELOC Mortgage Loans that are 30
to 59 days Delinquent, 85%; and
(f) with respect to all HELOC Mortgage Loans that are 60
or more days Delinquent, 0%.
Collateral Value: With respect to each Loan and each Business
Day, an amount equal to (a) the lesser of (1) the Collateral Percentage of the
Market Value of such Loan, and (2) 100% of the Principal Balance of such Loan as
of the most recent Determination Date (or, for Loans sold and conveyed to the
Trust after the most recent Determination Date, the Transfer Cutoff Date
Principal Balance thereof), less (b) the aggregate unreimbursed Servicing
Advances attributable to such Loan as of the most recent Determination Date;
provided, however, that the Collateral Value shall be zero with respect to each
Loan (1) that a Loan Originator is required to repurchase pursuant to Section
2.05 or Section 3.06 hereof or (2) which is a Loan of the type specified in
subparagraphs (i)-(vii) hereof and which is in excess of the limits permitted
under subparagraphs (i)-(vii) hereof, or (3) which remains pledged to the
Indenture Trustee later than 180 days after its related Transfer Date, or (4)
which has been released from the possession of the Custodian to the Servicer or
any Loan Originator for a period in excess of 14 days; provided further however:
(i) the aggregate Collateral Value of Loans (other than
HELOC Mortgage Loans) which are Second Lien Loans may
not exceed 25% of the aggregate outstanding Note
Principal Balance;
(ii) the aggregate Collateral Value of Loans which are
Mixed Use Loans may not exceed 1% of the Maximum Note
Principal Balance;
(iii) the aggregate Collateral Value of Loans which are
Balloon Loans may not exceed 25% of the Maximum Note
Principal Balance;
(iv) the aggregate Collateral Value of Loans that are High
LTV Loans may not exceed 10% of the Maximum Note
Principal Balance;
(v) the aggregate Collateral Value of Loans (other than
HELOC Mortgage Loans) which are 30 to 59 days
Delinquent as of the related Determination Date, may
not exceed 3% of the aggregate Note Principal
Balance, provided, however that if the aggregate
Collateral Value of all Loans (other than HELOC
Mortgage Loans) that are 30 to 59 days Delinquent as
of such date exceeds 3% of the aggregate Note
Principal Balance as of such day, each Loan (other
than HELOC Mortgage Loans) or portion thereof
included in the portion of such aggregate Collateral
Value in excess of such limit shall be deemed to be
60 to 89 days Delinquent;
(vi) the aggregate Collateral Value of Loans which are not
HELOC Mortgage Loans which are 60 to 89 days
Delinquent as of the related Determination Date, may
not exceed 1% of the aggregate Note Principal
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Balance, provided, however that if the aggregate
Collateral Value of all Loans which are not HELOC
Mortgage Loans that are 60 to 89 days Delinquent as
of such date exceed 1% of the aggregate Note
Principal Balance as of such day, each Loan or
portion thereof included in the portion of such
aggregate Collateral Value in excess of such limit
shall be deemed to be 90 or more days Delinquent;
(vii) the aggregate Collateral Value of Loans which are 90
or more days Delinquent as of the most recent
Determination Date (inclusive of all Loans that are
deemed to be 90 or more days Delinquent pursuant to
clause (vi) above and each Loan which is a Foreclosed
Loan or which is an REO Property), may not exceed 0%;
(viii) the aggregate Collateral Value of Loans which are
secured by a Manufactured Dwelling may not exceed 5%
of the Maximum Note Principal Balance;
(ix) the aggregate Collateral Value of Loans which are
HELOC Mortgage Loans may not exceed $150,000,000;
(x) the Collateral Value of each HELOC Mortgage Loan with
a Principal Balance as of the most recent
Determination Date in excess of the Credit Limit
shall be based on the Credit Limit; and
(xi) the aggregate Collateral Value of HELOC Mortgage
Loans which are 30 to 59 days Delinquent as of the
related Determination Date may not exceed 2% of the
aggregate Note Principal Balance.
Collateral Value Excess: With respect to any Business Day, an
amount equal to the positive difference, if any, between (a) (i) the aggregate
Collateral Value of all Loans in the Loan Pool on such Business Day, or (ii) in
the event that a Performance Trigger shall have occurred and not been Deemed
Cured, the aggregate Collateral Value of all Loans in the Loan Pool on such
Business Day multiplied by 0.98 and (b) the Note Principal Balance on such
Business Day.
Collateral Value Excess Date: Any Business Day on which a
Collateral Value Excess exists and on which the Initial Noteholder purchases
Additional Note Principal Balance in respect thereof pursuant to Section 2.01
hereof.
Collection Account: The account designated as such,
established and maintained by the Servicer in accordance with Section 5.01(a)(1)
hereof.
Combined LTV or CLTV:
(i) With respect to any HELOC Mortgage Loan, as of any
Determination Date, the percentage equivalent of a fraction, the numerator of
which is the sum of (A) the Credit Limit and (B) the outstanding principal
balance as of the date of execution of the related Credit
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Line Agreement of such HELOC Mortgage Loan (or as of any subsequent date, if
any, as of which such outstanding principal balance may be determined in
connection with an increase in the Credit Limit for such HELOC Mortgage Loan) of
any mortgage loan or mortgage loans that are senior in priority to the HELOC
Mortgage Loan and which is secured by the same Mortgaged Property and the
denominator of which is the lesser of (A) the Appraised Value of the related
Mortgaged Property on such date of execution of the related Credit Line
Agreement or on such subsequent date, if any, or (B) in the case of a Mortgaged
Property purchased within one year prior to such date of execution of the
related Credit Line Agreement, the purchase price thereof; and
(ii) with respect to any Loan that is not a HELOC Mortgage
Loan, the ratio of (a) the outstanding principal balance on the related date of
origination of (i) such Loan plus (ii) the loan constituting the first lien (if
any) to (b) (i) the Appraised Value of the related Mortgaged Property on such
date of origination or on such subsequent date, if any, or (ii) in the case of a
Mortgaged Property purchased within one year prior to such date of origination,
the purchase price thereof, expressed as a percentage.
Commission: The Securities and Exchange Commission.
Credit Limit: With respect to each HELOC Mortgage Loan, the
maximum amount permitted under the terms of the related Credit Line Agreement.
Credit Line Agreement: With respect to any HELOC Mortgage
Loan, the related home equity line of credit agreement and promissory note (if
any) executed by the related mortgagor and any amendment or modification
thereof.
Custodial Agreement: The custodial agreement dated as of
September 25, 1998, among the Issuer, the Servicer, the Indenture Trustee and
the Custodian, providing for the retention of the Custodial Loan Files by the
Custodian on behalf of the Indenture Trustee.
Custodial Loan File: As defined in Section 2.04.
Custodian: The custodian named in the Custodial Agreement,
which custodian shall not be affiliated with the Servicer, the Loan Originators,
the Depositor or any Subservicer. Bankers Trust Company of California, N.A., a
national banking association, shall be the initial Custodian pursuant to the
terms of the Custodial Agreement.
Custodian Fee: If applicable, the quarterly fee payable to the
Custodian, calculated and payable on every third Payment Date. The Servicer
shall pay such fee pursuant to Section 6 of the Custodial Agreement.
Daily Interest Accrual Amount: With respect to each day,
interest accrued at the Note Interest Rate on the Note Principal Balance as of
the preceding Business Day after giving effect to all changes to the Note
Principal Balance on or prior to such preceding Business Day.
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Deemed Cured: When the condition that originally gave rise to
a Performance Trigger or Rapid Amortization Trigger has not continued for 20
consecutive days or has otherwise been waived with the prior written consent of
the Majority Noteholders.
Default: Any occurrence that is, or with notice or the lapse
of time or both would become, an Event of Default.
Defaulted Loan: With respect to any Determination Date, any
Loan, including, without limitation, any Liquidated Loan with respect to which
any of the following has occurred as of the end of the preceding Remittance
Period: (a) foreclosure or similar proceedings have been commenced; or (b) the
Servicer or any Subservicer has determined in good faith and in accordance with
the servicing standard set forth in Section 4.01 that such Loan is in default or
imminent default.
Deleted Loan: A Loan replaced or to be replaced by one or more
Qualified Substitute Loans.
Delinquent: A Loan is "Delinquent" if any Monthly Payment due
thereon is not made by the close of business on the day such Monthly Payment is
required to be paid. A Loan is "30 days Delinquent" if any Monthly Payment due
thereon has not been received by the opening of business on the corresponding
day of the month immediately succeeding the month in which such Monthly Payment
was required to be paid 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 required to be paid
on the 31st day of such month), then on the last day of such immediately
succeeding month. The determination of whether a Loan is "60 days Delinquent,"
"90 days Delinquent", etc., shall be made in like manner.
Delivery: When used with respect to Trust Account Property
means:
(a) with respect to bankers' acceptances, commercial paper,
negotiable certificates of deposit and other obligations that
constitute "instruments" within the meaning of Section 9-105(1)(i) of
the UCC and are susceptible of physical delivery (except with respect
to Trust Account Property consisting of certificated securities (as
defined in Section 8-102(a)(4) of the UCC)), physical delivery to the
Indenture Trustee or its custodian endorsed to the Indenture Trustee or
its custodian or endorsed in blank;
(b) with respect to a certificated security (i) delivery of
such certificated security endorsed to, or registered in the name of,
the Indenture Trustee or endorsed in blank to a securities intermediary
(as defined in Section 8-102(a)(14) of the UCC) and the making by such
securities intermediary of appropriate entries in its records
identifying such certificated securities as credited to the securities
account (as defined in Section 8-501(a) of the UCC) of the Indenture
Trustee, or (ii) by delivery thereof to a "clearing corporation" (as
defined in Section 8-102(5) of the UCC) and the making by such clearing
corporation of appropriate entries in its records crediting the
securities account of a securities intermediary by the amount of such
certificated security and the making by such securities intermediary of
appropriate entries in its records identifying such certificated
securities as credited to the securities account of the Indenture
Trustee
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(all of the Trust Account Property described in Subsections (a) and
(b), "Physical Property");
and, in any event, any such Physical Property in registered
form shall be in the name of the Indenture Trustee or its nominee or
custodian; and such additional or alternative procedures as may
hereafter become appropriate to effect the complete transfer of
ownership of any such Trust Account Property (as defined herein) to the
Indenture Trustee or its nominee or custodian, consistent with changes
in applicable law or regulations or the interpretation thereof;
(c) with respect to any security issued by the U.S. Treasury,
FNMA or FHLMC that is a book-entry security held through the Federal
Reserve System pursuant to federal book-entry regulations, the
following procedures, all in accordance with applicable law, including
applicable federal regulations and Articles 8 and 9 of the UCC: the
making by a Federal Reserve Bank of an appropriate entry crediting such
Trust Account property to an account of a securities intermediary that
is also a "participant" pursuant to applicable federal regulations; the
making by such securities intermediary of appropriate entries in its
records crediting such book-entry security held through the Federal
Reserve System pursuant to federal book-entry regulations and Articles
8 and 9 of the UCC to the securities account of the Indenture Trustee;
and such additional or alternative procedures as may hereafter become
appropriate to effect complete transfer of ownership of any such Trust
Account Property to the Indenture Trustee or its nominee or custodian,
consistent with changes in applicable law or regulations or the
interpretation thereof; and
(d) with respect to any item of Trust Account Property that is
an uncertificated security (as defined in Section 8-102(a)(18) of the
UCC) and that is not governed by clause (c) above, registration in the
records of the Issuer thereof in the name of the securities
intermediary, and the making by such securities intermediary of
appropriate entries in its records crediting such uncertificated
certificates to the Indenture Trustee.
Denomination: With respect to a Note, the portion of the Note
Principal Balance represented by such Note as specified therein.
Depositor: Advanta Conduit Receivables Inc., a Nevada
corporation, and any successors thereto.
Determination Date: With respect to any Payment Date occurring
on the 25th day of a month, the third Business Day immediately preceding such
Payment Date, and with respect to any other Payment Date, as mutually agreed by
the Servicer and the Noteholders.
Disposition: A Securitization, Whole Loan Sale transaction, or
other disposition of Loans, in each case by the Issuer.
Disposition Agent: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated and its
successors and assigns acting at the direction of the Majority Noteholders or
such other Person designated by
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the Issuer with the consent of the Majority Noteholders; provided that with
respect to any Disposition in connection with an Event of Default, or during a
Termination Period, the Disposition Agent shall be ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
Incorporated.
Disposition Participant: With respect to a Disposition, any
"depositor" with respect to a Securitization, the Disposition Agent, the
Majority Noteholders, the Servicer, the related trustee and the related
custodian, any nationally recognized credit rating agency, the related
underwriters, the related placement agent, the related credit enhancer, the
related whole-loan purchaser, the related purchaser of securities and/or any
other party necessary or, in the good faith belief of any of the foregoing,
desirable to effect a Disposition.
Disposition Proceeds: With respect to a Disposition, (x) the
proceeds of the Disposition remitted to the Trust in respect of the Loans
transferred on the date of and with respect to such Disposition, including
without limitation, any cash and Retained Securities created in any related
Securitization less all costs, fees and expenses incurred in connection with
such Disposition, including, without limitation, all amounts deposited into any
reserve funds upon the closing thereof plus or minus (y) the net positive or net
negative value of all Hedging Instruments terminated in connection with such
Disposition minus (z) all other amounts agreed upon in writing by the Initial
Noteholder, the Trust and the Servicer.
Distribution Account: The account established and maintained
pursuant to Section 5.01(a)(2) hereof.
Draw: With respect to any HELOC Mortgage Loan, an additional
borrowing by the Borrower under the terms of the related Credit Line Agreement
subsequent to each Transfer Cutoff Date in accordance with the related Credit
Line Agreement.
Draw Period: With respect to any HELOC Mortgage Loan, the
period of time during which the Borrower under the related Credit Line Agreement
may make a Draw under the related Credit Line Agreement; such period not to
exceed three to five years (as applicable), unless extended at the option of the
related Loan Originator pursuant to the terms of the related Credit Line
Agreement (provided that such extension shall be in accordance with the
provisions set forth herein with respect to Loan modifications).
Draw Reimbursement Rights: As to each HELOC Mortgage Loan, the
right to be reimbursed for the making of Draws on behalf of the Issuer in the
case of ANB, ABC and the Depositor, and on behalf of the Depositor, in the case
of AMCUSA, which shall equal an amount equal to the principal for the aggregate
Draws thereunder, which rights shall automatically be conveyed to the Issuer
pursuant to the terms of this Agreement (and in the case of AMCUSA, to the
Depositor pursuant to the terms of the Loan Purchase Agreement) under which the
related HELOC Mortgage Loans were conveyed.
Due Date: The day of the month on which the Monthly Payment is
due from the Borrower with respect to a Loan.
Due Diligence Fees: Shall have the meaning provided in Section
11.15 hereof.
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Eligible Account: At any time, an account which is maintained
with 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 A or better by S&P and the short-term
deposits of which shall be rated P-1 or better by ▇▇▇▇▇'▇ and A-1 or better by
S&P and which is any of the following: (i) a federal savings and loan
association duly organized, validly existing and in good standing under the
federal banking laws; (ii) an institution duly organized, validly existing and
in good standing under the applicable banking laws of any state; (iii) a
national banking association duly organized, validly existing and in good
standing under the federal banking laws; (iv) a principal subsidiary of a bank
holding company; or (v) approved in writing by the Majority Noteholders;
provided, however, that any such institution or association shall have combined
capital, surplus and undivided profits of at least $50,000,000.
Eligible Servicer: (x) AMCUSA, ANB, ABC or (y) any other
Person that (a) (i) has been designated as an approved seller-servicer by FNMA
or FHLMC for first and second mortgage loans and (ii) has equity of not less
than $15,000,000, as determined in accordance with GAAP or (b) any other Person
to which the Majority Noteholders may consent in writing.
Escrow Payments: With respect to any Loan, the amounts
constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, fire, hazard, liability and other insurance premiums,
condominium charges, and any other payments required to be escrowed by the
related Borrower with the related servicer pursuant to the Mortgage or any other
document.
Event of Default: Either a Servicer Event of Default or an
Event of Default under the Indenture.
Exchange Act: The Securities Exchange Act of 1934, as amended.
FDIC: The Federal Deposit Insurance Corporation and any
successor thereto.
FHLMC: The Federal Home Loan Mortgage Corporation and any
successor thereto.
Fidelity Bond: As described in Section 4.22 hereof.
Final Put Date: As defined in Section 10.05 of the Indenture.
First Lien Loan: A Loan secured by the lien on the related
Mortgaged Property, subject to no prior liens on such Mortgaged Property at the
time of origination or the date of execution of the Credit Line Agreement, as
applicable.
FNMA: The Federal National Mortgage Association and any
successor thereto.
Foreclosed Loan: As of any Determination Date, any Loan that
as of the end of the preceding Remittance Period has been discharged as a result
of (i) the completion of
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foreclosure or comparable proceedings by the Servicer, on behalf of the Issuer;
(ii) the acceptance of the deed or other evidence of title to the related
Mortgaged Property in lieu of foreclosure or other comparable proceeding; or
(iii) the acquisition of title to the related Mortgaged Property by operation of
law.
Foreclosure Property: Any real property securing a Foreclosed
Loan that has been acquired by the Servicer on behalf of the Issuer through
foreclosure, deed in lieu of foreclosure or similar proceedings in respect of
the related Loan.
GAAP: Generally Accepted Accounting Principles as in effect in
the United States.
Gross Margin: With respect to each ARM and HELOC Mortgage
Loan, the fixed percentage amount set forth in the related Promissory Note.
Hedge Funding Requirement: With respect to any day, all
amounts required to be paid or delivered by the Issuer under any Hedging
Instrument, whether in respect of payments thereunder or in order to meet
margin, collateral or other requirements thereof. Such amounts shall be
calculated by the Market Value Agent and communicated in writing to the
Indenture Trustee.
Hedge Value: With respect to any Business Day and a specific
Hedging Instrument, the positive amount, if any, that is equal to the amount
that would be paid to the Issuer in consideration of an agreement between the
Issuer and an unaffiliated third party, that would have the effect of preserving
for the Issuer the net economic equivalent, as of such Business Day, of all
payment and delivery requirements payable to and by the Issuer under such
Hedging Instrument until the termination thereof, as determined by the Market
Value Agent in accordance with Section 6.03 hereof.
Hedging Counterparty: A Person (i) (A) the long-term and
commercial paper or short-term deposit ratings of which are acceptable to the
Majority Noteholders and (B) which shall agree in writing that, in the event
that any of its long-term or commercial paper or short-term deposit ratings
cease to be at or above the levels deemed acceptable by the Majority
Noteholders, it shall secure its obligations in accordance with the reasonable
request of the Majority Noteholders, (ii) that has entered into a Hedging
Instrument and (iii) that is acceptable to the Majority Noteholders, which
acceptance shall not be unreasonably withheld.
Hedging Instrument: Any interest rate cap agreement, interest
rate floor agreement, interest rate swap agreement or other interest rate
hedging agreement entered into by the Issuer with a Hedging Counterparty, and
which requires the Hedging Counterparty to deposit all amounts payable thereby
directly to the Collection Account. Each Hedging Instrument shall meet the
requirements set forth in Article VII hereof with respect thereto.
HELOC Mortgage Loan: A Loan which is an adjustable-rate home
equity revolving line of credit secured by a first or second mortgage, deed of
trust or other instrument creating a lien on the related Mortgaged Property,
which lien secures the related Promissory Note.
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High LTV Loans: First and second lien Loans other than HELOC
Mortgage Loans with an LTV greater than 90% and less than or equal to 100%.
Indenture: The Indenture dated as of September 25, 1998,
together with the Indenture Supplement, between the Issuer and the Indenture
Trustee, and all amendments or supplements thereto.
Indenture Supplement: With respect to a Series of Notes, the
Indenture Supplement pursuant to which such Series of Notes was issued.
Indenture Trustee: Bankers Trust Company of California, N.A.,
a national banking association, as Indenture Trustee under the Indenture, or any
successor indenture trustee under the Indenture.
Indenture Trustee Fee: As to any Payment Date, the amount
payable to the Indenture Trustee equal to an amount as separately agreed in
writing by the Indenture Trustee and the Servicer and with the approval of the
Majority Noteholders, which approval shall not be unreasonably withheld.
Independent: When used with respect to any specified Person,
such Person (i) is in fact independent of the Loan Originators, the Transfer
Obligor, the Servicer, the Depositor or any of their respective Affiliates, (ii)
does not have any direct financial interest in, or any material indirect
financial interest in, any of the Loan Originators, the Transfer Obligor, the
Servicer, the Depositor or any of their respective Affiliates and (iii) is not
connected with any of the Loan Originators, the Transfer Obligor, the Depositor,
the Servicer or any of their respective Affiliates, as an officer, employee,
promoter, underwriter, trustee, partner, director or Person performing similar
functions; provided, however, that a Person shall not fail to be Independent of
the Loan Originators, the Transfer Obligor, the Depositor, the Servicer or any
of their respective Affiliates merely because such Person is the beneficial
owner of 1% or less of any class of securities issued by the Loan Originators,
the Transfer Obligor, the Depositor, the Servicer or any of their respective
Affiliates, as the case may be.
Independent Accountants: A firm of nationally recognized
certified public accountants which is Independent.
Index: With respect to each ARM and HELOC Mortgage Loan, the
index set forth in the related Promissory Note for the purpose of calculating
the Loan Interest Rate thereon.
Initial Noteholder: MSSFI.
Interest Carry-Forward Amount: With respect to any Payment
Date, the excess, if any, of (A) the Interest Payment Amount for such Payment
Date plus the Interest Carry-Forward Amount for the prior Payment Date over (B)
the amount in respect of interest that is actually paid from the Distribution
Account on such Payment Date in respect of the interest for such Payment Date.
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Interest Payment Amount: With respect to any Payment Date, the
sum of the Daily Interest Accrual Amounts for all days in the related Accrual
Period.
LIBOR: With respect to each day, the rate for United States
dollar deposits for one month that appears on the Telerate Screen Page 3750 as
of 11:00 a.m., London time, on the related LIBOR Determination Date. If such
rate does not appear on such page (or such other page as may replace that page
on that service, or if such service is no longer offered, such other service for
displaying LIBOR or comparable rates as may be reasonably selected by the
Initial Noteholder with the consent of the Issuer, such consent not to be
unreasonably withheld), LIBOR for the applicable day will be the Reference Bank
Rate. If no such rates can be obtained by the Initial Noteholder and no
Reference Bank Rate is available, LIBOR will be LIBOR applicable to the first
preceding day on which LIBOR has been determined in accordance with this
definition.
LIBOR Business Day: Any day on which banks are open for
dealing in foreign currency and exchange in London.
LIBOR Determination Date: With respect to each day that is a
LIBOR Business Day, such LIBOR Business Day, and with respect to any day that is
not a LIBOR Business Day, the LIBOR Business Day preceding such day.
LIBOR Margin: With respect to each day, the percentage equal
to the weighted average of the Non HELOC Rate and the HELOC Rate (each as
defined below) based on the relative aggregate Principal Balance of the Loans
which are not HELOC Mortgage Loans and the aggregate Principal Balance of the
HELOC Mortgage Loans, respectively, each as of such day.
NON HELOC RATE
Unfunded Transfer Obligation LIBOR Margin:
Percentage:
>= 8.00% 0.75%, provided that when the aggregate
Principal Balance of all Loans and mortgage
loans pledged under the Warehouse Lines is
greater than $250,000,000 as of such date, 0.65%
>=5.00%, but <8.00% 1.25%
<5.00% 2.25%
provided that the Non HELOC Rate shall be equal to 2.25% upon the occurrence of
an Event of Default or for the period commencing the day following the Clean-up
Call Date.
HELOC RATE
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Unfunded Transfer Obligation LIBOR Margin:
Percentage:
>= 8.00% 0.95%, provided that when the aggregate
Principal Balance of all Loans and mortgage
loans pledged under the Warehouse Lines is
greater than $250,000,000 as of such date, 0.85%
>=5.00%, but <8.00% 1.45%
<5.00% 2.45%
provided that the HELOC Rate shall be equal to 2.45% upon the occurrence of an
Event of Default or for the period commencing the day following the Clean-up
Call Date.
Lien: With respect to any asset, (a) any mortgage, lien,
pledge, charge, security interest, hypothecation, option or encumbrance of any
kind in respect of such asset or (b) the interest of a vendor or lessor under
any conditional sale agreement, financing lease or other title retention
agreement relating to such asset.
Lifetime Cap: The provision in the Promissory Note for each
ARM or HELOC Mortgage Loan which limits the maximum Loan Interest Rate over the
life of such ARM or HELOC Mortgage Loan.
Liquidated Loan: As defined in Section 4.12(b).
Liquidated Loan Losses: With respect to any Determination
Date, the difference between (i) the aggregate Principal Balances as of such
date of all Loans that became Liquidated Loans and (ii) all Liquidation Proceeds
allocable to principal received on or prior to such date.
Liquidation Proceeds: With respect to a Liquidated Loan, any
cash amounts received in connection with the liquidation of such Liquidated
Loan, whether through trustee's sale, foreclosure sale or other disposition, any
cash amounts received in connection with the management of the Mortgaged
Property from Defaulted Loans and any other amounts required to be deposited in
the Collection Account pursuant to Section 5.01(b)(1) hereof, in each case other
than Mortgage Insurance Proceeds and Released Mortgaged Property Proceeds.
Loan: Any loan, including a HELOC Mortgage Loan, sold to the
Trust hereunder and pledged to the Indenture Trustee, which loan includes,
without limitation, (i) a Promissory Note and the related Mortgage and (ii) all
right, title and interest of the related Loan Originator in and to the Mortgaged
Property covered by such Mortgage. The term Loan shall be deemed to include the
related Promissory Note, related Mortgage and related Foreclosure Property, if
any.
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Loan Documents: With respect to a Loan, the documents
comprising the Custodial Loan File for such Loan.
Loan File: With respect to each Loan, the Custodial Loan File
and the Servicer's Loan File.
Loan Interest Rate: With respect to each Loan, the annual rate
of interest borne by the related Promissory Note, as shown on the Loan Schedule,
and, in the case of an ARM or HELOC Mortgage Loan, as the same may be
periodically adjusted in accordance with the terms of such Promissory Note.
Loan Originator: Each of ANB, AMCUSA and ABC. "Loan
Originators" shall mean all such entities, collectively, and any successors
thereto. In the case of AMCUSA, its subsidiary, Advanta Finance Corp., may
transfer Loans originated by Advanta Finance Corp. to AMCUSA, which Loans shall
be transferred by AMCUSA to the Depositor and in turn to the Issuer. AMCUSA
shall be the Loan Originator for all such Loans.
Loan Originator Put: The mandatory repurchase by a Loan
Originator, at the option of the Majority Noteholders, of a Loan pursuant to
Section 3.08(a) hereof.
Loan Pool: As of any date of determination, the pool of all
Loans conveyed to the Issuer pursuant to this Agreement on all Transfer Dates up
to and including such date of determination, which Loans have not been released
from the Lien of the Indenture pursuant to the terms of the Basic Documents,
together with the rights and obligations of a holder thereof, and the payments
thereon and proceeds therefrom received after the applicable Transfer Cutoff
Date (other than interest thereon accrued prior to such Transfer Cutoff Date),
as identified from time to time on the Loan Schedule.
Loan Purchase Agreement: The Loan Purchase Agreement, among
AMCUSA, as seller and the Depositor, as purchaser, dated as of September 25,
1998, and all amendments and supplements thereto.
Loan Schedule: The schedule of Loans conveyed to the Issuer
and delivered to the Initial Noteholder and the Indenture Trustee in the form of
a computer-readable transmission specifying the following information (a) with
respect to each non-Wet Funded Loan conveyed on such date: (i) the Loan
identifying number, (ii) the Borrower's name, (iii) ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇,
▇▇▇▇▇ and zip code of the related Mortgaged Property, (iv) the original
Principal Balance (v) the Transfer Cutoff Date Principal Balance, (vi) the Loan
Interest Rate as of the Transfer Cutoff Date, (vii) whether such Loan has a
fixed Loan Interest Rate, or, if such Loan is an ARM or HELOC Mortgage Loan, the
Index thereof, the Gross Margin thereof, the Lifetime Cap, and the adjustment
date of the Loan; (viii) the maturity date, (ix) the Lien Position of such Loan
(i.e., whether such Loan is a First Lien Loan or a Second Lien Loan), (x) the
next Due Date, (xi) whether such Loan is a Balloon Loan, (xii) whether such Loan
is a Mixed Use Loan, (xiii) whether or not the loan has been assumed pursuant to
an assumption agreement, (xiv) the related Loan Originator, (xv) whether there
is any written instrument that modifies the Promissory Note or Mortgage, (xvi)
such other information as may be reasonably requested by the Majority
Noteholders and the Indenture Trustee, and (xvii) that such Loan is
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not a Wet Funded Loan, (xviii) a code indicating whether such Loan was
previously a Wet Funded Loan, (xix) the applicable Servicing Fee Rate, (xx) the
Wet Custodial File Delivery Date, (xxi) whether the Loan is a HELOC Mortgage
Loan; (b) with respect to each Wet Funded Loan conveyed on such date: (i) the
temporary Loan identifying number or the Borrower's name, (ii) the original
Principal Balance, and (iii) a code indicating that such Loan is a Wet Funded
Loan, and the Wet Custodial File Delivery Date; and (c) with respect to HELOC
Mortgage Loans, the Credit Limit under the related Credit Line Agreement.
