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EXHIBIT 4.4
SALE AND SERVICING AGREEMENT
Among
ADVANTA MORTGAGE LOAN TRUST 1999-4,
as Trust,
ADVANTA HOLDING TRUST 1999-4,
as Holding Trust,
ADVANTA CONDUIT RECEIVABLES, INC.,
as Sponsor,
ADVANTA MORTGAGE CORP. USA,
as Master Servicer,
and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as Indenture Trustee
Dated as of November 1, 1999
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TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS; RULES OF CONSTRUCTION.................................1
Section 1.01 Definitions...................................................1
Section 1.02 Use of Words and Phrases......................................1
Section 1.03 Captions; Table of Contents...................................1
Section 1.04 Opinions......................................................2
ARTICLE II CONVEYANCE OF MORTGAGE LOANS......................................2
Section 2.01 Conveyance of the Mortgage Loans..............................2
Section 2.02 Acceptance by the Trust; Certain Substitutions of
Mortgage Loans; Certification by Indenture Trustee.........6
Section 2.03 Cooperation Procedures........................................8
Section 2.04 Conveyance of the Subsequent Mortgage Loans...................8
ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
SPONSOR AND THE MASTER SERVICER..............................11
Section 3.01 Representations and Warranties of the Sponsor................11
Section 3.02 Representations and Warranties of the Master Servicer........13
Section 3.03 Representations and Warranties of the Sponsor with
Respect to the Mortgage Loans.............................15
Section 3.04 Covenants of Sponsor to Take Certain Actions with
Respect to the Mortgage Loans In Certain
Situations................................................16
ARTICLE IV SERVICING AND ADMINISTRATION OF MORTGAGE LOANS...................19
Section 4.01 Master Servicer and Sub-Servicers............................19
Section 4.02 Collection of Certain Mortgage Loan Payments.................20
Section 4.03 Sub-Servicing Agreements Between Master Servicer and
Sub-Servicers.............................................21
Section 4.04 Successor Sub-Servicers......................................21
Section 4.05 Liability of Master Servicer.................................21
Section 4.06 No Contractual Relationship Between Sub-Servicer and
Indenture Trustee or the Noteholders......................22
Section 4.07 Assumption or Termination of Sub-Servicing Agreement
by Indenture Trustee......................................23
Section 4.08 Principal and Interest Account...............................23
Section 4.09 Delinquency Advances, Compensating Interest and
Servicing Advances........................................25
Section 4.10 Purchase of Mortgage Loans...................................26
Section 4.11 Maintenance of Insurance.....................................26
Section 4.12 Due-on-Sale Clauses; Assumption and Substitution
Agreements................................................27
Section 4.13 Realization Upon Defaulted Mortgage Loans....................28
Section 4.14 Indenture Trustee to Cooperate; Release of Mortgage
Files.....................................................29
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Section 4.15 Servicing Compensation.......................................30
Section 4.16 Annual Statement as to Compliance............................30
Section 4.17 Annual Independent Certified Public Accountants'
Reports...................................................31
Section 4.18 Access to Certain Documentation and Information
Regarding the Mortgage Loans..............................31
Section 4.19 Assignment of Agreement......................................31
Section 4.20 Inspections by the Note Insurer and the Indenture
Trustee; Errors and Omissions Insurance...................31
Section 4.21 Merger, Conversion, Consolidation or Succession to
Business of Master Servicer...............................31
Section 4.22 Notices to Noteholders.......................................32
Section 4.23 Notices of Material Events...................................32
ARTICLE V SERVICING TERMINATION.............................................33
Section 5.01 Events of Servicer Termination...............................33
ARTICLE VI ADMINISTRATIVE DUTIES OF THE MASTER SERVICER.....................37
Section 6.01 Administrative Duties with Respect to the Indenture..........37
Section 6.02 Records......................................................39
Section 6.03 Additional Information to be Furnished to the Trust..........39
ARTICLE VII MISCELLANEOUS...................................................39
Section 7.01 Compliance Certificates and Opinions.........................39
Section 7.02 Form of Documents Delivered to the Indenture Trustee.........39
Section 7.03 Acts of Noteholders..........................................40
Section 7.04 Notices to Indenture Trustee.................................41
Section 7.05 Notices and Reports to Noteholders; Waiver of Notices........41
Section 7.06 Rules by Indenture Trustee and Sponsor.......................41
Section 7.07 Successors and Assigns.......................................42
Section 7.08 Severability.................................................42
Section 7.09 Benefits of Agreement........................................42
Section 7.10 Legal Holidays...............................................42
Section 7.11 Governing Law................................................42
Section 7.12 Counterparts.................................................42
Section 7.13 Amendment....................................................42
Section 7.14 The Note Insurer.............................................43
Section 7.15 Notices......................................................43
Section 7.16 Limitation of Liability......................................45
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SCHEDULE I -- Schedules of Mortgage Loans
EXHIBIT A -- Form of Notice of Establishment of Principal and Interest
Account
EXHIBIT B -- Form of Indenture Trustee's Acknowledgement of Receipt
EXHIBIT C -- Form of Indenture Trustee's Certification
EXHIBIT D -- Form of Master Servicer's Trust Receipt
EXHIBIT E -- Form of Lost Note Affidavit
EXHIBIT F -- Form of Power of Attorney
EXHIBIT G -- Form of Subsequent Transfer Agreement
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SALE AND SERVICING AGREEMENT, dated as of November 1, 1999 (this
"Agreement"), by and among ADVANTA MORTGAGE LOAN TRUST 1999-4, a Delaware
business trust, as the trust (the "Trust"), ADVANTA HOLDING TRUST 1999-4, a
Delaware business trust, as the holding trust (the "Holding Trust"), ADVANTA
CONDUIT RECEIVABLES, INC., a Nevada corporation, in its capacity as sponsor
of the Trust (the "Sponsor"), ADVANTA MORTGAGE CORP. USA, a Delaware
corporation, in its capacity as master servicer (the "Master Servicer"), and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A., a national banking association,
in its capacity as indenture trustee (the "Indenture Trustee").
WHEREAS, the Holding Trust desires to purchase a portfolio of
Mortgage Loans originated by the Originators;
WHEREAS, the Sponsor is willing to sell or cause or direct to be
sold such Mortgage Loans to the Holding Trust;
WHEREAS, the Holding Trust desires to transfer such Mortgage
Loans to the Trust and the Trust desires to acquire such Mortgage Loans from
the Holding Trust;
WHEREAS, the Master Servicer has agreed to service the Mortgage
Loans, which constitute the principal assets of the Trust Estate; and
WHEREAS, Ambac Assurance Corporation (the "Note Insurer") is
intended to be a third party beneficiary of this Agreement and is hereby
recognized by the parties hereto to be a third-party beneficiary of this
Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Sponsor, the Master Servicer, the Trust and
the Indenture Trustee hereby agree as follows:
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
Section 1.01 Definitions. Capitalized terms used herein shall
have their respective meanings as set forth in Annex A attached hereto.
Section 1.02 Use of Words and Phrases. "Herein", "hereby",
"hereunder", "hereof", "hereinbefore", "hereinafter" and other equivalent
words refer to this Agreement as a whole and not solely to the particular
Section of this Agreement in which any such word is used. The definitions
set forth in Annex A hereto include both the singular and the plural.
Whenever used in this Agreement, any pronoun shall be deemed to include both
singular and plural and to cover all genders.
Section 1.03 Captions; Table of Contents. The captions or
headings in this Agreement and the Table of Contents are for convenience
only and in no way define, limit or describe the scope and intent of any
provisions of this Agreement.
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Section 1.04 Opinions. Each opinion with respect to the
validity, binding nature and enforceability of documents or Notes may be
qualified to the extent that the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity (whether considered in a proceeding or action in equity
or at law) and may state that no opinion is expressed on the availability of
the remedy of specific enforcement, injunctive relief or any other equitable
remedy. Any opinion required to be furnished by any Person hereunder must be
delivered by counsel upon whose opinion the addressee of such opinion may
reasonably rely, and such opinion may state that it is given in reasonable
reliance upon an opinion of another, a copy of which must be attached,
concerning the laws of a foreign jurisdiction.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS
Section 2.01 Conveyance of the Mortgage Loans. (a) The
Sponsor, concurrently with the execution and delivery hereof, hereby
transfers, assigns, sets over and otherwise conveys or shall request or
cause to be transferred, sold, assigned, set over and otherwise conveyed,
without recourse, for good and valuable consideration, to the Holding Trust,
and the Holding Trust hereby transfers, assigns, sets over and otherwise
conveys, without recourse, for good and valuable consideration, to the
Trust, for pledge to the Indenture Trustee, on behalf of the Noteholders and
the Note Insurer, all right, title and interest of the Sponsor or the
Holding Trust, as the case may be, in and to (i) the Mortgage Loans, (ii)
such amounts in all Accounts including principal collected and interest
accrued in respect of the related Mortgage Loans on or after the Initial
Cut-Off Date, each Subsequent Cut-Off Date and each Replacement Cut-Off
Date, as applicable, including Eligible Investments, as may from time to
time may be held in such Accounts (except any Premium Recapture and interest
accrued prior to the Initial Cut-Off Date, each Subsequent Cut-Off Date and
each Replacement Cut-Off Date, as applicable and except for net investment
earnings on the Principal and Interest Account, the Capitalized Interest
Account and the Note Account), (iii) any Property, the ownership of which
has been effected on behalf of the Trust as a result of foreclosure or
acceptance by the Master Servicer of a deed in lieu of foreclosure and that
has not been withdrawn from the Trust, (iv) any Mortgage Insurance Policies
relating to the Mortgage Loans and any rights of the Sponsor or any
Originator under any Mortgage Insurance Policies, (v) Net Liquidation
Proceeds with respect to any Liquidated Mortgage Loan, (vii) the rights of
the Sponsor against any Originator pursuant to the Mortgage Loan Transfer
Agreement and (viii) any other assets included or to be included in the
Trust Estate for pledge to the Indenture Trustee on behalf of the
Noteholders and the Note Insurer. In addition, on or prior to the Closing
Date, the Sponsor shall cause the Note Insurer to deliver the Policy to the
Indenture Trustee, on behalf of the Noteholders. The transfer of the Initial
Mortgage Loans set forth on the Schedule of Mortgage Loans to the Trust is
absolute and is intended by the Sponsor, the Holding Trust, the Noteholders
and all parties hereto to be treated as a sale by the Sponsor to the Holding
Trust, and by the Holding Trust to the Trust.
(b) The Sponsor and the Holding Trust agree to take or cause
to be taken such actions and execute such documents as are necessary to
perfect and protect the Note Owners' and the Note Insurer's interests in
each Mortgage Loan and the proceeds thereof (including, without
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limitation, the filing of all necessary continuation statements for the
UCC-1 financing statements filed in the appropriate jurisdictions (which
shall have been filed within 90 days of the Closing Date or the Subsequent
Transfer Date, as the case may be)) and to file in the appropriate
jurisdictions any amendments to UCC-1 financing statements required to
reflect a change in the name or corporate structure of the debtor or
permitted assigns or the filing of any additional UCC-1 financing statements
due to a change in the principal office of the debtor or permitted assigns
(within 90 days of any event necessitating such filing)).
(c) In connection with the transfer and assignment of the
Mortgage Loans, the Sponsor and the Holding Trust agree to:
(i) cause to be delivered to the Indenture Trustee, without
recourse no later than the Closing Date or any Subsequent Transfer
Date or any date on which a Qualified Replacement Mortgage Loan is
transferred, as applicable, the items listed in the definition of
"Mortgage File"; provided, that the assignments of Mortgage listed in
such definition shall be delivered to the Indenture Trustee within 75
Business Days of the Closing Date, any Subsequent Transfer Date or
date on which a Qualified Replacement Mortgage Loan is transferred, as
applicable; and
(ii) cause, within 75 Business Days following the Closing
Date, any Subsequent Transfer Date or date on which a Qualified
Replacement Mortgage Loan is transferred, as applicable, the
assignments of Mortgage to be submitted for recording in the
appropriate jurisdictions wherein such recordation is necessary to
perfect the lien thereof against creditors of or purchasers from the
related Originator to the Indenture Trustee; provided, however, that
for administrative convenience and facilitation of servicing and to
reduce closing costs, assignments of mortgage shall not be required to
be submitted for recording with respect to any Mortgage Loan only if
the Indenture Trustee, the Note Insurer and each Rating Agency has
received an Opinion of Counsel, satisfactory in form and substance to
the Note Insurer and to each Rating Agency to the effect that the
recordation of such assignments in any specific jurisdiction is not
necessary to protect the Indenture Trustee's interest in the related
Mortgage.
All recording required pursuant to this Section 2.01, shall be
accomplished at the expense of the Originators or of the Sponsor.
Notwithstanding anything to the contrary contained in this Section 2.01, in
those instances where the public recording office retains the original
Mortgage, the assignment of a Mortgage or the intervening assignments of the
Mortgage after it has been recorded, the Sponsor shall be deemed to have
satisfied its obligations hereunder upon delivery to the Indenture Trustee
of a copy of such Mortgage, such assignment or assignments of Mortgage
certified by the public recording office to be a true copy of the recorded
original thereof.
Copies of all Mortgage assignments received by the Indenture
Trustee shall be kept in the related Mortgage File.
Such assignments of mortgage shall, in addition to the
requirements specified in the definition of " Mortgage File", be in
recordable form. On or before the Closing Date, any Subsequent Transfer Date
or date on which a Qualified Replacement Mortgage Loan is
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transferred, as applicable, the Sponsor shall deliver to the Indenture
Trustee an original executed power of attorney, from the current
recordholders of the related Mortgage substantially in the form of Exhibit
F, authorizing the Indenture Trustee and the Master Servicer on behalf of
the Indenture Trustee to record the assignments of mortgage as provided in
clause (ii) of this Section 2.01(c). Pursuant to such power of attorney, the
Indenture Trustee also may execute a new assignment of mortgage for any
Mortgage Loan if the original assignment of mortgage delivered by the
Sponsor to the Indenture Trustee is not in recordable form at such time as
the assignment of mortgage is to be recorded by the Indenture Trustee.
(d) As full consideration for the transfer, set-over and
conveyance by the Holding Trust to the Trust of all of its right, title and
interest in and to the Mortgage Loans and the other rights and properties
specified in Section 2.01(a), the Trust shall (x) pay to or upon the order
of the Holding Trust that amount in immediately available funds equal to the
proceeds of the sale of the Notes, net of any underwriting discounts and
other transaction costs (including the cost of obtaining the Policy), and
(y) issue to the Holding Trust one or more Certificates evidencing in the
aggregate 100% of the beneficial ownership interest in the Trust. As full
consideration for the transfer, set-over and conveyance by the Sponsor to
the Holding Trust of all of its right, title and interest in and to the
Mortgage Loans and the other rights and properties specified in Section
2.01(a), the Holding Trust shall (x) pay to or upon the order of the Sponsor
that amount in immediately available funds equal to the proceeds of the sale
of the Notes, net of any underwriting discounts, the Original Pre-Funded
Amount, the Capitalized Interest Account Deposit and other transaction costs
(including the cost of obtaining the Policy), and (y) issue to or at the
direction of the Sponsor one or more trust certificates evidencing in the
aggregate 100% of the beneficial ownership interest in the Holding Trust.
(e) The Sponsor (or any affiliate of the Sponsor) shall
transfer, sell, assign, set over and otherwise convey, without recourse, to
the Holding Trust, and the Holding Trust shall transfer, sell assign, set
over and otherwise convey, without recourse, to the Trust and for pledge to
the Indenture Trustee on behalf of the Noteholders all right, title and
interest of the Sponsor (or of such affiliate) or the Holding Trust, as the
case may be, in and to any Qualified Replacement Mortgage Loan delivered to
by the Sponsor to the Holding Trust and by the Holding Trust to the Trust
pursuant to Sections 2.02, 3.03 and 3.04 hereof and all its right, title and
interest to principal collected and interest accruing on such Qualified
Replacement Mortgage Loan on and after the applicable Replacement Cut-Off
Date; provided, however, that the Sponsor (or such affiliate) shall reserve
and retain all right, title and interest in and to payments of principal due
and interest accrued on such Qualified Replacement Mortgage Loan prior to
the applicable Replacement Cut-Off Date.
(f) If a Mortgage assignment is lost during the process of
recording, or is returned from the recorder's office unrecorded due to a
defect therein, the Sponsor shall prepare a substitute assignment or cure
such defect, as the case may be, and thereafter cause each such assignment
to be duly recorded.
(g) The Sponsor shall cause to be reflected on the applicable
records that the Mortgage Loans have been sold to the Holding Trust and the
Holding Trust shall cause to be reflected on the applicable records that the
Mortgage Loans have been sold to the Trust.
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(h) To the extent that the ratings, if any, then assigned to
the unsecured debt of the Sponsor or of its ultimate corporate parent are
satisfactory to the Controlling Party and each Rating Agency then, any of
the Document Delivery Requirements described above may be waived by an
instrument signed by the Controlling Party and each Rating Agency (or any
documents theretofore delivered to the Indenture Trustee returned to the
Sponsor) on such terms and subject to such conditions as the Controlling
Party and each Rating Agency may permit.
