SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)
October 20, 1999
AMRESCO Residential Securities Corporation (as Depositor under the Pooling and
Servicing Agreement, dated as of September 1, 1999, providing for the issuance
of AMRESCO Residential Securities Corporation Mortgage Loan Trust, Series
1999-1)
AMRESCO Residential Securities Corporation
(Exact Name of Registrant as Specified in its Charter)
Delaware 333-30759 75-2620414
State or Other Jurisdiction (Commission (I.R.S. Employer
Of Incorporation) File Number) Identification No.)
700 North Pearl Street
Suite 2400, LB #342
Dallas, Texas 75201
(Address of Principal Executive (Zip Code)
Offices)
Registrant's telephone number, including area code: (214) 953-7700
No Change
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
Item 5. Other Events
The Registrant registered issuances of AMRESCO Residential Securities
Corporation Mortgage Loan Trust 1999-1 Mortgage Loan Pass-Through Certificates
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, as amended (the "Act"), by a Registration Statement on Form S-3
(Registration File No. 333-30759) (the "Registration Statement"). Pursuant to
the Registration Statement, the Registrant issued $208,740,000 in aggregate
principal amount of Class A, Class M1, Class M2 and Class B Certificates of
its AMRESCO Residential Securities Corporation Mortgage Loan Trust 1999-1
Mortgage Loan Pass-Through Certificates (the "Certificates") on October 20,
1999. This Current Report on Form 8-K is being filed to satisfy an
undertaking, contained in the definitive Prospectus dated October 18, 1999, as
supplemented by the Prospectus Supplement dated October 18, 1999 (the
"Prospectus Supplement"), to file a copy of the Pooling and Servicing
Agreement (as defined below) executed in connection with the issuance of the
Certificates, a form of which was filed as an exhibit to the Registration
Statement.
The Certificates were issued pursuant to a Pooling and Servicing
Agreement (the "Pooling and Servicing Agreement"), attached hereto as Exhibit
4.1, dated as of September 1, 1999, among AMRESCO Residential Securities
Corporation, as depositor (the "Depositor"), AMRESCO Residential Mortgage
Corporation, as originator (the "Originator"), AMRESCO Residential Capital
Markets, Inc., Finance America, LLC, as seller (the "Seller"), Ocwen Federal
Bank FSB, as servicer (the "Servicer"), and Norwest Bank Minnesota, National
Association, as trustee (the "Trustee"). The "Certificates" consist of the
following classes: Class A, Class M1, Class M2 and Class B. The Certificates
evidence beneficial ownership interest in a trust fund (the "Trust Fund") that
consists primarily of a pool of fixed and adjustable rate, conventional, first
and second lien residential mortgage loans (the "Mortgage Loans") with an
aggregate outstanding principal balance of $208,964,821 as of September 1,
1999, together with certain other assets. Capitalized terms used herein and
not otherwise defined shall have the meanings assigned to them in the Pooling
and Servicing Agreement.
<PAGE>
Item 7. Financial Statements; PRO FORMA Financial Information
and Exhibits
(a) Not applicable.
(b) Not applicable.
(c) Exhibits:
1.1 Underwriting Agreement, dated October 18, 1999,
between AMRESCO Residential Securities Corporation
and Lehman Brothers Inc.
4.1 Pooling and Servicing Agreement, dated as of
September 1, 1999, among AMRESCO Residential
Securities Corporation, as Depositor, AMRESCO
Residential Mortgage Corporation, as Originator,
AMRESCO Residential Capital Markets, Inc., Finance
America, LLC, as Seller, Ocwen Federal Bank FSB, as
Servicer, and Norwest Bank
Minnesota, National Association, as Trustee.
<PAGE>
SIGNATURES
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.
ACE SECURITIES CORP.
By: /s/ Karen H. Cornell
Name: Karen H. Cornell
Title: Assistant Secretary
Dated: November 3, 1999
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page No.
1.1 Underwriting Agreement, dated October 18, 1999, between
AMRESCO Residential Securities Corporation and Lehman
Brothers Inc.
4.1 Pooling and Servicing Agreement, dated as of
September 1, 1999, among AMRESCO Residential
Securities Corporation, as Depositor, AMRESCO
Residential Mortgage Corporation, as Originator,
AMRESCO Residential Capital Markets, Inc., Finance
America, LLC, as Seller, Ocwen Federal Bank FSB, as
Servicer, and Norwest Bank Minnesota, National
Association, as Trustee.
Exhibit 1.1
Underwriting Agreement
AMRESCO RESIDENTIAL SECURITIES CORPORATION
AND
LEHMAN BROTHERS, INC.
As Underwriter
UNDERWRITING AGREEMENT
FOR
AMRESCO RESIDENTIAL SECURITIES CORPORATION MORTGAGE LOAN TRUST
1999-1
MORTGAGE LOAN PASS THROUGH CERTIFICATES, SERIES 1999-1
Class A Certificates
Class M1 Certificates
Class M2 Certificates
Class B Certificates
October 18, 1999
<PAGE>
AMRESCO RESIDENTIAL SECURITIES CORPORATION MORTGAGE LOAN TRUST
1999-1
MORTGAGE LOAN PASS THROUGH CERTIFICATES, SERIES 1999-1
UNDERWRITING AGREEMENT
October 18, 1999
Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
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, Series 1999-1, Class A (the "Class A
Certificates"), Class M1 (the "Class M1 Certificates"), Class M2 (the "Class
M2 Certificates" and, collectively with the Class M1 Certificates, the
"Mezzanine Certificates"), Class B (the "Class B Certificates" and,
collectively, with the Mezzanine Certificates, the "Subordinate Certificates")
and the Class X Certificate and the Class R Certificate (the "Private
Certificates," and, collectively with the Class A Certificates, and the
Subordinate 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 and second deeds of trust or
mortgages on one- to four-family residential properties. The Class A
Certificates, the Mezzanine Certificates and the Class B Certificates
(collectively, the "Offered Certificates") will be publicly offered pursuant
to the Prospectus described below. The Private Certificates will not be
publicly offered. Only the Offered Certificates are being purchased by Lehman
Brothers Inc. (the "Underwriter").
The Certificates will be issued under a Pooling and Servicing
Agreement, dated as of September 1, 1999 (the "Pooling and Servicing
Agreement") among the Depositor, AMRESCO Residential Mortgage Corporation, as
Originator (the "Originator"), AMRESCO Residential Capital Markets, Inc.
("ARCMI"), Finance America, LLC, as Seller (the "Seller"), Ocwen Federal Bank
FSB, as Servicer (the "Servicer"), and Norwest Bank Minnesota, National
Association, as trustee (the "Trustee"). The Certificates will evidence
fractional undivided interests in the AMRESCO Residential Securities
Corporation Mortgage Loan Trust 1999-1 (the "Trust"). The assets of the Trust
Fund will initially include, among other things, a pool of fixed and
adjustable rate Mortgage Loans (the "Mortgage Loans") and any accounts held by
the Trustee for the Trust Fund. The Mortgage Loans will be acquired from the
Originator pursuant to the Pooling and Servicing Agreement.
ARCMI, which is an affiliate of the Depositor, will enter into a
Guaranty (the "Guaranty") dated October 18, 1999, pursuant to which ARCMI will
guaranty certain obligations of the Depositor. A form of the Guaranty is
attached hereto as Exhibit I.
The Offered Certificates are more fully described in a Registration
Statement which the Depositor has furnished to the Underwriter. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Pooling and Servicing Agreement. For purposes of this Agreement, "Business
Day" means any day on which the New York Stock Exchange, Inc. is open for
trading.
SECTION I. Representations and Warranties of the Depositor. The
Depositor represents and warrants to, and agrees with the Underwriter that:
A. A Registration Statement on Form S-3 (No. 333-30759) has (i) been
prepared by the Depositor in conformity with the requirements of the
Securities Act of 1933, as amended (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 and (iii) become effective under the Securities Act. Copies of such
Registration Statement have been delivered by the Depositor to the
Underwriter. 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 October 18, 1999; 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.
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 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; 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
Underwriter 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 Underwriter except to the extent such documents
reflect information furnished by the Depositor to the Underwriter 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 and the Pooling and Servicing Agreement
(collectively, the "Depositor Agreements") 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 the Depositor Agreements 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 Depositor Agreements, (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 Depositor Agreements or the Certificates 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 other Depositor Agreements, when
executed and delivered as contemplated hereby, will have been, duly
authorized, executed and delivered by the Depositor, and this Agreement
constitutes, and the other Depositor Agreements when executed and delivered as
contemplated hereby, 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, limitations of public policy under
applicable securities laws.
H. The execution, delivery and performance of the Depositor
Agreements 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
(which breach or violation would have a material adverse effect on the
business, operations or financial condition 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. 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 the Depositor Agreements 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 Underwriter, or the consummation by the
Depositor of the other transactions contemplated by the Depositor Agreements,
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 Underwriter 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 Originator, 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 Underwriter. 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 Underwriter of the
Offered Certificates, the Underwriter will have good title to the Offered
Certificates, free of any Liens.
N. As of the Closing 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 Fund is an "investment
company" within the meaning of such term under the Investment Company Act of
1940 and the rules and regulations of the Commission thereunder (the "1940
Act").
P. At the Closing Date, the Offered Certificates and the Pooling and
Servicing Agreement will conform in all material respects to the descriptions
thereof contained in the Prospectus.
Q. At the Closing Date, the Class A Certificates shall have been
rated in the highest rating category by Standard & Poor's Rating Services, a
division of The McGraw-Hill Companies, Inc. ("S&P") and Duff & Phelps Credit
Rating Co. ("DCR"). In addition, the Class M1 and Class M2 Certificates shall
receive ratings of at least "AA" and "A" from S&P and DCR and the Class B
Certificates shall receive a rating of "BBB" from DCR.
R. Any taxes, fees and other governmental charges in connection with
the execution, delivery and issuance of the Depositor Agreements 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 will be true
and correct in all material respects.
T. The transfer of the Mortgage Loans to the Trust Fund at the
Closing 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.
V. The Pooling and Servicing Agreement is not required to be
qualified under the Trust Indenture Act of 1939, as amended (the "1939 Act").
W. Any information concerning the characteristics of the Mortgage
Loans furnished by the Depositor or its affiliates to the Underwriter for use
in preparation of Computational Materials or ABS Term Sheets (each as defined
herein) was accurate in all material respects as of the date furnished.
Any certificate signed by an officer of the Depositor and delivered
to the Underwriter or counsel for the Underwriter in connection with an
offering of the Offered Certificates shall be deemed to be, 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 Underwriter 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 Underwriter, and the Underwriter agrees (except as
provided in Section X hereof) to purchase from the Depositor, the aggregate
initial principal amounts or percentage interests of the Offered Certificates
set forth on Schedule A, at the purchase price or prices set forth in Schedule
A.
The parties hereto agree that settlement for all securities sold
pursuant to this Agreement shall take place on the terms set forth herein and
not as set forth in Rule 15c6-1(a) under the Exchange Act.
SECTION III. Delivery and Payment. Delivery of and payment for the
Offered Certificates to be purchased by the Underwriter shall be made at
offices of Brown & Wood LLP in Washington, D.C., or at such other place as
shall be agreed upon by the Underwriter and the Depositor at 10:00 A.M.
Eastern daylight time on October 20 , 1999 or at such other time or date as
shall be agreed upon in writing by the Underwriter 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
Underwriter against payment of the purchase price thereof. The Certificates
shall be in such authorized denominations and registered in such names as the
Underwriter 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 Underwriter no later than 2:00 p.m. eastern time on the first Business
Day prior to the Closing Date.
SECTION IV. Offering by the Underwriter. It is understood that,
subject to the terms and conditions hereof, the Underwriter proposes 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 Underwriter
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 Underwriter; 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
Underwriter, 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
Underwriter 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 Underwriter 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; or (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 Underwriter and to counsel for the
Underwriter 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 Underwriter such number of the
following documents as the Underwriter 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 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 Underwriter and, upon the Underwriter's request, shall file
such document and prepare and furnish without charge to the Underwriter and to
any dealer in securities as many copies as the Underwriter 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; provided, however, that the Depositor will not be required to file
any such amendment or supplement with respect to any Computational Materials,
Structural Term Sheets or Collateral Term Sheets (each as defined herein)
incorporated by reference in the Prospectus other than any amendments or
supplements of such Computational Materials or Structural Term Sheets that are
furnished to the Depositor by the Underwriter pursuant to Section X.C hereof
or any amendments or supplements of such Collateral Term Sheets that are
furnished to the Depositor by the Underwriter pursuant to Section XI.C hereof
which are required to be filed in accordance therewith. 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 Underwriter, be required by
the Securities Act, or that is requested by the Commission.
E. To furnish the Underwriter and counsel for the Underwriter, prior
to filing with the Commission, and to obtain the consent of the Underwriter
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 Fund
(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 Underwriter, 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 Underwriter 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, and
pursuant to the Pooling and Servicing Agreement, the Depositor shall cause the
Trustee, as soon as such statements are furnished to the Trustee, to deliver
to the Underwriter the following documents: (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 Servicer's Monthly Servicing
Reports furnished by the Servicer pursuant to Section 8.29(a) of the Pooling
and Servicing Agreement; (iv) the monthly reports furnished to the Owners of
the Offered Certificates pursuant to Section 7.11 of the Pooling and Servicing
Agreement; and (v) from time to time, any other information concerning the
Trust Fund filed with any government or regulatory authority that is otherwise
publicly available, as the Underwriter 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 Depositor will, without the Underwriter'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.
L. To cause any Computational Materials and any Structural Term
Sheets (each as defined herein) that are delivered by the Underwriter to the
Depositor pursuant to Section X to be filed with the Commission on a Current
Report on Form 8-K (an "ABS Filing") pursuant to Rule 13a-11 under the
Exchange Act on the business day immediately following the later of (i) the
day on which such Computational Materials and Structural Term Sheets are
delivered to counsel for the Depositor by the Underwriter prior to 5:00 p.m.
New York time and (ii) the date on which the related Prospectus Supplement is
first made available to the public. The Depositor shall cause any Collateral
Term Sheet that is delivered by the Underwriter to the Depositor in accordance
with the provisions of Section XI to be filed with the Commission on an ABS
Filing pursuant to Rule 13a-11 under the Exchange Act on the business day
immediately following the day on which such Collateral Term Sheet is delivered
to counsel for the Depositor by the Underwriter. Each such ABS Filing shall be
incorporated by reference in the Prospectus and the Registration Statement.
SECTION VI. Conditions to the Underwriter's Obligations. The
obligations of the Underwriter 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 Underwriter 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 Underwriter 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 Brown &
Wood LLP, counsel for the Underwriter, 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 the Depositor Agreements, the
Certificates, the Registration Statement and the Prospectus, and all other
legal matters relating to the Depositor Agreements and the transactions
contemplated hereby shall be satisfactory in all respects to counsel for the
Underwriter, 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 Underwriter shall have received the Depositor
Agreements and the Offered Certificates in form and substance satisfactory to
the Underwriter, duly executed by all signatories required pursuant to the
respective terms thereof.
D. Brown & Wood LLP, special counsel for the Depositor, shall have
furnished to the Underwriter their written opinion, as counsel to the
Depositor, addressed to the Underwriter and dated the Closing Date, in form
and substance satisfactory to the Underwriter, 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 Securities" and in the Prospectus
Supplement under the captions "Description of The Certificates" and
"The Pooling and Servicing Agreement," to the extent such statements
purport to summarize certain provisions of the Offered 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 Consequences," "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 conforms 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 1939 Act, and the Trust Fund is not required to be
registered under the 1940 Act.
7. Neither the Depositor nor the Trust Fund is an "investment
company" or under the "control" of an "investment company" as such
terms are defined in the 1940 Act.
8. Under existing law, assuming a REMIC election is made and
assuming compliance with all provisions of the Pooling and Servicing
Agreement, for federal income tax purposes, each pool of assets for
which the Pooling and Servicing Agreement directs a REMIC election to
be made, the Trust, exclusive of the Basis Reserve Fund, will qualify
as a "real estate mortgage investment conduit" ("REMIC") pursuant to
Section 860D of the Internal Revenue Code of 1986, as amended (the
"Code"); each of the Certificates, other than the Class R
Certificate, will evidence ownership of REMIC "regular interests" in
the REMIC within the meaning of Section 860G(a)(1) of the Code and
the Class R Certificate will be designated as the sole class of
"residual interest" in the REMIC within the meaning of Section
860G(a)(2) of the Code; the Basis Reserve Fund is an "outside reserve
fund" that is beneficially owned by the holder of the Class X
Certificate; the rights of the holders of the Certificates, other
than the Class X Certificates, to receive payment of any Available
Funds Cap Shortfall from the Basis Reserve Fund represent, for
federal income tax purposes, an interest in an interest rate cap
contract.
9. To the best of such counsel's knowledge, there are no
actions, proceedings or investigations pending that would adversely
affect the status of REMIC1, REMIC2, REMIC3 or REMIC4 as REMICs.
10. As a consequence of the qualification of REMIC1, REMIC2,
REMIC3 and REMIC4 as REMICs, the Offered Certificates will be treated
as "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 Fund consist of qualifying assets under such Sections. In
addition, as a consequence of the qualification of REMIC1, REMIC2,
REMIC3 and REMIC4 as REMICs, 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.
11. Assuming that the Trustee and the Depositor have been duly
authorized to do so, when executed, authenticated and delivered by
the Trustee and the Depositor 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 and, when issued, conform to the description
thereof contained in the Prospectus.
Brown & Wood LLP shall furnish to the Underwriter such other written
opinions as the Underwriter may reasonably request.
Such counsel shall also have furnished to the Underwriter a written
statement, addressed to the Underwriter and dated the Closing Date, in form
and substance satisfactory to the Underwriter 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 to make the statements therein, in the light of
the circumstances under which they were made, not misleading; 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 the
Underwriter to the extent such document relates to Computational Materials or
ABS Term Sheets) 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 to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
E. The Underwriter shall have received the favorable opinion, dated
the Closing Date, of Brown & Wood LLP, special counsel to the Depositor,
addressed to the Depositor and satisfactory to S&P, DCR and the Underwriter,
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 S&P, DCR and the Underwriter as
though such opinion had been addressed to each such party.
F. Hunton & Williams, special counsel to the Servicer, shall have
furnished to the Underwriter a written opinion, addressed to the Underwriter
and the Depositor and dated the Closing Date, in form and substance
satisfactory to the Underwriter, to the effect that:
1. The Servicer is validly existing in good standing as a
federal savings bank under the laws of the United States of America.
2. The Servicer has full corporate power and authority to serve
in the capacity of servicer of the Mortgage Loans as contemplated in
the Pooling and Servicing Agreement.
3. The Pooling and Servicing Agreement has been duly authorized,
executed and delivered by the Servicer, and, assuming the due
authorization, execution and delivery of such agreement by the other
parties thereto, constitutes the legal, valid and binding agreement
of the Servicer, enforceable against the Servicer 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.
4. No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body
having jurisdiction over the Servicer is required for the
consummation by the Servicer of the transactions contemplated by the
Pooling and Servicing Agreement, except such consents, approvals,
authorizations, registrations and qualifications as have been
obtained.
5. The execution, delivery or performance by the Servicer of the
Pooling and Servicing 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 the 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 the Servicer is a party or is bound or to which any of the
property or assets of the Servicer or any of its subsidiaries is
subject; (iii) to the best of such counsel's knowledge without
independent investigation any order, judgment, writ, injunction or
decree of any court or governmental authority having jurisdiction
over the Servicer; or (iv) any law, rule or regulations applicable to
the Servicer; or (B) to the best of such counsel's knowledge without
independent investigation, result in the creation or imposition of
any lien, charge or encumbrance upon the Trust Fund Estate or upon
the Certificates.
6. There are no actions, proceedings or investigations pending
or, to the best of such counsel's knowledge without independent
investigation, threatened against the Servicer before any court,
administrative agency or other tribunal (a) asserting the invalidity
of the Pooling and Servicing 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 Servicer
of its obligations under, or the validity or enforceability of, the
Pooling and Servicing Agreement.
G. Counsel for the Depositor, ARCMI and the Originator (which may be
in-house counsel) shall have furnished to the Underwriter such counsel's
written opinion, addressed to the Underwriter and dated the Closing Date, in
form and substance satisfactory to the Underwriter, 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 the Depositor Agreements) 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 Depositor Agreements, 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, of the Depositor.
3. The Depositor Agreements have been duly authorized, 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 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, limitations of public policy under
applicable securities laws.
4. The execution, delivery and performance of the Depositor
Agreements 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, which breach or violation would have a
material adverse effect on the business, operations or financial
condition 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)
and (iii) nor will such actions result in the creation or imposition
of any lien, charge or encumbrance upon the Trust Fund 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.
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 Underwriter, or the
consummation by the Depositor of the other transactions contemplated
by the Depositor Agreements, 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
Underwriter 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, 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 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 Depositor Agreements; or (d) which
might materially and adversely affect the performance by the
Depositor of its obligations under, or the validity or enforceability
of, the Depositor Agreements 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 Underwriter, such Certificates are owned by the
Depositor, free and clear of all Liens.
9. The Originator 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 Pooling and Servicing Agreement.
10. The Originator 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 Originator 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 Originator or which
might materially and adversely affect the properties or assets, taken
as a whole, of the Originator.
11. The Pooling and Servicing Agreement has been duly
authorized, executed and delivered by the Originator and, assuming
the due authorization, execution and delivery of such agreement by
the parties thereto other than the Originator, such agreement will
constitute a valid and binding obligation, enforceable against the
Originator 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 Pooling and
Servicing Agreement by the Originator 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
Originator is a party or by which the Originator is bound or to which
any of the property or assets of the Originator 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 Originator, nor will such actions result in a
violation of the provisions of the articles of incorporation or
by-laws of the Originator or any statute or any order, rule or
regulation of any court or governmental agency or body having
jurisdiction over the Originator 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 Originator.
13. There are no actions, proceedings or investigations pending
with respect to which the Originator has received service of process
before or, to the best of such counsel's knowledge, without
independent investigation, threatened by any court, administrative
agency or other tribunal to which the Originator is a party or of
which any of its properties is the subject: (a) which if determined
adversely to the Originator would have a material adverse effect on
the business, results of operations or financial condition of the
Originator; (b) asserting the invalidity of the Pooling and Servicing
Agreement or the Certificates; (c) seeking to prevent the issuance of
the Certificates or the consummation by the Originator of any of the
transactions contemplated by the Pooling and Servicing Agreement; or
(d) which might materially and adversely affect the performance by
the Originator of its obligations under, or the validity or
enforceability of, the Pooling and Servicing Agreement or the
Certificates.
14. ARCMI 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
Pooling and Servicing Agreement and the Guaranty (collectively, the
"ARCMI Agreements").
15. ARCMI 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 ARCMI 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 ARCMI or which might materially and adversely affect the
properties or assets, taken as a whole, of ARCMI.
16. The ARMCI Agreements have been duly authorized, executed and
delivered by ARCMI and, assuming the due authorization, execution and
delivery of such agreements by the parties thereto other than ARCMI,
such agreements will constitute valid and binding obligations,
enforceable against ARCMI 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).
17. The execution, delivery and performance of ARCMI Agreements
by ARCMI 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 ARCMI is a party or by
which ARCMI is bound or to which any of the property or assets of
ARCMI 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 ARCMI, nor will such actions
result in a violation of the provisions of the articles of
incorporation or by-laws of ARCMI or any statute or any order, rule
or regulation of any court or governmental agency or body having
jurisdiction over ARCMI 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 ARCMI.
18. There are no actions, proceedings or investigations pending
with respect to which ARCMI has received service of process before
or, to the best of such counsel's knowledge, without independent
investigation, threatened by any court, administrative agency or
other tribunal to which ARCMI is a party or of which any of its
properties is the subject: (a) which if determined adversely to ARCMI
would have a material adverse effect on the business, results of
operations or financial condition of ARCMI; (b) asserting the
invalidity of the Pooling and Servicing Agreement, the Guaranty or
the Certificates; (c) seeking to prevent the issuance of the
Certificates or the consummation by ARCMI of any of the transactions
contemplated by ARCMI Agreements; or (d) which might materially and
adversely affect the performance by ARCMI of its obligations under,
or the validity or enforceability of, the Pooling and Servicing
Agreement, the Guaranty or the Certificates.
H. Counsel for the Seller (which may be in-house counsel) shall have
furnished to the Underwriter such counsel's written opinion, addressed to the
Underwriter and dated the Closing Date, in form and substance satisfactory to
the Underwriter, to the effect that:
1. The Seller has been duly organized and is validly existing as
a limited liability company in good standing under the laws of the
State of Delaware and is duly qualified to do business and is in good
standing 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 Pooling and
Servicing Agreement.
2. The Seller is not in violation of its certificate of
formation or limited liability agreement 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.
3. The Pooling and Servicing Agreement has been duly authorized,
executed and delivered by the Seller and, assuming the due
authorization, execution and delivery of such agreement by the
parties thereto other than the Seller, such agreement will constitute
a valid and binding obligation, enforceable against the Seller in
accordance with its 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 and (y) general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).
4. The execution, delivery and performance of the Pooling and
Servicing Agreement 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 certificate of formation or limited liability agreement 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.
5. There are no actions, proceedings or investigations pending
with respect to which the Seller has received service of process
before or, to the best of such counsel's knowledge, without
independent investigation, threatened by any court, administrative
agency or other tribunal to which the Seller is a party or of which
any of its properties is the subject: (a) which if determined
adversely to the Seller would have a material adverse effect on the
business, results of operations or financial condition of the Seller;
(b) asserting the invalidity of the Pooling and Servicing Agreement
or the Certificates; (c) seeking to prevent the issuance of the
Certificates or the consummation by the Seller of any of the
transactions contemplated by the Pooling and Servicing Agreement; or
(d) which might materially and adversely affect the performance by
the Seller of its obligations under, or the validity or
enforceability of, the Pooling and Servicing Agreement or the
Certificates.
I. The Underwriter shall have received the favorable opinion of
Timothy J. Carlin, Senior Counsel for the Trustee or of Hunton & Williams,
counsel to the Trustee, dated the Closing Date, addressed to the Underwriter
and in form and scope satisfactory to counsel to the Underwriter, to the
effect that:
1. The Trustee is a national 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 United States
federal court 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 United States federal statute, rule or regulation or require
any consent, approval or authorization of United States federal court
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 the 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 the Servicer under the Pooling and Servicing
Agreement.
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.
J. The Underwriter shall have received the favorable opinion or
opinions, dated the date of the Closing Date, of counsel for the Underwriter,
with respect to the issue and sale of the Offered Certificates, this
Agreement, the Prospectus and such other related matters as the Underwriter
may reasonably require.
K. The Depositor shall have furnished to the Underwriter 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) and the Depositor
Agreements and that, to the best of his or her knowledge based upon reasonable
investigation:
1. The representations and warranties of the Depositor in the
Depositor Agreements 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 October 12, 1999, 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 June 30, 1999.
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 Depositor Agreements in any
material way; and no merger, liquidation, dissolution or bankruptcy
of the Depositor is pending or contemplated.
5. No stop order suspending the effectiveness of such
Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to his or her knowledge, threatened.
6. Nothing has come to his or her attention that would lead them
to believe that such Registration Statement contains any untrue
statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, or that the Prospectus contains any untrue
statement of a material fact or omits to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
L. The Trustee shall have furnished to the Underwriter 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 Underwriter shall reasonably request.
M. The Class A Certificates shall have been rated "AAA" by S&P and
DCR. The Class M1 and Class M2 Certificates shall have been rated "AA" and "A"
by S&P and DCR. The Class B Certificates shall have been rated "BBB" by DCR.
N. The Depositor shall have furnished to the Underwriter such further
information, certificates and documents as the Underwriter may reasonably have
requested not less than three full Business Days prior to the Closing Date.
O. Prior to the Closing Date, counsel for the Underwriter 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 Underwriter and counsel for the Underwriter.
P. 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
Underwriter, 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.
Q. The Underwriter shall have received a letter from Deloitte &
Touche, LLP, dated on or before the Closing Date, in form and substance
satisfactory to the Underwriter and counsel for the Underwriter, addressed to
the Underwriter to the effect that they have performed certain specified
procedures requested by the Underwriter with respect to the information set
forth in the Prospectus and certain matters relating to the Depositor.
R. The Underwriter and counsel for the Underwriter 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 the Underwriter
or accompanied by reliance letters to the Underwriter or shall state that the
Underwriter may rely upon them.
S. 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 June 30, 1999, of the Originator or
the Depositor and their affiliates, that is in the Underwriter's judgment
material and adverse and that makes it in the Underwriter's judgment
impracticable to market the Offered Certificates on the terms and in the
manner contemplated in the Prospectus.
T. On or prior to the Closing Date, there shall have been no
downgrading, nor shall any notice have been given of (i) any intended or
possible downgrading or (ii) any review or possible changes, the direction of
which has not been indicated, of the rating accorded and originally requested
by the Depositor relating to any previously issued asset-backed securities of
the Depositor by any "nationally recognized statistical rating organization"
(as such term is defined for purposes of the Exchange Act).
U. ARCMI shall have executed and delivered the Guaranty, which shall
be in form and substance acceptable to the underwriter and its counsel.
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 Underwriter 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 Underwriter.
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 Underwriter); (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 except for expenses relating to
the accountant's audit of the loan files; and (h) 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 Underwriter shall pay their own costs and expenses, including
the costs and expenses of its 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 Underwriter, and the Underwriter shall
pay the cost of any accountant's comfort letters which the Underwriter chooses
to request relating to any Computational Materials (as defined herein).
If this Agreement is terminated by the Underwriter 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
Underwriter to be reimbursed for all reasonable out-of-pocket expenses except
that the Depositor shall not be obligated under this Agreement to reimburse
the Underwriter for reasonable out-of-pocket expenses, including fees and
disbursements of counsel for the Underwriter, if this Agreement is terminated
by the Underwriter in accordance with Section VI.P herein.
SECTION VIII. Indemnification and Contribution.
A. The Depositor agrees to indemnify and hold harmless the
Underwriter and each person, if any, who controls the Underwriter within the
meaning of Section 15 of the Securities Act or Section 20 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 the 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 the Underwriter and each such controlling person promptly upon
demand for any legal or other expenses reasonably incurred by the 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, (A) in
reliance upon and in conformity with written information furnished to the
Depositor by or on behalf of the Underwriter specifically for inclusion
therein or (B) in any Computational Materials or ABS Term Sheets (or
amendments or supplements thereof) delivered to prospective investors by such
Underwriter, including any Computational Materials or ABS Term Sheets that are
furnished to the Depositor by such Underwriter pursuant to this Agreement and
incorporated by reference in such Registration Statement, or the Prospectus or
any amendment or supplement thereof, except to the extent that any untrue
statement or alleged untrue statement or omission or alleged omission is a
result of Originator Provided Information (as defined below) 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 the Underwriter or any controlling person of any of the Underwriter.
B. The Underwriter 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 20 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 (A) in
reliance upon and in conformity with written information furnished to the
Depositor by or on behalf of the Underwriter specifically for inclusion
therein or (B) in any Computational Materials or ABS Term Sheets (or
amendments or supplements thereof) delivered to prospective investors by such
Underwriter, including any Computational Materials or ABS Term Sheets that are
furnished to the Depositor by such Underwriter pursuant to this Agreement and
incorporated by reference in such Registration Statement or the Prospectus or
any amendment or supplement thereof, 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, provided, however, that the Underwriter shall not be liable to the
extent that such untrue statements or alleged untrue statement or omission or
alleged omission is a result of Originator Provided Information that is not
accurate and complete in all material respects. The foregoing indemnity
agreement is in addition to any liability which the Underwriter may otherwise
have to the Depositor or any such director, officer or controlling person.
For purposes of this Section VIII, the Depositor and the Underwriter
agree that the information set forth in the second paragraph under the heading
"Underwriting" in the Prospectus Supplement constitutes the only information
furnished to the Depositor by or on behalf of the Underwriter for inclusion in
the Prospectus, and the Underwriter confirms that such information is correct.
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
Underwriter, if the indemnified parties under this Section VIII consist of one
or more of the Underwriter's 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. 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 or B 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 Underwriter 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 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 the 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 Underwriter from time
to time in negotiated sales of the related Offered Certificates.
The relative fault of the 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 the 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 Underwriter agree that it would not be just and
equitable if contributions pursuant to this Section VIII.E were to be
determined by pro rata allocation 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.E shall be deemed to include, for purposes of this Section
VIII.E, 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 the Underwriter
(except with respect to any document (other than the Computational Materials
or ABS Term Sheets) incorporated by reference into the Registration Statement
or Prospectus at the request of the Underwriter) be responsible for any amount
in excess of (x) the amount received by the Underwriter in connection with its
resale of the Offered Certificates over (y) the amount paid by the Underwriter
to the Depositor for the Offered Certificates by the 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 the 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.
"Originator Provided Information" means any computer tape or other
information furnished to the Underwriter by the Originator concerning the
assets comprising the Trust Fund.
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 Underwriter or controlling persons thereof, or by or on behalf
of the Depositor and shall survive delivery of any Offered Certificates to the
Underwriter.
SECTION X. Computational Materials and Structural Term Sheets.
A. Not later than 5 p.m., New York time, on the business day before
the date on which the applicable ABS Filing relating to the Certificates is
required to be filed by the Depositor with the Commission pursuant to Section
V.L hereof, the Underwriter shall deliver to the Depositor a complete copy of
all materials provided by the Underwriter to prospective investors in the
Certificates that constitute (i) "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 and the no-action letter dated May 27, 1994, issued by the
Division of Corporation Finance of the Commission to the Public Securities
Association (together, the "Kidder Letters"), the filing of which material is
a condition of the relief granted in such letters (such materials being the
"Computational Materials") and (ii) "Structural Term Sheets" within the
meaning of the no-action letter dated February 17, 1995, issued by the
Division of Corporation Finance of the Commission to the Public Securities
Association (the "PSA Letter"), the filing of which material is a condition of
the relief granted in such letter (such materials being the "Structural Term
Sheets"); prior to such delivery by the Underwriter to the Depositor of such
materials, the Underwriter shall notify, or cause to be notified, the
Depositor or its counsel by telephone of its intention to deliver such
materials and the approximate date on which such delivery of such materials is
expected to occur.
B. The Underwriter represents and warrants to and agrees with the
Depositor, as of the date hereof and as of the related Closing Date, that:
(i) the Computational Materials furnished to the Depositor
pursuant to Section X.A constitute (either in original, aggregated or
consolidated form) all of the materials furnished to prospective
investors by the Underwriter prior to the time of delivery thereof to
the Depositor that are required to be filed with the Commission with
respect to the Certificates in accordance with the Kidder Letters,
and such Computational Materials comply with the requirements of the
Kidder Letters; and
(ii) the Structural Term Sheets furnished to the Depositor
pursuant to Section X.A constitute all of the materials furnished to
prospective investors by the Underwriter prior to the time of
delivery thereof to the Depositor that are required to be filed with
the Commission as "Structural Term Sheets" with respect to the
Certificates in accordance with the PSA Letter, and such Structural
Term Sheets comply with the requirements of the PSA Letter.
C. If, at any time when a prospectus relating to the Certificates is
required to be delivered under the Securities Act, it shall be necessary to
amend or supplement the related Prospectus and Prospectus Supplement as a
result of an untrue statement of a material fact contained in any
Computational Materials or Structural Term Sheets provided by the Underwriters
pursuant to this Section X or the omission to state therein a material fact
required, when considered in conjunction with the related Prospectus and
Prospectus Supplement, to be stated therein or necessary to make the
statements therein, when read in conjunction with the related Prospectus and
Prospectus Supplement, not misleading, or if it shall be necessary to amend or
supplement any ABS Filing relating to any Computational Materials or
Structural Term Sheets to comply with the Securities Act or the Rules and
Regulations, the Underwriter promptly will prepare and furnish to the
Depositor for filing with the Commission an amendment or supplement that will
correct such statement or omission or an amendment which will effect such
compliance.
SECTION XI. Collateral Term Sheets.