Loan Schedule and Exceptions Report: The meaning set forth in
the Custodial Agreement.
Loan-to-Value Ratio or LTV: With respect to any Loan, the
ratio of the original outstanding principal amount of the Loan to the lesser of
(a) the Appraised Value of the Mortgaged Property at origination or (b) if the
Mortgaged Property was purchased within 12 months of the origination of the
Loan, the purchase price of the Mortgaged Property.
LPA Assignment: The Assignment of Loans from AMCUSA to the
Depositor under the Loan Purchase Agreement.
Majority Certificateholders: Has the meaning set forth in the
Trust Agreement.
Majority Noteholders: The holder or holders of in excess of
50% of the Note Principal Balance. In the event of the release of the Lien of
the Indenture in accordance with the terms thereof, the Majority Noteholders
shall mean the Majority Certificateholders.
Manufactured Dwelling: Shall mean a fully attached
manufactured home which is considered and treated as "real estate" under
applicable state law.
Market Value: The market value of such Loan as of any Business
Day as determined by the Market Value Agent in accordance with Section 6.03
hereof.
Market Value Agent: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated and its
successors in interest.
Maturity Date: With respect to the Notes of a given Series,
the date set forth in the related Indenture Supplement or such later date as may
be agreed in writing by the Majority Noteholders.
Maximum Note Principal Balance: For any Series of Notes, as
set forth in the related Indenture Supplement, less the aggregate principal
balance of the loans outstanding under the Warehouse Lines.
Mixed Use Loan: A Loan secured by a Mortgaged Property that is
used primarily for residential purposes, but which is also used for
non-residential purposes.
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Monthly Payment: The scheduled monthly payment of principal
and/or interest required to be made by a Borrower on the related Loan, as set
forth in the related Promissory Note.
Monthly Remittance Amount: With respect to each Remittance
Period, the sum, without duplication, of (i) the aggregate interest portions of
the payments collected on the Loans during the immediately preceding Remittance
Period, (ii) the aggregate principal payments on the Loans collected by the
Servicer during the immediately preceding Remittance Period, (iii) the aggregate
of amounts deposited into the Collection Account pursuant to Section
5.01(b)(1)(ii) through 5.01(b)(1)(vi) and Section 5.01(b)(1)(viii) during the
immediately preceding Remittance Period and (iv) any Termination Price, cash
Disposition Proceeds and payments by Hedging Counterparties received on or prior
to the related Determination Date.
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc., or any successor
thereto.
Mortgage: With respect to any Loan, the mortgage, deed of
trust or other instrument securing the related Promissory Note, which creates a
first or second lien on the fee in real property and/or a first or second lien
on the leasehold estate in real property securing the Promissory Note and the
assignment of rents and leases related thereto.
Mortgage Insurance Policies: With respect to any Mortgaged
Property or Loan, the insurance policies required pursuant to Section 4.10.
Mortgage Insurance Proceeds: With respect to any Mortgaged
Property, all amounts collected in respect of Mortgage Insurance Policies and
not required either pursuant to applicable law or the related Loan Documents to
be applied to the restoration of the related Mortgaged Property or paid to the
related Borrower.
Mortgaged Property: With respect to a Loan, the related
Borrower's fee and/or leasehold interest in the real property (and/or all
improvements, buildings, fixtures, building equipment and personal property
thereon (to the extent applicable) and all additions, alterations and
replacements made at any time with respect to the foregoing) and all other
collateral securing repayment of the debt evidenced by the related Promissory
Note.
MSSFI: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Securitization Funding Inc.
Net Liquidation Proceeds: With respect to any Payment Date,
Liquidation Proceeds received during the prior Remittance Period, net of any
reimbursements to the Servicer made from such amounts for any unreimbursed
Servicing Compensation, Servicing Advances (including Nonrecoverable Servicing
Advances) made and any other fees and expenses paid in connection with the
foreclosure, conservation and liquidation of the related Liquidated Loans or
Foreclosure Properties pursuant to Section 4.12 hereof.
Net Loan Losses: With respect to any Defaulted Loan that is
subject to a modification pursuant to Section 4.02 hereof, an amount equal to
the portion of the Principal Balance, if any, released in connection with such
modification.
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Nonrecoverable Servicing Advance: With respect to any Loan or
any Foreclosure Property, (a) any Servicing Advance (including Preservation
Expenses) previously made and not reimbursed from collections, Liquidation
Proceeds, Mortgage Insurance Proceeds or the Released Mortgaged Property
Proceeds or (b) a Servicing Advance proposed to be made in respect of a Loan or
Foreclosure Property either of which, in the good faith business judgment of the
Servicer, as evidenced by certificate of a Servicing Officer delivered to the
Initial Noteholder, would not be ultimately recoverable.
Note: The meaning assigned thereto in the Indenture.
Noteholder: The meaning assigned thereto in the Indenture.
Note Interest Rate: Interest will accrue on the Notes on each
day at a per annum interest rate equal to LIBOR as of the related LIBOR
Determination Date plus the LIBOR Margin for such day.
Note Principal Balance: With respect to the Notes, as of any
date of determination (a) the sum of the Additional Note Principal Balances of
all Notes purchased on or prior to such date pursuant to the Note Purchase
Agreement less (b) all amounts previously distributed in respect of principal of
the Notes on or prior to such day.
Note Purchase Agreement: The Note Purchase Agreement among
MSSFI, the Issuer and the Depositor, dated as of September 25, 1998, as amended.
Note Redemption Amount: As of any Determination Date, an
amount without duplication equal to the sum of (i) then outstanding Note
Principal Balance plus all accrued and unpaid interest thereon as of the related
Payment Date, (ii) any Trust Fees and Expenses due and unpaid on the related
Payment Date, (iii) any Servicing Advance Reimbursement Amount as of such
Determination Date, and (iv) all amounts due to Hedging Counterparties in
respect of the termination of all related Hedging Instruments.
Officer's Certificate: A certificate signed by a Responsible
Officer of the Depositor, ANB, ABC, the Servicer or the Issuer, in each case, as
required by this Agreement.
Opinion of Counsel: A written opinion of counsel who may be
employed by the Servicer, the Depositor, ANB, ABC or any of their respective
Affiliates.
Overcollateralization Shortfall: With respect to any Payment
Date, an amount equal to the positive difference, if any, between (a) the Note
Principal Balance on such Payment Date and (b) (i) the aggregate Collateral
Value of all Loans in the Loan Pool as of the last day of the related Remittance
Period, or (ii) in the event that a Performance Trigger shall have occurred and
not been Deemed Cured, the aggregate Collateral Value of all Loans in the Loan
Pool as of the last day of the related Remittance Period multiplied by 0.98;
provided, however, that, in either case, on (A) the Maturity Date, (B) the
occurrence of a Rapid Amortization Trigger, (C) the Payment Date on which the
Trust is to be terminated pursuant to Section 10.02 hereof, the
Overcollateralization Shortfall shall be equal to the Note Principal
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Balance. Notwithstanding anything to the contrary herein, in no event shall the
Overcollateralization Shortfall exceed the Note Principal Balance as of such
date. With the written consent of the Majority Noteholders in their sole
discretion, if as of such Payment Date, no Rapid Amortization Trigger or Default
under this Agreement or the Indenture shall be in effect, the
Overcollateralization Shortfall shall be reduced (but in no event to an amount
below zero) by all or any portion of the aggregate Hedge Value as of such
Payment Date as the Majority Noteholders may, in their sole discretion,
designate in writing.
Owner Trustee: means Wilmington Trust Company, a Delaware
banking corporation, not in its individual capacity but solely as Owner Trustee
under this Agreement, and any successor owner trustee under the Trust Agreement.
Owner Trustee Fee: The annual fee of $2,500.00 payable in
equal monthly installments to the Servicer pursuant to Section 5.01(c)(3)(i)
which shall in turn pay, in one lump sum, such $2,500.00 to the Owner Trustee on
the Scheduled Payment Date occurring in September each year during the term of
this Agreement, commencing in September, 1999.
Payment Date: The 25th day of each calendar month commencing
on the first such 25th day to occur after the first Transfer Date, or if any
such day is not a Business Day, the first Business Day immediately following
such day, and any day a Loan is sold pursuant to the terms hereof. From time to
time, the Majority Noteholders and the Issuer may agree, upon written notice to
the Owner Trustee and the Indenture Trustee, to additional Payment Dates in
accordance with Section 5.01(c)(4).
Payment Statement: As defined in Section 6.01(b) hereof.
Percentage Interest: As defined in the Trust Agreement.
Performance Trigger: As of any Determination Date, a
Performance Trigger shall mean the existence of one or more of the following
conditions:
(i) the aggregate Principal Balance of all Loans that are
30 to 59 days Delinquent as of such Determination
Date divided by the Pool Principal Balance is greater
than 5% provided, however, that a Performance Trigger
shall not occur if such percentage is reduced to less
than 3% within 15 Business Days of such Determination
Date as the result of the exercise of a Servicer
Call;
(ii) the aggregate Principal Balance of all Loans that are
60 to 89 days Delinquent as of such Determination
Date divided by the Pool Principal Balance is greater
than 2%; provided, however, that a Performance
Trigger shall not occur if such percentage is reduced
to less than 1% within 15 Business Days of such
Determination Date as the result of the exercise of a
Servicer Call;
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(iii) the aggregate Liquidated Loan Losses for the previous
three calendar month period divided by the average
Pool Principal Balance during such three calendar
month period is greater than 0.10%; and
A Performance Trigger shall continue to exist until Deemed
Cured.
Permitted Investments: Each of the following:
(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 S&P.
(c) FHLMC senior debt obligations and rated Aa2 or higher by
Moody's and AA or better by S&P.
(d) Federal Home Loan Banks' consolidated senior debt
obligations and rated Aa2 or higher by Moody's and AA or better by S&P.
(e) FNMA 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 A-1 or better by S&P and P-1 by
Moody's.
(g) Investment agreements approved by the Majority
Noteholders, 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 S&P, 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
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5. The Indenture Trustee and the Majority Noteholders
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 A-1 or better by S&P and P-1 or better by Moody's.
(i) Investments in money market funds rated AAAm or AAAM-G by
S&P and Aaa or P-1 by Moody's.
(j) Investments approved in writing by the Majority
Noteholders.
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.
Person: Any individual, corporation, partnership, joint
venture, limited liability company, association, joint-stock company, trust,
national banking association, unincorporated organization or government or any
agency or political subdivision thereof.
Physical Property: As defined in clause (b) of the definition
of "Delivery" above.
PMI Policy or Primary Insurance Policy: A policy of primary
mortgage guaranty insurance issued by a Qualified Insurer.
Pool Principal Balance: With respect to any Determination
Date, the aggregate Principal Balances of the Loans as of the end of the
preceding Remittance Period.
Premium: Any amount paid by a Loan Originator to a third party
seller of a Loan in excess of the par value of the Loan.
Premium Recapture: Any portion of a Premium that a Loan
Originator receives back from a third party seller of a Loan.
Prepaid Installment: With respect to any Loan, any payment
thereon received prior to the scheduled Due Date for such installment, intended
by the Borrower as an early payment thereof and not as a Prepayment with respect
to such Loan.
Prepayment: Any payment of principal of a Loan which is
received by the 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 Mortgage Insurance
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Policy which are to be applied as a payment of principal on the related Loan
shall be deemed to be Prepayments for all purposes of this Agreement.
Preservation Expenses: Expenditures made by the Servicer in
connection with a foreclosed Loan prior to the liquidation thereof, including,
without limitation, expenditures for real estate property taxes, hazard
insurance premiums, property restoration or preservation.
Principal Balance: With respect to any Loan or related
Foreclosure Property, (i) at the Transfer Cutoff Date, the Transfer Cutoff Date
Principal Balance and (ii) with respect to any other Determination Date, the
outstanding unpaid principal balance of the Loan as of the end of the preceding
Remittance Period (after giving effect to (1) the allocation of any Net Loan
Losses with respect thereto for a Defaulted Loan, (2) Draws and (3) all payments
received thereon prior to such day); provided, however, that any Liquidated Loan
shall be deemed to have a Principal Balance of zero. With respect to HELOC
Mortgage Loans, the Principal Balance as of any date shall take into account all
Draws on or prior to such date.
Proceeding: Means any suit in equity, action at law or other
judicial or administrative proceeding.
Promissory Note: With respect to a Loan, the original executed
promissory note, Credit Line Agreement or other evidence of the indebtedness of
the related Borrower or Borrowers.
Put/Call Loan: Any (i) Loan that has become 30 or more days
Delinquent, (ii) Defaulted Loan, (iii) Loan that has been in default for a
period of 30 days or more (other than a Loan referred to in clause (i) hereof),
(iv) Loan that does not meet criteria established by independent rating agencies
or surety agency conditions for Dispositions which criteria have been
established at the related Transfer Date and may be modified only to match
changed criteria of independent rating agencies or surety agents, or (v) Loan
that is inconsistent with the intended tax status of the Securitization.
Put Date: The date on which the Notes are to be purchased by
the Issuer as a result of the exercise of the Put Option.
Put Option: The right of the Majority Noteholders to require
the Issuer to repurchase the Notes in accordance with Section 10.04 of the
Indenture.
Qualified Insurer: An insurance company duly qualified as such
under the laws of the states in which the Mortgaged Property is located, duly
authorized and licensed in such states to transact the applicable insurance
business and to write the insurance provided.
Qualified Substitute Loan: A Loan or Loans substituted for a
Deleted Loan pursuant to Section 3.06 hereof, which (i) has or have been
approved in writing by the Majority Noteholders and (ii) complies or comply as
of the date of substitution with each representation and warranty set forth in
Section 3.05 hereof and is or are not 30 or more days Delinquent as of the date
of substitution for such Deleted Loan or Loans.
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Rapid Amortization Trigger: As of any Determination Date, a
Rapid Amortization Trigger shall mean the existence of one or more of the
following conditions:
(i) the aggregate Principal Balance of all Loans that are
30 to 59 days Delinquent as of such Determination
Date divided by the Pool Principal Balance is greater
than 6%; provided, however, that a Rapid Amortization
Trigger shall not occur if such percentage is reduced
to less than 3% within 15 Business Days of such
Determination Date as the result of the exercise of a
Servicer Call;
(ii) the aggregate Principal Balance of all Loans that are
60 to 89 days Delinquent as of such Determination
Date divided by the Pool Principal Balance is greater
than 3%; provided, however, that a Rapid Amortization
Trigger shall not occur if such percentage is reduced
to less than 1% within 15 Business Days of such
Determination Date as the result of the exercise of a
Servicer Call;
(iii) (x) the aggregate Liquidated Loan Losses for the
previous three calendar month period divided by the
average Pool Principal Balance during such three
calendar month period is greater than 0.25%;
A Rapid Amortization Trigger shall continue to exist until it
is Deemed Cured.
Rate Change Date: The date on which the Loan Interest Rate of
each ARM or HELOC Mortgage Loan is subject to adjustment.
Rating Agencies: S&P and Moody's or such other nationally
recognized credit rating agencies as may from time to time be designated in
writing by the Majority Noteholders in their sole discretion, with the approval
of the Issuer, which approval shall not be unreasonably withheld.
Reallocation Date: Any date on which Loans are conveyed into
the Trust, any date on which any Loans are resold pursuant to a Disposition or
otherwise repurchased or substituted from the Trust and, in the case of HELOC
Mortgage Loans, any date the related Loan Originator automatically conveys the
related Draw Reimbursements Rights to the Depositor or the Issuer and any other
date on which the Allocation Percentage shall change for any reason, as
applicable.
Record Date: With respect to each Payment Date, the close of
business on the last day of the preceding Remittance Period.
Reference Bank Rate: With respect to any day, the arithmetic
mean (rounded upwards, if necessary, to the nearest one sixteenth of a percent)
of the offered rates for United States dollar deposits for one month that are
offered by the Reference Banks not affiliated with ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
Incorporated as of 11:00 a.m., New York City time, on the related LIBOR
Determination Date to prime banks in the London interbank market for a period of
one month in amounts approximately equal to the Note Principal Balance, provided
that at least two
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such Reference Banks provide such rate. If fewer than two offered rates appear,
the Reference Bank Rate will be the arithmetic mean of the rates quoted by one
or more major banks in New York City, selected by the Majority Noteholders, as
of 11:00 a.m., New York City time, on such day for loans in U.S. Dollars to
leading European Banks for a period of one month in amounts approximately equal
to the outstanding Note Principal Balance. If no such quotation can be obtained,
the Reference Bank Rate will be the Reference Bank Rate applicable to the
preceding day.
Reference Banks: Three money center banks selected by the
Initial Noteholder with the approval of the Issuer, which approval shall not be
unreasonably withheld.
Released Mortgaged Property Proceeds: With respect to any
Loan, proceeds received by the Servicer in connection with (i) a taking of an
entire Mortgaged Property by exercise of the power of eminent domain or
condemnation or (ii) any release of part of the Mortgaged Property from the lien
of the related Mortgage, whether by partial condemnation, sale or otherwise;
which proceeds in either case are not released to the Borrower in accordance
with applicable law and the servicing standard set forth in Section 4.01 of this
Agreement.
Remittance Date: The 18th calendar day of each month, if such
date is not a Business Day, the first Business Day immediately following such
day.
Remittance Period: With respect to any Determination Date or
Payment Date, the calendar month immediately preceding such Determination Date
or Payment Date, as the case may be.
REO Property: Real property (including all improvements and
fixtures on the Mortgaged Property) acquired through foreclosure sale or by deed
in lieu of foreclosure or otherwise.
Repurchase Price: With respect to a Loan, the sum of (i) the
Principal Balance thereof as of the date of repurchase, (ii) all accrued and
unpaid interest on such Loan to, but not including the date of repurchase,
computed at the applicable Loan Interest Rate and (iii) the amount of any
unreimbursed Servicing Advances made by the Servicer (after deducting therefrom
any amounts received in respect of such repurchased Loan and being held in the
Collection Account for future distribution to the extent such amounts represent
recoveries of principal not yet applied to reduce the related Principal Balance
or interest for the period from and after the date of repurchase). The
Repurchase Price shall be (i) increased by the net negative value or (ii)
decreased by the net positive value of all Hedging Instruments terminated with
respect to the repurchase of such Loan. To the extent the Servicer does not
reimburse itself for amounts, if any, in respect of the Servicing Advance
Reimbursement Amount pursuant to Section 5.01(c)(1) hereof, with respect to such
Loan, the Repurchase Price shall be reduced by such amounts.
Reserve Account: The account established and maintained
pursuant to Section 5.01(a)(3) hereof.
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Reserve Account Right: The rights of the Depositor, ANB or
ABC, respectively, to receive releases from the Reserve Account in accordance
with the terms hereof.
Responsible Officer: When used with respect to the Indenture
Trustee or Custodian, any officer within the corporate trust office of such
Person, including any Vice President, Assistant Vice President, Secretary,
Assistant Secretary or any other officer of such Person customarily performing
functions similar to those performed by any of the above designated officers and
also, with respect to a particular matter, any other officer to whom such matter
is referred because of such officer's knowledge of and familiarity with the
particular subject. When used with respect to the Issuer, Depositor, ANB, ABC or
any officer of the Owner Trustee who is authorized to act for the Owner Trustee
in matters relating to the Issuer or Depositor and who is identified on the list
of Authorized Officers delivered by the Administrator to the Owner Trustee on
the date hereof (as such list may be modified or supplemented from time to time
thereafter) and, so long as the Administration Agreement is in effect, any Vice
President or more senior officer of the Administrator who is authorized to act
for the Administrator in matters relating to the Issuer, Depositor, ANB or ABC
and to be acted upon by the Administrator pursuant to the Administration
Agreement and who is identified on the list of Responsible Officers delivered by
the Administrator to the Owner Trustee on the date hereof (as such list may be
modified or supplemented from time to time thereafter). When used with respect
to the Depositor, the Loan Originators, the Transfer Obligor or the Servicer,
the President, any Vice President, or the Treasurer.
Retained Securities: With respect to a Securitization, any
subordinated securities issued or expected to be issued, or excess collateral
value retained or expected to be retained, in connection therewith to the extent
the Depositor, ANB or ABC or an Affiliate thereof decides in its sole discretion
to retain, instead of sell, such securities.
Retained Securities Value: With respect to any Business Day
and a Retained Security, the market value thereof as determined by the Market
Value Agent in accordance with Section 6.03(d) hereof.
Revolving Period: With respect to a Note of a given Series,
the period commencing on the Closing Date and ending on the earlier of (i) the
date on which the Revolving Period is terminated pursuant to Section 2.07 and
(ii) the date set forth in the related Indenture Supplement.
Sales Price: The sum of the Collateral Value with respect to
each Loan conveyed on any Transfer Date, minus any Overcollateralization
Shortfall as of such date, after giving effect to all payments of principal
received thereon prior to the Transfer Cutoff Date.
SAS 70: Relevant Statement on Auditing Standards issued by the
Auditing Standards Board providing guidance on the factors an Independent
Accountant should consider when auditing the financial reports of an entity that
uses a service organization to process certain transactions.
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S&SA Assignment: An Assignment, in the form of Exhibit C
hereto, of Loans and other property from the Depositor, ANB and ABC,
respectively, to the Issuer pursuant to this Agreement.
Second Lien Loan: A Loan secured by the lien on the Mortgaged
Property, subject to one Senior Lien on such Mortgaged Property.
Securities: The Notes or Trust Certificates.
Securitization: A sale or transfer of loans, including Loans,
to the Depositor or an Affiliate of the Depositor or any other Person in order
to effect one or a series of structured-finance securitization transactions,
including but not limited to transactions involving the issuance of securities
which may be treated for federal income tax purposes as indebtedness of Advanta
Corp. or one or more of its wholly-owned subsidiaries.
Securityholder: Any Noteholder or Certificateholder.
Senior Lien: With respect to any Second Lien Loan, the
mortgage loan(s) having a senior priority lien on the related Mortgaged
Property.
Series: With respect to a Note, the related series of which
such Note is a part, as specified in the Indenture Supplement. There shall be
only one Series of Notes at any given time.
Servicer: Advanta Mortgage Corp. USA, in its capacity as the
master servicer hereunder, or any successor appointed as herein provided.
Servicer Call: The optional repurchase by the Servicer of a
Loan pursuant to Section 3.08(b) hereof.
Servicer Event of Default: As described in Section 9.01
hereof.
Servicer's Fiscal Year: January 1st through December 31st of
each year.
Servicer's Loan File: With respect to each Loan, the file held
by the Servicer, consisting of all documents (or electronic images thereof)
relating to such Loan, including, without limitation, copies of all of the Loan
Documents included in the related Custodial Loan File as well as the original
attorney's opinion of title and abstract of title or the original mortgagee
title insurance policy, or if the original mortgagee title insurance policy has
not been issued, the original irrevocable commitment to issue the same, or with
respect to a HELOC Mortgage Loan with a Credit Limit less than $50,000, the
title report.
Servicer's Remittance Report: A report prepared and computed
by the Servicer in substantially the form of Exhibit B attached hereto.
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Servicing Advance Reimbursement Amount: With respect to any
Determination Date, the amount of any Servicing Advances that have not been
reimbursed as of such date, including Nonrecoverable Servicing Advances.
Servicing Advances: As defined in Section 4.08 hereof.
Servicing Compensation: The Servicing Fee and other amounts to
which the Servicer is entitled pursuant to Section 4.16 hereof.
Servicing Fee: As to each Loan (including any Loan that has
been foreclosed and has become a Foreclosure Property, but excluding any
Liquidated Loan), the fee payable monthly to the Servicer on each Payment Date,
which shall be the product of the applicable Servicing Fee Rate and the
Principal Balance of such Loan as of the beginning of the immediately preceding
Remittance Period, divided by 12. The Servicing Fee includes any servicing fees
owed or payable to any Subservicer, which fees shall be paid from the Servicing
Fee.
Servicing Fee Rate: Unless the Servicer informs the Issuer and
the Initial Noteholder in writing otherwise, 0.50%. The Servicer may inform
Issuer and the Initial Noteholder in writing that the Servicing Fee Rate shall
be a rate other than 0.50%, but not to exceed 0.75%. The Servicing Fee Rate may
exceed 0.75% only with the consent of the Initial Noteholder.
Servicing Officer: Any officer of the Servicer or Subservicer
involved in, or responsible for, the administration and servicing of the Loans
whose name and specimen signature appears on a list of servicing officers
annexed to an Officer's Certificate furnished by the Servicer or the
Subservicer, respectively, on the date hereof to the Issuer and the Indenture
Trustee, on behalf of the Noteholders, as such list may from time to time be
amended.
S&P: Standard & Poor's Ratings Services, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
State: Means any one of the states of the United States of
America or the District of Columbia.
Subservicer: Any Person with which the Servicer has entered
into a Subservicing Agreement and which is an Eligible Servicer and satisfies
any requirements set forth in Section 4.03 hereof in respect of the
qualifications of a Subservicer.
Subservicing Account: An account established by a Subservicer
pursuant to a Subservicing Agreement, which account must be an Eligible Account.
Subservicing Agreement: Any agreement between the Servicer and
any Subservicer relating to subservicing and/or administration of any or all
Loans as provided in Section 4.03 hereof. Copies of any Subservicing Agreement
between the Servicer and a Subservicer which is not an Affiliate of the Servicer
shall be made available, along with any modifications thereto, to the Initial
Noteholder.
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Substitution Adjustment: As to any date on which a
substitution occurs pursuant to Section 2.05 or Section 3.06 hereof, the amount,
if any, by which (a) the sum of the aggregate principal balance (after
application of principal payments received on or before the date of
substitution) of any Qualified Substitute Loans as of the date of substitution,
plus any accrued and unpaid interest thereon to the date of substitution, is
less than (b) the sum of the aggregate of the Principal Balances, together with
accrued and unpaid interest thereon to the date of substitution, of the related
Deleted Loans.
Termination Event: Shall have the meaning set forth in Section
5.17 of the Indenture.
Termination Period: Shall be the 30 day period commencing with
the occurrence of a Termination Event or such other longer period as the
Majority Noteholders may approve.
Termination Price: As of any Determination Date, an amount
without duplication equal to the greater of (A) the Note Redemption Amount and
(B) the sum of (i) the Principal Balance of each Loan included in the Trust as
of the end of the preceding Remittance Period; and (ii) all unpaid interest
accrued on the Principal Balance of each such Loan (net of the Servicing Fee) to
the end of the preceding Remittance Period.
Transfer Cutoff Date: With respect to each Loan, the later of
the first day of the month in which the Transfer Date occurs or the date of
origination (or, with respect to a HELOC Mortgage Loan, origination shall mean
the date of the first draw).
Transfer Cutoff Date Principal Balance: As to each Loan, its
Principal Balance as of the opening of business on the Transfer Cutoff Date
(after giving effect to any payments received on the Loan before the Transfer
Cutoff Date).
Transfer Date: With respect to each Loan, the day such Loan is
sold and conveyed to the Depositor by AMCUSA pursuant to the Loan Purchase
Agreement and to the Issuer by the Depositor, ANB and ABC, as applicable,
pursuant to Section 2.01 hereof.
Transfer Obligation: The obligation of the Transfer Obligor
under Section 5.06 hereof to make certain payments in connection with
Dispositions and other related matters.
Transfer Obligation Account: The account designated as such,
established and maintained pursuant to Section 5.05 hereof.
Transfer Obligation Target Amount: With respect to any Payment
Date or Collateral Value Excess Date, as applicable, the cumulative total of all
withdrawals pursuant to Section 5.05(e), 5.05(f), 5.05(g), and 5.05(h) hereof
from the Transfer Obligation Account to but not including such Payment Date
minus any amount withdrawn from the Transfer Obligation Account to return to the
Transfer Obligor pursuant to Section 5.05(k)(i).
Transfer Obligor: Advanta Corp., a Delaware corporation.
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Treasury Regulations: The regulations, or temporary
regulations, promulgated under the Code. References herein to specific
provisions of temporary regulations shall include analogous provisions of final
Treasury Regulations or other successor Treasury Regulations.
Trust: Advanta Home Equity Loan Owner Trust 1998-MS1, the
Delaware business trust created pursuant to the Trust Agreement.
Trust Agreement: The Trust Agreement dated as of September 25,
1998 among the Depositor and the Owner Trustee.
Trust Account Property: The Trust Accounts, all amounts and
investments held from time to time in the Trust Accounts and all proceeds of the
foregoing.
Trust Accounts: The Distribution Account, the Collection
Account, the Transfer Obligation Account and the Reserve Account.
Trust Certificate: The meaning assigned thereto in the Trust
Agreement.