(i) It is the express intent of the parties hereto that the
conveyance of the Mortgage Loans (including all other rights and properties
described in Section 2.01(a) above) by the Sponsor to the Holding Trust and
by the Holding Trust to the Trust be construed as a sale of the Mortgage
Loans by the Sponsor to the Holding Trust and a sale of the Mortgage Loans
by the Holding Trust to the Trust. It is, further, not the intent of the
parties that the conveyance from the Sponsor to the Holding Trust or from
the Holding Trust to the Trust be deemed a pledge of the Mortgage Loans by
the Sponsor to the Holding Trust to secure a debt or other obligation of the
Sponsor or any of its assignors or by the Holding Trust to the Trust to
secure a debt or other obligation of the Holding Trust or any of its
assignors. However, in the event and to the extent that, notwithstanding the
intent of the parties hereto, any or all of the Mortgage Loans (including
the other rights and properties described in Section 2.01(a) above) are held
to be property of the Sponsor or any of its assignors, or the Holding Trust
or any of its assignors, then
(i) this Agreement shall also be deemed to be a security
agreement within the meaning of Article 9 of the New York UCC;
(ii) the conveyance provided for herein shall be deemed to be
a grant by the Sponsor to the Holding Trust and by the Holding Trust
to the Trust of a first priority security interest in all of the
Sponsor's and the Holding Trust's, respectively, right, title and
interest in and to the Mortgage Loans (including the other rights and
properties described in Section 2.01(a) above) and all amounts payable
to the holder of the Mortgage Loans and/or such rights or properties
in accordance with the terms thereof and all proceeds of the
conversion, voluntary or involuntary, of the foregoing into cash,
instruments, securities or other property, including all amounts from
time to time held or invested in any Account, whether in the form of
cash, instruments, securities or other property;
(iii) the possession by the Indenture Trustee or its bailees
or agents of items of property that constitute instruments, money,
negotiable documents or chattel paper shall be deemed to be
"possession by the secured party" for purposes of perfecting the
security interest pursuant to Section 9-305 of the New York UCC;
(iv) notifications to persons holding such property, and
acknowledgments, receipts or confirmations from persons holding such
property, shall be deemed notifications to, or acknowledgments,
receipts or confirmations from, financial intermediaries, bailees or
agents (as applicable) of the Indenture Trustee for the purpose of
perfecting such security interest under applicable law; and
(v) the obligations secured by the first priority security
interest described in clause (iii) above shall be deemed to include
any and all obligations of the Trust to pay
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the principal of and interest on the Notes to the Noteholders and to
pay the fees, expenses and other amounts required to be paid to the
Master Servicer, the Indenture Trustee, the Note Insurer and the
Noteholders, all in accordance with and otherwise subject to the
Operative Documents.
Any assignment or other transfer of the interest of the
Indenture Trustee under any provision hereof shall also be deemed to be an
assignment of any security interest created hereby. Each of the Sponsor, the
Holding Trust and the Master Servicer shall, to the extent consistent with
this Agreement, take such actions as may be necessary to ensure that, if
this Agreement were deemed to create a security interest in the Mortgage
Loans, such security interest would be deemed to be a perfected security
interest of first priority under applicable law and would be maintained as
such throughout the terms of this Agreement. The Sponsor and the Holding
Trust also covenant not to pledge, assign or grant any security interest to
any third party in any Mortgage Loan conveyed to the Trust hereunder.
Upon the Indenture Trustee's or the Note Insurer's request, the
Sponsor and/or the Holding Trust shall perform (or cause to be performed)
such further acts and execute, acknowledge and deliver (or cause to be
executed, acknowledged and delivered) to the Indenture Trustee such further
documents as the Indenture Trustee or the Note Insurer shall deem necessary
or advisable in order to evidence, establish, maintain, protect, enforce or
defend its rights in and to the Mortgage Loans and other rights and
properties transferred hereunder or otherwise to carry out the intent and
accomplish the purposes of this Agreement (including UCC-1 financing
statements naming the Sponsor or the Holding Trust as debtor and the
Indenture Trustee as secured party and any continuation statements relating
thereto).
Section 2.02 Acceptance by the Trust; Certain Substitutions of
Mortgage Loans; Certification by Indenture Trustee. (a) The Indenture
Trustee, on behalf of the Trust, hereby acknowledges receipt of the Trust
Estate and agrees to execute and deliver no later than the Closing Date, on
any Subsequent Transfer Date and on any date on which a Qualified
Replacement Mortgage Loan is transferred to the Trust, as applicable, an
acknowledgment of receipt in the form attached as Exhibit B hereto of the
Mortgage Files delivered by the Sponsor to the Holding Trust and by the
Holding Trust to the Indenture Trustee, and declares that it will hold such
documents and any amendments, replacement or supplements thereto, as well as
any other assets included in the definition of Trust Estate and pledged to
it on behalf of the Noteholders and the Note Insurer. On or before the tenth
Business Day after the Closing Date, any Subsequent Transfer Date, and any
date on which a Qualified Replacement Mortgage Loan is conveyed to the
Trust, the Indenture Trustee shall execute and deliver to the Note Insurer
and the Master Servicer an acknowledgement of receipt of the original
Mortgage Notes for each Mortgage Loan.
The Indenture Trustee further agrees to review any documents
delivered by the Sponsor within 90 days after the Closing Date (or within 90
days with respect to any Subsequent Mortgage Loan or Qualified Replacement
Mortgage Loan after the assignment thereof) and to deliver to the Sponsor,
the Holding Trust, the Master Servicer and the Note Insurer a Certification
in the form attached hereto as Exhibit C hereto. The Indenture Trustee shall
be under no duty or obligation to inspect, review or examine any such
documents, instruments, certificates or other papers to determine that they
are genuine, enforceable, or appropriate for the
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represented purpose or that they are other than what they purport to be on
their face, nor shall the Indenture Trustee be under any duty to determine
independently whether there are any intervening assignments or assumption or
modification agreements with respect to any Mortgage Loan.
(b) If the Indenture Trustee during such 90-day period finds
any document constituting a part of a Mortgage File which (i) is not
properly executed, (ii) has not been received within the specified period,
(iii) is unrelated to the Mortgage Loans identified in the Schedules of
Mortgage Loans, (iv) that any Mortgage Loan does not conform in a material
respect to the description thereof as set forth in the Schedules of Mortgage
Loans, the Indenture Trustee shall promptly so notify the Sponsor, the
Master Servicer and the Note Insurer. In performing any such review, the
Indenture Trustee may conclusively rely on the Sponsor as to the purported
genuineness of any such document and any signature thereon. The Sponsor
agrees to use reasonable efforts to remedy a material defect in a document
constituting part of a Mortgage File of which it is so notified by the
Indenture Trustee. If, however, within 60 days after the Indenture Trustee's
notice respecting such defect the Sponsor has not remedied or caused to be
remedied the defect and the defect materially and adversely affects the
interest of the Noteholders or of the Note Insurer in the related Mortgage
Loan, the Sponsor will (or will cause the related Originator or an affiliate
of the Sponsor to) on the next succeeding Remittance Date (i) substitute in
lieu of such Mortgage Loan a Qualified Replacement Mortgage Loan and,
deliver the Substitution Amount or (ii) purchase such Mortgage Loan at a
purchase price equal to the Loan Purchase Price thereof, which purchase
price shall be delivered to the Master Servicer for deposit in the Principal
and Interest Account.
Upon receipt of any Qualified Replacement Mortgage Loan or of
written notification signed by a Servicing Officer to the effect that the
Loan Purchase Price in respect of such Mortgage Loan has been deposited into
the Principal and Interest Account, then as promptly as practicable, the
Indenture Trustee shall execute such documents and instruments of transfer
presented by the Sponsor, in each case without recourse, representation or
warranty, and take such other actions as shall reasonably be requested by
the Sponsor to effect such transfer by the Trust of such Mortgage Loan
pursuant to this Section 2.02. It is understood and agreed that the
obligation of the Sponsor to accept a transfer of a Mortgage Loan and to
either convey a Qualified Replacement Mortgage Loan or to make a deposit of
any related Loan Purchase Price into the Principal and Interest Account
shall constitute the sole remedy respecting such defect available to
Noteholders, the Indenture Trustee, the Trust and the Note Insurer against
the Sponsor.
The Sponsor, promptly following the transfer of a Mortgage Loan
from or to the Trust pursuant to this Section 2.02(b), shall deliver an
amended Schedule of Mortgage Loans to the Indenture Trustee and the Note
Insurer and shall make appropriate entries in its general account records to
reflect such transfer. The Master Servicer shall, following the transfer of
a repurchased Mortgage Loan from the Indenture Trustee to the Sponsor,
appropriately xxxx its records to indicate that it is no longer servicing
such Mortgage Loan on behalf of the Trust.
(c) As to any Qualified Replacement Mortgage Loan, the
Sponsor shall deliver to the Indenture Trustee with respect to such
Qualified Replacement Mortgage Loan such documents and agreements as are
required to be held by the Indenture Trustee in accordance
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with this Section 2.02. For any Remittance Period during which the Sponsor
substitutes one or more Qualified Replacement Mortgage Loans, the Master
Servicer shall determine the Substitution Amount, which amount shall be
deposited by the Sponsor in the Principal and Interest Account at the time
of substitution. All amounts received in respect of the Qualified
Replacement Mortgage Loan during the Remittance Period in which the
circumstances giving rise to such substitution occur shall not be a part of
the Trust Estate and shall not be deposited by the Master Servicer in the
Principal and Interest Account. All amounts received by the Master Servicer
during the Remittance Period in which the circumstances giving rise to such
substitution occur in respect of any Mortgage Loan so removed by the Trust
Estate shall be deposited by the Master Servicer in the Principal and
Interest Account. Upon such substitution, each Qualified Replacement
Mortgage Loan shall be subject to the terms of this Agreement in all
respects, and the Sponsor shall be deemed (i) to have made with respect to
such Qualified Replacement Mortgage Loan, as of the date of substitution,
the covenants, representations and warranties set forth in Section 3.03 and
(ii) to have certified that such Mortgage Loan(s) is/are Qualified
Replacement Mortgage Loan(s).
Section 2.03 Cooperation Procedures. The Sponsor, the Master
Servicer and the Indenture Trustee covenant to provide each other and to the
Note Insurer all data and information required to be provided by them
hereunder at the times required hereunder, and additionally covenant
reasonably to cooperate with each other in providing any additional
information required by any of them in connection with their respective
duties hereunder.
Section 2.04 Conveyance of the Subsequent Mortgage Loans.
(a) On any Subsequent Transfer Date, subject to the conditions set forth in
paragraph (b) below, in consideration of the Indenture Trustee's delivery of
all or a portion of the balance of funds in the Pre-Funding Account, the
Sponsor shall sell, transfer, assign, set over and otherwise convey, without
recourse, to the Holding Trust or shall request or cause the Holding Trust
to acquire from the Sponsor or an affiliate of the Sponsor, and the Holding
Trust shall sell, transfer, assign, set over and otherwise convey to the
Trust, without recourse, for pledge to the Indenture Trustee on behalf of
the Noteholders and the Note Insurer all right, title and interest of the
Sponsor or such affiliate or the Holding Trust, as applicable, in and to
each Subsequent Mortgage Loan listed on the Schedule of Mortgage Loans
delivered by the Sponsor to the Indenture Trustee on such Subsequent
Transfer Date, all right, title and interest in and to principal collected
and interest accrued on each such Subsequent Mortgage Loan on and after the
related Subsequent Cut-Off Date and all right, title and interest in and to
all Mortgage Insurance Policies; provided, however, that the Sponsor
reserves and retains all of its right, title and interest in and to
principal collected and interest accrued on each such Subsequent Mortgage
Loan prior to the related Subsequent Cut-Off Date. Each of the transfer by
the Sponsor to the Holding Trust and by the Holding Trust to the Trust of
the Subsequent Mortgage Loans set forth on the Schedule of Mortgage Loans
shall be absolute and shall be intended by the Sponsor, the Holding Trust
the Noteholders and all parties hereto to be treated as a sale.
The amount released from the Pre-Funding Account shall be equal
to 96.25% of the aggregate Loan Balances of the Subsequent Mortgage Loans so
transferred.
The Sponsor shall transfer or cause to be transferred to the
Indenture Trustee, on behalf of the Trust, the Subsequent Mortgage Loans and
the other property and rights related
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thereto described in paragraph (a) above only upon the satisfaction of each of
the following conditions on or prior to the related Subsequent Transfer Date:
(i) the Sponsor shall have provided the Indenture Trustee,
the Note Insurer and each Rating Agency with an Addition Notice and
any information in an electronic data file with respect to the
Subsequent Mortgage Loans;
(ii) the Sponsor and the Holding Trust shall have delivered
to the Indenture Trustee a duly executed written assignment (including
an acceptance by the Indenture Trustee) in substantially the form of
Exhibit G (the "Subsequent Transfer Agreement"), which shall include a
Schedule of Mortgage Loans, listing the Subsequent Mortgage Loans and
any other exhibits listed thereon;
(iii) prior to or on the first Remittance Date following the
related Subsequent Transfer Date, the Sponsor shall have deposited in
the Principal and Interest Account all principal collected and
interest accrued (excluding premium recapture and interest accrued
prior to the related Subsequent Cut-Off Date) in respect of the
Subsequent Mortgage Loans on or after the related Subsequent Cut-Off
Date;
(iv) as of each Subsequent Transfer Date, none of the related
Originators, the Master Servicer or the Sponsor was insolvent nor will
any of them have been made insolvent by such transfer nor is any of
them aware of any pending insolvency;
(v) such conveyance of Subsequent Mortgage Loans will not
result in a material adverse tax consequence to the Trust or the
Noteholders;
(vi) the Pre-Funding Period shall not have terminated;
(vii) the Sponsor shall have delivered to the Indenture
Trustee an Officer's Certificate confirming the satisfaction of each
condition precedent specified in paragraphs (b), (c) and (d) of this
Section 2.04 and in the related Subsequent Transfer Agreement.
(viii) the Rating Agencies, the Note Insurer, and the
Indenture Trustee shall have received, Opinions of Counsel with
respect to certain tax, true sale and bankruptcy matters related to
the transfer of the Subsequent Mortgage Loans (which Opinions of
Counsel may be delivered on the Closing Date); and
(ix) the Note Insurer shall have approved the Subsequent
Mortgage Loans to be transferred.
(b) The obligation of the Trust to purchase a Subsequent
Mortgage Loan on any Subsequent Transfer Date is subject to the following
requirements:
(i) for each Subsequent Mortgage Loan, as of the related
Subsequent Cut-Off Date:
(A) the applicable Gross Margin is at least 1.90%;
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(B) the final maturity date is not later than
February 29, 2030,
(C) the Loan-to-Value Ratio is not in excess of 100%;
(D) the Loan Balance is not in excess of $500,000.00;
and
(E) the Mortgage Loan is not more than 30 days
Delinquent; and
(ii) following the purchase of such Subsequent Mortgage Loans
by the Trust, the Mortgage Loans (by aggregate Loan Balance)
(including Subsequent Mortgage Loans):
(A) will have a weighted average Coupon Rate of at
least 9.25%;
(B) will have a weighted average Loan-to-Value Ratio
of not more than 81.00%;
(C) will have not more than 2.00% Mortgage Loans with
a Loan-to-Value Ratio of greater than 90.00%;
(D) will have at least 92.00% Mortgage Loans that are
considered "fully documented" loans;
(E) will have at least 87.00% Mortgage Loans that are
related to single family detached residences or
planned unit developments;
(F) will have 100.00% Mortgage Loans which are First
Mortgage Loans;
(G) will have at least 75.00% Mortgage Loans which
are classified "A-" or better;
(H) will have not more than 8.00% of Mortgage Loans
that are classified "C";
(I) will have not more than 1.50% of Mortgage Loans
that are classified "D";
(J) will have a weighted average Gross Margin of at
least 5.15%;
(K) will have not more than 15.00% of Mortgage Loans
for which the related Property is located in any
one state.
The Note Insurer may waive or modify any of the requirements in
this Section 2.04(c) or specify any additional criteria provided that
any such modification shall not materially and adversely affect the
Sponsor.
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(c) In connection with the transfer and assignment of the
Subsequent Mortgage Loans, the Sponsor agrees to satisfy, or cause to be
satisfied, the conditions set forth in Sections 2.01(b), (c), (f), (g), (h)
and (i), 2.02 and 2.03 hereof and this Section 2.04.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE SPONSOR AND THE MASTER SERVICER
Section 3.01 Representations and Warranties of the Sponsor. The
Sponsor hereby represents, warrants and covenants to the Indenture Trustee,
the Note Insurer and to the Noteholders as of the Closing Date that:
(a) The Sponsor is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada
and is in good standing as a foreign corporation in each jurisdiction
in which the nature of its business, or the properties owned or leased
by it make such qualification necessary. The Sponsor has all requisite
corporate power and authority to own and operate its properties, to
carry out its business as presently conducted and as proposed to be
conducted and to enter into and discharge its obligations under this
Agreement and the other Operative Documents to which it is a party.
(b) The execution and delivery of this Agreement and the
other Operative Documents to which the Sponsor is a party by the
Sponsor and its performance and compliance with the terms of this
Agreement and of the other Operative Documents to which it is a party
have been duly authorized by all necessary corporate action on the
part of the Sponsor and will not violate the Sponsor's Articles of
Incorporation or Bylaws or constitute a default (or an event which,
with notice or lapse of time, or both, would constitute a default)
under, or result in the breach of, any material contract, agreement or
other instrument to which the Sponsor is a party or by which the
Sponsor is bound, or violate any statute or any order, rule or
regulation of any court, governmental agency or body or other tribunal
having jurisdiction over the Sponsor or any of its properties.
(c) This Agreement and the other Operative Documents to which
the Sponsor is a party, assuming due authorization, execution and
delivery by the other parties hereto and thereto, each constitutes a
valid, legal and binding obligation of the Sponsor, enforceable
against it in accordance with the terms hereof and thereof, except as
the enforcement hereof and thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and by general principles
of equity (whether considered in a proceeding or action in equity or
at law).
(d) The Sponsor is not in default with respect to any order
or decree of any court or any order, regulation or demand of any
federal, state, municipal or governmental agency, which might have
consequences that would materially and adversely affect the condition
(financial or other) or operations of the Sponsor or its properties or
might have
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consequences that would materially and adversely affect its performance
hereunder and under the other Operative Documents to which it is a party.
(e) No litigation is pending or, to the best of the Sponsor's
knowledge, threatened against the Sponsor which litigation might have
consequences that would prohibit its entering into this Agreement or
any other Operative Document to which it is a party or might have
consequences that would materially and adversely affect its
performance hereunder and under the other Operative Documents to which
it is a party.
