SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
June 20, 1996
AMRESCO Residential Securities Corporation
(on behalf of AMRESCO Residential Securities Corporation
Mortgage Loan Trust 1996-3)
(Exact name of registrant as specified in its charter)
New York 33-99346 Pending
(State or Other Jurisdiction) (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
c/o Bankers Trust Company of California, N.A.
3 Park Plaza, 16th Floor
Irvine, CA 92714
(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code (909) 605-7600
No Change
(Former name or former address, if changed since last report)
Total number of sequentially numbered pages 4
Exhibit index located on sequentially numbered page 4
Page 1
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(a) Not applicable
(b) Not applicable
(c) Exhibits:
1.1 Underwriting Agreement dated June 3,
1996, between AMRESCO Residential Securities
Corporation as Depositor and Prudential Securities
Incorporated, CS First Boston and Goldman, Sachs &
Co. as Underwriters.
4.1 Pooling and Servicing Agreement dated as
of June 1, 1996, between AMRESCO Residential
Securities Corporation as Depositor, AMRESCO
Residential Mortgage Corporation as Seller, Long
Beach Mortgage Company and Advanta Mortgage Corp.
USA as Servicers and Bankers Trust Company as
Trustee.
Page 2
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
AMRESCO RESIDENTIAL SECURITIES CORPORATION,
as Depositor
By: /s/ Ronald B. Kirkland
Name: Ronald B. Kirkland
Title: Chief Financial Officer and
Chief Accounting Officer
Dated: July 4, 1996
Page 3
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
1.1 Underwriting Agreement
dated June 3, 1996, between AMRESCO
Residential Securities Corporation
as Depositor and Prudential
Securities Incorporated, CS First
Boston and Goldman, Sachs & Co. as
Underwriters.
4.1 Pooling and Servicing
Agreement dated as of June 1, 1996,
between AMRESCO Residential
Securities Corporation as
Depositor, AMRESCO Residential
Mortgage Corporation as Seller,
Long Beach Mortgage Company and
Advanta Mortgage Corp. USA as
Servicers and Bankers Trust Company
as Trustee.
Page 4
<PAGE>
AMRESCO RESIDENTIAL SECURITIES CORPORATION
AND
PRUDENTIAL SECURITIES INCORPORATED
As Representatives of the several Underwriters
UNDERWRITING AGREEMENT
FOR
AMRESCO RESIDENTIAL SECURITIES CORPORATION MORTGAGE LOAN TRUST
1996-3
MORTGAGE LOAN PASS THROUGH CERTIFICATES,
CLASS A-1 ADJUSTABLE RATE CERTIFICATES
CLASS A-2 FIXED RATE CERTIFICATES
CLASS A-3 FIXED RATE CERTIFICATES
CLASS A-4 FIXED RATE CERTIFICATES
CLASS A-5 FIXED RATE CERTIFICATES
CLASS A-6 FIXED RATE CERTIFICATES
CLASS A-7 FIXED RATE CERTIFICATES
CLASS A-8 ADJUSTABLE RATE CERTIFICATES
June 5, 1996
AMRESCO RESIDENTIAL SECURITIES CORPORATION MORTGAGE LOAN TRUST
1996-3
MORTGAGE LOAN PASS THROUGH CERTIFICATES,
CLASS A-1 ADJUSTABLE RATE CERTIFICATES
CLASS A-2 FIXED RATE CERTIFICATES
CLASS A-3 FIXED RATE CERTIFICATES
CLASS A-4 FIXED RATE CERTIFICATES
CLASS A-5 FIXED RATE CERTIFICATES
CLASS A-6 FIXED RATE CERTIFICATES
CLASS A-7 FIXED RATE CERTIFICATES
CLASS A-8 ADJUSTABLE RATE CERTIFICATES
UNDERWRITING AGREEMENT
June 5, 1996
Prudential Securities Incorporated
as Representative of the
several Underwriters
1 New York Plaza
26th Floor
New York, New York 10292
Dear Ladies and Gentlemen:
AMRESCO Residential Securities Corporation (the
"Depositor"), a Delaware corporation, has authorized the issuance
and sale of Mortgage Loan Pass-Through Certificates, Class A-1,
Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7,
Class A-8 (the "Offered Certificates") and the Class B-IO and the
Class R Certificates (the "Subordinated Certificates," and
collectively with the Offered Certificates, the "Certificates"),
evidencing interests in a pool of fixed and adjustable rate
mortgage loans (the "Mortgage Loans"). The Mortgage Loans are
secured primarily by first deeds of trust or mortgages on one- to
four-family residential properties.
Only the Offered Certificates are being purchased by the
Underwriters named in Schedule A hereto, and the Underwriters are
purchasing, severally, only the Offered Certificates set forth
opposite their names in Schedule A, except that the amounts
purchased by the Underwriters may change in accordance with
Section X of this Agreement. Prudential Securities Incorporated
is acting as representative of the several Underwriters and in
such capacity, is hereinafter referred to as the
"Representative."
The Certificates will be issued under a pooling and
servicing agreement (the "Pooling and Servicing Agreement"),
dated as of June 1, 1996 among the Depositor, AMRESCO Residential
Mortgage Corporation, as Seller (the "Seller"), Long Beach
Mortgage Company ("Long Beach") and Advanta Mortgage Corp. USA
("Advanta") as Servicers (the "Servicers") and Bankers Trust
Company, as trustee (the "Trustee"). The Certificates will
evidence fractional undivided interests in the trust (the
"Trust"). The assets of the Trust will initially include, among
other things, a pool of fixed and adjustable rate Mortgage Loans
(the "Initial Mortgage Loans") and such amounts as may be held by
the Trustee in the Pre-Funding Account (the "Pre-Funding
Account"), the Capitalized Interest Account (the "Capitalized
Interest Account") and any other accounts held by the Trustee for
the Trust. The Initial Mortgage Loans will be acquired, in part,
(i) from Long Beach, pursuant to a Continuing Loan Purchase
Agreement dated November 1, 1995, as supplemented by Supplement
dated June 20, 1996 (the "Long Beach Purchase Agreement"), (ii)
from Walsh Securities, Inc. ("Walsh"), pursuant to a Loan
Purchase Agreement dated as of May 10, 1996, between Walsh, as
Seller and the Seller, as buyer (the "Walsh Purchase Agreement"),
and (iii) from New Century Mortgage Corporation ("New Century"),
pursuant to a Continuing Loan Purchase Agreement dated April 5,
1996 between New Century, as Seller and the Seller, as buyer (the
"New Century Purchase Agreement") and together with the Long
Beach Purchase Agreement and the Walsh Purchase Agreement,
collectively, the "Mortgage Loan Purchase Agreements"). On the
Closing Date, approximately $16,400,000 will be deposited by the
Depositor in the name of the Trustee in the Pre-Funding Account
from the sale of the Certificates. It is intended that additional
Mortgage Loans satisfying the criteria specified in the Pooling
and Servicing Agreement (the "Subsequent Mortgage Loans") will be
purchased by the Trust for inclusion in the Trust from the
Depositor from time to time on or before July 20, 1996 from funds
on deposit in the Pre-Funding Account at the time of execution
and delivery of each Subsequent Transfer Agreement ("Subsequent
Transfer Agreement"). Funds in the Capitalized Interest Account
will be applied by the Trustee to cover shortfalls in interest
during the Funding Period. The Offered Certificates will
initially represent an undivided ownership interest in the sum of
(i) a pool of Initial Mortgage Loans in an amount of
$251,312,567.69 as of the close of business on June 1, 1996 (the
"Cut-Off Date") and (ii) approximately $16,400,000 on deposit in
the Pre-Funding Account. The Offered Certificates will also have
the benefit of two Certificate Insurance Policies (the
"Certificate Insurance Policies") issued by MBIA Insurance
Corporation, a New York stock insurance company (the "Certificate
Insurer"). The Certificate Insurance Policies will be issued
pursuant to the insurance agreement (the "Insurance Agreement")
dated as of June 1, 1996 among the Certificate Insurer, the
Depositor and the Trustee. A form of the Pooling and Servicing
Agreement has been filed as an exhibit to the Registration
Statement (hereinafter defined).
The Certificates are more fully described in a Registration
Statement which the Depositor has furnished to the Underwriters.
Capitalized terms used but not defined herein shall have the
meanings given to them in the Pooling and Servicing Agreement.
SECTION I. Representations and Warranties of the Depositor.
The Depositor represents and warrants to, and agrees with the
Underwriters that:
A. A Registration Statement on Form S-3 (No. 33-99346),
has (i) been prepared by the Depositor in conformity with the
requirements of the Securities Act of 1933 (the "Securities Act")
and the rules and regulations (the "Rules and Regulations") of
the United States Securities and Exchange Commission (the
"Commission") thereunder, (ii) been filed with the Commission
under the Securities Act and (iii) become effective under the
Securities Act. Copies of such Registration Statement have been
delivered by the Depositor to the Representative. As used in
this Agreement, "Effective Time" means the date and the time as
of which such Registration Statement, or the most recent
post-effective amendment thereto, if any, was declared effective
by the Commission; "Effective Date" means the date of the
Effective Time; "Registration Statement" means such registration
statement, at the Effective Time, including any documents
incorporated by reference therein at such time; "Basic
Prospectus" means such final prospectus dated January 24, 1996;
and "Prospectus Supplement" means the final prospectus supplement
relating to the Offered Certificates, to be filed with the
Commission pursuant to paragraphs (2), (3) or (5) of Rule 424(b)
of the Rules and Regulations. "Prospectus" means the Basic
Prospectus together with the Prospectus Supplement. Reference
made herein to the Prospectus shall be deemed to refer to and
include any documents incorporated by reference therein pursuant
to Item 12 of Form S-3 under the Securities Act as of the date of
the Prospectus, any reference to any amendment or supplement to
the Prospectus shall be deemed to refer to and include any
document filed under the Securities Exchange Act of 1934 (the
"Exchange Act") after the date of the Prospectus and incorporated
by reference in the Prospectus, and any reference to any
amendment to the Registration Statement shall be deemed to
include any report of the Depositor filed with the Commission
pursuant to Section 13(a) or 15(d) of the Exchange Act after the
Effective Time that is incorporated by reference in the
Registration Statement. The Commission has not issued any order
preventing or suspending the use of the Prospectus. There are no
contracts or documents of the Depositor which are required to be
filed as exhibits to the Registration Statement pursuant to the
Securities Act or the Rules and Regulations which have not been
so filed or incorporated by reference therein on or prior to the
Effective Date of the Registration Statement other than such
documents or materials, if any, as any Underwriter delivers to
the Depositor pursuant to Section VIII D hereof for filing on
Form 8-K.
B. The Registration Statement conforms, and the Prospectus
and any further amendments or supplements to the Registration
Statement or the Prospectus will, when they become effective or
are filed with the Commission, as the case may be, conform in all
respects to the requirements of the Securities Act and the Rules
and Regulations. The Registration Statement, as of the Effective
Date thereof and of any amendment thereto, did not contain an
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading. The Prospectus as of its date,
and as amended or supplemented as of the Closing Date does not
and will not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading; provided that no representation
or warranty is made as to information contained in or omitted
from the Registration Statement or the Prospectus in reliance
upon and in conformity with written information furnished to the
Depositor in writing by the Underwriters expressly for use
therein.
C. The documents incorporated by reference in the
Prospectus, when they became effective or were filed with the
Commission, as the case may be, conformed in all material
respects to the requirements of the Securities Act or the
Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder, and none of such documents contained an
untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading; and any further documents
so filed and incorporated by reference in the Prospectus, when
such documents become effective or are filed with the Commission,
as the case may be, will conform in all material respects to the
requirements of the Securities Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission
thereunder and will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading; provided that no representation is made as to
documents deemed to be incorporated by reference in the
Prospectus as the result of filing a Form 8-K at the request of
the Underwriters except to the extent such documents reflect
information furnished by the Depositor to the Underwriters for
the purpose of preparing such documents.
D. Since the respective dates as of which information is
given in the Prospectus, there has not been any material adverse
change, or any development involving a prospective material
adverse change, in the general affairs, management, financial
condition, or results of operations of the Depositor, otherwise
than as set forth or contemplated in the Prospectus as
supplemented or amended as of the Closing Date.
E. The Depositor has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, is duly qualified to do business
and is in good standing as a foreign corporation in each
jurisdiction in which its ownership or lease of property or the
conduct of its business requires such qualification, and has all
power and authority necessary to own or hold its properties, to
conduct the business in which it is engaged and to enter into and
perform its obligations under this Agreement, the Pooling and
Servicing Agreement and the Insurance Agreement or any Subsequent
Transfer Agreement and to cause the Certificates to be issued.
F. There are no actions, proceedings or investigations
pending with respect to which the Depositor has received service
of process before or threatened by any court, administrative
agency or other tribunal to which the Depositor is a party or of
which any of its properties is the subject (a) which if
determined adversely to the Depositor would have a material
adverse effect on the business or financial condition of the
Depositor, (b) asserting the invalidity of this Agreement, the
Pooling and Servicing Agreement, the Insurance Agreement, the
Certificates, or any Subsequent Transfer Agreement, (c) seeking
to prevent the issuance of the Certificates or the consummation
by the Depositor of any of the transactions contemplated by the
Pooling and Servicing Agreement, the Insurance Agreement, this
Agreement or any Subsequent Transfer Agreement, as the case may
be, (d) which might individually or in the aggregate materially
and adversely affect the performance by the Depositor of its
obligations under, or the validity or enforceability of, the
Pooling and Servicing Agreement, this Agreement, and the
Insurance Agreement, the Certificates or any Subsequent Transfer
Agreement or (e) which might adversely affect the federal income
tax attributes of the Certificates as described in the
Prospectus.
G. This Agreement has been, and the Pooling and Servicing
Agreement, each Subsequent Transfer Agreement and the Insurance
Agreement when executed and delivered as contemplated hereby and
thereby will have been, duly authorized, executed and delivered
by the Depositor, and this Agreement constitutes, and the Pooling
and Servicing Agreement and the Insurance Agreement when executed
and delivered as contemplated herein, will constitute, legal,
valid and binding instruments enforceable against the Depositor
in accordance with their respective terms, subject as to
enforceability to (x) applicable bankruptcy, reorganization,
insolvency, moratorium or other similar laws affecting creditors'
rights generally, (y) general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at
law), and (z) with respect to rights of indemnity under this
Agreement and the Insurance Agreement, limitations of public
Policy under applicable securities laws.
H. The execution, delivery and performance of this
Agreement, the Pooling and Servicing Agreement, any Subsequent
Transfer Agreement and the Insurance Agreement by the Depositor
and the consummation of the transactions contemplated hereby and
thereby, compliance with the provisions thereof, and the issuance
and delivery of the Certificates do not and will not conflict
with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Depositor is a party, by which the
Depositor is bound or to which any of the properties or assets of
the Depositor or any of its subsidiaries is subject, which breach
or violation would have a material adverse effect on the
business, operations or financial condition of the Depositor, nor
will such actions result in any violation of the provisions of
the articles of incorporation or by-laws of the Depositor or any
statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the
Depositor or any of its properties or assets, which breach or
violation would have a material adverse effect on the business,
operations or financial condition of the Depositor. The
Depositor is not a party to, bound by, or in breach or violation
of, any indenture or other agreement or instrument, or subject to
or in violation of any statute, order, rule or regulation of any
court, governmental agency or body or other tribunal having
jurisdiction over the Depositor, which materially and adversely
affects, or is reasonably likely in the future to materially and
adversely affect, (i) the ability of the Depositor to perform its
obligations under this Agreement and the Insurance Agreement or
(ii) the business, operations, results of operations, financial
position, income, properties or assets of the Depositor.
I. The Depositor has no reason to know that Deloitte &
Touche, LLP are not independent public accountants with respect
to the Depositor as required by the Securities Act and the Rules
and Regulations.
J. The direction by the Depositor to the Trustee to
execute, authenticate, issue and deliver the Certificates has
been duly authorized by the Depositor, and assuming the Trustee
has been duly authorized to do so, when executed, authenticated,
issued and delivered by the Trustee in accordance with the
Pooling and Servicing Agreement, the Certificates will be validly
issued and outstanding and will be entitled to the benefits
provided by the Pooling and Servicing Agreement.
K. No consent, approval, authorization, order,
registration or qualification of or with any court or
governmental agency or body of the United States is required for
the issuance of the Certificates and the sale of the Offered
Certificates to the Underwriters, or the consummation by the
Depositor of the other transactions contemplated by this
Agreement, the Pooling and Servicing Agreement, any Subsequent
Transfer Agreement and the Insurance Agreement, except such
consents, approvals, authorizations, registrations or
qualifications as may be required under State securities or Blue
Sky laws in connection with the purchase and distribution of the
Offered Certificates by the Underwriters or as have been
obtained.
L. The Depositor possesses all material licenses,
certificates, authorities or permits issued by the appropriate
State, Federal or foreign regulatory agencies or bodies necessary
to conduct the business now conducted by it and as described in
the Prospectus, and there are no proceedings pending with respect
to which the Depositor has received service of process or, to the
best knowledge of the Depositor threatened, relating to the
revocation or modification of any such license, certificate,
authority or permit which if decided adversely to the Depositor
would, singly or in the aggregate, materially and adversely
affect the conduct of its business, operations or financial
condition.
M. At the time of execution and delivery of the Pooling
and Servicing Agreement, the Depositor will: (i) have good title
to the Mortgage Loans conveyed by the Seller, free and clear of
any lien, mortgage, pledge, charge, encumbrance, adverse claim or
other security interest (collectively, "Liens"); (ii) not have
assigned to any person any of its right or title in the Mortgage
Loans, in the Pooling and Servicing Agreement or in the
Certificates being issued pursuant thereto; and (iii) have the
power and authority to sell its interest in the Mortgage Loans to
the Trustee and to sell the Offered Certificates to the
Underwriters. Upon execution and delivery of the Pooling and
Servicing Agreement by the Trustee, the Trustee will have
acquired beneficial ownership of all of the Depositor's right,
title and interest in and to the Mortgage Loans. Upon delivery to
the Underwriters of the Offered Certificates, the Underwriters
will have good title to the Offered Certificates, free of any
Liens.
N. As of the Cut-Off Date, each of the Mortgage Loans will
meet the eligibility criteria described in the Prospectus and
will conform to the descriptions thereof contained in the
Prospectus.
O. Neither the Depositor nor the Trust created by the
Pooling and Servicing Agreement is an "investment company" within
the meaning of such term under the Investment Company Act of 1940
(the "1940 Act") and the rules and regulations of the Commission
thereunder.
P. At the Closing Date, the Offered Certificates, the
Mortgage Loan Purchase Agreements and the Pooling and Servicing
Agreement will conform in all material respects to the
descriptions thereof contained in the Prospectus. The Offered
Certificates will be duly and validly authorized and, when duly
and validly executed, authenticated, issued and delivered in
accordance with the Pooling and Servicing Agreement and sold to
the Underwriters as provided herein, will be validly issued and
outstanding and entitled to the benefits of the Pooling and
Servicing Agreement.
Q. At the Closing Date, the Offered Certificates shall
have been rated in the highest rating category by at least two
nationally recognized rating agencies.
R. Any taxes, fees and other governmental charges in
connection with the execution, delivery and issuance of this
Agreement, the Pooling and Servicing Agreement, the Insurance
Agreement and the Certificates have been paid or will be paid at
or prior to the Closing Date.
S. At the Closing Date, each of the representations and
warranties of the Depositor set forth in the Pooling and
Servicing Agreement and the Insurance Agreement will be true and
correct in all material respects.
T. The transfer of the Mortgage Loans to the Trust at the
Closing Date and, if applicable, on each Subsequent Transfer
Date, will be treated by the Depositor for financial accounting
and reporting purposes as a sale of assets and not as a pledge of
assets to secure debt.
U. The Depositor is not aware of (i) any request by the
Commission for any further amendment of the Registration
Statement or the Prospectus or for any additional information, or
(ii) any notification with respect to the suspension of the
qualification of the Certificates for sale in any jurisdiction or
the initiating or threatening of any proceeding for such purpose.
Any certificate signed by an officer of the Depositor and
delivered to the Representative or counsel for the Representative
in connection with an offering of the Offered Certificates shall
be deemed, and shall state that it is, a representation and
warranty as to the matters covered thereby to each person to whom
the representations and warranties in this Section I are made.
SECTION II. Purchase and Sale. The commitment of the
Underwriters to purchase the Offered Certificates pursuant to
this Agreement shall be deemed to have been made on the basis of
the representations and warranties herein contained and shall be
subject to the terms and conditions herein set forth. The
Depositor agrees to instruct the Trustee to issue the Offered
Certificates and agrees to sell to the Underwriters, and the
Underwriters agree (except as provided in Sections X and XI
hereof) severally and not jointly to purchase from the Depositor
the aggregate initial principal amounts or percentage interests
of the Class A Certificates set forth opposite their names on
Schedule A, at the purchase price or prices set forth in Schedule
A.
SECTION III. Delivery and Payment. Delivery of and payment
for the Offered Certificates to be purchased by the Underwriters
shall be made at the offices of Arter & Hadden, Irvine,
California or at such other place as shall be agreed upon by the
Representative and the Depositor at 8:00 A.M. California time on
June 20, 1996 or at such other time or date as shall be agreed
upon in writing by the Representative and the Depositor (such
date being referred to as the "Closing Date"). Payment shall be
made to the Depositor by wire transfer of same day funds payable
to the account of the Depositor. Delivery of the Offered
Certificates shall be made to the Representative for the accounts
of the Underwriters against payment of the purchase price
thereof. The Certificates shall be in such authorized
denominations and registered in such names as the Underwriters
may request in writing at least two business days prior to the
Closing Date. The Offered Certificates will be made available for
examination by the Representative no later than 2:00 p.m. New
York City time on the first business day prior to the Closing
Date.
SECTION IV. Offering by the Underwriters. It is understood
that, subject to the terms and conditions hereof, the
Underwriters propose to offer the Offered Certificates for sale
to the public as set forth in the Prospectus.
SECTION V. Covenants of the Depositor. The Depositor agrees
as follows:
A. To prepare the Prospectus in a form approved by the
Underwriters and to file such Prospectus pursuant to Rule 424(b)
under the Securities Act not later than the Commission's close of
business on the second business day following the availability of
the Prospectus to the Underwriters to make no further amendment
or any supplement to the Registration Statement or to the
Prospectus prior to the Closing Date except as permitted herein;
to advise the Underwriters, promptly after it receives notice
thereof, of the time when any amendment to the Registration
Statement has been filed or becomes effective prior to the
Closing Date or any supplement to the Prospectus or any amended
Prospectus has been filed prior to the Closing Date and to
furnish the Underwriters with copies thereof; to file promptly
all reports and any definitive proxy or information statements
required to be filed by the Depositor with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of the Prospectus and, for so long as the
delivery of a prospectus is required in connection with the
offering or sale of the Offered Certificates; to promptly advise
the Underwriters of its receipt of notice of the issuance by the
Commission of any stop order or of: (i) any order preventing or
suspending the use of the Prospectus; (ii) the suspension of the
qualification of the Offered Certificates for offering or sale in
any jurisdiction; (iii) the initiation of or threat of any
proceeding for any such purpose; (iv) any request by the
Commission for the amending or supplementing of the Registration
Statement or the Prospectus or for additional information. In the
event of the issuance of any stop order or of any order
preventing or suspending the use of the Prospectus or suspending
any such qualification, the Depositor promptly shall use its best
efforts to obtain the withdrawal of such order by the Commission.
B. To furnish promptly to the Underwriters and to counsel
for the Underwriters a signed copy of the Registration Statement
as originally filed with the Commission, and of each amendment
thereto filed with the Commission, including all consents and
exhibits filed therewith.
C. To deliver promptly to the Underwriters such number of
the following documents as the Underwriters shall reasonably
request: (i) conformed copies of the Registration Statement as
originally filed with the Commission and each amendment thereto
(in each case including exhibits); (ii) the Prospectus and any
amended or supplemented Prospectus; and (iii) any document
incorporated by reference in the Prospectus (including exhibits
thereto). If the delivery of a prospectus is required at any time
prior to the expiration of nine months after the Effective Time
in connection with the offering or sale of the Offered
Certificates, and if at such time any events shall have occurred
as a result of which the Prospectus as then amended or
supplemented would include any untrue statement of a material
fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances
under which they were made when such Prospectus is delivered, not
misleading, or, if for any other reason it shall be necessary
during such same period to amend or supplement the Prospectus or
to file under the Exchange Act any document incorporated by
reference in the Prospectus in order to comply with the
Securities Act or the Exchange Act, the Depositor shall notify
the Underwriters and, upon any Underwriter's request, shall file
such document and prepare and furnish without charge to the
Underwriters and to any dealer in securities as many copies as
the Underwriters may from time to time reasonably request of an
amended Prospectus or a supplement to the Prospectus which
corrects such statement or omission or effects such compliance,
and in case the Underwriters are required to deliver a Prospectus
in connection with sales of any of the Offered Certificates at
any time nine months or more after the Effective Time, upon the
request of an Underwriter but at its expense, the Depositor shall
prepare and deliver to such Underwriter as many copies as such
Underwriter may reasonably request of an amended or supplemented
Prospectus complying with Section 10(a)(3) of the Securities Act.
If such amendment or supplement to the Prospectus is required to
be contained in a post-effective amendment to the Registration
Statement, the Depositor will use its best efforts to cause such
amendment of the Registration Statement to be made effective as
soon as possible.
D. To file promptly with the Commission any amendment to
the Registration Statement or the Prospectus or any supplement to
the Prospectus that may, in the judgment of the Depositor or the
Underwriters, be required by the Securities Act or requested by
the Commission.
E. To furnish the Underwriters and counsel for the
Underwriters, prior to filing with the Commission, and to obtain
the consent of the Underwriters for the filing of the following
documents relating to the Certificates: (i) amendment to the
Registration Statement or supplement to the Prospectus, or
document incorporated by reference in the Prospectus, or (ii)
Prospectus pursuant to Rule 424 of the Rules and Regulations.
F. To make generally available to holders of the Offered
Certificates as soon as practicable, but in any event not later
than 90 days after the close of the period covered thereby, a
statement of earnings of the Trust (which need not be audited)
complying with Section 11(a) of the Securities Act and the Rules
and Regulations (including, at the option of the Depositor, Rule
158) and covering a period of at least twelve consecutive months
beginning not later than the first day of the first fiscal
quarter following the Closing Date.
G. To use its best efforts, in cooperation with the
Underwriters, to qualify the Offered Certificates for offering
and sale under the applicable securities laws of such states and
other jurisdictions of the United States or elsewhere as the
Underwriters may designate, and maintain or cause to be
maintained such qualifications in effect for as long as may be
required for the distribution of the Offered Certificates. The
Depositor will file or cause the filing of such statements and
reports as may be required by the laws of each jurisdiction in
which the Offered Certificates have been so qualified.
H. So long as the Offered Certificates shall be
outstanding the Depositor shall cause the Trustee, pursuant to
the Pooling and Servicing Agreement, to deliver to the
Underwriters as soon as such statements are furnished to the
Trustee: (i) the annual statement as to compliance delivered to
the Trustee pursuant to Section 8.16 of the Pooling and Servicing
Agreement; (ii) the annual statement of a firm of independent
public accountants furnished to the Trustee pursuant to Section
8.17 of the Pooling and Servicing Agreement; (iii) the monthly
servicing report furnished to the Trustee pursuant to Section
8.29 of the Pooling and Servicing Agreement; (iv) the monthly
reports furnished to the Certificateholders pursuant to
Section 7.09 of the Pooling and Servicing Agreement; and (v) from
time to time, any other information concerning the Trust filed
with any government or regulatory authority that is otherwise
publicly available, as the Representative may reasonably request.
I. To apply the net proceeds from the sale of the Offered
Certificates in the manner set forth in the Prospectus.
J. During a period of seven calendar days from the Closing
Date, neither the Depositor nor any trust established, directly
or indirectly, by the Company will, without the Representative's
prior written consent (which consent shall not be unreasonably
withheld), offer or sell mortgage pass-through certificates
backed by mortgage loans, except pursuant to this Agreement.
K. The Depositor will enter into the applicable
agreements, to which it is a party pursuant to the Pooling and
Servicing Agreement, on or prior to the Closing Date and will
cause to be delivered to the Trustee the Insurance Policies
issued by the Certificate Insurer.
L. On each Subsequent Transfer Date, the Depositor shall
cause its special counsel to deliver a favorable opinion
substantially to the effect set forth in Section VI.G (except as
it applies to subdivisions 5 and 6 therein) hereof, appropriately
modified to refer to the applicable Subsequent Mortgage Loans,
Subsequent Transfer Agreement, Subsequent Cut-Off Date and
Subsequent Transfer Date.
M. The Depositor will cause the Computational Materials
(as defined in Section VIII.D below) with respect to the
Certificates which are delivered to the Depositor as provided in
Section VIII.D below to be filed with the Commission on a Current
Report on Form 8-K (the "Current Report") not later than the date
on which such materials are required to be filed pursuant to the
Kidder/PSA Letters (as defined in Section VIII.D below).
SECTION VI. Conditions to the Underwriters' Obligations.
The obligations of the Underwriters to purchase the Offered
Certificates pursuant to this Agreement are subject to: (i) the
accuracy on and as of the Closing Date of the representations and
warranties on the part of the Depositor herein contained
(including those representations and warranties set forth in the
Pooling and Servicing Agreement and incorporated herein); (ii)
the performance by the Depositor of all of its obligations
hereunder; (iii) the accuracy of the statements of the Depositor
made in any certificate or other document delivered pursuant to
the provisions hereof; and (iv) the following conditions as of
the Closing Date:
A. The Underwriters shall have received confirmation of
the effectiveness of the Registration Statement. No stop order
suspending the effectiveness of the Registration Statement or any
part thereof shall have been issued and no proceeding for that
purpose shall have been initiated or threatened by the
Commission. Any request of the Commission for inclusion of
additional information in the Registration Statement or the
Prospectus shall have been complied with. The Prospectus shall
have been filed pursuant to Rule 424(b).
B. The Underwriters shall not have discovered and
disclosed to the Depositor on or prior to the Closing Date that
the Registration Statement or the Prospectus or any amendment or
supplement thereto contains an untrue statement of a fact or
omits to state a fact which, in the opinion of Cadwalader,
Wickersham & Taft, counsel for the Underwriters, is material and
is required to be stated therein or is necessary to make the
statements therein not misleading.
C. All corporate proceedings and other legal matters
relating to the authorization, form and validity of this
Agreement, the Pooling and Servicing Agreement, the Insurance
Agreement, the Certificates, the Registration Statement and the
Prospectus, and all other legal matters relating to this
Agreement and the transactions contemplated hereby shall be
satisfactory in all respects to counsel for the Underwriters, and
the Depositor shall have furnished to such counsel all documents
and information that they may reasonably request to enable them
to pass upon such matters. The Representative shall have
received the Pooling and Servicing Agreement and the Offered
Certificates in form and substance satisfactory to the
Representative, duly executed by all signatories required
pursuant to the respective terms thereof.
D. Arter & Hadden shall have furnished to the Underwriters
their written opinion, as counsel to the Depositor, addressed to
the Underwriters and dated the Closing Date, in form and
substance satisfactory to the Underwriters, to the effect that:
1. The conditions to the use by the Depositor of a
registration statement on Form S-3 under the Securities Act, as
set forth in the General Instructions to Form S-3, have been
satisfied with respect to the Registration Statement and the
Prospectus.
2. The Registration Statement and any amendments thereto
have become effective under the 1933 Act; to the best of such
counsel's knowledge, no stop order suspending the effectiveness
of the Registration Statement has been issued and not withdrawn
and no proceedings for that purpose have been instituted or
threatened and not terminated; and the Registration Statement,
the Prospectus and each amendment or supplement thereto, as of
their respective effective or issue dates (other than the
financial and statistical information contained therein, as to
which such counsel need express no opinion), complied as to form
in all material respects with the applicable requirements of the
1933 Act and the rules and regulations thereunder, and such
counsel does not know of any amendment to the Registration
Statement required to be filed.
3. There are no material contracts, indentures or other
documents of a character required to be described or referred to
in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement other than those described
or referred to therein or filed or incorporated by reference as
exhibits thereto.
4. The statements set forth in the Basic Prospectus under
the captions "Description of The Certificates" and in the
Prospectus Supplement under the captions "Description of The
Class A Certificates" and "The Pooling and Servicing Agreement,"
to the extent such statements purport to summarize certain
provisions of the Certificates or of the Pooling and Servicing
Agreement, are fair and accurate in all material respects.
5. The statements set forth in the Basic Prospectus and
the Prospectus Supplement under the captions "ERISA
Considerations," "Certain Federal Income Tax Considerations,"
"Legal Investment Matters" and, "Certain Legal Aspects of the
Mortgage Assets" to the extent that they constitute matters of
federal law, provide a fair and accurate summary of such law or
conclusions.
6. The Pooling and Servicing Agreement and the Mortgage
Loan Purchase Agreements conform in all material respects to the
description thereof contained in the Prospectus and the Pooling
and Servicing Agreement is not required to be qualified under the
Trust Indenture Act of 1939, as amended, and the Trust is not
required to be registered under the Investment Company Act of
1940, as amended.
7. Neither the Depositor nor the Trust is an "investment
company" or under the "control" of an "investment company" as
such terms are defined in the 1940 Act.
8. Assuming that the Trustee causes certain assets of the
REMIC Estate, as the Trustee has covenanted to do in the Pooling
and Servicing Agreement, to be treated as a "real estate mortgage
investment conduit" ("REMIC"), as such term is defined in the
Internal Revenue Code of 1986, as amended (the "Code"), and the
parties to the Pooling and Servicing Agreement comply with the
terms thereof, such assets of the REMIC Estate will be treated as
a REMIC, the Offered Certificates and the Class B-IO Certificates
will be treated as the "regular interests" in the REMIC and the
Class R Certificates will be treated as the sole "residual
interest" in the REMIC. Neither the Trust nor certain assets and
accounts are subject to tax upon its income or assets by any
taxing authority of the State of New York or the City of New
York.
9. Assuming that the Offered Certificates are rated at the
time of issuance in one of the two highest rating categories by a
nationally recognized statistical rating organization, the
Offered Certificates at such time will be a "mortgage related
security" as such term is defined in Section 3(a)(41) of the
Securities Exchange Act of 1934, as amended.
10. To the best of such counsel's knowledge, there are no
actions, proceedings or investigations pending that would
adversely affect the status of the REMIC Estate as a REMIC.
11. As a consequence of the qualification of the REMIC
Estate as a REMIC, the Offered Certificates will be treated as
"qualifying real property loans" under Section 593(d) of the
Code, "regular . . . interest(s) in a REMIC" under Section
7701(a)(19)(C) of the Code and "real estate assets" under Section
856(c) of the Code in the same proportion that the assets in the
Trust consist of qualifying assets under such Sections. In
addition, as a consequence of the qualification of the REMIC
Estate as a REMIC interest on the Offered Certificates will be
treated as "interest on obligations secured by mortgages on real
property" under Section 856(c) of the Code to the extent that
such Offered Certificates are treated as "real estate assets"
under Section 856(c) of the Code.
12. The Certificates will, when issued, conform to the
description thereof contained in the Prospectus.
Such counsel shall also have furnished to the Underwriters a
written statement, addressed to the Underwriters and dated the
Closing Date, in form and substance satisfactory to the
Underwriters to the effect that no facts have come to the
attention of such counsel which lead them to believe that: (a)
the Registration Statement, at the time such Registration
Statement became effective, contained an untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading (except as to financial or statistical data contained
in the Registration Statement); (b) the Prospectus, as of its
date and as of the Closing Date, contained or contains an untrue
statement of a material fact or omitted or omits to state a
material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading (except as to
statements set forth in the Prospectus Supplement under the
caption "The Certificate Insurer"); or (c) any document
incorporated by reference in the Prospectus or any further
amendment or supplement to any such incorporated document made by
the Depositor prior to the Closing Date (other than any document
filed at the request of an Underwriter to the extent such
document relates to Computational Materials) contained, as of the
time it became effective or was filed with the Commission, as the
case may be, an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
E. The Underwriters shall have received the favorable
opinion, dated the Closing Date, of Arter & Hadden, special
counsel to the Depositor, addressed to the Depositor and
satisfactory to the Certificate Insurer, Standard & Poor's, A
Division of The McGraw-Hill Companies, Moody's Investors Service
Inc., Fitch Investors Service, L.P. and the Underwriters, with
respect to certain matters relating to the transfer of the
Mortgage Loans to the Depositor and from the Depositor to the
Trust, and such counsel shall have consented to reliance on such
opinion by the Certificate Insurer, Standard & Poor's, A Division
of The McGraw-Hill Companies, Moody's Investors Service Inc.,
Fitch Investors Service, L.P. and the Underwriters as though such
opinion had been addressed to each such party.
F. Thacher Proffitt & Wood, counsel for Long Beach, and
Dewey Ballantine, counsel for Advanta, each shall have furnished
to the Underwriters their written opinion, as counsel to the
related Servicer, addressed to the Underwriters and the Depositor
and dated the Closing Date, in form and substance satisfactory to
the Underwriters, to the effect that:
1. The Servicers are each validly existing in good
standing as a corporation under the laws of their States of
incorporation.
2. Each of the Servicers has full corporate power and
authority to serve in the capacity of servicers of the related
Mortgage Loans as contemplated in the Pooling and Servicing
Agreement.
3. The Pooling and Servicing Agreement and the Insurance
Agreement have been duly authorized, executed and delivered by
the Servicers, and, assuming the due authorization, execution and
delivery of such agreements by the other parties thereto,
constitute the legal, valid and binding agreements of the
Servicers, enforceable against them in accordance with their
terms, subject as to enforceability to (x) bankruptcy,
insolvency, reorganization, moratorium, receivership or other
similar laws now or hereafter in effect relating to creditors'
rights generally and (y) the qualification that the remedy of
specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the
discretion, with respect to such remedies, of the court before
which any proceedings with respect thereto may be brought.
4. No consent, approval, authorization, order,
registration or qualification of or with any court or
governmental agency or body having jurisdiction over either of
the Servicers is required for the consummation by either of them
of the transactions contemplated by the Pooling and Servicing
Agreement and the Insurance Agreement, except such consents,
approvals, authorizations, registrations and qualifications as
have been obtained.
5. The execution, delivery or performance by each of the
Servicers of the Pooling and Servicing Agreement or the Insurance
Agreement and the transactions contemplated thereby do not
(A) conflict with or result in a breach of, or constitute a
default under, (i) any term or provision of the certificate of
incorporation or by-laws of such Servicer; (ii) any term or
provision of any material agreement, deed of trust, mortgage loan
agreement, contract, instrument or indenture, or other agreement
to which such Servicer is a party or is bound or to which any of
the property or assets of such Servicer or any of its
subsidiaries is subject; (iii) to the best of such firm's
knowledge without independent investigation any order, judgment,
writ, injunction or decree of any court or governmental authority
having jurisdiction over such Servicer; or (iv) any law, rule or
regulations applicable to such Servicer; or (B) to the best of
such firm's knowledge without independent investigation, results
in the creation or imposition of any lien, charge or encumbrance
upon the Trust Estate or upon the Certificates.
6. There are, to the best of such counsel's knowledge
without independent investigation, no actions, proceedings or
investigations pending or threatened against the Servicers before
any court, administrative agency or other tribunal (a) asserting
the validity of the Pooling and Servicing Agreement, the
Insurance Agreement or the Certificates, (b) seeking to prevent
the consummation of any of the transactions contemplated by the
Pooling and Servicing Agreement or (c) which would materially and
adversely affect the performance by the Servicers of its
obligations under, or the validity or enforceability of, the
Pooling and Servicing Agreement, or the Insurance Agreement.
G. Counsel for the Depositor and the Seller (which may be
in-house counsel) shall have furnished to the Underwriters such
counsel's written opinion, addressed to the Underwriters and
dated the Closing Date, in form and substance satisfactory to the
Underwriters, to the effect that:
1. The Depositor has been duly organized and is validly
existing as a corporation in good standing under the laws of the
State of Delaware and is duly qualified to do business and is in
good standing as a foreign corporation in each jurisdiction in
which its ownership or lease of property or the conduct of its
business requires such qualification (except where any such
failure would not have a material adverse effect on the
Depositor's ability to perform its obligations under this
Agreement, the Pooling and Servicing Agreement or the Insurance
Agreement), and has all power and authority necessary to own or
hold its properties and to conduct the business in which it is
engaged and to enter into and perform its obligations under this
Agreement, the Pooling and Servicing Agreement and the Insurance
Agreement, and to cause the Certificates to be issued.
2. The Depositor is not in violation of its articles of
incorporation or by-laws or in default in the performance or
observance of any material obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which the Depositor
is a party or by which it or its properties may be bound, which
default might result in any material adverse change in the
financial condition of the Depositor or which might materially
and adversely affect the properties or assets, taken as a whole,
the Depositor.
3. This Agreement, the Pooling and Servicing Agreement,
the Indemnification Agreement and the Insurance Agreement have
been duly authorized, executed and delivered by the Depositor and
the Subsequent Transfer Agreements have been duly authorized, and
when duly executed and delivered by the Depositor and, assuming
the due authorization, execution and delivery of such agreements
by the other parties thereto, such agreements constitute and in
the case of any Subsequent Transfer Agreement will constitute
valid and binding obligations, enforceable against the Depositor
in accordance with their respective terms, subject as to
enforceability to (x) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally, (y) general principles
of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law) and (z) with respect to rights of
indemnity under this Agreement and the Insurance Agreement,
limitations of public Policies under applicable securities laws.
4. The execution, delivery and performance of this
Agreement, the Pooling and Servicing Agreement, the Insurance
Agreement and each Subsequent Transfer Agreement by the
Depositor, the consummation of the transactions contemplated
hereby and thereby, and the issuance and delivery of the
Certificates (i) do not and will not conflict with or result in a
breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which
the Depositor is a party or by which the Depositor is bound or to
which any of the property or assets of the Depositor or any of
its subsidiaries is subject, which breach or violation would have
a material adverse effect on the business, operations or
financial condition of the Depositor, (ii) nor will such actions
result in a violation of the provisions of the articles of
incorporation or by-laws of the Depositor or any statute or any
order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Depositor or any of its
properties or assets, which breach or violation would have a
material adverse effect on the business, operations or financial
condition of the Depositor, and (iii) nor will such actions
result in the creation or imposition of any lien, charge or
encumbrance upon the Trust Estate or upon the Certificates,
except as otherwise contemplated by the Pooling and Servicing
Agreement.
5. The direction by the Depositor to the Trustee to
execute, issue, authenticate and deliver the Certificates has
been duly authorized by the Depositor and, assuming that the
Trustee has been duly authorized to do so, when executed by the
Depositor and authenticated and delivered by the Trustee in
accordance with the Pooling and Servicing Agreement, the
Certificates will be validly issued and outstanding and will be
entitled to the benefits of the Pooling and Servicing Agreement.
6. No consent, approval, authorization, order,
registration or qualification of or with any court or
governmental agency or body of the United States is required for
the issuance of the Certificates, and the sale of the Offered
Certificates to the Underwriters, or the consummation by the
Depositor of the other transactions contemplated by this
Agreement, the Pooling and Servicing Agreement and the Insurance
Agreement, except such consents, approvals, authorizations,
registrations or qualifications as may be required under the 1933
Act or State securities or Blue Sky laws in connection with the
purchase and distribution of the Offered Certificates by the
Underwriters or as have been previously obtained.
7. There are no actions, proceedings or investigations
pending with respect to which the Depositor has received service
of process before or, to the best of such counsel's knowledge,
without independent investigation, to the best of such counsel's
knowledge without independent investigation, threatened by any
court, administrative agency or other tribunal to which the
Depositor is a party or of which any of its properties is the
subject: (a) which if determined adversely to the Depositor would
have a material adverse effect on the business, results of
operations or financial condition of the Depositor; (b) asserting
the invalidity of the Pooling and Servicing Agreement, the
Insurance Agreement or the Certificates; (c) seeking to prevent
the issuance of the Certificates or the consummation by the
Depositor of any of the transactions contemplated by the Pooling
and Servicing Agreement, the Insurance Agreement or this
Agreement, as the case may be; or (d) which might materially and
adversely affect the performance by the Depositor of its
obligations under, or the validity or enforceability of, the
Pooling and Servicing Agreement, the Insurance Agreement, this
Agreement or the Certificates.
8. The Certificates have been duly and validly authorized
and issued, and, immediately prior to the sale of the Offered
Certificates to the Underwriters, such Certificates are owned by
the Depositor, free and clear of all Liens.
9. AMRESCO Residential Mortgage Corporation (the "Seller")
has been duly organized and is validly existing as a corporation
in good standing under the laws of the State of Delaware and is
duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction in which its ownership
or lease of property or the conduct of its business requires such
qualification, and has all power and authority necessary to own
or hold its properties and to conduct the business in which it is
engaged and to enter into and perform its obligations under the
Mortgage Loan Purchase Agreements.
10. The Seller is not in violation of its articles of
incorporation or by-laws or in default in the performance or
observance of any material obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which the Seller is
a party or by which it or its properties may be bound, which
default might result in any material adverse changes in the
financial condition, earnings, affairs or business of the Seller
or which might materially and adversely affect the properties or
assets, taken as a whole, of the Seller.
11. The Mortgage Loan Purchase Agreements have been duly
authorized, executed and delivered by the Seller and, assuming
the due authorization, execution and delivery of such agreements
by the parties thereto, such agreements will constitute valid and
binding obligations, enforceable against the Seller in accordance
with their respective terms, subject as to enforceability to (x)
bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors'
rights generally, (y) general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at
law).
12. The execution, delivery and performance of the Mortgage
Loan Purchase Agreements by the Seller and the consummation of
the transactions contemplated thereby do not and will not
conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Seller is a party or by
which the Seller is bound or to which any of the property or
assets of the Seller or any of its subsidiaries is subject, which
breach or violation would have a material adverse effect on the
business, operations or financial condition of the Seller, nor
will such actions result in a violation of the provisions of the
articles of incorporation or by-laws of the Seller or any statute
or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Seller or any of its
properties or assets, which breach or violation would have a
material adverse effect on the business, operations or financial
condition of the Seller.
H. The Underwriters shall have received the favorable
opinion of counsel (which may be in-house counsel) to the
Trustee, dated the Closing Date, addressed to the Underwriters
and in form and scope satisfactory to counsel to the
Underwriters, to the effect that:
1. The Trustee is a banking association duly incorporated
and validly existing under the laws of the United States of
America.
2. The Trustee has the full corporate trust power to
execute, deliver and perform its obligations under the Pooling
and Servicing Agreement.
3. The execution and delivery by the Trustee of the
Pooling and Servicing Agreement and the performance by the
Trustee of its obligations under the Pooling and Servicing
Agreement have been duly authorized by all necessary corporate
action of the Trustee.
4. The Pooling and Servicing Agreement is a valid and
legally binding obligation of the Trustee enforceable against the
Trustee.
5. The execution and delivery by the Trustee of the
Pooling and Servicing Agreement does not (a) violate the
organization certificate of the Trustee or the By-laws of the
Trustee, (b) to such counsel's knowledge, violate any judgment,
decree or order of any California or United States federal court
or other California or United States federal governmental
authority by which the Trustee is bound or (c) assuming the non-
existence of any judgment, decree or order of any court or other
governmental authority that would be violated by such execution
and delivery, violate any California or United States federal
statute, rule or regulation or require any consent, approval or
authorization of any California or United States federal court or
other California or United States federal governmental authority.
6. The Certificates have been duly authenticated, executed
and delivered by the Trustee.
7. If the Trustee were acting in the stead of either
Servicer under the Pooling and Servicing Agreement as of the date
of such opinion, the Trustee would have the full corporate trust
power to perform the obligations of either Servicer under the
Pooling and Servicing Agreement; and
8. To the best of such counsel's knowledge, there are no
actions, proceedings or investigations pending or threatened
against or affecting the Trustee before or by any court,
arbitrator, administrative agency or other governmental authority
which, if decided adversely to the Trustee, would materially and
adversely affect the ability of the Trustee to carry out the
transactions contemplated in the Pooling and Servicing Agreement.
I. The Underwriters shall have received the favorable
opinion or opinions, dated the date of the Closing Date, of
counsel for the Underwriters, with respect to the issue and sale
of the Offered Certificates, this Agreement, the Prospectus and
such other related matters as the Underwriters may reasonably
require.
J. The Underwriters shall have received the favorable
opinion dated the Closing Date, from Dewey Ballantine counsel to
the Certificate Insurer in form and scope satisfactory to counsel
for the Underwriters, substantially to the effect that:
1. The Certificate Insurer is a stock insurance
corporation duly incorporated, validly existing, and in good
standing under the laws of the State of New York. The Certificate
Insurer is validly licensed and authorized to issue the
Certificate Insurance Policies and perform its obligations under
the Insurance Agreement in accordance with the terms thereof,
under the laws of the State of New York.
2. The Certificate Insurer has the corporate power to
execute and deliver, and to take all action required of it under
the Insurance Agreement and the Certificate Insurance Policies.
3. The execution, delivery and performance by the
Certificate Insurer of the Certificate Insurance Policies and
Insurance Agreement is within the corporate power of the
Certificate Insurer and has been authorized by all necessary
corporate action on the part of the Certificate Insurer, and does
not require the consent or approval of, the giving of notice to,
the prior registration with, or the taking of any other action in
respect of any state or other governmental agency or authority
which has not previously been obtained or effected.
4. The Certificate Insurance Policies and Insurance
Agreement have been duly authorized, executed and delivered by
the Certificate Insurer and constitute the legal, valid and
binding agreement of the Certificate Insurer, enforceable against
the Certificate Insurer in accordance with its terms subject, as
to enforcement, to (x) bankruptcy, reorganization, insolvency,
moratorium and other similar laws relating to or affecting the
enforcement of creditors' rights generally, including, without
limitation, laws relating to fraudulent transfers or conveyances,
preferential transfers and equitable subordination, presently or
from time to time in effect and general principles of equity
(regardless of whether such enforcement is considered in a
proceeding in equity or at law), as such laws may be applied in
any such proceeding with respect to the Certificate Insurer and
(y) the qualification that the remedy of specific performance and
other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any
proceedings with respect thereto may be brought.
5. To the extent the Certificate Insurance Policies
constitutes a security within the meaning of Section 2(1) of the
Securities Act, it is a security that is exempt from the
registration requirements of the Act.
6. The information set forth under the caption "THE
CERTIFICATE INSURANCE Policies AND THE CERTIFICATE INSURER" in
the Prospectus Supplement, insofar as such information
constitutes a description of the Certificate Insurance Policies,
accurately summarizes the Certificate Insurance Policies.
K. The Depositor shall have furnished to the Underwriters
a certificate, dated the Closing Date and signed by the Chairman
of the Board, the President or a Vice President of the Depositor
to the extent that the signer of such certificate has carefully
examined the Registration Statement (excluding any documents
incorporated therein by reference), the Pooling and Servicing
Agreement and this Agreement and that, to the best of his or her
knowledge based upon reasonable investigation:
1. The representations and warranties of the Depositor in
this Agreement, the Pooling and Servicing Agreement and all
related agreements are true and correct as of the Closing Date;
and the Depositor has complied with all agreements and satisfied
all the conditions on its part which are to have been complied
with on or prior to the Closing Date.
2. There has been no amendment or other document filed
affecting the certificate of incorporation or bylaws of the
Depositor since November 9, 1995 and no such amendment has been
authorized. No event has occurred since January 19, 1996 which
has affected the good standing of the Depositor under the laws of
the State of Delaware.
3. There has not occurred any material adverse change, or
any development involving a prospective material adverse change,
in the condition, financial or otherwise, or in the earnings,
business or operations of the Depositor from December 1, 1995.
4. There are no actions, suits or proceedings pending with
respect to which it has received service of process or, to the
best of such officer's knowledge, threatened against or affecting
the Depositor which if adversely determined, individually or in
the aggregate, would be reasonably likely to adversely affect the
Depositor's obligations under the Pooling and Servicing Agreement
or this Agreement in any material way; and no merger,
liquidation, dissolution or bankruptcy of the Depositor is
pending or contemplated.
L. The Trustee shall have furnished to the Underwriters a
certificate of the Trustee, signed by one or more duly authorized
officers of the Trustee, dated the Closing Date, as to the due
authorization, execution and delivery of the Pooling and
Servicing Agreement by the Trustee and the acceptance by the
Trustee of the trusts created thereby and the due execution,
authentication and delivery of the Certificates by the Trustee
thereunder and such other matters as the Representative shall
reasonably request.
M. The Certificate Insurance Policies and the Insurance
Agreement shall have been issued by the Certificate Insurer and
shall have been duly authenticated by an authorized agent of the
Certificate Insurer, if so required under applicable state law or
regulations.
N. The Offered Certificates shall have been rated "AAA" by
Standard & Poor's, "Aaa" by Moody's Investors Service and "AAA"
by Fitch Investors Service, L.P.
O. The Depositor shall have furnished to the Underwriters
such further information, certificates and documents as the
Underwriters may reasonably have requested not less than three
full business days prior to the Closing Date.
P. Prior to the Closing Date, counsel for the Underwriters
shall have been furnished with such documents and opinions as
they may reasonably require for the purpose of enabling them to
pass upon the issuance and sale of the Certificates as herein
contemplated and related proceedings or in order to evidence the
accuracy and completeness of any of the representations and
warranties, or the fulfillment of any of the conditions, herein
contained, and all proceedings taken by the Depositor in
connection with the issuance and sale of the Certificates as
herein contemplated shall be satisfactory in form and substance
to the Underwriters and counsel for the Underwriters.