Trust Estate: Shall mean the assets subject to this Agreement,
the Trust Agreement and the Indenture and assigned to the Trust, which assets
consist of: (i) such Loans as from time to time are subject to this Agreement as
listed in the Loan Schedule, as the same may be amended or supplemented on each
Transfer Date, by the removal of Deleted Loans and by the addition of Qualified
Substitute Loans, together with the Servicer's Loan Files and the Custodial Loan
Files relating thereto and all proceeds thereof, and including, with respect to
all HELOC Mortgage Loans, all Draws which arise after the related Transfer
Cutoff Date on HELOC Mortgage Loans then held by the Trust, the Credit Line
Agreements and all rights and obligations of the Loan Originator under the
related Credit Line Agreements, including the rights to fund Draws thereunder,
(ii) the Mortgages and security interests in the Mortgaged Property, (iii) all
payments in respect of principal and interest collected or received with respect
to each Loan on or after the related Transfer Cutoff Date, (iv) such assets as
from time to time are identified as Foreclosure Property, (v) such assets and
funds as are from time to time deposited in the Distribution Account, Collection
Account, the Transfer Obligation Account and the Reserve Account, including,
without limitation, amounts on deposit in such accounts that are invested in
Permitted Investments (except any Premium Recapture and net investment
earnings), (vi) lenders' rights under all Mortgage Insurance Policies and to any
Mortgage Insurance Proceeds, (vii) Net Liquidation Proceeds and Released
Mortgaged Property Proceeds, (viii) all right, title and interest of the Trust
(but none of the obligations) in and to the obligations of Hedging
Counterparties under Hedging Instruments and (ix) all right, title and interest
of each of the Depositor and ANB and ABC and the Trust in and under the Basic
Documents including, without limitation, the obligations of the Loan Originators
(other than ANB and ABC) under the Loan Purchase Agreement pursuant to which the
Depositor acquired the Loans from the Loan Originators (other than ANB and ABC),
and all proceeds of any of the foregoing.
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Trust Fees and Expenses: As of each Payment Date, an amount
equal to the Servicing Compensation, the Owner Trustee Fee, the Indenture
Trustee Fee and the Custodian Fee, if any.
UCC: The Uniform Commercial Code as in effect in the State of
New York.
UCC Assignment: A form "UCC-2" or "UCC-3" statement meeting
the requirements of the Uniform Commercial Code of the relevant jurisdiction to
reflect an assignment of a secured party's interest in collateral.
UCC-1 Financing Statement: A financing statement meeting the
requirements of the Uniform Commercial Code of the relevant jurisdiction.
Underwriting Guidelines: The underwriting guidelines
(including the loan origination guidelines) provided to the Initial Noteholder
on or prior to the date hereof by the Loan Originators or Affiliates thereof, as
amended and updated from time to time.
Unfunded Draw Reimbursement Amount: As of any date of
determination, the positive difference, if any, of (x) the aggregate of all
Draws made on HELOC Mortgage Loans on or prior to such date for which the
related Loan Originator has automatically conveyed the related Draw
Reimbursement Rights less (y) the aggregate of all Principal Balances of each
Draw for which Collateral Value Excesses were eliminated.
Unfunded Transfer Obligation: With respect to any date of
determination, an amount equal to (x) the sum of (A) 10% of the aggregate
Collateral Value (as of the related Transfer Date, inclusive, in the case of
HELOC Mortgage Loans, of the Collateral Value attributable to the Principal
Balance of each Draw for which the Collateral Value Excesses have been
eliminated) of all Loans sold hereunder, plus (B) any amounts withdrawn or
deemed withdrawn from the Transfer Obligation Account for return to the Transfer
Obligor pursuant to Section 5.05(k)(i) hereof prior to such Payment Date, less
(y) the sum of (i) the aggregate amount of payments actually made by the
Transfer Obligor in respect of the Transfer Obligation pursuant to Section 5.06
plus (ii) the aggregate amount of the Repurchase Prices paid by the Loan
Originators in respect of any Loan Originator Puts plus (iii) any Unfunded Draw
Reimbursement Rights as of such date.
Unfunded Transfer Obligation Percentage: As of any date of
determination, an amount equal to (x) the Unfunded Transfer Obligation as of
such date, divided by (y) 100% of the aggregate Collateral Value as of the
related Transfer Date of all Loans sold hereunder.
Unqualified Loan: As defined in Section 3.06(a) hereof.
USAP: The Uniform Single Attestation Program for Mortgage
Bankers.
Warehouse Lines: Any facility or arrangement between Advanta
Corp. or any of its affiliates, on the one hand, and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage
Capital, Inc. or any of its affiliates, on the other hand, which has been
designated in writing by the Depositor, the Loan
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Originators and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital, Inc. to be deemed a "Warehouse
Line" for purposes of this Agreement.
Wet Custodial File Delivery Date: With respect to a Wet Funded
Loan, the twenty-first day after the related Transfer Date, provided that if a
Default or Event of Default shall have occurred, the Wet Custodial File Delivery
Date shall be the fifth day after the occurrence of such event.
Wet Funded Loan: A Loan for which the related Custodial Loan
File shall not have been delivered to the Custodian as of the related Transfer
Date.
Whole Loan Sale: A Disposition of Loans pursuant to a
whole-loan sale.
Section 1.02 Other Definitional Provisions.
(a) Any agreement, instrument or statute defined or referred
to herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as from time to time amended,
modified or supplemented and includes (in the case of agreements or instruments)
references to all attachments thereto and instruments incorporated therein;
references to a Person are also to its permitted successors and assigns.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate or
other document to the extent not defined, shall have the respective meanings
given to them under GAAP. To the extent that the definitions of accounting terms
in this Agreement or in any such certificate or other document are inconsistent
with the meanings of such terms under GAAP, the definitions contained in this
Agreement or in any such certificate or other document shall control.
(d) The words "hereof," "herein," "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement; Article, Section,
Schedule and Exhibit references contained in this Agreement are references to
Articles, Sections, Schedules and Exhibits in or to this Agreement unless
otherwise specified; and the term "including" shall mean "including without
limitation."
(e) The definitions contained in this Agreement are applicable
to the singular as well as the plural forms of such terms and to the masculine
as well as to the feminine and neuter genders of such terms.
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ARTICLE II
CONVEYANCE OF THE TRUST ESTATE; ADDITIONAL NOTE PRINCIPAL
BALANCES
Section 2.01 Conveyance of the Trust Estate; Additional Note
Principal Balances.
(a)(i) On the terms and conditions of this Agreement, on each
Transfer Date, each of the Depositor, ANB and ABC, as applicable, agree to offer
for sale and to sell Loans and deliver related Loan Documents to or at the
direction of the Issuer. To the extent the Issuer has or is able to obtain
sufficient funds for the purchase thereof, the Issuer agrees to purchase such
Loans offered for sale by the Depositor, ANB and ABC, as applicable.
(ii) In consideration of the payment of the Additional Note
Principal Balance pursuant to Section 2.06 hereof, the Depositor, ANB and ABC,
as applicable, as of the initial Closing Date and concurrently with the
execution and delivery hereof, hereby sell, transfer, assign, set over and
otherwise convey to the Issuer, without recourse, but subject to the other terms
and provisions of this Agreement, all of the right, title and interest of the
Depositor, ANB and ABC, as applicable, in and to the Trust Estate.
(iii) During the Revolving Period, on each Transfer Date,
subject to the conditions precedent set forth in Section 2.06(a) and in
accordance with the procedures set forth in Section 2.01(c), the Depositor, ANB
and ABC, as applicable, pursuant to an S&SA Assignment, will assign to the
Issuer without recourse all their right, title and interest in and to the Loans
and all proceeds thereof listed on the Loan Schedule attached to such S&SA
Assignment, including all interest and principal received by the Loan
Originators, the Depositor or the Servicer on or with respect to the Loans on or
after the related Transfer Cutoff Date (and including Monthly Payments due on or
after the related Transfer Cutoff Date but received by the Loan Originators on
or before the related Transfer Cutoff Date and held for application on the
related scheduled Due Dates and excluding any Premium Recapture), together with
all right, title and interest in and to the proceeds of any related Mortgage
Insurance Policies and all of the Depositor's rights, title and interest in and
to (but none of its obligations under) the Loan Purchase Agreement and all
proceeds of the foregoing.
(iv) The foregoing sales, transfers, assignments, set overs
and conveyances do not, and are not intended to, result in a creation or an
assumption by the Issuer of any of the obligations of the Depositor, the Loan
Originators or any other Person in connection with the Trust Estate or under any
agreement or instrument relating thereto except as specifically set forth in the
Basic Documents.
(v) With respect to ANB, ABC and the Depositor, as applicable,
and with respect to a HELOC Mortgage Loan sold on a Transfer Date, ANB, ABC and
the Depositor, as applicable, hereby assigns to the Issuer and the Issuer hereby
assumes with respect to each such HELOC Mortgage Loan, the duty to fund Draws
under the related Credit Line Agreement. The Issuer hereby delegates to ANB, ABC
and the Depositor, and each of ANB, ABC and the Depositor hereby assumes with
respect to each HELOC Mortgage Loan
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originated by ANB, ABC and AMCUSA, respectively and sold hereunder, the duty to
fund Draws under the related Credit Line Agreement. In consideration of the
foregoing, the Issuer hereby assigns, transfers and conveys to ANB, ABC and the
Depositor, as applicable, all the right, title and interest in and to the Draw
Reimbursement Rights relating to such HELOC Mortgage Loan.
(vi) With respect to a HELOC Mortgage Loan, upon the funding
of Draws under the related Credit Line Agreement, ANB, ABC and the Depositor, as
applicable, agrees to and hereby assigns, automatically, and without any further
action, to the Issuer without recourse all the right, title and interest of ANB,
ABC and the Depositor, as applicable, in and to the Draw Reimbursement Rights
and all proceeds thereof. In consideration of the foregoing, the Trust
Certificates attributable to ANB, ABC and the Depositor shall automatically be
adjusted ratably to reflect the conveyance of the related Draw Reimbursement
Rights.
(b) As of the Closing Date and as of each Transfer Date, the
Issuer acknowledges (or will acknowledge pursuant to the S&SA Assignment) the
conveyance to it of the Trust Estate, including all rights, title and interest
of the Depositor, ANB and ABC, as applicable, in and to the Trust Estate,
receipt of which is hereby acknowledged by the Issuer. Concurrently with such
delivery, as of the initial Closing Date and as of each Transfer Date, pursuant
to the Indenture the Issuer pledges the Trust Estate to the Indenture Trustee.
In addition, concurrently with such delivery and in exchange therefor, the Owner
Trustee, pursuant to the instructions of the Depositor, has executed (not in its
individual capacity, but solely as Owner Trustee on behalf of the Issuer) and
caused the Trust Certificates to be authenticated and delivered to or at the
direction of the Depositor, ANB and ABC, respectively.
(c)(i) Pursuant to and subject to the Note Purchase Agreement,
the Trust may, at its sole option, from time to time request that the Initial
Noteholder advance on any Transfer Date and on any Collateral Value Excess Date,
Additional Note Principal Balances and the Initial Noteholder shall remit on
such Transfer Date or Collateral Value Excess Date, as the case may be, to the
Advance Account an amount equal to the Additional Note Principal Balance.
(ii) Notwithstanding anything to the contrary herein, in no
event shall the Initial Noteholder be required to advance Additional Note
Principal Balances on a Transfer Date if the conditions precedent to a transfer
of the Loans under Section 2.06(a) and the conditions precedent to the purchase
of Additional Note Principal Balances set forth in Section 3.01 of the Note
Purchase Agreement have not been fulfilled.
(iii) Notwithstanding anything to the contrary herein, in no
event shall the Initial Noteholder be required to advance Additional Note
Principal Balance on a Collateral Value Excess Date if the conditions precedent
thereto set forth in Section 2.06(b) and the conditions precedent to the
purchase of Additional Note Principal Balances set forth in Section 3.01 of the
Note Purchase Agreement have not been fulfilled.
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(iv) The Servicer shall appropriately note such Additional
Note Principal Balance (and the increased Note Principal Balance) in the next
succeeding Payment Statement; provided, however, that failure to make any such
notation in such Payment Statement or any error in such notation shall not
adversely affect any Noteholder's rights with respect to its Note Principal
Balance and its right to receive interest and principal payments in respect of
the Note Principal Balance held by such Noteholder. The Initial Noteholder shall
record on the schedule attached to such Noteholder's Note, the date and amount
of any Additional Note Principal Balance advanced by it; provided, that failure
to make such recordation on such schedule or any error in such schedule shall
not adversely affect any Noteholder's rights with respect to its Note Principal
Balance and its right to receive interest and principal payments in respect of
the Note Principal Balance held by such Noteholder.
(v) Absent manifest error, the Note Principal Balance of each
Note as set forth in the Initial Noteholder's records shall be binding upon the
Noteholders and the Trust, notwithstanding any notation made by the Servicer in
its Payment Statement pursuant to the preceding paragraph.
Section 2.02 Ownership and Possession of Loan Files.
With respect to each Loan, as of the related Transfer Date the
ownership of the related Promissory Note, the related Mortgage and the contents
of the related Servicer's Loan File and Custodial Loan File shall be vested in
the Trust for the benefit of the Securityholders, although possession of the
Servicer's Loan File (other than items required to be maintained in the
Custodial Loan Files) on behalf of and for the benefit of the Securityholders
shall remain with the Servicer, and the Custodian shall take possession of the
Custodial Loan Files as contemplated in Section 2.05 hereof.
Section 2.03 Books and Records; Intention of the Parties.
(a) As of each Transfer Date, the sale of each of the Loans
conveyed on such Transfer Date shall be reflected on the balance sheets and
other financial statements of the Depositor and the Loan Originators, as the
case may be, as a sale of assets by the Depositor and the Loan Originators, as
the case may be, under GAAP. Each of the Servicer and the Custodian shall be
responsible for maintaining, and shall maintain, a complete set of books and
records for each Loan which shall be clearly marked to reflect the ownership of
each Loan, as of the related Transfer Date, by the Issuer and for the benefit of
the Securityholders.
(b) It is the intention of the parties hereto that, other than
for federal, state and local income or franchise tax purposes, the transfers and
assignments of the Trust Estate on the initial Closing Date, on each Transfer
Date and as otherwise contemplated by the Basic Documents and the Assignments
shall constitute a sale of the Trust Estate including, without limitation, the
Loans and all other property comprising the Trust Estate specified in Section
2.01(a) hereof, from the Depositor, ANB, ABC, as applicable, to the Issuer and
such property shall not be property of the Depositor, ANB or ABC. The parties
hereto shall treat the Notes as indebtedness for federal, state and local income
and franchise tax purposes.
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(c) If any of the assignments and transfers of the Loans
and the other property of the Trust Estate specified in Section 2.01(a) hereof
to the Issuer pursuant to this Agreement or the conveyance of the Loans or any
of such other property of the Trust Estate to the Issuer, other than for
federal, state and local income or franchise tax purposes, is held or deemed not
to be a sale or is held or deemed to be a pledge of security for a loan, the
Depositor, ANB and ABC intend that the rights and obligations of the parties
shall be established pursuant to the terms of this Agreement and that, in such
event, with respect to such property, (i) consisting of Loans and related
property, the Depositor, ANB and ABC, as applicable, shall be deemed to have
granted, as of the related Transfer Date, to the Issuer a first priority
security interest in the entire right, title and interest of the Depositor, ANB
and ABC, as applicable, in and to such Loans and proceeds and all other property
conveyed to the Issuer as of such Transfer Date, (ii) consisting of any other
property specified in Section 2.01(a), the Depositor, ANB and ABC, as
applicable, shall be deemed to have granted, as of the initial Closing Date, to
the Issuer a first priority security interest in the entire right, title and
interest of the Depositor, ANB and ABC, as applicable, in and to such property
and the proceeds thereof. In such event, with respect to such property, this
Agreement shall constitute a security agreement under applicable law.
(d) Within ten (10) days of the initial Transfer Date,
the Depositor, ANB and ABC shall, at each party's sole expense, cause to be
filed UCC-1 Financing Statements naming the Issuer as "secured party" and
describing the Trust Estate being sold by the Depositor, ANB and ABC,
respectively, to the Issuer with the office of the Secretary of State of the
state in which the Depositor, ANB and ABC are located.
Section 2.04 Delivery of Loan Documents.
(a) The related Loan Originator shall, no less than four
(4) Business Days prior to the related Transfer Date, or such other time as
mutually agreed upon between the related Loan Originator and the Custodian (or
in the case of a Wet Funded Loan, on or before the related Wet Custodial File
Delivery Date), deliver or cause to be delivered to the Custodian, as the
designated agent of the Indenture Trustee, a Loan Schedule and each of the
following documents (collectively, the "Custodial Loan File"):
(i) the original Promissory Note bearing all intervening
endorsements, endorsed either (i) "Pay to the order
of Bankers Trust Company of California, N.A., as
custodian or trustee under the applicable custody or
trust agreement, without recourse" or (ii) "Pay to
the order of Bankers Trust Company of California,
N.A., as custodian or trustee under the applicable
custody or trust agreement, without recourse, Advanta
as Servicer," or (iii) "Pay to the order of Bankers
Trust Company of California, N.A., as custodian or
trustee" by [Seller, signature, name, title] and
signed in the name of the previous owner by an
authorized officer (in the event that the 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 Loan was
acquired or originated while doing business under
another
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name, the signature must be in the following form:
"[the previous owner], formerly known as [previous
name]" or (iv) "Pay to the order of Bankers Trust
Company of California, N.A., without recourse" or (v)
"Pay to the order of __________________, without
recourse". The original Promissory Note should be
accompanied by any rider made in connection with the
origination of the related Loan;
(ii) the original of any guarantee executed in connection
with the Promissory Note (if any);
(iii) 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;
(iv) the originals of any assumption, modification,
consolidation or extension agreements;
(v) the original or a certified copy of the Assignment of
Mortgage of each Loan to "Bankers Trust Company of
California, N.A., as custodian or trustee", "Bankers
Trust Company of California, N.A. as trustee or
custodian on behalf of Advanta Conduit Receivables
Inc.", "Bankers Trust Company of California, N.A., as
trustee" or "Pay to the Order of _____________." In
the event that the 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
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)";
(vi) the originals of all intervening Assignments of
Mortgage, showing a complete chain of assignment from
origination to the related Loan Originator, 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);
(b) The Loan Originator shall, on the related Transfer
Date (or in the case of a Wet Funded Loan, on or before the related Wet
Custodial File Delivery Date), deliver or cause to be delivered to the Servicer
for the benefit of the Indenture Trustee, as secured party on behalf of the
Noteholders, the related Servicer's Loan File.
(c) The Indenture Trustee shall cause the Custodian to take
and maintain continuous physical possession of the Custodial Loan Files in the
State of California and, in connection therewith, shall act solely as agent for
the Noteholders in accordance with the terms hereof and not as agent for the
Loan Originators, the Servicer or any other party.
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Section 2.05 Acceptance by the Indenture Trustee of the
Loans; Certain Substitutions and Repurchases;
Certification by the Custodian.
(a) The Indenture Trustee declares that it will cause the
Custodian to hold the Custodial Loan Files and any additions, amendments,
replacements or supplements to the documents contained therein, as well as any
other assets included in the Trust Estate and delivered to the Custodian, in
trust, upon and subject to the conditions set forth herein. The Indenture
Trustee further agrees to cause the Custodian to execute and deliver such
certifications as are required under the Custodial Agreement and to otherwise
direct the Custodian to perform all of its obligations with respect to the
Custodial Loan Files in strict accordance with the terms of the Custodial
Agreement.
(b)(i) With respect to any Loans which are set forth as
exceptions in the Exceptions Report (after giving effect to the specific
provisions relating to Wet Funded Loans in Section 2.04(a)), the related Loan
Originator shall cure such exception by delivering such missing documents to the
Custodian or otherwise curing the defect no later than (A) other than Loan
Documents specified in clause (B) below, in the case of (x) a non-Wet Funded
Loan, 5 Business Days, or (y) in the case of a Wet Funded Loan one Business Day,
in each case, following the receipt of the first Loan Schedule and Exceptions
Report listing such exception with respect to such Loan or (B) in the case of
Loan Documents referenced in Section 2.04(a) (iii), (iv) and (vi) 30 days after
the related Transfer Date or with respect to Wet Funded Loans, from the related
Wet Custodial File Delivery Date.
(ii) In the event that, with respect to any Loan, the
related Loan Originator does not comply with the document delivery requirements
of this Section 2.05, the related Loan Originator shall repurchase such Loan
within one Business Day of notice thereof from the Indenture Trustee or the
Initial Noteholder at the Repurchase Price with respect to such Loan by
depositing such Repurchase Price in the Collection Account; provided, however,
that if there is not an Overcollateralization Shortfall on the date of such
repurchase (after giving effect to such repurchase) the Loan Originator shall
remit the Alternate Repurchase Price in accordance with Section 5.01(c)(4)(i).
In lieu of such a repurchase, the Depositor and related Loan Originator may
comply with the substitution provisions of Section 3.06 hereof. The related Loan
Originator shall provide the Servicer, the Indenture Trustee, the Issuer and the
Initial Noteholder with a certification of a Responsible Officer on or prior to
such repurchase or substitution indicating that the related Loan Originator
intends to repurchase or substitute such Loan.
(iii) It is understood and agreed that the obligation of
the related Loan Originator to repurchase or substitute any such Loan pursuant
to this Section 2.05(b) shall constitute the sole remedy against it with respect
to such failure to comply with the foregoing delivery requirements.
(c) In performing its reviews of the Custodial Loan Files
pursuant to the Custodial Agreement, the Custodian shall have no responsibility
to determine the genuineness of any document contained therein and any signature
thereon. The Custodian shall not have any responsibility for determining whether
any document is valid and binding, whether the text
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of any assignment or endorsement is in proper or recordable form, whether any
document has been recorded in accordance with the requirements of any applicable
jurisdiction or whether a blanket assignment is permitted in any applicable
jurisdiction.
(d) The Servicer's Loan File shall be held in the custody
of the Servicer (i) for the benefit of, and as agent for, the Noteholders and
(ii) for the benefit of the Indenture Trustee, on behalf of the Noteholders, for
so long as the Notes are outstanding; after the Notes are not outstanding, the
Servicer's Loan File shall be held in the custody of the Servicer for the
benefit of, and as agent for, the Certificateholders. It is intended that, by
the Servicer's agreement pursuant to this Section 2.05(d), the Indenture Trustee
shall be deemed to have possession of the Servicer's Loan Files for purposes of
Section 9-305 of the UCC of the state in which such documents or instruments are
located. The Servicer shall promptly report to the Indenture Trustee any failure
by it to hold the Servicer's Loan File as herein provided and shall promptly
take appropriate action to remedy any such failure. In acting as custodian of
such documents and instruments, the Servicer agrees not to assert any legal or
beneficial ownership interest in the Loans or such documents or instruments.
Subject to Section 8.01(d), the Servicer agrees to indemnify the Securityholders
and the Indenture Trustee, its officers, directors, employees, agents and
"control persons" as such term is used under the Act and under the Securities
Exchange Act of 1934, as amended for any and all liabilities, obligations,
losses, damages, payments, costs or expenses of any kind whatsoever which may be
imposed on, incurred by or asserted against the Securityholders or the Indenture
Trustee as the result of the negligence or willful misfeasance by the Servicer
relating to the maintenance and custody of such documents or instruments which
have been delivered to the Servicer provided, however, that the Servicer will
not be liable for any portion of any such amount resulting from the negligence
or willful misconduct of any Securityholders or the Indenture Trustee; and
provided, further, that the Servicer will not be liable for any portion of any
such amount resulting from the Servicer's compliance with any instructions or
directions consistent with this Agreement issued to the Servicer by the
Indenture Trustee or the Majority Noteholders. The Indenture Trustee shall have
no duty to monitor or otherwise oversee the Servicer's performance as custodian
hereunder.
Section 2.06 Conditions Precedent to Transfer Dates and
Collateral Value Excess Dates.
(a) On each Transfer Date, the Depositor, ANB and ABC, as
applicable, shall convey to the Issuer, the Loans and the other property and
rights related thereto described in the related S&SA Assignment, and the Issuer
shall cause the Initial Noteholder, pursuant to and subject to the Note Purchase
Agreement, only upon the satisfaction of each of the conditions set forth below
on or prior to such Transfer Date, to deposit or cause to be deposited cash in
the amount of the Additional Note Principal Balance in the Advance Account (or
in the case of Wet Funded Loans, in the Reserve Account to the extent of the
Sales Prices therefor) in respect thereof, and the Servicer shall, promptly
after such deposit, withdraw the amount deposited in respect of applicable
Additional Note Principal Balance from the Advance Account, and distribute such
amount to or at the direction of the Depositor, ANB and ABC. As of each Transfer
Date:
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(i) the Depositor, ANB and ABC, as applicable, shall have
delivered to the Issuer and the Initial Noteholder
duly executed Assignments, which shall have attached
thereto a Loan Schedule setting forth the appropriate
information with respect to all Loans conveyed on
such date, expressed in an amount, and shall have
delivered to the Initial Noteholder a computer
readable transmission of such Loan Schedule;
(ii) the Depositor, ANB and ABC or the Servicer, as
applicable, shall have deposited in the Collection
Account all collections received with respect to each
of the Loans on and after the applicable Transfer
Cutoff Date;
(iii) neither the Loan Originators, nor the Depositor shall
(A) be insolvent, (B) be made insolvent by its
respective sale of Loans or (C) have reason to
believe that its insolvency is imminent;
(iv) the Revolving Period shall not have terminated;
(v) there shall be no Overcollateralization Shortfall;
(vi) in the case of non-Wet Funded Loans, the Issuer shall
have delivered the Custodial Loan File to the
Custodian in accordance with the Custodial Agreement
and the Initial Noteholder shall have received a copy
of the Loan Schedule and Exceptions Report reflecting
such delivery with evidence that the Promissory Note
and Assignment of Mortgage with respect to such Loan
shall be present therein;
(vii) each of the representations and warranties made by
the Loan Originators pursuant to Section 3.05 with
respect to the Loans shall be true and correct in all
material respects as of the related Transfer Date
with the same effect as if then made, and the
Depositor, ANB and ABC shall have performed all
obligations to be performed by it under the Basic
Documents on or prior to such Transfer Date;
(viii) the Depositor, ANB and ABC shall each, at its own
expense, within one Business Day following the
Transfer Date, indicate in its computer files that
the Loans, expressed in an amount, identified in the
LPA Assignment (with respect to Loans sold by the
Depositor) and S&SA Assignment have been sold to the
Issuer pursuant to this Agreement and the S&SA
Assignment;
(ix) the Depositor, ANB and ABC shall have taken any
action requested by the Indenture Trustee, the Issuer
or the Noteholders
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required to maintain the ownership interest of the
Issuer in the Trust Estate;
(x) no selection procedures believed by the Depositor,
ANB or ABC to be adverse to the interests of the
Noteholders shall have been utilized in selecting the
Loans conveyed on such Transfer Date;
(xi) the Depositor, ANB or ABC, as applicable, shall have
provided the Issuer, the Indenture Trustee and the
Initial Noteholder no later than one Business Day
prior to such date a Notice of Additional Note
Principal Balance in the form of Exhibit A hereto;
(xii) after giving effect to the Additional Note Principal
Balance associated therewith, the Note Principal
Balance will not exceed the Maximum Note Principal
Balance;
(xiii) all conditions precedent to the Depositor's purchase
of Loans pursuant to the Loan Purchase Agreement
shall have been fulfilled as of such Transfer Date;
(xiv) all conditions precedent to the Noteholders' purchase
of Additional Note Principal Balance pursuant to the
Note Purchase Agreement shall have been fulfilled;
and
(xv) on or prior to any Transfer Date the Unfunded Draw
Reimbursement Amount shall have been reduced to zero.
(b) On each Collateral Value Excess Date, upon the
satisfaction of conditions set forth in subclauses (iii), (iv), (ix), (xi),
(xii), (xiii) and (xiv) of Section 2.06(a) on such Collateral Value Excess Date,
the Issuer shall deposit, cause the Initial Noteholder to deposit, or otherwise
cause to be deposited into (i) the Transfer Obligation Account, cash in the
amount equal to the lesser of (A) the Additional Note Principal Balance and (B)
the Transfer Obligation Target Amount and (ii) the Advance Account the excess
(if any) of the Additional Note Principal Balance over the amount deposited into
the Transfer Obligation Account pursuant to clause (i) above; provided that, in
the case of Wet Funded Loans, the Additional Note Principal Balance shall be
deposited in the Reserve Account to the extent of the Sales Prices therefor. The
Issuer agrees that on each Collateral Value Excess Date on which there exists an
Unfunded Draw Reimbursement Amount, the Issuer shall issue Additional Note
Principal Balances in the maximum amount permitted by the related Collateral
Value Excess. The Servicer shall withdraw the amount deposited in respect of
Additional Note Principal Balance from the Advance Account in respect of such
deposit and distribute such amount to or at the direction of the Depositor, ANB
and ABC in accordance with the Allocation Percentage or as such parties may
otherwise direct.
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Section 2.07 Termination of Revolving Period .
Upon the occurrence of (i) an Event of Default or Default or
(ii) a Rapid Amortization Trigger, the Initial Noteholder (if still a
Noteholder) may, in its sole discretion, terminate the Revolving Period.
Section 2.08 Correction of Errors .
The parties hereto shall cooperate to reconcile any errors in
calculating the Sales Price from and after the Closing Date. In the event that
an error in the Sales Price is discovered by any party, including without
limitation, any error due to miscalculations of Market Value where insufficient
information has been provided with respect to a Loan to make an accurate
determination of Market Value as of any applicable Transfer Date, any
miscalculations of Principal Balance, accrued interest, Overcollateralization
Shortfall or aggregate unreimbursed Servicing Advances attributable to the
applicable Loan, or any prepayments not properly credited, such party shall give
prompt notice to the other parties hereto, and the party that shall have
benefited from such error shall promptly remit to the other, by wire transfer of
immediately available funds, the amount of such error with no interest thereon.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 Representations and Warranties of the Depositor.