A. Prior to the delivery of any "Collateral Term Sheet" within the
meaning of the PSA Letter, the filing of which material is a condition of the
relief granted in such letter (such material being the "Collateral Term
Sheets" and together with Structural Term Sheets, referred to herein as "ABS
Term Sheets"), to a prospective investor in the Certificates, the Underwriter
shall, in order to facilitate the timely filing of such material with the
Commission, notify the Depositor and its counsel by telephone of its intention
to deliver such materials and the approximate date on which the first such
delivery of such materials is expected to occur. Not later than 2 p.m., New
York time, on the business day immediately following the date on which any
Collateral Term Sheet was first delivered to a prospective investor in the
Certificates, the Underwriter shall deliver to the Depositor a complete copy
of all materials provided by the Underwriter to prospective investors in the
Certificates that constitute "Collateral Term Sheets." At the time of each
such delivery, the Underwriter shall indicate in writing that the materials
being delivered constitute Collateral Term Sheets.
B. The Underwriter represents and warrants to and agrees with the
Depositor as of the date hereof and as of the related Closing Date, that the
Collateral Term Sheets furnished to the Depositor pursuant to Section XI.A
constitute all of the materials furnished to prospective investors by the
Underwriter prior to time of delivery thereof to the Depositor that are
required to be filed with the Commission as "Collateral Term Sheets" with
respect to the Certificates in accordance with the PSA Letter, and such
Collateral Term Sheets comply with the requirements of the PSA Letter.
C. If, at any time when a prospectus relating to the Certificates is
required to be delivered under the Securities Act, it shall be necessary to
amend or supplement the related Prospectus and Prospectus Supplement as a
result of an untrue statement of a material fact contained in any Collateral
Term Sheets provided by the Underwriter pursuant to this Section XI or the
omission to state therein a material fact required, when considered in
conjunction with the related Prospectus and Prospectus Supplement, to be
stated therein or necessary to make the statements therein, when read in
conjunction with the related Prospectus and Prospectus Supplement, not
misleading, or if it shall be necessary to amend or supplement any ABS Filing
relating to any Collateral Term Sheets to comply with the Securities Act or
the Rules and Regulations, the Underwriter promptly will prepare and furnish
to the Depositor for filing with the Commission an amendment or supplement
that will correct such statement or omission or an amendment which will effect
such compliance.
SECTION XII. Termination of Agreement. The Underwriter 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.P 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 XV shall
remain in effect.
SECTION XIII. Notices. All statements, requests, notices and
agreements hereunder shall be in writing, and:
A. if to the Underwriter, shall be delivered or sent by mail, telex
or facsimile transmission to the Underwriter at its address set forth above;
B. if to the Depositor, shall be delivered or sent by overnight mail
or facsimile transmission to 700 North Pearl Street, Suite 2400, LB #342,
Dallas, TX 75201-7424, Attn.: General Counsel, Fax No. 214-953-7757.
SECTION XIV. Persons Entitled to the Benefit of this Agreement. This
Agreement shall inure to the benefit of and be binding upon the Underwriter
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 the Underwriter 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 XIV, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision contained herein.
SECTION XV. Survival. The respective indemnities, representations,
warranties and agreements of the Depositor and the Underwriter 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 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 Underwriter.
[Signature Page Follows]
<PAGE>
If the foregoing correctly sets forth the agreement between the
Depositor and the Underwriter, please indicate your acceptance in the space
provided for the purpose below.
Very truly yours,
AMRESCO RESIDENTIAL SECURITIES CORPORATION
By:_/s/ Karen H. Cornell________________
Name: Karen H. Cornell
Title: Assistant Secretary
The foregoing Agreement is hereby confirmed and accepted as of the
date first above written.
LEHMAN BROTHERS INC.
By: /s/ Stanely Labanowski
---------------------------
Name: Stanely Labanowski
Title: Vice President
<PAGE>
SCHEDULE A
Initial Principal
Class of Amount of
Certificates Certificates
Purchased by the Purchased by Purchase Price
Underwriter Underwriter (% of Par)
Lehman Brothers Inc. A $176,863,000 99.9375%
M1 13,690,000 99.9375
M2 8,572,000 99.375
B 9,615,000 89.230
<PAGE>
EXHIBIT I
October 18, 1999
Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
Ladies and Gentlemen:
This guaranty is made by AMRESCO Residential Capital Markets, Inc., a
Delaware corporation with its principal office at 700 North Pearl Street,
Suite 2400, LB #342, Dallas, Texas 75201 ("ARCMI"), in favor of Lehman
Brothers Inc., with its principal office at 3 World Financial Center, New
York, New York 10285, in its capacity as underwriter (the "Underwriter") in
connection with the underwriting of the Offered Certificates.
As an inducement to you and in consideration of your entering into the
Underwriting Agreement referred to below, ARCMI hereby absolutely,
unconditionally and irrevocably guarantees the full and punctual performance
of the obligations, including any payment obligations (collectively, the
"Guaranteed Obligations") of AMRESCO Residential Securities Corporation (the
"Depositor"), a Delaware corporation with its principal office at 700 North
Pearl Street, Suite 2400, LB #342, Dallas, Texas 75201, under Section VIII of
the Underwriting Agreement, dated October 14, 1999, between the Depositor and
the Underwriter. This guaranty is a guaranty of performance and payment and
not of collection. The obligations of ARCMI hereunder are unconditional and
absolute and, without limiting the generality of the foregoing, shall not be
released, discharged or otherwise affected by the Depositor as a result of:
(i) Any extension, renewal, settlement, compromise, waiver or
release in respect of any Guaranteed Obligation or any related
document in connection with the transactions contemplated hereby or
thereby, whether by operation of law or otherwise;
(ii) Any modification or amendment of or supplement to this
Agreement or any Operative Document;
(iii) Any change in the corporate existence, structure or
ownership of the Depositor or any insolvency, bankruptcy,
reorganization or other similar proceeding affecting the Depositor or
its assets and properties or any resulting release or discharge of
any Guaranteed Obligation;
(iv) The existence of any claim, set-off, defense or other right
which ARCMI may have at any time against the Depositor or any other
Person, whether in connection herewith or any unrelated transactions;
PROVIDED, HOWEVER, that nothing herein shall prevent the assertion of
any such claim, set-off, defense or other right by separate suit or
compulsory counterclaim;
(v) Any invalidity or unenforceability relating to or against
the Depositor for any reason of any Operative Document, or any
provision of applicable law purporting to prohibit the performance of
any Guaranteed Obligation;
(vi) Any other act or omission to act or delay of any kind by
the Depositor; or
(vii) Any other circumstance whatsoever which might, but for the
provisions of this paragraph, constitute a legal or equitable
discharge of ARCMI's obligations hereunder; PROVIDED, however, that
ARCMI shall not be deemed to have waived any counterclaim or defense
based on a breach of representation, warranty or covenant of the
Underwriter hereunder that would have been a defense to the failure
of the Depositor to make any payment or perform any obligation in
respect of which a claim is made hereunder. The guarantee provided
hereunder shall encompass any modification or amendment of, or
supplement to, this Agreement.
ARCMI's obligations hereunder shall remain in full force and effect
for so long as the Depositor has any Guaranteed Obligations. If at any time
any payment of any amount payable by the Depositor under Section VIII of the
Underwriting Agreement is rescinded or must be otherwise restored or returned
upon the insolvency, bankruptcy or reorganization of the Depositor, ARCMI's
obligations hereunder with respect to such payment shall be reinstated as
though such payment had been due but not made at such time.
ARCMI irrevocably waives acceptance hereof, presentment, demand,
protest and any notice not provided for herein, as well as any requirement
that at any time any action first be taken by any person against the Depositor
or any other person, including that any action first be taken to pursue other
remedies or to mitigate damages resulting from a failure by the Depositor to
perform any Guaranteed Obligation, prior to seeking performance by ARCMI of
its obligations hereunder.
ARCMI shall not enforce or otherwise exercise any right of
subrogation to any of the rights of any other person or any indemnified person
against the Depositor and, notwithstanding anything to the contrary contained
herein, ARCMI hereby waives all rights of subrogation (whether contractual,
under Section 509 of the U.S. Bankruptcy Code, at law or in equity or
otherwise) to the claims of the Underwriter or any indemnified person against
the Depositor and all contractual, statutory or legal or equitable rights of
contribution, reimbursement, indemnification and similar rights and "claims"
(as that term is defined in the U.S. Bankruptcy Code) which ARCMI might now
have or hereafter acquire against the Depositor that arise from the existence
or performance of ARCMI's obligations hereunder.
This guaranty may be amended only by an instrument in writing
executed by the undersigned and accepted in writing by the Underwriter.
This guaranty shall be governed by the laws of the State of New York
applicable to agreements made and to be performed in the State of New York
without giving effect to the conflict of law rules thereof.
IN WITNESS WHEREOF, ARCMI has caused this guaranty to be executed by
duly authorized corporate officers the day and year first above written.
AMRESCO RESIDENTIAL CAPITAL MARKETS, INC.
By:______________________________________
Name:
Title:
ACCEPTED this 18th day of
October, 1999
LEHMAN BROTHERS INC.
By:_________________________________
Name:
Title:
Exhibit 4.1
Pooling and Servicing Agreement
EXECUTION COPY
POOLING AND SERVICING AGREEMENT
Relating to
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1999-1
Among
AMRESCO RESIDENTIAL SECURITIES CORPORATION,
as Depositor,
AMRESCO RESIDENTIAL MORTGAGE CORPORATION,
as Originator,
AMRESCO RESIDENTIAL CAPITAL MARKETS, INC.,
FINANCE AMERICA, LLC,
as Seller
OCWEN FEDERAL BANK FSB,
as Servicer
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
Dated as of September 1, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Table of Contents
Page
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
<S> <C> <C> <C>
Section 1.01. Definitions................................................................................4
Section 1.02. Use of Words and Phrases..................................................................29
Section 1.03. Captions; Table of Contents...............................................................29
Section 1.04. Opinions..................................................................................29
ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST FUND
Section 2.01. Establishment of the Trust Fund...........................................................31
Section 2.02. Office....................................................................................31
Section 2.03. Purposes and Powers.......................................................................31
Section 2.04. Appointment of the Trustee; Declaration of Trust Fund.....................................31
Section 2.05. Ownership of the Trust Fund...............................................................31
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE DEPOSITOR, THE SERVICER, THE ORIGINATOR, ARCMI AND THE SELLER;
COVENANT OF ORIGINATOR AND THE SELLER TO CONVEY MORTGAGE LOANS
Section 3.01. Representations and Warranties of the Depositor...........................................32
Section 3.02. Representations and Warranties of the Servicer............................................34
Section 3.03. Representations and Warranties of ARCMI...................................................36
Section 3.04. Representations and Warranties of the Originator..........................................38
Section 3.05. Representations and Warranties of the Seller..............................................41
Section 3.06. Representations and Warranties Relating to the Mortgage Loans; Covenants of
Originator to Take Certain Actions with Respect to the Mortgage Loans In Certain Situations.............42
Section 3.07. Conveyance of the Mortgage Loans and Qualified Replacement Mortgages......................52
Section 3.08. Acceptance by Trustee; Certain Substitutions of Mortgage Loans; Certification by
Trustee.................................................................................................56
Section 3.09. Conveyance of the Subsequent Mortgage Loans...............................................57
ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES
Section 4.01. Issuance of Certificates..................................................................60
Section 4.02. Sale of Certificates......................................................................60
ARTICLE V
CERTIFICATES AND TRANSFER OF INTERESTS
Section 5.01. Terms.....................................................................................61
Section 5.02. Forms.....................................................................................61
Section 5.03. Execution, Authentication and Delivery....................................................61
Section 5.04. Registration and Transfer of Certificates.................................................62
Section 5.05. Mutilated, Destroyed, Lost or Stolen Certificates.........................................64
Section 5.06. Persons Deemed Owners.....................................................................65
Section 5.07. Cancellation..............................................................................65
Section 5.08. Limitation on Transfer of Ownership Rights................................................65
Section 5.09. Assignment of Rights......................................................................69
Section 5.10. Determination of LIBOR....................................................................69
ARTICLE VI
COVENANTS
Section 6.01. Distributions.............................................................................71
Section 6.02. Money for Distributions to be Held in Trust; Withholding..................................71
Section 6.03. Protection of Trust Estate................................................................72
Section 6.04. Performance of Obligations................................................................73
Section 6.05. Negative Covenants........................................................................73
Section 6.06. No Other Powers...........................................................................73
Section 6.07. Limitation of Suits.......................................................................74
Section 6.08. Unconditional Rights of Owners to Receive Distributions...................................74
Section 6.09. Rights and Remedies Cumulative............................................................74
Section 6.10. Delay or Omission Not Waiver..............................................................75
Section 6.11. Control by Owners.........................................................................75
Section 6.12. Access to Owners of Certificates' Names and Addresses.....................................75
Section 6.13. Year 2000.................................................................................76
ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 7.01. Collection of Money.......................................................................77
Section 7.02. Establishment of Accounts.................................................................77
Section 7.03. Distributions from the Certificate Account................................................77
Section 7.04. Allocation of Losses......................................................................80
Section 7.05. REMIC 1, REMIC 2, REMIC 3 and REMIC 4 Allocations.........................................80
Section 7.06. Basis Risk Reserve Fund...................................................................83
Section 7.07. Pre-Funding Account.......................................................................84
Section 7.08. Investment of Accounts....................................................................85
Section 7.09. Eligible Investments......................................................................85
Section 7.10. Reports by Trustee........................................................................88
Section 7.11. Additional Reports by Trustee.............................................................90
Section 7.12. Credit Reserve Fund.......................................................................91
ARTICLE VIII
SERVICING AND ADMINISTRATION OF MORTGAGE LOANS
Section 8.01. Servicer and Subservicers.................................................................92
Section 8.02. Collection of Certain Mortgage Loan Payments..............................................93
Section 8.03. Subservicing Agreements...................................................................94
Section 8.04. Successor Subservicer.....................................................................94
Section 8.05. Liability of Servicer.....................................................................95
Section 8.06. No Contractual Relationship Between Subservicer and the Trustee or the Owners.............95
Section 8.07. Principal and Interest Account; Escrow Accounts...........................................96
Section 8.08. Delinquency Advances and Servicing Advances...............................................98
Section 8.09. Compensating Interest; Purchase of Mortgage Loans.........................................99
Section 8.10. Maintenance of Insurance..................................................................99
Section 8.11. Due-on-Sale Clauses; Assumption and Substitution Agreements..............................100
Section 8.12. Realization Upon Defaulted Mortgage Loans................................................101
Section 8.13. Trustee and Custodian to Cooperate; Release of Files.....................................103
Section 8.14. Servicing Compensation...................................................................105
Section 8.15. Annual Statement as to Compliance........................................................105
Section 8.16. Annual Independent Certified Public Accountants' Reports.................................105
Section 8.17. Access to Certain Documentation and Information Regarding the Mortgage Loans.............105
Section 8.18. Assignment of Agreement..................................................................106
Section 8.19. Events of Servicing Termination..........................................................106
Section 8.20. Resignation of the Servicer and Appointment of Successor.................................107
Section 8.21. Assumption or Termination of Subservicing Agreement By the Trustee.......................110
Section 8.22. Inspections by Trustee, the Seller and Originator; Errors and Omissions Insurance........110
Section 8.23. Merger, Conversion, Consolidation or Succession to Business of Servicer..................111
Section 8.24. Notices of Material Events...............................................................111
Section 8.25. Servicer's Monthly Servicing Report......................................................112
Section 8.26. Indemnification by the Servicer..........................................................114
Section 8.27. Servicing Standard.......................................................................114
Section 8.28. No Solicitation..........................................................................114
Section 8.29. Waiver of Past Events of Servicing Termination...........................................115
ARTICLE IX
TERMINATION OF TRUST FUND
Section 9.01. Purchase of Mortgage Loans; Termination of Trust Fund Upon Purchase or
Liquidation of All Mortgage Loans......................................................................116
Section 9.02. Procedure Upon Termination of Trust Fund.................................................116
Section 9.03. Additional Trust Fund Termination Requirements...........................................117
ARTICLE X
THE TRUSTEE
Section 10.01. Certain Duties and Responsibilities.....................................................119
Section 10.02. Removal of Trustee for Cause............................................................120
Section 10.03. Certain Rights of the Trustee...........................................................122
Section 10.04. Not Responsible for Recitals or Issuance of Certificates................................123
Section 10.05. May Hold Certificates...................................................................123
Section 10.06. Money Held in Trust.....................................................................124
Section 10.07. Compensation and Reimbursement..........................................................124
Section 10.08. Corporate Trustee Required; Eligibility.................................................124
Section 10.09. Resignation and Removal; Appointment of Successor.......................................125
Section 10.10. Acceptance of Appointment by Successor Trustee..........................................126
Section 10.11. Merger, Conversion, Consolidation or Succession to Business of the Trustee..............126
Section 10.12. Reporting; Withholding..................................................................127
Section 10.13. Liability of the Trustee................................................................127
Section 10.14. Appointment of Co-Trustee or Separate Trustee...........................................128
Section 10.15. Appointment of Custodians...............................................................129
Section 10.16. No Solicitation.........................................................................129
Section 10.17. Periodic Filings with the Securities and Exchange Commission; Additional
Information............................................................................................129
ARTICLE XI
MISCELLANEOUS
Section 11.01. Compliance Certificates and Opinions....................................................131
Section 11.02. Form of Documents Delivered to the Trustee..............................................131
Section 11.03. Acts of Owners..........................................................................132
Section 11.04. Notices, etc............................................................................133
Section 11.05. Notices and Reports to Owners; Waiver of Notices........................................133
Section 11.06. Rules by Trustee........................................................................133
Section 11.07. Successors and Assigns..................................................................133
Section 11.08. Severability............................................................................134
Section 11.09. Benefits of Agreement...................................................................134
Section 11.10. Legal Holidays..........................................................................134
Section 11.11. Governing Law; Submission to Jurisdiction...............................................134
Section 11.12. Counterparts............................................................................135
Section 11.13. Usury...................................................................................135
Section 11.14. Amendment...............................................................................135
Section 11.15. Paying Agent; Appointment and Acceptance of Duties......................................136
Section 11.16. REMIC Status............................................................................137
Section 11.17. Prohibited Transactions and Activities..................................................139
Section 11.18. Indemnification with Respect to Certain Taxes and Loss of REMIC Status..................140
Section 11.19. Attorneys' Fees.........................................................................140
Section 11.20. Notices.................................................................................140
</TABLE>
SCHEDULE I SCHEDULE OF MORTGAGE LOANS
EXHIBIT A FORM OF CLASS A CERTIFICATES
EXHIBIT B FORM OF CLASS M1, M2 AND B CERTIFICATES
EXHIBIT C FORM OF CLASS R CERTIFICATE
EXHIBIT D FORM OF CLASS X CERTIFICATE
EXHIBIT E FORM OF SUBSEQUENT TRANSFER AGREEMENT
EXHIBIT F FORM OF CERTIFICATE RE: PREPAID MORTGAGE LOANS
EXHIBIT G FORM OF CUSTODIAN'S RECEIPT
EXHIBIT H FORM OF POOL CERTIFICATION
EXHIBIT I FORM OF DELIVERY ORDER
EXHIBIT J FORM OF SERVICER'S TRUST RECEIPT
EXHIBIT K FORM OF CLASS R TRANSFER AFFIDAVIT AND AGREEMENT
EXHIBIT L FORM OF CLASS R TRANSFEROR CERTIFICATE
EXHIBIT M FORM OF ERISA AFFIDAVIT
EXHIBIT N FORM OF LIQUIDATION REPORT
EXHIBIT O FORM OF CUSTODIAL AGREEMENT
EXHIBIT P FORM OF INVESTOR REPRESENTATION LETTER
EXHIBIT Q FORM OF TRANSFEROR REPRESENTATION LETTER
EXHIBIT R FORM OF RULE 144A INVESTMENT REPRESENTATIONS
<PAGE>
POOLING AND SERVICING AGREEMENT, relating to AMRESCO RESIDENTIAL
SECURITIES CORPORATION MORTGAGE LOAN TRUST 1999-1, dated as of September 1,
1999, 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
Originator (the "Originator"), AMRESCO RESIDENTIAL CAPITAL MARKETS, INC.
("ARCMI"), FINANCE AMERICA, LLC, a Delaware limited liability company, in its
capacity as Seller (the "Seller"), OCWEN FEDERAL BANK FSB, a federal savings
bank, in its capacity as Servicer (the "Servicer"), and NORWEST BANK
MINNESOTA, NATIONAL ASSOCIATION, a national banking association, in its
capacity as the Trustee (the "Trustee").
WHEREAS, the Originator desires to sell to the Seller and the Seller
desires to purchase from the Originator the Mortgage Loans;
WHEREAS, the Seller desires to sell to the Depositor and the
Depositor desires to purchase from the Seller the Mortgage Loans;
WHEREAS, the Depositor wishes to establish the Trust Fund and provide
for the allocation and sale of the beneficial interests therein and the
maintenance and distribution of the assets held therein;
WHEREAS, the Servicer has acquired the servicing rights with respect
to the Mortgage Loans and agreed to service the Mortgage Loans which
constitute the principal assets of the Trust Fund in accordance with the terms
set forth in this Agreement;
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, Norwest Bank Minnesota, National Association, is willing to
serve in the capacity of the Trustee hereunder;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Depositor, the Originator, ARCMI, the Seller,
the Servicer and the Trustee hereby agree as follows:
PRELIMINARY STATEMENT:
To provide for the distribution of the principal of and/or interest
on the 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 Originator
hereby bargains, sells, conveys, assigns, and transfers to the Seller and the
Seller hereby bargains, sells, conveys, assigns and transfers to the Depositor
and 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, all of their respective right, title and interest
in and to any and all benefits accruing to them from (a) the Mortgage Loans
(other than any principal and interest payments due thereon on or prior to the
Cut-Off Date or Subsequent Cut-Off Date, as applicable, and the rights to
service the Mortgage Loans as provided under the Servicing Rights Purchase
Agreement) listed in Schedule I to this Agreement (or Schedule I to any
Subsequent Transfer Agreement) which the Originator is causing to be delivered
to the Seller, the Seller is causing to be delivered to the Depositor and the
Depositor is causing to be delivered to the Trustee (and all substitutions
therefor as provided by Section 3.04, 3.06, 3.07 and 3.08), together with the
related Mortgage Loan documents and the Originator's, the Seller's and the
Depositor's interest in any Property which secured a Mortgage Loan, 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 any Account
(other than the Principal and Interest Account), 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 Trustee and the Servicer); (c) such amounts as may be
on deposit in the Basis Risk Reserve Fund from time to time; (d) such amounts
as may be on deposit in the Credit Reserve Fund from time to time; and (e)
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 Certificates as
specified herein ((a)-(e) above shall be collectively referred to herein as
the "Trust Estate").
The Trustee acknowledges such sale, accepts the assets of the Trust
Fund hereunder in accordance with the provisions hereof and agrees to perform
the duties herein to the best of its ability.
As provided herein, the Trustee shall elect that the Trust Fund be
treated for federal income tax purposes as including four separate real estate
mortgage investment conduits (each a "REMIC" or, in the alternative, "REMIC
1," "REMIC 2," "REMIC 3," and "REMIC 4," respectively, REMIC 4 also being
referred to as the "Upper Tier REMIC"). The Class A1, Class M1, Class M-2,
Class B, and Class X Certificates represent ownership of all of the "regular
interests" in REMIC 4 (the Class T4-1, Class T4-2, Class T4-3, Class T4-4,
Class T4-5, Class T4-6, Class T4-7, Class T4-8, Class T4-9, Class T4-10, and
Class T4-11 Interests), and the Class R4 Interest represents the sole class of
"residual interest" in REMIC 4 for purposes of the REMIC Provisions. Each of
the Class R1, Class R2, and Class R3 Interests represents the sole class of
"residual interest" in REMIC 1, REMIC 2, and REMIC 3, respectively, for
purposes of the REMIC Provisions. There are also three classes of
uncertificated REMIC 1 Regular Interests issued under this Agreement (the
Class T1-1, Class T1-2 and Class T1-3 Interests), each of which will
constitute regular interests in REMIC 1; four classes of uncertificated REMIC
2 Regular Interests (the Class T2-1, Class T2-2, Class T2-3, and Class T2-4
Interests), each of which will constitute regular interests in REMIC 2; and
eight classes of uncertificated REMIC 3 Regular Interests (the Class T3-1,
Class T3-2, Class T3-3, Class T3-4, Class T3-5, Class T3-6, Class T3-7, and
Class T3-8 Interests), each of which will constitute regular interests in
REMIC 3. REMIC 1 shall hold as assets the Trust Fund excluding the Basis Risk
Reserve Fund, the Credit Reserve Fund and the Pre-Funding Account. The REMIC 1
Regular Interests shall be held as assets of REMIC 2, the REMIC 2 Regular
Interests shall be held as assets of REMIC 3, and the REMIC 3 Regular
Interests shall be held as assets of REMIC 4.
The following table sets forth (or describes) the Class designation,
Pass-Through Rate, Initial Class Principal Balance and minimum denomination
for each Class of Certificates comprising the interests in the Trust created
hereunder.
Initial Certificate Minimum
Class Designation Pass-Through Rate Principal Balance Denomination
- ----------------- ----------------- ------------------- ------------
Class A (1) $176,863,000 $ 100,000
Class M1 (2) 13,690,000 100,000
Class M2 (3) 8,572,000 100,000
Class B (4) 9,615,000 100,000
Class X (5) (5) (7)
Class R (6) (6) (7)
- ---------------------------
(1) The Pass-Through Rate with respect to any Payment Date for the Class
A Certificates is the per annum rate equal to the lesser of (i) LIBOR
plus 0.47% and (ii) the Available Funds Cap for such Payment Date;
PROVIDED, that if the Owner of the Class X Certificate does not
exercise its option to purchase the Mortgage Loans and related
property pursuant to Section 9.01(b) on the Payment Date on which it
is first entitled to do so, then with respect to such Payment Date
and each subsequent Payment Date the per annum rate calculated
pursuant to clause (i) above with respect to the Class A Certificates
will be LIBOR plus 0.94%.
(2) The Pass-Through Rate with respect to any Payment Date for the Class
M1 Certificates is the per annum rate equal to the lesser of (i)
LIBOR plus 0.75% and (ii) the Available Funds Cap for such Payment
Date; PROVIDED, that if the Owner of the Class X Certificate does not
exercise its option to purchase the Mortgage Loans and related
property pursuant to Section 9.01(b) on the Payment Date on which it
is first entitled to do so, then with respect to such Payment Date
and each subsequent Payment Date the per annum rate calculated
pursuant to clause (i) above with respect to the Class M1
Certificates will be LIBOR plus 1.25%.
(3) The Pass-Through Rate with respect to any Payment Date for the Class
M2 Certificates is the per annum rate equal to the lesser of (i)
LIBOR plus 1.35% and (ii) the Available Funds Cap for such Payment
Date; PROVIDED, that if the Owner of the Class X Certificate does not
exercise its option to purchase the Mortgage Loans and related
property pursuant to Section 9.01(b) on the Payment Date on which it
is first entitled to do so, then with respect to such Payment Date
and each subsequent Payment Date the per annum rate calculated
pursuant to clause (i) above with respect to the Class M2
Certificates will be LIBOR plus 1.85%.
(4) The Pass-Through Rate with respect to any Payment Date for the Class
B Certificates is the per annum rate equal to the lesser of (i) LIBOR
plus 3.50% and (ii) the Available Funds Cap for such Payment Date;
PROVIDED, that if the Owner of the Class X Certificate does not
exercise its option to purchase the Mortgage Loans and related
property pursuant to Section 9.01(b) on the Payment Date on which it
is first entitled to do so, then with respect to such Payment Date
and each subsequent Payment Date the per annum rate calculated
pursuant to clause (i) above with respect to the Class B Certificates
will be LIBOR plus 4.00%.
(5) The Initial Certificate Principal Balance for the Class X Certificate
shall equal the initial Overcollateralization Amount as of the
Startup Day and will be entitled to the Class X Distributable Amount.
(6) The Class R Certificate will be issued without a Certificate
Principal Balance and will not bear interest.
(7) The Class X and Class R Certificates will each be issued initially as
a single Certificate evidencing the entire Percentage Interest in
such Class.
As of the Cut-off Date, the Mortgage Loans had an aggregate Loan
Balance of $208,964,820.85.
In consideration of the mutual agreements herein contained, the
Depositor, the Originator, the Seller, the Servicer and the Trustee hereby
agree as follows:
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
8.07 hereof.
"Accrual Period": With respect to any Payment Date and any
Certificate, the period commencing on the preceding Payment Date (or on the
Startup Day in the case of the first Payment Date) and ending on the day
immediately preceding the current Payment Date. All calculations of interest
on any Certificate will be made on the basis of the actual number of days
elapsed in the related Accrual Period and a year of 360 days.
"Adjustable Rate Loans": Any Mortgage Loan as to which the related
Note provides for the adjustment of the Mortgage Rate.
"Adjusted Overcollateralization Amount": With respect to any Payment
Date, the amount, if any, by which (a) the Assumed Total Loan Balance for such
Payment Date (reduced to give effect to any Realized Losses and Delinquency
Advances of principal) exceeds (b) the aggregate of the balances of the Class
T3-1, Class T3-2, Class T3-3 and Class T3-4 Interests as of such Payment Date
(after giving effect to the distribution of principal on such Regular
Interests on such Payment Date).
"Adjusted Overcollateralization Release Amount": With respect to any
Payment Date, the lesser of (x) the Principal Remittance Amount for such
Payment Date and (y) the amount, if any, by which (i) the Adjusted
Overcollateralization Amount for such date, calculated for this purpose on the
basis of the assumption that 100% of the Principal Remittance Amount for such
date is applied on such date in reduction of the principal balances of the
Class T3-1, Class T3-2, Class T3-3 and Class T3-4 Interests exceeds (ii) the
Targeted Overcollateralization Amount for such date.
"Adverse REMIC Event": As defined in Section 11.16(f) hereof.
"Agreement": This Pooling and Servicing Agreement, as it may be
amended from time to time, including the Exhibits and Schedules hereto.
"Applied Realized Loss Amount": As of any Payment Date, the excess of
(x) the aggregate Certificate Principal Balance of all Classes of Offered
Certificates on such Payment Date, after taking into account the distribution
of the Principal Distribution Amount on such Payment Date but prior to the
application of the Applied Realized Loss Amount, if any, on such Payment Date
over (y) the Assumed Total Loan Balance as of the last day of the related
Remittance Period.
"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.
"ARCMI": AMRESCO Residential Capital Markets, Inc., a Delaware
corporation.
"Assumed Total Loan Balance": As of any date of determination will be
equal to the sum of (1) the Total Loan Balance of the Mortgage Loans as of
that date and (2) the amount, if any, on deposit in the Pre-Funding Account as
of such date (other than investment earnings).
"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 Originator, ARCMI, the Seller, the Servicer and 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 Cap": With respect to any Payment Date, the per
annum rate equal to the fraction, expressed as a percentage, the numerator of
which is the product of (i) the Optimal Interest Remittance Amount for such
date and (ii) twelve, and the denominator of which is the product of (a) the
Total Loan Balance as of the immediately preceding Payment Date multiplied by
(b) a fraction, the numerator of which is 30 and the denominator of which is
the actual number of days in the immediately preceding calendar month.
"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.
"Basis Risk Reserve Fund": A fund created as part of the Trust Fund
pursuant to Section 7.06 of this Agreement but which is not an asset of any of
REMIC 1, REMIC 2, REMIC 3 or REMIC 4.
"Basis Risk Shortfall": With respect to any Payment Date and any
Class of Certificates other than the Class R and Class X Certificates, the
amount by which the Pass-Through Rate applicable to such Certificate for such
date, determined without regard to the Available Funds Cap for such date but
subject to the Net Maximum Pass-Through Rate, exceeds such Available Funds
Cap.
"Business Day": Any day other than a Saturday, a Sunday, or other day
on which banking institutions in the States of California, Minnesota, Florida
or Maryland are required or authorized by law or executive order to be closed.
"Certificate": Any Certificate of a Class identified in the
Preliminary Statement hereto executed by the Trustee on behalf of the Trust
Fund and authenticated by the Trustee in substantially the forms attached
hereto as Exhibits A, B, C and D.
"Certificate Account": The certificate account established in
accordance with Section 7.02(a) hereof and maintained at the Corporate Trust
Office; provided that the funds in such account shall not be commingled with
other funds held by the Trustee.
"Certificate Principal Balance": As to each Class of Certificates
(other than the Class X and Class R Certificates), the Initial Certificate
Principal Balance thereof, less the amount of all principal distributions
previously made with respect to such Certificate and any Applied Realized Loss
Amount previously allocated to such Certificate. The Class R Certificate has
been issued without Certificate Principal Balance. The Class X Certificate
will have a Certificate Principal Balance equal to the initial
Overcollateralization Amount as of the Startup Day.
"Class": All Certificates having the same class designation.
"Class B Principal Distribution Amount": With respect to any Payment
Date, the amount, if any, by which (x) the sum of (i) the Class Principal
Balance of the Class A Certificates, the Class M1 Certificates and the Class
M2 Certificates, in each case after giving effect to distributions thereon on
such Payment Date and (ii) the Class Principal Balance of the Class B
Certificates immediately prior to such Payment Date exceeds (y) the lesser of
(A) the product of (i) 95.50% and (ii) the Assumed Total Loan Balance for such
Payment Date and (B) the amount, if any, by which (i) the Assumed Total Loan
Balance for such Payment Date exceeds (ii) the product of (a) 0.50% and (b)
the sum of the Original Aggregate Loan Balance and the Original Pre-Funded
Amount.
"Class M1 Principal Distribution Amount": With respect to any Payment
Date, the amount, if any, by which (x) the sum of (i) the Class Principal
Balance of the Senior Certificates after giving effect to distributions
thereon on such Payment Date and (ii) the Class Principal Balance of the Class
M1 Certificates immediately prior to such Payment Date exceeds (y) the lesser
of (A) the product of (i) 78.42% and (ii) the Assumed Total Loan Balance for
such Payment Date and (B) the amount, if any, by which (i) the Assumed Total
Loan Balance for such Payment Date exceeds (ii) the product of (a) 0.50% and
(b) the sum of the Original Aggregate Loan Balance and the Original Pre-Funded
Amount.
"Class M2 Principal Distribution Amount: With respect to any Payment
Date, the amount, if any, by which (x) the sum of (i) the Class Principal
Balance of the Senior Certificates and the Class Principal Balance of the
Class M1 Certificates, in each case after giving effect to distributions
thereon on such Payment Date and (ii) the Class Principal Balance of the Class
M2 Certificates immediately prior to such Payment Date exceeds (y) the lesser
of (A) the product of (i) 86.47% and (ii) the Assumed Total Loan Balance for
such Payment Date and (B) the amount, if any, by which (i) the Assumed Total
Loan Balance for such Payment Date exceeds (ii) the product of (a) 0.50% and
(b) the sum of the Original Aggregate Loan Balance and the Original Pre-Funded
Amount.
"Class Principal Balance": With respect to each Class of
Certificates, other than the Class R Certificate, the aggregate Certificate
Principal Balance of such Class as of the date of determination.
"Class R Certificate": The Class R Certificate executed by the
Trustee, and authenticated and delivered by the Registrar, substantially in
the form annexed hereto as Exhibit C and evidencing the ownership of the Class
R1 Interest, Class R2 Interest, Class R3 Interest and Class R4 Interest.
"Class R1 Interest": The uncertificated residual interest in REMIC 1.
"Class R2 Interest": The uncertificated residual interest in REMIC 2.
"Class R3 Interest": The uncertificated residual interest in REMIC 3.
"Class R4 Interest": The uncertificated residual interest in REMIC 4.
"Class T1-1 Interest": A regular interest in REMIC 1 held as an asset
of REMIC 2 that has an initial principal balance equal to 98% of the sum of
(i) the Original Aggregate Loan Balance and (ii) the Original Pre-Funded
Amount, bears interest at a per annum rate equal to the Available Funds Cap,
and has such other terms as are described in Section 7.05.
"Class T1-2 Interest": A regular interest in REMIC 1 held as an asset
of REMIC 2 that has an initial principal balance equal to 1% of the sum of (i)
the Original Aggregate Loan Balance and (ii) the Original Pre-Funded Amount,
bears interest at a per annum rate equal to the Available Funds Cap, and has
such other terms as are described in Section 7.05.
"Class T1-3 Interest": A regular interest in REMIC 1 held as an asset
of REMIC 2 that has an initial principal balance equal to 1% of the sum of (i)
the Original Aggregate Loan Balance and (ii) the Original Pre-Funded Amount,
bears interest at a per annum rate equal to the Available Funds Cap, and has
such other terms as are described in Section 7.05.