Q. Subsequent to the execution and delivery of this
Agreement none of the following shall have occurred: (i) trading
in securities generally on the New York Stock Exchange, the
American Stock Exchange or the over-the counter market shall have
been suspended or minimum prices shall have been established on
either of such exchanges or such market by the Commission, by
such exchange or by any other regulatory body or governmental
authority having jurisdiction; (ii) a banking moratorium shall
have been declared by Federal or state authorities; (iii) the
United States shall have become engaged in hostilities, there
shall have been an escalation of hostilities involving the United
States or there shall have been a declaration of a national
emergency or war by the United States; or (iv) there shall have
occurred such a material adverse change in general economic,
political or financial conditions (or the effect of international
conditions on the financial markets of the United States shall be
such) as to make it in each of the instances set forth in clauses
(i), (ii), (iii) and (iv) herein, in the reasonable judgment of
the Underwriters, impractical or inadvisable to proceed with the
public offering or delivery of the Certificates on the terms and
in the manner contemplated in the Prospectus.
R. The Representative shall have received a letter from
Deloitte & Touche, LLP, dated on or before the Closing Date, in
form and substance satisfactory to the Representative and special
counsel for the Underwriters, addressed to each of the
Underwriters to the effect that they have performed certain
specified procedures requested by the Representative with respect
to the information set forth in the Prospectus and certain
matters relating to the Depositor.
S. The Representative and special counsel for the
Underwriters shall have received copies of any opinions of
counsel supplied to the rating organizations relating to any
matters with respect to the Certificates. Any such opinions
shall be dated the Closing Date and addressed to each of the
Underwriters or accompanied by reliance letters to the
Representative or shall state that each of the Underwriters may
rely upon them.
T. On or prior to the Closing Date there shall not have
occurred any downgrading, nor shall any notice have been given of
(A) any intended or potential downgrading or (B) any review or
possible change in rating the direction of which has not been
indicated, in the rating accorded the Certificate Insurer's
claims paying ability by any "nationally recognized statistical
rating organization," as such term is defined for purposes of the
Securities Act.
U. There has not occurred any change, or any development
involving a prospective change, in the condition, financial or
otherwise, or in the earnings, business or operations, since
December 1, 1995, of (A) the Depositor and its subsidiaries or
(B) the Certificate Insurer, that is in the Representative's
judgment material and adverse and that makes it in the
Representative's judgment impracticable to market the Offered
Certificates on the terms and in the manner contemplated in the
Prospectus.
V. Thacher Proffitt & Wood, counsel for Long Beach, shall
have furnished to the Underwriters their written opinion, as
counsel to Long Beach, addressed to the Underwriters and the
Depositor and dated the Closing Date, in form and substance
satisfactory to the Underwriters, to the effect that the Long
Beach Purchase Agreement has been duly authorized, executed and
delivered by Long Beach, and assuming the due authorization,
execution and deliver of such agreements by the other parties
thereto, constitutes the legal, valid and binding agreement of
Long Beach, enforceable against it in accordance with its terms,
subject as to enforceability to (x) bankruptcy, insolvency,
reorganization, moratorium, receivership or other similar laws
now or hereafter in effect relating to creditors' rights
generally and (y) the qualification that the remedy of specific
performance and injunctive and other forms of equitable relief
may be subject to equitable defenses and to the discretion, with
respect to such remedies, of the court before which any
proceedings with respect thereto may be brought.
If any condition specified in this Section VI shall not have
been fulfilled when and as required to be fulfilled, this
Agreement may be terminated by the Underwriters by notice to the
Depositor at any time at or prior to the Closing Date, and such
termination shall be without liability of any party to any other
party except as provided in Section VII.
All opinions, letters, evidence and certificates mentioned
above or elsewhere in this Agreement shall be deemed to be in
compliance with the provisions hereof only if they are in form
and substance reasonably satisfactory to counsel for the
Underwriters.
SECTION VII. Payment of Expenses. If the transaction
closes, or if the transaction fails to close other than as a
result of a failure of the Underwriter to perform hereunder, the
Depositor, agrees to pay: (a) the costs incident to the
authorization, issuance, sale and delivery of the Certificates
and any taxes payable in connection therewith; (b) the costs
incident to the preparation, printing and filing under the
Securities Act of the Registration Statement and any amendments
and exhibits thereto (including the Prospectus); (c) the costs of
distributing the Registration Statement as originally filed and
each amendment thereto and any post-effective amendments thereof
(including, in each case, exhibits), the Prospectus and any
amendment or supplement to the Prospectus or any document
incorporated by reference therein, all as provided in this
Agreement; (d) the costs of reproducing and distributing this
Agreement; (e) the fees and expenses of qualifying the
Certificates under the securities laws of the several
jurisdictions as provided in Section V(G) hereof and of
preparing, printing and distributing a Blue Sky Memorandum and a
Legal Investment Survey (including related fees and expenses of
counsel to the Representative); (f) any fees charged by
securities rating services for rating the Offered Certificates;
(g) the cost of the accountant's letter relating to the
Prospectus; (h) the fees and expenses of the Certificate Insurer
(other than the fees payable pursuant to the Pooling and
Servicing Agreement) and (i) all other costs and expenses
incident to the performance of the obligations of the Depositor
(including costs and expenses of its counsel); provided that,
except as provided in this Section VII, the Underwriters shall
pay their own costs and expenses, including the costs and
expenses of their counsel, any transfer taxes on the Offered
Certificates which they may sell and the expenses of advertising
any offering of the Offered Certificates made by the
Underwriters, and the Underwriters shall pay the cost of any
accountant's comfort letters which such Underwriters choose to
request relating to any Computational Materials (as defined
herein).
If this Agreement is terminated by the Underwriters in
accordance with the provisions of Section VI or Section XI,
whether or not the transactions contemplated hereunder are
consummated, the Depositor shall cause the Underwriters to be
reimbursed for all reasonable out-of-pocket expenses.
SECTION VIII. Indemnification and Contribution. A. The
Depositor agrees to indemnify and hold harmless each Underwriter
and each person, if any, who controls such Underwriter within the
meaning of Section 15 of the Securities Act or Section 12 of the
Exchange Act from and against any and all loss, claim, damage or
liability, joint or several, or any action in respect thereof
(including, but not limited to, any loss, claim, damage,
liability or action relating to purchases and sales of the
Offered Certificates), to which such Underwriter or any such
controlling person may become subject, under the Securities Act
or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue statement
or alleged untrue statement of a material fact contained in the
Registration Statement, or any amendment thereof or supplement
thereto, (ii) the omission or alleged omission to state in the
Registration Statement a material fact required to be stated
therein or necessary to make the statements therein not
misleading, (iii) any untrue statement or alleged untrue
statement of a material fact contained in the Prospectus, or any
amendment thereof or supplement thereto, or (iv) the omission or
alleged omission to state in the Prospectus a material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were
made, not misleading and shall reimburse such Underwriter and
each such controlling person promptly upon demand for any legal
or other expenses reasonably incurred by such Underwriter or such
controlling person in connection with investigating or defending
or preparing to defend against any such loss, claim, damage,
liability or action as such expenses are incurred; provided,
however, that the Depositor shall not be liable in any such case
to the extent that any such loss, claim, damage, liability or
action arises out of, or is based upon, any untrue statement or
alleged untrue statement or omission or alleged omission made in
the Prospectus, or any amendment thereof or supplement thereto,
or the Registration Statement, or any amendment thereof or
supplement thereto, in reliance upon and in conformity with
written information furnished to the Depositor by or on behalf of
such Underwriter specifically for inclusion therein (except to
the extent that any untrue statement or alleged untrue statement
or omission or alleged omission is a result of Seller Provided
Information which is not accurate and complete in all material
respects). The foregoing indemnity agreement is in addition to
any liability which the Depositor may otherwise have to any
Underwriter or any controlling person of any of such Underwriter.
B. Each Underwriter severally agrees to indemnify and hold
harmless the Depositor, each of its directors, each of its
officers who signed the Registration Statement, and each person,
if any, who controls the Depositor within the meaning of Section
15 of the Securities Act or Section 12 of the Exchange Act
against any and all loss, claim, damage or liability, or any
action in respect thereof, to which the Depositor or any such
director, officer or controlling person may become subject, under
the Securities Act or otherwise, insofar as such loss, claim,
damage, liability or action arises out of, or is based upon, (i)
any untrue statement or alleged untrue statement of a material
fact contained in the Prospectus, or any amendment thereof or
supplement thereto, or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements in the Prospectus, when
considered in conjunction with the Prospectus, and in the light
of the circumstances under which they were made, not misleading,
but in each case only to the extent that the untrue statement or
alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information
furnished to the Depositor by or on behalf of such Underwriter
specifically for inclusion therein, and shall reimburse the
Depositor and any such director, officer or controlling person
for any legal or other expenses reasonably incurred by the
Depositor or any director, officer or controlling person in
connection with investigating or defending or preparing to defend
against any such loss, claim, damage, liability or action as such
expenses are incurred. The foregoing indemnity agreement is in
addition to any liability which any Underwriter may otherwise
have to the Depositor or any such director, officer or
controlling person.
C. Promptly after receipt by any indemnified party under
this Section VIII of notice of any claim or the commencement of
any action, such indemnified party shall, if a claim in respect
thereof is to be made against any indemnifying party under this
Section VIII, notify the indemnifying party in writing of the
claim or the commencement of that action; provided, however, that
the failure to notify an indemnifying party shall not relieve it
from any liability which it may have under this Section VIII
except to the extent it has been materially prejudiced by such
failure and, provided further, that the failure to notify any
indemnifying party shall not relieve it from any liability which
it may have to any indemnified party otherwise than under this
Section VIII.
If any such claim or action shall be brought against an
indemnified party, and it shall notify the indemnifying party
thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense
thereof with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to the
indemnified party of its election to assume the defense of such
claim or action, except to the extent provided in the next
following paragraph, the indemnifying party shall not be liable
to the indemnified party under this Section VIII for any legal or
other expenses subsequently incurred by the indemnified party in
connection with the defense thereof other than reasonable costs
of investigation.
Any indemnified party shall have the right to employ
separate counsel in any such action and to participate in the
defense thereof, but the fees and expenses of such counsel shall
be at the expense of such indemnified party unless: (i) the
employment thereof has been specifically authorized by the
indemnifying party in writing; (ii) such indemnified party shall
have been advised by such counsel that there may be one or more
legal defenses available to it which are different from or
additional to those available to the indemnifying party and in
the reasonable judgment of such counsel it is advisable for such
indemnified party to employ separate counsel; or (iii) the
indemnifying party has failed to assume the defense of such
action and employ counsel reasonably satisfactory to the
indemnified party, in which case, if such indemnified party
notifies the indemnifying party in writing that it elects to
employ separate counsel at the expense of the indemnifying party,
the indemnifying party shall not have the right to assume the
defense of such action on behalf of such indemnified party, it
being understood, however, the indemnifying party shall not, in
connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for
the reasonable fees and expenses of more than one separate firm
of attorneys (in addition to one local counsel per jurisdiction)
at any time for all such indemnified parties, which firm shall be
designated in writing by the related Underwriter, if the
indemnified parties under this Section VIII consist of one or
more Underwriters or any of its or their controlling persons, or
the Depositor, if the indemnified parties under this Section VIII
consist of the Depositor or any of the Depositor's directors,
officers or controlling persons.
Each indemnified party, as a condition of the indemnity
agreements contained in Section VIII(A) and (B), shall use its
best efforts to cooperate with the indemnifying party in the
defense of any such action or claim. No indemnifying party shall
be liable for any settlement of any such action effected without
its written consent (which consent shall not be unreasonably
withheld), but if settled with its written consent or if there be
a final judgment for the plaintiff in any such action, the
indemnifying party agrees to indemnify and hold harmless any
indemnified party from and against any loss or liability by
reason of such settlement or judgment.
Notwithstanding the foregoing paragraph, if at any time an
indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel,
the indemnifying party agrees that it shall be liable for any
settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 30 days after
receipt by such indemnifying party of the aforesaid request and
(ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the
date of such settlement. No indemnifying party shall, without
the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of
which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release
of such indemnified party from all liability on claims that are
the subject matter of such proceeding.
D. Computational Materials. Not later than 10:30 a.m. New
York City time, on the business day before the date on which the
Current Report relating to the Certificates is required to be
filed by the Depositor with the Commission pursuant to Section
V.M hereof, each Underwriter shall deliver to the Depositor five
complete copies of all materials, if any, provided by such
Underwriter to prospective investors in such Certificates which
constitute "Computational Materials" within the meaning of the no-
action letter dated May 20, 1994, issued by the Division of
Corporation Finance of the Commission to Kidder, Peabody
Acceptance Corporation I, Kidder, Peabody & Co. Incorporated, and
Kidder Structured Asset Corporation, the no-action letter dated
May 27, 1994, issued by the Division of Corporation Finance of
the Commission to the Public Securities Association and the no-
action letter of February 17, 1995 issued by the Commission to
the Public Securities Association (collectively, the "Kidder/PSA
Letters") and the filing of which is a condition of the relief
granted in such letters (such materials being the "Computational
Materials"). Each delivery of Computational Materials to the
Depositor pursuant to this paragraph (a) shall be effected by
delivering four copies of such material to counsel for the
Depositor on behalf of the Depositor and one copy of such
materials to the Depositor.
E. Each Underwriter severally and not jointly agrees,
assuming all Seller Provided Information is accurate and complete
in all material respects, to indemnify and hold harmless the
Depositor, each of the Depositor's officers and directors and
each person who controls the Depositor within the meaning of
Section 15 of the Securities Act and Section 12 of the Exchange
Act against any and all losses, claims, damages or liabilities,
joint or several, to which they may become subject under the
Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement of a material fact
contained in the Computational Materials provided by such
Underwriter, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, when
considered in conjunction with the Prospectus, and in the light
of the circumstances under which they were made, not misleading,
and agrees to reimburse each such indemnified party for any legal
or other expenses reasonably incurred by him, her or it in
connection with investigating or defending or preparing to defend
any such loss, claim, damage, liability or action as such
expenses are incurred. The obligations of an Underwriter under
this Section VIII (E) shall be in addition to any liability which
such Underwriter may otherwise have.
The procedures set forth in Section VIII (C) shall be
equally applicable to this Section VIII (E).
F. If the indemnification provided for in this Section
VIII shall for any reason be unavailable to or insufficient to
hold harmless an indemnified party under Section VIII (A), (B) or
(E) in respect of any loss, claim, damage or liability, or any
action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by
such indemnified party as a result of such loss, claim, damage or
liability, or action in respect thereof, (i) in such proportion
as shall be appropriate to reflect the relative benefits received
by the Depositor on the one hand and the related Underwriters on
the other from the offering of the related Offered Certificates
or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law or if the indemnified party failed to
give the notice required under Section VIII(C), in such
proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative
fault of the Depositor on the one hand and the related
Underwriter on the other with respect to the statements or
omissions which resulted in such loss, claim, damage or
liability, or action in respect thereof, as well as any other
relevant equitable considerations.
The relative benefits of an Underwriter and the Depositor
shall be deemed to be in such proportion as the total net
proceeds from the offering (before deducting expenses) received
by the Depositor bear to the total underwriting discounts and
commissions received by the related Underwriter from time to time
in negotiated sales of the related Offered Certificates.
The relative fault of an Underwriter and the Depositor shall
be determined by reference to whether the untrue or alleged
untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied
or prepared by the Depositor or by such Underwriter, the intent
of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement
or omission and other equitable considerations.
The Depositor and the Underwriters agree that it would not
be just and equitable if contributions pursuant to this Section
VIII(F) were to be determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purposes) or by
any other method of allocation which does not take into account
the equitable considerations referred to herein. The amount paid
or payable by an indemnified party as a result of the loss,
claim, damage or liability, or action in respect thereof,
referred to above in this Section VIII(F) shall be deemed to
include, for purposes of this Section VIII(F), any legal or other
expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or
claim.
For purposes of this Section VIII, in no case shall any
Underwriter (except with respect to any document (other than the
Computational Materials) incorporated by reference into the
Registration Statement or Prospectus at the request of such
Underwriter and except as may be provided in any agreement among
the Underwriters relating to the offering of the Offered
Certificates) be responsible for any amount in excess of (x) the
amount received by such Underwriter in connection with its resale
of the Offered Certificates over (y) the amount paid by such
Underwriter to the Depositor for the Offered Certificates by such
Underwriter hereunder. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
The Depositor and each Underwriter expressly waive, and
agree not to assert, any defense to their respective
indemnification and contribution obligations under this Section
VIII which they might otherwise assert based upon any claim that
such obligations are unenforceable under federal or state
securities laws or by reason of public Policy.
"Seller-Provided Information" means any computer tape (or other
information) furnished to any Underwriter by the Seller
concerning the assets comprising the Trust.
G. The Underwriters confirm that the information set forth
in the last paragraph on the front cover page of the Prospectus
Supplement and the Computational Materials are correct, and, the
Depositor acknowledges that such information constitutes the only
information furnished in writing to the Depositor by or on behalf
of any Underwriter specifically for inclusion in the Registration
Statement and the Prospectus.
SECTION IX. Representations, Warranties and Agreements to
Survive Delivery. All representations, warranties and agreements
contained in this Agreement or contained in agreements delivered
pursuant hereto or certificates of officers of the Depositor
submitted pursuant hereto shall remain operative and in full
force and effect, regardless of any investigation made by or on
behalf of the Underwriters or controlling persons thereof, or by
or on behalf of the Depositor and shall survive delivery of any
Offered Certificates to the Underwriters.
SECTION X. Default by One or More of the Underwriters. If
one or more of the Underwriters participating in the public
offering of the Offered Certificates shall fail at the Closing
Date to purchase the Offered Certificates which it is (or they
are) obligated to purchase hereunder (the "Defaulted
Certificates"), then the non-defaulting Underwriters shall have
the right, within 48 hours thereafter, to make arrangements for
one or more of the non-defaulting Underwriters, or any other
underwriters, to purchase all, but not less than all, of the
Defaulted Certificates in such amounts as may be agreed upon and
upon the terms herein set forth (as used in this Agreement, the
term "Underwriter" includes any underwriter substituted for an
Underwriter under this Section X). If, however, the Underwriters
have not completed such arrangements within such 48-hour period,
then:
(i) if the aggregate original principal amount of Defaulted
Certificates does not exceed 10% of the aggregate original
principal amount of the Offered Certificates to be purchased
pursuant to this Agreement, the non-defaulting Underwriters named
in this Agreement shall be obligated to purchase the full amount
thereof in the proportions that their respective underwriting
obligations hereunder bear to the underwriting obligations of all
such non-defaulting Underwriters, or
(ii) if the aggregate original principal amount of Defaulted
Certificates exceeds 10% of the aggregate original principal
amount of the Offered Certificates to be purchased pursuant to
this Agreement, this Agreement shall terminate, without any
liability on the part of any non-defaulting Underwriters.
No action taken pursuant to this Section X shall relieve any
defaulting Underwriter from the liability with respect to any
default of such Underwriter under this Agreement.
In the event of a default by any Underwriter as set forth in
this Section X, each of the Underwriters and the Depositor shall
have the right to postpone the Closing Date for a period not
exceeding seven Business Days in order that any required changes
in the Registration Statement or Prospectus or in any other
documents or arrangements may be effected.
SECTION XI. Termination of Agreement. The Underwriters may
terminate this Agreement immediately upon notice to the
Depositor, at any time at or prior to the Closing Date if any of
the events or conditions described in Section VI(Q) of this
Agreement shall occur and be continuing. In the event of any such
termination, the provisions of Section VII, the indemnity
agreement set forth in Section VIII, and the provisions of
Sections IX and XIV shall remain in effect.
SECTION XII. Notices. All statements, requests, notices and
agreements hereunder shall be in writing, and:
A. if to the Underwriters, shall be delivered or sent by
mail, telex or facsimile transmission to the Representative at
its address set forth above;
B. if to the Depositor, shall be delivered or sent by
overnight mail or facsimile transmission to 1845 Woodall Rodgers
Freeway, Suite 1700, Dallas, TX 75201, Attn.: General Counsel,
Fax No. 214-953-7757;
SECTION XIII. Persons Entitled to the Benefit of this
Agreement. This Agreement shall inure to the benefit of and be
binding upon the Underwriters and the Depositor, and their
respective successors. This Agreement and the terms and
provisions hereof are for the sole benefit of only those persons,
except that the representations, warranties, indemnities and
agreements contained in this Agreement shall also be deemed to be
for the benefit of the person or persons, if any, who control any
of the Underwriters within the meaning of Section 15 of the
Securities Act, and for the benefit of directors of the
Depositor, officers of the Depositor who have signed the
Registration Statement and any person controlling the Depositor
within the meaning of Section 15 of the Securities Act. Nothing
in this Agreement is intended or shall be construed to give any
person, other than the persons referred to in this Section XIII,
any legal or equitable right, remedy or claim under or in respect
of this Agreement or any provision contained herein.
SECTION XIV. Survival. The respective indemnities,
representations, warranties and agreements of the Depositor and
the Underwriters contained in this Agreement, or made by or on
behalf of them, respectively, pursuant to this Agreement, shall
survive the delivery of and payment for the Certificates and
shall remain in full force and effect, regardless of any
investigation made by or on behalf of any of them or any person
controlling any of them. The provisions of Sections V, VII and
VIII hereof shall survive the termination or cancellation of this
Agreement.
SECTION XV. Definition of the Term "Business Day". For
purposes of this Agreement, "Business Day" means any day on which
the New York Stock Exchange, Inc. is open for trading.
SECTION XVI. Governing Law; Submission to Jurisdiction.
This Agreement shall be governed by and construed in accordance
with the laws of the State of New York without giving effect to
the conflict of law rules thereof.
The parties hereto hereby submit to the jurisdiction of the
United States District Court for the Southern District of New
York and any court in the State of New York located in the City
and County of New York, and appellate court from any thereof, in
any action, suit or proceeding brought against it or in
connection with this Agreement or any of the related documents or
the transactions contemplated hereunder or for recognition or
enforcement of any judgment, and the parties hereto hereby agree
that all claims in respect of any such action or proceeding may
be heard or determined in New York State court or, to the extent
permitted by law, in such federal court.
SECTION XVII. Counterparts. This Agreement may be executed
in counterparts and, if executed in more than one counterpart,
the executed counterparts shall each be deemed to be an original
but all such counterparts shall together constitute one and the
same instrument.
SECTION XVIII. Headings. The headings herein are inserted
for convenience of reference only and are not intended to be part
of, or to affect the meaning or interpretation of, this
Agreement.
SECTION XIX. Amendments and Waivers. This Agreement may be
amended, modified, altered or terminated, and any of its
provisions waived, only in a writing signed on behalf of the
Depositor and the Representative.
If the foregoing correctly sets forth the agreement between
the Depositor and the Underwriters, please indicate your
acceptance in the space provided for the purpose below.
Very truly yours,
AMRESCO RESIDENTIAL SECURITIES
CORPORATION
By:
Name:
Title:
CONFIRMED AND ACCEPTED, as
of the date first above written:
PRUDENTIAL SECURITIES INCORPORATED
Acting on its own behalf and as
Representative of the several
Underwriters referred to in the
foregoing Agreement
By:
Name:
Title:
SCHEDULE A
Class of Initial Purchase
Name of Certificates Principal Amount Price
Underwriter Purchased by the of Certificates (% of Par)
Underwriters Purchased by
Underwriters
Prudential Class A-1 $35,000,000 100.000%
Securities
Incorporated
Class A-2 $13,353,000 99.984375
Class A-3 $17,073,000 100.234375
Class A-4 $ 8,524,000 100.265265
Class A-5 $11,313,000 99.937500
Class A-6 $13,428,500 100.031250
Class A-7 $13,102,500 100.06250
Class A-8 $21,098,000 100.000
CS First Boston Class A-1 $24,500,000 100.000%
Class A-2 $ 9,487,000 99.984375
Class A-3 $11,951,400 100.234375
Class A-4 $ 5,967,150 100.265265
Class A-5 $ 7,919,100 99.937500
Class A-6 $ 9,399,950 100.031250
Class A-7 $ 9,171,750 100.06250
Class A-8 $14,768,600 100.000
Goldman Sachs & Class A-1 $10,500,000 100.000%
Co.
Class A-2 $ 4,065,900 99.984375
Class A-3 $ 5,121,900 100.234375
Class A-4 $ 2,557,350 100.265265
Class A-5 $ 3,393,900 99.937500
Class A-6 $ 4,028,550 100.031250
Class A-7 $ 3,930,750 100.06250
Class A-8 $ 6,329,400 100.000
POOLING AND SERVICING AGREEMENT
Relating to
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1996-3
Among
AMRESCO RESIDENTIAL SECURITIES CORPORATION,
as Depositor,
AMRESCO RESIDENTIAL MORTGAGE CORPORATION,
as Seller,
LONG BEACH MORTGAGE COMPANY,
ADVANTA MORTGAGE CORP. USA,
as Servicers
and
BANKERS TRUST COMPANY
as Trustee
Dated as of June 1, 1996
CONTENTS Page
CONVEYANCE 1
ARTICLE I DEFINITIONS; RULES OF CONSTRUCTION 2
Section 1.01 Definitions 2
Section 1.02 Use of Words and Phrases 31
Section 1.03 Captions; Table of Contents 31
Section 1.04 Opinions 31
ARTICLE II ESTABLISHMENT AND ORGANIZATION OF THE TRUST 33
Section 2.01 Establishment of the Trust 33
Section 2.02 Office 33
Section 2.03 Purposes and Powers 33
Section 2.04 Appointment of the Trustee;
Declaration of Trust 33
Section 2.05 Expenses of the Trust 33
Section 2.06 Ownership of the Trust 34
Section 2.07 Situs of the Trust 34
Section 2.08 Miscellaneous REMIC Provisions 34
ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS OF
THE DEPOSITOR, THE SERVICERS AND THE SELLER;
COVENANT OF SELLER TO CONVEY MORTGAGE LOANS 36
Section 3.01 Representations and Warranties
of the Depositor 36
Section 3.02 Representations and Warranties
of the Servicers 37
Section 3.03 Representations and Warranties
of the Seller 39
Section 3.04 Covenants of Seller to Take Certain
Actions with Respect to the Mortgage
Loans In Certain Situations 42
Section 3.05 Conveyance of the Mortgage Loans,
Subsequent Mortgage Loans and
Qualified Replacement Mortgages 43
Section 3.06 Acceptance by Trustee; Certain
Substitutions of Mortgage
Loans; Certification by Trustee 46
Section 3.07 Conveyance of the Subsequent
Mortgage Loans 48
ARTICLE IV ISSUANCE AND SALE OF CERTIFICATES 50
Section 4.01 Issuance of Certificates 50
Section 4.02 Sale of Certificates 50
ARTICLE V CERTIFICATES AND TRANSFER OF INTERESTS 51
Section 5.01 Terms 51
Section 5.02 Forms 51
Section 5.03Execution, Authentication and Delivery 51
Section 5.04Registration and Transfer of Certificates 52
Section 5.05 Mutilated, Destroyed, Lost or Stolen
Certificates 54
Section 5.06 Persons Deemed Owners 54
Section 5.07 Cancellation 55
Section 5.08 Limitation on Transfer of Ownership
Rights 55
Section 5.09 Assignment of Rights 56
ARTICLE VI COVENANTS 57
Section 6.01 Distributions 57
Section 6.02 Money for Distributions to be Held
in Trust; Withholding 57
Section 6.03 Protection of Trust Estate 58
Section 6.04 Performance of Obligations 59
Section 6.05 Negative Covenants 59
Section 6.06 No Other Powers 59
Section 6.07 Limitation of Suits 59
Section 6.08 Unconditional Rights of Owners to
Receive Distributions 60
Section 6.09 Rights and Remedies Cumulative 60
Section 6.10 Delay or Omission Not Waiver 61
Section 6.11Control by Certificate Insurer and Owners 61
Section 6.12 Access to Owners of Certificates'
Names and Addresses 61
ARTICLE VII ACCOUNTS, DISBURSEMENTS AND RELEASES 62
Section 7.01 Collection of Money 62
Section 7.02 Establishment of Accounts; 62
Section 7.03 Flow of Funds 63
Section 7.04 Pre-Funding Account and Capitalized
Interest Account 67
Section 7.05 Investment of Accounts 67
Section 7.06 Reserved. 68
Section 7.07 Eligible Investments 68
Section 7.08 Accounting and Directions by Trustee 70
Section 7.09 Reports by Trustee to Owners and
Certificate Insurer 71
Section 7.10 Reports by Trustee. 74
Section 7.11 Preference Payments 74
Section 7.12 Claims Upon the Policies. 75
ARTICLE VIII SERVICING AND ADMINISTRATION OF MORTGAGE LOANS 76
Section 8.01 Servicers and Subservicers 76
Section 8.02 Collection of Certain Mortgage
Loan Payments 77
Section 8.03 Subservicing Agreements Between
Servicer and Subservicer 78
Section 8.04 Successor Subservicer 78
Section 8.05 Liability of Servicer 78
Section 8.06 No Contractual Relationship Between
Subservicer and Trustee, Certificate
Insurer or the Owners 78
Section 8.07 Assumption or Termination of
Subservicing Agreement by Trustee 78
Section 8.08 Principal and Interest Accounts;
Escrow Accounts 79
Section 8.09 Delinquency Advances, Servicing
Advances and Compensating Interest 80
Section 8.10 Compensating Interest; Purchase of
Mortgage Loans 81
Section 8.11 Maintenance of Insurance 82
Section 8.12 Due-on-Sale Clauses; Assumption and
Substitution Agreements 83
Section 8.13Realization Upon Defaulted Mortgage Loans 83
Section 8.14Trustee to Cooperate; Release of Files 85
Section 8.15 Servicing Compensation 86
Section 8.16 Annual Statement as to Compliance 86
Section 8.17 Annual Independent Certified Public
Accountants' Reports 87
Section 8.18 Access to Certain Documentation and
Information Regarding the Mortgage Loans 87
Section 8.19 Assignment of Agreement 87
Section 8.20 Events of Servicing Termination 87
Section 8.21 Resignation of a Servicer and
Appointment of Successor 89
Section 8.22 Waiver of Past Events of Servicing
Termination 92
Section 8.23 Assumption or Termination of
Subservicing Agreement By the Trustee 92
Section 8.24 Powers and Duties of the Trustee as
Successor Servicer 92
Section 8.25 Liability of the Servicers 93
Section 8.26 Inspections by Certificate Insurer,
Trustee and Seller;
Errors and Omissions Insurance 93
Section 8.27 Merger, Conversion, Consolidation or
Succession to Business of Servicer 94
Section 8.28 Notices of Material Events 94
Section 8.29Monthly Servicing Report and Servicing
Certificate 95
Section 8.30 Indemnification by the Servicer 96
Section 8.31 Reserved 97
Section 8.32 Servicing Standard 97
Section 8.33 No Solicitation 97
ARTICLE IX TERMINATION OF TRUST 98
Section 9.01 Termination of Trust 98
Section 9.02 Termination Upon Option of Owners of
Class R Certificates; Servicer Termination 98
Section 9.03 Termination Upon Loss of REMIC Status 100
Section 9.04 Disposition of Proceeds 101
ARTICLE X THE TRUSTEE 102
Section 10.01 Certain Duties and Responsibilities 102
Section 10.02 Removal of Trustee for Cause 103
Section 10.03 Certain Rights of the Trustee 104
Section 10.04 Not Responsible for Recitals or
Issuance of Certificates 105
Section 10.05 May Hold Certificates 106
Section 10.06 Money Held in Trust 106
Section 10.07 Compensation and Reimbursement;
No Lien for Fees. 106
Section 10.08Corporate Trustee Required; Eligibility 106
Section 10.09 Resignation and Removal; Appointment
of Successor 107
Section 10.10 Acceptance of Appointment by
Successor Trustee 108
Section 10.11 Merger, Conversion, Consolidation or
Succession to Business of the Trustee 108
Section 10.12 Reporting; Withholding 109
Section 10.13 Liability of the Trustee 109
Section 10.14Appointment of Co-Trustee or Separate
Trustee 110
ARTICLE XI MISCELLANEOUS 112
Section 11.01 Compliance Certificates and Opinions 112
Section 11.02 Form of Documents Delivered to the
Trustee 112
Section 11.03 Acts of Owners 113
Section 11.04 Notices, etc. to Trustee 113
Section 11.05 Notices and Reports to Owners;
Waiver of Notices 113
Section 11.06 Rules by Trustee 114
Section 11.07 Successors and Assigns 114
Section 11.08 Severability 114
Section 11.09 Benefits of Agreement 114
Section 11.10 Legal Holidays 114
Section 11.11Governing Law; Submission to Jurisdiction 115
Section 11.12 Counterparts 115
Section 11.13 Usury 115
Section 11.14 Amendment 116
Section 11.15 Paying Agent; Appointment and
Acceptance of Duties 117
Section 11.16 REMIC Status 117
Section 11.17 Additional Limitation on Action and
Imposition of Tax 119
Section 11.18 Appointment of Tax Matters Person 119
Section 11.19 The Certificate Insurer 119
Section 11.20 Maintenance of Security Interest 120
Section 11.21 Third Party Rights 120
Section 11.22 Attorneys' Fees 120
Section 11.23 Notices 120
SCHEDULE I-A SCHEDULE OF GROUP I MORTGAGE LOANS
SCHEDULE I-B SCHEDULE OF GROUP II MORTGAGE LOANS
SCHEDULE I-C SCHEDULE OF DISCOUNTED MORTGAGE LOANS
EXHIBIT A-1 FORM OF CLASS A-1 CERTIFICATE
EXHIBIT A-2 FORM OF CLASS A-2 CERTIFICATE
EXHIBIT A-3 FORM OF CLASS A-3 CERTIFICATE
EXHIBIT A-4 FORM OF CLASS A-4 CERTIFICATE
EXHIBIT A-5 FORM OF CLASS A-5 CERTIFICATE
EXHIBIT A-6 FORM OF CLASS A-6 CERTIFICATE
EXHIBIT A-7 FORM OF CLASS A-7 CERTIFICATE
EXHIBIT A-8 FORM OF CLASS A-8 CERTIFICATE
EXHIBIT B FORM OF CLASS R CERTIFICATE
EXHIBIT B-IO FORM OF CLASS B-IO CERTIFICATE
EXHIBIT C FORM OF SUBSEQUENT TRANSFER AGREEMENT
EXHIBIT D FORM OF CERTIFICATE RE: MORTGAGE LOANS
PREPAID IN FULL AFTER CUT-OFF DATE
EXHIBIT E FORM OF TRUSTEE'S RECEIPT
EXHIBIT F FORM OF POOL CERTIFICATION
EXHIBIT G FORM OF DELIVERY ORDER
EXHIBIT H FORM OF SERVICER'S TRUST RECEIPT
EXHIBIT I FORM OF CLASS R TAX MATTERS TRANSFER CERTIFICATE
EXHIBIT J FORM OF NOTICE
EXHIBIT K FORM OF LIQUIDATION REPORT
POOLING AND SERVICING AGREEMENT, relating to AMRESCO
RESIDENTIAL SECURITIES CORPORATION MORTGAGE LOAN TRUST 1996-3,
dated as of June 1, 1996, by and among AMRESCO RESIDENTIAL
SECURITIES CORPORATION, a Delaware corporation, in its capacity
as Depositor (the "Depositor"), AMRESCO RESIDENTIAL MORTGAGE
CORPORATION, a Delaware corporation, in its capacity as the
Seller (the "Seller"), Long Beach Mortgage Company and Advanta
Mortgage Corp. USA as the Servicers (the "Servicers") and Bankers
Trust Company, a New York banking corporation, in its capacity as
the trustee (the "Trustee").
WHEREAS, the Depositor wishes to establish a trust and two
subtrusts and provide for the allocation and sale of the
beneficial interests therein and the maintenance and distribution
of the Trust Estate;
WHEREAS, each of the Servicers have agreed to service a
portion of the Mortgage Loans, respectively, which constitute the
principal assets of the Trust Estate;
WHEREAS, all things necessary to make the Certificates, when
executed by the Depositor and authenticated by the Trustee valid
instruments, and to make this Agreement a valid agreement, in
accordance with their and its terms, have been done;
WHEREAS, Bankers Trust Company is willing to serve in the
capacity of the Trustee hereunder; and
WHEREAS, MBIA Insurance Corporation is intended to be a
third-party beneficiary of this Agreement and is hereby
recognized by the parties hereto to be a third-party beneficiary
of this Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained, the Depositor, the Seller,
each Servicer and the Trustee hereby agree as follows:
CONVEYANCE
To provide for the distribution of the principal of and/or
interest on the Class A Certificates, the Class B-IO Certificates
and the Class R Certificates in accordance with their terms, all
of the sums distributable under this Agreement with respect to
the Certificates and the performance of the covenants contained
in this Agreement, the Depositor hereby bargains, sells, conveys,
assigns and transfers to the Trustee, in trust, without recourse
and for the exclusive benefit of the Owners of the Certificates
and the Certificate Insurer, as their interests may appear, all
of the Depositor's right, title and interest in and to any and
all benefits accruing to the Depositor from (a) the Mortgage
Loans (other than any principal and interest payments due thereon
on or prior to the Cut-Off Date on any Mortgage Loan that is
current as of the Cut-Off Date) listed in Schedules I-A and I-B
to this Agreement which the Depositor is causing to be delivered
to the Trustee herewith (and all substitutions therefor as
provided by Section 3.03, 3.04, 3.05 and 3.06), together with the
related Mortgage Loan documents and the Depositor's interest in
any Property which secured a Mortgage Loan but which has been
acquired by foreclosure or deed in lieu of foreclosure, and all
payments thereon and proceeds of the conversion, voluntary or
involuntary, of the foregoing; (b) such amounts as may be held by
the Trustee in the Certificate Account, the Pre-Funding Account
and the Capitalized Interest Account together with investment
earnings on such amounts and such amounts as may be held in the
name of the Trustee in the Principal and Interest Account, if
any, exclusive of investment earnings thereon (except as
otherwise provided herein), whether in the form of cash,
instruments, securities or other properties (including any
Eligible Investments held by the Servicers); (c) the Certificate
Insurance Policies issued under the Insurance Agreement;
(d) proceeds of all the foregoing (including, but not by way of
limitation, all proceeds of any mortgage insurance, hazard
insurance and title insurance policy relating to the Mortgage
Loans, cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts,
rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or
part of or are included in the proceeds of any of the foregoing)
to pay the Owners and the Certificate Insurer as specified
herein; and (e) certain of the Seller's rights under the Transfer
Agreements that are being assigned to the Trust hereunder
((a)-(e) above shall be collectively referred to herein as the
"Trust Estate").
The Trustee acknowledges such sale, accepts the Trust
hereunder in accordance with the provisions hereof and agrees to
perform the duties herein to the best of its ability to the end
that the interests of the Owners may be adequately and
effectively protected.
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
Section 1.01 Definitions.
For all purposes of this Agreement, the following terms
shall have the meanings set forth below, unless the context
clearly indicates otherwise:
"Account": Any account established in accordance with
Section 7.02 or 8.08 hereof.
"Accrual Period": With respect to the Fixed Rate Group
Certificates (except the Class A-1 Certificates) and any Payment
Date, the calendar month immediately preceding the month in which
the Payment Date occurs; a "calendar month" shall be deemed to be
30 days. With respect to the Class A-1 Certificates and the
Class A-8 Certificates and any Payment Date, the period
commencing on the preceding Payment Date (or from the Closing
Date in the case of the first Payment Date) and ending on the day
immediately preceding the current Payment Date. All calculations
of interest on the Fixed Rate Group Certificates (except the
Class A-1 Certificates) will be made on the basis of a 360-day
year assumed to consist of twelve 30 day months and calculations
of interest on the Class A-1 Certificates and the Class A-8
Certificates will be made on the basis of the actual number of
days elapsed in the related Accrual Period and a year of 360
days.
"Addition Notice": With respect to the transfer of
Subsequent Mortgage Loans to the Trust for inclusion in Group I
or Group II pursuant to Section 3.07 hereof, notice given in
accordance with Section 3.07(b)(i) regarding the Depositor's
designation of Subsequent Mortgage Loans to be sold to the Trust
for inclusion in Group I or Group II and the aggregate Loan
Balance of such Subsequent Mortgage Loans with respect to each
such Group.
"Adjustable Rate Group Available Funds Cap Rate": As of any
Payment Date the weighted average of the Coupon Rates on the
Mortgage Loans in Group II, less 1.14625% per annum.
"Adjustable Rate Group Certificates": Collectively, the
Class A-8 Certificates.
"Adjusted Pass-Through Rate": A rate equal to the sum of
(a)(i) the Fixed Rate Group Weighted Average Pass-Through Rates
of the Fixed Rate Group Certificates in the case of Mortgage
Loans in Group I or (ii) the Class A-8 Pass-Through Rate in the
case of Mortgage Loans in Group II, plus (b) any portion of the
Premium Amount and the Trustee Fee (calculated as an annual rate
based on the outstanding principal amount of the Certificates)
then accrued and outstanding.
"Advanta Loans": The Mortgage Loans serviced by Advanta
Mortgage Corp. USA.
"Agreement": This Pooling and Servicing Agreement, as it
may be amended from time to time, including the Exhibits and
Schedules hereto.
"Annual Loss Percentage (Rolling Twelve Month)": As of any
date of determination thereof and as to the related Mortgage Loan
Servicing Group, a fraction, expressed as a percentage, the
numerator of which is the aggregate of the Realized Losses that
occurred in such Mortgage Loan Servicing Group during the twelve
immediately preceding Prepayment Periods and the denominator of
which is the Loan Balances of the Mortgage Loans in the related
Mortgage Loan Servicing Group on the twelfth Determination Date
preceding such date.
"Appraised Value": The appraised value of any Property
based upon the appraisal or other valuation made at the time of
the origination of the related Mortgage Loan, or, in the case of
a Mortgage Loan which is a purchase money mortgage, the sales
price of the Property at such time of origination, if such sales
price is less than such appraised value.
"Authorized Officer": With respect to any Person, any
officer of such Person who is authorized to act for such Person
in matters relating to this Agreement, and whose action is
binding upon, such Person; with respect to the Depositor, the
Seller and the Servicers, initially including those individuals
whose names appear on the lists of Authorized Officers delivered
at the Closing; with respect to the Trustee, any Vice President,
Assistant Vice President, Trust Officer or any Officer of the
Trustee located at the Corporate Trust Office.
"Available Funds": Group I Available Funds or Group II
Available Funds, as the case may be.
"Available Funds Shortfall": A Group I Available Funds
Shortfall or Group II Available Funds Shortfall, as the case may
be.
"Balloon Loan": A Mortgage Loan with respect to which the
principal balance by its original terms does not fully amortize
at final maturity.
"Balloon Payment": The final payment of principal due with
respect to a Balloon Loan.
"Business Day": Any day that is not a Saturday, Sunday or
other day on which commercial banking institutions in California,
The City of New York, or in the city in which the principal
corporate trust office of the Trustee is located, are authorized
or obligated by law or executive order to be closed.
"Capitalized Interest Account": The Capitalized Interest
Account established in accordance with Section 7.02(b) hereof and
maintained by the Trustee. Funds on deposit in the Capitalized
Interest Account shall be invested in the Bankers Trust Treasury
Money Fund from the day following the Startup Day until the end
of the Funding Period.
"Carry-Forward Amount": With respect to any Class of the
Class A Certificates for any Payment Date, the sum of (x) the
amount, if any, by which (i) the Class A Distribution Amount
allocable to such Class as of the immediately preceding Payment
Date exceeded (ii) the amount of the actual distribution made to
the Owners of such Class of the Class A Certificates on such
immediately preceding Payment Date plus (y) 30 days' interest on
the interest portion of such amount at the Pass-Through Rate in
effect with respect to such Class of Class A Certificates.
"Certificate": Any one of the Class A Certificates, the
Class B-IO Certificates or the Class R Certificates, each
representing the interests and the rights described in this
Agreement.
"Certificate Account": The certificate account established
in accordance with Section 7.02(a) hereof and maintained in the
corporate trust department of the Trustee; provided that the
funds in such account shall not be commingled with other funds
held by the Trustee.
"Certificate Insurance Policies": The financial guaranty
insurance policy (number 21396) dated June 20, 1996 issued by the
Certificate Insurer for the benefit of the Owners of the Class A-
1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6 and
Class A-7 Certificates pursuant to which the Certificate Insurer
guarantees Insured Payments and the financial guaranty insurance
policy (number 21395) dated June 20, 1996 issued by the
Certificate Insurer for the benefit of the Owners of the Class A-
8 Certificates pursuant to which the Certificate Insurer
guarantees Insured Payments.
"Certificate Insurer": MBIA Insurance Corporation or any
successor thereto, as issuer of the Certificate Insurance
Policies.
"Certificate Insurer Default": The existence and
continuance of any of the following:
(a) the Certificate Insurer fails to make a payment
required under a Certificate Insurance Policy in accordance with
its terms; or
(b)(i) the entry by a court having jurisdiction of (A)
a decree or order for relief in respect of the Certificate
Insurer in an involuntary case or proceeding under any applicable
United States federal or state bankruptcy, insolvency,
rehabilitation, reorganization or other similar law or (B) a
decree or order adjudging the Certificate Insurer as bankrupt or
insolvent, or approving as properly filed a petition seeking
reorganization, rehabilitation, arrangement, adjustment or
composition of or in respect of the Certificate Insurer under any
applicable United States federal or state law, or appointing a
custodian, receiver, liquidator, rehabilitator, assignee,
trustee, sequestrator or other similar official of the
Certificate Insurer or of any substantial part of its property,
or ordering the winding-up or liquidation of its affairs, and the
continuance of any such decree or order for relief or any such
other decree or order unstayed and in effect for a period of 60
consecutive days; or
(ii) the commencement by the Certificate Insurer of a
voluntary case or proceeding under any applicable United States
federal or state bankruptcy, insolvency, reorganization or other
similar law or of any other case or proceeding to be adjudicated
as bankrupt or insolvent, or the consent of the Certificate
Insurer to the entry of a decree or order for relief in respect
of the Certificate Insurer in an involuntary case or proceeding
under any applicable United States federal or state bankruptcy,
insolvency case or proceeding against the Certificate Insurer, or
the consent by the Certificate Insurer to the filing of such
petition or to the appointment of or the taking possession by a
custodian, receiver, liquidator, assignee, trustee, sequestrator
or similar official of the Certificate Insurer or of any
substantial part of its property, or the marshalling of assets by
the Certificate Insurer to pay debts generally as they become
due, or the admission by the Certificate Insurer in writing of
its inability to pay its debts generally as they become due, or
the taking of corporate action by the Certificate Insurer in
furtherance of any such action.
"Certificate Principal Balance": As of the Startup Day as
to each of the following Classes of Class A Certificates, the
Certificate Principal Balances thereof, as follows:
Class A-1 Certificates - $70,892,000
Class A-2 Certificates - $27,106,000
Class A-3 Certificates - $34,146,000
Class A-4 Certificates - $17,049,000
Class A-5 Certificates - $22,626,000
Class A-6 Certificates - $26,857,000
Class A-7 Certificates - $26,205,000
Class A-8 Certificates - $42,196,000
The Class B-IO Certificates and the Class R Certificates do
not have a Certificate Principal Balance.
"Class": Any class of the Class A Certificates, the Class B-
IO Certificates or the Class R Certificates.
"Class A Certificate": Any one of the Class A-1
Certificates, Class A-2 Certificates, Class A-3 Certificates,
Class A-4 Certificates, Class A-5 Certificates, Class A-6
Certificates, Class A-7 Certificates or Class A-8 Certificates.
"Class A Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the
Startup Day of all Class A Certificates less any amounts actually
distributed on such Class A Certificates with respect to the
Class A Distribution Amount pursuant to Section 7.03(c)(v)(B) and
(D) hereof with respect to principal thereon on all prior Payment
Dates (except, for purposes of effecting the Certificate
Insurer's subrogation rights, that portion of Insured Payments
made in respect of principal).
"Class A Certificate Termination Date": With respect to the
Class A-1 Certificates, the Class A-1 Certificate Termination
Date, with respect to the Class A-2 Certificates, the Class A-2
Certificate Termination Date, with respect to the Class A-3
Certificates, the Class A-3 Certificate Termination Date, with
respect to the Class A-4 Certificates, the Class A-4 Certificate
Termination Date, with respect to the Class A-5 Certificates, the
Class A-5 Certificate Termination Date, with respect to the Class
A-6 Certificates, the Class A-6 Certificate Termination Date,
with respect to the Class A-7 Certificates, the Class A-7
Certificate Termination Date and with respect to the Class A-8
Certificates, the Class A-8 Certificate Termination Date.
"Class A Distribution Amount": The sum of the Class A-1
Distribution Amount, the Class A-2 Distribution Amount, the Class
A-3 Distribution Amount, the Class A-4 Distribution Amount, the
Class A-5 Distribution Amount, the Class A-6 Distribution Amount,
the Class A-7 Distribution Amount and the Class A-8 Distribution
Amount.
"Class A-1 Certificate": Any one of the Certificates
designated on the face thereof as a Class A-1 Certificate,
substantially in the form annexed hereto as Exhibit A-1
authenticated and delivered by the Trustee, representing the
right to distributions as set forth herein.
"Class A-1 Certificate Principal Balance": As of any time
of determination, the Certificate Principal Balance as of the
Startup Day of all Class A-1 Certificates less any amounts
actually distributed with respect to the Class A-1 Distribution
Amount pursuant to Section 7.03(c)(v)(B)(1) hereof with respect
to principal thereon on all prior Payment Dates (except, for
purposes of effecting the Certificate Insurer's subrogation
rights, that portion of Insured Payments made in respect of
principal).
"Class A-1 Certificate Termination Date": The Payment Date
on which the Class A-1 Certificate Principal Balance is reduced
to zero.
"Class A-1 Current Interest": With respect to any Payment
Date, the amount of interest accrued on the Class A-1 Certificate
Principal Balance immediately prior to such Payment Date during
the related Accrual Period at the Class A-1 Pass-Through Rate
plus any unpaid Preference Amount owed to the Owners of the Class
A-1 Certificates as it relates to interest previously paid on the
Class A-1 Certificates plus the interest portion of the Carry-
Forward Amount, if any, with respect to the Class A-1
Certificates.
"Class A-1 Distribution Amount": The sum of (x) Class A-1
Current Interest and (y) the Group I Principal Distribution
Amount payable to the Owners of the Class A-1 Certificates
pursuant to Section 7.03(c)(v)(B)(1) hereof.
"Class A-1 Pass-Through Rate": For the initial Payment
Date, 5.55922% per annum. Thereafter, for any Payment Date, the
lesser of (i) One-Month LIBOR plus 0.11% per annum and (ii) the
Fixed Rate Group Available Funds Cap Rate.
"Class A-2 Certificate": Any one of the Certificates
designated on the face thereof as a Class A-2 Certificate,
substantially in the form annexed hereto as Exhibit A-2
authenticated and delivered by the Trustee, representing the
right to distributions as set forth herein.
"Class A-2 Certificate Principal Balance": As of any time
of determination, the Certificate Principal Balance as of the
Startup Day of all Class A-2 Certificates less any amounts
actually distributed with respect to the Class A-2 Distribution
Amount pursuant to Section 7.03(c)(v)(B)(2) hereof with respect
to principal thereon on all prior Payment Dates (except, for
purposes of effecting the Certificate Insurer's subrogation
rights, that portion of Insured Payments made in respect of
principal).
"Class A-2 Certificate Termination Date": The Payment Date
on which the Class A-2 Certificate Principal Balance is reduced
to zero.
"Class A-2 Current Interest": With respect to any Payment
Date, the amount of interest accrued on the Class A-2 Certificate
Principal Balance immediately prior to such Payment Date during
the related Accrual Period at the Class A-2 Pass-Through Rate
plus the Preference Amount owed to the Owners of the Class A-2
Certificates as it relates to interest previously paid on the
Class A-2 Certificates plus the interest portion of the Carry-
Forward Amount, if any, with respect to the Class A-2
Certificates.
"Class A-2 Distribution Amount": The sum of (x) Class A-2
Current Interest and (y) the Group I Principal Distribution
Amount payable to the Owners of Class A-2 Certificates pursuant
to Section 7.03(c)(v)(B)(2) hereof.
"Class A-2 Pass-Through Rate": 7.00% per annum.
"Class A-3 Certificate": Any one of the Certificates
designated on the face thereof as a Class A-3 Certificate,
substantially in the form annexed hereto as Exhibit A-3
authenticated and delivered by the Trustee, representing the
right to distributions as set forth herein.
"Class A-3 Certificate Principal Balance": As of any time
of determination, the Certificate Principal Balance as of the
Startup Day of all Class A-3 Certificates less any amounts
actually distributed with respect to the Class A-3 Distribution
Amount pursuant to Section 7.03(c)(v)(B)(3) hereof with respect
to principal thereon on all prior Payment Dates (except, for
purposes of effecting the Certificate Insurer's subrogation
rights, that portion of Insured Payments made in respect of
principal).
"Class A-3 Certificate Termination Date": The Payment Date
on which the Class A-3 Certificate Principal Balance is reduced
to zero.
"Class A-3 Current Interest": With respect to any Payment
Date, the amount of interest accrued on the Class A-3 Certificate
Principal Balance immediately prior to such Payment Date during
the related Accrual Period at the Class A-3 Pass-Through Rate
plus the Preference Amount owed to the Owners of the Class A-3
Certificates as it relates to interest previously paid on the
Class A-3 Certificates plus the interest portion of the Carry-
Forward Amount, if any, with respect to the Class A-3
Certificates.
"Class A-3 Distribution Amount": The sum of (x) Class A-3
Current Interest and (y) the Group I Principal Distribution
Amount payable to the Owners of the Class A-3 Certificates
pursuant to Section 7.03(c)(v)(B)(3) hereof.
"Class A-3 Pass-Through Rate": 7.30% per annum.
"Class A-4 Certificate": Any one of the Certificates
designated on the face thereof as a Class A-4 Certificate,
substantially in the form annexed hereto as Exhibit A-4
authenticated and delivered by the Trustee, representing the
right to distributions as set forth herein.