The Depositor hereby represents, warrants and covenants to the
other parties hereto and the Securityholders that as of each Closing Date, as of
each Transfer Date and as of each Collateral Value Excess Date:
(a) The Depositor is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization and has, and had at all relevant times, full power to own
its property, to carry on its business as currently conducted, to enter
into and perform its obligations under each Basic Document to which it
is a party;
(b) The execution and delivery by the Depositor of each Basic
Document to which the Depositor is a party and its performance of and
compliance with all of the terms thereof will not violate the
Depositor's organizational documents 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 or acceleration of, any
material contract, agreement or other instrument to which the Depositor
is a party or which are applicable to the Depositor or any of its
assets;
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(c) The Depositor has the full power and authority to enter
into and consummate the transactions contemplated by each Basic
Document to which the Depositor is a party, has duly authorized the
execution, delivery and performance of each Basic Document to which it
is a party and has duly executed and delivered each Basic Document to
which it is a party. Each Basic Document to which it is a party,
assuming due authorization, execution and delivery by the other party
or parties thereto, constitutes a valid, legal and binding obligation
of the Depositor, enforceable against it in accordance with the terms
thereof, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization, receivership, moratorium or other similar
laws relating to or affecting the rights of creditors generally, and by
general equity principles (regardless of whether such enforcement is
considered in a proceeding in equity or at law);
(d) The Depositor is not in violation of, and the execution
and delivery by the Depositor of each Basic Document to which the
Depositor is a party and its performance and compliance with the terms
of each Basic Document to which the Depositor is a party will not
constitute a violation with respect to, any order or decree of any
court or any order or regulation of any federal, state, municipal or
governmental agency having jurisdiction, which violation would
materially and adversely affect the condition (financial or otherwise)
or operations of the Depositor or any of its properties or materially
and adversely affect the performance of any of its duties hereunder;
(e) There are no actions or proceedings against, or
investigations of, the Depositor currently pending with regard to which
the Depositor has received service of process and no action or
proceeding against, or investigation of, the Depositor is, to the
knowledge of the Depositor, threatened or otherwise pending before any
court, administrative agency or other tribunal that (A) if determined
adversely to the Depositor, would prohibit its entering into any of the
Basic Documents to which it is a party or render the Securities
invalid, (B) seek to prevent the issuance of the Securities or the
consummation of any of the transactions contemplated by any of the
Basic Documents to which it is a party or (C) if determined adversely
to the Depositor, would prohibit or materially and adversely affect the
performance by the Depositor of its obligations under, or the validity
or enforceability of, any of the Basic Documents to which it is a party
or the Securities;
(f) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery
and performance by the Depositor of, or compliance by the Depositor
with, any of the Basic Documents to which the Depositor is a party or
the Securities, or for the consummation of the transactions
contemplated by any of the Basic Documents to which the Depositor is a
party, except for such consents, approvals, authorizations and orders,
if any, that have been obtained prior to such date;
(g) The Depositor is solvent, is able to pay its debts as they
become due and has capital sufficient to carry on its business and its
obligations hereunder; it will not be rendered insolvent by the
execution and delivery of any of the Basic Documents to
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which it is a party or the assumption of any of its obligations
thereunder; no petition of bankruptcy (or similar insolvency
proceeding) has been filed by or against the Depositor;
(h) The Depositor did not sell the Loans sold thereon to the
Trust with any intent to hinder, delay or defraud any of its creditors;
nor will the Depositor be rendered insolvent as a result of such sale;
(i) The Depositor had good title to, and was the sole owner
of, each Loan sold thereon free and clear of any lien other than any
such lien released simultaneously with the sale contemplated herein,
and, immediately upon each transfer and assignment herein contemplated,
the Depositor will have delivered to the Trust good title to, and the
Trust will be the sole owner of, each Loan transferred thereon free and
clear of any lien;
(j) The Depositor acquired title to each of the Loans sold
thereon in good faith, without notice of any adverse claim;
(k) None of the Basic Documents to which the Depositor is a
party, nor any Officer's Certificate, statement, report or other
document prepared by the Depositor and furnished or to be furnished by
it pursuant to any of the Basic Documents to which it is a party or in
connection with the transactions contemplated thereby contains any
untrue statement of material fact or omits to state a material fact
necessary to make the statements contained herein or therein not
misleading;
(l) The Depositor is not required to be registered as an
"investment company" under the Investment Company Act of 1940, as
amended;
(m) The transfer, assignment and conveyance of the Loans by
the Depositor thereon pursuant to this Agreement is not subject to the
bulk transfer laws or any similar statutory provisions in effect in any
applicable jurisdiction;
(n) The Depositor's principal place of business and chief
executive offices are located at ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇ ▇▇▇▇▇,
▇▇ ▇▇▇▇▇; and
(o) The Depositor covenants that during the continuance of
this Agreement it will comply in all respects with the provisions of
its organizational documents in effect from time to time.
Section 3.02 Representations and Warranties of the Loan
Originators.
Each Loan Originator hereby represents and warrants to the
other parties hereto and the Securityholders that as of the Closing Date, as of
each Transfer Date and as of each Collateral Value Excess Date:
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(a) The Loan Originator is a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its organization and the Loan Originator or other
Person who originated a Loan on behalf of such Loan Originator (i) is
duly qualified, in good standing and licensed to carry on its business
in each state where any Mortgaged Property relating to a Loan that it
originated is located and (ii) is in compliance with the laws of any
such jurisdiction, in both cases, to the extent necessary to ensure the
enforceability of the Loans in accordance with the terms thereof and
had at all relevant times, full corporate power to originate the Loans,
to own its property, to carry on its business as currently conducted
and to enter into and perform its obligations under each Basic Document
to which it is a party;
(b) The execution and delivery by the Loan Originator of each
Basic Document to which it is a party and its performance of and
compliance with the terms thereof will not violate the Loan
Originator's articles of organization or by-laws 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 or
acceleration of, any contract, agreement or other instrument to which
the Loan Originator is a party or which may be applicable to the Loan
Originator or any of its assets;
(c) The Loan Originator has the full power and authority to
enter into and consummate all transactions contemplated by the Basic
Documents to be consummated by it, has duly authorized the execution,
delivery and performance of each Basic Document to which it is a party
and has duly executed and delivered each Basic Document to which it is
a party. Each Basic Document to which it is a party, assuming due
authorization, execution and delivery by each of the other parties
thereto, constitutes a valid, legal and binding obligation of the Loan
Originator, enforceable against it in accordance with the terms hereof,
except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium or other similar laws relating
to or affecting the rights of creditors generally, and by general
equity principles (regardless of whether such enforcement is considered
in a proceeding in equity or at law);
(d) The Loan Originator is not in violation of, and the
execution and delivery of each Basic Document to which it is a party by
the Loan Originator and its performance and compliance with the terms
of each Basic Document to which it is a party will not constitute a
violation with respect to, any order or decree of any court or any
order or regulation of any federal, state, municipal or governmental
agency having jurisdiction, which violation would materially and
adversely affect the condition (financial or otherwise) or operations
of the Loan Originator or its properties or materially and adversely
affect the performance of its duties under any Basic Document to which
it is a party;
(e) There are no actions or proceedings against, or
investigations of, the Loan Originator currently pending with regard to
which the Loan Originator has received service of process and no action
or proceeding against, or investigation of, the Loan Originator is, to
the knowledge of the Loan Originator, threatened or otherwise
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pending before any court, administrative agency or other tribunal that
(A) if determined adversely to the Loan Originator, would prohibit its
entering into any Basic Document to which it is a party or render the
Securities invalid, (B) seek to prevent the issuance of the Securities
or the consummation of any of the transactions contemplated by any
Basic Document to which it is a party or (C) if determined adversely to
the Loan Originator, would prohibit or materially and adversely affect
the sale of the Loans to the Depositor, the performance by the Loan
Originator of its obligations under, or the validity or enforceability
of, any Basic Document to which it is a party or the Securities;
(f) No consent, approval, authorization or order of any court
or governmental agency or body is required for: (1) the execution,
delivery and performance by the Loan Originator of, or compliance by
the Loan Originator with, any Basic Document to which it is a party,
(2) the issuance of the Securities, (3) the sale of the Loans under the
Loan Purchase Agreement (to the extent such Loan Originator is a party
thereto), (4) the sale by ANB and ABC, respectively, of the Loans under
this Agreement, or (5) the consummation of the transactions required of
it by any Basic Document to which it is a party, except such as shall
have been obtained before such date;
(g) Immediately prior to the Transfer Date related thereto,
the Loan Originator had good title to the Loans sold on such Transfer
Date without notice of any adverse claim;
(h) The information, reports, financial statements, exhibits
and schedules furnished in writing by or on behalf of the Loan
Originator to the Initial Noteholder in connection with the
negotiation, preparation or delivery of the Basic Documents to which it
is a party or delivered pursuant thereto, when taken as a whole, do not
contain any untrue statement of material fact or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. All written
information furnished after the date hereof by or on behalf of the Loan
Originator to the Initial Noteholder in connection with the Basic
Documents to which it is a party and the transactions contemplated
thereby will be true, complete and accurate in every material respect,
or (in the case of projections) based on reasonable estimates, on the
date as of which such information is stated or certified;
(i) The Loan Originator is solvent, is able to pay its debts
as they become due and has capital sufficient to carry on its business
and its obligations under each Basic Document to which it is a party;
it will not be rendered insolvent by the execution and delivery of this
Agreement or by the performance of its obligations under each Basic
Document to which it is a party; no petition of bankruptcy (or similar
insolvency proceeding) has been filed by or against the Loan Originator
prior to the date hereof;
(j) Each Loan Originator has transferred the Loans transferred
on or prior to such Transfer Date without any intent to hinder, delay
or defraud any of its creditors;
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(k) Each Loan Originator has received fair consideration
and reasonably equivalent value in exchange for the Loans they sold on
such Transfer Date;
(l) (i) Advanta National Bank's principal place of
business and chief executive offices are located at ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇; (ii) Advanta Mortgage Corp. USA's
principal place of business and chief executive offices are located at
Welsh & ▇▇▇▇▇▇ Roads, ▇.▇. ▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇;
and (iii) Advanta Bank Corp.'s principal place of business and chief
executive offices are located at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇, ▇▇▇▇▇;
(m) With respect to ANB and ABC only, such party is an
"insured depository institution" (within the meaning of Section
1813(c)(2) of Title 12 of the United States Code) and accordingly,
makes the following additional representations and warranties:
(1) the Basic Documents do not violate any statutory
or regulatory requirements applicable to such party;
(2) the Basic Documents have been (i) executed
contemporaneously with the definitive agreement reached by such party
and the parties to the Basic Documents, (ii) approved by a specific
resolution by such party's board of directors, which approval shall be
reflected in the minutes of said board, and (iii) entered into the
official records of such party, a copy of which approvals, certified by
a Secretary, Assistant Secretary, vice president or higher officer of
such party, has been provided to the Issuer;
(3) the aggregate amount of the Sales Price of all
Loans conveyed on each Transfer Date by such party to the Issuer does
not exceed any restrictions or limitations imposed by the board of
directors of such party;
(4) ANB and ABC are each at least Adequately
Capitalized.
It is understood and agreed that the representations and
warranties set forth in this Section 3.02 shall survive delivery of the
respective Custodial Loan Files to the Custodian (as the agent of the Indenture
Trustee) and shall inure to the benefit of the Securityholders, the Depositor,
the Servicer, the Indenture Trustee, the Owner Trustee and the Issuer. Upon
discovery by any Loan Originator, the Depositor, the Servicer, the Indenture
Trustee or the Trust of a breach of any of the foregoing representations and
warranties that materially and adversely affects the value of any Loan or the
interests of the Securityholders therein, the party discovering such breach
shall give prompt written notice (but in no event later than two Business Days
following such discovery) to the other parties. The obligations of the Loan
Originator set forth in Sections 2.05 and 3.06 hereof to cure any breach or to
substitute for or repurchase an affected Loan shall constitute the sole remedies
available hereunder to the Securityholders, the Depositor, the Servicer, the
Indenture Trustee or the Trust respecting a breach of the representations and
warranties contained in this Section 3.02. The fact that the Initial Noteholder
has conducted or has failed to conduct any partial or complete due diligence
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investigation of the Loan Files shall not affect the Securityholders' rights to
demand repurchase or substitution as provided under this Agreement.
Section 3.03 Representations, Warranties and Covenants of the
Servicer.
The Servicer hereby represents and warrants to and covenants
with the other parties hereto and the Securityholders that as of each Closing
Date, as of each Transfer Date and as of each Collateral Value Excess Date:
(a) The Servicer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware
and (i) is duly qualified, in good standing and licensed to carry on
its business in each state where any Mortgaged Property is located, and
(ii) is in compliance with the laws of any such state, in both cases,
to the extent necessary to ensure the enforceability of the Loans in
accordance with the terms thereof and to perform its duties under each
Basic Document to which it is a party and had at all relevant times,
full corporate power to own its property, to carry on its business as
currently conducted, to service the Loans and to enter into and perform
its obligations under each Basic Document to which it is a party;
(b) The execution and delivery by the Servicer of each Basic
Document to which it is a party and its performance of and compliance
with the terms thereof will not violate the Servicer's articles of
incorporation or by-laws 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 or acceleration of, any material
contract, agreement or other instrument to which the Servicer is a
party or which are applicable to the Servicer or any of its assets;
(c) The Servicer has the full power and authority to enter
into and consummate all transactions contemplated by each Basic
Document to which it is a party, has duly authorized the execution,
delivery and performance of each Basic Document to which it is a party
and has duly executed and delivered each Basic Document to which it is
a party. Each Basic Document to which it is a party, assuming due
authorization, execution and delivery by each of the other parties
thereto, constitutes a valid, legal and binding obligation of the
Servicer, enforceable against it in accordance with the terms hereof,
except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium or other similar laws relating
to or affecting the rights of creditors generally, and by general
equity principles (regardless of whether such enforcement is considered
in a proceeding in equity or at law);
(d) The Servicer is not in violation of, and the execution and
delivery of each Basic Document to which it is a party by the Servicer
and its performance and compliance with the terms of each Basic
Document to which it is a party will not constitute a violation with
respect to, any order or decree of any court or any order or regulation
of any federal, state, municipal or governmental agency having
jurisdiction, which violation would materially and adversely affect the
condition (financial or
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otherwise) or operations of the Servicer or materially and adversely
affect the performance of its duties under any Basic Document to which
it is a party;
(e) There are no actions or proceedings against, or
investigations of, the Servicer currently pending with regard to which
the Servicer has received service of process and no action or
proceeding against, or investigation of, the Servicer is, to the
knowledge of the Servicer, threatened or otherwise pending before any
court, administrative agency or other tribunal that (A) if determined
adversely to the Servicer, would prohibit its entering into any Basic
Document to which it is a party, (B) seek to prevent the consummation
of any of the transactions contemplated by any Basic Document to which
it is a party or (C) if determined adversely to the Servicer, would
prohibit or materially and adversely affect the performance by the
Servicer of its obligations under, or the validity or enforceability
of, any Basic Document to which it is a party or the Securities;
(f) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery
and performance by the Servicer of, or compliance by the Servicer with,
any Basic Document to which it is a party or the Securities, or for the
consummation of the transactions contemplated by any Basic Document to
which it is a party, except for such consents, approvals,
authorizations and orders, if any, that have been obtained prior to
such date;
(g) The information, reports, financial statements, exhibits
and schedules furnished in writing by or on behalf of the Servicer to
the Initial Noteholder in connection with the negotiation, preparation
or delivery of the Basic Documents to which it is a party or delivered
pursuant thereto, when taken as a whole, do not contain any untrue
statement of material fact or omit to state any material fact necessary
to make the statements therein, in light of the circumstances under
which they were made, not misleading. All written information furnished
after the date hereof by or on behalf of the Servicer to the Initial
Noteholder in connection with the Basic Documents to which it is a
party and the transactions contemplated thereby will be true, complete
and accurate in every material respect, or (in the case of projections)
based on reasonable estimates, on the date as of which such information
is stated or certified;
(h) The Servicer is solvent and will not be rendered insolvent
as a result of the performance of its obligations pursuant to under the
Basic Documents to which it is a party;
(i) The Servicer acknowledges and agrees that the Servicing
Fee represents reasonable compensation for the performance of its
services hereunder and that the entire Servicing Fee shall be treated
by the Servicer, for accounting purposes, as compensation for the
servicing and administration of the Loans pursuant to this Agreement;
and
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(j) The Servicer is an Eligible Servicer and covenants to
remain an Eligible Servicer or, if not an Eligible Servicer, each
Subservicer is an Eligible Servicer and the Servicer covenants to cause
each Subservicer to be an Eligible Servicer.
It is understood and agreed that the representations,
warranties and covenants set forth in this Section 3.03 shall survive delivery
of the respective Custodial Loan Files to the Indenture Trustee or the Custodian
on its behalf and shall inure to the benefit of the Depositor, the
Securityholders, the Indenture Trustee and the Issuer. Upon discovery by any of
the Loan Originators, the Depositor, the Servicer, the Indenture Trustee, the
Owner Trustee or the Issuer of a breach of any of the foregoing representations,
warranties and covenants that materially and adversely affects the value of any
Loans or the interests of the Securityholders therein, the party discovering
such breach shall give prompt written notice (but in no event later than two
Business Days following such discovery) to the other parties. The fact that the
Initial Noteholder has conducted or has failed to conduct any partial or
complete due diligence investigation shall not affect the Securityholders'
rights to exercise their remedies as provided under this Agreement.
Section 3.04 Representations and Warranties of the Transfer
Obligor.
The Transfer Obligor hereby represents, warrants and covenants
to the other parties hereto and the Securityholders that as of each Closing
Date, as of each Transfer Date and as of each Collateral Value Excess Date:
(a) The Transfer Obligor is a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its organization and has, and had at all relevant
times, full power to own its property, to carry on its business as
currently conducted, to enter into and perform its obligations under
each Basic Document to which it is a party;
(b) The execution and delivery of each Basic Document to which
it is a party and its performance of and compliance with all of the
terms thereof will not violate the Transfer Obligor's articles of
incorporation or by-laws 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 or acceleration of, any material
contract, agreement or other instrument to which the Transfer Obligor
is a party or which is applicable to the Transfer Obligor or any of its
material assets;
(c) The Transfer Obligor has the full power and authority to
enter into and consummate the transactions contemplated by each Basic
Document to which it is a party, has duly authorized the execution,
delivery and performance of each Basic Document to which it is a party
and has duly executed and delivered each Basic Document to which it is
a party. Each Basic Document to which it is a party, assuming due
authorization, execution and delivery by the other party or parties
thereto, constitutes a valid, legal and binding obligation of the
Transfer Obligor, enforceable against it in accordance with the terms
thereof, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization, receivership, moratorium or other
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similar laws relating to or affecting the rights of creditors
generally, and by general equity principles (regardless of whether such
enforcement is considered in a proceeding in equity or at law);
(d) The Transfer Obligor is not in violation of, and the
execution and delivery of each Basic Document to which it is a party by
the Transfer Obligor and its performance and compliance with the terms
of each Basic Document to which it is a party will not constitute a
violation with respect to, any order or decree of any court or any
order or regulation of any federal, state, municipal or governmental
agency having jurisdiction, which violation would materially and
adversely affect the condition (financial or otherwise) or operations
of the Transfer Obligor or its properties or materially and adversely
affect the performance of its duties hereunder;
(e) There are no actions or proceedings against, or
investigations of, the Transfer Obligor currently pending with regard
to which the Transfer Obligor has received service of process and no
action or proceeding against, or investigation of, the Transfer Obligor
is, to the knowledge of the Transfer Obligor, threatened or otherwise
pending before any court, administrative agency or other tribunal that
(A) if determined adversely to the Transfer Obligor, would prohibit its
entering into any of the Basic Documents to which it is a party or
render the Securities invalid, (B) seek to prevent the issuance of the
Securities or the consummation of any of the transactions contemplated
by any of the Basic Documents to which it is a party or (C) if
determined adversely to the Transfer Obligor, would prohibit or
materially and adversely affect the performance by the Transfer Obligor
of its obligations under, or the validity or enforceability of, any of
the Basic Documents to which it is a party or the Securities;
(f) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery
and performance by the Transfer Obligor of, or compliance by the
Transfer Obligor with, any of the Basic Documents to which it is a
party or the Securities, or for the consummation of the transactions
contemplated by any of the Basic Documents to which it is a party,
except for such consents, approvals, authorizations and orders, if any,
that have been obtained prior to the such date;
(g) The Transfer Obligor is solvent, is able to pay its debts
as they become due and has capital sufficient to carry on its business
and its obligations hereunder; it will not be rendered insolvent by the
execution and delivery of any of the Basic Documents to which it is a
party or the assumption of any of its obligations thereunder; no
petition of bankruptcy (or similar insolvency proceeding) has been
filed by or against the Transfer Obligor; and
(h) None of the Basic Documents to which it is a party, nor
any Officer's Certificate, statement, report or other document prepared
by the Transfer Obligor and furnished or to be furnished by it pursuant
to any of the Basic Documents to which it is a party or in connection
with the transactions contemplated thereby contains any untrue
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statement of material fact or omits to state a material fact necessary
to make the statements contained herein or therein not misleading.
Section 3.05 Representations and Warranties Regarding Loans.
The Loan Originator which sold the related Loan hereby makes
the representations and warranties set forth in Annex 1 hereto to the other
parties hereto and the Securityholders, with respect to each such Loan as of the
related Transfer Date (except as otherwise expressly agreed in writing by the
Majority Noteholders).
Section 3.06 Repurchase and Substitution.
(a) It is understood and agreed that the representations and
warranties referenced in Annex 1 hereto shall survive the conveyance of the
Loans to the Indenture Trustee on behalf of the Issuer, and the delivery of the
Securities to the Securityholders. Upon discovery by the Depositor, the
Servicer, the Loan Originators, the Custodian, the Issuer, the Indenture Trustee
or any Securityholder of a breach of any of such representations and warranties
or the representations and warranties of the Loan Originators set forth in
Section 3.02 which materially and adversely affects the value of the Loans or
the interests of the Securityholders in the related Loan (notwithstanding that
such representation and warranty was made to the related Loan Originator's best
knowledge) or which, as a result of the attributes of the aggregate Loan Pool,
constitutes a breach of the representations and warranties set forth in Annex 1,
the party discovering such breach shall give prompt written notice to the
others. The related Loan Originator shall within 5 Business Days of any breach
of a representation or warranty, promptly cure such breach in all material
respects. If within 5 Business Days after the earlier of the related Loan
Originator's discovery of such breach or the related Loan Originator's receiving
notice thereof such breach has not been remedied by the related Loan Originator
and such breach materially and adversely affects the interests of the
Securityholders or in the related Loan (the "Unqualified Loan"), the related
Loan Originator shall promptly either (i) remove such Unqualified Loan from the
Trust (in which case it shall become a Deleted Loan) and substitute one or more
Qualified Substitute Loans in the manner and subject to the conditions set forth
in this Section 3.06 or (ii) repurchase such Unqualified Loan at a purchase
price equal to the Repurchase Price with respect to such Unqualified Loan by
depositing such Repurchase Price in the Collection Account; provided, however,
that if there is not an Overcollateralization Shortfall on the date of such
repurchase (after giving effect to such repurchase) the Loan Originator shall
remit the Alternate Repurchase Price in accordance with Section 5.01(c)(4)(i).
The related Loan Originator shall provide the Servicer, the Indenture Trustee,
the Initial Noteholder and the Issuer with a certification of a Responsible
Officer on the Determination Date next succeeding the end of such 5 Business
Days period indicating whether the related Loan Originator is purchasing the
Unqualified Loan or substituting in lieu of such Unqualified Loan a Qualified
Substitute Loan. To the extent that a Wet Funded Loan is repurchased by the
related Loan Originator by means of a withdrawal of the Sales Price therefor
from the Reserve Account and distribution of such amount to the Noteholders, the
related Loan Originator shall pay an additional amount equal to the Note
Interest Rate on the Principal Balance of such Wet Loan, computed for the period
of time that the Wet Funded
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Loan was included in the Trust Estate; and the amount so withdrawn and such
additional amount shall constitute the Repurchase Price of such Wet Funded Loan.
Any substitution of Loans pursuant to this Section 3.06(a)
shall be accompanied by payment by the related Loan Originator of the
Substitution Adjustment, if any, to be deposited in the Collection Account
pursuant to Section 5.01(b)(1) hereof.
It is understood and agreed that the obligation of the Loan
Originator to repurchase or substitute any such Loan pursuant to this Section
3.06 shall constitute the sole remedy against it with respect to such breach of
the foregoing representations or warranties or the existence of the foregoing
conditions.
(b) As to any Deleted Loan for which the related Loan
Originator substitutes a Qualified Substitute Loan or Loans, the related Loan
Originator shall effect such substitution by delivering (i) to the Indenture
Trustee and Initial Noteholder a certification executed by a Responsible Officer
of the related Loan Originator to the effect that the Substitution Adjustment,
if any, has been remitted to the Noteholders or, if an Overcollateralization
Shortfall exists on the date of substitution (after giving effect to such
substitution), credited to the Collection Account and (ii) to the Custodian the
documents constituting the Custodial Loan File for such Qualified Substitute
Loan or Loans.
The Servicer shall deposit in the Collection Account all
payments received in connection with such Qualified Substitute Loan or Loans
after the date of such substitution. Monthly Payments received with respect to
Qualified Substitute Loans on or before the date of substitution will be
retained by the related Loan Originator. The Issuer will be entitled to all
payments received on the Deleted Loan on or before the date of substitution and
the related Loan Originator shall thereafter be entitled to retain all amounts
subsequently received in respect of such Deleted Loan. The Servicer shall give
written notice to the Issuer, the Indenture Trustee and Initial Noteholder that
such substitution has taken place and the Servicer shall amend the Loan Schedule
to reflect (i) the removal of such Deleted Loan from the terms of this Agreement
and (ii) the substitution of the Qualified Substitute Loan. The related Loan
Originator shall promptly deliver to the Issuer, the Servicer, the Indenture
Trustee and Initial Noteholder, a copy of the amended Loan Schedule. Upon such
substitution, such Qualified Substitute Loan or Loans shall be subject to the
terms of this Agreement in all respects, and the related Loan Originator shall
be deemed to have made, as of the date of substitution, the covenants,
representations and warranties set forth in Section 3.05 hereof with respect to
such Qualified Substitute Loan or Loans. On the date of such substitution, the
Servicer shall cause the Indenture Trustee to release the Deleted Loan from the
lien of the Indenture and the Servicer will cause such Qualified Substitute Loan
to be pledged to the Indenture Trustee under the Indenture as part of the Trust
Estate.
(c) With respect to all Unqualified Loans or other Loans
repurchased by the related Loan Originator pursuant to this Agreement, upon the
deposit of the Repurchase Price therefor into the Collection Account or, if
there is not an Overcollateralization Shortfall on the date of such repurchase
(after giving effect to such repurchase) upon the remittance of the Alternate
Repurchase Price by the Loan Originator in accordance with Section
5.01(c)(4)(i),
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the Indenture Trustee shall assign to the related Loan Originator, without
recourse, representation or warranty, all the Indenture Trustee's right, title
and interest in and to such Unqualified Loans or Loans, which right, title and
interest were conveyed to the Indenture Trustee pursuant to Section 2.01 hereof.
The Indenture Trustee shall, at the expense of the related Loan Originator, take
any actions as shall be reasonably requested by the related Loan Originator to
effect the repurchase of any such Loans.
(d) It is understood and agreed that the obligations of the
related Loan Originator set forth in this Section 3.06 to cure, repurchase or
substitute for an Unqualified Loan constitute the sole remedies hereunder of the
Depositor, the Issuer, the Indenture Trustee, the Owner Trustee and the
Securityholders respecting a breach of the representations and warranties
contained in Section 3.05 hereof. Any cause of action against the related Loan
Originator relating to or arising out of a defect in a Custodial Loan File as
contemplated by Section 2.05 hereof or against the related Loan Originator
relating to or arising out of a breach of any representations and warranties
made in Section 3.05 hereof shall accrue as to any Loan upon (i) discovery of
such defect or breach by any party and notice thereof to the related Loan
Originator, (ii) failure by the related Loan Originator to cure such defect or
breach or purchase or substitute such Loan as specified above, and (iii) demand
upon the related Loan Originator, as applicable, by the Issuer or the Majority
Noteholders for all amounts payable in respect of such Loan.
(e) Neither the Issuer nor the Indenture Trustee shall have
any duty to conduct any affirmative investigation other than as specifically set
forth in this Agreement as to the occurrence of any condition requiring the
repurchase or substitution of any Loan pursuant to this Section or the
eligibility of any Loan for purposes of this Agreement.
Section 3.07 Dispositions.