"Class T2-1 Interest": A regular interest in REMIC 2 held as an asset
of REMIC 3 that has an initial principal balance equal to 98% of the sum of
(i) the Original Aggregate Loan Balance and (ii) the Original Pre-Funded
Amount, bears interest at a per annum rate equal to the Available Funds Cap,
and has such other terms as are described in Section 7.05.
"Class T2-2 Interest": A regular interest in REMIC 2 held as an asset
of REMIC 3 that has an initial principal balance equal to 1% of the sum of (i)
the Original Aggregate Loan Balance and (ii) the Original Pre-Funded Amount,
bears interest at a per annum rate equal to the Class B Pass-Through Rate, and
has such other terms as are described in Section 7.05.
"Class T2-3 Interest": A regular interest in REMIC 2 held as an asset
of REMIC 3 that has an initial principal balance equal to 1% of the sum of (i)
the Original Aggregate Loan Balance and (ii) the Original Pre-Funded Amount,
bears interest at a per annum rate equal to the Available Funds Cap, and has
such other terms as are described in Section 7.05.
"Class T2-4 Distributable Amount": With respect to any Payment Date,
an amount equal to the product of (i) a fraction, the numerator of which is
the number of days in the related Accrual Period and the denominator of which
is 360, (ii) the Class T2-4 Notional Balance, and (iii) the Class T2-4
Pass-Through Rate.
"Class T2-4 Interest": A regular interest in REMIC 2 that is held as
an asset of REMIC 3 that is entitled to the Class T2-4 Distributable Amount
and has such other terms and conditions as are described in Section 7.05.
"Class T2-4 Notional Balance": With respect to any Payment Date, an
amount that corresponds to the actual balance of the Class T1-2 Interest.
"Class T2-4 Pass-Through Rate": With respect to each Payment Date, a
rate equal to the excess of the rate payable on the Class T1-2 Interest over
the Class B Pass-Through Rate.
"Class T3-1 Interest": A regular interest in REMIC 3 that is held as
an asset of REMIC 4, has an initial balance as of the Startup Day equal to the
Class A Class Principal Balance, bears interest at the Class B Pass-Through
Rate, and has such other terms as are described in Section 7.05.
"Class T3-2 Interest". A regular interest in REMIC 3 that is held as
an asset of REMIC 4, has an initial balance as of the Startup Day equal to the
Class M1 Class Principal Balance, bears interest at the Class B Pass-Through
Rate, and has such other terms as are described in Section 7.05.
"Class T3-3 Interest". A regular interest in REMIC 3 that is held as
an asset of REMIC 4, has an initial balance as of the Startup Day equal to the
Class M2 Class Principal Balance, bears interest at the Class B Pass-Through
Rate, and has such other terms as are described in Section 7.05.
"Class T3-4 Interest". A regular interest in REMIC 3 that is held as
an asset of REMIC 4, has an initial balance as of the Startup Day equal to the
Class B Class Principal Balance, bears interest at the Class B Pass-Through
Rate, and has such other terms as are described in Section 7.05.
"Class T3-5 Interest". A regular interest in REMIC 3 that is held as
an asset of REMIC 4, has an initial balance as of the Startup Day equal to the
Class X Class Principal Balance, bears interest at the Class B Pass-Through
Rate, and has such other terms as are described in Section 7.05.
"Class T3-6 Distributable Amount": With respect to any Payment Date,
an amount equal to the product of (i) a fraction, the numerator of which is
the number of days in the related Accrual Period and the denominator of which
is 360, (ii) the Class T3-6 Notional Balance immediately prior to such Payment
Date and (iii) the Class T3-6 Pass-Through Rate.
"Class T3-6 Interest": A regular interest in REMIC 3 that is held as
an asset of REMIC 4, is entitled to the Class T3-6 Distributable Amount, and
has such other terms as are described in Section 7.05.
"Class T3-6 Notional Balance": A notional principal balance equal as
of any date to the sum of the principal balances of the Class T2-1 and T2-3
Interests on such date.
"Class T3-6 Pass-Through Rate": With respect to any Payment Date, a
per annum rate equal to the excess of (i) the rate payable on the Class T2-1
and Class T2-3 Interests for such date over (ii) the product of (x) two and
(y) a fraction, the numerator of which is the sum of (a) the product of the
Class B Pass-Through Rate and the principal balance of the Class T2-2 Interest
immediately prior to such Payment Date and (b) the product of the Class B
Pass-Through Rate subject to a cap equal to zero and the principal balance of
the Class T2-3 Interest immediately prior to such Payment Date and the
denominator of which is the sum of the principal balances of the related Class
T2-2 and Class T2-3 Interests immediately prior to such Payment Date.
"Class T3-7 Distributable Amount": With respect to any Payment Date,
an amount equal to the product of (i) a fraction, the numerator of which is
the number of days in the related Accrual Period and the denominator of which
is 360, (ii) the Class T3-7 Notional Balance immediately prior to such Payment
Date and (iii) the Class T3-7 Pass-Through Rate.
"Class T3-7 Interest": A regular interest in REMIC 3 that is held as
an asset of REMIC 4, is entitled to the Class T3-7 Distributable Amount, and
such other terms as are described in Section 7.05.
"Class T3-7 Notional Balance": A notional principal balance equal as
of any date to the principal balance of the Class T2-2 Interest for such date.
"Class T3-7 Pass-Through Rate": With respect to any Payment Date, a
per annum rate equal to the excess of (i) the Class B Pass-Through Rate over
(ii) the product of (x) two and (y) a fraction, the numerator of which is the
sum of (a) the product of the Class B Pass-Through Rate and the principal
balance of the Class T2-2 Interest immediately prior to such Payment Date and
(b) the product of the Class B Pass-Through Rate subject to a cap equal to
zero and the principal balance of the Class T2-3 Interest immediately prior to
such Payment Date and the denominator of which is the sum of the principal
balances of the related Class T2-2 and Class T2-3 Interests immediately prior
to such Payment Date.
"Class T3-8 Distributable Amount": With respect to any Payment Date,
an amount equal to the Class T2-4 Distributable Amount for such date.
"Class T3-8 Interest": A regular interest in REMIC 3 that is held as
an asset of REMIC 4, is entitled to the Class T3-8 Distributable Amount, and
has such other terms as are described in Section 7.05.
"Class T4-1 Interest": A regular interest in REMIC 4 that has an
initial balance as of the Startup Day equal to the Class A Class Principal
Balance, bears interest at the Class A Pass-Through Rate, and the ownership of
which is evidenced by the Class A Certificates.
"Class T4-2 Interest": A regular interest in REMIC 4 that has an
initial balance as of the Startup Day equal to the Class M1 Class Principal
Balance, bears interest at the Class M1 Pass-Through Rate, and the ownership
of which is evidenced by the Class M1 Certificates.
"Class T4-3 Interest": A regular interest in REMIC 4 that has an
initial balance as of the Startup Day equal to the Class M2 Class Principal
Balance, bears interest at the Class M2 Pass-Through Rate, and the ownership
of which is evidenced by the Class M2 Certificates.
"Class T4-4 Interest": A regular interest in REMIC 4 that has an
initial balance as of the Startup Day equal to the Class B Class Principal
Balance, bears interest at the Class B Pass-Through Rate, and the ownership of
which is evidenced by the Class B Certificates.
"Class T4-5 Interest": A regular interest in REMIC 4 that has an
initial balance as of the Startup Day equal to the Class X Class Principal
Balance, bears interest at the Class B Pass-Through Rate, and the ownership of
which is evidenced by the Class X Certificates.
"Class T4-6 Distributable Amount": With respect to any Payment Date,
an amount equal to the Class T3-6 Distributable Amount for such date.
"Class T4-6 Interest": A regular interest in REMIC 4 that is entitled
to the Class T4-6 Distributable Amount, and the ownership of which is
evidenced by the Class X Certificate.
"Class T4-7 Distributable Amount": With respect to any Payment Date,
an amount equal to the Class T3-7 Distributable Amount for such date.
"Class T4-7 Interest": A regular interest in REMIC 4 that is entitled
to the Class T4-7 Distributable Amount, and the ownership of which is
evidenced by the Class X Certificate.
"Class T4-8 Distributable Amount": With respect to any Payment Date,
an amount equal to the Class T3-8 Distributable Amount for such date.
"Class T4-8 Interest": A regular interest in REMIC 4 that is entitled
to the Class T4-8 Distributable Amount, and the ownership of which is
evidenced by the Class X Certificate.
"Class T4-9 Distributable Amount": With respect to any Payment Date,
an amount equal to the product of (i) a fraction, the numerator of which is
the number of days in the related Accrual Period and the denominator of which
is 360, (ii) the Class T4-9 Notional Balance, and (iii) the Class T4-9
Pass-Through Rate.
"Class T4-9 Interest": A regular interest in REMIC 4 that is entitled
to the Class T4-9 Distributable Amount and the ownership of which is evidenced
by the Class X Certificate.
"Class T4-9 Notional Balance": With respect to any Payment Date, an
amount that corresponds to the actual balance of the Class T3-1 Interest.
"Class T4-9 Pass-Through Rate": With respect to each Payment Date, a
rate equal to the excess of the rate payable on the Class T3-1 Interest over
the Class A Pass-Through Rate.
"Class T4-10 Distributable Amount": With respect to any Payment Date,
an amount equal to the product of (i) a fraction, the numerator of which is
the number of days in the related Accrual Period and the denominator of which
is 360, (ii) the Class T4-10 Notional Balance, and (iii) the Class T4-10
Pass-Through Rate.
"Class T4-10 Interest": A regular interest in REMIC 4 that is
entitled to the Class T4-10 Distributable Amount and the ownership of which is
evidenced by the Class X Certificate.
"Class T4-10 Notional Balance": With respect to any Payment Date, an
amount that corresponds to the actual balance of the Class T3-2 Interest.
"Class T4-10 Pass-Through Rate": With respect to each Payment Date, a
rate equal to the excess of the rate payable on the Class T3-2 Interest over
the Class M1 Pass-Through Rate.
"Class T4-11 Distributable Amount": With respect to any Payment Date,
an amount equal to the product of (i) a fraction, the numerator of which is
the number of days in the related Accrual Period and the denominator of which
is 360, (ii) the Class T4-11 Notional Balance, and (iii) the Class T4-11
Pass-Through Rate.
"Class T4-11 Interest": A regular interest in REMIC 4 that is
entitled to the Class T4-11 Distributable Amount and the ownership of which is
evidenced by the Class X Certificate.
"Class T4-11 Notional Balance": With respect to any Payment Date, an
amount that corresponds to the actual balance of the Class T3-3 Interest.
"Class T4-11 Pass-Through Rate": With respect to each Payment Date, a
rate equal to the excess of the rate payable on the Class T3-3 Interest over
the Class M2 Pass-Through Rate.
"Class X Distributable Amount": With respect to any Payment Date, the
aggregate of the Class T4-6, Class T4-7, Class T4-8, Class T4-9, Class T4-10,
and Class T4-11 Distributable Amounts together with all amounts of principal
and interest distributable for such date with respect to the Class T4-5
Interest as provided in Section 7.05. Moreover, with respect to any Payment
Date, the Class X Distributable Amount shall include prepayment premiums
included in the Monthly Excess Cashflow Amount.
"Closing": As defined in Section 4.02 hereof.
"Code": The Internal Revenue Code of 1986, as amended.
"Collection Period": The period beginning on the first day of the
calendar month immediately preceding the month in which a Monthly Remittance
Date occurs and ending on the last day of such immediately preceding calendar
month; provided that in the case of the first Monthly Remittance Date, the
Collection Period is the period from September 2, 1999 to September 30, 1999.
"Combined Loan-to-Value Ratio": With respect to any Mortgage Loan is
the ratio, expressed as a percentage, of (a) the sum of the Loan Balance of
such Mortgage Loan and any outstanding loan balances of mortgage loans secured
by the related Property senior to such Mortgage Loan, each determined at the
time of origination, to (b) the lesser of the appraised value of the related
Property and the purchase price of such Property, each determined at the time
of origination.
"Compensating Interest": As defined in Section 8.09(a) hereof.
"Corresponding Class": With respect to REMIC 3 Regular Interests and
REMIC 4 Regular Interests, the Classes of Offered Certificates that correspond
to such interests in accordance with the table set out below:
REMIC 3 Class REMIC 4 Class Certificate Class
------------- ------------- -----------------
T3-1 T4-1 A
T3-2 T4-2 M1
T3-3 T4-3 M2
T3-4 T4-4 B
"Corporate Trust Office": The principal corporate trust office of the
Trustee at Norwest Bank Minnesota, National Association, Sixth Street and
Marquette Avenue, Minneapolis, Minnesota 55479-1026, Attn.: AMRESCO 1999-1 or
any other address that the Trustee advises the parties hereto is its principal
corporate trust office.
"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 Mortgage 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.
"Credit Reserve Fund": A fund created as part of the Trust Fund
pursuant to Section 7.12 of this Agreement but which is not an asset of any of
REMIC 1, REMIC 2, REMIC 3 or REMIC 4.
"Credit Reserve Fund Deposit Amount": The amount of any Monthly
Excess Cashflow Amount remaining after distributions have been made pursuant
to Section 7.03(d)(i) through (d)(xii) on any Payment Date prior to the
Payment Date occurring in April 2000, which amount shall be deposited into the
Credit Reserve Fund pursuant to Section 7.03(d)(xiii).
"Current Interest": With respect to each Class of Offered
Certificates and any Payment Date, the amount of interest accrued during the
related Accrual Period at the applicable Pass-Through Rate.
"Custodial Agreement": The Custodial Agreement dated as of September
1, 1999 among the Custodian, the Trustee, the Depositor, the Originator,
ARCMI, the Seller and the Servicer.
"Custodian": Bankers Trust Company of California, N.A., or any
successor thereto.
"Cut-Off Date": As of the close of business on September 1, 1999.
"DCR": Duff & Phelps Credit Rating Co., or its successors in interest.
"Definitive Certificate": A Certificate of any Class issued in
definitive, fully registered, certificated form.
"Delinquency Advance": As defined in Section 8.08(a) hereof.
"Delinquency Rate": With respect to any Collection Period, the
fraction, expressed as a percentage, the numerator of which is the aggregate
outstanding principal balance of all Mortgage Loans 60 or more days
Delinquent, all Mortgage Loans in foreclosure and all Mortgage Loans relating
to REO Properties as of the close of business on the last day of such
Collection Period, and the denominator of which is the Total Loan Balance for
the related Payment Date.
"Delinquent": A Mortgage Loan is "Delinquent" if any payment due
thereon is not made by the close of business on the corresponding day such
payment is scheduled to be due. A Mortgage Loan is "30 days Delinquent" if
such payment has not been received by the close of business on the
corresponding day of the month immediately succeeding the month in which such
payment was due, or, if there is no such corresponding day (e.g., as when a
30-day month follows a 31-day month in which a payment was due on the 31st day
of such month) then on the last day of such immediately succeeding month.
Similarly for "60 days Delinquent," "90 days Delinquent" and so on.
"Delivery Order": The delivery order in the form set forth as Exhibit
I hereto and delivered by the Depositor 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, 55 Water Street, New
York, New York 10004, and any successor Depository hereafter named. The
nominee of the initial Depository for purposes of registering those
Certificates that are to be Depository Certificates is Cede & Co. The
Depository shall at all times be a "clearing corporation" as defined in
Section 8-102(3) of the Uniform Commercial Code of the State of New York and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934, as amended.
"Depository Certificates: " The Class A, Class M1, Class M2 and Class
B Certificates.
"Direct Participant" or "DTC Participant": Any broker-dealer, bank or
other financial institution for which the Depository holds Depository
Certificates from time to time as a securities depository.
"Disqualified Non-United States Person": A transferee of a Class R
Certificate other than a person that (i) is not a Non-United States Person or
(ii) is a Non-United States Person that holds a Class R Certificate in
connection with the conduct of a trade or business within the United States
and has furnished the transferor and the Trustee with an effective Internal
Revenue Service Form 4224 or (iii) is a Non-United States Person that has
delivered to both the transferor and the Trustee an opinion of a nationally
recognized tax counsel to the effect that the transfer of a Class R
Certificate to it is in accordance with the requirements of the Code and the
regulations promulgated thereunder and that such transfer of a Class R
Certificate will not be disregarded for federal income tax purposes.
"Disqualified Organization": Any of (i) the United States, any State
or political subdivision thereof, any possession of the United States, or any
agency or instrumentality of any of the foregoing (other than an
instrumentality which is a corporation if all of its activities are subject to
tax and, except for Freddie Mac, a majority of its board of directors is not
selected by such governmental unit), (ii) any foreign government, any
international organization, or any agency or instrumentality of any of the
foregoing, (iii) any organization (other than certain farmers' cooperatives
described in Section 521 of the Code) which is exempt from the tax imposed by
Chapter 1 of the Code (unless such organization is subject to the tax imposed
by Section 511 of the Code on unrelated business taxable income), or rural
electric and telephone cooperatives described in Section 1381(a)(2)(C) of the
Code and (iv) any other Person so designated by the Trustee based upon an
Opinion of Counsel provided to the Trustee that the holding of an ownership
interest in a Class R Certificate by such Person may cause the REMIC or any
Person having an ownership interest in any Class of Certificates (other than
such Person) to incur liability for any federal tax imposed under the Code
that would not otherwise be imposed but for the transfer of an ownership
interest in the Class R Certificate to such Person. The terms "United States",
"State" and "international organization" shall have the meanings set forth in
Section 7701 of the Code.
"Due Date": The day of the month on which each Scheduled Payment is
due on a Mortgage Loan, exclusive of any grace period.
"Eligible Account": Either (A) a segregated account or accounts
maintained with an institution (which may include the Trustee, provided such
institution otherwise meets these requirements) whose deposits are insured by
the FDIC, the unsecured and uncollateralized debt obligations of which
institution shall be rated A (or the equivalent) or better by each Rating
Agency and in the highest short term rating category by each Rating Agency,
and which is (i) a federal savings and loan association duly organized,
validly existing and in good standing under the federal banking laws, (ii) an
institution duly organized, validly existing and in good standing under the
applicable banking laws of any state, (iii) a national banking association
duly organized, validly existing and in good standing under the federal
banking laws (including the Trustee), (iv) a principal subsidiary of a bank
holding company, or (v) approved in writing by each Rating Agency or (B) a
segregated trust account or accounts maintained in the trust department of a
federal or state chartered depository institution, acting in its fiduciary
capacity.
"Eligible Investments": Those investments so designated pursuant to
Section 7.09 hereof.
"ERISA-Restricted Certificate": Any Class M1, Class M2, Class B,
Class R or Class X Certificate.
"Escrow Payment": The amounts constituting ground rents, taxes,
assessments, water rates, sewer rents, municipal charges, mortgage insurance
premiums, fire and hazard insurance premiums, condominium charges, and any
other payments required to be escrowed by the Mortgagor with the mortgagee
pursuant to the Mortgage or any other document.
"Extra Principal Distribution Amount": With respect to any Payment
Date, the lesser of (a) the sum of (i) Monthly Excess Interest Amount, if any,
for such date and (ii) amounts in the Credit Reserve Fund, if any, for such
date and (b) the Overcollateralization Deficiency, if any, for such date.
"Fannie Mae": Fannie Mae, a federally-chartered and privately-owned
corporation existing under the Federal National Mortgage Association Charter
Act, as amended, or any successor thereof.
"FDIC": The Federal Deposit Insurance Corporation, a corporate
instrumentality of the United States, or any successor thereto.
"File": The documents delivered to the Custodian, on behalf of the
Trustee, pursuant to Section 3.07(b) hereof pertaining to a particular
Mortgage Loan and any additional documents required to be added to the File
pursuant to this Agreement.
"Final Scheduled Payment Date": With respect to the Class A
Certificates, June 25, 2029; with respect to the Class M1 Certificates,
November 25, 2029; with respect to the Class M2 Certificates, November 25,
2029; and with respect to the Class B Certificates, November 25, 2029.
"First Mortgage": Mortgage Loans secured by a valid Mortgage which
represents a first lien.
"Fixed Rate Loan": Any Mortgage Loan as to which the related Note
provides for a fixed Mortgage Rate.
"Freddie Mac": The Federal Home Loan Mortgage Corporation, a
corporate instrumentality of the United States created pursuant to the
Emergency Home Finance Act of 1970, as amended, or any successor thereof.
"Funding Period": 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 (exclusive of any investment earnings) is less than
$100,000 and (ii) December 10, 1999.
"Highest Lawful Rate": As defined in Section 11.13.
"Indirect Participant": Any financial institution for whom any Direct
Participant holds an interest in a Depository Certificate.
"Initial Certificate Principal Balance": As set forth in the
Preliminary Statement.
"Initial LIBOR Rate": 5.40625%.
"Initial Mortgage Loans": The Mortgage Loans to be conveyed to the
Trust Fund by the Depositor on the Startup Day.
"Insurance Policy": Any hazard, flood, title or primary mortgage
insurance policy relating to a Mortgage Loan, provided that any amount
remitted under Section 8.10 hereof shall be considered a payment under an
Insurance Policy.
"Interest Carryforward Amount": With respect to any Payment Date and
each Class of Certificates, the sum of (i) the amount, if any, by which (x)
the sum of (A) Current Interest for such Class for the immediately preceding
Payment Date and (B) any unpaid Interest Carryforward Amount for such Class
from previous Payment Dates exceeds (y) the amount distributed in respect of
interest on such Class on such immediately preceding Payment Date, and (ii)
interest on such amount for the related Accrual Period at the applicable
Pass-Through Rate.
"Interest Rate Adjustment Date": With respect to an adjustable rate
Mortgage Loan, the date on which the Mortgage Rate is adjusted with respect to
such Mortgage Loan. The first Interest Rate Adjustment Date for each
adjustable rate Mortgage Loan is the date set forth on the Schedule of
Mortgage Loans.
"Interest Remittance Amount": As of any Monthly Remittance Date, the
sum of (i) all interest collected (other than Prepaid Installments) or
advanced in respect of Scheduled Payments on the Mortgage Loans during the
related Remittance Period (less the Servicing Fee and unreimbursed Delinquency
Advances and Servicing Advances due to the Servicer under this Agreement, to
the extent allocable to interest), (ii) all Compensating Interest paid by the
Servicer with respect to the related Monthly Remittance Date, (iii) any
amounts collected as prepayment penalties on the Mortgage Loans during the
related Remittance Period, (iv) the portion of the Loan Purchase Price paid
for any Mortgage Loan repurchased from the Trust Fund during the related
Remittance Period and any Substitution Amount paid during the related
Remittance Period allocable to interest, and (v) all Net Liquidation Proceeds
and any other recoveries (net of unpaid Servicing Fees), to the extent
allocable to interest. The amount so determined is then reduced by any amounts
reimbursable to the Trustee pursuant to Sections 8.20, 10.07 and 11.16 and the
Servicer pursuant to Section 8.05.
"Latest Possible Maturity Date": The Payment Date occurring in
November 2030.
"LIBOR": With respect to the first Accrual Period, the Initial LIBOR
Rate. With respect to each subsequent Accrual Period, the per annum rate
determined pursuant to Section 5.10 on the basis of London interbank offered
rate quotations for one-month Eurodollar deposits, as such quotations may
appear on the display designated as page "LIUS01M" on the Bloomberg Financial
Markets Commodities News (or such other page as may replace such page on that
service for the purpose of displaying London interbank offered quotations of
major banks).
"LIBOR Determination Date": The second London Business Day preceding
the commencement of each Accrual Period other than the first Accrual Period.
"Liquidated Loan": As defined in Section 8.12(b) hereof.
"Liquidation Expenses": Expenses, not to exceed Liquidation Proceeds,
which are incurred by the Servicer in connection with the liquidation of any
defaulted Mortgage Loan, such expenses, including, without limitation, legal
fees and expenses, and any unreimbursed Servicing Advances expended by the
Servicer pursuant to Section 8.08(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.
"Loan Balance": With respect to each Mortgage Loan and as of any date
of determination, the outstanding principal balance thereof 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) the
principal portion of all Scheduled Payments due on or before the due date in
the Remittance Period immediately preceding the date of determination, whether
or not received, (ii) all amounts of Prepayments allocable to principal
received on or before the last day of the Remittance Period immediately
preceding the date of determination and (iii) 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 3.04, 3.06,
3.07, 3.08(b), 8.09(b) or 8.12(a) hereof, an amount equal to the sum of (i)
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 Mortgage Rate and
(ii) all unreimbursed Delinquency Advances and Servicing Advances theretofore
made with respect to such 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 commercial banks and foreign
exchange markets settle payments in London and New York City.
"Manufactured Home (Mobile Home)": A residential structure built on a
steel undercarriage with necessary wheel assembly to be transported to a
permanent or semi-permanent site (1) that is permanently affixed to a concrete
foundation that assumes the characteristics commonly used for site-built
housing in the area, (2) that has the wheels, axles and trailer hitches
removed, (3) that is on a foundation with footings anchored in concrete and
located below the frost line of the property or is permanently affixed to a
concrete slab, (4) is built after June 15, 1976 and conforms to National
Manufactured Home Construction and Safety Standards, (5) is at least a
double-wide structure, (6) is legally classified and taxed as real property,
and (7) has a title policy issued and is insured as a single family residence
with all title insurance endorsements (including the merging and elimination
of any vehicle or UCC licensing or title) and indemnities against any loss of
the Manufactured Home determined not to be part of the real property.
"Mezzanine Certificates": Collectively, the Class M1 Certificates and
the Class M2 Certificates.
"Monthly Excess Cashflow Amount": For any Payment Date, the sum of
(x) the Monthly Excess Interest Amount for such Payment Date and (y) the
Overcollateralization Release Amount for such Payment Date.
"Monthly Excess Interest Amount": With respect to any Payment Date,
the amount of any Interest Remittance Amount remaining after application
pursuant to clauses (i) through (v) of Section 7.03(b) on such date.
"Monthly Remittance Date": With respect to the Payment Date in
October 1999, October 20, 1999 and with respect to the Payment Date in
November 1999, November 22, 1999. On each Payment Date thereafter, the 18th
day of each month or if such day is not a Business Day, the immediately
succeeding Business Day.
"Mortgage": The mortgage, deed of trust or other instrument creating
a lien on an estate in fee simple interest in real property securing a Note.
"Mortgage Loans": Such of the mortgage loans (including Initial
Mortgage Loans and the Subsequent Mortgage Loans) transferred and assigned to
the Trust Fund pursuant to Section 3.07(a) and 3.09(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 Fund, the
Mortgage Loans originally so held being identified in the Schedule 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 Fund.
Any mortgage loan which, although intended by the parties hereto to have been,
and which purportedly was, transferred and assigned to the Trust Fund by the
Depositor, in fact was not transferred and assigned to the Trust Fund for any
reason whatsoever, including, without limitation, the incorrectness of the
statement in Section 3.06(a)(i) with respect to such mortgage loan, shall
nevertheless be considered a "Mortgage Loan" for all purposes of this
Agreement.
"Mortgage Rate": The rate of interest borne by each Note from time to
time.
"Mortgagor": The obligor on a Note.
"Net Excess Spread": With respect to any Payment Date, the fraction,
expressed as a percentage, the numerator of which is equal to the product of
(i) the amount, if any, by which (a) the Optimal Interest Remittance Amount
for such Payment Date exceeds (b) the Current Interest payable with respect to
the Certificates for such date and (ii) twelve, and the denominator of which
is the Total Loan Balance for such date.
"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 Maximum Pass-Through Rate": With respect to any Class of Offered
Certificates and any Payment Date, the per annum rate equal to (a) the
weighted average (by Principal Balance) of the maximum interest rates
applicable to the Adjustable Rate Mortgage Loans under the applicable Mortgage
Notes and the Mortgage Rates applicable to the Fixed Rate Mortgage Loans,
MINUS (b) the Total Expense Rate.
"Net Mortgage Rate": With respect to each Mortgage Loan at any time
of determination, a rate equal to the Mortgage Rate on such Mortgage Loan
MINUS the Total Expense Rate.
"90+ Day Delinquent Loan": With respect to any date of determination
thereof, all REO Properties and each Mortgage Loan, with respect to which any
portion of a Scheduled Payment is, as of the last day of the related
Collection Period, 90 days or more Delinquent (including any Mortgage Loans
which have gone into foreclosure or have been discharged by reason of
bankruptcy).
"Non-United States Person": Any Person other than a United States
Person.
"Note": The note or other evidence of indebtedness evidencing the
indebtedness of a Mortgagor under a Mortgage Loan.
"Offered Certificates": Collectively, the Class A Certificates, the
Mezzanine Certificates and the Class B Certificates.
"Officer's Certificate": A certificate signed by any Authorized
Officer of any Person delivering such certificate and delivered to the
Trustee.
"Operative Documents": Collectively, this Agreement, the Custodial
Agreement and the Certificates.
"Opinion of Counsel": A written opinion of counsel, who may be
counsel to the Depositor, the Originator, ARCMI, the Seller, the Servicer or
the Trustee, which counsel shall be reasonably acceptable to the Trustee. Any
Opinion of Counsel that relates to tax matters must be an opinion of
independent outside counsel.
"Optimal Interest Remittance Amount": With respect to each Payment
Date, the product of (1)(x) the weighted average of the Net Mortgage Rates of
the Mortgage Loans as of the first day of the related Remittance Period,
DIVIDED BY (y) twelve, and (2) the Total Loan Balance for the immediately
preceding Payment Date.
"Original Aggregate Loan Balance": The aggregate Loan Balance of all
Initial Mortgage Loans as of the Cut-Off Date, i.e., $208,964,820.85
(consisting of $131,170,976.21 relating to Adjustable Rate Loans and
$77,793,844.64 relating to Fixed Rate Loans).
"Original Pre-Funded Amount": The amount deposited in the Pre-Funding
Account on the Startup Day from the proceeds of the sale of the Certificates,
which amount is $4,035,179.
"Originator": AMRESCO Residential Mortgage Corporation, a Delaware
corporation.
"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 canceled 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.
"Overcollateralization Amount": As of any Payment Date, the amount,
if any, by which (x) the Assumed Total Loan Balance for such Payment Date
exceeds (y) the aggregate Certificate Principal Balance of all of the Offered
Certificates (after giving effect to all distributions of principal on the
Certificates for such Payment Date).
"Overcollateralization Deficiency": As of any Payment Date, the
amount, if any, by which (x) the Targeted Overcollateralization Amount for
such Payment Date exceeds (y) the Overcollateralization Amount for such
Payment Date, calculated for this purpose after taking into account the
reduction on such Payment Date of the aggregate Certificate Principal Balance
resulting from the distribution of the Principal Remittance Amount (but not
the Extra Principal Distribution Amount) on such Payment Date, but prior to
taking into account any Applied Realized Loss Amount on such Payment Date.
"Overcollateralization Release Amount": As of any Payment Date, will
be equal to the amount, if any, by which (i) the Overcollateralization Amount
for such Payment Date exceeds (ii) the Targeted Overcollateralization Amount
for such Payment Date.
"Owner": The Person in whose name a Certificate is registered in the
Register, to the extent described in Section 5.06 hereof; provided that solely
for the purposes of determining the exercise of any voting rights hereunder,
if any Offered Certificates are beneficially owned by the Originator or any
affiliate thereof, the Originator or such affiliate shall not be considered an
Owner.
"Ownership Interest": As to any Certificate, any ownership or
security interest in such Certificate, including any interest in such
Certificate as the Owner thereof and any other interest therein, whether
direct or indirect, legal or beneficial, as owner or as pledgee.
"Pass-Through Rate": As set forth in the Preliminary Statement.
"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 October 27, 1999 for the first
Payment Date and, thereafter, the 25th day of each month or if such day is not
a Business Day, the next Business Day thereafter.
"Percentage Interest": With respect to an Offered Certificate, a
fraction, expressed as a decimal, the numerator of which is the initial
Certificate Principal Balance represented by such Certificate and the
denominator of which is the aggregate initial Certificate Principal Balance
represented by all the Certificates of the same Class. With respect to a Class
X 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.
"Permitted Exceptions": The following: (a) the lien of current real
property taxes and assessments not yet due and payable; (b) covenants,
conditions and restrictions, rights of way, easements and other matters of the
public record as of the date of recording acceptable to prudent mortgage
lending institutions generally and specifically referred to in the lender's
title insurance policy delivered to the originator of the Mortgage Loan and
referred to or otherwise considered in the appraisal made for the originator
of the Mortgage Loan; (c) other matters to which like properties are commonly
subject which do not materially interfere with the benefits of the security
intended to be provided by the Mortgage or the use, enjoyment, value or
marketability of the related Property; and (d) a valid and current first lien
for Second Mortgages.
"Permitted Transferee": Any transferee of a Class R Certificate other
than a Disqualified Non-United States Person or Disqualified Organization.
"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.
"Pre-Funded Amount": As of any date of determination thereof, the
amount remaining on deposit in the Pre-Funding Account.
"Pre-Funding Account": The Pre-Funding Account established in
accordance with Section 7.02(b) hereof and maintained by the Trustee.
"Pre-Funding Account Earnings": The actual investment earnings earned
during the period from the Startup Day through the earlier to occur of (i)
December 27, 1999 and (ii) the Payment Date immediately following the date
upon which amounts in the Pre-Funding Account have been reduced to less than
$100,000, on the portion of the Pre-Funded Amount remaining during such period
as calculated by the Trustee pursuant to Section 7.07(d) hereof.
"Prepaid Installment": With respect to any Mortgage Loan, any
installment of principal thereof and interest thereon received by the 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 Fund pursuant to Section 3.04, 3.06,
3.07, 3.08(b) or 8.09(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.
"Preservation Expenses": Expenditures made by the 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.
"Prime Rate": The prime rate of major United States banks as listed
in The Wall Street Journal on the first Business Day of the month.
"Principal Distribution Amount": As of any Payment Date, the sum of
(i) the Principal Remittance Amount for such Payment Date MINUS the
Overcollateralization Release Amount, if any, and (ii) the Extra Principal
Distribution Amount, if any, for such Payment Date.
"Principal and Interest Account": The principal and interest account
established by the Servicer pursuant to Section 8.07(a) hereof.
"Principal Remittance Amount": As of any Monthly Remittance Date, the
sum, without duplication, of (i) the principal collected (other than Prepaid
Installments) or advanced by the Servicer with respect to Mortgage Loans
during the related Remittance Period (less unreimbursed Delinquency Advances
and Servicing Advances due to the Servicer under this Agreement, to the extent
allocable to principal), (ii) all Prepayments collected during the related
Remittance Period, (iii) the Loan Balance of each Mortgage Loan that was
purchased from the Trust Fund on or prior to such Monthly Remittance Date, to
the extent such Loan Balance was actually deposited in the Principal and
Interest Account, (iv) any Substitution Amounts relating to principal in
connection with a substitution of a Mortgage Loan to the extent such
Substitution Amounts were actually deposited in the Principal and Interest
Account on or prior to such Monthly Remittance Date, (v) any amounts required
to be transferred from the Pre-Funding Account to the Certificate Account
pursuant to Section 7.07(c) hereof and (vi) all Net Liquidation Proceeds
actually collected by the Servicer during the related Remittance Period (to
the extent such Net Liquidation Proceeds related to principal). The amount so
determined is then reduced by any amounts reimbursable to the Trustee pursuant
to Sections 8.20, 10.07 and 11.16 and the Servicer pursuant to Section 8.05
(to the extent the Interest Remittance Amount was insufficient to cover such
amounts).
"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.
"Property": The underlying property securing a Mortgage Loan.
"Prospectus": The Prospectus dated October 18, 1999 constituting part
of the Registration Statement.
"Prospectus Supplement": The AMRESCO Residential Securities
Corporation Mortgage Loan Trust 1999-1 Prospectus Supplement dated October 18,
1999 to the Prospectus.
"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 Fund.