(f) No certificate of an officer, statement furnished in
writing or report delivered pursuant to the terms hereof by the
Sponsor contains any untrue statement of a material fact or omits to
state any material fact necessary to make the certificate, statement
or report not misleading.
(g) The statements contained in the Registration Statement
which describe the Sponsor or matters or activities for which the
Sponsor is responsible in accordance with the Operative Documents or
which are attributed to the Sponsor therein are true and correct in
all material respects, and the Registration Statement does not contain
any untrue statement of a material fact with respect to the Sponsor or
omit to state a material fact required to be stated therein or
necessary in order to make the statements contained therein with
respect to the Sponsor not misleading. To the best of the Sponsor's
knowledge and belief, the Registration Statement does not contain any
untrue statement of a material fact required to be stated therein or
omit to state any material fact required to be stated therein or
necessary to make the statements contained therein not misleading.
(h) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and
licenses required to be taken, given or obtained, as the case may be,
by or from any federal, state or other governmental authority or
agency (other than any such actions, approvals, etc. under any state
securities laws, real estate syndication or "Blue Sky" statutes, as to
which the Sponsor makes no such representation or warranty), that are
necessary or advisable in connection with the purchase and sale of the
Notes and the execution and delivery by the Sponsor of the Operative
Documents to which it is a party, have been duly taken, given or
obtained, as the case may be, are in full force and effect on the date
hereof, are not subject and are not reasonably expected to be subject
to any pending proceedings or appeals (administrative, judicial or
otherwise) and either the time within which any appeal therefrom may
be taken or review thereof may be obtained has expired or no review
thereof may be obtained or appeal therefrom taken, and are adequate to
authorize the consummation of the transactions contemplated by this
Agreement and the other Operative Documents on the part of the Sponsor
and the performance by the Sponsor of its obligations under this
Agreement and such of the other Operative Documents to which it is a
party.
(i) The transactions contemplated by this Agreement are in
the ordinary course of business of the Sponsor.
(j) The Sponsor received fair consideration and reasonably
equivalent value in exchange for the sale of the interests in the
Mortgage Loans to the Trust.
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(k) The Sponsor did not sell any interest in any Mortgage
Loan with any intent to hinder, delay or defraud any of its respective
creditors.
(l) The Sponsor is solvent and the Sponsor will not be
rendered insolvent as a result of the sale of the Mortgage Loans to
the Trust or the issuance of the Notes.
It is understood and agreed that the representations and
warranties set forth in this Section 3.1 shall survive delivery of the
Mortgage Loans to the Indenture Trustee.
Section 3.02 Representations and Warranties of the Master
Servicer. The Master Servicer hereby represents, warrants and covenants to
the Indenture Trustee, the Note Insurer and to the Noteholders as of the
Closing Date that:
(a) The Master Servicer is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware, is, and each Sub-Servicer is, in compliance with the laws of
each state in which any Property is located to the extent necessary to
enable it to perform its obligations hereunder and is in good standing
as a foreign corporation in each jurisdiction in which the nature of
its business, or the properties owned or leased by it make such
qualification necessary. The Master Servicer and each Sub-Servicer has
all requisite corporate power and authority to own and operate its
properties, to carry out its business as presently conducted and as
proposed to be conducted and to enter into and discharge its
obligations under this Agreement and the other Operative Documents to
which it is a party. The Master Servicer has, on a consolidated basis
with its parent, AMHC, equity of at least $5,000,000, as determined in
accordance with generally accepted accounting principles.
(b) The execution and delivery of this Agreement by the
Master Servicer and its performance and compliance with the terms of
this Agreement and the other Operative Documents to which it is a
party have been duly authorized by all necessary corporate action on
the part of the Master Servicer and will not violate the Master
Servicer's Articles of Incorporation or Bylaws or constitute a default
(or an event which, with notice or lapse of time, or both, would
constitute a default) under, or result in the breach of, any material
contract, agreement or other instrument to which the Master Servicer
is a party or by which the Master Servicer is bound or violate any
statute or any order, rule or regulation of any court, governmental
agency or body or other tribunal having jurisdiction over the Master
Servicer or any of its properties.
(c) This Agreement and the other Operative Documents to which
the Master Servicer is a party, assuming due authorization, execution
and delivery by the other parties hereto and thereto, each constitutes
a valid, legal and binding obligation of the Master Servicer,
enforceable against it in accordance with the terms hereof, except as
the enforcement hereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
(d) The Master Servicer is not in default with respect to any
order or decree of any court or any order, regulation or demand of any
federal, state, municipal or
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governmental agency, which might have consequences that would
materially and adversely affect the condition (financial or other) or
operations of the Master Servicer or its properties or might have
consequences that would materially and adversely affect its
performance hereunder and under the other Operative Documents to which
the Master Servicer is a party.
(e) No litigation is pending or, to the best of the Master
Servicer's knowledge, threatened against the Master Servicer which
litigation might have consequences that would prohibit its entering
into this Agreement or any other Operative Document to which it is a
party or might have consequences that would materially and adversely
affect its performance hereunder and under the other Operative
Documents to which the Master Servicer is a party.
(f) No certificate of any an officer, statement furnished in
writing or report delivered pursuant to the terms hereof the by the
Master Servicer contains any untrue statement of a material fact or
omits to state any material fact necessary to make the certificate,
statement or report not misleading.
(g) The statements contained in the Registration Statement
which describe the Master Servicer or matters or activities for which
the Master Servicer is responsible in accordance with the Operative
Documents or which are attributed to the Master Servicer therein are
true and correct in all material respects, and the Registration
Statement does not contain any untrue statement of a material fact
with respect to the Master Servicer or omit to state a material fact
required to be stated therein or necessary to make the statements
contained therein with respect to the Master Servicer not misleading.
To the best of the Master Servicer's knowledge and belief, the
Registration Statement does not contain any untrue statement of a
material fact required to be stated therein or omit to state any
material fact required to be stated therein or necessary to make the
statements contained therein not misleading.
(h) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and
licenses required to be taken, given or obtained, as the case may be,
by or from any federal, state or other governmental authority or
agency (other than any such actions, approvals, etc. under any state
securities laws, real estate syndication or "Blue Sky" statutes, as to
which the Master Servicer makes no such representation or warranty),
that are necessary or advisable in connection with the execution and
delivery by the Master Servicer of the Operative Documents to which it
is a party, have been duly taken, given or obtained, as the case may
be, are in full force and effect on the date hereof, are not
reasonably expected to be subject to any pending proceedings or
appeals (administrative, judicial or otherwise) and either the time
within which any appeal therefrom may be taken or review thereof may
be obtained has expired or no review thereof may be obtained or appeal
therefrom taken, and are adequate to authorize the consummation of the
transactions contemplated by this Agreement and the other Operative
Documents on the part of the Master Servicer and the performance by
the Master Servicer of its obligations under this Agreement and such
of the other Operative Documents to which it is a party.
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(i) The collection practices used by the Master Servicer with
respect to the Mortgage Loans directly serviced by it have been, in
all material respects, legal, proper, prudent and customary in the
mortgage loan servicing business.
(j) The transactions contemplated by this Agreement are in
the ordinary course of business of the Master Servicer.
(k) The terms of each existing Sub-Servicing Agreement are
acceptable to the Master Servicer and any new Sub-Servicing Agreements
or Sub-Servicers will comply with the provisions of Section 4.03.
It is understood and agreed that the representations and
warranties set forth in this Section 3.2 shall survive delivery of the
Mortgage Loans to the Indenture Trustee.
Upon discovery by any of the Master Servicer, the Sponsor, any
Sub-Servicer, the Note Insurer or the Indenture Trustee of a breach of any
of the representations and warranties set forth in this Section 3.02 which
materially and adversely affects the interests of the Noteholders or of the
Note Insurer, the party discovering such breach shall give prompt written
notice to the other parties. Within 30 days of its discovery or its receipt
of notice of breach, the Master Servicer shall cure such breach in all
material respects and, upon the Master Servicer's continued failure to cure
such breach, may thereafter be removed by the Indenture Trustee or the Note
Insurer pursuant to Section 5.01 hereof; provided, however, that, if the
Master Servicer can demonstrate to the reasonable satisfaction of the
Controlling Party that it is diligently pursuing remedial action, then the
cure period may be extended with the written approval of the Controlling
Party.
Section 3.03 Representations and Warranties of the Sponsor with
Respect to the Mortgage Loans. (a) The Sponsor makes the following
representations and warranties as to the Mortgage Loans on which the Note
Insurer relies and the Indenture Trustee relies in accepting the Mortgage
Loans in trust and executing and authenticating the Noteholders. Such
representations and warranties speak as of the Closing Date with respect to
the Initial Mortgage Loans, as of the related Subsequent Transfer Date with
respect to any Subsequent Mortgage Loan, or as of the date upon which any
Qualified Replacement Mortgage Loan is added to the Trust, but shall in each
case survive the sale, transfer and assignment of the Mortgage Loans to the
Trust and the pledge of the Mortgage Loans to the Indenture Trustee pursuant
to the Indenture:
(i) The information with respect to each Mortgage Loan set
forth in the Schedule of Mortgage Loans is true and correct as of the
Initial Cut-Off Date, the Subsequent Cut-Off Date, or the Replacement
Cut-Off Date, as the case may be;
(ii) All of the original or certified documentation set forth
in Section 2.01 (including all material documents related thereto)
with respect to each Mortgage Loan has been or will be delivered to
the Indenture Trustee not later than the Closing Date, the related
Subsequent Transfer Date, or the date on which any Qualified
Replacement Mortgage Loan is added to the Trust, as the case may be,
or as otherwise provided in Section 2.01;
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(iii) Each Mortgage Loan is being serviced by the Master
Servicer or a Master Servicer Affiliate;
(iv) As of the Initial Cut-Off Date, no more than 0.30% of
the aggregate principal balances of the Initial Mortgage Loans are
30-59 days Delinquent and no Initial Mortgage Loan is 60 or more days'
Delinquent;
(v) All of the Mortgage Loan conform, in all material respects,
to the description thereof set forth in the Registration Statement;
(vi) The credit underwriting guidelines applicable to each
Mortgage Loan conform in all material respects to the description
thereof set forth in the Prospectus.
(b) The Sponsor hereby assigns to the Indenture Trustee for
the benefit of the Noteholders and the Note Insurer (so long as a Note
Insurer Default has not occurred and is continuing) all of its right, title
and interest in respect of the Mortgage Loan Transfer Agreement. Insofar as
the Mortgage Loan Transfer Agreement provides for representations and
warranties made by the related Originator in respect of a Mortgage Loan and
any remedies provided thereunder for any breach of such representations and
warranties, such right, title and interest may be enforced by the Master
Servicer or by the Indenture Trustee on behalf of the Noteholders and the
Note Insurer. Upon the discovery by the Sponsor, the Master Servicer, the
Note Insurer or the Indenture Trustee of a breach of any of the
representations and warranties made in the Mortgage Loan Transfer Agreement
in respect of any Mortgage Loan which materially and adversely affects the
interests of the Noteholders or of the Note Insurer in such Mortgage Loan,
the party discovering such breach shall give prompt written notice to the
other parties. The Master Servicer shall promptly notify the related
Originator of such breach and request that such Originator cure such breach
or take the actions described in Section 3.04(b) hereof within the time
periods required thereby, and if such Originator does not cure such breach
in all material respects, the Sponsor shall cure such breach or take such
actions. The obligations of the Sponsor or Master Servicer, as the case may
be, set forth herein with respect to any Mortgage Loan as to which such a
breach has occurred and is continuing shall constitute the sole obligations
of the Master Servicer and of the Sponsor in respect of such breach.
Section 3.04 Covenants of Sponsor to Take Certain Actions with
Respect to the Mortgage Loans In Certain Situations. (a) With the
provisos and limitations as to remedies set forth in this Section 3.04, upon
the discovery by the Sponsor, the Master Servicer, the Note Insurer, any
Sub-Servicer or the Indenture Trustee that the representations and
warranties set forth in Section 3.03 of this Agreement or in the Mortgage
Loan Transfer Agreement were untrue in any material respect as of the
Closing Date (or the Subsequent Transfer Date, as the case may be) and such
breaches of the representations and warranties materially and adversely
affect the interests of the Noteholders or of the Note Insurer, the party
discovering such breach shall give prompt written notice to the other
parties.
The Sponsor acknowledges that a breach of any representation or
warranty (x) relating to marketability of title sufficient to transfer
unencumbered title to a Mortgage Loan or (y) relating to enforceability of
the Mortgage Loan against the related Mortgagor or Property,
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constitutes breach of a representation or warranty which materially and
adversely affects the interests of the Noteholders or of the Note Insurer in
such Mortgage Loan.
(b) Upon the earliest to occur of the Sponsor's discovery,
its receipt of notice of breach from any one of the other parties hereto or
from the Note Insurer or such time as a breach of any representation and
warranty materially and adversely affects the interests of the Noteholders
or of the Note Insurer as set forth above, the Sponsor hereby covenants and
warrants that it shall promptly cure such breach in all material respects or
it shall (or shall cause an affiliate of the Sponsor or an Originator to),
subject to the further requirements of this paragraph, on the second
Remittance Date next succeeding such discovery, or receipt of notice (i)
substitute in lieu of each Mortgage Loan which has given rise to the
requirement for action by the Sponsor a Qualified Replacement Mortgage Loan
and deliver the Substitution Amount applicable thereto, together with the
aggregate amount of all Delinquency Advances and Servicing Advances
theretofore made with respect to such Mortgage Loan and not previously
reimbursed to the Master Servicer for deposit in the Principal and Interest
Account or (ii) purchase such Mortgage Loan from the Trust at a purchase
price equal to the Loan Purchase Price thereof, which purchase price shall
be delivered to the Master Servicer for deposit in the Principal and
Interest Account. It is understood and agreed that the obligation of the
Sponsor to cure the defect, or substitute for, or purchase any Mortgage Loan
as to which a representation or warranty is untrue in any material respect
and has not been remedied shall constitute the sole remedy available to the
Noteholders, the Indenture Trustee or the Note Insurer.
(c) In the event that any Qualified Replacement Mortgage Loan
is delivered by an Originator or by the Sponsor (or by an affiliate of the
Sponsor, as the case may be) to the Trust pursuant to Sections 3.03, 3.04 or
2.02 hereof, the related Originator and the Sponsor shall be obligated to
take the actions described in Section 3.04(b) with respect to such Qualified
Replacement Mortgage Loan upon the discovery by any of the Noteholders, the
Sponsor, the Master Servicer, the Note Insurer, any Sub-Servicer or the
Indenture Trustee that the representations and warranties set forth in the
Mortgage Loan Transfer Agreement or in Section 3.03 above are untrue in any
material respect on the date such Qualified Replacement Mortgage Loan is
conveyed to the Trust such that the interests of the Noteholders or the Note
Insurer in the related Qualified Replacement Mortgage Loan are materially
and adversely affected.
(d) In the event that any Qualified Replacement Mortgage Loan
is delivered to the Trust, such Qualified Replacement Mortgage Loan must be
a Mortgage Loan which: (i) bears an adjustable rate of interest, (ii) has
the same interest rate index, a margin over such index and a maximum
interest rate equal to or greater than those applicable to the Mortgage Loan
being replaced, (iii) is of the same or better property type and the same or
better occupancy status as the replaced Mortgage Loan, (iv) shall be of the
same or better credit quality classification (determined in accordance with
the Originators' credit underwriting guidelines) as the Mortgage Loan being
replaced, (v) shall mature no later than February 29, 2030, (vi) has a
Loan-to-Value Ratio as of the Replacement Cut-Off Date no higher than the
Loan-to-Value Ratio of the replaced Mortgage Loan at such time, (vii) has a
Loan Balance as of the related Replacement Cut-Off Date equal to or less
than the Loan Balance of the replaced Mortgage Loans as of such Replacement
Cut-Off Date, (viii) satisfies all of the representations and warranties set
forth in Section 3.03 as evidenced by an Officer's Certificate of the
Sponsor
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delivered to the Note Insurer, the Sponsor and the Indenture Trustee prior
to any such substitution and (ix) is a valid First Mortgage Loan. In the
event that one or more mortgage loans are proposed to be substituted for one
or more mortgage loans, the Note Insurer may allow the foregoing tests to be
met on a weighted average basis with respect to the Mortgage Loans only or
other aggregate basis acceptable to the Note Insurer, as evidenced by a
written consent delivered to the Indenture Trustee by the Note Insurer,
except that the requirement of clause (viii) hereof must be satisfied as to
each Qualified Replacement Mortgage Loan. The procedures applied by the
Sponsor in selecting each Qualified Replacement Mortgage Loan shall not be
materially adverse to the interests of the Indenture Trustee, the
Noteholders or the Note Insurer.
(e) As to each Mortgage Loan released from the Trust in
connection with the conveyance of a Qualified Replacement Mortgage Loan
therefor, the Indenture Trustee will transfer, assign, set over and
otherwise convey without recourse, all of its right, title and interest in
and to such released Mortgage Loan and all of the Trust's right, title and
interest to principal collected and interest accruing on such released
Mortgage Loan on and after the applicable Replacement Cut-Off Date;
provided, however, that the Trust shall reserve and retain all right, title
and interest in and to payments of principal collected and interest accrued
on such released Mortgage Loan prior to the applicable Replacement Cut-Off
Date.
(f) In connection with any transfer and assignment of a
Qualified Replacement Mortgage Loan to the Trust, the Sponsor agrees to
cause to be delivered to the Indenture Trustee the items described in
Section 2.01(c) on the date of such transfer and assignment or, if a later
delivery time is permitted by Section 2.01(c), then no later than such later
delivery time.
(g) As to each Mortgage Loan released from the Trust in
connection with the conveyance of a Qualified Replacement Mortgage Loan the
Indenture Trustee shall deliver no later than the date of conveyance of such
Qualified Replacement Mortgage Loan and on the order of the Sponsor (i) the
original Mortgage Note, or the certified copy, relating thereto, endorsed
without recourse, to the Sponsor and (ii) such other documents as
constituted the Mortgage File with respect thereto.
(h) The Sponsor shall, in connection with the delivery of
each Qualified Replacement Mortgage Loan to the Indenture Trustee, provide
the Indenture Trustee with the information set forth in the Schedule of
Mortgage Loans with respect to such Qualified Replacement Mortgage Loan.
(i) It is understood and agreed that the covenants set forth
in this Section 3.04 shall survive delivery of the respective Mortgage Loans
(including Subsequent Mortgage Loans and Qualified Replacement Mortgage
Loans) to the Indenture Trustee on behalf of the Trust.
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ARTICLE IV
SERVICING AND ADMINISTRATION
OF MORTGAGE LOANS
Section 4.01 Master Servicer and Sub-Servicers. (a) Acting
directly or through one or more Sub-Servicers as provided in Section 4.03,
the Master Servicer, as master servicer, shall service and administer the
Mortgage Loans in accordance with this Agreement and on behalf of the
Indenture Trustee and the Note Insurer in accordance with Accepted Servicing
Practices, and shall have full power and authority, acting alone, to do or
cause to be done any and all things in connection with such servicing and
administration which it may deem necessary or desirable.
(b) With respect to the Mortgage Loans, the duties of the
Master Servicer shall include (i) collecting and posting of all payments,
(ii) responding to inquiries of Mortgagors or by federal, state or local
government authorities, (iii) investigating delinquencies, (iv) reporting
tax information to Mortgagors in accordance with its customary practices,
(v) accounting for collections, (vi) furnishing monthly and annual
statements to the Indenture Trustee and the Note Insurer, as applicable,
with respect to distributions, (vii) paying Compensating Interest and (viii)
making Delinquency Advances and Servicing Advances pursuant hereto. The
Master Servicer shall follow Accepted Servicing Practices in performing its
duties as Master Servicer. The Master Servicer shall cooperate with the
Indenture Trustee and furnish to the Indenture Trustee with reasonable
promptness information in its possession as may be necessary or appropriate
to enable the Indenture Trustee to perform its tax reporting duties
hereunder.
(c) Without limiting the generality of the foregoing, the
Master 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 Note Insurer 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 Mortgage
Loans and with respect to the related Properties; (ii) may consent to any
modification of the terms of any Mortgage Note not expressly prohibited
hereby if the effect of any such modification will not be to affect
materially and adversely the security afforded by the related Property, the
timing of receipt of any payments required hereby or the interest of the
Note Insurer.
(d) The Master Servicer shall, in accordance with Accepted
Servicing Practices, have the right to approve applications of Mortgagors
for consent to (i) partial releases of Mortgages, (ii) alterations to
Properties and (iii) removal, demolition or division of Properties. No
application for consent may be approved by the Master Servicer unless: (x)
the provisions of the related Note and Mortgage have been complied with; (y)
the 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 Indenture
Trustee) and the Mortgagor's debt-to-income ratio after any release does not
exceed the Loan-to-Value Ratio and debt-to-income ratio applicable to such
Mortgage Loan at origination and (z) the lien priority of the related
Mortgage is not adversely affected; provided, however, that the foregoing
requirements in clauses (x), (y) and (z) shall not apply to
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any such situation described in this paragraph if such situation results
from any condemnation or easement activity by a governmental entity.
(e) Without limiting the generality of the foregoing, but
subject to Sections 4.13 and 4.14, the Master Servicer in its own name or in
the name of a Sub-Servicer may be authorized and empowered pursuant to a
power of attorney executed and delivered by the Indenture Trustee to execute
and deliver, and may be authorized and empowered by the Indenture Trustee,
to execute and deliver, on behalf of itself, the Noteholders, the Note
Insurer and the Indenture Trustee or any of them, (i) any and all
instruments of satisfaction or cancellation or of partial or full release or
discharge and all other comparable instruments with respect to the Mortgage
Loans and with respect to the Properties, (ii) to institute foreclosure
proceedings or obtain a deed in lieu of foreclosure so as to effect
ownership of any Property on behalf of the Indenture Trustee and (iii) to
hold title to any Property upon such foreclosure or deed in lieu of
foreclosure on behalf of the Indenture Trustee; provided, however, that
Section 4.14(a) shall constitute a power of attorney from the Indenture
Trustee to the Master Servicer or any Sub-Servicer to execute an instrument
of satisfaction (or assignment of mortgage without recourse) with respect to
any Mortgage Loan paid in full (or with respect to which payment in full has
been escrowed). Subject to Sections 4.13 and 4.14, the Indenture Trustee
shall agree in the Indenture to furnish the Master Servicer or any
Sub-Servicer with any powers of attorney and other documents as the Master
Servicer or such Sub-Servicer shall reasonably request to enable the Master
Servicer or any Sub-Servicer to carry out their respective servicing and
administrative duties hereunder.
(f) The Master Servicer shall give prompt notice to the
Indenture Trustee of any action, of which the Master Servicer has actual
knowledge, to (i) assert a claim against the Trust or (ii) assert
jurisdiction over the Trust.
(g) Servicing Advances incurred by the Master Servicer or any
Sub-Servicer in connection with the servicing of the Mortgage Loans
(including any penalties in connection with the payment of any taxes and
assessments or other charges) on any Property shall be recoverable by the
Master Servicer or such Sub-Servicer to the extent described in Section
4.09(c) and in Section 8.06(b)(xii) of the Indenture.
(h) The Master Servicer shall modify payments of monthly
principal and interest on any Mortgage Loan becoming subject to the terms of
the Civil Relief Act in accordance with the Master Servicer's general
policies of the comparable mortgage loans subject to the Civil Relief Act.
(i) The Master Servicer shall have the right to sell, in
whole-loan, third-party sales, any Mortgage Loan that is more than 90 days
delinquent if the Master Servicer believes that such means of disposition
will provide the largest recovery.
Section 4.02 Collection of Certain Mortgage Loan Payments.
(a) The Master Servicer shall, to the extent such procedures shall be
consistent with this Agreement and the terms and provisions of any
applicable Mortgage Insurance Policies, follow Accepted Servicing Practices.
The Master Servicer may in its discretion waive any assumption fees, late
payment
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charges, charges for checks returned for insufficient funds, prepayment
fees, if any, or other fees which may be collected in the ordinary course of
servicing the Mortgage Loans,
In addition, the Master Servicer may, if a Mortgagor is in
default or about to be in default because of a Mortgagor's financial
condition, arrange with the Mortgagor a schedule for the payment of
delinquent payments due on the related Mortgage Loan; provided, however, the
Master Servicer shall not reschedule the payment of delinquent payments more
than one time in any twelve consecutive months with respect to any
Mortgagor; and, provided, further, that such modifications shall not be made
in excess of 10% of the Original Pool Principal Balance without the prior
written consent of the Note Insurer; provided, further, however, that, if
the Note Insurer has not given its consent within five (5) Business Days
after notice from the Master Servicer, the Note Insurer shall be deemed to
have given its consent to such modification or rescheduling for payments of
delinquent payments; provided, however, that such notice and consent shall
not be required in the event that the Master Servicer determines, in its
good faith business judgment that such modification is legally required to
be made prior to such five (5) day period, in which case the Master Servicer
shall give the Note Insurer immediate notice of such action.
(b) The Master Servicer shall hold in escrow on behalf of the
related Mortgagor all Prepaid Installments received by it, and shall apply
such Prepaid Installments as directed by such Mortgagor and as set forth in
the related Mortgage Note.
Section 4.03 Sub-Servicing Agreements Between Master Servicer
and Sub-Servicers. The Master Servicer may and is hereby authorized to
perform any of its servicing responsibilities with respect to all or certain
of the Mortgage Loans through a Sub-Servicer, which may be an Affiliate.
Pursuant to the foregoing, the Master Servicer may enter into Sub-Servicing
Agreements for any servicing and administration of Mortgage Loans with any
institution and which is in compliance with the laws of each state necessary
to enable it to perform its obligations under such Sub-Servicing Agreement.
The Master Servicer shall give notice to the Note Insurer and the Indenture
Trustee of the appointment of any Sub-Servicer that is not a Master Servicer
Affiliate. The Master Servicer shall also furnish to the Note Insurer and
the Indenture Trustee a copy of the Sub-Servicing Agreement, except when the
Sub-Servicer is a Master Servicer Affiliate. For purposes of this Agreement,
the Master Servicer shall be deemed to have received payments on Mortgage
Loans when any Sub-Servicer has received such payments. Any such
Sub-Servicing Agreement shall be consistent with and not violate the
provisions of this Agreement.
By delivery of the Policy, the Note Insurer is deemed to have
approved Advanta National Bank and Advanta Finance Corp. as Sub-Servicers
hereunder.
Section 4.04 Successor Sub-Servicers. The Master Servicer may
terminate any Sub-Servicing Agreement in accordance with the terms and
conditions of such Sub-Servicing Agreement and either directly service the
related Mortgage Loans itself or enter into a Sub-Servicing Agreement with a
successor Sub-Servicers that qualifies under Section 4.03.
Section 4.05 Liability of Master Servicer(a) . The Master
Servicer shall not be relieved of its obligations under this Agreement
notwithstanding any Sub-Servicing Agreement between the Master Servicer and
a Sub-Servicer or otherwise and the Master Servicer shall be
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obligated to the same extent and under the same terms and conditions as if
it alone were servicing and administering the Mortgage Loans. The Master
Servicer shall be entitled to enter into any agreement with a Sub-Servicer
for indemnification of the Master Servicer by such Sub-Servicer and nothing
contained in such Sub-Servicing Agreement shall be deemed to limit or modify
this Agreement. The Trust shall not indemnify the Master Servicer for any
losses due to the Master Servicer's negligence.
(b) The Master Servicer shall defend, indemnify and hold
harmless the Indenture Trustee (including its officers, directors, employees
and agents), the Owner Trustee (including its officers, directors, employees
and agents), the Noteholders, the Holding Trust and the Trust from and
against any and all claims, damages, liabilities, losses, costs and expenses
(including the reasonable fees and expenses of counsel) to the extent that
such claims, damages, liabilities, losses, costs or expenses arose out of,
or were imposed upon the Indenture Trustee, the Owner Trustee, the
Noteholders, the Holding Trust or the Trust in connection with or by reason
of, (i) any failure by the Master Servicer to perform its duties under this
Agreement or any errors or omissions of the Master Servicer related to such
duties, including the making of any inaccurate representations or warranties
hereunder; or (ii) in the case of the Indenture Trustee or the Owner
Trustee, the performance of its duties hereunder or under the other
Operative Documents, except to the extent that such claim, damage,
liability, loss, cost or expense resulted from the Indenture Trustee's or
the Owner Trustee's gross negligence or willful misconduct. The provisions
of this Section 4.04(b) shall run directly to and be enforceable by each
injured party subject to the limitations hereof, and the indemnification
provided by the Master Servicer to the Indenture Trustee, the Owner Trustee,
the Noteholders, the Holding Trust and the Trust pursuant to this Section
4.04(b) shall survive the payment in full of the Notes, the termination of
the Indenture and the resignation or removal of the Indenture Trustee or the
Owner Trustee. The Master Servicer shall pay any amounts owing pursuant to
this Section 4.04(b) directly to the indemnified Person, and such amounts
shall not be deposited in either the Principal and Interest Account or the
Note Account. Indemnification under this Section 4.04(b) shall include
reasonable fees and expenses of counsel and expenses of litigation
reasonably incurred. If the Master Servicer has made any indemnity payments
to the Indenture Trustee, the Owner Trustee, the Noteholders, the Holding
Trust or the Trust pursuant to this Section 4.04(b) and such party
thereafter collects any of such amounts from others, such party will
promptly repay such amounts collected to the Master Servicer, without
interest.
(c) The Master Servicer shall be the secondary obligor in
respect of any Expenses (as defined in the Trust Agreement and the Holding
Trust Agreement) owing to any Indemnified Party (as defined in the Trust
Agreement and the Holding Trust Agreement) under Section 8.02 of the Trust
Agreement and the Holding Trust Agreement.
Section 4.06 No Contractual Relationship Between Sub-Servicer
and Indenture Trustee or the Noteholders. Any Sub-Servicing Agreement and
any other transactions or services relating to the Mortgage Loans involving
a Sub-Servicer shall be deemed to be between the Sub-Servicer and the Master
Servicer alone and the Note Insurer, the Indenture Trustee and the
Noteholders shall not be deemed parties thereto and shall have no claims,
rights, obligations, duties or liabilities with respect to any Sub-Servicer
except as set forth in Section 4.07 hereof.
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Section 4.07 Assumption or Termination of Sub-Servicing
Agreement by Indenture Trustee. In connection with the assumption of the
responsibilities, duties and liabilities and of the authority, power and
rights of the Master Servicer hereunder by the Indenture Trustee pursuant to
Section 5.01, it is understood and agreed that the Master Servicer's rights
and obligations under any Sub-Servicing Agreement then in force between the
Master Servicer and a Sub-Servicer may be assumed or terminated by the
Indenture Trustee at its option. Any termination fee due under any such
Sub-Servicing agreement shall be paid by the preceding Master Servicer but
in no event shall the Indenture Trustee be liable for any such fee.
The Master Servicer shall, upon request of the Indenture
Trustee, but at the expense of the Master Servicer, deliver to the assuming
party documents and records relating to each Sub-Servicing Agreement and an
accounting of amounts collected and held by it and otherwise use its best
reasonable efforts to effect the orderly and efficient transfer of the
Sub-Servicing Agreements to the assuming party, without the payment of any
fee by the Indenture Trustee, notwithstanding any contrary provision in any
Sub-Servicing Agreement.
Section 4.08 Principal and Interest Account(a) . (a) The Master
Servicer and/or each Sub-Servicer, as applicable, shall establish and
maintain at one or more Designated Depository Institutions in the name of
the Trust for the benefit of the Noteholders and the Note Insurer, as their
interests may appear, the Principal and Interest Account. The establishment
of the Principal and Interest Account shall be evidenced by the Master
Servicer's delivery of a notice in the form of Exhibit A hereto, properly
completed.
Subject to paragraphs (c) and (e) below, the Master Servicer and
any Sub-Servicer shall deposit all receipts of principal and accrued
interest related to the Mortgage Loans (including, without limitation, Net
Liquidation Proceeds) to the Principal and Interest Account on a daily basis
(but no later than the second Business Day after receipt).
(b) All funds in the Principal and Interest Account may only
be held (i) uninvested, up to the limits insured by the FDIC or (ii)
invested in Eligible Investments. The Principal and Interest Account shall
be held in trust in the name of the Trust and for the benefit of the
Noteholders and the Note Insurer. Any investment earnings on funds held in
the Principal and Interest Account shall be for the account of the Master
Servicer. Any references herein to amounts on deposit in the Principal and
Interest Account shall refer to amounts net of such investment earnings. Any
investment losses are at the expense of the Master Servicer and shall be
replaced on or prior to the Remittance Date.
(c) With respect to the Mortgage Loans and subject to
paragraph (e) below, the Master Servicer shall deposit to the Principal and
Interest Account all principal collected and interest accrued on or after
the Cut-Off Date, related Subsequent Cut-Off Date or Replacement Cut-Off
Date including any Prepaid Installments, Prepayments, Net Liquidation
Proceeds, all Loan Purchase Prices and Substitution Amounts received or paid
by the Master Servicer, other recoveries or amounts received by the Master
Servicer, Compensating Interest and Delinquency Advances together with any
amounts which are reimbursable from the Principal and Interest Account, but
net of (i) the Servicing Fee and other servicing compensation to the Master
Servicer as permitted by Section 4.15 hereof, (ii) principal (including
Prepayments) collected on the related Mortgage Loans prior to the Initial
Cut-Off Date, Subsequent Cut-Off Date or
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Replacement Cut-Off Date, (iii) interest accrued on the related Mortgage
Loans prior to the Initial Cut-Off Date, Subsequent Cut-Off Date or
Replacement Cut-Off Date and (iv) Net Liquidation Proceeds to the extent
such Net Liquidation Proceeds exceed the Loan Balance of the related
Mortgage Loan and accrued and unpaid interest thereon.
(d) (i) The Master Servicer may make withdrawals from the
Principal and Interest Account only for the following purposes:
(A) to effect the timely remittance to the Indenture
Trustee of the Monthly Remittance Amount due on
the Remittance Date;
(B) to reimburse itself pursuant to Section 4.09(a)
hereof for unreimbursed Delinquency Advances and
Servicing Advances and Nonrecoverable Advances;
(C) to withdraw investment earnings on amounts on
deposit in the Principal and Interest Account if
such investment earnings have been deposited to
the Principal and Interest Account;
(D) to withdraw amounts that have been deposited to a
Principal and Interest Account in error;
(E) to clear and terminate each Principal and
Interest Account following the termination of the
Trust pursuant to Article X of the Indenture; and
(F) to invest in Eligible Investments.
(ii) On the tenth day of each month, the Master Servicer
shall send to the Indenture Trustee a computer tape detailing the
payments on the Mortgage Loans during the prior Remittance Period.
Such tape shall be in the form and have the specifications as may be
agreed to between the Master Servicer and the Indenture Trustee from
time to time. The Note Insurer shall have the right to request this
computer tape upon providing three (3) Business Days written notice to
the Master Servicer. Upon any change in the format of the electronic
medium maintained by the Master Servicer in respect of the Mortgage
Loans, the Master Servicer shall deliver a copy of such electronic
medium to the Indenture Trustee.
(iii) On each Remittance Date the Master Servicer shall remit
to the Indenture Trustee by wire transfer in immediately available
funds for deposit in the Note Account the amounts specified in Section
8.07(a) of the Indenture.
(e) To the extent that the ratings, if any, then assigned to
the unsecured debt of the Master Servicer or of the Master Servicer's
ultimate corporate parent are satisfactory to the Note Insurer and each
Rating Agency, then the requirement to maintain the Principal and Interest
Account and deposit of principal collections and accrued interest may be
waived by an instrument signed by the Note Insurer, each Rating Agency and
the Master Servicer may be allowed to co-mingle with its general funds the
amounts otherwise required to be deposited to
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the Principal and Interest Account, on such terms and subject to such
conditions as the Note Insurer and each Rating Agency may permit.
Section 4.09 Delinquency Advances, Compensating Interest and
Servicing Advances. (a) The Master Servicer is required, not later than
each Remittance Date, to deposit into the Principal and Interest Account an
amount equal to the sum of the interest portions accrued (net of the
Servicing Fees and certain other administrative amounts, if any) with
respect to Delinquent Mortgage Loans during the related Remittance Period
but not collected on or prior to such Remittance Date, but only if, in its
good faith business judgment, the Master Servicer reasonably believes that
such amount will ultimately be recoverable from the related Mortgage Loan.
Such amounts are "Delinquency Advances".
The Master Servicer shall be permitted to fund its payment of
Delinquency Advances on any Remittance Date and to reimburse itself for any
Delinquency Advances paid from the Master Servicer's own funds, from
subsequent collections on the related Mortgage Loan. The Master Servicer may
use funds deposited to the Principal and Interest Account subsequent to the
related Remittance Period and shall deposit into the Principal and Interest
Account with respect thereto (i) late collections from the Mortgagor whose
Delinquency gave rise to the shortfall which resulted in such Delinquency
Advance and (ii) Net Liquidation Proceeds recovered on account of the
related Mortgage Loan to the extent of the amount of aggregate Delinquency
Advances related thereto or (iii) from its own funds. If not therefore
recovered from the related Mortgagor or the related Liquidation Proceeds,
Delinquency Advances constituting Nonrecoverable Advances shall be
recoverable pursuant to Section 8.06(b)(xi) of the Indenture and Section
4.08(d) hereof.
(b) On or prior to each Remittance Date, the Master Servicer
shall deposit in the Principal and Interest Account with respect to any full
Prepayment received on a Mortgage Loan during the related Remittance Period
Compensating Interest out of its own funds, without any right of
reimbursement therefor. "Compensating Interest" shall equal the lesser of
(i) the aggregate of the Prepayment Interest Shortfalls for the related
Remittance Period and (ii) the aggregate Servicing Fee received by the
Master Servicer with respect to all Mortgage Loans for such Remittance
Period; in no event shall the Master Servicer be required to pay
Compensating Interest with respect to any Remittance Period in an amount in
excess of the aggregate Servicing Fee received by the Master Servicer with
respect to all Mortgage Loans for such Remittance Period nor shall it be
required to pay Compensating Interest due to partial prepayments or Relief
Act Shortfalls. "Prepayment Interest Shortfall" for any prepaid Mortgage
Loan shall be an amount equal to the difference between (x) 30 days'
interest at the Mortgage Loan's Coupon Rate (less the Servicing Fee) on the
Loan Balance of such Mortgage Loan as of the first day of the related
Remittance Period and (y) the interest (less the Servicing Fee) paid by the
Mortgagor with respect to the Mortgage Loan during such Remittance Period
(c) The Master Servicer will pay all "out-of-pocket" costs
and expenses incurred by the Master Servicer in the performance of its
servicing obligations, including, but not limited to, the cost of (i)
Preservation Expenses (including the payment of flood insurance premiums),
(ii) any enforcement or judicial proceedings, including (a) foreclosures and
(b) other legal actions and costs associated therewith that potentially
affect the existence, validity, priority, enforceability, or collectibility
of the Mortgage Loans, including collection agency fees and costs
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of pursuing or obtaining personal judgments, garnishments, levies,
attachment and similar actions, (iii) the conservation, management,
liquidation, sale or other disposition of any Property acquired in
satisfaction of the related Mortgage Loan, including reasonable fees paid to
any independent contractor in connection therewith, and (iv) advances to
keep liens current; and with respect to any of the foregoing, the Master
Servicer is only required to pay such costs and expenses to the extent the
Master Servicer reasonably believes such costs and expense will be
recoverable from the related Mortgage Loan. Each such amount so paid will
constitute a "Servicing Advance". The Master Servicer may recover Servicing
Advances (x) from the Mortgagors to the extent permitted by the Mortgage
Notes, (y) from Liquidation Proceeds realized upon the liquidation of the
related Mortgage Loan and (z) as provided in Section 4.08(d) hereof. In no
case may the Master Servicer recover Servicing Advances from principal and
interest payments on any other Mortgage Loan or from any amount relating to
any other Mortgage Loan except as provided pursuant to Section 4.08(d)
hereof.
(d) On the first Remittance Date following the Closing Date,
the Master Servicer shall make an advance (a "Special Advance") equal to the
sum of (x) one-month's interest, calculated at the Note Interest Rate,
applicable to such Payment Date, with respect to all Mortgage Loans not
having a payment due prior to the December 1999 Remittance Date; the amounts
of such Special Advances shall be included in the Interest Remittance
Amount. Reimbursement of Special Advances shall be made only as provided in
Section 8.06(b)(xi) of the Indenture.
Section 4.10 Purchase of Mortgage Loans. The Master Servicer
may, but is not obligated to, purchase for its own account any Mortgage Loan
which becomes Delinquent, in whole or in part, as to four consecutive
monthly installments or any Mortgage Loan as to which enforcement
proceedings have been brought by the Master Servicer or by any Sub-Servicer
pursuant to Section 4.13. Any such Mortgage Loan shall be purchased by the
Master Servicer on a Remittance Date at a purchase price equal to the Loan
Purchase Price thereof, which purchase price shall be deposited in the
Principal and Interest Account.
Section 4.11 Maintenance of Insurance. (a) The Master
Servicer shall cause to be maintained with respect to each Mortgage Loan
either a blanket insurance policy as described in Section 4.11(c) hereof or
a hazard insurance policy that provides for fire and extended coverage, and
which provides for a recovery by the Master Servicer on behalf of the Trust
of insurance proceeds relating to such Mortgage Loan in an amount not less
than the least of (i) the outstanding principal balance of the Mortgage
Loan, (ii) the minimum amount required to compensate for damage or loss on a
replacement cost basis and (iii) the full insurable value of the premises.
(b) Unless otherwise covered pursuant to Section 4.11(c)
hereof, if the Mortgage Loan at the time of origination relates to a
Property in an area identified in the Federal Register by the Federal
Emergency Management Agency as having special flood hazards, the Master
Servicer will cause to be maintained with respect thereto either a blanket
insurance policy as described in Section 4.11(c) hereof or a flood insurance
policy in a form meeting the requirements of the current guidelines of the
Federal Insurance Administration. Such policy shall provide for a recovery
by the Master Servicer on behalf of the Trust of insurance proceeds relating
to such Mortgage Loan of not less than the least of (i) the outstanding
principal balance
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of the Mortgage Loan, (ii) the minimum amount required to compensate for
damage or loss on a replacement cost basis and (iii) the maximum amount of
insurance that is available under the Flood Disaster Protection Act of 1973.
The Master Servicer shall indemnify the Trust and the Note Insurer out of
the Master Servicer's own funds for any loss to the Trust and the Note
Insurer resulting from the Master Servicer's failure to maintain the
insurance required by this Section 4.11.
(c) In the event that the Master Servicer shall obtain and
maintain a blanket insurance policy insuring against fire, flood and hazards
of extended coverage on all of the Mortgage Loans, then, to the extent such
policy names the Master Servicer as loss payee and provides coverage in an
amount equal to the aggregate unpaid principal balance on the Mortgage Loans
without co-insurance, and otherwise complies with the requirements of this
Section 4.11, the Master Servicer shall be deemed conclusively to have
satisfied its obligations with respect to fire, flood and hazard insurance
coverage under this blanket policy may contain a deductible clause, in which
case the Master Servicer shall, in the event that there shall not have been
maintained on the related Property a policy complying with paragraphs (a)
and (b) of this Section 4.11, and there shall have been a loss which would
have been covered by such policy, deposit in the Principal and Interest
Account from the Master Servicer's own funds the difference, if any, between
the amount that would have been payable under a policy complying with
paragraphs (a) and (b) of this Section 4.11 and the amount paid under such
blanket policy. Upon the request of the Indenture Trustee or the Note
Insurer, the Master Servicer shall cause to be delivered to the Indenture
Trustee or the Note Insurer, a certified true copy of such policy.
Section 4.12 Due-on-Sale Clauses; Assumption and Substitution
Agreements. When a Property has been or is about to be conveyed by the
Mortgagor, the Master Servicer shall, to the extent it has knowledge of such
conveyance or prospective conveyance, exercise its rights to accelerate the
maturity of the related Mortgage Loan under any "due-on-sale" clause
contained in the related Mortgage or Mortgage Note; provided, however, that
the Master Servicer shall not exercise any such right if (i) the
"due-on-sale" clause, in the reasonable belief of the Master Servicer, is
not enforceable under applicable law or (ii) the Master Servicer reasonably
believes that to permit an assumption of the Mortgage Loan would not
materially and adversely affect the interest of the Noteholders or of the
Note Insurer. In such event, the Master Servicer shall enter into an
assumption and modification agreement with the person to whom such property
has been or is about to be conveyed, pursuant to which such person becomes
liable under the Mortgage Note and, unless prohibited by applicable law or
the Mortgage Documents, the Mortgagor remains liable thereon. If the
foregoing is not permitted under applicable law, the Master Servicer is
authorized to enter into a substitution of liability agreement with such
person, pursuant to which the original Mortgagor is released from liability
and such person is substituted as Mortgagor and becomes liable under the
Mortgage Note; provided, however, that to the extent any such substitution
of liability agreement would be delivered by the Master Servicer outside of
its usual procedures for mortgage loans held in its own portfolio the Master
Servicer shall, prior to executing and delivering such agreement, obtain the
prior written consent of the Controlling Party. The Mortgage Loan, as
assumed, shall conform in all respects to the requirements, representations
and warranties of this Agreement. The Master Servicer shall notify the
Indenture Trustee that any such assumption or substitution agreement has
been completed by forwarding to the Indenture Trustee the original copy of
such assumption or substitution agreement, which copy shall be added by the
Indenture Trustee to the related Mortgage File and which shall, for all
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purposes, be considered a part of such Mortgage File to the same extent as
all other documents and instruments constituting a part thereof. The Master
Servicer shall be responsible for recording or causing the recordation any
such assumption or substitution agreements. In connection with any such
assumption or substitution agreement, the required monthly payment on the
related Mortgage Loan shall not be changed but shall remain as in effect
immediately prior to the assumption or substitution, the stated maturity or
outstanding principal amount of such Mortgage Loan shall not be changed nor
shall any required monthly payments of principal or interest be deferred or
forgiven. Any fee collected by the Master Servicer or the Sub-Servicer for
consenting to any such conveyance or entering into an assumption or
substitution agreement shall be retained by or paid to the Master Servicer
as additional servicing compensation.
Notwithstanding the foregoing paragraph or any other provision
of this Agreement, the Master Servicer shall not be deemed to be in default,
breach or any other violation of its obligations hereunder by reason of any
assumption of a Mortgage Loan by operation of law or any assumption which
the Master Servicer may be restricted by law from preventing, for any reason
whatsoever.
Section 4.13 Realization Upon Defaulted Mortgage Loans. (a)
The Master Servicer shall foreclose upon or otherwise comparably effect the
ownership on behalf of the Trust of Properties relating to defaulted
Mortgage Loans as to which no satisfactory arrangements can be made for
collection of Delinquent payments and which the Master Servicer has not
purchased pursuant to Section 4.10. In connection with such foreclosure or
other conversion, the Master Servicer shall exercise such of the rights and
powers vested in it hereunder, and use the same degree of care and skill in
their exercise or use, as prudent mortgage lenders would exercise or use
under the circumstances in the conduct of their own affairs, including, but
not limited to, advancing funds for the payment of taxes and insurance
premiums. Any amounts so advanced shall constitute "Servicing Advances"
within the meaning of Section 4.09(c) hereof.
Notwithstanding the generality of the foregoing provisions, the
Master Servicer shall manage, conserve, protect and operate each REO
Property for the Noteholders solely for the purpose of its prompt
disposition and sale. Pursuant to its efforts to sell such REO Property, the
Master Servicer shall either itself or through an agent selected by the
Master Servicer protect and conserve such REO Property in the same manner
and to such extent as is customary in the locality where such REO Property
is located and may, incident to its conservation and protection of the
interests of the Noteholders, rent the same, or any part thereof, as the
Master Servicer deems to be in the best interest of the Noteholders for the
period prior to the sale of such REO Property. The Master Servicer shall
take into account the existence of any hazardous substances, hazardous
wastes or solid wastes, as such terms are defined in the Comprehensive
Environmental Response Compensation and Liability Act, the Resource
Conservation and Recovery Act of 1976, or other federal, state or local
environmental legislation, on an REO Property in determining whether to
foreclose upon or otherwise comparably convert the ownership of such REO
Property. With respect to any Mortgage Loan secured by a mixed use REO
Property, the Master Servicer shall, prior to foreclosing upon or otherwise
comparably effecting the ownership in the name of the Master Servicer on
behalf of the Trust, either (x) perform a "phase one environmental study" of
such REO Property or (y) repurchase such REO Property at the Loan Purchase
Price.
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(b) The Master Servicer shall determine, with respect to each
defaulted Mortgage Loan, when it has recovered, whether through trustee's
sale, foreclosure sale or otherwise, all amounts it expects to recover from
or on account of such defaulted Mortgage Loan (exclusive of any possibility
of a deficiency judgement), whereupon such Mortgage Loan shall become a
Liquidated Mortgage Loan and, if requested, shall promptly deliver to the
Note Insurer, and to the Indenture Trustee, a related liquidation report
with respect to such Liquidated Mortgage Loan.
Section 4.14 Indenture Trustee to Cooperate; Release of Mortgage
Files. (a) Upon the payment in full of any Mortgage Loan (including the
repurchase of any Mortgage Loan or any liquidation of such Mortgage Loan
through foreclosure or otherwise), or the receipt by the Master Servicer or
any Sub-Servicer of a notification that payment in full will be escrowed in
a manner customary for such purposes, the Master Servicer or any
Sub-Servicer shall deliver to the Indenture Trustee a Master Servicer's
Trust Receipt attached hereto as Exhibit D. Upon receipt of such Master
Servicer's Trust Receipt, the Indenture Trustee shall promptly release the
related Mortgage File, as directed by the Master Servicer in the Master
Servicer's Trust Receipt. Upon any such payment in full, or the receipt of
such notification that such funds have been placed in escrow, the Master
Servicer or any Sub-Servicer is authorized to give, as attorney-in-fact for
the Indenture Trustee and the mortgagee under the Mortgage which secured the
Note, an instrument of satisfaction (or assignment of Mortgage without
recourse) regarding the Property relating to such Mortgage, which instrument
of satisfaction or assignment, as the case may be, shall be delivered to the
Person or Persons entitled thereto against receipt therefor of payment in
full, it being understood and agreed that no expense incurred in connection
with such instrument of satisfaction or assignment, as the case may be,
shall be chargeable to the Principal and Interest Account. In lieu of
executing any such satisfaction or assignment, the Master Servicer or any
Sub-Servicer may prepare and submit to the Indenture Trustee, a satisfaction
(or assignment without recourse, if requested by the Person or Persons
entitled thereto) in form for execution by the Indenture Trustee with all
requisite information completed by the Master Servicer or any Sub-Servicer;
in such event, the Indenture Trustee shall execute and acknowledge such
satisfaction or assignment and deliver the same with the related Mortgage
File, as aforesaid.
(b) From time to time and as appropriate in the servicing of
any Mortgage Loan, including, without limitation, foreclosure or other
comparable conversion of a Mortgage Loan or collection under any applicable
Mortgage Insurance Policy, the Indenture Trustee shall (except in the case
of the payment or liquidation pursuant to which the related Mortgage File is
released to an escrow agent or an employee, agent or attorney of the
Indenture Trustee), upon request of the Master Servicer or any Sub-Servicer
and delivery to the Indenture Trustee of a Master Servicer's Trust Receipt,
release the related Mortgage File to the Master Servicer and shall execute
such documents as shall be necessary to the prosecution of any such
proceedings, including, without limitation, an assignment without recourse
of the related Mortgage to the Master Servicer; provided, that the Master
Servicer shall not have received and not returned at any one time more than
10% of the entire number of Mortgage Files. The Indenture Trustee shall
complete in the name of the Indenture Trustee any endorsement in blank on
any Note prior to releasing such Mortgage Note to the Master Servicer or any
Sub-Servicer. Such receipt shall obligate the Master Servicer or any
Sub-Servicer to return the Mortgage File to the Indenture Trustee when the
need therefor by the Master Servicer or any Sub-Servicer no longer exists
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unless the Mortgage Loan shall be liquidated, in which case, upon receipt of
the liquidation information, in physical or electronic form acceptable to
the Master Servicer and the Indenture Trustee, a copy of the Master
Servicer's Trust Receipt shall be released by the Indenture Trustee to the
Master Servicer or any Sub-Servicer.
(c) No costs associated with the procedures described in this
Section 4.14 shall be an expense of the Trust.
(d) The provisions set forth in paragraphs (a) and (b) may be
superseded by any waiver of the Document Delivery Requirement as may be
given by the Controlling Party and the Rating Agencies pursuant to Section
2.01(h) hereof.
(e) Each Master Servicer's Trust Receipt may be delivered to
the Indenture Trustee (i) via mail or courier, (ii) via facsimile or (iii)
by such other means, including, without limitation, electronic or computer
readable medium, as the Master Servicer and the Indenture Trustee shall
mutually agree. The Indenture Trustee shall promptly release the related
Mortgage File(s) no later than seven (7) Business Days of receipt of a
properly completed Master Servicer's Trust Receipt or such shorter period as
may be agreed upon by the Master Servicer and the Indenture Trustee. Receipt
of a Master Servicer's Trust Receipt shall be authorization to the Indenture
Trustee to release such Mortgage Files, provided, the Indenture Trustee has
determined that such Master Servicer's Trust Receipt has been executed, with
respect to clauses (i) or (ii) above, or approved, with respect to clause
(iii) above, by an Authorized Officer of the Master Servicer or any
Sub-Servicer, and so long as the Indenture Trustee complies with its duties
and obligations under this Agreement. If the Indenture Trustee is unable to
release the Mortgage Files within the time frames previously specified, the
Indenture Trustee shall immediately notify the Master Servicer or any
Sub-Servicer indicating the reason for such delay, but in no event shall
such notification be later than five business days after receipt of a Master
Servicer's Trust Receipt. If the Master Servicer is required to pay
penalties or damages due solely to the Indenture Trustee's negligent failure
to release the related Mortgage File or the Indenture Trustee's negligent
failure to execute and release documents in a timely manner, the Indenture
Trustee shall be liable for such penalties or damages.
Section 4.15 Servicing Compensation. As compensation for its
activities hereunder, the Master Servicer shall be entitled to retain the
amount of the Servicing Fee with respect to each Mortgage Loan. Additional
servicing compensation in the form of investment income on each Principal
and Interest Account, the Capitalized Interest Account, and on the Note
Account, prepayment charges, release fees, bad check charges, assumption
fees, late payment charges, any other servicing-related fees, Net
Liquidation Proceeds not required to be deposited in the Principal and
Interest Account pursuant to Section 4.08(c)(iv) and similar items may, to
the extent collected from Mortgagors, be retained by the Master Servicer.
Section 4.16 Annual Statement as to Compliance. The Master
Servicer, at its own expense, will deliver to the Indenture Trustee and the
Note Insurer, on or before the last day of March of each year, commencing in
the year 2000, an Officer's Certificate stating, as to each signer thereof,
that (i) a review of the activities of the Master Servicer during such
preceding calendar year and of performance under this Agreement has been
made under such officers' supervision, and (ii) to the best of such
officers' knowledge, based on such review, the Master
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Servicer has fulfilled all its obligations under this Agreement for such
year, or, if there has been a default in the fulfillment of all such
obligations, specifying each such default known to such officers and the
nature and status thereof including the steps being taken by the Master
Servicer to remedy such defaults.
Section 4.17 Annual Independent Certified Public Accountants'
Reports. On or before the last day of March of each year, commencing in the
year 2000, the Master Servicer, at its own expense, shall cause to be
delivered to the Indenture Trustee and the Note Insurer a letter or letters
of a firm of independent, nationally recognized certified public accountants
reasonably acceptable to the Controlling Party stating that such firm has,
with respect to the Master Servicer's overall servicing operations (i)
performed applicable tests in accordance with the compliance testing
procedures as set forth in Appendix 3 of the Audit Guide for Audits of HUD
Approved Nonsupervised Mortgagees or (ii) examined such operations in
accordance with the requirements of the Uniform Single Audit Program for
Mortgage Bankers, and in either case stating such firm's conclusions
relating thereto or (iii) examined such operations in accordance with the
requirements of SAS 70.
Section 4.18 Access to Certain Documentation and Information
Regarding the Mortgage Loans. The Master Servicer shall provide to the
Indenture Trustee, the Note Insurer, access to the documentation regarding
the Mortgage Loans required by applicable state and federal regulations,
such access being afforded without charge but only upon reasonable request
and during normal business hours at the offices of the Master Servicer.
Section 4.19 Assignment of Agreement. The Master Servicer may
not assign its obligations under this Agreement, in whole or in part, unless
it shall have first obtained the written consent of the Indenture Trustee
and the Note Insurer, which such consent shall not be unreasonably withheld;
provided, however, that any assignee must meet the eligibility requirements
set forth in Section 5.01(g) hereof for a successor servicer; and provided,
further, that this Section 4.19 does not apply to the appointment of
Sub-Servicers or to the assignment to a Master Servicer Affiliate. Notice of
any such assignment shall be given by the Master Servicer to the Indenture
Trustee, the Note Insurer and each Rating Agency.
Section 4.20 Inspections by the Note Insurer and the Indenture
Trustee; Errors and Omissions Insurance. (a) At any reasonable time during
business hours and from time to time upon five (5) Business Day's notice, the
Note Insurer, the Indenture Trustee, or any agents or representatives thereof
may inspect the Master Servicer's servicing operations and discuss the servicing
operations of the Master Servicer with any of its officers or directors. The
reasonable costs and expenses incurred by the Master Servicer in connection with
any such examinations or discussions shall be paid by the Master Servicer.
(b) The Master Servicer agrees to maintain errors and
omissions coverage and a fidelity bond, each at least to the extent
generally maintained by prudent mortgage loan servicers having servicing
portfolios of a similar size.
Section 4.21 Merger, Conversion, Consolidation or Succession to
Business of Master Servicer. Any corporation into which the Master Servicer
may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion
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or consolidation to which the Master Servicer shall be a party, or any
corporation succeeding to all or substantially all of the business of the
Master Servicer, shall be the successor of the Master Servicer hereunder
upon notice to the Note Insurer, without the execution or filing of any
paper or any further act on the part of any of the parties hereto provided
that such corporation is a housing and home finance institution, bank or
mortgage servicing institution which has shareholders' equity of not less
the $10,000,000, as determined in accordance with generally accepted
accounting principles.
Section 4.22 Notices to Noteholders. Upon any termination or
appointment of a successor to the Master Servicer pursuant to this Article
V, the Indenture Trustee shall give prompt written notice thereof to the
Noteholders at their respective addresses appearing in the Note Register,
the Note Insurer and each Rating Agency.
Section 4.23 Notices of Material Events. The Master Servicer
shall give prompt notice to the Note Insurer, the Indenture Trustee, and
each Rating Agency of the occurrence of any of the following events:
(a) Any default or any fact or event which results, or which
with notice or the passage of time, or both, would result in the
occurrence of a default by the Sponsor, or the Master Servicer under
any Operative Document, or would constitute a material breach of a
representation, warranty or covenant under any Operative Document,
which default would have a material adverse effect on the Noteholders
or the Note Insurer;
(b) The submission of any claim or the initiation of any
legal process, litigation or administrative or judicial investigation
against the Sponsor, the Master Servicer or AMHC in any federal, state
or local court or before any governmental body or agency, or before
any arbitration board, or any such proceedings threatened by any
governmental agency, which, if adversely determined, would have a
material adverse effect upon any the Sponsor's, the Master Servicer's
or AMHC's ability to perform its obligations under any Operative
Document;
(c) The commencement of any proceedings by or against the
Sponsor, the Master Servicer or AMHC under any applicable bankruptcy,
reorganization, liquidation, insolvency or other similar law now or
hereafter in effect or of any proceeding in which a receiver,
liquidator, trustee or other similar official shall have been, or may
be, appointed or requested for the Sponsor, the Master Servicer or
AMHC; and
(d) The receipt of notice from any agency or governmental
body having authority over the conduct of any of the Sponsor's the
Master Servicer's or the AMHC's business that the Sponsor, the Master
Servicer or AMHC is to cease and desist, or to undertake any practice,
program, procedure or policy employed by the Sponsor, the Master
Servicer or AMHC in the conduct of the business of any of them, and
such cessation or undertaking will materially adversely affect the
conduct of the Sponsor's, the Master Servicer's or AMHC's business or
its ability to perform under the Operative Documents or materially
adversely affect the financial affairs of the Sponsor, the Master
Servicer or AMHC.
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ARTICLE V
SERVICING TERMINATION
Section 5.01 Events of Servicer Termination. (a) The Indenture
Trustee, with the consent of the Note Insurer (or the Noteholders, if a Note
Insurer Default shall have occurred and be continuing) may remove the Master
Servicer upon the occurrence of any of the following events (each, an "Event of
Servicing Termination"):
(i) The Master Servicer shall fail to deliver to the
Indenture Trustee any proceeds or required payment, which failure
continues unremedied for five (5) Business Days following written
notice to an Authorized Officer of the Master Servicer from the
Indenture Trustee, the Note Insurer or from Noteholders evidencing
Percentage Interests aggregating not less than 25%.
(ii) The Master Servicer shall (A) apply for or consent to
the appointment of a receiver, trustee, liquidator or custodian or
similar entity with respect to itself or its property, (B) admit in
writing its inability to pay its debts generally as they become due,
(C) make a general assignment for the benefit of creditors, (D) be
adjudicated a bankrupt or insolvent, (E) commence a voluntary case
under the federal bankruptcy laws of the United States of America or
file a voluntary petition or answer seeking reorganization, an
arrangement with creditors or an order for relief or seeking to take
advantage of any insolvency law or file an answer admitting the
material allegations of a petition filed against it in any bankruptcy,
reorganization or insolvency proceeding or (F) take corporate action
for the purpose of effecting any of the foregoing; or
(iii) If, without the application, approval or consent of the
Master Servicer, a proceeding shall be instituted in any court of
competent jurisdiction, under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking in respect of
the Master Servicer an order for relief or an adjudication in
bankruptcy, reorganization, dissolution, winding up, liquidation, a
composition or arrangement with creditors, a readjustment of debts,
the appointment of a trustee, receiver, liquidator or custodian or
similar entity with respect to the Master Servicer or of all or any
substantial part of its assets, or other like relief in respect
thereof under any bankruptcy or insolvency law, and, if such
proceeding is being contested by the Master Servicer in good faith,
the same shall (A) result in the entry of an order for relief or any
such adjudication or appointment or (B) continue undismissed or
pending and unstayed for any period of seventy-five (75) consecutive
days.
(iv) The Master Servicer shall fail to perform any one or
more of its obligations hereunder other than the obligations
contemplated by subsection 5.01(i) above, and shall continue in
default thereof for a period of sixty (60) days after notice by the
Indenture Trustee or the Note Insurer of said failure; provided,
however, that if the Master Servicer can demonstrate to the reasonable
satisfaction of the Controlling Party that it is diligently pursuing
remedial action, then the cure period may be extended with the written
approval of the Controlling Party; or
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(v) The Master Servicer shall fail to cure any breach of any
of its representations and warranties set forth in Section 3.02 which
materially and adversely affects the interests of the Noteholders or
the Note Insurer for a period of thirty (30) days after the Master
Servicer's discovery or receipt of notice thereof; provided, however,
that if the Master Servicer can demonstrate to the reasonable
satisfaction of the Controlling Party that it is diligently pursuing
remedial action, then the cure period may be extended with the written
approval of the Controlling Party.
(b) The Note Insurer also may remove the Master Servicer as
set forth in the Insurance Agreement or upon the occurrence of any of the
following events:
(i) upon the making of any Insured Payment; provided,
however, that the Note Insurer shall have no right to remove the
Master Servicer under this clause (i) if the Master Servicer can
demonstrate to the reasonable satisfaction of the Note Insurer that
such event was due to circumstances beyond the control of the Master
Servicer; or
(ii) the failure by the Master Servicer to make any required
Servicing Advance; or
(iii) the failure by the Master Servicer to perform any one
or more of its material obligations hereunder or under the Insurance
Agreement, which failure materially and adversely affects the
interests of the Note Insurer and the Indenture Trustee; or
(iv) the failure by the Master Servicer to make any required
Delinquency Advance, any Special Advance or to pay any Compensating
Interest; or
(v) the occurrence of a Servicer Termination Loss Trigger or
of a Servicer Termination Delinquency Trigger, as such terms are
defined in the Insurance Agreement; or
(vi) the enactment of any law by a legislative body that
declares, or any finding or ruling by a court of competent
jurisdiction, that the Insurance Agreement or this Agreement is not
valid and binding on the Sponsor or the Master Servicer.
provided, however, with respect to clause (iv), if the Master Servicer
can demonstrate to the reasonable satisfaction of the Note Insurer
that any such event was due to circumstances beyond the control of the
Master Servicer, such event shall not be considered an event of
termination of the Master Servicer;
provided, further, however, that (x) prior to any removal of the
Master Servicer by the Note Insurer pursuant to clauses (ii) or (iii)
of this Section 5.01(b), the Master Servicer shall first have been
given by the Note Insurer and by registered or certified mail, notice
of the occurrence of one or more of the events set forth in clauses
(ii) or (iii) above and the Master Servicer shall not have remedied,
or shall not have taken actions satisfactory to the Note Insurer to
remedy, such event or events within 30 days (60 days with respect to
clause (iii)) after the Master Servicer's receipt of such notice
(provided, however, that if the Master Servicer can demonstrate to the
reasonable satisfaction of the Note Insurer
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that it is diligently pursuing remedial action, then the cure period
in each case may be extended with the written approval of the Note
Insurer) and (y) in the event of the refusal or inability of the
Master Servicer to make any required Delinquency Advance or Special
Advance or to pay any Compensating Interest (as described in clause
(iv)) or Monthly Remittance Amount, such removal shall be effective
(without the requirement of any action on the part of the Note Insurer
or of the Indenture Trustee) at 4:00 p.m. on the second Business Day
following the day on which the Indenture Trustee or the Note Insurer
notifies an Authorized Officer of the Master Servicer that a required
Delinquency Advance or Special Advance or any Compensating Interest or
Monthly Remittance Amount has not been received by the Indenture
Trustee. Upon the Indenture Trustee's determination that a required
Delinquency Advance or Special Advance or any Compensating Interest or
Monthly Remittance Amount has not been made by the Master Servicer,
the Indenture Trustee shall so notify in writing an Authorized Officer
of the Master Servicer and the Note Insurer as soon as is reasonably
practical.
(c) The Master Servicer shall not resign from the obligations
and duties hereby imposed on it, except upon determination that its duties
hereunder are no longer permissible under applicable law or are in material
conflict by reason of applicable law with any other activities carried on by
it, the other activities of the Master Servicer so causing such a conflict
being of a type and nature carried on by the Master Servicer at the date of
this Agreement. Any such determination permitting the resignation of the
Master Servicer shall be evidenced by an opinion of counsel to such effect
which shall be delivered to the Indenture Trustee and the Note Insurer.
(d) No removal or resignation of the Master Servicer shall
become effective until the Indenture Trustee or a successor servicer shall
have assumed the Master Servicer's responsibilities and obligations in
accordance with this Agreement. If no successor servicer is available, the
Indenture Trustee shall act as successor servicer and perform all of the
obligations of this Agreement, including, without limitation, making
Delinquency Advances, Servicing Advances and paying Compensating Interest;
provided, however, that the Indenture Trustee will not be obligated to act
as successor servicer if it is legally unable to perform its duties
hereunder.
(e) Upon removal or resignation of the Master Servicer, the
Master Servicer also shall promptly deliver or cause to be delivered to a
successor servicer or the Indenture Trustee all the books and records
(including, without limitation, records kept in electronic form) that the
Master Servicer has maintained for the Mortgage Loans, including all tax
bills, assessment notices, insurance premium notices and all other documents
as well as all original documents then in the Master Servicer's possession.
(f) Any collections received by the Master Servicer after
removal or resignation shall be endorsed by it to the Indenture Trustee and
remitted directly and immediately to the Indenture Trustee or the successor
Master Servicer.
(g) Upon removal or resignation of the Master Servicer, the
Indenture Trustee (x) may solicit bids for a successor servicer as described
below, and (y) pending the appointment of a successor Master Servicer as a
result of soliciting such bids, shall serve as Master Servicer. The
Indenture Trustee shall, if it is unable to obtain a qualifying bid and is
prevented by law
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from acting as Master Servicer, appoint, or petition a court of competent
jurisdiction to appoint, any housing and home finance institution, bank or
mortgage servicing institution which has shareholders' equity of not less
than $10,000,000, as determined in accordance with generally accepted
accounting principles, and acceptable to the Note Insurer as the successor
to the Master Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Master Servicer hereunder.
The compensation of any successor servicer (including, without limitation,
the Indenture Trustee) so appointed shall be the aggregate Servicing Fees,
together with the other servicing compensation in the form of assumption
fees, late payment charges or otherwise as provided in Sections 4.08 and
4.15; provided, however, that if the Indenture Trustee acts as successor
Master Servicer then the Sponsor agrees to pay to the Indenture Trustee at
such time that the Indenture Trustee becomes such successor Master Servicer
a fee of twenty-five dollars ($25.00) for each Mortgage Loan then included
in the Trust Estate. The Indenture Trustee shall be obligated to serve as
successor Master Servicer whether or not the $25.00 fee described in the
preceding sentence is paid by the Sponsor, but shall in any event be
entitled to receive, and to enforce payment of, such fee from the Sponsor.
(h) In the event the Indenture Trustee solicits bids as
provided above, the Indenture Trustee shall solicit, by public announcement,
bids from housing and home finance institutions, banks and mortgage
servicing institutions meeting the qualifications set forth above. Such
public announcement shall specify that the successor Master Servicer shall
be entitled to the compensation set forth in clause (g) above. Within thirty
(30) days after any such public announcement, the Indenture Trustee shall
negotiate and effect the sale, transfer and assignment of the servicing
rights and responsibilities hereunder to the qualified party submitting the
highest satisfactory bid. The Indenture Trustee shall deduct from any sum
received by the Indenture Trustee from the successor to the Master Servicer
in respect of such sale, transfer and assignment all costs and expenses of
any public announcement and of any sale, transfer and assignment of the
servicing rights and responsibilities hereunder. After such deductions, the
remainder of such sum shall be paid by the Indenture Trustee to the Master
Servicer at the time of such sale, transfer and assignment to the Master
Servicer's successor.
(i) The Indenture Trustee and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate
any such succession. The Master Servicer agrees to cooperate with the
Indenture Trustee and any successor Master Servicer in effecting the
termination of the Master Servicer's servicing responsibilities and rights
hereunder and shall promptly provide the Indenture Trustee or such successor
Master Servicer, as applicable, all documents and records reasonably
requested by it to enable it to assume the Master Servicer's functions
hereunder and shall promptly also transfer to the Indenture Trustee or such
successor Master Servicer, as applicable, all amounts which then have been
or should have been deposited in the Principal and Interest Account by the
Master Servicer or which are thereafter received with respect to the
Mortgage Loans. Neither the Indenture Trustee nor any other successor Master
Servicer shall be held liable by reason of any failure to make, or any delay
in making, any distribution hereunder or any portion thereof caused by (i)
the failure of the Master Servicer to deliver, or any delay in delivering,
cash, documents or records to it, or (ii) restrictions imposed by any
regulatory authority having jurisdiction over the Master Servicer or (iii)
any breaches of a predecessor Master Servicer.
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(j) The Indenture Trustee or any other successor Master
Servicer, upon assuming the duties of Master Servicer hereunder, shall
immediately make all Delinquency Advances and pay all Compensating Interest
which the Master Servicer has theretofore failed to remit with respect to
the Mortgage Loans; provided, however, that if the Indenture Trustee is
acting as successor Master Servicer, the Indenture Trustee shall only be
required to make Delinquency Advances (including the Delinquency Advances
required to be made by the predecessor Master Servicer but not so deposited)
if, in the Indenture Trustee's reasonable good faith judgment, such
Delinquency Advances will ultimately be recoverable from the related
Mortgage Loans.
(k) The Master Servicer that is being removed or is resigning
shall give notice to the Mortgagors and to each Rating Agency of the
transfer of the servicing to the successor.
(l) The Indenture Trustee shall give notice to the Note
Insurer, each Rating Agency and to the Note Owners of the occurrence of any
event specified in Section 5.01(a) of which the Indenture Trustee has
knowledge.
(m) Notwithstanding anything herein to the contrary, upon
termination of the Master Servicer hereunder, any liabilities of the Master
Servicer which accrued prior to such termination shall survive such
termination.
ARTICLE VI
ADMINISTRATIVE DUTIES OF THE MASTER SERVICER
Section 6.01 Administrative Duties with Respect to the
Indenture. The Master Servicer shall perform all its duties and the duties
of the Trust pursuant to under the Indenture. In addition, the Master
Servicer shall consult with the Owner Trustee as the Master Servicer deems
appropriate regarding the duties of the Trust under the Indenture. The
Master Servicer shall monitor the performance of the Trust. The Master
Servicer shall prepare for execution by the Trust or shall cause the
preparation by other appropriate Persons of all such documents, reports,
filings, instruments, certificates and opinions as it shall be the duty of
the Trust to prepare, file or deliver pursuant to the Indenture. In
furtherance of the foregoing, the Master Servicer shall take all necessary
action that is the duty of the Trust to take pursuant to the Indenture.
(a) Duties with Respect to the Trust.
(i) In addition to the duties of the Master Servicer
set forth in this Agreement or any of the Operative Documents,
the Master Servicer shall perform such calculations and shall
prepare for execution by the Trust or the Owner Trustee or shall
cause the preparation by other appropriate Persons of all such
documents, reports, filings, instruments, certificates and
opinions as it shall be the duty of the Trust or the Owner
Trustee to prepare, file or deliver pursuant to this Agreement
or any of the Operative Documents or under state and federal tax
and securities laws, and at the request of the Owner Trustee
shall take all appropriate action that it is the duty of the
Trust to take pursuant to this Agreement or any of
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the Operative Documents. In accordance with the directions of
the Trust or the Owner Trustee, the Master Servicer shall
administer, perform or supervise the performance of such other
activities in connection with the Mortgage Loans (including the
Operative Documents) as are not covered by any of the foregoing
provisions and as are expressly requested by the Trust or the
Owner Trustee and are reasonably within the capability of the
Master Servicer.
(ii) Notwithstanding anything in this Agreement or any
of the Operative Documents to the contrary, the Master Servicer
shall be responsible for promptly notifying the Owner Trustee
and the Indenture Trustee in the event that any withholding tax
is imposed on the Trust's payments (or allocations of income)
with respect to the Notes as contemplated by this Agreement. Any
such notice shall be in writing and specify the amount of any
withholding tax required to be withheld by the Owner Trustee or
the Indenture Trustee pursuant to such provision.
(iii) Notwithstanding anything in this Agreement or the
Operative Documents to the contrary, the Master Servicer shall
be responsible for performance of the duties of the Trust or the
Sponsor set forth in Section 5.01(a), (b), (c) and (d) of the
Trust Agreement with respect to, among other things, accounting
and reports with respect to the Notes.
(iv) In carrying out the foregoing duties or any of its
other obligations under this Agreement, the Master Servicer may
enter into transactions with or otherwise deal with any of its
Affiliates; provided, however, that the terms of any such
transactions or dealings shall be in accordance with any
directions received from the Trust (with the written consent of
the Note Insurer) and shall be, in the Master Servicer's
opinion, no less favorable to the Trust or the Note Insurer in
any material respect.
(b) Non-Ministerial Matters. With respect to matters that in
the reasonable judgment of the Master Servicer are non-ministerial,
the Master Servicer shall not take any action pursuant to this Article
VI unless, the Master Servicer shall have notified the Owner Trustee
and the Note Insurer of the proposed action and the Owner Trustee and
the Note Insurer shall not have withheld consent or provided an
alternative direction. For the purpose of the preceding sentence,
"non-ministerial matters" shall include:
(i) the amendment of or any supplement to the
Indenture;
(ii) the initiation of any claim or lawsuit by the
Trust and the compromise of any action, claim or lawsuit brought
by or against the Trust (other than in connection with the
collection of the Mortgage Loans);
(iii) the amendment, change or modification of this
Agreement or any of the Operative Documents;
(iv) the appointment of successor Note Registrars,
successor Paying Agents and successor Indenture Trustees
pursuant to the Indenture or the
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appointment of Successor Servicers or the consent to the
assignment by the Note Registrar, Note Paying Agent or Indenture
Trustee of its obligations under the Indenture; and
(v) the removal of the Indenture Trustee.
(c) Exceptions. Notwithstanding anything to the contrary in
this Agreement, except as expressly provided herein or in the other
Operative Documents, the Master Servicer, in its capacity hereunder,
shall not be obligated to, and shall not, (1) make any payments to the
Noteholders under the Operative Documents, (2) sell the Trust Estate
pursuant to Section 5.01 of the Indenture, (3) take any other action
that the Trust directs the Master Servicer not to take on its behalf
(unless the Note Insurer so directs) or (4) in connection with its
duties hereunder assume any indemnification obligation of any other
Person.
(d) The Indenture Trustee or any successor Servicer shall not
be responsible for any obligations or duties of the Master Servicer
under this Section 6.01.
Section 6.02 Records. The Master Servicer shall maintain
appropriate books of account and records relating to services performed
under this Agreement, which books of account and records shall be accessible
for inspection by Trust and the Indenture Trustee at any time during normal
business hours.
Section 6.03 Additional Information to be Furnished to the
Trust. The Master Servicer shall furnish to the Trust, the Indenture Trustee
and the Note Insurer from time to time such additional information regarding
the Mortgage Loans as the Trust, the Indenture Trustee and the Note Insurer
shall reasonably request.
ARTICLE VII
MISCELLANEOUS
Section 7.01 Compliance Certificates and Opinions. Upon any
application or request by the Sponsor, the Note Insurer or the Noteholders
to the Indenture Trustee to take any action under any provision of this
Agreement, the Sponsor, the Note Insurer or the Noteholders, as the case may
be, shall furnish to the Indenture Trustee a certificate stating that all
conditions precedent, if applicable, provided for in this Agreement relating
to the proposed action have been complied with, except that in the case of
any such application or request as to which the furnishing of any documents
is specifically required by any provision of this Agreement relating to such
particular application or request, no additional certificate need be
furnished.
Section 7.02 Form of Documents Delivered to the Indenture
Trustee. In any case where several matters are required to be certified by,
or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one
such Person, or by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other such
Persons as to other
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matters, and any such Person may certify or give an opinion as to such
matters in one or several documents.
Any certificate of an Authorized Officer of the Indenture
Trustee may be based, insofar as it relates to legal matters, upon an
opinion of counsel, unless such Authorized Officer knows, or in the exercise
of reasonable care should know, that the opinion is erroneous. Any such
certificate of an Authorized Officer of the Indenture Trustee or any opinion
of counsel may be based, insofar as it relates to factual matter upon a
certificate or opinion of, or representations by, one or more Authorized
Officers of the Sponsor or of the Master Servicer, stating that the
information with respect to such factual matters is in the possession of the
Sponsor or of the Master Servicer, unless such Authorized Officer or counsel
knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to such matters are
erroneous. Any opinion of counsel may also be based, insofar as it relates
to factual matters, upon a certificate or opinion of, or representations by,
an Authorized Officer of the Indenture Trustee, stating that the information
with respect to such matters is in the possession of the Indenture Trustee,
unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to
such matters are erroneous. Any opinion of counsel may be based on the
written opinion of other counsel, in which event such opinion of counsel
shall be accompanied by a copy of such other counsel's opinion and shall
include a statement to the effect that such counsel believes that such
counsel and the Indenture Trustee may reasonably rely upon the opinion of
such other counsel.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Agreement, they may, but need not, be
consolidated and form one instrument.
Section 7.03 Acts of Noteholders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided
by this Agreement to be given or taken by the Noteholders may be embodied in
and evidenced by one or more instruments of substantially similar tenor
signed by such Noteholders in person or by an agent duly appointed in
writing; and, except as herein otherwise expressly provided, such action
shall become effective when such instrument or instruments are delivered to
the Indenture Trustee, and, where it is hereby expressly required, to the
Sponsor and/or the Note Insurer. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred
to as the "act" of the Noteholders signing such instrument or instruments.
Proof of execution of any such instrument or of a writing appointing any
such agent shall be sufficient for any purpose of this Agreement and
conclusive in favor of the Indenture Trustee and the Trust, if made in the
manner provided in this Section 7.03.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a witness of
such execution or by the certificate of any notary public or other officer
authorized by law to take acknowledgments of deeds, certifying that the
individual signing such instrument or writing acknowledged to him the
execution thereof. Whenever such execution is by an officer of a corporation
or a member of a partnership on behalf of such corporation or partnership,
such certificate or affidavit shall also constitute sufficient proof of his
authority.
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(c) The ownership of Notes shall be proved by the Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Noteholders shall bind the
Noteholders issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof, in respect of anything done, omitted or
suffered to be done by the Indenture Trustee or the Trust in reliance
thereon, whether or not notation of such action is made upon such Notes.
Section 7.04 Notices to Indenture Trustee. Any request, demand,
authorization, direction, notice, consent, waiver or act of the Notes or
other documents provided or permitted by this Agreement to be made upon,
given or furnished to, or filed with the Indenture Trustee by any Notes, the
Note Insurer or by the Sponsor shall be sufficient for every purpose
hereunder if made, given, furnished or filed in writing to and received by
the Indenture Trustee at its corporate trust office as set forth in the
Indenture.
Section 7.05 Notices and Reports to Noteholders; Waiver of
Notices. Where this Agreement provides for notice to Noteholders of any
event or the mailing of any report to Noteholders, such notice or report
shall be sufficiently given (unless otherwise herein expressly provided) if
mailed, first-class postage prepaid, to each Noteholder affected by such
event or to whom such report is required to be mailed, at the address of
such Noteholder as it appears on the Register, not later than the latest
date, and not earlier than the earliest date, prescribed for the giving of
such notice or the mailing of such report. In any case where a notice or
report to Noteholders is mailed in the manner provided above, neither the
failure to mail such notice or report nor any defect in any notice or report
so mailed to any particular Noteholder shall affect the sufficiency of such
notice or report with respect to other Noteholders, and any notice or report
which is mailed in the manner herein provided shall be conclusively presumed
to have been duly given or provided.
Where this Agreement provides for notice in any manner, such
notice may be waived in writing by any Person entitled to receive such
notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Noteholders shall be filed
with the Indenture Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver.
In case, by reason of the suspension of regular mail service as
a result of a strike, work stoppage or similar activity, it shall be
impractical to mail notice of any event to Noteholders when such notice is
required to be given pursuant to any provision of this Agreement, then any
manner of giving such notice as shall be satisfactory to the Indenture
Trustee shall be deemed to be a sufficient giving of such notice.
Where this Agreement provides for notice to any rating agency
that rated any Notes, failure to give such notice shall not affect any other
rights or obligations created hereunder.
Section 7.06 Rules by Indenture Trustee and Sponsor. The
Indenture Trustee may make reasonable rules for any meeting of Noteholders.
The Sponsor may make reasonable rules and set reasonable requirements for
its functions.
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Section 7.07 Successors and Assigns. All covenants and
agreements in this Agreement by any party hereto shall bind its successors
and assigns, whether so expressed or not.
Section 7.08 Severability. In case any provision in this
Agreement or in the Notes shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby.
Section 7.09 Benefits of Agreement. Nothing in this Agreement or
in the Notes, expressed or implied, shall give to any Person, other than the
Noteholders, the Note Insurer and the parties hereto and their successors
hereunder, any benefit or any legal or equitable right, remedy or claim
under this Agreement.
Section 7.10 Legal Holidays. In any case where the date of any
Payment Date, any other date on which any distribution to any Noteholder is
proposed to be paid, or any date on which a notice is required to be sent to
any Person pursuant to the terms of this Agreement shall not be a Business
Day, then (notwithstanding any other provision of the Notes or this
Agreement) payment or mailing need not be made on such date, but may be made
on the next succeeding Business Day with the same force and effect as if
made or mailed on the nominal date of any such Payment Date, or such other
date for the payment of any distribution to any Noteholder or the mailing of
such notice, as the case may be, and no interest shall accrue for the period
from and after any such nominal date, provided such payment is made in full
on such next succeeding Business Day.
Section 7.11 Governing Law. In view of the fact that Noteholders
are expected to reside in many states and outside the United States and the
desire to establish with certainty that this Agreement will be governed by
and construed and interpreted in accordance with the law of a state having a
well-developed body of commercial and financial law relevant to transactions
of the type contemplated herein, this Agreement and each Note shall be
construed in accordance with and governed by the laws of the State of New
York applicable to agreements made and to be performed therein.
Section 7.12 Counterparts. This instrument may be executed in
any number of counterparts, each of which so executed shall be deemed to be
an original, but all such counterparts shall together constitute but one and
the same instrument.
Section 7.13 Amendment. (a) The Indenture Trustee, the
Sponsor and the Master Servicer, may at any time and from time to time, with
the prior written consent of each other and of the Note Insurer but without
the giving of notice to or the receipt of the consent of each other and of
the Noteholders, and subject to Section 6.01(b) hereof amend this Agreement,
and the Indenture Trustee shall consent to such amendment, for the purpose
of (i) curing any ambiguity, or correcting or supplementing any provision
hereof, which may be inconsistent with any other provision hereof or of the
Operative Documents, or to add provisions hereto which are not inconsistent
with the provisions hereof, or (ii) complying with the requirements of the
Code and the regulations proposed or promulgated thereunder; provided,
however, that any such action shall not, as evidenced by an opinion of
counsel delivered to the Indenture Trustee, materially and adversely affect
the interests of any Noteholder (without its written consent).
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(b) The Indenture Trustee, the Sponsor and the Master
Servicer may, at any time and from time to time, with the prior written
consent of each other party hereto and the Note Insurer but without the
giving of notice to or the receipt of the consent of the Noteholders, and
subject to Section 6.01(b) hereof, amend this Agreement, and the Indenture
Trustee shall consent to such amendment, for the purpose of changing the
definitions of "Specified Overcollateralization Amount"; provided, however,
that no such change shall affect the weighted average life of the Notes
(assuming an appropriate prepayment speed as determined by the
Representative) by more than five percent (5%), as determined by the
Representative.
(c) This Agreement may also be amended by the Indenture
Trustee, the Sponsor, and the Master Servicer at any time and from time to
time, with the prior written approval of the Note Insurer and not less than
a majority of the Percentage Interest represented by each the Notes then
Outstanding, and subject to Section 6.01(b) hereof for the purpose of adding
any provisions or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
Noteholders hereunder; provided, however, that no such amendment shall (a)
change in any manner the amount of, or change the timing of, payments which
are required to be distributed to any Noteholder without the consent of the
Noteholder, (b) reduce the aforesaid percentages of Percentage Interests
which are required to consent to any such amendments or (c) result in a
down-rating or withdrawal of any ratings then assigned to the Notes, without
the consent of the Noteholders of the then Outstanding Notes.
(d) The Note Insurer, the Noteholders, the Owner Trustee, the
Indenture Trustee, and the Rating Agencies shall be provided with copies of
any amendments to this Agreement, together with copies of any opinions or
other documents or instruments executed in connection therewith.
Section 7.14 The Note Insurer. The Note Insurer is a third-party
beneficiary of this Agreement. Any right conferred to the Note Insurer shall
be suspended during any period in which the Note Insurer is in default in
its payment obligations under the Policy, except with respect to amendments
to this Agreement pursuant to Section 7.13. During the continuance of a Note
Insurer Default, the Note Insurer's rights hereunder shall vest in the
Indenture Trustee on behalf of the Noteholders and shall be exercisable by
the Noteholders of at least a majority in Percentage Interest of the Notes
then Outstanding. At such time as the Notes are no longer Outstanding
hereunder and the Note Insurer has been reimbursed for all Reimbursement
Amounts to which it is entitled hereunder, under the Indenture and under the
Insurance Agreement and the Policy has expired, the Note Insurer's rights
hereunder shall terminate.
Section 7.15 Notices. All notices hereunder shall be given as
follows, until any superseding instructions are given to all other Persons
listed below:
The Indenture Trustee: Bankers Trust Company
of California, N.A.