(a) (i) In consideration of the consideration received from
the Depositor under the Loan Purchase Agreement, and, with respect to ANB and
ABC, from the Issuer hereunder, each Loan Originator hereby agrees and covenants
that in connection with each Disposition it shall effect the following at the
direction of the Disposition Agent with respect to the Loans it sold to the
Issuer:
(A) make such representations and warranties concerning the
Loans as of the "cutoff date" of the related Disposition to the
Disposition Participants as may be necessary to effect the Disposition
and such additional representations and warranties as may be necessary,
in the reasonable opinion of any of the Disposition Participants, to
effect such Disposition; provided, that no Loan Originator shall be
required to make any representation or warranty beyond the scope or
substance of the representations and warranties delineated herein; and
provided further that, to the extent that a Loan Originator has at the
time of the Disposition actual knowledge of any facts or circumstances
that would render any of such representations and warranties materially
false, such Loan Originator may notify the Disposition Participants of
such facts or circumstances and, in such event, shall have no
obligation to make such materially false representation and warranty;
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(B) supply such information, opinions of counsel, letters from
law and/or accounting firms and other documentation and certificates
regarding the origination of the Loans as any Disposition Participant
shall reasonably request to effect a Disposition and enter into such
indemnification agreements customary for such transaction relating to
or in connection with the Disposition as the Disposition Agent may
reasonably require;
(C) make itself available for and engage in good faith
consultation with the Disposition Participants concerning information
to be contained in any document, agreement, private placement
memorandum, or filing with the Securities and Exchange Commission
relating to the Loan Originator or the Loans in connection with a
Disposition and shall use reasonable efforts to compile any information
and prepare any reports and certificates, into a form, whether written
or electronic, suitable for inclusion in such documentation;
(D) to implement the foregoing and to otherwise effect a
Disposition, enter into, or cause its Affiliates to enter into
insurance and indemnity agreements, underwriting or placement
agreements, servicing agreements, purchase agreements and any other
documentation which may be required of or deemed appropriate by the
Disposition Participants in order to effect a Disposition; and
(E) take such further actions as may be reasonably necessary
to effect the foregoing.
provided, that notwithstanding anything to the contrary, (a) the Loan
Originators shall have no liability for the Loans arising from or relating to
the ongoing ability of the related Borrowers to pay under the Loans; (b) none of
the indemnities hereunder shall constitute an unconditional guarantee by the
Loan Originators of collectibility of the Loans; (c) the Loan Originators shall
have no obligation with respect to the financial inability of any Borrower to
pay principal, interest or other amount owing by such Borrower under a Loan; and
(d) the Loan Originators shall only be required to enter into documentation in
connection with Dispositions that is consistent with the prior public
securitizations of affiliates of the Loan Originators, provided that to the
extent an Affiliate of the Initial Noteholder acts as "depositor" or performs a
similar function in a Securitization, additional indemnities and informational
representations and warranties are provided which are consistent with those in
the Basic Documents and may upon request of the Loan Originators be set forth in
a separate agreement between an Affiliate of the Initial Noteholder and the Loan
Originators.
(ii) In connection with Dispositions the Loan Originators (A)
may participate as a concurrent bidder for the Loans subject to such
Whole Loan Sale, but may not pay a price higher than the fair market
value thereof (as determined by the Market Value Agent), and (B) shall
retain such underwriters or sales agents as shall be agreed in writing
between the Servicer and the Initial Noteholder.
(iii) Conditions to Dispositions. The following conditions
shall apply to all Dispositions:
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(A) As long as no Event of Default or Default shall have
occurred and be continuing under the Sale and Servicing Agreement or the
Indenture, the Servicer shall continue to service the Loans included in any
Disposition.
(B) During a Termination Period, the Loan Originators,
the Issuer and the Depositor shall use commercially reasonable efforts to effect
a Disposition at the direction of the Disposition Agent prior to the expiration
of the Termination Period.
(b) In accordance with the terms of Section 3.07(a),
Section 2.01(a)(vi) or upon the exercise of the Put Option, the Issuer shall
effect Dispositions at the direction of the Disposition Agent. In connection
therewith, the Trust agrees to assist the Loan Originators in such Dispositions
and accordingly it shall, at the request and direction of the Disposition Agent:
(i) transfer, deliver and sell all or a portion of the
Loans, as of the "cutoff dates" of the related
Dispositions, to such Disposition Participants as may
be necessary to effect the Dispositions; provided,
that any such sale shall be for "fair market value,"
as determined by the Disposition Agent in its
reasonable discretion;
(ii) deposit the cash Disposition Proceeds into the
Collection Account pursuant to Section 5.01(b)(1) or
otherwise remit the Disposition Proceeds in
accordance with Section 5.01(c)(4)(ii) and retain any
Retained Securities created in any Securitizations in
accordance with the terms of this Agreement or as
otherwise directed in writing by the Noteholders of
100% of the outstanding Notes;
(iii) to the extent that a Securitization creates any
Retained Securities, to accept such Retained
Securities as a part of the Disposition Proceeds; and
(iv) take such further actions as may be reasonably
necessary to effect such Dispositions.
(c) The Servicer hereby covenants that it will take such
actions as may be reasonably necessary to effect Dispositions as the Disposition
Agent may request and direct, including without limitation providing the Loan
Originators and Disposition Participants such information as may be required to
make representations and warranties required of them hereunder.
(d) The right of the Disposition Agent to require the
Issuer and the Loan Originators to effect Dispositions is subject to the
conditions set forth in Section 3.07(a).
(e) The Disposition Agent may effect Whole Loan Sales
upon written notice to the Servicer of its intent to cause the Issuer to effect
a Whole Loan Sale at least 5 Business Days in advance thereof. The Disposition
Agent shall serve as agent for Whole Loan Sales and will receive a reasonable
fee for such services provided that no such fee shall be payable if
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the Loan Originator or its Affiliates purchase such Loans, and no Event of
Default or Default shall have occurred. The Loan Originator or its Affiliates
may concurrently bid to purchase Loans in a Whole Loan Sale; however, it shall
not pay a price in excess of the fair market value thereof as reasonably
determined by the Market Value Agent.
(f) The parties' obligations under this Section 3.07
shall continue notwithstanding the occurrence of an Event of Default.
(g) The Disposition Agent (and the Majority Noteholders
to the extent directing the Disposition Agent) shall be an independent
contractor to the Issuer and shall have no fiduciary obligations to the Issuer
or any of its affiliates. In that connection, the Disposition Agent shall not be
liable for any error of judgment made in good faith and shall not be liable with
respect to any action it takes or omits to take in good faith in the performance
of its duties.
(h) In the event there is a Disposition with respect to
some but not all of the Loans then subject to this Agreement, the Disposition
Agent may select the Loans to be included in such Disposition using the
following criteria selection:
(i) aggregate Loan Balance;
(ii) type of loan (fixed, ARM, intermediate or
HELOC Mortgage Loan);
(iii) LTV;
(iv) average Loan Balance;
(v) production channel;
(vi) lien position; or
(vii) loan originator;
provided that in the event that the Disposition Agent shall select Loans using
any criteria listed above such that fewer than all Loans meeting any selection
criteria are selected, such selection shall be based upon the Transfer Date of
each Loan, commencing with the earliest Transfer Date, and progressing to the
most recent Transfer Date (commonly referred to as the "first in/first out
method").
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Section 3.08 Loan Originator Put; Servicer Call.
(a) Loan Originator Put. The related Loan Originator shall
promptly repurchase, upon the written demand of the Majority Noteholders, any
Put/Call Loan originated by such Loan Originator; provided, however, that such
Loan Originator shall only be required to repurchase such Put/Call Loan whenever
the limits set forth in the definition of Performance Trigger shall have been
exceeded.
(b) Servicer Call. The Servicer may repurchase any Put/Call
Loan at any time. Such Servicer Calls shall be solely at the option of the
Servicer. Prior to exercising a Servicer Call, the Servicer shall deliver
written notice to the Majority Noteholders and the Indenture Trustee which
notice shall identify each Loan to be repurchased and the Repurchase Price or
Alternate Repurchase Price therefor, as applicable.
(c) In connection with each Loan Originator Put, the related
Loan Originator shall deposit such Repurchase Price for the Loans to be
repurchased in the Collection Account; provided, however, that if there is not
an Overcollateralization Shortfall on the date of such repurchase (after giving
effect to such repurchase) the Loan Originator shall remit the Alternate
Repurchase Price in accordance with Section 5.01(c)(4)(i). In connection with
each Servicer Call, the Servicer shall deposit such Repurchase Price for the
Loans to be repurchased in the Collection Account; provided, however, that if
there is not an Overcollateralization Shortfall on the date of such repurchase
(after giving effect to such repurchase) the Loan Originator shall remit the
Alternate Repurchase Price in accordance with Section 5.01(c)(4)(i). The
aggregate Repurchase Price of all Loans transferred pursuant to Section 3.08(a)
shall in no event exceed the Unfunded Transfer Obligation at the time of such
Loan Originator Put.
Section 3.09 Modification of Underwriting Guidelines.
The Servicer shall give the Initial Noteholder prompt written
notification of any material modification or change to the Underwriting
Guidelines.
ARTICLE IV
ADMINISTRATION AND SERVICING OF THE LOANS
Section 4.01 Duties of the Servicer.
(a) Acting directly or through one or more Subservicers as
provided in Section 4.03, the Servicer, as master servicer, shall service and
administer the Loans in accordance with this Agreement and on behalf of the
Indenture Trustee and the Initial Noteholder and with reasonable care, and using
that degree of skill and attention that the Servicer exercises with respect to
comparable mortgage loans that it services for itself or others, and shall have
full power and authority, acting alone, to do or cause to be done any and all
things in connection with such servicing and administration which it may deem
necessary or desirable.
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(b) The duties of the Servicer shall include collecting and
posting of all payments, responding to inquiries of Borrowers or by federal,
state or local government authorities with respect to the Loans, investigating
delinquencies, reporting tax information to Borrowers in accordance with its
customary practices and accounting for collections and furnishing monthly and
annual statements to the Indenture Trustee and the Initial Noteholder, with
respect to distributions, making Servicing Advances pursuant hereto. The
Servicer shall follow its customary standards, policies and procedures in
performing its duties as Servicer. The Servicer shall cooperate with the
Indenture Trustee and furnish to the Indenture Trustee with reasonable
promptness information in its possession as may be necessary or appropriate to
enable the Indenture Trustee to perform its tax reporting duties hereunder. The
Indenture Trustee shall furnish the Servicer or any Subservicer with any powers
of attorney and other documents necessary or appropriate to enable the Servicer
or any Subservicer to carry out its servicing and administrative duties
hereunder.
(c) Without limiting the generality of the foregoing, the
Servicer (i) shall continue, and is hereby authorized and empowered by the
Indenture Trustee, to execute and deliver, on behalf of itself, the Noteholders,
the Issuer and the Indenture 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 Loans and with respect to the
related Mortgaged Properties; (ii) may consent to any modification of the terms
of any Promissory Note not expressly prohibited hereby if the effect of any such
modification will not be to affect materially and adversely the security
afforded by the related Mortgaged Property, the timing of receipt of any
payments required hereby or the interests of the Indenture Trustee or
Noteholders.
(d) The Servicer shall have the right using that degree of
skill and attention that the Servicer exercises with respect to comparable
mortgage loans that it services for itself or others, to approve applications of
Borrowers for consent to (i) partial releases of Mortgages, (ii) alterations to
Mortgaged Properties and (iii) removal, demolition or division of Mortgaged
Properties. No application for approval shall be considered by the Servicer
unless: (x) the provisions of the related Promissory 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 Majority Noteholders) and the Borrower'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 Loan at origination and (z) the lien
priority of the related Mortgage is not adversely affected; provided, however,
that the foregoing requirements (x), (y) and (z) shall not apply to any such
situation described in this paragraph if such situation results from any
condemnation or easement activity by a governmental entity.
(e) The Servicer may, and is hereby authorized to, perform any
of its servicing responsibilities with respect to all or certain of the Loans
through a Subservicer as it may from time to time designate, but no such
designation of a Subservicer shall serve to release the Servicer from any of its
obligations under this Agreement. Such Subservicer shall have all the rights and
powers of the Servicer with respect to such Loans under this Agreement.
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(f) Without limiting the generality of the foregoing, but
subject to Sections 4.12 and 4.13, the Servicer in its own name or in the name
of a Subservicer may be authorized and empowered pursuant to a power of attorney
executed and delivered by the Indenture Trustee to execute and deliver, and may
be authorized and empowered by the Indenture Trustee to execute and deliver, on
behalf of itself, the Noteholders, the Issuer and the Indenture Trustee or any
of them, (i) any and all instruments of satisfaction or cancellation or of
partial or full release or discharge and all other comparable instruments with
respect to the Loans and with respect to the Mortgaged Properties, (ii) to
institute foreclosure proceedings or obtain a deed in lieu of foreclosure so as
to effect ownership of any Mortgaged Property on behalf of the Indenture
Trustee, and (iii) to hold title to any Mortgaged Property upon such foreclosure
or deed in lieu of foreclosure on behalf of the Indenture Trustee; provided,
however, that Section 4.13 shall constitute a power of attorney from the
Indenture Trustee to the Servicer or any Subservicer to execute an instrument of
satisfaction (or assignment of mortgage without recourse) with respect to any
Loan paid in full (or with respect to which payment in full has been escrowed).
Subject to Sections 4.12 and 4.13, the Indenture Trustee shall furnish the
Servicer and any Subservicer with any powers of attorney and other documents as
the Servicer or such Subservicer shall reasonably request to enable the Servicer
and such Subservicer to carry out their respective servicing and administrative
duties hereunder.
(g) The Servicer shall give prompt notice to the Indenture
Trustee and the Initial Noteholder of any action, of which the Servicer has
actual knowledge, to (i) assert a claim against the Trust or (ii) assert
jurisdiction over the Trust.
(h) Servicing Advances incurred by the Servicer or any
Subservicer in connection with the servicing of the Loans (including any
penalties in connection with the payment of any taxes and assessments or other
charges) on any Mortgaged Property shall be recoverable by the Servicer or such
Subservicer to the extent described in Section 4.08.
(i) In the event of a Disposition or other removal of a Loan
from the Trust Estate, the Servicer shall be terminated hereunder with respect
to such Loan.
(j) The Servicer agrees that in the event that any Notes are
outstanding after the applicable Maturity Date, the Servicer will resign and the
Majority Noteholders shall appoint a successor in accordance with provisions of
Section 9.02. The Majority Noteholders may, by written notice to the Servicer
and the Indenture Trustee, elect to have the Servicer continue its duties
hereunder.
Section 4.02 Collection of Certain Loan Payments.
(a) The Servicer shall, to the extent such procedures shall be
consistent with this Agreement and the terms and provisions of any applicable
Mortgage Insurance Policies, follow Accepted Servicing Practices. Consistent
with the foregoing, the 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 Loans, (ii) if a Borrower is in default or about to be
in default
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because of a Borrower's financial condition, arrange with the Borrower a
schedule for the payment of delinquent payments due on the related Loan;
provided, however, the Servicer shall not reschedule the payment of delinquent
payments more than one time in any twelve consecutive months with respect to any
Borrower.
(b) The Servicer shall hold in escrow on behalf of the related
Borrower all Prepaid Installments received by it, and shall apply such Prepaid
Installments as directed by such Borrower and as set forth in the related
Promissory Note.
Section 4.03 Subservicing Agreements Between Servicer and
Subservicers.
The Servicer may enter into Subservicing Agreements for any
servicing and administration of Loans with any institution which is in
compliance with the laws of each state necessary to enable it to perform its
obligations under such Subservicing Agreement and is an Eligible Servicer. The
Servicer shall give notice to the Indenture Trustee and the Initial Noteholder
of the appointment of any Subservicer and shall furnish to the Indenture Trustee
and the Initial Noteholder a copy of the Subservicing Agreement between the
Servicer and such unaffiliated Subservicer. For purposes of this Agreement, the
Servicer shall be deemed to have received payments on Loans when any Subservicer
has received such payments. Any such Subservicing Agreement shall be consistent
with and not violate the provisions of this Agreement.
Section 4.04 Successor Subservicers.
Upon notice to the Indenture Trustee and the Initial
Noteholder, the Servicer shall be entitled to terminate any Subservicing
Agreement in accordance with the terms and conditions of such Subservicing
Agreement and to either itself directly service the related Loans or enter into
a Subservicing Agreement with a successor Subservicer which qualifies under
Section 4.03.
Section 4.05 Liability of Servicer.
The Servicer shall not be relieved of its obligations under
this Agreement notwithstanding any Subservicing Agreement or any of the
provisions of this Agreement relating to agreements or arrangements between the
Servicer and a Subservicer or otherwise, and the Servicer shall be obligated to
the same extent and under the same terms and conditions as if it alone were
servicing and administering the Loans. The Servicer shall be entitled to enter
into any agreement with a Subservicer for indemnification of the Servicer by
such Subservicer and nothing contained in such Subservicing Agreement shall be
deemed to limit or modify this Agreement. The Trust shall not indemnify the
Servicer for any losses due to the Servicer's negligence.
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Section 4.06 No Contractual Relationship Between Subservicer
and Indenture Trustee or the Securityholders.
Any Subservicing Agreement and any other transactions or
services relating to the Loans involving a Subservicer shall be deemed to be
between the Subservicer and the Servicer alone and no party hereto nor the
Securityholders shall be deemed parties thereto and shall have no claims,
rights, obligations, duties or liabilities with respect to any Subservicer
except as set forth in Section 4.07.
Section 4.07 Assumption or Termination of Subservicing
Agreement by Successor Servicer.
In connection with the assumption of the responsibilities,
duties and liabilities and of the authority, power and rights of the Servicer
hereunder by a successor Servicer pursuant to Section 9.02, it is understood and
agreed that the Servicer's rights and obligations under any Subservicing
Agreement then in force between the Servicer and a Subservicer may be assumed or
terminated by the successor Servicer at its option without the payment of any
fee (notwithstanding any contrary provision in any Subservicing Agreement).
The Servicer shall, upon request of the successor Servicer,
but at the expense of the Servicer, deliver to the assuming party documents and
records relating to each Subservicing 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 Subservicing Agreements to the
assuming party, without the payment of any fee by the successor Servicer,
notwithstanding any contrary provision in any Subservicing Agreement.
Section 4.08 Servicing Advances.
The Servicer will pay all "out-of-pocket" costs and expenses
incurred in the performance of its servicing obligations including, but not
limited to, the cost of (i) Preservation Expenses, (ii) any enforcement or
judicial proceedings, including foreclosures, and (iii) the management and
liquidation of Foreclosure Property but is only required to pay such costs and
expenses to the extent the Servicer reasonably believes such costs and expenses
will increase Net Liquidation Proceeds on the related Loan. Each such amount so
paid will constitute a "Servicing Advance". The Servicer may recover Servicing
Advances (x) from the Borrowers to the extent permitted by the Loans, from
Liquidation Proceeds realized upon the liquidation of the related Loan and (y)
as provided in Sections 5.01(c)(1)(ii) or 5.01(c)(3)(i) hereof. In no case may
the Servicer recover Servicing Advances from principal and interest payments on
any Loan or from any amounts relating to any other Loan except as provided
pursuant to Sections 5.01(c)(1)(ii) or 5.01(c)(3)(i) hereof.
Section 4.09 Reserved.
Section 4.10 Maintenance of Insurance.
(a) The Servicer shall cause to be maintained with respect to
each Loan a hazard insurance policy with a generally acceptable carrier that
provides for fire and extended
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coverage, and which provides for a recovery by the Servicer on behalf of the
Trust of insurance proceeds relating to such Loan in an amount not less than the
least of (i) the outstanding principal balance of the Loan, (ii) the minimum
amount required to compensate for loss or damage on a replacement cost basis and
(iii) the full insurable value of the premises.
(b) If the Loan at the time of origination relates to a
Mortgaged Property in an area identified in the Federal Register by the Federal
Emergency Management Agency as having special flood hazards, the 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 Servicer on behalf of the
Trust of insurance proceeds relating to such Loan of not less than the least of
(i) the outstanding principal balance of the 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 Servicer shall indemnify the Indenture Trustee out
of the Servicer's own funds for any loss to the Trust and the Majority
Noteholders resulting from the Servicer's failure to maintain the insurance
required by this Section.
(c) In the event that the Servicer shall obtain and maintain a
blanket policy insuring against fire and hazards of extended coverage on all of
the Loans, then, to the extent such policy names the Servicer as loss payee and
provides coverage in an amount equal to the aggregate unpaid principal balance
on the Loans with co-insurance, and otherwise complies with the requirements of
this Section 4.10, the Servicer shall be deemed conclusively to have satisfied
its obligations with respect to fire and hazard insurance coverage under this
Section 4.10, it being understood and agreed that such blanket policy may
contain a deductible clause, in which case the Servicer shall, in the event that
there shall not have been maintained on the related Mortgaged Property a policy
complying with the preceding paragraphs of this Section 4.10, and there shall
have been a loss which would have been covered by such policy, deposit in the
Collection Account from the Servicer's own funds the difference, if any, between
the amount that would have been payable under a policy complying with the
preceding paragraph of this Section 4.10 and the amount paid under such blanket
policy. Upon the request of the Indenture Trustee, the Issuer or the Initial
Noteholder, the Servicer shall cause to be delivered to the Indenture Trustee,
the Issuer or the Initial Noteholder, a certified true copy of such policy.
Section 4.11 Due-on-Sale Clauses; Assumption and Substitution
Agreements.
When a Mortgaged Property has been or is about to be conveyed
by the Borrower, the Servicer shall, to the extent it has knowledge of such
conveyance or prospective conveyance, exercise its rights to accelerate the
maturity of the related Loan under any "due on sale" clause contained in the
related Mortgage and, in the case of a HELOC Mortgage Loan, the related Credit
Line Agreement or Promissory Note; provided, however, that the Servicer shall
not exercise any such right if (i) the "due on sale" clause, in the reasonable
belief of the Servicer, is not enforceable under applicable law; or (ii) the
Servicer reasonably believes that to permit an assumption of the Loan would not
materially and adversely affect the interest of the Majority Noteholders or of
the Issuer. In such event, the Servicer shall enter into an
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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 Promissory Note and, unless prohibited by applicable law or the Loan
Documents, the Borrower remains liable thereon. If the foregoing is not
permitted under applicable law, the Servicer is authorized to enter into a
substitution of liability agreement with such person, pursuant to which the
original Borrower is released from liability and such person is substituted as
Borrower and becomes liable under the Promissory Note; provided, however, that
to the extent any such substitution of liability agreement would be delivered by
the Servicer outside of its usual procedures for mortgage loans held in its own
portfolio the Servicer shall, prior to executing and delivering such agreement,
obtain the prior written consent of the Majority Noteholders. The Loan, as
assumed, shall conform in all respects to the requirements, representations and
warranties of this Agreement. The Servicer shall notify the Indenture Trustee
that any such assumption or substitution agreement has been completed by
forwarding to the Indenture Trustee the original copy of such assumption or
substitution agreement, which copy shall be added by the Indenture Trustee to
the related Loan File and which shall, for all purposes, be considered a part of
such Loan File to the same extent as all other documents and instruments
constituting a part thereof. The 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 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 Loan shall not be changed nor shall any
required monthly payments of principal or interest be deferred or forgiven. Any
fee collected by the Servicer or the Subservicer for consenting to any such
conveyance or entering into an assumption or substitution agreement shall be
retained by or paid to the Servicer as additional servicing compensation.
Notwithstanding the foregoing paragraph or any other provision
of this Agreement, the 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 Loan by operation of law or any assumption which the Servicer may be
restricted by law from preventing, for any reason whatsoever.
Section 4.12 Realization Upon Defaulted Loans.
(a) The Servicer shall foreclose upon or otherwise comparably
effect the ownership on behalf of the Trust of Mortgaged Properties relating to
defaulted Loans as to which no satisfactory arrangements can be made for
collection of Delinquent payments and which the Servicer has not purchased
pursuant to a Servicer Call. In connection with such foreclosure or other
conversion, the Servicer shall exercise such of the rights and powers vested in
it hereunder, and use the same degree of care and skill in their exercise or
use, as prudent mortgage lenders would exercise or use under the circumstances
in the conduct of their own affairs, including, but not limited to, advancing
funds for the payment of taxes, amounts due with respect to senior liens, and
insurance premiums. Any amounts so advanced shall constitute "Servicing
Advances" within the meaning of Section 4.08 hereof. The Servicer shall sell any
Foreclosure Property as soon as practicable in accordance with the servicing
standard set forth herein. Notwithstanding the generality of the foregoing
provisions, the
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Servicer shall manage, conserve, protect and operate each Foreclosure Property
for the Issuer and the Majority Noteholders solely for the purpose of its prompt
disposition and sale. Pursuant to its efforts to sell such Foreclosure Property,
the Servicer shall either itself or through an agent selected by the Servicer
protect and conserve such Foreclosure Property in the same manner and to such
extent as is customary in the locality where such Foreclosure Property is
located and may, incident to its conservation and protection of the interests of
the Securityholders, rent the same, or any part thereof, as the Servicer deems
to be in the best interest of the Securityholders for the period prior to the
sale of such Foreclosure Property. The 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 Foreclosure Property in
determining whether to foreclose upon or otherwise comparably convert the
ownership of such Foreclosure Property. With respect to any Loan secured by a
mixed use Foreclosure Property, the Servicer shall, prior to foreclosing upon or
otherwise comparably effecting the ownership in the name of the Servicer on
behalf of the Trust, either (x) perform a "phase one environmental study" of
such Foreclosure Property or (y) repurchase such Foreclosure Property at the
Alternate Repurchase Price, unless an Overcollateralization Shortfall exists, in
which case it shall be at the Repurchase Price.
Pursuant to its efforts to sell such Foreclosure Property, the
Servicer shall either itself or through an agent selected by the Servicer
protect and conserve such Foreclosure Property in the same manner and to such
extent as is customary in the locality where such Foreclosure Property is
located and may, incident to its conservation and protection of the interests of
the Securityholders, rent the same, or any part thereof, as the Servicer deems
to be in the best interest of the Securityholders for the period prior to the
sale of such Foreclosure Property. The Servicer shall take into account the
existence of any hazardous substances, hazardous wastes or solid wastes, as such
terms are defined in the Comprehensive Environmental Response Compensation and
Liability Act, the Resource Conservation and Recovery Act of 1976, or other
federal, state or local environmental legislation, on a Mortgaged Property in
determining whether to foreclose upon or otherwise comparably convert the
ownership of such Mortgaged Property.
(b) The Servicer shall determine, with respect to each
Defaulted 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 Loan, whereupon such Loan shall become a "Liquidated
Loan" and shall promptly deliver to the Initial Noteholder a related liquidation
report with respect to such Liquidated Loan.
Section 4.13 Release of Files.
Upon the payment in full of any Loan (including the repurchase
of any Loan or any liquidation of such Loan through foreclosure or otherwise),
or the receipt by the Servicer or any Subservicer of a notification that payment
in full will be escrowed in a manner customary for such purposes, the Servicer
shall deliver to the Custodian a Request for Release and Receipt in accordance
with the terms of the Custodial Agreement. The Servicer shall
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either hold such Custodial File in trust or deliver it to (i) an escrow agent or
(ii) any employee, agent or attorney of the Indenture Trustee, in each case
pending its release by the Servicer, such escrow agent or such employee, agent
or attorney of the Indenture 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 Servicer or any Subservicer is authorized to give, as
attorney-in-fact for the Issuer and the Indenture Trustee and the mortgagee
under the Mortgage which secured the Promissory Note, an instrument of
satisfaction (or assignment of Mortgage without recourse) regarding the
Mortgaged Property relating to such Mortgage, which instrument of satisfaction
or assignment, as the case may be, shall be delivered to the Person or Persons
entitled thereto against receipt therefor of payment in full, it being
understood and agreed that no expense incurred in connection with such
instrument of satisfaction or assignment, as the case may be, shall be
chargeable to the Collection Account. In lieu of executing any such satisfaction
or assignment, as the case may be, the Servicer may prepare and submit to the
Indenture Trustee, a satisfaction (or assignment without recourse, if requested
by the Person or Persons entitled thereto) in form for execution by the
Indenture Trustee with all requisite information completed by the Servicer or
any Subservicer; in such event, the Indenture Trustee shall execute and
acknowledge such satisfaction or assignment, as the case may be, and deliver the
same with the related Custodial File, as aforesaid.
Section 4.14 Access to Information.
(a) The Servicer understands that, in connection with the
transfer of the Notes, Noteholders may request that the Servicer make available
to the Noteholders and to prospective Noteholders annual audited financial
statements of Advanta Corp. if AMCUSA or any Affiliate thereof is the Servicer,
or if not, the Servicer for any or all of the most recently completed five
fiscal years for which such statements are available, which request shall not be
unreasonably denied.
(b) So long as any Notes remain outstanding, each of the
Issuer and any Noteholder shall, at any time and from time to time during
regular business hours, or at such other times upon reasonable notice to the
Servicer and the Servicer shall permit the Issuer and any Noteholder, or its
agents or representatives to:
(i) examine all books, records and documents (including
computer tapes and disks) in the possession or under the control of the Servicer
relating to the Loans, the servicing of the Loans and the compliance of the
terms of the Basic Documents, as may be reasonably requested;
(ii) visit the offices and property of the Servicer for the
purpose of examining such materials described in clause (b)(i) above;
(iii) consult with such professionals as may reasonably be
aware of the operations or condition of the Servicer, including, without
limitation, accountants and auditors, and the Servicer shall cause such
professionals to cooperate with any examination conducted in accordance with the
terms of this Section 4.14 and to provide access to those materials listed in
subclause (b)(i) above in the possession or under the control of such
professionals.
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Section 4.15 Release of Loan Files.