"Qualified Replacement Mortgage": A Mortgage Loan substituted for
another pursuant to Section 3.04, 3.06, 3.07 or 3.08(b) hereof, which (i) has
a Mortgage Rate not less than and not more than 1% greater than the Mortgage
Rate of the Mortgage Loan being replaced, (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 as the replaced Mortgage Loan or is a
primary residence, (iii) shall mature no later than November 1, 2029, (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 as the Mortgage Loan which
such Qualified Replacement Mortgage replaces, (vi) has a Loan Balance as of
the related Subsequent Cut-Off Date not greater than and not substantially
less than the Loan Balance of the replaced Mortgage Loan as of such Subsequent
Cut-Off Date, (vii) shall have a remaining term to stated maturity not greater
than (and not more than six months less than) that of the Mortgage Loan being
replaced, (viii) 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), (ix) shall be a fixed rate Mortgage
Loan if the Mortgage Loan being replaced is a fixed rate Mortgage Loan or an
adjustable rate Mortgage Loan if the Mortgage Loan being replaced is an
adjustable rate Mortgage Loan, (x) if such Mortgage Loan being replaced is an
adjustable rate Mortgage Loan, (a) has the index of the replaced Mortgage
Loan, (b) has the same amount of time between rate adjustment dates as the
replaced Mortgage Loan and (c) has a margin no less than the replaced Mortgage
Loan and (xi) 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 Fund. In the event that one or more home
equity loans are proposed to be substituted for one or more Mortgage Loans,
the foregoing tests may be met on a weighted average (or similar) basis,
except that the requirements of clause (xi) hereof must be satisfied as to
each Qualified Replacement Mortgage.
"Rating Agencies": Collectively, Standard and Poor's and DCR 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.
"Realized Loss Amortization Amount": With respect to any Payment Date
and each Certificate, the amount, if any, by which (x) the aggregate of
Applied Realized Loss Amounts previously applied in reduction of the
Certificate Principal Balance thereof exceeds (y) the total of any amounts
previously reimbursed in respect of Applied Realized Loss Amounts.
"Record Date": With respect to the Certificates and each Payment
Date, the day immediately preceding such Payment Date.
"Reference Banks": As defined in Section 5.10.
"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
333-30759), including all amendments thereto and including the Prospectus
Supplement relating to the Offered Certificates constituting a part thereof.
"Regular Interest": A "regular interest" in a REMIC within the
meaning of Section 860G(a)(1) of the Code.
"REMIC": Each pool of assets in the Trust designated as a REMIC
pursuant to Section 11.16(a) hereof.
"REMIC 1 Regular Interest": Any of the Class T1-1, Class T1-2 and
Class T1-3 Interests.
"REMIC 2 Regular Interest": Any of the Class T2-1, Class T2-2, Class
T2-3, and Class T2-4 Interests.
"REMIC 3 Regular Interest": Any of the Class T3-1, Class T3-2, Class
T3-3, Class T3-4, Class T3-5, Class T3-6, Class T3-7, and Class T3-8
Interests.
"REMIC 4 Regular Interest": Any of the Class T4-1, Class T4-2, Class
T4-3, Class T4-4, Class T4-5, Class T4-6, Class T4-7, Class T49, Class T4-10,
and Class T4-11 Interests.
"REMIC Opinion": As defined in Section 3.04 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": The period from and including the second day of
the calendar month preceding the month in which a Monthly Remittance Date
occurs to and including the first day of the calendar month in which a Monthly
Remittance Date occurs.
"REO Property": A Property acquired by the Servicer on behalf of the
Trust through foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted Mortgage Loan.
"Representation Letter": Letters to, or agreements with, the
Depository to effectuate a book entry system with respect to the Depository
Certificates registered in the Register under the nominee name of the
Depository.
"Required Reserve Fund Deposit": With respect to any Payment Date on
which the Net Excess Spread is less than 0.25%, the amount, if any, by which
(a) the product of 1.00% and the Total Loan Balance for such date exceeds (b)
the amount on deposit in the Basis Risk Reserve Fund immediately prior to such
date. With respect to any Payment Date on which the Net Excess Spread is equal
to or greater than 0.25%, the amount, if any, by which (i) $1,000 exceeds (ii)
the amount on deposit in the Basis Risk Reserve Fund immediately prior to such
date.
"Restricted Certificate": Any Class R or Class X Certificate.
"Schedule of Mortgage Loans": The schedule of Mortgage Loans, listing
each Initial Mortgage Loan to be conveyed on the Startup Day or each
Subsequent Mortgage Loan to be conveyed on each Subsequent Transfer Date. Such
Schedule of Mortgage Loans shall identify each Mortgage Loan by: (i) the loan
number and name of the Mortgagor; (ii) the street address, city, state and zip
code of the Property; (iii) (A) the original term to maturity and (B) if such
Mortgage Loan is a Balloon Loan, the amortization term thereof; (iv) the
original Loan Balance and the original Mortgage Rate; (v) the first payment
date; (vi) whether the Mortgage Loan is a Balloon Mortgage Loan or a Mortgage
Loan the terms of which do not provide for a Balloon Payment; (vii) the type
of Property; (viii) the Scheduled Payment in effect as of the Cut-Off Date or
Subsequent Cut-Off Date, as applicable; (ix) the Loan Balance as of the
Cut-Off Date or Subsequent Cut-Off Date, as applicable; (x) the Mortgage Rate
as of the Cut-Off Date or Subsequent Cut-Off Date, as applicable; (xi) the
occupancy status; (xii) the purpose of the Mortgage Loan; (xiii) the
collateral value of the Property; (xiv) the paid-through date of the Mortgage
Loan; (xv) the Net Mortgage Rate for such Mortgage Loan; and (xvi) the
documentation type.
"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).
"Second Mortgage": Mortgage Loans secured by a valid mortgage which
represents a second lien.
"Securities Act": The Securities Act of 1933, as amended.
"Senior Certificates": The Class A Certificates.
"Senior Enhancement Percentage": With respect to any Payment Date,
the fraction, expressed as a percentage, the numerator of which is the sum of
the aggregate Certificate Principal Balance of the Class M1, Class M2 and
Class B Certificates and the Overcollateralization Amount (which amount, for
purposes of this definition, shall not be less than zero), in each case
calculated after giving effect to distributions on such Payment Date, and the
denominator of which is the Assumed Total Loan Balance for such Payment Date.
"Senior Principal Distribution Amount": With respect to any Payment
Date, the amount, if any, by which (x) the Class Principal Balance of the
Class A Certificates immediately prior to such Payment Date exceeds (y) the
lesser of (A) the product of (i) 65.57%, and (ii) the Assumed Total Loan
Balance for such Payment Date and (B) the amount, if any, by which (i) the
Assumed Total Loan Balance for such Payment Date exceeds (ii) the product of
(a) 0.50% and (b) the Original Aggregate Loan Balance on the Original
Pre-Funded Amount.
"Servicer": Ocwen Federal Bank FSB, a federal savings bank, and its
successors and assigns.
"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 Termination Event": As defined in Section 8.19(a) hereof.
"Servicer's Monthly Servicing Report": Any report provided by the
Servicer pursuant to Section 8.25(a) hereof.
"Servicer's Trust Receipt": The Servicer's Trust Receipt, in the form
set out as Exhibit J hereto.
"Servicing Advance": As defined in Section 8.08(b) and Section
8.12(a) hereof.
"Servicing Fee": With respect to any Payment Date, an amount equal to
the product of (x) the Servicing Fee Rate and (y) the aggregate outstanding
Loan Balance as of the first day of the related Remittance Period.
"Servicing Fee Rate": 0.50% per annum.
"Servicing Rights Purchase Agreement": The Servicing Rights Purchase
Agreement dated as of October 20, 1999, between the Servicer and the
Originator.
"Standard and Poor's": Standard and Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc., or its successors in interest.
"Startup Day": October 20, 1999.
"Stepdown Date": The later to occur of (x) the Payment Date in
October 2002 and (y) the first Payment Date on which the Senior Enhancement
Percentage (calculated for this purpose AFTER giving effect to payments or
other recoveries in respect of the Mortgage Loans during the related
Remittance Period but BEFORE giving effect to distributions on the
Certificates on such Payment Date) is greater than or equal to 34.43%.
"Subordinate Certificates": Collectively, the Mezzanine Certificates,
the Class B Certificates and the Class X Certificate.
"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
Fund after the Startup Day pursuant to a fixed price contract pursuant to
Section 3.09 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,
the Seller, ARCMI and the Originator substantially in the form of Exhibit E
hereto, by which Subsequent Mortgage Loans are sold and assigned to the Trust
Fund.
"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 Fund 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 3.04 hereof.
"Tape": The meaning provided in Section 8.25(b) hereof.
"Targeted Overcollateralization Amount": On any Payment Date (a)
prior to the Stepdown Date, the product of (i) the greater of (A) the product
of (I) 2.25% and (II) the Original Aggregate Loan Balance and the Original
Pre-Funded Amount or (B) the product of (I) one-seventh of the Three Month
Delinquency Rate and (II) the Assumed Total Loan Balance for the related
Payment Date; (b) on or after the Stepdown Date and if a Trigger Event has not
occurred for such Payment Date, the greater of (i) the product of (A) the
greater of (I) 4.50% or (II) one-seventh of the Three Month Delinquency Rate
and (B) the Assumed Total Loan Balance for the related Payment Date and (ii)
the product of (A) 0.50% and (B) the Original Aggregate Loan Balance and the
Original Pre-Funded Amount; and (c) on and after the Stepdown Date, and if a
Trigger Event has occurred for such Payment Date, the amount calculated
pursuant to clause (a) above.
"Termination Price": As defined in Section 9.01(b) hereof.
"Three Month Delinquency Rate": With respect to any Payment Date, the
average of the Delinquency Rates for each of the three (or one and two, in the
case of the first and second Payment Dates) immediately preceding Collection
Periods.
"Total Distribution Amount": With respect to any Payment Date, the
sum of the Interest Remittance Amount for such date and the Principal
Remittance Amount for such date.
"Total Expense Rate": With respect to any Payment Date, the sum of
the Servicing Fee Rate and the Trustee Fee Rate.
"Total Loan Balance": The aggregate of the Loan Balances of all
Mortgage Loans at the date of determination.
"Transfer": Any direct or indirect transfer, sale, pledge,
hypothecation or other form of assignment of any Ownership Interest in a
Certificate.
"Transfer Affidavit and Agreement": As defined in Section 5.08(c).
"Transferee": Any Person who is acquiring by Transfer any Ownership
Interest in a Certificate.
"Transferor": Any Person who is disposing by Transfer any Ownership
Interest in a Certificate.
"Trigger Event": A Trigger Event will have occurred with respect to
any Payment Date if the Three Month Delinquency Rate for such Payment Date
equals or exceeds 50% of the Senior Enhancement Percentage for such Payment
Date.
"Trust Fund": AMRESCO Residential Securities Corporation Mortgage
Loan Trust 1999-1, the trust fund created and administered under this
Agreement consisting of the assets of the Trust Estate.
"Trust Estate": As defined in the Preliminary Statement under this
Agreement.
"Trustee": Norwest Bank Minnesota, National Association, a national
banking association, not in its individual capacity but solely as Trustee
under this Agreement, and any successor hereunder.
"Trustee Fee": With respect to any Payment Date, an amount equal to
the product of (x) the Trustee Fee Rate and (y) the sum of the aggregate
outstanding Loan Balance and the balance in the Pre-Funding Account, if any,
in each case as of the first day of the related Remittance Period.
"Trustee Fee Rate": 0.0125% per annum.
"Underwriter": Lehman Brothers, Inc.
"Unpaid Basis Risk Shortfall": With respect to any Payment Date and
any Offered Certificate, the aggregate of all Basis Risk Shortfalls with
respect to such Certificate remaining unpaid from previous Payment Dates, plus
interest accrued thereon at the applicable Pass-Through Rate (calculated
without giving effect to the applicable Available Funds Cap).
"United States Person" (i) a citizen or resident of the United
States; (ii) a corporation (or entity treated as a corporation for tax
purposes) created or organized in the United States or under the laws of the
United States or of any state thereof, including, for this purpose, the
District of Columbia; (iii) a partnership (or entity treated as a partnership
for tax purposes) organized in the United States or under the laws of the
United States or of any state thereof, including, for this purpose, the
District of Columbia (unless provided otherwise by future Treasury
regulations); (iv) an estate whose income is includible in gross income for
United States income tax purposes regardless of its source; or (v) a trust, if
a court within the United States is able to exercise primary supervision over
the administration of the trust and one or more U.S. Persons have authority to
control all substantial decisions of the trust. Notwithstanding the last
clause of the preceding sentence, to the extent provided in Treasury
regulations, certain trusts in existence on August 20, 1996, and treated as
U.S.
Persons prior to such date, may elect to continue to be U.S. Persons.
"Upper Tier REMIC": REMIC 4.
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,
<PAGE>
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
<PAGE>
ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST FUND
Section 2.01. Establishment of the Trust Fund.
The parties hereto do hereby create and establish, pursuant to the
laws of the State of New York and this Agreement, the Trust Fund, which, for
convenience, shall be known as "AMRESCO Residential Securities Corporation
Mortgage Loan Trust 1999-1".
Section 2.02. Office.
The office of the Trust Fund shall be in care of the Trustee,
addressed to the Corporate Trust Office or at such other address as the
Trustee may designate by notice to the Depositor, the Originator, the Seller,
the Servicer and the Owners.
Section 2.03. Purposes and Powers.
The purpose of the Trust Fund is to engage in the following
activities and only such activities: (i) the issuance of the Certificates and
the acquiring, owning, holding and disposing of the assets of the Trust Fund
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 assets of the Trust Fund and distributions to the
Owners; provided, however, that nothing contained herein shall permit the
Trustee to take any action which would adversely affect the status of REMIC 1,
REMIC 2, REMIC 3 or REMIC 4 as a REMIC.
Section 2.04. Appointment of the Trustee; Declaration of Trust Fund.
The Depositor hereby appoints the Trustee as trustee of the Trust
Fund 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 assets of the Trust Fund in trust upon and subject to the conditions
set forth herein for the benefit of the Owners.
Section 2.05. Ownership of the Trust Fund.
On the Startup Day the ownership interests in the Trust Fund 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.
END OF ARTICLE II
<PAGE>
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE DEPOSITOR,
THE SERVICER, THE ORIGINATOR, ARCMI AND THE SELLER; COVENANT
OF ORIGINATOR AND THE 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 Originator, ARCMI, the Seller, the Servicer 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 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 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 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 or omit to state a material fact required to be stated
therein or necessary to make the statements contained therein, 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 Servicer.
(a) The Servicer hereby represents and warrants to the Trustee,
the Depositor, the Originator, ARCMI, the Seller and the Owners, that as of
the Startup Day:
(i) It is a federal savings bank duly organized, validly
existing and in good standing under the laws of the United States of
America, 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 in each
jurisdiction in which the nature of its business, or the properties
owned or leased by it make such qualification necessary. The Servicer
has all requisite 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.
(ii) The execution and delivery of the Operative
Documents to which the Servicer is a party by the Servicer and its
performance and compliance with the terms thereof have been duly
authorized by all necessary action on the part of the Servicer and
will not violate the Servicer's charter or bylaws or constitute a
default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or result in the breach of, any
material contract, agreement or other instrument to which the
Servicer is a party or by which the Servicer is bound or violate any
statute or any order, rule or regulation of any court, governmental
agency or body or other tribunal having jurisdiction over the
Servicer or any of its properties.
(iii)Each Operative Document to which the Servicer is a
party, assuming due authorization, execution and delivery by the
other parties thereto, constitutes a valid, legal and binding
obligation of the 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).
(iv) The 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 the Servicer or its properties or would
materially and adversely affect its performance hereunder.
(v) No litigation is pending with respect to which the
Servicer has received service of process or, to the best of the
Servicer's knowledge, threatened against the Servicer which
litigation would prohibit its entering into the Operative Documents
to which the Servicer is a party or would materially and adversely
affect the condition (financial or otherwise) or operations of the
Servicer or its properties or would materially and adversely affect
its performance hereunder and under the other Operative Documents to
which the Servicer is a party.
(vi) No certificate of an officer, statement furnished
in writing or report delivered pursuant to the terms hereof by the
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.
(vii)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 actions, approvals, etc. under
any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Servicer makes no representation or
warranty), that are necessary or advisable in connection with the
execution, delivery and performance by the 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 the Servicer and the performance by the Servicer of its
obligations under the Operative Documents to which it is a party.
(viii) The collection practices used by the
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.
(ix) The transactions contemplated by this Agreement are
in the ordinary course of business of the Servicer.
(x) The Servicer's computer and other systems used in
servicing the Mortgage Loans will be modified and maintained to
operate in a manner such that at all times, including on and after
January 1, 2000, (a) the Servicer can service the Mortgage Loans in
accordance with the terms of this Agreement and (b) the Servicer can
operate its business in the same manner as it is operating on the
date hereof provided, that, the Servicer's ability to meet the
requirements of this representation may be limited in circumstances
where it relies on third party systems which are incompatible with
those of the Servicer on or after January 1, 2000.
(xi) The statements contained in the Prospectus
Supplement under the headings "The Servicer - General" and
"-Delinquency, Loan Loss and Foreclosure Information" (collectively,
the "Servicer Information") are true and correct in all material
respects, and the Servicer Information does not contain any untrue
statements of a material fact with respect to the Servicer required
to be stated therein or necessary to make the statements contained
therein, in light of the circumstances under which they were made,
not misleading.
(b) 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.
(c) Upon discovery by any of the Originator, ARCMI, the Seller,
the Servicer, the Depositor, 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, the party discovering such breach shall give prompt
written notice to the other parties. As promptly as possible, but in any
event, within 60 days of its discovery or its receipt of notice of such
breach, (A) the Servicer shall cure such breach in all material respects and
(B) to the extent that such breach is not cured in accordance with clause (A)
above, the Servicer may thereafter be removed pursuant to Section 8.19(a)(iv)
hereof.
Section 3.03. Representations and Warranties of ARCMI.
ARCMI hereby represents, warrants and covenants to the Trustee, the
Originator, the Seller, the Depositor, the Servicer and the Owners that as of
the Startup Day:
(a) ARCMI 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. ARCMI 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 by ARCMI 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
ARCMI and will not violate ARCMI'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 ARCMI is a party or
by which ARCMI 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 ARCMI or any of its properties.
(c) Each Operative Document to which ARCMI is a party, assuming
due authorization, execution and delivery by the other parties hereto and
thereto, constitutes a valid, legal and binding obligation of ARCMI,
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) ARCMI 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 ARCMI or its
properties or which would materially and adversely affect its performance
hereunder and under the Operative Documents to which ARCMI is a party.
(e) No litigation is pending with respect to which ARCMI has
received service of process or, to the best of ARCMI's knowledge, threatened
against ARCMI, 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 ARCMI or its properties or would
materially and adversely affect its performance hereunder and under the other
Operative Documents to which ARCMI 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 ARCMI
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 ARCMI or matters or activities for which ARCMI is responsible in
accordance with the Operative Documents or which are attributable to ARCMI
therein are true and correct in all material respects, and the Registration
Statement does not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements contained therein, 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 ARCMI that materially adversely affects or in the future
may (so far as ARCMI can now reasonably foresee) materially adversely affect
ARCMI 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 ARCMI makes no such
representation or warranty), that are necessary or advisable in connection
with the execution, delivery and performance by ARCMI 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 ARCMI and the performance by ARCMI 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 ARCMI.
(j) ARCMI is not insolvent, nor will it be made insolvent by the
terms of this Agreement, nor is ARCMI aware of any pending insolvency.
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.
Section 3.04. Representations and Warranties of the Originator.
The Originator hereby represents, warrants and covenants to the
Trustee, ARCMI, the Seller, the Depositor, the Servicer and the Owners as of
the Startup Day as follows:
(a) The Originator 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 Originator 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 by the Originator 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 Originator and will not violate the Originator'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 Originator is a party or by which the Originator 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 Originator or any of its
properties.
(c) Each Operative Document to which the Originator 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
Originator, 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 Originator 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
Originator or its properties or which would materially and adversely affect
its performance under the Operative Documents to which the Originator is a
party.
(e) No litigation is pending with respect to which the
Originator has received service of process or, to the best of the Originator's
knowledge, threatened against the Originator, 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
Originator or its properties or would materially and adversely affect its
performance under the Operative Documents to which the Originator 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
Originator 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 Originator or matters or activities for which the Originator is
responsible in accordance with the Operative Documents or which are
attributable to the Originator 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 Originator required to be stated
therein or necessary to make the statements contained therein with respect to
the Originator, in light of the circumstances under which they were made, not
misleading. There is no fact known to the Originator that materially adversely
affects or in the future may (so far as the Originator can now reasonably
foresee) materially adversely affect the Originator 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 assets of the Trust Fund by the Trustee under this
Agreement, the Trust Fund will have good title to such Mortgage Loan
(including the related Note) and such other assets of the Trust Fund 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 Originator 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 Originator 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 Originator
and the performance by the Originator 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 Originator.
(k) The Originator is not insolvent, nor will it be made
insolvent by the transfer of the Mortgage Loans, nor is it aware of any
insolvency pending.
(l) The transfer, assignment and conveyance of the Notes and the
Mortgages by the Originator 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 3.04 shall survive delivery of the respective
Mortgage Loans to the Trustee.
Upon discovery by the Servicer, the Depositor, the Originator, ARCMI,
the Seller 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 3.04 which materially and adversely affects the interests of the
Owners, the party discovering such breach shall give prompt written notice to
the other parties. The Originator 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 on the Monthly Remittance Date next succeeding such discovery
or receipt of notice (i) within two years of the Startup Day, at the
Originator's option 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) interest accrued and unpaid with respect to such Mortgage Loan (a
"Substitution Amount") to the Servicer for deposit in the Principal and
Interest Account or (ii) purchase such Mortgage Loan (subject to the Servicing
Rights Purchase Agreement) from the Trust Fund at the Loan Purchase Price,
which purchase price shall be delivered to the 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 Originator obtains for the Trustee an
opinion of counsel experienced in federal income tax matters (which must be
outside counsel) to the effect that such a repurchase or substitution would
not constitute a Prohibited Transaction for the Trust Fund or REMIC 1, REMIC
2, REMIC 3 or REMIC 4 or otherwise subject the Trust Fund or REMIC 1, REMIC 2,
REMIC 3 or REMIC 4 to tax and would not jeopardize the status of REMIC 1,
REMIC 2, REMIC 3 or REMIC 4 as a REMIC (a "REMIC Opinion") addressed to the
Servicer, ARCMI, the Seller and the Trustee and acceptable to the Servicer 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 3.04, 3.06 or 3.08, 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 of a REMIC Opinion. If the Originator fails to
meet its obligations to cure any such breach or substitute or purchase any
such Mortgage Loan pursuant to and within the time periods specified in this
paragraph, the Trustee shall immediately give notice to ARCMI of such failure
and, within 10 Business Days of receipt of such notice, ARCMI shall purchase
such Mortgage Loan from the Trust Fund pursuant to the terms of this
paragraph.
Section 3.05. Representations and Warranties of the Seller.
The Seller hereby represents, warrants and covenants to the Trustee,
the Originator, ARCMI, the Depositor, the Servicer and the Owners as of the
Startup Day as follows:
(a) The Seller is a limited liability company duly organized,
validly existing and in good standing under the laws governing its creation
and existence and is in good standing 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 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 limited liability agreement or
certificate of formation 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 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 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) 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 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.
(i) The transactions contemplated by the Operative Documents are
in the ordinary course of business of the Seller.
(j) The Seller is not insolvent, nor will it be made insolvent
by the transfer of the Mortgage Loans, nor is it aware of any insolvency
pending.
(k) 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.
It is understood and agreed that the representations and warranties
set forth in this Section 3.05 shall survive delivery of the respective
Mortgage Loans to the Trustee.
Section 3.06. Representations and Warranties Relating to the Mortgage
Loans; Covenants of Originator to Take Certain Actions with Respect to the
Mortgage Loans In Certain Situations.
(a) With respect to each Mortgage Loan, the Originator
represents and warrants to, and covenants to the Trustee, the Seller, the
Depositor, ARCMI, the Servicer, and the Owners that, as of the Startup Date
(with respect to the Initial Mortgage Loans) and as of the Subsequent Transfer
Date (with respect to the Subsequent Mortgage Loans):
(i) Title to the Mortgage Loans. Immediately prior to the
transfer and assignment of the Mortgage Loans by the Originator to
the Seller, by the Seller to the Depositor and by the Depositor to
the Trust Fund contemplated herein, the Originator held good title to
and was the sole owner of record and holder of the Mortgage Loans and
the indebtedness evidenced by each Note. The Originator has good,
indefeasible and marketable title thereto, and has full right to
transfer and sell the Mortgage Loan free and clear of any
encumbrance, equity interest, participation interest, lien, pledge,
charge, claim or security interest, and has full right and authority
subject to no interest or participation of, or agreement with, any
other party, to sell and assign each Mortgage Loan pursuant to this
Agreement, and following the sale of each Mortgage Loan, the Trustee
will own such Mortgage Loan free and clear of any encumbrance, equity
interest, participation interest, lien, pledge, charge, claim or
security interest.
(ii) Accuracy of the Schedule of Mortgage Loans. Each
Initial Mortgage Loan and Subsequent Mortgage Loan is as described in
the Schedule of Mortgage Loans, and the information contained in each
Schedule of Mortgage Loans is true and correct as of the Cut-Off Date
(or in the case of the Subsequent Mortgage Loans, as of the
Subsequent Cut-Off Date).
(iii) Payments. As of August 31, 1999, no Initial Mortgage
Loan is thirty (30) or more days Delinquent except that there are 21
Mortgage Loans with an outstanding aggregate Loan Balance of
$1,251,718.47 that are 30 or more days Delinquent but not more than
59 days Delinquent.
(iv) No Outstanding Charges. Except for delinquencies
described in Subsection (a)(iii) above, there are no defaults in
complying with the terms of the Mortgage, nor, with respect to any
Second Mortgage, the terms of any senior mortgage. All taxes,
governmental assessments, insurance premiums, water, sewer and
municipal charges, leasehold payments or ground rents which
previously became due and owing have been paid, or an escrow of funds
has been established in an amount sufficient to pay for every such
item which remains unpaid and which has been assessed but is not yet
due and payable. The Originator has not advanced funds, or induced or
solicited or knowingly received any advance of funds by a party other
than the Mortgagor, directly or indirectly, for the payment of any
amount required under the Mortgage Loan, except for interest accruing
from the date of the Note or date of disbursement of the Mortgage
Loan proceeds, whichever occurred later, to the day which precedes by
one month the Due Date of the first Scheduled Payment.
(v) Original Terms Unmodified. The terms of the Note and
the Mortgage have not been impaired, waived, altered or modified in
any respect, except by a written instrument which has been recorded,
if necessary to protect the interests of the Trust. The substance of
any such waiver, alteration or modification has been approved by the
title insurer, to the extent required by the policy, and its terms
are reflected on the related Schedule of Mortgage Loans. No Mortgagor
has been released, in whole or in part, except in connection with an
assumption agreement approved by the title insurer, to the extent
required by the policy, and which assumption agreement is part of the
File.
(vi) Absence of Defenses. The Mortgage and the Note are not
subject to any right of rescission, set-off, counterclaim, or defense
(including the defense of usury), based on the invalidity or
unenforceability of the Note and/or Mortgage or on any conduct of the
Originator, the Depositor or any of their officers, employees,
representatives, affiliates or assignors in originating or servicing
the Initial Mortgage Loan prior to the Cut-Off Date (or, in the case
of the Subsequent Mortgage Loans, the Subsequent Cut-Off Date), nor
will the operation of any of the terms of the Mortgage or the Note,
or the exercise of any right thereunder, render the Mortgage or the
Note unenforceable, in whole or in part, or subject to any right of
rescission, set-off, counterclaim, or defense (including the defense
of usury) based on any such invalidity, unenforceability or conduct.
No right of rescission, set-off, counterclaim, or defense with
respect thereto has been asserted to the Originator or, to
Originator's knowledge, has been asserted to any other person and no
Mortgagor was a debtor in any state or Federal bankruptcy or
insolvency proceeding at the time the Mortgage Loan was originated.
(vii) Hazard Insurance. Pursuant to the terms of the
Mortgage, all improvements upon the Mortgaged Property are insured by
an insurer acceptable to Fannie Mae against loss by fire and such
other risks as are usually insured against in the broad form of
extended coverage hazard insurance available from time to time,
including flood hazards if upon origination of the Mortgage Loan, the
Property was in an area identified in the Federal Register by the
Federal Emergency Management Agency as having special flood hazards
(and if flood insurance was required by federal regulation and such
flood insurance has been made available). All such insurance policies
(collectively, the "hazard insurance policy") meet the requirements
of the current guidelines of the Federal Insurance Administration,
conform to the requirements of the Fannie Mae Seller's Guide and the
Fannie Mae Servicers' Guide and are a standard policy of insurance
for the locale where the Property is located. The amount of the
insurance is at least in the amount of the full insurable value of
the Property on a replacement cost basis or the unpaid balance of the
Mortgage Loan, whichever is less. The hazard insurance policy names
(and will name) the Mortgagor as the insured and contains a standard
mortgagee loss payable clause in favor of the related Originator and
its successors and assigns. The Mortgage obligates the Mortgagor
thereunder to maintain the hazard insurance policy at the Mortgagor's
cost and expense, and on the Mortgagor's failure to do so, authorizes
the holder of the Mortgage to obtain and maintain such insurance at
such Mortgagor's cost and expense, and to seek reimbursement therefor
from the Mortgagor. Where required by state law or regulation, the
Mortgagor has been given an opportunity to choose the carrier of the
required hazard insurance policy, provided the policy is not a
"master" or "blanket" hazard insurance policy covering a condominium,
or any hazard insurance policy covering the common facilities of a
planned unit development. The hazard insurance policy is the valid
and binding obligation of the insurer, is in full force and effect,
and will be in full force and effect and inure to the benefit of
Trust upon the consummation of the transactions contemplated by this
Agreement. The Originator has not engaged in, and has no knowledge of
the Mortgagor's or any other party's having engaged in, any act or
omission which would impair the coverage of any such policy, the
benefits of the endorsement provided for therein, or the validity and
binding effect of either.
(viii) Compliance with Applicable Laws. Any and all
requirements of any federal, state or local law including, without
limitation, usury, truth-in-lending, real estate settlement
procedures, consumer credit protection, equal credit opportunity or
disclosure laws applicable to the Mortgage Loan have been complied
with or, if there is a deficiency in compliance, it is not material
to the interests of the Trust Fund or the Owners of the Certificates.
The consummation of the transactions contemplated hereby will not
involve the violation of any such laws or regulations.
(ix) No Satisfaction of Mortgage or Note. Neither the
Mortgage nor the Note has been satisfied, canceled, subordinated or
rescinded, in whole or in part, and the Property has not been
released from the lien of the Mortgage, in whole or in part, nor has
any instrument been executed that would effect any such release,
cancellation, subordination or rescission.
(x) Location and Type of Property. The Property consists of
a parcel of real property with a residential dwelling erected
thereon. The Property is either a fee simple estate or a long-term
residential lease. If the Mortgage Loan is secured by a long-term
residential lease, (A) the terms of such lease expressly permit the
mortgaging of the leasehold estate, the assignment of the lease
without the lessor's consent (or the lessor's consent has been
obtained and such consent is in the File) and the acquisition by the
holder of the Mortgage of the rights of the lessee upon foreclosure
or assignment in lieu of foreclosure to provide the holder of the
Mortgage with substantially similar protection; (B) the terms of such
lease do not (i) allow the termination thereof upon the lessee's
default without the holder of the Mortgage being entitled to receive
written notice of, and opportunity to cure, such default, (ii) allow
the termination of the lease in the event of damage or destruction as
long as the Mortgage is in existence or (iii) prohibit the holder of
the Mortgage from being insured under the hazard insurance policy
relating to the Property; (C) the original term of such lease is not
less than fifteen (15) years; (D) the term of such lease does not
terminate earlier than five (5) years after the maturity date of the
Note; and (E) the Property is located in a jurisdiction in which the
use of leasehold estates for residential properties is a widely
accepted practice.
(xi) Valid Lien. The Mortgage for any First Mortgage
creates a valid, subsisting, enforceable and perfected first lien on
the Property, and the Mortgage for any Second Mortgage creates a
valid, subsisting, enforceable and perfected second lien on the
Property, and in each case includes all buildings on the Property and
all installations and mechanical, electrical, plumbing, heating and
air conditioning systems located in or annexed to such buildings, and
all additions, alterations and replacements made at any time with
respect to the foregoing. The lien of the Mortgage is subject only to
Permitted Exceptions. Any security agreement, chattel mortgage or
equivalent document related to and delivered in connection with a
First Mortgage established and created a valid, subsisting,
enforceable and perfected first lien and first priority security
interest on the property described therein, and with respect to a
Second Mortgage, a second lien and second priority security interest,
and the Originator has full right to sell and assign the same.
(xii) Validity of Mortgage Documents. The Note and the
Mortgage and every other agreement, if any, executed and delivered by
the Mortgagor in connection with the Mortgage Loan are genuine, and
each is the legal, valid and binding obligation of the maker thereof
enforceable in accordance with its terms. All parties to the Note,
the Mortgage and each other such related agreement had legal capacity
to enter into the Mortgage Loan and to execute and deliver the Note,
the Mortgage and each other such related agreement, and the Note, the
Mortgage and each other such related agreement have been duly and
properly executed by the respective Mortgagors. The Originator has
reviewed all of the documents constituting the File and has made such
inquiries as it deems necessary to make and confirm the accuracy of
the representations set forth herein.
(xiii) Full Disbursement of Proceeds. The Mortgage Loan has
been closed and the proceeds of the Mortgage Loan have been fully
disbursed and there is no requirement for future advances thereunder,
and any and all requirements as to completion of any on-site or
off-site improvement and as to disbursements of any escrow funds
therefor have been complied with. All costs, fees and expenses
incurred in making or closing the Mortgage Loan and the recording of
the Mortgage were paid, and the Mortgagor is not entitled to any
refund of any amounts paid or due under the Note or Mortgage.
(xiv) Doing Business. All parties which have had any
interest in the Mortgage Loan, whether as mortgagee, assignee,
pledgee or otherwise, are (or, during the period in which they held
and disposed of such interest, were) (1) in compliance with any and
all applicable licensing requirements of the laws of the state where
the Property is located, and (2)(a) organized under the laws of such
state, or (b) qualified to do business in such state, or (c) federal
savings and loan associations, savings banks, or national banks
having principal offices in such state, or (d) not doing business in
such state.
(xv) Loan-to-Value Ratio. The Loan-to-Value Ratio for each
First Mortgage was no greater than 100%, and the Combined
Loan-to-Value Ratio for each Second Mortgage was no greater than 95%.
(xvi) Title Insurance. The Mortgage Loan is covered by
either (a) an attorney's opinion of title and abstract of title the
form and substance of which is acceptable to Fannie Mae, or (b) an
ALTA lender's title insurance policy or other generally acceptable
form of policy of insurance issued by a title insurer qualified to do
business in the jurisdiction where the Property is located, insuring
the related Originator, its successors and assigns, as to the first
priority lien of the Mortgage in the original principal amount of the
First Mortgage, and as to the second priority lien of the Mortgage in
the original principal amount of the Second Mortgage, subject only to
the Permitted Exceptions, and against any loss by reason of the
invalidity or unenforceability of the lien resulting from the
provisions of the Mortgage providing for adjustment in the Mortgage
Rate and Scheduled Payment. Additionally, such lender's title
insurance policy affirmatively insures ingress and egress, and
against encroachments by or upon the Property or any interest
therein. Where required by state law or regulation, the Mortgagor has
been given the opportunity to choose the carrier of such lender's
title insurance policy. The related Originator, its successors and
assigns, are the sole insureds (except in the case of a joint
protection policy, in which case the related Originator's interest is
insured) of such lender's title insurance policy, and such lender's
title insurance policy is valid and remains in full force and effect
and will be in full force and effect upon the sale of the Mortgage
Loan to the Trust Fund. No claims have been made under such lender's
title insurance policy, and no prior holder of the Mortgage,
including the Originator, has done anything which would impair the
coverage of such lender's title insurance policy.
(xvii) No Defaults. Except for payment delinquencies noted
on the related Mortgage Loan Schedule, there is no default, breach,
violation or event of acceleration existing under the Mortgage or the
Note or related documents and no event which, with the passage of
time or with notice and the expiration of any applicable grace or
cure period, would constitute a default, breach, violation or event
of acceleration, and neither the Originator nor any of its
predecessors have waived any default, breach, violation or event of
acceleration.
(xviii) No Mechanics' Liens. There are no mechanics' or
similar liens or claims which have been filed for work, labor or
material (and no rights are outstanding that under the law could give
rise to such liens) affecting the related Property which are or may
be liens prior to, or equal or coordinate with, the lien of the
related Mortgage.
(xix) Location of Improvements; No Encroachments. All
improvements which were considered in determining the Appraised Value
of the Property lay wholly within the boundaries and building
restriction lines of the Property and no improvements on adjoining
properties encroach upon the Property. No improvement located on or
being part of the Property is in violation of any applicable zoning
law or regulation; provided, that in no event shall a legal
non-conforming use of the Property be considered a violation of any
such zoning law or regulation.