"Class A-4 Certificate Principal Balance": As of any time
of determination, the Certificate Principal Balance as of the
Startup Day of all Class A-4 Certificates less any amounts
actually distributed with respect to the Class A-4 Distribution
Amount pursuant to Section 7.03(c)(v)(B)(4) hereof with respect
to principal thereon on all prior Payment Dates (except, for
purposes of effecting the Certificate Insurer's subrogation
rights, that portion of Insured Payments made in respect of
principal).
"Class A-4 Certificate Termination Date": The Payment Date
on which the Class A-4 Certificate Principal Balance is reduced
to zero.
"Class A-4 Current Interest": With respect to any Payment
Date, the amount of interest accrued on the Class A-4 Certificate
Principal Balance immediately prior to such Payment Date during
the related Accrual Period at the Class A-4 Pass-Through Rate
plus the Preference Amount owed to the Owners of the Class A-4
Certificates as it relates to interest previously paid on the
Class A-4 Certificates plus the interest portion of the Carry-
Forward Amount, if any, with respect to the Class A-4
Certificates.
"Class A-4 Distribution Amount": The sum of (x) Class A-4
Current Interest and (y) the Group I Principal Distribution
Amount payable to the Owners of the Class A-4 Certificates
pursuant to Section 7.03(c)(v)(B)(4) hereof.
"Class A-4 Pass-Through Rate": 7.475% per annum.
"Class A-5 Certificate": Any one of the Certificates
designated on the face thereof as a Class A-5 Certificate,
substantially in the form annexed hereto as Exhibit A-5
authenticated and delivered by the Trustee, representing the
right to distributions as set forth herein.
"Class A-5 Certificate Principal Balance": As of any time
of determination, the Certificate Principal Balance as of the
Startup Day of all Class A-5 Certificates less any amounts
actually distributed with respect to the Class A-5 Distribution
Amount pursuant to Section 7.03(c)(v)(B)(5) hereof with respect
to principal thereon on all prior Payment Dates (except, for
purposes of effecting the Certificate Insurer's subrogation
rights, that portion of Insured Payments made in respect of
principal).
"Class A-5 Certificate Termination Date": The Payment Date
on which the Class A-5 Certificate Principal Balance is reduced
to zero.
"Class A-5 Current Interest": With respect to any Payment
Date, the amount of interest accrued on the Class A-5 Certificate
Principal Balance immediately prior to such Payment Date during
the related Accrual Period at the Class A-5 Pass-Through Rate
plus the Preference Amount owed to the Owners of the Class A-5
Certificates as it relates to interest previously paid on the
Class A-5 Certificates plus the interest portion of the Carry-
Forward Amount, if any, with respect to the Class A-5
Certificates.
"Class A-5 Distribution Amount": The sum of (x) Class A-5
Current Interest and (y) the Group I Principal Distribution
Amount payable to the Owners of the Class A-5 Certificates
pursuant to Section 7.03(c)(v)(B)(5) hereof.
"Class A-5 Pass-Through Rate": 7.550% per annum.
"Class A-6 Certificate": Any one of the Certificates
designated on the face thereof as a Class A-6 Certificate,
substantially in the form annexed hereto as Exhibit A-6
authenticated and delivered by the Trustee, representing the
right to distributions as set forth herein.
"Class A-6 Certificate Principal Balance": As of any time
of determination, the Certificate Principal Balance as of the
Startup Day of all Class A-6 Certificates less any amounts
actually distributed with respect to the Class A-6 Distribution
Amount pursuant to Section 7.03(c)(v)(B)(6) hereof with respect
to principal thereon on all prior Payment Dates (except, for
purposes of effecting the Certificate Insurer's subrogation
rights, that portion of Insured Payments made in respect of
principal).
"Class A-6 Certificate Termination Date": The Payment Date
on which the Class A-6 Certificate Principal Balance is reduced
to zero.
"Class A-6 Current Interest": With respect to any Payment
Date, the amount of interest accrued on the Class A-6 Certificate
Principal Balance immediately prior to such Payment Date during
the related Accrual Period at the Class A-6 Pass-Through Rate
plus the Preference Amount owed to the Owners of the Class A-6
Certificates as it relates to interest previously paid on the
Class A-6 Certificates plus the interest portion of the Carry-
Forward Amount, if any, with respect to the Class A-6
Certificates.
"Class A-6 Distribution Amount": The sum of (x) Class A-6
Current Interest and (y) the Group I Principal Distribution
Amount payable to the Owners of the Class A-6 Certificates
pursuant to Section 7.03(c)(v)(B)(6) hereof.
"Class A-6 Pass-Through Rate": 7.875% per annum.
"Class A-7 Certificate": Any one of the Certificates
designated on the face thereof as a Class A-7 Certificate,
substantially in the form annexed hereto as Exhibit A-7
authenticated and delivered by the Trustee, representing the
right to distributions as set forth herein.
"Class A-7 Certificate Principal Balance": As of any time
of determination, the Certificate Principal Balance as of the
Startup Day of all Class A-7 Certificates less any amounts
actually distributed with respect to the Class A-7 Distribution
Amount pursuant to Section 7.03(c)(v)(B)(7) hereof with respect
to principal thereon on all prior Payment Dates (except, for
purposes of effecting the Certificate Insurer's subrogation
rights, that portion of Insured Payments made in respect of
principal).
"Class A-7 Certificate Termination Date": The Payment Date
on which the Class A-7 Certificate Principal Balance is reduced
to zero.
"Class A-7 Current Interest": With respect to any Payment
Date, the amount of interest accrued on the Class A-7 Certificate
Principal Balance immediately prior to such Payment Date during
the related Accrual Period at the Class A-7 Pass-Through Rate
plus the Preference Amount owed to the Owners of the Class A-7
Certificates as it relates to interest previously paid on the
Class A-7 Certificates plus the interest portion of the Carry-
Forward Amount, if any, with respect to the Class A-7
Certificates.
"Class A-7 Distribution Amount": The sum of (x) Class A-7
Current Interest and (y) the Group I Principal Distribution
Amount payable to the Owners of the Class A-7 Certificates
pursuant to Section 7.03(c)(v)(B)(7) hereof.
"Class A-7 Pass-Through Rate": On any Payment Date, the
lesser of (i) 8.075% per annum (provided that for any Payment
Date in any month following the month in which the Clean-Up Call
Date occurs, 8.825% per annum) and (ii) the Fixed Rate Group
Available Funds Cap Rate.
"Class A-8 Certificate": Any one of the Certificates
designated on the face thereof as a Class A-8 Certificate,
substantially in the form annexed hereto as Exhibit A-8
authenticated and delivered by the Trustee, representing the
right to distributions as set forth herein.
"Class A-8 Certificate Principal Balance": As of any time
of determination, the Certificate Principal Balance as of the
Startup Day of all Class A-8 Certificates less any amounts
actually distributed with respect to the Class A-8 Distribution
Amount pursuant to Section 7.03(c)(v)(D) hereof with respect to
principal thereon on all prior Payment Dates (except, for
purposes of effecting the Certificate Insurer's subrogation
rights, that portion of Insured Payments made in respect of
principal).
"Class A-8 Certificate Termination Date": The Payment Date
on which the Class A-8 Certificate Principal Balance is reduced
to zero.
"Class A-8 Current Interest": With respect to any Payment
Date, the amount of interest accrued on the Class A-8 Certificate
Principal Balance immediately prior to such Payment Date during
the related Accrual Period at the Class A-8 Pass-Through Rate
plus any unpaid Preference Amount owed to the Owners of the Class
A-8 Certificates as it relates to interest previously paid on the
Class A-8 Certificates plus the interest portion of the Carry-
Forward Amount, if any, with respect to the Class A-8
Certificates.
"Class A-8 Distribution Amount": The sum of (x) Class A-8
Current Interest and (y) the Group II Principal Distribution
Amount payable to the Owners of Class A-8 Certificates pursuant
to Section 7.03(c)(v)(D) hereof.
"Class A-8 Pass-Through Rate": For the initial Payment
Date, 5.78922% per annum. Thereafter, for any Payment Date in
any month up to the month in which the Clean-Up Call Date occurs,
the lesser of (i) One-Month LIBOR plus .34% per annum and, (ii)
the Adjustable Rate Group Available Funds Cap Rate for such
Payment Date; and for any Payment Date in any month following the
month in which the Clean-Up Call Date occurs, the lesser of
(i) One-Month LIBOR plus .68% per annum and (ii) the Adjustable
Rate Group Available Funds Cap Rate for such Payment Date.
"Class B-IO Carry Forward Amount": With respect to any
Payment Date the sum of the amount, if any, by which (x) the
Class B-IO Distribution Amount as of the immediately preceding
Payment Date exceeded (y) the amount of the actual distribution
made to Owners of the Class B-IO Certificates on such immediately
preceding Payment Date.
"Class B-IO Certificate": Any one of the Certificates
designated on the face thereof as a Class B-IO Certificate,
substantially in the form annexed hereto as Exhibit B-IO,
authenticated and delivered by the Trustee, representing the
right to distributions as set forth herein.
"Class B-IO Distribution Amount": With respect to any
Payment Date, the sum of:
(1) with respect to Mortgage Loans in Group I, one-
twelfth of the product of (x) the sum of the aggregate Loan
Balances of such Mortgage Loans on the immediately preceding
Payment Date and (y) the excess of (I) the weighted average
of the Coupon Rates of such Mortgage Loans (or in the case
of the Discounted Mortgage Loans, a rate equal to 8.721%) on
such immediately preceding Payment Date (weighted on the
basis of the Loan Balances as of such Payment Date) over
(II) the sum of the following payments allocable to Group I
on or in respect of the related Payment Date (in each case
expressed as an annual rate based on such aggregate
outstanding Loan Balance): (A) the Servicing Fee (calculated
at the initial Servicing Fee Rate), (B) the Premium Amount,
(C) the Trustee Fee, (D) any Reimbursement Amount, and (E)
the Class A-7 Pass-Through Rate;
(2) with respect to Mortgage Loans in Group II, one-
twelfth of the product of (x) the sum of the aggregate Loan
Balances of such Mortgage Loans on the immediately preceding
Payment Date and (y) the excess of (I) the weighted average
of the Coupon Rates of such Mortgage Loans on such
immediately preceding Payment Date (weighted on the basis of
the Loan Balances as of such Payment Date) over (II) the sum
of the following payments allocable to Group II on or in
respect of the related Payment Date (in each case expressed
as an annual rate based on such aggregate outstanding Loan
Balance): (A) the Servicing Fee (calculated at the initial
Servicing Fee Rate), (B) the Premium Amount, (C) the Trustee
Fee, (D) any Reimbursement Amount and (E) the Pass-Through
Rate of the Class A-8 Certificates; and
(3) the Class B-IO Carry Forward Amount.
"Class R Certificate": Any one of the Certificates
designated on the face thereof as a Class R Certificate,
substantially in the form annexed hereto as Exhibit B,
authenticated and delivered by the Trustee, representing the
right to distributions as set forth herein, and evidencing an
interest designated as the "residual interest" in the REMIC for
the purposes of the REMIC Provisions.
"Clean-Up Call Date": The first Monthly Remittance Date on
which the aggregate Certificate Principal Balance has declined to
$26,707,700 or less.
"Closing": As defined in Section 4.02 hereof.
"Code": The Internal Revenue Code of 1986, as amended.
"Compensating Interest": As defined in Section 8.10(a)
hereof.
"Corporate Trust Office": The principal office of the
Trustee at Bankers Trust Company, Four Albany Street, New York,
NY 10006, Attn.: AMRESCO Residential Securities Corporation
Mortgage Loan Trust 1996-3.
"Coupon Rate": The rate of interest borne by each Note.
"Cram Down Loss": With respect to a Mortgage Loan, if a
court of appropriate jurisdiction in an insolvency proceeding
shall have issued an order reducing the Loan Balance or the
Coupon Rate of such Mortgage Loan, the amount of such reduction.
A "Cram Down Loss" shall be deemed to have occurred on the date
of issuance of such order.
"Cumulative Loss Percentage": As of any date of
determination thereof, the Cumulative Realized Losses as a
percentage of the Maximum Collateral Amount (and with respect to
the Servicer Loss Test the aggregate portion thereof applicable
to the related Servicer as set forth in the definition of Maximum
Collateral Amount).
"Cumulative Realized Losses": As of any date of determina
tion, the aggregate amount of Realized Losses with respect to the
Mortgage Loans in the related Group (and with respect to the
Servicer Loss Test with respect to the Mortgage Loans in the
related Mortgage Loan Servicing Group) since the Cut-Off Date.
"Current Interest": With respect to any Payment Date, the
sum of the Class A-1 Current Interest, the Class A-2 Current
Interest, the Class A-3 Current Interest, the Class A-4 Current
Interest, the Class A-5 Current Interest, the Class A-6 Current
Interest, the Class A-7 Current Interest and the Class A-8
Current Interest.
"Cut-Off Date": As of the close of business on June 1,
1996.
"Delinquency Advance": As defined in Section 8.09(a)
hereof.
"Delinquent": A Mortgage Loan is "Delinquent" if any
payment due thereon is not made by the close of business on the
Determination Date immediately following 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 Determination Date of the month immediately succeeding the
month in which such payment was due. Similarly for "60 days
Delinquent," "90 days Delinquent" and so on.
"Delivery Order": The delivery order in the form set forth
as Exhibit G hereto and delivered by the Seller to the Trustee on
the Startup Day pursuant to Section 4.01 hereof.
"Depositor": AMRESCO Residential Securities Corporation, a
Delaware corporation, or any successor thereto.
"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 each
Principal and Interest Account, a trust account maintained by
Bankers Trust Company, as long as it remains the Trustee, or by
the trust department of a federal or state chartered depository
institution acceptable to the Certificate Insurer, acting in its
fiduciary capacity, having combined capital and surplus of at
least $50,000,000; provided, however, that if a Principal and
Interest Account is not maintained with the Trustee, (i) such
institution shall have a long-term debt rating of at least "A" by
Standard & Poor's and "A2" by Moody's and (ii) the Servicers
shall provide the Trustee, the Certificate Insurer and the Owners
with a statement identifying the location of the related
Principal and Interest Account when moved.
"Determination Date": As to each Payment Date, the last day
of the related Prepayment Period or if such date is not a
Business Day, the next Business Day thereafter.
"Direct Participant" or "DTC Participant": Any broker-
dealer, bank or other financial institution for which the
Depository holds Class A Certificates from time to time as a
securities depository.
"Discounted Mortgage Loan": Those Mortgage Loans indicated
on the Schedule of Discounted Mortgage Loans annexed hereto as
Exhibit I-C.
"Discounted Principal Balance": With respect to each
Discounted Mortgage Loan, the Discounted Principal Balance
indicated for such Mortgage Loan on the related Schedule of
Discounted Mortgage Loans annexed hereto as Exhibit I-C.
"Disqualified Organization": "Disqualified Organization"
shall have the meaning set forth from time to time in the
definition thereof at Section 860E(e)(5) of the Code (or any
successor statute thereto) and applicable to the Trust.
"Eligible Investments": Those investments so designated
pursuant to Section 7.07 hereof.
"Excess Subordinated Amount": With respect to either
Mortgage Loan Group and any Payment Date, the excess, if any, of
(x) the Subordinated Amount that would apply to the related
Mortgage Loan Group on such Payment Date after taking into
account the payment of the related Class A Distribution Amounts
on such Payment Date (except for any distributions of related
Subordination Reduction Amounts on such Payment Date), over (y)
the related Specified Subordinated Amount for such Payment Date.
"FDIC": The Federal Deposit Insurance Corporation, a
corporate instrumentality of the United States, 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.
"File": The documents delivered to the Trustee pursuant to
Section 3.05(b) hereof pertaining to a particular Mortgage Loan
and any additional documents required to be added to the File
pursuant to this Agreement.
"Final Determination": As defined in Section 9.03(a)
hereof.
"Final Scheduled Payment Date": For each Class of Class A
Certificates is as set out in Section 2.08(a).
"Fitch": Fitch Investors Service, L.P.
"Fixed Rate Group Available Funds Cap Rate": As of any
Payment Date, the weighted average of the Coupon Rates on the
Mortgage Loans in Group I, less 0.64625% per annum.
"Fixed Rate Group Certificates": Collectively, the Class A-
1 Certificates, the Class A-2 Certificates, the Class A-3
Certificates, the Class A-4 Certificates, the Class A-5
Certificates, the Class A-6 Certificates and the Class A-7
Certificates.
"Fixed Rate Group Weighted Average Pass-Through Rate": As
to the Fixed Rate Group Certificates and any Payment Date, the
weighted average of the Class A-1 Pass-Through Rate, the Class A-
2 Pass-Through Rate, the Class A-3 Pass-Through Rate, the Class A-
4 Pass-Through Rate, the Class A-5 Pass-Through Rate, the Class A-
6 Pass-Through Rate and the Class A-7 Pass-Through Rate weighted
by the respective Certificate Principal Balance of the related
Class as of such Payment Date after taking into account any
distributions to be made on such Payment Date.
"FNMA": The Federal National Mortgage Association, a
federally-chartered and privately-owned corporation existing
under the Federal National Mortgage Association Charter Act, as
amended, or any successor thereof.
"Funding Period": With respect to either Group I or Group
II, the period commencing on the Startup Day and ending on the
earliest to occur of (i) the date on which the amount on deposit
in the Pre-Funding Account with respect to such Group (exclusive
of any investment earnings) is less than $100,000, and (ii) July
20, 1996.
"Group I": The pool of Mortgage Loans identified in the
related Schedule of Mortgage Loans as having been assigned to
Group I in Schedule I-A hereto, including any Qualified
Replacement Mortgages delivered in replacement thereof and each
Subsequent Mortgage Loan delivered to the Trust for inclusion
therein.
"Group I Available Funds": As defined in Section 7.02(c)
hereof.
"Group I Available Funds Shortfall": As defined in Section
7.03(c)(iii)(A) hereof.
"Group I Capitalized Interest Requirement": With respect to
the July 1996 Payment Date, the excess, if any, of (x) the
interest on the Fixed Rate Group Certificates on such Payment
Date calculated at the Fixed Rate Group Weighted Average Pass-
Through Rate allocable to Group I over (y) the sum of
(i) one-month's interest on the aggregate Loan Balances of the
Mortgage Loans in Group I as of the close of business on the last
day of the immediately preceding Remittance Period calculated at
a rate equal to 1/12 of the weighted average of the Coupon Rates
of the Mortgage Loans in Group I less the applicable Servicing
Fee Rate as of such Payment Date and (ii) any Group I Pre-Funding
Account Earnings to be transferred to the Capitalized Interest
Account on such Payment Date pursuant to Section 7.04(d) hereof.
"Group I Interest Remittance Amount": As of any Monthly
Remittance Date, the sum, without duplication, of (i) all
interest collected or advanced (net of the applicable Servicing
Fee) during the related Remittance Period with respect to the
Mortgage Loans in Group I, (ii) all Compensating Interest paid by
the related Servicers on such Monthly Remittance Date with
respect to Group I and (iii) the portion of the Substitution
Amount relating to interest on the Mortgage Loans in Group I.
"Group I Monthly Remittance Amount": As of any Monthly
Remittance Date, the sum of (i) the Group I Interest Remittance
Amount and (ii) the Group I Principal Remittance Amount for such
Monthly Remittance Date.
"Group I Permanent Specified Subordination Amount": As
defined in the Insurance Agreement.
"Group I Pre-Funding Account Earnings": With respect to the
July, 1996 Payment Date, the actual investment earnings earned
during the period from June 20 through July 20, 1996 (inclusive)
on the portion of the Pre-Funded Amount remaining and allocable
to Group I during such period as calculated by the Trustee
pursuant to Section 3.07(d) hereof.
"Group I Principal Distribution Amount": With respect to
the Fixed Rate Group Certificates for any Payment Date, the
lesser of:
(a) the Group I Total Available Funds plus any Insured
Payment actually made by the Certificate Insurer with respect to
the Fixed Rate Group Certificates minus the Current Interest with
respect to the Fixed Rate Group Certificates; and
(b) the excess, if any, of (i) the sum of:
(A) the Preference Amount owed to the Owners
of the Fixed Rate Group Certificates as such amounts
relate to principal previously distributed on the Fixed
Rate Group Certificates,
(B) all scheduled installments of principal
actually collected or advanced by the related Servicer
during the related Remittance Period and all
unscheduled collections of principal (other than
Prepaid Installments) actually collected by the related
Servicer during the related Prepayment Period,
(C) the principal portion of the Loan
Purchase Price with respect to each Mortgage Loan in
Group I that was repurchased by the related Originator
on or prior to the related Monthly Remittance Date, to
the extent such amount is actually received by the
Trustee on or prior to the related Monthly Remittance
Date,
(D) any Substitution Amounts delivered by
the related Originator on the related Monthly
Remittance Date in connection with a substitution of a
Mortgage Loan in Group I (to the extent such
Substitution Amounts relate to principal), to the
extent such Substitution Amounts are actually received
by the Trustee on or prior to the related Monthly
Remittance Date,
(E) all Net Liquidation Proceeds actually
collected by the related Servicer with respect to
Mortgage Loans in Group I during the related Prepayment
Period (to the extent such Net Liquidation Proceeds
relate to principal) to the extent such Net Liquidation
Proceeds are actually received by the Trustee on or
prior to the related Monthly Remittance Date,
(F) the amount of any Subordination Deficit
with respect to Group I for such Payment Date,
(G) the portion of the proceeds received by
the Trustee with respect to Group I from any
termination of the Trust (to the extent such proceeds
relate to principal), and
(H) any moneys released from the Pre-Funding
Account as a prepayment of the Fixed Rate Group
Certificates on the Payment Date which immediately
follows the end of the Funding Period as a prepayment
of such Certificates on such Payment Date, and
(I) the amount of any Subordination Increase
Amount with respect to Group I for such Payment Date,
to the extent of any Net Monthly Excess Cashflow
available for such purpose;
over
(ii) the amount of any Subordination Reduction Amount
with respect to Group I for such Payment Date.
"Group I Principal Remittance Amount": As of any Monthly
Remittance Date, the sum, without duplication, of (i) the
principal collected or required to be advanced with respect to
Mortgage Loans in Group I during the related Remittance Period
and all unscheduled collections of principal actually collected
by the related Servicer during the related Prepayment Period
(other than Prepaid Installments), (ii) the principal portion of
the Loan Purchase Price of each such Mortgage Loan in Group I
that was purchased from the Trustee on or prior to such Monthly
Remittance Date, to the extent such amount was actually deposited
in the Principal and Interest Account on or prior to such Monthly
Remittance Date, (iii) any Substitution Amounts relating to
principal delivered to the Trust in connection with a
substitution of a Mortgage Loan in Group I, to the extent such
Substitution Amounts were actually deposited in the Principal and
Interest Account on or prior to such Monthly Remittance Date, and
(iv) all Net Liquidation Proceeds actually collected by the
related Servicer with respect to such Mortgage Loans in Group I
during the related Prepayment Period (to the extent such Net
Liquidation Proceeds related to principal).
"Group I Specified Subrodination Percentage": As defined in
the Insurance Agreement.
"Group I Subordinated Amount": As of any Payment Date, the
excess, if any, of (x) the sum of (i) the aggregate Loan Balances
of the Mortgage Loans in Group I as of the close of business on
the last day of the related Prepayment Period and (ii) any
amounts on deposit in the Pre-Funding Account relating to Group I
at such time exclusive of any Group I Pre-Funding Account
Earnings over (y) the Certificate Principal Balance of the Fixed
Rate Group Certificates as of such Payment Date (after taking
into account the payment of the Group I Principal Distribution
Amount thereon (except for any Subordination Deficit with respect
to Group I and Subordination Increase Amount with respect to
Group I) on such Payment Date).
"Group I Total Available Funds": As defined in Section
7.02(c) hereof.
"Group I Total Monthly Excess Spread": With respect to
Group I and any Payment Date, the excess, if any, of (i) the sum
of (x) the interest which is collected on the Mortgage Loans in
such Group during the related Remittance Period less the related
Servicing Fee with respect to Group I plus (y) the interest
portion of any Delinquency Advances and (z) Compensating Interest
paid by the related Servicer with respect to Group I for such
Remittance Period over (ii) the interest due on the Fixed Rate
Group Certificates on such Payment Date; provided, however, that
for any Payment Date during the Funding Period, the amount in
(ii) above shall be multiplied by a fraction (A) the numerator of
which is the difference between the Certificate Principal Balance
of the Fixed Rate Group Certificates and the then outstanding Pre-
Funded Amount relating to Group I and (B) the denominator of
which is the Certificate Principal Balance of the Fixed Rate
Group Certificates.
"Group II": The pool of Mortgage Loans identified in the
related Schedule of Mortgage Loans as having been assigned to
Group II in Schedule I-B hereto, including any Qualified
Replacement Mortgages delivered in replacement thereof and each
Subsequent Mortgage Loan delivered to the Trust for inclusion
therein.
"Group II Available Funds": As defined in Section 7.02(d)
hereof.
"Group II Available Funds Shortfall": As defined in Section
7.03(c)(iii)(A) hereof.
"Group II Capitalized Interest Requirement." With respect
to the July 1996 Payment Date, the excess, if any, of (x) the
interest on the Adjustable Rate Group Certificates on such
Payment Date calculated at the Class A-8 Pass-Through Rate over
(y) the sum of (i) one-month's interest on the aggregate Loan
Balances of the Mortgage Loans in Group II as of the close of
business on the last day of the immediately preceding Remittance
Period calculated at a rate equal to 1/12 of the weighted average
of the Coupon Rates of the Mortgage Loans in Group II less the
applicable Servicing Fee Rate as of such Payment Date and (ii)
any Group II Pre-Funding Account Earnings to be transferred to
the Capitalized Interest Account on such Payment Date pursuant to
Section 7.04(d) hereof.
"Group II Interest Remittance Amount": As of any Monthly
Remittance Date, the sum, without duplication, of (i) all
interest collected or advanced (net of the applicable Servicing
Fee) during the related Remittance Period with respect to the
Mortgage Loans in Group II, (ii) all Compensating Interest paid
by the related Servicers on such Monthly Remittance Date with
respect to Group II and (iii) the portion of the Substitution
Amount relating to interest on the Mortgage Loans in Group II.
"Group II Monthly Remittance Amount": As of any Monthly
Remittance Date, the sum of (i) the Group II Interest Remittance
Amount and (ii) the Group II Principal Remittance Amount for such
Monthly Remittance Date.
"Group II Pre-Funding Account Earnings": With respect to
the July 1996 Payment Date, the actual investment earnings earned
during the period from June 20 through July 20, 1996 (inclusive)
on the portion of the Pre-Funded Amount remaining and allocable
to Group II during such period as calculated by the Trustee
pursuant to Section 3.07(d) hereof.
"Group II Principal Distribution Amount": With respect to
the Class A-8 Certificates for any Payment Date, the lesser of:
(a) the Group II Total Available Funds plus any Insured
Payment actually made by the Certificate Insurer with respect to
the Class A-8 Certificates minus the Current Interest with
respect to the Class A-8 Certificates; and
(b) the excess, if any, of (i) the sum of:
(i) the Preference Amount owed to the Owners
of the Class A-8 Certificates as such amounts relate to
principal previously distributed on the Adjustable Rate
Group Certificates,
(B) all scheduled installments of principal
actually collected or advanced by the related Servicers
during the related Remittance Period and all
unscheduled collections of principal (other than
Prepaid Installments) actually collected by the related
Servicer during the related Prepayment Period,
(C) the principal portion of the Loan
Purchase Price with respect to each Mortgage Loan in
Group II that was repurchased by the related Originator
on or prior to the related Monthly Remittance Date, to
the extent such amount is actually received by the
Trustee on or prior to the related Monthly Remittance
Date,
(D) any Substitution Amounts delivered by
the related Originator on the related Monthly
Remittance Date in connection with a substitution of a
Mortgage Loan in Group II (to the extent such
Substitution Amounts relate to principal), to the
extent such Substitution Amounts are actually received
by the Trustee on or prior to the related Monthly
Remittance Date,
(E) all Net Liquidation Proceeds actually
collected by the related Servicers with respect to
Mortgage Loans in Group II during the related
Prepayment Period (to the extent such Net Liquidation
Proceeds relate to principal) to the extent such Net
Liquidation Proceeds are actually received by the
Trustee on or prior to the related Monthly Remittance
Date,
(F) the amount of any Subordination Deficit
with respect to Group II for such Payment Date,
(G) the portion of the proceeds received by
the Trustee with respect to Group II from any
termination of the Trust (to the extent such proceeds
related to principal),
(H) any moneys released from the Pre-Funding
Account as a prepayment of the Adjustable Rate Group
Certificates on the Payment Date which immediately
follows the end of the Funding Period as a prepayment
of such Certificates on such Payment Date, and
(I) the amount of any Subordination Increase
Amount with respect to Group II for such Payment Date,
to the extent of any Net Monthly Excess Cashflow
available for such purpose;
over
(ii) the amount of any Subordination
Reduction Amount with respect to Group II for such
Payment Date.
"Group II Principal Remittance Amount": As of any Monthly
Remittance Date, the sum, without duplication, of (i) the
principal collected or required to be advanced with respect to
Mortgage Loans in Group II during the related Remittance Period
and all unscheduled collections of principal actually collected
by the related Servicers during the related Prepayment Period
(other than Prepaid Installments), (ii) the Loan Balance of each
such Mortgage Loan in Group II that was purchased from the
Trustee on or prior to such Monthly Remittance Date, to the
extent such Loan Balance was actually deposited in the Principal
and Interest Account, (iii) any Substitution Amounts relating to
principal delivered to the Trust in connection with a
substitution of a Mortgage Loan in Group II, to the extent such
Substitution Amounts were actually deposited in the Principal and
Interest Account on or prior to such Monthly Remittance Date, and
(iv) all Net Liquidation Proceeds actually collected by the
related Servicers with respect to such Mortgage Loans in Group II
during the related Prepayment Period (to the extent such Net
Liquidation Proceeds related to principal).
"Group II Specified Subordination Percentage": As defined
in the Insurance Agreement.
"Group II Subordinated Amount": As of any Payment Date, the
excess, if any, of (x) the sum of (i) the aggregate Loan Balances
of the Mortgage Loans in Group II as of the close of business on
the last day of the related Prepayment Period and (ii) any
amounts on deposit in the Pre-Funding Account relating to Group
II at such time exclusive of any Group II Pre-Funding Account
Earnings over (y) the Certificate Principal Balance of the Class
A-8 Certificates as of such Payment Date (after taking into
account the payment of the Group II Principal Distribution Amount
thereon (except for any Subordination Deficit with respect to
Group II and Subordination Increase Amount with respect to Group
II) on such Payment Date).
"Group II Total Available Funds": As defined in Section
7.02(d) hereof.
"Group II Total Monthly Excess Spread": With respect to
Group II and any Payment Date, the excess, if any, of (i) the sum
of (x) the interest which is collected on the Mortgage Loans in
such Group during the related Remittance Period less the related
Servicing Fee with respect to Group II plus (y) the interest
portion of any Delinquency Advances and (z) Compensating Interest
paid by the related Servicers with respect to Group II for such
Remittance Period over (ii) the interest due on the Class A-8
Certificates on such Payment Date; provided, however, that for
any Payment Date during the Funding Period, the amount in (ii)
above shall be multiplied by a fraction (A) the numerator of
which is the difference between the Certificate Principal Balance
of the Class A-8 Certificates and the then outstanding Pre-Funded
Amount relating to Group II and (B) the denominator of which is
the Certificate Principal Balance of the Class A-8 Certificates.
"Highest Lawful Rate": As defined in Section 11.13.
"Indemnification Agreement": The Indemnification Agreement
dated as of June 20, 1996, among the Certificate Insurer, the
Depositor and Prudential Securities Incorporated, as
representative of the Underwriters.
"Indirect Participant": Any financial institution for whom
any Direct Participant holds an interest in a Class A
Certificate.
"Initial Mortgage Loans": The Mortgage Loans to be conveyed
to the Trust by the Depositor on the Startup Day.
"Insurance Agreement": The Insurance Agreement dated as of
June 1, 1996, among the Depositor, the Seller, the Certificate
Insurer and the Trustee, as it may be amended from time to time.
"Insurance Policy": Any hazard, flood, title or primary
mortgage insurance policy relating to a Mortgage Loan, provided
that any amount remitted under Section 8.11 hereof shall be
considered a payment under an Insurance Policy.
"Insured Payment": With respect to either Mortgage Loan
Group and as to any Payment Date (i) the excess, if any, of (a)
the sum of the Current Interest related to the Fixed Rate Group
Certificates or the Class A-8 Certificates, as the case may be,
and the then existing related Subordination Deficit, if any, over
(b) the Total Available Funds to be actually distributed on such
Payment Date on the Fixed Rate Group Certificates or the Class A-
8 Certificates, as the case may be, pursuant to Section
7.03(c)(v) hereof (without regard to any related Insured Payment
to be made with respect to such Payment Date), plus (ii) an
amount equal to the Preference Amount with respect to the related
Class of Class A Certificates.
"Interest Remittance Amount": The sum of the Group I
Interest Remittance Amount and the Group II Interest Remittance
Amount.
"Late Payment Rate": For any Payment Date, the fluctuating
rate of interest, as it is published from time to time in the New
York, New York edition of The Wall Street Journal, under the
caption "Money Rates" as the "prime rate," to change when and as
such published prime rate changes, plus 2%. The Late Payment
Rate shall be computed on the basis of a year of 360 days
calculating the actual number of days elapsed. In no event shall
the Late Payment Rate exceed the maximum rate permissible under
any applicable law limiting interest rates.
"Liquidated Loan": As defined in Section 8.13(b) hereof.
"Liquidation Expenses": Expenses, not to exceed Liquidation
Proceeds, which are incurred by a Servicer in connection with the
liquidation of any defaulted Mortgage Loan, such expenses,
including, without limitation, legal fees and expenses and
accrued but unpaid Servicing Fees, and any unreimbursed Servicing
Advances expended by that Servicer pursuant to Section 8.09(b)
with respect to the related Mortgage Loan.
"Liquidation Proceeds": With respect to any Liquidated
Loan, any amounts (including the proceeds of any Insurance
Policy) recovered by a Servicer in connection with such
Liquidated Loan, whether through trustee's sale, foreclosure sale
or otherwise and Section 8.13(a).
"Loan Balance": With respect to each Mortgage Loan and as
of any date of determination, the outstanding principal balance
thereof, or with respect to the Discounted Mortgage Loans, the
Discounted Principal Balance thereof, in each case on the Cut-Off
Date with respect to the Initial Mortgage Loans or relevant
Subsequent Cut-Off Date with respect to the Subsequent Mortgage
Loans, less the sum of (i) any principal payments relating to
such Mortgage Loan (whether received from the related Mortgagor
or advanced by the related Servicer) included in previous Monthly
Remittance Amounts, and (ii) any Cram Down Losses relating to
such Mortgage Loan; provided, however, that the Loan Balance for
any Mortgage Loan that has become a Liquidated Loan shall be zero
as of the first day of the Remittance Period following the
Remittance Period in which such Mortgage Loan becomes a
Liquidated Loan, and at all times thereafter.
"Loan Purchase Price": With respect to any Mortgage Loan
purchased from the Trust on a Monthly Remittance Date pursuant to
Section 3.03, 3.04, 3.05, 3.06(b), 8.10(b) or 8.13(a) hereof, an
amount equal to the Loan Balance of such Mortgage Loan as of the
date of purchase (assuming that the related Delinquency Advance
has already been remitted), plus one month's interest on the Loan
Balance thereof as of the beginning of the related Remittance
Period computed at the then applicable Coupon Rate (or in the
case of a Discounted Mortgage Loan, computed at 8.721% per
annum), together with (without duplication) the aggregate amounts
of (i) all unreimbursed Delinquency Advances and Servicing
Advances theretofore made with respect to such Mortgage Loan,
(ii) the interest portion of any Delinquency Advances which the
related Servicer has theretofore failed to remit with respect to
such Mortgage Loan as required by this Agreement and (iii) all
reimbursed Delinquency Advances to the extent that reimbursement
is not made from the Mortgagor or from Liquidation Proceeds from
the respective Mortgage Loan.
"Loan-to-Value Ratio": As of any particular date, the
percentage obtained by dividing the Appraised Value into the
original principal balance of the Note.
"London Business Day": Any day on which banks are open for
dealing in foreign currency and exchange in London and New York
City.
"Long Beach Loans": The Mortgage Loans serviced by Long
Beach.
"Maximum Collateral Amount": As to Group I,
$225,505,851.34; provided that with respect to Group I,
$208,336,204.65 shall apply to Long Beach and $17,169,646.69
shall apply to Advanta for purposes of calculating the Servicer
Loss Test; as to Group II, $42,197,666.04; provided that with
respect to Group II, $34,717,670.87 shall apply to Long Beach and
$7,479,995.17 shall apply to Advanta for purposes of calculating
the Servicer Loss Test.
"Monthly Remittance Amount": The sum of the Group I Monthly
Remittance Amount and the Group II Monthly Remittance Amount.
"Monthly Remittance Date": The 20th day of each month or if
such day is not a Business Day, the Business Day succeeding such
day, commencing in the month following the month in which the
Startup Day occurs.
"Monthly Servicing Report": Any report provided by a
Servicer pursuant to Section 8.29 hereof.
"Moody's": Moody's Investors Service.
"Mortgage": The mortgage, deed of trust or other instrument
creating a first lien on an estate in fee simple interest in real
property securing a Note.
"Mortgage Loan Group" or "Group": Group I or Group II, as
the case may be. References herein to the related Class of Class
A Certificates, when used with respect to a Mortgage Loan Group,
shall mean (A) in the case of Group I, the Fixed Rate Group
Certificates and (B) in the case of Group II, the Class A-8
Certificates.
"Mortgage Loan Servicing Group": Advanta Loans or Long
Beach Loans, as applicable.
"Mortgage Loans": Such of the mortgage loans (including
Initial Mortgage Loans and Subsequent Mortgage Loans) transferred
and assigned to the Trust pursuant to Section 3.05(a) and 3.07(a)
hereof, together with any Qualified Replacement Mortgages
substituted therefor in accordance with this Agreement, as from
time to time are held as a part of the Trust Estate, the Mortgage
Loans originally so held being identified in the Schedules of
Mortgage Loans. The term "Mortgage Loan" includes any Mortgage
Loan which is Delinquent, which relates to a foreclosure or which
relates to a Property which is REO Property prior to such
Property's disposition by the Trust. Any mortgage loan which,
although intended by the parties hereto to have been, and which
purportedly was, transferred and assigned to the Trust by the
Depositor, in fact was not transferred and assigned to the Trust
for any reason whatsoever, including, without limitation, the
incorrectness of the statement in a Transfer Agreement concerning
the transfer of title to the transferee with respect to such
mortgage loan, shall nevertheless be considered a "Mortgage Loan"
for all purposes of this Agreement.
"Mortgagor": The obligor on a Note.
"Net Liquidation Proceeds": As to any Liquidated Loan,
Liquidation Proceeds net of Liquidation Expenses, unreimbursed
Delinquency Advances, unreimbursed Servicing Advances and accrued
Servicing Fees relating to such Mortgage Loan. In no event shall
Net Liquidation Proceeds with respect to any Liquidated Loan be
less than zero.
"Net Monthly Excess Cashflow": As defined in Section
7.03(c)(iv) hereof.
"90-Day Delinquent Loan": With respect to any Determination
Date, the Mortgage Loan related to each REO Property and each
Mortgage Loan with respect to which any portion of a Scheduled
Payment is 90 days or more Delinquent.
"90+ Delinquency Percentage (Rolling Three Month)": With
respect to each Mortgage Loan Servicing Group and any
Determination Date, the average of the percentage equivalents of
the fractions determined for each of the three immediately
preceding Remittance Periods the numerator of each of which is
equal to the aggregate Loan Balance of 90-Day Delinquent Loans
(including any Mortgage Loans which have gone into foreclosure or
have been discharged by reason of bankruptcy) in the related
Mortgage Loan Servicing Group as of such Determination Date and
the denominator of which is the aggregate Loan Balance of all of
the Mortgage Loans in the related Mortgage Loan Servicing Group
as of such Determination Date.
"Note": The note or other evidence of indebtedness
evidencing the indebtedness of a Mortgagor under a Mortgage Loan.
"O/C Loss Test": The O/C Loss Test with respect to each
Mortgage Loan Group and for any period set out below is satisfied
if the related Cumulative Loss Percentage for such period does
not exceed the percentage set out for such period below:
Cumulative Loss
Period Percentage
June 2, 1996 - June 1, 1997 .75%
June 2, 1997 - June 1, 1998 1.25%
June 2, 1998 - June 1, 1999 1.80%
June 2, 1999 - June 1, 2000 2.25%
June 2, 2000 - and thereafter 2.75%
"Officer's Certificate": A certificate signed by any
Authorized Officer of any Person delivering such certificate and
delivered to the Trustee.
"One-Month LIBOR": With respect to any Accrual Period for
the Class A-1 Certificates and the Class A-8 Certificates, the
rate determined by the Trustee on the related One-Month LIBOR
Determination Date on the basis of the offered rate for one-month
U.S. dollar deposits as such rate appears on Telerate Page 3750
as of 11:00 a.m. (London time) on such date; provided that if
such rate does not appear on Telerate Page 3750, the rate for
such date will be determined on the basis of the rates at which
one-month U.S. dollar deposits are offered by the Reference Banks
at approximately 11:00 a.m. (London time) on such date to prime
banks in the London interbank market. In such event, the Trustee
will request the principal London office of each of the Reference
Banks to provide a quotation of its rate. If at least two such
quotations are provided, the rate for that date will be the
arithmetic mean of the quotations (rounded upwards if necessary
to the nearest whole multiple of 1/16%). If fewer than two
quotations are provided as requested, the rate for that date will
be the arithmetic mean of the rates quoted by major banks in New
York City, selected by the Trustee, at approximately 11:00 a.m.
(New York City time) on such date for one-month U.S. dollar loans
to leading European banks.
"One-Month LIBOR Determination Date": With respect to any
Accrual Period for the Class A-1 Certificates and the Class A-8
Certificates, the second London Business Day preceding the
commencement of such Accrual Period.
"Operative Documents": Collectively, this Agreement, the
Transfer Agreements, the Interim Servicing Agreements, the
Subsequent Transfer Agreements, the Certificate Insurance
Policies, the Indemnification Agreement, the Certificates, the
Servicer Insurance Agreement and the Insurance Agreement.
"Opinion of Counsel": A written opinion of counsel, who may
be counsel to the Depositor, Seller, any Servicer or the Trustee,
which counsel shall be reasonably acceptable to the Trustee and
the Certificate Insurer.
"Original Aggregate Loan Balance": The aggregate Loan
Balances of all Initial Mortgage Loans as of the Cut-Off Date,
i.e., $251,312,577.69
"Original Pre-Funded Amount": The amount deposited in the
Pre-Funding Account on the Startup Day from the proceeds of the
sale of the (i) Fixed Rate Group Certificates, which amount is
$12,900,000, and (ii) Class A-8 Certificates, which amount is
$3,400,000.
"Originator": The originator of the related Mortgage Loans
from whom the Seller purchased the Mortgage Loans.
"Outstanding": With respect to all Certificates of a Class,
as of any date of determination, all such Certificates
theretofore executed and delivered hereunder except:
(i) Certificates theretofore cancelled by the
Registrar or delivered to the Registrar for cancellation;
(ii) Certificates or portions thereof for which full
and final payment of money in the necessary amount has been
theretofore deposited with the Trustee or any Paying Agent
in trust for the Owners of such Certificates;
(iii) Certificates in exchange for or in lieu of which
other Certificates have been executed and delivered pursuant
to this Agreement, unless proof satisfactory to the Trustee
is presented that any such Certificates are held by a bona
fide purchaser;
(iv) Certificates alleged to have been destroyed, lost
or stolen for which replacement Certificates have been
issued as provided for in Section 5.05 hereof; and
(v) Certificates as to which the Trustee has made the
final distribution thereon, whether or not such Certificate
is ever returned to the Trustee.
"Overfunded Interest Amount": With respect to each
Subsequent Transfer Date, the sum, if any, of (x) with respect to
the Fixed Rate Group Certificates, the excess of (i) interest
that would accrue from the Subsequent Cut-Off Date through July
20, 1996 on the aggregate Loan Balances of the Subsequent
Mortgage Loans related to Group I acquired by the Trust on such
Subsequent Transfer Date, calculated at the rate at which Pre-
Funding Account moneys are invested as of such Subsequent
Transfer Date over (ii) interest that would accrue from the
related Subsequent Cut-Off Date through July 20, 1996 on the
aggregate Loan Balances of the Subsequent Mortgage Loans acquired
by the Trust on such Subsequent Transfer Date, calculated at a
rate equal to the sum of (I) the Fixed Rate Group Weighted
Average Pass-Through Rate and (II) the rate at which the Premium
Amount is determined and the Trustee Fee each allocable to Group
I (such fees and amounts calculated as an annual rate based on
the aggregate Loan Balances of the Mortgage Loans in Group I),
and (y) with respect to the Class A-8 Certificates the excess of
(i) interest that would accrue from the Subsequent Cut-Off Date
through July 20, 1996 on the aggregate Loan Balances of the
Subsequent Mortgage Loans related to Group II acquired by the
Trust on such Subsequent Transfer Date, calculated at the rate at
which Pre-Funding Account moneys are invested as of such
Subsequent Transfer Date over (ii) interest that would accrue
from the related Subsequent Cut-Off Date through July 20, 1996 on
the aggregate Loan Balances of the Subsequent Mortgage Loans
acquired by the Trust on such Subsequent Transfer Date,
calculated at a rate equal to the sum of (I) the Class A-8 Pass-
Through Rate and (II) the rate at which the Premium Amount is
determined and the Trustee Fee each allocable to Group II (such
fees and amounts calculated as an annual rate based on the
aggregate Loan Balances of the Mortgage Loans in Group II).
"Owner": The Person in whose name a Certificate is
registered in the Register, and the Certificate Insurer, to the
extent described in Section 5.06 and Section 7.03(f) hereof,
respectively; provided that solely for the purposes of
determining the exercise of any voting rights hereunder, none of
the Seller, any Seller affiliate, either Servicer or any Servicer
affiliate shall be considered an Owner of a Class A Certificate
hereunder.
"Paying Agent": Initially, the Trustee, and thereafter, the
Trustee or any other Person that meets the eligibility standards
for the Paying Agent specified in Section 11.15 hereof and is
authorized by the Trustee and the Depositor to make payments on
the Certificates on behalf of the Trustee.
"Payment Date": Any date on which the Trustee is required
to make distributions to the Owners, which shall be the 25th day
of each month or if such day is not a Business Day, the next
Business Day thereafter, commencing in the month following the
month in which the Startup Day occurs.
"Percentage Interest": With respect to a Class A
Certificate a fraction, expressed as a decimal, the numerator of
which is the initial Class A Certificate Principal Balance
represented by such Class A Certificate and the denominator of
which is the aggregate initial Class A Certificate Principal
Balance represented by all the Class A Certificates of such
Class. With respect to a Class B-IO Certificate or a Class R
Certificate, the portion of the Class evidenced thereby,
expressed as a percentage, as stated on the face of such
Certificate, all of which shall total 100% with respect to the
related Class.
"Person": Any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock
company, trust, unincorporated organization or government or any
agency or political subdivision thereof.
"Policy Payments Account": As defined in Section 12.02
hereof.
"Preference Amount": With respect to the Class A
Certificates, any amounts of Current Interest and principal
included in previous distributions of any Class A Distribution
Amounts to the Owners of the Class A Certificates which are
recovered from such Owners as a voidable preference by a trustee
in bankruptcy pursuant to the United States Bankruptcy Code in
accordance with a final, nonappealable order of a court having
competent jurisdiction and which have not theretofore been repaid
to such Owners and for which there has been full compliance with
the provisions of Section 7.11.
"Pre-Funded Amount": With respect to any Determination
Date, the amount remaining on deposit in the Pre-Funding Account;
as of the Startup Day, the Pre-Funded Amount with respect to
Group I shall be $13,000,000; and the Pre-Funded Amount with
respect to Group II shall be $3,400,000.
"Pre-Funding Account": The Pre-Funding Account established
in accordance with Section 7.02(b) hereof and maintained by the
Trustee.
"Premium Amount": As defined in the Commitment Letters,
each by and between the Certificate Insurer and the Seller,
relating to the Certificate Insurance Policies.
"Prepaid Installment": With respect to any Mortgage Loan,
any installment of principal thereof and interest thereon
received by the related Servicer prior to the scheduled due date
for such installment, intended by the Mortgagor as an early
payment thereof and not as a Prepayment with respect to such
Mortgage Loan.
"Prepayment": Any payment of principal of a Mortgage Loan
which is received by the Servicer in advance of the scheduled due
date for the payment of such principal (other than the principal
portion of any Prepaid Installment). Substitution Amounts, the
portion of the purchase price of any Mortgage Loan purchased from
the Trust pursuant to Section 3.03, 3.04, 3.05, 3.06(b) or
8.10(b) hereof representing principal and the proceeds of any
Insurance Policy which are to be applied as a payment of
principal on the related Mortgage Loan shall be deemed to be
Prepayments for all purposes of this Agreement.
"Prepayment Interest Excess": Interest received on
Prepayments in full by a Mortgagor from the second day to the
15th day of any month.
"Prepayment Period": As to any Payment Date, the period
commencing on the opening of business on the 16th day of the
calendar month preceding the month in which such Payment Date
occurs and ending on the closing of business on the 15th day of
the month in which such Payment Date occurs (or, with respect to
the first Payment Date, the period from the day after the Cut-Off
Date through July 15, 1996).
"Preservation Expenses": Expenditures made by a 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": Each principal and
interest account established by a Servicer pursuant to Section
8.08(a) hereof.
"Principal Remittance Amount": Either the Group I Principal
Remittance Amount or the Group II Principal Remittance Amount, as
the case may be.
"Prohibited Transaction": The meaning set forth from time
to time in the definition thereof at Section 860F(a)(2) of the
Code (or any successor statute thereto) and applicable to the
Trust.
"Projected Net Monthly Excess Cashflow": As of any Payment
Date and with respect to either Group, six times Net Monthly
Excess Cashflow, as calculated pursuant to Section 7.03(c)(iv)
hereof with respect to such Group on such Payment Date.
"Property": The underlying property securing a Mortgage
Loan.
"Prospectus": The Prospectus dated January 24, 1996
constituting part of the Registration Statement.
"Prospectus Supplement": The AMRESCO Residential Securities
Corporation Mortgage Loan Trust 1996-3 Prospectus Supplement
dated June 18, 1996 to the Prospectus.
"Purchase Option Period": As defined in Section 9.03(a)
hereof.
"Qualified Liquidation": The meaning set forth from time to
time in the definition thereof at Section 860F(a)(4) of the Code
(or any successor statute thereto) and applicable to the Trust.
"Qualified Mortgage": The meaning set forth from time to
time in the definition thereof at Section 860G(a)(3) of the Code
(or any successor statute thereto) and applicable to the Trust.
"Qualified Replacement Mortgage": A Mortgage Loan
substituted for another pursuant to Section 3.03, 3.04, 3.05 or
3.06(b) hereof, which (i) has a Coupon Rate at least equal to the
Coupon Rate of the Mortgage Loan being replaced or, if the
Mortgage Loan being replaced is a Discounted Mortgage Loan, a
Coupon Rate at least equal to 8.721%, (ii) is of the same
property type (i.e., single family, condominium, PUD unit, etc.)
or is a single family dwelling and the same occupancy status or
is a primary residence as the replaced Mortgage Loan, (iii) shall
mature no later than July 1, 2026, (iv) has a Loan-to-Value Ratio
as of the Subsequent Cut-Off Date no higher than the
Loan-to-Value Ratio of the replaced Mortgage Loan at such time,
(v) shall be of the same or higher credit quality classification
(determined in accordance with the related Originator's credit
underwriting guidelines set forth in the related Originator's
underwriting manual) as the Mortgage Loan which such Qualified
Subsequent Mortgage replaces, (vi) has a Loan Balance as of the
related Subsequent Cut-Off Date equal to or less than the Loan
Balance of the replaced Mortgage Loan as of such Subsequent
Cut-Off Date, (vii) shall not provide for a Balloon Payment if
the related Mortgage Loan did not provide for a Balloon Payment
(and if such related Mortgage Loan provided for a Balloon
Payment, such Qualified Replacement Mortgage shall have an
original maturity of not less than the original maturity of such
related Mortgage Loan), (viii) shall be a fixed rate first lien
Mortgage Loan if the Mortgage Loan being replaced is a fixed rate
Mortgage Loan or an adjustable rate first lien Mortgage Loan if
the Mortgage Loan being replaced is an adjustable rate Mortgage
Loan and (ix) satisfies the criteria set forth from time to time
in the definition thereof at Section 860G(a)(4) of the Code (or
any successor statute thereto) and applicable to the Trust.
"Rating Agencies": Collectively, Moody's, Fitch and
Standard & Poor's or any successors thereto.
"Realized Loss": As to any Liquidated Loan, the amount, if
any, by which (x) the Loan Balance thereof plus any accrued and
unpaid interest thereon as of the date of liquidation exceeds (y)
Net Liquidation Proceeds realized thereon applied in reduction of
such Loan Balance and accrued and unpaid interest. As to any
Mortgage Loan as to which there has been a Cram Down Loss, the
amount of such Cram Down Loss.
"Record Date": With respect to the Fixed Rate Group
Certificates (except the Class A-1 Certificates) and each Payment
Date, the last day of the calendar month immediately preceding
the calendar month in which such Payment Date occurs and with
respect to the Class A-1 Certificates and the Class A-8
Certificates and each Payment Date, the day immediately preceding
such Payment Date.
"Reference Banks": Bankers Trust Company, Barclays Bank
PLC, The Bank of Tokyo and National Westminster Bank PLC,
provided that if any of the foregoing banks are not suitable to
serve as a Reference Bank, then any leading banks selected by the
Trustee which are engaged in transactions in Eurodollar deposits
in the international Eurocurrency market (i) with an established
place of business in London, (ii) not controlling, under the
control of or under common control with the Seller or any
affiliate thereof, (iii) whose quotations appear on Telerate Page
3750 on the relevant One-Month LIBOR Determination Date and (iv)
which have been designated as such by the Trustee.
"Register": The register maintained by the Registrar in
accordance with Section 5.04 hereof, in which the names of the
Owners are set forth.
"Registrar": The Trustee, acting in its capacity as
Registrar appointed pursuant to Section 5.04 hereof, or any duly
appointed and eligible successor thereto.
"Registration Statement": The Registration Statement filed
by the Depositor with the Securities and Exchange Commission
(Registration Number 33-99346), including all amendments thereto
and including the Prospectus Supplement relating to the Class A
Certificates constituting a part thereof.
"Reimbursement Amount": As of any Payment Date, the sum of
(x)(i) all Insured Payments previously paid to the Trustee by the
Certificate Insurer and not previously repaid to the Certificate
Insurer pursuant to Section 7.03(c)(iii)(C) or (D) hereof plus
(ii) interest accrued on each such Insured Payment not previously
repaid at the Late Payment Rate and (y)(i) any amounts then due
and owing to the Certificate Insurer under the Insurance
Agreement plus (ii) interest on such amounts at the Late Payment
Rate. The Certificate Insurer shall notify the Trustee, the
Depositor and the Seller of the amount of any Reimbursement
Amount.
"REMIC": A "real estate mortgage investment conduit" within
the meaning of Section 860D of the Code.
"REMIC Estate": The segregated pool of assets referred to
as the Trust Estate (other than the Pre-Funding Account and the
Capitalized Interest Account).
"REMIC Opinion": As defined in Section 3.03 hereof.
"REMIC Provisions": Provisions of the federal income tax
law relating to real estate mortgage investment conduits, which
appear at Section 860A through 860G of Subchapter M of Chapter 1
of the Code, and related provisions, and regulations and revenue
rulings promulgated thereunder, as the foregoing may be in effect
from time to time.
"Remittance Period": As to any Monthly Remittance Date, the
period commencing on the opening of business on the second day of
the month preceding the month in which such Monthly Remittance
Date occurs and ending on the close of business on the first day
of the month in which such Monthly Remittance Date occurs.
"REO Property": A Property acquired by a Servicer on behalf
of the Trust through foreclosure or deed-in-lieu of foreclosure
in connection with a defaulted Mortgage Loan.
"Reporting Date": Two Business Days (no later than 5:00
p.m. California time) following the Determination Date of each
month, on which date each Servicer will provide the Monthly
Servicing Report described in Section 8.29 hereof to the Trustee.
"Representation Letter": Letters to, or agreements with,
the Depository to effectuate a book entry system with respect to
the Class A Certificates registered in the Register under the
nominee name of the Depository.
"Residual Net Monthly Excess Cashflow": With respect to any
Payment Date, the aggregate Net Monthly Excess Cashflow, if any,
remaining, plus any Subordination Reduction Amount remaining
after the making of all applications, transfers and disbursements
described in Sections 7.03(c)(i) through 7.03(c)(vi)(A) hereof.
"Schedule of Discounted Mortgage Loans": The Schedule of
Discounted Mortgage Loans attached hereto as Schedule I-C,
listing the Discounted Mortgage Loans and the Discounted
Principal Balance of each such Discounted Mortgage Loan as of the
Cut-Off Date.
"Schedule of Mortgage Loans": Each of the schedules of
Mortgage Loans, segregated by Mortgage Loan Group, with respect
to the Initial Mortgage Loans listing each Initial Mortgage Loan
in the related Group to be conveyed on the Startup Day and with
respect to Subsequent Mortgage Loans listing each Subsequent
Mortgage Loan conveyed to the Trust for inclusion in the related
Group as of each Subsequent Transfer Date and the name of the
related Servicer. Such Schedules of Mortgage Loans shall
identify each Mortgage Loan by (1) the Servicer's loan number,
(2) the related Servicing Fee, (3) borrower's name, (4) address
(including the state) of the Property, (5) shall set forth as to
each Mortgage Loan the lien status thereof, (6) the Loan-to-Value
Ratio, (7) the Loan Balance as of the Cut-Off Date, (8) the
Coupon Rate thereof, (9) the paid-through date for such Mortgage
Loan and (10) with respect to only the Advanta Loans, whether the
Mortgage Loan is located in an area identified in the Federal
Registrar by the Federal Emergency Management Agency as having
special flood hazards.
"Scheduled Payment": As of any date of calculation, with
respect to a Mortgage Loan, the then stated scheduled monthly
installment of principal and interest payable as it may have been
reduced thereunder which, if timely paid, would result in the
full amortization of principal over the term thereof (or, in the
case of a "balloon" Note, the term to the nominal maturity date
for amortization purposes, without regard to the actual maturity
date).
"Securities Act": The Securities Act of 1933, as amended.
"Seller": AMRESCO Residential Mortgage Corporation, a
Delaware corporation.
"Servicers" or "Servicer": Long Beach Mortgage Company and
Advanta Mortgage Corp. USA, and their permitted successors and
assigns. Any reference to Servicers or Servicer shall mean the
related Servicer with respect to any Mortgage Loan or Mortgage
Loan Servicing Group.
"Servicer Affiliate": A Person (i) controlling, controlled
by or under common control with the Servicer and (ii) which is
qualified to service residential mortgage loans.
"Servicer Clean-Up Call Date": The first Monthly Remittance
Date on which the outstanding Certificate Principal Balance has
declined to $13,353,850.
"Servicer Loss Test": The Servicer Loss Test for each
Servicer and with respect to its related Mortgage Loan Servicing
Group for any period set out below is satisfied if the Cumulative
Loss Percentage as it relates to such Mortgage Loan Servicing
Group and such period does not exceed the percentage set out for
such period below (provided, that for purposes of the calculation
of the Servicer Loss Test, Realized Losses attributable solely to
Cram Down Losses should be excluded from the calculation of
Cumulative Loss Percentage):
Cumulative Loss
Period Percentage
June 2, 1996 - June 1, 1997 .75%
June 2, 1997 - June 1, 1998 1.25%
June 2, 1998 - June 1, 1999 1.80%
June 2, 1999 - June 1, 2000 2.25%
June 2, 2000 and thereafter 2.75%
"Servicer Termination Event": As defined in Section 8.20(d)
hereof.
"Servicer Termination Test": The Servicer Termination Test
for each Servicer and with respect to the related Mortgage Loan
Servicing Group is satisfied for any date of determination
thereof, if (x) the 90+ Delinquency Percentage (Rolling Three
Month) with respect to the related Mortgage Loan Servicing Group
is less than 13.0%, (y) the Servicer Loss Test is satisfied and
(z) the Annual Loss Percentage (Rolling Twelve Month) as it
relates to such Mortgage Loan Servicing Group for the twelve
month period immediately preceding the date of determination
thereof is not greater than 2.25%.
"Servicing Advance": As defined in Section 8.09(b) and
Section 8.13(a) hereof.
"Servicing Fee": With respect to any Mortgage Loan, an
amount retained by the related Servicer as compensation for
servicing and administration duties relating to such Mortgage
Loan pursuant to the first sentence of Section 8.15.
"Servicing Fee Letter": Each of the servicing fee letters
between the Trustee, the Seller and the related Servicer, setting
forth the Servicing Fee Rate and other servicing compensation
applicable to such Servicer.
"Servicing Fee Rate": The rate per annum set forth in the
related Servicing Fee Letter.
"Specified Subordinated Amount": Means as to each Group:
(a) for any Payment Date commencing on the Startup Day
and ending on the later to occur of (i) the date upon which
the aggregate Loan Balances of the Mortgage Loans in the
related Group on such Payment Date are less than or equal to
one-half of the related Maximum Collateral Amount and (ii)
the 30th Payment Date following the Startup Day, the greater
of the Specified Subordinated Amount Requirement and the
excess of (i) the aggregate Loan Balances of all Mortgage
Loans in the related Group which are 91 or more days
Delinquent (including REO properties) over (ii) the
Projected Net Monthly Excess Cash Flow as of such Payment
Date; and
(b) for any Payment Date occurring after the last
Payment Date specified in clause (a) above, the greatest of
(i) the lesser of (A) the related Specified Subordinated
Amount Requirement and (B) two (2) times the Specified
Subordination Percentage, times the then outstanding Loan
Balance of all Mortgage Loans in the related Group, (ii) two
times the excess of (A) the aggregate Loan Balance of all
Mortgage Loans which are 90 or more days Delinquent
(including REO Properties) over (B) the Projected Net
Monthly Excess Cashflow as of such Payment Date, (iii) an
amount equal to .50% times the related Maximum Collateral
Amount and (iv) an amount equal to the aggregate Loan
Balances of the four largest loans in the related Group.
(c) Notwithstanding anything to the contrary set forth
in clauses (a) and (b) of this definition, on and after any
Payment Date on which (A) an Insured Payment has become due
and owing with respect to such Group or (B) as to Group I,
the Servicer Termination Test is not satisfied with respect
to both Long Beach and Advanta or (C) as to Group II, the
Servicer Termination Test is not satisfied with respect to
both Long Beach and Advanta, the related Specified
Subordinated Amount shall be an amount not less than the
related Specified Subordinated Amount as of the immediately
preceding Payment Date, and the Specified Subordinated
Amount for Group I in clauses (a) and (b) shall never be
less than the Group I Permanent Specified Subordination
Amount.
"Specified Subordinated Amount Requirement": As of any
Payment Date, the product of the related Specified Subordination
Percentage and the Maximum Collateral Amount with respect to the
related Group.
"Specified Subordination Percentage": As defined in the
Commitment Letters for the Certificate Insurance Policies.
"Standard & Poor's": Standard & Poor's, a division of the
McGraw Hill Companies.
"Startup Day": June 20, 1996.
"Subordinate Certificates": The Class B-IO Certificates and
the Class R Certificates.
"Subordinated Amount": The Group I Subordinated Amount or
the Group II Subordinated Amount, as the case may be.
"Subordination Deficiency Amount": With respect to either
Mortgage Loan Group and any Payment Date, the excess, if any, of
(i) the Specified Subordinated Amount applicable to such Mortgage
Loan Group and Payment Date over (ii) the Subordinated Amount
applicable to such Mortgage Loan Group and Payment Date prior to
taking into account the payment of any related Subordination
Increase Amounts on such Payment Date.
"Subordination Deficit": With respect to either Mortgage
Loan Group and Payment Date, the amount, if any, by which (x) the
aggregate of the related Class A Certificate Principal Balances,
after taking into account the payment of the Class A Distribution
Amount with respect to such Mortgage Loan Group on such Payment
Date (except for any Subordination Deficit with respect to the
Classes of Certificates related to such Mortgage Loan Group and
Subordination Increase Amount with respect to such Mortgage Loan
Group), exceeds (y) the sum of (a) the aggregate Loan Balances of
the Mortgage Loans in the related Mortgage Loan Group as of the
close of business on the last day of the related Prepayment
Period and (b) with respect to the related Group, the amount, if
any, on deposit in the Pre-Funding Account allocable to such
Group as of the close of business on the last day of the related
Prepayment Period.
"Subordination Increase Amount": With respect to either
Mortgage Loan Group and Payment Date, the lesser of (i) the
related Subordination Deficiency Amount as of such Payment Date
(after taking into account the payment of the related Class A
Distribution Amount on such Payment Date (except for any
Subordination Increase Amount with respect to such Mortgage Loan
Group)) and (ii) the aggregate amount of Net Monthly Excess
Cashflow allocated to the Classes of Certificates related to such
Mortgage Loan Group pursuant to Sections 7.03(c)(iv)(A) and
7.03(c)(iv)(B) on such Payment Date.
"Subordination Reduction Amount": With respect to any
Mortgage Loan Group and Payment Date, an amount equal to the
lesser of (x) the Excess Subordinated Amount for such Mortgage
Loan Group and Payment Date and (y) the Principal Remittance
Amount with respect to such Mortgage Loan Group for the related
Monthly Remittance Date.
"Subsequent Cut-Off Date": The close of business on the
first day of the month in which a Qualified Replacement Mortgage
or a Subsequent Mortgage Loan is transferred and assigned to the
Trust.
"Subsequent Mortgage Loans": The Mortgage Loans sold to the
Trust after the Startup Day for inclusion in Group I or Group II
pursuant to Section 3.07 hereof, which shall be listed on the
Schedule of Mortgage Loans attached to a Subsequent Transfer
Agreement.
"Subsequent Transfer Agreement": Each Subsequent Transfer
Agreement dated as of a Subsequent Transfer Date executed by the
Trustee, the Depositor and the Seller substantially in the form
of Exhibit C hereto, by which Subsequent Mortgage Loans are sold
and assigned to the Trust.
"Subsequent Transfer Date": With respect to Subsequent
Mortgage Loans, the date specified in each Subsequent Transfer
Agreement, and with respect to a Qualified Replacement Mortgage,
the date upon which a conveyance of such Qualified Replacement
Mortgage to the Trust is effective.
"Subservicer": Any Person with whom a Servicer has entered
into a subservicing agreement and who satisfies all requirements
set forth in Section 8.03 hereof in respect of the qualification
of a subservicer.
"Subservicing Agreement": The written contract between a
Servicer and any Subservicer relating to servicing and/or
administration of certain Mortgage Loans as permitted by Section
8.03.
"Substitution Amount": As defined in Section 3.03 hereof.
"Tax Matters Certificate": The Class R Certificate,
initially issued to Bankers Trust Company as the initial Tax
Matters Person.
"Tax Matters Person": The Person appointed for the Trust
pursuant to Section 11.18 hereof to act as the Tax Matters Person
under the Code.
"Tax Matters Person Residual Interest": The 0.001% interest
in the Class R Certificates, which shall be issued to and held by
Bankers Trust Company throughout the term hereof unless another
Person shall accept an assignment of such interest and the
designation of Tax Matters Person pursuant to Section 11.18
hereof.
"Telerate Page 3750": The display designated as page "3750"
on the Dow Jones Telerate Capital Markets Report (or such other
page as may replace page 3750 on that report for the purpose of
displaying London interbank offered rates of major banks).
"Termination Notice": As defined in Section 9.03(a) hereof.
"Total Available Funds": Either the Group I Total Available
Funds or the Group II Total Available Funds, as applicable.
"Total Monthly Excess Cashflow": As defined in Section
7.03(c)(iii) hereof.
"Total Monthly Excess Spread": Either the Group I Total
Monthly Excess Spread or the Group II Total Monthly Excess
Spread, as applicable.
"Transfer Agreement": Either of (x) the Continuing Loan
Purchase Agreement dated November 1, 1995 between Long Beach
Mortgage Company, as seller and the Seller, as buyer, as
supplemented by the Supplement dated June 20, 1996 (collectively,
the "Long Beach Transfer Agreement"), or (y) the Continuing Loan
Purchase Agreement dated as of April 5, 1996, between New Century
Mortgage Corporation, as seller, and the Seller, as buyer, as
supplemented by the Supplement dated June 20, 1996 (collectively,
the "New Century Transfer Agreement") or (z) the Continuing Loan
Purchase Agreement dated as of May 10, 1996 between Walsh
Securities, Inc., as seller, and the Seller, as buyer, the "Walsh
Transfer Agreement").
"Trust": AMRESCO Residential Securities Corporation
Mortgage Loan Trust 1996-3, the trust created under this
Agreement.
"Trust Estate": As defined in the conveyance clause under
this Agreement.
"Trustee": Bankers Trust Company, a New York banking
corporation, the corporate trust office of which is located on
the date of execution of this Agreement at Four Albany Street,
New York, New York 11421, Attn: AMRESCO Residential Securities
Corporation Mortgage Loan Trust 1996-3, not in its individual
capacity but solely as Trustee under this Agreement, and any
successor hereunder.
"Trustee Fee": The fee payable monthly on each Payment Date
in an amount equal to one-twelfth of .00125% multiplied by the
then outstanding Loan Balance.
"Underwriters": Prudential Securities Incorporated, CS
First Boston and Goldman Sachs & Co.
Section 1.02 Use of Words and Phrases.
"Herein", "hereby", "hereunder", "hereof", "hereinbefore",
"hereinafter" and other equivalent words refer to this Agreement
as a whole and not solely to the particular section of this
Agreement in which any such word is used. The definitions set
forth in Section 1.01 hereof include both the singular and the
plural. Whenever used in this Agreement, any pronoun shall be
deemed to include both singular and plural and to cover all
genders.
Section 1.03 Captions; Table of Contents.
The captions or headings in this Agreement and the Table of
Contents are for convenience only and in no way define, limit or
describe the scope and intent of any provisions of this
Agreement.
Section 1.04 Opinions.
Each opinion with respect to the validity, binding nature
and enforceability of documents or Certificates may be qualified
to the extent that the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity (whether considered
in a proceeding or action in equity or at law) and may state that
no opinion is expressed on the availability of the remedy of
specific enforcement, injunctive relief or any other equitable
remedy. Any opinion required to be furnished by any Person
hereunder must be delivered by counsel upon whose opinion the
addressee of such opinion may reasonably rely, and such opinion
may state that it is given in reasonable reliance upon an opinion
of another, a copy of which must be attached, concerning the laws
of a foreign jurisdiction.
END OF ARTICLE I
ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST
Section 2.01 Establishment of the Trust.
The parties hereto (excluding the Servicers) do hereby
create and establish, pursuant to the laws of the State of New
York and this Agreement, the Trust, which, for convenience, shall
be known as "AMRESCO Residential Securities Corporation Mortgage
Loan Trust 1996-3".
Section 2.02 Office.
The office of the Trust shall be in care of the Trustee,
addressed to Four Albany Street, New York, NY 10006, Attention:
AMRESCO Residential Securities Corporation Mortgage Loan Trust
1996-3 or at such other address as the Trustee may designate by
notice to the Depositor, the Seller, the Servicers, the Owners
and the Certificate Insurer.
Section 2.03 Purposes and Powers.
The purpose of the Trust is to engage in the following
activities and only such activities: (i) the issuance of the
Certificates and the acquiring, owning and holding of Mortgage
Loans and the Trust Estate in connection therewith; (ii)
activities that are necessary, suitable or convenient to
accomplish the foregoing or are incidental thereto or connected
therewith, including the investment of moneys in accordance with
this Agreement; and (iii) such other activities as may be
required in connection with conservation of the Trust Estate and
distributions to the Owners; provided, however, that nothing
contained herein shall permit the Trustee to take any action
which would adversely affect the REMIC Estate's status as a
REMIC.
Section 2.04 Appointment of the Trustee;
Declaration of Trust.
The Depositor hereby appoints the Trustee as trustee of the
Trust effective as of the Startup Day, to have all the rights,
powers and duties set forth herein. The Trustee hereby
acknowledges and accepts such appointment, represents and
warrants its eligibility as of the Startup Day to serve as
Trustee pursuant to Section 10.08 hereof and declares that it
will hold the Trust Estate in trust upon and subject to the
conditions set forth herein for the benefit of the Owners.
Section 2.05 Expenses of the Trust.
The expenses of the Trust, including (i) the fees of the
Trustee and (ii) any reasonable expenses of the Trustee that are
"unanticipated expenses of the REMIC" within the meaning of
Treasury Regulations Section 1.860G-1(b)(3), shall be paid
pursuant to Section 7.03(c)(ii). The Seller shall pay directly
the reasonable fees and expenses of counsel to the Trustee
pursuant to a fee letter between the Seller and the Trustee. The
reasonable fees and expenses of the Trustee's counsel in
connection with the review and delivery of this Agreement and
related documentation shall be paid by the Seller on the Startup
Day.
Section 2.06 Ownership of the Trust.
On the Startup Day the ownership interests in the Trust
shall be transferred as set forth in Section 4.02 hereof, such
transfer to be evidenced by sale of the Certificates as described
therein. Thereafter, transfer of any ownership interest shall be
governed by Sections 5.04 and 5.08 hereof.
Section 2.07 Situs of the Trust.
It is the intention of the parties hereto that the situs of
the Trust shall be in the State of California.
Section 2.08 Miscellaneous REMIC Provisions.
(a) The beneficial ownership interest in the REMIC Estate
shall be evidenced by the interests having the characteristics
and terms as follows, including for federal income tax purposes
the Final Scheduled Payment Dates:
Class Designation Initial Final Scheduled
Balance Payment Dates
Class A-1 $70,892,000 December 25, 2011
Class A-2 $27,106,000 January 25, 2016
Class A-3 $34,146,000 November 25, 2019
Class A-4 $17,049,000 May 25, 2021
Class A-5 $22,626,000 February 25, 2023
Class A-6 $26,857,000 November 25, 2024
Class A-7 $26,205,000 April 25, 2026
Class A-8 $42,196,000 March 25, 2026
Class B-IO 1
Class R Certificates 1
____________________
1 No Certificate Principal Balance.
(b) The Depositor hereby designates the Class A-1, Class A-
2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-
8 and Class B-IO Certificates as "regular interests," and the
Class R Certificates as the single class of "residual interests"
in the REMIC Estate for purposes of the REMIC Provisions.
(c) The Startup Day is hereby designated as the "startup
day" of the REMIC Estate within the meaning of Section 860G(a)(9)
of the Code.
(d) The Owner of the Tax Matters Person Residual Interest
in the REMIC Estate is hereby designated as Tax Matters Person
with respect to the REMIC Estate.
(e) The Trust and the REMIC Estate shall, for federal
income tax purposes, maintain books on a calendar year basis and
report income on an accrual basis.
(f) The Trustee shall cause the REMIC Estate to elect to be
treated as a REMIC under Section 860D of the Code. Any
inconsistencies or ambiguities in this Agreement or in the
administration of the Trust shall be resolved in a manner that
preserves the validity of such election to be treated as a REMIC.
(g) The Trustee shall provide to the Internal Revenue
Service and to the person described in Section 860(E)(e)(3) and
(6) of the Code the information described in Treasury Regulation
Section 1.860D-1(b)(5)(ii), or any successor regulation thereto
with respect to the REMIC Estate. Such information will be
provided in the manner described in Treasury Regulation
Section 1.860E-2(a)(5), or any successor regulation thereto.
END OF ARTICLE II
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE DEPOSITOR, THE SERVICERS AND THE SELLER;
COVENANT OF SELLER TO CONVEY MORTGAGE LOANS
Section 3.01 Representations and Warranties of
the Depositor.
The Depositor hereby represents, warrants and covenants to
the Trustee, the Seller, the Certificate Insurer, the Servicers
and the Owners that as of the Startup Day:
(a) The Depositor is a corporation duly organized, validly
existing and in good standing under the laws governing its
creation and existence 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 Depositor 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 the Operative Documents to which it is a party.
(b) The execution and delivery of this Agreement by the
Depositor and its performance and compliance with the terms of
the Operative Documents to which it is a party have been duly
authorized by all necessary corporate action on the part of the
Depositor and will not violate the Depositor's certificate 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 a breach of, any material contract,
agreement or other instrument to which the Depositor is a party
or by which the Depositor 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 Depositor or
any of its properties.
(c) Each Operative Document to which the Depositor is a
party, assuming due authorization, execution and delivery by the
other parties hereto and thereto, constitutes a valid, legal and
binding obligation of the Depositor, enforceable against it in
accordance with the terms hereof and thereof, except as the
enforcement 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 Depositor 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
default would materially and adversely affect the condition
(financial or other) or operations of the Depositor or its
properties or the consequences of which would materially and
adversely affect its performance hereunder and under the
Operative Documents to which the Depositor is a party.
(e) No litigation is pending with respect to which the
Depositor has received service of process or, to the best of the
Depositor's knowledge, threatened against the Depositor, which
litigation might have consequences that would prohibit its
entering into this Agreement or any other Operative Documents to
which it is a party or that would materially and adversely affect
the condition (financial or otherwise) or operations of the
Depositor 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 Depositor is a
party.
(f) No certificate of an officer, statement furnished in
writing or report delivered, or to be delivered, pursuant to the
terms hereof by the Depositor contains or will contain any untrue
statement of a material fact or omits or will omit 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 Depositor or matters or activities for which
the Depositor is responsible in accordance with the Operative
Documents or which are attributable to the Depositor 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 Depositor required to be stated therein
or necessary to make the statements contained therein with
respect to the Depositor, in light of the circumstances under
which they were made, not misleading. 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 necessary
to make the statements contained therein, in light of the
circumstances under which they were made, not misleading. There
is no fact known to the Depositor that materially adversely
affects or in the future may (so far as the Depositor can now
reasonably foresee) materially adversely affect the Depositor or
the Mortgage Loans or the ownership interests therein represented
by the Certificates that has not been set forth in the
Registration Statement.
(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 Depositor makes no such
representation or warranty), that are necessary or advisable in
connection with the acquisition by the Depositor of the Mortgage
Loans, the conveyance by the Depositor of the Mortgage Loans, the
purchase and sale of the Certificates and the execution, delivery
and performance by the Depositor 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 otherwise) and either the time
within which any appeal therefrom may be taken or review thereof
may be obtained has expired or no review thereof may be obtained
or appeal therefrom taken, and are adequate to authorize the
consummation of the transactions contemplated by the Operative
Documents on the part of the Depositor and the performance by the
Depositor of its obligations under this Agreement and such of the
other Operative Documents to which it is a party.
(i) The transactions contemplated by the Operative
Documents are in the ordinary course of business of the
Depositor.
(j) The Depositor is not insolvent, nor will it be made
insolvent by the transfer of the Mortgage Loans, nor is the
Depositor aware of any pending insolvency.
(k) The transfer, assignment and conveyance of the Notes
and the Mortgages by the Depositor hereunder are not subject to
the bulk transfer laws or any similar statutory provisions in
effect in any applicable jurisdiction.
It is understood and agreed that the representations and
warranties set forth in this Section 3.01 shall survive delivery
of the respective Mortgage Loans to the Trustee.
Section 3.02 Representations and Warranties of
the Servicers.
(i) Each Servicer hereby represents and warrants to the
Trustee, the Depositor, the Seller, the Certificate Insurer and
the Owners, as to itself only, that as of the Startup Day:
I It is a corporation duly organized, validly existing
and in good standing under the laws of its state of
incorporation, is in compliance with the laws of each state in
which any Property is located to the extent necessary to enable
it to perform its obligations hereunder and is in good standing
as a foreign corporation in each jurisdiction in which the nature
of its business, or the properties owned or leased by it make
such qualification necessary. Such 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 the Operative Documents to which it is a party.
(b) The execution and delivery of the Operative Documents
to which such Servicer is a party by such Servicer and its
performance and compliance with the terms thereof have been duly
authorized by all necessary corporate action on the part of such
Servicer and will not violate such Servicer's articles or
certificate 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 such
Servicer is a party or by which such 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 such Servicer or any of its properties.
(c) Each Operative Document to which such Servicer is a
party, assuming due authorization, execution and delivery by the
other parties thereto, constitutes a valid, legal and binding
obligation of such Servicer, enforceable against it in accordance
with the terms thereof, except as the enforcement 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) Such 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
would materially and adversely affect the condition (financial or
otherwise) or operations of such Servicer or its properties or
would materially and adversely affect its performance hereunder.
(e) No litigation is pending with respect to which such
Servicer has received service of process or, to the best of such
Servicer's knowledge, threatened against such Servicer which
litigation would prohibit its entering into the Operative
Documents to which such Servicer is a party or would materially
and adversely affect the condition (financial or otherwise) or
operations of such Servicer or its properties or would materially
and adversely affect its performance hereunder and under the
other Operative Documents to which such Servicer is a party.
(f) No certificate of an officer, statement furnished in
writing or report delivered pursuant to the terms hereof by such
Servicer contains any untrue statement of a material fact or
omits to state any material fact necessary to make the
certificate, statement or report not misleading.
(g) 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 such Servicer makes no such
representation or warranty), that are necessary or advisable in
connection with the execution, delivery and performance by such
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
otherwise) and either the time within which any appeal therefrom
may be taken or review thereof may be obtained has expired or no
review thereof may be obtained or appeal therefrom taken, and are
adequate to authorize the consummation of the transactions
contemplated by the Operative Documents on the part of such
Servicer and the performance by such Servicer of its obligations
under the Operative Documents to which it is a party.
(h) The collection practices used by such Servicer with
respect to the Mortgage Loans serviced by it have been, in all
material respects, legal, proper, prudent and customary in the
mortgage servicing business.
(i) The transactions contemplated by this Agreement are in
the ordinary course of business of such Servicer.
It is understood and agreed that the representations and
warranties set forth in this Section 3.02 shall survive delivery
of the Mortgage Loans to the Trustee.
(ii) Upon discovery by any of the Seller, a Servicer, the
Depositor, the Certificate Insurer, or the Trustee (each, for
purposes of this paragraph, a "party") of a breach of any of the
representations and warranties set forth in this Section 3.02
which materially and adversely affects the interests of the
Owners or of the Certificate Insurer, the party discovering such
breach shall give prompt written notice to the other parties.
Within 60 days of its discovery or its receipt of notice of such
breach, the related Servicer shall (A) cure such breach in all
material respects to the satisfaction of the Certificate Insurer,
(B) to the extent such breach can only be cured through
repurchase or substitution of one or more Mortgage Loans, the
Servicer (other than Advanta) may so repurchase or substitute in
the manner set forth in Section 3.04(b), and (C) to the extent
that such breach is not cured in accordance with clause (A) or
(B) above, the related Servicer may thereafter be removed
pursuant to Section 8.20(a)(iv) hereof; provided, however, that
if any party can establish to the reasonable satisfaction of the
Certificate Insurer that it is diligently pursuing remedial
action, then the cure period may be extended with the written
approval of the Certificate Insurer.
Section 3.03 Representations and Warranties of
the Seller.
The Seller hereby represents, warrants and covenants to the
Trustee, the Depositor, the Certificate Insurer, the Servicers
and the Owners as of the Startup Day as follows:
(a) The Seller is a corporation duly organized, validly
existing and in good standing under the laws governing its
creation and existence 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 Seller 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
the Operative Documents to which it is a party.
(b) The execution and delivery of this Agreement by the
Seller and its performance and compliance with the terms of the
Operative Documents to which it is a party have been duly
authorized by all necessary corporate action on the part of the
Seller and will not violate the Seller's certificate 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 a breach of, any material contract,
agreement or other instrument to which the Seller is a party or
by which the Seller 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 Seller or any of its
properties.
(c) Each Operative Document to which the Seller is a party,
assuming due authorization, execution and delivery by the other
parties hereto and thereto, constitutes a valid, legal and
binding obligation of the Seller, enforceable against it in
accordance with the terms hereof and thereof, except as the
enforcement 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 Seller 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 default
would materially and adversely affect the condition (financial or
other) or operations of the Seller or its properties or the
consequences of which would materially and adversely affect its
performance under the Operative Documents to which the Seller is
a party.
(e) No litigation is pending with respect to which the
Seller has received service of process or, to the best of the
Seller's knowledge, threatened against the Seller, which
litigation might have consequences that would prohibit its
entering into this Agreement or any other Operative Documents to
which it is a party or that would materially and adversely affect
the condition (financial or otherwise) or operations of the
Seller or its properties or might have consequences that would
materially and adversely affect its performance under the
Operative Documents to which the Seller is a party.
(f) No certificate of an officer, statement furnished in
writing or report delivered or to be delivered pursuant to the
terms hereof by the Seller contains or will contain any untrue
statement of a material fact or omits or will omit 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 Seller or matters or activities for which the
Seller is responsible in accordance with the Operative Documents
or which are attributable to the Seller 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 Seller required to be stated therein or necessary
to make the statements contained therein with respect to the
Seller, in light of the circumstances under which they were made,
not misleading. There is no fact known to the Seller that
materially adversely affects or in the future may (so far as the
Seller can now reasonably foresee) materially adversely affect
the Seller or the Mortgage Loans or the ownership interests
therein represented by the Certificates that has not been set
forth in the Registration Statement.
(h) Upon the receipt of each Mortgage Loan (including the
related Note) and other items of the Trust Estate by the Trustee
under this Agreement, the Trust will have good title to such
Mortgage Loan (including the related Note) and such other items
of the Trust Estate free and clear of any lien, charge, mortgage,
encumbrance or rights of others.
(i) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights
and licenses required to be taken, given or obtained, as the case
may be, by or from any federal, state or other governmental
authority or agency (other than any such actions, approvals, etc.
under any state securities laws, real estate syndication or "Blue
Sky" statutes, as to which the Seller makes no such
representation or warranty), that are necessary or advisable in
connection with the purchase and sale of the Certificates and the
execution, delivery and performance by the Seller 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 otherwise)
and either the time within which any appeal therefrom may be
taken or review thereof may be obtained has expired or no review
thereof may be obtained or appeal therefrom taken, and are
adequate to authorize the consummation of the transactions
contemplated by the other Operative Documents on the part of the
Seller and the performance by the Seller of its obligations under
this Agreement and such of the other Operative Documents to which
it is a party.
(j) The transactions contemplated by the Operative
Documents are in the ordinary course of business of the Seller.
(k) The Seller is not insolvent, nor will it be made
insolvent by the transfer of the Mortgage Loans, nor is the
Seller aware of any pending insolvency.
(l) The transfer, assignment and conveyance of the Notes
and the Mortgages by the Seller hereunder are not subject to the
bulk transfer laws or any similar statutory provisions in effect
in any applicable jurisdiction.
(m) The Seller is not aware of a default by an Originator
under any Operative Document or that any Mortgage Loan breaches
any representation or warranty in a Transfer Agreement that as of
the Startup Date is not subject to cure.
It is understood and agreed that the representations and
warranties set forth in this Section 3.03 shall survive delivery
of the respective Mortgage Loans to the Trustee.
Upon discovery by any of the Servicers, the Depositor, the
Seller, the Certificate Insurer or the Trustee (each, for
purposes of this paragraph, a "party") of a breach of any of the
representations and warranties set forth in this Section 3.03
which materially and adversely affects the interests of the
Owners or the interests of the Certificate Insurer, the party
discovering such breach shall give prompt written notice to the
other parties. The Seller hereby covenants and agrees that
within 60 days of its discovery or its receipt of notice of
breach, it shall cure such breach in all material respects or,
with respect to a breach of clause (h) above, it shall itself, or
if the related Originator or other party to the related Transfer
Agreement causes such breach, such party shall on the Monthly
Remittance Date next succeeding such discovery or receipt of
notice (i) within two years of the Startup Day, substitute in
lieu of any Mortgage Loan not in compliance with clause (h) a
Qualified Replacement Mortgage and, if the outstanding principal
amount of such Qualified Replacement Mortgage as of the
applicable Subsequent Cut-Off Date is less than the Loan Balance
of such Mortgage Loan as of such Subsequent Cut-Off Date, deliver
an amount equal to such difference together with the aggregate
amount of (A) all unreimbursed Delinquency Advances and Servicing
Advances theretofore made with respect to such Mortgage Loan and
(B) the interest portion of any Delinquency Advances which the
related Servicer has theretofore failed to remit with respect to
such Mortgage Loan (a "Substitution Amount") to the related
Servicer for deposit in the Principal and Interest Account or
(ii) purchase such Mortgage Loan from the Trust at the Loan
Purchase Price, which purchase price shall be delivered to the
related Servicer for deposit in the Principal and Interest
Account. Notwithstanding any provision of this Agreement to the
contrary, with respect to any Mortgage Loan which is not in
default or as to which no default is imminent, no repurchase or
substitution pursuant hereto shall be made unless the related
Originator or the Seller obtains for the Trustee and the
Certificate Insurer an opinion of counsel experienced in federal
income tax matters to the effect that such a repurchase or
substitution would not constitute a Prohibited Transaction for
the REMIC Estate or otherwise subject the REMIC Estate to tax and
would not jeopardize the status of the REMIC Estate as a REMIC (a
"REMIC Opinion") addressed to the related Servicer, the Trustee
and the Certificate Insurer and acceptable to the related
Servicer, the Certificate Insurer and the Trustee. Any Mortgage
Loan as to which repurchase or substitution was delayed pursuant
to this Section because of the inability to deliver a REMIC
Opinion shall be repurchased or substituted for (subject to
compliance with Sections 3.03, 3.04 or 3.06, as the case may be)
upon the earlier of (a) the occurrence of a default or imminent
default with respect to such Mortgage Loan and (b) receipt by the
Trustee and the Certificate Insurer of a REMIC Opinion.
Section 3.04 Covenants of Seller to Take Certain
Actions with Respect to the Mortgage Loans In
Certain Situations.
(a) The Seller hereby assigns to the Depositor, who assigns
to the Trustee for the benefit of the Owners and the Certificate
Insurer all of its right, title and interest under each Transfer
Agreement applicable to the Mortgage Loans but none of its
obligations thereunder. Insofar as such Transfer Agreement
provides for representations and warranties made by the related
Originator or another party who has sold loans to the Seller in
respect of a Mortgage Loan and any remedies provided thereunder
for any breach of such representations and warranties, such
right, title and interest may be enforced against such Originator
directly by the Seller, the Depositor, the related Servicer, by
the Trustee on behalf of the Owners, or by the Certificate
Insurer; provided, that the Trustee must enforce such remedies if
such other parties do not so enforce such remedies. Upon the
discovery by the Seller, the Depositor, the Certificate Insurer,
a Servicer or the Trustee of a breach of any of the
representations and warranties made in a Transfer Agreement in
respect of any Mortgage Loan, without regard to any limitation
set forth in such representation or warranty concerning the
knowledge of the related Originator or another party who has sold
loans to the Seller as to the facts stated therein, which
materially and adversely affects the interests of the Owners or
of the Certificate Insurer in such Mortgage Loan, the party
discovering such breach shall give prompt written notice to the
other parties.
A breach of any representation or warranty (x) relating to
marketability of title sufficient to transfer unencumbered title
to a Mortgage Loan set forth in Section 4.3(a) of each Transfer
Agreement, (y) relating to enforceability of the Mortgage Loan
against the related Mortgagor or Property set forth in
Section 4.3(f) and (l) of each Transfer Agreement or (z) the
status of such Mortgage Loan as a "qualified mortgage" under
Section 860G(a)(3) of the Code is a priori the breach of a
representation or warranty which "materially and adversely
affects the interests of the Owners or of the Certificate
Insurer" in such Mortgage Loan provided that the related
Originator shall nevertheless have the opportunity to cure,
substitute or repurchase in accordance with Section 3.04(b).
(b) Upon the earliest to occur of the Seller's discovery,
its receipt of notice of breach of a representation and warranty
given by an Originator from any one of the other parties hereto
or from the Certificate Insurer or such time as a breach of any
representation and warranty materially and adversely affects the
interests of the Owners or of the Certificate Insurer as set
forth above, the Seller hereby covenants and warrants that it
shall promptly request that the related Originator shall cure
such breach in all material respects or, if such breach is not
cured, the Seller shall request that the related Originator
shall, subject to the further requirements of this paragraph and
within the time period specified in the related Transfer
Agreement (but in any case for a Mortgage Loan that is not a
"qualified mortgage", within 90 days of discovery thereof) (i)
within two years of the Startup Day, substitute in lieu of each
Mortgage Loan which has given rise to the requirement for action
a Qualified Replacement Mortgage and deliver the Substitution
Amount applicable thereto, to the related Servicer for deposit in
the related Principal and Interest Account or (ii) purchase such
Mortgage Loan from the Trust at a purchase price equal to the
Loan Purchase Price thereof, which purchase price shall be
delivered to the related Servicer for deposit in the related
Principal and Interest Account by the related Originator. In
connection with any such proposed purchase or substitution, the
Seller may request the Originator at such party's expense to
cause to be delivered to the Trustee or may itself deliver to the
related Servicer, the Trustee and to the Certificate Insurer an
opinion of counsel experienced in federal income tax matters
stating whether or not such a proposed purchase or substitution
would constitute a Prohibited Transaction for the Trust or would
jeopardize the status of the Trust as a REMIC, and the related
Originator shall only be required to take either such action to
the extent such action would not constitute a Prohibited
Transaction for the Trust or would not jeopardize the status of
the Trust as a REMIC. Any required purchase or substitution, if
delayed by the absence of such opinion, shall nonetheless occur
upon the earlier of (i) the occurrence of a default or imminent
default with respect to the Mortgage Loan or (ii) the delivery of
such opinion by the Seller at the related Originator's expense or
by the related Originator. Any repurchase or substitution shall
occur prior to the related Monthly Remittance Date and the
related Originator shall provide the Servicer with written notice
no less than five Business Days in advance of such repurchase or
substitution. It is understood and agreed that the obligation of
the related Originator to cure the defect, or substitute for or
purchase any Mortgage Loan as to which a representation or
warranty is untrue in any material respect and has not been
remedied shall constitute the sole remedy available to the
Owners, the Seller, the Depositor, the Trustee and the
Certificate Insurer.
(c) In the event that any Qualified Replacement Mortgage is
delivered by an Originator to the Trust pursuant to this Section
3.04 or Section 3.06 hereof, the Seller shall cause the related
Originator to take the actions described in Section 3.04(b) with
respect to such Qualified Replacement Mortgage upon the discovery
by any of the Owners, the Seller, the Certificate Insurer, a
Servicer or the Trustee that the representations and warranties
set forth in the related Transfer Agreement or in Section 3.03
above, are untrue in any material respect on the date such
Qualified Replacement Mortgage is conveyed to the Trust such that
the interests of the Owners or the Certificate Insurer in the
related Qualified Replacement Mortgage are materially and
adversely affected; provided, however, that for the purposes of
this subsection (c) the representations and warranties in the
related Transfer Agreement or as set forth in Section 3.3 above
referring to items "as of the Cut-Off Date" or "as of the Startup
Day" shall be deemed to refer to such items as of the related
Subsequent Cut-Off Date.
(d) It is understood and agreed that the covenants set
forth in this Section 3.04 shall survive delivery of the
respective Mortgage Loans (including Qualified Replacement
Mortgages) to the Trustee.
(e) The Trustee and the Servicers (in their capacities as
Servicers) shall have no duty to conduct any affirmative
investigation other than as specifically set forth in this
Agreement as to the occurrence of any condition requiring the
repurchase or substitution of any Mortgage Loan pursuant to this
Section or the eligibility of any Mortgage Loan for purposes of
this Agreement.
Section 3.05 Conveyance of the Mortgage Loans,
Subsequent Mortgage Loans and Qualified
Replacement Mortgages.
(a) On the Startup Day the Seller, concurrently with the
execution and delivery hereof, hereby transfers, assigns, sets
over and otherwise conveys without recourse to the Depositor and
the Depositor, concurrently with the execution and delivery
hereof, transfers, assigns, sets over and otherwise conveys
without recourse, to the Trustee for the benefit of the Owners of
the Certificates, all of their respective right, title and
interest in and to the Trust Estate; provided, however, that the
Seller reserves and retains all of its right, title and interest
in and to principal (including Prepayments collected) and
interest due on each Initial Mortgage Loan on or prior to the Cut-
Off Date on any Mortgage Loan that is current on the Cut-Off
Date. The transfer by the Depositor of the Initial Mortgage
Loans set forth on the Schedule of Mortgage Loans to the Trustee
is absolute and is intended by the Owners and all parties hereto
to be treated as a sale by the Depositor.
It is intended that the sale, transfer, assignment and
conveyance herein contemplated constitute a sale of the Initial
Mortgage Loans conveying good title thereto free and clear of any
liens and encumbrances from the Seller to the Depositor and from
the Depositor to the Trust and that the Initial Mortgage Loans
not be part of the Depositor's or the Seller's estate in the
event of insolvency. In the event that either such conveyance or
a conveyance of a Qualified Replacement Mortgage or a conveyance
pursuant to Section 3.07 and any Subsequent Transfer Agreement is
deemed to be a loan, the parties intend that the Seller shall be
deemed to have granted to the Depositor and the Depositor shall
be deemed to have granted to the Trustee a security interest in
the Trust Estate, and that this Agreement shall constitute a
security agreement under applicable law.
In connection with such sale, transfer, assignment, and
conveyance from the Seller to the Depositor, the Seller has
filed, in the appropriate office or offices in the States of
Texas and Delaware, a UCC-1 financing statement executed by the
Seller as debtor, naming the Depositor as secured party and
listing the Initial Mortgage Loans and the other property
(including any Qualified Replacement Mortgage) described above as
collateral and on or prior to each Subsequent Transfer Date the
Seller will file in such offices a UCC-1 financing statement
listing the Subsequent Mortgage Loans so transferred as
collateral. The characterization of the Seller as a debtor and
the Depositor as the secured party on such financing statements
is solely for protective purposes and shall in no way be
construed as being contrary to the intent of the parties that
this transaction be treated as a sale of the Seller's entire
right, title and interest in the Trust Estate. In connection
with such filing, the Seller agrees that it shall cause to be
filed all necessary continuation statements thereof and to take
or cause to be taken such actions and execute such documents as
are necessary to perfect and protect the Trustee's, the Owners'
and the Certificate Insurer's interest in the Trust Estate.
In connection with such sale, transfer, assignment, and
conveyance, from the Depositor to the Trustee, the Depositor has
filed, in the appropriate office or offices in the States of
Texas and Delaware, a UCC-1 financing statement executed by the
Depositor as debtor, naming the Trustee as secured party and
listing the Initial Mortgage Loans and the other property
(including any Qualified Replacement Mortgage) described above as
collateral and on or prior to each Subsequent Transfer Date the
Depositor will file in such offices a similar UCC-1 financing
statement listing the Subsequent Mortgage Loans so transferred as
collateral. The characterization of the Depositor as a debtor
and the Trustee as the secured party in such financing statements
is solely for protective purposes and shall in no way be
construed as being contrary to the intent of the parties that
this transaction be treated as a sale of the Depositor's entire
right, title and interest in the Trust Estate. In connection
with such filing, the Depositor agrees that it shall cause to be
filed all necessary continuation statements thereof and to take
or cause to be taken such actions and execute such documents as
are necessary to perfect and protect the Trustee's, the Owners'
and the Certificate Insurer's interest in the Trust Estate.
(b) In connection with the transfer and assignment of the
Initial Mortgage Loans and prior to each Subsequent Transfer Date
with respect to the Qualified Replacement Mortgage or Subsequent
Mortgage Loan, the Depositor agrees to:
(i) deliver without recourse to the Trustee on the
Startup Day with respect to each Initial Mortgage Loan or on
each Subsequent Transfer Date with respect to the Qualified
Replacement Mortgage or Subsequent Mortgage Loans, (A) the
original Notes endorsed in blank or to the order of the
Trustee, (B) the original title insurance policy or any one
of an original title binder, an original preliminary title
report or an original title commitment or a copy of any of
the foregoing certified by the issuer of the title insurance
policy, or the attorney's opinion of title, (C) originals or
certified copies of all intervening recorded assignments,
showing a complete chain of title from origination to the
Trustee, if any, with evidence of recording thereon, (D)
originals of all assumption, modification, written assurance
or substitution agreements, if any and (E) either: (1) the
original Mortgage, with evidence of recording thereon, (2) a
certified copy if such original Mortgage has not been
returned by the applicable recording office, or (3) a copy
of the Mortgage certified by the public recording office in
those instances where the original recorded Mortgage has
been lost;
(ii) cause the Trustee, within 60 days following the
Startup Day with respect to the Initial Mortgage Loans or on
each Subsequent Transfer Date with respect to the Qualified
Replacement Mortgages or Subsequent Mortgage Loans to
complete the assignments of the Mortgages to "Bankers Trust
Company, as Trustee of AMRESCO Residential Securities
Corporation Mortgage Loan Trust 1996-3 under the Pooling and
Servicing Agreement dated as of June 1, 1996" to be
submitted to the related Originator (if the Originator is
Long Beach) or the Seller for recording in the appropriate
jurisdictions; provided, however, that the Depositor shall
not be required to cause the Trustee to complete and cause
the related Originator (if the Originator is Long Beach) or
the Seller to record an assignment for any Mortgage with
respect to a Property located in California or with respect
to which the original recording information is lacking;
(iii) if not delivered on the Startup Day, deliver
the title insurance policy or title searches, the original
Mortgages and such recorded assignments, together with
originals or duly certified copies of any and all prior
assignments, to the Trustee within 15 days of receipt
thereof by the Depositor (but in any event, with respect to
any Mortgage as to which original recording information has
been made available to the Depositor, within one year after
the Startup Day with respect to the Initial Mortgage Loans
or on each Subsequent Transfer Date with respect to the
Qualified Replacement Mortgages or Subsequent Mortgage
Loans); and
(iv) furnish to the Trustee and the Certificate Insurer
at the Depositor's expense, an opinion of counsel with
respect to the sale and perfection of the Subsequent
Mortgage Loans delivered to the Trust, corporate and
enforceability matters and an opinion of counsel as to the
tax consequences to the Trust, if any, resulting from the
conveyance of Subsequent Mortgage Loans, each in form and
substance satisfactory to the Trustee and the Certificate
Insurer.
Notwithstanding anything to the contrary contained in this
Section 3.05, in those instances where the public recording
office retains the original Mortgage, the assignment of a
Mortgage or the intervening assignments of the Mortgage after it
has been recorded, the Depositor shall be deemed to have
satisfied its obligations hereunder upon delivery to the Trustee
of a copy of such Mortgage, such assignment or assignments of
Mortgage certified by the public recording office to be a true
copy of the recorded original thereof.
Copies of all Mortgage assignments received by the Trustee
shall be retained in the related File.
All recording required pursuant to this Section 3.05 shall
be accomplished at the expense of the Seller.
(c) In the case of Initial Mortgage Loans which have been
prepaid in full after the Cut-Off Date and prior to the Startup
Day, the Depositor, in lieu of the foregoing, will deliver within
six (6) days after the Startup Day to the Trustee a certification
of an Authorized Officer in the form set forth in Exhibit D.
(d) The Seller shall cause the related Originator, to
transfer, assign, set over and otherwise convey without recourse,
to the Trustee all right, title and interest of such party in and
to any Qualified Replacement Mortgage delivered to the Trustee on
behalf of the Trust by such party pursuant to Section 3.03, 3.04
or 3.06 hereof and all such party's right, title and interest to
principal and interest due on such Qualified Replacement Mortgage
after the applicable Subsequent Cut-Off Date; provided, however,
that such party shall reserve and retain all right, title and
interest in and to payments of principal and interest due on such
Qualified Replacement Mortgage on or prior to the applicable
Subsequent Cut-Off Date.
(e) As to each Mortgage Loan released from the Trust in
connection with the conveyance of a Qualified Replacement
Mortgage therefor, the Trustee will transfer, assign, set over
and otherwise convey without recourse or representation, to the
party providing such Qualified Replacement Mortgage, 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 due on such released Mortgage Loan after the applicable
Subsequent Cut-Off Date; provided, however, that the Trust shall
reserve and retain all right, title and interest in and to
payments of principal and interest due on such released Mortgage
Loan on or prior to the applicable Subsequent Cut-Off Date.
(f) In connection with any transfer and assignment of a
Qualified Replacement Mortgage to the Depositor and then to the
Trustee on behalf of the Trust, the Seller agrees to (i) deliver
without recourse to the Trustee on the date of delivery of such
Qualified Replacement Mortgage the original Note relating
thereto, endorsed in blank or to the order of the Trustee, (ii)
cause promptly to be recorded an assignment in the appropriate
jurisdictions, (iii) deliver the original Qualified Replacement
Mortgage and such recorded assignment, together with original or
duly certified copies of any and all prior assignments, to the
Trustee within 15 days of receipt thereof by the Seller (but in
any event within 120 days after the date of conveyance of such
Qualified Replacement Mortgage), (iv) deliver the title insurance
policy, or where no such policy is required to be provided under
Section 3.05(b)(i)(B), the other evidence of title in same
required in Section 3.05(b)(i)(B) and (v) originals of all
assumption, modification, written assurance or substitution
agreements, if any.
(g) As to each Mortgage Loan released from the Trust in
connection with the conveyance of a Qualified Replacement
Mortgage the Trustee shall deliver on the date of conveyance of
such Qualified Replacement Mortgage to the party providing such
Qualified Replacement Mortgage (i) the original Note relating
thereto, endorsed without recourse or representation, to the
Seller, (ii) the original Mortgage so released and all
assignments relating thereto and (iii) such other documents as
constituted the File with respect thereto.
(h) If a Mortgage assignment is lost during the process of
recording, or is returned from the recorder's office unrecorded
due to a defect therein, the Seller shall prepare a substitute
assignment or cure such defect, as the case may be, and
thereafter cause each such assignment to be duly recorded.
Section 3.06 Acceptance by Trustee; Certain
Substitutions of Mortgage Loans; Certification by
Trustee.
(a) The Trustee agrees to execute and deliver on the
Startup Day an acknowledgment of receipt of the items delivered
by the Seller or the Depositor in the form attached as Exhibit E
hereto, and declares that it will hold such documents and any
amendments, replacement or supplements thereto, as well as any
other assets included in the definition of Trust Estate and
delivered to the Trustee, as Trustee in trust upon and subject to
the conditions set forth herein for the benefit of the Owners and
the Certificate Insurer. The Trustee agrees, for the benefit of
the Owners and the Certificate Insurer, to review such items
within 45 days after the Startup Day (or, with respect to any
document delivered after the Startup Day, within 45 days of
receipt and with respect to any Subsequent Mortgage Loan or
Qualified Replacement Mortgage, within 45 days after the
Subsequent Transfer Date) and to deliver to the Depositor, the
Seller, the related Servicer and the Certificate Insurer a
certification in the form attached hereto as Exhibit F (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 or any Mortgage Loan specifically identified in
such Pool Certification as not covered by such Pool
Certification), (i) all documents required to be delivered to it
pursuant to Section 3.05(b)(i) of this Agreement are in its
possession, (ii) such documents have been reviewed by it and have
not been mutilated, damaged or torn and relate to such Mortgage
Loan and (iii) based on its examination and only as to the
foregoing documents, the information set forth on items (1), (3)
and (4) of the Schedule of Mortgage Loans accurately reflects the
information set forth in the File. The Trustee shall have no
responsibility for reviewing any File except as expressly
provided in this subsection 3.06(a). Without limiting the effect
of the preceding sentence, in reviewing any File, the Trustee
shall have no responsibility for determining whether any document
is valid and binding, whether the text of any assignment is in
proper form (except to determine if the Trustee is the assignee),
whether any document (other than the assignments) has been
recorded in accordance with the requirements of any applicable
jurisdiction or whether a blanket assignment is permitted in any
applicable jurisdiction, but shall only be required to determine
whether a document has been executed, that it appears to be what
it purports to be, and, where applicable, that it purports to be
recorded. The Trustee shall be under no duty or obligation to
inspect, review or examine any such documents, instruments,
certificates or other papers to determine that they are genuine,
enforceable, or appropriate for the represented purpose or that
they are other than what they purport to be on their face, nor
shall the Trustee be under any duty to determine independently
whether there are any intervening assignments or assumption or
modification agreements with respect to any Mortgage Loan.
(b) If the Trustee during such 45-day period finds any
document constituting a part of a File which is not executed, has
not been received, or is unrelated to the Mortgage Loans
identified in the Schedule of Mortgage Loans, or that any
Mortgage Loan does not conform to the description thereof as set
forth in the Schedule of Mortgage Loans, the Trustee shall
promptly so notify the Depositor, the Seller, the related
Servicer, the related Originator (if the Originator was Long
Beach) and the Certificate Insurer. In performing any such
review, the Trustee may conclusively rely on the Seller as to the
purported genuineness of any such document and any signature
thereon. It is understood that the scope of the Trustee's review
of the items delivered by the Seller pursuant to
Section 3.05(b)(i) is limited solely to confirming that the
documents listed in Section 3.05(b)(i) have been executed and
received, relate to the Files identified in the Schedule of
Mortgage Loans and conform to the description thereof in the
Schedule of Mortgage Loans. The Seller agrees to request that
the related Originator use reasonable efforts to remedy a
material defect in a document constituting part of a File of
which it is so notified by the Trustee. If, however, within the
time period specified in the related Transfer Agreement after the
Trustee's notice to the related Originator respecting such defect
the related Originator has not remedied the defect and the defect
materially and adversely affects the interest in the related
Mortgage Loan of the Owners or of the Certificate Insurer, the
Seller will request the related Originator to, within the time
period set forth in the related Transfer Agreement, (i)
substitute in lieu of such Mortgage Loan a Qualified Replacement
Mortgage and deliver the Substitution Amount to the Servicer for
deposit in the Principal and Interest Account or (ii) purchase
such Mortgage Loan at a purchase price equal to the Loan Purchase
Price thereof, which purchase price shall be delivered to the
Servicer for deposit in the Principal and Interest Account.
(c) In addition to the foregoing, the Trustee also agrees
to provide an updated report during the 12th month after the
Startup Day indicating the current status of the exceptions
previously indicated on the Pool Certification (the "Final
Certification"). After delivery of the Final Certification, the
Trustee shall provide to the Certificate Insurer and the
Servicers no less frequently than monthly updated certifications
indicating the then current status of exceptions, until all such
exceptions have been eliminated.
Section 3.07 Conveyance of the Subsequent
Mortgage Loans.
(a) Subject to the satisfaction of the conditions set forth
in Section 3.05 and paragraphs (b) and (c) below in consideration
of the Trustee's delivery on the relevant Subsequent Transfer
Dates to or upon the order of the Depositor of all or a portion
of the balance of funds in the Pre-Funding Account, the Depositor
shall on each Subsequent Transfer Date sell, transfer, assign,
set over and otherwise convey without recourse, to the Trustee,
all of the Depositor's right, title and interest in and to any
and all benefits accruing to the Depositor from the Subsequent
Mortgage Loans (other than any principal and interest payments
received thereon on or prior to the relevant Subsequent Cut-Off
Date) which the Depositor is causing to be delivered to the
Trustee herewith (and all substitutions therefor as provided by
Sections 3.03, 3.04 and 3.06), together with the related
Subsequent Mortgage Loan documents and the Depositor's interest
in any Property and all payments thereon and proceeds of the
conversion, voluntary or involuntary, of the foregoing and
proceeds of all the foregoing (including, but not by way of
limitation, all proceeds of any mortgage insurance, hazard
insurance and title insurance policy relating to the Subsequent
Mortgage Loans, cash proceeds, accounts, accounts receivable,
notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other
forms of obligations and receivables which at any time constitute
all or part of or are included in the proceeds of any of the
foregoing). There shall be no more than three Subsequent
Transfer Dates.
The transfer of the Subsequent Mortgage Loans set forth on
the Schedule of Mortgage Loans by the Seller to the Depositor and
by the Depositor to the Trust shall be absolute and shall be
intended by the Owners and all parties hereto to be treated as a
sale by the Seller to the Depositor and by the Depositor to the
Trust. Any Subsequent Mortgage Loan so transferred will be
included in the related Mortgage Loan Group. The amount released
from the Pre-Funding Account shall be one-hundred percent (100%)
of the aggregate principal balances of the Subsequent Mortgage
Loans so transferred. Upon the transfer by the Depositor of the
Subsequent Mortgage Loans hereunder, such Subsequent Mortgage
Loans (and all principal collected and interest accruing thereon
subsequent to the Subsequent Cut-Off Date) and all other rights
and interests with respect to such Subsequent Mortgage Loans
transferred pursuant to a Subsequent Transfer Agreement shall be
deemed for all purposes hereunder to be part of the Trust Estate.
The Seller hereby covenants and agrees to use its best efforts to
ensure that a sufficient amount of Subsequent Mortgage Loans will
be transferred to the Depositor during the Funding Period to
enable the Depositor to reduce the Pre-Funded Amount with respect
to each Group to less than $100,000. The Depositor hereby
covenants and agrees to use its best efforts to ensure that a
sufficient amount of Subsequent Mortgage Loans will be
transferred to the Trust during the Funding Period to reduce the
Pre-Funded Amount with respect to each Group to less than
$100,000.
(b) The obligation of the Trustee to accept the transfer of
the Subsequent Mortgage Loans and the other property and rights
related thereto described in paragraph (a) above is subject to
the satisfaction of each of the following conditions on or prior
to the related Subsequent Transfer Date:
(i) the Depositor shall have provided the
Trustee and the Certificate Insurer with an Addition
Notice not less than ten (10) calendar days prior to
the proposed Subsequent Transfer Date (unless the
Trustee and the Certificate Insurer agree to a shorter
time period) and shall have provided any information
reasonably requested by any of the foregoing with
respect to the Subsequent Mortgage Loans;
(ii) the Depositor shall have delivered to
the Trustee a duly executed written assignment
(including an acceptance by the Trustee) in
substantially the form of Exhibit C, which shall
include a Schedule of Mortgage Loans, listing the
Subsequent Mortgage Loans and any other exhibits listed
thereon;
(iii) the Depositor shall have deposited
in the Principal and Interest Account all principal
collected and interest accruing in respect of such
Subsequent Mortgage Loans on or after the related
Subsequent Cut-Off Date;
(iv) as of each Subsequent Transfer Date,
neither the Depositor nor the Seller was insolvent, nor
will either of them be made insolvent by such transfer,
nor is either of them aware of any pending insolvency;
(v) the Funding Period for the related Group
shall not have ended;
(vi) the Depositor shall have delivered to
the Trustee an Officer's Certificate confirming the
satisfaction of each condition precedent specified in
this paragraph (b) and in the related Subsequent
Transfer Agreement together with the written approval
of the Certificate Insurer required by paragraph (c)
below; and
(vii) such sale will not result in a
materially adverse tax consequence to the Trust as
evidenced by an Opinion of Counsel delivered to the
Trustee by the Depositor at its own expense.
(c) The obligation of the Trust to purchase a Subsequent
Mortgage Loan is subject to the following requirements: (i) with
respect to Group I only, such Subsequent Mortgage Loan will be a
fixed rate mortgage loan, and with respect to Group II only, such
Subsequent Mortgage Loan will be an adjustable rate mortgage
loan; (ii) such Subsequent Mortgage Loan may not be 30 or more
days contractually Delinquent as of the related Subsequent Cut-
Off Date; (iii) the remaining term to maturity of such Subsequent
Mortgage Loan may not exceed 360 months; (iv) no Subsequent
Mortgage Loan will have a minimum Coupon Rate less than 7.50%;
and (v) following the purchase of such Subsequent Mortgage Loan
by the Trust, the Mortgage Loans (including the Subsequent
Mortgage Loans) (a) will have a weighted average Coupon Rate of
at least 9.862% and 9.911% for Group I and Group II,
respectively; (b) will have a weighted average remaining term to
stated maturity of not more than 358 months and 346 months for
Group I and Group II, respectively and, (c) will have a weighted
average Loan-to-Value Ratio of not more than 73.28% and 75.11%
for Group I and Group II, respectively; (d) will not have Balloon
Loans with an aggregate Loan Balance in excess of 5.493% and 0%
of the Original Aggregate Loan Balance of the Mortgage Loans in
Group I and Group II, respectively; and (e) will have no Mortgage
Loan with a Loan Balance in excess of $500,000; and the
Certificate Insurer shall have given its approval in writing.
With the consent of the Seller and the Certificate Insurer, the
above characteristics may be modified.
(d) In connection with each Subsequent Transfer Date and on
the Payment Date occurring in July 1996, the Trustee shall
determine: (i) the amount and correct dispositions of each of the
Group I and Group II Capitalized Interest Requirements,
Overfunded Interest Amounts, Pre-Funding Account Earnings and the
Pre-Funded Amount and (ii) any other necessary matters in
connection with the administration of the Pre-Funding Account and
of the Capitalized Interest Account. In the event that any
amounts are released as a result of an error in calculation to
the Owners or Depositor from the Pre-Funding Account or from the
Capitalized Interest Account, such Owners or the Depositor shall
immediately repay such amounts to the Trustee.
END OF ARTICLE III
ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES
Section 4.01 Issuance of Certificates
On the Startup Day, upon the Trustee's receipt from the
Depositor of an executed Delivery Order in the form set forth as
Exhibit G hereto, the Trustee shall authenticate and deliver the
Certificates on behalf of the Trust.
Section 4.02 Sale of Certificates.
At 10 a.m. California time on the Startup Day (the
"Closing"), at the offices of Arter & Hadden, Irvine, California
(or at such other location acceptable to the Seller), the Seller
will sell and convey the Initial Mortgage Loans and the money,
instruments and other property related thereto to the Depositor
and the Depositor will sell and convey the Initial Mortgage Loans
and the money, instruments and other property related thereto to
the Trustee, and the Trustee will deliver (i) to the Underwriters
the Class A Certificates with an aggregate Percentage Interest in
each Class equal to 100%, registered in the name of Cede & Co.,
or in such other names as the Underwriters shall direct, against
payment of the purchase price thereof by wire transfer of
immediately available funds to the Trustee, and (ii) to the
respective registered owners thereof, a Class B-IO Certificate
with a Percentage Interest equal to 100% and a Class R
Certificate with a Percentage Interest equal to 99.999%,
registered in the names designated by the Depositor and the Tax
Matters Person Residual Interest to the Trustee.
Upon the Trustee's receipt of the entire net proceeds of the
sale of the Certificates the Depositor shall instruct the Trustee
to deposit (a) an amount equal to the Original Pre-Funded Amount
in the Pre-Funding Account and (b) an amount equal to $92,462.33
in the Capitalized Interest Account contributed by the Depositor
out of such proceeds or otherwise. The Trustee shall then remit
the entire balance of such net proceeds to the Depositor in
accordance with instructions delivered by the Depositor.
END OF ARTICLE IV
ARTICLE V
CERTIFICATES AND TRANSFER OF INTERESTS
Section 5.01 Terms.
(a) The Certificates are pass-through securities having the
rights described therein and herein. Notwithstanding references
herein or therein with respect to the Certificates as to
"principal" and "interest" no debt of any Person is represented
thereby, nor are the Certificates or the underlying Notes
guaranteed by any Person (except that the Notes may be recourse
to the Mortgagors thereof to the extent permitted by law and
except for the rights of the Trustee on behalf of the Owners of
the Class A Certificates with respect to the Certificate
Insurance Policy). The Class A Certificates are payable solely
from payments received on or with respect to the Mortgage Loans
(other than the Servicing Fees), moneys in the Principal and
Interest Account, except as otherwise provided herein, moneys in
the Pre-Funding Account and the Capitalized Interest Account,
from earnings on moneys and the proceeds of property held as a
part of the Trust Estate and, with respect to the Class A
Certificates upon the occurrence of certain events, from Insured
Payments. Each Certificate entitles the Owner thereof to receive
monthly on each Payment Date, in order of priority of
distributions with respect to such Class of Certificates as set
forth in Section 7.03, a specified portion of such payments with
respect to the Mortgage Loans (and, with respect to the Owners of
the Class A Certificates, Insured Payments deposited in the
Certificate Account), pro rata in accordance with such Owner's
Percentage Interest.
(b) Each Owner is required, and hereby agrees, to return to
the Trustee any Certificate prior to receiving the final
distribution due thereon. Any such Certificate as to which the
Trustee has made the final distribution thereon shall be deemed
cancelled and shall no longer be Outstanding for any purpose of
this Agreement, whether or not such Certificate is ever returned
to the Trustee.
Section 5.02 Forms.
The Class A-1 Certificates, the Class A-2 Certificates, the
Class A-3 Certificates, the Class A-4 Certificates, the Class A-5
Certificates, the Class A-6 Certificates, the Class A-7
Certificates, the Class A-8 Certificates, the Class B-IO
Certificates and the Class R Certificates shall be in
substantially the forms set forth in Exhibits A-1, A-2, A-3, A-4,
A-5, A-6, A-7, A-8, B-IO and B hereof, respectively, with such
appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Agreement or as
may in the Depositor's judgment be necessary, appropriate or
convenient to comply, or facilitate compliance, with applicable
laws, and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as
may be required to comply with the rules of any applicable
securities laws or as may, consistently herewith, be determined
by the Authorized Officer of the Depositor executing such
Certificates, as evidenced by his execution thereof.
Section 5.03 Execution, Authentication and
Delivery.
Each Certificate shall be executed on behalf of the Trust,
by the manual or facsimile signature of one of the Depositor's
Authorized Officers and shall be authenticated by the manual or
facsimile signature of one of the Trustee's Authorized Officers.
Certificates bearing the manual or facsimile signature of
individuals who were at any time the proper officers of the
Depositor shall, upon proper authentication by the Trustee, bind
the Trust, notwithstanding that such individuals or any of them
have ceased to hold such offices prior to the execution and
delivery of such Certificates or did not hold such offices at the
date of authentication of such Certificates.
The initial Certificates shall be dated as of the Startup
Day and delivered at the Closing to the parties specified in
Section 4.02 hereof. Subsequently issued Certificates will be
dated as of the issuance of the Certificate.
No Certificate shall be valid until executed and
authenticated as set forth above.
Section 5.04 Registration and Transfer of
Certificates.
I The Trustee shall cause to be kept a register (the
"Register") in which, subject to such reasonable regulations as
it may prescribe, the Trustee shall provide for the registration
of Certificates and the registration of transfer of Certificates.
The Trustee is hereby initially appointed Registrar for the
purpose of registering Certificates and transfers of Certificates
as herein provided. The Certificate Insurer, the Owners and the
Trustee shall have the right to inspect the Register during the
Trustee's normal hours and to obtain copies thereof, and the
Trustee shall have the right to rely upon a certificate executed
on behalf of the Registrar by an Authorized Officer thereof as to
the names and addresses of the Owners of the Certificates and the
principal amounts and numbers of such Certificates.
If a Person other than the Trustee is appointed as Registrar
by the Owners of a majority of the aggregate Percentage Interests
represented by the Class A Certificates then Outstanding with the
consent of the Certificate Insurer or, if there are no longer any
Class A Certificates then Outstanding, by such majority of the
Percentage Interests represented by the Class R Certificates, the
Trustee will give the Certificate Insurer and the Owners prompt
written notice of the appointment of such Registrar and of the
location, and any change in the location, of the Register.
(b) Subject to the provisions of Section 5.08 hereof, upon
surrender for registration of transfer of any Certificate at the
office designated as the location of the Register, upon the
direction of the Registrar the Depositor shall execute and the
Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new
Certificates of a like Class and in the aggregate principal
amount or Percentage Interest of the Certificate so surrendered.
(c) At the option of any Owner, Certificates of any Class
owned by such Owner may be exchanged for other Certificates
authorized of like Class and tenor and a like aggregate original
principal amount or percentage interest and bearing numbers not
contemporaneously Outstanding, upon surrender of the Certificates
to be exchanged at the office designated as the location of the
Register. Whenever any Certificate is so surrendered for
exchange, upon the direction of the Registrar, the Depositor and
the Trustee shall execute, authenticate and deliver the
Certificate or Certificates which the Owner making the exchange
is entitled to receive.
(d) All Certificates issued upon any registration of
transfer or exchange of Certificates shall be valid evidence of
the same ownership interests in the Trust and entitled to the
same benefits under this Agreement as the Certificates
surrendered upon such registration of transfer or exchange.
(e) Every Certificate presented or surrendered for
registration of transfer or exchange shall be duly endorsed, or
be accompanied by a written instrument of transfer in form
satisfactory to the Registrar duly executed by the Owner thereof
or his attorney duly authorized in writing.
(f) No service charge shall be made to an Owner for any
registration of transfer or exchange of Certificates, but the
Registrar or Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of
Certificates; any other expenses in connection with such transfer
or exchange shall be an expense of the Trust.
(g) It is intended that the Class A Certificates be
registered so as to participate in a global book-entry system
with the Depository, as set forth herein. Each Class of Class A
Certificates shall, except as otherwise provided in Subsection
(h), be initially issued in the form of a single fully registered
Class A Certificate of such Class. Upon initial issuance, the
ownership of each such Class A Certificate shall be registered in
the Register in the name of Cede & Co., or any successor thereto,
as nominee for the Depository.
On the Startup Day, no Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6, Class A-7 or Class A-8
Certificates shall be issued in denominations of less than $1,000
except that one certificate in each class may be in an amount
less than $1,000. The Class B-IO Certificates and Class R
Certificates (other than the Tax Matters Person Residual
Interest) will be issued in minimum percentage interests of 10%.
The Depositor and the Trustee are hereby authorized to
execute and deliver the Representation Letter with the
Depository.
With respect to the Class A Certificates registered in the
Register in the name of Cede & Co., as nominee of the Depository,
the Depositor, the Servicers, the Seller, the Certificate Insurer
and the Trustee shall have no responsibility or obligation to
Direct or Indirect Participants or beneficial owners for which
the Depository holds Class A Certificates from time to time as a
Depository. Without limiting the immediately preceding sentence,
the Depositor, the Servicers, the Seller, the Certificate Insurer
and the Trustee shall have no responsibility or obligation with
respect to (i) the accuracy of the records of the Depository,
Cede & Co., or any Direct or Indirect Participant with respect to
the ownership interest in the Class A Certificates, (ii) the
delivery to any Direct or Indirect Participant or any other
Person, other than a registered Owner of a Class A Certificate as
shown in the Register, of any notice with respect to the Class A
Certificates or (iii) the payment to any Direct or Indirect
Participant or any other Person, other than a registered Owner of
a Class A Certificate as shown in the Register, of any amount
with respect to any distribution of principal or interest on the
Class A Certificates. No Person other than a registered Owner of
a Class A Certificate as shown in the Register shall receive a
certificate evidencing such Class A Certificate.
Upon delivery by the Depository to the Trustee of written
notice to the effect that the Depository has determined to
substitute a new nominee in place of Cede & Co., and subject to
the provisions hereof with respect to the payment of interest by
the mailing of checks or drafts to the registered Owners of Class
A Certificates appearing as registered Owners in the registration
books maintained by the Trustee at the close of business on a
Record Date, the name "Cede & Co." in this Agreement shall refer
to such new nominee of the Depository.
(h) In the event that (i) the Depository or the Depositor
advises the Trustee in writing that the Depository is no longer
willing or able to discharge properly its responsibilities as
nominee and depository with respect to the Class A Certificates
and the Depositor or the Trustee is unable to locate a qualified
successor or (ii) the Depositor at its sole option elects to
terminate the book-entry system through the Depository, the Class
A Certificates shall no longer be restricted to being registered
in the Register in the name of Cede & Co. (or a successor
nominee) as nominee of the Depository. At that time, the
Depositor may determine that the Class A Certificates shall be
registered in the name of and deposited with a successor
depository operating a global book-entry system, as may be
acceptable to the Depositor and at the Depositor's expense, or
such depository's agent or designee but, if the Depositor does
not select such alternative global book-entry system, then the
Class A Certificates may be registered in whatever name or names
registered Owners of Class A Certificates transferring Class A
Certificates shall designate, in accordance with the provisions
hereof.
(i) Notwithstanding any other provision of this Agreement
to the contrary, so long as any Class A Certificate is registered
in the name of Cede & Co., as nominee of the Depository, all
distributions of principal or interest on such Class A
Certificates and all notices with respect to such Class A
Certificates shall be made and given, respectively, in the manner
provided in the Representation Letter.
Section 5.05 Mutilated, Destroyed, Lost or
Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the
Trustee, or the Trustee receives evidence to its satisfaction of
the destruction, loss or theft of any Certificate, and (ii) in
the case of any mutilated Certificate, such mutilated Certificate
shall first be surrendered to the Trustee, and in the case of any
destroyed, lost or stolen Certificate, there shall be first
delivered to the Trustee and the Certificate Insurer such
security or indemnity as may be reasonably required by it to hold
the Trustee and the Certificate Insurer harmless, then, in the
absence of notice to the Trustee or the Registrar that such
Certificate has been acquired by a bona fide purchaser, the
Depositor shall execute and the 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 aggregate principal amount, bearing a number not
contemporaneously outstanding.
Upon the issuance of any new Certificate under this Section,
the Registrar or Trustee may require the payment of a sum
sufficient to cover any tax or other governmental charge that may
be imposed in relation thereto; any other expenses in connection
with such issuance shall be an expense of the Trust.
Every new Certificate issued pursuant to this Section in
exchange for or in lieu of any mutilated, destroyed, lost or
stolen Certificate shall constitute evidence of a substitute
interest in the Trust, and shall be entitled to all the benefits
of this Agreement equally and proportionately with any and all
other Certificates of the same Class duly issued hereunder and
such mutilated, destroyed, lost or stolen Certificate shall not
be valid for any purpose.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies
with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Certificates.
Section 5.06 Persons Deemed Owners.
The Certificate Insurer, the Trustee and any agent of the
Trustee may treat the Person in whose name any Certificate is
registered as the Owner of such Certificate for the purpose of
receiving distributions with respect to such Certificate and for
all other purposes whatsoever, and neither the Certificate
Insurer, the Trustee nor any agent of the Trustee shall be
affected by notice to the contrary.
Section 5.07 Cancellation.
All Certificates surrendered for registration of transfer or
exchange shall, if surrendered to any Person other than the
Trustee, be delivered to the Trustee and shall be promptly
cancelled by it. No Certificate shall be authenticated in lieu
of or in exchange for any Certificate cancelled as provided in
this Section, except as expressly permitted by this Agreement.
All cancelled Certificates may be held by the Trustee in
accordance with its standard retention policy.
Section 5.08 Limitation on Transfer of Ownership
Rights.
I No sale or other transfer of record or beneficial
ownership or assignment of an interest in a Class R Certificate
(whether pursuant to a purchase, a transfer resulting from a
default under a secured lending agreement or otherwise) shall be
made to a Disqualified Organization or an agent of a Disqualified
Organization. The transfer, sale or other disposition of a Class
R Certificate (whether pursuant to a purchase, a transfer
resulting from a default under a secured lending agreement or
otherwise) to a Disqualified Organization shall be deemed to be
of no legal force or effect whatsoever and such transferee shall
not be deemed to be an Owner for any purpose hereunder,
including, but not limited to, the receipt of distributions on
such Class R Certificate. Furthermore, in no event shall the
Trustee accept surrender for transfer, registration of transfer,
or register the transfer, of any Class R Certificate nor
authenticate and make available any new Class R Certificate
unless the Trustee has received an affidavit from the proposed
transferee in the form attached hereto as Exhibit I. Each holder
of a Class R Certificate by his acceptance thereof, shall be
deemed for all purposes to have consented to the provisions of
this Section 5.08(a).
(b) No other sale or other transfer of record or beneficial
ownership of a Class B-IO Certificate or a Class R 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 said Securities Act
and laws. In the event such a transfer is to be made within
three years from the Startup Day, (i) the Trustee or the
Depositor shall require a written Opinion of Counsel acceptable
to and in form and substance satisfactory to the Depositor and
the Certificate Insurer in the event that such transfer may be
made pursuant to an exemption, describing the applicable
exemption and the basis therefor, from said Securities Act and
laws or is being made pursuant to said Securities Act and laws,
which Opinion of Counsel shall not be an expense of the Trustee,
the Trust Estate, the Servicers or the Certificate Insurer, and
(ii) the Trustee shall require the transferee to execute an
investment letter acceptable to and in form and substance
satisfactory to the Seller and the Certificate Insurer certifying
to the Trustee, the Certificate Insurer and the Seller the facts
surrounding such transfer, which investment letter shall not be
an expense of the Trustee, the Trust Estate, the Certificate
Insurer or the Seller. The Owner of a Class B-IO Certificate or
Class R Certificate desiring to effect such transfer shall, and
does hereby agree to, indemnify the Trustee, the Certificate
Insurer, the Servicers, the Depositor and the Seller 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 transfer of a Class B-IO Certificate or Class R
Certificate shall be made unless the Trustee shall have received
either: (i) a representation letter from the transferee of such
Class B-IO Certificate or Class R Certificate, acceptable to and
in form and substance satisfactory to the Trustee, to the effect
that such transferee is not an employee benefit plan subject to
Section 406 of Employee Retirement Income Security Act ("ERISA")
nor a plan or other arrangement subject to Section 406 of ERISA
nor a plan or other arrangement subject to Section 4975 of the
Code (collectively, a "Plan"), nor is acting on behalf of any
Plan nor using the assets of any Plan to effect such transfer or
(ii) in the event that any Class B-IO Certificates or Class R
Certificates are purchased by a Plan, or by a person or entity
acting on behalf of any Plan or using the assets of any Plan to
effect such transfer (including the assets of any Plan held in an
insurance company separate or general account), an Opinion of
Counsel, acceptable to and in form and substance satisfactory to
the Trustee and the Servicers, which Opinion of Counsel shall not
be at the expense of either the Trustee, the Servicers, or the
Trust, to the effect that the purchase or holding of any Class B-
IO Certificates or Class R Certificates will not result in the
assets of the Trust being deemed to be "plan assets," will not
cause the Trust, Trustee or any Servicer to be subject to the
fiduciary requirements and prohibited transaction provisions of
ERISA and the Code, and will not subject the Trustee or any
Servicer to any obligation or liability in addition to those
expressly undertaken under this Agreement. Notwithstanding
anything else to the contrary herein, any purported transfer of a
Class B-IO or Class R Certificate to or on behalf of any Plan
without the delivery to the Trustee of an Opinion of Counsel as
described above shall be null and void and of no effect.
(d) No sale or other transfer of any Class A Certificate
may be made to the Depositor or the Seller or any Originator. No
sale or other transfer of any Class A Certificate may be made to
a Seller affiliate unless the Trustee and the Certificate Insurer
shall have been furnished with an Opinion of Counsel acceptable
to the Certificate Insurer and the Trustee experienced in federal
bankruptcy matters to the effect that such sale or transfer would
not adversely affect the character of the conveyance of the
Mortgage Loans to the Trust as a sale. To the extent any payment
to an Owner of a Class A Certificate constitutes an Insured
Payment, such payment will not be made to the Seller, the
Depositor or the Servicers or any Subservicer. No sale or other
transfer of the Class R Certificate issued to the Tax Matters
Person appointed on the Startup Day may be transferred or sold to
any Person, except to a person who accepts the appointment of Tax
Matters Person pursuant to Section 11.18 hereof.
Section 5.09 Assignment of Rights.
An Owner may pledge, encumber, hypothecate or assign all or
any part of its right to receive distributions hereunder, but
such pledge, encumbrance, hypothecation or assignment shall not
constitute a transfer of an ownership interest sufficient to
render the transferee an Owner of the Trust without compliance
with the provisions of Section 5.04 and Section 5.08 hereof.
END OF ARTICLE V
ARTICLE VI
COVENANTS
Section 6.01 Distributions.
On each Payment Date, the Trustee will withdraw amounts from
the Certificate Account and make the distributions with respect
to the Certificates in accordance with the terms of the
Certificates and this Agreement. Such distributions shall be
made (i) by check or draft mailed on each Payment Date or (ii) if
requested by any Owner of (A) a Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6, Class A-7 or Class A-8
Certificate having an original principal balance of not less than
$1,000,000 or (B) a Class B-IO or Class R Certificate having a
Percentage Interest of not less than 10% in writing not later
than five Business Days prior to the applicable Record Date
(which request does not have to be repeated unless it has been
withdrawn), to such Owner by wire transfer to an account within
the United States designated no later than five Business Days
prior to the related Record Date, made on each Payment Date, in
each case to each Owner of record on the immediately preceding
Record Date.
Section 6.02 Money for Distributions to be Held
in Trust; Withholding.
(a) All payments of amounts due and payable with respect to
any Certificate that are to be made from amounts withdrawn from
the Certificate Account or from Insured Payments shall be made by
and on behalf of the Trustee, and no amounts so withdrawn from
the Certificate Account for payments of Certificates and no
Insured Payment shall be paid over to the Trustee except as
provided in this Section.
(b) Whenever the Depositor has appointed one or more Paying
Agents pursuant to Section 11.15 hereof, the Trustee will, on the
Business Day immediately preceding each Payment Date, deposit
with such Paying Agents in immediately available funds an
aggregate sum sufficient to pay the amounts then becoming due (to
the extent funds are then available for such purpose in the
Certificate Account for the Class to which such amounts are due)
such sum to be held in trust for the benefit of the Owners
entitled thereto.
(c) The Depositor may at any time direct any Paying Agent
to pay to the Trustee all sums held in trust by such Paying
Agent, such sums to be held by the Trustee upon the same trusts
as those upon which the sums were held by such Paying Agent; and
upon such payment by any Paying Agent to the Trustee, such Paying
Agent shall be released from all further liability with respect
to such money.
(d) The Depositor shall require each Paying Agent,
including the Trustee on behalf of the Trust, to comply with all
requirements of the Code and applicable state and local law with
respect to the withholding from any distributions made by it to
any Owner of any applicable withholding taxes imposed thereon and
with respect to any applicable reporting requirements in
connection therewith.
(e) Any money held by the Trustee or any Paying Agent in
trust for the payment of any amount due with respect to any Class
A Certificate and remaining unclaimed by the Owner of such Class
A Certificate for the period then specified in the escheat laws
of the State of New York after such amount has become due and
payable shall be discharged from such trust and be paid to the
Owners of the Class R Certificates; and the Owner of such Class A
Certificate shall thereafter, as an unsecured general creditor,
look only to the Owners of the Class R Certificates for payment
thereof (but only to the extent of the amounts so paid to the
Owners of the Class R Certificates) and all liability of the
Trustee or such Paying Agent with respect to such trust money
shall thereupon cease; provided, however, that the Trustee or
such Paying Agent before being required to make any such payment,
may at the expense of the Trust cause to be published once, in
the eastern edition of The Wall Street Journal, notice that such
money remains unclaimed and that, after a date specified therein,
which shall be not fewer than 30 days from the date of such
publication, any unclaimed balance of such money then remaining
will be paid to the Owners of the Class R Certificates. The
Trustee shall, at the direction of the Depositor, also adopt and
employ, at the expense of the Trust, any other reasonable means
of notification of such payment (including but not limited to
mailing notice of such payment to Owners whose right to or
interest in moneys due and payable but not claimed is
determinable from the records of the Registrar, the Trustee or
any Paying Agent, at the last address of record for each such
Owner).
Section 6.03 Protection of Trust Estate.
(a) The Trustee will hold the Trust Estate in trust for the
benefit of the Owners and the Certificate Insurer and, upon
request of the Certificate Insurer or, with the consent of the
Certificate Insurer, at the request of the Depositor, will from
time to time execute and deliver all such supplements and
amendments hereto pursuant to Section 11.14 hereof and all
instruments of further assurance and other instruments, and will
take such other action upon such request from the Depositor or
the Certificate Insurer, to:
(i) more effectively hold in trust all or any portion
of the Trust Estate;
(ii) perfect, publish notice of, or protect the
validity of any grant made or to be made by this Agreement;
(iii) enforce any of the Mortgage Loans; or
(iv) preserve and defend title to the Trust Estate and
the rights of the Trustee, and the interests of the Owners
and the Certificate Insurer represented thereby, in such
Trust Estate against the contrary claims of all Persons and
parties.
The Trustee shall send copies of any request received from
the Certificate Insurer or the Depositor to take any action
pursuant to this Section 6.03 to the other parties hereto.
(b) The Trustee shall have the power to enforce, and shall
enforce the obligations and rights of the other parties to this
Agreement, and of the Certificate Insurer or the Owners, by
action, suit or proceeding at law or equity, and shall also have
the power to enjoin, by action or suit in equity, any acts or
occurrences which may be unlawful or in violation of the rights
of the Certificate Insurer as such rights are set forth in this
Agreement; provided, however, that nothing in this Section shall
require any action by the Trustee unless the Trustee shall first
(i) have been furnished indemnity satisfactory to it and (ii)
when required by this Agreement, have been requested by the
Certificate Insurer or the Owners of a majority of the Percentage
Interests represented by the Class A Certificates then
Outstanding with the consent of the Certificate Insurer or, if
there are no longer any Class A Certificates then Outstanding, by
such majority of the Percentage Interests represented by the
Class R Certificates; provided, further, however, that if there
is a dispute with respect to payments under the Certificate
Insurance Policy the Trustee's sole responsibility is to the
Owners.
(c) The Trustee shall execute any instrument required
pursuant to this Section so long as such instrument does not
conflict with this Agreement or with the Trustee's fiduciary
duties, or adversely affect its rights and immunities hereunder.
Section 6.04 Performance of Obligations.
The Trustee will not take any action that would release any
Person from any of such Person's covenants or obligations under
any instrument or document relating to the Certificates or which
would result in the amendment, hypothecation, subordination,
termination or discharge of, or impair the validity or
effectiveness of, any such instrument or document, except as
expressly provided in this Agreement or such other instrument or
document.
The Trustee may contract with other Persons to assist it in
performing its duties hereunder pursuant to Section 10.03(g).
Section 6.05 Negative Covenants.
The Trustee will not permit the Trust to:
(i) sell, transfer, exchange or otherwise dispose of
any of the Trust Estate except as expressly permitted by
this Agreement;
(ii) claim any credit on or make any deduction from the
distributions payable in respect of, the Certificates (other
than amounts properly withheld from such payments under the
Code) or assert any claim against any present or former
Owner by reason of the payment of any taxes levied or
assessed upon any of the Trust Estate;
(iii) incur, assume or guaranty any indebtedness of any
Person except pursuant to this Agreement;
(iv) dissolve or liquidate in whole or in part, except
pursuant to Article IX hereof; or
(v) (A) permit the validity or effectiveness of this
Agreement to be impaired, or permit any Person to be
released from any covenants or obligations with respect to
the Trust or to the Certificates under this Agreement,
except as may be expressly permitted hereby or (B) permit
any lien, charge, adverse claim, security interest, mortgage
or other encumbrance to be created on or extend to or
otherwise arise upon or burden the Trust Estate or any part
thereof or any interest therein or the proceeds thereof.
Section 6.06 No Other Powers.
The Trustee will not permit the Trust to engage in any
business activity or transaction other than those activities
permitted by Section 2.03 hereof.
Section 6.07 Limitation of Suits.
No Owner shall have any right to institute any proceeding,
judicial or otherwise, with respect to this Agreement or the
Certificate Insurance Policy, or for the appointment of a
receiver or trustee of the Trust, or for any other remedy with
respect to an event of default hereunder, unless:
(1) such Owner has previously given written notice to
the Depositor, the Certificate Insurer and the Trustee
of such Owner's intention to institute such proceeding;
(2) the Owners of not less than 25% of the Percentage
Interests represented by the Class A Certificates then
Outstanding or, if there are no Class A Certificates
then Outstanding, by such percentage of the Percentage
Interests represented by the Class B-IO Certificates
and the Class R Certificates, shall have made written
request to the Trustee to institute such proceeding in
its own name as Trustee establishing the Trust;
(3) such Owner or Owners have offered to the Trustee
reasonable indemnity against the costs, expenses and
liabilities to be incurred in compliance with such
request;
(4) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to
institute such proceeding;
(5) as long as any Class A Certificates are
Outstanding or any Reimbursement Amounts remain unpaid,
the Certificate Insurer consented in writing thereto
(unless the Certificate Insurer is the party against
whom the proceeding is directed); and
(6) no direction inconsistent with such written
request has been given to the Trustee during such
60-day period by the Owners of a majority of the
Percentage Interests represented by the Class A
Certificates or, if there are no Class A Certificates
then Outstanding, by such majority of the Percentage
Interests represented by the Class B-IO Certificates
and the Class R Certificates;
it being understood and intended that no one or more Owners shall
have any right in any manner whatever by virtue of, or by
availing themselves of, any provision of this Agreement to
affect, disturb or prejudice the rights of any other Owner of the
same Class or to obtain or to seek to obtain priority or
preference over any other Owner of the same Class or to enforce
any right under this Agreement, except in the manner herein
provided and for the equal and ratable benefit of all the Owners
of the same Class.
In the event the Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of
Owners, each representing less than a majority of the applicable
Class of Certificates and each conforming to paragraphs (1)-(6)
of this Section 6.07, the Certificate Insurer in its sole
discretion may determine what action, if any, shall be taken,
notwithstanding any other provision of this Agreement (unless the
Certificate Insurer is the party against whom the proceeding is
directed).
Section 6.08 Unconditional Rights of Owners to
Receive Distributions.
Notwithstanding any other provision in this Agreement, the
Owner of any Certificate shall have the right, which is absolute
and unconditional, to receive distributions to the extent
provided herein and therein with respect to such Certificate or
to institute suit for the enforcement of any such distribution,
and such right shall not be impaired without the consent of such
Owner.
Section 6.09 Rights and Remedies Cumulative.
Except as otherwise provided herein, no right or remedy
herein conferred upon or reserved to the Trustee, the Certificate
Insurer or to the Owners is intended to be exclusive of any other
right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other
right and remedy given hereunder or now or hereafter existing at
law or in equity or otherwise. Except as otherwise provided
herein, the assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 6.10 Delay or Omission Not Waiver.
No delay of the Trustee, the Certificate Insurer, the Seller
or any Owner of any Certificate to exercise any right or remedy
under this Agreement with respect to any event described in
Section 8.20(a) or (b) shall impair any such right or remedy or
constitute a waiver of any such event or an acquiescence therein.
Every right and remedy given by this Article VI or by law to the
Trustee, the Certificate Insurer or to the Owners may be
exercised from time to time, and as often as may be deemed
expedient, by the Trustee, the Certificate Insurer, or by the
Owners, as the case may be.
Section 6.11 Control by Certificate Insurer and
Owners.
The Certificate Insurer or the Owners of a majority of the
Percentage Interests represented by the Class B-IO Certificates
and the Class A Certificates then Outstanding with the consent of
the Certificate Insurer or, if there are no longer any Class A
Certificates or Reimbursement Amounts then Outstanding, by such
majority of the Percentage Interests represented by the Class B-
IO Certificates and the Class R Certificates then Outstanding may
direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee with respect to the
Certificates or exercising any trust or power conferred on the
Trustee with respect to the Certificates or the Trust Estate,
including, but not limited to, those powers set forth in
Section 6.03 and Section 8.20 hereof, provided that:
(1) such direction shall not be in conflict with any
rule of law or with this Agreement;
(2) the Trustee shall have been provided with
indemnity satisfactory to it; and
(3) the Trustee may take any other action deemed
proper by the Trustee, as the case may be, which is not
inconsistent with such direction; provided, however,
that the Seller or the Trustee, as the case may be,
need not take any action which it determines might
involve it in liability or may be unjustly prejudicial
to the Owners not so directing.
Section 6.12 Access to Owners of Certificates' Names and
Addresses. (a) If the Certificate Insurer or any Owner (for
purposes of this Section 6.12, an "Applicant") applies in writing
to the Trustee, and such application states that the Applicant
desires to communicate with other Owners with respect to their
rights under this Agreement or under the Certificates and is
accompanied by a copy of the communication which such Applicant
proposes to transmit, then the Trustee shall, at the expense of
such Applicant, within ten (10) Business Days after the receipt
of such application, furnish or cause to be furnished to such
Applicant a list of the names and addresses of the Owners of
record as of the most recent Payment Date.
(b) Every Owner, by receiving and holding such list, agrees
with the Trustee that the Trustee shall not be held accountable
in any way by reason of the disclosure of any information as to
the names and addresses of the Owners hereunder, regardless of
the source from which such information was derived.
END OF ARTICLE VI
ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 7.01 Collection of Money.
Except as otherwise expressly provided herein, the Trustee
shall demand payment or delivery of all money and other property
payable to or receivable by the Trustee pursuant to this
Agreement or the Certificate Insurance Policies, including (a)
all payments due on the Mortgage Loans in accordance with the
respective terms and conditions of such Mortgage Loans and
required to be paid over to the Trustee by the related Servicer
or by any Subservicer and (b) Insured Payments. The Trustee
shall hold all such money and property received by it, other than
pursuant to or as contemplated by Section 6.02(e) hereof, as part
of the Trust Estate and shall apply it as provided in this
Agreement.
Section 7.02 Establishment of Accounts;
(a) The Depositor shall cause to be established on the
Startup Day, and the Trustee shall maintain, a segregated trust
account, entitled the Certificate Account, to be held by the
Trustee on behalf of the Owners of the Certificates, the Trustee
and the Certificate Insurer, as their interests may appear.
(b) The Depositor shall cause to be established, and the
Trustee shall maintain, at the Corporate Trust Office two
segregated trust accounts, referred to herein as the "Pre-Funding
Account" and the "Capitalized Interest Account" to be held by the
Trustee in the name of the Trust for the benefit of the Owners
and the Certificate Insurer, as their interests may appear.
(c) No later than the second Business Day after the
Trustee's receipt of each Servicer's related Monthly Servicing
Report pursuant to Section 8.29, the Trustee shall determine
(subject to the terms of Section 10.03(j) hereof, based solely on
information provided to it by the Servicer) with respect to the
immediately following Payment Date, the amount that is expected
to be on deposit in the Certificate Account as of such Payment
Date for Group I (disregarding the amount of any Insured
Payments), which amount will be equal to the sum of (x) the
amount on deposit therein with respect to such Group excluding
the amount of any Total Monthly Excess Cashflow from Group I
included in such amount and any payments or other recoveries on
the Mortgage Loans that are not required to be distributed to the
Owners on the next Payment Date plus (y) any amount of Total
Monthly Excess Cashflow from either Group to be applied on such
Payment Date to the Fixed Rate Group Certificates excluding any
payments or other recoveries on the Mortgage Loans that are not
required to be distributed to the Owners on the next Payment Date
plus (z) any deposit to the Certificate Account from the Pre-
Funding Account and the Capitalized Interest Account expected to
be made with respect to Group I. The amount described in clauses
(x) and (z) of the preceding sentence with respect to each
Payment Date is the "Group I Available Funds"; the sum of the
amounts described in clauses (x), (y) and (z) of the preceding
sentence with respect to each Payment Date is the "Group I Total
Available Funds."
(d) No later than the second Business Day after the
Trustee's receipt of each Servicer's related Monthly Servicing
Report pursuant to Section 8.29, the Trustee shall determine
(subject to the terms of Section 10.03(j) hereof, based solely on
information provided to it by the Servicer) with respect to the
immediately following Payment Date, the amount that is expected
to be on deposit in the Certificate Account as of such Payment
Date for Group II (disregarding the amount of any Insured
Payments), which amount will be equal to the sum of (x) the
amount on deposit therein with respect to such Group excluding
the amount of any Total Monthly Excess Cashflow from Group II
included in such amount and any payments or other recoveries on
the Mortgage Loan that are not required to be distributed to the
Owners on the next Payment Date plus (y) any amount of Total
Monthly Excess Cashflow from either Group to be applied on such
Payment Date to the Class A-8 Certificates excluding any payments
or other recoveries on the Mortgage Loans that are not required
to be distributed to the Owners on the next Payment Date plus (z)
any deposit to the Certificate Account from the Pre-Funding
Account and the Capitalized Interest Account expected to be made
with respect to Group II. The amount described in clauses (x)
and (z) of the preceding sentence with respect to each Payment
Date is the "Group II Available Funds"; the sum of the amounts
described in clauses (x), (y) and (z) of the preceding sentence
with respect to each Payment Date is the "Group II Total
Available Funds."
Section 7.03 Flow of Funds.
(a) With respect to Group I, the Trustee shall deposit to
the Certificate Account, without duplication, (i) pursuant to
Section 12.02(b), from the Policy Payments Account, any Insured
Payments relating to such Group, (ii) the proceeds of any
liquidation of the assets of the Trust insofar as such proceeds
relate to Group I, (iii) all remittances made to the Trustee
pursuant to Section 8.09 insofar as such remittances relate to
Group I, (iv) each portion of the Group I Monthly Remittance
Amount remitted by the related Servicer, (v) on the first Payment
Date, the Group I Capitalized Interest Requirement and the Group
I Pre-Funding Account Earnings to be transferred on such Payment
Dates from the Capitalized Interest Account for the related
Payment Date, pursuant to Section 7.04(e) hereof and (vi) on the
first Payment Date, the amount, if any, to be transferred on such
Payment Date from the Pre-Funding Account pursuant to Section
7.04(c) hereof.
(b) With respect to Group II, the Trustee shall deposit to
the Certificate Account without duplication, (i) pursuant to
Section 12.02(b), from the Policy Payments Account, any Insured
Payments relating to such Group, (ii) the proceeds of any
liquidation of the assets of the Trust insofar as such proceeds
relate to Group II, (iii) all remittances made to the Trustee
pursuant to Section 8.09 insofar as such remittances relate to
Group II, (iv) each portion of the Group II Monthly Remittance
Amount remitted by the related Servicer, (v) on the first Payment
Date, the Group II Capitalized Interest Requirement to be
transferred on such Payment Dates from the Capitalized Interest
Account for the related Payment Date, pursuant to Section 7.04(e)
hereof and (vi) on the first Payment Date, the amount, if any, to
be transferred on such Payment Date from the Pre-Funding Account
pursuant to Section 7.04(c) hereof.
(c) With respect to the Certificate Account, on each
Payment Date, the Trustee shall make the following allocations,
disbursements and transfers for each Mortgage Loan Group from
amounts deposited therein pursuant to subsections (a) and (b),
respectively, in the following order of priority, and each such
allocation, transfer and disbursement shall be treated as having
occurred only after all preceding allocations, transfers and
disbursements have occurred:
(i) first, the Trustee shall disburse the Premium
Amount for such Payment Date to the Certificate
Insurer;
(ii) second, to the Trustee, the Trustee Fees with
respect to such Group then due (plus any expenses owing
to the Trustee pursuant to Section 2.05 and Section
8.21(f));
(iii) third, the Trustee shall allocate an amount
equal to the sum of (x) the Total Monthly Excess Spread
with respect to such Mortgage Loan Group and Payment
Date (net of the related Premium Amount paid pursuant
to clause (i) above and the Trustee Fee payable under
clause (ii) above) plus (y) any Subordination Reduction
Amount with respect to such Mortgage Loan Group and
Payment Date (such sum (net of such Premium Amount and
Trustee Fee) being the "Total Monthly Excess Cashflow"
with respect to such Mortgage Loan Group and Payment
Date) with respect to such Mortgage Loan Group in the
following order of priority:
(A) first, such Total Monthly Excess
Cashflow with respect to each Group shall be
allocated to the payment of the related Class A
Distribution Amount pursuant to clause (iv) below
on such Payment Date with respect to the related
Mortgage Loan Group in an amount equal to the
amount, if any, by which (x) the related Class A
Distribution Amount (calculated for this purpose
only by reference to clause (b) of the definition
of Group I Principal Distribution Amount or Group
II Principal Distribution Amount, as the case may
be, and without any Subordination Increase Amount
with respect to the related Group) for such
Payment Date exceeds (y) the Available Funds with
respect to such Mortgage Loan Group for such
Payment Date (the amount of such difference being
the "Group I Available Funds Shortfall" with
respect to Group I and the "Group II Available
Funds Shortfall" with respect to Group II);
(B) second, any portion of the Total
Monthly Excess Cashflow with respect to such
Mortgage Loan Group remaining after the
application described in clause (A) above shall be
allocated against any Available Funds Shortfall
with respect to the other Mortgage Loan Group and
to the payment of the related Class A Distribution
Amount with respect to the other Mortgage Loan
Group pursuant to clause (iv) below;
(C) third, any portion of the Total Monthly
Excess Cashflow with respect to such Mortgage Loan
Group remaining after the allocations described in
clauses (A) and (B) above shall be disbursed to
the Certificate Insurer in respect of amounts owed
on account of any Reimbursement Amount with
respect to the related Mortgage Loan Group; and
(D) fourth, any portion of the Total Monthly
Excess Cashflow with respect to such Mortgage Loan
Group remaining after the allocations described in
clauses (A), (B) and (C) above shall be disbursed
to the Certificate Insurer in respect of any
Reimbursement Amount with respect to any other
Mortgage Loan Group;
(iv) fourth, the amount, if any, of the Total Monthly
Excess Cashflow with respect to a Mortgage Loan Group
on a Payment Date remaining after the allocations
described in clause (iii) above (the "Net Monthly
Excess Cashflow" for such Mortgage Loan Group and
Payment Date) is required to be allocated in the
following order of priority:
(A) first, such Net Monthly Excess Cashflow
shall be used to reduce to zero, through the
allocation of a Subordination Increase Amount to
the payment of the related Class A Distribution
Amount pursuant to clause (v) below, any
Subordination Deficiency Amount with respect to
the related Mortgage Loan Group as of such Payment
Date;
(B) second, any Net Monthly Excess Cashflow
remaining after the application described in
clause (A) above shall be used to reduce to zero,
through the allocation of a Subordination Increase
Amount to the payment of the related Class A
Distribution Amount pursuant to clause (v) below,
the Subordination Deficiency Amount, if any, with
respect to the other Mortgage Loan Group; and
(C) third, any Net Monthly Excess Cashflow
remaining after the applications described in
clauses (A) and (B) above shall be paid to the
Servicer to the extent of any unreimbursed
Delinquency Advances and Servicing Advances
determined by the related Servicer to be
nonrecoverable and Servicing Fees and unreimbursed
expenses pursuant to Section 8.25;
(v) fifth, following the making by the Trustee of all
allocations, transfers and disbursements described
above under this subsection (c) from amounts (including
any related Insured Payment) then on deposit in the
Certificate Account with respect to the related
Mortgage Loan Group, the Trustee shall distribute:
(A) to the Owners of the Fixed Rate Group
Certificates, the related Current Interest thereon
until the related Class A Certificate Termination
Date on a pro rata basis based on each such Class
of Fixed Rate Group Certificate's Current Interest
without any priority among the related Fixed Rate
Group Certificates; and
(B) the Group I Principal Distribution
Amount shall be distributed as follows:
(1) first, to the Owners of the
Class A-1 Certificates until the Class A-1
Certificate Termination Date;
(2) second, to the Owners of the
Class A-2 Certificates until the Class A-2
Certificate Termination Date;
(3) third, to the Owners of the
Class A-3 Certificates until the Class A-3
Certificate Termination Date;
(4) fourth, to the Owners of the
Class A-4 Certificates until the Class A-4
Certificate Termination Date;
(5) fifth, to the Owners of the
Class A-5 Certificates until the Class A-5
Certificate Termination Date;
(6) sixth, to the Owners of the
Class A-6 Certificates until the Class A-6
Certificate Termination Date;
(7) seventh, to the Owners of the
Class A-7 Certificates until the Class A-7
Certificate Termination Date;
(C) to the Owners of the Class A-8
Certificates, the Class A-8 Current Interest; and
(D) to the Owners of the Class A-8
Certificates, the Group II Principal Distribution
Amount;
(vi) sixth, following the making by the Trustee of all
allocations, transfers and disbursements described
above under this subsection (c), from amounts then on
deposit in the Certificate Account, the Trustee shall
distribute:
(A) to the Owners of the Class B-IO
Certificates, the Class B-IO Distribution Amount;
and
(B) to the Owners of the Class R
Certificates, the Residual Net Monthly Excess
Cashflow, if any, for such Payment Date.
(d) On any Payment Date during the continuance of any
Certificate Insurer Default:
(i) Any amounts otherwise payable to the
Certificate Insurer as Premium Amounts or
Reimbursement Amounts shall be retained in the
Certificate Account as Total Available Funds; and
(ii) If there is a Subordination Deficit,
then the Class A Principal Distribution Amount for
such Payment Date shall be distributed pro rata to
the Owners of any Outstanding Class A Certificates
on such Payment Date.
(e) Notwithstanding clause (c)(v) above, the aggregate
amounts distributed on all Payment Dates to the Owners of the
Class A Certificates on account of principal pursuant to clauses
(c)(v)(B) and (D) shall not exceed the original Certificate
Principal Balance of the related Certificates.
(f) Upon receipt of Insured Payments from the Certificate
Insurer on behalf of Owners of the Class A Certificates, the
Trustee shall receive such payments as attorney-in-fact of the
Owners of the Class A Certificates and deposit such Insured
Payments in the Policy Payments Account and on the related
Payment Date transfer such Insured Payments to the Certificate
Account and shall distribute such Insured Payments on the related
Payment Date, or the proceeds thereof to the Owners of such
Certificates or on such later date on which the Trustee has
received such Insured Payment on or before 12:00 noon New York
City time.
(g) Anything herein to the contrary notwithstanding, any
payment with respect to principal of or interest on any of the
Class A Certificates which is made with moneys received pursuant
to the terms of the Certificate Insurance Policy shall not be
considered payment of such Certificates from the Trust and shall
not result in the payment of or the provision for the payment of
the principal of or interest on such Certificates within the
meaning of Section 7.03. The Depositor, the Seller, the
Servicers and the Trustee acknowledge, and each Owner by its
acceptance of a Certificate agrees, that without the need for any
further action on the part of the Certificate Insurer, the
Depositor, the Seller, the Servicers, the Trustee or the
Registrar (a) to the extent the Certificate Insurer makes
payments, directly or indirectly, on account of principal of or
interest on any Class A Certificates to the Owners of such
Certificates, the Certificate Insurer will be fully subrogated to
the rights of such Owners to receive such principal and interest
together with any interest thereon of the applicable Pass-Through
Rate from the Trust and (b) the Certificate Insurer shall be paid
such principal and interest but only from the sources and in the
manner provided herein for the payment of such principal and
interest.
It is understood and agreed that the intention of the
parties is that the Certificate Insurer shall not be entitled to
reimbursement on any Payment Date for amounts previously paid by
it other than pursuant to clauses 7.03(c)(iii)(C) and (D).
The Trustee or Paying Agent shall (i) receive as attorney-in-
fact of each Owner of Class A Certificates any Insured Payment
from the Certificate Insurer and (ii) disburse the same to the
Owners of the related Class A Certificates as set forth in
Section 7.03(c)(v). Insured Payments disbursed by the Trustee or
Paying Agent from proceeds of the Certificate Insurance Policy
shall not be considered payment by the Trust, nor shall such
payments discharge the obligation of the Trust with respect to
such Class A Certificates and the Certificate Insurer shall be
entitled to receive the related Reimbursement Amount pursuant to
Section 7.03(c)(iii)(C) hereof.
The rights of the Owners to receive distributions from the
proceeds of the Trust Estate, and all ownership interests of the
Owners in such distributions, shall be as set forth in this
Agreement. In this regard, all rights of the Owners of the
Subordinate Certificates to receive distributions in respect of
the Subordinate Certificates, and all ownership interests of the
Owners of the Subordinate Certificates, in and to such
distributions, shall be subject and subordinate to the
preferential rights of the Owners of the Class A Certificates to
receive distributions thereon and the ownership interests of such
Owners in such distributions, as described herein. In accordance
with the foregoing, the ownership interests of the Owners of the
Subordinate Certificates in amounts deposited in the Accounts
from time to time shall not vest unless and until such amounts
are distributed in respect of the Subordinate Certificates in
accordance with the terms of this Agreement. Notwithstanding
anything contained in this Agreement to the contrary, the Owners
of the Subordinate Certificates shall not be required to refund
any amount properly distributed on the Subordinate Certificates
pursuant to this Section 7.03.
Section 7.04 Pre-Funding Account and Capitalized
Interest Account.
(a) On the Startup Day, the Depositor will deposit in the
Pre-Funding Account, on behalf of the Owners of the Class A
Certificates, from the proceeds of the sale of the Class A
Certificates, the Original Pre-Funded Amount.
(b) On any Subsequent Transfer Date, the Seller shall
instruct the Trustee to withdraw from the Pre-Funding Account an
amount equal to 100% of the aggregate Loan Balances of the
Subsequent Mortgage Loans sold to the Trust on such Subsequent
Transfer Date and pay such amount to or upon the order of the
Depositor upon satisfaction of the conditions set forth in
Sections 3.05 and 3.08 hereof with respect to such transfer. In
no event shall the Depositor be permitted to instruct the Trustee
to release from the Pre-Funding Account to the Certificate
Account with respect to Subsequent Mortgage Loans to be
transferred to a Group an amount in excess of the Original Pre-
Funded Amount with respect to such Group.
(c) On the first Payment Date, the Trustee shall transfer
from the Pre-Funding Account to the Certificate Account the
amount remaining on the Pre-Funding Account on such Payment Date.
(d) Reserved.
(e) On the first Payment Date the Trustee shall transfer
from the Capitalized Interest Account to the Certificate Account,
with respect to each Group, the related Capitalized Interest
Requirement and any Pre-Funding Account Earnings with respect to
such Group, if any, for such Payment Date.
(f) On each Subsequent Transfer Date the Trustee shall
distribute the Overfunded Interest Amount (calculated by the
Trustee on the day prior to such Subsequent Transfer Date) from
the Capitalized Interest Account to the Seller and on the Payment
Date in July 1996, the Trustee shall distribute to the Seller any
amounts remaining in the Capitalized Interest Account after
taking into account the transfers on such Payment Date described
in clause (e) above. The Capitalized Interest Account shall be
closed at the end of the Funding Period. All amounts, if any,
remaining in the Capitalized Interest Account on such day shall
be transferred to the Seller.
Section 7.05 Investment of Accounts.
(a) Except as provided below, consistent with any
requirements of the Code, all or a portion of any Account held by
the Trustee for the benefit of the Owners shall be invested and
reinvested by the Trustee in the name of the Trustee for the
benefit of the Owners, as directed in writing by the party who
benefits from such investment, which shall be the Depositor in
the case of the Pre-Funding Account and the Capitalized Interest
Account and the related Servicer in the case of the related
Principal and Interest Account, in one or more Eligible
Investments bearing interest or sold at a discount. The earnings
on each Principal and Interest Account are payable to the related
Servicer. Earnings on the Certificate Account are payable to the
Trustee. The bank serving as Trustee or any affiliate thereof
may be the obligor on any investment which otherwise qualifies as
an Eligible Investment. No investment in any Account shall
mature later than the Business Day immediately preceding the next
Payment Date.
If the Depositor shall have failed to give investment
directions to the Trustee then the Trustee shall invest the funds
in such Accounts in money market funds described in Section
7.07(k) to be redeemable without penalty no later than the
Business Day immediately preceding the next Payment Date.
(b) Reserved.
(c) Subject to Section 10.01 hereof, the Trustee shall not
in any way be held liable by reason of any insufficiency in any
Account held by the Trustee resulting from any loss on any
Eligible Investment included therein (except to the extent that
the bank serving as Trustee is the obligor thereon).
(d) Reserved.
(e) All income or other gain from investments in any
Account held by the Trustee shall be deposited in such Account
immediately on receipt (other than the Principal and Interest
Accounts, which income or other gains shall be retained by the
related Servicer and the Certificate Account, which income or
other gains shall be retained by the Trustee), and any loss
resulting from such investments shall be charged to such Account,
provided that the related Servicer and the Trustee shall each
contribute funds in an amount equal to such loss in the case of
the Principal and Interest Account and the Certificate Account,
respectively.
Section 7.06 Reserved.
Section 7.07 Eligible Investments.
The following are Eligible Investments:
(a) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal
and interest by, the United States or any agency or
instrumentality thereof, provided such obligations are backed by
the full faith and credit of the United States, Federal Housing
Administration debentures, FHLMC senior debt obligations, and
FNMA senior debt obligations, but excluding any of such
securities whose terms do not provide for payment of a fixed
dollar amount upon maturity or call for redemption;
(b) Federal Housing Administration debentures;
(c) FHLMC participation certificates which guaranty timely
payment of principal and interest and senior debt obligations;
(d) Consolidated senior debt obligations of any Federal
Home Loan Banks;
(e) FNMA mortgage-backed securities (other than stripped
mortgage securities which are valued greater than par on the
portion of unpaid principal) and senior debt obligations;
(f) Federal funds, certificates of deposit, time deposits,
and bankers' acceptances (having original maturities of not more
than 365 days) of any domestic bank, the short-term debt
obligations of which have been rated A-1+ or better by Standard &
Poor's and P-1 by Moody's;
(g) Deposits of any bank or savings and loan association
(the long-term deposit rating of which is Baa3 or better by
Moody's and BBB by Standard & Poor's) which has combined capital,
surplus and undivided profits of at least $50,000,000 which
deposits are insured by the FDIC and held up to the limits
insured by the FDIC;
(h) Investment agreements approved by the Certificate
Insurer provided:
1. The agreement is with a bank or insurance company
which has unsecured, uninsured and unguaranteed senior debt
obligation rated Aa2 or better by Moody's and AA or better
by Standard & Poor's, or is the lead bank of a parent bank
holding company with an uninsured, unsecured and
unguaranteed senior debt obligation meeting such rating
requirements, and
2. Moneys invested thereunder may be withdrawn
without any penalty, premium or charge upon not more than
one day's notice (provided such notice may be amended or
canceled at any time prior to the withdrawal date), and
3. The agreement is not subordinated to any other
obligations of such insurance company or bank, and
4. The same guaranteed interest rate will be paid on
any future deposits made pursuant to such agreement, and
5. The Trustee and the Certificate Insurer receive an
opinion of counsel (at the expense of the party requesting
the investment) that such agreement is an enforceable
obligation of such insurance company or bank;
(i) Repurchase agreements collateralized by securities
described in (a), (c), or (e) above with any registered
broker/dealer subject to the Securities Investors Protection
Corporation's jurisdiction and subject to applicable limits
therein promulgated by Securities Investors Protection
Corporation or any commercial bank, if such broker/dealer or bank
has an uninsured, unsecured and unguaranteed short-term or long-
term obligation rated P-1 or Aa2, respectively, or better by
Moody's and A-1+ or AA, respectively, or better by Standard &
Poor's, provided:
a. A master repurchase agreement or specific written
repurchase agreement governs the transaction, and
b. The securities are held free and clear of any lien
by the Trustee or an independent third party acting solely
as agent for the Trustee, and such third party is (a) a
Federal Reserve Bank, (b) a bank which is a member of the
FDIC and which has combined capital, surplus and undivided
profits of not less than $125 million, or (c) a bank
approved in writing for such purpose by the Certificate
Insurer, and the Trustee shall have received written
confirmation from such third party that it holds such
securities, free and clear of any lien, as agent for the
Trustee, and
c. A perfected first security interest under the
Uniform Commercial Code, or book entry procedures prescribed
at 31 CFR 306.1 et seq. or 31 CFR 350.0 et seq., in such
securities is created for the benefit of the Trustee, and
d. The repurchase agreement has a term of thirty days
or less and the Trustee will value the collateral securities
no less frequently than monthly and will liquidate the
collateral securities if any deficiency in the required
collateral percentage is not restored within two business
days of such valuation, and
e. The fair market value of the collateral securities
in relation to the amount of the repurchase obligation,
including principal and interest, is equal to at least 106%.
(j) Commercial paper (having original maturities of not
more than 270 days) rated in the highest short-term rating
categories of Standard & Poor's and Moody's; and
(k) Investments in money market funds rated AAAm or AAAm-G
by Standard & Poor's and Aaa by Moody's;
provided that no instrument described above shall evidence either
the right to receive (a) only interest with respect to the
obligations underlying such instrument or (b) both principal and
interest payments derived from obligations underlying such
instrument and the interest and principal payments with respect
to such instrument provided a yield to maturity at par greater
than 120% of the yield to maturity at par of the underlying
obligations; and provided, further, that all instruments
described hereunder shall mature at par on or prior to the next
succeeding Payment Date unless otherwise provided in this
Agreement and that no instrument described hereunder may be
purchased at a price greater than par if such instrument may be
prepaid or called at a price less than its purchase price prior
to stated maturity.
Section 7.08 Accounting and Directions by
Trustee.
(a) Not later than the later of (i) 5:00 p.m. (New York
City time) on the second Business Day after the Trustee's receipt
of the Monthly Servicing Report and (ii) the related Monthly
Remittance Date, the Trustee shall determine whether an Insured
Payment will be required to be made by the Certificate Insurer on
the following Payment Date; provided that the Trustee agrees to
use its best efforts to provide such notice earlier than such
second Business Day. If the Trustee determines that an Insured
Payment will be required to be made by the Certificate Insurer on
the following Payment Date, then no later than 5:00 p.m. (New
York City time) on the date of such determination the Trustee
shall furnish the Certificate Insurer and the Depositor with a
completed Notice in the form set forth as Exhibit J hereto. The
Notice shall specify the amount of Insured Payment and shall
constitute a claim for an Insured Payment pursuant to the
Certificate Insurance Policy.
(b) On or before the Business Day preceding each Payment
Date, the Trustee shall notify (subject to the terms of Section
10.03(j)) hereof the Depositor, the Seller and the Certificate
Insurer of the following information with respect to the next
Payment Date (which notification may be given by facsimile, or by
telephone promptly confirmed in writing):
(1) The aggregate amount then on deposit in the
Certificate Account;
(2) The Class A Distribution Amount, with respect to
each Class individually, and all Classes in the aggregate,
on the next Payment Date;
(3) The amount of any Subordination Increase Amount;
(4) The amount of any Insured Payment to be made by
the Certificate Insurer on such Payment Date;
(5) The application of the amounts described in
clauses (1), (3) and (4) preceding to the allocation and
distribution of the related Class A Distribution Amounts on
such Payment Date in accordance with Section 7.03 hereof;
(6) The Certificate Principal Balance of each Class of
Class A Certificates, the aggregate amount of the principal
of each Class of the Class A Certificates to be paid on such
Payment Date and the remaining Certificate Principal Balance
of each Class of Class A Certificates following any such
payment;
(7) The amount, if any, of any Realized Losses for the
related Remittance Period;
(8) The amount of any Subordination Reduction Amount;
(9) For the Payment Dates during the Funding Period,
and as to each Group (A) the related Pre-Funded Amount
previously used to purchase Subsequent Mortgage Loans, (B)
the related Pre-Funded Amount distributed as part of the
related Principal Distribution Amount, (C) the related Pre-
Funding Account Earnings transferred to the Capitalized
Interest Account, and (D) the amounts transferred from the
Capitalized Interest Account to the Certificate Account and
the Overfunded Interest Amount to the Seller, if any;
(10) The amount of the B-IO Distribution Amount and
the amount of any Residual Net Monthly Excess Cashflow for
each Group; and
(11) whether the Servicer Termination Test and the
Stepdown Requirement have been met and state separately each
component thereof.
Section 7.09 Reports by Trustee to Owners and
Certificate Insurer.
(a) On each Payment Date the Trustee shall report in
writing to the Depositor (in hard copy and electronic diskette
format), each Owner, the Certificate Insurer, the Underwriters
and their designees (designated in writing to the Trustee),
Standard & Poor's and Moody's;
(i) the amount of the distribution with respect to
such Owners' Certificates (based on a Certificate in the
original principal amount of $1,000);
(ii) (a) the amount of such Owner's distributions
allocable to principal, separately identifying the aggregate
amount of any Prepayments or other recoveries of principal
included therein, (b) with respect to each Group, any Pre-
Funded Amounts distributed as a Prepayment (based on a
Certificate in the original principal amount of $1,000) and
(c) any Subordination Increase Amount with respect to the
related Mortgage Loan Group;
(iii) the amount of such Owner's distributions allocable
to interest (based on a Certificate in the original
principal amount of $1,000);
(iv) if the distribution (net of any Insured Payment)
to the Owners of any Class of the Class A Certificates on
such Payment Date was less than the related Class A
Distribution Amount on such Payment Date, the related Carry
Forward Amount and the allocation thereof to the related
Classes of the Class A Certificates resulting therefrom;
(v) the amount of any Insured Payment included in
the amounts distributed to the Owners of Class A
Certificates on such Payment Date;
(vi) the principal amount of each Class of Class A
Certificate which will be Outstanding and the aggregate Loan
Balance of each Group, in each case after giving effect to
any payment of principal on such Payment Date;
(vii) the aggregate Loan Balance of the Mortgage Loans
in each Group and the aggregate Loan Balance of the Initial
Mortgage Loans and the Subsequent Mortgage Loans in each
Group in each case after giving effect to any payment of
principal on such Payment Date;
(viii) the Subordinated Amount and Subordination Deficit
for each Group, if any, remaining after giving effect to all
distributions and transfers on such Payment Date;
(ix) based upon information furnished by the Depositor,
such information as may be required by Section 6049(d)(7)(C)
of the Code and the regulations promulgated thereunder to
assist the Owners in computing their market discount;
(x) the total of any Substitution Amounts and any Loan
Purchase Price amounts included in such distribution with
respect to each Group;
(xi) the weighted average Coupon Rate of the Mortgage
Loans with respect to each Group;
(xii) such other information as the Certificate Insurer
may reasonably request with respect to Delinquent Mortgage
Loans;
(xiii) the largest Mortgage Loan balance outstanding in
each Group;
(xiv) for Payment Dates during the Funding Period, the
remaining Pre-Funded Amount for each Group;
(xv) the Servicing Fees, Trustee's Fees and Premium
Amount allocable to each Group; and
(xvi) One-Month LIBOR on the most recent One-Month LIBOR
Determination Date.
Each Servicer shall provide to the Trustee the information
required by Section 8.29 with respect to the Mortgage Loans
serviced by it to enable the Trustee to perform its reporting
obligations under this Section, and the obligations of the
Trustee under this Section are conditioned upon such information
being received and the information provided in clauses (ii)(a),
(x) and (xi) above shall be based solely upon information
contained in the Monthly Servicing Report provided by a Servicer
to the Trustee.
(b) In addition, on each Payment Date the Trustee will
distribute to the Depositor, each Owner, the Certificate Insurer,
the Underwriters, Standard & Poor's and Moody's, together with
the information described in Subsection (a) preceding, the
following information with respect to each Mortgage Loan Group
which information is hereby required to be prepared in hard copy
or tape format by the Servicer (other than the information in
clause (i)) and furnished to the Trustee to the extent provided
for in Section 8.29 for such purpose on the Reporting Date:
(i) the related Class A Certificate Principal
Balance, as of such Payment Date;
(ii) the number and aggregate principal
balances of Mortgage Loans in each Group (a) 30-59 days
Delinquent, (b) 60-89 days Delinquent and (c) 90 or more
days Delinquent, as of the close of business on the last
Business Day of the related Remittance Period (taking into
account payments received on or prior to the related
Determination Date).
(iii) the numbers and aggregate Loan Balances
of all Mortgage Loans in each Group as of such Payment Date
and the percentage that each of the amounts represented by
clauses (a), (b) and (c) of paragraph (ii) above represent
as a percentage of the respective amounts in this paragraph
(iii);
(iv) the status and the number and dollar amounts
of all Mortgage Loans in each Group in foreclosure
proceedings as of the close of business on the related
Determination Date, separately stating, for this purpose,
all Mortgage Loans in each Group with respect to which
foreclosure proceedings were commenced in the immediately
preceding calendar month;
(v) the number of Mortgagors and the Loan
Balances of Mortgage Loans in each Group of the related
Mortgages involved in bankruptcy proceedings as of the close
of business on the related Determination Date;
(vi) the existence and status of any REO
Properties in each Group, as of the close of business on the
related Determination Date;
(vii) the book value of any REO Property in
each Group as of the close of business on the related
Determination Date;
(viii) the Cumulative Loss Percentage for each
Group and each Mortgage Loan Servicing Group, the amount of
Cumulative Realized Losses for each Group and each Mortgage
Loan Servicing Group, the current period Realized Losses and
the Annual Loss Percentage for such Group and each Mortgage
Loan Servicing Group, in each case as of the related
Determination Date; and
(ix) the 90+ Delinquency Percentage and the number
and amount by principal balance of 90 Day Delinquent Loans
in each Group and each Mortgage Loan Servicing Group, in
each case as of the related Determination Date.
(c) Each Servicer shall furnish to the Trustee and to the
Certificate Insurer, during the term of this Agreement, such
periodic, special, or other reports or information not
specifically provided for herein, with respect to Mortgage Loans
serviced by it, as may be necessary, reasonable, or appropriate
with respect to the Trustee or the Certificate Insurer, as the
case may be, or otherwise with respect to the purposes of this
Agreement, all such reports or information to be provided by and
in accordance with such applicable instructions and directions as
the Trustee or the Certificate Insurer may reasonably require;
provided, that the Servicer shall be entitled to be reimbursed by
the requesting party, for the fees and actual expenses associated
with providing such reports, if such reports are not generally
produced in the ordinary course of business.
Section 7.10 Reports by Trustee.
(a) The Trustee shall report to the Depositor, the Seller,
the Underwriters, the Certificate Insurer and each Owner, with
respect to the amount on deposit in the Certificate Account, the
amount therein relating to each Group and the identity of the
investments included therein, as the Depositor, the Seller or the
Certificate Insurer may from time to time request. Without
limiting the generality of the foregoing, the Trustee shall, at
the request of the Depositor, the Seller or the Certificate
Insurer transmit promptly to the Depositor, the Seller and the
Certificate Insurer copies of all accountings of receipts in
respect of the Mortgage Loans furnished to it by the related
Servicer and shall notify the Seller and the Certificate Insurer
if any Monthly Remittance Amount has not been received by the
Trustee when due.
(b) The Trustee shall report to the Certificate Insurer
with respect to any written notices it may from time to time
receive which provide an Authorized Officer with actual knowledge
that any of the representations and warranties contained herein
or in any of the Transfer Agreements are inaccurate.
Section 7.11 Preference Payments
Subject to the terms of the related Certificate Insurance
Policy, the Certificate Insurer will pay any Insured Payment that
is a Preference Amount on the Business Day following receipt on a
Business Day by State Street Bank and Trust Company, N.A., its
fiscal agent (the "Fiscal Agent") of (i) a certified copy of an
order requiring the return of such Preference Amount, (ii) an
opinion of counsel satisfactory to the Certificate Insurer that
such order is final and not subject to appeal, (iii) an
assignment in such form as if reasonably required by the
Certificate Insurer, irrevocably assigning to the Certificate
Insurer all rights and claims of the Owner relating to or arising
under the Class A Certificates against the debtor which made such
preference payment or otherwise with respect to such preference
payment, (iv) appropriate instruments to effect the appointment
of the Certificate Insurer as agent for such Owner in any legal
proceeding related to such preference payment, such instruments
being in a form satisfactory to the Certificate Insurer and (v) a
Notice (as described in the Certificate Insurance Policy),
provided, that if such documents are received after 5:00 p.m. New
York City time on such Business Day, they will be deemed to be
received on the following Business Day. Such payments shall be
disbursed to the receiver or the trustee in bankruptcy named in
the final order of the court exercising on behalf of the Owner
and not to any Owner directly unless such Owner has returned
principal or interest paid on the Class A Certificates to such
receiver or trustee in bankruptcy, in which case payment shall be
disbursed to the Owner.
Each Owner of a Class A Certificate, by its purchase of
Class A Certificates, the related Servicer and the Trustee hereby
agree that the Certificate Insurer may at any time during the
continuation of any proceeding relating to a preference claim
direct all matters relating to such preference claim, including,
without limitation, the direction of any appeal of any order
relating to such preference claim and the posting of any surety,
supersedes or performance bond pending any such appeal. In
addition and without limitation of the foregoing, the Certificate
Insurer shall be subrogated to the rights of the related
Servicer, the Trustee and the Owner of each Class A Certificate
in the conduct of any such preference claim, including, without
limitation, all rights of any party to an adversary proceeding
action with respect to any court order issued in connection any
such preference claim.
Section 7.12 Claims Upon the Policies.
If within the latter of (i) 5:00 p.m. (New York City time)
on the second Business Day after the Trustee's receipt of the
Monthly Servicing Report from the Servicers, and (ii) the related
Monthly Remittance Date, the Trustee determines that the Total
Available Funds are insufficient to pay the Insured Payments on
such Payment Date, the Trustee shall give notice by 5:00 p.m.
(New York City time) on such date to the Certificate Insurer by
telephone or telecopy of the amount of such deficiency, confirmed
in writing in the form of the Notice set forth as Exhibit A to
the related Certificate Insurance Policy, to the Certificate
Insurer and the Fiscal Agent (as defined in such Certificate
Insurance Policy). Under the related Certificate Insurance
Policy, the Certificate Insurer shall make the Insured Payment on
the later of (i) 12:00 noon (New York City time) on the second
Business Day following receipt of such notice and (ii) 12:00 noon
(New York City time) on the Payment Date.
END OF ARTICLE VII
ARTICLE VIII
SERVICING AND ADMINISTRATION
OF MORTGAGE LOANS
Section 8.01 Servicers and Subservicers. (a) Acting
directly or through one or more subservicers as provided in
Section 8.03, each Servicer, as servicer, shall service and
administer the Mortgage Loans identified on the Schedule of
Mortgage Loans as being serviced by it as described below and
with reasonable care, and using that degree of skill and
attention that such Servicer exercises with respect to comparable
mortgage loans that it services for itself or others, and shall
have full power and authority, acting alone, to do or cause to be
done any and all things in connection with such servicing and
administration which it may deem necessary or desirable. In
performing such servicing functions such Servicer shall (i) take
into account the mortgagor non-conforming credit quality of the
Mortgage Loans, (ii) follow the policies and procedures that it
would apply to similar loans held for its own account, unless
such policies and procedures are not generally in accordance with
standard industry practices, in which case the Servicer shall
service the loans generally in accordance with standard industry
practices applicable to servicing similar loans, (iii) comply
with all applicable laws and follow collection practices with
respect to the related Mortgage Loans that are in all material
respects legal, proper and prudent, and (iv) subject to its
obligation to comply with clauses (i), (ii) and (iii) will not
materially change its collection and servicing practices that are
in existence as of the Startup Day without the consent of the
Seller (such consent not to be unreasonably withheld). Each
Servicer shall notify the Certificate Insurer of the changes
specified in clause (iv) of the preceding sentence.
(b) The duties of each Servicer shall include the
collecting and posting of all payments, responding to inquiries
of Mortgagors or by federal, state or local government
authorities with respect to the Mortgage Loans, investigating
delinquencies, reporting tax information to Mortgagors in
accordance with its customary practices and accounting for
collections, furnishing monthly statements to the Trustee and the
Seller with respect to remittances on the Mortgage Loans,
advising the Trustee or the Seller of the amount of Compensating
Interest and Delinquency Advances due as of any Monthly
Remittance Date with respect to the Mortgage Loans serviced by it
and funding such Compensating Interest and Delinquency Advances,
to the extent set forth in this Agreement. Each Servicer shall
reasonably cooperate with the Trustee and furnish upon reasonable
request to the Trustee with reasonable promptness information in
its possession as may be necessary or appropriate to enable the
Trustee to perform its tax reporting duties hereunder.
(c) The parties intend that the REMIC Estate shall
constitute and that the affairs of REMIC Estate shall be
conducted so as to qualify it as a REMIC. In furtherance of such
intention, each Servicer covenants and agrees that it shall not
knowingly or intentionally take any action or omit to take any
action that would cause the termination of the REMIC status of
the REMIC Estate or that would subject the REMIC Estate to tax.
(d) Each Servicer may, and is hereby authorized to, perform
any of its servicing responsibilities with respect to all or
certain of the Mortgage Loans through a subservicer as it may
from time to time designate in accordance with Section 8.03 but
no such designation of a subservicer shall serve to release such
Servicer from any of its obligations under this Agreement. Such
subservicer shall have all the rights and powers of the relevant
Servicer with respect to such Mortgage Loans under this
Agreement.
(e) Without limiting the generality of the foregoing, but
subject to Sections 8.13 and 8.14, each Servicer in its own name
or in the name of a subservicer is hereby authorized and
empowered and this subsection shall constitute a power of
attorney to carry out its servicing and administrative duties
hereunder, on behalf of itself, the Owners and the Trust or any
of them; to institute foreclosure proceedings or obtain a deed in
lieu of foreclosure so as to effect ownership of any Property on
behalf of the Trust and to hold title to any Property upon such
foreclosure or deed in lieu of foreclosure on behalf of the
Trust; provided, however, that Section 8.14(a) and (c) shall
constitute a power of attorney from the Trustee to each Servicer
with respect to the matters described therein and in accordance
with the terms thereof. Subject to Sections 8.13 and 8.14, the
Trustee shall furnish any Servicer with any additional powers of
attorney and other documents as such Servicer shall reasonably
request to enable such Servicer to carry out its respective
servicing and administrative duties hereunder.
(f) Each Servicer shall give prompt notice to the Trustee,
the Seller and the Certificate Insurer of any action, of which a
responsible officer of such Servicer has actual knowledge, to (i)
assert a claim against the Trust or (ii) assert control over the
Trust or the Trust Estate.
(g) Servicing Advances incurred by any Servicer in
connection with the servicing of the Mortgage Loans (including
any penalties in connection with the payment of any taxes and
assessments or other charges) on any Property shall be
recoverable by such Servicer to the extent described in Section
8.09 and in Section 7.03(c)(iv)(C) hereof.
Section 8.02 Collection of Certain Mortgage Loan Payments.
(a) Each Servicer shall, to the extent such procedures shall be
consistent with this Agreement and the terms and provisions of
any applicable Insurance Policies, follow such collection
procedures as it follows from time to time with respect to
mortgage loans in its servicing portfolio that are comparable to
the Mortgage Loans; provided that such Servicer shall always at
least follow collection procedures that are consistent with
Section 8.01(a) hereof. Consistent with the foregoing, each
Servicer may in its discretion (i) waive any assumption fees,
late payment charges, charges for checks returned for
insufficient funds or other fees which may be collected in the
ordinary course of servicing the Mortgage Loans, (ii) if a
Mortgagor is in default or about to be in default because of a
Mortgagor's financial condition, arrange with the Mortgagor a
schedule for the payment of delinquent payments due on the
related Mortgage Loan or (iii) modify payments of monthly
principal and interest on any Mortgage Loan becoming subject to
the terms of the Soldiers' and Sailors' Civil Relief Act of 1940,
as amended, in accordance with such Servicer's general policies
with respect to comparable mortgage loans subject to such Act.
Neither Servicer shall be required to institute or join in
litigation with respect to collection of any payment (whether
under a Mortgage, Note or otherwise or against any public or
governmental authority with respect to a taking or condemnation)
if it reasonably believes that enforcing the provision of the
Mortgage or other instrument pursuant to which such payment is
required is prohibited by applicable law. Consistent with the
terms of this Agreement, a Servicer may waive, modify or vary any
term of any Mortgage Loan or consent to the postponement of
strict compliance with any such term or in any manner grant
indulgence to any Mortgagor, provided, however, that (unless the
Mortgagor is in default with respect to the Mortgage Loan, or
such default is, in the judgment of such Servicer, imminent and
such Servicer has the consent of the Seller) such Servicer may
not permit any modification with respect to any Mortgage Loan
that would change the Coupon Rate (except for any change made
pursuant to the adjustment provisions of a Note evidencing an
Adjustable Rate Loan), forgive the payment of any principal or
interest, change the outstanding principal amount, require any
future advances, provide for the substitution or release of any
material portion of the collateral or extend the final maturity
date on such Mortgage Loan.
(b) Each Servicer shall deposit into the related Principal
and Interest Account in accordance with Section 8.08(a) all
Prepaid Installments received by it, and shall apply such Prepaid
Installments as directed by such Mortgagor and as set forth in
the related Note.
Section 8.03 Subservicing Agreements Between Servicer and
Subservicer. Each Servicer may enter into subservicing
agreements for any servicing and administration of Mortgage Loans
with any institution which is acceptable to the Certificate
Insurer and the Owner of a majority of the Percentage Interests
of the Class R Certificates, as indicated in writing, and which
represents and warrants that it is in compliance with the laws of
each state necessary to enable it to perform its obligations
under such Subservicing Agreement. For this purpose,
subservicing shall not be deemed to include the use of a tax
service, or services for reconveyance, insurance or brokering REO
Property. Each Servicer shall give prior notice to the
Certificate Insurer, the Seller and the Trustee of the
appointment of any Subservicer and shall furnish to the
Certificate Insurer and the Seller a copy of such Subservicing
Agreement. For purposes of this Agreement, the relevant Servicer
shall be deemed to have received payments on Mortgage Loans when
any Subservicer has received such payments. Any such
Subservicing Agreement shall be consistent with and not violate
the provisions of this Agreement. Each Subservicing Agreement
shall provide that a successor Servicer shall have the option to
terminate such agreement without payment of any fees if the
predecessor Servicer is terminated or resigns.
Section 8.04 Successor Subservicer. Each Servicer may
terminate any Subservicing Agreement in accordance with the terms
and conditions of such Subservicing Agreement and either itself
directly service the related Mortgage Loans or enter into a
Subservicing Agreement with a successor Subservicer that
qualifies under Section 8.03.
Section 8.05 Liability of Servicer. Neither Servicer
shall be relieved of its obligations under this Agreement
notwithstanding any Subservicing Agreement or any of the
provisions of this Agreement relating to agreements or
arrangements between such Servicer and a Subservicer or
otherwise, and such 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 as such terms
and conditions may be limited pursuant to the terms of this
Agreement. Each Servicer shall be entitled to enter into any
agreement with a Subservicer for indemnification of such Servicer
by such Subservicer and nothing contained in such Subservicing
Agreement shall be deemed to limit or modify this Agreement. The
Trust shall not indemnify any Servicer for any losses due to any
Subservicer's negligence.
Section 8.06 No Contractual Relationship Between
Subservicer and Trustee, Certificate Insurer or the Owners. Any
Subservicing Agreement and any other transactions or services
relating to the Mortgage Loans involving a Subservicer shall be
deemed to be between the Subservicer and the related Servicer
alone and the Certificate Insurer, the Trustee and the Owners
shall not be deemed parties thereto and shall have no claims,
rights, obligations, duties or liabilities with respect to any
Subservicer except as set forth in Section 8.07 hereof or in the
related Subservicing Agreement.
Section 8.07 Assumption or Termination of Subservicing
Agreement by Trustee. In connection with the assumption of the
responsibilities, duties and liabilities and of the authority,
power and rights of each Servicer hereunder by the Trustee
pursuant to Section 8.20, it is understood and agreed that such
Servicer's rights and obligations under any Subservicing
Agreement then in force between such Servicer and a Subservicer
may be assumed or terminated by the Trustee at its option. Each
Servicer shall, upon request of the Trustee, but at the expense
of such Servicer, deliver to the Trustee documents and records
relating to each Subservicing Agreement and an accounting of
amounts collected and held by such Servicer and otherwise use its
best reasonable efforts to effect the orderly and efficient
transfer of the Subservicing Agreement to the Trustee.
Section 8.08 Principal and Interest Accounts; Escrow
Accounts. (a) Each Servicer shall establish in the name of the
related Servicer on behalf of the Trustee for the benefit of the
Owners of the Certificates and maintain or cause to be maintained
at a Designated Depository Institution a Principal and Interest
Account to be held as a trust account. The Principal and
Interest Accounts shall be identified on the records of the
Designated Depository Institution as follows: [Name of Servicer]
on behalf of Bankers Trust Company, as Trustee under the Pooling
and Servicing Agreement relating to the AMRESCO Residential
Securities Corporation Mortgage Loan Trust 1996-3 dated as of
June 1, 1996. If the institution at any time holding a Principal
and Interest Account ceases to be eligible as a Designated
Depository Institution hereunder, then the related Servicer in
the case of a Principal and Interest Account shall, within 30
days, be required to name a successor institution meeting the
requirements for a Designated Depository Institution hereunder.
If such party fails to name such a successor institution, then
the Trustee shall cause such Account to be held as a trust
account with a qualifying Designated Depository Institution. The
related Servicer shall notify the Trustee, the Certificate
Insurer and the Owners if there is a change in the name, account
number or institution holding a Principal and Interest Account.
Subject to Subsection (c) below, each Servicer shall deposit all
receipts related to the Mortgage Loans into the related Principal
and Interest Accounts on a daily basis (but no later than the
second Business Day after receipt).
(b) All funds in the Principal and Interest Accounts may
only be held (i) uninvested, up to the limits insured by the FDIC
or (ii) invested in Eligible Investments as selected by the
related Servicer. The Principal and Interest Accounts shall be
held in trust in the name of the Trustee for the benefit of the
Owners of the Certificates and the Certificate Insurer (other
than the earnings which shall be retained by the related
Servicer).
(c) Subject to Section 8.09, each Servicer shall deposit on
a daily basis (except as described below), and in any case not
later than two Business Days following receipt, to the related
Principal and Interest Account all scheduled principal and
interest payments on the Mortgage Loans serviced by it due after
the Cut-Off Date, Subsequent Cut-Off Date and all unscheduled
principal and interest collections received, on or after the Cut-
Off Date or Subsequent Cut-Off Date including any Prepayments and
Net Liquidation Proceeds, all Loan Purchase Prices and
Substitution Amounts received by such Servicer with respect to
the Mortgage Loans, other recoveries or amounts related to the
Mortgage Loans received by such Servicer, Compensating Interest
(which shall be deposited into the Certificate Account on or
prior to each Monthly Remittance Date) and Delinquency Advances
(which shall be deposited no later than the related Monthly
Remittance Date) but net of (i) the related Servicing Fee with
respect to each Mortgage Loan and other servicing compensation to
such Servicer as permitted by Section 8.15 hereof, (ii) principal
retained by the Depositor (including Prepayments) and due on the
related Mortgage Loans on or prior to the Cut-Off Date,
(iii) interest retained by the Depositor and accruing on the
related Mortgage Loans prior to the Cut-Off Date or Subsequent
Cut-Off Date, and (iv) reimbursements for unreimbursed or
unrecovered Delinquency Advances and Servicing Advances pursuant
to Section 8.09.
(d) Each Servicer may each make withdrawals from the
related Principal and Interest Account only for the following
purposes:
(a) to effect the timely remittance to the
Trustee of the Monthly Remittance Amount due on
each Monthly Remittance Date and to effect the
timely remittance to the Trustee on each Monthly
Remittance Date of any Compensating Interest;
(B) to reimburse itself pursuant to Section
8.09 hereof for unreimbursed Delinquency Advances
and Servicing Advances and unrecovered Delinquency
Advances and Servicing Advances determined by it
to be nonrecoverable.
(C) to withdraw investment earnings on
amounts on deposit in its Principal and Interest
Account;
(D) to withdraw amounts that have been
deposited to the related Principal and Interest
Account in error;
(E) to reimburse itself pursuant to Section
8.25; and
(F) to clear and terminate the related
Principal and Interest Accounts following the
termination of the Trust Estate pursuant to
Article IX hereof.
(e) On each Monthly Remittance Date, each Servicer shall
remit to the Trustee by wire transfer in immediately available
funds from the related Principal and Interest Account for deposit
to the Certificate Account, the portion of the Monthly Remittance
Amount related to the Mortgage Loans serviced by such Servicer
for such Monthly Remittance Date.
(f) Each Servicer shall establish and maintain one or more
custodial accounts (each, an "Escrow Account") and deposit and
retain therein all collections from the Mortgagors, if any,
received with respect to the Mortgage Loans, or advances by such
Servicer, for the payment of taxes, assessments, hazard insurance
premiums and primary mortgage insurance policy premiums or
comparable items for the account of the Mortgagors. Nothing
herein shall require any Servicer to compel a Mortgagor to
establish an Escrow Account in violation of applicable law.
Withdrawals of amounts so collected from the Escrow Accounts
may be made only to effect timely payment of taxes, assessments,
hazard insurance premiums or primary mortgage insurance policy
premiums, condominium or PUD association dues, or comparable
items, to reimburse such Servicer, to refund to any Mortgagors
any sums as may be determined to be overages, to pay interest, if
required, to Mortgagors on balances in the Escrow Account or to
clear and terminate the Escrow Account at the termination of this
Agreement. As part of its servicing duties, such Servicer shall
be required to pay to the Mortgagors interest on funds in the
Escrow Account, to the extent required by law.
Each Servicer shall advance the payments (to be treated as
Servicing Advances) referred to in the preceding paragraph that
are not timely paid by the Mortgagors, including tax penalties,
if any; provided, however, that such Servicer shall be required
to so advance only to the extent that such advances, in the good
faith business judgment of such Servicer, will be recoverable by
such Servicer out of insurance proceeds, liquidation proceeds or
otherwise from the related Mortgage Loan.
Section 8.09 Delinquency Advances, Servicing Advances and
Compensating Interest.
(a) Each Servicer is required, not later than each Monthly
Remittance Date, to deposit into the related Principal and
Interest Account an amount equal to the sum of the interest (net
of the Servicing Fee) and scheduled principal due (except any
Balloon Payment), but not collected, with respect to Delinquent
Mortgage Loans serviced by it during the related Remittance
Period but only if, in its good faith business judgment, such
Servicer reasonably believes that such amount will ultimately be
recovered from the related Mortgage Loan. With respect to each
Balloon Loan, the related Servicer shall be required to advance
an amount of principal and interest on an assumed schedule based
on the original principal amortization for the related Balloon
Loan (but only if, in its good faith business judgment, such
Servicer reasonably believes that such amount will ultimately be
recovered from the related Mortgage Loan). Any determination of
nonrecoverability shall be explained in a notice provided to the
Trustee and the Seller. Such amounts are "Delinquency Advances".
Each Servicer shall be permitted to fund its payment of
Delinquency Advances from its own funds or from funds on deposit
in the related Principal and Interest Account that are not
required to be distributed on the related Payment Date. To the
extent a Servicer uses funds not required for distribution on a
Payment Date to make Delinquency Advances with respect to such
Payment Date, it shall deposit into the related Principal and
Interest Account such amount prior to the next succeeding Monthly
Remittance Date. Each Servicer shall be entitled to
reimbursement for Delinquency Advances from late collections,
Liquidation Proceeds or otherwise with respect to collections on
the Mortgage Loan (including Balloon Loans) with respect to which
such Delinquency Advance was made.
Notwithstanding the foregoing, in the event that a Servicer
determines that the aggregate unreimbursed Delinquency Advances
exceed the expected Liquidation Proceeds on a Mortgage Loan, such
Servicer shall not be required to make any future Delinquency
Advances with respect to that Mortgage Loan, and shall be
entitled to reimbursement for such aggregate unreimbursed
Delinquency Advances from amounts in the related Principal and
Interest Account. Such Servicer shall give written notice of
such determination to the Trustee, the Certificate Insurer and
the Seller, and the Trustee shall promptly furnish a copy of such
notice to the Owner of a majority of the Percentage Interests of
the Class R Certificates; provided, further, that such Servicer
shall be entitled to recover any unreimbursed Delinquency
Advances from the aforesaid Liquidation Proceeds prior to the
payment of the Liquidation Proceeds to any other party to this
Agreement.
(b) Each Servicer will pay all customary, reasonable and
necessary "out-of-pocket" costs and expenses incurred in the
performance of its servicing obligations, including, but not
limited to, the cost of (i) Preservation Expenses, (ii) any
enforcement or judicial proceedings, including foreclosures,
(iii) the management and liquidation of REO Property, (iv) the
escrow expenditures required pursuant to Section 8.08(f) hereof
(but is only required to pay such costs and expenses to the
extent such Servicer reasonably believes that such amounts will
ultimately be recovered from the related Mortgage Loan) and
(v) fees and expenses for opinions of counsel pursuant to
Section 8.13. Each such amount so paid will constitute a
"Servicing Advance". Each Servicer may recover Servicing
Advances (x) from the Mortgagors to the extent permitted by the
Mortgage Loans, (y) from Liquidation Proceeds realized upon the
liquidation of the related Mortgage Loan, and (z) as provided in
Section 7.03(c)(iv)(C) hereof. Except as provided in the
previous sentence, and in Sections 7.03(c)(iv) and 8.13, in no
case may a Servicer recover Servicing Advances from principal and
interest payments on any Mortgage Loan or from any amounts
relating to any other Mortgage Loan.
Section 8.10 Compensating Interest; Purchase of Mortgage
Loans. (a) On or prior to each Determination Date and with
respect to Mortgage Loans serviced by it, each Servicer shall
deposit into the related Principal and Interest Account with
respect to any full Prepayment made by the Mortgagor after the
end of the Prepayment Period in the preceding calendar month
until the last day of such calendar month received on a Mortgage
Loan, an amount equal to the difference between (x) 30 days'
interest at the Mortgage Loan's Coupon Rate (less the Servicing
Fee) on the Loan Balance of such Mortgage Loan as of the first
day of the related Prepayment Period and (y) to the extent not
previously advanced, the interest (less the Servicing Fee) paid
by the Mortgagor with respect to the Mortgage Loan for the
related Remittance Period (any such amount, "Compensating
Interest"), which amount shall be included in the Monthly
Remittance Amount to be made available to the Trustee on each
Monthly Remittance Date; provided that the sum of all such
deposits shall not exceed the amounts set forth in the related
Servicing Fee Letter.
(b) Each Servicer with respect to Mortgage Loans originated
by it, may, but is not obligated to, purchase for its own account
any 90-Day Delinquent Loan, or any Mortgage Loan as to which
enforcement proceedings have been brought by the related Servicer
pursuant to Section 8.13. Any such Mortgage Loan so purchased
shall be purchased by such Servicer on a Monthly Remittance Date
at a purchase price equal to the Loan Purchase Price thereof,
which purchase price shall be deposited in the related Principal
and Interest Account.
Section 8.11 Maintenance of Insurance. (a) Each Servicer
shall cause to be maintained with respect to each Mortgage Loan
serviced by it a hazard insurance policy with a generally
acceptable carrier that provides for fire and extended coverage,
and which provides for a recovery by such Servicer on behalf of
the Trust of insurance proceeds relating to such Mortgage Loan in
an amount not less than the least of (i) the outstanding
principal balance of the Mortgage Loan, (ii) the minimum amount
required to compensate for damage or loss on a replacement cost
basis and (iii) the full insurable value of the premises.
(b) If the Mortgage Loan relates to a Property which is
located in an area identified in the Federal Register by the
Federal Emergency Management Agency as having special flood
hazards, as identified to the related Servicer by the Originator
in the related Mortgage Loan Schedule, the related Servicer will
cause to be maintained with respect thereto a flood insurance
policy in a form meeting the requirements of the current
guidelines of the Federal Insurance Administration with a
generally acceptable carrier in an amount representing coverage,
and which provides for a recovery by such Servicer on behalf of
the Trust of insurance proceeds relating to such Mortgage Loan of
not less than the least of (i) the outstanding principal balance
of the Mortgage Loan, (ii) the minimum amount required to
compensate for damage or loss on a replacement cost basis and
(iii) the maximum amount of insurance that is available under the
Flood Disaster Protection Act of 1973.
(c) In the event that a Servicer shall obtain and maintain
a blanket policy insuring against fire, flood and hazards of
extended coverage on all of the Mortgage Loans, then, to the
extent such policy names such Servicer as loss payee and provides
coverage in an amount equal to the aggregate unpaid principal
balance on the Mortgage Loans without co-insurance and otherwise
complies with the requirements of this Section 8.11, such
Servicer shall be deemed conclusively to have satisfied its
obligations with respect to fire and hazard insurance coverage
under this Section 8.11, it being understood and agreed that such
blanket policy may contain a deductible clause, in which case
such Servicer shall, in the event that there shall not have been
maintained on the related Property a policy complying with the
preceding paragraphs of this Section 8.11, and there shall have
been a loss which would have been covered by such policy, deposit
in the related Principal and Interest Account from such
Servicer's own funds the difference, if any, between the amount
that would have been payable under a policy complying with the
preceding paragraphs of this Section 8.11 and the amount paid
under such blanket policy. Upon the request of the Trustee or
the Certificate Insurer, such Servicer shall cause to be
delivered an Officer's Certificate to the Trustee or the
Certificate Insurer to the effect that the Servicer maintains
such policy.
(d) Each Servicer also shall maintain on related REO
Property, fire and hazard insurance with extended coverage in an
amount which is at least equal to the lesser of (i) the maximum
insurable value of the improvements which are a part of such
property and (ii) the outstanding principal balance of the
related Mortgage Loan at the time it became an REO Property,
liability insurance and, to the extent required and available
under the National Flood Insurance Act of 1968 and the Flood
Disaster Protection Act of 1973, as amended, flood insurance in
an amount as provided above.
(e) If a Servicer shall fail to maintain or cause to be
maintained any insurance required by this Section 8.11, and there
shall have been a loss which would have been covered by such
policy, the Servicer shall deposit in the related Principal and
Interest Account from the Servicer's own funds the amount, if
any, that would have been payable under a policy complying with
the preceding paragraphs of this Section 8.11.
Section 8.12 Due-on-Sale Clauses; Assumption and
Substitution Agreements. When a Property has been or is about to
be conveyed by the Mortgagor, the related Servicer shall, to the
extent a responsible officer thereof has knowledge of such
conveyance or prospective conveyance, exercise the rights of the
Trust to accelerate the maturity of the related Mortgage Loan
under any "due-on-sale" clause contained in the related Mortgage
or Note; provided, however, that such Servicer shall not exercise
any such right if the "due-on-sale" clause, in the reasonable
belief of such Servicer, is not enforceable under applicable law.
In such event, such Servicer is authorized to enter into an
assumption and modification agreement with the Person to whom
such Property has been or is about to be conveyed, pursuant to
which such Person becomes liable under the Note and, unless
prohibited by applicable law or the Mortgage Documents, the
Mortgagor remains liable thereon. If the foregoing is not
permitted under applicable law, such Servicer is authorized to
enter into a substitution of liability agreement with such
person, pursuant to which the original Mortgagor is released from
liability and such Person is substituted as Mortgagor and becomes
liable under the Note; provided, however, that to the extent any
such substitution of liability agreement would not otherwise have
been delivered by such Servicer in its usual procedures for
mortgage loans held in its own portfolio such Servicer shall,
prior to executing and delivering such agreement, obtain the
prior written consent of the Certificate Insurer. The Trustee
shall execute any agreements required to effectuate the
foregoing. The Mortgage Loan, as assumed, shall conform in all
respects to the requirements, representations and warranties of
this Agreement. The related Servicer of such Mortgage Loan
shall notify the Trustee that any such assumption or substitution
agreement has been completed by forwarding to the Trustee the
original copy of such assumption or substitution agreement, which
copy shall be added by the Trustee to the related File and which
shall, for all purposes, be considered a part of such File to the
same extent as all other documents and instruments constituting a
part thereof. Each Servicer shall be responsible for recording
any such assumption or substitution agreements relating to
Mortgage Loans serviced by it at the expense of the related
Servicer. In connection with any such assumption or substitution
agreement, no material term of the Mortgage Loan, including the
required monthly payment on the related Mortgage Loan shall be
changed but all terms thereof shall remain as in effect as
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 any Servicer for consenting to any such conveyance or entering
into an assumption or substitution agreement shall be retained by
or paid to such Servicer as additional servicing compensation.
Notwithstanding the foregoing paragraph or any other
provision of this Agreement, no Servicer shall 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 such Servicer may be
restricted by law from preventing, for any reason whatsoever.
Section 8.13 Realization Upon Defaulted Mortgage Loans.
(a) Each Servicer, with respect to Mortgage Loans serviced by
it, shall foreclose upon or otherwise comparably convert the
ownership on behalf of the Trust of Properties relating to
defaulted Mortgage Loans as to which no satisfactory arrangements
can be made for collection of Delinquent payments and which the
related Servicer has not purchased pursuant to Section 8.10(b).
In connection with such foreclosure or other conversion, the
Servicer of such defaulted Mortgage Loans shall exercise such of
the rights and powers vested in it hereunder, and use the same
degree of care and skill in its exercise or use as prudent
mortgage lenders would exercise or use under the circumstances in
the conduct of their own affairs, including, but not limited to,
advancing funds deemed by such Servicer in its good faith
business judgment to be recoverable from the related Mortgage
Loan for the payment of taxes, amounts due with respect to senior
liens and insurance premiums. Any amounts so advanced shall
constitute "Servicing Advances" within the meaning of Section
8.09(b) hereof. Each Servicer shall sell any REO Property
managed by it within 23 months of its acquisition by the Trust,
unless such Servicer obtains for the Trustee and the Certificate
Insurer an Opinion of Counsel (the cost of which shall be
advanced by the related Servicer as a Servicing Advance)
experienced in federal income tax matters and reasonably
acceptable to the Certificate Insurer, addressed to the Trustee,
the Certificate Insurer and such Servicer, to the effect that the
holding by the Trust of such REO Property for any greater period
will not result in the imposition of taxes on "Prohibited
Transactions" of the Trust as defined in Section 860F of the Code
or cause the Trust to fail to qualify as a REMIC under the REMIC
Provisions at any time that any Certificates are outstanding, or
the Servicer obtains an appropriate extension from the applicable
tax authorities, in which case such Servicer shall sell any REO
Property by the end of any extended period specified in any such
opinion or extension.
Notwithstanding the generality of the foregoing provisions,
each Servicer shall manage, conserve, protect and operate each
REO Property managed by it solely for the purpose of its prompt
disposition and sale in a manner which does not cause such REO
Property to fail to qualify as "foreclosure property" within the
meaning of Section 860G(a)(8) of the Code or result in the
receipt by the Trust of any "income from non-permitted assets"
within the meaning of Section 860F(a)(2)(B) of the Code or any
"net income from foreclosure property" which is subject to
taxation under the REMIC Provisions. Pursuant to its efforts to
sell such REO Property, the related Servicer shall either itself
or through an agent selected by such Servicer protect and
conserve such REO Property in the same manner and to such extent
as is customary in the locality where such REO Property is
located and may, incident to its conservation and protection of
the interests of the Owners and the Certificate Insurer and after
consultation with the holder of a majority in interest of the
Class R Certificates, rent the same, or any part thereof, as such
Servicer deems to be in the best interest of the Owners and the
Certificate Insurer for the period prior to the sale of such REO
Property.
Notwithstanding anything to the contrary contained herein,
in connection with a foreclosure or acceptance of a deed in lieu
of foreclosure, or exercising control over the Mortgaged Property
so that the Trust would be considered a mortgagee-in-possession,
owner or operator of the Mortgaged Property under the
Comprehensive Environmental Response Compensation and Liability
Act of 1980, as amended (42 U.S.C. 9601 et seq.) or a comparable
law, in the event any responsible officer of a Servicer has
knowledge that a Property is in any way affected by hazardous or
toxic substances or wastes and determines that it may be
reasonable to convert such Property ownership to the Trust, or if
the Certificate Insurer or the holder of a majority in interest
of the Class R Certificates otherwise requests in writing an
environmental inspection to be conducted, such Servicer shall
cause an environmental inspection or review of such Property to
be conducted by a qualified inspector and shall be reimbursed for
the amount of such environmental inspection in the manner
described herein for reimbursement of Servicing Advances in the
same manner as set forth in the immediately following paragraph.
Upon completion of the inspection, such Servicer shall promptly
provide the Certificate Insurer, the Owner of the majority of the
Class R Certificates and the Trustee with a written report of the
environmental inspection. In the absence of such determination
or a written request from the Certificate Insurer or the Owner of
the majority of the Class R Certificates for an environmental
inspection, neither the related Servicer nor the Trustee shall be
liable for any liability, cost or expense incurred by the Trust
due to the decision of such Servicer not to cause an
environmental inspection of a Property.
After reviewing the environmental inspection report, the
Certificate Insurer and the Owner of the majority of the Class R
Certificates shall determine how the related Servicer shall
proceed with respect to the Property and shall notify such
Servicer within 15 Business Days of receipt of the inspection
report. In the event the environmental inspection report
indicates that the Property is in any way affected by hazardous
or toxic substances or wastes such Servicer shall only foreclose
or comparably convert such Property if the Certificate Insurer
(after consultation with the Owner of the majority of the Class R
Certificates) directs such Servicer to proceed with foreclosure
or acceptance of a deed-in-lieu of foreclosure. In the event the
Certificate Insurer (after such consultation) requires such
Servicer to foreclose or accept a deed-in-lieu of foreclosure
pursuant to this Section 8.13(a),(i) such Servicer (or the
Trustee and any other successor Servicer) shall be reimbursed for
any related environmental clean up costs, as applicable, from the
related Liquidation Proceeds, or if the Liquidation Proceeds are
insufficient to fully reimburse such Servicer (or the Trustee and
any other successor Servicer), such Servicer (or the Trustee and
any other successor Servicer) shall be entitled to be reimbursed
from amounts in the related Principal and Interest Account, and
(ii) the Certificate Insurer and such Class R Owner hereby
indemnifies the Trust, the Trustee and such Servicer with respect
to any costs, liabilities and expenses incurred by any such party
in connection with any such hazardous or toxic substances or
wastes with respect to such foreclosure or comparable conversion.
In the event the Certificate Insurer and such Class R Owner
directs such Servicer not to proceed with foreclosure or
acceptance of a deed-in-lieu of foreclosure, such Servicer (or
the Trustee and any other successor Servicer) shall be reimbursed
for all Servicing Advances made with respect to the related
Property from such Principal and Interest Account pursuant to
Section 8.08(d)(B) hereof.
(b) Each Servicer shall determine, with respect to each
defaulted Mortgage Loan serviced by it, when it has recovered,
whether through trustee's sale, foreclosure sale or otherwise,
all amounts it expects to recover from or on account of such
defaulted Mortgage Loan (exclusive of any possibility of a
deficiency judgment), whereupon such Mortgage Loan shall become a
"Liquidated Loan".
Upon such a determination, the related Servicer shall
prepare and submit to the Seller, the Trustee and the Certificate
Insurer a Liquidation Report in substantially the form of Exhibit
K hereto.
Section 8.14 Trustee to Cooperate; Release of Files.
(a) Upon the payment in full of any Mortgage Loan (including the
repurchase of any Mortgage Loan or any liquidation of such
Mortgage Loan through foreclosure or otherwise) or the receipt by
the related Servicer of a notification that payment in full will
be escrowed in a manner customary for such purposes, such
Servicer shall deliver to the Trustee a Servicer's Trust Receipt
in the form of Exhibit H hereto. Upon receipt of such Servicer's
Trust Receipt, the Trustee shall promptly release the related
File, in trust to (i) such Servicer, (ii) an escrow agent or
(iii) any employee, agent or attorney of the Trustee, in each
case pending its release by such Servicer, such escrow agent or
such employee, agent or attorney of the Trustee, as the case may
be. Upon any such payment in full or the receipt of such
notification that such funds have been placed in escrow, such
Servicer is authorized to give, as attorney-in-fact for the
Trustee and the mortgagee under the Mortgage which secured the
Note, an instrument of satisfaction (or assignment of Mortgage
without recourse) regarding the Property relating to such
Mortgage, which instrument of satisfaction or assignment, as the
case may be, shall be delivered to the Person or Persons entitled
thereto against receipt therefor of payment in full, it being
understood and agreed that no expense incurred in connection with
such instrument of satisfaction or assignment, as the case may
be, shall be chargeable to the related Principal and Interest
Account. In lieu of executing any such satisfaction or
assignment, as the case may be, such Servicer may prepare and
submit to the Trustee a satisfaction (or assignment without
recourse, if requested by the Person or Persons entitled thereto)
in form for execution by the Trustee with all requisite
information completed by such Servicer; in such event, the
Trustee shall execute and acknowledge such satisfaction or
assignment, as the case may be, and deliver the same with the
related File, as aforesaid.
(b) From time to time and as appropriate in the servicing
of any Mortgage Loan, including, without limitation, foreclosure
or other comparable conversion of a Mortgage Loan or collection
under any applicable Insurance Policy, the Trustee shall (except
in the case of the payment or liquidation pursuant to which the
related File is released to an escrow agent or an employee, agent
or attorney of the Trustee), upon request of such Servicer and
delivery to the Trustee of a Servicer's Trust Receipt
substantially in the form of Exhibit H hereto, release the
related File to such 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 such Servicer. The Trustee shall
complete in the name of the Trustee any endorsement in blank on
any Note prior to releasing such Note to such Servicer. Such
receipt shall obligate such Servicer to return the File to the
Trustee when the need therefor by such 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, such Servicer's Trust Receipt shall be released by the
Trustee to such Servicer.
(c) Each Servicer shall have the right to approve
applications of Mortgagors for consent to (i) partial releases of
Mortgages, (ii) alterations and (iii) removal, demolition or
division of properties subject to Mortgages. No application for
approval shall be considered by any Servicer unless: (x) the
provisions of the related Note and Mortgage have been complied
with; (y) the Originator certifies to such Servicer that the
Loan-to-Value Ratio (which may, for this purpose, be determined
at the time of any such action in a manner reasonably acceptable
to the Certificate Insurer) and the Mortgagor's debt-to-income
ratio after any release does not exceed the maximum 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. Upon
receipt by the Trustee of an Officer's Certificate executed on
behalf of a Servicer setting forth the action proposed to be
taken in respect of a particular Mortgage Loan and certifying
that the criteria set forth in the immediately preceding sentence
have been satisfied, the Trustee shall execute and deliver to
such Servicer the consent or partial release so requested by such
Servicer. A proposed form of consent or partial release, as the
case may be, shall accompany any Officer's Certificate delivered
by such Servicer pursuant to this paragraph.
(d) Costs associated with preparing assignments,
satisfactions and releases described in this Section 8.14 shall
not be an expense of the Trust or the Trustee, but rather shall
be borne directly by the related Servicer; provided, however,
that the Trustee shall be liable for the cost associated with the
shipping of documents from the Trustee to the related Servicer
pursuant to this Section 8.14.
Section 8.15 Servicing Compensation. As compensation for
their activities hereunder, each Servicer shall be entitled to
the Servicing Fee for each Mortgage Loan that it services. Such
Servicing Fee shall be payable on a monthly basis out of interest
payments on the related Mortgage Loans and shall equal one-
twelfth of the related Servicing Fee Rate multiplied by the
outstanding principal amount of such Mortgage Loan as of the
prior Monthly Remittance Date. Subject to the related Servicing
Fee Letter, additional servicing compensation in the form of
Prepayment Interest Excess (net of any Compensating Interest
requirements), release fees, bad check charges, assumption fees,
late payment charges, prepayment penalties, any other
servicing-related fees, and similar items may, to the extent
collected from Mortgagors, be retained by the related Servicer.
Section 8.16 Annual Statement as to Compliance. (a) Each
Servicer, at its own expense, will deliver to the Trustee, the
Seller, the Depositor, the Certificate Insurer, and the Rating
Agencies on or before April 15 of each year, commencing in 1997,
an Officer's Certificate stating, as to each signer thereof, that
(i) a review of the activities of such Servicer during such
preceding calendar year and of performance under this Agreement
has been made under such officer's supervision and (ii) to the
best of such officer's knowledge, based on such review, such
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 officer and the nature and status thereof including the
steps being taken by such Servicer to remedy such defaults.
(b) Each Servicer shall deliver to the Trustee, the
Certificate Insurer, the Seller, the Depositor and the Rating
Agencies promptly after a responsible officer of the Servicer
obtains knowledge thereof but in no event later than five
Business Days thereafter, written notice by means of an Officer's
Certificate of any event which with the giving of notice or lapse
of time, or both, such officer knows would become an Event of
Servicing Termination.
Section 8.17 Annual Independent Certified Public
Accountants' Reports. On or before April 15 of each year,
commencing in 1997, each Servicer shall cause to be delivered to
the Trustee, the Certificate Insurer and the Rating Agencies a
letter or letters of a firm of independent, nationally-
recognized certified public accountants reasonably acceptable to
the Certificate Insurer stating that such firm has, with respect
to such Servicer's overall servicing operations examined such
operations in accordance with the requirements of the Uniform
Single Attestation Program for Mortgage Bankers, and in either
case stating such firm's conclusions relating thereto.
Section 8.18 Access to Certain Documentation and
Information Regarding the Mortgage Loans. Each Servicer shall
provide to the Trustee, the Certificate Insurer, the Seller, the
FDIC and the supervisory agents and examiners of each of the
foregoing access to the documentation and electronic data
regarding the Mortgage Loans not in the possession of the
Trustee, such access being afforded without charge but only upon
prior written reasonable request and during normal business hours
at the offices of such Servicer designated by it.
Upon any change in the format of the computer tape by any
Servicer in respect of the Mortgage Loans, such Servicer shall
deliver a copy of such computer tape to the Trustee. In
addition, each Servicer shall provide a copy of such computer
tape to the Trustee and the Certificate Insurer at such other
times as the Trustee or the Certificate Insurer may reasonably
request upon reasonable notice to such Servicer and upon payment
of all reasonable expenses associated with such request by the
Trustee or the Certificate Insurer. Nothing contained herein
shall limit the obligation of the Servicer to observe any
applicable law prohibiting disclosure of information relating to
the Mortgage Loans or Mortgagors.
Section 8.19 Assignment of Agreement. No Servicer may
assign its obligations under this Agreement (except pursuant to
Section 8.27 hereof), in whole or in part, unless it shall have
first obtained the prior written consent of the Seller, the
Trustee and the Certificate Insurer, which such consent shall not
be unreasonably withheld; provided, however, that any assignee
must meet the eligibility requirements set forth in Section
8.21(f) hereof for a successor Servicer. Notice of any such
assignment shall be given by such Servicer to the Trustee, the
Certificate Insurer and the Rating Agencies.
Section 8.20 Events of Servicing Termination. (a) The
Certificate Insurer (or the Owners pursuant to Section 6.11
hereof) or the Trustee or the Seller (in each case with the
consent of the Certificate Insurer, which consent may not be
unreasonably withheld) may immediately remove the related
Servicer (including any successor entity serving as the Servicer)
upon the occurrence of any of the following events and the
expiration of the related cure period (provided, that the
occurrence of any such events with respect to one Servicer shall
be cause to remove only such Servicer):
(A) Such Servicer shall fail to deliver to the
Trustee any proceeds or required payment (including any
Delinquency Advance or Compensating Interest payment), which
failure continues unremedied for two Business Days following
written notice to an Authorized Officer of such Servicer
from the Trustee or from any Owner;
(ii) Such 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 such 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 such 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, custodian or
similar entity with respect to such 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 such 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 sixty (60) consecutive days;
(iv) Such Servicer shall fail to perform any one
or more of its obligations hereunder (other than those
specified in item (i) above) and shall continue in default
thereof for a period of forty-five (45) days after the
earlier of (x) notice by the Trustee or the Certificate
Insurer of said failure or (y) actual knowledge of a
responsible officer of such Servicer; provided, however,
that if such Servicer can demonstrate to the reasonable
satisfaction of the Certificate Insurer that it is
diligently pursuing remedial action, then the cure period
may be extended with the written approval of the Certificate
Insurer;
(v) The failure of such Servicer to satisfy the
Servicer Termination Test; and
(vi) The failure of Long Beach to maintain a net
worth of at least $30,000,000.
The Trustee shall determine on each Payment Date whether the
Servicer Termination Test is satisfied for the related Prepayment
Period. Upon the Trustee's determination that the Servicer
Termination Test is not satisfied, or that a payment of
Compensating Interest, a Monthly Remittance Amount for the
related Group, or a required Delinquency Advance has not been
made by the relevant Servicer, the Trustee shall so notify in
writing an Authorized Officer of such Servicer, the Seller and
the Certificate Insurer as soon as is reasonably practical.
(b) Any party exercising any termination rights under
Subsection (a) above shall give notice in writing to the relevant
Servicer (and a copy to the Trustee) of the termination of all of
the rights and obligations of such Servicer under this Agreement.
The Trustee shall mail a copy of any notice given by it hereunder
to the Depositor, the Seller, the Certificate Insurer, the Owners
and Rating Agencies. On or after the receipt by such Servicer of
such written notice (including any required consent of the
Certificate Insurer), all authority and power of such Servicer
under this Agreement, whether with respect to the Certificates or
the Mortgage Loans or otherwise, shall without further action
pass to and be vested in the Trustee or such successor Servicer
as may be appointed hereunder, and, without limitation, the
Trustee is hereby authorized and empowered (which authority and
power are coupled with an interest and are irrevocable) to
execute and deliver, on behalf of the predecessor 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 or
termination, whether to complete the transfer and endorsement of
the Mortgage Loans and related documents or otherwise. The
predecessor Servicer shall cooperate with the successor Servicer
or the Trustee in effecting the termination of the
responsibilities and rights of the predecessor Servicer under
this Agreement including the transfer to the successor Servicer
or to the Trustee for administration by it of all cash accounts
that shall at the time be held by the predecessor Servicer for
deposit or shall thereafter be received with respect to a
Mortgage Loan. All reasonable costs and expenses incurred in
connection with transferring the Files to the successor Servicer
or the Trustee.
(c) If any event described in subsection (a)(iv) or (v)
above occurs and is continuing, during the 30 day period
following receipt of notice, the Trustee, the Owners requesting
termination, the Seller and the Certificate Insurer shall
cooperate with each other to determine if the occurrence of such
event is more likely than not the result of the acts or omissions
of such Servicer or more likely than not the result of events
beyond the control of such Servicer. If the Trustee, the Seller,
the Owners requesting termination and the Certificate Insurer
conclude that the event is the result of the latter, such
Servicer may not be terminated, unless and until some other event
set forth in subsection (a) has occurred and is continuing. If
the Trustee, the Seller, the Owners requesting termination and
the Certificate Insurer conclude that the event is the result of
the former, the Certificate Insurer may terminate such Servicer
in accordance with this Section, and the Trustee shall act as
successor Servicer.
If the Trustee, the Seller and the Certificate Insurer
cannot agree, and the basis for such disagreement is not
arbitrary or unreasonable, as to the cause of the event, the
decision of the Certificate Insurer shall control; provided,
however, that if the Certificate Insurer decides to terminate any
Servicer, the Trustee shall be relieved of its obligation to
assume the servicing or to appoint a successor, which shall be
the exclusive obligation of the Certificate Insurer and the
Trustee shall be indemnified by the Certificate Insurer for any
liabilities, costs or expenses resulting from such decision.
The Certificate Insurer and the Seller agree to use their
best efforts to inform the Trustee each Servicer and each other
of any materially adverse information regarding such Servicer's
servicing activities that comes to the attention of such party
from time to time.
Section 8.21 Resignation of a Servicer and Appointment of
Successor. (i) Upon any Servicer's receipt of notice of
termination pursuant to Section 8.20 or such Servicer's
resignation in accordance with the terms of this Section 8.21,
the predecessor Servicer shall continue to perform its functions
as Servicer under this Agreement, in the case of termination,
only until the date specified in such termination notice or in
accordance with Section 8.20(d), if applicable, or, if no such
date is specified in a notice of termination, until receipt of
such notice and, in the case of resignation, until the earlier of
(x) the date 45 days from the delivery to the Seller, the
Certificate Insurer and the Trustee of written notice of such
resignation (or written confirmation of such notice) in
accordance with the terms of this Agreement and (y) the date upon
which the predecessor Servicer shall become unable to act as
Servicer, as specified in the notice of resignation and
accompanying opinion of counsel. All collections then being held
by the predecessor Servicer prior to its removal and any
collections received by such Servicer after removal or
resignation shall be endorsed by it to the Trustee and remitted
directly and immediately to the Trustee or the successor
Servicer. In the event of any Servicer's resignation or
termination hereunder, the Trustee shall appoint a successor
Servicer and the successor Servicer shall accept its appointment
by execution of a written assumption in form acceptable to the
Trustee, the Certificate Insurer and the Seller, with copies of
such assumption to the Certificate Insurer, the Trustee and the
Rating Agencies, provided that as a condition precedent to the
appointment of a successor Servicer and the execution of the
related written assumption, such successor Servicer shall, if
applicable, also execute either (i) a written assumption or
termination of any of the Subservicing Agreements or (ii)
appropriate amendments to each of any Subservicing Agreements.
(b) No Servicer shall resign from the obligations and
duties hereby imposed on it, except (i) 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
such Servicer so causing such a conflict being of a type and
nature carried on by such Servicer at the date of this Agreement
or (ii) upon prior written consent of the Certificate Insurer,
the Seller and the Trustee and confirmation from the Rating
Agencies that the Class A Certificate ratings are not reduced.
Any such determination referred to in clause (i) permitting the
resignation of any Servicer shall be evidenced by an Opinion of
Counsel to such effect which shall be delivered to the Trustee,
the Seller and the Certificate Insurer.
(c) No removal or resignation of any Servicer shall become
effective until the Trustee or a successor Servicer shall have
assumed such Servicer's responsibilities and obligations in
accordance with this Section. The removal or resignation of one
Servicer hereunder, shall have no effect on the status of any
other Servicer hereunder.
(d) Upon removal or resignation of any Servicer, such
Servicer also shall promptly deliver or cause to be delivered to
the successor Servicer or the Trustee all the books and records
(including, without limitation, records kept in electronic form)
that such 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 such Servicer's possession.
(e) Any collections received by any Servicer after removal
or resignation thereof shall be endorsed by it to the Trustee and
remitted directly and immediately to the Trustee or the successor
Servicer.
(f) Upon removal or resignation of any Servicer, the
Trustee, with the cooperation of the Seller and the Certificate
Insurer, (x) shall solicit bids for a successor Servicer as
described below and (y) pending the appointment of a successor
Servicer as a result of soliciting such bids, shall serve as
Servicer of the Mortgage Loans serviced by such predecessor
Servicer. The Trustee shall, if it is unable to obtain a
qualifying bid and is prevented by law from acting as Servicer,
(I) appoint, or petition a court of competent jurisdiction to
appoint, any housing and home finance institution, bank or
mortgage servicing institution which is reasonably acceptable to
the Seller, the Certificate Insurer and the Owners of the Class R
Certificates, as indicated in writing (provided that if the
Certificate Insurer and such Owners cannot agree as to the
acceptability of such successor Servicer, the decision of the
Certificate Insurer shall control) as the successor to such
Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of such Servicer
hereunder and (II) give notice thereof to the Seller, the Owners,
the Certificate Insurer and the Rating Agencies. The
compensation of any successor Servicer (including, without
limitation, the Trustee) so appointed shall be the amount agreed
by the related Servicer and the Seller and the Certificate
Insurer. Any reasonable out of pocket set-up costs or expenses
incurred by the Trustee as interim successor Servicer as
specified in subclause (y) of this Section 8.21(f) shall be at
the expense of the Trust and shall be payable pursuant to Section
7.03(c)(ii).
(g) In the event that the Trustee is able to solicit bids
as provided above, the Trustee shall solicit, by public
announcement, bids from housing and home finance institutions,
banks and mortgage servicing institutions meeting the
qualifications set forth above (including the Trustee or any
affiliate thereof). Such public announcement shall specify that
the successor Servicer shall be entitled to the servicing
compensation agreed upon between the Trustee, the successor
Servicer and the Seller; provided, however, that no such fee
shall exceed the related Servicing Fee. Within thirty days after
any such public announcement, the Trustee, with the cooperation
of the Seller and the Certificate Insurer, shall negotiate in
good faith and effect the sale, transfer and assignment of the
servicing rights and responsibilities hereunder to the qualified
party submitting the highest satisfactory bid as to the price
they will pay to obtain such servicing. The Trustee upon receipt
of the purchase price shall pay such purchase price to the
Servicer being so removed (except in the case of subsection (h)
below, in which case the Trustee shall pay such purchase price to
the Seller), after deducting from any sum received by the Trustee
from the successor to such 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 reasonably incurred
hereunder. After such deductions, the remainder of such sum
shall be paid by the Trustee to such Servicer (other than
Advanta) at the time of such sale.
(h) The Trustee and the successor Servicer shall take such
action consistent with this Agreement as shall be necessary to
effectuate any such succession, including the notification to all
Mortgagors of the transfer of servicing if such notification is
not done by such predecessor Servicer as required by subsection
(i) below. Each predecessor Servicer agrees to cooperate with
the Trustee and any successor Servicer in effecting the
termination of such Servicer's servicing responsibilities and
rights hereunder and shall promptly provide the Trustee or such
successor Servicer, as applicable, all documents and records
reasonably requested by it to enable it to assume such Servicer's
functions hereunder and shall promptly also transfer to the
Trustee or such successor Servicer, as applicable, all amounts
which then have been or should have been deposited in the related
Principal and Interest Account by such Servicer, or which are
thereafter received with respect to the Mortgage Loans. Neither
the Trustee nor any other successor Servicer shall be held liable
by reason of any failure to make, or any delay in making, any
distribution hereunder or any portion thereof caused by (i) the
failure of the predecessor Servicer to deliver, or any delay in
delivery, cash, documents or records to it or (ii) restrictions
imposed by any regulatory authority having jurisdiction over such
Servicer.
(i) The Trustee or any other successor Servicer, upon
assuming the duties of Servicer hereunder, shall as soon as
reasonably practicable pay all Compensating Interest and, if
applicable, Delinquency Advances which have theretofore not been
remitted to the extent required by this Agreement with respect to
the Mortgage Loans; provided, however, that if the Trustee is
acting as successor Servicer, the Trustee shall only be required
to make such Delinquency Advances if, in the Trustee's reasonable
good faith judgment, such Delinquency Advances will ultimately be
recoverable from the related Mortgage Loans. Any Delinquency
Advances and Servicing Advances previously made by the
predecessor Servicer and accrued and unpaid Servicing Fees shall
be recoverable by it and paid to it by the successor Servicer to
the extent such Delinquency Advances, Servicing Advances and
accrued and unpaid Servicing Fees would otherwise have been
recoverable had the predecessor Servicer not been terminated.
(j) Any Servicer which is being removed or is resigning
shall give notice to the Mortgagors and to the Rating Agencies of
the transfer of the servicing to the successor Servicer.
(k) Upon appointment, the successor Servicer shall be the
successor in all respects to the predecessor Servicer and shall
be subject to all the responsibilities, duties and liabilities of
the predecessor Servicer including, but not limited to, the
maintenance of the hazard insurance policy(ies), the fidelity
bond and an errors and omissions policy pursuant to Section 8.26
and shall be entitled to such fees as may be agreed upon between
the Seller and such successor Servicer (such amount not to exceed
the related Servicing Fee), and all of the rights granted to the
predecessor Servicer by the terms and provisions of this
Agreement; provided, that if the Trustee shall be the successor
Servicer, the Trustee shall be entitled to the same fees as the
Servicer was entitled to at the time of succession. The
appointment of a successor Servicer (including the Trustee) shall
not affect any liability of the predecessor Servicer which may
have arisen under this Agreement prior to its termination as
Servicer (including, without limitation, any deductible under an
insurance policy) nor shall any successor Servicer (including the
Trustee) be liable for any acts or omissions of the predecessor
Servicer or for any breach by such Servicer of any of its
representations or warranties contained herein or in any related
document or agreement.
(l) The Trustee and the Seller shall each give notice to
the Certificate Insurer, the Rating Agencies and the Owners or
the Seller of the occurrence of any event specified in Section
8.20 of which a Responsible Officer of the Trustee has actual
knowledge.
Section 8.22 Waiver of Past Events of Servicing
Termination. Subject to the rights of the Certificate Insurer,
the Trustee, the Owners and the Seller pursuant to Section 8.20
to terminate all of the rights and obligations of any Servicer
under this Agreement, the Certificate Insurer or the Owners of at
least 51% of the Percentage Interests of the Class R Certificates
with the consent of the Certificate Insurer may, on behalf of all
Owners of Certificates, waive any default by such Servicer in the
performance of its obligations hereunder and its consequences.
Upon any such waiver of a past default, such default shall cease
to exist, and any Event of Servicing Termination arising
therefrom shall be deemed to have been remedied for every purpose
of this Agreement. No such waiver shall extend to any subsequent
or other default or impair any right consequent thereon.
Section 8.23 Assumption or Termination of Subservicing
Agreement By the Trustee. In connection with the assumption of
the responsibilities, duties and liabilities and of the
authority, power and rights of any Servicer hereunder by the
Trustee pursuant to Section 8.21, it is understood and agreed
that such Servicer's rights and obligations under any
Subservicing Agreement then in force between such Servicer and a
subservicer shall be assumed simultaneously by the Trustee
without act or deed on part of the Trustee; provided, however,
the Trustee in its sole discretion may terminate any subservicer
notwithstanding the provisions of the related Subservicing
Agreement.
Each Servicer shall, upon the reasonable request of the
Trustee, but at the expense of such Servicer, deliver to the
assuming party documents and records relating to each
Subservicing Agreement and an accounting of amounts collected and
held by it and otherwise use its best reasonable efforts (through
the execution of any documents or otherwise) to effect the
orderly and efficient transfer of the Subservicing Agreements to
the assuming party and shall cooperate with the Trustee in any
other manner reasonably requested by the Trustee.
Section 8.24 Powers and Duties of the Trustee as Successor
Servicer. Following the termination of any Servicer hereunder
and pending the appointment of any other Person as successor
Servicer, the Trustee is hereby empowered to perform the duties
of such Servicer hereunder; it being expressly understood,
however, by all parties hereto, and the Owners, that prior to any
termination of such Servicer pursuant to Section 8.21, such
Servicer shall perform such duties. Specifically, and not in
limitation of the foregoing, the Trustee shall upon termination
or resignation of any Servicer, and pending the appointment of
any other Person as successor Servicer, have the power:
(i) to collect Mortgage payments;
(ii) to foreclose on Delinquent Mortgage Loans;
(iii) to enforce due-on-sale clauses and to enter
into assumption and substitution agreements as permitted by
Section 8.12 hereof;
(iv) to deliver instruments of satisfaction
pursuant to Section 8.14 hereof;
(v) to enforce the Mortgage Loans; and
(vi) to make Servicing Advances and Delinquency
Advances and to pay Compensating Interest.
Section 8.25 Liability of the Servicers. Neither of the
Servicers nor any of their directors, officers, employees or
agents shall be under any liability on any Certificate or
otherwise to the Seller, the Trustee, Certificate Insurer or any
Owner for any action taken or for refraining from the taking of
any action in good faith pursuant to this Agreement or for errors
in judgment except as required hereunder; provided, however, that
this provision shall not protect any Servicer, its directors,
officers, employees or agents or any such Person against any
liability which would otherwise be imposed by reason of negligent
action, negligent failure to act, misconduct in the performance
of duties or by reason of reckless disregard of obligations and
duties hereunder. Each of the Servicers and any director,
officer, employee or agent of each of the Servicers may rely in
good faith on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters
arising hereunder. Neither of the Servicers shall be under any
obligation to appear in, prosecute or defend any legal action
that is not incidental to its duties hereunder and which in its
opinion may involve it in any expense or liability; provided,
however, that each Servicer may in its discretion undertake any
such action that it may deem necessary or desirable in respect of
this Agreement and the rights and duties of the parties hereto
and interests of the Trustee, the Certificate Insurer and the
Owners hereunder. In such event, the legal expenses and costs of
such action and any liability resulting therefrom shall be
expenses, costs and liabilities of the Trust, and such Servicer
shall be entitled to be reimbursed therefor out of the Principal
and Interest Account. The Servicers and any director, officer,
employee or agent of each of the Servicers shall be indemnified
by the Trust and held harmless against any loss, liability or
expense incurred in connection with any audit, controversy or
judicial proceeding relating to a governmental taxing authority
or any legal action relating to this Agreement or the
Certificates, other than any loss, liability or expense related
to any specific Mortgage Loan or Mortgage Loans (except as any
such loss, liability or expense shall be otherwise reimbursable
pursuant to this Agreement) and any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or
negligence in the performance of duties hereunder or by reason of
reckless disregard of obligations and duties hereunder.
Section 8.26 Inspections by Certificate Insurer, Trustee
and Seller; Errors and Omissions Insurance. (a) At any
reasonable time and from time to time upon prior written and
reasonable notice, the Certificate Insurer, the Trustee, the
Seller or any agents or representatives thereof may inspect any
Servicer's servicing operations and discuss the servicing
operations of such Servicer with a responsible officer designated
by the related Servicer. The reasonable costs and expenses
incurred by such Servicer or its agents or representatives in
connection with any such examinations or discussions shall be
paid by such Servicer.
(b) Each Servicer shall maintain, at its own expense, a
blanket fidelity bond and an errors and omissions insurance
policy, with broad coverage with responsible companies that meet
the requirements of FNMA or FHLMC on all officers, employees or
other persons acting in any capacity with regard to the Mortgage
Loan to handle funds, money, documents and papers relating to the
Mortgage Loans it services. The fidelity bond and errors and
omissions insurance shall be in the form of Mortgage Banker's
Blanket bond and shall protect and insure such Servicer against
losses, including forgery, theft, embezzlement, fraud, errors and
omissions and negligent acts of such persons. Such fidelity bond
shall also protect and insure such Servicer against losses in
connection with the failure to maintain any insurance policies
required pursuant to this Agreement and the release or
satisfaction of a Mortgage Loan without having obtained payment
in full of the indebtedness secured thereby. No provision of
this Section 8.26 requiring the fidelity bond and errors and
omissions insurance shall diminish or relieve the Servicer from
its duties and obligations as set forth in this Agreement. The
minimum coverage under any such bond and insurance policy shall
be at least equal to the corresponding amounts required by FNMA
in the FNMA Servicing Guide or by FHLMC in the FHLMC Sellers' and
Servicers' Guide. Upon the written request of the Seller or the
Certificate Insurer, a Servicer shall cause to be delivered to
the Seller an Officer's Certificate as to the maintenance of the
fidelity bond and insurance policy that such fidelity bond and
insurance policy are in full force and effect.
Section 8.27 Merger, Conversion, Consolidation or
Succession to Business of Servicer. Any corporation into which
any Servicer may be merged or converted or with which it may be
consolidated, or corporation resulting from any merger,
conversion or consolidation to which such Servicer shall be a
party or any corporation succeeding to all or substantially all
of the business of such Servicer shall be the successor of such
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 8.21(f).
Section 8.28 Notices of Material Events. Upon any
responsible officer of the Servicer's actual knowledge thereof,
such Servicer shall give prompt notice to the Certificate
Insurer, the Trustee, the Seller, and the Rating Agencies of the
occurrence of any of the following events:
(a) Any default or any fact or event which such officer
knows results, or which with notice or the passage of time, or
both, would result in the occurrence of a default by such
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 such Servicer of which it has knowledge, in
any federal, state or local court or before any governmental body
or agency or before any arbitration board or any such proceedings
threatened by any governmental agency, which, if adversely
determined, would have a material adverse effect upon any such
Servicer's ability to perform its obligations under any Operative
Document;
(c) The commencement of any proceedings of which it has
knowledge or has received service of process by or against such
Servicer 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 Servicer; and
(d) The receipt of notice from any agency or governmental
body having authority over the conduct of such Servicer's
business that such Servicer is to cease and desist, or to
undertake any practice, program, procedure or policy employed by
such Servicer in the conduct of the business of any of them, and
such cessation or undertaking will materially and adversely
affect the conduct of such Servicer's business or its ability to
perform under the Operative Documents or materially and adversely
affect the financial affairs of such Servicer.
Section 8.29 Monthly Servicing Report and Servicing
Certificate. (a) Each Servicer with respect to the Mortgage
Loans serviced by it shall deliver not later than the Reporting
Date, a Monthly Servicing Report (which shall be by tape format
and, with respect to certain delinquency information, may be
delivered by hard copy), to the Trustee and, upon request, to the
Seller and the Certificate Insurer. The Monthly Servicing Report
shall state as to the related Remittance Period or Prepayment
Period, as applicable, for the Mortgage Loans serviced by such
Servicer:
(a) (a) scheduled interest due (net of the Servicing
Fee); (b) Compensating Interest paid; (c) scheduled
principal due; (d) Prepayments; (e) Loan Balance of Mortgage
Loans repurchased; (f) Substitution Amounts; and (g) Net
Liquidation Proceeds (related to principal);
(ii) The Servicing Fee withheld by the related
Servicer;
(iii) The principal and interest payments remitted by
such Servicer to its Principal and Interest Account(s);
(iv) The scheduled principal and interest payments on
the Mortgage Loans that were not made by the related
Mortgagors as of the related Determination Date;
(v) The number and aggregate Loan Balances (computed
in accordance with the terms of the Mortgage Loans) and the
percentage of the total number of Mortgage Loans and of the
Loan Balance which they represent of Mortgage Loans
delinquent, if any, (i) 30 to 59 days, (ii) 60 to 89 days
and (iii) 90 days or more, respectively, as of the last day
of the related Remittance Period (taking into account
payments received on or prior to the related Determination
Date);
(vi) The number and aggregate Loan Balances of Mortgage
Loans, if any, in foreclosure and the number and Book Value
of any REO Properties as of the related Determination Date;
(vii) The Loan Balances (immediately prior to being
classified as Liquidated Mortgage Loans) of Liquidated
Mortgage Loans as of the related Determination Date;
(viii) Liquidation Proceeds received during the related
Prepayment Period;
(ix) The amount of any Liquidation Expenses being
deducted from Liquidation Proceeds or otherwise being
charged to the Principal and Interest Account(s) with
respect to such Monthly Remittance Date;
(x) Liquidation Expenses incurred during the related
Prepayment Period which are not being deducted from
Liquidation Proceeds or otherwise being charged to the
Principal and Interest Account with respect to such Monthly
Remittance Date;
(xi) Net Liquidation Proceeds as of the related
Determination Date;
(xii) The scheduled principal balance of each Mortgage
Loan as of the first day of the related Remittance Period
and the date through which interest has been paid as of the
related Determination Date;
(xiii) The number and aggregate Loan Balances and Loan
Purchase Prices of Mortgage Loans required to be repurchased
by each Originator as of the related Subsequent Cut-Off
Date;
(xiv) The amount of any Delinquency Advances made by
such Servicer during the related Remittance Period and any
unreimbursed Delinquency Advances as of such Monthly
Remittance Date;
(xv) The weighted average Coupon Rates of the Mortgage
Loans;
(xvi) Any additional information reasonably requested by
the Trustee or the Certificate Insurer;
(xvii) The number and aggregate Loan Balances of Mortgage
Loans, if any, currently in bankruptcy proceedings as of the
related Determination Date and any Preference Amounts to the
extent the related Servicer has knowledge;
(xviii) The amount of unreimbursed Servicing Advances; and
(xix) The amount of Compensating Interest paid during
the month by such Servicer and the unreimbursed amount of
Compensating Interest paid by such Servicer.
In addition to the reports and certificates described in this
Section 8.29 to be provided by such Servicer, information as the
Trustee and such Servicer may agree upon shall be provided by
such Servicer to the Trustee or such other party as may be
requested by the Trustee by electronic transmission or hard copy.
(b) The Trustee shall, no later than the related Payment
Date, provide to the Certificate Insurer, the Underwriters, the
Depositor, the Seller and the Rating Agencies a written report
setting forth the information required under Section 7.09(b)
hereof, based solely on information contained in the Monthly
Servicing Certificate.
(c) Each Servicer with respect to the Mortgage Loans in
Group II agrees that, in addition to the reports and certificates
described in Section 8.29(a) hereof, it shall upon the reasonable
request of the Seller, prepare reports detailing the Mortgage
Loans serviced by it by index and in the aggregate.
(d) The Depositor shall deliver or cause to be delivered to
the Trustee on the Startup Day in hard copy and on electronic
tape in a form acceptable to the Trustee (the "Tape") detailing
the information required to be set forth on the Schedules of
Mortgage Loans as of the close of business on the Cut-Off Date.
(e) Within two Business Days of receipt thereof, the
Trustee shall review the Monthly Servicing Reports against the
information, as updated by the Trustee on the basis of the
current and all previous Monthly Servicing Reports received by
the Trustee. Within one Business Day following a determination
by the Trustee that inconsistencies between the Monthly Servicing
Report and such information are not reconcilable, the Trustee
shall notify the related Servicer, the Seller and the Certificate
Insurer of any such material inconsistencies and related Servicer
shall rectify them.
Section 8.30 Indemnification by the Servicer. Each
Servicer agrees to indemnify and hold the Certificate Insurer,
the Seller and the Depositor harmless against any and all claims,
losses, penalties, fines, forfeitures, legal fees and related
costs, judgments, and any other costs, fees and expenses that the
Seller, the Depositor and the Certificate Insurer may sustain in
any way caused by or arising out of the negligent failure of such
Servicer, or Subservicer appointed by it, to perform its duties
and service the Mortgage Loans in compliance with the terms of
this Agreement and which, in the case of the Certificate Insurer,
the Seller or the Depositor, materially and adversely affects
such party. A party against whom a claim is brought shall
immediately notify the other parties and the Rating Agencies if a
claim is made by a third party with respect to this Agreement,
and the relevant Servicer may assume (with the consent of the
Trustee) the defense of any such claim and pay all expenses in
connection therewith, including reasonable counsel fees, and
promptly pay, discharge and satisfy any judgment or decree which
may be entered against the Seller, the Depositor and the
Certificate Insurer.
Section 8.31 Reserved.
Section 8.32 Servicing Standard. Each Servicer shall
perform its servicing functions with respect to the Mortgage
Loans in the best interests of and for the benefit of the Owners
and the Certificate Insurer subject to the terms hereof.
Section 8.33 No Solicitation. Each Servicer agrees that
it will not take any action or permit or cause any action to be
taken by any of its agents and Affiliates, or by any independent
contractors or independent mortgage brokerage companies on such
Servicer's behalf, to personally, by telephone or mail, solicit
the borrower or Mortgagor under any Mortgage Loan for any purpose
whatsoever, including to refinance a Mortgage Loan.
Notwithstanding the foregoing, it is understood and agreed that
promotions undertaken by a Servicer or any Affiliate thereof
which are directed to the general public at large, including,
without limitation, mass mailing based on commercially acquired
mailing lists, newspaper, radio and television advertisements
shall not constitute solicitation under this paragraph, nor is a
Servicer prohibited from responding to unsolicited requests or
inquiries made by a Mortgagor or an agent of a Mortgager;
provided further, that the Servicer may solicit any Mortgagor (i)
for whom the Servicer has received a request for verification of
mortgage from an originator of mortgage loan products similar to
the Mortgage Loans that indicates that such Mortgagor intends to
refinance his or her Mortgage Loan and (ii) otherwise in
accordance with the Seller's policy, if such policy is delivered
to the related Servicer in writing. It is understood and agreed
that all rights and benefits relating to the solicitation of any
Mortgagors and the attendant rights, title and interest in and to
the list of Mortgagors and data relating to their Mortgages shall
be retained by Seller.
END OF ARTICLE VIII
ARTICLE IX
TERMINATION OF TRUST
Section 9.01 Termination of Trust.
The Trust created hereunder and all obligations created by
this Agreement will terminate upon the payment to the Owners of
all Certificates (including the Certificate Insurer, pursuant to
its subrogation rights), from amounts other than those available
under the Certificate Insurance Policy, of all amounts held by
the Trustee and required to be paid to such Owners pursuant to
this Agreement upon the later to occur of (a) the final payment
or other liquidation (or any advance made with respect thereto)
of the last Mortgage Loan in the Trust Estate, (b) the
disposition of all property acquired in respect of any Mortgage
Loan remaining in the Trust Estate and (c) at any time when a
Qualified Liquidation of both Mortgage Loan Groups included
within the REMIC Estate is effected as described below. To
effect a termination of this Agreement pursuant to clause (c)
above, the Owners of all Certificates then Outstanding shall
(i) unanimously direct the Trustee on behalf of the REMIC to
adopt a plan of complete liquidation for each of the Mortgage
Loan Groups, as contemplated by Section 860F(a)(4) of the Code
and (ii) provide to the Trustee and the Certificate Insurer an
opinion of counsel experienced in federal income tax matters
acceptable to the Certificate Insurer and the Trustee to the
effect that each such liquidation constitutes a Qualified
Liquidation, and the Trustee either shall sell the Mortgage Loans
and distribute the proceeds of the liquidation of the Trust
Estate, or shall distribute equitably in kind all of the assets
of the Trust Estate to the remaining Owners of the Certificates
each in accordance with such plan, so that the liquidation or
distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of this Agreement
occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation. In no event, however, will
the Trust created by this Agreement continue beyond the
expiration of twenty-one (21) years from the death of the last
survivor of the descendants of Joseph P. Kennedy, the late
Ambassador of the United States to the Court of Saint James's,
living on the date hereof. The Trustee shall give written notice
of termination of the Agreement to each Owner and the Certificate
Insurer in the manner set forth in Section 11.05.
Section 9.02 Termination Upon Option of Owners
of Class R Certificates; Servicer Termination.
(a) On any Monthly Remittance Date on or after the Clean-Up
Call Date, the Owners of a majority of the Percentage Interests
represented by the Class R Certificates then outstanding may
determine to purchase and may cause the purchase from the Trust
of all (but not fewer than all) Mortgage Loans and all property
theretofore acquired in respect of any Mortgage Loan by
foreclosure, deed in lieu of foreclosure, or otherwise then
remaining in the Trust Estate (i) on terms agreed upon between
the Certificate Insurer and such Class R Certificate Owners, or
(ii) in the absence of such an agreement, at a price equal to
100% of the aggregate Loan Balances of the related Mortgage Loans
(including any REO Property) as of the day of purchase minus
amounts remitted from the Principal and Interest Account to the
Certificate Account representing collections of principal on the
Mortgage Loans during the current Remittance Period, plus one
month's interest on such amount computed at the Adjusted
Pass-Through Rate, plus in all cases all accrued and unpaid
Servicing Fees plus any unpaid Reimbursement Amounts plus the
aggregate amount of any unreimbursed Delinquency Advances and
Servicing Advances and Delinquency Advances which the Servicers
have theretofore failed to remit; but in any event such purchase
amount shall be sufficient to retire the Class A Certificates in
full. In connection with such purchase, the related Servicer
shall remit to the Trustee all amounts then on deposit in the
Principal and Interest Account for deposit to the Certificate
Account, which deposit shall be deemed to have occurred
immediately preceding such purchase.
(b) On any Monthly Remittance Date on or after the Servicer
Clean-Up Call Date, the Servicers simultaneously may determine to
purchase and may cause the purchase from the Trust of all (but
not fewer than all) Mortgage Loans serviced by the related
Servicer and all property theretofore acquired in respect of any
Mortgage Loan by foreclosure, deed in lieu of foreclosure, or
otherwise then remaining in the Trust Estate (i) on terms agreed
upon between the Certificate Insurer, the Servicers and the Owner
of the Class R Certificate, or (ii) in the absence of such an
agreement, at a price equal to 100% of the aggregate Loan
Balances of the related Mortgage Loans (including any REO
Property) as of the day of purchase minus amounts remitted from
the Principal and Interest Account to the Certificate Account
representing collections of principal on the Mortgage Loans
during the current Remittance Period, plus one month's interest
on such amount computed at the Adjusted Pass-Through Rate, plus
in all cases all accrued and unpaid Servicing Fees plus the
aggregate amount of any unreimbursed Delinquency Advances and
Servicing Advances and Delinquency Advances which the Servicer
have theretofore failed to remit. In connection with such
purchase, the related Servicer shall remit to the Trustee all
amounts then on deposit in the Principal and Interest Account for
deposit to the Certificate Account, which deposit shall be deemed
to have occurred immediately preceding such purchase.
If on any such Monthly Remittance Date a Servicer does not
elect to purchase the Mortgage Loans it is servicing and the
other Servicer has so elected, the Servicer having so elected may
give the other Servicer notice (not less than ten days prior to
the next succeeding Monthly Remittance Date) that the electing
Servicer will purchase the other Servicer's Mortgage Loans on
such Monthly Remittance Date at the price set forth in the
preceding paragraph. If such other Servicer does not agree in
writing to purchase the Mortgage Loans it is servicing prior to
the fifth day preceding such Monthly Remittance Date, the
electing Servicer may purchase all Mortgage Loans on such Monthly
Remittance Date.
If on any such Monthly Remittance Date, neither Servicer
shall have elected to purchase all or its portion of the Mortgage
Loans, the Certificate Insurer may give the Servicers notice (not
less than ten days prior to the next succeeding Monthly
Remittance Date) that the Certificate Insurer will purchase all
of the Mortgage Loans on such Monthly Remittance Date at the
price set forth in the preceding paragraph. If one or both of
the Servicers do not agree in writing to purchase all of the
Mortgage Loans prior to the fifth day preceding such Monthly
Remittance Date, the Certificate Insurer may purchase all of the
Mortgage Loans on such Monthly Remittance Date.
(c) In connection with any such purchase, such Owners of
the Class R Certificates or Servicers, as applicable, shall
unanimously direct the Trustee to adopt and the Trustee shall
adopt, as to the REMIC, a plan of complete liquidation for all of
the Mortgage Loan Groups as contemplated by Section 860F(a)(4) of
the Code and shall provide to the Trustee and the Certificate
Insurer an Opinion of Counsel experienced in federal income tax
matters acceptable to the Certificate Insurer and the Trustee to
the effect that such purchase and liquidation constitutes, as to
the REMIC, a Qualified Liquidation. In addition, such Owners of
the Class R Certificates or such Servicer shall provide to the
Trustee and the Certificate Insurer an Opinion of Counsel
acceptable to the Trustee and the Certificate Insurer to the
effect that such purchase and liquidation does not constitute a
preference payment pursuant to the United States Bankruptcy Code.
(d) Promptly following any purchase described in this
Section 9.02, the Trustee will release the Files to the Owners of
the Class R Certificates or otherwise upon their order or to the
related Servicer, if applicable, in accordance with Section 8.14
hereof. Upon such release, the servicing of the Mortgage Loans
shall remain with the related Servicer, subject to the servicing
provisions provided for herein.
Section 9.03 Termination Upon Loss of REMIC
Status.
(a) Following a final determination by the Internal Revenue
Service or by a court of competent jurisdiction, in either case
from which no appeal is taken within the permitted time for such
appeal, or if any appeal is taken, following a final
determination of such appeal from which no further appeal can be
taken, to the effect that the REMIC Estate does not and will no
longer qualify as a REMIC pursuant to Section 860D of the Code
(the "Final Determination"), at any time on or after the date
which is 30 calendar days following such Final Determination (i)
the Certificate Insurer or the Owners of a majority in Percentage
Interests represented by the Class A Certificates then
Outstanding with the consent of the Certificate Insurer may
direct the Trustee on behalf of the Trust to adopt a plan of
complete liquidation, as contemplated by Section 860F(a)(4) of
the Code and (ii) the Certificate Insurer may notify the Trustee
of the Certificate Insurer's determination to purchase from the
Trust all (but not fewer than all) Mortgage Loans and all
property theretofore acquired by foreclosure, deed in lieu of
foreclosure, or otherwise in respect of any Mortgage Loan then
remaining in the Trust Estate at a price equal to the sum of (x)
the greater of (i) 100% of the aggregate Loan Balances of the
Mortgage Loans as of the day of purchase minus amounts remitted
from the Principal and Interest Account representing collections
of principal on the Mortgage Loans during the current Remittance
Period, and (ii) the fair market value of such Mortgage Loans
(disregarding accrued interest), (y) one month's interest on such
amount computed at the Adjusted Pass-Through Rate and (z) the
aggregate amount of any unreimbursed Delinquency Advances and
Servicing Advances and any Delinquency Advances which the related
Servicer has theretofore failed to remit.
Upon receipt of such direction from the Certificate
Insurer, the Trustee shall notify the Servicers and the Owners of
the Class R Certificates of such election to liquidate or such
determination to purchase, as the case may be (the "Termination
Notice"). The Owners of a majority of the Percentage Interest of
the Class R Certificates then Outstanding may, within 60 days
from the date of receipt of the Termination Notice (the "Purchase
Option Period"), at their option, purchase from the Trust all
(but not fewer than all) Mortgage Loans and all property
theretofore acquired by foreclosure, deed in lieu of foreclosure,
or otherwise in respect of any Mortgage Loan then remaining in
the Trust Estate at a purchase price equal to the aggregate Loan
Balances of all Mortgage Loans as of the date of such purchase,
plus (a) one month's interest on such amount at the Adjusted Pass-
Through Rate, (b) the aggregate amount of any unreimbursed
Delinquency Advances, Servicing Advances and unpaid Servicing
Fees, (c) any Delinquency Advances which the related Servicer has
theretofore failed to remit and (d) any outstanding Reimbursement
Amount. If, during the Purchase Option Period, the Owners of the
Class R Certificates have not exercised the option described in
the immediately preceding paragraph, then upon the expiration of
the Purchase Option Period (i) in the event that the Certificate
Insurer or the Owners of the Class A Certificates with the
consent of the Certificate Insurer have given the Trustee the
direction described in clause (a)(i) above, the Trustee shall
sell the Mortgage Loans and reimburse the Servicer for
unreimbursed Delinquency Advances, Servicing Advances and
Servicing Fees and distribute the remaining proceeds of the
liquidation of the Trust Estate, each in accordance with the plan
of complete liquidation, such that, if so directed, the
liquidation of the Trust Estate, the distribution of the proceeds
of the liquidation and the termination of this Agreement occur no
later than the close of the 60th day, or such later day as the
Certificate Insurer or the Owners of the Class A Certificates
with the consent of the Certificate Insurer shall permit or
direct in writing, after the expiration of the Purchase Option
Period and (ii) in the event that the Certificate Insurer has
given the Trustee notice of the Certificate Insurer's
determination to purchase the Trust Estate described in clause
(a)(ii) preceding the Certificate Insurer shall, within 60 days,
purchase all (but not fewer than all) Mortgage Loans and all
property theretofore acquired by foreclosure, deed in lieu of
foreclosure or otherwise in respect of any Mortgage Loan then
remaining in the Trust Estate. In connection with such purchase,
the Servicer shall remit to the Trustee all amounts then on
deposit in the Principal and Interest Account for deposit to the
Certificate Account, which deposit shall be deemed to have
occurred immediately preceding such purchase.
(b) Following a Final Determination, the Owners of a
majority of the Percentage Interest of the Class R Certificates
then Outstanding may, at their option and upon delivery to the
Certificate Insurer of an Opinion of Counsel experienced in
federal income tax matters acceptable to the Certificate Insurer
selected by the Owners of the Class R Certificates which opinion
shall be reasonably satisfactory in form and substance to the
Certificate Insurer to the effect that the effect of the Final
Determination is to increase substantially the probability that
the gross income of the Trust will be subject to federal
taxation, purchase from the Trust all (but not fewer than all)
Mortgage Loans and all property theretofore acquired by
foreclosure, deed in lieu of foreclosure, or otherwise in respect
of any Mortgage Loan then remaining in the Trust Estate at a
purchase price equal to the aggregate Loan Balances of all
Mortgage Loans as of the date of such purchase, plus (a) one
month's interest on such amount computed at the Adjusted Pass-
Through Rate, (b) the aggregate amount of unreimbursed
Delinquency Advances, Servicing Advances and Servicing Fees, (c)
the interest portion of any Delinquency Advances which a related
Servicer has theretofore failed to remit and (d) any outstanding
Reimbursement Amount. In connection with such purchase, the
Servicer shall remit to the Trustee all amounts then on deposit
in the Principal and Interest Account for deposit to the
Certificate Account, which deposit shall be deemed to have
occurred immediately preceding such purchase. The foregoing
opinion shall be deemed satisfactory unless the Certificate
Insurer gives the Owners of a majority of the Percentage Interest
of the Class R Certificates notice that such opinion is not
satisfactory within thirty days after receipt of such opinion.
In connection with any such purchase, such Owners shall direct
the Trustee to adopt a plan of complete liquidation as
contemplated by Section 860F(a)(4) of the Code and shall provide
to the Trustee an Opinion of Counsel experienced in federal
income tax matters to the effect that such purchase constitutes a
Qualified Liquidation.
Section 9.04 Disposition of Proceeds.
The Trustee shall, upon receipt thereof, deposit the
proceeds of any liquidation of the Trust Estate pursuant to this
Article IX to the Certificate Account for application as provided
in Section 7.03 hereof; provided, however, that any amounts
representing unrecovered Delinquency Advances and Servicing
Advances which a Servicer determined to be nonrecoverable and
unreimbursed Delinquency Advances and Servicing Advances and
Servicing Fees theretofore funded by a Servicer from the
Servicer's own funds shall be paid by the Trustee to the Servicer
from the proceeds of the Trust Estate.