If with respect to any Loan:
(i) such Loan has become an Unqualified Loan and has been
repurchased or a Qualified Substitute Loan has been
conveyed to the Trust pursuant to Section 3.06
hereof;
(ii) such Loan or the related Foreclosure Property has
been sold in connection with the termination of the
Trust pursuant to Section 10.01 hereof;
(iii) such Loan has been repurchased by the related Loan
Originator in accordance with the terms of Section
3.08; or
(iv) such Loan has been included in a Disposition and
concurrently with such release the cash Disposition
Proceeds associated therewith will be deposited into
the Collection Account,
then, in each such case, the Servicer shall deliver a certificate to the effect
that the Servicer has complied with all of its obligations under this Agreement
with respect to such Loan and requesting that the Indenture Trustee release to
the Servicer the related Custodial Loan File, and the Indenture Trustee shall,
within five Business Days or such shorter period as may be required by
applicable law, release, or cause the Custodian to release (unless such
Custodial Loan File has previously been released), the related Custodial Loan
File to the Servicer and execute and deliver such instruments of transfer or
assignment prepared and delivered to it by the Servicer, in each case without
recourse, representation or warranty as shall be necessary to vest ownership of
such Loan in the Servicer or such other Person as may be specified in such
certificate, the forms of any such instrument to be appended to such
certificate.
Section 4.16 Servicing Compensation.
As compensation for its services hereunder, the Servicer shall
be entitled to retain from collections on the Loans or otherwise withdraw from
the Collection Account the Servicing Fee, out of which the Servicer shall pay
any servicing fees owed or payable to any Subservicer. Additional servicing
compensation in the form of investment income on the Collection Account,
Distribution Account and Transfer Obligation Account, assumption fees,
modification fees, and other administrative fees, and any prepayment premiums,
insufficient funds charges, amounts remitted pursuant to Section 5.01 hereof and
late payment charges shall be part of the Servicing Compensation payable to the
Servicer hereunder and shall be paid either by the Servicer's retaining such
additional servicing compensation prior to deposit into the Collection Account
pursuant to Section 5.01(b)(1) hereof or, if deposited into the Collection
Account, as part of the Servicing Compensation withdrawn therefrom pursuant to
Section 5.01 hereof.
The Servicer shall be required to pay all expenses incurred by
it in connection with its servicing activities hereunder and shall not be
entitled to reimbursement therefor
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except as specifically provided for herein. The Servicer also agrees to pay all
reasonable costs and expenses incurred by any successor Servicer or the
Indenture Trustee in replacing the Servicer in the event of a default by the
Servicer in the performance of its duties under the terms and conditions of this
Agreement.
Section 4.17 Statement as to Compliance and Financial
Statements.
The Servicer will deliver to the Initial Noteholder:
(a) not later than 105 days following the end of each calendar
year (beginning in March, 2000), an Officer's Certificate stating that (i) a
review of the activities of the Servicer during the preceding year and of
performance under this Agreement has been made under such officer's supervision
and (ii) to the best of such officer's knowledge, based on such review, the
Servicer has fulfilled all of its obligations under this Agreement throughout
such year, or, if there has been a default in the fulfillment of any such
obligation, specifying each such default known to such officer and the nature
and status thereof and what action the Servicer proposes to take with respect
thereto.
(b) As soon as available and in no event later than 5 Business
Days after the filing thereof with the Commission each of the first three
quarterly fiscal periods of Advanta Corp., a Quarterly Report on "Form 10-Q"
filed by Advanta Corp. with the Commission.
(c) As soon as available and in no event later than 5 Business
Days after the filing thereof with the Commission, an Annual Report on "Form
10-K" filed by Advanta Corp. with the Commission.
(d) As soon as available and in any event within 5 Business
Days after the delivery thereof to its shareholders, the annual report that is
delivered to its shareholders.
(e) Within 10 days after service of process on any of the
following, notice of all legal or arbitrable proceedings affecting the Servicer
or any of its subsidiaries that questions or challenges the validity or
enforceability of any of the Basic Documents or as to which there is a
reasonable likelihood of adverse determination which would result in a material
adverse effect with respect to the value of the Loans or the interests of any of
the Securityholders therein. The Servicer shall also furnish and certify to the
requesting party such other information as to (i) its organization, activities
and personnel relating to the performance of the obligations of the Servicer
hereunder, (ii) its financial condition, (iii) the Loans and (iv) the
performance of the obligations of any Subservicer under the related Subservicing
Agreement, in each case as the Indenture Trustee or the Issuer may reasonably
request from time to time.
Section 4.18 Independent Public Accountants' Servicing Report.
Not later than 105 days following the end of each calendar
year (beginning in March, 2000), the Servicer at its expense shall cause a
nationally recognized firm of Independent Certified Public Accountants (which
may also render other services to the Servicer) to furnish a statement to the
Indenture Trustee, the Depositor and the Initial Noteholder to the effect that
such firm has examined certain documents and records relating to
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the servicing of the Loans under this Agreement or of loans under pooling and
servicing agreements (including the Loans and this Agreement) substantially
similar to one another (such statement to have attached thereto a schedule
setting forth the pooling and servicing agreements covered thereby) and that, on
the basis of such examination conducted substantially in compliance with USAP or
SAS 70, such firm confirms that such servicing has been conducted in compliance
with such pooling and servicing agreements except for such significant
exceptions or errors in records that, in the opinion of such firm, USAP or SAS
70 requires it to report, each of which errors and omissions shall be specified
in such statement. In rendering such statement, such firm may rely, as to
matters relating to direct servicing of loans by Subservicers, upon comparable
statements for examinations conducted substantially in compliance with USAP or
SAS 70 (rendered within one year of such statement) of Independent certified
public accountants with respect to the related Subservicer. Notwithstanding the
foregoing, in the event that the Independent Certified Public Accountants
conduct reviews of the Servicer pursuant to SAS 70, then SAS 70 rather than USAP
shall govern such reviews.
Section 4.19 ARMs.
The Servicer shall enforce each ARM in accordance with its
terms and shall timely calculate, record, report and apply all interest rate
adjustments in accordance with the related Promissory Note. The Servicer's
records shall, at all times, reflect the then Loan Interest Rate and monthly
payment and the Servicer shall timely notify the Borrower of any changes to the
Loan Interest Rate or the Borrower's monthly payment. If the Servicer fails to
make either a timely or accurate adjustment to the Loan Interest Rate or monthly
payment or to notify the Borrower of such adjustments, the Servicer shall pay
from its own funds any shortage. If the Servicer's failure to make a scheduled
change affects the Trust's rights to make future adjustments under the terms of
the ARM, the Servicer shall purchase the ARM, in accordance with the provisions
of the last sentence of Section 3.08(b). Any amounts paid by the Servicer
pursuant to this Section shall not be an advance and shall not be reimbursable
from the proceeds of any Loan.
Section 4.20 Year 2000 Compliance.
By December 31, 1999, the Servicer will maintain all hardware,
firmware or software, or any system consisting of one or more thereof,
including, without limitation, any and all enhancements, upgrades,
customizations, modifications, maintenance and the like (collectively, the
"System"), used by or for the benefit of the Servicer in order for the Servicer
to perform its obligations under the Basic Documents to which it is a party in a
manner that permits the Servicer to record, store, process, provide and where
appropriate, insert, true and accurate dates and calculations for dates and
spans, including and following January 1, 2000 (herein referred to as "Year 2000
Compliant"). In addition, "Year 2000 Compliant" shall mean that the System will
support the ability for its continued normal usage such that neither the
performance nor the correct functioning of the System will be affected by the
approach, and passing into, the year 2000.
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Section 4.21 Inspections by the Majority Noteholders and the
Indenture Trustee.
At any reasonable time and from time to time upon reasonable
notice, the Majority Noteholders, the Indenture Trustee, or any agents or
representatives thereof may inspect the Servicer's servicing operations and
discuss the servicing operations of the Servicer with any of its officers or
directors. The costs and expenses incurred by the Servicer or its agents or
representatives in connection with any such examinations or discussions shall be
paid by the Servicer.
Section 4.22 Errors and Omissions Insurance.
The 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 similar size.
ARTICLE V
ESTABLISHMENT OF TRUST ACCOUNTS; TRANSFER OBLIGATION
Section 5.01 Collection Account and Distribution Account;
Reserve Account.
(a) (1) Establishment of Collection Account. The Servicer, for
the benefit of the Noteholders, shall cause to be established and maintained one
or more Collection Accounts (collectively, the "Collection Account"), which
shall be separate Eligible Accounts entitled "Collection Account, Bankers Trust
Company of California, N.A., as Indenture Trustee, for the benefit of the
Advanta Home Equity Loan Owner Trust 1998-MS1". The Collection Account shall be
maintained with the Indenture Trustee or any other depository institution which
satisfies the requirements set forth in the definition of Eligible Account.
Funds in the Collection Account shall be invested in accordance with Section
5.03 hereof.
The Collection Account shall be established, as of the date
hereof, as an Eligible Account pursuant to the definition thereof.
(2) Establishment of Distribution Account. No later than the
date hereof, the Servicer, for the benefit of the Noteholders, shall cause to be
established and maintained with Bankers Trust Company of California, N.A., one
or more Distribution Accounts (collectively, the "Distribution Account"), which
shall be separate Eligible Accounts, entitled "Distribution Account, Bankers
Trust Company of California, N.A., as Indenture Trustee, for the benefit of the
Advanta Home Equity Loan Owner Trust 1998-MS1."
(3) Establishment of Reserve Account. No later than the date
hereof, the Servicer, for the benefit of the Noteholders, shall cause to be
established and maintained with Bankers Trust Company of California, N.A. a
Reserve Account (the "Reserve Account"), which shall be an Eligible Account,
entitled "Reserve Account, Bankers Trust Company of California, N.A., as
Indenture Trustee, for the benefit of the Advanta Home Equity Loan
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Owner Trust 1998-MS1." Funds in the Reserve Account shall be invested in
accordance with Section 5.03 hereof.
(b)(1) Deposits to Collection Account. The Servicer shall
deposit or cause to be deposited to the Collection Account (without
duplication):
(i) all payments on or in respect of each Loan collected
on or after the related Transfer Cutoff Date net of
any Servicing Compensation retained therefrom and
excluding any Premium Recapture within two (2)
Business Days after receipt thereof;
(ii) all Net Liquidation Proceeds pursuant to Section 4.12
hereof within two (2) Business Days after receipt
thereof;
(iii) all Mortgage Insurance Proceeds not required to be
applied to restoration or repair of Mortgaged
Property pursuant to Section 4.10 within two (2)
Business Days after receipt thereof;
(iv) all Released Mortgaged Property Proceeds within two
(2) Business Days after receipt thereof;
(v) any amounts payable in connection with the repurchase
of any Loan and the amount of any Substitution
Adjustment pursuant to Sections 2.05 and 3.06 hereof
concurrently with payment thereof;
(vi) any Repurchase Price payable in connection with a
Servicer Call pursuant to Section 3.08(b) hereof
concurrently with payment thereof;
(vii) the deposit of the Termination Price under Section
10.02 hereof concurrently with payment thereof;
(viii) any Repurchase Price payable in connection with a
Loan Originator Put remitted by the related Loan
Originator pursuant to Section 3.08 hereof in
accordance with the last sentence of this Section
5.01(b)(1);
(ix) any cash Disposition Proceeds pursuant to Section
3.07 in accordance with the last sentence of this
Section 5.01(b)(1); and
(x) any payments received under Hedging Instruments or
the return of amounts by the Hedging Counterparty
pledged pursuant to prior Hedge Funding Requirements
in accordance with the last sentence of this Section
5.01(b)(1).
Except as provided in Section 5.01(c)(4), the Servicer agrees
that it will cause the Loan Originator, Borrower or other appropriate Person
paying such amounts, as the case may be, to remit directly to the Indenture
Trustee for deposit into the Collection Account all amounts referenced in
clauses (vii), (viii), (ix) and (x) to the extent such amounts are in excess
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of a Monthly Payment on the related Loan. To the extent the Servicer receives
any such amounts, it will deposit them into the Collection Account on the same
Business Day as receipt thereof.
(2) Deposits to the Reserve Account. On any Transfer Date
on which Wet Funded Loans are purchased by the Issuer and pledged to the
Noteholders, the Initial Noteholder shall deposit into the Reserve Account the
Sales Prices for each such Wet Funded Loan.
(c) Withdrawals From Collection Account; Deposits to
Distribution Account.
(1) Withdrawals From Collection Account -- Reimbursement
Items. The Indenture Trustee, at the written direction of the Servicer, shall
periodically but in any event on each Determination Date, make the following
withdrawals from the Collection Account prior to any other withdrawals, in no
particular order of priority:
(i) to withdraw any amount not required to be deposited
in the Collection Account or deposited therein in
error;
(ii) to withdraw the Servicing Advance Reimbursement
Amount; and
(iii) to withdraw net investment earnings and remit such
amounts to the Servicer, as provided in Section
5.03(b)(1); and
(iv) to clear and terminate the Collection Account in
connection with the termination of this Agreement.
(2) Indenture Trustee Deposits to Distribution Account -
Payment Dates.
(A) On the Business Day prior to each Payment Date, the
Indenture Trustee shall deposit into the Distribution Account such amounts as
are required from the Transfer Obligation Account pursuant to Sections 5.05(e),
5.05(f), 5.05(g) and 5.05(h).
(B) After making all withdrawals specified in Section
5.01(c)(1) above, on each Remittance Date, the Indenture Trustee (based on
information provided by the Servicer for such Payment Date), shall withdraw the
Monthly Remittance Amount from the Collection Account not later than 5:00 P.M.
Noon, New York City time and deposit such amount into the Distribution Account.
(C) The Indenture Trustee shall make such deposits into
the Distribution Account from the Reserve Account as required by Section
5.01(d)(2).
(3) Withdrawals From Distribution Account -- Payment
Dates. On each Payment Date, to the extent funds are available in the
Distribution Account, the Indenture Trustee (based on the information provided
by the Servicer contained in the Servicer's
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Remittance Report for such Payment Date) shall make withdrawals therefrom for
application in the following order of priority:
(i) to distribute on such Payment Date the following
amounts in the following order: (a) to the Servicer,
(x) an amount equal to the Servicing Compensation and
all unpaid Servicing Compensation from prior Payment
Dates (to the extent not retained from collections),
including net investment earnings on the Distribution
Account and (y) all Nonrecoverable Servicing Advances
not previously reimbursed, (b) to the Servicer, in
trust for the Owner Trustee, an amount equal to the
Owner Trustee Fee and all unpaid Owner Trustee Fees
from prior Payment Dates;
(ii) to distribute on such Payment Date, the Hedge Funding
Requirement to the appropriate Hedging
Counterparties; provided, that only cash on or in
respect of fixed rate Loans (including cash
Disposition Proceeds received therefrom) shall be
distributed for such purpose and; provided, further,
that amounts distributed pursuant to clause (i) above
to the extent not attributable to a specific Loan
shall be deemed paid from fixed rate Loans, pro rata
based on their aggregate Principal Balances relative
to the Pool Principal Balance on such Payment Date;
(iii) to the holders of the Notes pro rata, the sum of the
Interest Payment Amount for such Payment Date and the
Interest Carry-Forward Amount for such Payment Date;
(iv) to the holders of the Notes pro rata, the sum of the
Overcollateralization Shortfall for such Payment Date
for such Payment Date; provided, however, that if (a)
a Rapid Amortization Trigger shall have occurred and
not been Deemed Cured or (b) an Event of Default
under the Indenture or Default shall have occurred,
the holders of the Notes shall receive, in respect of
principal, all remaining amounts on deposit in the
Distribution Account;
(v) to the appropriate Person, amounts in respect of
Issuer/Depositor Indemnities (as defined in the Trust
Agreement) and Due Diligence Fees until such amounts
are paid in full;
(vi) to the Transfer Obligation Account, all remaining
amounts until the balance therein equals the Transfer
Obligation Target Amount; and
(vii) to the holders of the Trust Certificates of record on
the next preceding Record Date, pro rata, all amounts
remaining therein.
(4) (i) If a Loan Originator or the Servicer, as
applicable, repurchases a Loan pursuant to Section 2.05, 3.06(a), 3.06(c), 3.08
(b) or 3.08(c), as applicable, and on the date of such repurchase there is not
an Overcollateralization Shortfall (after giving effect to
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such repurchase), then the Majority Noteholders and the Issuer shall deem such
date to be an additional Payment Date and will provide written notice to the
Indenture Trustee of such additional Payment Date. On such additional Payment
Date, the Loan Originator or Servicer, in satisfaction of its obligations under
2.05, 3.06(a), 3.06(c), 3.08 (b) or 3.08(c) and in satisfaction of the
obligations of the Issuer, to distribute such amounts to the Noteholders
pursuant to Section 5.01(c), shall remit to the Noteholders, on behalf of the
Issuer, an amount equal to the Alternate Repurchase Price, and the Note
Principal Balance will be reduced accordingly. Such amounts shall be deemed
deposited into the Collection Account and the Distribution Account, as
applicable, and such amounts will be deemed distributed pursuant to the terms of
Section 5.01(c).
(ii) To the extent that there is deposited in the Collection
Account any amounts referenced in Section 5.01(b)(1)(v), (vi), (vii), (viii) and
(ix) and the Majority Noteholders and the Issuer may agree, upon reasonable
written notice to the Indenture Trustee, to additional Payment Dates, provided
that such notice may provide that the Servicer shall, instead of depositing into
the Collection Account the amounts referenced in Section 5.01(b)(1)(v), (vi),
(vii), (viii) and (ix), the Servicer shall distribute such amounts to the
Persons specified in such written notice. The Issuer and the Majority Noteholder
shall give the Indenture Trustee at least one (1) Business Day's written notice
prior to such additional Payment Date and such notice shall specify each amount
(if any) in Section 5.01(c) to be withdrawn from the Collection Account and
Distribution Account on such day.
Notwithstanding that the Notes have been paid in full, the
Indenture Trustee and the Servicer shall continue to maintain the Distribution
Account hereunder until this Agreement has been terminated.
(d) Withdrawals from the Reserve Account.
(1) On each day on which (A) the Indenture Trustee shall have
been directed by the Initial Noteholder pursuant to instructions substantially
in the form of Exhibit D hereto, which instructions shall be delivered by the
Initial Noteholder by no later than 12:00 p.m. Noon New York City time on the
Business Day following any day on which the Indenture Trustee and the Initial
Noteholder shall have received, by 6:00 p.m. New York City time, a Loan Schedule
and Exceptions Report, complete and in form and substance satisfactory to the
Initial Noteholder, confirming that the Custodial Loan File has been received by
the Custodian for the related Wet Funded Loan in accordance with Section 2.04
(provided, that if such Loan Schedule and Exceptions Report shall be received
after 6:00 p.m. New York City time it shall be deemed to have been received by
6:00 p.m. New York City time on the following Business Day) or on which (B) the
Indenture Trustee and the Initial Noteholder shall have confirmed receipt of the
Repurchase Price on account of such Wet Funded Loan in the Collection Account
paid pursuant to Section 2.05(b), the Indenture Trustee shall distribute an
amount equal to the Sales Price for such Wet Funded Loan to the applicable Loan
Originator that conveyed such Wet Funded Loan, as the assignee of the Reserve
Account Right.
(2) For each Wet Funded Loan for which the Custodian shall not
have received a Custodial Loan File in accordance with Section 2.04, on or
before the related Wet
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Custodial File Delivery Date the related Loan Originator, upon demand of the
Initial Noteholder or Issuer, shall repurchase such Wet Funded Loan pursuant to
Section 2.05(b)(ii), provided that if the related Repurchase Price is not
received prior to 1:00 P.M., New York City time on such date, the Indenture
Trustee, at the direction of the Initial Noteholder, shall withdraw from the
Reserve Account and deposit into the Distribution Account for payment to the
Noteholders, an amount equal to the Sales Price for such Loan.
(3) The Indenture Trustee shall withdraw from the Reserve
Account any net investment earnings then on deposit therein, and remit such
amounts to the Loan Originators, as provided in Section 5.03(b)(1) hereof.
(4) Notwithstanding anything set forth in the Basic Documents,
the Reserve Account shall be applied in accordance with this Section 5.01(d)
regardless of the occurrence of a Default or Event of Default.
Section 5.02 Payments to Securityholders.
(a) All distributions made on the Notes on each Payment Date
will be made on a pro rata basis among the Noteholders of record of the Notes on
the next preceding Record Date based on the Percentage Interest represented by
their respective Notes, without preference or priority of any kind, and, except
as otherwise provided in the next succeeding sentence, shall be made by wire
transfer of immediately available funds to the account of such Noteholder, if
such Noteholder shall own of record Notes having a Percentage Interest (as
defined in the Indenture) of at least 20% and shall have so notified the
Indenture Trustee, 5 Business Days prior to the related Record Date and
otherwise by check mailed to the address of such Noteholder appearing in the
Notes Register. The final distribution on each Note will be made in like manner,
but only upon presentment and surrender of such Note at the location specified
in the notice to Noteholders of such final distribution.
(b) All distributions made on the Trust Certificates on each
Payment Date will be made pro rata among the holders of the Trust Certificates
of record on the next preceding Record Date based on their Percentage Interests
(as defined in the Trust Agreement), without preference or priority of any kind,
and, except as otherwise provided in the next succeeding sentence, shall be made
by wire transfer of immediately available funds to the account of each such
holder, if such holder shall be the Depositor, ANB or ABC or an Affiliate
thereof or shall own of record a Trust Certificate in an original denomination
aggregating at least 25% of the Percentage Interests (as defined in the Trust
Agreement) and shall have so notified the Indenture Trustee 5 Business Days
prior to the related Record Date, and otherwise by check mailed to the address
of such Certificateholder appearing in the Certificate Register. The final
distribution on each Trust Certificate will be made in like manner, but only
upon presentment and surrender of such Trust Certificate at the location
specified in the notice to holders of the Trust Certificates of such final
distribution. Any amount distributed to the holders of the Trust Certificates on
any Payment Date shall not be subject to any claim or interest of the
Noteholders. In the event that at any time there shall be more than one
Certificateholder, the Indenture Trustee shall be entitled to reasonable
additional
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compensation from the Servicer for its obligations hereunder, including, without
limitation, its obligations to distribute funds and produce and deliver
statements.
(c) For purposes of this Section 5.02, the sole holders of the
Trust Certificates shall be deemed to be the Depositor, ANB and ABC until such
time as the Depositor, ANB or ABC provides written notice to the contrary to the
Indenture Trustee and the Initial Noteholder.
Section 5.03 Trust Accounts; Trust Account Property.
(a) Control of Trust Accounts. Each of the Trust Accounts
established hereunder has been pledged by the Issuer to the Indenture Trustee
under the Indenture and shall be subject to the lien of the Indenture. Amounts
distributed from each Trust Account in accordance with the terms of this
Agreement shall be released for the benefit of the Securityholders from the
Trust Estate upon such distribution thereunder or hereunder. The Indenture
Trustee shall possess all right, title and interest in and to all funds on
deposit from time to time in the Trust Accounts and in all proceeds thereof
(excluding all investment earnings thereon) and all such funds, investments,
proceeds and income shall be part of the Trust Account Property and the Trust
Estate. If, at any time, any Trust Account ceases to be an Eligible Account, the
Indenture Trustee shall, within ten Business Days (or such longer period, not to
exceed 30 calendar days, with the prior written consent of the Majority
Noteholders) (i) establish a new Trust Account as an Eligible Account, (ii)
terminate the ineligible Trust Account, and (iii) transfer any cash and
investments from such ineligible Trust Account to such new Trust Account.
With respect to the Trust Accounts, the Issuer and the
Indenture Trustee agree, that each such Trust Account shall be subject to the
sole and exclusive dominion, custody and control of the Indenture Trustee for
the benefit of the Noteholders, and, except as may be consented to in writing by
the Majority Noteholders, the Indenture Trustee shall have sole signature and
withdrawal authority with respect thereto.
The Servicer shall have the power, revocable by the Majority
Noteholder or by the Indenture Trustee, to instruct the Indenture Trustee to
make withdrawals and payments from the Trust Accounts for the purpose of
permitting the Servicer to carry out its duties hereunder or permitting the
Indenture Trustee or Owner Trustee to carry out their respective duties herein
or under the Indenture or the Trust Agreement, as applicable.
(b)(1) Investment of Funds. Funds held in the Distribution
Account, the Collection Account, Reserve Account and the Transfer Obligation
Account may be invested (to the extent practicable and consistent with any
requirements of the Code) in Permitted Investments, as directed by the Servicer
prior to the occurrence of an Event of Default and by the Majority Noteholders
thereafter, in writing or facsimile transmission confirmed in writing by the
Servicer or Majority Noteholders, as applicable. In the event the Indenture
Trustee has not received such written direction, such Funds shall be invested in
any investment described in clause (i) of the definition of Permitted
Investments. Funds held in the Reserve Account may be invested at the direction
of the Majority Noteholders in the same method. In any case,
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funds in the Collection Account, Reserve Account and the Transfer Obligation
Account must be available for withdrawal without penalty, and any Permitted
Investments must mature or otherwise be available for withdrawal, one Business
Day prior to the next Payment Date and shall not be sold or disposed of prior to
its maturity subject to Subsection (b)(2) of this Section. All interest and any
other investment earnings on amounts or investments held in the Trust Accounts
(other than the Reserve Account) shall be paid to the Servicer immediately upon
receipt by the Indenture Trustee. All investment income on the Reserve Account
shall be distributed to the Loan Originators as assignees of the Reserve Account
Right in accordance with the applicable Allocation Percentage or as such parties
may otherwise direct by the Indenture Trustee upon receipt. All Permitted
Investments in which funds in the Collection Account, Reserve Account or the
Transfer Obligation Account are invested must be held by or registered in the
name of "Bankers Trust Company of California, N.A., as Indenture Trustee, in
trust for the Advanta Home Equity Loan Owner Trust 1998-1."
(2) Insufficiency and Losses in Trust Accounts. If any amounts
are needed for disbursement from the Collection Account, Reserve Account or the
Transfer Obligation Account held by or on behalf of the Indenture Trustee and
sufficient uninvested funds are not available to make such disbursement, the
Indenture Trustee shall cause to be sold or otherwise converted to cash a
sufficient amount of the investments in the Collection Account, Reserve Account
or the Transfer Obligation Account, as the case may be. The Indenture Trustee
shall not be liable for any investment loss or other charge resulting therefrom,
unless such loss or charge is caused by the failure of the Indenture Trustee to
perform in accordance with written directions provided pursuant to this Section
5.03.
If any losses are realized in connection with any investment
in the Collection Account or the Transfer Obligation Account pursuant to this
Agreement, then the Servicer shall deposit the amount of such losses (to the
extent not offset by income from other investments in the Collection Account or
the Transfer Obligation Account, as the case may be) into the Collection
Account, or the Transfer Obligation Account, as the case may be, immediately
upon the realization of such loss, provided that all such losses incurred with
respect to Permitted Investments in the Reserve Account specified in clause (j)
of the definition thereof shall be reimbursed by the Initial Noteholder. All
interest and any other investment earnings on amounts held in the Collection
Account, Reserve Account and the Transfer Obligation Account shall be taxed to
the Issuer and for federal and state income tax purposes the Issuer shall be
deemed to be the owner of the Collection Account, Reserve Account and/or the
Transfer Obligation Account, as the case may be.
(c) Subject to Section 6.01 of the Indenture, the Indenture
Trustee shall not in any way be held liable by reason of any insufficiency in
any Trust Account held by the Indenture Trustee resulting from any investment
loss on any Permitted Investment included therein.
(d) With respect to the Trust Account Property, the Indenture
Trustee acknowledges and agrees that:
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(1) any Trust Account Property that is held in deposit
accounts shall be held solely in the Eligible Accounts, subject to the last
sentence of Subsection (a) of this Section 5.03; and each such Eligible Account
shall be subject to the sole and exclusive dominion, custody and control of the
Indenture Trustee; and, without limitation on the foregoing, the Indenture
Trustee shall have sole signature authority with respect thereto;
(2) any Trust Account Property that constitutes Physical
Property shall be delivered to the Indenture Trustee in accordance with
paragraph (a) of the definition of "Delivery" in Section 1.01 hereof and shall
be held, pending maturity or disposition, solely by the Indenture Trustee or a
financial intermediary (as such term is defined in Section 8-102(a)(14) of the
UCC) acting solely for the Indenture Trustee;
(3) any Trust Account Property that is a book-entry security
held through the Federal Reserve System pursuant to federal book-entry
regulations shall be delivered in accordance with paragraph (b) of the
definition of "Delivery" in Section 1.01 hereof and shall be maintained by the
Indenture Trustee, pending maturity or disposition, through continued book-entry
registration of such Trust Account Property as described in such paragraph; and
(4) any Trust Account Property that is an "uncertificated
security" under Article 8 of the UCC and that is not governed by clause (3)
above shall be delivered to the Indenture Trustee in accordance with paragraph
(c) of the definition of "Delivery" in Section 1.01 hereof and shall be
maintained by the Indenture Trustee, pending maturity or disposition, through
continued registration of the Indenture Trustee's (or its nominee's) ownership
of such security. Funds in the Collection Account shall be invested in
accordance with Section 5.03 hereof.
Section 5.04 Advance Account.
(a) The Servicer shall cause to be established and maintained
in its name, an Advance Account (the "Advance Account"), which need not be a
segregated account. The Advance Account shall be maintained with any financial
institution the Servicer elects.