(xx) Payment Terms. For fixed rate Mortgage Loans that are
not Balloon Loans, the Note is payable on the same (or corresponding)
day of each month in equal monthly installments (other than the last
payment) of principal and interest sufficient to amortize the
Mortgage Loan fully by the stated maturity date, over an original
term of not more than thirty years from inception of the Mortgage
Loan. For adjustable rate Mortgage Loans, the Mortgage Rate is
adjusted in accordance with the terms of the Note and the Note is
payable on the same (or corresponding) day of each month and, during
an adjustment period or initial period, in equal monthly installments
of principal and interest. Installments of interest are subject to
change due to the adjustments to the Mortgage Rate on each Interest
Rate Adjustment Date, with interest calculated and payable in
arrears, sufficient to amortize the Mortgage Loan fully by the stated
maturity date, over an original term of not more than thirty years
from inception of the Mortgage Loan.
(xxi) Interest Rate Adjustments. All required notices of
interest rate and payment amount adjustments have been sent to the
Mortgagor on a timely basis and the computations of such adjustments
were properly calculated. All interest rate adjustments applicable to
the Mortgage Loans have been made in strict compliance with state and
federal law and the terms of the related Note. Any interest required
to be paid pursuant to state and local law has been properly paid and
credited.
(xxii) Customary Provisions. The Mortgage contains
customary and enforceable provisions such as to render the rights and
remedies of the holder thereof adequate for the realization against
the Property of the benefits of the security provided thereby,
including, (i) in the case of a Mortgage designated as a deed of
trust, by trustee's sale, and (ii) otherwise by judicial or
nonjudicial foreclosure. Upon default by an Mortgagor on a Mortgage
Loan and foreclosure on, or trustee's sale of, the Property pursuant
to the proper procedures, the holder of the Mortgage Loan will be
able to deliver good and merchantable title to the Property. There is
no homestead or other exemption available to the Mortgagor which
would interfere with the right to sell the Property at a trustee's
sale or the right to foreclose the Mortgage subject to applicable
federal and state laws and judicial precedent with respect to
bankruptcy and right of redemption.
(xxiii) Occupancy of the Property. All inspections,
licenses and certificates required to be made or issued with respect
to all occupied portions of the Property and with respect to the use
and occupancy of the same, including, but not limited to,
certificates of occupancy and fire underwriting certificates, have
been made or obtained from the appropriate authorities.
(xxiv) No Additional Collateral. The Note is not and has
not been secured by any collateral except the lien of the
corresponding Mortgage and the security interest of any applicable
security agreement or chattel mortgage referred to in subsection
3.06(a)(xi) above.
(xxv) Deeds of Trust. In the event the Mortgage constitutes
a deed of trust, a trustee, authorized and duly qualified under
applicable law to serve as such, has been properly designated and
currently so serves and is named in the Mortgage, and no fees or
expenses are or will become payable by Trust Fund to such trustee
under the deed of trust, except in connection with a trustee's sale
after default by the Mortgagor.
(xxvi) Due on Sale. Each Mortgage, together with any such
documents as may be required under applicable law, contains a
provision for the acceleration of the payment of the unpaid Loan
Balance of the Mortgage Loan in the event that the Property is sold
or transferred without the prior written consent of the mortgagee
thereunder, at the option of the mortgagee. This provision provides
that the mortgagee cannot exercise its option if either (a) the
exercise of such option is prohibited by law or (b)(i) the Mortgagor
causes to be submitted to the mortgagee information required by the
mortgagee to evaluate the intended transferee as if a new loan were
being made to such transferee and (ii) the mortgagee reasonably
determines that the mortgagee's security will not be impaired by the
assumption of such Mortgage Loan by the transferee and that the risk
of breach of any covenant or agreement in the documents evidencing
such Mortgage Loan is acceptable to the mortgagee. To the best of the
Originator's knowledge, such provision is enforceable.
(xxvii) Transfer of Loans. Each of the Mortgages is in
recordable form and is acceptable for recording under the laws of the
jurisdiction in which the Property is located, and each Mortgage has
been delivered to the appropriate recorder's office for recording.
(xxviii) No Buydown Provisions; No Graduated Payments or
Contingent Interests. The Mortgage Loan does not contain provisions
pursuant to which Scheduled Payments are paid or partially paid with
funds deposited in any separate account established by the
Originator, the Mortgagor or anyone on behalf of the Mortgagor, or
paid by any source other than the Mortgagor, nor does it contain any
other similar provisions currently in effect which may constitute a
"buydown" provision. The Mortgage Loan is not a graduated payment
mortgage loan and the Mortgage Loan does not have a shared
appreciation or other contingent interest feature.
(xxix) Consolidation of Future Advances. Any future
advances made to the Mortgagor prior to the Startup Day have been
consolidated with the outstanding principal amount secured by the
Mortgage, and the secured principal amount, as consolidated, bears a
single interest readjustment feature or rate and single repayment
term. For First Mortgages, the lien of the Mortgage securing the
consolidated principal amount is expressly insured as having first
lien priority by a title insurance policy, an endorsement to the
policy insuring the mortgagee's consolidated interest or by other
title evidence acceptable to the Trustee. For Second Mortgages, the
lien of the Mortgage securing the consolidated principal amount is
expressly insured as having second lien priority by a title insurance
policy, an endorsement to the policy insuring the mortgagee's
consolidated interest or by other title evidence acceptable to
Trustee. The consolidated principal amount does not exceed the
original principal amount of the Mortgage Loan. With respect to
Second Mortgages, no future advances are permitted under the senior
mortgage.
(xxx) Property Undamaged; No Condemnation Proceedings.
There is no proceeding pending or, threatened for the total or
partial condemnation of the Property. The Property is undamaged by
waste, fire, earthquake or earth movement, windstorm, flood, water,
tornado or other casualty so as to adversely affect the value of the
Property as security for the Mortgage Loan or the use for which the
premises were intended and each Property is in good repair. There
have not been any condemnation proceedings with respect to the
Property and the Originator and the Depositor have no knowledge of
any such proceedings in the future.
(xxxi) Appraisals. The related Originator has delivered to
the Originator an appraisal of the Property signed by a qualified
appraiser, who (i) is licensed in the state where the Property is
located, (ii) has no interest, direct or indirect, in the Property or
in any Mortgage Loan or the security therefor, and (iii) does not
receive compensation that is affected by the approval or disapproval
of the Mortgage Loan. The appraisal shall have been made within
ninety (90) days of the origination of the Mortgage Loan, be
completed in compliance with the Uniform Standards of Professional
Appraisal Practice, and all applicable Federal and state laws and
regulations.
(xxxii) Soldier's and Sailors' Relief Act. The Mortgagor
has not notified the Originator and the Originator has no knowledge
of any relief requested or allowed to the Mortgagor under the
Soldier's and Sailors' Civil Relief Act of 1940.
(xxxiii) Environmental Matters. There exists no violation
of any local, state or federal environmental law, rule or regulation
in respect of the Property which violation has or could have a
material adverse effect on the market value of such Property. The
Originator has no knowledge of any pending action or proceeding
directly or indirectly involving the related Property in which
compliance with any environmental law, rule or regulation is in
issue; and, to the best of the Originator's knowledge, nothing
further remains to be done to satisfy in full all requirements of
each such law, rule or regulation constituting a prerequisite to the
use and enjoyment of such Property.
(xxxiv) Mortgagor Acknowledgment. The Mortgagor has
executed a statement to the effect that the Mortgagor has received
all disclosure materials required by applicable law with respect to
the making of adjustable rate mortgage loans. The Originator shall
deliver such statement to the Trustee in the related File.
(xxxv) No Construction Loans. The Mortgage Loan was not
made in connection with (a) the construction or rehabilitation of a
Property or (b) facilitating the trade-in or exchange of a Property.
(xxxvi) Circumstances Affecting Value, Marketability or
Prepayment. Except as otherwise disclosed in the Prospectus
Supplement, the Originator has no knowledge of any circumstances or
conditions with respect to the Mortgage, the Property, or the
Mortgagor, that could reasonably be expected to adversely affect the
value or the marketability of any Property or Mortgage Loan, subject
to the economic and geological conditions generally and specifically
to the area in which the Mortgaged Property is located, or cause the
Mortgage Loan to become delinquent.
(xxxvii) Manufactured Housing. Each Mortgage Loan secured
by a Manufactured Home has a minimum of 400 square feet of living
space and a minimum width in excess of 102 inches and which is a kind
customarily used at a fixed location.
(xxxviii) Absence of Error, Omission, Misrepresentation,
Negligence or Fraud. To the best of the Originator's knowledge, no
error, omission, misrepresentation, negligence, fraud or similar
occurrence with respect to any Mortgage Loan has taken place on the
part of any person, including without limitation the Mortgagor, any
appraiser, any builder or developer, or any other party involved in
the origination of the Mortgage Loans or in the application of any
insurance in relation to the Mortgage Loans.
(b) At such time as Originator becomes aware of a breach of any
representation and warranty which materially and adversely affects the
interests of the Owners (or, in the case of Subsection (a)(viii), if the
related Mortgagor disputes in writing the Originator's compliance with any
such requirement or if the Originator or the Servicer determine that a
compliance deficiency materially and adversely affects the interests of the
Owners), the Originator hereby covenants and warrants that it shall promptly
cure such breach in all material respects or, if such breach is not cured, the
Originator shall, subject to the further requirements of this paragraph (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, at the
Originator's option, substitute in lieu of each related Mortgage Loan which
has given rise to the requirement for action a Qualified Replacement Mortgage
and deliver the Substitution Amount applicable thereto, to the Servicer for
deposit in the Principal and Interest Account or (ii) purchase such Mortgage
Loan (subject to the Servicing Rights Purchase Agreement) from the Trust Fund
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 by the Originator. In connection with any such proposed
purchase or substitution, the Originator shall deliver to the Servicer, ARCMI,
the Seller and the Trustee a REMIC Opinion if such Mortgage Loan is not in
default or default is not imminent, and the Originator shall only be required
to take either such action to the extent such action would not constitute a
Prohibited Transaction for the Trust Fund or REMIC 1, REMIC 2, REMIC 3 or
REMIC 4 and would not jeopardize the status of REMIC 1, REMIC 2, REMIC 3 or
REMIC 4 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 receipt by the Trustee of the REMIC Opinion. Any repurchase or
substitution shall occur prior to the related Monthly Remittance Date and the
Originator shall provide the Servicer with written notice no less than five
Business Days in advance of such repurchase or substitution. If the Originator
fails to meet its obligations to cure any such breach or to purchase any such
Mortgage Loan or to substitute a Qualified Replacement Mortgage pursuant to
and within the time period specified in this paragraph, the Trustee shall
immediately give notice to ARCMI of such failure and, within 10 Business Days
of receipt of such notice, ARCMI shall purchase such Mortgage Loan from the
Trust Fund pursuant to the terms of this paragraph. It is understood and
agreed that the obligation of the 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 (and the obligation
of ARCMI to purchase any such Mortgage Loan, upon the Originator's failure to
meet its obligations under this paragraph) shall constitute the sole remedy
available to the Owners, the Seller, the Depositor and the Trustee.
(c) In the event that any Qualified Replacement Mortgage is
delivered by the Originator to the Trust Fund pursuant to this Section 3.06 or
Section 3.08 hereof, the Originator shall take the actions described in
Section 3.06(b) with respect to such Qualified Replacement Mortgage upon the
discovery by any of the Owners, the Originator, ARCMI, the Seller, the
Servicer or the Trustee that the representations and warranties set forth in
Section 3.06(a) above are untrue in any material respect on the date such
Qualified Replacement Mortgage is conveyed to the Trust Fund such that the
interests of the Owners in the related Qualified Replacement Mortgage are
materially and adversely affected; provided, however, that for the purposes of
this subsection (d) the representations and warranties as set forth in Section
3.06(a) 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 3.06 shall survive delivery of the respective Mortgage Loans
(including Qualified Replacement Mortgages) to the Trustee.
(e) The Trustee and the Servicer 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 3.07. Conveyance of the Mortgage Loans and Qualified
Replacement Mortgages.
(a) On the Startup Day the Originator, concurrently with the
execution and delivery hereof, hereby transfers, assigns, sets over and
otherwise conveys without recourse to the Seller and the Seller, concurrently
with the execution and delivery thereof, 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, subject to the Servicing Rights Purchase Agreement, all their
respective right, title and interest in and to the assets of the Trust Fund;
provided, however, that the Originator reserves and retains all 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.
Each of such transfers of the Initial Mortgage Loans set forth on the Schedule
of Mortgage Loans is absolute and is intended by the Owners and all parties
hereto to be treated as a sale by the respective sellers thereof.
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
Originator to the Seller, from the Seller to the Depositor and from the
Depositor to the Trust Fund and that the Initial Mortgage Loans not be part of
the Depositor's, the Seller's or the Originator's estate in the event of
insolvency. In the event that any of the above conveyances or a conveyance of
a Qualified Replacement Mortgage or a conveyance pursuant to Section 3.09 and
any Subsequent Transfer Agreement is deemed to be a loan, the parties intend
that (i) the Originator shall be deemed to have granted a security interest in
the assets of the Trust Fund to the Seller, (ii) the Seller shall have been
deemed to have granted a security interest in the assets of the Trust Fund to
the Depositor and (iii) the Depositor shall be deemed to have granted to the
Trustee a security interest in the assets of the Trust Fund, and that this
Agreement shall constitute a security agreement under applicable law.
In connection with such sale, transfer, assignment, and conveyance
from the Originator to the Seller, the Originator has filed, in the
appropriate office or offices in the State of California, a UCC-1 financing
statement executed by the Originator as debtor, naming the Seller as secured
party and listing the Initial Mortgage Loans, any Subsequent Mortgage Loans to
be delivered to the Seller and the other property (including any Qualified
Replacement Mortgage) described above as collateral. The characterization of
the Originator as a debtor and the Seller 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 Originator's entire right, title and interest in
the assets of the Trust Fund. In connection with such filing, the Originator
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 and the
Owners' interest in the assets of the Trust Fund.
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 State of California, a UCC-1 financing statement
executed by the Seller as debtor, naming the Depositor as secured party and
listing the Initial Mortgage Loans, any Subsequent Mortgage Loans to be
delivered to the Depositor and the other property (including any Qualified
Replacement Mortgage) described above 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
assets of the Trust Fund. 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 and the Owners' interest in
the assets of the Trust Fund.
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 State of Texas, a UCC-1 financing statement executed
by the Depositor as debtor, naming the Trustee as secured party and listing
the Initial Mortgage Loans, any Subsequent Mortgage Loans to be delivered to
the Trust and the other property (including any Qualified Replacement
Mortgage) described above 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 assets of the
Trust Fund. 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 and the Owners' interest in the assets of
the Trust Fund.
(b) In connection with the transfer and assignment of the
Initial Mortgage Loans and prior to each Subsequent Transfer Date with respect
to any Qualified Replacement Mortgage or Subsequent Mortgage Loan, the
Depositor agrees to:
(i) deliver without recourse to the Custodian, on behalf of
the Trustee, on the Startup Day with respect to each Initial Mortgage
Loan or on each Subsequent Transfer Date with respect to any
Qualified Replacement Mortgage or Subsequent Mortgage Loan, (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, 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 Custodian, on behalf of the Trustee, within
90 days following the Startup Day with respect to the Initial
Mortgage Loans or each Subsequent Transfer Date with respect to any
Qualified Replacement Mortgage or Subsequent Mortgage Loan to
complete the assignments of the Mortgages to "Norwest Bank Minnesota,
National Association, as Trustee of AMRESCO Residential Securities
Corporation Mortgage Loan Trust 1999-1 under the Pooling and
Servicing Agreement dated as of September 1, 1999" to be submitted to
the Originator for recording in the appropriate jurisdictions;
provided, however, that the Depositor shall not be required to cause
the Originator to record an assignment for any Mortgage with respect
to which the original recording information has not yet been received
until such information is received; and
(iii) if not delivered on the Startup Day or Subsequent
Transfer Date, as applicable, 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 Custodian, on behalf of 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 each
Subsequent Transfer Date with respect to the Qualified Replacement
Mortgages and the Subsequent Mortgage Loans).
Notwithstanding anything to the contrary contained in this Section
3.07, 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 Custodian, on
behalf of 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 Custodian, on
behalf of the Trustee, shall be retained in the related File.
All recording required pursuant to this Section 3.07 shall be
accomplished by and at the expense of the Originator.
(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 F and will deposit the funds received with respect
to such Mortgage Loans in the Principal and Interest Account as provided
herein.
(d) The Originator shall 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 Fund by such party pursuant to Section
3.04, 3.06 or 3.08 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 Fund 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 Fund'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 Fund 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 Fund, the Originator agrees to (i) deliver without
recourse to the Custodian, on behalf of 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 Custodian, on behalf of the Trustee within 15 days of receipt thereof by
the Originator (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
3.07(b)(i)(B), the other evidence of title in same required in Section
3.07(b)(i)(B) and (v) deliver originals of all assumption, modification,
written assurance or substitution agreements, if any.
(g) As to each Mortgage Loan released from the Trust Fund in
connection with the conveyance of a Qualified Replacement Mortgage the Trustee
shall cause the Custodian, on behalf of the Trustee to 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 such party, (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 Originator shall prepare a substitute assignment or cure
such defect, as the case may be, and thereafter cause each such assignment to
be duly recorded.
(i) The Originator shall reflect on its records that the
Mortgage Loans have been sold to the Seller. The Seller shall reflect in its
records that the Mortgage Loans have been sold to the Depositor. The Depositor
shall reflect on its records that the Mortgage Loans have been sold to the
Trust Fund.
Section 3.08. Acceptance by Trustee; Certain Substitutions of
Mortgage Loans; Certification by Trustee.
(a) The Trustee agrees to cause the Custodian to execute and
deliver on the Trustee's behalf on the Startup Day an acknowledgment of
receipt of the items delivered by the Originator or the Depositor in the form
attached as Exhibit G hereto, and declares that it will hold such documents
and any amendments, replacements or supplements thereto, as well as any other
assets included in the definition of Trust Estate and delivered to the
Custodian, on behalf of the Trustee, as Trustee in trust upon and subject to
the conditions set forth herein for the benefit of the Owners. The Trustee
agrees to cause the Custodian to review on the Trustee's behalf, for the
benefit of the Owners, 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 Qualified Replacement Mortgage or
Subsequent Mortgage Loan, within 45 days after the Subsequent Transfer Date)
and to deliver to the Trustee, the Depositor, the Seller, the Originator,
ARCMI and the Servicer a certification in the form attached hereto as Exhibit
H (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 3.07(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 (i), (ii), (iii)(A) and (iv) of the Schedule of Mortgage Loans
accurately reflects the information set forth in the File. Neither the Trustee
nor the Custodian shall have any responsibility for reviewing any File except
as expressly provided in this subsection 3.08(a). Without limiting the effect
of the preceding sentence, in reviewing any File, neither the Trustee nor the
Custodian shall have any 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.
Neither the Trustee nor the Custodian shall be under any 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 either the Trustee or the Custodian 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 or the Custodian, on behalf of 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 or the Custodian, on behalf of the Trustee shall
promptly so notify the Depositor, the Originator, ARCMI, the Seller and the
Servicer. In performing any such review, the Trustee or the Custodian, on
behalf of the Trustee may conclusively rely on the Originator as to the
purported genuineness of any such document and any signature thereon. It is
understood that the scope of the Trustee's and the Custodian's review of the
items delivered by the Depositor pursuant to Section 3.07(b)(i) or the
Originator pursuant to Section 3.07(f) is limited solely to confirming that
the documents listed in Section 3.07(b)(i) or Section 3.07(f), respectively,
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 Originator agrees to use its best efforts to
remedy a material defect in a document constituting part of a File of which it
is so notified by the Trustee. If, however, within 60 days after the Trustee's
notice to the Originator and respecting such defect the Originator has not
remedied the defect and the defect materially and adversely affects the
interest in the related Mortgage Loan of the Owners, the Originator will, upon
delivery of a REMIC Opinion, if necessary, (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. The Originator
shall obtain a REMIC Opinion addressed to the Seller, ARCMI, the Servicer and
the Trustee and acceptable to the Servicer and the Trustee. If the Originator
fails to meet its obligations pursuant to and within the time periods
specified in this Section 3.08(b), the Trustee shall immediately give notice
to ARCMI of such failure and, within 10 Business Days of receipt of such
notice, ARCMI shall purchase such Mortgage Loan from the Trust Fund pursuant
to the terms of this Section 3.08(b).
(c) In addition to the foregoing, the Trustee also agrees to
cause the Custodian 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 cause the Custodian to
provide to the Servicer, no less frequently than monthly, updated
certifications indicating the then current status of exceptions, until all
such exceptions have been eliminated.
Section 3.09. Conveyance of the Subsequent Mortgage Loans.
(a) Subject to the satisfaction of the conditions set forth in
Section 3.07 and paragraphs (b) and (c) below in consideration of the
Trustee's delivery on the relevant Subsequent Transfer Dates to and upon the
order of the Depositor of all or a portion of the balance of funds in the
Pre-Funding Account, the Originator shall on each Subsequent Transfer Date
sell, transfer, assign, set over and otherwise convey without recourse, to the
Seller, the Seller shall sell, transfer, assign, set over and otherwise convey
without recourse, to the Depositor and the Depositor shall sell, transfer,
assign, set over and otherwise convey without recourse, to the Trustee, all of
their right, title and interest in and to any and all benefits accruing from
the Subsequent Mortgage Loans (other than any principal and interest payments
due thereon on or prior to the relevant Subsequent Cut-Off Date and the rights
to service the Subsequent Mortgage Loans as provided under the Servicing
Rights Purchase Agreement) which the Depositor will cause to be delivered to
the Trustee therewith (and all substitutions therefor as provided by Sections
3.04, 3.06 and 3.08), 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 Originator to the Seller, 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
Originator to the Seller, by the Seller to the Depositor and by the Depositor
to the Trust. 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 (including Prepayments collected) and interest due 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 Fund. The Originator 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 Fund during the Funding Period to enable the
Pre-Funded Amount to be reduced 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
Servicer with an Addition Notice not less than five (5) calendar days
prior to the proposed Subsequent Transfer Date (unless the Trustee
agrees 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 E, 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, none of the
Depositor, the Seller or the Originator was insolvent, or will any of
them be made insolvent by such transfer, or is any of them aware of
any pending insolvency;
(v) the Funding Period 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 paragraph (c) below and
in the related Subsequent Transfer Agreement; and
(vii) the Depositor shall furnish to the Trustee, at the
Depositor's expense, an opinion of counsel with respect to the true
sale of the Subsequent Mortgage Loans delivered to the Trust Fund,
corporate and enforceability matters and tax consequences to the
Trust Fund, if any, resulting from the conveyance to the Trust Fund
of the Subsequent Mortgage Loans, each in form and substance
satisfactory to the Trustee.
(c) The obligation of the Trust Fund to purchase Subsequent
Mortgage Loans on a Subsequent Transfer Date is subject to the following
requirements, among others: (i) the ratings on the Offered Certificates shall
not have been downgraded by any Rating Agency; (ii) such Subsequent Mortgage
Loan may not be 60 or more days contractually delinquent as of the Business
Day preceding the related Subsequent Cut-Off Date; (iii) the remaining term to
maturity of such Subsequent Mortgage Loan may not exceed 360 months; (iv) such
Subsequent Mortgage Loans shall have a loan balance not greater than $500,000;
and (v) following the purchase of all of the Subsequent Mortgage Loans by the
Trust Fund, the Mortgage Loans, as a whole, (I) will have a weighted average
Combined Loan-to-Value Ratio of not more than 76.70%; (II) will have a
weighted average Mortgage Rate of not less than 9.695%; and (III) will have a
weighted average remaining term to maturity of not less than 350 months.
END OF ARTICLE III
<PAGE>
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 I hereto, the
Trustee shall authenticate and deliver the Certificates on behalf of the Trust
Fund.
Section 4.02. Sale of Certificates.
At 9 a.m., Eastern time on the Startup Day (the "Closing"), at the
offices of Brown & Wood LLP, 815 Connecticut Ave., N.W., Washington, D.C.
20006 (or at such other location acceptable to the Originator), the Originator
will sell and convey the Mortgage Loans and the money, instruments and other
property related thereto to the Seller, the Seller will sell and convey to
Mortgage Loans to the Depositor and the Depositor will sell and convey the
Mortgage Loans and the money, instruments and other property related thereto
to the Trustee, and the Trustee will deliver (i) to the Underwriter, the
Depository 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 Underwriter shall direct, against payment of the purchase price thereof by
wire transfer of immediately available funds to the Trustee, (ii) to the
registered owner thereof, a Class X Certificate with an aggregate Percentage
Interest of 100% and (iii) to the registered owner thereof, a Class R
Certificate with a Percentage Interest equal to 100%.
Upon the Trustee's receipt of the entire net proceeds of the sale of
the Certificates the Depositor shall instruct the Trustee to deposit an amount
equal to the Original Pre-Funded Amount in the Pre-Funding 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
<PAGE>
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). The
Certificates are payable solely from payments received on or with respect to
the Mortgage Loans (other than the Servicing Fee and the Trustee Fee), money
in the Principal and Interest Account, except as otherwise provided herein,
money in the Basis Risk Reserve Fund, money in the Credit Reserve Fund, money
in the Pre-Funding Account, earnings and the proceeds of property held as a
part of the Trust Estate. 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, pro
rata in accordance with such Owner's Percentage Interest.
(b) Each Owner is required, and hereby agrees, to return to the
Trustee, at its Corporate Trust Office, 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.
Each Class of the Offered Certificates shall be in substantially the
form set forth as Exhibit A hereto and the Class X Certificates and the Class
R Certificates shall be in substantially the forms set forth in Exhibits D and
C hereof, respectively, and shall, on original issue, be executed,
authenticated and delivered by the Trustee to or upon the order of the
Depositor concurrently with the sale and assignment to the Trustee of the
Trust Fund.
Section 5.03. Execution, Authentication and Delivery.
Each Certificate shall be executed and authenticated on behalf of the
Trust Fund, by the manual or facsimile signature of one of the Trustee's
Authorized Officers.
Certificates bearing the manual signature of individuals who were at
any time the proper officers of the Trustee shall, upon proper authentication
by the Trustee, bind the Trust Fund, 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.
(a) 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 Owners and the Trustee shall have the
right to inspect the Register during the Registrar'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
Offered Certificates then Outstanding or, if there are no longer any Offered
Certificates then Outstanding, by a majority of the aggregate Percentage
Interests represented by the Class X Certificates, the Trustee will give 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 Trustee shall execute, authenticate and deliver, in the name of
the designated transferee or transferees, one or more new Certificates of a
like Class and in the aggregate principal amount 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 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 Fund 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 Fund.
(g) It is intended that the Depository Certificates be
registered so as to participate in a global book-entry system with the
Depository, as set forth herein. Each Class of the Depository Certificates
shall, except as otherwise provided in Subsection (h), be initially issued in
the form of a single fully registered Offered Certificate of such Class. Upon
initial issuance, the ownership of each of the Depository 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 Depository Certificates shall be issued in
denominations of less than $100,000. The Class X Certificates shall be issued
in minimum Percentage Interests of 20%. The Class R Certificate shall be
issued in one certificate with a Percentage Interest equal to 100%.
The Depositor and the Trustee are hereby authorized to execute and
deliver the Representation Letter with the Depository.
With respect to the Depository Certificates registered in the
Register in the name of Cede & Co., as nominee of the Depository, the
Depositor, the Servicer, the Originator, the Seller and the Trustee shall have
no responsibility or obligation to Direct or Indirect Participants or
beneficial owners for which the Depository holds the Depository Certificates
from time to time as a Depository. Without limiting the immediately preceding
sentence, the Depositor, the Servicer, the Originator, the Seller 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 Depository
Certificates, (ii) the delivery to any Direct or Indirect Participant or any
other Person, other than a registered Owner of a Depository Certificate as
shown in the Register, of any notice with respect to the Offered Certificates
or (iii) the payment to any Direct or Indirect Participant or any other
Person, other than a registered Owner of a Depository Certificate as shown in
the Register, of any amount with respect to any distribution of principal or
interest on the Depository Certificates. In addition, the Trustee shall (i)
not be required to monitor, determine or inquire as to compliance with the
transfer restrictions with respect to transfers by Direct or Indirect
Participants or beneficial owners of interests in the Depository Certificates;
and (ii) have no liability for transfers by any of such Persons of interests
in the Depository Certificates made through the book-entry facilities of the
Depository or between or among Direct or Indirect Participants or beneficial
owners and in violation of the applicable restrictions set forth in this
Agreement. No Person other than a registered Owner of a Depository Certificate
as shown in the Register shall receive a certificate evidencing such
Depository 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 Offered 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) (A) the Depositor advises the Trustee
in writing that the Depository is no longer willing or able to discharge
properly its responsibilities with respect to the Depository Certificates, and
(B) the Trustee or the Depositor is unable to locate a qualified successor,
(ii) the Depositor, at its option, advises the Trustee in writing that it
elects to terminate the book-entry system through the Depository or (iii)
Owners representing beneficial interests aggregating not less a majority of
the outstanding Percentage Interests of the Depository Certificates identified
as such to the Trustee by an Officer's Certificate from the Depository advise
the Trustee and the Depository through the Depository Participants in writing
that the continuation of a book-entry system through the Depository is no
longer in the best interests of the Owners of the Depository Certificates, the
Trustee shall notify or cause the Registrar to notify the Depository to effect
notification to all Owners of the Depository Certificates, through the
Depository, of the occurrence of any such event and of the availability of
Definitive Certificates to Owners of Depository Certificates requesting the
same. Upon surrender to the Trustee of the Depository Certificates by the
Depository, accompanied by registration instructions from the Depository for
registration, the Trustee shall issue the Definitive Certificates. Neither the
Depositor nor the Trustee shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying
on, such instructions. Upon the issuance of Definitive Certificates all
references herein to obligations imposed upon or to be performed by the
Depository shall be deemed to be imposed upon and performed by the Trustee, to
the extent applicable, with respect to such Definitive Certificates and the
Trustee shall recognize the holders of the Definitive Certificates as
Certificateholders hereunder.
(i) Notwithstanding any other provision of this Agreement to the
contrary, so long as any Depository Certificate is registered in the name of
Cede & Co., as nominee of the Depository, all distributions of principal or
interest on such Offered Certificates and all notices with respect to such
Offered 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 such security or indemnity as may be reasonably
required by it to hold the Trustee 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 Trustee shall execute, authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like Class, tenor and aggregate principal
amount, bearing a number not contemporaneously outstanding.
Upon the issuance of any new Certificate under this Section, the
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 Fund.
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 Fund, 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 Trustee and any agent of the Trustee may treat the Person in
whose name any Certificate is registered as the Owner of such Certificate for
the purpose of receiving distributions with respect to such Certificate and
for all other purposes whatsoever, and neither the Trustee nor any agent of
the Trustee shall be affected by notice to the contrary.
Section 5.07. 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.
(a) No Transfer, sale, pledge or other disposition of a
Restricted Certificate shall be made unless such transfer, sale, pledge or
other disposition is exempt from the registration requirements of the
Securities Act, and any applicable state securities laws or is made in
accordance with said Securities Act and laws. In the event that a transfer of
a Restricted Certificate is to be made under this Section 5.08(a), (i) the
Trustee may require an Opinion of Counsel in form and substance satisfactory
to the Trustee and the Depositor that such Transfer shall 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
Depositor or the Servicer, provided that such Opinion of Counsel will not be
required in connection with the initial transfer of any such Certificate by
the Depositor or any affiliate thereof, to a non-affiliate of the Depositor
and (ii) the Trustee shall require the transferee to execute a representation
letter, substantially in the form of Exhibit P hereto, and the Trustee shall
require the transferor to execute a representation letter, substantially in
the form of Exhibit Q hereto, each acceptable to and in form and substance
satisfactory to the Depositor and the Trustee certifying to the Depositor and
the Trustee the facts surrounding such transfer, which representation letters
shall not be an expense of the Trustee, the Depositor or the Servicer,
provided that such representation letter will not be required in connection
with any transfer of any such Certificate by the Depositor to an affiliate of
the Depositor. Any such Certificateholder desiring to effect such transfer
shall, and does hereby agree to, indemnify the Trustee, the Depositor and the
Servicer against any liability that may result if the transfer is not so
exempt or is not made in accordance with such applicable federal and state
laws.
(b) Transfers of Restricted Certificates may be made in
accordance with this Section 5.08(b) if the prospective transferee of a
Restricted Certificate provides the Trustee and the Depositor with an
investment letter substantially in the form of Exhibit R attached hereto,
which investment letter shall not be an expense of the Trustee, the Depositor
or the Servicer, and which investment letter states that, among other things,
such transferee is a "qualified institutional buyer" as defined under Rule
144A under the Securities Act. Such transfers shall be deemed to have complied
with the requirements of Section 5.08(a) hereof; provided, however, that no
Transfer of any of the Restricted Certificates may be made pursuant to this
Section 5.08(b) by the Depositor. Any such Certificateholder desiring to
effect such transfer shall, and does hereby agree to, indemnify the Trustee,
the Depositor and the Servicer against any liability that may result if the
transfer is not so exempt or is not made in accordance with such applicable
federal and state laws.
(c) Each Person who has or who acquires any Ownership Interest
in a Class R Certificate shall be deemed by the acceptance or acquisition of
such Ownership Interest to have agreed to be bound by the following provisions
and to have irrevocably appointed the Depositor or its designee as its
attorney-in-fact to negotiate the terms of any mandatory sale under clause
(vi) below and to execute all instruments of transfer and to do all other
things necessary in connection with any such sale, and the rights of each
Person acquiring any Ownership Interest in a Class R Certificate are expressly
subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest
in a Class R Certificate shall be a Permitted Transferee and shall
promptly notify the Trustee of any change or impending change in its
status as a Permitted Transferee.
(ii) In connection with any proposed Transfer of any
Ownership Interest in a Class R Certificate, the Trustee shall
require delivery to it, and shall not register the Transfer of any
Class R Certificate until its receipt of, an affidavit and agreement
(a "Transfer Affidavit and Agreement") attached hereto as Exhibit K
from the proposed Transferee, in form and substance satisfactory to
the Trustee, representing and warranting, among other things, that
such Transferee is a Permitted Transferee, that it is not acquiring
its Ownership Interest in the Class R Certificate that is the subject
of the proposed Transfer as a nominee, trustee or agent for any
Person that is not a Permitted Transferee, that for so long as it
retains its Ownership Interest in a Class R Certificate, it will
endeavor to remain a Permitted Transferee, and that it has reviewed
the provisions of this Section 5.08(c) and agrees to be bound by
them.
(iii) Notwithstanding the delivery of a Transfer Affidavit
and Agreement by a proposed Transferee under clause (ii) above, if an
Authorized Officer of the Trustee has actual knowledge that the
proposed Transferee is not a Permitted Transferee, no Transfer of an
Ownership Interest in a Class R Certificate to such proposed
Transferee shall be effected.
(iv) Each Person holding or acquiring any Ownership
Interest in a Class R Certificate shall agree (x) to require a
Transfer Affidavit and Agreement from any other Person to whom such
Person attempts to transfer its Ownership Interest in a Class R
Certificate and (y) not to transfer its Ownership Interest unless it
provides a certificate (in the form attached hereto as Exhibit L) to
the Trustee stating that, among other things, it has no actual
knowledge that such other Person is not a Permitted Transferee.
(v) The Trustee will register the Transfer of any Class R
Certificate only if it shall have received the Transfer Affidavit and
Agreement and all of such other documents as shall have been
reasonably required by the Trustee as a condition to such
registration. In addition, no Transfer of a Class R Certificate shall
be made unless the Trustee shall have received a representation
letter from the Transferee of such Certificate to the effect that
such Transferee is not a Disqualified Non-United States Person and is
not a Disqualified Organization. Transfers of the Class R
Certificates to Disqualified Non-United States Persons and
Disqualified Organizations are prohibited.
(vi) Any attempted or purported transfer of any Ownership
Interest in a Class R Certificate in violation of the provisions of
this Section 5.08 shall be absolutely null and void and shall vest no
rights in the purported transferee. If any purported transferee shall
become an Owner of a Class R Certificate in violation of the
provisions of this Section 5.08, then the last preceding Permitted
Transferee shall be restored to all rights as Owner thereof
retroactive to the date of registration of transfer of such Class R
Certificate. The Trustee shall notify the Depositor upon receipt of
written notice or discovery by an Authorized Officer that the
registration of transfer of a Class R Certificate was not in fact
permitted by this Section 5.08. Knowledge shall not be imputed to the
Trustee with respect to an impermissible transfer in the absence of
such a written notice or discovery by an Authorized Officer. The
Trustee shall be under no liability to any Person for any
registration of transfer of a Class R Certificate that is in fact not
permitted by this Section 5.08 or for making any payments due on such
Certificate to the Owner thereof or taking any other action with
respect to such Owner under the provisions of this Agreement so long
as the transfer was registered after receipt of the related Transfer
Affidavit and Agreement. The Trustee shall be entitled, but not
obligated to recover from any Owner of a Class R Certificate that was
in fact not a Permitted Transferee at the time it became an Owner or,
at such subsequent time as it became other than a Permitted
Transferee, all payments made on such Class R Certificate at and
after either such time. Any such payments so recovered by the Trustee
shall be paid and delivered by the Trustee to the last preceding
Owner of such Certificate.
(d) The Trustee shall make available to the Internal Revenue
Service and those Persons specified by the REMIC Provisions, all information
necessary to compute any tax imposed (A) as a result of the transfer of an
ownership interest in a Class R Certificate to any Person who is a
Disqualified Organization, including the information regarding "excess
inclusions" of such Class R Certificates required to be provided to the
Internal Revenue Service and certain Persons as described in Treasury
Regulations Sections 1.860D-1(b)(5) and 1.860E- 2(a)(5), and (B) as a result
of any regulated investment company, real estate investment trust, common
trust fund, partnership, trust, estate or organization described in Section
1381 of the Code that holds an Ownership Interest in a Class R Certificate
having as among its record holders at any time any Person who is a
Disqualified Organization. The Trustee may charge and shall be entitled to
reasonable compensation for providing such information as may be required from
those Persons which may have had a tax imposed upon them as specified in
clauses (A) and (B) of this paragraph for providing such information.
(e) By acceptance of an ERISA-Restricted Certificate, whether
upon original issuance or subsequent transfer, each Owner of such a
Certificate acknowledges the restrictions on the transfer of such Certificate
set forth thereon and agrees that it will transfer such a Certificate only as
provided herein. In addition, each Owner of an ERISA-Restricted Certificate
registered in the book-entry system of the Depository shall be deemed to have
made the representation contained in paragraph 2 of Exhibit M hereto. No
transfer of an ERISA-Restricted Certificate in the form of a Definitive
Certificate shall be made to any Person unless the Trustee has received (A) a
certificate substantially in the form of Exhibit M hereto from such transferee
or (B) an Opinion of Counsel satisfactory to the Trustee and the Depositor to
the effect that the purchase and holding of such a Certificate will not
constitute or result in the assets of the Trust Fund being deemed to be "plan
assets" subject to the prohibited transactions provisions of ERISA or Section
4975 of the Code and will not subject the Trustee or the Depositor to any
obligation in addition to those undertaken in this Agreement; PROVIDED,
HOWEVER, that the Trustee will not require such certificate or opinion in the
event that, as a result of a change of law or otherwise, counsel satisfactory
to the Trustee has rendered an opinion to the effect that the purchase and
holding of an ERISA-Restricted Certificate by a Plan or a Person that is
purchasing or holding such a Certificate with the assets of a Plan will not
constitute or result in a prohibited transaction under ERISA or Section 4975
of the Code. The preparation and delivery of the certificate and opinions
referred to above shall not be an expense of the Trust Fund, the Trustee or
the Depositor. Notwithstanding the foregoing, no opinion or certificate shall
be required for the initial issuance of the ERISA-Restricted Certificates.
(f) No transfer of a Class R Certificate or any interest therein
shall be made to any employee benefit plan or other retirement arrangement,
including individual retirement accounts and annuities, Keogh plans and
collective investment funds and separate accounts in which such plans,
accounts or arrangements are invested, that is subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or the Code
(each, a "Plan"), unless the prospective transferee of such Class R
Certificate provides the Servicer and the Trustee with a certification of
facts and, at the prospective transferee's expense, an Opinion of Counsel
which establish to the satisfaction of the Servicer and the Trustee that such
transfer will not result in a violation of Section 406 of ERISA or Section
4975 of the Code or cause the Servicer or the Trustee to be deemed a fiduciary
of such Plan or result in the imposition of an excise tax under Section 4975
of the Code. In the absence of their having received the certification of
facts or Opinion of Counsel contemplated by the preceding sentence, the
Trustee and the Servicer shall require the prospective transferee of any Class
R Certificate to certify in the form of Exhibit P or Exhibit R that (A) it is
neither (i) a Plan nor (ii) a Person who is directly or indirectly purchasing
a Class R Certificate on behalf of, as named fiduciary of, as trustee of, or
with assets, of a Plan and (B) all funds used by such transferee to purchase
such Certificates will be funds held by it in its general account which it
reasonably believes do not constitute "plan assets" of any Plan.
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 Fund
without compliance with the provisions of Section 5.04 and Section 5.08
hereof.
Section 5.10. Determination of LIBOR.
(a) On each LIBOR Determination Date the Trustee shall determine
LIBOR on the basis of the offered LIBOR quotations of the Reference Banks as
of 11:00 a.m. London time on such LIBOR Determination Date as follows:
(i) If on any LIBOR Determination Date two or more of the
Reference Banks provide such offered quotations, LIBOR for the next
Accrual Period will be the arithmetic mean of such offered quotations
(rounding such arithmetic mean if necessary to the nearest five
decimal places);
(ii) If on any LIBOR Determination Date only one or none of
the Reference Banks provides such offered quotations, LIBOR for the
next Accrual Period will be whichever is the higher of (x) LIBOR as
determined on the previous LIBOR Determination Date or (y) the
Reserve Interest Rate. The "Reserve Interest Rate" will be either (A)
the rate per annum which the Trustee determines to be the arithmetic
mean (rounding such arithmetic mean if necessary to the nearest five
decimal places) of the one-month Eurodollar lending rates that New
York City banks selected by the Trustee are quoting, on the relevant
LIBOR Determination Date, to the principal London offices of at least
two leading banks in the London interbank market or (B) in the event
that the Trustee can determine no such arithmetic mean, the lowest
one-month Eurodollar lending rate that the New York City banks
selected by the Trustee are quoting on such LIBOR Determination Date
to leading European banks; and
(iii) If on any LIBOR Determination Date the Trustee is
required but is unable to determine the Reserve Interest Rate in the
manner provided in paragraph (ii) above, LIBOR for the next Accrual
Period will be LIBOR as determined on the previous LIBOR
Determination Date or, in the case of the first LIBOR Determination
Date, the Initial LIBOR Rate.
(b) The establishment of LIBOR by the Trustee and the Trustee's
subsequent calculation of the Pass-Through Rate applicable to the Certificates
for the relevant Accrual Period, in the absence of manifest error, will be
final and binding. In all cases, the Trustee may conclusively rely on
quotations of LIBOR for the Reference Banks as such quotations appear on the
display designated "LIUS01M" on the Bloomberg Financial Markets Commodities
News.
(c) As used herein, "Reference Banks" shall mean four leading
banks engaged in transactions in Eurodollar deposits in the international
Eurocurrency market (i) with an established place of business in London,
England, (ii) whose quotations appear on the "Bloomberg Screen LIUS01M Index
Page" (as described in the definition of LIBOR) on the applicable LIBOR
Determination Date and (iii) which have been designated as such by the Trustee
and are able and willing to provide such quotations to the Trustee on each
LIBOR Determination Date. The Reference Banks initially shall be: Barclay's
plc, Bank of Tokyo, National Westminster Bank and Trust Company and Bankers
Trust Company. If any of the initial Reference Banks should be removed from
the Bloomberg Screen LIUS01M Index Page or in any other way fail to meet the
qualifications of a Reference Bank, the Depositor shall use its best efforts
to designate alternate Reference Banks.
(d) If (i) with respect to any LIBOR Determination Date LIBOR is
determined pursuant to clause (a)(iii) of this Section and (ii) on the next
succeeding LIBOR Determination Date LIBOR would, without giving effect to this
paragraph (d), be determined pursuant to such clause (a)(iii), then the
Trustee shall select an alternative interest rate index over which the Trustee
has no control that is used for determining Eurodollar lending rates and is
calculated and published (or otherwise made available) by an independent third
party, and such alternative interest rate index shall constitute LIBOR for all
purposes hereof.
END OF ARTICLE V
<PAGE>
ARTICLE VI
COVENANTS
Section 6.01. Distributions.
On each Payment Date, the Trustee will withdraw amounts from the
related Account(s) 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) an Offered Certificate having an
original principal balance of not less than $1,000,000 or (B) a Class X 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 shall be made by and on behalf of the Trustee, and no amounts may be
so withdrawn from the Certificate Account for payments of Certificates 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 Fund, 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 Offered Certificate or
Class X Certificate and remaining unclaimed by the Owner of such 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 Owner of the Class R Certificate; and the Owner of
such Offered Certificate shall thereafter, as an unsecured general creditor,
look only to the Owner of the Class R Certificate for payment thereof (but
only to the extent of the amounts so paid to the Owner of the Class R
Certificate) 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 Owner of the Class R Certificate. The
Trustee shall, at the direction of the Depositor, also adopt and employ, at
the expense of the Trust Fund, 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 assets of the Trust Fund in trust
for the benefit of the Owners and, 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, 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 assets of the Trust
Fund and the rights of the Trustee, and the interests of the Owners
represented thereby, in such Trust Fund against the contrary claims
of all Persons and parties.
The Trustee shall send copies of any request received from 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 or
the Owners, by action, suit or proceeding at law or equity; provided, however,
that nothing in this Section shall require any action by the Trustee unless
the Trustee shall first (i) have been furnished indemnity satisfactory to it
and (ii) when required by this Agreement, have been requested to take such
action by the Owners of at least a majority of the Percentage Interests
represented by the Offered Certificates then Outstanding or, if there are no
longer any Offered Certificates then Outstanding, by such majority of the
Percentage Interests represented by the Class X Certificates.
(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 Fund to:
(i) sell, transfer, exchange or otherwise dispose of any of
the assets of the Trust Fund 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 assets of the
Trust Fund;
(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 Fund 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 assets of the Trust Fund
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 Fund 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 for the appointment of a
receiver or trustee of the Trust Fund, 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, and the Trustee of such Owner's intention
to institute such proceeding;
(2) the Owners of not less than a majority of the
Percentage Interests represented by the Offered Certificates
then Outstanding or, if there are no Offered Certificates
then Outstanding, by such percentage of the Percentage
Interests represented by the Class X 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 30 days after its receipt of
such notice, request and offer of indemnity has failed to
institute such proceeding; and
(5) no direction inconsistent with such written
request has been given to the Trustee during such 30-day
period by the Owners of a majority of the Percentage
Interests represented by the Offered Certificates or, if
there are no Offered Certificates then Outstanding, by such
majority of the Percentage Interests represented by the
Class X 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.
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 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 or any Owner of any Certificate to exercise
any right or remedy under this Agreement with respect to any event described
in Section 8.19(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 or to the Owners may be
exercised from time to time, and as often as may be deemed expedient, by the
Trustee or by the Owners, as the case may be.
Section 6.11. Control by Owners.
The Owners of a majority of the Percentage Interests represented by
the Offered Certificates then Outstanding or, if there are no longer any
Offered Certificates then Outstanding, by such majority of the Percentage
Interests represented by the Class X 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 Fund, including, but not limited to, those powers set forth in
Section 6.03 and Section 8.19 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 Trustee need not take any action which it determines
might involve it in liability or may be unjustly prejudicial
to the Owners not so directing.
Section 6.12. Access to Owners of Certificates' Names and Addresses.
(a) If 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.
Section 6.13. Year 2000.
The Trustee has undertaken a firmwide initiative to address the year
2000 issue. The Trustee does not believe that the transition to the year 2000
will materially affect its ability to perform its functions on behalf of the
Trust Estate or have a material financial impact on the Trust Estate. However,
the Trustee does not guarantee to the Trust Fund or the Certificateholders
that the systems of other companies, on which the Trustee's systems might
rely, will be timely converted or that a failure to convert by another company
or a conversion that is incompatible with the Trustee's systems will not have
a material adverse effect on the Trust Estate.
END OF ARTICLE VI
<PAGE>
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, including all payments
due on the Mortgage Loans in accordance with the respective terms and
conditions of such Mortgage Loans and required to be paid over to the Trustee
by the Servicer or by any Subservicer. 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 Fund 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 at the Corporate Trust Office as a
segregated account, the Certificate Account, to be held by the Trustee on
behalf of the Owners of the Certificates and the Trustee.
(b) The Depositor shall cause to be established, and the Trustee
shall maintain, at the Corporate Trust Office a segregated account, referred
to herein as the "Pre-Funding Account" to be held by the Trustee in the name
of the Trust for the benefit of the Owners. For federal income tax purposes,
the Depositor shall be the owner of such account and such account shall not be
treated as assets of any REMIC created pursuant to this Agreement.
(c) The Trustee shall invest the funds in the Certificate
Account only in Eligible Investments. With respect to each Payment Date,
investment income realized from any such Eligible Investment shall be for the
benefit of the Trustee as additional compensation. The amount of any losses
incurred in respect of any such investments shall be deposited in the
Certificate Account by the Trustee out of its own funds immediately as
realized.
Section 7.03. Distributions from the Certificate Account.
(a) On each Payment Date the Trustee (or the Paying Agent on
behalf of the Trustee) shall withdraw from the Certificate Account the Total
Distribution Amount for such date, shall allocate such amount to the interests
issued in respect of REMIC 1, REMIC 2, REMIC 3 and REMIC 4 and shall
distribute such amount as specified in this Section.
(b) On each Payment Date, the Trustee shall distribute the
Interest Remittance Amount for such date in the following order of priority:
(i) to the Trustee, the Trustee Fee for such Payment Date;
(ii) to the Class A Certificates, Current Interest for such
Class for such Payment Date and any Interest Carryforward Amount for
such Class for such Payment Date;
(iii) to the Class M1 Certificates, Current Interest for
such Class and such Payment Date;
(iv) to the Class M2 Certificates, Current Interest for
such Class and such Payment Date;
(v) to the Class B Certificates, Current Interest for such
Class and such Payment Date; and
(vi) for application as part of Monthly Excess Cashflow
Amount for such Payment Date, as provided in subsection (d) of this
Section, any Interest Remittance Amount remaining after application
pursuant to clauses (i) through (v) above.
(c) On each Payment Date, the Trustee shall distribute the
Principal Distribution Amount for such date as follows:
(i) On each Payment Date (a) prior to the Stepdown Date or
(b) with respect to which a Trigger Event has occurred, the Trustee
will make the following distributions in the following order:
(1) to the Class A Certificates, the Principal
Distribution Amount, until the Class Principal Balance of
such Class has been reduced to zero;
(2) to the Class M1 Certificates, the remaining
Principal Distribution Amount, if any, until the Class
Principal Balance of such Class has been reduced to zero;
(3) to the Class M2 Certificates, the remaining
Principal Distribution Amount, if any, until the Class
Principal Balance of such Class has been reduced to zero;
(4) to the Class B Certificates, the remaining
Principal Distribution Amount, if any, until the Class
Principal Balance of such Class has been reduced to zero;
and
(5) for application as part of Monthly Excess
Cashflow Amount for such Payment Date, as provided in
subsection (d) of this Section, any Principal Distribution
Amount remaining after application pursuant to clauses (1)
through (4) above.
(ii) On each Payment Date (a) on or after the Stepdown Date
and (b) with respect to which a Trigger Event has not occurred, the
Principal Distribution Amount for such date will be distributed in
the following order of priority:
(1) to the Class A Certificates, an amount equal to
the lesser of (x) the Principal Distribution Amount for such
Payment Date and (y) the Senior Principal Distribution
Amount for such date, until the Class Principal Balance has
been reduced to zero;
(2) to the Class M1 Certificates, an amount equal
to the lesser of (x) the remaining Principal Distribution
for such Payment Date and (y) the Class M1 Principal
Distribution Amount for such date, until the Class Principal
Balance has been reduced to zero;
(3) to the Class M2 Certificates, an amount equal
to the lesser of (x) the remaining Principal Distribution
Amount for such Payment Date and (y) the Class M2 Principal
Distribution Amount for such date, until the Class Principal
Balance has been reduced to zero;
(4) to the Class B Certificates, an amount equal to
the lesser of (x) the Principal Distribution Amount for such
Payment Date and (y) the Class B Principal Distribution
Amount for such date, until the Class Principal Balance has
been reduced to zero; and
(5) for application as part of Monthly Excess
Cashflow Amount for such Payment Date, as provided in
subsection (d) of this Section, any Principal Distribution
Amount remaining after application pursuant to clauses (1)
through (4) above.
Notwithstanding the foregoing, on any Payment Date on which the Class
Principal Balance of each Class of Certificates having a higher
priority of distribution has been reduced to zero, any remaining
Principal Distribution Amount will be distributed to the remaining
Certificates in the order of priority set forth above until the Class
Principal Balance of each such Class has been reduced to zero.
(d) On each Payment Date, the Trustee shall distribute the
Monthly Excess Cashflow Amount, and to the extent required to pay amounts due
under clauses d(i) through d(xii) below until the Payment Date in April 2000
after the application of Monthly Excess Cashflow Amount, amounts in the Credit
Reserve Fund, on each Payment Date in the following order of priority:
(i) to the extent of Monthly Excess Interest, to fund the
Extra Principal Distribution Amount for that Payment Date;
(ii) to the Basis Risk Reserve Fund and then to the Class A
Certificates, any Basis Risk Shortfall and Unpaid Basis Risk
Shortfall with respect to such Class;
(iii) to the Basis Risk Reserve Fund and then to the Class
M1 Certificates, any Basis Risk Shortfall and Unpaid Basis Risk
Shortfall with respect to such Class;
(iv) to the Basis Risk Reserve Fund and then to the Class
M2 Certificates, any Basis Risk Shortfall and Unpaid Basis Risk
Shortfall with respect to such Class;
(v) to the Basis Risk Reserve Fund and then to the Class B
Certificates, any Basis Risk Shortfall and Unpaid Basis Risk
Shortfall with respect to such Class;
(vi) to the Class M1 Certificates, any Interest
Carryforward Amount for such Class;
(vii) to the Class M1 Certificates, any Realized Loss
Amortization Amount for such Class;
(viii) to the Class M2 Certificates, any Interest
Carryforward Amount for such Class;
(ix) to the Class M2 Certificates, any Realized Loss
Amortization Amount for such Class;
(x) to the Class B Certificates, any Interest Carryforward
Amount for such Class;
(xi) to the Class B Certificates, any Realized Loss
Amortization Amount for such Class;
(xii) to the Basis Risk Reserve Fund, the Required Reserve
Fund Deposit;
(xiii) until the Payment Date in April 2000, to the Credit
Reserve Fund, the Credit Reserve Fund Deposit Amount;
(xiv) to the Class X Certificate, the amount the Class X
Distributable Amount together with any amounts withdrawn from the
Basis Risk Reserve Fund for distribution with respect to the Class X
Certificate pursuant to Section 7.06(c) and (d) ; and
(xv) subject to Section 11.16(g), to the Class R
Certificate, any remaining amount.
Section 7.04. Allocation of Losses.
On each Payment Date, the Class Principal Balances of the Class M1,
Class M2 and Class B Certificates will be reduced by the amount of any Applied
Realized Loss Amount for such date, in the following order of priority:
(i) to the Class B Certificates, until the Class
Principal Balance thereof has been reduced to zero;
(ii) to the Class M2 Certificates, until the Class
Principal Balance thereof has been reduced to zero; and
(iii)to the Class M1 Certificates, until the Class
Principal Balance thereof has been reduced to zero.
Section 7.05. REMIC 1, REMIC 2, REMIC 3 and REMIC 4 Allocations.
(a) The initial principal balances of the Class T1-1, Class T1-2
and Class T1-3 Interests shall equal 98%, 1% and 1%, respectively, of the sum
of the Original Aggregate Loan Balance and the Original Pre-Funded Amount.
With respect to each Payment Date, 98% of all collections and other recoveries
allocable to principal will be allocated to the Class T1-1 Interest. Remaining
amounts allocable to principal on such Payment Date will be allocated first to
the Class T1-3 Interest up to an amount equal to 2% of any amount that
represents an Adjusted Overcollateralization Release Amount with respect to
such Payment Date, but only to the extent of the Extra Principal Distribution
Amounts distributed on preceding Payment Dates, and then equally to the Class
T1-2 and Class T1-3 Interests. Interest accruing on the Class T1-3 Interest in
respect of each Payment Date in an amount equal to 1% of the Extra Principal
Distribution Amount for the Payment Date will be deferred and added to the
principal balance of the Class T1-3 Interest. The amount of interest accrued
and deferred on the Class T1-3 Interest in accordance with the preceding
sentence in respect of each Payment Date shall be distributed as principal on
such date to the Class T1-2 Interest. Prepayment penalties included in the
Interest Remittance Amount are to be allocated among the Class T1-2 and Class
T1-3 Interests in proportion to their principal balances.
(b) On each Payment Date, the Realized Losses for such date
shall be allocated 98% to the Class T1-1 Interest. The remaining 2% of such
Realized Losses shall be allocated to the Class T1-3 Interest to the extent
that the principal balance of the Class T1-3 Interest exceeds that of the
Class T1-2 Interests and then equally between the Class T1-2 Interest and the
Class T1-3 Interest.
(c) The initial principal balances of the Class T2-1 Interest,
Class T2-2 Interest and Class T2-3 Interest shall equal 98%, 1% and 1%,
respectively, of the sum of the Original Aggregate Loan Balance and the
Original Pre-Funded Amount. The Class T2-4 Interest shall not have a principal
balance. On each Payment Date, all collections and other recoveries allocable
to principal will be allocated 98% to the Class T2-1 Interest. Remaining
amounts allocable to principal on such Payment Date will be allocated first to
the Class T2-3 Interest up to an amount equal to 2% of any amount that
represents an Adjusted Overcollateralization Release Amount for such Payment
Date, but only to the extent of the Extra Principal Distribution Amounts
distributed on preceding Payment Dates, and then equally to the Class T2-2 and
Class T2-3 Interests. Interest accruing on the Class T2-3 Interest in respect
of such Payment Date in an amount equal to 1% of the Extra Principal
Distribution Amount for the Payment Date will be deferred and added to the
principal balance of the Class T2-3 Interest. The amount of interest accrued
and deferred on the Class T2-3 Interest in accordance with the preceding
sentence in respect of each Payment Date shall be distributed as principal to
the Class T2-2 Interest. Prepayment penalties included in the Interest
Remittance Amount are to be allocated among the Class T2-1, Class T2-2 and
Class T2-3 Interest in proportion to their principal balances.
(d) On each Payment Date, the Realized Losses for such date
shall be allocated 98% to the Class T2-1 Interest. The remaining 2% of such
Realized Losses shall be allocated to the Class T2-3 Interest to the extent
that the principal balance of the Class T2-3 Interest exceeds that of the
Class T2-2 Interest and then equally between the Class T2-2 Interest and the
Class T2-3 Interests.
(e) On each Payment Date, Class T2-4 Interest shall be entitled
to the Class T2-4 Distributable Amount.
(f) On each Payment Date, principal that is distributed with
respect to the Class T2-1, Class T2-2, and Class T2-3 Interests will be
distributed with respect to the Class T3-1, Class T3-2, Class T3-3, and Class
T3-4 Interests in the same priority as the Principal Distribution Amount is
allocated among the Corresponding Class of Certificates pursuant to Section
7.03(c).
(g) On each Payment Date, interest that accrues on the Class
T3-5 Interest and the Class T3-6, Class T3-7, and Class T3-8 Distributable
Amounts will not be distributed currently with respect to those interests but
will be deferred and added to the outstanding balances of those interests to
the extent the Targeted Overcollateralization Amount exceeds the Adjusted
Overcollateralization Amount for such date. Any amount so deferred will be
distributed as principal on the Class T3-1, Class T3-2, Class T3-3, and Class
T3-4 Interests in the same priority as the Principal Distribution Amount is
allocated among the Corresponding Class of Certificates pursuant to Section
7.03(c). Amounts deferred with respect to the Class T3-6, Class T3-7, and
Class T3-8 Interests will not bear interest. To the extent amounts are not
deferred, they will be distributed with respect to the Class T3-5, Class T3-6,
Class T3-7, and Class T3-8 Interests. The deferred balances of the Class T3-5,
Class T3-6, Class T3-7, and Class T3-8 Interests (and the initial balance of
the Class T3-5 Interest) will be distributed on each Payment Date for which
there is an Adjusted Overcollateralization Release Amount.
(h) On each Payment Date, Realized Losses shall be allocated in
the following priority:
(i) FIRST, to the Class T3-1 Interest, to the extent that
its principal balance exceeds the principal balance of the Class T4-1
Interest as of such Payment Date (after giving effect to any
distributions made on such date);
(ii) SECOND, to the Class T3-2 Interest, to the extent that
its principal balance exceeds the principal balance of the Class T4-2
Interest as of such Payment Date (after giving effect to any
distributions made on such date);
(iii) THIRD, to the Class T3-3 Interest, to the extent that
its principal balance exceeds the principal balance of the Class T4-3
Interest as of such Payment Date (after giving effect to any
distributions made on such date);
(iv) FOURTH, in proportion to their relative balances, to
the Class T3-5, Class T3-6, Class T3-7, and Class T3-8 Interests; and
(v) FIFTH, in a manner that will cause the balance on each
REMIC 3 Regular Interest to equal the balance of the Corresponding
Class of Certificates.
(i) On each Payment Date, principal that is distributed with
respect to the Class T3-1, Class T3-2, Class T3-3, and Class T3-4 Interests
will be distributed with respect to the Class T4-1, Class T4-2, Class T4-3,
and Class T4-4 Interests in the same priority as the Principal Distribution
Amount is allocated among the Corresponding Class of Certificates pursuant to
Section 7.03(c).
(j) On each Payment Date, interest that accrues on the Class
T4-5 Interest and the Class T4-6, Class T4-7, Class T4-8, Class T4-9, Class
T4-10, and Class T4-11 Distributable Amounts will not be distributed currently
with respect to those interests but will be deferred and added to the
outstanding balances of those interests to the extent the Targeted
Overcollateralization Amount exceeds the Overcollateralization Amount for such
date. Any amount so deferred will be distributed as principal on the Class
T4-1, Class T4-2, Class T4-3, and Class T4-4 Interests in the same priority as
the Principal Distribution Amount is allocated among the Corresponding Class
of Certificates pursuant to Section 7.03(c). Amounts deferred with respect to
the Class T4-6, Class T4-7, Class T4-8, Class T4-9, Class T4-10, and Class
T4-11 Interests will not bear interest. To the extent amounts are not
deferred, they will be distributed with respect to the Class T4-5, Class T4-6,
Class T4-7, Class T4-8, Class T4-9, Class T4-10, and Class T4-11 Interests.
The deferred balances of the Class T4-5, Class T4-6, Class T4-7, Class T4-8,
Class T4-9, Class T4-10, and Class T4-11 Interests (and the initial balance of
the Class T4-5 Interest) will be distributed on each Payment Date for which
there is an Overcollateralization Release Amount. On any Payment Date, amounts
distributed from REMIC 4 with respect to the Class T4-5, Class T4-6, Class
T4-7, Class T4-8, Class T4-9, Class T4-10, and Class T4-11 Interests shall be
retained by the Trustee to the extent the Trustee is required to deposit such
amounts in the Basis Risk Reserve Fund or the Credit Reserve Fund.
(k) On each Payment Date, Realized Losses shall be allocated
first among the class T4-5, Class T4-6, Class T4-7, Class T4-8, Class T4-9,
Class T4-10, and Class T4-11 Interests in proportion to their relative
balances on such date until the balance of each such interest is reduced to
zero. Thereafter, Realized losses will be allocated among the Class T4-1,
Class T4-2, Class T4-3, and Class T4-4 Interests in accordance with the
allocation of the Applied Realized Loss Amount among the Corresponding Classes
of Certificates pursuant to Section 7.04.
Section 7.06. Basis Risk Reserve Fund.
(a) On the Startup Day, the Trustee shall establish and maintain
in its name, in trust for the benefit of the holders of the Class A, Class M1,
Class M2 and Class B Certificates, a Basis Risk Reserve Fund, into which the
Depositor shall deposit $1,000. The Basis Risk Reserve Fund shall be held in
an Eligible Account, and funds on deposit therein shall be held separate and
apart from, and shall not be commingled with, any other moneys, including,
without limitation, other moneys of the Trustee held pursuant to this
Agreement.
(b) On each Payment Date on which the Net Excess Spread is less
than 0.25%, the Trustee shall transfer the Required Reserve Fund Deposit from
the Certificate Account to the Basis Risk Reserve Fund pursuant to Section
7.03(d)(xii). The Trustee shall make withdrawals from the Basis Risk Reserve
Fund to make distributions pursuant to Section 7.03(d)(ii) through (v).
(c) Funds in the Basis Risk Reserve Fund shall be invested in
Eligible Investments and must mature no later than the Business Day prior to
each Payment Date. Any earnings on such amounts shall be distributed to the
Class X Certificate pursuant to Section 7.03(d)(xiv). The Class X Certificate
shall evidence ownership of the Basis Risk Reserve Fund for federal income tax
purposes and the Owner thereof shall direct the Trustee, in writing, as to
investment of amounts on deposit therein and must mature no later than the
Business Day prior to each Payment Date. In the absence of written
instructions from the Class X Certificateholder as to investment of funds on
deposit in the Basis Risk Reserve Fund, such funds shall be invested in the
money market funds described in Section 7.09(k). Any amounts on deposit in the
Basis Risk Reserve Fund in excess of the Required Reserve Fund Deposit on any
Payment Date shall be distributed to the Class X Certificate on the following
Payment Date.
(d) Upon termination of the Trust, any amounts remaining in the
Basis Risk Reserve Fund shall be distributed to the Class X Certificateholder
pursuant to Section 7.03(d)(xiv).
Section 7.07. Pre-Funding Account.
(a) On the Startup Day, the Depositor will deposit in the
Pre-Funding Account, on behalf of the Owners of the Offered Certificates, from
the proceeds of the sale of the Offered Certificates, the Original Pre-Funded
Amount. The Pre-Funding Account shall be an Eligible Account.
(b) On any Subsequent Transfer Date, the Depositor 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 Fund 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 3.07 and 3.09 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 an amount in excess of the Original
Pre-Funded Amount.
(c) At the end of the Pre-Funding Period, the Depositor shall
instruct the Trustee to withdraw from the Pre-Funding Account the amount
(exclusive of any related Pre-Funding Account Earnings still on deposit
therein) remaining in the Pre-Funding Account and deposit such amount to the
Certificate Account, on the next Monthly Remittance Date for distribution on
the next Payment Date. In addition, at the end of the Pre-Funding Period the
Trustee will withdraw all Pre-Funding Account Earnings on deposit in the
Pre-Funding Account on the next Payment Date for distribution to the
Depositor.
(d) In connection with the end of the Pre-Funding Period, the
Trustee shall determine: (i) the amount and correct dispositions of the
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. 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, such
Owners or the Depositor shall immediately repay such amounts to the Trustee.
(e) The Pre-Funding Account is not an asset of REMIC 1, REMIC 2,
REMIC 3 or REMIC 4 formed hereunder.
Section 7.08. 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 Servicer in the case of the
Principal and Interest Account, in one or more Eligible Investments bearing
interest or sold at a discount. The earnings on the Principal and Interest
Account are payable to the Servicer as additional compensation for the
performance of its duties as Servicer. Earnings on Eligible Investments of
funds in the Certificate Account are payable pursuant to Section 7.02(c) to
the Trustee as additional compensation for the performance of its duties as
Trustee. The bank serving as Trustee or any affiliate thereof may be the
obligor, manager or advisor on any investment which otherwise qualifies as an
Eligible Investment. No investment in any Account held by the Trustee shall
mature later than the Business Day immediately preceding the next Payment
Date.
If any Person entitled hereunder to give investment directions with
respect to an Account held by the Trustee shall have failed to give investment
directions to the Trustee then the Trustee shall invest the funds in such
Account in money market funds described in Section 7.09(k) to be redeemable
without penalty no later than the Business Day immediately preceding the next
Payment Date.
(b) 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
in its corporate capacity thereon).
(c) All income from investments in any Account held by the
Trustee shall be deposited in such Account immediately on receipt (other than
the Principal and Interest Account, which income or other gains shall be
retained by the 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 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 7.09. 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, Freddie Mac senior debt
obligations, and Fannie Mae 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; provided, that
any such investment shall be rated in one of the two highest ratings
categories by each Rating Agency;
(c) Freddie Mac participation certificates and other Freddie Mac
guaranteed mortgage-backed securities and senior debt obligations;
(d) Consolidated senior debt obligations of any Federal Home
Loan Banks;
(e) Fannie Mae 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 DCR, if rated by DCR, and A-1 by Standard and Poor's;
(g) Deposits of any bank or savings and loan association (the
long-term deposit rating of which is BBB- or better by Standard and Poor's and
BBB- or better by DCR, if rated by DCR) 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 provided:
(i) The agreement is with a bank or insurance company which
has unsecured, uninsured and unguaranteed senior debt obligations
rated AA or better by Standard and Poor's and AA or better by DCR, if
rated by DCR, 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
(ii) 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
(iii)The agreement is not subordinated to any other
obligations of such insurance company or bank, and
(iv) The same guaranteed interest rate will be paid on any
future deposits made pursuant to such agreement, and
(v) The Trustee receives 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) or (c) 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
A-1+ or AA, respectively, or better by Standard and Poor's, and A-1+ or AA,
respectively or better by DCR, if rated by DCR, provided:
(i) A master repurchase agreement or specific written
repurchase agreement governs the transaction, and
(ii) 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 or
(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,
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
(iii) 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
(iv) 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
(v) 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 each
Rating Agency having a remaining maturity of not more than 30 days; and
(k) Investments in no load money market funds registered under
the Investment Company Act of 1940, whose shares are registered under the
Securities Act and rated no lower than AAA by Standard and Poor's and AAA by
DCR, if rated by DCR, including any such funds for which the Trustee or any
affiliate of the Trustee acts as manager or advisor;
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 7.10. Reports by Trustee.