0000 X. Xx. Xxxxxx Xxxxx
Xxxxx Xxx, Xxxxxxxxxx 00000
Attention: Advanta 1999-4
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48
Tel: (000) 000-0000
Fax: (000) 000-0000
The Sponsor: Advanta Conduit Receivables, Inc.
00000 Xxxxxx Xxxxxxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Structured Finance
The Master Servicer: Advanta Mortgage Corp. USA
00000 Xxxxxx Xxxxxxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Investor Reporting
The Note Insurer: Ambac Assurance Corporation
Xxx Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Structured Finance Department
Advanta Mortgage Loan Trust
1999-4
In each case in which notice or other communication to the Note
Insurer refers to an Event of Servicing Termination, a claim on the Policy
or with respect to which failure on the part of the Note Insurer to respond
shall be deemed to constitute consent or acceptance, then a copy of such
notice or other communication should also be sent to the attention of the
general counsel (fax no. 000-000-0000 and with the same confirmation number
as stated above) and should be marked "URGENT MATERIAL ENCLOSED".
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49
Moody's: Xxxxx'x Investors Service
00 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: The Mortgage Monitoring
Department
Standard & Poor's: Standard & Poor's
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Manager, Structured Finance
Operations Group
Representative: Bear, Xxxxxxx & Co. Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Asset-Backed Securities Group
The Trust: Advanta Mortgage Loan Trust 1999-4
c/o Wilmington Trust Company, as Owner
Trustee
Xxxxxx Square North
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Section 7.16 Limitation of Liability. It is expressly understood
and agreed by the parties hereto that (a) this Agreement is executed and
delivered by Wilmington Trust Company, not individually or personally but
solely as Owner Trustee of the Trust under the Trust Agreement, in the
exercise of the powers and authority conferred and vested in it, (b) each of
the representations, undertakings and agreements herein made on the part of
the Trust is made and intended not as personal representations, undertakings
and agreements by Wilmington Trust Company but is made and intended for the
purpose for binding only the Trust, (c) nothing herein contained shall be
construed as creating any liability on Wilmington Trust Company individually
or personally to perform any covenant either expressed or implied contained
herein, all such liability, if any, being expressly waived by the parties to
this Agreement and by any person claiming by, through or under them and (d)
under no circumstances shall Wilmington Trust Company be personally liable
for the payment of any indebtedness or expenses of the Trust or be liable
for the breach or failure of any obligation, representation, warranty or
covenant made or undertaking by the Trust under this Agreement or any
related documents.
[Remainder of Page Intentionally Left Blank]
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50
IN WITNESS WHEREOF, the Sponsor, the Trust, the Master Servicer,
the Holding Trust and the Indenture Trustee have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized, all as
of the day and year first above written.
ADVANTA CONDUIT RECEIVABLES, INC.,
as Sponsor
By: /s/ Xxxxxxx Xxxx
-----------------------------------------
Name: Xxxxxxx Xxxx
Title: Vice President
ADVANTA MORTGAGE CORP. USA
as Master Servicer
By: /s/ Xxxxxxx Xxxx
-----------------------------------------
Name: Xxxxxxx Xxxx
Title: Vice President
ADVANTA MORTGAGE LOAN
TRUST 1999-4, as the Trust
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Owner Trustee,
By: /s/ Xxxxxx X. XxxXxxxxx
-----------------------------------------
Name: Xxxxxx X. XxxXxxxxx
Title: Vice President
ADVANTA HOLDING TRUST 1999-4, as the
Holding Trust
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Owner Trustee,
By: /s/ Xxxxxx X. XxxXxxxxx
-----------------------------------------
Name: Xxxxxx X. XxxXxxxxx
Title: Vice President
BANKERS TRUST COMPANY OF CALIFORNIA,
N.A., as Indenture Trustee
By: /s/ Xxxxxxx Xxxx
-----------------------------------------
Name: Xxxxxxx Xxxx
Title: Assistant Vice President
51
SCHEDULE 1
SCHEDULE OF MORTGAGE LOANS
52
EXHIBIT A
EVIDENCE OF THE ESTABLISHMENT OF
PRINCIPAL AND INTEREST ACCOUNT
Advanta Mortgage Loan Trust 1999-4
c/o Wilmington Trust Company, as Owner Trustee
Xxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Ladies & Gentlemen:
In accordance with Section 8.03 of the Indenture, dated as of
November 1, 1999, among Advanta Mortgage Loan Trust 1999-4 and Bankers Trust
Company of California, N.A., as indenture trustee (the "Indenture Trustee"),
please be advised that the Indenture Trustee has caused the following
Principal and Interest Account to be established in the name of the
Indenture Trustee for the benefit of the Noteholders:
Principal and Interest Account # Institution
________________________________ ___________
________________________________ ___________
Very truly yours,
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., as Indenture Trustee
By: ______________________________
Name:
Title:
Dated: November 17, 1999
A-1
53
EXHIBIT B
FORM OF INDENTURE TRUSTEE'S ACKNOWLEDGMENT OF RECEIPT
Bankers Trust Company of California, N.A., a national banking
association, in its capacity as indenture trustee (the "Indenture Trustee")
under that certain Sale and Servicing Agreement dated as of November 1, 1999
(the "Sale and Servicing Agreement") by and among Advanta Mortgage Loan
Trust 1999-4, Advanta Conduit Receivables, Inc., a Nevada corporation, as
sponsor (the "Sponsor"), Advanta Mortgage Corp. USA, a Delaware corporation,
as master servicer, Advanta Holding Trust 1999-4, as holding trust and the
Indenture Trustee, hereby acknowledges receipt of the items delivered to it
by the Sponsor with respect to the Mortgage Loans listed on Schedule 1 of
the Sale and Servicing Agreement, except as set forth on the exception
report (the "Exception Report") attached hereto.
The Indenture Trustee hereby additionally acknowledges that it
shall review such items (i) to confirm that an original Note is contained in
the file within 10 Business Days after the Startup Day and (ii) as required
by Section 2.02(a) of the Sale and Servicing Agreement, during the period
specified therein, and shall otherwise comply with Section 2.02(b) of the
Sale and Servicing Agreement as required thereby.
BANKERS TRUST COMPANY OF CALIFORNIA,
N.A., as Indenture Trustee
By:_________________________________
Name:
Title:
Dated: _______________________
B-1
54
SCHEDULE TO EXHIBIT B
EXCEPTION REPORT
B-2
55
EXHIBIT C
FORM OF INDENTURE TRUSTEE'S CERTIFICATION
WHEREAS, the undersigned is an Authorized Officer of Bankers
Trust Company of California, N.A., a national banking association, acting in
its capacity as indenture trustee (the "Indenture Trustee") of a certain
pool of mortgage loans (the "Pool") heretofore conveyed in trust to the
Trustee, pursuant to that certain Sale and Servicing Agreement dated as of
November 1, 1999 (the "Sale and Servicing Agreement") by and among Advanta
Mortgage Loan Trust 1999-4, Advanta Conduit Receivables, Inc., a Nevada
corporation, as sponsor (the "Sponsor"), Advanta Mortgage Corp. USA, a
Delaware corporation, as master servicer, Advanta Holding Trust 1999-4, as
holding trust and the Indenture Trustee; and
WHEREAS, the Indenture Trustee is required, pursuant to Section
2.02(a) of the Sale and Servicing Agreement, to review the Mortgage Files
relating to the Pool within a specified period following the Startup Day and
to notify the Sponsor promptly of any defects with respect to the Pool, and
the Sponsor is required to remedy such defects or take certain other action,
all as set forth in Section 2.02(b) of the Sale and Servicing Agreement; and
WHEREAS, Section 2.02(a) of the Sale and Servicing Agreement
requires the Indenture Trustee to deliver this Certification upon the
satisfaction of certain conditions set forth therein.
NOW, THEREFORE, it has determined that all required documents
(or certified copies of documents listed in Section 2.01 of the Sale and
Servicing Agreement) have been executed or received, and that such documents
relate to the Initial Mortgage Loans identified in the Schedules of Mortgage
Loans pursuant to Section 2.01(a) of the Sale and Servicing Agreement. In
the event that such documents have not been executed and received or do not
relate to the Initial Mortgage Loans, any remedial action by the Sponsor
pursuant to Section 2.02(b) of the Sale and Servicing Agreement has been
completed. The Indenture Trustee makes no certification hereby, however,
with respect to any intervening assignments or assumption and modification
agreements.
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A., as indenture trustee
By: ______________________________________
Name:
Title:
C-1
56
EXHIBIT D
FORM OF MASTER SERVICER'S TRUST RECEIPT
To: Bankers Trust Company
of California, N.A.
0000 X. Xx. Xxxxxx Xxxxx
Xxxxx Xxx, Xxxxxxxxxx 00000
Attn: Corporate Trust
Date:
In connection with the administration of the Mortgage Loans held
by you as Indenture Trustee under a certain Sale and Servicing Agreement
dated as of November 1, 1999 by and among Advanta Mortgage Loan Trust
1999-4, Advanta Holding Trust 1999-4, Advanta Mortgage Corp. USA, as master
servicer (the "Master Servicer"), Advanta Conduit Receivables, Inc., as
sponsor, and you, as indenture trustee (the "Agreement"), the Master
Servicer hereby requests a release of the Mortgage File held by you as
Indenture Trustee with respect to the following Mortgage Loan for the reason
indicated below:
Mortgagor's Name:
Loan No.:
Reason for requesting file:
_______ 1. Mortgage Loan paid in full.
(The Master Servicer hereby certifies that all
amounts received in connection with the loan have
been or will be credited to the Note Account
(whichever is applicable) pursuant to the Agreement.)
_______ 2. Mortgage Loan repurchased pursuant to Section 2.02(b), 3.03,
3.04, or 4.10 of the Agreement.
(The Master Servicer hereby certifies that the Loan
Purchase Price has been or will be paid to the Note
Account pursuant to the Agreement.)
_______ 3. Mortgage Loan substituted.
(The Master Servicer hereby certifies that a
Qualified Replacement Mortgage Loan has been or will
be assigned and delivered to you along with the
related Mortgage File pursuant to the Agreement.)
D-1
57
_______ 4. The Mortgage Loan is being foreclosed.
_______ 5. Other. (Describe)
The undersigned acknowledges that the above Mortgage File will
be held by the Master Servicer in accordance with the provisions of the
Agreement and will be returned to you, unless the Mortgage Loan has been (i)
paid in full, (ii) repurchased, (iii) substituted by a Qualified Replacement
Mortgage (in which case the Mortgage File will be retained by us
permanently) or (iv) is being foreclosed, in which case the Mortgage File
will be returned when no longer required by us for such purpose.
Capitalized terms used herein shall have the meanings ascribed
to them in the Agreement.
ADVANTA MORTGAGE CORP. USA
By__________________________
Name:
Title:
D-2
58
EXHIBIT E
FORM OF LOST NOTE AFFIDAVIT
AFFIDAVIT OF LOST NOTE
Loan # : Note Date:
Current Borrower(s) :
I, ___________________, being duly sworn, do hereby state under oath that:
1. I, as [Title] of _________________ (the "Lender"), am authorized to make
this affidavit.
2. The Lender is the payee under the mortgage note ("Note"). A mortgage/deed
of trust ("Security Instrument") signed by the Borrower(s) refers to the
note made of even date. The Security Instrument is attached as Exhibit 1.
3. The Lender is the lawful owner of the Note and has good title to the Note
and has the right to convey good title thereto, and the Lender has not
canceled, altered, assigned or hypothecated the Note except to the
Sponsor and the Indenture trustee.
4. The Note was not located after a thorough and diligent search which
consisted of the following actions:
Searching of all servicing and collateral loan files
Querying the loan servicing employees
5. Attached hereto as Exhibit 1 is a true and correct copy of the Security
Instrument with an original note endorsement in blank by Lender.
6. This Affidavit is intended to be relied on by [Advanta entity], its
successors, and assigns.
7. Following the assignment of the Note to the Indenture trustee, the
Indenture trustee will be entitled to enforce the Note pursuant to
Section 3-309 of the Uniform Commercial Code.
Executed this ___ day of ______, _____, on behalf of the Lender by:
By: ____________________________
Name:
Title:
E-1
59
ON THIS ____ DAY OF ____________, _____, BEFORE ME APPEARED
_____________________________, to me personally known, who being duly sworn
did say that he is the [Title] of ___________________________, and that said
Affidavit of Lost Note was signed and sealed in behalf of such corporation
as Lender and said __________________________ acknowledged this instrument
to be the free act and deed of said corporation.
________________________________________________________________
Notary Public in and for the State of ____________
My commission expires _____________________________________
X-0
00
XXXXXXX X
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, _____________,
______________ of Advanta Conduit Receivables, Inc. (the "Sponsor"), do
hereby constitute and appoint Bankers Trust Company of California, N.A., as
the true and lawful attorney, for the Sponsor and in its name, place and
stead, to record the assignments of mortgage with respect to the Mortgage
Loans transferred to the Bankers Trust Company of California, N.A., as
indenture trustee (the "Indenture Trustee"), under that Sale and Servicing
Agreement dated as of November 1, 1999 by and among the Advanta Mortgage
Loan Trust 1999-4 (the "Trust"), Advanta Holding Trust (the "Holding
Trust"), the Sponsor, the Indenture Trustee and Advanta Mortgage Corp. USA,
as master servicer, and to do and perform all other things and acts relating
to such assignments of mortgage as may be necessary to effectuate the
transfer of such Mortgage Loans to the Indenture trustee, including the
execution and delivery of new assignments of mortgage where necessary to
comply with applicable real estate recording laws at the time of
recordation.
This power of attorney is irrevocable and is coupled with an
interest in the Mortgage Loans, and it may at all times be relied upon by
any person, firm or corporation dealing with the attorney named herein as
remaining in full force and effect, and such person, firm or corporation
shall have no liability to the Sponsor with respect thereto.
WITNESS the following signature this ____ day of ___________
_____.
______________________________
By: __________________________
Name: ________________________
Title: _______________________
STATE OF PENNSYLVANIA
COUNTY OF XXXXXXXXXX
I, _____________, a Notary Public in and for the jurisdiction
aforesaid, do hereby certify that _______________, who acknowledged himself
to be the _______________ of Advanta Conduit Receivables, Inc., a Nevada
corporation, personally appeared before me in the jurisdiction aforesaid and
that he as such ______________ executed the foregoing instrument on behalf
of said corporation for the purposes therein contained.
Witness my hand and official seal this _____ day of _________________.
____________________________ (SEAL)
Notary Public
My Commission Expires:
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EXHIBIT G
FORM OF SUBSEQUENT TRANSFER AGREEMENT
SUBSEQUENT TRANSFER AGREEMENT
Advanta Conduit Receivables, Inc. (the "Sponsor"), Advanta
Holding Trust 1999-4, Advanta Mortgage Loan Trust 1999-4, and Bankers Trust
Company of California, N.A., as indenture trustee (the "Indenture Trustee"),
of the Advanta Mortgage Loan Trust 1999-4 (the "Trust"), pursuant to the
Sale and Servicing Agreement dated as of November 1, 1999 among Advanta
Mortgage Loan Trust 1999-4, Advanta Mortgage Corp. USA, as master servicer
(the "Master Servicer"), Advanta Holding Trust 1999-4, the Sponsor and the
Indenture trustee (the "Sale and Servicing Agreement"), hereby confirm their
understanding with respect to the acquisition by the Trust of those Mortgage
Loans listed on the attached Schedule of Mortgage Loans (the "Subsequent
Mortgage Loans").
Conveyance of Subsequent Mortgage Loans. The Sponsor does hereby
irrevocably transfer, assign, set over and otherwise convey to the Holding
Trust, and the Holding Trust does hereby irrevocably transfer, assign, set
over and otherwise convey to the Trust, without recourse (except as
otherwise explicitly provided for herein) all of their respective right,
title and interest in and to the Subsequent Mortgage Loans listed on the
attached Schedule of Mortgage Loans, including specifically, without
limitation, the Mortgages, the Mortgage Files and all other documents,
materials and properties appurtenant thereto, including all principal
collected and interest accrued on or after __________, _____ (the
"Subsequent Cut-Off Date") and any Mortgage Insurance Policies relating
thereto. The Sponsor shall deliver or cause to be delivered the original
Mortgage or Mortgage assignment with evidence of recording thereon (except
as otherwise provided by the Sale and Servicing Agreement) and other
required documentation in accordance with the terms set forth in Section
2.04(b) of the Sale and Servicing Agreement.
The costs relating to the delivery of the documents specified in
this Subsequent Transfer Agreement and the Sale and Servicing Agreement
shall be borne by the Sponsor.
The Sponsor hereby affirms the representations and warranties
set forth in the Sale and Servicing Agreement that relate to itself and to
the Subsequent Mortgage Loans as of the date hereof.
All terms and conditions of the Sale and Servicing Agreement are
hereby ratified, confirmed and incorporated herein; provided that in the
event of any conflict, the provisions of this Subsequent Transfer Agreement
shall control over the conflicting provisions of the Sale and Servicing
Agreement.
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Terms and capitalized and not defined herein shall have their
respective meanings as set forth in the Sale and Servicing Agreement.
IN WITNESS WHEREOF, the parties have executed this Subsequent
Transfer Agreement as of this ____ day of ____________, ______.
ADVANTA CONDUIT RECEIVABLES, INC.,
as Sponsor
By: _______________________________________
Name:
Title:
ADVANTA MORTGAGE LOAN
TRUST 1999-4
By: Wilmington Trust Company
not in its individual capacity but
solely as Owner Trustee
By: _______________________________________
Name:
Title:
ADVANTA HOLDING TRUST 1999-4
By: Wilmington Trust Company
not in its individual capacity but
solely as Owner Trustee
By: _______________________________________
Name:
Title:
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BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., as
Indenture Trustee
By: _______________________________________
Name:
Title:
Dated:
Attachments
A. Addition Notice.
B. Schedule of Mortgage Loans.
C. Officer's Certificate.
D. Indenture Trustee's Certificate.
E. Conveyance Agreement.
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