(b) Deposits and Withdrawals. Amounts in respect of the
transfer of Additional Note Principal Balances and Loans shall be deposited in
and withdrawn from the Advance Account as provided in Sections 2.01(c) and 2.06
hereof, Section 3.01 of the Note Purchase Agreement.
Section 5.05 Transfer Obligation Account.
(a) The Servicer, for the benefit of the Noteholders, shall
cause to be established and maintained in the name of the Indenture Trustee a
Transfer Obligation Account (the "Transfer Obligation Account"), which shall be
a separate Eligible Account and may be interest-bearing, entitled "Transfer
Obligation Account, Bankers Trust Company of California, N.A., as Indenture
Trustee, in trust for the Advanta Home Equity Loan Owner Trust 1998-MS1." The
Transfer Obligation Account shall be maintained with the Indenture Trustee. The
Indenture Trustee shall have no monitoring or calculation obligation with
respect to
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withdrawals from the Transfer Obligation Account. Amounts in the Transfer
Obligation Account shall be invested in accordance with Section 5.03.
(b) In accordance with Section 5.06, the Transfer Obligor
shall deposit into the Transfer Obligation Account such amounts as may be
required thereby.
(c) (i) On each Payment Date, the Indenture Trustee will
deposit in the Transfer Obligation Account any amounts required to be deposited
therein pursuant to Section 5.01(c)(3)(v).
(ii) On each Collateral Value Excess Date, the Issuer
shall deposit in the Transfer Obligation Account any amounts required to be
deposited therein pursuant to Section 2.06(b).
(d) On the date of each Disposition, the Indenture Trustee
shall withdraw from the Transfer Obligation Account such amount on deposit
therein as may be requested by the Disposition Agent in writing to effect such
Disposition.
(e) On each Payment Date, the Indenture Trustee, upon the
written direction of the Servicer shall withdraw from the Transfer Obligation
Account and deposit into the Distribution Account on such Payment Date the
lesser of (x) the amount then on deposit in the Transfer Obligation Account and
(y) the Interest Carry-Forward Amount as of such date.
(f) If with respect to any Business Day the
Overcollateralization Shortfall exceeds the lesser of (x) 1% of the aggregate
Principal Balance of all Loans as of the prior Business Day and (y) $500,000,
the Indenture Trustee, upon the written direction of the Servicer shall withdraw
from the Transfer Obligation Account and deposit into the Distribution Account
on the related Payment Date the lesser of the amount then on deposit in the
Transfer Obligation Account and the amount of such Overcollateralization
Shortfall as of such date.
(g) If with respect to any Payment Date there shall exist a
Hedge Funding Requirement, the Indenture Trustee, upon the written direction of
the Servicer shall withdraw from the Transfer Obligation Account and deposit
into the Distribution Account on the Business Day prior to such Payment Date the
lesser of (x) the amount then on deposit in the Transfer Obligation Account
(after making all other required withdrawals therefrom with respect to such
Payment Date) and (y) the amount of such Hedge Funding Requirement as of such
date.
(h) In the event of the occurrence of an Event of Default
under the Indenture, the Indenture Trustee shall withdraw all remaining funds
from the Transfer Obligation Account and apply such funds in satisfaction of the
Notes as provided in Section 5.04(b) of the Indenture.
(i) The Indenture Trustee shall withdraw from the Transfer
Obligation Account any net investment earnings on deposit therein, and remit
such amounts to the Servicer, as provided in Section 5.03(b)(1) hereof.
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(j) To the extent this Agreement requires the deposit of any
amounts into the Transfer Obligation Account, if the Majority Noteholders and
the Transfer Obligor agree in writing to distribute such amounts to persons
specified in such written notice, then upon reasonable notice to the Indenture
Trustee such amounts may be distributed in accordance with such written notice.
All such amounts shall be deemed deposited and withdrawn from the Transfer
Obligation Account for purposes of making calculations hereunder.
(k) (i) The Indenture Trustee shall return to the Transfer
Obligor (as the Transfer Obligor shall agree) all amounts on deposit in the
Transfer Obligation Account (after making all other withdrawals pursuant to this
Section 5.05) until the Majority Noteholders provide written notice to the
Indenture Trustee (with a copy to the Transfer Obligor) of the occurrence of a
default or event of default (however defined) under any Basic Document with
respect to the Issuer, Transfer Obligor, the Depositor, ANB or ABC or any of
their Affiliates and (ii) upon the date of the termination of this Agreement
pursuant to Article X, the Indenture Trustee, at the written direction of the
Loan Originator, shall withdraw any remaining amounts from the Transfer
Obligation Account and remit all such amounts to the Transfer Obligor.
Section 5.06 Transfer Obligation.
(a) In consideration of the transactions contemplated by the
Basic Documents, the Transfer Obligor agrees and covenants with the Depositor
that:
(i) In connection with each Disposition it shall fund, or
cause to be funded, reserve funds, pay credit enhancer fees, pay, or
cause to be paid, underwriting fees, fund any difference between the
cash Disposition Proceeds and the aggregate Note Principal Balance at
the time of such Disposition, and make, or cause to be made, such other
payments as may be, in the reasonable opinion of the Disposition Agent,
commercially reasonably necessary to effect Dispositions, in each case
to the extent that Disposition Proceeds are insufficient to pay such
amounts;
(ii) In connection with Hedging Instruments, on the Business
Day prior to each Payment Date, it shall deliver to the Indenture
Trustee for deposit into the Transfer Obligation Account any Hedge
Funding Requirement (to the extent amounts available on the related
Payment Date pursuant to Section 5.01 are insufficient to make such
payment), when as and if due to any Hedging Counterparty;
(iii) If any Interest Carry-Forward Amount shall occur, it
shall deposit into the Transfer Obligation Account any such Interest
Carry-Forward Amount on or before the Business Day preceding such
related Payment Date;
(iv) If on any Business Day, the Overcollateralization
Shortfall exceeds the lesser of (x) 1% of the aggregate Principal
Balance of all Loans in the Loan Pool as of the prior Business Day and
(y) $500,000, it shall, on the following Business Day deposit into the
Transfer Obligation Account the full amount of the
Overcollateralization Shortfall as of such date; and
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(v) Notwithstanding anything to the contrary herein, in the
event of the occurrence of an Event of Default under the Indenture, the
Transfer Obligor shall promptly deposit into the Transfer Obligation
Account the entire amount of the Unfunded Transfer Obligation;
provided, that notwithstanding anything to the contrary contained herein, the
Transfer Obligor' cumulative payments under or in respect of the Transfer
Obligation (after subtracting therefrom any amounts returned to the Transfer
Obligor pursuant to Section 5.05(k)(i)) together with the related Loan
Originator's payments in respect of any Loan Originator Puts shall not in the
aggregate exceed the Unfunded Transfer Obligation.
(b) The Transfer Obligor shall pay such amounts upon one
Business Day's notice from either the Servicer or the Majority Noteholders.
(c) The Transfer Obligor agree that the Noteholders, as
ultimate assignee of the rights of the Depositor, ANB and ABC, respectively
under this Agreement and the other Basic Documents, may enforce the rights of
the Depositor, ANB and ABC, respectively, directly against the Transfer Obligor.
ARTICLE VI
STATEMENTS AND REPORTS; SPECIFICATION OF TAX MATTERS
Section 6.01 Statements.
(a) No later than 12 noon (California time) on each Remittance
Date, the Servicer shall deliver to the Indenture Trustee and the Initial
Noteholder by facsimile, the receipt and legibility of which shall be confirmed
by telephone, and with hard copy thereof to be delivered no later than one (1)
Business Day after such Remittance Date, the Servicer's Remittance Report,
setting forth the date of such Report (day, month and year), the name of the
Issuer (i.e., "Advanta Home Equity Loan Owner Trust 1998-MS1"), the Series
designation of the Notes (i.e., "Series 1998-MS1") and the date of this
Agreement, all in substantially the form set out in Exhibit B hereto.
Furthermore, on each Remittance Date, the Servicer shall deliver to the
Indenture Trustee and the Initial Noteholder a magnetic tape or computer disk
providing, with respect to each Loan in the Loan Pool as of the last day of the
related Remittance Period (i) the related Loan Originator's internal loan
identifying number; (ii) if such Loan is an ARM, the current Loan Interest Rate;
(iii) the Principal Balance with respect to such Loan; (iv) the date of the last
Monthly Payment paid in full; and (v) such other information as may be
reasonably requested by the Initial Noteholder and the Indenture Trustee.
(b)(i) No later than 12 noon (California time) on each
Remittance Date, the Servicer shall prepare and provide to the Indenture Trustee
via fax, receipt confirmed by telephone, the Initial Noteholder and each
Noteholder, a statement (the "Payment Statement"),
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stating each date and amount of a purchase of Additional Note Principal Balance
(day, month and year), the name of the Issuer (i.e., "Advanta Home Equity Loan
Owner Trust 1998-MS1"), the Series designation of the Notes (i.e., "Series
1998-MS1"), the date of this Agreement and the following information:
(1) the aggregate amount of collections in respect of
principal of the Loans received by the Servicer
during the preceding Remittance Period;
(2) the aggregate amount of collections in respect of
interest on the Loans received by the Servicer during
the preceding Remittance Period;
(3) all Mortgage Insurance Proceeds received by the
Servicer and not required to be applied to
restoration or repair of the related Mortgaged
Property during the preceding Remittance Period;
(4) all Net Liquidation Proceeds deposited by the
Servicer into the Collection Account during the
preceding Remittance Period;
(5) all Released Mortgaged Property Proceeds deposited by
the Servicer into the Collection Account during the
preceding Remittance Period;
(6) the aggregate amount of all Servicing Advances, set
forth separately, made by the Servicer during the
preceding Remittance Period;
(7) the aggregate of all amounts deposited into the
Collection Account in respect of the repurchase of
Unqualified Loans and the repurchase of Loans
pursuant to Section 2.05 hereof during the preceding
Remittance Period;
(8) the aggregate Principal Balance of all Loans for
which a Servicer Call was exercised during the
preceding Remittance Period;
(9) the aggregate Principal Balance of all Loans for
which a Loan Originator Put was exercised during the
preceding Remittance Period;
(10) the aggregate amount of all payments received under
Hedging Instruments during the preceding Remittance
Period;
(11) the aggregate amount of all withdrawals from the
Collection Account pursuant to Section 5.01(c)(1)(i)
hereof during the preceding Remittance Period;
(12) the aggregate amount of cash Disposition Proceeds
received during the preceding Remittance Period;
(13) withdrawals from the Collection Account in respect of
the Servicing Advance Reimbursement Amount with
respect to the Payment Date;
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(14) [Reserved];
(15) [Reserved];
(16) the aggregate amount of Liquidated Loan Losses
incurred (i) during the preceding Remittance Period,
and (ii) during the preceding three Remittance
Periods;
(17) the aggregate of the Principal Balances of all Loans
in the Loan Pool as of the end of the related
Remittance Period;
(18) the aggregate amount of all deposits into the
Distribution Account from the Transfer Obligation
Account pursuant to Sections 5.05(e), 5.05(f),
5.05(g), and 5.05(h) on the preceding Payment Date;
(19) if the Servicer is not Advanta Corp. or an Affiliate
thereof, the aggregate amount of distributions in
respect of Servicing Compensation to the Servicer,
and unpaid Servicing Compensation from prior Payment
Dates for the related Payment Date;
(20) the aggregate amount of distributions in respect of
Indenture Trustee Fees and unpaid Indenture Trustee
Fees from prior Payment Dates for the related Payment
Date;
(21) the aggregate amount of distributions in respect of
the Custodian Fee and unpaid Custodian Fees from
prior Payment Dates for the related Payment Date;
(22) the Unfunded Transfer Obligation and
Overcollateralization Shortfall on such Payment Date
for the related Payment Date;
(23) the aggregate amount of distributions in respect of
Servicing Compensation and unpaid Servicing
Compensation from prior Payment Dates, to the
Servicer, if Advanta Corp. or an Affiliate thereof is
the Servicer, for the related Payment Date;
(24) the aggregate amount of distributions to the Transfer
Obligation Account for the related Payment Date;
(25) the aggregate amount of distributions in respect of
Trust/Depositor Indemnities for the related Payment
Date;
(26) the aggregate amount of distributions to the holders
of the Trust Certificates for the related Payment
Date;
(27) the Note Principal Balance of the Notes as of the
last day of the related Remittance Period (without
taking into account any additional Note
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Principal Balance between the last day of the related
Remittance Period and the Payment Date) before and
after giving effect to distributions made to the
holders of the Notes for the related Payment Date;
(28) the Pool Principal Balance as of the end of the
preceding Remittance Period;
(29) whether a Rapid Amortization Trigger shall exist with
respect to such Payment Date;
(30) the aggregate Principal Balance of all HELOC Mortgage
Loans as of the end of the related Remittance Period;
(31) the aggregate Principal Balance of all Draw Amounts
during the preceding Remittance Period;
(32) the aggregate Principal Balance of Credit Limits on
the HELOC Mortgage Loans as of the end of the related
Remittance Period; and
(33) the Unfunded Draw Reimbursement Amounts as of the end
of the related Remittance Period.
Such Payment Statement shall also be provided on the Remittance Date to the
Initial Noteholder and Indenture Trustee in the form of a magnetic tape or
computer disk in a form mutually agreed to by and between the Initial
Noteholder, the Indenture Trustee and the Servicer. The Indenture Trustee shall
have no duty to monitor the occurrence of a Performance Trigger, Rapid
Amortization Trigger, Collateral Value Excess or any events resulting in
withdrawals from the Transfer Obligation Account.
(c) On each Payment Date, the Indenture Trustee shall forward
to the holders of the Securities a copy of the Payment Statement in respect of
such Payment Date, together with such other information as the Indenture Trustee
deems necessary or appropriate.
Section 6.02 Specification of Certain Tax Matters.
The Indenture Trustee shall comply with all requirements of
the Code and applicable state and local law with respect to the withholding from
any distributions made to any Securityholder of any applicable withholding taxes
imposed thereon and with respect to any applicable reporting requirements in
connection therewith, giving due effect to any applicable exemptions from such
withholding and effective certifications or forms provided by the recipient. Any
amounts withheld pursuant to this Section 6.02 shall be deemed to have been
distributed to the Securityholders, as the case may be, for all purposes of this
Agreement.
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Section 6.03 Valuation of Loans, Hedge Value and Retained
Securities Value; Market Value Agent.
(a) The Issuer hereby irrevocably appoints the Market Value
Agent to determine the Market Value of each Loan, the Hedge Value of each
Hedging Instrument and the Retained Securities Value of all Retained Securities.
(b) The Market Value Agent shall determine the Market Value of
each Loan in its sole judgment. In determining the Market Value of each Loan,
the Market Value Agent may consider any information that it may deem relevant
and shall base such determination primarily on the lesser of its estimate of the
projected proceeds from such Loan's inclusion in (i) a Securitization (inclusive
of the projected Retained Securities Value of any Retained Securities to be
issued in connection with such Securitization) and (ii) a Whole Loan Sale, in
each case net of such Loan's ratable share of all costs and fees associated with
such Disposition, including, without limitation, any costs of issuance, sale,
underwriting and funding reserve accounts. The Market Value Agent's
determination, in its sole judgment, of Market Value shall be conclusive and
binding upon the parties hereto, absent manifest error (including without
limitation, any error contemplated in Section 2.08).
(c) On each Business Day the Market Value Agent shall
determine in its sole judgment the Hedge Value of each Hedging Instrument as of
such Business Day. In making such determination the Market Value Agent may rely
exclusively on quotations provided by the Hedging Counterparty, by leading
dealers in instruments similar to such Hedging Instrument, which leading dealers
may include the Market Value Agent and its Affiliates and such other sources of
information as the Market Value Agent may deem appropriate.
(d) On each Business Day, the Market Value Agent shall
determine in its sole judgment the Retained Securities Value of the Retained
Securities, if any, expected to be issued pursuant to such Securitization as of
the closing date of such Securitization. In making such determination the Market
Value Agent may rely exclusively on quotations provided by leading dealers in
instruments similar to such Retained Securities, which leading dealers may
include the Market Value Agent and its Affiliates and such other sources of
information as the Market Value Agent may deem appropriate.
ARTICLE VII
HEDGING
Section 7.01 Hedging Instruments.
(a) If the Unfunded Transfer Obligation Percentage is less
than 7%, the Trust, upon request of the Majority Noteholders, shall enter into
such Hedging Instruments as the Market Value Agent, on behalf of the Majority
Noteholders shall determine are necessary, in order to hedge the interest rate
risk with respect to at least 80% of the Collateral Value of fixed rate Loans
acquired by the Trust on or after the date of such request relative to the
expected Disposition Proceeds therefrom. The Market Value Agent shall determine,
in its sole
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discretion, whether any Hedging Instrument conforms to the requirements of
Section 7.01(b), (c) and (d).
(b) Each Hedging Instrument shall expressly provide that in
the event of a Disposition or other removal of the Loan from the Trust, such
portion of the Hedging Instrument shall terminate as the Disposition Agent deems
appropriate to facilitate the hedging of the risks specified in Section 7.01(a).
In the event that the Hedging Instrument is not otherwise terminated, it shall
contain provisions that allow the position of the Trust to be assumed by an
Affiliate of the Trust upon the liquidation of the Trust. The terms of the
assignment documentation and the credit quality of the successor to the Trust
shall be subject to the Hedging Counterparty's approval.
(c) Any Hedging Instrument that provides for any payment
obligation on the part of the Issuer must (i) be without recourse to the assets
of the Issuer, (ii) contain a non-petition covenant provision in the form of
Section 11.l3, (iii) limit payment dates thereunder to Payment Dates and (iv)
contain a provision limiting any cash payments due on any day under such Hedging
Instrument solely to funds available therefor in the Collection Account on such
day pursuant to Section 5.01(c)(3)(ii) hereof and funds available therefor in
the Transfer Obligation Account.
(d) Each Hedging Instrument must (i) provide for the direct
payment of any amounts thereunder to the Collection Account pursuant to Section
5.01(b)(1)(x), (ii) contain an assignment of all of the Issuer's rights (but
none of its obligations) under such Hedging Instrument to the Indenture Trustee
and shall include an express consent to the Hedging Counterparty to such
assignment, (iii) provide that in the event of the occurrence of an Event of
Default, such Hedging Instrument shall terminate upon the direction of the
Majority Noteholders, (iv) prohibit the Hedging Counterparty from "setting-off"
or "netting" other obligations of the Issuer or its Affiliates against such
Hedging Counterparty's payment obligations thereunder, (v) provide that the
appropriate portion of the Hedging Instrument will terminate upon the removal of
the related Loans from the Trust Estate and (vi) have economic terms that are
fixed and not subject to alteration after the date of assumption or execution.
(e) If agreed to by the Majority Noteholders, the Issuer may
pledge its assets in order to secure its obligations in respect of Hedge Funding
Requirements, provided that such right shall be limited solely to Hedging
Instruments for which an Affiliate of the Initial Noteholder is a Hedging
Counterparty.
ARTICLE VIII
THE SERVICER
Section 8.01 Indemnification; Third Party Claims.
(a) The Servicer shall indemnify the Loan Originators, the
Owner Trustee, the Trust, the Depositor, the Indenture Trustee and the
Noteholders, their respective officers, directors, employees, agents and
"control persons," as such term is used under the Act and
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under the Securities Exchange Act of 1934 as amended (each a "Servicer
Indemnified Party") and hold harmless each of them against any and all claims,
losses, damages, penalties, fines, forfeitures, reasonable legal fees and
related costs, judgments, and other costs and expenses resulting from any claim,
demand, defense or assertion based on or grounded upon, or resulting from, a
breach of any of the Servicer's representations and warranties and covenants
contained in this Agreement or in any way relating to the failure of the
Servicer to perform its duties and service the Loans in compliance with the
terms of this Agreement except to the extent such loss arises out of such
Servicer Indemnified Party's gross negligence or willful misconduct; provided,
however, that if the Servicer is not liable pursuant to the provisions of
Section 8.01(d) hereof for its failure to perform its duties and service the
Loans in compliance with the terms of this Agreement, then the provisions of
this Section 8.01 shall have no force and effect with respect to such failure.
(b) None of the Loan Originators, the Depositor or the
Servicer or any of their respective Affiliates, directors, officers, employees
or agents shall be under any liability to the Owner Trustee, the Issuer, the
Indenture Trustee or the Securityholders 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
Loan Originators, the Depositor, the Servicer or any of their respective
Affiliates, directors, officers, employees, agents against the remedies provided
herein for the breach of any warranties, representations or covenants made
herein, or against any expense or liability specifically required to be borne by
such party without right of reimbursement pursuant to the terms hereof, or
against any expense or liability which would otherwise be imposed by reason of
misfeasance, bad faith or negligence in the performance of the respective duties
of the Servicer, the Depositor or the Loan Originators, as the case may be. The
Loan Originators, the Depositor, the Servicer and any of their respective
Affiliates, directors, officers, employees, agents may rely in good faith on any
document of any kind which, prima facie, is properly executed and submitted by
any Person respecting any matters arising hereunder.
(c) Each Loan Originator agrees to indemnify and hold harmless
the Depositor and the Noteholders, as the ultimate assignees from the Depositor
(each an "Originator Indemnified Party," together with the Servicer Indemnified
Parties, the "Indemnified Parties"), from and against any loss, liability,
expense, damage, claim or injury arising out of or based on (i) any breach of
any representation, warranty or covenant of the Loan Originators, the Servicer
or their Affiliates, in any Basic Document, including, without limitation, the
origination or prior servicing of the Loans by reason of any acts, omissions, or
alleged acts or omissions arising out of activities of the Loan Originators, the
Servicer or their Affiliates, and (ii) any untrue statement by the Loan
Originators, the Servicer or its Affiliates of any material fact or any such
Person's failure to state a material fact necessary to make such statements not
misleading with respect to any such Person's statements contained in any Basic
Document, including, without limitation, any Officer's Certificate, statement,
report or other document or information prepared by any such Person and
furnished or to be furnished by it pursuant to or in connection with the
transactions contemplated thereby including, without limitation, such written
information as may have been and may be furnished in connection with any due
diligence investigation with respect to the Loans or any such Person's business,
operations or financial condition, including reasonable attorneys' fees and
other costs or
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expenses incurred in connection with the defense of any actual or threatened
action, proceeding or claim; provided that the Loan Originators shall not
indemnify an Originator Indemnified Party to the extent such loss, liability,
expense, damage or injury is due to either an Originator Indemnified Party's
willful misfeasance, bad faith or negligence or by reason of an Originator
Indemnified Party's reckless disregard of its obligations hereunder; provided,
further, that the Loan Originators shall not be so required to indemnify an
Originator Indemnified Party or to otherwise be liable to an Originator
Indemnified Party for any losses in respect of the performance of the Loans, the
creditworthiness of the Borrowers under the Loans, changes in the market value
of the Loans or other, similar investment risks associated with the Loans
arising from a breach of any representation or warranty set forth in Section
3.05(a) or (b) hereof, a remedy for the breach of which is provided in Section
3.06 hereof. The provisions of this indemnity shall run directly to and be
enforceable by an Originator Indemnified Party subject to the limitations
hereof.
(d) With respect to a claim subject to indemnity hereunder
made by any Person against an Indemnified Party (a "Third Party Claim"), such
Indemnified Party shall notify the related indemnifying parties (each an
"Indemnifying Party") in writing of the Third Party Claim within a reasonable
time after receipt by such Indemnified Party of written notice of the Third
Party Claim unless the Indemnifying Parties shall have previously obtained
actual knowledge thereof. Thereafter, the Indemnified Party shall deliver to the
Indemnifying Parties, within a reasonable time after the Indemnified Party's
receipt thereof, copies of all notices and documents (including court papers)
received by the Indemnified Party relating to the Third Party Claim. No failure
to give such notice or deliver such documents shall effect the rights to
indemnity hereunder. Each Indemnifying Party shall promptly notify the Indenture
Trustee and the Indemnified Party (if other than the Indenture Trustee) of any
claim of which it has been notified and shall promptly notify the Indenture
Trustee and the Indemnified Party (if applicable) of its intended course of
action with respect to any claim.
(e) If a Third Party Claim is made against an Indemnified
Party, (a) the related Indemnifying Party will be entitled to participate in the
defense thereof and, (b) if it so chooses, to assume the defense thereof with
counsel selected by the Indemnifying Party, provided that in connection with
such assumption (i) such counsel is not reasonably objected to by the
Indemnified Party and (ii) the Indemnifying Party first admits in writing its
liability to indemnify the Indemnified Party with respect to all elements of
such claim in full. Should the related Indemnifying Party so elect to assume the
defense of a Third Party Claim, the Indemnifying Party will not be liable to the
Indemnified Party for any legal expenses subsequently incurred by the
Indemnified Party in connection with the defense thereof. If the Indemnifying
Party elects to assume the defense of a Third Party Claim, the Indemnified Party
will (i) cooperate in all reasonable respects with the Indemnifying Party in
connection with such defense and (ii) not admit any liability with respect to,
or settle, compromise or discharge, such Third Party Claim without the
Indemnifying Party' prior written consent, as the case may be. If the
Indemnifying Party shall assume the defense of any Third Party Claim, the
Indemnified Party shall be entitled to participate in (but not control) such
defense with its own counsel at its own expense. If the Indemnifying Party does
not assume the defense of any such Third Party Claim, the Indemnified Party may
defend the same in such manner as it may deem appropriate, including settling
such claim or litigation after giving notice to the
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Indemnifying Party of such terms and the Indemnifying Party will promptly
reimburse the Indemnified Party upon written request. Anything contained in this
Agreement to the contrary notwithstanding, the Indemnifying Party shall not be
entitled to assume the defense of any part of a Third Party Claim that seeks an
order, injunction or other equitable relief or relief for other than money
damages against an Indemnified Party unless the Indemnifying Party has
demonstrated to such Indemnified Party reasonable financial capacity to meet its
obligations with respect to such Third Party Claim.
Section 8.02 Merger or Consolidation of the Servicer.
The Servicer shall keep in full effect its existence, rights
and franchises as a corporation, and will obtain and preserve its qualification
to do business as a foreign corporation and maintain such other licenses and
permits in each jurisdiction necessary to protect the validity and
enforceability of each Basic Document to which it is a party and each of the
Loans and to perform its duties under each Basic Document to which it is a
party; provided, however, that the Servicer may merge or consolidate with any
other corporation upon the satisfaction of the conditions set forth in the
following paragraph.
Any Person into which the Servicer may be merged or
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Servicer shall be a party, or any Person succeeding
to the business of the Servicer, shall be an Eligible Servicer and shall be the
successor of the Servicer, as applicable hereunder, without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding. The Servicer shall send notice
of any such merger, conversion, consolidation or succession to the Indenture
Trustee and the Issuer.
Section 8.03 Limitation on Liability of the Servicer and
Others.
The Servicer and any director, officer, employee or agent of
the Servicer may rely on any document of any kind which it in good faith
reasonably believes to be genuine and to have been adopted or signed by the
proper authorities respecting any matters arising hereunder. Subject to the
terms of Section 8.01 hereof, the Servicer shall have no obligation to appear
with respect to, prosecute or defend any legal action which is not incidental to
the Servicer's duty to service the Loans in accordance with this Agreement.
Section 8.04 Servicer Not to Resign; Assignment.
The Servicer shall not resign from the obligations and duties
hereby imposed on it except (a) with the consent of the Majority Noteholders or
(b) upon determination that its duties hereunder are no longer permissible under
applicable law. Any such determination pursuant to clause (b) of the preceding
sentence permitting the resignation of the Servicer shall be evidenced by an
Independent opinion of counsel to such effect delivered (at the expense of the
Servicer) to the Indenture Trustee and Majority Noteholders. No resignation of
the Servicer shall become effective until a successor servicer, appointed
pursuant to the provisions of Section 9.02 hereof shall have assumed the
Servicer's responsibilities, duties, liabilities (other than those liabilities
arising prior to the appointment of such successor) and obligations under this
Agreement.
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Except as expressly provided herein, the Servicer shall not
assign or transfer any of its rights, benefits or privileges hereunder to any
other Person, or delegate to or subcontract with, or authorize or appoint any
other Person to perform any of the duties, covenants or obligations to be
performed by the Servicer hereunder and any agreement, instrument or act
purporting to effect any such assignment, transfer, delegation or appointment
shall be void.
The Servicer agrees to cooperate with any successor Servicer
in effecting the transfer of the Servicer's servicing responsibilities and
rights hereunder pursuant to the first paragraph of this Section 8.04,
including, without limitation, the transfer to such successor of all relevant
records and documents (including any Loan Files in the possession of the
Servicer) and all amounts received with respect to the Loans and not otherwise
permitted to be retained by the Servicer pursuant to this Agreement. In
addition, the Servicer, at its sole cost and expense, shall prepare, execute and
deliver any and all documents and instruments to the successor Servicer
including all Loan Files in its possession and do or accomplish all other acts
necessary or appropriate to effect such termination and transfer of servicing
responsibilities.
Section 8.05 Relationship of Servicer to Issuer and the
Indenture Trustee.
The relationship of the Servicer (and of any successor to the
Servicer as servicer under this Agreement) to the Issuer, the Owner Trustee and
the Indenture Trustee under this Agreement is intended by the parties hereto to
be that of an independent contractor and not of a joint venturer, agent or
partner of the Issuer, the Owner Trustee or the Indenture Trustee.