(a) On each Payment Date, the Trustee shall make the following
information available to the Depositor, the Seller, the Originator, ARCMI,
each Owner, the Underwriter and their designees (designated in writing to the
Trustee) and the Rating Agencies:
(i) The aggregate amount then on deposit in the Certificate
Account prior to making any distributions on such Payment Date;
(ii) the amount of interest and principal to be distributed
with respect to each Class of the Certificates (based on a
Certificate in the original principal amount of $1,000);
(iii) the amount of such distribution allocable to
scheduled principal on the Mortgage Loans in the aggregate,
separately identifying the aggregate amount of any Prepayments,
repurchases or Liquidation Proceeds (based on a Certificate in the
original principal amount of $1,000);
(iv) the amount of such distribution allocable to interest
on the Mortgage Loans (based on a Certificate in the original
principal amount of $1,000);
(v) the principal amount of each Class of Certificates
(based on a Certificate in the original principal amount of $1,000)
which will be Outstanding and the aggregate Loan Balance, in each
case after giving effect to any payment of principal on such Payment
Date;
(vi) the Total Loan Balance and the Assumed Total Loan
Balance, after giving effect to any payment of principal on such
Payment Date;
(vii) the total of any Substitution Amounts and any Loan
Purchase Price amounts included in such distribution;
(viii) the weighted average Mortgage Rate and the weighted
average remaining term to maturity of the Mortgage Loans, calculated
both as of the first day of the related Collection Period;
(ix) the Servicing Fees and Trustee Fees;
(x) the amount of any Extra Principal Distribution Amount;
(xi) the Senior Enhancement Percentage, the Target
Overcollateralization Amount, the Overcollateralization Amount or
Overcollateralization Deficiency and whether a Trigger Event has
occurred as shown by the Three Month Delinquency Rate;
(xii) the Certificate Principal Balance of each Class of
the Offered Certificates then outstanding after giving effect to any
payment of principal on such Payment Date;
(xiii) the amount of any Applied Realized Loss Amount and
the Realized Loss Amortization Amount for each Class of Subordinated
Certificates as of the close of such Payment Date;
(xiv) the Pass-Through Rate applicable to each Class of
Offered Certificates;
(xv) the amount of Interest Carryforward Amount for each
Class of Offered Certificates after distributions on that Payment
Date;
(xvi) the amount of Basis Risk Shortfalls and Unpaid Basis
Risk Shortfalls for each Class of Offered Certificates after that
Payment Date;
(xvii) the amount of Delinquency Advances included in
distributions on that Payment Date;
(xviii) the amount of any prepayments or amounts from the
Pre-Funding Account distributed as payments of principal on that
Payment Date;
(xix) any amounts in the Credit Reserve Fund and the Basis
Risk Reserve Fund;
(xx) any amount distributed to the holders of the Class X
and Class R Certificates;
(xxi) the number and aggregate principal balances of
Mortgage Loans (a) 30-59 days Delinquent, (b) 60-89 days Delinquent,
and (c) 90 or more days Delinquent (inclusive of foreclosures, REO
Properties and bankruptcies), as of the close of business on the last
Business Day of the related Collection Period;
(xxii) the amount, if any, of Realized Losses for the
related Remittance Period;
(xxiii) the Delinquency Rate and the Three Month
Delinquency Rate;
(xxiv) the number and Total Loan Balances of all Mortgage
Loans as of the last day of the related Collection Period;
(xxv) the number and dollar amounts of all Mortgage Loans
in foreclosure proceedings as of the close of business on the last
day of the prior Collection Period;
(xxvi) the number of Mortgagors and the Loan Balances of
the related Mortgage Loans involved in bankruptcy proceedings as of
the close of business on the last day of the prior Collection Period;
(xxvii) the number and aggregate principal balance of
Mortgage Loans and related to REO Properties and, to the extent
reported by the Servicer, the aggregate book value of the Mortgage
Loans related to REO Properties (as of the last day such value was
determined);
(xxviii) the total of any Substitution Amounts and any Loan
Purchase Price amounts; and
(xxix) the Total Loan Balance of 60 or more days Delinquent
as of the last day of the prior Collection Period.
The Trustee will make such information available each month to
Certificateholders and to the other parties hereto via the Trustee's internet
website and its fax-on-demand service. The Trustee's internet website shall
initially be located at "www.ctslink.com." The Trustee's fax-on-demand service
may be accessed by calling (301) 815-6610. Assistance in using the website or
the fax-on-demand service can be obtained by calling the Trustee's customer
service desk at (301) 815-6600. The Trustee shall have the right to change the
way such information is distributed in order to make such distribution more
convenient and/or more accessible to such Persons and the Trustee shall
provide timely and adequate notifications to all such Persons regarding any
such changes.
The Servicer shall provide to the Trustee the information required by
Section 8.25(a) with respect to the Mortgage Loans to enable the Trustee to
perform its reporting obligations under this Section, and the obligations of
the Trustee under this Section (to the extent dependent thereon) are
conditioned upon such information being received and shall be based solely
upon information contained in the Servicer's Monthly Servicing Report provided
by the Servicer to the Trustee, and the Trustee shall not be obligated to
verify, recompute, reconcile or recalculate any such information or data.
Within a reasonable time after the end of each calendar year, the
Trustee shall furnish to each person who at any time during the calendar year
was an Owner of a Certificate, if requested in writing by such person, a
statement containing the information described in clauses (iii) and (iv)
above, aggregated for such calendar year or applicable portion thereof during
which such person was an Owner. Such obligation of the Trustee shall be deemed
to have been satisfied to the extent that substantially comparable information
has been prepared and furnished by the Trustee to Owners pursuant to any
requirements of the Code as in effect from time to time.
(b) The Servicer shall furnish to the Trustee, during the term
of this Agreement, such information reasonably available to it and not
specifically provided for herein, with respect to Mortgage Loans serviced by
it, as may be necessary, reasonable, or appropriate with respect to the
purposes of this Agreement, such information to be provided by and in
accordance with such applicable instructions and directions as the Trustee may
reasonably require.
Section 7.11. Additional Reports by Trustee.
The Trustee, upon request, shall provide monthly bank statements to
the Depositor, the Originator, the Seller, the Underwriter and each Owner,
with respect to the amount on deposit in the Certificate Account and the
identity of the investments included therein. Without limiting the generality
of the foregoing, the Trustee shall, at the request of the Depositor or the
Originator, transmit promptly to the Depositor, and the Originator copies of
all accountings of receipts in respect of the Mortgage Loans furnished to it
by the Servicer and shall notify the Originator and the Servicer if any Total
Distribution Amount has not been received by the Trustee when due.
Section 7.12. Credit Reserve Fund.
(a) On the Startup Day, the Trustee shall establish and maintain
in its name, in trust for the benefit of the Owner of the Class A, Class M1,
Class M2, and Class B Certificates, a Credit Reserve Fund. The Credit Reserve
Fund shall be an Eligible Account and funds on deposit therein shall be held
separate and apart from, and shall not be commingled with, any other moneys,
including, without limitation, other moneys of the Trustee held pursuant to
this Agreement. During the first six Payment Dates, the Trustee shall deposit
in the Credit Reserve Fund from the Certificate Account Monthly Excess
Cashflow Amount to the extent provided in Section 7.03(d)(xiii). Amounts in
the Credit Reserve Fund shall be invested in Eligible Investments and must
mature no later than the Business Day prior to each Payment Date. The Class X
Certificate shall evidence ownership of Credit Reserve Fund for federal income
tax purposes and the Owner thereof shall direct the Trustee, in writing, as to
investment of amounts on deposit therein. In the absence of written
instructions from the Owner of the Class X Certificate as to investment of
funds on deposit in the Credit Reserve Fund, such funds shall be invested in
the money market funds described in Section 7.09(k).
(b) Amounts in the Credit Reserve Fund will be available to
cover, up to the amount on deposit, any amounts described in Section
7.03(d)(i) through (xii) for each Class of Offered Certificates in the
priority described in Section 7.03(d) after application of the Monthly Excess
Cashflow Amount for the related Payment Date. On the Payment Date occurring in
April 2000, any amounts remaining on deposit in the Credit Reserve Fund,
together with any earnings thereon, will be paid to the Owner of the Class X
Certificate. Thereafter, the Credit Reserve Fund Account will be dissolved and
no longer available to provide credit support for the Certificates.
END OF ARTICLE VII
<PAGE>
ARTICLE VIII
SERVICING AND ADMINISTRATION OF MORTGAGE LOANS
Section 8.01. Servicer and Subservicers.
(a) Acting directly or through one or more subservicers as
provided in Section 8.03, the Servicer shall service and administer the
Mortgage Loans as described below and with reasonable care, and using that
degree of skill and attention that the Servicer exercises with respect to
comparable mortgage loans that it services for itself or others, and shall
have full power and authority, acting alone, to do or cause to be done any and
all things in connection with such servicing and administration which it may
deem necessary or desirable. In performing such servicing functions the
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, and (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.
(b) The duties of the 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 with respect to remittances on
the Mortgage Loans, advising the Trustee 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.
The Servicer shall reasonably cooperate with the Trustee as necessary to
enable the Trustee to perform its duties hereunder. The Servicer shall 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 Originator, the Seller and the Depositor intend that
REMIC 1, REMIC 2, REMIC 3 and REMIC 4 created hereunder shall constitute and
that the affairs of each such REMIC be conducted so as to qualify it as a
REMIC. In furtherance of such intention, the 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 any REMIC
in the Trust Fund or that would subject any REMIC in the Trust Fund to tax.
(d) The 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 the Servicer from any of its obligations under this
Agreement. Such subservicer shall have all the rights and powers of the
Servicer, as the case may be, with respect to such Mortgage Loans under this
Agreement.
(e) Without limiting the generality of the foregoing, but
subject to Sections 8.12 and 8.13, the 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, the Trustee and the Trust
Fund 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 Fund and to hold title to any Property upon such foreclosure or deed in
lieu of foreclosure on behalf of the Trust Fund; provided, however, that
Section 8.13(a) and (c) shall constitute a power of attorney from the Trustee
to the Servicer with respect to the matters described therein and in
accordance with the terms thereof. Subject to Sections 8.12 and 8.13, the
Trustee shall execute any additional powers of attorney and other documents as
the Servicer shall prepare and reasonably request to enable the Servicer or
any Subservicer thereof to carry out its respective servicing and
administrative duties hereunder.
(f) The Servicer shall give prompt notice to the Trustee of any
action of which a responsible officer of the Servicer has actual knowledge,
seeking to (i) assert a claim against the Trust Fund or (ii) assert control
over the Trust Fund or any portion of the Trust Estate.
(g) Servicing Advances incurred by the 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 party to the extent described in
Section 8.08 hereof.
Section 8.02. Collection of Certain Mortgage Loan Payments.
(a) The Servicer shall, to the extent such procedures shall be
consistent with this Agreement and the terms and provisions of any applicable
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 the Servicer shall always at
least follow collection procedures that are consistent with Section 8.01(a)
hereof. Consistent with the foregoing, the Servicer may, in its discretion (i)
waive any assumption fees, late payment charges, charges for checks returned
for insufficient funds or other fees (other than prepayment penalties) 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 party's general policies with
respect to comparable mortgage loans subject to such Act. The Servicer shall
not 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, the 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 the Servicer, imminent and the Servicer has the consent of the
Originator and the Seller ) the Servicer may not permit any modification that
would constitute a significant modification under Treasury Regulation ss.
1.1001-3 and with respect to any Mortgage Loan that would change the Mortgage
Rate (except for any change made pursuant to the adjustment provisions of a
Note evidencing an adjustable rate Mortgage Loan), forgive the payment of any
principal or interest or prepayment penalties (unless the Servicer believes
that forgiving such prepayment penalties will maximize the financial benefit
and recovery to the Trust Fund), 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; provided further that no such indulgence shall affect the
Servicer's obligation to make Delinquency Advances pursuant to Section 8.08.
(b) The Servicer shall deposit into the Principal and Interest
Account in accordance with Section 8.07(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.
The Servicer may enter into subservicing agreements for any servicing
and administration of Mortgage Loans with any institution which (i) is in
compliance with the laws of each state necessary to enable it to perform its
obligations under such Subservicing Agreement, (ii) has experience servicing
mortgage loans similar to the Mortgage Loans and (iii) has equity of not less
than $25,000,000 (as determined in accordance with generally acceptable
accounting standards). 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. The Servicer shall give prior notice to the Trustee of
the appointment of any Subservicer and shall furnish to the Trustee a copy of
such Subservicing Agreement. For purposes of this Agreement, the 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. The Originator shall be the
initial Subservicer until such time as servicing has been physically
transferred to the Servicer, which in no event shall occur later than November
2, 1999. The Originator in its capacity as initial Subservicer will comply
with all of the obligations of the "Servicer" hereunder during the period in
which it is acting in such capacity. The Originator will use its best efforts
to ensure that the transfer of servicing will occur by November 2, 1999.
Section 8.04. Successor Subservicer.
The Servicer may terminate any Subservicing Agreement to which it is
a party 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.
(a) The Servicer shall not be relieved of its obligations under
this Agreement notwithstanding any Subservicing Agreement or any of the
provisions of this Agreement relating to agreements or arrangements between
the Servicer and a Subservicer or otherwise, and the Servicer shall be
obligated to the same extent and under the same terms and conditions as if it
alone were servicing and administering the Mortgage Loans as such terms and
conditions may be limited pursuant to the terms of this Agreement. The
Servicer shall be entitled to enter into any agreement with a Subservicer for
indemnification of the Servicer by such Subservicer and nothing contained in
such Subservicing Agreement shall be deemed to limit or modify this Agreement.
The Trust Fund shall not indemnify the Servicer for any losses due to any
Subservicer's negligence.
(b) Neither the Servicer nor any of their directors, officers,
employees or agents shall be under any liability on any Certificate or
otherwise to the Trustee 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 the 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, willful
misconduct in the performance of duties or by reason of reckless disregard of
obligations and duties hereunder. The Servicer and any director, officer,
employee or agent of the Servicer 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. The Servicer shall not 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 the 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 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 Fund, and the Servicer shall
be entitled to be reimbursed therefor out of the Principal and Interest
Account. The Servicer and any director, officer, employee or agent of the
Servicer 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 negligent action, negligent failure to act, willful misconduct in
the performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder.
Section 8.06. No Contractual Relationship Between Subservicer
and the Trustee 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 Servicer alone and 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 8.21 hereof or in the related Subservicing Agreement.
Section 8.07. Principal and Interest Account; Escrow Accounts.
(a) The Servicer shall establish in its name on behalf of the
Trustee for the benefit of the Owners of the Certificates and maintain or
cause to be maintained the Principal and Interest Account. The Principal and
Interest Account shall be held in an Eligible Account. The Principal and
Interest Account shall be identified on the records of an Eligible Account as
follows: Ocwen Federal Bank FSB on behalf of Norwest Bank Minnesota, National
Association, as Trustee under the Pooling and Servicing Agreement relating to
the AMRESCO Residential Securities Corporation Mortgage Loan Trust 1999-1
dated as of September 1, 1999. If the institution at any time holding the
Principal and Interest Account ceases to be eligible to hold Eligible Accounts
hereunder, then the Servicer shall, within 15 days, be required to name a
successor institution meeting the requirements for holding Eligible Accounts
hereunder. If the Servicer fails to name such a successor institution, then
the Trustee shall cause such Account to be held in a qualifying Eligible
Account. The Servicer shall notify the Trustee if there is a change in the
name, account number or institution holding the Principal and Interest
Account. Subject to Subsection (c) below, the Servicer shall deposit all
receipts related to the Mortgage Loans into the Principal and Interest Account
on a daily basis (but no later than the second Business Day after receipt).
(b) All funds in the Principal and Interest Account may only be
held (i) uninvested, up to the limits insured by the FDIC or (ii) invested in
Eligible Investments as selected by the Servicer. The Principal and Interest
Account shall be held in trust in the name of the Servicer on behalf of the
Trustee for the benefit of the Owners of the Certificates (other than the
earnings thereon which shall be retained by the Servicer). Any investments of
funds in the Principal and Interest Account shall mature or be withdrawable at
par on or prior to the immediately succeeding Monthly Remittance Date. Any
investment earnings on funds held in a Principal and Interest Account shall be
for the account of the Servicer and may be withdrawn from the Principal and
Interest Account pursuant to Section 8.07(d). Any investment losses on funds
held in the Principal and Interest Account shall be for the account of the
Servicer and promptly upon the realization of such loss shall be contributed
by the Servicer to the Principal and Interest Account. Any references herein
to amounts on deposit in the Principal and Interest Account shall refer to
amounts net of such investment earnings.
(c) Subject to Sections 8.08 and 8.09, the Servicer shall
deposit to the Principal and Interest Account on the Business Day following
receipt (except as described below), all scheduled principal and interest
payments on the Mortgage Loans due after the Cut-Off Date or Subsequent
Cut-Off Date, as the case may be, all unscheduled principal and interest
collections received after the Cut-Off Date or Subsequent Cut-off Date, as the
case may be, including any Prepayments and Net Liquidation Proceeds, all Loan
Purchase Prices and Substitution Amounts received by the Servicer, other
recoveries or amounts related to the Mortgage Loans received by the Servicer,
Compensating Interest (which shall be deposited 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 Servicing Fee
with respect to each Mortgage Loan and other servicing compensation to the
Servicer as permitted by Section 8.14 hereof, (ii) principal retained by the
Depositor and due on the related Mortgage Loans on or prior to the Cut-Off
Date or Subsequent Cut-Off Date, as the case may be, (iii) interest retained
by the Depositor and accruing on the related Mortgage Loans on or prior to the
Cut-Off Date or Subsequent Cut-off Date, as the case may be, and (iv)
reimbursements for unreimbursed and nonrecoverable Delinquency Advances and
Servicing Advances pursuant to Section 8.08.
(d) The Servicer may make withdrawals from the Principal and
Interest Account only for the following purposes:
(i) to effect the timely remittance to the Trustee of the
Total Distribution 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;
(ii) to reimburse itself pursuant to Section 8.08 hereof
for unreimbursed Delinquency Advances and Servicing Advances and
unrecovered Delinquency Advances and Servicing Advances determined by
it to be nonrecoverable;
(iii) to withdraw investment earnings on amounts on deposit
in the Principal and Interest Account;
(iv) to withdraw amounts that have been deposited to the
Principal and Interest Account in error;
(v) to reimburse the Trustee pursuant to Sections 8.20,
10.07 and 11.16;
(vi) to reimburse the Servicer pursuant to Section 8.05;
and
(vii)to clear and terminate the Principal and Interest
Account following the termination of the Trust Estate pursuant to
Article IX hereof.
(e) On each Monthly Remittance Date, the Servicer shall remit to
the Trustee by wire transfer in immediately available funds from the Principal
and Interest Account for deposit to the Certificate Account, the Total
Distribution Amount remaining after the withdrawals permitted by clauses
(ii)-(vi) of Section 8.07(d).
(f) The 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 the 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 the 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 the 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, the Servicer shall be required to pay to the Mortgagors
interest on funds in the Escrow Account, to the extent required by law.
The 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 the
Servicer shall be required to so advance only to the extent that such
advances, in the good faith business judgment of the Servicer, will be
recoverable by the Servicer out of Insurance Proceeds, Liquidation Proceeds or
otherwise from the related Mortgage Loan. Notwithstanding the previous
sentence, the Servicer shall be entitled to be reimbursed as provided in
Section 8.08(b) hereof with respect to any Servicing Advances deemed to be
nonrecoverable.
Section 8.08. Delinquency Advances and Servicing Advances.
(a) The Servicer is required, not later than each Monthly
Remittance Date, to deposit into the 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 during the
related Remittance Period, with respect to each Delinquent Mortgage Loan but
only if, in its good faith business judgment, the Servicer reasonably believes
that such amount will ultimately be recovered from the related Mortgage Loan.
With respect to each Balloon Loan, the 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, the 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 by
the Servicer to the Trustee and the Seller. Such amounts are "Delinquency
Advances". The Servicer shall be permitted to fund its payment of Delinquency
Advances from its own funds or from funds on deposit in the Principal and
Interest Account that are not required to be distributed on the related
Payment Date. To the extent the 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 Principal and Interest Account
such amount prior to the next succeeding Monthly Remittance Date. The Servicer
shall be entitled to reimbursement for Delinquency Advances paid with the
Servicer's own funds 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 the Servicer
determines that the aggregate unreimbursed Delinquency Advances exceed the
expected Liquidation Proceeds on a Mortgage Loan, the 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 Principal and Interest Account. The
Servicer shall give written notice of such determination of nonrecoverability
to the Trustee and the Seller.
(b) The Servicer will each 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 8.07(f) hereof and (v) fees
and expenses for opinions of counsel pursuant to Sections 8.11 and 8.12 (but
only to the extent the Servicer reasonably believes that such amounts advanced
pursuant to clauses (i) - (iv) above will ultimately be recovered from the
related Mortgage Loan). Each such amount so paid will constitute a "Servicing
Advance". The 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 8.07(d) hereof.
Section 8.09. Compensating Interest; Purchase of Mortgage Loans.
(a) On or prior to each Monthly Remittance Date, the Servicer
shall deposit into the Principal and Interest Account with respect to any full
or partial Prepayment made by the Mortgagor during the preceding Remittance
Period, an amount equal to the excess, if any, of (x) 30 days' interest at the
Mortgage Loan's Mortgage Rate (less the Servicing Fee) on the Loan Balance of
such Mortgage Loan as of the first day of the related Remittance Period over
(y) to the extent not previously advanced, the interest paid by the Mortgagor
with respect to the Mortgage Loan for the related Remittance Period (any such
excess amount, "Compensating Interest"), which amount shall be included in the
Total Distribution Amount to be made available to the Trustee on each Monthly
Remittance Date. The total Compensating Interest for each Monthly Remittance
Date shall be limited to the Servicing Fee due to the Servicer for the related
Remittance Period.
(b) The Servicer with respect to Mortgage Loans served by it,
may, but is not obligated to, purchase for its own account (or, during the two
year period beginning on the Startup Day, substitute a Qualified Replacement
Mortgage for) any 90+ Day Delinquent Loan or any Mortgage Loan as to which
enforcement proceedings have been brought by the Servicer pursuant to Section
8.12. Any such Mortgage Loan so purchased shall be purchased by the 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 Principal and
Interest Account.
Section 8.10. Maintenance of Insurance.
(a) The 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 the Servicer on behalf of the Trust Fund 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
Servicer by the Originator in the related Mortgage Loan Schedule, and flood
insurance has been made available, the Servicer will cause to be maintained
with respect thereto a flood insurance policy in a form meeting the
requirements of the current guidelines of the Federal Insurance Administration
with a generally acceptable carrier in an amount representing coverage, and
which provides for a recovery by the Servicer on behalf of the Trust Fund 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 the Servicer shall obtain and
maintain a blanket policy insuring against fire, flood and hazards of extended
coverage on all the Mortgage Loans, then, to the extent such policy names the
Servicer as loss payee and provides coverage in an amount equal to the
aggregate unpaid principal balance on the Mortgage Loans without co-insurance
and otherwise complies with the requirements of this Section 8.10, the
Servicer shall be deemed conclusively to have satisfied its obligations with
respect to fire and hazard insurance coverage under this Section 8.10.
However, in the event that there shall not have been maintained on the related
Property a policy complying with the preceding paragraphs of this Section
8.10, and there shall have been a loss which would have been covered by such
policy, the Servicer shall deposit in the Principal and Interest Account from
the Servicer's own funds the difference, if any, between the amount that would
have been payable under a policy complying with the preceding paragraphs of
this Section 8.10 and the amount paid under such blanket policy. Upon the
request of the Trustee, the Servicer shall cause to be delivered an Officer's
Certificate to the Trustee to the effect that the Servicer maintains such
policy.
(d) The 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
interest and 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 the Servicer shall fail to maintain or cause to be
maintained any insurance required by this Section 8.10, and there shall have
been a loss which would have been covered by such policy, the Servicer shall
deposit in the 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 8.10; provided, however, that the
Servicer shall not be obligated to make such deposit if it has made reasonable
efforts consistent with the servicing standard set forth in this Agreement to
maintain such insurance and such insurance was not available to it.
Section 8.11. Due-on-Sale Clauses; Assumption and Substitution
Agreements.
When a Property has been or is about to be conveyed by the Mortgagor,
the Servicer shall, to the extent a responsible officer thereof has actual
knowledge of such conveyance or prospective conveyance, exercise the rights of
the Trust Fund to accelerate the maturity of the related Mortgage Loan under
any "due-on-sale" clause contained in the related Mortgage or Note; provided,
however, that the Servicer shall not exercise any such right if the
"due-on-sale" clause, in the reasonable belief of the Servicer, is not
enforceable under applicable law. An Opinion of Counsel, provided at the
expense of the Servicer (which expense shall be a Servicing Advance) to the
foregoing effect shall conclusively establish the reasonableness of such
belief. In such event, the 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, the 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 such substitution of
liability agreement would have been delivered by the Servicer in its usual
procedures for mortgage loans held in its own portfolio. The Trustee shall
execute any agreements required to effectuate the foregoing. The Servicer
shall notify the Trustee that any such assumption or substitution agreement
has been completed by forwarding to the Trustee (or the Custodian on behalf of
on Trustee) the original copy of such assumption or substitution agreement,
which copy shall be added by the Trustee or by the Custodian to the related
File and which shall, for all purposes, be considered a part of such File to
the same extent as all other documents and instruments constituting a part
thereof. The Servicer shall be responsible for recording any such assumption
or substitution agreements at its expense. 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 the Servicer for consenting to any such conveyance or
entering into an assumption or substitution agreement shall be retained by or
paid to the Servicer as additional servicing compensation.
Notwithstanding the foregoing paragraph or any other provision of
this Agreement, the Servicer shall not be deemed to be in default, breach or
any other violation of its obligations hereunder by reason of any assumption
of a Mortgage Loan by operation of law or any assumption which the Servicer
may be restricted by law from preventing, for any reason whatsoever.
Section 8.12. Realization Upon Defaulted Mortgage Loans.
(a) The Servicer 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 Servicer has not purchased
pursuant to Section 8.09(b). In connection with such foreclosure or other
conversion, the Servicer shall exercise such of the rights and powers vested
in it hereunder, and use the same degree of care and skill in 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 the 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
8.08(b) hereof. The Servicer shall sell any REO Property managed by it within
35 months of its acquisition by the Trust Fund, unless the Servicer obtains
for the Trustee an Opinion of Counsel (the cost of which shall be advanced by
the Servicer as a Servicing Advance) experienced in federal income tax matters
and reasonably acceptable to the Trustee, addressed to the Trustee and
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 Fund as defined in Section 860F of the Code or
cause the Trust Fund or REMIC 1, REMIC 2, REMIC 3 or REMIC 4 therein to fail
to qualify as a REMIC under the REMIC Provisions at any time that any
Certificates are outstanding, or the Servicer produces evidence that it has
properly requested from, and has received the approval of, the applicable tax
authorities at least 60 days before the day on which the three year grace
period would otherwise expire, an extension of the three year grace period, in
which case the 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, the
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 Fund 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 Servicer shall either
itself or through an agent selected by the Servicer protect and conserve such
REO Property in the same manner and to such extent as is customary in the
locality where such REO Property is located and may, incident to its
conservation and protection of the interests of the Owners, rent the same, or
any part thereof, as the Servicer deems to be in the best interest of the
Owners 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 Fund 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. ss.9601 et seq.) or a comparable
law, in the event any responsible officer of the Servicer has actual 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 Fund, the 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. In the event the
environmental inspection report indicates that the Property is in any way
affected by hazardous or toxic substances or wastes the Servicer shall, in
accordance with the servicing standard set forth in Schedule 8.01(a), take
such action as it deems to be in the best interests of the Owners of the
Certificates; provided, however, that the Servicer will not take title to any
such Property in the name of the Trustee without the prior written consent of
the Trustee.
(b) The 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 Servicer shall prepare and submit to
the Seller and the Trustee a Liquidation Report in substantially the form of
Exhibit N hereto.
Section 8.13. Trustee and Custodian to Cooperate; Release of Files.
(a) (i) 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 Servicer of a
notification that payment in full will be escrowed in a manner customary for
such purposes, the Servicer shall deliver to the Custodian, on behalf of the
Trustee, a Servicer's Trust Receipt in the form of Exhibit J hereto. Upon
receipt of such Servicer's Trust Receipt, the Custodian, on behalf of the
Trustee shall promptly release the related File, in trust to (i) the Servicer,
(ii) an escrow agent or (iii) any employee, agent or attorney of the Trustee,
in each case pending its release by the Servicer. Upon any such payment in
full or the receipt of such notification that such funds have been placed in
escrow, the Servicer is authorized to give, as attorney-in-fact for the
Trustee and the mortgagee under the Mortgage which secured the Note, an
instrument of satisfaction (or assignment of Mortgage without recourse)
regarding the Property relating to such Mortgage, which instrument of
satisfaction or assignment, as the case may be, shall be delivered to the
Person or Persons entitled thereto against receipt therefor of payment in
full, it being understood and agreed that no expense incurred in connection
with such instrument of satisfaction or assignment, as the case may be, shall
be chargeable to the Principal and Interest Account. In lieu of executing any
such satisfaction or assignment, as the case may be, the Servicer may prepare
and submit to the Custodian, on behalf of the Trustee, a satisfaction (or
assignment without recourse, if requested by the Person or Persons entitled
thereto) in form for execution by the Trustee with all requisite information
completed by the Servicer; in such event, the Custodian, on behalf of 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.
(ii) The Servicer's Trust Receipt may be delivered to the
Custodian, on behalf of the Trustee, (A) via mail or courier, (B) via
facsimile or (C) by such other means, including, without limitation,
electronic or computer readable medium, as the Servicer and the Custodian, on
behalf of the Trustee, shall mutually agree. The Custodian, on behalf of the
Trustee, shall promptly release the related File(s) within five (5) Business
Days of receipt of a properly completed Servicer's Trust Receipt pursuant to
clause (A), (B) or (C) above, which shall be authorization to the Custodian,
on behalf of the Trustee, to release such Files, provided the Custodian, on
behalf of the Trustee, has determined that such Servicer's Trust Receipt has
been executed, with respect to clause (A) or (B) above, or approved, with
respect to clause (C) above, by an authorized Servicing Officer of the
Servicer, and so long as the Trustee complies with its duties and obligations
under this Agreement. If the Custodian, on behalf of the Trustee, is unable to
release the Files within the time frames previously specified, the Custodian,
on behalf of the Trustee, shall immediately notify the Servicer indicating the
reason for such delay, but in no event shall such notification be later than
five Business Days after receipt of a Servicer's Trust Receipt.
On each day that the Servicer remits to the Custodian, on behalf of
the Trustee, Servicer's Trust Receipts pursuant to clauses (B) or (C) above,
the Servicer shall also submit to the Custodian, on behalf of the Trustee, a
summary of the total amount of such Servicer's Trust Receipts requested on
such day by the same method as described in such clauses (B) and (C) above.
(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 Custodian, on behalf of the Trustee shall (except in the case of
the payment or liquidation pursuant to which the related File is released to
an escrow agent or an employee, agent or attorney of the Trustee), upon
request of the Servicer and delivery to the Custodian, on behalf of the
Trustee, of a Servicer's Trust Receipt substantially in the form of Exhibit J
hereto, release the related File to the Servicer and shall execute such
documents as shall be necessary to the prosecution of any such proceedings,
including, without limitation, an assignment without recourse of the related
Mortgage to the Servicer. The Custodian, on behalf of the Trustee, shall
complete in the name of the Trustee any endorsement in blank on any Note prior
to releasing such Note to the Servicer. Such receipt shall obligate the
Servicer to return the File to the Custodian, on behalf of the Trustee, when
the need therefor by the 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 Custodian, on behalf of the Trustee, to the Servicer.
(c) The 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 the Servicer unless: (x)
the provisions of the related Note and Mortgage have been complied with; (y)
the Loan-to-Value Ratio 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 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 the 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 the Servicer the consent or partial release so requested by the Servicer. A
proposed form of consent or partial release, as the case may be, shall
accompany any Officer's Certificate delivered by the Servicer pursuant to this
paragraph. No action shall be taken by the Servicer if such action would
constitute a significant modification under Treasury Regulation ss. 1.1001-3.
(d) Costs associated with preparing assignments, satisfactions
and releases described in this Section 8.13 shall not be an expense of the
Trust Fund or the Trustee, but rather shall be borne directly by the Servicer;
provided, however, that the Custodian shall be liable for any penalty solely
associated with late reconveyance that results from the Custodian's failure to
perform its duties hereunder.
Section 8.14. Servicing Compensation.
As compensation for its activities hereunder, the Servicer shall be
entitled to the Servicing Fee for each Mortgage Loan. 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. Additional servicing compensation in the form of
release or satisfaction fees, bad check charges, assumption fees, late payment
charges, any other servicing-related fees (other than prepayment penalties),
and similar items may, to the extent collected from Mortgagors, be retained by
the Servicer.
Section 8.15. Annual Statement as to Compliance.
(a) The Servicer, at its own expense, will deliver to the
Trustee, the Depositor, and the Rating Agencies on or before March 31 of each
year, commencing in 2000, an Officer's Certificate stating, as to each signer
thereof, that (i) a review of the activities of the 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, the 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 the Servicer to remedy such defaults.
(b) The Servicer shall deliver to the Trustee, the Seller, the
Depositor and the Rating Agencies promptly after a responsible officer of the
Servicer obtains actual 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 8.16. Annual Independent Certified Public Accountants'
Reports.
On or before March 31 of each year, commencing in 2000, the Servicer
shall cause to be delivered to the Trustee, the Depositor and the Rating
Agencies a letter or letters of a firm of independent, nationally-recognized
certified public accountants stating that such firm has, with respect to the
Servicer's overall servicing operations examined such operations in accordance
with the requirements of the Uniform Single Attestation Program for Mortgage
Bankers, and stating such firm's conclusions relating thereto.
Section 8.17. Access to Certain Documentation and Information
Regarding the Mortgage Loans.
(a) The Servicer shall provide to the Trustee, the Office of
Thrift Supervision (the "OTS"), 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 the Servicer
designated by it.
(b) Upon any material change in the format of the electronic
report or computer tape by the Servicer in respect of the Mortgage Loans, the
Servicer shall deliver a copy of such electronic report or computer tape to
the Trustee. In addition, the Servicer shall provide a copy of such electronic
report or computer tape to the Trustee at such other times as the Trustee may
reasonably request upon reasonable notice to the Servicer. 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 8.18. Assignment of Agreement.
The Servicer may not assign its obligations under this Agreement
(except pursuant to Section 8.23 hereof), in whole or in part, unless it shall
have first obtained the prior written consent of the Trustee, which such
consent shall not be unreasonably withheld; provided, however, that any
assignee must meet the eligibility requirements set forth in Section 8.20(f)
hereof for a successor Servicer and provided that the Servicer and its
assignee shall furnish to the Trustee the agreements described in the last
sentence of Section 8.20(a). Notice of any such assignment shall be given by
such Servicer to the Trustee and the Rating Agencies.
Section 8.19. Events of Servicing Termination.
(a) The Trustee (acting upon the request of the
Owners of at least 50% of the Percentage Interests of the Offered Certificates
then Outstanding) may immediately remove the Servicer as Servicer upon the
occurrence of any of the following events and the expiration of the related
cure period:
(i) The Servicer shall fail to deliver to the Trustee any
proceeds or payment (including any Delinquency Advance or required
Compensating Interest payment) required to be delivered under this
Agreement, which failure continues unremedied for two Business Days
following written notice to an Authorized Officer of the Servicer, as
applicable, from the Trustee or from any Owner;
(ii) The Servicer shall (I) apply for or consent to the
appointment of a receiver, trustee, liquidator or custodian or
similar entity with respect to itself or its property, (II) admit in
writing its inability to pay its debts generally as they become due,
(III) make a general assignment for the benefit of creditors, (IV) be
adjudicated a bankrupt or insolvent, (V) commence a voluntary case
under the federal bankruptcy laws of the United States of America or
file a voluntary petition or answer seeking reorganization, an
arrangement with creditors or an order for relief or seeking to take
advantage of any insolvency law or file an answer admitting the
material allegations of a petition filed against it in any
bankruptcy, reorganization or insolvency proceeding or (VI) take
corporate action for the purpose of effecting any of the foregoing;
(iii) If without the application, approval or consent of
the Servicer a proceeding shall be instituted in any court of
competent jurisdiction, under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking in respect
of the 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 the Servicer or of all or any substantial part
of its assets, or other like relief in respect thereof under any
bankruptcy or insolvency law, and, if such proceeding is being
contested by the 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; or
(iv) The 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 thirty
(30) days after the earlier of (x) notice by the Trustee of said
failure or (y) actual knowledge of a responsible officer of the
Servicer.
Upon the Trustee's determination that a payment of required
Compensating Interest payment, Total Distribution Amount, or a required
Delinquency Advance has not been made by the Servicer, the Trustee shall so
notify in writing an Authorized Officer of the Servicer and the Seller as soon
as is reasonably practical.
(b) The Trustee shall give notice in writing to the Servicer of
the termination of all the rights and obligations of the Servicer under this
Agreement. The Trustee shall mail a copy of any notice given by it hereunder
to the Depositor, the Seller, the Owners and Rating Agencies. On or after the
receipt by the Servicer of such written notice, all authority and power of the
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
delivering the Files to the successor Servicer or the Trustee shall be paid by
the predecessor Servicer.
Section 8.20. Resignation of the Servicer and Appointment
of Successor.
(a) Upon the Servicer's receipt of notice of termination
pursuant to Section 8.19 or the Servicer's resignation in accordance with the
terms of this Section 8.20, the predecessor Servicer shall continue to perform
its functions as Servicer under this Agreement, until such time as the
servicing functions are actually transferred to the Successor Servicer, which
shall in any event occur no later than 90 days from the written notice of such
termination or resignation (or written confirmation of such notice) in
accordance with the terms of this Agreement. All collections then being held
by the predecessor Servicer prior to its removal and any collections received
by the Servicer after removal or resignation shall be endorsed by it to the
Trustee or the successor Servicer and remitted directly and immediately to the
Trustee or the successor Servicer. In the event of the Servicer's resignation
or termination hereunder, upon the appointment of a successor Servicer
pursuant to Section 8.20(f), the successor Servicer shall accept its
appointment by execution of a written assumption in form acceptable to the
Trustee, with copies of such assumption to 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) The Servicer shall not 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 the Servicer so causing such a conflict being of a
type and nature carried on by the Servicer at the date of this Agreement or
(ii) upon prior written consent of the Owners of the Class X Certificates and
the Trustee (such consent not to be unreasonably withheld) and confirmation
from the Rating Agencies that the ratings currently assigned to any Class of
the Offered Certificates are not reduced. Any such determination referred to
in clause (i) permitting the resignation of the Servicer shall be evidenced by
an Opinion of Counsel to such effect which shall be delivered to the Trustee.