END OF ARTICLE IX
ARTICLE X
THE TRUSTEE
Section 10.01 Certain Duties and Responsibili
ties.
(a) The Trustee (i) (A) undertakes to perform such duties
and only such duties as are specifically set forth in this
Agreement, and no implied covenants or obligations shall be read
into this Agreement against the Trustee and (B) shall serve as
the Trustee at all times under this Agreement, and (ii) in the
absence of bad faith on its part, may conclusively rely, as to
the truth of the statements and the correctness of the opinions
expressed therein, upon certificates or opinions furnished
pursuant to and conforming to the requirements of this Agreement;
but in the case of any such certificates or opinions which by any
provision hereof are specifically required to be furnished to the
Trustee, shall be under a duty to examine the same to determine
whether or not they conform to the requirements of this
Agreement.
(b) Notwithstanding the appointment of the Servicers
hereunder, the Trustee is hereby empowered to perform the duties
of the Servicers it being expressly understood, however, that the
foregoing describes a power and not an obligation of the Trustee,
and that all parties hereto agree that, prior to any termination
of the Servicers, the Servicers and, thereafter, the Trustee or
any other successor servicer shall perform such duties.
Specifically, and not in limitation of the foregoing, the Trustee
shall upon termination or resignation of the Servicers, and
pending the appointment of any other Person as successor Servicer
have the power and duty during its performance as successor
Servicer:
(i) to collect Mortgagor payments;
(ii)to foreclose on defaulted Mortgage Loans;
(iii) to enforce due-on-sale clauses and to enter
into assumption and substitution agreements as
permitted by Section 8.12 hereof;
(iv)to deliver instruments of satisfaction pursuant to
Section 8.14;
(v) to enforce the Mortgage Loans; and
(vi)to make Delinquency Advances and Servicing
Advances and to pay Compensating Interest.
(c) No provision of this Agreement shall be construed to
relieve the Trustee from liability for its own negligent action,
its own negligent failure to act or its own willful misconduct,
except that:
(i) this subsection shall not be construed to limit
the effect of subsection (a) of this Section;
(ii)the Trustee shall not be personally liable for any
error of judgment made in good faith by an Authorized
Officer, unless it shall be proved that the Trustee
was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in
good faith in accordance with the direction of the
Certificate Insurer or of the Owners of a majority in
Percentage Interest of the Certificates of the
affected Class or Classes and the Certificate Insurer
relating to the time, method and place of conducting
any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred
upon the Trustee, under this Agreement relating to
such Certificates.
(d) Whether or not therein expressly so provided, every
provision of this Agreement relating to the conduct or affecting
the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section.
(e) No provision of this Agreement shall require the Trustee
to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or
in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not
reasonably assured to it. None of the provisions contained in
this Agreement shall in any event require the Trustee to perform,
or be responsible for the manner of performance of, any of the
obligations of the Servicers under this Agreement, except during
such time, if any, as the Trustee shall be the successor to, and
be vested with the rights, duties, powers and privileges of, the
Servicers in accordance with the terms of this Agreement.
(f) The permissive right of the Trustee to take actions
enumerated in this Agreement shall not be construed as a duty and
the Trustee shall not be answerable for other than its own
negligence or willful misconduct.
(g) The Trustee shall be under no obligation to institute
any suit, or to take any remedial proceeding under this
Agreement, or to take any steps in the execution of the trusts
hereby created or in the enforcement of any rights and powers
hereunder until it shall be indemnified to its satisfaction
against any and all costs and expenses, outlays and counsel fees
and other reasonable disbursements and against all liability,
except liability which is adjudicated to have resulted from its
negligence or willful misconduct, in connection with any action
so taken.
(h) Neither the Servicers, the Seller nor the Trustee
knowingly shall take any action that would cause the Class A
Certificates to fail to qualify as "mortgage related securities"
within the meaning of the Securities Exchange Act of 1934, as
amended.
Section 10.02 Removal of Trustee for Cause.
(a) The Trustee may be removed pursuant to paragraph (b)
hereof upon the occurrence of any of the following events
(whatever the reason for such event and whether it shall be
voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any
order, rule or regulation of any administrative or governmental
body):
(1) the Trustee shall fail to distribute to the Owners
entitled hereto on any Payment Date amounts available for
distribution in accordance with the terms hereof (provided,
however, that any such failure which is due to circumstances
beyond the control of the Trustee shall not be a cause for
removal hereunder); or
(2) the Trustee shall fail in the performance of, or
breach, any covenant or agreement of the Trustee in this
Agreement, or if any representation or warranty of the
Trustee made in this Agreement or in any certificate or
other writing delivered pursuant hereto or in connection
herewith shall prove to be incorrect in any material respect
as of the time when the same shall have been made, and such
failure or breach shall continue or not be cured for a
period of 30 days after there shall have been given, by
registered or certified mail, to the Trustee by the Seller,
the Certificate Insurer, or by the Owners of at least 25% of
the aggregate Percentage Interests in the Trust Estate
represented by the Class A Certificates or Reimbursement
Amount then Outstanding, or, if there are no Class A
Certificates or Reimbursement Amount then Outstanding, by
such Percentage Interests represented by the Class R
Certificates, a written notice specifying such failure or
breach and requiring it to be remedied; or
(3) a decree or order of a court or agency or
supervisory authority having jurisdiction for the
appointment of a conservator or receiver or liquidator in
any insolvency, readjustment of debt, marshalling of assets
and liabilities or similar proceedings, or for the winding-
up or liquidation of its affairs, shall have been entered
against the Trustee, and such decree or order shall have
remained in force undischarged or unstayed for a period of
60 days; or
(4) a conservator or receiver or liquidator or
sequestrator or custodian of the property of the Trustee is
appointed in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings
of or relating to the Trustee or relating to all or
substantially all of its property;
(5) the Trustee shall become insolvent (however
insolvency is evidenced), generally fail to pay its debts as
they come due, file or consent to the filing of a petition
to take advantage of any applicable insolvency or
reorganization statute, make an assignment for the benefit
of its creditors, voluntarily suspend payment of its
obligations, or take corporate action for the purpose of any
of the foregoing; or
(6) the Trustee shall fail to meet the eligibility
requirements set forth in Section 10.08 herein.
The Depositor shall give to the Certificate Insurer and the
Rating Agencies notice of the occurrence of any such event of
which the Depositor is aware.
(b) If any event described in Paragraph (a) occurs and is
continuing, then and in every such case (i) the Certificate
Insurer or (ii) with the prior written consent (which shall not
be unreasonably withheld) of the Certificate Insurer, the
Depositor and the Owners of a majority of the Percentage
Interests represented by the Class A Certificates or
Reimbursement Amount or if there are no Class A Certificates or
Reimbursement Amount then Outstanding by such majority of the
Percentage Interests represented by the Class R Certificates,
may, whether or not the Trustee resigns pursuant to Section
10.09(b) hereof, immediately, concurrently with the giving of
notice to the Trustee, and without delaying the 30 days required
for notice therein, appoint a successor Trustee pursuant to the
terms of Section 10.09 hereof.
(c) Neither Servicer shall be liable for any costs relating
to the removal of the Trustee or the appointment of a new
Trustee.
Section 10.03 Certain Rights of the Trustee.
Except as otherwise provided in Section 10.01 hereof:
(a) the Trustee may rely and shall be protected in acting
or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, note or other paper or document
believed by it to be genuine and to have been signed or presented
by the proper party or parties;
(b) any request or direction of the Depositor, the Seller,
the Certificate Insurer, the Servicers or the Owners of any Class
of Certificates mentioned herein shall be in writing;
(c) whenever in the administration of this Agreement the
Trustee shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting to take any
action hereunder, the Trustee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on its
part, request and rely upon an Officer's Certificate;
(d) the Trustee may consult with counsel, and the written
advice of such counsel (selected in good faith by the Trustee)
shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder
in good faith and in reasonable reliance thereon;
(e) the Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Agreement at the
request or direction of any of the Owners pursuant to this
Agreement, unless such Owners shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with such
request or direction;
(f) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, note or other paper or
document, but the Trustee in its discretion may make such further
inquiry or investigation into such facts or matters as it may see
fit;
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by
or through agents, attorneys or custodian;
(h) the Trustee shall not be liable for any action it takes
or omits to take in good faith which it reasonably believes to be
authorized by the Authorized Officer of any Person or within its
rights or powers under this Agreement other than as to validity
and sufficiency of its authentication of the Certificates;
(i) the right of the Trustee to perform any discretionary
act enumerated in this Agreement shall not be construed as a
duty, and the Trustee shall not be answerable for other than its
negligence or willful misconduct in the performance of such act;
(j) pursuant to the terms of this Agreement, each Servicer
is required to furnish to the Trustee from time to time certain
information and make various calculations which are relevant to
the performance of the Trustee's duties under the Agreement. The
Trustee shall be entitled to rely in good faith on any such
information and calculations in the performance of its duties
hereunder, (i) unless and until an Authorized Officer of the
Trustee has actual knowledge, or is advised by any Owner of a
Certificate (either in writing or orally with prompt written or
telecopies confirmation), that such information or calculations
is or are incorrect, or (ii) unless there is a manifest error in
any such information; and
(k) the Trustee shall not be required to give any bond or
surety in respect of the execution of the Trust Estate created
hereby or the powers granted hereunder.
Section 10.04 Not Responsible for Recitals or
Issuance of Certificates.
The recitals and representations contained herein and in the
Certificates, except any such recitals and representations
relating to the Trustee, shall be taken as the statements of the
Depositor and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representation as to the
validity or sufficiency of this Agreement, of the Certificates,
or any Mortgage Loan or document related thereto other than as to
validity and sufficiency of its authentication of the
Certificates. The Trustee shall not be accountable for the use
or application by the Depositor of any of the Certificates or of
the proceeds of such Certificates, or for the use or application
of any funds paid to the Depositor, the Seller or the Servicer in
respect of the Mortgage Loans or deposited into or withdrawn from
the Principal and Interest Account or the Certificate Account by
the Depositor, the related Servicer or the Seller, and shall have
no responsibility for filing any financing or continuation
statement in any public office at any time or otherwise to
perfect or maintain the perfection of any security interest or
lien or to prepare or file any tax returns (except as provided in
Section 11.16) or Securities and Exchange Commission filings for
the Trust or to record this Agreement. The Trustee shall not be
required to take notice or be deemed to have notice or knowledge
of any default unless an Authorized Officer of the Trustee shall
have received written notice thereof or an Authorized Officer has
actual knowledge thereof. In the absence of receipt of such
notice, the Trustee may conclusively assume that no default has
occurred.
Section 10.05 May Hold Certificates.
The Trustee, any Paying Agent, Registrar or any other agent
of the Trust, in its individual or any other capacity, may become
an Owner or pledgee of Certificates and may otherwise deal with
the Trust with the same rights it would have if it were not
Trustee, any Paying Agent, Registrar or such other agent.
Section 10.06 Money Held in Trust.
Money held by the Trustee in trust hereunder need not be
segregated from other trust funds except to the extent required
herein or required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder
except as otherwise agreed with the Seller and except to the
extent of income or other gain on investments which are deposits
in or certificates of deposit of the Trustee in its commercial
capacity.
Section 10.07 Compensation and Reimbursement; No
Lien for Fees.
The Trustee shall receive compensation for fees and
reimbursement for expenses pursuant to Section 2.05, Section
7.03(c)(ii) and Section 7.05 hereof. The Trustee shall have no
lien on the Trust Estate for the payment of such fees and
expenses.
Section 10.08 Corporate Trustee Required;
Eligibility.
There shall at all times be a Trustee hereunder which shall
be a corporation or association organized and doing business
under the laws of the United States of America or of any State
authorized under such laws to exercise corporate trust powers,
having a combined capital and surplus of at least $50,000,000
subject to supervision or examination by the United States of
America, acceptable to the Certificate Insurer and having a
deposit rating of at least A- from Standard & Poor's (or such
lower rating as may be acceptable to Standard & Poor's) and A2 by
Moody's (or such lower rating as may be acceptable to Moody's).
If such Trustee publishes reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such corporation or
association shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible
in accordance with the provisions of this Section, it shall, upon
the request of the Seller with the consent of the Certificate
Insurer (which consent shall not be unreasonably withheld) or of
the Certificate Insurer, resign immediately in the manner and
with the effect hereinafter specified in this Article X.
Section 10.09 Resignation and Removal;
Appointment of Successor.
(a) No resignation or removal of the Trustee and no
appointment of a successor trustee pursuant to this Article X
shall become effective until the acceptance of appointment by the
successor trustee under Section 10.10 hereof.
(b) The Trustee, or any trustee or trustees hereafter
appointed, may resign at any time by giving written notice of
resignation to the Depositor and by mailing notice of resignation
by first-class mail, postage prepaid, to the Certificate Insurer
and the Owners at their addresses appearing on the Register;
provided, that the Trustee cannot resign solely for the failure
to receive the Trustee Fee. A copy of such notice shall be sent
by the resigning Trustee to the Rating Agencies. Upon receiving
notice of resignation, the Depositor shall promptly appoint a
successor trustee or trustees acceptable to the Certificate
Insurer by written instrument, in duplicate, executed on behalf
of the Trust by an Authorized Officer of the Depositor, one copy
of which instrument shall be delivered to the Trustee so
resigning and one copy to the successor trustee or trustees. If
no successor trustee shall have been appointed and have accepted
appointment within 30 days after the giving of such notice of
resignation, the resigning trustee may petition any court of
competent jurisdiction for the appointment of a successor
trustee, or any Owner may, on behalf of himself and all others
similarly situated, petition any such court for the appointment
of a successor trustee. Such court may thereupon, after such
notice, if any, as it may deem proper and appropriate, appoint a
successor trustee.
(c) If at any time the Trustee shall cease to be eligible
under Section 10.08 hereof and shall fail to resign after written
request therefor by the Depositor or by the Certificate Insurer,
the Certificate Insurer or the Depositor with the written consent
of the Certificate Insurer may remove the Trustee and appoint a
successor trustee acceptable to the Certificate Insurer by
written instrument, in duplicate, executed on behalf of the Trust
by an Authorized Officer of the Depositor, one copy of which
instrument shall be delivered to the Trustee so removed and one
copy to the successor trustee.
(d) The Owners of a majority of the Percentage Interests
represented by the Class A Certificates with the consent of the
Certificate Insurer, or, if there are no Class A Certificates or
Reimbursement Amount then Outstanding, by such majority of the
Percentage Interests represented by the Class R Certificates, may
at any time remove the Trustee and appoint a successor trustee
acceptable to the Certificate Insurer by delivering to the
Trustee to be removed, to the successor trustee so appointed, to
the Depositor, to the Servicer and to the Certificate Insurer,
copies of the record of the act taken by the Owners, as provided
for in Section 11.03 hereof.
(e) If the Trustee fails to perform its duties in
accordance with the terms of this Agreement, or becomes
ineligible pursuant to Section 10.08 to serve as Trustee, the
Certificate Insurer may remove the Trustee and appoint a
successor trustee by written instrument, in triplicate, signed by
the Certificate Insurer duly authorized, one complete set of
which instruments shall be delivered to the Depositor, one
complete set to the Trustee so removed and one complete set to
the successor Trustee so appointed.
(f) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of
the Trustee for any cause, the Seller shall promptly appoint a
successor trustee acceptable to the Certificate Insurer. If
within one year after such resignation, removal or incapability
or the occurrence of such vacancy, a successor trustee shall be
appointed by act of the Certificate Insurer or the Owners of a
majority of the Percentage Interests represented by the Class A
Certificates then Outstanding with the consent of the Certificate
Insurer, the successor trustee so appointed shall forthwith upon
its acceptance of such appointment become the successor trustee
and supersede the successor trustee appointed by the Depositor.
If no successor trustee shall have been so appointed by the
Depositor or the Owners and shall have accepted appointment in
the manner hereinafter provided, any Owner may, on behalf of
himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor
trustee. Such court may thereupon, after such notice, if any, as
it may deem proper and prescribe, appoint a successor trustee.
(g) The Depositor shall give notice of any removal of the
Trustee by mailing notice of such event by first-class mail,
postage prepaid, to the Certificate Insurer, to the Rating
Agencies and the Servicers and to the Owners as their names and
addresses appear in the Register. Each notice shall include the
name of the successor Trustee and the address of its corporate
trust office.
Section 10.10 Acceptance of Appointment by
Successor Trustee.
Every successor trustee appointed hereunder shall execute,
acknowledge and deliver to the Depositor on behalf of the Trust,
to the Certificate Insurer and to its predecessor Trustee an
instrument accepting such appointment hereunder and stating its
eligibility to serve as Trustee hereunder, and thereupon the
resignation or removal of the predecessor Trustee shall become
effective and such successor trustee, without any further act,
deed or conveyance, shall become vested with all the rights,
powers, trusts, duties and obligations of its predecessor
hereunder; but, on request of the Depositor, the Certificate
Insurer or the successor Trustee, such predecessor Trustee shall,
upon payment of its charges then unpaid, execute and deliver an
instrument transferring to such successor trustee all of the
rights, powers and trusts of the Trustee so ceasing to act, and
shall duly assign, transfer and deliver to such successor trustee
all property and money held by such Trustee so ceasing to act
hereunder. Upon request of any such successor trustee, the
Depositor on behalf of the Trust shall execute any and all
instruments for more fully and certainly vesting in and
confirming to such successor trustee all such rights, powers and
trusts.
Upon acceptance of appointment by a successor Trustee as
provided in this Section, the Depositor shall mail notice thereof
by first-class mail, postage prepaid, to the Owners at their last
addresses appearing upon the Register. The Depositor shall send
a copy of such notice to the Rating Agencies. If the Depositor
fails to mail such notice within ten days after acceptance of
appointment by the successor Trustee, the successor trustee shall
cause such notice to be mailed at the expense of the Trust.
No successor trustee shall accept its appointment unless at
the time of such acceptance such successor shall be qualified and
eligible under this Article X.
Section 10.11 Merger, Conversion, Consolidation
or Succession to Business of the Trustee.
Any corporation or association into which the Trustee may be
merged or converted or with which it may be consolidated, or any
corporation or association resulting from any merger, conversion
or consolidation to which the Trustee shall be a party, or any
corporation or association succeeding to all or substantially all
of the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, without the execution or
filing of any paper or any further act on the part of any of the
parties hereto; provided, however, that such corporation or
association shall be otherwise qualified and eligible under this
Article X. In case any Certificates have been executed, but not
delivered, by the Trustee then in office, any successor by
merger, conversion or consolidation to such Trustee may adopt
such execution and deliver the Certificates so executed with the
same effect as if such successor Trustee had itself executed such
Certificates.
Section 10.12 Reporting; Withholding.
(a) The Trustee shall timely provide to the Owners the
Internal Revenue Service's Form 1099 and any other statement
required by applicable Treasury regulations as determined by the
Tax Matters Person, and shall withhold, as required by applicable
law, federal, state or local taxes, if any, applicable to
distributions to the Owners, including but not limited to backup
withholding under Section 3406 of the Code and the withholding
tax on distributions to foreign investors under Sections 1441 and
1442 of the Code.
(b) As required by law or upon request of the Tax Matters
Person and except as otherwise specifically set forth in (a)
preceding, the Trustee shall timely file all reports prepared by
the Depositor and required to be filed by the Trust with any
federal, state or local governmental authority having
jurisdiction over the Trust, including other reports that must be
filed with the Owners, such as the Internal Revenue Service's
Form 1066 and Schedule Q and the form required under Section
6050J and 6050K of the Code, if applicable to REMICs. The
Trustee shall, upon request of the Tax Matters Person, collect
any forms or reports from the Owners determined by the Tax
Matters Person to be required under applicable federal, state and
local tax laws.
(c) The Depositor covenants and agrees that it shall
provide to the Trustee any information necessary to enable the
Trustee to meet its obligations under subsections (a) and (b)
above.
(d) Except as otherwise provided, the Depositor shall have
the responsibility for preparation of all returns, forms, reports
and other documents referred to in this Section and the Trustee's
responsibility shall be to execute such documents.
Section 10.13 Liability of the Trustee.
The Trustee shall be liable in accordance herewith only to
the extent of the obligations specifically imposed upon and
undertaken by the Trustee herein. Neither the Trustee nor any of
the directors, officers, employees or agents of the Trustee shall
be under any liability on any Certificate or otherwise to the
Certificate Account, the Depositor, the Seller, the Servicers or
any Owner for any action taken or for refraining from the taking
of any action in good faith pursuant to this Agreement and the
Insurance Agreement, or for errors in judgment; provided,
however, that this provision shall not protect the Trustee, its
directors, officers, employees or agents or any such Person
against any liability which would otherwise be imposed by reason
of negligent action, negligent failure to act or willful
misconduct in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder. In addition, the
Depositor, the Seller and Servicers covenant and agree to
indemnify the Trustee in its capacity as Trustee and not as
successor Servicer (unless resulting from failure of the related
predecessor Servicer to perform in accordance with this
Agreement), from, and hold it harmless against, any and all
losses, liabilities, damages, claims or expenses (including legal
fees and expenses) of whatsoever kind arising out of or in
connection with the performance of the Trustee's duties hereunder
other than those resulting from the negligence or bad faith of
the Trustee, and the Depositor shall pay all amounts not
otherwise paid pursuant to Sections 2.05 and 7.06 hereof. The
Trustee and any director, officer, employee or agent of the
Trustee may rely and shall be protected in acting or refraining
from acting in good faith on any certificate, notice or other
document of any kind prima facie properly executed and submitted
by the Authorized Officer of any Person respecting any matters
arising hereunder. The provisions of this Section 10.13 shall
survive the termination of this Agreement and the payment of the
outstanding Certificates.
Section 10.14 Appointment of Co-Trustee or
Separate Trustee .
Notwithstanding any other provisions of this Agreement, at
any time, for the purpose of meeting any legal requirements of
any jurisdiction in which any part of the Trust Estate or
Property may at the time be located, the Depositor and the
Trustee acting jointly shall have the power and shall execute and
deliver all instruments to appoint one or more Persons approved
by the Trustee and reasonably acceptable to the Certificate
Insurer to act as co-Trustee or co-Trustees, jointly with the
Trustee, of all or any part of the Trust Estate or separate
Trustee or separate Trustees of any part of the Trust Estate, and
to vest in such Person or Persons, in such capacity and for the
benefit of the Owners, such title to the Trust Estate, or any
part thereof, and, subject to the other provisions of this
Section 10.14, such powers, duties, obligations, rights and
trusts as the Depositor and the Trustee may consider necessary or
desirable. If the Depositor shall not have joined in such
appointment within 15 days after the receipt by it of a request
so to do, or in the case any event indicated in Section 8.20(a)
shall have occurred and be continuing, the Trustee subject to
reasonable approval of the Certificate Insurer alone shall have
the power to make such appointment. No co-Trustee or separate
Trustee hereunder shall be required to meet the terms of
eligibility as a successor trustee under Section 10.08 and no
notice to Owner of the appointment of any co-Trustee or separate
Trustee shall be required under Section 10.09.
Every separate Trustee and co-Trustee shall, to the extent
permitted, be appointed and act subject to the following
provisions and conditions:
(i) All rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or
imposed upon and exercised or performed by the Trustee and
such separate Trustee or co-Trustee jointly (it being
understood that such separate Trustee or co-Trustee is not
authorized to act separately without the Trustee joining in
such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be
performed (whether as Trustee hereunder or as successor to
the Servicer hereunder), the Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations (including the
holding of title to the Trust Estate or any portion thereof
in any such jurisdiction) shall be exercised and performed
singly by such separate Trustee or co-Trustee, but solely at
the direction of the Trustee;
(ii) No co-Trustee hereunder shall be held personally
liable by reason of any act or omission of any other co-
Trustee hereunder; and
(iii) The Servicers, and the Certificate Insurer
and the 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 Trustee
shall be deemed to have been given to each of the then separate
Trustees and co-Trustees, as effectively as if given to each of
them. Every instrument appointing any separate Trustee or co-
Trustee shall refer to this Agreement and the conditions of this
Section 10.14. Each separate Trustee and co-Trustee, upon its
acceptance of the trusts conferred, shall be vested with the
estates or property specified in its instrument of appointment,
either jointly with the Trustee or separately, as may be provided
therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating
to the conduct of, affecting the liability of, or affording
protection to, the Trustee. Every such instrument shall be filed
with the Trustee and a copy thereof given to the Servicers.
Any separate Trustee or co-Trustee may, at any time,
constitute the Trustee, its agent or attorney-in-fact, with full
power and authority, to the extent not prohibited by law, to do
any lawful act under or in respect of this Agreement on its
behalf and in its name. If any separate Trustee or co-Trustee
shall die, become incapable of acting, resign or be removed, all
of its estates, properties, rights, remedies and trusts shall
vest in and be exercised by the Trustee, to the extent permitted
by law, without the appointment of a new or successor Trustee.
END OF ARTICLE X
ARTICLE XI
MISCELLANEOUS
Section 11.01 Compliance Certificates and
Opinions.
Upon any application or request by the Depositor, the Seller,
the Certificate Insurer or the Owners to the Trustee to take any
action under any provision of this Agreement, the Depositor, the
Seller, the Certificate Insurer or the Owners, as the case may
be, shall furnish to the Trustee a certificate stating that all
conditions precedent, if any, provided for in this Agreement
relating to the proposed action have been complied with, except
that in the case of any such application or request as to which
the furnishing of such 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 (including
one furnished pursuant to specific requirements of this Agreement
relating to a particular application or request) shall include:
(a) a statement that each individual signing such
certificate or opinion has read such covenant or condition
and the definitions herein relating thereto;
(b) a brief statement as to the nature and scope of
the examination or investigation upon which the statements
or opinions contained in such certificate or opinion are
based; and
(c) a statement as to whether, in the opinion of each
such individual, such condition or covenant has been
complied with.
Section 11.02 Form of Documents Delivered to the
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 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 or opinion of an Authorized Officer of the
Trustee may be based, insofar as it relates to legal matters,
upon an Opinion of Counsel, unless such Authorized Officer knows,
or in the exercise of reasonable care should know, that the
opinion with respect to the matters upon which his certificate or
opinion is based is erroneous. Any such certificate or opinion
of an Authorized Officer of the Trustee or any Opinion of Counsel
may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, one or more
Authorized Officers of the Depositor, the Seller or the
Servicers, stating that the information with respect to such
factual matters is in the possession of the Depositor, the Seller
or such Servicer, unless such Authorized Officer or counsel
knows, or in the exercise of reasonable care should know, that
the certificate or opinion or representations with respect to
such matters are erroneous. Any Opinion of Counsel may also be
based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an Authorized
Officer of the Trustee, stating that the information with respect
to such matters is in the possession of the Trustee, unless such
counsel knows, or in the exercise of reasonable care should know,
that the certificate or opinion or representations with respect
to such matters are erroneous. Any Opinion of Counsel may be
based on the written opinion of other counsel, in which event
such Opinion of Counsel shall be accompanied by a copy of such
other counsel's opinion and shall include a statement to the
effect that such counsel believes that such counsel and the
Trustee may reasonably rely upon the opinion of such other
counsel.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements,
opinions or other instruments under this Agreement, they may, but
need not, be consolidated and form one instrument.
Section 11.03 Acts of Owners.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Agreement to be
given or taken by the Owners may be embodied in and evidenced by
one or more instruments of substantially similar tenor signed by
such Owners in person or by agent duly appointed in writing; and,
except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are
delivered to the Trustee, and, where it is hereby expressly
required, to the Seller. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein
sometimes referred to as the "act" of the Owners signing such
instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Agreement and conclusive in
favor of the Trustee and the Trust, if made in the manner
provided in this Section.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a
witness of such execution or by the certificate of any notary
public or other officer authorized by law to take acknowledgments
of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Whenever
such execution is by an officer of a corporation or a member of a
partnership on behalf of such corporation or partnership, such
certificate or affidavit shall also constitute sufficient proof
of his authority.
(c) The ownership of Certificates shall be proved by the
Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Owner of any Certificate
shall bind the Owner of every Certificate issued upon the
registration of transfer thereof or in exchange therefor or in
lieu thereof, in respect of anything done, omitted or suffered to
be done by the Trustee or the Trust in reliance thereon, whether
or not notation of such action is made upon such Certificates.
Section 11.04 Notices, etc. to Trustee.
Any request, demand, authorization, direction, notice,
consent, waiver or act of the Owners or other documents provided
or permitted by this Agreement to be made upon, given or
furnished to, or filed with the Trustee by any Owner, the
Certificate Insurer, the Depositor, the Seller and the Servicers
shall be sufficient for every purpose hereunder if made, given,
furnished or filed in writing to or with and received by the
Trustee at its corporate trust office as set forth in Section
2.02 hereof.
Section 11.05 Notices and Reports to Owners;
Waiver of Notices.
Where this Agreement provides for notice to Owners of any
event or the mailing of any report to Owners, such notice or
report shall be sufficiently given (unless otherwise herein
expressly provided) if mailed, first-class postage prepaid, to
each Owner affected by such event or to whom such report is
required to be mailed, at the address of such Owner as it appears
on the Register, not later than the latest date, and not earlier
than the earliest date, prescribed for the giving of such notice
or the mailing of such report. In any case where a notice or
report to Owners is mailed in the manner provided above, neither
the failure to mail such notice or report nor any defect in any
notice or report so mailed to any particular Owner shall affect
the sufficiency of such notice or report with respect to other
Owners, and any notice or report which is mailed in the manner
herein provided shall be conclusively presumed to have been duly
given or provided. Notwithstanding the foregoing, if a Servicer
has been removed or resigned or the Trust is terminated, notice
of any such events shall be made by overnight courier, registered
mail or telecopy followed by a telephone call.
Where this Agreement provides for notice in any manner, such
notice may be waived in writing by any Person entitled to receive
such notice, either before or after the event, and such waiver
shall be the equivalent of such notice. Waivers of notice by
Owners shall be filed with the Trustee, but such filing shall not
be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case, by reason of the suspension of regular mail service
as a result of a strike, work stoppage or similar activity, it
shall be impractical to mail notice of any event to Owners when
such notice is required to be given pursuant to any provision of
this Agreement, then any manner of giving such notice as shall be
satisfactory to the Trustee shall be deemed to be a sufficient
giving of such notice.
Where this Agreement provides for notice to any rating agency
that rated any Certificates, failure to give such notice shall
not affect any other rights or obligations created hereunder.
Section 11.06 Rules by Trustee.
The Trustee may make reasonable rules for any meeting of
Owners.
Section 11.07 Successors and Assigns.
All covenants and agreements in this Agreement by any party
hereto shall bind its successors and assigns, whether so
expressed or not.
Section 11.08 Severability.
In case any provision in this Agreement or in the
Certificates shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby.
Section 11.09 Benefits of Agreement.
Nothing in this Agreement or in the Certificates, expressed
or implied, shall give to any Person, other than the Owners, the
Certificate Insurer and the parties hereto and their successors
hereunder, any benefit or any legal or equitable right, remedy or
claim under this Agreement.
Section 11.10 Legal Holidays.
In any case where the date of any Monthly Remittance Date,
any Payment Date, any other date on which any distribution to any
Owner is proposed to be paid, or any date on which a notice is
required to be sent to any Person pursuant to the terms of this
Agreement shall not be a Business Day, then (notwithstanding any
other provision of the Certificates or this Agreement) payment or
mailing need not be made on such date, but may be made on the
next succeeding Business Day with the same force and effect as if
made or mailed on the nominal date of any such Monthly Remittance
Date, such Payment Date, or such other date for the payment of
any distribution to any Owner or the mailing of such notice, as
the case may be, and no interest shall accrue for the period from
and after any such nominal date, provided such payment is made in
full on such next succeeding Business Day.
Section 11.11 Governing Law; Submission to
Jurisdiction.
(a) In view of the fact that Owners are expected to reside
in many states and outside the United States and the desire to
establish with certainty that this Agreement will be governed by
and construed and interpreted in accordance with the law of a
state having a well-developed body of commercial and financial
law relevant to transactions of the type contemplated herein,
this Agreement and each Certificate shall be construed in
accordance with and governed by the laws of the State of New York
applicable to agreements made and to be performed therein,
without giving effect to the conflicts of law principles thereof.
(b) The parties hereto hereby irrevocably submit to the
jurisdiction of the United States District Court for the Southern
District of New York and any court in the State of New York
located in the City and County of New York, and any appellate
court from any thereof, in any action, suit or proceeding brought
against it or in connection with this Agreement or any of the
related documents or the transactions contemplated hereunder or
for recognition or enforcement of any judgment, and the parties
hereto hereby irrevocably and unconditionally agree that all
claims in respect of any such action or proceeding may be heard
or determined in such New York State court or, to the extent
permitted by law, in such federal court. The parties hereto
agree that a final judgment in any such action, suit or
proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner
provided by law. To the extent permitted by applicable law, the
parties hereto hereby waive and agree not to assert by way of
motion, as a defense or otherwise in any such suit, action or
proceeding, any claim that it is not personally subject to the
jurisdiction of such courts, that the suit, action or proceeding
is brought in an inconvenient forum, that the venue of the suit,
action or proceeding is improper or that the related documents or
the subject matter thereof may not be litigated in or by such
courts.
(c) Nothing contained in this Agreement shall limit or
affect the right of the Depositor, the Seller, the Servicers or
the Certificate Insurer or other third-party beneficiary
hereunder, as the case may be, to serve process in any other
manner permitted by law or to start legal proceedings relating to
any of the Mortgage Loans against any Mortgagor in the courts of
any jurisdiction.
Section 11.12 Counterparts.
This instrument may be executed in any number of
counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but
one and the same instrument.
Section 11.13 Usury.
The amount of interest payable or paid on any Certificate
under the terms of this Agreement shall be limited to an amount
which shall not exceed the maximum nonusurious rate of interest
allowed by the applicable laws of the State of New York or any
applicable law of the United States permitting a higher maximum
nonusurious rate that preempts such applicable New York laws,
which could lawfully be contracted for, charged or received (the
"Highest Lawful Rate"). In the event any payment of interest on
any Certificate exceeds the Highest Lawful Rate, the Trust
stipulates that such excess amount will be deemed to have been
paid to the Owner of such Certificate as a result of an error on
the part of the Trustee acting on behalf of the Trust and the
Owner receiving such excess payment shall promptly, upon
discovery of such error or upon notice thereof from the Trustee
on behalf of the Trust, refund the amount of such excess or, at
the option of such Owner, apply the excess to the payment of
principal of such Certificate, if any, remaining unpaid. In
addition, all sums paid or agreed to be paid to the Trustee for
the benefit of Owners of Certificates for the use, forbearance or
detention of money shall, to the extent permitted by applicable
law, be amortized, prorated, allocated and spread throughout the
full term of such Certificates.
Section 11.14 Amendment.
(a) The Trustee, the Depositor, the Seller and the
Servicers may at any time and from time to time, and without
notice to or the consent of the Owners but with the consent of
the Certificate Insurer (such consent not to be unreasonably
withheld), amend this Agreement, subject to the provisions of
Section 11.16 and 11.17 and the Trustee shall consent to such
amendment, for the purpose of (i) curing any ambiguity,
typographical error, or mistake, 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) upon receipt of
an Opinion of Counsel experienced in federal income tax matters
to the effect that no entity-level tax will be imposed on the
Trust, the REMIC Estate or upon the transferor of a Class R
Certificate as a result of the ownership of any Class R
Certificate by a Disqualified Organization, removing the
restriction on transfer set forth in Section 5.08(b) hereof or
(iii) complying with the requirements of the Code and the
regulations proposed or promulgated thereunder including any
amendments necessary to maintain REMIC status or (iv) for any
other purpose, provided that in the case of this clause (iv) the
Seller delivers to the Trustee and the Certificate Insurer an
Opinion of Counsel acceptable to the Trustee that (A) such
amendment will not adversely affect in any material respect the
interest of the Owners and (B) such amendment will not result in
a withdrawal or reduction of the rating of the Class A
Certificates without regard to the Certificate Insurance Policy.
This Agreement may also be amended by the Trustee, the Depositor,
the Seller and the Servicers at any time and from time to time,
with the prior written approval of the Certificate Insurer and
not less than a majority of the Percentage Interest represented
by each affected Class of Certificates then Outstanding, for the
purpose of adding any provisions or changing in any manner or
eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Owners hereunder.
Notwithstanding anything to the contrary herein, no such
amendment shall (a) change in any manner the amount of, or change
the timing of, payments which are required to be distributed to
any Owner without the consent of the Owner of such Certificate,
(b) reduce the aforesaid percentages of Percentage Interests
which are required to consent to any such amendments, without the
consent of the Owners of all Certificates of the Class or Classes
affected then Outstanding, (c) affect in any the manner the terms
or provisions of the Certificate Insurance Policy or (d)
adversely affect the qualification of the REMIC or subject the
REMIC to tax, as evidenced by an Opinion of Counsel satisfactory
to the Trustee at the expense of the party requesting such
amendment.
(b) Promptly after the execution of any such amendment, the
Trustee shall furnish written notification of the substance of
such amendment to each Owner in the manner set forth in Section
11.05, and to the Rating Agencies.
(c) The Certificate Insurer, the Owners and the Rating
Agencies shall be provided with copies of any amendments to this
Agreement, together with copies of any opinions or other
documents or instruments executed in connection therewith.
Section 11.15 Paying Agent; Appointment and
Acceptance of Duties.
The Trustee is hereby appointed Paying Agent. The Depositor
may, subject to the eligibility requirements for the Trustee set
forth in Section 10.08 hereof, with the consent of the
Certificate Insurer appoint one or more other Paying Agents or
successor Paying Agents.
Each Paying Agent, immediately upon such appointment, shall
signify its acceptance of the duties and obligations imposed upon
it by this Agreement by written instrument of acceptance
deposited with the Trustee.
Each such Paying Agent other than the Trustee shall execute
and deliver to the Trustee an instrument in which such Paying
Agent shall agree with the Trustee, subject to the provisions of
Section 6.02, that such Paying Agent will:
(a) allocate all sums received for distribution to the
Owners of Certificates of each Class for which it is acting
as Paying Agent on each Payment Date among such Owners in
the proportion specified by the Trustee; and
(b) hold all sums held by it for the distribution of
amounts due with respect to the Certificates in trust for
the benefit of the Owners entitled thereto until such sums
shall be paid to such Owners or otherwise disposed of as
herein provided and pay such sums to such Persons as herein
provided.
Any Paying Agent other than the Trustee may at any time
resign and be discharged of the duties and obligations created by
this Agreement by giving at least sixty (60) days written notice
to the Trustee. Any such Paying Agent may be removed at any time
by an instrument filed with such Paying Agent and signed by the
Trustee.
In the event of the resignation or removal of any Paying
Agent other than the Trustee such Paying Agent shall pay over,
assign and deliver any moneys held by it as Paying Agent to its
successor, or if there be no successor, to the Trustee.
Upon the appointment, removal or notice of resignation of any
Paying Agent, the Trustee shall notify the Certificate Insurer,
the Servicers and the Owners by mailing notice thereof at their
addresses appearing on the Register.
Section 11.16 REMIC Status.
(a) The parties hereto intend that the REMIC Estate shall
constitute, and that the affairs of the REMIC Estate shall be
conducted so as to qualify it as a REMIC in accordance with the
REMIC Provisions. In furtherance of such intention, Bankers
Trust Company or such other person designated pursuant to Section
11.18 hereof shall act as agent for the Trust and as Tax Matters
Person for the Trust and that in such capacity it shall:
(i) prepare or cause to be prepared and filed, in a timely
manner, annual tax returns and any other tax return required to
be filed by the REMIC Estate established hereunder using a
calendar year as the taxable year for the REMIC Estate
established hereunder; (ii) in the related first such tax return,
make (or cause to be made) an election satisfying the
requirements of the REMIC Provisions, on behalf of the REMIC
Estate for it to be treated as a REMIC; (iii) prepare and
forward, or cause to be prepared and forwarded, to the Owners all
information, reports or tax returns required with respect to the
REMIC Estate as, when and in the form required to be provided to
the Owners, and to the Internal Revenue Service and any other
relevant governmental taxing authority in accordance with the
REMIC Provisions and any other applicable federal, state or local
laws, including without limitation information reports relating
to "original issue discount" as defined in the Code based upon
the prepayment assumption and calculated by using the "Issue
Price" (within the meaning of Section 1273 of the Code) of the
Certificates of the related Class; (iv) not take any action or
omit to take any action that would cause the termination of the
REMIC status of the REMIC Estate, except as provided under this
Agreement; (v) represent the Trust or of the REMIC Estate in any
administrative or judicial proceedings relating to an examination
or audit by any governmental taxing authority, request an
administrative adjustment as to a taxable year of the Trust or
the REMIC Estate, enter into settlement agreements with any
governmental taxing agency, extend any statute of limitations
relating to any tax item of the Trust or the REMIC Estate, and
otherwise act on behalf of the Trust or the REMIC Estate therein
in relation to any tax matter involving the Trust or the REMIC
therein; (vi) comply with all statutory or regulatory
requirements with regard to its conduct of activities pursuant to
the foregoing clauses of this Section 11.16, including, without
limitation, providing all notices and other information to the
Internal Revenue Service and Owners of Class R Certificates
required of a "tax matters person" pursuant to subtitle F of the
Code and the Treasury Regulations thereunder; (vii) make
available information necessary for the computation of any tax
imposed (A) on transferor of residual interests to certain
Disqualified Organizations or (B) on pass-through entities, any
interest in which is held by a Disqualified Organization; and
(viii) acquire and hold the Tax Matters Person Residual Interest.
The obligations of Bankers Trust Company or such other designated
Tax Matters Person pursuant to this Section 11.16 shall survive
the termination or discharge of this Agreement.
(b) The Seller, the Depositor, the Trustee and each
Servicer covenant and agree for the benefit of the Owners and the
Certificate Insurer (i) to take no action which would result in
the termination of "REMIC" status for the REMIC Estate, (ii) not
to engage in any "prohibited transaction", as such term is
defined in Section 860F(a)(2) of the Code, and (iii) not to
engage in any other action which may result in the imposition on
the Trust of any other taxes under the Code and the Seller in
addition covenants to cause each Servicer not to take or engage
in any such action, to the extent the Seller is aware of any such
proposed action by the Servicer.
(c) The REMIC Estate shall, for federal income tax
purposes, maintain books on a calendar year basis and report
income on an accrual basis.
(d) Except as otherwise permitted by Section 7.05(b), no
Eligible Investment shall be sold prior to its stated maturity
(unless sold pursuant to a plan of liquidation in accordance with
Article IX hereof).
(e) Neither the Depositor, the Seller nor the Trustee shall
enter into any arrangement by which the Trustee will receive a
fee or other compensation for services rendered pursuant to this
Agreement, other than as expressly contemplated by this
Agreement.
(f) Notwithstanding the foregoing clauses (d) and (e), the
Trustee or the Seller may engage in any of the transactions
prohibited by such clauses, provided that the Trustee and the
Certificate Insurer shall have received an Opinion of Counsel
experienced in federal income tax matters acceptable to the
Certificate Insurer to the effect that such transaction does not
result in a tax imposed on the Trust or cause a termination of
REMIC status for the REMIC Estate; provided, however, that such
transaction is otherwise permitted under this Agreement.
(g) The Trustee, the Servicer and Tax Matters Person each
agree to indemnify the Trust for any tax imposed on the Trust or
the REMIC Estate as a result of their own negligence.
Section 11.17 Additional Limitation on Action and
Imposition of Tax.
Any provision of this Agreement to the contrary
notwithstanding, the Trustee shall not, without having obtained
for itself and the Certificate Insurer an Opinion of Counsel
experienced in federal income tax matters acceptable to the
Certificate Insurer to the effect that such transaction does not
result in a tax imposed on the Trust or the REMIC Estate or cause
a termination of REMIC status for the REMIC Estate, (i) sell any
assets in the Trust Estate (except as specifically provided in
Section 8.13(a)), (ii) accept any contribution of assets after
the Startup Day in violation of the REMIC Provisions or
(iii) agree to any modification of this Agreement. To the extent
that sufficient amounts cannot be so retained to pay or provide
for the payment of such tax, the Trustee is hereby authorized to
and shall segregate, into a separate non-interest bearing
account, the net income from any such Prohibited Transactions of
the REMIC Estate and use such income, to the extent necessary, to
pay such tax; provided that, to the extent that any such income
is paid to the Internal Revenue Service, the Trustee shall retain
an equal amount from future amounts otherwise distributable to
the Owners of Class R Certificates and shall distribute such
retained amounts to the Owners of Class A Certificates to the
extent they are fully reimbursed and then to the Owners of the
Class R Certificates. If any tax, including interest penalties
or assessments, additional amounts or additions to tax, is
imposed on the Trust, such tax shall be charged against amounts
otherwise distributable to the owners of the Class R Certificates
on a pro rata basis. The Trustee is hereby authorized to and
shall retain from amounts otherwise distributable to the Owners
of the Class R Certificates sufficient funds to pay or provide
for the payment of, and to actually pay, such tax as is legally
owed by the Trust (but such authorization shall not prevent the
Trustee from contesting any such tax in appropriate proceedings,
and withholding payment of such tax, if permitted by law, pending
the outcome of such proceedings).
Section 11.18 Appointment of Tax Matters Person.
A Tax Matters Person will be appointed for the REMIC Estate
for all purposes of the Code and such Tax Matters Person will
perform, or cause to be performed, such duties and take, or cause
to be taken, such actions as are required to be performed or
taken by the Tax Matters Person under the Code. The Tax Matters
Person for the REMIC Estate shall be Bankers Trust Company as
long as it owns a Class R Certificate. If Bankers Trust Company
does not own a Class R Certificate, the Tax Matters Person may be
any other entity that owns a Class R Certificate and accepts a
designation hereunder as Tax Matters person by delivering an
affidavit in the form of Exhibit I. The Seller shall notify the
Trustee in writing of the name and address of another person who
accepts a designation as Tax Matters Person hereunder.
Section 11.19 The Certificate Insurer.
Any right conferred to the Certificate Insurer hereunder
shall be suspended and shall run to the benefit of the Owners
during the occurrence and continuance of a Certificate Insurer
Default. At such time as the Class A Certificates and all
Reimbursement Amounts are no longer Outstanding hereunder, the
Certificate Insurer's rights hereunder shall terminate.
Section 11.20 Maintenance of Security Interest.
(a) The Owners of the Class R Certificates shall each
execute and file such financing statements and cause to be
executed and filed such continuation statements, all in such
manner and in such places as may be required by law fully to
preserve, maintain, and protect the interest of the Trustee under
this Agreement in the Total Monthly Excess Cashflow and in the
proceeds thereof. The Owners of the Class R Certificates shall
each deliver (or cause to be delivered) to the Trustee file-
stamped copies of, or filing receipts for, any document filed as
provided above, as soon as available following such filing.
(b) No Owner of Class R Certificates shall change its name,
identity, address or corporate structure in any manner that
would, could, or might make any financing statement or
continuation statements filed by such Owner in accordance with
paragraph (a) above seriously misleading within the meaning of
9-402(7) of the UCC, unless it shall have theretofore filed
amendments to such statements reflecting such change and shall
have given the Trustee at least 15 days' prior written notice
thereof.
(c) The Depositor and each Owner of a Class R Certificate
shall continuously keep an original executed counterpart of this
Agreement in its official records.
Section 11.21 Third Party Rights.
The Trustee, the Seller and the Owners agree that the
Certificate Insurer shall be deemed a third-party beneficiary of
this Agreement as if it were a party hereto.
Section 11.22 Attorneys' Fees.
Any party successfully asserting a claim for a breach of this
Agreement against another party is entitled to receive all
reasonable attorneys' fees incurred by such party in asserting
such claim.
Section 11.23 Notices.
All notices hereunder shall be given as follows, until any
superseding instructions are given to all other Persons listed
below:
The Trustee: Bankers Trust Company
Four Albany Street
New York, New York 10006
Attn: AMRESCO Residential
Securities Corporation
Mortgage Loan Trust 1996-3
Tel: (714) 253-7575
Fax: (714) 253-7577
The Depositor: AMRESCO Residential Securities Corporation
1845 Woodall Rodgers Freeway
Dallas, Texas 75201
Attn: General Counsel
Tel: (214) 953-7700
Fax: (214) 953-7757
The Seller: AMRESCO Residential Mortgage Corporation
c/o AMRESCO Residential Credit Corporation
3401 Centrelake Drive
Suite 480
Ontario, California 91761
Attn: Michael W. Trickey
Tel: (909) 605-7600
Fax: (909) 605-7619
The Servicers: Advanta Mortgage Corp. USA
16875 West Bernardo Drive
San Diego, CA 92127
Attn: Senior Vice President - Loan Servicing
Tel: (619) 674-1800
Fax: (619) 674-3666
Long Beach Mortgage Company
1100 Town & County Road
Orange, CA 92668
Attn: Del Dillingham
Tel: (714) 564-0600
Fax: (714) 973-4535
The Certificate
Insurer: MBIA Insurance Corporation
113 King Street
Armonk, New York 1050
Attn: Insured Portfolio AMRESCO Residential
Securities Corporation Mortgage Loan
Trust 1996-3
Tel: 914) 765-3790
Fax: (914) 765-3810
Moody's: Moody's Investors Service
99 Church Street
New York, New York 10007
Attn: The Mortgage Monitoring Department
Tel: (212) 553-0300
Fax: (212) 553-4773
Standard & Poor's: Standard & Poor's, a division of the
McGraw Hill Companies
26 Broadway
15th Floor
New York, New York 10004
Attn: Residential Mortgage Group
Tel: (212) 208-8000
Fax: (212) 412-0224
Fitch: Fitch Investors Service, L.P.
One State Street Plaza
New York, New York 10004
Attn: Michelle Loesch
Tel: (212) 908-0500
Fax: (212) 376-6857
Underwriters: Prudential Securities Incorporated
One New York Plaza
15th Floor
New York, New York 10292
Attn: Sean Low
Tel: (212) 778-1492
Fax: (212) 778-7401
Goldman, Sachs & Co.
85 Broad St., 28th Floor
New York, New York 10004
Attn: Shymala Menon
Tel: (212) 902-3067
Fax: (212) 902-4024
CS First Boston
55 E. 52nd St.
New York, New York 10055-0186
Attn: Nita Cherry
Tel: (212) 909-2333
Fax: (212) 479-5502
Owners: As set forth in the Register.
END OF ARTICLE XI
IN WITNESS WHEREOF, the Depositor, the Seller, each Servicer
and the Trustee have caused this Agreement to be duly executed by
their respective officers thereunto duly authorized, all as of
the day and year first above written.
AMRESCO RESIDENTIAL
SECURITIES CORPORATION,
as Depositor
By:
Title:
AMRESCO RESIDENTIAL
MORTGAGE CORPORATION,
as Seller
By:
Title:
LONG BEACH MORTGAGE COMPANY,
as Servicer
By:
Title:
ADVANTA MORTGAGE CORP. USA,
as Servicer
By:
Title:
BANKERS TRUST COMPANY,
as Trustee
By:
Title:
STATE OF CALIFORNIA )
: ss.:
COUNTY OF ORANGE )
On the ___ day of June, 1996, before me personally came
__________________, to me known, who, being by me duly sworn, did
depose and say that he/she resides at ________________,
_____________________________; that he/she is a
____________________ of AMRESCO Residential Securities
Corporation, a Delaware Corporation; and that he signed his name
thereto by order of the Board of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
my official seal the day and year in this certificate first above
written.
NOTARIAL SEAL
Notary Public
STATE OF CALIFORNIA )
: ss.:
COUNTY OF ORANGE )
On the ___ day of June, 1996, before me personally came
__________________, to me known, who, being by me duly sworn, did
depose and say that he/she resides at ________________,
_____________________________; that he/she is a
____________________ of AMRESCO Residential Mortgage Corporation,
a Delaware Corporation; and that he signed his name thereto by
order of the Board of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
my official seal the day and year in this certificate first above
written.
NOTARIAL SEAL
Notary Public
STATE OF CALIFORNIA )
: ss.:
COUNTY OF ORANGE )
On the ___ day of June, 1996, before me personally came
____________________________, to me known, who, being by me duly
sworn, did depose and say that he resides at
__________________________, ____________________,
_______________________; that he is the
__________________________________ of Long Beach Mortgage
Company, a Delaware Corporation; and that he signed his name
thereto by order of the respective Boards of Directors of said
corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
my official seal the day and year in this certificate first above
written.
NOTARIAL SEAL
Notary Public
STATE OF CALIFORNIA )
: ss.:
COUNTY OF ORANGE )
On the ___ day of June, 1996, before me personally came
____________________________, to me known, who, being by me duly
sworn, did depose and say that he resides at
__________________________, ____________________,
_______________________; that he is the Chief Financial Officer
of Advanta Mortgage Corp. USA, a _______________ corporation; and
that he signed his name thereto by order of the Board of
Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
my official seal the day and year in this certificate first above
written.
NOTARIAL SEAL
Notary Public
STATE OF CALIFORNIA )
): ss.:
COUNTY OF ORANGE )
On the ___ day of June, 1996, before me personally came
______________, to me known, who, being by me duly sworn did
depose and say that he/she resides at ____________________; that
he/she is a Assistant Vice President of Bankers Trust Company, a
national banking association described in and that executed the
above instrument as Trustee; and that he/she signed his/her name
thereto by order of the Board of Directors of said national
banking association.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
my official seal the day and year in this certificate first above
written.
NOTARIAL SEAL
Notary Public
SCHEDULE I-A
SCHEDULE OF GROUP I MORTGAGE LOANS
SCHEDULE I-B
SCHEDULE OF GROUP II MORTGAGE LOANS
[BY ORIGINATOR]
SCHEDULE I-C
SCHEDULE OF DISCOUNTED MORTGAGE LOANS