Section 8.06 Servicer May Own Securities.
Each of the Servicer and any Affiliate of the Servicer may in
its individual or any other capacity become the owner or pledgee of Securities
with the same rights as it would have if it were not the Servicer or an
Affiliate thereof except as otherwise specifically provided herein; provided,
however, that at any time that AMCUSA or any of its Affiliates is the Servicer,
neither the Servicer nor any of its Affiliates (other than an Affiliate which is
a corporation whose purpose is limited to holding securities and related
activities and which cannot incur recourse debt) may be a Noteholder. Securities
so owned by or pledged to the Servicer or such Affiliate shall have an equal and
proportionate benefit under the provisions of this Agreement, without
preference, priority, or distinction as among all of the Securities; provided,
however, that any Securities owned by the Servicer or any Affiliate thereof,
during the time such Securities are owned by them, shall be without voting
rights for any purpose set forth in this Agreement unless the Servicer or such
Affiliate owns all outstanding Securities of the related class. The Servicer
shall notify the Indenture Trustee promptly after it or any of its Affiliates
becomes the owner or pledgee of a Security.
Section 8.07 Indemnification of the Indenture Trustee and
Initial Noteholder.
The Servicer agrees to indemnify the Indenture Trustee and its
employees, officers, directors and agents, and reimburse its reasonable
out-of-pocket expenses in accordance with Section 6.07 of the Indenture as if it
was a signatory thereto. The Servicer
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agrees to indemnify the Initial Noteholder in accordance with Section 9.01 of
the Note Purchase Agreement as if it were signatory thereto.
ARTICLE IX
SERVICER EVENTS OF DEFAULT
Section 9.01 Servicer Events of Default.
(a) In case one or more of the following Servicer Events of
Default by the Servicer shall occur and be continuing, that is to say:
(i) any failure by Servicer to deposit (A) into the Collection
Account in accordance with Section 5.01(b) any amount required to be
deposited by it under any Basic Document to which it is a party, which
failure continues unremedied for two Business Days following the date
on which such deposit was first requested to be made, which failure
continues unremedied until 12:00 p.m. New York City time on the
Business Day following such day; or
(ii) any failure on the part of the Servicer duly to observe
or perform in any material respect any other of the material covenants
or agreements on the part of the Servicer, contained in any Basic
Document to which it is a party, which continues unremedied for a
period of 30 days (or, in the case of payment of insurance premiums,
for a period of 15 days) after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given to
the Servicer by any other party hereto or to the Servicer (with copy to
each other party hereto), by Holders of 25% of the Percentage Interests
of the Notes or the Trust Certificates; or
(iii) any breach on the part of the Servicer of any
representation or warranty contained in any Basic Document to which it
is a party that materially and adversely affects the interests of any
of the parties hereto or any Securityholder and which continues
unremedied for a period of 30 days after the date on which notice of
such breach, requiring the same to be remedied, shall have been given
to the Servicer by any other party hereto or to the Servicer (with copy
to each other party hereto), by the Initial Noteholder or Holders of
25% of the Percentage Interests (as defined in the Indenture) of the
Notes; or
(iv) there shall have been commenced before a court or agency
or supervisory authority having jurisdiction in the premises an
involuntary proceeding against the Servicer under any present or future
federal or state bankruptcy, insolvency or similar law for the
appointment of a conservator, receiver, liquidator, trustee or similar
official in any bankruptcy, insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, which action shall not have
been dismissed for a period of 60 days; or
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(v) the Servicer shall consent to the appointment of a
conservator, receiver, liquidator, trustee or similar official in any
bankruptcy, insolvency, readjustment of debt, marshaling of assets and
liabilities or similar proceedings of or relating to it or of or
relating to all or substantially all of its property; or
(vi) the Servicer shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take
advantage of any applicable bankruptcy, insolvency or reorganization
statute, make an assignment for the benefit of its creditors,
voluntarily suspend payment of its obligations, or take any corporate
action in furtherance of the foregoing.
(b) Then, and in each and every such case, so long as an
Servicer Event of Default shall not have been remedied, the Indenture Trustee or
the Majority Noteholders, by notice in writing to the Servicer may, in addition
to whatever rights such Person may have at law or in equity to damages,
including injunctive relief and specific performance, may terminate all the
rights and obligations of the Servicer under this Agreement and in and to the
Loans and the proceeds thereof, as servicer under this Agreement. Upon receipt
by the Servicer of such written notice, all authority and power of the Servicer
under this Agreement, whether with respect to the Loans or otherwise, shall,
subject to Section 9.02 hereof, pass to and be vested in a successor servicer,
and the successor servicer is hereby authorized and empowered to execute and
deliver, on behalf of the Servicer, as attorney-in-fact or otherwise, any and
all documents and other instruments and do or cause to be done all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, including, but not limited to, the transfer and endorsement or
assignment of the Loans and related documents. The Servicer agrees to cooperate
with the successor servicer in effecting the termination of the Servicer's
responsibilities and rights hereunder, including, without limitation, the
transfer to the successor servicer for administration by it of all amounts which
shall at the time be credited by the Servicer to each Collection Account or
thereafter received with respect to the Loans.
Section 9.02 Appointment of Successor.
On and after the date the Servicer receives a notice of
termination pursuant to Section 9.01 hereof, or the Owner Trustee receives the
resignation of the Servicer evidenced by an Opinion of Counsel or accompanied by
the consents required by Section 8.04 hereof, or the Servicer is removed as
servicer pursuant to this Article IX or Section 4.01(i), then, the Majority
Noteholders shall appoint a successor servicer to be the successor in all
respects to the Servicer in its capacity as Servicer under this Agreement and
the transactions set forth or provided for herein and shall be subject to all
the responsibilities, duties and liabilities relating thereto placed on the
Servicer by the terms and provisions hereof; provided, however, that the
successor servicer shall not be liable for any actions of any servicer prior to
it.
The successor servicer shall be obligated to make Servicing
Advances hereunder. As compensation therefor, the successor servicer appointed
pursuant to the following paragraph, shall be entitled to all funds relating to
the Loans which the Servicer would have been entitled to receive from the
Collection Account pursuant to Section 5.01(c) hereof as if the Servicer had
continued to act as servicer hereunder, together with other
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Servicing Compensation in the form of assumption fees, late payment charges or
otherwise as provided in Section 4.16 hereof. The Servicer shall not be entitled
to any termination fee if it is terminated pursuant to Section 9.01 hereof but
shall be entitled to any accrued and unpaid Servicing Compensation to the date
of termination.
Any collections received by the Servicer after removal or
resignation shall be endorsed by it to the Indenture Trustee and remitted
directly to the successor servicer. The compensation of any successor servicer
appointed shall be the Servicing Fee, together with other Servicing Compensation
provided for herein. The Indenture Trustee, the Issuer, any Custodian, the
Servicer and any such successor servicer shall take such action, consistent with
this Agreement, as shall be reasonably necessary to effect any such succession.
Any costs or expenses incurred by the Indenture Trustee in connection with the
termination of the Servicer and the succession of a successor servicer shall be
an expense of the outgoing Servicer and, to the extent not paid thereby, an
expense of such successor servicer. The Servicer agrees to cooperate with the
Indenture Trustee and any successor servicer in effecting the termination of the
Servicer's servicing responsibilities and rights hereunder and shall promptly
provide the successor servicer all documents and records reasonably requested by
it to enable it to assume the Servicer's functions hereunder and shall promptly
also transfer to the successor servicer all amounts which then have been or
should have been deposited in any Trust Account maintained by the Servicer or
which are thereafter received with respect to the Loans. Upon the occurrence of
an Event of Default, the Majority Noteholders shall have the right to order the
Servicer's Loan Files and all other files of the Servicer relating to the Loans
and all other records of the Servicer and all documents relating to the Loans
which are then or may thereafter come into the possession of the Servicer or any
third party acting for the Servicer to be delivered to such custodian or
servicer as it selects and the Servicer shall deliver to such custodian or
servicer such assignments as the Majority Noteholders shall request. No
successor 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 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 Servicer hereunder. No appointment of a
successor to the Servicer hereunder shall be effective until written notice of
such proposed appointment shall have been provided by the Indenture Trustee to
the Initial Noteholder, the Issuer and the Depositor, ANB, ABC, the Majority
Noteholders and the Issuer shall have consented in writing thereto.
In connection with such appointment and assumption, the
Majority Noteholder may make such arrangements for the compensation of such
successor servicer out of payments on the Loans as they and such successor
servicer shall agree.
Section 9.03 Waiver of Defaults.
The Majority Noteholders may waive any events permitting
removal of the Servicer as servicer pursuant to this Article IX. Upon any waiver
of a past default, such default shall cease to exist and any Servicer Event of
Default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to
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any subsequent or other default or impair any right consequent thereto except to
the extent expressly so waived.
Section 9.04 Accounting Upon Termination of Servicer.
Upon termination of the Servicer under this Article IX, the
Servicer shall, at its own expense:
(a) deliver to its successor or, if none shall yet have been
appointed, to the Indenture Trustee the funds in any Trust Account maintained by
the Servicer;
(b) deliver to its successor or, if none shall yet have been
appointed, to the Indenture Trustee all Loan Files and related documents and
statements held by it hereunder and a Loan portfolio computer tape;
(c) deliver to its successor or, if none shall yet have been
appointed, to the Indenture Trustee and to the Issuer and the Securityholders a
full accounting of all funds, including a statement showing the Monthly Payments
collected by it and a statement of monies held in trust by it for payments or
charges with respect to the Loans; and
(d) execute and deliver such instruments and perform all acts
reasonably requested in order to effect the orderly and efficient transfer of
servicing of the Loans to its successor and to more fully and definitively vest
in such successor all rights, powers, duties, responsibilities, obligations and
liabilities of the Servicer under this Agreement.
ARTICLE X
TERMINATION; PUT OPTION
Section 10.01 Termination.
(a) This Agreement shall terminate upon either: (a) the later
of (i) the satisfaction and discharge of the Indenture and the provisions
thereof, to the Noteholders of all amounts due and owing in accordance with the
provisions hereof or (ii) the disposition of all funds with respect to the last
Loan and the remittance of all funds due hereunder and the payment of all
amounts due and payable, including, in both cases, without limitation,
indemnification payments payable pursuant to any Basic Document to the Indenture
Trustee, the Owner Trustee, the Issuer and the Custodian, written notice of the
occurrence of either of which shall be provided to the Indenture Trustee by the
Servicer; or (b) the mutual consent of the Servicer, the Depositor, ANB, ABC and
all Securityholders in writing and delivered to the Indenture Trustee by the
Servicer.
(b) The Securities shall be subject to an early redemption or
termination at the option of the Majority Noteholders in the manner and subject
to the provisions of Section 10.02 of this Agreement.
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(c) Except as provided in Sections 10.01 and 10.02, none of
the Depositor, the Servicer nor any Noteholder shall be entitled to revoke or
terminate the Trust.
Section 10.02 Optional Termination
(a) The Majority Certificateholders may, at their option,
effect an early termination of the Trust on any Payment Date on or after the
Clean-up Call Date. The Majority Certificateholders shall effect such early
termination by providing notice thereof to the Indenture Trustee and Owner
Trustee and by purchasing all of the Loans at a purchase price, payable in cash,
equal to or greater than the Termination Price. The expense of any Independent
appraiser required under this Section 10.02 shall be a nonreimbursable expense
of the Majority Certificateholders.
Any such early termination by the Majority Certificateholders
shall be accomplished by depositing into the Collection Account on the third
Business Day prior to the Payment Date on which the purchase is to occur the
amount of the Termination Price to be paid. The Termination Price and any
amounts then on deposit in the Collection Account (other than any amounts
withdrawable pursuant to Section 5.01(c)(1) hereof) shall be distributed by the
Indenture Trustee pursuant to Section 5.01(c)(3) of this Agreement and Section
9.1 of the Trust Agreement on the next succeeding Payment Date; and any amounts
received with respect to the Loans and Foreclosure Properties subsequent to the
final Payment Date shall belong to the purchaser thereof.
Section 10.03 Notice of Termination.
Notice of termination of this Agreement or of early redemption
and termination of the Issuer pursuant to Section 10.01 shall be sent by the
Indenture Trustee to the Noteholders in accordance with Section 10.02 of the
Indenture.
Section 10.04 Put Option.
The Majority Noteholders may, at their option, effect a put of
the entire outstanding Note Principal Balance, or any portion thereof, to the
Trust on any Payment Date by exercise of the Put Option. The Majority
Noteholders shall effect such put by providing notice thereof in accordance with
Section 10.05 of the Indenture.
On the third Business Day prior to the Payment Date on which
the exercise of the Put Option is to occur the Issuer shall deposit the Note
Redemption Amount into the Collection Account and any amounts then on deposit in
the Collection Account (other than any amounts withdrawable pursuant to Section
5.01(c)(1) hereof) shall be distributed by the Indenture Trustee pursuant to
Section 5.01(c)(3) of this Agreement on the next succeeding Payment Date; and
any amounts received with respect to the Loans and Foreclosure Properties
subsequent to the final Payment Date shall belong to the Issuer.
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ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01 Acts of Securityholders.
Except as otherwise specifically provided herein, whenever
action, consent or approval of the Securityholders is required under this
Agreement, such action, consent or approval shall be deemed to have been taken
or given on behalf of, and shall be binding upon, all Securityholders if the
Majority Noteholders agree to take such action or give such consent or approval.
Section 11.02 Amendment.
(a) This Agreement may be amended from time to time by the
Depositor, the Servicer, the Loan Originators, the Indenture Trustee and the
Issuer by written agreement with notice thereof to the Securityholders, without
the consent of any of the Securityholders, to cure any error or ambiguity, to
correct or supplement any provisions hereof which may be defective or
inconsistent with any other provisions hereof or to add any other provisions
with respect to matters or questions arising under this Agreement; provided,
however, that such action will not adversely affect in any material respect the
interests of the Securityholders. An amendment described above shall be deemed
not to adversely affect in any material respect the interests of the
Securityholders if an Opinion of Counsel is obtained to such effect.
(b) This Agreement may also be amended from time to time by
the Depositor, the Servicer, the Loan Originators, the Indenture Trustee and the
Issuer by written agreement, with the prior written consent of the Majority
Noteholders, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement, or of modifying
in any manner the rights of the Securityholders; provided, however, that no such
amendment shall (i) reduce in any manner the amount of, or delay the timing of,
collections of payments on Loans or distributions which are required to be made
on any Security, without the consent of the holders of 100% of the Securities,
(ii) adversely affect in any material respect the interests of any of the
holders of the Securities in any manner other than as described in clause (i),
without the consent of the holders of 100% of the Securities, or (iii) reduce
the percentage of the Securities, the consent of which is required for any such
amendment, without the consent of the holders of 100% of the Securities.
(c) It shall not be necessary for the consent of
Securityholders under this Section to approve the particular form of any
proposed amendment, but it shall be sufficient if such consent shall approve the
substance thereof.
Prior to the execution of any amendment to this Agreement, the
Issuer and the Indenture Trustee shall be entitled to receive and rely upon an
Opinion of Counsel stating that the execution of such amendment is authorized or
permitted by this Agreement. The Issuer and the Indenture Trustee may, but shall
not be obligated to, enter into any such amendment which affects the Issuer's
own rights, duties or immunities of the Issuer or the Indenture Trustee, as the
case may be, under this Agreement.
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Section 11.03 Recordation of Agreement.
To the extent permitted by applicable law, this Agreement, or
a memorandum thereof if permitted under applicable law, is subject to
recordation in all appropriate public offices for real property records in all
of the counties or other comparable jurisdictions in which any or all of the
Mortgaged Property is situated, and in any other appropriate public recording
office or elsewhere, such recordation to be effected by the Servicer at the
Securityholders' expense on direction of the Majority Noteholders but only when
accompanied by an Opinion of Counsel to the effect that such recordation
materially and beneficially affects the interests of the Securityholders or is
necessary for the administration or servicing of the Loans.
Section 11.04 Duration of Agreement.
This Agreement shall continue in existence and effect until
terminated as herein provided.
Section 11.05 Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS, WITHOUT GIVING
EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
Section 11.06 Notices.
All demands, notices and communications hereunder shall be in
writing and shall be deemed to have been duly given if (i) delivered personally,
mailed by overnight mail, certified mail or registered mail, postage prepaid, or
(ii) transmitted by telecopy, upon telephone confirmation of receipt thereof
(with a copy delivered by overnight courier), as follows: (I) in the case of the
Depositor, to Advanta Conduit Receivables Inc., Welsh & ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, telecopy number: (215)
▇▇▇-▇▇▇▇, telephone number: (▇▇▇) ▇▇▇-▇▇▇▇, or such other addresses or telecopy
or telephone numbers as may hereafter be furnished to the Securityholders and
the other parties hereto in writing by the Depositor; (II) in the case of the
Trust, to Advanta Home Equity Loan Owner Trust 1998-MS1, c/o Wilmington Trust
Company, One ▇▇▇▇▇▇ Square North, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: Corporate Trust Administration, telecopy number: (302)
▇▇▇-▇▇▇▇, telephone number: (▇▇▇) ▇▇▇-▇▇▇▇, or such other address or telecopy or
telephone numbers as may hereafter be furnished to the Noteholders and the other
parties hereto in writing by the Trust; (III) in the case of the Transfer
Obligor, to Advanta Corp., Welsh & ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, telecopy number: (▇▇▇) ▇▇▇-▇▇▇▇, telephone
number: (▇▇▇) ▇▇▇-▇▇▇▇ or such other addresses or telecopy or telephone numbers
as may hereafter be furnished to the Securityholders and the other parties
hereto in writing by the Transfer Obligor, (IV) in the case of the Loan
Originators, to Advanta Mortgage Corp. USA, Welsh & ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, telecopy number: (215)
▇▇▇-▇▇▇▇, telephone number: (▇▇▇) ▇▇▇-▇▇▇▇, and/or to Advanta National Bank, ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇,
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telecopy number: (▇▇▇) ▇▇▇-▇▇▇▇, telephone number: (▇▇▇) ▇▇▇-▇▇▇▇, and/or to
Advanta Bank Corp., Welsh & ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, telecopy number: (▇▇▇) ▇▇▇-▇▇▇▇, telephone
number: (▇▇▇) ▇▇▇-▇▇▇▇, or such other addresses or telecopy or telephone numbers
as may hereafter be furnished to the Securityholders and the other parties
hereto in writing by the Loan Originators, (V) in the case of the Servicer, to
Advanta Mortgage Corp. USA, Welsh & ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, telecopy number: (▇▇▇) ▇▇▇-▇▇▇▇,
telephone number: (▇▇▇) ▇▇▇-▇▇▇▇, or such other addresses or telecopy or
telephone numbers as may hereafter be furnished to the Securityholders and the
other parties hereto in writing by the Servicer; and, (VI) in the case of the
Indenture Trustee, at the Corporate Trust Office, as defined in the Indenture,
any such notices shall be deemed to be effective with respect to any party
hereto upon the receipt of such notice or telephone confirmation thereof by such
party, except; provided, that notices to the Securityholders shall be effective
upon mailing or personal delivery.
Section 11.07 Severability of Provisions.
If any one or more of the covenants, agreements, provisions or
terms of this Agreement shall be held invalid for any reason whatsoever, then
such covenants, agreements, provisions or terms shall be deemed severable from
the remaining covenants, agreements, provisions or terms of this Agreement and
shall in no way affect the validity or enforceability of the other covenants,
agreements, provisions or terms of this Agreement.
Section 11.08 No Partnership.
Nothing herein contained shall be deemed or construed to
create any partnership or joint venture between the parties hereto and the
services of the Servicer shall be rendered as an independent contractor.
Section 11.09 Counterparts.
This Agreement may be executed in one or more counterparts and
by the different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same Agreement.
Section 11.10 Successors and Assigns.
This Agreement shall inure to the benefit of and be binding
upon the Servicer, the Loan Originators, the Depositor, the Indenture Trustee,
the Issuer and the Securityholders and their respective successors and permitted
assigns.
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Section 11.11 Headings.
The headings of the various Sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed to be
part of this Agreement.
Section 11.12 Actions of Securityholders.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Agreement to be given or taken
by Securityholders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Securityholders in person or by
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 Depositor, ANB, ABC, the Servicer or the Issuer. 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
Depositor, ANB, ABC, the Servicer and the Issuer if made in the manner provided
in this Section 11.12.
(b) The fact and date of the execution by any Securityholder
of any such instrument or writing may be proved in any reasonable manner which
the Depositor, ABC, ANB the Servicer or the Issuer may deem sufficient.
(c) Any request, demand, authorization, direction, notice,
consent, waiver or other act by a Securityholder shall bind every holder of
every Security issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof, in respect of anything done, or omitted to be done,
by the Depositor, ANB, ABC, the Servicer or the Issuer in reliance thereon,
whether or not notation of such action is made upon such Security.
(d) The Depositor, ANB, ABC, the Servicer or the Issuer may
require additional proof of any matter referred to in this Section 11.12 as it
shall deem necessary.
Section 11.13 Non-Petition Agreement.
Notwithstanding any prior termination of any Basic Document,
the Loan Originators, the Transfer Obligor, the Servicer, the Depositor and the
Indenture Trustee each severally and not jointly covenants that it shall not,
prior to the date which is one year and one day after the payment in full of the
all of the Notes, acquiesce, petition or otherwise, directly or indirectly,
invoke or cause the Trust or the Depositor to invoke the process of any
governmental authority for the purpose of commencing or sustaining a case
against the Issuer or Depositor under any Federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Issuer or
Depositor or any substantial part of their respective property or ordering the
winding up or liquidation of the affairs of the Issuer or the Depositor.
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Section 11.14 Holders of the Certificates.
(a) Any sums to be distributed or otherwise paid hereunder or
under this Agreement to the holders of the Securities shall be paid to such
holders pro rata based on their Percentage Interests;
(b) Where any act or event hereunder is expressed to be
subject to the consent or approval of the holders of the Securities, such
consent or approval shall be capable of being given by the holder or holders
evidencing in the aggregate not less than 51% of the Percentage Interests.
Section 11.15 Due Diligence Fees, Due Diligence.
Each Loan Originator acknowledges that the Initial Noteholder
has the right to perform continuing due diligence reviews with respect to the
Loans, for purposes of verifying compliance with the representations, warranties
and specifications made hereunder, or otherwise, and each Loan Originator agrees
that upon reasonable (but no less than 10 Business Days') prior notice (with no
notice being required upon the occurrence of an Event of Default) to any Loan
Originator, the Initial Noteholder, the Indenture Trustee and Custodian or its
authorized representatives will be permitted during normal business hours to
examine, inspect, and make copies and extracts of, the Loan Files and any and
all documents, records, agreements, instruments or information relating to such
Loans in the possession or under the control of the Servicer and the Indenture
Trustee. The Loan Originators also shall make available to the Initial
Noteholder a knowledgeable financial or accounting officer for the purpose of
answering questions respecting the Loan Files and the Loans. Without limiting
the generality of the foregoing, each Loan Originator acknowledges that the
Initial Noteholder may purchase Notes based solely upon the information provided
by the Loan Originators to the Initial Noteholder in the Loan Schedule and the
representations, warranties and covenants contained herein, and that the Initial
Noteholder, at its option, has the right at any time to conduct a partial or
complete due diligence review on some or all of the Loans securing such
purchase, including without limitation ordering new credit reports and new
appraisals on the related Mortgaged Properties and otherwise re-generating the
information used to originate such Loan. The Initial Noteholder may underwrite
such Loans itself or engage a mutually agreed upon third party underwriter to
perform such underwriting. Each Loan Originator agrees to cooperate with the
Initial Noteholder and any third party underwriter in connection with such
underwriting, including, but not limited to, providing the Initial Noteholder
and any third party underwriter with access to any and all documents, records,
agreements, instruments or information relating to such Loans in the possession,
or under the control, of the Servicer. Each Loan Originator further agrees that
the Loan Originators shall reimburse the Initial Noteholder for any and all
reasonable out-of-pocket costs and expenses incurred by the Initial Noteholder
in connection with the Initial Noteholder's activities pursuant to this Section
11.15 hereof (the "Due Diligence Fees"), provided that, unless an Event of
Default shall occur, the sum of (i) the aggregate reimbursement obligation of
the Loan Originators under this Agreement, and (ii) the reimbursement obligation
of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. pursuant to the Warehouse Lines, shall
be limited to $25,000 per annum. The Initial Noteholder agrees (on behalf of
itself and its Affiliates, directors, officers, employees and
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representatives) to use reasonable precaution to keep confidential, in
accordance with its customary procedures for handling confidential information
and in accordance with safe and sound practices, and not to disclose to any
third party, any non-public information supplied to it or otherwise obtained by
it hereunder with respect to any of the Loan Originators, Advanta Corp. or any
of its Affiliates; provided, however, that nothing herein shall prohibit the
disclosure of any such information to the extent required by statute, rule,
regulation or judicial process; provided, further that, unless specifically
prohibited by applicable law or court order, the Initial Noteholder shall, prior
to disclosure thereof, notify Loan Originators of any request for disclosure of
any such non-public information. The Initial Noteholder further agrees not to
use any such non-public information for any purpose unrelated to this Agreement.
Section 11.16 Liability. AMCUSA shall be liable for all
obligations of the Loan Originators set forth in this Agreement.
Section 11.17 Confidential Information. All Confidential
Information (as defined below) will be held and treated by each Noteholder in
confidence and will not, without the prior written consent of the Servicer be
disclosed or used by such Noteholder or its directors, officers, employees,
agents or controlling persons ("Information Recipients") other than in
connection with the Basic Documents. Each Noteholder agrees to disclose
Confidential Information only to its Information Recipients who need to know it
for purposes of the Basic Documents and who are informed by such Noteholder of
its confidential nature and who agree to be bound by the terms of this Section
11.17. Disclosure that is not in violation of the Right to Financial Privacy Act
or other applicable law by such Noteholder of any Confidential Information at
the request of any of its auditors, governmental regulatory authorities or
self-regulatory authorities in connection with an examination of a Noteholder by
any such authority shall not constitute a breach of its obligations under this
Section 11.17 and shall not require the prior consent of the Servicer. Each
Noteholder shall be responsible for any breach of this Section 11.17 by its
Information Recipients. The Initial Noteholder may use Confidential Information
for internal due diligence purposes in connection with its analysis of the
transactions contemplated by the Basic Documents. The Disposition Agent may
disclose Confidential Information to Disposition Participants as required to
effect Dispositions. This Section 11.17 shall terminate upon the occurrence of
an Event of Default. As used herein, "Confidential Information" means all
information, whether in electronic or written form concerning the Servicer or
any Loan Originator, any client or customer list of the Servicer or any Loan
Originator, including, but not limited to, all information relating to the
Loans, individual Borrowers, the Loans and the Promissory Notes, in each case
which the Servicer or any Loan Originator made available to such Noteholder,
together with analyses, statistics or compilations or other documents, which
contain or otherwise reflect such information. Confidential Information shall
not include information which (i) is or becomes generally available to the
public other than as a result of a disclosure by such Noteholder or any
Information Recipients; (ii) was available to such Noteholder on a
non-confidential basis prior to its disclosure to such Noteholder by the
Servicer or such Loan Originator; (iii) required to be disclosed by a
governmental authority or related governmental agencies, auditors, accountants
or as otherwise required by law; or (iv) becomes available to such Noteholder on
a non-confidential basis from a person other than the Servicer or any Loan
Originator who, to the best knowledge of such Noteholder, is not otherwise bound
by a confidentiality agreement
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with the Servicer or any Loan Originator or is not otherwise prohibited from
transmitting the information to such Noteholder.
Section 11.18 Servicer to Provide Information to Loan
Originator. The Servicer, as appropriate, will provide the Loan Originator such
information as may be required to make representations and warranties required
of them. The Servicer hereby agrees to indemnify and hold harmless the Loan
Originator from and against any loss, liability, expense, damage, claim or
injury arising out of or based on any breach of any representation or warranty
relating to information provided by the Servicer, or out of the failure of the
Servicer to provide such required information.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Issuer, the Depositor, the Servicer,
the Indenture Trustee, the Loan Originators and the Transfer Obligor have caused
their names to be signed by their respective officers thereunto duly authorized,
as of the day and year first above written, to this Amended and Restated Sale
And Servicing Agreement.
ADVANTA HOME EQUITY LOAN OWNER TRUST
1998-MS1,
By: Wilmington Trust Company
not in its individual capacity
but solely as Owner Trustee
By:* /s/
-------------------------------
Name:
Title:
ADVANTA CONDUIT RECEIVABLES INC.,
as Depositor
By: /s/
-------------------------------
Name:
Title:
ADVANTA MORTGAGE CORP. USA,
as Servicer
By: /s/
-------------------------------
Name:
Title:
BANKERS TRUST COMPANY OF CALIFORNIA,
N.A., as Indenture Trustee
By: /s/
-------------------------------
Name:
Title:
109
ADVANTA CORP.,
as Transfer Obligor
By: /s/
-------------------------------
Name:
Title:
ADVANTA MORTGAGE CORP. USA,
as Loan Originator
By: /s/
-------------------------------
Name:
Title:
ADVANTA NATIONAL BANK,
as Loan Originator
By: /s/
-------------------------------
Name:
Title:
ADVANTA BANK CORP.,
as Loan Originator
By: /s/
-------------------------------
Name:
Title: