Document:

<PAGE>   1
                                 TRUST AGREEMENT

                                     between

                       ADVANTA CONDUIT RECEIVABLES, INC.,
                                   as Sponsor

                                       and

                            WILMINGTON TRUST COMPANY,
                                as Owner Trustee

                            Dated as of April 1, 2000
<PAGE>   2
                                Table of Contents

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ARTICLE I.
Definitions......................................................................................................   1
         Section 1.1  Capitalized Terms..........................................................................   1
         Section 1.2  Other Definitional Provisions..............................................................   4
         Section 1.3  Action by or Consent of Noteholders and Certificateholders.................................   4

ARTICLE II.
Organization.....................................................................................................   5
         Section 2.1  Names......................................................................................   5
         Section 2.2  Office.....................................................................................   5
         Section 2.3  Purposes and Powers........................................................................   5
         Section 2.4  Appointment of Owner Trustee...............................................................   6
         Section 2.5  Initial Capital Contribution of Trust Estate...............................................   6
         Section 2.6  Declaration of Trust.......................................................................   6
         Section 2.7  Liability..................................................................................   6
         Section 2.8  Title to Trust Property....................................................................   6
         Section 2.9  Situs of Trust.............................................................................   7
         Section 2.10  Representations and Warranties of the Sponsor.............................................   7
         Section 2.11  Federal Income Tax Allocations............................................................   8
         Section 2.12  Covenants of the Sponsor..................................................................   8
         Section 2.13  Covenants of the Certificateholders.......................................................   9
         Section 2.14  Investment Company........................................................................  10

ARTICLE III.
Certificates and Transfer of Interests...........................................................................  10
         Section 3.1  Initial Ownership..........................................................................  10
         Section 3.2  The Certificates...........................................................................  10
         Section 3.3  Authentication of Certificates.............................................................  11
         Section 3.4  Registration of Transfer and Exchange of Certificates......................................  11
         Section 3.5  Mutilated, Destroyed, Lost or Stolen Certificates..........................................  11
         Section 3.6  Persons Deemed Certificateholders..........................................................  11
         Section 3.7  Access to List of Certificateholders' Names and Addresses..................................  12
         Section 3.8  Maintenance of Office or Agency............................................................  12
         Section 3.9  ERISA......................................................................................  12
         Section 3.10  Restrictions on Transfer of Certificates..................................................  12
         Section 3.11  Acceptance of Obligations.................................................................  14
         Section 3.12  Payments on Certificates..................................................................  14

ARTICLE IV.
Voting Rights and Other Actions..................................................................................  14
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         Section 4.1  Prior Notice to Holders with Respect to Certain Matters....................................  14
         Section 4.2  Action by Certificateholders with Respect to Certain Matters...............................  15
         Section 4.3  Action by Certificateholders with Respect to Bankruptcy....................................  16
         Section 4.4  Restrictions on Certificateholders' Power..................................................  16
         Section 4.5  Majority Control...........................................................................  17
         Section 4.6  Rights of Insurer..........................................................................  17
         Section 4.7  Separateness...............................................................................  17

ARTICLE V.
Certain Duties...................................................................................................  17
         Section 5.1  Accounting and Records to the Noteholders,
          Certificateholders, the Internal Revenue Service and Others............................................  17
         Section 5.2  Signature on Returns; Tax Matters Partner..................................................  18

ARTICLE VI.
Authority and Duties of Owner Trustee............................................................................  18
         Section 6.1  General Authority..........................................................................  18
         Section 6.2  General Duties.............................................................................  19
         Section 6.3  Action upon Instruction....................................................................  19
         Section 6.4  No Duties Except as Specified in this Agreement or in Instructions.........................  20
         Section 6.5  No Action Except under Specified Documents or Instructions.................................  20
         Section 6.6  Restrictions...............................................................................  20

ARTICLE VII.
Concerning the Owner Trustee.....................................................................................  20
         Section 7.1  Acceptance of Trust and Duties.............................................................  20
         Section 7.2  Furnishing of Documents....................................................................  22
         Section 7.3  Representations and Warranties.............................................................  22
         Section 7.4  Reliance; Advice of Counsel................................................................  22
         Section 7.5  Not Acting in Individual Capacity..........................................................  23
         Section 7.6  Owner Trustee Not Liable for Certificates or Mortgage Loans................................  23
         Section 7.7  Owner Trustee May Own Certificates and Notes...............................................  23
         Section 7.8  Payments from Trust Estate.................................................................  23
         Section 7.9  Doing Business in Other Jurisdictions......................................................  24

ARTICLE VIII.
Compensation of Owner Trustee....................................................................................  24
         Section 8.1  Owner Trustee's Fees and Expenses..........................................................  24
         Section 8.2  Indemnification............................................................................  24
         Section 8.3  Payments to the Owner Trustee..............................................................  25
         Section 8.4  Non-recourse Obligations...................................................................  25
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ARTICLE IX.
Termination of Trust Agreement...................................................................................  25
         Section 9.1  Termination of Trust Agreement.............................................................  25

ARTICLE X
Successor Owner Trustees and Additional Owner Trustees...........................................................  26
         Section 10.1  Eligibility Requirements for Owner Trustee................................................  26
         Section 10.2  Resignation or Removal of Owner Trustee...................................................  27
         Section 10.3  Successor Owner Trustee...................................................................  28
         Section 10.4  Merger or Consolidation of Owner Trustee..................................................  28
         Section 10.5  Appointment of Co-Owner Trustee or Separate Owner Trustee.................................  28

ARTICLE XI
Miscellaneous....................................................................................................  30
         Section 11.1  Supplements and Amendments................................................................  30
         Section 11.2  [Reserved.]...............................................................................  31
         Section 11.3  Limitations on Rights of Others...........................................................  31
         Section 11.4  Notices...................................................................................  31
         Section 11.5  Severability..............................................................................  31
         Section 11.6  Separate Counterparts.....................................................................  32
         Section 11.7  Assignments...............................................................................  32
         Section 11.8  No Petition...............................................................................  32
         Section 11.9  No Recourse...............................................................................  32
         Section 11.10  Headings.................................................................................  32
         Section 11.11  Governing Law............................................................................  32
         Section 11.12  Master Servicer..........................................................................  32
         Section 11.13  No Borrowing.............................................................................  33
         Section 11.14  Nonpetition Covenant.....................................................................  33
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EXHIBITS
--------

Exhibit A         Form of Asset Backed Certificate
Exhibit B         Form of Certificate of Trust

                                      -iii-
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         TRUST AGREEMENT dated as of April 1, 2000, between ADVANTA CONDUIT
RECEIVABLES, INC., a Nevada corporation, as sponsor (the "Sponsor"), and
WILMINGTON TRUST COMPANY, a Delaware banking corporation, as owner trustee (the
"Owner Trustee").

                                   ARTICLE I.

                                   Definitions

         Section 1.1 Capitalized Terms. For the purposes of this Agreement, the
following terms shall have the meanings set forth below. All other capitalized
terms used herein but not defined shall have the meanings set forth in the
Indenture.

         "Affiliate" shall mean with respect to any specified Person, a Person
that directly, or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, or owns, directly or indirectly,
50% or more of, the Person specified.

         "Agreement" shall mean this Trust Agreement, as the same may be amended
and supplemented from time to time.

         "Benefit Plan Investor" shall have the meaning assigned to such term in
Section 3.9.

         "Business Trust Statute" shall mean Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code Section 3801 et. seq. as the same may be amended
from time to time.

         "Certificate" means a trust certificate evidencing an undivided
beneficial ownership interest of a Certificateholder in the Trust, substantially
in the form of Exhibit A hereto.

         "Certificate of Trust" shall mean the Certificate of Trust in the form
of Exhibit B to be filed for the Trust pursuant to Section 3810(a) of the
Business Trust Statute.

         "Certificate Register" and "Certificate Registrar" shall mean the
register maintained and the registrar appointed pursuant to Section 3.4.

         "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and Treasury Regulations promulgated thereunder.

         "Corporate Trust Office" shall mean, with respect to the Owner Trustee,
the principal corporate trust office of the Owner Trustee located at Rodney
Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001,
Attention: Corporate Trust Administration, or at such other address as the Owner
Trustee may designate by notice to the Certificateholders, the Insurer and the
Sponsor, or the principal
<PAGE>   6
corporate trust office of any successor Owner Trustee (the address of which the
successor Owner Trustee will notify the Certificateholders, the Insurer and the
Sponsor).

         "ERISA" shall have the meaning assigned to such term in Section 3.9.

         "Expenses" shall have the meaning assigned to such term in Section 8.2.

         "Holder" or "Certificateholder" shall mean the Person in whose name a
Certificate is registered on the Certificate Register.

         "Indemnification Agreement" shall mean the Indemnification Agreement,
dated as of April 27, 2000, among the Insurer and the Underwriters.

         "Indemnified Parties" shall have the meaning assigned to such term in
Section 8.2.

         "Indenture" shall mean the Indenture, dated as of April 1, 2000,
between the Trust and the Indenture Trustee, as the same may be amended and
supplemented from time to time.

         "Indenture Trustee" shall mean, initially Bankers Trust Company of
California, N.A., in its capacity as indenture trustee, including its successors
in interest, until and unless a successor Person shall have become the Indenture
Trustee pursuant to the Indenture and thereafter "Indenture Trustee" shall mean
such successor Person.

         "Instructing Party" shall have the meaning assigned to such term in
Section 6.3.

         "Insurance Agreement" shall mean the Insurance and Indemnity Agreement
dated as of April 27, 2000, among the Insurer, the Sponsor, the Trust, the
Master Servicer and the Indenture Trustee.

         "Insurer" shall mean Ambac Assurance Corporation, a Wisconsin-domiciled
stock insurance corporation, or any successor thereto.

         "Master Servicer" shall mean Advanta Mortgage Corp. USA, a Delaware
corporation, and its permitted successors and assigns.

         "Notes" shall mean any of the Notes issued pursuant to the Indenture.

         "Noteholder" shall mean a Person in whose name a Note is registered in
the Note Register.

         "Operative Documents" shall mean, collectively, this Agreement, the
Certificate of Trust, the Sale and Servicing Agreement, the Indemnification
Agreement, the Insurance Agreement, the Subsequent Transfer Agreements, the
Indenture, the Purchase Agreement, the Guaranties, and the other documents and
certificates delivered in connection therewith.

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         "Originators" shall mean, collectively, Advanta Bank Corp., a Utah
industrial loan corporation, Advanta National Bank, a national banking
association, and Advanta Finance Corp., a Nevada corporation, and their
respective successors and assigns.

         "Owner Trustee" shall mean Wilmington Trust Company, a Delaware banking
corporation, not in its individual capacity but solely as owner trustee under
this Agreement, its successors in interest and any successor Owner Trustee
hereunder.

         "Policy" shall mean the certificate guaranty insurance policy (No.
AB0358BE) with respect to the Notes, dated April 27, 2000, issued by the Insurer
to the Indenture Trustee for the benefit of the Noteholders.

         "Record Date" shall mean with respect to any Payment Date, (i) in the
case of the Certificates, the close of business on the last Business Day of the
month immediately preceding such Payment Date and (ii) in the case of the Notes,
so long as the Notes are Book Entry Notes, the Business Day immediately
preceding such Payment Date, and, so long as the Notes are Definitive Notes, the
last Business Day of the calendar month preceding the calendar month in which
such Payment Date occurs.

         "Sale and Servicing Agreement" shall mean the Sale and Servicing
Agreement among the Trust, the Sponsor, the Master Servicer and the Indenture
Trustee, dated as of April 1, 2000, as the same may be amended and supplemented
from time to time.

         "Secretary of State" shall mean the Secretary of State of the State of
Delaware.

         "Security Majority" means, at any time, Noteholders holding Notes
evidencing a majority of the Note Balance so long as any Notes are outstanding
and Holders of a majority by principal amount of the Certificates if no Notes
are then Outstanding.

         "Shadow Rating" shall mean, with respect to a Rating Agency, at any
time, the rating assigned to the Notes by such Rating Agency based on the
characteristics of the Mortgage Loans and the transaction structure, in the
absence of the Policy.

         "Sponsor" shall mean Advanta Conduit Receivables, Inc., a Nevada
corporation, in its capacity as Sponsor hereunder.

         "Subsequent Transfer Agreement" shall mean each Subsequent Transfer
Agreement executed by the Owner Trustee and the Sponsor substantially in the
form of Exhibit H to the Sale and Servicing Agreement, by which Subsequent
Mortgage Loans are transferred and assigned to the Trust.

         "Treasury Regulations" shall mean regulations, including proposed or
temporary regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary

                                      -3-
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regulations shall include analogous provisions of final Treasury Regulations or
other successor Treasury Regulations.

         "Trust" shall mean the trust established by this Agreement.

         "Trust Estate" shall mean all right, title and interest of the Trust in
and to the property and rights assigned to the Trust pursuant to Article II of
the Sale and Servicing Agreement, all funds on deposit from time to time in the
Accounts (excluding any investment earnings on the Principal and Interest
Account, Note Account and the Capitalized Interest Account) and all other
property of the Trust from time to time, including any rights of the Owner
Trustee and the Trust pursuant to the Sale and Servicing Agreement.

         Section 1.2 Other Definitional Provisions. (a) Capitalized terms used
herein and not otherwise defined shall have the meanings assigned to them in the
Sale and Servicing Agreement or, if not defined therein, in the Indenture.

         (b) All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.

         (c) As used in this Agreement and in any certificate or other document
made or delivered pursuant hereto, accounting terms not defined in this
Agreement or in any such certificate or other document, and accounting terms
partly defined in this Agreement or in any such certificate or other document to
the extent not defined, shall have the respective meanings given to them under
generally accepted accounting principles as in effect on the date of this
Agreement or any such certificate or other document, as applicable. To the
extent that the definitions of accounting terms in this Agreement or in any such
certificate or other document are inconsistent with the meanings of such terms
under generally accepted accounting principles, the definitions contained in
this Agreement or in any such certificate or other document shall control.

         (d) The words "hereof," "herein," "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement; Section and Exhibit
references contained in this Agreement are references to Sections and Exhibits
in or to this Agreement unless otherwise specified; and the term "including"
shall mean "including without limitation."

         (e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.

         Section 1.3 Action by or Consent of Noteholders and Certificateholders.
Whenever any provision of this Agreement refers to action to be taken, or
consented to, by Noteholders or Certificateholders, such provision shall be
deemed to refer to the Certificateholder or Noteholder, as the case may be, of
record as of the Record Date immediately preceding the date on which such action
is to be taken, or consent given, by Noteholders or Certificateholders. Solely
for the purposes of any action to be taken, or

                                      -4-
<PAGE>   9
consented to, by Noteholders or Certificateholders, any Note or Certificate
registered in the name of the Sponsor or any Affiliate thereof shall be deemed
not to be outstanding; provided, however that, solely for the purpose of
determining whether the Indenture Trustee is entitled to rely upon any such
action or consent, only Notes or Certificates which the Indenture Trustee or the
Owner Trustee, respectively, knows to be so owned shall be so disregarded.

                                   ARTICLE II.

                                  Organization

         Section 2.1 Names. There is hereby formed a trust to be known as
"Advanta Revolving Home Equity Loan Trust 2000-A," in which name the Owner
Trustee may conduct the business of the Trust, make and execute contracts and
other instruments on behalf of the Trust and sue and be sued.

         Section 2.2 Office. The office of the Trust shall be in care of the
Owner Trustee at the Corporate Trust Office or at such other address as the
Owner Trustee may designate by written notice to the Indenture Trustee for the
Noteholders, the Certificateholders, the Insurer and the Sponsor.

         Section 2.3 Purposes and Powers. The purpose of the Trust is, and the
Trust shall have the power and authority, to engage in the following activities:

                 (i) to issue the Notes pursuant to the Indenture and the
Certificates pursuant to this Agreement, and to sell the Notes;

                 (ii) with the proceeds of the sale of the Notes, to pay the
organizational, startup and transactional expenses of the Trust and to pay the
balance to the Sponsor pursuant to the Sale and Servicing Agreement;

                 (iii) to acquire, hold, dispose of and release the Trust Estate
in accordance with the Operative Documents, and to Grant the Trust Estate to the
Indenture Trustee for the benefit of the Noteholders and the Insurer and to
hold, manage and distribute to the Certificateholders pursuant to the terms of
this Agreement, any portion of the Trust Estate released from the lien of, and
remitted to the Trust pursuant to, the Indenture;

                 (iv) to enter into and perform its obligations under the
Operative Documents to which it is a party;

                 (v) to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith; and

                                      -5-
<PAGE>   10
                 (vi) subject to compliance with the Operative Documents, to
engage in such other activities as may be required in connection with
conservation of the Trust Estate and the making of distributions to the
Certificateholders and the Noteholders.

The Trust is hereby authorized to engage in the foregoing activities. The Trust
shall not engage in any activity other than in connection with the foregoing or
other than as required or authorized by the terms of this Agreement or the
Operative Documents.

         Section 2.4 Appointment of Owner Trustee. The Sponsor hereby appoints
the Owner Trustee as trustee of the Trust effective as of the date hereof, to
have all the rights, powers and duties set forth herein and in the Business
Trust Statute.

         Section 2.5 Initial Capital Contribution of Trust Estate. The Sponsor
hereby assigns, transfers, conveys and sets over to the Owner Trustee, as of the
date hereof, the sum of $1. The Owner Trustee hereby acknowledges receipt in
trust from the Sponsor, as of the date hereof, of the foregoing contribution,
which shall constitute the initial Trust Estate and shall be deposited in a
segregated trust account established and maintained by the Owner Trustee for the
benefit of the Certificateholders. On or prior to the Closing Date, the Owner
Trustee will also, upon receipt thereof, acknowledge on behalf of the Trust,
receipt of the Mortgage Loans pursuant to the Sale and Servicing Agreement. The
Sponsor shall pay organizational expenses of the Trust as they may arise.

         Section 2.6 Declaration of Trust. The Owner Trustee hereby declares
that it will hold the Trust Estate in trust upon and subject to the conditions
set forth herein for the use and benefit of the Certificateholders, subject to
the obligations of the Trust under the Operative Documents. It is the intention
of the parties hereto that the Trust constitute a business trust under the
Business Trust Statute and that this Agreement constitute the governing
instrument of such business trust. It is the intention of the parties hereto
that, solely for income tax purposes, the Trust shall be treated as a branch;
provided, however, that in the event Certificates are owned by more than one
Certificateholder, it is the intention of the parties hereto that, solely for
income and franchise tax purposes, the Trust shall then be treated as a
partnership and that, unless otherwise required by appropriate tax authorities,
only after such time the Trust will file or cause to be filed annual or other
necessary returns, reports and other forms consistent with the characterization
of the Trust as a partnership for such tax purposes. Effective as of the date
hereof, the Owner Trustee shall have all rights, powers and duties set forth
herein and to the extent not inconsistent herewith, in the Business Trust
Statute with respect to accomplishing the purposes of the Trust. The Owner
Trustee shall file the Certificate of Trust with the Secretary of State.

         Section 2.7 Liability. No Holder shall have any personal liability for
any liability or obligation of the Trust.

                                      -6-
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         Section 2.8 Title to Trust Property. (a) Legal title to all of the
Trust Estate shall be vested at all times in the Trust as a separate legal
entity except where applicable law in any jurisdiction requires title to any
part of the Trust Estate to be vested in a trustee or trustees, in which case
title shall be deemed to be vested in the Owner Trustee, a co-trustee and/or a
separate trustee, as the case may be.

         (b) The Holders shall not have legal title to any specific part of the
Trust Estate. The Holders shall be entitled to receive distributions with
respect to their undivided beneficial ownership interest in the Trust only in
accordance with Article IX. No transfer, by operation of law or otherwise, by
any Certificateholder of its ownership interest in the Trust shall operate to
terminate this Agreement or the trusts hereunder or entitle any transferee to an
accounting or to the transfer to it of legal title to any specific part of the
Trust Estate.

         Section 2.9 Situs of Trust. The Trust will be located and administered
in the State of Delaware. All bank accounts maintained by the Owner Trustee on
behalf of the Trust shall be located in the State of Delaware or the State of
New York. Payments will be received by the Trust only in Delaware or New York
and payments will be made by the Trust only from Delaware or New York. The Trust
shall not have any employees in any state other than Delaware; provided,
however, that nothing herein shall restrict or prohibit the Owner Trustee, the
Master Servicer or any agent of the Trust from having employees within or
without the State of Delaware. The only office of the Trust will be at the
Corporate Trust Office in Delaware.

         Section 2.10 Representations and Warranties of the Sponsor. The Sponsor
makes the following representations and warranties on which the Owner Trustee
relies in accepting the Trust Estate in trust and issuing the Certificates and
upon which the Insurer relies in issuing the Policy:

                 (i) The Sponsor is duly organized and validly existing as a
Nevada corporation with power and authority to own its properties and to conduct
its business as such properties are currently owned and such business is
presently conducted and is proposed to be conducted pursuant to this Agreement
and the other Operative Documents;

                 (ii) The Sponsor is duly qualified to do business as a foreign
corporation in good standing, and has obtained all necessary licenses and
approvals, in all jurisdictions in which the ownership or lease of its property,
the conduct of its business and the performance of its obligations under this
Agreement and the other Operative Documents requires such qualification;

                 (iii) The Sponsor has the corporate power and authority to
execute and deliver this Agreement and to carry out its terms. The Sponsor has
full power and authority to sell and assign the property to be sold and assigned
to and deposited with the Trust and the Sponsor has duly authorized such sale
and assignment and deposit to the Trust by all necessary corporate action. The
execution, delivery and performance of this Agreement has been duly authorized
by the Sponsor by all necessary corporate action. The Sponsor has duly executed
this Agreement and this Agreement constitutes a legal, valid and binding
obligation of the Sponsor enforceable against the Sponsor, in accordance with
its terms, except as

                                      -7-
<PAGE>   12
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).

                 (iv) To the best knowledge of the Sponsor, no consent, license,
approval or authorization or registration or declaration with, any Person or
with any governmental authority, bureau or agency is required in connection with
the execution, delivery or performance by the Sponsor of this Agreement and the
other Operative Documents, except for such as have been obtained, effected or
made;

                 (v) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do not (A) conflict with,
result in any breach of any of the terms and provisions of, or constitute (with
or without notice or lapse of time) a default under, the certificate of
incorporation or bylaws of the Sponsor, or any material indenture, agreement or
other instrument to which the Sponsor is a party or by which it is bound, (B)
result in the creation or imposition of any lien upon any of the Sponsor's
properties pursuant to the terms of any such indenture, agreement or other
instrument (other than pursuant to the Operative Documents), or (C) violate any
law or, to the best of the Sponsor's knowledge, any order, rule or regulation
applicable to the Sponsor of any court or of any Federal or state regulatory
body, administrative agency or other governmental instrumentality having
jurisdiction over the Sponsor or its properties; and

                 (vi) There are no proceedings or investigations pending or, to
the Sponsor's knowledge, threatened against the Sponsor before any court,
regulatory body, administrative agency or other tribunal or governmental
instrumentality having jurisdiction over the Sponsor or its properties (A)
asserting the invalidity of this Agreement or any of the other Operative
Documents, (B) seeking to prevent the issuance of the Certificates or the Notes
or the consummation of any of the transactions contemplated by this Agreement or
any of the other Operative Documents, (C) seeking any determination or ruling
that might materially and adversely affect the Sponsor's performance of its
obligations under, or the validity or enforceability of, this Agreement or any
of the other Operative Documents, or (D) seeking to adversely affect the federal
income tax or other federal, state or local tax attributes of the Notes or the
Certificates.

         Section 2.11 Federal Income Tax Allocations. In the event that the
Trust is treated as a partnership for Federal income tax purposes, net income of
the Trust for any month as determined for Federal income tax purposes (and each
item of income, gain, loss, credit and deduction entering into the computation
thereof) shall be allocated to the extent of available net income, among the
Certificateholders as of the first Record Date following the end of such month,
in proportion to their ownership percentage of the outstanding principal amount
of the Certificates on such Record Date.

         Net losses of the Trust, if any, for any month as determined for
Federal income tax purposes (and each item of income, gain, loss, credit and
deduction entering into the computation thereof) shall be allocated among the
Certificateholders as of the first Record Date following the end of such month,
in proportion to their ownership percentage of the principal amount of the
Certificates outstanding on such Record Date until the principal balance of the
Certificates is reduced to zero. The Sponsor, as agent on

                                      -8-
<PAGE>   13
behalf of the Originators, is authorized to modify the allocations in this
paragraph if necessary or appropriate, in its sole discretion, for the
allocations to fairly reflect the economic income, gain or loss to the
Certificateholders, or as otherwise required by the Code.

         Section 2.12 Covenants of the Sponsor. The Sponsor agrees and covenants
for the benefit of each Certificateholder, the Insurer and the Owner Trustee,
during the term of this Agreement, and to the fullest extent permitted by
applicable law, that:

         (a) it shall not create, incur or suffer to exist any indebtedness or
engage in any business, except, in each case, as permitted by its certificate of
incorporation and the Operative Documents;

         (b) it shall not, for any reason, institute proceedings for the Trust
to be adjudicated a bankrupt or insolvent, or consent to the institution of
bankruptcy or insolvency proceedings against the Trust, or file a petition
seeking or consenting to reorganization or relief under any applicable federal
or state law relating to the bankruptcy of the Trust, or consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the Trust or a substantial part of the property of the
Trust or cause or permit the Trust to make any assignment for the benefit of
creditors, or admit in writing the inability of the Trust to pay its debts
generally as they become due, or declare or effect a moratorium on the debt of
the Trust or take any action in furtherance of any such action;

         (c) it shall obtain from each counterparty to each Operative Document
to which it or the Trust is a party and each other agreement entered into on or
after the date hereof to which it or the Trust is a party, an agreement by each
such counterparty that prior to the occurrence of the event specified in Section
9.1(e) such counterparty shall not institute against, or join any other Person
in instituting against, the Sponsor or the Trust, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or other
similar proceedings under the laws of the United States or any state of the
United States; and

         (d) it shall not, for any reason, withdraw or attempt to withdraw from
this Agreement, dissolve, institute proceedings for it to be adjudicated a
bankrupt or insolvent, or consent to the institution of bankruptcy or insolvency
proceedings against it, or file a petition seeking or consenting to
reorganization or relief under any applicable federal or state law relating to
bankruptcy, or consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of it or a substantial part of
its property, or make any assignment for the benefit of creditors, or admit in
writing its inability to pay its debts generally as they become due, or declare
or effect a moratorium on its debt or take any action in furtherance of any such
action.

         Section 2.13 Covenants of the Certificateholders. Each
Certificateholder agrees:

         (a) to be bound by the terms and conditions of the Certificates and of
this Agreement, including any supplements or amendments hereto and to perform
the obligations of a Certificateholder as set forth therein or herein, in all
respects as if it were a signatory hereto. This undertaking is made for the
benefit of the Trust, the Owner Trustee, the Insurer and all other
Certificateholders present and future;

                                      -9-
<PAGE>   14
         (b) to appoint, and hereby appoints, the Sponsor as such
Certificateholder's agent and attorney-in-fact to sign all federal, state and
local income or franchise tax returns and any federal income tax information
return filed on behalf of the Trust, if any, and agrees that, if requested by
the Trust, it will sign such tax returns and information returns in its capacity
as holder of an interest in the Trust. Each Certificateholder also hereby agrees
that in its tax returns it will not take any position inconsistent with those
taken in any tax returns that may be filed by the Trust;

         (c) if such Certificateholder is other than an individual or entity
holding its Certificate through a broker who reports securities sales on Form
1099B, to notify the Owner Trustee of any transfer by it of a Certificate in a
taxable sale or exchange, within 30 days of the date of the transfer; and

         (d) until the completion of the events specified in Section 9.1(e), not
to, for any reason, (i) institute proceedings for the Trust or the Sponsor to be
adjudicated a bankrupt or insolvent, or consent to the institution of bankruptcy
or insolvency proceedings against the Trust, or (ii) file a petition seeking or
consenting to reorganization or relief under any applicable federal or state law
relating to bankruptcy, with respect to the Sponsor or the Trust, or consent to
the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or
other similar official) of the Sponsor or the Trust or a substantial part of the
Sponsor's or the Trust's property, or (iii) cause or permit the Sponsor or the
Trust to make any assignment for the benefit of its creditors, or admit in
writing its inability to pay its debts generally as they become due, or declare
or effect a moratorium on its debt or take any action in furtherance of any such
action.

         Except as provided in this Section 2.13, and notwithstanding any other
provision to the contrary in this Agreement, no Certificateholder shall be
deemed to have adopted, be bound by, or succeed in any way to any representation
by, or duty of indemnification by or any other duty of, the Sponsor, including
those contained in Sections 2.10, 2.11, 2.12, and 8.2 or elsewhere herein.

         Section 2.14 Investment Company. Neither the Sponsor nor any Holder
shall take any action that would cause the Trust to become an "investment
company" required to register under the Investment Company Act of 1940, as
amended.

                                  ARTICLE III.

                     Certificates and Transfer of Interests

         Section 3.1 Initial Ownership. Upon the formation of the Trust by the
contribution by the Sponsor pursuant to Section 2.5, the Owner Trustee,
contemporaneously therewith, having full power, authority, and authorization to
do so, has executed, authenticated, dated, issued, and delivered, in the name
and on behalf of the Trust, to the Originators, one or more Certificates
representing in the aggregate a 100% interest in the Trust, and has registered
such Certificates on the Certificate Register in the names of the Originators.
Initially, the Originators shall be the sole beneficiaries of the Trust. Such
Certificates are duly authorized, validly

                                      -10-
<PAGE>   15
issued, and entitled to the benefits of this Agreement. For so long as the
Originators shall own such 100% interest in the Trust, the Originators shall be
the sole beneficial owners of the Trust. For so long as any Notes remain
outstanding, each Originator shall not transfer its ownership interest in the
Trust, in whole or in part, to any Person that is not an Affiliate of the such
Originator, without the Insurer's prior written consent. Each Originator shall
give the Insurer notice of any transfer of its ownership interest in the Trust
to an Affiliate of such Originator.

         Section 3.2 The Certificates. The Certificates shall be issued in
denominations of $1,000 and integral multiples of $1,000 in excess thereof. The
Certificates shall be executed on behalf of the Trust by manual or facsimile
signature of an authorized officer of the Owner Trustee. Certificates bearing
the manual or facsimile signatures of individuals who were, at the time when
such signatures were affixed, authorized to sign on behalf of the Trust, shall
be validly issued and entitled to the benefit of this Agreement, notwithstanding
that such individuals or any of them shall have ceased to be so authorized prior
to the authentication and delivery of such Certificates or did not hold such
offices at the date of authentication and delivery of such Certificates. A
transferee of a Certificate shall become a Certificateholder, and shall be
entitled to the rights and subject to the obligations of a Certificateholder
hereunder, upon due registration of such Certificate in such transferee's name
pursuant to Section 3.4. The Trust shall not issue any other Certificate, other
than (i) in connection with a transfer or exchange of a Certificate in
accordance with Sections 3.4 and 3.10 or (ii) in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Certificate, in accordance with Section
3.5.

         Section 3.3 Authentication of Certificates. Concurrently with the
initial sale of the Mortgage Loans to the Trust pursuant to the Sale and
Servicing Agreement, the Owner Trustee shall cause each Certificate to be
executed on behalf of the Trust, authenticated and delivered to or upon the
written order of the Sponsor in authorized denominations; provided, that, such
written order, if any, is signed by the chairman of the board, the president,
any vice president, the treasurer or any assistant treasurer of the Sponsor
without further corporate action by the Sponsor. No Certificate shall entitle
its holder to any benefit under this Agreement, or shall be valid for any
purpose, unless there shall appear on such Certificate a certificate of
authentication substantially in the form set forth in Exhibit A, executed by the
Owner Trustee, by manual signature; such authentication shall constitute
conclusive evidence that such Certificate shall have been duly authenticated and
delivered hereunder. All Certificates shall be dated the date of their
authentication.

         Section 3.4 Registration of Transfer and Exchange of Certificates. The
Certificate Registrar shall keep or cause to be kept, at the office or agency
maintained pursuant to Section 3.8, a Certificate Register in which, subject to
such reasonable regulations as it may prescribe, the Owner Trustee shall provide
for the registration of Certificates and of transfers and exchanges of
Certificates as herein provided. The Owner Trustee shall be the initial
Certificate Registrar.

                                      -11-
<PAGE>   16
         Section 3.5 Mutilated, Destroyed, Lost or Stolen Certificates. If (a)
any mutilated Certificate shall be surrendered to the Certificate Registrar, or
if the Certificate Registrar shall receive evidence to its satisfaction of the
destruction, loss or theft of any Certificate and (b) there shall be delivered
to the Certificate Registrar, the Owner Trustee and the Insurer such security or
indemnity as may be required by them to save each of them harmless, then in the
absence of notice that such Certificate shall have been acquired by a bona fide
purchaser, the Owner Trustee on behalf of the Trust shall execute and the Owner
Trustee shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
class, tenor and denomination. In connection with the issuance of any new
Certificate under this Section, the Owner Trustee or the Certificate Registrar
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith. Any duplicate
Certificate issued pursuant to this Section shall constitute conclusive evidence
of an ownership interest in the Trust, as if originally issued, whether or not
the lost, stolen or destroyed Certificate shall be found at any time.

         Section 3.6 Persons Deemed Certificateholders. Every Person by virtue
of becoming a Certificateholder in accordance with this Agreement and the rules
and regulations of the Certificate Registrar shall be deemed to be bound by the
terms of this Agreement. Prior to due presentation of a Certificate for
registration of transfer, the Owner Trustee, the Certificate Registrar and the
Insurer, and any agents of the Owner Trustee, the Certificate Registrar and the
Insurer, may treat the Person in whose name any Certificate shall be registered
in the Certificate Register as the owner of such Certificate for the purpose of
receiving distributions pursuant to the Sale and Servicing Agreement and the
Indenture and for all other purposes whatsoever, and none of the Owner Trustee,
the Certificate Registrar or the Insurer or any agent of the Owner Trustee, the
Certificate Registrar or the Insurer shall be bound by any notice to the
contrary.

         Section 3.7 Access to List of Certificateholders' Names and Addresses.
The Owner Trustee shall furnish or cause to be furnished to the Master Servicer,
the Sponsor and/or the Insurer, within fifteen (15) days after receipt by the
Owner Trustee of a request therefor from such Person in writing, a list of the
names and addresses of the Certificateholders as of the most recent Record Date.
If three or more Holders of Certificates or one or more Holders of Certificates
evidencing an aggregate Percentage Interest of not less than 25% apply in
writing to the Owner Trustee, and such application states that the applicants
desire to communicate with other Certificateholders with respect to their rights
under this Agreement or under the Certificates and such application is
accompanied by a copy of the communication that such applicants propose to
transmit, then the Owner Trustee shall, within five (5) Business Days after the
receipt of such application, afford such applicants access during normal
business hours to the current list of Certificateholders. Each Holder, by
receiving and holding a Certificate, shall be deemed to have agreed not to hold
any of the Sponsor, the Master Servicer, the Owner Trustee or the Insurer or any
agent of any of them accountable by reason of the disclosure of its name and
address, regardless of the source from which such information was derived.

                                      -12-
<PAGE>   17
         Section 3.8 Maintenance of Office or Agency. The Owner Trustee shall
maintain in Wilmington, Delaware an office or offices or agency or agencies
where Certificates may be surrendered for registration of transfer or exchange
and where notices and demands to or upon the Owner Trustee in respect of the
Certificates and the Operative Documents may be served. The Owner Trustee
initially designates its Corporate Trust Office for such purposes. The Owner
Trustee shall give prompt written notice to the Sponsor, the Certificateholders
and the Insurer of any change in the location of the Certificate Register or any
such office or agency.

         Section 3.9 ERISA. The Certificates may not be acquired by or for the
account of (i) an employee benefit plan (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")) that is
subject to the provisions of Title I of ERISA, (ii) a plan (as defined in
Section 4975(e)(1) of the Code) that is subject to Section 4975 of the Code, or
(iii) any person acting on behalf of or using the assets of a plan described in
(i) or (ii) of this Section 3.9 (each, a "Benefit Plan Investor"). By accepting
and holding its beneficial ownership interest in its Certificate, the Holder
thereof shall be deemed to have represented and warranted that it is not a
Benefit Plan Investor.

         Section 3.10 Restrictions on Transfer of Certificates. (a) The
Certificates shall be assigned, transferred, exchanged, pledged, financed,
hypothecated or otherwise conveyed (collectively, for purposes of this Section
3.10 and any other Section referring to the Certificates, "transferred" or a
"transfer") only in accordance with this Section 3.10.

         (b) No transfer of a Certificate shall be made unless such transfer is
exempt from the registration requirements of the Securities Act of 1933, as
amended (the "Securities Act"), and any applicable state securities laws or is
made in accordance with the Securities Act and such state securities laws.
Except for the initial issuance of the Certificates to the Originators, the
Owner Trustee shall require (i) the transferee to execute an investment letter
acceptable to and in form and substance satisfactory to the Owner Trustee and
the Insurer, certifying to the Owner Trustee and the Insurer the facts
surrounding such transfer, which investment letter shall not be an expense of
the Owner Trustee or the Insurer, or (ii) if the investment letter is not
delivered, a written Opinion of Counsel acceptable to and in form and substance
satisfactory to the Owner Trustee and the Insurer that such transfer may be made
pursuant to an exemption from the Securities Act, describing the applicable
exemption and the basis therefor, or is being made in accordance with the
Securities Act, which Opinion of Counsel shall not be an expense of the Owner
Trustee, the Insurer or the Sponsor. The Holder of a Certificate desiring to
effect such transfer shall, and does hereby agree to, indemnify the Sponsor, the
Owner Trustee and the Insurer against any liability that may result if the
transfer is not so exempt or is not made in accordance with such federal and
state laws.

         (c) No Certificate or any interest therein shall be transferred except
upon satisfaction of the following conditions precedent: (i) the Person that
acquires such Certificate shall: (A) be organized and existing under the laws of
the United States of America or any state thereof or the District of Columbia;
(B) expressly assume, by an agreement supplemental hereto, executed and
delivered to the Owner Trustee, the performance of every covenant and obligation
of the Sponsor hereunder except for the covenants and obligations contained in
Sections 2.1, 2.2, 2.3, 2.4, 3.3 and 3.4 of the Sale and Servicing Agreement and

                                      -13-
<PAGE>   18
in the Credit Line Agreements and the Mortgage Notes; (ii) the Person that
acquires such Certificate shall deliver to the Owner Trustee and the Insurer an
Officer's Certificate stating that such transfer and such supplemental agreement
comply with this Section 3.10 and that all conditions precedent set forth in
this Section 3.10 have been complied with and an Opinion of Counsel stating that
such transfer and such supplemental agreement comply with this Section 3.10 and
that all conditions precedent set forth in this Section 3.10 have been complied
with, and the Owner Trustee may conclusively rely on such Officer's Certificate,
shall have no duty to make inquiries with regard to the matters set forth
therein and shall incur no liability in so relying; (iii) the Person that
acquires such Certificate shall deliver to the Owner Trustee and the Insurer a
letter from each Rating Agency confirming that its Shadow Rating will not be
reduced, after giving effect to the proposed transfer, solely as a result of the
transfer to such Person; (iv) the Person that acquires such Certificate shall
deliver to the Owner Trustee and the Insurer an Opinion of Counsel to the effect
that (A) such transfer will not adversely affect the treatment of the Notes
after such transfer as debt for federal and applicable state income tax
purposes, (B) such transfer will not result in the Trust being subject to tax at
the entity level for federal or applicable state tax purposes, (C) such transfer
will not have any material adverse impact on the federal or applicable state
income taxation of a Noteholder and (D) such transfer will not result in the
arrangement created by this Agreement or any "portion" of the Trust being
treated as a taxable mortgage pool as defined in Section 7701(i) of the Code;
(v) all filings and other actions necessary to continue the perfection of the
interest of the Trust in the Mortgage Loans and the other property conveyed
hereunder shall have been taken or made; and (vi) the prior written consent of
the Insurer has been obtained, which consent shall not be unreasonably withheld.
Notwithstanding the foregoing, the requirement set forth in subclause (c)(i)(A)
of this Section 3.10 shall not apply in the event the Owner Trustee and the
Insurer shall have received a letter from each Rating Agency confirming that its
Shadow Rating will not be reduced, after giving effect to a proposed transfer to
a Person that does not meet the requirement set forth in subclause (c)(i)(A),
solely as a result of the transfer to such Person. Notwithstanding the
foregoing, the requirements set forth in this paragraph (c) shall not apply to
the initial issuance of the Certificates to the Originators.

         (d) Except for the initial issuance of the Certificates to the
Originators, no transfer of a Certificate shall be made unless the Owner Trustee
and the Insurer shall have received a representation letter from the transferee
of such Certificate, acceptable to and in form and substance satisfactory to
the Owner Trustee and the Insurer, to the effect that such transferee is not a
Benefit Plan Investor, which representation letter shall not be an expense of
the Owner Trustee.

         (e) No transfer or pledge of the Certificates shall result in more than
ninety-eight (98) other holders of Certificates.

         Section 3.11 Acceptance of Obligations. The Sponsor agrees to be bound
by and to perform all the duties of the Sponsor set forth in this Agreement.

                                      -14-
<PAGE>   19
         Section 3.12 Payments on Certificates. The Holders of the Certificates
will be entitled to distributions on each Payment Date, as provided in the
Indenture.

                                   ARTICLE IV.

                         Voting Rights and Other Actions

         Section 4.1 Prior Notice to Holders with Respect to Certain Matters.
With respect to the following matters, the Owner Trustee shall not take action
unless at least thirty (30) days before the taking of such action, the Owner
Trustee shall have notified the Certificateholders and the Insurer in writing of
the proposed action and (i) the Insurer shall have consented in writing thereto
and (ii) the Certificateholders shall not have notified the Owner Trustee in
writing prior to the 30th day after such notice is given that the
Certificateholders have withheld consent or, with the written consent of the
Insurer, provided alternative direction:

         (a) the election by the Trust to file an amendment to the Certificate
of Trust (unless such amendment is required to be filed under the Business Trust
Statute or unless such amendment would not materially and adversely affect the
interests of the Holders);

         (b)      the amendment of any Operative Document;

         (c) the appointment pursuant to the Indenture of a successor Note
Registrar, Paying Agent or Indenture Trustee or, pursuant to Agreement, of a
successor Certificate Registrar or the consent by the Trust or the Owner Trustee
to the assignment by the Note Registrar, Paying Agent, Indenture Trustee or
Certificate Registrar of its obligations under the Indenture or this Agreement,
as applicable;

         (d) the consent to the declaration or waiver of any default under any
Operative Document;

         (e) the consent to the assignment by the Indenture Trustee or Master
Servicer of their respective obligations under any Operative Document;

         (f) the performance of any act that conflicts with any other Operative
Document;

         (g) the performance of any act which would make it impossible to carry
on the ordinary business of the Trust as described in Section 2.3 hereof;

         (h) the confession of a judgment against the Trust;

         (i) the possession of Trust assets or assignment of the Trust's
interest in any property, for any purpose other than a purpose enumerated in
Section 2.3;

         (j) a loan by the Trust to any Person; or

                                      -15-
<PAGE>   20
         (k) any change in the Trust's purposes and powers enumerated in Section
2.3.

The Owner Trustee shall notify the Certificateholders and the Insurer in writing
of any appointment of a successor Note Registrar or Certificate Registrar within
five (5) Business Days thereof.

         In addition, the Owner Trustee shall not: (i) cause the Trust to merge
or consolidate with or into any other entity, or convey or transfer all or
substantially all of the Trust's assets to any other entity; (ii) cause the
Trust to incur, assume or guaranty any indebtedness other than as set forth in
this Trust Agreement; or (iii) except as provided in Article IX hereof,
dissolve, terminate or liquidate the Trust in whole or in part.

         Section 4.2 Action by Certificateholders with Respect to Certain
Matters. (a) The Owner Trustee shall not have the power, except upon the written
direction of the Insurer or in the event that an Insurer Default shall have
occurred and is continuing, instruction of the Security Majority in accordance
with the Operative Documents, to (i) remove the Master Servicer under the Sale
and Servicing Agreement, (ii) except as expressly provided in the Operative
Documents, sell the Mortgage Loans after the termination of the Indenture, (iii)
institute proceedings to have the Trust declared or adjudicated to be bankrupt
or insolvent, (iv) consent to the institution of bankruptcy or insolvency
proceedings against the Trust, (v) file a petition or consent to a petition
seeking reorganization or relief on behalf of the Trust under any applicable
federal or state law relating to bankruptcy, (vi) consent to the appointment of
a receiver, liquidator, assignee, trustee, sequestrator (or any similar
official) of the Trust or a substantial portion of the property of the Trust,
(vii) make any assignment for the benefit of the Trust's creditors, (viii) cause
the Trust to admit in writing its inability to pay its debts generally as they
become due, (ix) take any action or cause the Trust to take any action in
furtherance of any of the foregoing clauses (iii) through (viii) (any such
action, a "Bankruptcy Action"). So long as the Indenture and the Insurance
Agreement remain in effect, no Certificateholder shall have the power to take,
and shall not take, any Bankruptcy Action with respect to the Trust or direct
the Owner Trustee to take any Bankruptcy Action with respect to the Trust. The
Owner Trustee shall take the actions referred to in the preceding sentence only
upon written instructions signed by the Insurer or the Security Majority, as the
case may be, and the furnishing of indemnification satisfactory to the Owner
Trustee.

         (b) Upon the written request of any Certificateholder (a "Proposer"),
the Owner Trustee shall distribute promptly to all Certificateholders any
request for action or consent of Certificateholders submitted by such Proposer.
The Owner Trustee shall provide a reasonable method for collecting responses to
such request and shall tabulate and report the results thereof to the
Certificateholders and the Sponsor. The Owner Trustee shall have no
responsibility or duty to determine if any such proposed action or consent is
permitted under the terms of this Agreement or applicable law.

                                      -16-
<PAGE>   21
         Section 4.3 Action by Certificateholders with Respect to Bankruptcy.
Until one year and one day following the day on which the Notes have been paid
in full, the Owner Trustee shall not have the power to, and shall not, commence
any proceeding or other actions contemplated by Section 2.12(b) relating to the
Trust without the prior written consent of the Insurer (unless an Insurer
Default shall have occurred and is continuing) or the Security Majority upon an
Insurer Default. Until one year and one day following the day on which the Notes
have been paid in full, all amounts due to the Insurer under the Insurance
Agreement have been paid in full, the Policy has been terminated and the
Indenture Trustee has surrendered the Policy to the Insurer, the Owner Trustee
shall not have the power to, and shall not, commence any proceeding or other
actions contemplated by Section 2.12(b) relating to the Trust without the prior
written consent of all of the Certificateholders and the delivery to the Owner
Trustee by each Certificateholder of a certificate certifying that such
Certificateholder reasonably believes that the Trust is insolvent.

         Section 4.4 Restrictions on Certificateholders' Power. (a) The
Certificateholders shall not direct the Owner Trustee to take or refrain from
taking any action if such action or inaction would be contrary to any obligation
of the Trust or the Owner Trustee under this Agreement or any of the other
Operative Documents or would be contrary to Section 2.3 or otherwise contrary to
law and the Owner Trustee shall not be obligated to follow any such direction,
if given.

         (b) No Certificateholder (other than an Originator) shall have any
right by virtue or by availing itself of any provisions of this Agreement to
institute any suit, action, or proceeding in equity or at law upon or under or
with respect to this Agreement or any other Operative Document, unless (i) the
Certificateholders are the Instructing Party pursuant to Section 6.3 and (ii) a
Certificateholder previously shall have given to the Owner Trustee a written
notice of default and of the continuance thereof, as provided in this Agreement
and Holders of Certificates evidencing an aggregate Percentage Interest of not
less than 25% shall have made written request upon the Owner Trustee to
institute such action, suit or proceeding in its own name as Owner Trustee under
this Agreement and shall have offered to the Owner Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
incurred by the Owner Trustee in connection therewith, and the Owner Trustee,
for 30 days after its receipt of such notice, request, and offer of indemnity,
shall have failed or refused to institute any such action, suit, or proceeding,
and during such 30-day period no request or waiver inconsistent with such
written request has been given to the Owner Trustee pursuant to and in
compliance with this Section or Section 6.3, it being understood and intended,
and being expressly covenanted by each Certificateholder with every other
Certificateholder and the Owner Trustee, that no one or more Holders of
Certificates shall have any right in any manner whatever by virtue or by
availing itself or themselves of any provisions of this Agreement to affect,
disturb, or prejudice the rights of the Holders of any other of the
Certificates, or to obtain or seek to obtain priority over or preference to any
other such Holder, or to enforce any right under this Agreement, except in the
manner provided in this Agreement and for the equal, ratable, and common benefit
of all Certificateholders. For the protection and enforcement of the provisions
of this Section 4.4, each and every Certificateholder and the Owner Trustee
shall be entitled to such relief as can be given either at law or in equity.

                                      -17-
<PAGE>   22
         Section 4.5 Majority Control. No Certificateholder shall have any right
to vote or in any manner otherwise control the operation and management of the
Trust except as expressly provided in this Agreement. Except as expressly
provided herein, any action that may be taken by the Certificateholders under
this Agreement may be taken by the Holders of Certificates evidencing an
aggregate Percentage Interest in excess of 50%. Except as expressly provided
herein, any written notice of the Certificateholders delivered pursuant to this
Agreement shall be effective if signed by Holders of Certificates evidencing an
aggregate Percentage Interest in excess of 50% at the time of the delivery of
such notice.

         Section 4.6 Rights of Insurer. Notwithstanding anything to the contrary
in the Operative Documents, without the prior written consent of the Insurer (or
if an Insurer Default shall have occurred and is continuing, the Security
Majority), the Owner Trustee shall not (i) remove the Master Servicer, (ii)
initiate any claim, suit or proceeding by the Trust or compromise any claim,
suit or proceeding brought by or against the Trust, other than with respect to
the enforcement of any Mortgage Loan or any rights of the Trust thereunder,
(iii) authorize the merger or consolidation of the Trust with or into any other
business trust or other entity, (iv) amend the Certificate of Trust or (v) amend
this Agreement in accordance with Section 11.1 of this Agreement.

         Section 4.7 Separateness. The Trust shall (i) not commingle its assets
with those of any other entity; (ii) maintain its financial and accounting books
and records separate from those of any other entity; (iii) maintain appropriate
minutes or other records of all appropriate actions and maintain books and
records separate from any other entity; (iv) conduct its own business in its own
name; (v) except as expressly set forth herein, pay its indebtedness, operating
expenses and liabilities from its own funds; (vi) enter into transactions with
affiliates only on terms that are commercially reasonable and on the same terms
as would be available in an arm's length transaction; (vii) not pay the
indebtedness, operating expenses and liabilities of any other entity; (viii) not
hold out its credit as being available to satisfy the obligation of any other
entity; (ix) not make loans to any other entity or buy or hold evidence of
indebtedness issued by any other entity (except for cash and investment-grade
securities); (x) use separate stationery, invoices, and checks bearing its own
name; (xi) allocate fairly and reasonably any overhead expenses that are shared
with an affiliate, including paying for office space and services performed by
any employee of any affiliate; (xii) not identify itself as a division of any
other entity; (xiii) hold itself out as a separate identity; and (xiv) maintain
adequate capital in light of its contemplated business operation.

                                   ARTICLE V.

                                 Certain Duties

         Section 5.1 Accounting and Records to the Noteholders,
Certificateholders, the Internal Revenue Service and Others. Subject to Sections
6.1(a) and 6.1(c) of the Sale and Servicing Agreement, the Sponsor shall (a)
maintain (or cause to be maintained) the books of the Trust on a calendar year
basis using the accrual method of accounting, including, without limitation, the
allocations of net income under Section 2.11 hereof, (b) deliver (or cause to be
delivered) to each Certificateholder, as may be required by the

                                      -18-
<PAGE>   23
Code and applicable Treasury Regulations, such information as may be required
(including Schedule K1, if applicable) to enable each Certificateholder to
prepare its Federal and state income tax returns, (c) file or cause to be filed,
if necessary, such tax returns relating to the Trust (including a partnership
information return, Form 1065), and direct the Owner Trustee or the Master
Servicer, as the case may be, to make such elections as may from time to time be
required or appropriate under any applicable state or Federal statute or rule or
regulation thereunder so as to maintain the Trust's characterization as a
branch, or if applicable, as a partnership, for Federal income tax purposes and
(d) collect or cause to be collected any withholding tax as described in and in
accordance with Section 6.1(a) of the Sale and Servicing Agreement with respect
to income or distributions to Certificateholders and the appropriate forms
relating thereto. The Owner Trustee or the Master Servicer, as the case may be,
shall make all elections pursuant to this Section as directed in writing by the
Sponsor. The Owner Trustee shall sign all tax information returns presented to
it in final execution form, if any, filed pursuant to this Section 5.1 and any
other returns as may be required by law, and in doing so shall rely entirely
upon, and shall have no liability for information provided by, or calculations
provided by, the Sponsor or the Master Servicer. The Owner Trustee shall elect
under Section 1278 of the Code to include in income currently any market
discount that accrues with respect to the Mortgage Loans. The Owner Trustee
shall not make the election provided under Section 754 of the Code.

         Section 5.2 Signature on Returns; Tax Matters Partner. (a)
Notwithstanding the provisions of Section 5.1 and in the event that the Trust is
characterized as a partnership, the Owner Trustee shall sign on behalf of the
Trust the tax returns of the Trust presented to it in final execution form,
unless applicable law requires a Certificateholder to sign such documents, in
which case such documents shall be signed by the Sponsor, as agent, on behalf of
the Certificateholders.

         (b) In the event that the Trust is characterized as a partnership, the
Sponsor shall be the "tax matters partner" of the Trust pursuant to the Code.

                                   ARTICLE VI.

                      Authority and Duties of Owner Trustee

         Section 6.1 General Authority. The Owner Trustee is authorized and
directed to execute and deliver the Operative Documents to which the Trust is
named as a party and each certificate or other document attached as an exhibit
to or contemplated by the Operative Documents to which the Trust is named as a
party and any amendment thereto, in each case, in such form as the Sponsor shall
approve as evidenced conclusively by the Owner Trustee's execution thereof, and
on behalf of the Trust, to direct the Indenture Trustee to authenticate and
deliver Notes in the aggregate principal amount of $400,000,000. In addition to
the foregoing, the Owner Trustee is authorized, but shall not be obligated, to
take all actions required of the Trust pursuant to the Operative Documents. The
Owner Trustee is further authorized from time to time to take such action as the
Instructing Party recommends with respect to the Operative Documents so long as
such activities are consistent with the terms of the Operative Documents.

                                      -19-
<PAGE>   24
         Section 6.2 General Duties. It shall be the duty of the Owner Trustee
to discharge (or cause to be discharged) all of its responsibilities pursuant to
the terms of this Agreement and to administer the Trust in the interest of the
Holders, subject to the Operative Documents and in accordance with the
provisions of this Agreement. Notwithstanding the foregoing, the Owner Trustee
shall be deemed to have discharged its duties and responsibilities hereunder and
under the other Operative Documents to the extent the Master Servicer has agreed
in the Sale and Servicing Agreement to perform any act or to discharge any duty
of the Trust or the Owner Trustee hereunder or under any Operative Document, and
the Owner Trustee shall not be liable for the default or failure of the Master
Servicer to carry out its obligations under the Sale and Servicing Agreement.

         Section 6.3 Action upon Instruction. (a) Subject to Article IV, the
Insurer (so long as an Insurer Default shall not have occurred and be
continuing) or the Certificateholders (if an Insurer Default shall have occurred
and be continuing) (the "Instructing Party") shall have the exclusive right to
direct the actions of the Owner Trustee in the management of the Trust, so long
as such instructions are not inconsistent with the express terms set forth
herein or in any other Operative Document. The Instructing Party shall not
instruct the Owner Trustee in a manner inconsistent with this Agreement or the
other Operative Documents.

         (b) The Owner Trustee shall not be required to take any action
hereunder or under any other Operative Document if the Owner Trustee shall have
reasonably determined, or shall have been advised by counsel, that such action
is likely to result in liability on the part of the Owner Trustee or is contrary
to the terms hereof or of any other Operative Document or is otherwise contrary
to law.

         (c) Whenever the Owner Trustee is unable to decide between alternative
courses of action permitted or required by the terms of this Agreement or any
other Operative Document, the Owner Trustee shall promptly give notice (in such
form as shall be appropriate under the circumstances) to the Instructing Party
requesting instruction as to the course of action to be adopted, and to the
extent the Owner Trustee acts in good faith in accordance with any written
instruction of the Instructing Party received, the Owner Trustee shall not be
liable on account of such action to any Person. If the Owner Trustee shall not
have received appropriate instruction within ten (10) days of such notice (or
within such shorter period of time as reasonably may be specified in such notice
or may be necessary under the circumstances) it may, but shall be under no duty
to, take or refrain from taking such action, not inconsistent with this
Agreement or the other Operative Documents, as it shall deem to be in the best
interests of the Certificateholders, and shall have no liability to any Person
for such action or inaction.

         (d) In the event that the Owner Trustee is unsure as to the application
of any provision of this Agreement or any other Operative Document or any such
provision is ambiguous as to its application, or is, or appears to be, in
conflict with any other applicable provision, or in the event that this
Agreement permits any determination by the Owner Trustee or is silent or is
incomplete as to the course of action that the Owner Trustee is required to take
with respect to a particular set of facts, the Owner Trustee may give notice (in
such form as shall be appropriate under the circumstances) to the Instructing
Party requesting instruction and, to the extent that the Owner Trustee acts or
refrains from acting in good faith in accordance

                                      -20-
<PAGE>   25
with any such instruction received, the Owner Trustee shall not be liable, on
account of such action or inaction, to any Person. If the Owner Trustee shall
not have received appropriate instruction within ten (10) days of such notice
(or within such shorter period of time as reasonably may be specified in such
notice or may be necessary under the circumstances) it may, but shall be under
no duty to, take or refrain from taking such action, not inconsistent with this
Agreement or the other Operative Documents, as it shall deem to be in the best
interests of the Certificateholders, and shall have no liability to any Person
for such action or inaction.

         Section 6.4 No Duties Except as Specified in this Agreement or in
Instructions. The Owner Trustee shall not have any duty or obligation to manage,
make any payment with respect to, register, record, sell, dispose of, or
otherwise deal with the Trust Estate, or to otherwise take or refrain from
taking any action under, or in connection with, any document contemplated hereby
to which the Owner Trustee is a party, except as expressly provided by the terms
of this Agreement or in any document or written instruction received by the
Owner Trustee pursuant to Section 6.3, and no implied duties or obligations
shall be read into this Agreement or any other Operative Document against the
Owner Trustee. The Owner Trustee shall have no responsibility for filing any
financing or continuation statement in any public office at any time or to
otherwise perfect or maintain the perfection of any security interest or lien
granted to it hereunder or to prepare or make any filing with the Commission for
the Trust or to record this Agreement or any other Operative Document. The Owner
Trustee nevertheless agrees that it will, at its own cost and expense, promptly
take all action as may be necessary to discharge any liens on any property
constituting part of the Trust Estate that result from actions by, or claims
against, the Owner Trustee (solely in its individual capacity) and that are not
related to the ownership or the administration of the Trust Estate.

         Section 6.5 No Action Except under Specified Documents or Instructions.
The Owner Trustee shall not manage, control, use, sell, dispose of or otherwise
deal with any property constituting part of the Trust Estate except (i) in
accordance with the powers granted to and the authority conferred upon the Owner
Trustee pursuant to this Agreement, (ii) in accordance with the Operative
Documents and (iii) in accordance with any document or instruction delivered to
the Owner Trustee pursuant to Section 6.3.

         Section 6.6 Restrictions. The Owner Trustee shall not take any action
(a) that is inconsistent with the purposes of the Trust set forth in Section 2.3
or (b) that, to the actual knowledge of the Owner Trustee, would result in the
Trust's becoming taxable as a corporation or a publicly traded partnership for
Federal income tax purposes. The Certificateholders shall not direct the Owner
Trustee to take any action that would violate the provisions of this Section.

                                      -21-
<PAGE>   26
                                  ARTICLE VII.

                          Concerning the Owner Trustee

         Section 7.1 Acceptance of Trust and Duties. The Owner Trustee accepts
the trust hereby created and agrees to perform its duties hereunder with respect
to such trust but only upon the terms of this Agreement. The Owner Trustee also
agrees to disburse all monies actually received by it constituting part of the
Trust Estate upon the terms of the Operative Documents and this Agreement. The
Owner Trustee shall not be answerable or accountable hereunder or under any
Operative Document under any circumstances, except (i) for its own willful
misconduct, bad faith or gross negligence, (ii) in the case of the inaccuracy of
any representation or warranty contained in Section 7.3 expressly made by the
Owner Trustee in its individual capacity, (iii) for liabilities arising from the
failure of the Owner Trustee to perform obligations expressly undertaken by it
in the last sentence of Section 6.4 hereof, (iv) for any investments issued by
the Owner Trustee or any branch or affiliate thereof in its commercial capacity
or (v) for taxes, fees or other charges on, based on or measured by, any fees,
commissions or compensation received by the Owner Trustee. In particular, but
not by way of limitation (and subject to the exceptions set forth in the
preceding sentence):

         (a) the Owner Trustee shall not be liable for any error of judgment,
not constituting gross negligence, made by an Authorized Officer of the Owner
Trustee;

         (b) the Owner Trustee shall not be liable with respect to any action
taken or omitted to be taken by it if such action or omission is in accordance
with the instructions of the Instructing Party, the Sponsor, the Master Servicer
or any Certificateholder pursuant to the terms hereof;

         (c) no provision of this Agreement or any other Operative Document
shall require the Owner Trustee to expend or risk funds or otherwise incur any
financial liability in the performance of any of its rights or powers hereunder
or under any Operative Document if the Owner Trustee shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured or provided to it;

         (d) under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Operative Documents,
including the principal of and interest on the Notes;

         (e) the Owner Trustee shall not be responsible for or in respect of the
validity or sufficiency of this Agreement or for the due execution hereof by the
Sponsor or for the form, character, genuineness, sufficiency, value or validity
of any of the Trust Estate or for or in respect of the validity or sufficiency
of any of the other Operative Documents, other than the certificate of
authentication on the Certificates, and the Owner Trustee shall in no event
assume or incur any liability, duty or obligation to the Sponsor, the Insurer,
the Indenture Trustee, or any Certificateholder, other than as expressly
provided for herein and in the other Operative Documents;

                                      -22-
<PAGE>   27
         (f) the Owner Trustee shall not be liable for the default or misconduct
of the Sponsor, the Insurer, the Indenture Trustee, or the Master Servicer under
any of the Operative Documents or otherwise and the Owner Trustee shall have no
obligation or liability to perform the obligations under this Agreement or the
other Operative Documents that are required to be performed by the Sponsor under
this Agreement, by the Indenture Trustee under the Indenture or the Master
Servicer under the Sale and Servicing Agreement; and

         (g) the Owner Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement, or to institute, conduct or
defend any litigation under this Agreement or otherwise or in relation to this
Agreement or any Operative Document, at the request, order or direction of the
Instructing Party or any of the Certificateholders, unless such Instructing
Party on the Certificateholders have offered to the Owner Trustee security or
indemnity reasonably satisfactory to it against the costs, expenses and
liabilities that may be incurred by the Owner Trustee therein or thereby. The
right of the Owner Trustee to perform any discretionary act enumerated in this
Agreement or in any other Operative Document shall not be construed as a duty,
and the Owner Trustee shall not be answerable for other than its gross
negligence, bad faith or willful misconduct in the performance of any such act.

         Section 7.2 Furnishing of Documents. The Owner Trustee shall furnish to
the Certificateholders promptly upon receipt of a written request therefor,
duplicates or copies of all reports, notices, requests, demands, certificates,
financial statements and any other instruments furnished to the Owner Trustee
under the Operative Documents.

         Section 7.3 Representations and Warranties. The Owner Trustee hereby
represents and warrants, in its individual capacity, to the Sponsor, the Holders
and the Insurer (which shall have relied on such representations and warranties
in issuing the Policy), that:

         (a) It is a Delaware banking corporation, duly organized and validly
existing in good standing under the laws of the State of Delaware. It has all
requisite corporate power and authority to execute, deliver and perform its
obligations under this Agreement.

         (b) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement, and this Agreement will be
executed and delivered by one of its officers who is duly authorized to execute
and deliver this Agreement on its behalf.

         (c) Neither the execution nor the delivery by it of this Agreement, nor
the consummation by it of the transactions contemplated hereby nor compliance by
it with any of the terms or provisions hereof will contravene any federal or
Delaware state law, governmental rule or regulation governing the banking or
trust powers of the Owner Trustee or any judgment or order binding on it, or
constitute any default under its charter documents or bylaws or any indenture,
mortgage, contract, agreement or instrument to which it is a party or by which
any of its properties may be bound.

                                      -23-
<PAGE>   28
         Section 7.4 Reliance; Advice of Counsel. (a) The Owner Trustee shall
incur no liability to anyone in acting upon any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, bond or other
document or paper believed by it to be genuine and believed by it to be signed
by the proper party or parties. The Owner Trustee may accept a certified copy of
a resolution of the board of directors or other governing body of any corporate
party as conclusive evidence that such resolution has been duly adopted by such
body and that the same is in full force and effect. As to any fact or matter the
method of the determination of which is not specifically prescribed herein, the
Owner Trustee may for all purposes hereof rely on a certificate, signed by the
president or any vice president or by the treasurer, secretary or other
authorized officers of the relevant party, as to such fact or matter, and such
certificate shall constitute full protection to the Owner Trustee for any action
taken or omitted to be taken by it in good faith in reliance thereon.

         (b) In the exercise or administration of the trusts hereunder and in
the performance of its duties and obligations under this Agreement or the other
Operative Documents, the Owner Trustee (i) may act directly or through its
agents or attorneys pursuant to agreements entered into with any of them, and
(ii) may consult with counsel, accountants and other skilled persons to be
selected with reasonable care and employed by it. The Owner Trustee shall not be
liable for anything done, suffered or omitted in good faith by it in accordance
with the written opinion or advice of any such counsel, accountants or other
such persons and according to such opinion not contrary to this Agreement or any
Operative Document.

         Section 7.5 Not Acting in Individual Capacity. Except as provided in
this Agreement, in accepting the trusts hereby created Wilmington Trust Company
acts solely as Owner Trustee hereunder and not in its individual capacity and
all Persons having any claim against the Owner Trustee by reason of the
transactions contemplated by this Agreement or any other Operative Document
shall look only to the Trust Estate for payment or satisfaction thereof.

         Section 7.6 Owner Trustee Not Liable for Certificates or Mortgage
Loans. The recitals contained herein and in the Certificates (other than the
signature and countersignature of the Owner Trustee on the Certificates) shall
be taken as the statements of the Sponsor and the Owner Trustee assumes no
responsibility for the correctness thereof. The Owner Trustee makes no
representations as to the validity or sufficiency of this Agreement, of any
other Operative Document or of the Certificates (other than the signature and
countersignature of the Owner Trustee on the Certificates) or the Notes (other
than the signature of the Owner Trustee on the Notes), or of any Mortgage Loan
or related documents. The Owner Trustee shall at no time have any responsibility
or liability for or with respect to the legality, validity and enforceability of
any Mortgage Loan, or the perfection and priority of any security interest
created by any Mortgage or the maintenance of any such perfection and priority,
or for or with respect to the sufficiency of the Trust Estate or its ability to
generate the payments to be distributed to Certificateholders under this
Agreement or the Noteholders under the Indenture, including, without limitation:
the existence, condition and ownership of any Mortgage Loan; the existence and
enforceability of any insurance thereon; the existence of, and information with
respect to, any Mortgage Loan on any computer or other record thereof; the
validity of the assignment of any Mortgage Loan to the Trust or of any
intervening assignment; the completeness of any Mortgage Loan; the performance
or enforcement of any Mortgage Loan; the

                                      -24-
<PAGE>   29
compliance by the Sponsor, the Master Servicer or any other Person with any
warranty or representation made under any Operative Document or in any related
document or the accuracy of any such warranty or representation or any action of
the Indenture Trustee or the Master Servicer or any Sub-Servicer taken in the
name of the Owner Trustee.

         Section 7.7 Owner Trustee May Own Certificates and Notes. Subject to
the provisions of Section 3.1 hereof, the Owner Trustee in its individual or any
other capacity may become the owner or pledgee of Certificates or Notes and may
deal with the Sponsor, the Indenture Trustee and the Master Servicer in banking
transactions with the same rights as it would have if it were not Owner Trustee.

         Section 7.8 Payments from Trust Estate. All payments to be made by the
Owner Trustee under this Agreement or any of the other Operative Documents to
which the Trust or the Owner Trustee is a party shall be made only from the
income and proceeds of the Trust Estate and only to the extent that the Owner
Trustee shall have received income or proceeds from the Trust Estate to make
such payments in accordance with the terms hereof. Wilmington Trust Company, or
any successor thereto, in its individual capacity, shall not be liable for any
amounts payable under this Agreement or any of the other Operative Documents to
which the Trust or the Owner Trustee is a party.

         Section 7.9 Doing Business in Other Jurisdictions. Notwithstanding
anything contained herein to the contrary, neither Wilmington Trust Company or
any successor thereto, nor the Owner Trustee, shall be required to take any
action in any jurisdiction other than the State of Delaware if the taking of
such action will, even after the appointment of a co-trustee or separate trustee
in accordance with Section 10.5 hereof, (i) require the consent or approval or
authorization or order of or the giving of notice to, or the registration with
or the taking of any other action in respect of, any state or other governmental
authority or agency of any jurisdiction other than the State of Delaware; (ii)
result in any fee, tax or other governmental charge under the laws of the State
of Delaware becoming payable by Wilmington Trust Company (or any successor
thereto); or (iii) subject Wilmington Trust Company (or any successor thereto)
to personal jurisdiction in any jurisdiction other than the State of Delaware
for causes of action arising from acts unrelated to the consummation of the
transactions by Wilmington Trust Company (or any successor thereto) or the Owner
Trustee, as the case may be, contemplated hereby.

                                  ARTICLE VIII.

                          Compensation of Owner Trustee

         Section 8.1 Owner Trustee's Fees and Expenses. The Owner Trustee shall
receive as compensation for its services hereunder such fees as have been
separately agreed upon before the date hereof between the Sponsor and the Owner
Trustee, and the Owner Trustee shall be entitled to be reimbursed by the Sponsor
for its other reasonable expenses hereunder, including the reasonable
compensation, expenses and disbursements of such agents, representatives,
experts and counsel as the

                                      -25-
<PAGE>   30
Owner Trustee may employ in connection with the exercise and performance of its
rights and its duties hereunder and under the Operative Documents.

         Section 8.2 Indemnification. The Sponsor shall be liable as primary
obligor for, and the Master Servicer pursuant to the Sale and Servicing
Agreement shall be the secondary obligor for, and shall indemnify the Owner
Trustee (in its individual and trust capacities) and its officers, directors,
successors, assigns, agents and servants (collectively, the "Indemnified
Parties") from and against, any and all liabilities, obligations, losses,
damages, taxes, claims, actions and suits, and any and all reasonable costs,
expenses and disbursements (including reasonable legal fees and expenses) of any
kind and nature whatsoever (collectively, "Expenses") which may (in its trust or
individual capacities) at any time be imposed on, incurred by, or asserted
against the Owner Trustee or any Indemnified Party in any way relating to or
arising out of this Agreement, the other Operative Documents, the Trust Estate,
the administration of the Trust Estate or the action or inaction of the Owner
Trustee hereunder, except only that the Sponsor and the Master Servicer shall
not be liable for or required to indemnify the Owner Trustee from and against
any Expenses arising or resulting from any of the matters described in the third
sentence of Section 7.1. The indemnities contained in this Section and the
rights under Section 8.1 shall survive the resignation or termination of the
Owner Trustee or the termination of this Agreement. In the event of any claim,
action or proceeding for which indemnity will be sought pursuant to this
Section, the Owner Trustee's choice of legal counsel shall be subject to the
approval of the Sponsor which approval shall not be unreasonably withheld.

         Section 8.3 Payments to the Owner Trustee. Any amounts paid to the
Owner Trustee pursuant to this Article VIII shall be deemed not to be a part of
the Trust Estate immediately after such payment.

         Section 8.4 Non-recourse Obligations. Notwithstanding anything in this
Agreement or any other Operative Document, the Owner Trustee agrees, in its
individual capacity and in its capacity as Owner Trustee for the Trust, that
with respect to all obligations of the Trust to the Owner Trustee, individually
or as Owner Trustee for the Trust, the Owner Trustee shall have recourse to the
Trust Estate only and the Owner Trustee shall not have recourse to the assets of
any Originator or any Certificateholder.

                                   ARTICLE IX.

                         Termination of Trust Agreement

         Section 9.1 Termination of Trust Agreement. (a) This Agreement and the
Trust shall terminate and be of no further force or effect upon the later of (i)
the maturity or other liquidation of the last Mortgage Loan (including the
redemption by the Master Servicer at its option of the Notes as described in
Section 10.1(b) of the Indenture) and the subsequent distribution of amounts in
respect of such Mortgage Loans or redemption, as the case may be, as provided in
the Operative Documents, (ii) the payment to Certificateholders of all amounts
required to be paid to them pursuant to this Agreement and the payment to the
Insurer of all amounts payable or reimbursable to it pursuant to the Sale and
Servicing Agreement

                                      -26-
<PAGE>   31
and the Insurance Agreement and (iii) the termination of the Indenture and the
Insurance Agreement; provided, however, that the rights to indemnification under
Section 8.2 and the rights under Section 8.1 shall survive the termination of
the Trust. The Master Servicer shall promptly notify the Owner Trustee and the
Insurer of any prospective termination pursuant to this Section 9.1. The
bankruptcy, liquidation, dissolution, death or incapacity of any
Certificateholder shall not (x) operate to terminate this Agreement or the
Trust, or (y) entitle such Certificateholder's legal representatives or heirs to
claim an accounting or to take any action or proceeding in any court for a
partition or winding up of all or any part of the Trust or Trust Estate or (z)
otherwise affect the rights, obligations and liabilities of the parties hereto.

         (b) Except as provided in clause (a), neither the Sponsor nor any
Certificateholder shall be entitled to revoke or terminate the Trust.

         (c) Notice of any termination of the Trust, specifying the Payment Date
upon which the Certificateholders shall surrender their Certificates to the
Indenture Trustee for payment of the final distribution and cancellation, shall
be given by the Owner Trustee by letter to the Certificateholders mailed within
five (5) Business Days of receipt of notice of such redemption from the Master
Servicer given pursuant to Section 10.1 of the Indenture, stating (i) the
Payment Date upon or with respect to which final payment of the Certificates
shall be made upon presentation and surrender of the Certificates at the office
of the Indenture Trustee therein designated, (ii) the amount of any such final
payment and (iii) that the Record Date otherwise applicable to such Payment Date
is not applicable, payments being made only upon presentation and surrender of
the Certificates at the office of the Indenture Trustee therein specified. The
Owner Trustee shall give such notice to the Certificate Registrar (if other than
the Owner Trustee) and the Indenture Trustee at the time such notice is given to
Certificateholders. Upon presentation and surrender of the Certificates, the
Indenture Trustee shall cause to be distributed to Certificateholders amounts
distributable on such Payment Date pursuant to Section 8.6(b)(xiii) of the
Indenture.

         In the event that all of the Certificateholders shall not surrender
their Certificates for cancellation within six months after the date specified
in the above mentioned written notice, the Owner Trustee shall give a second
written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within one year after the second notice all the Certificates shall
not have been surrendered for cancellation, the Owner Trustee may take
appropriate steps, or may appoint an agent to take appropriate steps, to contact
the remaining Certificateholders concerning surrender of their Certificates, and
the cost thereof shall be paid out of the funds and other assets that shall
remain subject to this Agreement. Any funds remaining in the Trust after
exhaustion of such remedies shall be distributed, subject to applicable escheat
laws, by the Owner Trustee to the Sponsor and Holders shall look solely to the
Sponsor for payment.

         (d) Any funds remaining in the Trust after funds for final distribution
have been distributed or set aside for distribution shall be distributed by the
Owner Trustee to the Sponsor.

         (e) Notwithstanding any other provision to the contrary herein, the
Trust shall not dissolve or liquidate so long as any Notes are outstanding.

                                      -27-
<PAGE>   32
         (f) Upon the winding up of the Trust and its termination, the Owner
Trustee shall cause the Certificate of Trust to be canceled by filing a
certificate of cancellation with the Secretary of State in accordance with the
provisions of Section 3810 of the Business Trust Statute.

                                   ARTICLE X.

             Successor Owner Trustees and Additional Owner Trustees

         Section 10.1 Eligibility Requirements for Owner Trustee. The Owner
Trustee shall at all times be a corporation (i) satisfying the provisions of
Section 3807(a) of the Business Trust Statute; (ii) organized, existing and
doing business under the laws of the United States of America or any State
thereof or the District of Columbia; (iii) authorized to exercise corporate
trust powers; (iv) having a combined capital and surplus of at least $50,000,000
and subject to supervision or examination by Federal or State authorities; (v)
having (or having a parent which has) a rating of at least Baa3 by Moody's or
A-1 by Standard & Poor's or being otherwise acceptable to the Rating Agencies;
and (vi) acceptable to the Insurer in its sole discretion. If such corporation
shall publish reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purpose of this Section, the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. In case at any time the Owner Trustee
shall cease to be eligible in accordance with the provisions of this Section,
the Owner Trustee shall resign immediately in the manner and with the effect
specified in Section 10.2.

         Section 10.2 Resignation or Removal of Owner Trustee. The Owner Trustee
may at any time resign and be discharged from the trusts hereby created by
giving written notice thereof to the Sponsor, the Insurer and the Master
Servicer. Upon receiving such notice of resignation, the Sponsor shall promptly
appoint a successor Owner Trustee, meeting the qualifications set forth in
Section 10.1 herein, by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Owner Trustee and one copy to the
successor Owner Trustee, provided that the Sponsor shall have received written
confirmation from each of the Rating Agencies that the proposed appointment will
not result in an increased capital charge to the Insurer by either of the Rating
Agencies. If no successor Owner Trustee shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Owner Trustee or the Insurer may petition any court
of competent jurisdiction for the appointment of a successor Owner Trustee.

         If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 10.1 and shall fail to resign after
written request therefor by the Sponsor, or if at any time the Owner Trustee
shall be legally unable to act, or shall be adjudged bankrupt or insolvent, or a
receiver of the Owner Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Owner Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then a majority of the Certificateholders with the consent of the
Insurer (so long as no Insurer

                                      -28-
<PAGE>   33
Default shall have occurred and is continuing) may remove the Owner Trustee. If
a majority of the Certificateholders shall remove the Owner Trustee under the
authority of the immediately preceding sentence, the Sponsor shall promptly
appoint a successor Owner Trustee acceptable to the Insurer meeting the
qualifications set forth in Section 10.1 herein, by written instrument, in
duplicate, one copy of which instrument shall be delivered to the outgoing Owner
Trustee so removed, one copy to the Insurer and one copy to the successor Owner
Trustee, and the Sponsor shall pay all fees owed to the outgoing Owner Trustee,
if not previously paid by the Trust.

         Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section shall
not become effective until acceptance of appointment by the successor Owner
Trustee pursuant to Section 10.3 and payment of all reasonable fees and expenses
owed to the outgoing Owner Trustee. The Servicer shall provide written notice of
such resignation or removal of the Owner Trustee to the Rating Agencies and the
Insurer.

         Notwithstanding any other provision of this Agreement, and in addition
to any other method of removal of the Owner Trustee contained herein, upon a
proposal made pursuant to Section 4.2(b) and the subsequent consent of Holders
of Certificates evidencing an aggregate Percentage Interest of no less than
66-2/3%, the Owner Trustee may be removed as Owner Trustee, subject to the
consent of the Insurer (so long as no Insurer Default shall have occurred and is
continuing), which consent is not to be unreasonably withheld. In the event the
Owner Trustee is removed pursuant to this paragraph, the provisions of this
Agreement, including Article X herein, shall apply as if the Owner Trustee had
resigned hereunder.

         Section 10.3 Successor Owner Trustee. Any successor Owner Trustee
appointed pursuant to Section 10.2 shall execute, acknowledge and deliver to the
Sponsor, the Master Servicer, the Insurer and its predecessor Owner Trustee an
instrument accepting such appointment under this Agreement, and thereupon the
resignation or removal of the predecessor Owner Trustee shall become effective
and such successor Owner Trustee, without any further act, deed or conveyance,
shall become fully vested with all the rights, powers, duties and obligations of
its predecessor under this Agreement, with like effect as if originally named as
Owner Trustee. The predecessor Owner Trustee shall, upon payment of its
reasonable fees and expenses, deliver to the successor Owner Trustee all
documents and statements and monies held by it under this Agreement and the
Sponsor and the predecessor Owner Trustee shall execute and deliver such
instruments and do such other things as may reasonably be required to fully vest
and confirm in the successor Owner Trustee all such rights, powers, duties and
obligations.

         No successor Owner Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Owner Trustee shall
be eligible pursuant to Section 10.1.

         Upon acceptance of appointment by a successor Owner Trustee pursuant to
this Section, the Master Servicer shall mail notice of the succession to the
Certificateholders, the Indenture Trustee, the Insurer and the Noteholders. If
the Master Servicer shall fail to mail such notice within 10 days after
acceptance of appointment by the successor Owner Trustee, the successor Owner
Trustee shall cause such notice to be mailed at the expense of the Master
Servicer.

                                      -29-
<PAGE>   34
         The successor Owner Trustee shall file an amendment to the Certificate
of Trust with the Secretary of State reflecting the name and principal place of
business of such successor Owner Trustee in the State of Delaware.

         Section 10.4 Merger or Consolidation of Owner Trustee. Any corporation
into which the Owner Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Owner Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Owner Trustee, shall be the successor of the Owner Trustee hereunder, provided
such corporation shall be eligible pursuant to Section 10.1, without the
execution or filing of any instrument or any further act on the part of any of
the parties hereto, anything herein to the contrary notwithstanding. The Owner
Trustee shall mail notice of such merger or consolidation to the Rating Agencies
and the Insurer.

         Section 10.5 Appointment of Co-Owner Trustee or Separate Owner Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust Estate or any Mortgaged Property may at the time be located, the
Master Servicer and the Owner Trustee, acting jointly, shall have the power, and
shall execute and deliver all instruments, to appoint one or more Persons
approved by the Owner Trustee and the Insurer to act as co-trustee, jointly with
the Owner Trustee, or separate trustee or separate trustees, of all or any part
of the Trust Estate, and to vest in such Person, in such capacity, such title to
the Trust, or any part thereof, and, subject to the other provisions of this
Section, such powers, duties, obligations, rights and trusts as the Master
Servicer and the Owner Trustee may consider necessary or desirable. If the
Master Servicer shall not have joined in such appointment within 15 days after
the receipt by it of a request so to do, the Owner Trustee, subject to the
approval of the Insurer (which approval shall not be unreasonably withheld),
shall have the power to make such appointment. No co-trustee or separate trustee
under this Agreement shall be required to meet the terms of eligibility as a
successor trustee pursuant to Section 10.1 and no notice of the appointment of
any co-trustee or separate trustee shall be required pursuant to Section 10.3,
except that notice to, and written consent of, the Insurer shall be required for
the appointment of a co-trustee.

         Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:

                 (i) all rights, powers, duties and obligations conferred or
imposed upon the Owner Trustee shall be conferred upon and exercised or
performed by the Owner Trustee and such separate trustee or co-trustee jointly
(it being understood that such separate trustee or co-trustee is not authorized
to act separately without the Owner Trustee joining in such act), except to the
extent that under any law of any jurisdiction in which any particular act or
acts are to be performed, the Owner Trustee shall be incompetent or unqualified
to perform such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust or any portion thereof
in any such jurisdiction) shall be exercised and performed singly by such
separate trustee or co-trustee, but solely at the direction of the Owner
Trustee;

                                      -30-
<PAGE>   35
                 (ii) no trustee under this Agreement shall be personally liable
by reason of any act or omission of any other trustee under this Agreement; and

                 (iii) the Master Servicer and the Owner Trustee, acting
jointly, may at any time accept the resignation of or remove any separate
trustee or co-trustee.

         Any notice, request or other writing given to the Owner Trustee shall
be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the Owner
Trustee or separately, as may be provided therein, subject to all the provisions
of this Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Owner Trustee. Each such instrument shall be filed with the Owner
Trustee and a copy thereof given to the Master Servicer and the Insurer.

         Any separate trustee or co-trustee may at any time appoint the Owner
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Owner Trustee, to the extent permitted by law, without the appointment of a new
or successor trustee.

                                   ARTICLE XI.

                                  Miscellaneous

         Section 11.1 Supplements and Amendments. (a) This Agreement may be
amended by the Sponsor and the Owner Trustee, with the prior written consent of
the Insurer and prior written notice to the Rating Agencies (so long as no
Insurer Default shall have occurred and is continuing) and without the consent
of any of the Noteholders (i) to cure any ambiguity or defect or (ii) to
correct, supplement or modify any provisions in this Agreement; provided,
however, that such action shall not, as evidenced by an Opinion of Counsel which
may be based upon a certificate of the Master Servicer, adversely affect in any
material respect the interests of any Noteholder or Certificateholder.

         (b) This Agreement may also be amended from time to time, with the
prior written consent of the Insurer (so long as no Insurer Default shall have
occurred and is continuing) by the Sponsor and the Owner Trustee, with prior
written notice to the Rating Agencies, and, to the extent such amendment
materially and adversely affects the interests of the Noteholders, with the
consent of Noteholders holding Notes evidencing more than 50% of the Note
Balance and the consent of the Holders of Certificates

                                      -31-
<PAGE>   36
evidencing an aggregate Percentage Interest greater than 50% (which consent of
any Holder of a Certificate or Note given pursuant to this Section or pursuant
to any other provision of this Agreement shall be conclusive and binding on such
Holder and on all future Holders of such Certificate or Note and of any
Certificate or Note issued upon the transfer thereof or in exchange thereof or
in lieu thereof whether or not notation of such consent is made upon the
Certificate or Note) for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Noteholders or the Certificateholders;
provided, however, that, subject to the express rights of the Insurer under the
Operative Documents, no such amendment shall (a) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, collections of
payments on Mortgage Loans or distributions that shall be required to be made
for the benefit of the Noteholders or the Certificateholders or (b) reduce the
aforesaid percentage of the Note Balance or the aggregate Percentage Interest,
the Holders of which are required to consent to any such amendment, without the
consent of the Holders of all the outstanding Notes and Holders of all the
outstanding Certificates.

         Promptly after the execution of any such amendment or consent, the
Owner Trustee shall furnish written notification of the substance of such
amendment or consent to the Insurer, to each Certificateholder and the Indenture
Trustee.

         It shall not be necessary for the consent of Certificateholders, the
Noteholders or the Indenture Trustee pursuant to this Section to approve the
particular form of any proposed amendment or consent, but it shall be sufficient
if such consent shall approve the substance thereof. The manner of obtaining
such consents (and any other consents of Certificateholders provided for in this
Agreement or in any other Operative Document) and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject to
such reasonable requirements as the Owner Trustee may prescribe. Promptly after
the execution of any amendment to the Certificate of Trust, the Owner Trustee
shall cause the filing of such amendment with the Secretary of State.

         Prior to the execution of any amendment to this Agreement or the
Certificate of Trust, the Owner Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement and that all conditions precedent to
the execution and delivery of such amendment have been satisfied. The Owner
Trustee may, but shall not be obligated to, enter into any such amendment which
affects the Owner Trustee's own rights, duties or immunities under this
Agreement or otherwise. The Owner Trustee shall furnish copies of any such
amendments to the Rating Agencies.

         Section 11.2  [Reserved.]

         Section 11.3 Limitations on Rights of Others. Except for Section 11.7,
the provisions of this Agreement are solely for the benefit of the Owner
Trustee, the Sponsor, the Certificateholders, the Master Servicer and, to the
extent expressly provided herein, the Insurer, the Indenture Trustee and the
Noteholders, and nothing in this Agreement, whether express or implied, shall be
construed to give to any

                                      -32-
<PAGE>   37
other Person any legal or equitable right, remedy or claim in the Trust Estate
or under or in respect of this Agreement or any covenants, conditions or
provisions contained herein.

         Section 11.4 Notices. (a) Unless otherwise expressly specified or
permitted by the terms hereof, all notices shall be: (i) in writing and
personally delivered, delivered by overnight courier or mailed first class mail
or certified mail, in each case return receipt requested; (ii) deemed to have
been duly given upon receipt; and (iii) if to the Owner Trustee, addressed to
the Corporate Trust Office; if to the Sponsor, addressed to Advanta Conduit
Receivables, Inc., 10790 Rancho Bernardo Road, San Diego, California 92127; if
to the Insurer, addressed to Ambac Assurance Corporation, One State Street
Plaza, New York, New York 10004, Attention: Structured Finance Department - MBS,
Telecopy No.:212-363-1459, Confirmation No.:212-668-0340; or, if to any party,
addressed to such other address as shall be designated by such party in a
written notice to each other party.

         (b) Any notice required or permitted to be given to a Certificateholder
shall be given by first-class mail, postage prepaid, at the address of such
Holder as shown in the Certificate Register. Any notice so mailed within the
time prescribed in this Agreement shall be conclusively presumed to have been
duly given, whether or not the Certificateholder receives such notice.

         Section 11.5 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

         Section 11.6 Separate Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.

         Section 11.7 Assignments. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective successors and
permitted assigns. This Agreement shall also inure to the benefit of the Insurer
for so long as an Insurer Default shall not have occurred and be continuing.
Without limiting the generality of the foregoing, all covenants and agreements
in this Agreement which confer rights upon the Insurer shall be for the benefit
of and run directly to the Insurer, and the Insurer shall be entitled to rely on
and enforce such covenants, subject, however, to the limitations on such rights
provided in this Agreement and the Operative Documents. The Insurer may disclaim
any of its rights and powers under this Agreement (but not its duties and
obligations under the Policy) upon delivery of a written notice to the Owner
Trustee.

                                      -33-
<PAGE>   38
         Section 11.8 No Petition. The Owner Trustee (in its individual capacity
and as Owner Trustee), by entering into this Agreement, each Certificateholder,
by accepting a Certificate, and the Indenture Trustee, the Originators and each
Noteholder by accepting the benefits of this Agreement, hereby covenants and
agrees that they will not at any time institute against the Sponsor or the
Trust, or join in any institution against the Sponsor or the Trust of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any United States Federal or state bankruptcy or
similar law.

         Section 11.9 No Recourse. Each Certificateholder, by accepting a
Certificate, acknowledges that such Certificateholder's Certificates represent
undivided beneficial interests in the Trust only and do not represent interests
in or obligations of the Master Servicer, the Sponsor, the Owner Trustee, the
Indenture Trustee, the Insurer or any Affiliate thereof and no recourse may be
had against such parties or their assets, except as may be expressly set forth
or contemplated in this Agreement, the Certificates or the other Operative
Documents.

         Section 11.10 Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.

         Section 11.11 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAWS PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

         Section 11.12 Master Servicer. The Master Servicer is authorized to
prepare, or cause to be prepared, execute and deliver on behalf of the Trust all
such documents, reports, filings, instruments, certificates and opinions as it
shall be the duty of the Trust or Owner Trustee to prepare, execute or deliver
pursuant to the Operative Documents. Upon written request, the Owner Trustee
shall execute and deliver to the Master Servicer a limited power of attorney
appointing the Master Servicer the Trust's agent and attorney-in-fact to
prepare, or cause to be prepared, execute and deliver all such documents,
reports, filings, instruments, certificates and opinions.

         Section 11.13 No Borrowing. The Trust shall not issue, incur, assume,
guarantee or otherwise become liable, directly or indirectly, for any
Indebtedness except for (i) the Notes, (ii) obligations owing from time to time
to the Insurer under the Insurance Agreement and (iii) any other Indebtedness
permitted by or arising under the Operative Documents, except that the Trust
shall not incur any Indebtedness that would cause it, or any portion thereof, to
be treated as a "taxable mortgage pool" under Section 7701(i) of the Code. The
proceeds of the Notes shall be used exclusively to fund the Trust's purchase of
the Mortgage Loans and the other assets specified in the Sale and Servicing
Agreement and to pay the Trust's organizational, transactional and start-up
expenses.

                                      -34-
<PAGE>   39
         Section 11.14 Nonpetition Covenant. (a) Until one year plus one day
shall have elapsed since the full discharge of all obligations under the
Indenture with respect to Noteholders in accordance with its terms, neither the
Sponsor nor any assignee of the Sponsor shall petition or otherwise invoke the
process of any court or government authority for the purpose of commencing or
sustaining a case against the Trust under any federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Trust or any
substantial part of its property, or ordering the winding up or liquidation of
the affairs of the Trust without the consent of the Owner Trustee.

         (b) So long as Notes remain outstanding, no voluntary petition for the
purpose of commencing or sustaining a case against the Trust under any federal
or state bankruptcy, insolvency or similar law shall be filed without the
consent of the Owner Trustee.

                            [Signature Page Follows]

                                      -35-
<PAGE>   40
         IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement
to be duly executed by their respective officers hereunto duly authorized as of
the day and year first above written.

                                       ADVANTA CONDUIT RECEIVABLES, INC.,
                                         as Sponsor

                                       By:  /s/ Michael Coco
                                            ------------------------------------
                                            Name:   Michael Coco
                                            Title:  Vice President

                                       WILMINGTON TRUST COMPANY, as
                                        Owner Trustee

                                       By:  /s/ Donald G. MacKelcan
                                            ------------------------------------
                                            Name:   Donald G. MacKelcan
                                            Title:  Vice President
<PAGE>   41
                                                                       EXHIBIT A

                                     FORM OF

                            ASSET BACKED CERTIFICATE

                       SEE REVERSE FOR CERTAIN DEFINITIONS

THIS CERTIFICATE REPRESENTS CERTAIN RESIDUAL RIGHTS TO PAYMENT TO THE EXTENT
DESCRIBED HEREIN AND IN THE TRUST AGREEMENT REFERRED TO HEREIN.

THIS CERTIFICATE MAY NOT BE HELD BY OR TRANSFERRED TO A NON-UNITED STATES
PERSON.

THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH
REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION WHICH DOES NOT
REQUIRE SUCH REGISTRATION OR QUALIFICATION AND IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 3.10 OF THE TRUST AGREEMENT REFERRED TO HEREIN.

NO TRANSFER OF THIS CERTIFICATE MAY BE MADE UNLESS THE OWNER TRUSTEE AND THE
INSURER SHALL HAVE RECEIVED A REPRESENTATION LETTER FROM THE TRANSFEREE OF SUCH
CERTIFICATE, ACCEPTABLE TO AND IN FORM AND SUBSTANCE SATISFACTORY TO THE OWNER
TRUSTEE AND THE INSURER, TO THE EFFECT THAT SUCH TRANSFEREE IS NOT (I) AN
EMPLOYEE BENEFIT PLAN (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA")), (II) A PLAN (AS DEFINED IN
SECTION 4975(e) (1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE")) THAT IS SUBJECT TO SECTION 4975 OF THE CODE, OR (III) A PERSON ACTING
ON BEHALF OF OR USING THE ASSETS OF A PLAN DESCRIBED IN (I) OR (II) ABOVE, WHICH
REPRESENTATION LETTER SHALL NOT BE AN EXPENSE OF THE OWNER TRUSTEE OR THE
INSURER.

NO TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS SUCH TRANSFER IS EXEMPT
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE
STATE SECURITIES LAWS OR IS MADE IN ACCORDANCE WITH THE SECURITIES ACT AND SUCH
STATE SECURITIES LAWS. EXCEPT FOR THE INITIAL ISSUANCE OF THIS CERTIFICATE TO
[________________________], THE OWNER TRUSTEE SHALL REQUIRE (I) THE TRANSFEREE
TO EXECUTE AN INVESTMENT LETTER ACCEPTABLE TO AND IN FORM AND SUBSTANCE
SATISFACTORY TO THE OWNER TRUSTEE AND THE INSURER CERTIFYING TO THE OWNER
TRUSTEE AND

                                       A-1

<PAGE>   42
THE INSURER THE FACTS SURROUNDING SUCH TRANSFER, WHICH INVESTMENT LETTER SHALL
NOT BE AN EXPENSE OF THE OWNER TRUSTEE OR THE INSURER OR (II) IF THE INVESTMENT
LETTER IS NOT DELIVERED, A WRITTEN OPINION OF COUNSEL ACCEPTABLE TO AND IN FORM
AND SUBSTANCE SATISFACTORY TO THE OWNER TRUSTEE AND THE INSURER THAT SUCH
TRANSFER MAY BE MADE PURSUANT TO AN EXEMPTION FROM THE SECURITIES ACT,
DESCRIBING THE APPLICABLE EXEMPTION AND THE BASIS THEREFOR, OR IS BEING MADE
PURSUANT TO THE SECURITIES ACT, WHICH OPINION OF COUNSEL SHALL NOT BE AN EXPENSE
OF THE OWNER TRUSTEE OR THE INSURER. THE HOLDER OF A CERTIFICATE DESIRING TO
EFFECT SUCH TRANSFER SHALL, AND DOES HEREBY AGREE TO, INDEMNIFY THE SPONSOR, THE
OWNER TRUSTEE AND THE INSURER AGAINST ANY LIABILITY THAT MAY RESULT IF THE
TRANSFER IS NOT SO EXEMPT OR IS NOT MADE IN ACCORDANCE WITH SUCH FEDERAL AND
STATE LAWS.

THIS CERTIFICATE OR ANY INTEREST HEREIN SHALL NOT BE TRANSFERRED EXCEPT UPON
SATISFACTION OF THE FOLLOWING CONDITIONS PRECEDENT: (I) THE PERSON THAT ACQUIRES
THIS CERTIFICATE SHALL: (A) BE ORGANIZED AND EXISTING UNDER THE LAWS OF THE
UNITED STATES OF AMERICA OR ANY STATE THEREOF OR THE DISTRICT OF COLUMBIA; (B)
EXPRESSLY ASSUME, BY AN AGREEMENT SUPPLEMENTAL HERETO, EXECUTED AND DELIVERED TO
THE OWNER TRUSTEE, THE PERFORMANCE OF EVERY COVENANT AND OBLIGATION OF THE
SPONSOR UNDER THE TRUST AGREEMENT, EXCEPT FOR THE COVENANTS AND OBLIGATIONS
CONTAINED IN SECTIONS 2.1, 2.2, 2.3, 2.4, 3.3 AND 3.4 OF THE SALE AND SERVICING
AGREEMENT AND UNDER THE CREDIT LINE AGREEMENTS AND THE MORTGAGE NOTES; (II) THE
PERSON THAT ACQUIRES THIS CERTIFICATE SHALL DELIVER TO THE OWNER TRUSTEE AND THE
INSURER AN OFFICER'S CERTIFICATE STATING THAT SUCH TRANSFER AND SUCH
SUPPLEMENTAL AGREEMENT COMPLY WITH SECTION 3.10 OF THE TRUST AGREEMENT AND THAT
ALL CONDITIONS PRECEDENT SET FORTH IN SECTION 3.10 OF THE TRUST AGREEMENT HAVE
BEEN COMPLIED WITH AND AN OPINION OF COUNSEL STATING THAT SUCH TRANSFER AND SUCH
SUPPLEMENTAL AGREEMENT COMPLY WITH SECTION 3.10 AND THAT ALL CONDITIONS
PRECEDENT SET FORTH IN SECTION 3.10 HAVE BEEN COMPLIED WITH, AND THE OWNER
TRUSTEE MAY CONCLUSIVELY RELY ON SUCH OFFICER'S CERTIFICATE, SHALL HAVE NO DUTY
TO MAKE INQUIRIES WITH REGARD TO THE MATTERS SET FORTH THEREIN AND SHALL INCUR
NO LIABILITY IN SO RELYING; (III) THE PERSON THAT ACQUIRES THIS CERTIFICATE
SHALL DELIVER TO THE OWNER TRUSTEE AND THE INSURER A LETTER FROM EACH RATING
AGENCY CONFIRMING THAT ITS RATING OF THE NOTES, AFTER GIVING EFFECT TO SUCH
TRANSFER, WILL NOT BE REDUCED OR WITHDRAWN, AS SET FORTH IN THE TRUST AGREEMENT;
(IV) THE PERSON THAT ACQUIRES THIS CERTIFICATE SHALL DELIVER TO THE OWNER
TRUSTEE AND THE INSURER AN OPINION OF COUNSEL TO THE EFFECT THAT (A) SUCH
TRANSFER WILL NOT ADVERSELY AFFECT THE TREATMENT OF THE NOTES AFTER SUCH
TRANSFER AS DEBT FOR FEDERAL AND APPLICABLE STATE INCOME TAX PURPOSES, (B) SUCH
TRANSFER WILL NOT RESULT IN THE TRUST BEING SUBJECT TO TAX AT THE ENTITY LEVEL
FOR FEDERAL OR APPLICABLE STATE TAX

                                       A-2
<PAGE>   43
PURPOSES, (C) SUCH TRANSFER WILL NOT HAVE ANY MATERIAL ADVERSE IMPACT ON THE
FEDERAL OR APPLICABLE STATE INCOME TAXATION OF A NOTEHOLDER AND (D) SUCH
TRANSFER WILL NOT RESULT IN THE ARRANGEMENT CREATED BY THE TRUST AGREEMENT OR
ANY "PORTION" OF THE TRUST, BEING TREATED AS A TAXABLE MORTGAGE POOL AS DEFINED
IN SECTION 7701(i) OF THE CODE; (V) ALL FILINGS AND OTHER ACTIONS NECESSARY TO
CONTINUE THE PERFECTION OF THE INTEREST OF THE TRUST IN THE MORTGAGE LOANS AND
THE OTHER PROPERTY CONVEYED UNDER THE TRUST AGREEMENT SHALL HAVE BEEN TAKEN OR
MADE.

THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAWS PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.

                                       A-3
<PAGE>   44
                 ADVANTA REVOLVING HOME EQUITY LOAN TRUST 2000-A
                            ASSET BACKED CERTIFICATE

Percentage Interest: [____]%

Cut-Off Date:
Close of business on March 31, 2000

First Payment Date:     Issue Date: April 27, 2000
May 25, 2000

No. ____

                      [__________________________________]
                                Registered Holder

         The Trust was created pursuant to a Trust Agreement dated as of April
1, 2000 (the "Trust Agreement"), between Advanta Conduit Receivables, Inc., as
sponsor (the "Sponsor"), and Wilmington Trust Company, as owner trustee (the
"Owner Trustee"), a summary of certain of the pertinent provisions of which is
set forth below. To the extent not otherwise defined herein, the capitalized
terms used herein have the meanings assigned to them in the Trust Agreement.

         This Certificate is one of the duly authorized Certificates designated
as Advanta Revolving Home Equity Loan Trust 2000-A "Asset Backed Certificates."
The Certificates are issued under and are subject to the terms, provisions and
conditions of the Trust Agreement, to which Trust Agreement the Holder of this
Certificate, by virtue of the acceptance hereof, assents and by which such
Holder is bound. Under the Indenture dated as of April 1, 2000 (the "Indenture")
between the Trust and Bankers Trust Company of California, N.A., as indenture
trustee (the "Indenture Trustee"), the Trust issued the Advanta Revolving Home
Equity Loan Asset Backed Notes, Series 2000-A (the "Notes"). The property of the
Trust includes a pool of adjustable rate revolving home equity credit line loans
secured by first or second deeds of trust or mortgages on primarily one-to-four
family residential properties.

         Under the Trust Agreement, there will be distributed on the 25th day of
each month or, if such 25th day is not a Business Day, the next Business Day
(the "Payment Date"), commencing on May 25, 2000, to the Person in whose name
this Certificate is registered at the close of business on the Business Day
preceding such Payment Date (the "Record Date") such Certificateholder's
Percentage Interest in the amount to be distributed to Certificateholders on
such Payment Date.

                                       A-4
<PAGE>   45
         The holder of this Certificate acknowledges and agrees that its rights
to receive distributions in respect of this Certificate are subordinated to the
rights of the Noteholders as described in the Sale and Servicing Agreement, the
Indenture and the Trust Agreement, as applicable.

         It is the intent of the Sponsor, the Master Servicer and the
Certificateholders that, for purposes of Federal income taxes, the Trust will be
treated as a branch. In the event that the Certificates are held by more than
one Holder, it is the intent of the Sponsor, the Master Servicer, and the
Certificateholders that, for purposes of Federal income taxes, the Trust will be
treated as a partnership and the Certificateholders will be treated as partners
in that partnership. The Sponsor and any other Certificateholders, by acceptance
of a Certificate, agree to treat, and to take no action inconsistent with the
treatment of, the Certificates for such tax purposes as partnership interests in
the Trust. Each Certificateholder, by its acceptance of a Certificate, covenants
and agrees that such Certificateholder will not at any time institute against
the Trust or the Sponsor, or join in any institution against the Trust or the
Sponsor of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any United States Federal or
state bankruptcy or similar law in connection with any obligations relating to
the Certificates, the Notes, the Trust Agreement or any of the other Operative
Documents.

         Distributions on this Certificate will be made as provided in the Sale
and Servicing Agreement and the Indenture by the Indenture Trustee by wire
transfer or check mailed to the Certificateholder of record in the Certificate
Register without the presentation or surrender of this Certificate or the making
of any notation hereon. Except as otherwise provided in the Trust Agreement and
notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Owner Trustee of the pendency of such distribution
and only upon presentation and surrender of this Certificate at the office or
agency maintained for the purpose by the Owner Trustee in the Corporate Trust
Office.

         Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.

         Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Owner Trustee, by manual signature,
this Certificate shall not entitle the Holder hereof to any benefit under the
Trust Agreement or the Sale and Servicing Agreement or be valid for any purpose.

                                       A-5
<PAGE>   46
         IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and not
in its individual capacity, has caused this Certificate to be duly executed.

Date: April 27, 2000             ADVANTA REVOLVING HOME EQUITY LOAN TRUST 2000-A

                            By:  WILMINGTON TRUST COMPANY, not in its individual
                                 capacity but solely as Owner Trustee

                                      By:  _________________________________
                                      Name:
                                      Title:

                  OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION

       This is one of the Certificates referred to in the within mentioned
                                Trust Agreement.

WILMINGTON TRUST COMPANY
not in its individual capacity but
solely as Owner Trustee

By:_____________________________
     Authenticating Agent

                                       A-6
<PAGE>   47
                            (Reverse of Certificate)

         This Certificate shall have the initial Percentage Interest set forth
on the face hereof, which Percentage Interest equals the percentage obtained by
dividing (x) the aggregate Principal Balance of the Initial Mortgage Loans
transferred to the Trust by the related Originator by (y) the aggregate
Principal Balance of all Initial Mortgage Loans. Thereafter, the Percentage
Interest of this Certificate, as of any date of determination, shall equal the
percentage obtained by dividing (x) the aggregate Principal Balance of the
Mortgage Loans transferred to the Trust by the related Originator by (y) the
aggregate Principal Balance of all of the Mortgage Loans transferred to the
Trust, in each case, as of such date of determination.

         The Certificates do not represent an obligation of, or an interest in,
the Originators, the Sponsor, the Master Servicer, the Insurer, the Owner
Trustee or any Affiliates of any of them and no recourse may be had against such
parties or their assets, except as may be expressly set forth or contemplated
herein or in the Trust Agreement, the Indenture or the other Operative
Documents. In addition, this Certificate is not guaranteed by any governmental
agency or instrumentality and is limited in right of payment to certain
collections with respect to the Mortgage Loans, as more specifically set forth
herein, in the Sale and Servicing Agreement and in the Indenture. A copy of each
of the Sale and Servicing Agreement and the Trust Agreement may be examined by
any Certificateholder upon written request during normal business hours at the
principal office of the Sponsor, and at such other places, if any, designated by
the Sponsor.

         The Trust Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations of the
Sponsor and the rights of the Certificateholders under the Trust Agreement at
any time by the Sponsor and the Owner Trustee with the prior written consent of
the Insurer and with the consent of Noteholders holding Notes evidencing more
than 50% of the Note Balance and holders of Certificates evidencing an aggregate
Percentage Interest greater than 50%. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such holder and on all future
holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange hereof or in lieu hereof, whether or not notation of such
consent is made upon this Certificate. The Trust Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates (other than the Sponsor or the Insurer).

         As provided in the Trust Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies of the Certificate Registrar maintained by
the Owner Trustee in the Corporate Trust Office, accompanied by a written
instrument of transfer in form satisfactory to the Owner Trustee and the
Certificate Registrar duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
in authorized denominations evidencing the same aggregate interest in the Trust
will be issued to the designated transferee. The initial Certificate Registrar
appointed under the Trust Agreement is Wilmington Trust Company.

                                       A-7
<PAGE>   48
         Except for Certificates issued to the Sponsor, the Certificates are
issuable only as registered Certificates without coupons in denominations of
$1,000 or integral multiples of $1,000 in excess thereof. As provided in the
Trust Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates in authorized denominations
evidencing the same aggregate denomination, as requested by the holder
surrendering the same. No service charge will be made for any such registration
of transfer or exchange, but the Owner Trustee or the Certificate Registrar may
require payment of a sum sufficient to cover any tax or governmental charge
payable in connection therewith.

         The Owner Trustee, the Certificate Registrar, the Insurer and any agent
of the Owner Trustee, the Certificate Registrar or the Insurer, may treat the
Person in whose name this Certificate is registered as the owner hereof for all
purposes, and none of the Owner Trustee, the Certificate Registrar or any such
agent shall be affected by any notice to the contrary.

         The obligations and responsibilities created by the Trust Agreement and
the Trust created thereby shall terminate upon the payment to the
Certificateholders of all amounts required to be paid to them pursuant to the
Trust Agreement and the Sale and Servicing Agreement and the disposition of all
property held as part of the Trust.

         The recitals contained herein shall be taken as the statements of the
Sponsor or the Master Servicer, as the case may be, and the Owner Trustee
assumes no responsibility for the correctness thereof. The Owner Trustee makes
no representations as to the validity or sufficiency of this Certificate or of
any Mortgage Loan or related document.

         Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Owner Trustee, by manual or facsimile
signature, this Certificate shall not entitle the holder hereof to any benefit
under the Trust Agreement or the Sale and Servicing Agreement or be valid for
any purpose.

                                       A-8
<PAGE>   49
                                   ASSIGNMENT

   FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto

PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE

________________________________________________________________________________
(Please print or type name and address, including postal zip code, of assignee)

________________________________________________________________________________
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing ___________________________________________ Attorney
to transfer said Certificate on the books of the Certificate Registrar, with
full power of substitution in the premises.

Dated:

                                           ____________________________________*
                                           Signature Guaranteed:

                                           ____________________________________*

________________
*        NOTICE: The signature to this assignment must correspond with the name
         of the registered owner as it appears on the face of the within
         Certificate in every particular, without alteration, enlargement or any
         change whatever. Such signature must be guaranteed by an "eligible
         guarantor institution" meeting the requirements of the Certificate
         Registrar, which requirements include membership or participation in
         STAMP or such other "signature guarantee program" as may be determined
         by the Certificate Registrar in addition to, or in substitution for,
         STAMP, all in accordance with the Securities Exchange Act of 1934, as
         amended.

                                      A-9
<PAGE>   50
                                                                       EXHIBIT B

                             CERTIFICATE OF TRUST OF
                 ADVANTA REVOLVING HOME EQUITY LOAN TRUST 2000-A

         This Certificate of Trust of Advanta Revolving Home Equity Loan Trust
2000-A (the "Trust") is being duly executed and filed by the undersigned, as
trustee, to form a business trust under the Delaware Business Trust Act (12 Del.
Code Section 3801 et seq.) (the "Act").

         1. Name. The name of the business trust formed hereby is Advanta
Revolving Home Equity Loan Trust 2000-A.

         2. Delaware Trust. The name and business address of the Owner Trustee
of the Trust in the State of Delaware is Wilmington Trust Company, Rodney Square
North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attn:
Corporate Trust Administration.

         3. This Certificate of Trust will be effective April ___, 2000.

         IN WITNESS WHEREOF, the undersigned, in accordance with Section 3811(a)
of the Act, has duly executed this Certificate of Trust.

                                       WILMINGTON TRUST COMPANY
                                       not in its individual capacity but solely
                                       as Owner Trustee of the Trust

                                       By: ________________________________
                                           Name:
                                           Title:

                                       B-1<PAGE>   1
                          SALE AND SERVICING AGREEMENT

                                      among

                ADVANTA REVOLVING HOME EQUITY LOAN TRUST 2000-A,
                                     Trust,

                       ADVANTA CONDUIT RECEIVABLES, INC.,
                                   as Sponsor,

                           ADVANTA MORTGAGE CORP. USA,
                               as Master Servicer,

                                       and

                   BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
                              as Indenture Trustee

                            Dated as of April 1, 2000
<PAGE>   2
                                TABLE OF CONTENTS
                         (Not a Part of this Agreement)

<TABLE>
<CAPTION>
                                                                                       Page

<S>                                                                                    <C>
Parties ..........................................................................       1
Recitals .........................................................................       1

ARTICLE 1
DEFINITIONS; RULES OF CONSTRUCTION ...............................................       1
         Section 1.1. Definitions ................................................       1
         Section 1.2. Use of Words and Phrases ...................................       1
         Section 1.3. Captions; Table of Contents ................................       1
         Section 1.4. Opinions ...................................................       2

ARTICLE 2
CONVEYANCE OF MORTGAGE LOANS .....................................................       2
         Section 2.1. Conveyance of the Mortgage Loans ...........................       2
         Section 2.2. Acceptance of Mortgage Files by Indenture Trustee; Certain
                       Substitutions of Mortgage Loans; Certification by
                       Indenture Trustee .........................................       6
         Section 2.3. Qualified Replacement Mortgage Loans .......................       8
         Section 2.4. Cooperation Procedures .....................................       9
         Section 2.5. Retransfers of Mortgage Loans at Election of Sponsor
                       or the Related Originator .................................       9
         Section 2.6. Conveyance of the Subsequent Mortgage Loans ................      10

ARTICLE 3
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE SPONSOR AND THE MASTER SERVICER ...........................................      13
         Section 3.1. Representations and Warranties of the Sponsor ..............      13
         Section 3.2. Representations and Warranties of the Master Servicer ......      14
         Section 3.3. Representations and Warranties of the Sponsor with Respect
                       to the Mortgage Loans; Retransfer of Certain Mortgage Loans      17
         Section 3.4. Covenants of Sponsor to Take Certain Actions with Respect
                       to the Mortgage Loans In Certain Situations ...............      22

ARTICLE 4
SERVICING AND ADMINISTRATION OF MORTGAGE LOANS ...................................      23
         Section 4.1. Master Servicer and Sub-Servicers ..........................      23
         Section 4.2. Modifications ..............................................      25
         Section 4.3. Servicer Report ............................................      27
         Section 4.4. Liability of Master Servicer ...............................      27
         Section 4.5. Sub-Servicing Agreements Between Master Servicer
</TABLE>

                                       i
<PAGE>   3
<TABLE>
<S>                                                                                    <C>
                       and Sub-Servicers .........................................      28
         Section 4.6. Successor Sub-Servicers ....................................      29
         Section 4.7.  No Contractual Relationship Between Sub-Servicer and
                        Indenture Trustee or the Noteholders .....................      29
         Section 4.8.  Assumption or Termination of Sub-Servicing Agreement
                        by Indenture Trustee .....................................      29
         Section 4.9.  Principal and Interest Account ............................      29
         Section 4.10. Servicing Advances ........................................      31
         Section 4.11. Maintenance of Insurance ..................................      31
         Section 4.12. Due-on-Sale Clauses; Assumption and Substitution Agreements      33
         Section 4.13. Realization Upon Defaulted Mortgage Loans .................      34
         Section 4.14. Indenture Trustee to Cooperate; Release of Mortgage Files .      35
         Section 4.15. Servicing Compensation ....................................      36
         Section 4.16. Annual Statement as to Compliance .........................      36
         Section 4.17. Annual Independent Certified Public Accountants' Reports ..      37
         Section 4.18. Access to Certain Documentation and Information
                        Regarding the Mortgage Loans .............................      37
         Section 4.19. Assignment of Agreement ...................................      38
         Section 4.20. Resignation of the Master Servicer ........................      38

ARTICLE 5
SERVICING TERMINATION ............................................................      38
         Section 5.1. Events of Servicing Termination ............................      38
         Section 5.2. Inspections by Insurer; Errors and Omissions Insurance .....      42
         Section 5.3. Merger, Conversion, Consolidation or Succession to
                       Business of Master Servicer ...............................      42
         Section 5.4. Notification to Noteholders ................................      42
         Section 5.5. Notices of Material Events .................................      42

ARTICLE 6
ADMINISTRATIVE DUTIES OF THE MASTER SERVICER .....................................      43
         Section 6.1. Administrative Duties with Respect to the Indenture ........      43
         Section 6.2. Records ....................................................      45
         Section 6.3. Additional Information to be Furnished to the Trust ........      45

ARTICLE 7
MISCELLANEOUS ....................................................................      45
         Section 7.1.  Compliance Certificates and Opinions ......................      45
         Section 7.2.  Form of Documents Delivered to the Indenture Trustee ......      46
         Section 7.3.  Acts of Noteholders .......................................      46
         Section 7.4.  Notices, etc. to Indenture Trustee ........................      47
         Section 7.5.  Notices and Reports to Noteholders; Waiver of Notices .....      47
         Section 7.6.  Successors and Assigns ....................................      48
         Section 7.7.  Severability ..............................................      48
</TABLE>

                                       ii
<PAGE>   4
<TABLE>
<S>                                                                                    <C>
         Section 7.8.  Benefits of Agreement .....................................      48
         Section 7.9.  Legal Holidays ............................................      48
         Section 7.10. Governing Law .............................................      48
         Section 7.11. Counterparts ..............................................      49
         Section 7.12. Usury .....................................................      49
         Section 7.13. Amendment .................................................      49
         Section 7.14. The Insurer ...............................................      50
         Section 7.16. Limitation of Liability ...................................      52
</TABLE>

<TABLE>
<S>                    <C>    <C>
         SCHEDULE I    --     Schedule of Mortgage Loans
         EXHIBIT A     --     Defined Terms (Copy of Annex 1 to the Indenture)
         EXHIBIT B     --     [Reserved]
         EXHIBIT C     --     [Reserved]
         EXHIBIT D     --     Form of Trustee's Acknowledgment of Receipt
         EXHIBIT E     --     Form of Pool Certification
         EXHIBIT F     --     Form of Master Servicer's Trust Receipt
         EXHIBIT G     --     Form of Power of Attorney
         EXHIBIT H     --     Form of Subsequent Transfer Agreement
</TABLE>

                                       iii
<PAGE>   5
         SALE AND SERVICING AGREEMENT (the "Agreement"), dated as of April 1,
2000, by and among ADVANTA REVOLVING HOME EQUITY LOAN TRUST 2000-A, a Delaware
business trust (the "Trust"), ADVANTA CONDUIT RECEIVABLES, INC., a Nevada
corporation, in its capacity as sponsor of the Trust (the "Sponsor"), ADVANTA
MORTGAGE CORP. USA, a Delaware corporation, in its capacity as master servicer
(the "Master Servicer"), and BANKERS TRUST COMPANY OF CALIFORNIA, N.A., a
national banking association, in its capacity as Indenture Trustee (the
"Indenture Trustee").

         WHEREAS, the Trust desires to purchase a portfolio of Mortgage Loans
(as defined in Annex 1 to the Indenture) originated by the Originators (as
defined in Annex 1 to the Indenture);

         WHEREAS, the Sponsor has purchased such Mortgage Loans from the
Originators and is willing to sell such Mortgage Loans to the Trust;

         WHEREAS, the Master Servicer has agreed to service such Mortgage Loans,
which constitute the principal assets of the Trust Estate (as defined in Annex 1
to the Indenture);

         NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Trust, the Sponsor, the Master Servicer and the
Indenture Trustee hereby agree as follows:

                                    ARTICLE 1

                       DEFINITIONS; RULES OF CONSTRUCTION

         Section 1.1. Definitions.

         Except as otherwise specified herein, capitalized terms used in this
Agreement are defined in Annex 1 to the Indenture, dated as of April 1, 2000
(the "Indenture"), between the Trust and the Indenture Trustee. A copy of Annex
1 to the Indenture is attached to this Agreement as Exhibit A. Defined terms
that are used only in one section or only in another definition may be omitted
from the list of defined terms in Annex 1. Defined terms include, as
appropriate, all genders and the plural as well as the singular.

         Section 1.2. Use of Words and Phrases.

         "Herein," "hereby," "hereunder," "hereof," "hereinbefore,"
"hereinafter" and other equivalent words refer to this Agreement as a whole and
not solely to the particular section of this Agreement in which any such word is
used. Whenever used in this Agreement, any pronoun shall be deemed to include
both singular and plural and to cover all genders. As used herein, any form of
the word "include" shall be deemed to be followed by the words "without
limitation."
<PAGE>   6
         Section 1.3. Captions; Table of Contents.

         The captions or headings in this Agreement and the Table of Contents
are for convenience only and in no way define, limit or describe the scope and
intent of any provisions of this Agreement.

         Section 1.4. Opinions.

         Each opinion with respect to the validity, binding nature and
enforceability of documents or Notes may be qualified to the extent that the
same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity (whether considered in a
proceeding or action in equity or at law) and may state that no opinion is
expressed on the availability of the remedy of specific enforcement, injunctive
relief or any other equitable remedy. Any opinion required to be furnished by
any Person hereunder must be delivered by counsel upon whose opinion the
addressee of such opinion may reasonably rely, and such opinion may state that
it is given in reasonable reliance upon an opinion of another, a copy of which
must be attached, concerning the laws of a foreign jurisdiction.

                                    ARTICLE 2

                          CONVEYANCE OF MORTGAGE LOANS

         Section 2.1. Conveyance of the Mortgage Loans.

                  (a) The Sponsor, concurrently with the execution and delivery
hereof, hereby sells, assigns, transfers, sets over and otherwise conveys or
shall request or cause to be transferred, sold, assigned, set over and otherwise
conveyed to the Trust, and the Trust hereby purchases and acquires, without
recourse (subject to the Sponsor's obligations herein), all right, title and
interest of the Sponsor in and to: (i) all Mortgage Loans listed on the Schedule
of Mortgage Loans, and their respective Principal Balances (including all
Additional Balances) and all principal and interest collected in respect thereof
on or after the respective Cut-Off Date; (ii) all Mortgaged Properties to the
extent that they are acquired by foreclosure or deed in lieu of foreclosure;
(iii) all of the Sponsor's rights under any Mortgage Insurance Policies covering
the Mortgaged Properties; (iv) all of the Sponsor's rights and benefits, but
none of its obligations or burdens, under Sections 2.03, 2.05, 4.01, 4.02 and
4.04 (other than the fourth paragraph thereof) of the Purchase Agreement,
including all of the Sponsor's rights and remedies in the event of certain
breaches by the Originators of their respective representations and warranties
under Sections 4.01 and 4.02 of the Purchase Agreement; (v) all Mortgage Files
and other documents relating to the foregoing; (vi) all amounts held in the
Accounts (excluding net investment earnings on the Principal and Interest
Account, the Note Account and the Capitalized Interest Account); (vii) all
proceeds with respect to the foregoing; and (viii) all other assets included or
to be included in the Trust Estate created under the Indenture for the benefit
of the Noteholders and the Insurer; provided, however, that neither the Trust
nor any of its Assignees (including the Indenture Trustee) shall assume any
obligation under any Credit Line Agreement that provides for the funding of
future advances to the Mortgagor thereunder, it being understood that neither
the Trust nor any of its Assignees (including the Indenture Trustee) shall be
required or permitted to fund any such future advances.

                                      -2-
<PAGE>   7
         On or before the Closing Date, the Sponsor will cause the Insurer to
deliver the Policy to the Indenture Trustee for the benefit of the Noteholders.

         As full consideration for the Sponsor's sale, assignment, transfer,
set-over and conveyance to the Trust of all of its right, title and interest in
and to the Mortgage Loans and the other rights and properties specified above,
the Trust shall (A) pay to or upon the order of the Sponsor that amount in
immediately available funds equal to the proceeds of the sale of the Notes, net
of any underwriting discounts and other transaction costs (including the cost of
obtaining the Policy as described above and the expenses referred to in Section
2.01 of the Purchase Agreement), and (B) direct the issuance of one or more
Certificates evidencing in the aggregate 100% of the beneficial ownership
interest in the Trust to or upon the order of the Sponsor or its designees, all
in such amounts as the Sponsor shall determine on or before the Closing Date.

                  (b) It is the express intent of the parties hereto that the
conveyance of the Mortgage Loans (including the related Mortgage Files and the
other rights and properties described in Section 2.1(a) above) by the Sponsor to
the Trust as contemplated by Section 2.1(a) be construed as a sale of the
Mortgage Loans by the Sponsor to the Trust for certain non-tax purposes. It is
not the intent of the parties that such conveyance be deemed a pledge of the
Mortgage Loans by the Sponsor to the Trust or any of the Trust's Assignees
(including the Indenture Trustee) to secure a debt or other obligation of the
Sponsor or any Assignor of the Sponsor. However, in the event and to the extent
that, notwithstanding the intent of the parties hereto, any or all of the
Mortgage Loans (including the related Mortgage Files and the other rights and
properties described in Section 2.1(a) above) are held to be property of the
Sponsor or its Assignors, then:

                  (i) this Agreement shall also be deemed to be a security
agreement within the meaning of Article 9 of the Uniform Commercial Code
("UCC");

                  (ii) the conveyance provided for herein shall be deemed to be
a grant by the Sponsor to the Trust of a first priority security interest in all
of the Sponsor's right, title and interest in and to the Mortgage Loans
(including the related Mortgage Files and the other rights and properties
described in Section 2.1(a) above) and all amounts payable to the holder of the
Mortgage Loans and/or such rights or properties in accordance with the terms
thereof and all proceeds of the conversion, voluntary or involuntary, of the
foregoing into cash, instruments, securities or other property, including all
amounts from time to time held or invested in the Accounts (excluding net
investment earnings on the Principal and Interest Account, the Note Account and
the Capitalized Interest Account), whether in the form of cash, instruments,
securities or other property;

                  (iii) the possession by the Trust or any of its Assignees or
their respective bailees or agents of items of property that constitute
instruments, money, negotiable documents or chattel paper shall be deemed to be
"possession by the secured party" for purposes of perfecting the security
interest pursuant to Section 9-305 of the California UCC;

                                      -3-
<PAGE>   8
                  (iv) notifications to persons holding such property, and
acknowledgments, receipts or confirmations from persons holding such property,
shall be deemed notifications to, or acknowledgments, receipts or confirmations
from, financial intermediaries, bailees or agents (as applicable) of the Trust
for the purpose of perfecting such security interest under applicable law; and

                  (v) the obligations secured by the first priority security
interest described in clause (ii) above shall be deemed to include any and all
obligations of the Trust or any of its Assignees to pay the principal of and
interest on the Notes to the Noteholders and to pay the fees, expenses and other
amounts required to be paid to the Master Servicer, the Indenture Trustee, the
Owner Trustee, the Insurer and the Certificateholders, all in accordance with
and otherwise subject to the Operative Documents (including the Indenture).

         Any assignment or other transfer of the interest of the Trust under any
provision hereof shall also be deemed to be an assignment of any security
interest created hereby. Each of the Sponsor and the Trust shall, to the extent
consistent with this Agreement, take such actions as may be necessary to ensure
that, if this Agreement were deemed to create a security interest in the
Mortgage Loans, such security interest would be deemed to be a perfected
security interest of first priority under applicable law and would be maintained
as such throughout the terms of this Agreement and the Indenture. The Sponsor
also covenants not to pledge, assign or grant any security interest to any third
party in any Mortgage Loan conveyed to the Trust hereunder.

                  (c) Upon the Trust's request, the Sponsor shall perform (or
cause to be performed) such further acts and execute, acknowledge and deliver
(or cause to be executed, acknowledged and delivered) to the Trust such further
documents as the Trust shall deem necessary or advisable in order to evidence,
establish, maintain, protect, enforce or defend its rights in and to the
Mortgage Loans and other rights and properties transferred hereunder or
otherwise to carry out the intent and accomplish the purposes of this Agreement
(including filing UCC-1 financing statements naming the Sponsor as debtor and
the Trust as secured party and any continuation statements relating thereto).

                  (d) In connection with the transfer and assignment of the
Mortgage Loans, the Sponsor agrees to:

                  (i) cause to be delivered without recourse to the Indenture
Trustee, on the Closing Date with respect to the Initial Mortgage Loans, on the
Transfer Date with respect to any Qualified Replacement Mortgage Loan, and on
the Subsequent Transfer Date with respect to any Subsequent Mortgage Loans, the
items listed in the definition of "Mortgage Files";

                  (ii) cause, within seventy-five (75) Business Days following
the Closing Date, the Subsequent Transfer Date or the Transfer Date (as
applicable), (x) Assignments of Mortgages to be prepared, (y) copies of
Assignments of Mortgages to be delivered to the Indenture Trustee and (z)
originals of Assignments of Mortgages to be submitted for recording in the
appropriate jurisdictions wherein such recordation is necessary to perfect the
lien of the Indenture Trustee against creditors of or purchasers from the
Sponsor; provided, however, that an Assignment of Mortgage shall not be required
to be submitted for recording with respect to any Mortgage Loan as to which the
recordholder is an

                                      -4-
<PAGE>   9
Originator unless (A) the related Mortgaged Property is not located in a
jurisdiction in which, as evidenced by an Opinion of Counsel acceptable to the
Rating Agencies and the Insurer and delivered to the Indenture Trustee and the
Insurer within thirty (30) Business Days following the Closing Date, recordation
of such Assignment of Mortgage is not necessary to perfect the lien of the
Indenture Trustee in the related Mortgage Loan, (B) an Event of Servicing
Termination or a Rapid Amortization Event shall have occurred, (C) the long-term
unsecured debt of Advanta Corp. shall have been assigned a rating of less than
BBB by S&P or less than Baa2 by Moody's, (D) the circumstances discussed in
Section 2.1(j) below shall exist, or (E) the Insurer otherwise directs the
Sponsor in writing; and

                  (iii) cause, within one (1) year after the Closing Date, the
Subsequent Transfer Date or the Transfer Date (as applicable), to be delivered
to the Indenture Trustee and the Insurer evidence of the recording of such
Assignments of Mortgage (provided that such recording is required pursuant to
clause (ii) above).

         All recording, if required pursuant to this Section 2.1, shall be
accomplished at the expense of the Sponsor. Notwithstanding anything to the
contrary contained in this Section 2.1, in those instances where the public
recording office retains the original Mortgage or assignment of a Mortgage after
it has been recorded, the Sponsor shall be deemed to have satisfied its
obligations hereunder upon delivery to the Indenture Trustee of a copy of such
Mortgage or such assignment of a Mortgage, as the case may be, certified by the
public recording office to be a true copy of the recorded original thereof.

         Copies of all Mortgage assignments and any Assignment of Mortgage in
recordable form received by the Indenture Trustee shall be kept in the related
Mortgage File.

         Within thirty (30) days after the Closing Day, the Master Servicer
shall deliver to the Indenture Trustee for execution powers of attorney,
substantially in the form of Exhibit G, authorizing the Master Servicer on
behalf of the Indenture Trustee to record the Assignments of Mortgage as
provided in clause (ii) above.

                  (e) If an Assignment of Mortgage is lost during the process of
recording, or is returned from the recorder's office unrecorded due to a defect
therein, the Sponsor shall prepare or cause to be prepared a substitute
assignment or cure such defect, as the case may be, and thereafter cause each
such assignment to be duly recorded.

                  (f) The Sponsor shall reflect on its records that the Mortgage
Loans have been sold to the Trust.

                  (g) If (i) the amount of shareholders' equity of the Master
Servicer and the ultimate consolidating parent of the Master Servicer,
calculated pursuant to generally accepted accounting principles, as evidenced by
the Financial Statements (as defined in the Insurance Agreement, and which the
Master Servicer hereby agrees to provide to the Insurer on a quarterly basis as
requested by the Insurer) falls below $5,000,000 and (ii) the amount of
shareholders' equity of Advanta National Bank, calculated pursuant to applicable
regulatory accounting principles, as evidenced by the financial statements of
Advanta National Bank, falls below $25,000,000, then the Sponsor shall promptly
prepare and deliver

                                      -5-
<PAGE>   10
to the Indenture Trustee an Assignment of Mortgage for each Mortgage Loan for
which an Assignment of Mortgage was not previously prepared. Upon the direction
of the Insurer, the Indenture Trustee shall submit such Assignments of Mortgages
with respect to all of the Mortgage Loans for recording in the appropriate
jurisdictions. The Master Servicer shall pay the anticipated recording costs to
the Indenture Trustee on the date of delivery of such Assignments of Mortgages
to the Indenture Trustee, and if the Master Servicer fails to do so or the
actual recording costs exceed the anticipated recording costs then the Indenture
Trustee shall pay such costs and shall be entitled to reimbursement therefor,
pursuant to Section 6.7 of the Indenture, from amounts otherwise distributable
to the Certificateholders.

                  (h) To the extent that the ratings, if any, then assigned to
the unsecured debt of Advanta National Bank or of its ultimate corporate parent
are satisfactory to the Insurer, Moody's and S&P, then any of the Document
Delivery Requirements described above may be waived by an instrument signed by
the Insurer, S&P and Moody's (and any documents theretofore delivered to the
Indenture Trustee shall be returned to Advanta National Bank or its designee) on
such terms and subject to such conditions as the Insurer, Moody's and S&P may
require.

         Section 2.2. Acceptance of Mortgage Files by Indenture Trustee; Certain
                      Substitutions of Mortgage Loans; Certification by
                      Indenture Trustee.

                  (a) The Indenture Trustee hereby acknowledges its receipt of
the Policy and agrees to execute and deliver on the Closing Date and each
Subsequent Transfer Date and each Transfer Date an acknowledgment of receipt of
the Mortgage Files delivered to it by the Sponsor and declares that it will hold
such documents and any amendments, replacements or supplements thereto, as well
as any other assets of the Trust Estate delivered to the Indenture Trustee, as
Indenture Trustee in trust upon and subject to the conditions set forth herein,
for the benefit of the Noteholders and the Insurer.

                  (b) The Indenture Trustee further agrees to review any
documents delivered to it by the Sponsor within ninety (90) days after the
Closing Date, the Subsequent Transfer Date or the Transfer Date, as applicable,
and to deliver to the Sponsor, the Master Servicer, the Insurer and the Owner
Trustee a certification, in the form of Exhibit E hereto (a "Pool
Certification"), to the effect that, as to each Mortgage Loan listed in the
Schedule of Mortgage Loans (other than any Mortgage Loan paid in full), (i) all
documents described in the definition of "Mortgage Files" and required to be
delivered to it pursuant to this Agreement are in its possession and (ii) such
documents have been reviewed by it and have not been damaged, torn or physically
altered (except where such alteration has been acknowledged and accepted by the
Mortgagor) and on their face appear to relate to such Mortgage Loan. The Pool
Certification shall be delivered to the Sponsor, the Master Servicer, the
Insurer and the Owner Trustee within one-hundred twenty (120) days, but is not
required to be delivered prior to ninety (90) days, after the Closing Date. The
Indenture Trustee shall be under no duty or obligation to inspect, review or
examine any such documents, instruments, certificates or other papers to verify
the validity, legality, enforceability, sufficiency, due authorization,
recordability or genuineness of same or to determine that they are genuine,
enforceable, or appropriate for the represented purpose or that they are other
than what they purport to be on their face, nor shall the Indenture Trustee be
under any duty to determine independently whether there are any intervening
assignments or assumption or modification agreements with respect to any
Mortgage Loan.

                                      -6-
<PAGE>   11
                  (c) If the Indenture Trustee during such 90-day period from
the Closing Date, the Subsequent Transfer Date or the Transfer Date, as
applicable, finds (i) any document constituting a part of a Mortgage File which
(A) is not properly executed, (B) has not been received within the specified
period, or (C) is unrelated to the Mortgage Loans identified in the Schedule of
Mortgage Loans, or (ii) that any Mortgage Loan does not conform in a material
respect to the description thereof as set forth in the Schedule of Mortgage
Loans, the Indenture Trustee shall promptly notify the Sponsor and the Insurer.
In performing any such review, the Indenture Trustee may conclusively rely on
the Sponsor as to the purported genuineness of any such document and any
signature thereon. It is understood that the scope of the Indenture Trustee's
review of the Mortgage File delivered by the Sponsor is limited solely to
confirming that the documents listed in the definition of Mortgage File have
been executed and received and, on their face, appear to relate to the Mortgage
Loans identified in the Schedule of Mortgage Loans and conform materially to the
description thereof in the Schedule of Mortgage Loans with regard to Mortgagor
name and original Credit Limit.

         The Sponsor agrees to use reasonable efforts to remedy a material
defect in a document constituting part of a Mortgage File of which it is so
notified by the Indenture Trustee. If, however, within thirty (30) days after
the Indenture Trustee's notice (which may be in the form of a Pool
Certification) to it respecting such defect, the Sponsor has not remedied or
caused to be remedied the defect and the defect materially and adversely affects
the interest in the related Mortgage Loan of the Indenture Trustee, the
Noteholders or the Insurer, the Sponsor will then, within five (5) Business Days
(i) substitute in lieu of such Mortgage Loan a Qualified Replacement Mortgage
Loan pursuant to Section 2.3 and, deliver the Substitution Amount applicable
thereto to the Master Servicer for deposit in the Principal and Interest Account
or (ii) reacquire such Mortgage Loan at a purchase price equal to the Loan
Reacquisition Price thereof, which reacquisition price shall be delivered to the
Master Servicer for deposit in the Principal and Interest Account.

                  (d) As to any Qualified Replacement Mortgage Loan, the Sponsor
shall, if required to deliver any such Qualified Replacement Mortgage Loan to
the Indenture Trustee, provide the Indenture Trustee with the information set
forth in the Schedule of Mortgage Loans with respect to such Qualified
Replacement Mortgage Loan, and deliver to the Indenture Trustee such documents
and agreements as are required to be held by the Indenture Trustee in accordance
with this Section 2.2. Upon receipt of the Mortgage File for a Qualified
Replacement Mortgage Loan and written notification signed by a Servicing Officer
to the effect that the related Substitution Amount, if any, has been deposited
into the Principal and Interest Account or of written notification signed by a
Servicing Officer to the effect that the Loan Reacquisition Price in respect of
an Unqualified Mortgage Loan has been deposited into the Principal and Interest
Account, then (i) on the date of conveyance of such Qualified Replacement
Mortgage Loan or deposit of the Loan Reacquisition Price, as the case may be,
the Indenture Trustee shall deliver to the Sponsor the Mortgage File for the
related Unqualified Mortgage Loan, properly endorsed without recourse to the
Sponsor and (ii) within ten (10) Business Days, the Indenture Trustee shall
execute such other documents and instruments of transfer including preparing an
endorsement and assignment of documents, in each case without recourse,
representation or warranty, and take such other actions as shall reasonably be
requested by the Sponsor to effect a transfer by the Trust of such Unqualified
Mortgage Loan to the Sponsor or its designee.

                                      -7-
<PAGE>   12
         It is understood and agreed that the obligation of the Sponsor to
accept a transfer of an Unqualified Mortgage Loan and to either convey a
Qualified Replacement Mortgage Loan (together with a deposit of the related
Substitution Amount, if any, into the Principal and Interest Account) or to make
a deposit of any related Loan Reacquisition Price into the Principal and
Interest Account shall constitute the sole remedy available to the Noteholders,
the Insurer and the Indenture Trustee against the Sponsor.

         The Sponsor, promptly following the transfer of an Unqualified Mortgage
Loan from the Trust pursuant to this Section, shall deliver an amended Schedule
of Mortgage Loans to the Indenture Trustee and the Insurer and shall make
appropriate entries in its general account records to reflect such transfer. The
Master Servicer shall, following such transfer, appropriately mark its records
to indicate that it is no longer servicing such Mortgage Loan on behalf of the
Trust.

         Section 2.3. Qualified Replacement Mortgage Loans.

                  (a) A "Qualified Replacement Mortgage Loan" is a Mortgage Loan
that substitutes for another pursuant to Section 2.2(c), 3.3 or 3.4 hereof,
which with respect to the Mortgage Loan being replaced and as of the Replacement
Cut-Off Date (i) has the same interest rate index as, and a margin over such
index and a maximum interest rate at least equal to, the Mortgage Loan being
replaced, (ii) is secured by property of the same or better type and with the
same or better occupancy status as the replaced Mortgage Loan, (iii) is of the
same or better credit quality classification (determined in accordance with the
related Originator's credit underwriting guidelines), (iv) shall mature no later
than the Payment Date occurring in September, 2023, (v) has a Combined
Loan-to-Value Ratio no higher than that of the replaced Mortgage Loan, (vi) has
a Principal Balance equal to or less than that of the replaced Mortgage Loan,
(vii) is in the same lien position or better, (viii) is not more than 30 days
delinquent, and (ix) complies with the representations and warranties set forth
in Section 3.3(a). Except with respect to clause (ix) above, in the event that
one or more mortgage loans are proposed to be substituted for one or more
Mortgage Loans, the Insurer may allow the foregoing tests to be met on a
weighted average basis or other aggregate basis acceptable to the Insurer, as
evidenced by a written approval delivered to the Indenture Trustee and the
Sponsor by the Insurer.

                  (b) Each Unqualified Mortgage Loan that is required to be
repurchased or substituted pursuant to the provisions of this Agreement or the
Purchase Agreement shall, upon such reacquisition or substitution in accordance
with the provisions hereof, be released from the Trust and from the lien created
by the Indenture. As to each Mortgage Loan released from the Trust in connection
with its reacquisition or the conveyance of a Qualified Replacement Mortgage
Loan, the Indenture Trustee will transfer, assign, set over and otherwise convey
without recourse, to or upon the order of the Sponsor, all of its right, title
and interest in and to such released Mortgage Loan and all the Trust's right,
title and interest to principal and interest collected on such released Mortgage
Loan on and after the first day of the calendar month in which such Mortgage
Loan is released; as applicable; provided, however, that the Trust shall reserve
and retain all right, title and interest in and to payments of principal and
interest collected on such released Mortgage Loan prior to such date.

                                      -8-
<PAGE>   13
                  (c) For any Remittance Period during which the Sponsor
substitutes one or more Qualified Replacement Mortgage Loans, the Master
Servicer shall determine the Substitution Amount, which the Sponsor shall
deposit in the Principal and Interest Account at the time of substitution. All
amounts received in respect of the Qualified Replacement Mortgage Loan during
the Remittance Period in which the circumstances giving rise to such
substitution occur shall not be a part of the Trust Estate and shall not be
deposited by the Master Servicer in the Principal and Interest Account. All
amounts received by the Master Servicer during the Remittance Period in which
the circumstances giving rise to such substitution occur in respect of any
Unqualified Mortgage Loan so removed by the Trust Estate shall be deposited by
the Master Servicer in the Principal and Interest Account. Upon such
substitution, the Qualified Replacement Mortgage Loan shall be subject to the
terms of this Agreement in all respects, and the Sponsor shall be deemed (i) to
have made with respect to such Qualified Replacement Mortgage Loan or Loans, as
of the date of substitution, the covenants, representations and warranties set
forth in Section 3.3 and (ii) to have certified that such Mortgage Loan(s)
is/are Qualified Replacement Mortgage Loan(s). The procedures applied by the
Sponsor in selecting each Qualified Replacement Mortgage Loan shall not be
materially adverse to the interests of the Indenture Trustee, the Noteholders or
the Insurer.

         Section 2.4. Cooperation Procedures.

         The Sponsor, the Master Servicer and the Indenture Trustee covenant to
provide each other with all data and information required to be provided by them
hereunder at the times required hereunder, and additionally covenant reasonably
to cooperate with each other in providing any additional information required by
any of them in connection with their respective duties hereunder.

         Section 2.5. Retransfers of Mortgage Loans at Election of Sponsor or
                      the Related Originator.

         Subject to the conditions set forth below, the Sponsor or the related
Originator, may, but shall not be obligated to (except the Sponsor or the
related Originator shall be obligated upon a breach of a representation or
warranty), accept the reassignment of Mortgage Loans held by the Trust as of the
close of business on a Payment Date (the "Transfer Date"). On the fifth Business
Day (the "Transfer Notice Date") prior to the Transfer Date designated in such
notice, the Sponsor or the related Originator shall give the Indenture Trustee,
the Insurer and the Master Servicer a notice of the proposed reassignment that
contains a list of the Mortgage Loans to be reassigned, to which the Insurer
must consent. Such reassignment of Mortgage Loans shall be permitted upon
satisfaction of the following conditions:

                  (i) No Rapid Amortization Event has occurred or will occur as
         a result of such reassignment;

                  (ii) On the Transfer Notice Date the Overcollateralization
         Amount (after giving effect to the removal from the Trust of the
         Mortgage Loans proposed to be retransferred) is at least equal to the
         Specified Overcollateralization Amount;

                  (iii) On or before the Transfer Date, the Sponsor or the
         related Originator shall have delivered to the Indenture Trustee and
         the Insurer a revised Schedule of Mortgage Loans, reflecting

                                      -9-
<PAGE>   14
         the proposed retransfer (including any Qualified Replacement Mortgage
         Loans proposed to be transferred) and the Transfer Date, and the Master
         Servicer shall have marked its servicing records to show that the
         Mortgage Loans reassigned to the Sponsor or the related Originator are
         no longer owned by the Trust;

                  (iv) The Sponsor or the related Originator shall represent and
         warrant that random selection procedures were used in selecting the
         Mortgage Loans to be removed from the Trust and no other selection
         procedures which are adverse to the interests of the Noteholders or the
         Insurer were utilized in selecting the Mortgage Loans to be removed
         from the Trust; and

                  (v) The Sponsor or the related Originator shall have delivered
         to the Indenture Trustee and the Insurer an Officer's Certificate
         certifying that the items set forth in subparagraphs (i) through (v) of
         this Section 2.5, inclusive, have been performed or are true and
         correct, as the case may be. The Indenture Trustee may conclusively
         rely on such Officer's Certificate, shall have no duty to make
         inquiries with regard to the matters set forth therein and shall incur
         no liability in so relying.

         Upon receiving the requisite information from the Sponsor or the
related Originator, the Master Servicer shall perform in a timely manner those
acts required of it, as specified above. Upon satisfaction of the above
conditions, on the Transfer Date the Indenture Trustee shall deliver, or cause
to be delivered, to the Sponsor or the related Originator (or their designee)
the Mortgage File for each Mortgage Loan being so reassigned, and the Indenture
Trustee shall execute and deliver (at the Sponsor's or the related Originator's
direction) to the Sponsor or the related Originator such other documents as
shall be reasonably necessary to reassign such Mortgage Loans to the Sponsor or
the related Originator. Any such transfer of the Trust's right, title and
interest in and to Mortgage Loans shall be without recourse, representation or
warranty by or of the Indenture Trustee or the Trust to the Sponsor or the
related Originator.

         Section 2.6. Conveyance of the Subsequent Mortgage Loans.

                  (a) On any Subsequent Transfer Date, subject to the conditions
set forth in paragraph (b) below in consideration of the Indenture Trustee's
delivery of all or a portion of the balance of funds on deposit in the
Pre-Funding Account, the Sponsor shall sell, transfer, assign, set over and
otherwise convey, all right, title and interest in and to each Subsequent
Mortgage Loan listed on the Schedule of Mortgage Loans delivered by the Sponsor
to the Indenture Trustee on such Subsequent Transfer Date. In addition, the
Sponsor shall transfer, assign and set over all right, title and interest in and
to principal and interest collected on each such Subsequent Mortgage Loan on and
after the related Subsequent Cut-Off Date and all right, title and interest in
and to all Mortgage Insurance Policies; provided, however, that the Sponsor
reserves and retains all its right, title and interest in and to principal and
interest collected on each such Subsequent Mortgage Loan prior to the related
Subsequent Cut-Off Date. The transfer to the Trust of the Subsequent Mortgage
Loans set forth on the Schedule of Mortgage Loans shall be absolute and shall be
intended by the Sponsor and all parties hereto to be treated as a sale by the
Sponsor. The amount released from the Pre-Funding Account shall be equal to
94.8% of the aggregate Principal Balances of the Subsequent Mortgage Loans so
transferred.

                                      -10-
<PAGE>   15
                  (b) The Sponsor shall transfer or cause to be transferred to
the Trust the Subsequent Mortgage Loans and the other property and rights
related thereto described in paragraph (a) above only upon the satisfaction of
each of the following conditions on or prior to the related Subsequent Transfer
Date:

                  (i) the Sponsor shall have provided the Indenture Trustee, the
Insurer and the Rating Agencies with an Addition Notice and shall have provided
information with respect to the Subsequent Mortgage Loans in an electronic data
file and in a form agreeable to the foregoing parties;

                  (ii) the Sponsor shall have delivered to the Indenture Trustee
a duly executed written assignment in substantially the form of Exhibit H (the
"Subsequent Transfer Agreement"), which shall include a Schedule of Mortgage
Loans listing the Subsequent Mortgage Loans and any other exhibits listed
thereon;

                  (iii) as of each Subsequent Transfer Date, none of the related
Originator, the Master Servicer or the Sponsor was insolvent nor will any of
them have been made insolvent by such transfer nor is any of them aware of any
pending insolvency;

                  (iv) such addition will not result in a material adverse tax
consequence to the Trust or the Noteholders;

                  (v) the Pre-Funding Period shall not have terminated;

                  (vi) the Sponsor shall have delivered to the Indenture Trustee
an Officer's Certificate confirming the satisfaction of each condition precedent
specified in this paragraph (b) and paragraphs (c), (d) and (e) below, and in
the related Subsequent Transfer Agreement;

                  (vii) the Sponsor shall have delivered to the Rating Agencies,
the Insurer and the Indenture Trustee, Opinions of Counsel with respect to
bankruptcy, corporate and tax matters relating to the Subsequent Mortgage Loans
(which opinions may have already been delivered on the Closing Date); and

                  (viii) the Insurer shall have approved the transfer.

                  (c) The obligation of the Trust to purchase a Subsequent
Mortgage Loan on any Subsequent Transfer Date is subject to the following
requirements:

                  (i) with respect to any individual Subsequent Mortgage Loan:

                               a. such Subsequent Mortgage Loan may not be 30 or
                  more days contractually delinquent as of the related
                  Subsequent Cut-Off Date;

                               b. the maturity date of such Subsequent Mortgage
                  Loan may not be later than September 30, 2023;

                                      -11-
<PAGE>   16
                               c. such Subsequent Mortgage Loan may not have a
                  Combined Loan-To-Value Ratio ("CLTV") in excess of 125%;

                               d. the Coupon Rate of such Subsequent Mortgage
                  Loan may not be below 8.00% per annum; and

                               e. such Subsequent Mortgage Loan may not have a
                  Principal Balance in excess of $300,000;

                  (ii) following the purchase of Subsequent Mortgage Loans, the
Mortgage Loans in the aggregate will satisfy the following criteria:

                               a. the Mortgage Loans will have a weighted
                  average Coupon Rate of at least 13.35%;

                               b. the Mortgage Loans will have a weighted
                  average CLTV of not more than 99.50%;

                               c. no more than 34.0% by aggregate Principal
                  Balance of the Mortgage Loans will have a CLTV of 100% or
                  greater;

                               d. no more than 0.5% by aggregate Principal
                  Balance of the Mortgage Loans will be secured by Mortgaged
                  Properties within a single zip code;

                               e. no more than 15.0% by aggregate Principal
                  Balance of the Mortgage Loans will be secured by Mortgaged
                  Properties in California;

                               f. no more than 96.0% by aggregate Principal
                  Balance of the Mortgage Loans will be in a second lien
                  position;

                               g. the Mortgage Loans will have a weighted
                  average FICO score of not less than 625;

                               h. the weighted average Margin will not be less
                  than 4.80% per annum;

                               i. the weighted average remaining term to
                  scheduled maturity of the Mortgage Loans will be not more than
                  275 months; and

                               j. no more than 45.0% by aggregate Principal
                  Balance of the Mortgage Loans will have FICO scores of less
                  than 620.

                               k. no more than 25% by Pool Principal Balance of
                  the Mortgage Loans will have been underwritten utilizing a
                  statistical property evaluation.

                                      -12-
<PAGE>   17
The Insurer may waive or modify any of the above requirements or specify any
additional criteria provided that any such modification shall not materially and
adversely affect the Sponsor.

                  (d) In connection with the transfer and assignment of the
Subsequent Mortgage Loans, the Sponsor agrees to satisfy the conditions set
forth in Sections 2.1(d)-(g).

                  (e) On each Subsequent Transfer Date, the Sponsor shall
deposit in the Principal and Interest Account all principal and interest
collections in respect of the related Subsequent Mortgage Loans received on or
after the related Subsequent Cut-Off Date.

                  (f) In connection with each Subsequent Transfer Date and on
the Payment Dates occurring in May 2000, June 2000, July 2000 and August 2000,
the Master Servicer and the Indenture Trustee shall co-operate in determining
(i) the amount and correct dispositions of the Capitalized Interest Requirement,
the Pre-Funding Earnings and the amount then on deposit in the Pre-Funding
Account, and (ii) any other necessary matters in connection with the
administration of the Pre-Funding Account and of the Capitalized Interest
Account.

                                    ARTICLE 3

                    REPRESENTATIONS, WARRANTIES AND COVENANTS
                     OF THE SPONSOR AND THE MASTER SERVICER

         Section 3.1. Representations and Warranties of the Sponsor.

         The Sponsor hereby represents, warrants and covenants to the Indenture
Trustee, the Master Servicer, the Insurer and the Noteholders as of the Closing
Date that:

                  (a) The Sponsor is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada and is in
good standing as a foreign corporation in each jurisdiction in which the nature
of its respective business, or the properties owned or leased by it make such
qualification necessary. The Sponsor has all requisite corporate power and
authority to own and operate its respective properties, to carry out its
respective business as presently conducted and as proposed to be conducted and
to enter into and discharge its respective obligations under this Agreement and
the other Operative Documents to which it is a party.

                  (b) The execution and delivery of this Agreement and the other
Operative Documents to which the Sponsor is a party by the Sponsor and its
performance and compliance with the terms of this Agreement and of the other
Operative Documents to which it is a party have been duly authorized by all
necessary corporate action on the part of the Sponsor and will not violate the
Sponsor's Articles of Incorporation or Bylaws or constitute a default (or an
event which, with notice or lapse of time, or both, would constitute a default)
under, or result in the breach of, any material contract, agreement or other
instrument to which the Sponsor is a party or by which the Sponsor is bound, or
violate any statute or any order, rule or regulation of any court, governmental
agency or body or other tribunal having jurisdiction over the Sponsor or any of
its properties.

                                      -13-
<PAGE>   18
                  (c) This Agreement and the other Operative Documents to which
the Sponsor is a party, assuming due authorization, execution and delivery by
the other parties hereto and thereto, each constitutes a valid, legal and
binding obligation of the Sponsor enforceable against it in accordance with the
terms hereof and thereof, except as the enforcement hereof and thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally and by general
principles of equity (whether considered in a proceeding or action in equity or
at law).

                  (d) The Sponsor is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which might have consequences that would
materially and adversely affect the condition (financial or other) or operations
of the Sponsor or its properties or might have consequences that would
materially and adversely affect its performance hereunder and under the other
Operative Documents to which it is a party.

                  (e) No litigation is pending or, to the best of the Sponsor's
knowledge, threatened against the Sponsor which litigation might have
consequences that would prohibit its entering into this Agreement or any other
Operative Document to which it is a party or might have consequences that would
materially and adversely affect its performance hereunder and under the other
Operative Documents to which it is a party.

                  (f) No certificate of an officer, statement furnished in
writing or report delivered pursuant to the terms hereof by the Sponsor contains
any untrue statement of a material fact or omits to state any material fact
necessary to make the certificate, statement or report not misleading.

                  (g) The statements contained in the Registration Statement
which describe the Sponsor, or matters or activities for which the Sponsor is
responsible in accordance with the Operative Documents or which are attributed
to the Sponsor therein are true and correct in all material respects, and such
statements do not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make such statements not misleading. Other than with respect to the statements
referred to in the preceding sentence, to the best of the Sponsor's knowledge
and belief, the Registration Statement does not contain any untrue statement of
a material fact required to be stated therein or omit to state any material fact
required to be stated therein or necessary to make the statements contained
therein not misleading.

                  (h) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and licenses
required to be taken, given or obtained, as the case may be, by or from any
federal, state or other governmental authority or agency (other than any such
actions, approvals, etc. under any state securities laws, real estate
syndication or "Blue Sky" statutes, as to which the Sponsor makes no such
representation or warranty), that are necessary or advisable in connection with
the purchase and sale of the Notes and the execution and delivery by the Sponsor
of the Operative Documents to which it is a party, have been duly taken, given
or obtained, as the case may be, are in full force and effect on the date
hereof, are not subject to any pending proceedings or appeals (administrative,
judicial or other) and either the time within which any appeal therefrom may be
taken or review thereof may be obtained has expired or no review thereof may be
obtained or appeal therefrom taken, and are adequate

                                      -14-
<PAGE>   19
to authorize the consummation of the transactions contemplated by this Agreement
and the other Operative Documents on the part of the Sponsor and the performance
by the Sponsor of its respective obligations under this Agreement and such of
the other Operative Documents to which it is a party.

         It is understood and agreed that the representations and warranties set
forth in this Section 3.1 shall survive delivery of the Initial Mortgage Loans,
any Qualified Replacement Mortgage Loans and the Subsequent Mortgage Loans to
the Indenture Trustee.

         Section 3.2. Representations and Warranties of the Master Servicer.

         The Master Servicer hereby represents, warrants and covenants to the
Indenture Trustee, the Sponsor, the Insurer and the Noteholders as of the
Closing Date that:

                  (a) The Master Servicer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
is in compliance with the laws of each state in which any Mortgaged Property is
located to the extent necessary to enable it to perform its obligations
hereunder and is in good standing as a foreign corporation in each jurisdiction
in which the nature of its business, or the properties owned or leased by it
make such qualification necessary. The Master Servicer has all requisite
corporate power and authority to own and operate its properties, to carry out
its business as presently conducted and as proposed to be conducted and to enter
into and discharge its obligations under this Agreement and the other Operative
Documents to which it is a party. The amount of shareholders' equity of the
Master Servicer or the ultimate consolidating parent of the Master Servicer,
calculated pursuant to generally accepted accounting principles, is at least
$5,000,000 or the amount of shareholders' equity of Advanta National Bank is at
least $25,000,000.

                  (b) The execution and delivery of this Agreement by the Master
Servicer and its performance and compliance with the terms of this Agreement and
the other Operative Documents to which it is a party have been duly authorized
by all necessary corporate action on the part of the Master Servicer and will
not violate the Master Servicer's Articles of Incorporation or Bylaws or
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or result in the breach of, any material
contract, agreement or other instrument to which the Master Servicer is a party
or by which the Master Servicer is bound or violate any statute or any order,
rule or regulation of any court, governmental agency or body or other tribunal
having jurisdiction over the Master Servicer or any of its properties.

                  (c) This Agreement and the other Operative Documents to which
the Master Servicer is a party, assuming due authorization, execution and
delivery by the other parties hereto and thereto, each constitutes a valid,
legal and binding obligation of the Master Servicer, enforceable against it in
accordance with the terms hereof and thereof, except as the enforcement hereof
and thereof may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally and by
general principles of equity (whether considered in a proceeding or action in
equity or at law).

                                      -15-
<PAGE>   20
                  (d) The Master Servicer is not in default with respect to any
order or decree of any court or any order, regulation or demand of any federal,
state, municipal or governmental agency, which might have consequences that
would materially and adversely affect the condition (financial or other) or
operations of the Master Servicer or its properties or might have consequences
that would materially and adversely affect its performance hereunder and under
the other Operative Documents to which the Master Servicer is a party.

                  (e) No litigation is pending or, to the best of the Master
Servicer's knowledge, threatened against the Master Servicer which litigation
might have consequences that would prohibit its entering into this Agreement or
any other Operative Document to which it is a party or might have consequences
that would materially and adversely affect its performance hereunder and under
the other Operative Documents to which the Master Servicer is a party.

                  (f) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and licenses
required to be taken, given or obtained, as the case may be, by or from any
federal, state or other governmental authority or agency (other than any such
actions, approvals, etc. under any state securities laws, real estate
syndication or "Blue Sky" statutes, as to which the Master Servicer makes no
such representation or warranty), that are necessary or advisable in connection
with the execution and delivery by the Master Servicer of the Operative
Documents to which it is a party, have been duly taken, given or obtained, as
the case may be, are in full force and effect on the date hereof, are not
subject to any pending proceedings or appeals (administrative, judicial or
other) and either the time within which any appeal therefrom may be taken or
review thereof may be obtained has expired or no review thereof may be obtained
or appeal therefrom taken, and are adequate to authorize the consummation of the
transactions contemplated by this Agreement and the other Operative Documents on
the part of the Master Servicer and the performance by the Master Servicer of
its obligations under this Agreement and such of the other Operative Documents
to which it is a party.

                  (g) No certificate of an officer, statement furnished in
writing or report delivered pursuant to the terms hereof by the Master Servicer
contains any untrue statement of a material fact or omits to state any material
fact necessary to make the certificate, statement or report not misleading.

                  (h) The statements contained in the Registration Statement
which describe the Master Servicer or matters or activities for which the Master
Servicer is responsible in accordance with the Operative Documents or which are
attributed to the Master Servicer therein are true and correct in all material
respects, and the Registration Statement does not contain any untrue statement
of a material fact with respect to the Master Servicer or omit to state a
material fact required to be stated therein or necessary to make the statement
contained therein with respect to the Master Servicer not misleading.

                  (i) The Servicing Fee is a "current (normal) servicing fee
rate" as that term is used in Statement of Financial Accounting Standards No. 65
issued by the Financial Accounting Standards Board. Neither the Master Servicer
nor any affiliate thereof will report on any financial statements any part of
the Servicing Fee as an adjustment to the sales price of the Mortgage Loans.

                                      -16-
<PAGE>   21
                  (j) The collection practices used by the Master Servicer with
respect to the Mortgage Loans directly serviced by it have been, in all material
respects, legal, proper, prudent and customary in the mortgage loan servicing
business.

                  (k) The transactions contemplated by this Agreement are in the
ordinary course of business of the Master Servicer.

                  (l) The terms of each existing Sub-Servicing Agreement and
each designated Sub-Servicer are acceptable to the Master Servicer and any new
Sub-Servicing Agreements or Sub-Servicers will comply with the provisions of
Section 4.1.

         It is understood and agreed that the representations and warranties set
forth in this Section 3.2 shall survive delivery of the Initial Mortgage Loans,
any Qualified Replacement Mortgage Loans and the Subsequent Mortgage Loans to
the Indenture Trustee.

         Upon discovery by the Master Servicer, the Sponsor or the Indenture
Trustee of a breach of any of the representations and warranties set forth in
this Section 3.2 which materially and adversely affects the interests of the
Noteholders or the Insurer, the party discovering such breach shall give prompt
written notice to the other parties. Within thirty (30) days of its discovery or
its receipt of notice of such breach, the Master Servicer shall cure such breach
in all material respects; provided, however, that if the Master Servicer can
demonstrate to the reasonable satisfaction of the Insurer that it is diligently
pursuing remedial action, then the cure period may be extended with the written
approval of the Insurer.

         Section 3.3. Representations and Warranties of the Sponsor with Respect
                      to the Mortgage Loans; Retransfer of Certain Mortgage
                      Loans.

                  (a) The Sponsor makes the following representations and
warranties as to each Mortgage Loan, on which the Trust relies in accepting the
Mortgage Loan and on which the Insurer relies in issuing the Policy. Such
representations and warranties speak as of the Closing Date, in the case of the
Initial Mortgage Loans, the Subsequent Transfer Date, in the case of the
Subsequent Mortgage Loans, and the Transfer Date, in the case of the Qualified
Replacement Mortgage Loans, but shall survive the transfer of the Mortgage Loans
to the Trust and the pledge thereof to the Indenture Trustee pursuant to the
Indenture:

                  (i) All of the original or certified documentation set forth
         in the definition of Mortgage File with respect to each Mortgage Loan
         has been or will be delivered to the Indenture Trustee on the Closing
         Date, the Subsequent Transfer Date or the Transfer Date, as applicable,
         except as otherwise provided in Section 2.1. All such documentation is
         true and accurate in all material respects. Each of the documents and
         instruments specified to be included therein has been duly executed, is
         in due and proper form, and each such document or instrument is in a
         form generally acceptable to prudent mortgage lenders that regularly
         originate, purchase or sell mortgage loans comparable to the Mortgage
         Loans.

                                      -17-
<PAGE>   22
                  (ii) Each Mortgage Loan is being serviced by the Master
         Servicer or a Master Servicer Affiliate.

                  (iii) The information set forth in the Schedule of Mortgage
         Loans (as amended for Qualified Replacement Mortgage Loans and
         Subsequent Mortgage Loans) for each Mortgage Loan listed is true and
         correct in all material respects.

                  (iv) Immediately prior to the transfers and assignments herein
         contemplated, the Sponsor held good and indefeasible title to, and was
         the sole owner of, each Mortgage Loan conveyed by the Sponsor to the
         Trust pursuant to Section 2.1 hereof, all monies due or to become due
         with respect thereto, and all proceeds of such Cut-Off Date Principal
         Balances with respect to such Mortgage Loans subject to no liens,
         charges, mortgages, encumbrances or rights of others except liens which
         will be released simultaneously with such transfers and assignments;
         and immediately upon the transfers and assignments herein contemplated,
         the Trust will hold good and indefeasible title to, and be the sole
         owner of, each Mortgage Loan subject to no liens, charges, mortgages,
         encumbrances or rights of others except liens which will be released
         simultaneously with such transfers and assignments.

                  (v) There is no valid offset, defense or counterclaim of any
         Mortgagor under any Credit Line Agreement or Mortgage. Neither the
         operation of any of the terms of any such Credit Line Agreement or any
         such Mortgage nor the exercise of any right thereunder will render
         either such Credit Line Agreement or such Mortgage unenforceable, in
         whole or in part, or subject to any right of rescission, set-off,
         claim, counterclaim or defense, including, without limitation, the
         defense of usury and no such right of rescission, set-off, counterclaim
         or defense has been asserted with respect thereto.

                  (vi) As of the Initial Cut-Off Date and with respect to the
         Initial Mortgage Loans, no Minimum Monthly Payment is more than 59 days
         Delinquent (measured on a contractual basis) and no more than 0.51% (by
         aggregate Cut-Off Date Principal Balance) of the Initial Mortgage Loans
         were 30-59 days Delinquent (measured on a contractual basis).

                  (vii) Each Credit Line Agreement and each Mortgage relating to
         the Mortgage Loans is the legal, valid, binding and enforceable
         obligation of the related Mortgagor and is enforceable in accordance
         with its terms, except as the enforceability thereof may be limited by
         any bankruptcy, insolvency, reorganization, moratorium or other similar
         laws affecting the enforcement of creditors' rights generally and by
         general principles of equity (whether considered in a proceeding or
         action in equity or at law).

                  (viii) With respect to each Mortgage Loan, on each date that
         the Coupon Rate has been adjusted, such adjustment was made in
         compliance with the related Mortgage and Credit Line Agreement and
         applicable law.

                  (ix) Each Mortgaged Property is improved by a single
         (one-to-four) family residential dwelling, which may include
         manufactured homes, condominiums and townhouses.

                                      -18-
<PAGE>   23
                  (x) As of the Initial Cut-Off Date, no Initial Mortgage Loan
         had a Combined Loan-to-Value Ratio in excess of 125.00%.

                  (xi) As of the Initial Cut-Off Date with respect to the
         Initial Mortgage Loans, as of the Subsequent Cut-Off Date with respect
         to the Subsequent Mortgage Loans and as of the applicable Transfer Date
         with respect to any Qualified Replacement Mortgage Loan, each Mortgage
         is a valid and subsisting first or junior lien of record on the
         Mortgaged Property (subject in the case of any Junior Mortgage Loan
         only to one or more Senior Liens on such Mortgaged Property) and
         subject in all cases to the exceptions to title set forth in the title
         insurance policy or title search, with respect to the related Mortgage
         Loan, which exceptions are generally acceptable to banking institutions
         in connection with their regular mortgage lending activities, and
         except for liens for (i) real estate taxes and special assessments not
         yet delinquent, (ii) income taxes not yet due, (iii) any covenants,
         conditions and restrictions, rights of way, easements, and other
         matters of public record and such other exceptions to which similar
         properties are commonly subject and which do not individually, or in
         the aggregate, materially and adversely affect the benefits of the
         security intended to be provided by such Mortgage.

                  (xii) To the best of the Sponsor's knowledge, there is no
         delinquent tax or assessment lien or mechanic's lien on any Mortgaged
         Property relating to a Mortgage Loan, and each such Mortgaged Property
         is free of substantial damage and is in good repair.

                  (xiii) Each Mortgage Loan at the time it was made complied in
         all material respects with all applicable state and federal laws and
         regulations, including, without limitation, the federal
         Truth-in-Lending Act, the federal Home Ownership and Equity Protection
         Act and other consumer protection laws, real estate settlement
         procedure, usury, equal credit opportunity, disclosure and recording
         laws.

                  (xiv) With respect to each Mortgage Loan that is a First
         Mortgage Loan, and, to the best of the Sponsor's knowledge, with
         respect to each Mortgage Loan that is a Junior Mortgage Loan, (i) a
         lender's title insurance policy, issued in standard California Land
         Title Association form or American Land Title Association form, or
         other form acceptable in a particular jurisdiction by a title insurance
         company authorized to transact business in the state in which the
         related Mortgaged Property is situated, was issued on the date of
         origination of such Mortgage Loan, and as of the Closing Date, the
         Subsequent Transfer Date or the Transfer Date, as applicable, each such
         policy is valid and remains in full force and effect, or (ii) a title
         search or guaranty of title customary in the relevant jurisdiction was
         obtained with respect to any Mortgage Loan as to which no title
         insurance policy or binder was issued.

                  (xv) The terms of each Credit Line Agreement and each related
         Mortgage have not been impaired, cancelled, subordinated, rescinded,
         altered or modified in any material respect (except as reflected in the
         Mortgage File and in the Schedule of Mortgage Loans), and the related
         Mortgaged Property has not been released from the lien of the related
         Mortgage, in whole or in part, and no instrument has been executed that
         would effect such release, cancellation,

                                      -19-
<PAGE>   24
         subordination or rescission, except by a written instrument which (if
         such instrument is secured by real property) has been recorded, if
         necessary, to protect the interest of the Noteholders and which has
         been delivered to the Indenture Trustee. The substance of any other
         alteration or modification of a Credit Line Agreement and related
         Mortgaged Property is reflected on the related Schedule of Mortgage
         Loans.

                  (xvi) Except as otherwise required by law or the terms of the
         Credit Line Agreement, the related Credit Line Agreement is not and has
         not been secured by any collateral, pledged account or other security
         except the lien of the corresponding Mortgage.

                  (xvii) Each Mortgaged Property is located in the state
         identified in the Schedule of Mortgage Loans and consists of one or
         more parcels of real property with a residential dwelling erected
         thereon.

                  (xviii) To the best of the Sponsor's knowledge, there is no
         proceeding pending or threatened for the total or partial condemnation
         of any Mortgaged Property, nor is such a proceeding currently
         occurring, and each such Mortgaged Property is undamaged by waste,
         fire, earthquake or earth movement, flood, tornado or other casualty,
         so as to affect adversely the value of such Mortgaged Property as
         security for the related Mortgage Loan or the use for which the
         premises were intended.

                  (xix) To the best of the Sponsor's knowledge, with respect to
         each Mortgage Loan that is a Junior Mortgage Loan, either (A) no
         consent for such Mortgage Loan was required by the holder of the
         related Senior Lien(s) prior to the making of such Mortgage Loan or (B)
         such consent has been obtained and is contained in the related Mortgage
         File or servicing file.

                  (xx) Each Mortgage contains customary and enforceable
         provisions which render the rights and remedies of the holder thereof
         adequate for the realization against the related Mortgaged Property of
         the benefits of the security, including (A) in the case of a Mortgage
         designated as a deed of trust, by trustee's sale and (B) otherwise by
         judicial foreclosure. To the best of the Sponsor's knowledge, there is
         no homestead or other exemption available which materially interferes
         with the right to sell the related Mortgaged Property at a trustee's
         sale or the right to foreclose the related Mortgage.

                  (xxi) There is no default, breach, violation or event of
         acceleration existing under any Mortgage or Credit Line Agreement and
         no event which, with the passage of time or with notice and the
         expiration of any grace or cure period, would constitute a default,
         breach, violation or event of acceleration, and the Sponsor has not
         waived any default, breach, violation or event of acceleration;
         provided, however, that the foregoing shall not apply to the extent
         that the relevant default, breach, violation or other event relates to
         one or more of the Delinquent Mortgage Loans.

                  (xxii) To the best of the Sponsor's knowledge, all parties to
         each Credit Line Agreement and the related Mortgage had legal capacity
         to execute such Credit Line Agreement and the related

                                      -20-
<PAGE>   25
         Mortgage and each such Credit Line Agreement and the related Mortgage
         have been duly and properly executed by such parties.

                  (xxiii) No selection procedures reasonably believed by the
         Sponsor to be adverse to the interests of the Noteholders or the
         Insurer was utilized in selecting the Mortgage Loans.

                  (xxiv) No Mortgagor has been released, in whole or in part,
         except in connection with an assumption agreement which has been
         approved by the applicable title insurer (to the extent required by
         such title insurer)and which is part of the related Mortgage File
         delivered to the Indenture Trustee.

                  (xxv) To the best of the Sponsor's knowledge, at the time of
         origination of each Mortgage Loan that is not a First Mortgage Loan,
         the related senior lien was not more than 30 days delinquent.

                  (xxvi) To the best of the Sponsor's knowledge, all required
         inspections, licenses and certificates with respect to the use and
         occupancy of all occupied portions of all property securing the
         Mortgages have been made, obtained or issued, as applicable.

                  (xxvii) With respect to each Mortgage Loan that is not a First
         Mortgage Loan, the related senior lien does not provide for negative
         amortization.

                  (xxviii) With respect to each Mortgage Loan that is not a
         First Mortgage Loan, the maturity date of the Mortgage Loan is prior to
         the maturity date of the related senior lien if such senior lien
         provides for a balloon payment.

                  (xxix) With respect to each Mortgage Loan, (A) the
         improvements upon each related Mortgaged Property are covered by a
         valid and existing hazard insurance policy with a carrier generally
         acceptable to the Master Servicer that provides for fire and extended
         coverage representing coverage not less than the least of (1) prior to
         the end of the draw period, the Credit Limit of such Mortgage Loan, (2)
         after the draw period, the unpaid principal balance of the related
         Mortgage Loan, or (3) the maximum insurable value of the related
         Mortgaged Property, or (B) the Master Servicer has obtained and will
         maintain a blanket policy insuring against fire and hazards of extended
         coverage with respect to all of the Mortgage Loans.

                  (xxx) With respect to each Mortgaged Property located in an
         area identified in the Federal Register by the Federal Emergency
         Management Agency as having special flood hazards, (A) such Mortgaged
         Property is covered by a valid and existing flood insurance policy in a
         form which meets the requirements of the current guidelines of the
         Federal Insurance Administration with a generally acceptable carrier
         which provides for coverage not less than the least of (1) prior to the
         end of the draw period, the Credit Limit of the related Mortgage Loan,
         (2) after the draw period, the unpaid principal balance of the related
         Mortgage Loan or (3) the maximum amount of insurance that is available
         under the Flood Disaster Protection Act of 1973, or (B) the Master
         Servicer has

                                      -21-
<PAGE>   26
         obtained a master flood insurance policy insuring against losses due to
         flooding on the Mortgaged Properties located in federally designated
         flood zones.

                  (xxxi) With respect to any Mortgage Loan which is a First
         Mortgage Loan, the Sponsor has caused and will cause to be performed
         any and all acts required to be performed to preserve the rights and
         remedies of the Master Servicer and the Indenture Trustee in any
         Mortgage Insurance Policies applicable to such Mortgage Loan,
         including, without limitation, any necessary notifications of insurers,
         assignments of policies or interests therein, and establishments of
         co-insured, joint loss payee and mortgagee rights in favor of the Trust
         and its assignees in care of the Indenture Trustee.

                  (xxxii) To the best of the Sponsor's knowledge, each Mortgage
         Loan was underwritten in all material respects in accordance with the
         credit underwriting guidelines of the related Originator, as in effect
         on the date of origination.

                  (xxxiii) The Sponsor has received no notice of default of any
         First Mortgage Loan secured by any Mortgaged Property that also secures
         a Mortgage Loan which has not been cured by a party other than the
         Sponsor or the Master Servicer.

                  (xxxiv) As of the respective Cut-Off Date, no Mortgagor had
         been identified on the records of the Sponsor as being the subject of a
         current bankruptcy proceeding.

                  (xxxv) To the best of the Sponsor's knowledge, each of the
         related Originator, the Master Servicer, and the Sponsor is (or, if
         applicable, during the period in which such party held any interest in
         a Mortgage Loan, was) in substantial compliance with any and all
         applicable licensing requirements of the law of the state wherein the
         property securing the Mortgage Loan is located.

                  (xxxvi) To the best of the Sponsor's knowledge, with respect
         to the Mortgage Loans, the documents, instruments and agreements
         submitted by each Mortgagor for loan underwriting were not falsified
         and contain no untrue statement of a material fact and do not omit to
         state a material fact required to be stated therein or necessary to
         make the information and the statements contained therein not
         misleading.

                  (xxxvii) Except as previously disclosed in writing to the
         Indenture Trustee and the Insurer, there is only one originally
         executed Mortgage and Credit Line Agreement not stamped as a duplicate.

                  (xxxviii) With respect to the Initial Mortgage Loans, as of
         the Initial Cut-Off Date, and with respect to the Subsequent Mortgage
         Loans on the Subsequent Cut-Off Date, each such Mortgage Loan conforms,
         and all the Mortgage Loans, in the aggregate, conform, in all material
         respects to the description thereof set forth in the Registration
         Statement.

                  (xxxix) During the period from origination to Closing Date,
         each Mortgage Loan has been serviced in accordance with applicable
         laws.

                                      -22-
<PAGE>   27
                  (xl) As of the Cut-Off Date, no more than 0.5% of the
         aggregate Cut-Off Date Principal Balance of the Initial Mortgage Loans
         is secured by Mortgaged Properties located within any single zip code
         area.

                  (xli) Except as disclosed in the Prospectus Supplement, no
         Mortgage Loan had a Combined Loan-to-Value Ratio in excess of 125.00%
         at the time of origination.

                  (b) [Reserved]

                  (c) Upon the discovery by the Master Servicer, any
Sub-Servicer, the Sponsor or the Indenture Trustee of a breach of any of the
representations and warranties made in respect of any Mortgage Loan which
materially and adversely affects the interests of the Noteholders or the Insurer
in such Mortgage Loan, the party discovering such breach shall give prompt
written notice to the other parties. The Master Servicer shall promptly notify
the Sponsor of such breach and request that the Sponsor cure such breach or take
the actions described in Section 3.4(b) hereof within the time periods required
thereby, and the Sponsor shall cure such breach or take such actions; provided,
however, that the cure for any breach of a representation and warranty relating
to the characteristics of the Mortgage Loans in the aggregate shall be a
reassignment of, or substitution for, only those Mortgage Loans necessary to
cause such characteristics to be in compliance with the related representation
and warranty, unless the Insurer shall waive such breach.

         Section 3.4. Covenants of Sponsor to Take Certain Actions with Respect
                      to the Mortgage Loans In Certain Situations.

                  (a) With respect to the representations and warranties set
forth in Section 3.3 that are made to the best of the Sponsor's knowledge or as
to which the Sponsor has no knowledge, if it is discovered by the Sponsor, the
Master Servicer, the Indenture Trustee or any Sub-Servicer that the substance of
such representation or warranty is inaccurate and such inaccuracy materially and
adversely affects the value of the related Mortgage Loan then, notwithstanding
the Sponsor's lack of knowledge with respect to the substance of such
representation and warranty being inaccurate at the time the representation or
warranty was made, such inaccuracy shall be deemed a breach of the applicable
representation or warranty and the Sponsor shall cure such breach, repurchase
the related Mortgage Loan at the Loan Reacquisition Price or substitute a
Qualified Replacement Mortgage Loan therefor pursuant to Section 2.2(b), 3.3(c)
or 3.4 hereof.

                  (b) With the provisos and limitations as to remedies set forth
in this Section 3.4, upon the discovery by the Sponsor, the Master Servicer, the
Insurer, any Sub-Servicer or the Indenture Trustee that the representations and
warranties set forth in Section 3.3 of this Agreement were untrue in any
material respect as of the Closing Date and such breaches of the representations
and warranties materially and adversely affect the interests of the Noteholders
or the Insurer, the party discovering such breach shall give prompt written
notice to the other parties.

                                      -23-
<PAGE>   28
         The Sponsor acknowledges that a breach of any representation or
warranty (x) relating to marketability of title sufficient to transfer
unencumbered title to a Mortgage Loan or (y) relating to enforceability of the
Mortgage Loan against the related Mortgagor or Mortgaged Property constitutes a
breach of a representation or warranty which materially and adversely affects
the interests of the Noteholders or of the Insurer in such Mortgage Loan.

                  (c) Upon the earliest to occur of the Sponsor's discovery of a
breach of any representation and warranty which materially and adversely affects
the interests of the Noteholders or the Insurer, its receipt of notice of such
breach from any one of the other parties hereto or from the Insurer such time as
a breach of any representation and warranty materially and adversely affects the
interests of the Noteholders or the Insurer as set forth above, the Sponsor
hereby covenants and warrants that it shall cure such breach in all material
respects within thirty (30) days or it shall (or shall cause an affiliate of the
Sponsor to), subject to the further requirements of this paragraph, regardless
of whether or not it had knowledge of such breach, at the end of such 30-day
period (i) substitute in lieu of each Mortgage Loan which has given rise to the
requirement for action by the Sponsor a Qualified Replacement Mortgage Loan and
deliver the Substitution Amount, if any, applicable thereto to the Master
Servicer for deposit in the Principal and Interest Account or (ii) purchase such
Mortgage Loan from the Trust at the Loan Reacquisition Price thereof, which
purchase price shall be delivered to the Master Servicer for deposit in the
Principal and Interest Account. It is understood and agreed that the obligation
of the Sponsor to cure the defect, substitute for, or purchase any Mortgage Loan
as to which a representation or warranty is untrue in any material respect and
has not been remedied shall constitute the sole remedy available to the
Noteholders and the Indenture Trustee or the Insurer against the Sponsor, except
as otherwise provided in the Insurance Agreement.

                  (d) It is understood and agreed that the covenants set forth
in this Section 3.4 shall survive the pledge of the Mortgage Loans (including
the Qualified Replacement Mortgage Loans) to the Indenture Trustee on behalf of
the Trust.

                                    ARTICLE 4

                          SERVICING AND ADMINISTRATION
                                OF MORTGAGE LOANS

         Section 4.1. Master Servicer and Sub-Servicers.

                  (a) Advanta Mortgage Corp. USA agrees to act as the Master
Servicer and to perform or cause to be performed all servicing duties under this
Agreement subject to the terms hereof.

                  (b) The Master Servicer shall service and administer the
Mortgage Loans on behalf of the Indenture Trustee and the Insurer and shall have
full power and authority, acting alone or through one or more Sub-Servicers, to
do any and all things in connection with such servicing and administration which
it may deem necessary or desirable. Without limiting the generality of the
foregoing, the Master Servicer, in its own name or the name of a Sub-Servicer,
may, and is hereby authorized and empowered by the Indenture Trustee to, execute
and deliver, on behalf of itself, the Noteholders, the Insurer and the Indenture

                                      -24-
<PAGE>   29
Trustee or any of them, any and all instruments of satisfaction or cancellation,
or of partial or full release or discharge and all other comparable instruments,
with respect to the Mortgage Loans, the related Mortgaged Properties and the
Mortgage Insurance Policies related thereto in accordance with the terms of this
Agreement. Upon the execution and delivery of this Agreement, and from time to
time as may be required thereafter, the Indenture Trustee shall furnish the
Master Servicer or its Sub-Servicers with any powers of attorney and such other
documents as may be necessary or appropriate to enable the Master Servicer to
carry out its servicing and administrative duties hereunder.

         In servicing and administering the Mortgage Loans, the Master Servicer
shall employ procedures consistent with Accepted Servicing Practices and in a
manner consistent with recovery under any Mortgage Insurance Policy required to
be maintained by the Master Servicer pursuant to this Agreement.

         Costs incurred by the Master Servicer in effectuating the timely
payment of taxes and assessments on the property securing a Credit Line
Agreement and foreclosure costs may be added by the Master Servicer to the
amount owing under such Credit Line Agreement where the terms of such Credit
Line Agreement so permit; provided, however, that the addition of any such cost
shall not be taken into account for purposes of calculating the principal amount
of the Credit Line Agreement and the Mortgage Loan related thereto or
distributions to be made to Noteholders. Such costs shall be recoverable by the
Master Servicer pursuant to Section 4.10 and 4.13.

                  (c) [reserved]

                  (d) The relationship of the Master Servicer (and of any
successor to the Master Servicer as servicer under this Agreement) to the
Indenture Trustee under this Agreement is intended by the parties to be that of
an independent contractor and not that of a joint venturer, partner or agent.

         In the event that the rights, duties and obligations of the Master
Servicer are terminated hereunder, any successor to the Master Servicer may
(with the written consent of the Insurer), to the extent permitted by applicable
law, terminate or assume the existing Sub-Servicer arrangements, which
termination or assumption will not violate the terms of such arrangements;
provided, that, in no event shall any successor to the Master Servicer be
permitted to assume any Sub-Servicer arrangements with any Affiliate of the
Master Servicer without such Affiliate's prior written consent.

                  (e) Subject to Sections 4.13 and 4.14, the Master Servicer, in
its own name, or a Sub-Servicer, in its own name, may be authorized and
empowered by the Indenture Trustee, (i) to institute foreclosure proceedings or
obtain a deed in lieu of foreclosure so as to effect ownership of any Mortgaged
Property on behalf of the Indenture Trustee and (ii) to hold title to any
Mortgaged Property upon such foreclosure or deed in lieu of foreclosure on
behalf of the Indenture Trustee; provided, however, that Section 4.14(a) shall
constitute a power of attorney from the Indenture Trustee to the Master Servicer
to execute an instrument of satisfaction (or assignment of mortgage without
recourse) with respect to any Mortgage Loan paid in full (or with respect to
which payment in full has been escrowed). Subject to Sections 4.13 and 4.14, the
Indenture Trustee shall furnish the Master Servicer and any Sub-Servicer with
any powers of attorney and other documents as the Master Servicer or such
Sub-Servicer shall reasonably

                                      -25-
<PAGE>   30
request to enable the Master Servicer and such Sub-Servicer to carry out their
respective servicing and administrative duties hereunder.

                  (f) The Master Servicer shall give prompt notice to the
Indenture Trustee of any action, of which the Master Servicer has actual
knowledge, to (i) assert a claim against the Trust or (ii) assert jurisdiction
over the Trust.

                  (g) Servicing Advances incurred by the Master Servicer or any
Sub-Servicer in connection with the servicing of the Mortgage Loans (including
any penalties in connection with the payment of any taxes and assessments or
other charges) on any Mortgaged Property shall be recoverable by the Master
Servicer or such Sub-Servicer to the extent described in Section 4.10 herein and
in Section 8.6(b)(ix) of the Indenture.

         Section 4.2. Modifications.

                  (a) The Master Servicer may consent to any modification of the
terms of any Mortgage Loan that is not Delinquent (a) which modification is not
expressly prohibited hereby, if the effect of any such modification will not be
to affect materially and adversely the security afforded by the related
Mortgaged Property, the timing of receipt of any payments required hereby or the
interests of the Noteholders or the Insurer, unless the Insurer consents in
writing; provided, however, that, if the Insurer has not given its written
response within five (5) Business Days after notice from the Master Servicer,
the Insurer shall be deemed to have given its consent to such modification;
provided, further, that such notice and consent shall not be required in the
event that the Master Servicer determines, in its reasonable discretion, that
such modification is legally required to be made prior to the lapse of such five
day period, in which case the Master Servicer shall give the Insurer immediate
notice of such action.

                  (b) In accordance with Accepted Servicing Practices, the
Master Servicer may in its discretion (or shall, to the extent required by
applicable law):

                  (i) waive any assumption fees, late payment charges, charges
         for checks returned for insufficient funds, termination fees, if any,
         or the fees which may be collected in the ordinary course of servicing
         the Mortgage Loans,

                  (ii) if a Mortgagor is in default or about to be in default
         because of a Mortgagor's financial condition, arrange with the
         Mortgagor to modify the payment terms, modify the coupon rate or
         otherwise modify or amend the related Mortgage Loan if the Master
         Servicer believes that such modification will maximize the amount of
         proceeds of such Mortgage Loan to the Trust and will not materially and
         adversely affect the interests of the Noteholder or the Insurer;
         provided, however, that the Master Servicer shall not be permitted to
         reschedule the payment of delinquent payments more than one time in any
         twelve consecutive months with respect to any Mortgagor and such
         modifications shall not be made with respect to Mortgage Loans with
         aggregate Principal Balances in excess of 10% of the Cut-Off Date Pool
         Balance without the prior written consent of the Insurer; provided,
         further, that if the Insurer has not given its written response within
         five (5) Business Days after notice from the Master Servicer, the
         Insurer shall be deemed to have given its

                                      -26-
<PAGE>   31
         consent to such modification or rescheduling; provided, further, that
         such notice and consent shall not be required in the event that the
         Master Servicer reasonably determines, in its sole discretion, that
         such modification or rescheduling is legally required to be made prior
         to the lapse of such five day period, in which case the Master Servicer
         shall give the Insurer immediate notice of such action;

                  (iii) modify payments of monthly principal and interest on any
         Mortgage Loan becoming subject to the terms of the Civil Relief Act in
         accordance with the Master Servicer's general policies of comparable
         mortgage loans subject to the Civil Relief Act;

                  (iv) extend the maturity date of any Mortgage Loan in
         connection with the extension of the related Draw Period (provided,
         however, that in no event may any such maturity date be extended to a
         date which is more than 12 months after the original maturity date
         without the Insurer's written approval or to a date which is later than
         the Payment Date occurring in August 2024), without the Insurer's
         written approval.

                  (v) without prior approval from the Insurer (but subject to
         the 10% limitation described above), increase the Credit Limits on
         Mortgage Loans provided that (i) new appraisals are obtained and the
         Combined Loan-to-Value Ratios of the Mortgage Loans after giving effect
         to such increases are less than or equal to the Combined Loan-to-Value
         Ratios of the Mortgage Loans as of the related dates of origination,
         (ii) such increases are consistent with the applicable Originator's
         underwriting policies, (iii) the related Mortgagors have made Draws on
         the Credit Line Agreements in the past twelve months and have made
         timely payments and (iv) the Master Servicer receives verbal
         verification of employment of the related Mortgagors. In addition, the
         Master Servicer may increase the Credit Limits on Mortgage Loans having
         aggregate balances of up to 5% of the Cut-Off Date Pool Balance without
         obtaining new appraisals provided that (i) the increases in the Credit
         Limits do not cause the Combined Loan-to-Value Ratios of such Mortgage
         Loans to exceed 100%, (ii) the increases are consistent with the
         applicable Originator's underwriting policies, (iii) the related
         Mortgagors have used the related Credit Line Agreements in the past
         twelve months and have made timely payments and (iv) the Master
         Servicer receives verbal verification of employment of the related
         Mortgagors.

                  (vi) for Mortgage Loans that are not Delinquent, without prior
         approval from the Insurer, solicit Mortgagors for a reduction in Coupon
         Rates of no more than 0.50%; provided that the Master Servicer may only
         reduce such Coupon Rates in accordance with the 10% limitation
         described above. Alternatively, the related Originators, acting on
         behalf of the Master Servicer, may take any action that the Master
         Servicer is permitted to take pursuant to this Section 4.2(b)(vi).

                  (vii) subject to the 10% limitation on modifications described
         above, approve applications of Mortgagors for consent to partial
         releases of Mortgages (with the written consent of the Insurer),
         alterations to Mortgaged Properties, and removal, demolition or
         division of Mortgaged Properties. If the Insurer has not given its
         written response within five (5) Business Days after notice from the
         Master Services, the Insurer shall be deemed to have given its consent

                                      -27-
<PAGE>   32
         to such modification; provided, however, that such notice and consent
         shall not be required in the event that the Master Services determines,
         in its reasonable discretion, that such modification is legally
         required to be made prior to the lapse of such five day period, in
         which case the Master Servicer shall give the Insurer immediate notice
         of such action.

         No application for consent to a partial release of Mortgage shall be
considered by the Master Servicer unless: (x) the provisions of the related
Credit Line Agreement and Mortgage have been complied with; (y) the Combined
Loan-to-Value Ratio (which may, for this purpose, be determined at the time of
any such action in a manner reasonably acceptable to the Insurer) and the
Mortgagor's debt-to-income ratio after any release does not exceed the maximum
Combined Loan-to-Value Ratio and debt-to-income ratio specified as the
then-current maximum levels under the related Originator's underwriting
guidelines for a similar credit grade borrower and (z) the lien priority of the
related Mortgage is not adversely affected.

                  (c) The Master Servicer shall have the right to sell, in
whole-loan, third-party sales, any Delinquent Mortgage Loan if the Master
Servicer believes that such means of disposition will provide the largest
recovery.

                  Except as otherwise permitted under this Agreement, the Master
Servicer may not, without the prior written consent of the Insurer (which
consent shall not be unreasonably withheld or delayed), forgive any Mortgage
Loan payments, impair any lien position on the Mortgage Loans or extend the
maturity of any Mortgage Loan. In addition, unless the Insurer consents in
writing, the Master Servicer may not modify Mortgage Loans having an aggregate
Principal Balance in excess of 10% of the Cut-Off Date Pool Balance.

         Section 4.3. Servicer Report.

         On the tenth day of each month, the Master Servicer shall send to the
Indenture Trustee a report (the "Servicer Report"), in the form of a computer
tape, detailing the aggregate payments on the Mortgage Loans during the prior
Remittance Period. Such tape shall be in the form and have the specifications as
may be agreed to between the Master Servicer and the Indenture Trustee from time
to time.

         Section 4.4. Liability of Master Servicer.

                  (a) The Master Servicer shall not be relieved of its
obligations under this Agreement notwithstanding any Sub-Servicing Agreement or
any of the provisions of this Agreement relating to agreements or arrangements
between the Master Servicer and a Sub-Servicer or otherwise, and the Master
Servicer shall be obligated to the same extent and under the same terms and
conditions as if it alone were servicing and administering the Mortgage Loans.
The Master Servicer shall be entitled to enter into any agreement with a
Sub-Servicer for indemnification of the Master Servicer by such Sub-Servicer.
Nothing contained in such Sub-Servicing Agreement shall be deemed to limit or
modify this Agreement. The Trust shall not indemnify the Master Servicer for any
losses due to the Master Servicer's or any Sub-Servicer's negligence.

                                      -28-
<PAGE>   33
                  (b) The Master Servicer shall defend, indemnify and hold
harmless the Indenture Trustee (including its officers, directors, employees and
agents), the Owner Trustee (including its officers, directors, employees and
agents), the Noteholders and the Trust from and against any and all claims,
damages, liabilities, losses, costs and expenses (including the reasonable fees
and expenses of counsel) to the extent that such claims, damages, liabilities,
losses, costs or expenses arose out of, or were imposed upon the Indenture
Trustee, the Owner Trustee, the Noteholders or the Trust in connection with or
by reason of: (i) any failure by the Master Servicer to perform its duties under
this Agreement or any errors or omissions of the Master Servicer related to such
duties, including the making of any inaccurate representations or warranties
hereunder; or (ii) in the case of the Indenture Trustee or the Owner Trustee,
the performance of its duties hereunder or under the other Operative Documents,
except to the extent that such claim, damage, liability, loss, cost or expense
resulted from the Indenture Trustee's or the Owner Trustee's gross negligence or
willful misconduct. The provisions of this Section 4.4(b) shall run directly to
and be enforceable by each injured party subject to the limitations hereof, and
the indemnification provided by the Master Servicer to the Indenture Trustee,
the Owner Trustee, the Noteholders and the Trust pursuant to this Section 4.4(b)
shall survive the payment in full of the Notes, the termination of the Indenture
and the resignation or removal of the Indenture Trustee or the Owner Trustee.
The Master Servicer shall pay any amounts owing pursuant to this Section 4.4(b)
directly to the indemnified Person, and such amounts shall not be deposited in
either the Principal and Interest Account or the Note Account. Indemnification
under this Section 4.4(b) shall include reasonable fees and expenses of counsel
and expenses of litigation reasonably incurred. If the Master Servicer has made
any indemnity payments to the Indenture Trustee, the Owner Trustee, the
Noteholders or the Trust pursuant to this Section 4.4(b) and such party
thereafter collects any of such amounts from others, such party will promptly
repay such amounts collected to the Master Servicer, without interest.

                  (c) The Master Servicer shall be the secondary obligor in
respect of any Expenses (as defined in the Trust Agreement) owing to any
Indemnified Party (as defined in the Trust Agreement) under Section 8.2 of the
Trust Agreement.

         Section 4.5. Sub-Servicing Agreements Between Master Servicer and
                      Sub-Servicers.

         The Master Servicer may enter into one or more Sub-Servicing Agreements
for any servicing and administration of Mortgage Loans with one or more
institutions (including affiliates) which are acceptable to the Insurer and are
in compliance with the laws of each state necessary to enable them to perform
their obligations under such Sub-Servicing Agreements. By delivery of the
Policy, the Insurer is deemed to have approved the respective Originators as
Sub-Servicers hereunder. The Master Servicer shall give notice to the Indenture
Trustee, the Insurer and the Rating Agencies of the appointment of any
Sub-Servicer and shall furnish to the Insurer and the Rating Agencies a copy of
the Sub-Servicing Agreement (unless the Sub-Servicer is an affiliate of the
Master Servicer). For purposes of this Agreement, the Master Servicer shall be
deemed to have received payments on Mortgage Loans when any Sub-Servicer has
received such payments. Any such Sub-Servicing Agreement shall be consistent
with and not violate the provisions of this Agreement.

                                      -29-
<PAGE>   34
         Section 4.6. Successor Sub-Servicers.

         The Master Servicer may terminate any Sub-Servicing Agreement in
accordance with the terms and conditions of such Sub-Servicing Agreement and
either directly service the related Mortgage Loans itself or enter into a
Sub-Servicing Agreement with a successor Sub-Servicer that qualifies under
Section 4.5.

         Section 4.7. No Contractual Relationship Between Sub-Servicer and
                      Indenture Trustee or the Noteholders.

         Any Sub-Servicing Agreement and any other transactions or services
relating to the Mortgage Loans involving a Sub-Servicer shall be deemed to be
between the Sub-Servicer and the Master Servicer alone and the Insurer, the
Indenture Trustee and the Noteholders shall not be deemed parties thereto and
shall have no claims, rights, obligations, duties or liabilities with respect to
any Sub-Servicer except as set forth in Section 4.8.

         Section 4.8. Assumption or Termination of Sub-Servicing Agreement by
                      Indenture Trustee.

         In connection with the assumption of the responsibilities, duties and
liabilities and of the authority, power and rights of the Master Servicer
hereunder by the Indenture Trustee, it is understood and agreed that the Master
Servicer's rights and obligations under any Sub-Servicing Agreement then in
force between the Master Servicer and a Sub-Servicer may be assumed or
terminated by the Indenture Trustee at its option.

         The Master Servicer shall, upon request of the Indenture Trustee, but
at the expense of the Master Servicer, deliver to the assuming party documents
and records relating to each Sub-Servicing Agreement and an accounting of
amounts collected and held by it and otherwise use its best reasonable efforts
to effect the orderly and efficient transfer of the Sub-Servicing Agreements to
the assuming party.

         Section 4.9. Principal and Interest Account.

                  (a) The Master Servicer and/or each Sub-Servicer, as
applicable, shall establish in the name of the Trust for the benefit of the
Noteholders and the Insurer and maintain at one or more Designated Depository
Institutions the Principal and Interest Account, which may be separate accounts
or a single account with sub-accounts.

                  Subject to Subsections (c) and (e) below, the Master Servicer
and any Sub-Servicer shall deposit all receipts related to the Mortgage Loans to
the Principal and Interest Account on a daily basis (but no later than the
second Business Day after receipt). Such receipts shall include Net Liquidation
Proceeds, including net recoveries from the disposition or other turning to
account of Charged-Off Mortgage Loans.

                                      -30-
<PAGE>   35
                  On the Closing Date, the Sponsor shall cause the Master
Servicer to deposit within five Business Days after the Closing Date to the
Principal and Interest Account all principal and interest collected on the
Mortgage Loans on and after the related Cut-Off Dates.

                  The Master Servicer shall hold in escrow on behalf of the
related Mortgagor all Prepaid Installments received by it, and shall apply such
Prepaid Installments as directed by such Mortgagor and as set forth in the
related Credit Line Agreement.

                  (b) All funds in the Principal and Interest Account may only
be held (i) uninvested, up to the limits insured by the FDIC, or (ii) invested
in Eligible Investments (as defined in the Indenture). The Principal and
Interest Account shall be held in trust in the name of the Trust and for the
benefit of the Noteholders and the Insurer. Any investment earnings on funds
held in the Principal and Interest Account shall be for the account of the
Master Servicer. Any references herein to amounts on deposit in the Principal
and Interest Account shall refer to amounts net of such investment earnings. The
Master Servicer shall deposit the amount of any investment losses immediately
into the Principal and Interest Account as realized.

                  (c) Subject to Subsection (e) below, the Master Servicer shall
deposit to the Principal and Interest Account all principal and interest
collected on the Mortgage Loans received on or after the related Cut-Off Dates,
including any Prepayments and Net Liquidation Proceeds, all Loan Reacquisition
Prices and Substitution Amounts received or paid by the Master Servicer with
respect to the Mortgage Loans and other recoveries or amounts related to the
Mortgage Loans received by the Master Servicer, together with any amounts which
are reimbursable from the Principal and Interest Account, but net of (i) the
Servicing Fee with respect to each Mortgage Loan and other servicing
compensation to the Master Servicer as permitted by Section 4.15 hereof, (ii)
principal (including Prepayments) collected on the Mortgage Loans prior to the
related Cut-Off Dates, (iii) interest collected on the Mortgage Loans prior to
the related Cut-Off Dates and (iv) Foreclosure Profits.

                  (d) (i) The Master Servicer may make withdrawals from the
Principal and Interest Account only for the following purposes:

                               a. to effect the timely remittance to the
                  Indenture Trustee of the Monthly Remittance Amount due on the
                  Remittance Date;

                               b. to pay to itself from any funds in the
                  Principal and Interest Account with respect to the Mortgage
                  Loans any accrued and unpaid Servicing Fees with respect to
                  Mortgage Loans and reimburse itself pursuant to Section 4.10
                  hereof for unreimbursed Servicing Advances and Servicing
                  Advances which have been deemed Nonrecoverable Advances;

                               c. to withdraw investment earnings on amounts on
                  deposit in the Principal and Interest Account;

                                      -31-
<PAGE>   36
                               d. to withdraw amounts that have been deposited
                  to the Principal and Interest Account in error;

                               e. to clear and terminate the Principal and
                  Interest Account following the termination of the Trust Estate
                  pursuant to Article X or XII of the Indenture; and

                               f. to invest in Eligible Investments.

                  (ii) On each Remittance Date the Master Servicer shall remit
to the Indenture Trustee by wire transfer, or otherwise make funds available in
immediately available funds, the Interest Remittance Amount and the Principal
Remittance Amount.

                  (e) To the extent that the ratings, if any, then assigned to
the unsecured debt of the Master Servicer or of the Master Servicer's ultimate
corporate parent are satisfactory to the Insurer, Moody's and S&P, then the
requirement to maintain the Principal and Interest Account at a Designated
Depository Institution may be waived by an instrument signed by the Insurer, S&P
and Moody's, and the Master Servicer may be allowed to co-mingle with its
general funds the amounts otherwise required to be deposited to the Principal
and Interest Account and make monthly deposits to the Note Account on such terms
and subject to such conditions as the Insurer, Moody's and S&P may permit.

         Section 4.10. Servicing Advances.

         The Master Servicer will pay all "out-of-pocket" costs and expenses
incurred in the performance of its servicing obligations, including, but not
limited to, the cost of (i) Preservation Expenses, (ii) the cost of any
enforcement or judicial proceedings, including (a) foreclosures, and (b) other
legal actions and costs associated herewith that potentially affect the
existence, validity, priority, enforceability or collectibility of the Mortgage
Loans, including collection agency fees and costs of pursuing or obtaining
personal judgments, garnishments, levies, attachment and similar actions, (iii)
the cost of the conservation, management, liquidation, sale or other disposition
of any Mortgaged Property acquired in satisfaction of the related Mortgage Loan
including reasonable fees paid to any independent contractors in connection
therewith, and (iv) advances to keep senior liens current, unless with respect
to any of the foregoing the Master Servicer has determined that such advance
would constitute a Nonrecoverable Advance. Each such amount so paid will
constitute a "Servicing Advance." The Master Servicer may recover Servicing
Advances (x) from the Mortgagors to the extent permitted by the Mortgage Loans,
from Liquidation Proceeds realized upon the liquidation of the related Mortgage
Loan and from Mortgage Insurance Proceeds, and (y) as provided in Section
8.6(c)(xxiii) of the Indenture.

         Section 4.11. Maintenance of Insurance.

                  (a) The Master Servicer shall cause to be maintained with
respect to each Mortgage Loan a hazard insurance policy with a generally
acceptable carrier that provides for fire and extended coverage which may be in
the form of a blanket policy as described in clause (c) below, and which
provides for a recovery by the Master Servicer on behalf of the Trust of
insurance proceeds relating to such Mortgage Loan in an amount not less than the
least of (i) during the draw period, the Credit Limit of such

                                      -32-
<PAGE>   37
Mortgage Loan, (ii) after the draw period, the unpaid principal balance of such
Mortgage Loan or (iii) the maximum insurable value of the related Mortgaged
Property. The Master Servicer may satisfy it obligation to cause a hazard
insurance policy to be maintained with respect to a Mortgaged Property by
causing the related Mortgagor to obtain, or obtaining on behalf of such
Mortgagor and at the expense of such Mortgagor, a hazard insurance policy
insuring against losses on the related Mortgage Property.

                  (b) If any Mortgage Loan at the time of origination relates to
a Mortgaged Property in an area identified in the Federal Register by the
Federal Emergency Management Agency as having special flood hazards, the Master
Servicer will cause to be maintained with respect thereto a flood insurance
policy in a form meeting the requirements of the current guidelines of the
Federal Insurance Administration with a generally acceptable carrier (which may
be in the form of a master policy as described in clause (d) below) in an amount
representing coverage, and which provides for a recovery by the Master Servicer
on behalf of the Trust of Mortgage Insurance Proceeds relating to such Mortgage
Loan of not less than the least of (i) during the draw period, the Credit Limit
of such Mortgage Loan, (ii) after the draw period, the unpaid principal balance
of such Mortgage Loan or (iii) the maximum amount of insurance that is available
under the Flood Disaster Protection Act of 1973. The Master Servicer shall
indemnify the Trust and the Insurer out of the Master Servicer's own funds for
any loss to the Trust and the Insurer resulting from the Master Servicer's
failure to maintain the insurance required by this Section; provided, however,
that in no event shall the Master Servicer be required to maintain a flood
insurance policy in an amount greater than 100% of the value of the related
Mortgaged Property. The Master Servicer may satisfy its obligation to cause a
flood insurance policy to be maintained with respect to a Mortgaged Property by
causing the related Mortgagor to obtain, or obtaining on behalf of such
Mortgagor and at the expense of such Mortgagor, a flood insurance policy
insuring against losses on the related Mortgage Property.

                  It is understood and agreed that such insurance shall be with
insurers approved by the Master Servicer and that no earthquake or other
additional insurance is to be required of any Mortgagor or to be maintained on
property acquired in respect of a defaulted loan, other than pursuant to such
applicable laws and regulations as shall at any time be in force and as shall
require such additional insurance. Any cost incurred by the Master Servicer in
maintaining any such insurance shall be added to the amount owing under the
Mortgage Loan where the terms of the Credit Line Agreement so permit; provided,
however, that the addition of any such cost shall not be taken into account for
purposes of calculating the principal amount of the Credit Line Agreements or
the distributions to be made to the Noteholders. Such costs shall be considered
a Servicing Advance and shall be recoverable by the Master Servicer pursuant to
Section 4.10.

                  (c) In the event that the Master Servicer shall obtain and
maintain a blanket policy insuring against fire and hazards of extended coverage
on all of the Mortgage Loans as set forth above, then, to the extent such policy
names the Master Servicer as loss payee and provides coverage in an amount equal
to the aggregate Credit Limit on the Mortgage Loans without co-insurance, and
otherwise complies with the requirements of this Section 4.11, the Master
Servicer shall be deemed conclusively to have satisfied its obligations with
respect to fire and hazard insurance coverage under this Section 4.11, it being
understood and agreed that such blanket policy may contain a deductible clause,
in which case the Master Servicer shall, in the event that there shall not have
been maintained on the related Mortgaged

                                      -33-
<PAGE>   38
Property a policy complying with the preceding paragraphs of this Section 4.11,
and there shall have been a loss which would have been covered by such policy,
deposit in the Principal and Interest Account from the Master Servicer's own
funds the difference, if any, between the amount that would have been payable
under a policy complying with the preceding paragraphs of this Section 4.11 and
the amount paid under such blanket policy. Upon the request of the Indenture
Trustee or the Insurer, the Master Servicer shall cause to be delivered to the
Indenture Trustee or the Insurer, a certified true copy of such policy.

                  (d) In the event that the Master Servicer shall obtain and
maintain a master policy insuring against flood on all of the Mortgage Loans
referred to in (b) above, then, to the extent such policy names the Master
Servicer as loss payee and otherwise complies with the requirements of this
Section 4.11, the Master Servicer shall be deemed conclusively to have satisfied
its obligations with respect to flood insurance coverage under this Section
4.11, it being understood that such master policy may contain a deductible
clause, in which case the Master Servicer shall, in the event that there shall
not have been maintained on the related Mortgaged Property a policy complying
with paragraph (b) of this Section 4.11, and there shall have been a loss which
would have been covered by such policy, deposit in the Principal and Interest
Account from the Master Servicer's own funds the difference, if any, between the
amount that would have been payable under a policy complying with paragraph (b)
of this Section 4.11 and the amount paid under such master policy. Upon the
request of the Indenture Trustee or the Insurer, the Master Servicer shall cause
to be delivered to the Indenture Trustee or the Insurer, a certified true copy
of such policy.

         Section 4.12. Due-on-Sale Clauses; Assumption and Substitution
                       Agreements.

         Except as provided in Section 4.14(b), when a Mortgaged Property has
been or is about to be conveyed by the Mortgagor, the Master Servicer shall, to
the extent it has knowledge of such conveyance or prospective conveyance,
exercise its rights to accelerate the maturity of the related Mortgage Loan
under any "due-on-sale" clause contained in the related Mortgage or Credit Line
Agreement; provided, however, that the Master Servicer shall not exercise any
such right if (i) the "due-on-sale" clause, in the reasonable belief of the
Master Servicer, is not enforceable under applicable law or (ii) the Master
Servicer reasonably believes that to permit an assumption of the Mortgage Loan
would not materially and adversely affect the interest of the Noteholders or the
Insurer, In such event, the Master Servicer shall enter into an assumption and
modification agreement (the terms of which will be consistent with the 10%
limitation on modifications described in Section 4.2(h) above) with the person
to whom such property has been or is about to be conveyed, pursuant to which
such person becomes liable under the Credit Line Agreements and, unless
prohibited by applicable law or this Agreement or any of the agreements,
guaranties or assignments relating to the Mortgage Loans contained in the
Mortgage Files, the Mortgagor remains liable thereon. If the foregoing is not
permitted under applicable law, the Master Servicer is authorized to enter into
a substitution of liability agreement with such person, pursuant to which the
original Mortgagor is released from liability and such person is substituted as
Mortgagor and becomes liable under the Credit Line Agreement; provided, however,
that to the extent any such substitution of liability agreement would be
delivered by the Master Servicer outside of its usual procedures for mortgage
loans held in its own portfolio, the Master Servicer shall, prior to executing
and delivering such agreement, obtain the prior written consent of the Insurer.
The Mortgage Loan, as assumed, shall conform in all respects to the
requirements, representations and warranties of this Agreement. The Master
Servicer shall notify the

                                      -34-
<PAGE>   39
Indenture Trustee that any such assumption or substitution agreement has been
completed by forwarding to the Indenture Trustee the original copy of such
assumption or substitution agreement, which copy shall be added by the Indenture
Trustee to the related Mortgage File and which shall, for all purposes, be
considered a part of such Mortgage File to the same extent as all other
documents and instruments constituting a part thereof. The Master Servicer shall
be responsible for recording any such assumption or substitution agreements. In
connection with any such assumption or substitution agreement, the required
monthly payment on the related Mortgage Loan shall not be changed but shall
remain as in effect immediately prior to the assumption or substitution, the
stated maturity or outstanding principal amount of such Mortgage Loan shall not
be changed nor shall any required monthly payments of principal or interest be
deferred or forgiven. Any fee collected by the Master Servicer or the
Sub-Servicer for consenting to any such conveyance or entering into an
assumption or substitution agreement shall be retained by or paid to the Master
Servicer as additional servicing compensation.

         Notwithstanding anything in this Section 4.12 or any other provision of
this Agreement, the Master Servicer shall not be deemed to be in default, breach
or any other violation of its obligations hereunder by reason of any assumption
of a Mortgage Loan by operation of law or any assumption which the Master
Servicer may be restricted by law from preventing, for any reason whatsoever.

         Section 4.13. Realization Upon Defaulted Mortgage Loans.

                  (a) The Master Servicer shall foreclose upon or otherwise
comparably effect the ownership on behalf of the Trust of the Mortgaged
Properties relating to defaulted Mortgage Loans as to which no satisfactory
arrangements can be made for collection of Delinquent payments, unless the
Master Servicer determines that the costs associated with the foreclosure will
be greater than the recovery received. If the Master Servicer determines not to
bring or to terminate foreclosure proceedings, it will determine in accordance
with the Accepted Servicing Practices whether or not to seek a judgment against
the Mortgagor. In connection with such foreclosure or other conversion, the
Master Servicer shall follow Accepted Servicing Practices. Any amounts advanced
pursuant to this Section 4.13 shall constitute "Servicing Advances" within the
meaning of Section 4.10 hereof.

                  Notwithstanding the generality of the foregoing provisions,
the Master Servicer shall manage, conserve, protect and operate each REO
Property for the Noteholders solely for the purpose of its prompt disposition
and sale. Pursuant to its efforts to sell such REO Property, the Master Servicer
shall either itself or through an agent selected by the Master Servicer protect
and conserve such REO Property in the same manner and to such extent as is
customary in the locality where such REO Property is located and may, incident
to its conservation and protection of the interests of the Noteholders, rent the
same, or any part thereof, as the Master Servicer deems to be in the best
interest of the Noteholders for the period prior to the sale of such REO
Property. The Master Servicer shall take into account the existence of any
hazardous substances, hazardous wastes or solid wastes, as such terms are
defined in the Comprehensive Environmental Response Compensation and Liability
Act, the Resource Conservation and Recovery Act of 1976, or other federal, state
or local environmental legislation, on a Mortgaged Property in determining
whether to foreclose upon or otherwise comparably convert the ownership of such
Mortgaged Property.

                                      -35-
<PAGE>   40
                  (b) The Master Servicer shall determine, with respect to each
defaulted Mortgage Loan, when it has recovered, whether through trustee's sale,
sales to third parties, foreclosure sale or otherwise, all amounts it expects to
recover from or on account of such defaulted Mortgage Loan, whereupon such
Mortgage Loan shall become a "Liquidated Mortgage Loan" and shall promptly
deliver to the Insurer a Master Servicer's customary liquidation report (each, a
"Liquidation Report") with respect to such Mortgage Loan. The Master Servicer
will charge-off an HLTV HELOC Mortgage Loan on the earlier to occur of (i) the
date upon which such Mortgage Loan becomes 180 days Delinquent or (ii) the date
upon which the Master Servicer has determined that it has recovered all amounts
it expects to recover from such Mortgage Loan, whereupon such Mortgage Loan
shall become a Liquidated Mortgage Loan. Any net recoveries from a Liquidated
Mortgage Loan shall constitute property of the Trust and shall be deposited by
the Master Servicer in the Principal and Interest Account, all in accordance
with the provisions of this Agreement.

         Section 4.14. Indenture Trustee to Cooperate; Release of Mortgage
                       Files.

                  (a) Upon the payment in full of the Principal Balance of any
Mortgage Loan (including the repurchase of any Mortgage Loan or any liquidation
of such Mortgage Loan through foreclosure or otherwise), or the receipt by the
Master Servicer of a notification that payment in full will be escrowed in a
manner customary for such purposes, the Master Servicer shall deliver to the
Indenture Trustee a Master Servicer's Trust Receipt. Upon receipt of such Master
Servicer's Trust Receipt, the Indenture Trustee shall promptly release the
related Mortgage File, in trust to (i) the Master Servicer, or (ii) an escrow
agent for the Master Servicer. Upon any such payment in full, or the receipt of
such notification that such funds have been placed in escrow, the Master
Servicer is authorized to give, as attorney-in-fact for the Indenture Trustee
and the mortgagee under the Mortgage which secured the Credit Line Agreement, an
instrument of satisfaction (or assignment of Mortgage without recourse)
regarding the Mortgaged Property relating to such Mortgage, which instrument of
satisfaction or assignment, as the case may be, shall be delivered to the Person
or Persons entitled thereto against receipt therefor of payment in full, it
being understood and agreed that no expense incurred in connection with such
instrument of satisfaction or assignment, as the case may be, shall be
chargeable to the Principal and Interest Account. In lieu of executing any such
satisfaction or assignment, as the case may be, the Master Servicer may prepare
and submit to the Indenture Trustee, a satisfaction (or assignment without
recourse, if requested by the Person or Persons entitled thereto) in form for
execution by the Indenture Trustee with all requisite information completed by
the Master Servicer; in such event, the Indenture Trustee shall execute and
acknowledge such satisfaction or assignment, as the case may be, and deliver the
same with the related Mortgage File, as aforesaid.

                  (b) From time to time and as appropriate in the servicing of
any Mortgage Loan, including, without limitation, foreclosure or other
comparable conversion of a Mortgage Loan or collection under any applicable
Mortgage Insurance Policy, the Indenture Trustee shall, upon request of the
Master Servicer and delivery to the Indenture Trustee of a Master Servicer's
Trust Receipt in the form of Exhibit F hereto, release the related Mortgage File
to the Master Servicer and shall execute such documents as shall be necessary to
the prosecution of any such proceedings, including, without limitation, an
assignment without recourse of the related Mortgage to the Master Servicer;
provided, that there shall not be released and unreturned at any one time more
than twenty-five (25) Mortgage Files. The Indenture Trustee shall complete in
the name of the Indenture Trustee any endorsement in blank on any Credit Line
Agreement

                                      -36-
<PAGE>   41
prior to releasing such Credit Line Agreement to the Master Servicer. Such
receipt shall obligate the Master Servicer to return the Mortgage File to the
Indenture Trustee when the need therefor by the Master Servicer no longer exists
unless the Mortgage Loan shall be liquidated, in which case, upon receipt of the
liquidation information, in physical or electronic form, a copy of the Master
Servicer's Trust Receipt shall be released by the Indenture Trustee to the
Master Servicer.

                  (c) No costs associated with the procedures described in this
Section 4.14 shall be an expense of the Trust.

                  (d) The provisions set forth in Subsections (a) and (b) may be
superseded by any waiver of the Document Delivery Requirement as may be given by
the Insurer, Moody's and S&P pursuant to Section 2.1(k) hereof.

                  (e) Each Master Servicer's Trust Receipt may be delivered to
the Indenture Trustee (i) via mail or courier, (ii) via facsimile or (iii) by
such other means, including, without limitation, electronic or computer readable
medium, as the Master Servicer and the Indenture Trustee shall mutually agree.
The Indenture Trustee shall promptly release the related Mortgage File(s) within
seven (7) Business Days of receipt of a properly completed Master Servicer's
Trust Receipt or such shorter period as may be agreed upon by the Master
Servicer and the Indenture Trustee. Receipt of a Master Servicer's Trust Receipt
as provided above shall be authorization to the Indenture Trustee to release
such Mortgage Files, provided the Indenture Trustee has determined that such
Master Servicer's Trust Receipt has been executed, or approved, as applicable,
by an Authorized Officer of the Master Servicer or any Sub-servicer, and so long
as the Indenture Trustee complies with its duties and obligations under this
Agreement. If the Indenture Trustee is unable to release the Mortgage Files
within the time frames specified, the Indenture Trustee shall immediately notify
the Master Servicer or any Sub-servicer indicating the reason for such delay,
but in no event shall such notification be later than seven (7) Business Days
after receipt of a Master Servicer's Trust Receipt. If the Master Servicer is
required to pay penalties or damages due solely to the Indenture Trustee's
negligent failure to release the related Mortgage File or the Indenture
Trustee's negligent failure to execute and release documents in a timely manner,
the Indenture Trustee shall be liable for such penalties or damages.

         Section 4.15. Servicing Compensation.

         As compensation for its activities hereunder, the Master Servicer shall
be entitled to retain the amount of the Servicing Fee with respect to each
Mortgage Loan pursuant to the provisions of this Agreement. Additional servicing
compensation in the form of prepayment charges, termination fees, release fees,
bad check charges, assumption fees, late payment charges, or any other
servicing- related fees, Foreclosure Profits, Net Liquidation Proceeds not
required to be deposited in the Principal and Interest Account pursuant to
Section 4.9(c) and similar items may, to the extent collected from Mortgagors,
be retained by the Master Servicer.

                                      -37-
<PAGE>   42
         Section 4.16. Annual Statement as to Compliance.

         The Master Servicer, at its own expense, will deliver to the Indenture
Trustee, the Insurer, S&P and Moody's, on or before the fifteenth of April of
each year, commencing in 2001, an Officer's Certificate stating, as to each
signer thereof, that (i) a review of the activities of the Master Servicer
during such preceding calendar year and of performance under this Agreement has
been made under such officers' supervision, and (ii) to the best of such
officers' knowledge, based on such review, the Master Servicer has fulfilled all
its obligations under this Agreement for such year, or, if there has been a
default in the fulfillment of all such obligations, specifying each such default
known to such officers and the nature and status thereof including the steps
being taken by the Master Servicer to remedy such defaults.

         Section 4.17. Annual Independent Certified Public Accountants' Reports.

         On or before the fifteenth of April of each year, commencing in 2001,
the Master Servicer, at its own expense, shall cause to be delivered to the
Indenture Trustee, the Insurer, S&P and Moody's a letter or letters of a firm of
independent, nationally recognized certified public accountants reasonably
acceptable to the Insurer, stating that such firm has, with respect to the
Master Servicer's overall servicing operations either (i) performed applicable
tests substantially in compliance with the testing procedures as set forth in
Appendix 3 of the Audit Guide for Audits of HUD Approved Nonsupervised
Mortgagees, (ii) examined such operations substantially in compliance with the
requirements of the Uniform Single Attestation Program for Mortgage Bankers, and
in either case stating such firm's conclusions relating thereto or (iii)
examined such operations in accordance with the requirements of SAS 70.

         Section 4.18. Access to Certain Documentation and Information Regarding
                       the Mortgage Loans.

         The Master Servicer shall provide to the Indenture Trustee, the
Insurer, and the agents and examiners of each of the foregoing (when accompanied
by each of the foregoing) access to the documentation regarding the Mortgage
Loans required by applicable state and federal regulations, such access being
afforded without charge but only upon reasonable request and during normal
business hours at the offices of the Master Servicer. The Indenture Trustee and
the Insurer shall not use or disclose any information provided pursuant to this
Section 4.18, unless such information is available from public sources or third
parties not, to the knowledge of the Indenture Trustee or the Insurer, as the
case may be, under any obligation of confidentiality with respect thereto, or
except as may be otherwise required by regulation, law or court order or other
legal process or requested by appropriate governmental authorities or as
necessary to preserve its rights or security under or to enforce the Operative
Documents; provided, however, that the foregoing shall not limit the right of
the Insurer to make such information available to its regulators, securities
rating agencies, reinsurers, credit and liquidity providers, counsel and
accountants. If the Insurer is requested or required (by oral questions,
interrogatories, requests for information or documents subpoena, civil
investigative demand or similar process) to disclose any information provided to
the Insurer pursuant to or in connection with this Section 4.18, the Insurer
will, unless otherwise prohibited by law, regulation or legal process, promptly
notify the Master Servicer of such request(s) so that the Master Servicer may
seek an appropriate protective order and/or waive the Insurer's compliance with
the provisions of this Section 4.18. If, in the absence of a protective order or
the receipt

                                      -38-
<PAGE>   43
of a waiver hereunder, the Insurer is, nonetheless, in the opinion of its
counsel (which shall be delivered the Master Servicer), compelled to disclose
such information to any tribunal or else stand liable for contempt or suffer
other censure of significant penalty, the Insurer may disclose such information
to such tribunal that the Insurer is compelled to disclose, provided that unless
otherwise prohibited by law, regulation or legal process, a copy of all
information disclosed is provided to the Master Servicer promptly upon such
disclosure.

         Upon any change in the format of the computer tape maintained by the
Master Servicer in respect of the Mortgage Loans, the Master Servicer shall
deliver a copy of such computer tape to the Indenture Trustee and in addition
shall provide a copy of such computer tape to the Indenture Trustee and the
Insurer at such other times as the Indenture Trustee or the Insurer may
reasonably request.

         Section 4.19. Assignment of Agreement.

         The Master Servicer may not assign its obligations under this
Agreement, in whole or in part, unless it shall have first obtained the written
consent of the Indenture Trustee and the Insurer, which such consent shall not
be unreasonably withheld; provided, however, that any assignee must meet the
eligibility requirements set forth in Section 5.1(f) hereof for a successor
servicer; and provided, further, that this Section 4.19 does not apply to the
appointment of Sub-Servicers or to the assignment to any affiliate. Notice of
any such assignment shall be given by the Master Servicer to the Indenture
Trustee, the Insurer, Moody's and S&P.

         Section 4.20. Resignation of the Master Servicer.

         Subject to Section 5.1(c), the Master Servicer shall not resign from
the obligations and duties hereby imposed on it except by mutual written consent
of the Sponsor, the Master Servicer, the Insurer, and the Indenture Trustee or
upon determination that its duties hereunder are no longer permissible under
applicable law or are in material conflict by reason of applicable law with any
other activities carried on by it, the other activities of the Master Servicer
so causing such a conflict being of a type and nature carried on by the Master
Servicer at the date of this Agreement. Any such determination permitting the
resignation of the Master Servicer shall be evidenced by an opinion of counsel
to such effect which shall be delivered to the Indenture Trustee and the
Insurer.

                                    ARTICLE 5

                              SERVICING TERMINATION

         Section 5.1. Events of Servicing Termination.

                  (a) If any one of the following events ("Event of Servicing
Termination") shall occur and be continuing:

                  (i) The Master Servicer shall fail to deliver to the Indenture
         Trustee any proceeds or required payment, which failure continues
         unremedied for three (3) Business Days following

                                      -39-
<PAGE>   44
         written notice to an Authorized Officer of the Master Servicer from the
         Indenture Trustee or from the Insurer or Noteholders holding Percentage
         Interests aggregating not less than 25%.

                  (ii) The Master Servicer shall (i) apply for or consent to the
         appointment of a receiver, trustee, liquidator or custodian or similar
         entity with respect to itself or its property, (II) admit in writing
         its inability to pay its debts generally as they become due, (III) make
         a general assignment for the benefit of creditors, (IV) be adjudicated
         a bankrupt or insolvent, (V) commence a voluntary case under the
         federal bankruptcy laws of the United States of America or file a
         voluntary petition or answer seeking reorganization, an arrangement
         with creditors or an order for relief or seeking to take advantage of
         any insolvency law or file an answer admitting the material allegations
         of a petition filed against it in any bankruptcy, reorganization or
         insolvency proceeding or (VI) take corporate action for the purpose of
         effecting any of the foregoing.

                  (iii) If without the application, approval or consent of the
         Master Servicer, a proceeding shall be instituted in any court of
         competent jurisdiction, under any law relating to bankruptcy,
         insolvency, reorganization or relief of debtors, seeking in respect of
         the Master Servicer an order for relief or an adjudication in
         bankruptcy, reorganization, dissolution, winding up, liquidation, a
         composition or arrangement with creditors, a readjustment of debts, the
         appointment of a trustee, receiver, liquidator or custodian or similar
         entity with respect to the Master Servicer or of all or any substantial
         part of its assets, or other like relief in respect thereof under any
         bankruptcy or insolvency law, and, if such proceeding is being
         contested by the Master Servicer in good faith, the same shall (A)
         result in the entry of an order for relief or any such adjudication or
         appointment or (B) continue undismissed or pending and unstayed for any
         period of seventy-five (75) consecutive days; or

                  (iv) The Master Servicer shall fail to cure any breach of any
         of its representations and warranties set forth in Section 3.2 or fail
         to perform any covenants hereunder, which failure materially and
         adversely affects the interests of the Noteholders or the Insurer for a
         period of 30 days after the Master Servicer's discovery or receipt of
         notice thereof from the Indenture Trustee, the Insurer or Noteholders
         holding Notes evidencing not less than 25% of the Note Balance;
         provided, however, that if the Master Servicer can demonstrate to the
         reasonable satisfaction of the Insurer that it is diligently pursuing
         remedial action, then the cure period may be extended with the written
         consent of the Insurer.

                  (v) The Master Servicer shall fail to make any required
         Servicing Advance which failure continues for thirty (30) days or more
         after written notice from the Insurer if such failure has a material
         and adverse affect on Net Liquidation Proceeds, in the sole
         determination of the Insurer.

                      then, and in each and every such case, so long as the
         Event of Servicing Termination shall not have been remedied by the
         Master Servicer, either the Indenture Trustee or Noteholders holding
         Notes evidencing not less than 51% of the Note Balance in each case
         with the written consent of the Insurer, or the Insurer, by notice then
         given in writing to the Master Servicer (and to the Indenture Trustee
         if given by the Insurer or the Noteholders) may terminate all of the
         rights and obligations of the Master Servicer as servicer under this
         Agreement. Any such notice to the

                                      -40-
<PAGE>   45
         Master Servicer shall also be given to each Rating Agency and the
         Insurer. On and after the receipt by the Master Servicer of such
         written notice, all authority and power of the Master Servicer under
         this Agreement, whether with respect to the Notes or the Mortgage Loans
         or otherwise, shall pass to and be vested in the Indenture Trustee
         pursuant to and under this Section 5.1 and, without limitation, the
         Indenture Trustee is hereby authorized and empowered to execute and
         deliver, on behalf of the Master Servicer, as attorney-in-fact or
         otherwise, any and all documents and other instruments, and to do or
         accomplish all other acts or things necessary or appropriate to effect
         the purposes of such notice of termination, whether to complete the
         transfer and endorsement of each Mortgage Loan and related documents,
         or otherwise.

                  The Master Servicer agrees to cooperate with the Indenture
         Trustee in effecting the termination of the responsibilities and rights
         of the Master Servicer hereunder, including, without limitation, the
         transfer to the Indenture Trustee for administration, all cash amounts
         that shall at the time be held by the Master Servicer. The Indenture
         Trustee will promptly deposit such cash in the Note Account.
         Thereafter, any cash received by the Master Servicer with respect to
         the Mortgage Loans shall be immediately transferred to the Note
         Account. All reasonable costs and expenses (including attorneys' fees)
         incurred in connection with amending this Agreement to reflect such
         succession as Master Servicer pursuant to this Section 5.1 shall be
         paid by the predecessor Master Servicer (or if the predecessor Master
         Servicer is the Indenture Trustee, the initial Master Servicer) upon
         presentation of reasonable documentation of such costs and expenses.

                      Nothing herein shall relieve the Master Servicer from
         using its best efforts to perform its respective obligations in a
         timely manner in accordance with the terms of this Agreement and the
         Master Servicer shall provide the Indenture Trustee, the Sponsor, the
         Insurer and the Noteholders with an Officer's Certificate giving prompt
         notice of any failure or delay by it to perform its obligations,
         together with a description of its efforts to so perform its
         obligations. The Master Servicer shall immediately notify the Indenture
         Trustee and the Insurer in writing of any Events of Servicing
         Termination.

                  (b) In addition to the foregoing, the Insurer may remove the
Master Servicer upon the occurrence of an "Insurance Agreement Event of
Servicing Termination" under the Insurance Agreement.

                  (c) No removal or resignation of the Master Servicer shall
become effective until the Indenture Trustee or a successor servicer acceptable
to the Insurer shall have assumed the Master Servicer's responsibilities and
obligations in accordance with this Section.

                  (d) Upon removal or resignation of the Master Servicer, the
Master Servicer also shall promptly deliver or cause to be delivered to a
successor servicer or the Indenture Trustee all the books and records
(including, without limitation, records kept in electronic form) that the Master
Servicer has maintained for the Mortgage Loans, including all tax bills,
assessment notices, insurance premium notices and all other documents as well as
all original documents then in the Master Servicer's possession.

                                      -41-
<PAGE>   46
                  (e) Any collections received by the Master Servicer after
removal or resignation shall be endorsed by it to the Indenture Trustee and
remitted directly and immediately to the Indenture Trustee or the successor
Master Servicer.

                  (f) Upon removal or resignation of the Master Servicer, the
Indenture Trustee (x) may solicit bids for a successor servicer as described
below, and (y) pending the appointment of a successor Master Servicer as a
result of soliciting such bids, shall serve as Master Servicer. The Indenture
Trustee shall, if it is unable to obtain a qualifying bid and is prevented by
law from acting as Master Servicer, appoint, or petition a court of competent
jurisdiction to appoint, any housing and home finance institution, bank or
mortgage servicing institution which has shareholders' equity of not less than
$5,000,000, as determined in accordance with generally accepted accounting
principles, acceptable to the Insurer, as the successor to the Master Servicer
hereunder in the assumption of all or any part of the responsibilities, duties
or liabilities of the Master Servicer hereunder. The compensation of any
successor servicer (including, without limitation, the Indenture Trustee) so
appointed shall be the aggregate Servicing Fees, together with the other
servicing compensation in the form of assumption fees, late payment charges or
otherwise as provided in Sections 4.9 and 4.15 (but excluding prepayment fees
and termination fees); provided, however, that if the Indenture Trustee acts as
successor Master Servicer then the Sponsor agrees to pay to the Indenture
Trustee at such time that the Indenture Trustee becomes such successor Master
Servicer a fee of twenty-five dollars ($25.00) for each Mortgage Loan then
included in the Trust Estate. The Indenture Trustee shall be obligated to serve
as successor Master Servicer whether or not the $25.00 fee described in the
preceding sentence is paid by the Sponsor, but shall in any event be entitled to
receive, and to enforce payment of, such fee from the Sponsor.

                  (g) In the event the Indenture Trustee solicits bids as
provided above, the Indenture Trustee shall solicit, by public announcement,
bids from housing and home finance institutions, banks and mortgage servicing
institutions meeting the qualifications set forth above. Such public
announcement shall specify that the successor Master Servicer shall be entitled
to the full amount of the aggregate Servicing Fees as servicing compensation,
together with the other servicing compensation in the form of assumption fees,
late payment charges or otherwise as provided in Sections 4.9 and 4.15 (but
excluding prepayment fees and termination fees). Within thirty (30) days after
any such public announcement, the Indenture Trustee shall negotiate and effect
the sale, transfer and assignment of the servicing rights and responsibilities
hereunder to the qualified party submitting the highest satisfactory bid. The
Indenture Trustee shall deduct from any sum received by the Indenture Trustee
from the successor to the Master Servicer in respect of such sale, transfer and
assignment all costs and expenses of any public announcement and of any sale,
transfer and assignment of the servicing rights and responsibilities hereunder.
After such deductions, the remainder of such sum shall be paid by the Indenture
Trustee to the Master Servicer at the time of such sale, transfer and assignment
to the Master Servicer's successor.

                  (h) The Indenture Trustee and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession. The Master Servicer agrees to cooperate with the Indenture
Trustee and any successor Master Servicer in effecting the termination of the
Master Servicer's servicing responsibilities and rights hereunder and shall
promptly provide the Indenture Trustee or such successor Master Servicer, as
applicable, all documents and records reasonably requested by it to enable it to
assume the Master Servicer's functions hereunder and shall promptly also
transfer to

                                      -42-
<PAGE>   47
the Indenture Trustee or such successor Master Servicer, as applicable, all
amounts which then have been or should have been deposited in the Principal and
Interest Account by the Master Servicer or which are thereafter received with
respect to the Mortgage Loans. Neither the Indenture Trustee nor any other
successor Master Servicer shall be held liable by reason of any failure to make,
or any delay in making, any distribution hereunder or any portion thereof caused
by (i) the failure of the Master Servicer to deliver, or any delay in
delivering, cash, documents or records to it, or (ii) restrictions imposed by
any regulatory authority having jurisdiction over the Master Servicer.

                  (i) The Master Servicer which is being removed or is resigning
shall give notice to the Mortgagors and to Moody's and S&P of the transfer of
the servicing to the successor.

                  (j) The Indenture Trustee shall give notice to the Insurer,
Moody's and S&P and to the Noteholders of the occurrence of any event specified
in Section 5.1(a) of which the Indenture Trustee has actual knowledge.

                  (k) The Indenture Trustee or any other successor Master
Servicer, upon assuming the duties of Master Servicer hereunder, shall
immediately make all Servicing Advances which the Master Servicer has
theretofore failed to pay with respect to the Mortgage Loans; provided, however,
that if the Indenture Trustee is acting as successor Master Servicer, the
Indenture Trustee shall only be required to make Servicing Advances if, in the
Indenture Trustee's reasonable good faith judgment, such Servicing Advances will
ultimately be recoverable from the related Mortgage Loans.

         Section 5.2. Inspections by Insurer; Errors and Omissions Insurance.

                  (a) At any reasonable time and from time to time upon
reasonable notice, the Insurer, or any agents or representatives thereof may
inspect the Master Servicer's servicing operations and discuss the servicing
operations of the Master Servicer with any of its officers or directors.

                  (b) The Master Servicer agrees to maintain errors and
omissions coverage and a fidelity bond, each at least to the extent generally
maintained by prudent mortgage loan servicers having servicing portfolios of a
similar size.

         Section 5.3. Merger, Conversion, Consolidation or Succession to
                      Business of Master Servicer.

         Any corporation into which the Master Servicer may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Master Servicer shall
be a party, or any corporation succeeding to all or substantially all of the
business of the Master Servicer, shall be the successor of the Master Servicer
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto provided that such corporation meets the
qualifications set forth in Section 5.1(f).

                                      -43-
<PAGE>   48
         Section 5.4. Notification to Noteholders.

         Upon any termination or appointment of a successor to the Master
Servicer pursuant to this Article V, the Indenture Trustee shall give prompt
written notice thereof to the Noteholders at their respective addresses
appearing in the Note Register, the Insurer and each Rating Agency.

         Section 5.5. Notices of Material Events.

         The Master Servicer shall give prompt notice to the Insurer, the
Indenture Trustee, Moody's and S&P of the occurrence of any of the following
events:

                  (a) Any default or any fact or event which results in the
occurrence of a default by the Sponsor, any Originator or the Master Servicer
under any Operative Document or would constitute a material breach of a
representation, warranty or covenant under any Operative Document.

                  (b) The submission of any claim or the initiation of any legal
process, litigation or administrative or judicial investigation against any
Originator, the Sponsor, the Master Servicer or AMHC in any federal, state or
local court or before any governmental body or agency, or before any arbitration
board, or the threatening of any such proceedings by any governmental agency,
which, if adversely determined, would have a material adverse effect upon any of
such Originator's, the Sponsor's, the Master Servicer's or AMHC's ability to
perform its obligations under any Operative Document.

                  (c) The commencement of any proceedings by or against any
Originator, the Sponsor, the Master Servicer or AMHC under any applicable
bankruptcy, reorganization, liquidation, insolvency or other similar law now or
hereafter in effect or of any proceeding in which a receiver, liquidator,
trustee or other similar official shall have been, or may be, appointed or
requested for such Originator, the Sponsor, the Master Servicer or AMHC; and

                  (d) The receipt of notice from any agency or governmental body
having authority over the conduct of any Originator's, the Sponsor's, the Master
Servicer's or AMHC's business that such Originator, the Sponsor, the Master
Servicer or AMHC is to cease and desist, or to undertake any practice, program,
procedure or policy employed by such Originator, the Sponsor, the Master
Servicer or AMHC in the conduct of the business of any of them, and such
cessation or undertaking will materially adversely affect the conduct of such
Originator's, the Sponsor's, the Master Servicer's or AMHC's business or its
ability to perform under the Operative Documents or materially adversely affect
the financial affairs of such Originator, the Sponsor, the Master Servicer or
AMHC.

                                      -44-
<PAGE>   49
                                    ARTICLE 6

                  ADMINISTRATIVE DUTIES OF THE MASTER SERVICER

         Section 6.1. Administrative Duties with Respect to the Indenture

         The Master Servicer shall perform all its duties and the duties of the
Trust under the Indenture. In addition, the Master Servicer shall consult with
the Owner Trustee as the Master Servicer deems appropriate regarding the duties
of the Trust under the Indenture. The Master Servicer shall monitor the
performance of the Trust and shall advise the Owner Trustee when action is
necessary to comply with the Trust's duties under the Indenture. The Master
Servicer shall prepare for execution by the Trust or shall cause the preparation
by other appropriate Persons of all such documents, reports, filings,
instruments, certificates and opinions as it shall be the duty of the Trust to
prepare, file or deliver pursuant to the Indenture. In furtherance of the
foregoing, the Master Servicer shall take all necessary action that is the duty
of the Trust to take pursuant to the Indenture.

                  (a) Duties with Respect to the Trust.

                  (i) In addition to the duties of the Master Servicer set forth
         in this Agreement or any of the Operative Documents, the Master
         Servicer shall perform such calculations and shall prepare for
         execution by the Trust or the Owner Trustee or shall cause the
         preparation by other appropriate Persons of all such documents,
         reports, filings, instruments, certificates and opinions as it shall be
         the duty of the Trust or the Owner Trustee to prepare, file or deliver
         pursuant to this Agreement or any of the Operative Documents or under
         state and federal tax and securities laws, and at the request of the
         Owner Trustee shall take all appropriate action that it is the duty of
         the Trust to take pursuant to this Agreement or any of the Operative
         Documents. In accordance with the directions of the Trust or the Owner
         Trustee, the Master Servicer shall administer, perform or supervise the
         performance of such other activities in connection with the Mortgage
         Loans (including the Operative Documents) as are not covered by any of
         the foregoing provisions and as are expressly requested by the Trust or
         the Owner Trustee and are reasonably within the capability of the
         Master Servicer.

                  (ii) Notwithstanding anything in this Agreement or any of the
         Operative Documents to the contrary, the Master Servicer shall be
         responsible for promptly notifying the Owner Trustee and the Indenture
         Trustee in the event that any withholding tax is imposed on the Trust's
         payments (or allocations of income) with respect to the
         Certificateholders' interest in the Trust as contemplated by this
         Agreement. Any such notice shall be in writing and specify the amount
         of any withholding tax required to be withheld by the Owner Trustee or
         the Indenture Trustee pursuant to such provision.

                  (iii) Notwithstanding anything in this Agreement or the
         Operative Documents to the contrary, the Master Servicer shall be
         responsible for performance of the duties of the Trust or the Sponsor
         set forth in Section 5.1(a), (b), (c) and (d) of the Trust Agreement
         with respect to, among other things, accounting and reports with
         respect to the Certificateholders' interest in the Trust.

                                      -45-
<PAGE>   50
                  (iv) In carrying out the foregoing duties or any of its other
         obligations under this Agreement, the Master Servicer may enter into
         transactions with or otherwise deal with any of its Affiliates;
         provided, however, that the terms of any such transactions or dealings
         shall be in accordance with any directions received from the Trust
         (with the written consent of the Insurer), and shall be, in the Master
         Servicer's opinion, no less favorable to the Trust or the Insurer in
         any material respect.

                  (b) Non-Ministerial Matters. With respect to matters that in
the reasonable judgment of the Master Servicer are non-ministerial, the Master
Servicer shall not take any action pursuant to this Article VI unless within a
reasonable time before the taking of such action, the Master Servicer shall have
notified the Owner Trustee and the Insurer of the proposed action and the Owner
Trustee and the Insurer shall have consented in writing thereto or provided an
alternative direction. For the purpose of the preceding sentence,
"non-ministerial matters" shall include:

                  (i) the amendment of or any supplement to the Indenture.

                  (ii) the initiation of any claim or lawsuit by the Trust and
         the compromise of any action, claim or lawsuit brought by or against
         the Trust (other than in connection with the collection of the Mortgage
         Loans).

                  (iii) the amendment, change or modification of this Agreement
         or any of the Operative Documents.

                  (iv) the appointment of successor Note Registrars, successor
         Paying Agents and successor Indenture Trustees pursuant to the
         Indenture or the appointment of Successor Servicers or the consent to
         the assignment by the Note Registrar, Paying Agent or Indenture Trustee
         of its obligations under the Indenture; and

                  (v) the removal of the Indenture Trustee.

                  (c) Exceptions. Notwithstanding anything to the contrary in
this Agreement, except as expressly provided herein or in the other Operative
Documents, the Master Servicer, in its capacity hereunder, shall not be
obligated to, and shall not, (1) make any payments to the Noteholders or any
Originator under the Operative Documents, (2) sell the Trust Property pursuant
to Section 5.6 of the Indenture, (3) take any other action that the Trust
directs the Master Servicer not to take on its behalf (unless the Insurer so
directs) or (4) in connection with its duties hereunder assume any
indemnification obligation of any other Person.

                  (d) Responsibility. The Indenture Trustee or any successor
Master Servicer shall not be responsible for any obligations or duties of the
Master Servicer under this Section 6.1.

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<PAGE>   51
         Section 6.2. Records

         The Master Servicer shall maintain appropriate books of account and
records relating to services performed under this Agreement, which books of
account and records shall be accessible for inspection by the Trust and the
Indenture Trustee at any time during normal business hours.

         Section 6.3. Additional Information to be Furnished to the Trust

         The Master Servicer shall furnish to the Trust, the Indenture Trustee
and the Insurer from time to time such additional information regarding the
Mortgage Loans as the Trust, the Indenture Trustee or the Insurer shall
reasonably request.

                                    ARTICLE 7

                                  MISCELLANEOUS

         Section 7.1. Compliance Certificates and Opinions.

         Upon any application or request by the Sponsor, the Insurer or the
Noteholders to the Indenture Trustee to take any action under any provision of
this Agreement, the Sponsor or the Noteholders, as the case may be, shall
furnish to the Indenture Trustee a certificate stating that all conditions
precedent, if any, provided for in this Agreement relating to the proposed
action have been complied with, except that in the case of any such application
or request as to which the furnishing of any documents is specifically required
by any provision of this Agreement relating to such particular application or
request, no additional certificate need be furnished.

         Except as otherwise specifically provided herein, each certificate or
opinion with respect to compliance with a condition or covenant provided for in
this Agreement shall include:

                  (a) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions herein
relating thereto.

                  (b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based; and

                  (c) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.

         Section 7.2. Form of Documents Delivered to the Indenture Trustee.

         In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may

                                      -47-
<PAGE>   52
certify or give an opinion with respect to some matters and one or more other
such Persons as to other matters, and any such Person may certify or give an
opinion as to such matters in one or several documents.

         Any certificate of an Authorized Officer of the Indenture Trustee may
be based, insofar as it relates to legal matters, upon an opinion of counsel,
unless such Authorized Officer knows, or in the exercise of reasonable care
should know, that the opinion is erroneous. Any such certificate of an
Authorized Officer of the Indenture Trustee or any opinion of counsel may be
based, insofar as it relates to factual matter upon a certificate or opinion of,
or representations by, one or more Authorized Officers of the Sponsor or of the
Master Servicer, stating that the information with respect to such factual
matters is in the possession of the Sponsor or of the Master Servicer, unless
such Authorized Officer or counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous. Any opinion of counsel may also be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an Authorized Officer of the Indenture Trustee, stating that
the information with respect to such matters is in the possession of the
Indenture Trustee, unless such counsel knows, or in the exercise of reasonable
care should know, that the certificate or opinion or representations with
respect to such matters are erroneous. Any opinion of counsel may be based on
the written opinion of other counsel, in which event such opinion of counsel
shall be accompanied by a copy of such other counsel's opinion and shall include
a statement to the effect that such counsel believes that such counsel and the
Indenture Trustee may reasonably rely upon the opinion of such other counsel.

         Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.

         Section 7.3. Acts of Noteholders.

                  (a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Agreement to be given or taken
by the Noteholders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Noteholders in person or by an
agent duly appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered to the Indenture Trustee and the Insurer has consented thereto in
writing, and, where it is hereby expressly required, to the Sponsor. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "act" of the Noteholders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Agreement and conclusive in favor of the Indenture Trustee and
the Trust, if made in the manner provided in this Section.

                  (b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Whenever
such execution is by an officer of a corporation or a member of a partnership on
behalf of such corporation or partnership, such certificate or affidavit shall
also constitute sufficient proof of his authority.

                                      -48-
<PAGE>   53
                  (c) The ownership of the Notes shall be proved by the Note
Register.

                  (d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by any Noteholder shall bind the Noteholder of
every Note issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof, in respect of anything done, omitted or suffered to
be done by the Indenture Trustee or the Trust in reliance thereon, whether or
not notation of such action is made upon such Notes.

         Section 7.4. Notices, etc. to Indenture Trustee.

         Any request, demand, authorization, direction, notice, consent, waiver
or act of the Noteholders or other documents provided or permitted by this
Agreement to be made upon, given or furnished to, or filed with the Indenture
Trustee by any Noteholder, the Insurer or by the Sponsor shall be sufficient for
every purpose hereunder if made, given, furnished or filed in writing to or with
and received by the Indenture Trustee at its Corporate Trust Office as set forth
in the Indenture.

         Section 7.5. Notices and Reports to Noteholders; Waiver of Notices.

         Where this Agreement provides for notice to Noteholders of any event or
the mailing of any report to Noteholders, such notice or report shall be
sufficiently given (unless otherwise herein expressly provided) if mailed,
first-class postage prepaid, to each Noteholder affected by such event or to
whom such report is required to be mailed, at the address of such Noteholder as
it appears on the Note Register, not later than the latest date, and not earlier
than the earliest date, prescribed for the giving of such notice or the mailing
of such report. In any case where a notice or report to Noteholders is mailed in
the manner provided above, neither the failure to mail such notice or report nor
any defect in any notice or report so mailed to any particular Noteholder shall
affect the sufficiency of such notice or report with respect to other
Noteholders, and any notice or report which is mailed in the manner herein
provided shall be conclusively presumed to have been duly given or provided.

         Where this Agreement provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.

         In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Noteholders when such notice is required to be
given pursuant to any provision of this Agreement, then any manner of giving
such notice as shall be satisfactory to the Indenture Trustee shall be deemed to
be a sufficient giving of such notice.

         Where this Agreement provides for notice to any rating agency that
rated any Notes, failure to give such notice shall not affect any other rights
or obligations created hereunder.

                                      -49-
<PAGE>   54
         Section 7.6. Successors and Assigns.

         All covenants and agreements in this Agreement by any party hereto
shall bind its successors and assigns, whether so expressed or not.

         Section 7.7. Severability.

         In case any provision in this Agreement or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

         Section 7.8. Benefits of Agreement.

         Nothing in this Agreement or in the Notes, expressed or implied, shall
give to any Person, other than the Noteholders, the Insurer and the parties
hereto and their successors hereunder, any benefit or any legal or equitable
right, remedy or claim under this Agreement.

         Section 7.9. Legal Holidays.

         In any case where any Payment Date, any other date on which any
distribution to any Noteholder is proposed to be paid, or any date on which a
notice is required to be sent to any Person pursuant to the terms of this
Agreement shall not be a Business Day, then (notwithstanding any other provision
of the Notes or this Agreement) payment or mailing need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made or mailed on the nominal date of any such Payment Date, or
such other date for the payment of any distribution to any Noteholder or the
mailing of such notice, as the case may be, and no interest shall accrue for the
period from and after any such nominal date, provided such payment is made in
full on such next succeeding Business Day.

         Section 7.10. Governing Law.

         THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAWS PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.

         Section 7.11. Counterparts.

         This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.

                                      -50-
<PAGE>   55
         Section 7.12. Usury.

         The amount of interest payable or paid on any Note under the terms of
this Agreement shall be limited to an amount which shall not exceed the maximum
nonusurious rate of interest allowed by the applicable laws of the State of New
York or any applicable law of the United States permitting a higher maximum
nonusurious rate that preempts such applicable New York laws, which could
lawfully be contracted for, charged or received (the "Highest Lawful Rate"). In
the event any payment of interest on any Note exceeds the Highest Lawful Rate,
the Trust stipulates that such excess amount will be deemed to have been paid to
the Noteholder inadvertently in error by the Indenture Trustee acting on behalf
of the Trust and the Noteholder receiving such excess payment shall promptly,
upon discovery of such error or upon notice thereof from the Indenture Trustee
on behalf of the Trust, refund the amount of such excess or, at the option of
such Noteholder, apply the excess to the payment of principal of such Note, if
any, remaining unpaid and, in any event, the Indenture Trustee shall not be
responsible for any repayment of such excess payments. In addition, all sums
paid or agreed to be paid to the Indenture Trustee for the benefit of
Noteholders of Notes for the use, forbearance or detention of money shall, to
the extent permitted by applicable law, be amortized, prorated, allocated and
spread throughout the full term of such Notes.

         Section 7.13. Amendment.

                  (a) The Indenture Trustee, the Sponsor and the Master
Servicer, may at any time and from time to time, with the prior written approval
of the Insurer, but without the giving of notice to or the receipt of the
consent of the Noteholders, amend this Agreement, and the Indenture Trustee
shall consent to such amendment, for the purpose of (i) curing any ambiguity, or
correcting or supplementing any provision hereof which may be inconsistent with
any other provision hereof, or to add provisions hereto which are not
inconsistent with the provisions hereof, or (ii) complying with the requirements
of the Code and the regulations proposed or promulgated thereunder; provided,
however, that any such action shall not, (i) as evidenced in writing from the
Rating Agencies delivered to the Indenture Trustee, reduce the then-current
rating on the Notes or (ii) as evidenced by an opinion of counsel delivered to
the Indenture Trustee, materially and adversely affect the interests of any
Noteholder (without its written consent).

                  (b) The Indenture Trustee, the Sponsor and the Master Servicer
may, at any time and from time to time, with the prior written approval of the
Insurer, but without the giving of notice to or the receipt of the consent of
the Noteholders, amend this Agreement, and the Indenture Trustee shall consent
to such amendment, for the purpose of changing the definition of "Specified
Overcollateralization Amount" (as defined in the Insurance Agreement) or other
terms related to the Insurer or the Insurance Agreement; provided, however, that
no such change shall affect the weighted average life of the Notes (assuming an
appropriate prepayment speed as determined by the Underwriters as evidenced in
writing) by more than five percent, as determined by the Underwriters.

                  (c) In addition to (a) and (b) above, this Agreement may also
be amended by the Indenture Trustee, the Sponsor, and the Master Servicer at any
time and from time to time, with the prior written approval of the Insurer and
Noteholders holding Notes evidencing more than 50% of the Note Balance, for the
purpose of adding any provisions or changing in any manner or eliminating any of
the

                                      -51-
<PAGE>   56
provisions of this Agreement or of modifying in any manner the rights of the
Noteholders hereunder; provided, however, that no such amendment shall (a)
change in any manner the amount of, or change the timing of, payments which are
required to be distributed to any Noteholder without the consent of such
Noteholder or (b) reduce the aforesaid percentages of Percentage Interests which
are required to consent to any such amendments, without the consent of all
Noteholders holding Notes then Outstanding.

                  (d) The Insurer, the Noteholders, Moody's and S&P shall be
provided with copies of any amendments to this Agreement, together with copies
of any opinions or other documents or instruments executed in connection
therewith.

         Section 7.14. The Insurer.

         The Insurer is a third-party beneficiary of this Agreement. Any right
conferred to the Insurer shall be suspended during any period in which the
Insurer is in default in its payment obligations under the Policy except with
respect to amendments to this Agreement pursuant to Section 7.13. During any
period of suspension the Insurer's rights hereunder shall vest in the
Noteholders of the Notes and shall be exercisable by Noteholders holding Notes
evidencing more than 50% of the Note Balance. At such time as the Notes are no
longer Outstanding hereunder and the Insurer has been reimbursed for all
payments made pursuant to the Policy to which it is entitled hereunder, the
Insurer's rights hereunder shall terminate. Except at such time as an Insurer
Default has occurred and is continuing, the Insurer shall be deemed the 100%
Noteholder for purposes of all voting rights, consents, directions, notices and
waivers hereunder.

         Section 7.15.     Notices.

         All notices hereunder shall be given as follows, until any superseding
instructions are given to all other Persons listed below:

         The Indenture Trustee:   Bankers Trust Company of California, N.A.
                                  1761 East St. Andrew Place
                                  Santa Ana, CA 92705
                                  Attention: ADVANTA REVOLVING HOME
                                  EQUITY LOAN TRUST 2000-A
                                        Tel: (714) 247-6000
                                        Fax: (714) 247-6009

         The Sponsor:             Advanta Conduit Receivables, Inc.
                                  10790 Rancho Bernardo Drive
                                  San Diego, CA  92127
                                  Attention:
                                         Tel: (858) 676-3099
                                         Fax: (858) 676-3024

with a copy addressed to the attention of the General Counsel at the same
address.

                                      -52-
<PAGE>   57
         The Master Servicer:     Advanta Mortgage Corp. USA
                                  10790 Rancho Bernardo Drive
                                  San Diego, CA  92127
                                  Attention:  Senior Vice President,
                                  Loan Service
                                         Tel: (858) 676-3099
                                         Fax: (858) 676-3024

         The Insurer:             Ambac Assurance Corporation
                                  One State Street Plaza
                                  New York, New York 10004
                                  Attention: Structured Finance
                                             Department-MBS
                                         Fax: (212) 363-1459
                                         Confirmation: (212) 668-0340

         In each case in which notice or other communication to the Insurer
refers to an Event of Servicing Termination, a claim on the Policy or with
respect to which failure on the part of the Insurer to respond shall be deemed
to constitute consent or acceptance, then a copy of such notice or other
communication should also be sent to the attention of the general counsel (fax
no. 212-208-3558 and with the same confirmation number as stated above) and
should be marked "URGENT MATERIAL ENCLOSED".

         Moody's:                 Moody's Investors Service, Inc.
                                  99 Church Street
                                  New York, New York  10007
                                  Attention: The Home Equity Monitoring
                                  Department

         S&P:                     Standard & Poor's Ratings Services, A division
                                  of the McGraw-Hill Companies, Inc.
                                  55 Water Street
                                  New York, New York  10041
                                  Attention: Mortgage Surveillance Group

         The Trust:               Advanta Revolving Home Equity Loan Trust
                                  2000-A
                                  c/o Wilmington Trust Company, as Owner Trustee
                                  Rodney Square North
                                  1100 North Market Street
                                  Wilmington, Delaware  19890

         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

                                      -53-
<PAGE>   58
and intended not as personal representations, undertakings and agreements by
Wilmington Trust Company but is made and intended for the purpose for binding
only the Trust, (c) nothing herein contained shall be construed as creating any
liability on Wilmington Trust Company individually or personally, to perform any
covenant either expressed or implied contained herein, all such liability, if
any, being expressly waived by the parties to this Agreement and by any person
claiming by, through or under them and (d) under no circumstances shall
Wilmington Trust Company be personally liable for the payment of any
indebtedness or expenses of the Trust or be liable for the breach or failure of
any obligation, representation, warranty or covenant made or undertaking by the
Trust under this Agreement or any related documents.

                            [Signature Page Follows]

                                      -54-
<PAGE>   59
         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized, all as of
the day and year first above written.

                                    ADVANTA REVOLVING HOME EQUITY LOAN
                                    TRUST 2000-A,

                                    By:     WILMINGTON TRUST COMPANY, not in its
                                            individual capacity but solely as
                                            Owner Trustee

                                    By:     /s/  Donald G. MacKelcan
                                            -----------------------------------
                                    Name:   Donald G. MacKelcan
                                    Title:  Vice President

                                    ADVANTA CONDUIT RECEIVABLES, INC.

                                    By:     /s/  Michael Coco
                                            -----------------------------------
                                    Name:   Michael Coco
                                    Title:  Vice President

                                    ADVANTA MORTGAGE CORP. USA

                                    By:     /s/  Michael Coco
                                            -----------------------------------
                                    Name:   Michael Coco
                                    Title:  Vice President

                                    BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
                                    not in its individual capacity but solely as
                                    Indenture Trustee

                                    By:     /s/  Mark McNeill
                                            -----------------------------------
                                    Name:   Mark McNeill
                                    Title:  Assistant Secretary

                                      -55-
<PAGE>   60
                                                                       EXHIBIT A

                                                                         ANNEX 1
                                                                TO THE INDENTURE

                                  DEFINED TERMS

         "Accelerated Principal Payments": With respect to any Payment Date, a
payment to be paid from Excess Cashflow received as a payment of principal by
the Noteholders, for the purpose of increasing the Overcollateralization Amount
to the Specified Overcollateralization Amount, and equal to the lesser of (x)
the amount of such Excess Cashflow and (y) the Overcollateralization Deficiency
Amount.

         "Accepted Servicing Practices": The Master Servicer's normal servicing
practices in servicing and administering mortgage loans for its own account,
which in general will conform to the mortgage servicing practices of prudent
mortgage lending institutions which service for their own account mortgage loans
of the same type as the Mortgage Loans in the jurisdictions in which the related
Mortgaged Properties are located.

         "Account": The Note Account, the Principal and Interest Account, the
Pre-Funding Account or the Capitalized Interest Account, each of which shall be
(i) an account maintained at a Designated Depository Institution or (ii) if the
applicable account is a segregated trust account, maintained with the corporate
trust department of a federal depository institution or a state chartered
depository institution subject to regulations regarding fiduciary funds on
deposit similar to Title 12 of the Code of Federal Regulations Section 9.10(b),
which in the case of either clause (i) or (ii), has corporate trust powers,
acting in its fiduciary capacity, and in accordance with Section 8.3 of the
Indenture or, with respect to the Principal and Interest Account, Section 4.9 of
the Sale and Servicing Agreement.

         "Act":  has the meaning specified in Section 11.3(a) of the Indenture.

         "Addition Notice": With respect to the transfer of Subsequent Mortgage
Loans to the Trust pursuant to Section 2.6(b) of the Sale and Servicing
Agreement, the notice (which shall be given not later than two Business Days
prior to the related Transfer Date), of the Sponsor's designation of Subsequent
Mortgage Loans to be sold to the Trust, such notice shall include the aggregate
Principal Balance and the approximate weighted average Coupon Rate of such
Subsequent Mortgage Loans.

         "Additional Balance": As to any Mortgage Loan and any day, the
aggregate amount of all Draws by the related Mortgagor conveyed to the Trust
after the Closing Date pursuant to Section 2.1 of the Sale and Servicing
Agreement, it being understood that the Trust shall not be required to fund any
Additional Balances.

         "Advanta Bank Corp.": A Utah industrial loan corporation, including any
successors and assigns.

         "Advanta Finance Corp.": A Nevada corporation, including any successors
and assigns.

                                      A-1
<PAGE>   61
         "Advanta National Bank": A national banking association located in
Delaware.

         "Affiliate": Means, with respect to any specified Person, any other
Person controlling, controlled by or under common control with such Person. For
the purposes of this definition, "control" means the power to direct the
management and policies of a Person, directly or indirectly, whether through
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.

         "AMHC": Advanta Mortgage Holding Company, a Delaware corporation and
the corporate parent of Advanta Mortgage Corp. USA, and the indirect corporate
parent of Advanta Conduit Receivables, Inc.

         "Appraised Value": As to any Mortgaged Property, the value established
by a drive-by inspection, a full appraisal or a statistical property valuation
of such Mortgaged Property.

         "Assignee": With respect to any Person, any direct or indirect
assignee, pledgee or other transferee of such Person.

         "Assignment of Mortgage": With respect to each Mortgage Loan, an
assignment of the Mortgage, notice of transfer or equivalent instrument, in
recordable form, sufficient under the laws of the jurisdiction wherein the
related Mortgaged Property is located to reflect the recordation of the pledge
of the Mortgage Loan to the Indenture Trustee.

         "Assignor": With respect to any Person, any immediate or mediate
assignor, pledgor or other transferor to such Person of any right, title or
interest in or to any property of any kind whatsoever.

         "Authorized Officer": With respect to any Person, any person who is
authorized to act for such Person in matters relating to this Indenture, and
whose action is binding upon such Person and, with respect to the Indenture
Trustee, the Master Servicer and the Sponsor, initially including those
individuals whose names appear on the lists of Authorized Officers delivered on
the Closing Date.

         "Available Funds": With respect to any Payment Date, the following
amounts, without duplication of any amount described more than once in the
following clauses (i) through (v):

         (i)      any Insured Payments;

         (ii)     the proceeds of any final liquidation of the assets of the
                  Trust;

         (iii)    the Monthly Remittance Amount remitted by the Master Servicer
                  or any Sub- Servicer;

         (iv)     on each Payment Date occurring during the Pre-Funding Period,
                  the Pre-Funding Earnings and the Capitalized Interest
                  Requirement for such Payment Date; and

                                      A-2
<PAGE>   62
         (v)      at the end of the Pre-Funding Period, any amount remaining in
                  the Pre-Funding Account in accordance with Section 8.5(d).

         "Book Entry Notes": Means a beneficial interest in the Notes, ownership
and transfers of which shall be made through book entries by a Clearing Agency
as described in Section 2.9 of the Indenture.

         "Business Day": Any day that is not a Saturday, Sunday or other day on
which any of the Insurer, the Master Servicer or the Sponsor is closed or
commercial banking institutions in the State of New York or Delaware or in the
city in which the principal Corporate Trust Office of the Indenture Trustee is
located, are authorized or obligated by law or executive order to be closed.

         "Capitalized Interest Account": The Capitalized Interest Account
established in accordance with Section 8.3 of the Indenture and maintained by
the Indenture Trustee.

         "Capitalized Interest Amount": The amount on deposit in the Capitalized
Interest Account, which shall initially be $2,253,543.85.

         "Capitalized Interest Requirement": As to any Payment Date, an amount
equal to the product of (x) the sum of the Note Interest Rate and the rate at
which the Insurer premium is calculated, and (y) the amount on deposit in the
Pre-Funding Account as of the preceding Payment Date (or as of the Closing Date,
in the case of the first Payment Date), less investment earnings on the amounts
on deposit in the Pre-Funding Account as of the preceding Payment Date.

         "Certificateholders": The holders of the Certificates issued pursuant
to the Trust Agreement.

         "Certificates": The trust certificates evidencing the beneficial
ownership interests in the Trust.

         "Civil Relief Act": The Soldiers' and Sailors' Civil Relief Act of
1940, as amended.

         "Clean-Up Call Date": The first date on which the Notes may be redeemed
pursuant to Section 10.1(b) of the Indenture.

         "Clearing Agency Participant": Means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.

         "Clearing Agency": Means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.

         "Closing Date": April 27, 2000.

         "Code": The Internal Revenue Code of 1986, as amended, and any
successor statute.

                                      A-3
<PAGE>   63
         "Combined Loan-to-Value Ratio": With respect to any Mortgage Loan as of
any date, the percentage equivalent of a fraction, the numerator of which is the
sum of (A) the Credit Limit and (B) as of the date of execution of the related
Credit Line Agreement (or as of any subsequent date, in connection with an
increase in the Credit Limit for such Mortgage Loan) the sum of the outstanding
principal balance of any mortgage loan or mortgage loans that are senior in
priority to the Mortgage Loan and which are secured by the same Mortgaged
Property and the denominator of which is the lesser of (C) the Appraised Value
of the related Mortgaged Property as set forth in the Mortgage File on such date
of execution or on such subsequent date, if any, or (D) in the case of a
Mortgaged Property purchased within one year of the date of execution of the
Credit Line Agreement, the purchase price thereof.

         "Controlling Party": Means (i) the Insurer, so long as no Insurer
Default shall have occurred and be continuing, or (ii) the Indenture Trustee,
for so long as an Insurer Default shall have occurred and be continuing;
provided, however, that the Insurer's rights as Controlling Party shall be
immediately reinstated following the cure of any Insurer Default.

         "Corporate Trust Office": The Indenture Trustee's office at 1761 East
St. Andrew Place, Santa Ana, California 92705.

         "Coupon Rate": With respect to any Mortgage Loan and as of any day, the
per annum rate of interest, as specified in the Credit Line Agreement,
applicable to the calculation of interest on the outstanding Principal Balance.

         "Credit Limit": As to any Mortgage Loan, the maximum principal balance
stated under the terms of the related Credit Line Agreement.

         "Credit Limit Utilization Rate": As to any Mortgage Loan, at any time
during the Draw Period, the percentage equivalent of a fraction, the numerator
of which is the outstanding Principal Balance and the denominator of which is
the related Credit Limit.

         "Credit Line Agreement": With respect to any Mortgage Loan, the related
home equity line of credit agreement or promissory note executed by the related
Mortgagor and any amendment or modification thereof.

         "Cut-Off Date": With respect to each (i) Initial Mortgage Loan, the
Initial Cut-Off Date, (ii) Qualified Replacement Mortgage Loan, the related
Replacement Cut-Off Date or (iii) Subsequent Mortgage Loan, the related
Subsequent Cut-Off Date.

         "Cut-Off Date Pool Balance": The sum of (x) the aggregate Cut-Off Date
Principal Balance of the Initial Mortgage Loans ($302,265,974.63), and (y) the
initial Pre-Funded Amount ($113,451,856.05), which sum is $415,717,830.60.

         "Cut-Off Date Principal Balance": With respect to any Mortgage Loan,
(a) the unpaid principal balance thereof as of the related Cut-Off Date and (b)
for Mortgage Loans originated after the Cut-Off

                                      A-4
<PAGE>   64
Date but prior to the Closing Date, the unpaid principal balance of such
Mortgage Loans as of its origination date.

         "Debt Service Reduction": With respect to any Mortgage Loan, as
directed by a court of competent jurisdiction, a reduction of the minimum amount
required to be paid by the related Mortgagor.

         "Deficiency Amount": As defined in the Policy.

         "Deficient Valuation": With respect to any Mortgage Loan, a valuation
of the related Mortgaged Property by a court of competent jurisdiction in an
amount less than the then outstanding Principal Balance of the Mortgage Loan,
which valuation results from a proceeding initiated under the United States
Bankruptcy Code.

         "Definitive Notes": Has the meaning specified in Section 2.9 of the
Indenture.

         "Delinquent": A Mortgage Loan is "Delinquent" if any payment due
thereon is not made by the close of business on the day such payment is
scheduled to be due. A Mortgage Loan is "30 days Delinquent" if such payment has
not been received by the close of business on the corresponding day of the month
immediately succeeding the month in which such payment was due, or, if there is
no such corresponding day (e.g., as when a 30-day month follows a 31-day month
in which a payment was due on the 31st day of such month), then on the last day
of such immediately succeeding month. Similarly for "60 days Delinquent," "90
days Delinquent" and so on.

         "Depository": The Depository Trust Company, 7 Hanover Square, New York,
New York 10004 and any successor Depository hereafter named.

         "Designated Depository Institution": With respect to any Account, a
federal or state chartered depository institution whose deposits are insured by
the Bank Insurance Fund or the Savings Association Insurance Fund of the FDIC,
the long-term deposits of which shall be rated "A2" or better by Moody's, the
long term debt obligations of which shall be rated at least "AA-" by S&P and the
commercial paper, short term debt obligations or short-term deposits of which
shall be rated "P-1" or better by Moody's and "A-1+" or better by S&P, unless
otherwise approved in writing by the Insurer and each of Moody's and S&P, and
which is any of the following: (i) a federal savings and loan association duly
organized, validly existing and in good standing under the federal banking laws,
(ii) an institution duly organized, validly existing and in good standing under
the applicable banking laws of any state, (iii) a national banking association
duly organized, validly existing and in good standing under the federal banking
laws, or (iv) a principal subsidiary of a bank holding company, and, in each
case acting or designated by the Master Servicer or the Indenture Trustee as the
depository institution for the any Account; provided, however, that any such
institution or association shall have combined capital, surplus and undivided
profits of at least $100,000,000.

         "Determination Date": As to each Payment Date, the third Business Day
next preceding such Payment Date or such earlier day as shall be agreed to by
the Insurer, the Master Servicer and the Indenture Trustee.

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         "Document Delivery Requirements": The Sponsor's obligations to deliver
certain legal documents, to prepare and record certain Assignments of Mortgage
or to deliver certain opinions relating to Assignments of Mortgage, in each case
with respect to the Mortgage Loans and upon certain conditions as set forth in
Section 2.1 of the Sale and Servicing Agreement.

         "Draw": With respect to any Mortgage Loan, an additional borrowing by
the Mortgagor in accordance with the related Credit Line Agreement.

         "Draw Period": With respect to any Mortgage Loan, the period of time
specified in the related Credit Line Agreement whereby a Mortgagor may make a
Draw. The Draw Period may be extended pursuant to the terms of the Credit Line
Agreement (provided that any such extension shall be in accordance with the
provisions set forth herein with respect to Mortgage Loan modifications) and the
Sale and Servicing Agreement, and will be limited by the provisions set forth in
Section 2.2 of the Sale and Servicing Agreement.

         "Eligible Investments": Those investments so designated pursuant to
Section 8.8 of the Indenture.

         "ERISA": Means the Employee Retirement Income Security Act of 1974, as
amended.

         "Event of Default": As defined in Section 5.4 of the Indenture.

         "Event of Servicing Termination": As defined in Section 5.1 of the Sale
and Servicing Agreement.

         "Excess Cashflow": With respect to any Payment Date, the Available
Funds with respect to such Payment Date which remain on deposit in the Note
Account after taking into account the distributions listed in clauses (i)
through (viii) of Section 8.6(b) of the Indenture on such Payment Date.

         "Exchange Act": Means the Securities Exchange Act of 1934, as amended.

         "FDIC": The Federal Deposit Insurance Corporation, or any successor
thereto.

         "FHLMC": The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created pursuant to the Emergency Home
Finance Act of 1970, as amended, or any successor thereof.

         "Final Scheduled Payment Date":  The Payment Date in August 2024.

         "First Mortgage Loan": A Mortgage Loan the Mortgage of which creates a
first priority mortgage lien with respect to any Mortgaged Property.

         "Fixed Allocation Percentage": With respect to the Mortgage Loans,
94.8%.

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         "FNMA": The Federal National Mortgage Association, a federally
chartered and privately owned corporation existing under the Federal National
Mortgage Association Charter Act as amended, and any successor thereto.

         "Foreclosure Profit": With respect to a Liquidated Mortgage Loan, the
amount, if any, by which (x) the aggregate of its Net Liquidation Proceeds
exceeds (y) the sum of (i) the related Principal Balance and (ii) accrued and
unpaid interest thereon at the applicable Coupon Rate from the date interest was
last paid through the date of receipt of the final Liquidation Proceeds.

         "Formula Rate ": For any Interest Accrual Period, (x) with respect to
any Payment Date which occurs on or prior to the Clean-Up Call Date, LIBOR plus
0.25% per annum and (y) for any Payment Date thereafter, LIBOR plus 0.50% per
annum.

         "Grant": Means mortgage, pledge, bargain, warrant, alienate, remise,
release, convey, assign, transfer, create, grant a lien upon and a security
interest in and right of set-off against, deposit, set over and confirm pursuant
to this Indenture. A Grant of the Trust Estate or of any agreement or instrument
shall include all rights, powers and options (but none of the obligations) of
the Granting party thereunder, including the immediate and continuing right to
claim for, collect, receive and give receipt for principal and interest payments
in respect of the Trust Estate and all other monies payable thereunder, to give
and receive notices and other communications, to make waivers or other
agreements, to exercise all rights and options, to bring proceedings in the name
of the Granting party or otherwise and generally to do and receive anything that
the Granting party is or may be entitled to do or receive thereunder or with
respect thereto.

         "Guaranties": The Letter Agreement, dated as of April 27, 2000, among
the Underwriters, the Insurer and AMHC and the Letter Agreement, dated as of
April 27, 2000, among the Insurer, the Indenture Trustee and AMHC.

         "HLTV HELOC Mortgage Loan": Any Mortgage Loan with a Combined
Loan-to-Value Ratio of greater than 100%.

         "Highest Lawful Rate": As defined in Section 7.12 of the Sale and
Servicing Agreement.

         "Indebtedness": With respect to any Person at any time, (a)
indebtedness or liability of such Person for borrowed money whether or not
evidenced by bonds, debentures, notes or other instruments, or for the deferred
purchase price of property or services (including trade obligations); (b)
obligations of such Person as lessee under leases which should have been or
should be, in accordance with generally accepted accounting principles, recorded
as capital leases; (c) current liabilities of such Person in respect of unfunded
vested benefits under plans covered by Title IV of ERISA; (d) obligations issued
for or liabilities incurred on the account of such Person; (e) obligations or
liabilities of such Person arising under acceptance facilities; (f) obligations
of such Person under any guarantees, endorsements (other than for collection or
deposit in the ordinary course of business) and other contingent obligations to
purchase, to provide funds for payment, to supply funds to invest in any Person
or otherwise to assure a creditor against loss; (g) obligations of such Person
secured by any lien on property or assets of such Person, whether or not the
obligations have been

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<PAGE>   67
assumed by such Person; or (h) obligations of such Person under any interest
rate or currency exchange agreement.

         "Indemnification Agreement": The Indemnification Agreement, dated as of
April 18, 2000, among the Insurer and the Underwriters.

         "Indenture": The Indenture dated as of April 1, 2000 between the Trust
and the Indenture Trustee, as the same may be amended and supplemented from time
to time in accordance with the terms thereof.

         "Indenture Trustee": Bankers Trust Company of California, N.A., located
on the date of execution of the Indenture at 1761 East St. Andrew Place, Santa
Ana, California 92705, not in its individual capacity but solely as Indenture
Trustee under the Indenture, and any successor thereunder.

         "Indenture Trustee Fee": With respect to any Payment Date, the product
of (x) one-twelfth of the Indenture Trustee Fee Rate and (y) the sum of (i) the
Pool Principal Balance as of the opening of business on the first day of the
related Remittance Period and (ii) the Pre-Funded Amount as of the opening of
business on the first day of the related Remittance Period.

         "Indenture Trustee Fee Rate": 0.011% (1.1 basis points) per annum.

         "Independent": When used with respect to any specified Person, that the
person (a) is in fact independent of the Trust, any other obligor upon the
Notes, the Sponsor and any Affiliate of any of the foregoing persons, (b) does
not have any direct financial interest or any material indirect financial
interest in the Trust, any such other obligor, the Sponsor or any Affiliate of
any of the foregoing Persons and (c) is not connected with the Trust, any such
other obligor, the Sponsor or any Affiliate of any of the foregoing Persons as
an officer, employee, promoter, underwriter, trustee, partner, director or
Person performing similar functions.

         "Independent Certificate": A certificate or opinion to be delivered to
the Indenture Trustee under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.1 of the Indenture,
prepared by an Independent appraiser or other expert, and such opinion or
certificate shall state that the signer has read this definition of
"Independent" and that the signer is Independent within the meaning thereof.

         "Initial Cut-Off Date":  The close of business on March 31, 2000.

         "Initial Mortgage Loans": Shall mean the Mortgage Loans conveyed to the
Trust by the Sponsor on the Closing Date.

         "Insurance Agreement": The agreement defined in the Preamble of the
Indenture.

         "Insurance Agreement Event of Servicing Termination": An Event of
Servicing Termination as defined in the Insurance Agreement.

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<PAGE>   68
         "Insured Amounts": With respect to the Notes and any Payment Date, the
Deficiency Amount for such Payment Date.

         "Insured Payments": With respect to the Notes and any Payment Date, the
aggregate amount actually paid by the Insurer to the Indenture Trustee in
respect of (i) Insured Amounts for such Payment Date and (ii) Preference Amounts
for any given Business Day.

         "Insurer": Ambac Assurance Corporation, a Wisconsin-domiciled stock
insurance corporation, or any successor thereto, as issuer of the Policy.

         "Insurer Default": Means the failure and the continuance of such
failure by the Insurer to make a payment required under the Policy in accordance
with the terms thereof.

         "Interest Accrual Period": With respect to any Payment Date, the period
from and including the prior Payment Date (or, in the case of the first Payment
Date, from and including the Closing Date) to, but excluding, the current
Payment Date.

         "Interest Collections": With respect to the Mortgage Loans during the
related Remittance Period, the sum of (i) all interest payments paid by or on
behalf of Mortgagors and collected by the Master Servicer, except that with
respect to Prepaid Installments, interest payments shall be deemed to be paid by
or on behalf of Mortgagors and collected by the Master Servicer in the
Remittance Period to which such payments relate, (ii) any other amounts
constituting interest collected by the Master Servicer, (iii) with respect to
Mortgage Loans other than HTLV Mortgage Loans, the portion of Net Liquidation
Proceeds allocated to interest and (iv) with respect to HLTV Mortgage Loans, the
total amount of "Net Liquidation Proceeds." The terms of the related Credit Line
Agreement shall determine the portion of each payment that constitutes interest
(other than with respect to Net Liquidation Proceeds).

         "Interest Determination Date": With respect to any Interest Accrual
Period, the second LIBOR Business Day preceding the first day of such Interest
Accrual Period.

         "Interest Distribution Amount": With respect to any Payment Date, the
product of (i) the Note Interest Rate multiplied by the actual number of days in
the Interest Accrual Period divided by 360 days and (ii) the Note Balance as of
the day immediately prior to such Payment Date.

         "Interest Remittance Amount": With respect to any Remittance Date, the
sum, without duplication, of (i) Interest Collections for such Remittance
Period, less the Servicing Fee for the related Remittance Period, (ii) the
portion of the Loan Reacquisition Price and the Substitution Amount relating to
interest on the Mortgage Loans reacquired and (iii) the proceeds of any
liquidation of the Trust Estate (to the extent such proceeds relate to
interest).

         "Interest Shortfall Amount": With respect to any payment date, the sum
of (i) the amount by which the Interest Distribution Amount exceeded the actual
amount distributed in respect of interest and (ii) any unreimbursed Interest
Shortfall Amounts from prior payment dates together with interest on such
amounts at the Note Interest Rate.

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<PAGE>   69
         "Issuer Order" and "Issuer Request": Means a written order or request
signed in the name of the Trust by any one of its Authorized Officers and
delivered to the Indenture Trustee.

         "Junior Mortgage Loan": A Mortgage Loan the Mortgage of which creates a
junior priority mortgage lien with respect to the related Mortgaged Property.

         "LIBOR": As defined in Section 2.6(b) of the Indenture.

         "LIBOR Business Day": Any day other than (i) a Saturday or a Sunday or
(ii) a day on which banking institutions in the State of New York or in the city
of London, England are required or authorized by law to be closed.

         "Lifetime Rate Cap": With respect to each Mortgage Loan for which the
related Credit Line Agreement provides for a lifetime rate cap, the maximum
Coupon Rate permitted at any time under the terms of the related Credit Line
Agreement.

         "Liquidated Mortgage Loan": Either (i) any HLTV HELOC Mortgage Loan
that has been Delinquent for a period of 180 consecutive days (irrespective of
any grace periods) or as to which the Master Servicer has determined that it has
recovered all amounts it expects to recover from such Mortgage Loan, whichever
is the first to occur, or (ii) any Mortgage Loan other than an HLTV HELOC
Mortgage Loan as to which the Master Servicer has determined that it has
recovered all amounts it expects to recover from such Mortgage Loan. The Trust
will be entitled to recoveries from any Liquidated Mortgage Loan and any such
recoveries (i) in the case of HLTV Mortgage Loans, shall be treated as Interest
Collections and (ii) in the case of non HLTV Mortgage Loans, shall be treated as
Principal Collections or Interest Collections. A Mortgage Loan which is
reacquired from the Trust pursuant to Section 2.2(b), 3.3(c) or 3.4 of the Sale
and Servicing Agreement shall not be a "Liquidated Mortgage Loan."

         "Liquidation Expenses": Expenses which are incurred by the Master
Servicer or any Sub-Servicer in connection with the liquidation of any
defaulted Mortgage Loan, such expenses, include, without limitation, legal fees
and expenses, and any unreimbursed Servicing Advances expended by the Master
Servicer or any Sub-Servicer pursuant to Section 4.10 and 4.13 of the Sale and
Servicing Agreement with respect to the related Mortgage Loan.

         "Liquidation Proceeds": With respect to any Liquidated Mortgage Loan,
any amounts (including the proceeds of any Mortgage Insurance Policy but
excluding any amounts drawn on the Policy) recovered by the Master Servicer,
whether through trustee's sale, foreclosure sale, sale to a third party or
otherwise.

         "Loan Reacquisition Price": With respect to any Mortgage Loan
reacquired from the Trust on a Remittance Date pursuant to Section 2.2(b),
3.3(c) or 3.4 of the Sale and Servicing Agreement, an amount, without
duplication, equal to (i) the outstanding Principal Balance of such Mortgage
Loan as of the date of reacquisition, (ii) one month's interest on (if not
already deposited in the Principal and Interest Account) the outstanding
Principal Balance thereof as of the beginning of the preceding Remittance Period
computed at the Coupon Rate and (iii) all Servicing Advances theretofore made
with respect to such Mortgage Loan and not subsequently recovered from the
related Mortgage Loan, including Nonrecoverable Advances.

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<PAGE>   70
         "Managed Amortization Period": The period commencing on the Closing
Date and ending on the earlier to occur of (x) the end of the Remittance Period
related to the May 2003 Payment Date and (y) the end of the Remittance Period
related to the Payment Date which immediately precedes the occurrence of a Rapid
Amortization Event.

         "Margin": With respect to each Mortgage Loan, the fixed percentage
amount set forth in the related Credit Line Agreement which amount is added to
the index specified in the related Credit Line Agreement to determine the Coupon
Rate for such Mortgage Loan, subject to any maximum or minimum.

         "Master Servicer": Advanta Mortgage Corp. USA, a Delaware corporation,
and its permitted successors and assigns.

         "Master Servicer Affiliate": A Person that is (i) controlling,
controlled by or under common control with the Master Servicer, (ii) qualified
to service residential mortgage loans, and (iii) subservicing the Mortgage
Loans.

         "Master Servicer's Trust Receipt": The Master Servicer's trust receipt
in the form set forth as Exhibit F to the Sale and Servicing Agreement.

         "Monthly Remittance Amount": With respect to each Remittance Date, the
sum of the Principal Remittance Amount and the Interest Remittance Amount.

         "Moody's": Moody's Investors Service, Inc.

         "Mortgage": The mortgage, deed of trust or other instrument creating a
first or junior lien in real property securing each Credit Line Agreement.

         "Mortgage Files": For each Mortgage Loan:

                  (a) The original Credit Line Agreement, or a certified copy
thereof, bearing all intervening endorsements, endorsed either (i) "Pay to the
order of Bankers Trust Company of California, N.A., as custodian or trustee
under the applicable custody or trust agreement, without recourse" or (ii) "Pay
to the order of Bankers Trust Company of California, N.A., as custodian or
trustee under the applicable custody or trust agreement, without recourse,
Advanta as Master Servicer," or (iii) "Pay to the order of Bankers Trust Company
of California, N.A., as custodian or trustee" by [Seller, signature, name,
title] and signed in the name of the previous owner by an authorized officer (in
the event that the Mortgage Loan was acquired by the previous owner in a merger
the signature must be in the following form: "[the previous owner], successor by
merger to [name of predecessor]," in the event that the Mortgage Loan was
acquired or originated while doing business under another name, the signature
must be in the following form: "[the previous owner], formerly known as
[previous name]", or (iv) "Pay to the order of Bankers Trust Company of
California, N.A., without recourse" or (v)"Pay to the order of _________,
without recourse". The original Credit Line Agreement should be accompanied by
any rider made in connection with the origination of the related Mortgage Loan;

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<PAGE>   71
         (b) The original of any guaranty executed in connection with the Credit
Line Agreement;

         (c) The original Mortgage with evidence of recording thereon or copies
certified by the related recording office or if the original Mortgage has not
yet been returned from the recording office, a certified copy of the Mortgage;

         (d) The originals of any assumption, modification, consolidation or
extension agreements;

         (e) The original Assignment of Mortgage of each Mortgage Loan to (1)
"Bankers Trust Company of California, N.A., as custodian or trustee," or (2)
"Bankers Trust Company of California, N.A., as trustee" or (3) in blank. In the
event that the Mortgage Loan was acquired by the previous owner in a merger, the
Assignment of Mortgage must be the "(previous owner), successor by merger to
(names of predecessor)"; and in the event that the Mortgage Loan was acquired or
originated by the previous owner while doing business under another name, the
Assignment of Mortgage must be by the "(previous owner), formerly known as
(previous name)"; and

         (f) The originals of all intervening Assignments of Mortgage, if
applicable, showing a complete chain of assignment from origination to the
related Seller, with evidence of recording thereon (or, if an original
intervening assignment has not been returned from the recording office, a
certified copy thereof).

         "Mortgage Insurance Policy": Any hazard, title or primary mortgage
insurance policy relating to a Mortgage Loan, but excluding any non-mortgage
related or credit life insurance policy. The term "Mortgage Insurance Policy"
shall not include the Policy.

         "Mortgage Insurance Proceeds": Proceeds paid by any insurer pursuant to
any Mortgage Insurance Policy covering a Mortgage Loan, or amounts required to
be paid by the Master Servicer pursuant to the last sentence of the first
paragraph of Section 4.11(b) of the Sale and Servicing Agreement, or the
penultimate sentence of Section 4.11(c) of the Sale and Servicing Agreement, net
of any component thereof (i) covering any Liquidation Expenses incurred by or on
behalf of the Master Servicer in connection with obtaining such proceeds, (ii)
that is applied to the restoration or repair of the related Mortgaged Property,
(iii) released to the Mortgagor in accordance with the Master Servicer's normal
servicing procedures, or (iv) required to be paid to any holder of a mortgage
senior to such Mortgage Loan.

         "Mortgage Loan": Each mortgage loan transferred and assigned to the
Trust pursuant to Section 2.1 or Section 2.6 of the Sale and Servicing
Agreement, together with any Subsequent Mortgage Loans and any Qualified
Replacement Mortgage Loans substituted therefor in accordance with the Sale and
Servicing Agreement, which are held as a part of the Trust Estate. The term
"Mortgage Loan" includes any Mortgage Loan which is Delinquent, which relates to
a foreclosure or which relates to a Mortgaged Property that is REO Property
prior to such Mortgaged Property's disposition by the Trust and any Mortgage
Loan the related Mortgagor of which is in bankruptcy. Any mortgage loan which,
although intended by the parties hereto to have been, and which purportedly was,
transferred and assigned to the Trust by the Sponsor, in fact was not
transferred and assigned to the Trust for any reason whatsoever shall
nevertheless be considered a "Mortgage Loan" for all purposes of the Operative
Documents.

                                      A-12
<PAGE>   72
         "Mortgaged Property": The underlying property securing a Mortgage Loan.

         "Mortgagor": The obligor under a Credit Line Agreement.

         "Net Funds Cap Carry-Forward Amount": With respect to any Payment Date,
the sum of (i) the excess of the amount of interest accrued during the related
Interest Accrual Period based on the Formula Rate, over the interest accrued
during the related Interest Accrual Period based on the Net Funds Cap Rate, (ii)
any such amounts described in clause (i) for prior Payment Dates and not
previously paid and (iii) interest on the amounts described in clauses (i) and
(ii) at the then-applicable Formula Rate.

         "Net Funds Cap Rate": The per annum rate equal to (x)(A) the product of
(i) twelve and (ii) the interest due on the Mortgage Loans at the applicable
Coupon Rate during the related Remittance Period minus the amount of aggregate
Prepayment Interest Shortfalls for the related Remittance Period and minus the
amount of aggregate Relief Act Shortfalls for the related Remittance Period (net
of the related Servicing Fee, the Indenture Trustee Fee, the Owner Trustee Fee
and the Premium Amount), divided by (B) the Pool Principal Balance as of the
opening of such related Remittance Period, less (y) 0.50%.

         "Net Liquidation Proceeds": As to any Liquidated Mortgage Loan,
Liquidation Proceeds net of, without duplication, (i) Liquidation Expenses other
than any such expenses reflected in the calculation of Mortgage Insurance
Proceeds for such Liquidated Mortgage Loan, (ii) unreimbursed Servicing Advances
incurred in connection with such Liquidated Mortgage Loan and (iii) accrued and
unpaid Servicing Fees with respect to such Mortgage Loan through the date of
liquidation. In no event shall Net Liquidation Proceeds with respect to any
Liquidated Mortgage Loan be less than zero.

         "Net Principal Collections": With respect to any Remittance Period, the
excess of (i) Principal Collections over (ii) the aggregate amount of all
Additional Balances arising during such Remittance Period; provided, however,
that, in no event will Net Principal Collections be less than zero.

          "Nonrecoverable Advance": With respect to any Mortgage Loan, any
Servicing Advance previously made and not reimbursed pursuant to Section 4.10 of
the Sale and Servicing Agreement or any Servicing Advance proposed to be made in
respect of a Mortgage Loan, either of which, in the good faith business judgment
of the Master Servicer would not be ultimately recoverable.

         "Note": Any note executed and authenticated by the Indenture Trustee in
substantially the form set forth in Exhibit A to the Indenture.

         "Note Account": The Note Account established in accordance with Section
8.3 of the Indenture and maintained by the Indenture Trustee.

         "Note Balance": As of any date of determination, the Original Note
Balance, less any amounts actually distributed as principal to the Noteholders
on all prior Payment Dates.

         "Note Interest Rate": As to any Payment Date, the lesser of (i) the
Formula Rate and (ii) the Net Funds Cap Rate.

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<PAGE>   73
         "Note Interest Shortfall": As of any Payment Date, the sum of (i) the
amount by which the Interest Distribution Amount for such Payment Date exceeds
the amount actually distributed to the Noteholders on such Payment Date and (ii)
any unreimbursed Note Interest Shortfalls from prior Payment Dates together with
interest accrued thereon at the Note Interest Rate for such Payment Date.

         "Note Owner": Means, with respect to a Book-Entry Note, the person who
is the owner of such Book-Entry Note or following the issuance of Definitive
Notes, the registered owner of the Notes.

         "Note Paying Agent": Means the Indenture Trustee or any other Person
that meets the eligibility standards for the Indenture Trustee specified in
Section 6.11 of the Indenture and is authorized by the Trust to make payments to
and distributions from the Note Account, including payment of principal of or
interest on the Notes on behalf of the Trust.

         "Note Register": The register maintained by the Indenture Trustee in
accordance with Section 2.3 of the Indenture, in which the names of the
Noteholders are set forth.

         "Note Registrar": The Indenture Trustee, acting in its capacity as Note
Registrar appointed pursuant to Section 2.3 of the Indenture, or any duly
appointed and eligible successor thereto.

         "Noteholder": A Person in whose name a Note is registered in the Note
Register.

         "Officer's Certificate": A certificate signed by any Authorized Officer
of the Trust, under the circumstances described in, and otherwise complying
with, the applicable requirements of Section 11.1 of the Indenture and TIA
Section 314.

         "Operative Documents": Collectively, the Indenture, the Guaranties, the
Trust Agreement, the Sale and Servicing Agreement, the Subsequent Transfer
Agreements, the Policy, the Notes, the Purchase Agreement, the Indemnification
Agreement and the Insurance Agreement.

         "Opinion of Counsel": Means one or more opinions of counsel who may,
except as otherwise expressly provided in the Indenture, be employees of or
counsel to the Trust or Sponsor and which shall comply with any applicable
requirements of Section 11.1 of the Indenture.

         "Original Note Balance": $400,000,000.00.

         "Originators": Advanta Bank Corp., Advanta National Bank and Advanta
Finance Corp.

         "Outstanding": As of any date of determination, all Notes theretofore
executed and delivered hereunder except:

         (i) Notes theretofore cancelled by the Indenture Trustee or delivered
to the Indenture Trustee for cancellation;

                                      A-14
<PAGE>   74
         (ii) Notes or portions thereof for which full and final payment money
in the necessary amount has been theretofore deposited with the Indenture
Trustee in trust for the Noteholders;

         (iii) Notes in exchange for or in lieu of which other Notes have been
executed and delivered pursuant to this Indenture, unless proof satisfactory to
the Indenture Trustee is presented that any such Notes are held by a bona fide
purchaser; and

         (iv) Notes alleged to have been destroyed, lost or stolen for which
replacement Notes have been issued as provided for in Section 2.4 of the
Indenture;

provided, however, that to the extent of any payments made under the Policy by
the Insurer and not reimbursed, such Notes shall be deemed to be "Outstanding"
for all purposes, not defeased or otherwise satisfied and not be considered paid
by the Trust.

         "Overcollateralization Amount": As of any Payment Date, the excess, if
any, of (x) the Pool Principal Balance at the end of the related Remittance
Period plus the Pre-Funded Amount over (y) the Note Balance (after taking into
account the payment of principal to the Noteholders on such Payment Date).

         "Overcollateralization Deficiency Amount": With respect to any Payment
Date, the difference, if any, between (i) the Specified Overcollateralization
Amount and (ii) the Overcollateralization Amount.

         "Overcollateralization Deficit": With respect to any Payment Date, the
amount, if any, by which (i) the Note Balance, after taking into account the
payment of principal to the Noteholders on such Payment Date, exceeds (ii) the
Pool Principal Balance plus the Pre-Funded Amount at the end of the related
Remittance Period.

         "Overcollateralization Reduction Amount": With respect to any Payment
Date, the lesser of (i) the excess of (x) the Overcollateralization Amount,
after taking into account all payments of principal (without taking into account
any Overcollateralization Reduction Amount) that were applied as a reduction in
the Note Balance on such Payment Date, over (y) the Specified
Overcollateralization Amount for such Payment Date and (ii) the Scheduled
Principal Distribution Amount (without taking into account any
Overcollateralization Reduction Amount).

         "Owner Trustee": Wilmington Trust Company, not in its individual
capacity but solely as Owner Trustee under the Trust Agreement, its successors
in interest or any successor Owner Trustee under the Trust Agreement.

         "Owner Trustee Fee": With respect to any Payment Date, one-twelfth of
$3,000 per annum.

         "Payment Date": Any date on which the Indenture Trustee is required to
make distributions to the Noteholders, which shall be the 25th day of each
month, commencing in the month following the Closing Date or, if such day is not
a Business Day, then on the next succeeding Business Day.

                                      A-15
<PAGE>   75
         "Percentage Interest": As to any Note and as of any date of
determination, that amount, expressed as a percentage, equal to a fraction, the
numerator of which is the then-outstanding principal balance of such Note and
the denominator of which is the Note Balance; and as to any Certificate, the
percentage interest set forth on such Certificate.

         "Person": Any individual, corporation, partnership, joint venture,
limited liability company, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.

         "Policy": The certificate guaranty insurance policy (No. AB0358BE) with
respect to the Notes, dated April 27, 2000, issued by the Insurer to the
Indenture Trustee for the benefit of the Noteholders.

         "Pool Certification": The certification of the Indenture Trustee as to
receipt of required documents that is required pursuant to Section 2.2 of the
Sale and Servicing Agreement, a form of which is attached thereto as Exhibit E.

         "Pool Factor": A seven-digit decimal which the Indenture Trustee shall
compute monthly expressing the Note Balance as of each Payment Date (after
giving effect to any distribution of principal on such Payment Date) as a
proportion of the Original Note Balance. On the Closing Date, the Pool Factor
will be 1.0000000.

         "Pool Principal Balance": With respect to any date of determination,
the aggregate of the Principal Balances of the Mortgage Loans as of such date.

         "Predecessor Note": means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.4 of the Indenture in lieu of a
mutilated, lost, destroyed or stolen Note shall be deemed to evidence the same
debt as the mutilated, lost, destroyed or stolen Note.

         "Preference Amount": As defined in the Policy.

         "Pre-Funded Amount": The amount on deposit in the Pre-Funding Account,
which shall initially be $113,451,856.05.

         "Pre-Funding Account": The Pre-Funding Account established in
accordance with Section 8.3 of the Indenture and maintained by the Indenture
Trustee.

         "Pre-Funding Earnings": With respect to each Payment Date during the
Pre-Funding Period, the investment earnings on the Pre-Funding Account during
the related Interest Accrual Period.

         "Pre-Funding Period": The period commencing on the Closing Date and
ending on the earliest to occur of (i) the date on which the Pre-Funded Amount
(exclusive of any investment earnings) is less than

                                      A-16
<PAGE>   76
$100,000, (ii) the date on which any Event of Default or Rapid Amortization
Event occurs, and (iii) August 31, 2000.

         "Premium Amount": With respect to any Payment Date, the product of (x)
the actual number of days elapsed in the period from the prior Payment Date (or
with respect to the first Payment Date, the Closing Date) to and including the
day prior to the applicable Payment Date, divided by 360, (y) the Premium
Percentage (as defined in the Insurance Agreement) and (z) the Note Balance on
such Payment Date after taking into account any distributions of the Scheduled
Principal Distributions Amount to be made on such Payment Date.

         "Prepaid Installment": With respect to any Mortgage Loan, any
installment of principal thereof and interest thereon received prior to the
scheduled due date for such installment, intended by the Mortgagor as an early
payment thereof and not as a Prepayment.

         "Prepayment": Any payment of principal of a Mortgage Loan which is
received by the Master Servicer in advance of the scheduled due date for the
payment of such principal (other than the principal portion of any Prepaid
Installment). The proceeds of any Mortgage Insurance Policy or credit life
insurance which are to be applied as a payment of principal on the related
Mortgage Loan in advance of the scheduled payment shall be deemed to be
Prepayments for all purposes of this Agreement.

         "Prepayment Interest Shortfalls": With respect to any Payment Date, for
each Mortgage Loan that was the subject of a Prepayment, the amount, if any, by
which (i) one month's interest at the applicable Coupon Rate on the Principal
Balance of such Mortgage Loan immediately prior to such Prepayment exceeds (ii)
the amount of interest paid or collected in connection with such Prepayment.

         "Preservation Expenses": Expenditures made by the Master Servicer or
any Sub-Servicer in connection with a foreclosed Mortgage Loan prior to the
liquidation thereof, including, without limitation, expenditures for real estate
property taxes, hazard insurance premiums, property restoration or preservation.

         "Principal and Interest Account": Collectively, each principal and
interest account created by the Master Servicer or any Sub-Servicer pursuant to
Section 4.9(a) of the Sale and Servicing Agreement, or pursuant to any
Sub-Servicing Agreement.

         "Principal Balance": As to any Mortgage Loan, other than a Liquidated
Mortgage Loan, and as of any date, the related Cut-Off Date Principal Balance,
plus (i) any Additional Balance, minus (ii) all collections credited as
principal against the Principal Balance of any Mortgage Loan prior to such day
in accordance with the Credit Line Agreement. For purposes of this definition, a
Liquidated Mortgage Loan shall be deemed to have a Principal Balance of zero as
of the first day of the Remittance Period following the Remittance Period in
which such Mortgage Loan becomes a Liquidated Mortgage Loan and at all times
thereafter.

         "Principal Collections": With respect to any Payment Date and any
Mortgage Loan, the sum of all payments by or on behalf of Mortgagors and any
other amounts constituting principal (including, but not

                                      A-17
<PAGE>   77
limited to, any portion of Mortgage Insurance Proceeds or Net Liquidation
Proceeds allocable to principal, but excluding Foreclosure Profits and any
recoveries in respect of Charged-Off Mortgage Loans) collected by the Master
Servicer during the related Remittance Period. The terms of the related Credit
Line Agreement shall determine the portion of each payment in respect of a
Mortgage Loan that constitutes principal and the priority of payment.

         "Principal Remittance Amount": With respect to any Remittance Date, the
sum, without duplication, of (i) Principal Collections for such Remittance
Period, except that with respect to Prepaid Installments, principal shall be
remitted in the scheduled Remittance Period, (ii) the portion of the Loan
Reacquisition Price and the Substitution Amount relating to principal on the
Mortgage Loans reacquired, (iii) the proceeds of any liquidation of the Trust
Estate (to the extent such proceeds relate to principal) and (iv) any Pre-Funded
Amount deposited in the Note Account at the termination of the Pre-Funding
Period.

         "Proceeding": Means any suit in equity, action at law or other judicial
or administrative proceeding.

         "Prospectus": That certain Prospectus, dated December 28, 1999, naming
Advanta Conduit Receivables, Inc. as registrant and describing certain mortgage
loan asset-backed securities to be issued from time to time as described in
related Prospectus Supplements.

         "Prospectus Supplement": That certain Prospectus Supplement dated April
18, 2000, describing the Notes issued by the Trust.

         "Purchase Agreement": Means the Purchase Agreement dated as of April 1,
2000 between the Originators and the Sponsor with respect to the Mortgage Loans.

         "Qualified Replacement Mortgage Loan": As defined in Section 2.3 of the
Sale and Servicing Agreement.

         "Rapid Amortization Period": The period which follows the earlier to
occur of (x) the end of the Managed Amortization Period and (y) the occurrence
of a Rapid Amortization Event.

         "Rating Agency": Means Moody's and S&P. If such agency or a successor
is no longer in existence, "Rating Agency" shall be such statistical credit
rating agency, or other comparable Person, designated by the Insurer, notice of
which designation shall be given by the Insurer to the Indenture Trustee, and
the Indenture Trustee shall give such notice to each of the Master Servicer and
the Sponsor. References herein to the highest short term unsecured rating
category of a Rating Agency shall mean A-1+ or better in the case of S&P and P-1
or better in the case of Moody's, and in the case of any other Rating Agency
shall mean the ratings such other Rating Agency deems equivalent to the
foregoing ratings. References herein to the highest long-term rating category of
a Rating Agency shall mean "AAA" in the case of S&P and "Aaa" in the case of
Moody's, and in the case of any other Rating Agency, the rating such other
Rating Agency deems equivalent to the foregoing ratings.

         "Realized Loss": As to any Liquidated Mortgage Loan, the amount, if
any, by which the Principal Balance of such Mortgage Loan as of the date of
liquidation is in excess of Net Liquidation Proceeds.

                                      A-18
<PAGE>   78
         "Record Date": With respect to each Payment Date, so long as the Notes
are Book Entry Notes, the Business Day preceding such Payment Date, and if the
Notes are maintained as Definitive Notes, the last Business Day of the calendar
month immediately preceding the calendar month in which such Payment Date
occurs.

         "Redemption Date": Means, in the case of a redemption of the Notes
pursuant to Section 10.1(a) of the Indenture, the Payment Date specified by the
Master Servicer or the Trust pursuant to Section 10.2(a) of the Indenture.

         "Redemption Price": As defined in Section 10.1(b) of the Indenture.

         "Reference Banks": Deutsche Bank AG, Barclay's Bank PLC, and National
Westminster Bank PLC; or such banks as are selected by the Indenture Trustee
after consultation with the Master Servicer which are engaged in transactions in
Eurodollar deposits in the international Eurocurrency market (i) with an
established place of business in London, (ii) not controlling, under the control
of or under common control with the Sponsors or any Affiliate thereof, (iii)
whose quotations appear on the Telerate Screen Page 3785 on the relevant
Interest Determination Date and (iv) which have been designated as such by the
Indenture Trustee.

         "Registration Statement": The Registration Statement (No. 333-92669)
filed by the Sponsor with the Securities and Exchange Commission, including all
amendments thereto and including the Prospectus, and the Prospectus Supplement
relating to the Notes.

         "Reimbursement Amount": As defined in the Policy.

         "Relief Act Shortfall": With respect to any Remittance Period and any
Mortgage Loan for which there has been a reduction in the amount of interest
collectible thereon as a result of the application of the Civil Relief Act, the
amount by which (i) interest collectible on such Mortgage Loan is less than (ii)
one month's interest on the Principal Balance of such Mortgage Loan at the
Coupon Rate.

         "Remittance Date": With respect to any Payment Date, the date on which
the Master Servicer is required to remit monies on deposit in the Principal and
Interest Account to the Indenture Trustee for deposit into the Note Account,
which shall be the 18th day of each month or, if such day is not a Business Day,
the next succeeding Business Day, commencing in the month following the Closing
Date.

         "Remittance Period": As to any Payment Date, the calendar month
preceding the month of such Payment Date.

         "REO Property": A Mortgaged Property acquired by the Master Servicer or
any Sub-Servicer on behalf of the Trust through foreclosure or deed-in-lieu of
foreclosure in connection with a defaulted Mortgage Loan.

         "Replacement Cut-Off Date": With respect to any Qualified Replacement
Mortgage Loan, the first day of the calendar month in which such Qualified
Replacement Mortgage Loan is conveyed to the Trust.

                                      A-19
<PAGE>   79
         "Reserve Interest Rate": Means the rate per annum that the Indenture
Trustee determines to be either the arithmetic mean, rounded to the nearest
whole multiple of 1/16%, of the one-month U.S. dollar lending rates which New
York City banks selected by the Indenture Trustee are quoting on the Interest
Determination Date to the principal London offices of lending banks in the
London interbank market or, in the event that the Indenture Trustee cannot
determine the arithmetic mean, the lowest one-month U.S. dollar lending rate
which New York City banks selected by the Indenture Trustee are quoting on the
Interest Determination Date to leading European banks.

         "S&P": Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc.

         "Sale and Servicing Agreement": Means the Sale and Servicing Agreement,
including the Exhibits thereto, dated as of April 1, 2000, among the Trust, the
Sponsor, the Master Servicer and the Indenture Trustee, as the same may be
amended or supplemented from time to time in accordance with the terms thereof.

         "SAS 70": Means the Statement on Auditing Standards No. 70, Reports on
the Processing of Transactions by Service Organizations as in effect as of the
date hereof, which may be amended from time to time.

         "Schedule of Mortgage Loans": The schedule of Mortgage Loans attached
to the Indenture as Schedule I, as the same may be supplemented or amended from
time to time in connection with substitutions of Qualified Replacement Mortgage
Loans and the addition of Subsequent Mortgage Loans. The information contained
on the Schedule of Mortgage Loans may be delivered to the Indenture Trustee in
an electronic medium.

         "Scheduled Principal Distribution Amount": On any Payment Date (A)
during the Managed Amortization Period, the excess of (x) the lesser of (i) the
Fixed Allocation Percentage of Principal Collections and (ii) the Net Principal
Collections over (y) the Overcollateralization Reduction Amount, if any, with
respect to such Payment Date and (B) during the Rapid Amortization Period, the
excess of (x) the Fixed Allocation Percentage of Principal Collections over (y)
the Overcollateralization Reduction Amount, if any, with respect to such Payment
Date. In no event will the Scheduled Principal Distribution Amount on any
Payment Date be (x) less than zero or (y) greater than the then outstanding Note
Balance.

         "Securities Act": The Securities Act of 1933, as amended.

         "Servicing Advance": As defined in Section 4.10 and Section 4.13 of the
Sale and Servicing Agreement.

         "Servicing Fee": With respect to any Remittance Period, the product of
(i) Servicing Fee Rate and (ii) the aggregate Principal Balance of the Mortgage
Loans as of the opening of business on the first day of the related Remittance
Period.

         "Servicing Fee Rate": 0.75% per annum.

                                      A-20
<PAGE>   80
         "Servicing Officer": Any officer of the Master Servicer or a
Sub-Servicer.

         "Specified Overcollateralization Amount": The amount specified in the
Insurance Agreement.

         "Sponsor": Advanta Conduit Receivables, Inc., a Nevada corporation.

         "Subsequent Cut-Off Date": With respect to any Subsequent Mortgage
Loan, the opening of business on the first day of the calendar month in which
such Subsequent Mortgage Loan is transferred and assigned to the Trust.

         "Subsequent Mortgage Loans": The Mortgage Loans transferred and
assigned to the Trust pursuant to Section 2.6 of the Sale and Servicing
Agreement, which shall be listed on the Schedule of Mortgage Loans attached to
the Subsequent Transfer Agreement.

         "Subsequent Transfer Agreement": Each Subsequent Transfer Agreement
executed by the Owner Trustee and the Sponsor substantially in the form of
Exhibit H to the Sale and Servicing Agreement, by which Subsequent Mortgage
Loans are transferred and assigned to the Trust.

         "Subsequent Transfer Date": Means, with respect to any Subsequent
Mortgage Loans transferred to the Trust, the date set forth in the related
Subsequent Transfer Agreement.

         "Sub-Servicer": Any Person with whom the Master Servicer has entered
into a Sub-Servicing Agreement in accordance with Section 4.5 of the Sale and
Servicing Agreement.

         "Sub-Servicing Agreement": The written contract reasonably acceptable
to the Insurer between the Master Servicer and any Sub-Servicer (other than an
Affiliated Sub-Servicer) relating to the servicing and/or administration of
certain Mortgage Loans as permitted by Section 4.5 of the Sale and Servicing
Agreement.

         "Substitution Amount": In connection with the delivery of any Qualified
Replacement Mortgage Loan, if the outstanding principal amount of such Qualified
Replacement Mortgage Loan as of the applicable Replacement Cut-Off Date is less
than the related Principal Balance of the Mortgage Loan being replaced, an
amount equal to such difference together with accrued and unpaid interest on
such amount calculated at the Coupon Rate, net of the Servicing Fee, of the
Mortgage Loan being replaced.

         "Telerate Screen Page 3750": The display designated as page 3750 on the
Telerate Service (or such other page as may replace page 3750 on that service
for the purpose of displaying London interbank offered rates of major banks).

         "Termination Date": Means the latest of (i) the date on which the
termination of the Policy and the return of the Policy to the Insurer for
cancellation occurs, (ii) the date on which the Insurer shall have received
indefeasible payment of all amounts owed to it under the Insurance Agreement and
(iii) the date on which the Indenture Trustee and the Noteholders shall have
received payment of all amounts owed to them under the Indenture.

                                      A-21
<PAGE>   81
          "Transfer Date": With respect to (i) a Qualified Replacement Mortgage
Loan, the date that such Mortgage Loan is delivered to the Indenture Trustee on
behalf of the Trust, (ii) a Mortgage Loan that is reassigned to the Sponsor
pursuant to Section 2.5 of the Sale and Servicing Agreement, the date that is
specified therein, and (iii) a Subsequent Mortgage Loan, the Subsequent Transfer
Date.

         "Transfer Notice Date": As defined in Section 2.5 of the Sale and
Servicing Agreement.

         "Trust": Advanta Revolving Home Equity Loan Trust 2000-A created by the
Trust Agreement.

         "Trust Agreement": The Trust Agreement dated as of April 1, 2000
between the Owner Trustee and the Sponsor relating to the formation of the
Trust.

         "Trust Estate": As defined in the Granting Clause of the Indenture.

         "Trust Indenture Act" or "TIA": Means the Trust Indenture Act of 1939,
as amended and as in force on the date hereof, unless otherwise specifically
provided.

         "UCC": Unless the context otherwise requires, the Uniform Commercial
Code, as in effect in the relevant jurisdiction, as amended from time to time.

         "Underwriters": Bear, Stearns & Co. Inc., Morgan Stanley & Co.
Incorporated, Prudential Securities Incorporated and Salomon Smith Barney Inc.

         "Unqualified Mortgage Loan": A Mortgage Loan which is subject to
repurchase or substitution pursuant to Section 2.1(b) or Section 3.4(b) of the
Sale and Servicing Agreement.

                                      A-22
<PAGE>   82
                                                                       EXHIBIT B

                                   [Reserved]

                                      B-1
<PAGE>   83
                                                                       EXHIBIT C

                                   [Reserved]

                                       C-1
<PAGE>   84
                                                                       EXHIBIT D

                   FORM OF TRUSTEE'S ACKNOWLEDGMENT OF RECEIPT

         Bankers Trust Company of California, N.A., a national banking
association, in its capacity as indenture trustee (the "Indenture Trustee")
under that certain Sale and Servicing Agreement, dated as of April 1, 2000 (the
"Sale and Servicing Agreement"), by and among Advanta Conduit Receivables, Inc.,
a Nevada corporation, as sponsor (the "Sponsor"), Advanta Mortgage Corp. USA, a
Delaware corporation, as Master Servicer, Advanta Revolving Home Equity Loan
Trust 2000-A, as Trust, and the Indenture Trustee, hereby acknowledges receipt
of the items delivered to it by the Sponsor with respect to the Mortgage Loans.

         The Schedule of Mortgage Loans is attached to this Receipt.

         The Indenture Trustee hereby additionally acknowledges that it shall
review such items as required by Section 2.2(a) of the Sale and Servicing
Agreement and shall otherwise comply with Section 2.2(b) of the Sale and
Servicing Agreement as required thereby.

         Capitalized terms used herein and not otherwise defined shall have the
meanings assigned thereto in Annex A to the Indenture, dated as of April 1,
2000, between the Trust and the Indenture Trustee.

                                  BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
                                  as Indenture Trustee

                                  By:
                                         --------------------------------------
                                  Name:
                                         --------------------------------------
                                  Title:
                                         --------------------------------------

Dated:
      ------------------

                                       D-1
<PAGE>   85
                                                                       EXHIBIT E

                           FORM OF POOL CERTIFICATION

         WHEREAS, the undersigned is an Authorized Officer of Bankers Trust
Company of California, N.A., a national banking association, acting in its
capacity as indenture trustee (the "Indenture Trustee") of a certain pool of
mortgage loans (the "Pool") heretofore conveyed in trust to the Indenture
Trustee, pursuant to that certain Sale and Servicing Agreement, dated as of
April 1, 2000 (the "Sale and Servicing Agreement"), by and among Advanta Conduit
Receivables, Inc., a Nevada corporation, as sponsor (the "Sponsor"), Advanta
Mortgage Corp. USA, a Delaware corporation, as Master Servicer, Advanta
Revolving Home Equity Loan Trust 2000-A, as Trust, and the Indenture Trustee
(Capitalized terms used herein and not otherwise defined shall have the meanings
assigned thereto in Annex A to the Indenture, dated as of April 1, 2000, between
the Trust and the Indenture Trustee); and

         WHEREAS, the Indenture Trustee is required, pursuant to Section 2.2(a)
of the Sale and Servicing Agreement, to review the Mortgage Files relating to
the Pool within a specified period following the Closing Date, Subsequent
Transfer Date and Transfer Date and to notify the Sponsor promptly of any
defects with respect to the Pool, and the Sponsor is required to remedy such
defects or take certain other action, all as set forth in Section 2.2(b) of the
Sale and Servicing Agreement; and

         WHEREAS, Section 2.2(a) of the Sale and Servicing Agreement requires
the Indenture Trustee to deliver this Certification upon the satisfaction of
certain conditions set forth therein;

         NOW, THEREFORE, the Indenture Trustee has determined that as to each
Mortgage Loan listed in the Schedule of Mortgage Loans (other than any Mortgage
Loan paid in full) (i) all documents required to be delivered to it (contained
in a Mortgage File) pursuant to this Agreement are in its possession and (ii)
such documents have been reviewed by it and on their face appear to relate to
such Mortgage Loan. The Indenture Trustee makes no certification hereby,
however, with respect to any intervening assignments or assumption and
modification agreements.

                                  BANKERS TRUST COMPANY OF CALIFORNIA, N.A.

                                  By:
                                         --------------------------------------
                                  Name:
                                         --------------------------------------
                                  Title:
                                         --------------------------------------

Date:
     ---------------------

                                       E-1
<PAGE>   86
                                                                       EXHIBIT F

                     FORM OF MASTER SERVICER'S TRUST RECEIPT

To:      Bankers Trust Company  of California, N.A.
         1761 East St. Andrew Place
         Santa Ana, CA 92705
         Attn:  Corporate Trust

         Date:
              ---------------------

         In connection with the administration of the mortgage loans held by you
as Indenture Trustee under that certain Sale and Servicing Agreement dated as of
April 1, 2000 by and among Advanta Conduit Receivables, Inc., a Nevada
corporation, as Sponsor, Advanta Mortgage Corp. USA, a Delaware corporation, as
Master Servicer, Advanta Revolving Home Equity Loan Trust 2000-A, as Trust, and
you (the "Agreement"), the Master Servicer hereby requests a release of the
Mortgage File held by you as Indenture Trustee with respect to the following
described Mortgage Loan for the reason indicated below:

         Mortgagor's Name:

         Loan No.:

Reason for requesting file:

_______ 1.        Mortgage Loan paid in full.

                  (The Master Servicer hereby certifies that all amounts
                  received in connection with the loan have been or will be
                  credited to the Note Account pursuant to the Agreement.)

_______ 2.        Mortgage Loan reacquired pursuant to Section 3.3(c), 3.4, or
                  2.2(b) of the Agreement.

                  (The Master Servicer hereby certifies that the Loan
                  Reacquisition Price has been or will be paid to the Note
                  Account pursuant to the Agreement.)

_______ 3.        Mortgage Loan substituted.

                  (The Master Servicer hereby certifies that a Qualified
                  Replacement Mortgage Loan has been or will be assigned and
                  delivered to you along with the related Mortgage File pursuant
                  to the Agreement.)

_______ 4.        The Mortgage Loan is being foreclosed.

_______ 5.        Other.  (Describe)

                                       F-1
<PAGE>   87
         The undersigned acknowledges that the above Mortgage File will be held
by the undersigned in accordance with the provisions of the Agreement and will
be returned to you, except if the Mortgage Loan has been paid in full, or
purchased or substituted for by a Qualified Replacement Mortgage Loan (in which
case the Mortgage File will be retained by us permanently) and except if the
Mortgage Loan is being foreclosed (in which case the Mortgage File will be
returned when no longer required by us for such purpose).

         Capitalized terms used herein shall have the meanings ascribed to them
in the Agreement.

                                  ADVANTA MORTGAGE CORP. USA

                                  By:
                                         --------------------------------------
                                  Name:
                                         --------------------------------------
                                  Title:
                                         --------------------------------------

                                       F-2
<PAGE>   88
                                                                       EXHIBIT G

                            FORM OF POWER OF ATTORNEY

                                       G-1
<PAGE>   89
                                                                       EXHIBIT H

                      FORM OF SUBSEQUENT TRANSFER AGREEMENT

         Pursuant to this Subsequent Transfer Agreement (this "Agreement"),
dated as of __________, _____, among Advanta Conduit Receivables, Inc., a Nevada
corporation (the "Sponsor), and Advanta Revolving Home Equity Loan Trust 2000-A
(the "Trust"), the Sponsor and the Trust agree to the sale by the Sponsor to the
Trust, of the Mortgage Loans listed on the attached schedule of Mortgage Loans
(the "Subsequent Mortgage Loans").

         Capitalized terms are used in this Agreement as defined in Annex 1 of
the Indenture, dated as of April 1, 2000 (the "Indenture"), between the Trust
and Bankers Trust Company of California, N.A., as Indenture Trustee, which
meanings are incorporated by reference herein. All other capitalized terms used
herein shall have the meanings specified herein.

         Section 1.        Sale of Subsequent Mortgage Loans.

         (a) The Sponsor does hereby sell, transfer, assign, set over and convey
to the Trust, without recourse, all of its right, title and interest in and to
the Subsequent Mortgage Loans, and including all principal and interest
collected on the Subsequent Mortgage Loans on and after the Subsequent Cut-Off
Date, and the Mortgage File for each Subsequent Mortgage Loan. The Sponsor,
contemporaneously with the delivery of this Agreement, has delivered or caused
to be delivered to the Trust the Mortgage File for each Subsequent Mortgage
Loan.

         The transfer to the Trust of the Subsequent Mortgage Loans identified
on the Schedule of Subsequent Mortgage Loans shall be absolute and is intended
by the parties hereto to constitute a sale by the Sponsor to the Trust on the
Subsequent Transfer Date of all the Sponsor's right, title and interest in and
to the Subsequent Mortgage Loans, and other property as and to the extent
described above. In the event the transactions set forth herein shall be deemed
not to be a sale, the Sponsor hereby grants to the Trust as of the Subsequent
Transfer Date a security interest in all of the Sponsor's right, title and
interest in, to and under the Subsequent Mortgage Loans, and such other
property, to secure all of the Sponsor's obligations hereunder, and this
Agreement shall constitute a security agreement under applicable law. The
Sponsor agrees to take or cause to be taken such actions and to execute such
documents, including without limitation the filing of all necessary UCC- 1
financing statements and any continuation statements with respect thereto as are
necessary to perfect and protect the Trust's interests in each Subsequent
Mortgage Loan and the proceeds thereof.

         (b) The expenses and costs relating to the delivery of the Subsequent
Mortgage Loans and this Agreement shall be borne by the Sponsor.

         Section 2.        Representations and Warranties; Conditions Precedent.

         (a) The Sponsor hereby affirms the representations and warranties set
forth in Sections 3.1 and 3.3 of the Sale and Servicing Agreement that relate to
the Sponsor or the Subsequent Mortgage Loans as

                                      H-1
<PAGE>   90
of the date hereof. The Sponsor hereby confirms that each of the conditions set
forth in Section 2.6 of the Sale and Servicing Agreement are satisfied as of the
date hereof and further represents and warrants that each Subsequent Mortgage
Loan complies with the requirements of this Agreement and Section 2.6 of the
Sale and Servicing Agreement.

         (b) The Sponsor is solvent, is able to pay its debts as they become due
and has capital sufficient to carry on its business and its obligations
hereunder; it will not be rendered insolvent by the execution and delivery of
this Agreement or by the performance of its obligations hereunder nor is it
aware of any pending insolvency; no petition of bankruptcy (or similar
insolvency proceeding) has been filed by or against the Sponsor prior to the
date hereof.

         (c) All terms and conditions of the Sale and Servicing Agreement are
hereby ratified and confirmed; provided, however, that in the event of any
conflict the provisions of this Agreement shall control over the conflicting
provisions of the Sale and Servicing Agreement.

         Section 3. Recordation of Instrument. To the extent permitted by
applicable law or a memorandum thereof if permitted under applicable law, this
Agreement is subject to recordation in all appropriate public offices for real
property records in all of the counties or other comparable jurisdictions in
which any or all of the properties subject to the related Mortgages are
situated, and in any other appropriate public recording office or elsewhere,
such recordation to be effected by the Master Servicer at the Noteholders'
expense on direction of the Insurer or Noteholders holding Notes evidencing at
least 51% of the Aggregate Note Balance, but only when accompanied by an Opinion
of Counsel to the effect that such recordation materially and beneficially
affects the interests of the Noteholders or the Insurer or is necessary for the
administration or servicing of the Subsequent Mortgage Loans.

         Section 4. GOVERNING LAW. THIS INSTRUMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAWS PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

         Section 5. Counterparts. This Agreement may be executed in
counterparts, each of which, when so executed, shall be deemed to be an original
and together shall constitute one and the same instrument.

         Section 6. Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the Sponsor the Trust and their respective
successors and assigns.

                            [Signature Page Follows]

                                       H-2
<PAGE>   91
                                  ADVANTA CONDUIT RECEIVABLES, INC.,
                                           as Sponsor

                                  By:
                                         --------------------------------------
                                  Name:
                                         --------------------------------------
                                  Title:
                                         --------------------------------------

                                  ADVANTA REVOLVING HOME EQUITY
                                           LOAN TRUST 2000-A,

                                  By: WILMINGTON TRUST COMPANY, not in its
                                  individual capacity but solely as Owner
                                  Trustee

                                  By:
                                         --------------------------------------
                                  Name:
                                         --------------------------------------
                                  Title:
                                         --------------------------------------

Acknowledged and Accepted:

BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
    as Indenture Trustee

By:
       ---------------------------
Name:
       ---------------------------
Title:
       ---------------------------

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00008-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00008-of-00352.parquet"}]]