(c) No removal or resignation of the Servicer shall become
effective until the Trustee (except in the case of a resignation pursuant to
clause (ii) of Section 8.20(b)) or a successor Servicer shall have assumed the
Servicer's responsibilities and obligations in accordance with this Section.
(d) Upon removal or resignation of the Servicer, the Servicer
also shall, at its own expense, 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 the Servicer has
maintained for the Mortgage Loans, including all tax bills, assessment
notices, insurance premium notices and all other documents as well as all
original documents then in the Servicer's possession.
(e) Any collections received by the Servicer after removal or
resignation thereof shall be endorsed by it and remitted directly and
immediately to the Trustee or the successor Servicer.
(f) Upon removal pursuant to Section 8.19 or resignation
pursuant to Section 8.20 of the Servicer, the Trustee, shall (except in the
case of a resignation pursuant to clause (ii) of Section 8.20(b)) (x) appoint
a successor Servicer satisfying the criteria set forth in this subsection (f)
and (y) pending the appointment of a successor Servicer, shall serve as
Servicer of the Mortgage Loans. The Trustee shall, if it is unable to appoint
a successor Servicer or 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 has
been designated as an approved servicer by Fannie Mae or Freddie Mac for first
and second mortgage loans and having equity of not less than $25,000,000 (or
such lower level as may be acceptable to the Owners of a majority of the Class
X Certificates) and is reasonably acceptable to the Owners of the Class X
Certificates, as indicated in writing, as the successor to the Servicer
hereunder in the assumption of all or any part of the responsibilities, duties
or liabilities of the Servicer hereunder and (II) give notice thereof to the
Owners and the Rating Agencies. The compensation of any successor Servicer
(other than the Trustee) so appointed shall be the amount agreed by such
successor Servicer and the Trustee, such compensation not to exceed the
Servicing Fee Rate. If the Trustee becomes the successor Servicer it shall be
entitled to receive Servicing Fees at the Servicing Fee Rate. All (a)
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
8.20(f) and (b) all costs associated with the transfer of servicing from the
Servicer to a successor Servicer, including, without limitation, any costs or
expenses associated with the complete transfer of all servicing data and the
completion, correction or manipulation of such servicing data as may be
required by the Trustee to correct any errors or insufficiencies in the
servicing data or otherwise to enable the Trustee to service the Mortgage
Loans properly and effectively, shall be at the expense of the Trust Fund.
Upon the appointment of a successor Servicer pursuant to this Section 8.20(f),
the Servicing Rights Purchase Agreement shall terminate and the terminating or
resigning Servicer shall have no further rights thereunder. In the event that
the Trustee receives any funds from the successor Servicer in connection with
the conveyance of the servicing rights to such successor Servicer, the Trustee
may deduct the expenses described in this Section 8.20(f) from the funds
received by it and shall remit any excess funds to the terminating or
resigning Servicer (provided, however, that nothing in this Section 8.20(f)
shall obligate the Trustee to make any efforts to sell the rights to service
the Mortgage Loans hereunder or require the Trustee to seek to obtain valuable
consideration of any kind in return for the appointment of a successor
Servicer).
(g) 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 the predecessor Servicer as
required by subsection (i) below. The predecessor Servicer agrees to cooperate
with the Trustee and the successor Servicer in effecting the termination of
the Servicer's servicing responsibilities and rights hereunder and shall
promptly provide the Trustee or such successor Servicer all documents and
records reasonably requested by it to enable it to assume the Servicer's
functions hereunder and shall promptly also transfer to the Trustee or the
successor Servicer all amounts which then have been or should have been
deposited in the Principal and Interest Account by the 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 the Servicer.
(h) 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.
(i) If the Servicer is being removed or is resigning, it shall
(x) give notice to the Rating Agencies of the transfer of the servicing to the
successor Servicer and (y) provide a "goodbye" notice to each of the
Mortgagors of Mortgage Loans that it is servicing.
(j) 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 8.22. 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 the Servicer of any of its
representations or warranties contained herein or in any related document or
agreement.
(k) The Trustee shall give notice to the Rating Agencies and the
Owners of the occurrence of any event specified in Section 8.19 of which a
Responsible Officer of the Trustee has actual knowledge.
Section 8.21. 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 the Servicer hereunder
by the Trustee pursuant to Section 8.20, it is understood and agreed that the
Servicer's rights and obligations under any Subservicing Agreement then in
force between the Servicer and a Subservicer 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.
The Servicer shall, upon the reasonable request of the Trustee, but
at the expense of the Servicer, deliver to the assuming party documents and
records relating to each Subservicing Agreement and an accounting of amounts
collected and held by it and otherwise use its best reasonable efforts
(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 8.22. Inspections by Trustee, the Seller and Originator;
Errors and Omissions Insurance.
(a) At any reasonable time during regular business hours and
from time to time upon prior written and reasonable notice, the Trustee or any
agents thereof may inspect the Servicer's servicing operations and discuss the
servicing operations of the Servicer with a responsible officer designated by
the Servicer. The reasonable costs and expenses incurred by the Servicer or
its agents or representatives in connection with any such examinations or
discussions shall be paid by the Servicer.
(b) The Servicer shall maintain, each 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 Fannie Mae
or Freddie Mac 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 the 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 the 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 8.22 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 Fannie Mae in the Fannie Mae
Servicing Guide or by Freddie Mac in the Freddie Mac Sellers' and Servicers'
Guide.
Section 8.23. Merger, Conversion, Consolidation or Succession to
Business of Servicer.
Any corporation into which the Servicer may be merged or converted or
with which it may be consolidated, or corporation resulting from any merger,
conversion or consolidation to which the Servicer shall be a party or any
corporation succeeding to all or substantially all of the business of the
Servicer shall be the successor of the 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 8.20(f).
Section 8.24. Notices of Material Events.
Upon any responsible officer of the Servicer's actual knowledge
thereof, the Servicer shall give prompt notice to 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 material default by the 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 the
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 the 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 the 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 the Servicer; and
(d) The receipt of notice from any agency or governmental body
having authority over the conduct of the Servicer's business that the Servicer
is to cease and desist, or to undertake any practice, program, procedure or
policy employed by the Servicer in the conduct of the business of any of them,
and such cessation or undertaking will materially and adversely affect the
conduct of the Servicer's business or its ability to perform under the
Operative Documents or materially and adversely affect the financial affairs
of the Servicer.
Section 8.25. Servicer's Monthly Servicing Report.
(a) The Servicer shall deliver to the Seller and the Trustee,
not later than the Monthly Remittance Date, a Servicer's Monthly Servicing
Report (in an electronic format and hard copy format reasonably agreeable to
both the Servicer and the Trustee) containing all information necessary for
the Trustee to perform its reporting requirements under Section 7.10 of this
Agreement, including all loan level information necessary to determine the
following:
(i) For the related Remittance Period, (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) For the related Remittance Period, the Servicing Fee
withheld by the Servicer;
(iii) For the related Remittance Period, the principal and
interest payments remitted by the Servicer to its Principal and
Interest Account;
(iv) For the related Remittance Period, the scheduled
principal and interest payments on the Mortgage Loans that were not
made by the related Mortgagors as of the last day of the such
Remittance Period;
(v) For the related Collection Period, 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 Delinquent
Mortgage Loans, if any, (1) 30 to 59 days, (2) 60 to 89 days and (3)
90 days or more, respectively, as of the last day of such Collection
Period;
(vi) For the related Collection Period, the number and
aggregate Loan Balance of Mortgage Loans, if any, in foreclosure and
the number and unpaid principal balance of any REO Properties as of
the last day of such Collection Period;
(vii) For the related Collection Period, the number and
aggregate Loan Balance (immediately prior to being classified as
Liquidated Mortgage Loans) of Liquidated Mortgage Loans as of the
last day of such Collection Period;
(viii) Liquidation Proceeds received during the related
Remittance Period;
(ix) The amount of any Liquidation Expenses being deducted
from Liquidation Proceeds or otherwise being charged to the Principal
and Interest Account with respect to such Monthly Remittance Date;
(x) Liquidation Expenses incurred during the related
Remittance 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 last day of the
related Remittance Period;
(xii) The Loan 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 last day of the related Remittance
Period;
(xiii) The number and aggregate Loan Balances and Loan
Purchase Prices of Mortgage Loans required to be repurchased by the
Originator as of the related Subsequent Cut-Off Date;
(xiv) The amount of any Delinquency Advances made by the
Servicer during the related Remittance Period and the aggregate
unreimbursed Delinquency Advances as of such Monthly Remittance Date;
(xv) The weighted average Mortgage Rates of the Mortgage
Loans;
(xvi) The amount of unreimbursed Servicing Advances as of
such Monthly Remittance Date;
(xvii) The number and aggregate Loan Balance of Mortgage
Loans, if any, currently in bankruptcy proceedings as of the last day
of the related Collection Period;
(xviii) The Delinquency Rate and the amount of any
prepayment penalties as of the last day of the related Remittance
Period; and
(xix) Any additional information requested by the Trustee
that is reasonably available to the Servicer.
In addition to the report described in this Section 8.25(a) to be
provided by the Servicer, information as the Trustee and the Servicer may
agree upon shall be provided by the Servicer to the Trustee by electronic
transmission or hard copy.
(b) The Depositor shall deliver or cause to be delivered to the
Custodian on behalf of 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.
Section 8.26. Indemnification by the Servicer.
The Servicer agrees to indemnify and hold the Trustee, the Seller,
the Originator and the Depositor and their employees, officers, directors and
agents harmless against any and all claims, losses, penalties, fines,
forfeitures, legal fees and related costs, judgments, and any other costs,
respective fees and expenses that the Seller, the Originator, the Depositor
and the Trustee and their employees, officers, directors and agents may
sustain in any way caused by or arising directly out of the negligent failure
of the Servicer, or any 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 Seller, the Originator or the Depositor, materially
and adversely affects such party. The Servicer shall immediately notify the
Trustee, the Seller, the Originator, the Depositor and the Rating Agencies if
a claim is made by a third party with respect to this Agreement, and the
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 Originator, the Trustee and the
Depositor and their employees, officers, directors and agents. The Servicer
shall be entitled to be reimbursed from amounts in the Principal and Interest
Account for all amounts advanced by it pursuant to the preceding sentence
except when the claim relates directly to the failure of the Servicer to
service and administer the Mortgage Loans in compliance with the terms of this
Agreement.
Section 8.27. Servicing Standard.
The Servicer shall perform its servicing functions with respect to
the Mortgage Loans in the best interests of and for the benefit of the Owners
subject to the terms hereof.
Section 8.28. No Solicitation.
The Servicer agree 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 the
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 the 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 the Servicer prohibited from
responding to unsolicited requests or inquiries made by a Mortgagor or an
agent of a Mortgagor; 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 Originator's policy,
if such policy is delivered to the 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
Originator.
Section 8.29. Waiver of Past Events of Servicing Termination.
Subject to the rights of the Trustee (acting upon the request of the
Owners of the majority of the Percentage Interests of the Offered Certificates
then Outstanding as a whole and not on a Class by Class basis) pursuant to
Section 8.20 to terminate all of the rights and obligations of the Servicer
under this Agreement, the Owners of a majority of the Percentage Interests of
the Offered Certificates may waive any default by the 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.
END OF ARTICLE VIII
<PAGE>
ARTICLE IX
TERMINATION OF TRUST FUND
Section 9.01. Purchase of Mortgage Loans; Termination of Trust
Fund Upon Purchase or Liquidation of All Mortgage Loans.
(a) The respective obligations and responsibilities of the
Originator, the Seller, the Depositor, the Servicer, ARCMI, and the Trustee
created hereby (other than the obligation of the Trustee to make payments to
Certificateholders as set forth in Section 7.03 with respect to such
termination) shall terminate on the earlier of (i) the final payment or other
liquidation of the last Mortgage Loan remaining in the Trust Fund and the
disposition of all REO Property and (ii) the sale of the property held by the
Trust Fund in accordance with Section 9.01(b); PROVIDED, HOWEVEr, that in no
event shall the Trust Fund created hereby continue beyond the earlier of (i)
the expiration of 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 St. James's, living on the date hereof, and (ii) the Latest
Possible Maturity Date. It is the parties' intent that any termination of the
Trust Fund shall be carried out in such a manner so that the termination of
each REMIC included therein shall qualify as a "qualified liquidation" under
the REMIC Provisions.
(b) On any Payment Date occurring on or after the date on which
the Class Principal Balance of the Class A Certificates is less than 35% of
the Initial Certificate Principal Balance of the Class A Certificates, the
Class X Certificateholder has the option, upon timely notice to the Trustee,
to cause the Trust Fund to adopt a plan of complete liquidation pursuant to
Section 9.03(a)(i) hereof to sell all of its property. Upon exercise of such
option, the property of the Trust Fund shall be sold to the Class X
Certificateholder at a price (the "Termination Price") equal to the sum of (i)
100% of the unpaid principal balance of each Mortgage Loan on the day of such
purchase plus interest accrued thereon at the applicable Mortgage Rate with
respect to any Mortgage Loan through the related Remittance Period, (ii) the
fair market value of any REO Property and any other property held by any
REMIC, such fair market value to be determined by an appraiser or appraisers
agreed upon by the Trustee and (iii) any unreimbursed Servicing Advances and
expenses of the Trust Fund. Any sale of the Mortgage Loans under this Section
9.01(b) shall be subject to the Servicing Rights Purchase Agreement.
Section 9.02. Procedure Upon Termination of Trust Fund.
(a) Notice of any termination pursuant to the provisions of
Section 9.01, specifying the Payment Date upon which the final distribution
shall be made, shall be given promptly by the Trustee by first class mail to
Certificateholders prior to (x) the sale of all of the property of the Trust
Fund by the Trustee pursuant to Section 9.01(b) or (y) the final payment or
other liquidation of the last Mortgage Loan or REO Property in the Trust Fund.
Such notice shall specify (A) the Payment Date upon which final distribution
on the Certificates of all amounts required to be distributed to Owners of the
Certificates pursuant to Section 7.03 will be made upon presentation and
surrender of the Certificates at the Corporate Trust Office, and (B) that the
Record Date otherwise applicable to such Payment Date is not applicable,
distribution being made only upon presentation and surrender of the
Certificates at the office or agency of the Trustee therein specified. The
Trustee shall give such notice to the Registrar at the time such notice is
given to Owners of the Certificates. Upon any such termination, the duties of
the Registrar with respect to the Certificates shall terminate and the
Servicer and the Trustee shall terminate the Principal and Interest Account
and the Certificate Account, respectively, and any other account or fund
maintained with respect to the Certificates, subject to the Trustee's
obligation hereunder to hold all amounts payable to Owners of the Certificates
in trust without interest pending such payment.
(b) In the event that all of the Owners do not surrender their
Certificates for cancellation within three months after the time specified in
the above-mentioned written notice, the Trustee shall give a second written
notice to the remaining Owners of the Certificates to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within one year after the second notice any Certificates shall not
have been surrendered for cancellation, the Trustee may take appropriate steps
to contact the remaining Certificateholders concerning surrender of such
Certificates, and the cost thereof shall be paid out of the amounts
distributable to such Owners. If within two years after the second notice any
Certificates shall not have been surrendered for cancellation, the Trustee
shall, subject to applicable state law relating to escheatment, hold all
amounts distributable to such Owners for the benefit of such Owners. No
interest shall accrue on any amount held by the Trustee and not distributed to
an Owner due to such Owner's failure to surrender its Certificate(s) for
payment of the final distribution thereon in accordance with this Section
9.02.
Section 9.03. Additional Trust Fund Termination Requirements.
(a) Any termination of the Trust Fund shall be effected in
accordance with the following additional requirements, unless the Trustee
seeks (at the request of the party exercising the option to purchase all of
the Mortgage Loans pursuant to Section 9.01(b)), and subsequently receives, an
Opinion of Counsel (at the expense of such requesting party), addressed to the
Trustee to the effect that the failure of the Trust Fund to comply with the
requirements of this Section 9.03 will not (i) result in the imposition of
taxes on any REMIC under the REMIC Provisions or (ii) cause any REMIC
established hereunder to fail to qualify as a REMIC at any time that any
Certificates are outstanding:
(i) Within 89 days prior to the time of the making of the
final payment on the Certificates, upon notification by the Owner of
the Class X Certificate that it intends to exercise its option to
cause the termination of the Trust Fund, the Trustee shall adopt a
plan of complete liquidation of the Trust Fund on behalf of each
REMIC, meeting the requirements of a qualified liquidation under the
REMIC Provisions (which plan may be adopted by the Trustee's
attachment of a statement specifying the first day of the 89-day
liquidation period to each REMIC's final federal income tax return);
(ii) Any sale of the assets of the Trust Fund pursuant to
Section 9.02 shall be a sale for cash and shall occur at or after the
time of adoption of such a plan of complete liquidation and prior to
the time of making of the final payment on the Certificates;
(iii) On the date specified for final payment of the
Certificates, the Trustee shall make final distributions of principal
and interest on the Certificates in accordance with Section 7.03 and,
after payment of, or provision for any outstanding expenses,
distribute or credit, or cause to be distributed or credited, to the
Owners of the Class R Certificates all cash on hand after such final
payment (other than cash retained to meet claims), and the Trust Fund
(and each REMIC) shall terminate at that time; and
(iv) In no event may the final payment on the Certificates
or the final distribution or credit to the Owners of the Class R
Certificates be made after the 89th day from the date on which the
plan of complete liquidation is adopted.
(b) By its acceptance of a Class R Certificate, each Owner
thereof hereby (i) authorizes the Trustee to take such action as may be
necessary to adopt a plan of complete liquidation of each REMIC and (ii)
agrees to take such other action as may be necessary to adopt a plan of
complete liquidation of each REMIC, which authorization shall be binding upon
all successor Class R Certificateholders.
END OF ARTICLE IX
<PAGE>
ARTICLE X
THE TRUSTEE
Section 10.01. Certain Duties and Responsibilities.
(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 Servicer hereunder,
the Trustee is hereby empowered to perform the duties of the Servicer 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 Servicer, the Servicer and, thereafter, the successor
servicer (which may be the Trustee) shall perform such duties. Specifically,
and not in limitation of the foregoing, the Trustee shall upon termination or
resignation of the Servicer, 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 8.11
hereof;
(iv) to deliver instruments of satisfaction pursuant to
Section 8.13;
(v) to enforce the Mortgage Loans; and
(vi) to make Delinquency Advances and Servicing Advances
and to pay Compensating Interest (and to be reimbursed therefor as
provided herein).
(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 Owners of a majority in Percentage Interest
of the Certificates of the affected Class or Classes 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 Servicer 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 Servicer 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.
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):
(i) 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
(ii) the Trustee shall fail in the performance of, or
breach, any material 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 Originator or by
the Owners of at least 25% of the aggregate Percentage Interests in
the Trust Fund represented by the Offered Certificates then
Outstanding, or, if there are no Offered Certificates then
Outstanding, by such Percentage Interests represented by the Class X
Certificates, a written notice specifying such failure or breach and
requiring it to be remedied; or
(iii) 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
(iv) a conservator or receiver or liquidator or
sequestrator or custodian of the property of the Trustee is appointed
in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating to the Trustee or
relating to all or substantially all of its property; or
(v) 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
(vi) the Trustee shall fail to meet the eligibility
requirements set forth in Section 10.08 herein.
The Depositor shall give to 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 the Depositor or the Owners of a
majority of the Percentage Interests represented by the Offered Certificates
then Outstanding or if there are no Offered Certificates then Outstanding by a
majority of the Class X Certificates, may, whether or not the Trustee resigns
pursuant to Section 10.09(b), 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.
(c) The Servicer shall not 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 request and rely upon and shall be protected
in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, note or other paper or document believed by it to be genuine and
to have been signed or presented by the proper party or parties;
(b) any request or direction of the Depositor, the Seller, the
Originator, the Servicer or the Owners of any Class of Certificates mentioned
herein shall, at the request of the Trustee, 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 or
within the discretion or the rights or powers conferred upon it 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, the 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 or any other
party hereto (either in writing or orally with prompt written or telecopied
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 Fund created hereby or the powers
granted hereunder.
(l) the Trustee shall not be charged with knowledge of any
failure by the Depositor, the Seller, the Originator or the Servicer to comply
with any of its obligations hereunder or any breach of any representation or
warranty hereunder unless an Authorized Officer of the Trustee obtains actual
knowledge of such failure or breach or the Trustee receives written notice of
such failure or breach.
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, the
Originator 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 Seller, the Servicer or the Originator, 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 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 expressly provided herein 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.
The Trustee shall withdraw from the Certificate Account on each
Payment Date and pay to itself the Trustee Fee as provided in Section
7.03(b)(i). The Trustee and any director, officer, employee or agent of the
Trustee shall be indemnified by the Trust Fund and held harmless against any
loss, liability or unanticipated out-of-pocket expense incurred or paid to
third parties (which expenses shall not include salaries paid to employees, or
allocable overhead, of the Trustee) in connection (a) with the acceptance or
administration of its trusts hereunder or the Certificates, other than any
loss, liability or expense incurred by reason of the Trustee's willful
misfeasance, bad faith or negligence in the performance of its duties
hereunder or by reason of reckless disregard of its obligations and duties
hereunder and (b) the selection of the initial Custodian, the failure of the
Custodian to perform its obligations under the Custodial Agreement or the
willful misconduct of the Custodian thereunder. All such amounts shall be
payable from funds in the Principal and Interest Account as provided in
Section 8.07(d).
The provisions of this Section 10.07 shall survive the termination of
this Agreement and the removal or resignation of the Trustee.
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 and having a deposit rating of at least A by Standard and Poor's
and, if rated by DCR, having a rating of at least A from DCR (or such lower
rating as may be acceptable to DCR). 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 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 Owners at their addresses appearing on the Register; provided,
that the Trustee may not 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 by written instrument, in
duplicate, executed on behalf of the Trust Fund 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, the Depositor may remove the Trustee and appoint a successor
trustee by written instrument, in duplicate, executed on behalf of the Trust
Fund 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 Offered Certificates or, if there are no Offered
Certificates then Outstanding, by a majority of the Class X Certificates, may
at any time remove the Trustee and appoint a successor trustee by delivering
to the Trustee to be removed, to the successor trustee so appointed, to the
Depositor and to the Servicer, copies of the record of the act taken by the
Owners, as provided for in Section 11.03.
(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 Seller may remove the Trustee and appoint a
successor trustee by written instrument, in triplicate, signed by the Seller
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. 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 Seller or the
Owners of a majority of the Percentage Interests represented by the Offered
Certificates then Outstanding, 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 Rating Agencies, the Seller, the Servicer 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 Fund 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 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 Fund.
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 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, 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 and except as otherwise specifically set
forth in subsection (a) above, the Trustee shall timely file all reports
required to be filed by the Trust Fund with any federal, state or local
governmental tax authority having jurisdiction over the Trust Fund, including
other reports that must be filed with the Owners. The Trustee shall collect
any forms or reports from the Owners it determines 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 Trustee 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
Originator, the Servicer or any Owner for any action taken or for refraining
from the taking of any action in good faith pursuant to this Agreement or for
errors in judgment; provided, however, that this provision shall not protect
the Trustee, 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.
The Trustee shall not be liable for any acts or omissions of any
Servicer. In particular, the Trustee shall not be liable for any servicing
errors or interruptions resulting from any failure of any Servicer to maintain
computer and other information systems that are year 2000 compliant.
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 Fund 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 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 Fund, and to vest in such Person or Persons, in such
capacity and for the benefit of the Owners, such title to the Trust Fund, 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, the Trustee 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 Fund 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 Originator, the Seller 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 Servicer.
Any separate Trustee or co-Trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate Trustee or co-Trustee
shall die, become incapable of acting, resign or be removed, all of its
estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor Trustee.
Section 10.15. Appointment of Custodians.
The Trustee may appoint one or more Custodians to hold all or a
portion of the Trustee's Files as agent for the Trustee, by entering into a
Custodial Agreement in the form of Exhibit O. Subject to this Article X, the
Trustee agrees to comply with the terms of each Custodial Agreement and to
enforce the terms and provisions thereof against the Custodian for the benefit
of the Owners of the Certificates. The initial Custodian shall be Bankers
Trust Company of California, N.A.
Section 10.16. No Solicitation.
The Trustee 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 the
Trustee'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 the Trustee 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 the Trustee prohibited from
responding to unsolicited requests or inquiries made by a Mortgagor or an
agent of a Mortgagor.
Section 10.17. Periodic Filings with the Securities and Exchange
Commission; Additional Information.
The Trustee shall prepare or cause to be prepared for filing with the
U.S. Securities and Exchange Commission (the "Commission") all monthly
periodic reports on Form 8-K respecting the Trust Fund and/or the Certificates
required to be filed with the Commission pursuant to the Securities Exchange
Act of 1934, as amended (other than the Current Reports on Form 8-K to be
filed by the Depositor in connection with computational materials and the
initial Current Report on Form 8-K to be filed by the Depositor in connection
with the issuance of the Certificates). The Trustee also will file a Form 15
with the Commission in January 2000 to terminate the Trustee's requirement for
future filings (other than Form 10-K, which the Trustee will file with the
Commission in March 2000 provided that there are at such time less than 300
Certificateholders). The Depositor shall promptly file, and exercise its
reasonable best efforts to obtain a favorable response to, no-action requests
with, or other appropriate exemptive relief from, the Commission seeking the
usual and customary exemption from such reporting requirements granted to
issuers of securities similar to the Certificates. The fees and expenses
incurred by the Trustee in connection with this Section shall not be
reimbursable from the Trust Fund.
END OF ARTICLE X
<PAGE>
ARTICLE XI
MISCELLANEOUS
Section 11.01. Compliance Certificates and Opinions.
Upon any application or request by the Depositor, the Seller, the
Originator or the Owners to the Trustee to take any action under any provision
of this Agreement, the Seller, the Depositor, the Originator 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, the Originator or the Servicer, stating that the
information with respect to such factual matters is in the possession of the
Depositor, the Seller, the Originator 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 or the Originator. 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 Fund, 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) An 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 Fund 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 Depositor, the Seller, the Originator and the Servicer shall be
sufficient for every purpose hereunder if made, given, furnished or filed in
writing to or with and received by the Trustee at the Corporate Trust Office.
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 the Servicer has been removed or resigned or the Trust Fund
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 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 Originator or the Servicer 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 Fund 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 Fund 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 Fund,
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, the Originator,
ARCMI and the Servicer may at any time and from time to time, and without
notice to or the consent of the Owners, amend this Agreement, subject to the
provisions of Section 11.16 and 11.17 and the consent of the Trustee to such
amendment shall not be unreasonably withheld, for the purpose of (i) curing
any ambiguity, typographical error, or mistake; (ii) correcting or
supplementing any provision hereof which may be inconsistent with any other
provision hereof or in the Prospectus or Prospectus Supplement; (iii) to make
any other provisions with respect to matters or questions arising under this
Agreement that are not materially inconsistent with the provisions hereof
subject to the provisions below; (iv) upon receipt of an Opinion of Counsel
satisfactory to experienced in federal income tax matters to the effect that
no entity-level tax will be imposed on the Trust Fund, any REMIC therein 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 hereof; (v) complying with
the requirements of the Code and the regulations proposed or promulgated
thereunder including any amendments necessary to maintain REMIC status for any
REMIC created pursuant to this Agreement; or (vi) for any other purpose,
provided that in the case of this clause (vi) such amendment will not
adversely affect in any material respect any Owners. Any such amendment shall
be deemed not to adversely affect in any material respect any Owner if there
is delivered to the Trustee either an Opinion of Counsel (provided by the
Person requesting the amendment) to such effect or written notification from
each Rating Agency to the effect that such amendment will not cause such
Rating Agency to reduce its then current rating assigned to any Class of the
Certificates. This Agreement may also be amended by the Trustee, the
Depositor, the Seller, the Originator, ARCMI and the Servicer at any time and
from time to time, with the prior written approval of 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, or (c)
adversely affect the qualification of any REMIC created pursuant to this
Agreement or subject any REMIC created pursuant to this Agreement 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 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, 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 Servicer and the Owners by mailing notice
thereof at their addresses appearing on the Register.
Section 11.16. REMIC Status.
(a) REMIC elections as set forth in the Preliminary Statement
shall be made by the Trustee on Forms 1066 or other appropriate federal tax or
information return for the taxable year ending on the last day of the calendar
year in which the Certificates are issued. The regular interests and residual
interest in each REMIC shall be as designated in the Preliminary Statement.
(b) The Startup Day is hereby designated as the "Startup Day" of
each REMIC within the meaning of section 86OG(a)(9) of the Code.
(c) The Trustee shall pay any and all tax related expenses (not
including taxes) of each REMIC, including but not limited to any professional
fees or expenses related to audits or any administrative or judicial
proceedings with respect to such REMIC that involve the Internal Revenue
Service or state tax authorities, but only to the extent that (i) such
expenses are ordinary or routine expenses, including expenses of a routine
audit but not expenses of litigation (except as described in (ii)); or (ii)
such expenses or liabilities (including taxes and penalties) are attributable
to the negligence or willful misconduct of the Trustee in fulfilling its
duties under this Section 11.16 or Section 10.12 (including its duties as tax
return preparer). The Trustee shall be entitled to reimbursement of expenses
to the extent provided in clause (i) above from the Principal and Interest
Account.
(d) The Trustee shall prepare, sign and file, all of each
REMIC's federal and state tax and information returns as such REMIC's direct
representative. The expenses of preparing and filing such returns shall be
borne by the Trustee.
(e) The Trustee or its designee shall perform on behalf of each
REMIC all reporting and other tax compliance duties that are the
responsibility of such REMIC under the Code, the REMIC Provisions, or other
compliance guidance issued by the Internal Revenue Service or any state or
local taxing authority. Among its other duties, if required by the Code, the
REMIC Provisions, or other such guidance, the Trustee shall provide (i) to the
Treasury or other governmental authority such information as is necessary for
the application of any tax relating to the transfer of a Class R Certificate
to any disqualified person or organization and (ii) to the Certificateholders
such information or reports as are required by the Code or REMIC Provisions.
(f) The Trustee (to the extent that the affairs of the Trust
Fund are within its control) and the Owners of Certificates shall take any
action or cause any REMIC to take any action necessary to create or maintain
the status of any REMIC as a REMIC under the REMIC Provisions and shall assist
each other as necessary to create or maintain such status. Neither the Trustee
nor the Owner of any Class R Certificate shall knowingly take any action,
cause any REMIC to take any action or fail to take (or fail to cause to be
taken) any action that, under the REMIC Provisions, if taken or not taken, as
the case may be, could (i) endanger the status of any REMIC as a REMIC or (ii)
result in the imposition of a tax upon any REMIC (including but not limited to
the tax on prohibited transactions as defined in Code Section 860F(a)(2) and
the tax on prohibited contributions set forth on Section 860G(d) of the Code)
(either such event, an "Adverse REMIC Event") unless the Trustee has received
an Opinion of Counsel (at the expense of the party seeking to take such
action) to the effect that the contemplated action will not endanger such
status or result in the imposition of such a tax. In addition, prior to taking
any action with respect to any REMIC or the assets therein, or causing any
REMIC to take any action, which is not expressly permitted under the terms of
this Agreement, any Owner of a Class R Certificate will consult with the
Trustee, or its designees, in writing, with respect to whether such action
could cause an Adverse REMIC Event to occur with respect to any REMIC, and no
such Person shall take any such action or cause any REMIC to take any such
action as to which the Trustee has advised it in writing that an Adverse REMIC
Event could occur.
(g) Each Owner of a Class R Certificate shall pay when due any
and all taxes imposed on the related REMIC by federal or state governmental
authorities. To the extent that such Trust Fund taxes are not paid by a Class
R Certificateholder, the Trustee shall pay any remaining REMIC taxes out of
current or future amounts otherwise distributable to the Owner of the Class R
Certificate in any such REMIC or, if no such amounts are available, out of
other amounts held in the Principal and Interest Account, and shall reduce
amounts otherwise payable to holders of regular interests in any such REMIC,
as the case may be.
(h) The Trustee shall, for federal income tax purposes, maintain
books and records with respect to each REMIC on a calendar year and on an
accrual basis.
(i) No additional contributions of assets shall be made to any
REMIC, except as expressly provided in this Agreement with respect to eligible
substitute mortgage loans.
(j) The Trustee shall not enter into any arrangement by which
any REMIC will receive a fee or other compensation for services.
(k) On or before March 31 of each calendar year beginning in
2000, the Trustee shall deliver to each Rating Agency an Officer's Certificate
stating, without regard to any actions taken by any party other than the
Trustee, the Trustee's compliance with the provisions of this Section 11.16.
(l) The Trustee shall treat the Basis Risk Reserve Fund as an
outside reserve fund within the meaning of Treasury Regulation Section
1.860G-2(h) that is owned by the Owner of the Class X Certificate and that is
not an asset of any REMIC. The Trustee shall treat the rights of the Class A,
Class M1, Class M2 and Class B Certificateholders to receive payments from any
Basis Risk Reserve Fund in the event of a Basis Risk Shortfall as rights in an
interest rate cap contract written by the Class X Certificateholder in favor
of the Class A, Class M1, Class M2 and Class B Certificateholders. Thus, each
Class A, Class M1, Class M2 and Class B Certificate shall be treated as
representing not only ownership of regular interests in REMIC 4, but also
ownership of an interest in an interest rate cap contract. For purposes of
determining the issue prices of the REMIC 4 regular interests, the Trustee
shall assume that the interest rate cap contract has only a nominal value of
$5,000 each.
(m) The Trustee shall apply to the Internal Revenue Service via
a form SS-4 or any other acceptable method for an employer identification
number for each of the REMICs.
(n) The Trustee shall treat the Credit Reserve Fund as an
outside reserve fund within the meaning of Treas. Reg. ss. 1.860G-2(h) that is
owned by the Owner of the Class X Certificate and that is not an asset of any
REMIC created under this Agreement. To the extent amounts are withdrawn from
the Credit Reserve Fund and paid pursuant to Section 7.03(d), such amounts
shall be treated as having been paid by the Class X Certificateholder pursuant
to a credit enhancement contract within the meaning of Treasury Regulation
Section 1.860G-2(c).
Section 11.17. Prohibited Transactions and Activities.
None of the Depositor, the Servicer, the Seller, the Originator nor
the Trustee shall sell, dispose of, or substitute for any of the Mortgage
Loans, (except in a disposition pursuant to (i) the foreclosure of a Mortgage
Loan, (ii) the bankruptcy of the Trust Fund, (iii) the termination of each
REMIC pursuant to Article IX of this Agreement, (iv) a substitution pursuant
to Article III of this Agreement or (v) a repurchase of Mortgage Loans
pursuant to Article III of this Agreement), nor acquire any assets for any
REMIC, nor sell or dispose of any investments in the Certificate Account for
gain, nor accept any contributions to any REMIC after the Startup Day, unless
it has received an Opinion of Counsel (at the expense of the party causing
such sale, disposition, or substitution) that such disposition, acquisition,
substitution, or acceptance will not (a) affect adversely the status of any
such REMIC as a REMIC or of the interests therein other than the Class R
Certificates as the regular interests therein, (b) affect the distribution of
interest or principal on the Certificates, (c) result in the encumbrance of
the assets transferred or assigned to the Trust Fund (except pursuant to the
provisions of this Agreement) or (d) cause any such REMIC to be subject to a
tax on prohibited transactions or prohibited contributions pursuant to the
REMIC Provisions.
Section 11.18. Indemnification with Respect to Certain Taxes and
Loss of REMIC Status.
In the event that any REMIC fails to qualify as a REMIC, loses its
status as a REMIC, or incurs federal, state or local taxes as a result of a
prohibited transaction or prohibited contribution under the REMIC Provisions
due to the negligent performance by the Trustee of its duties and obligations
set forth herein, the Trustee shall indemnify the Owner of the Class R
Certificate against any and all losses, claims, damages, liabilities or
expenses ("Losses") resulting from such negligence; PROVIDED, HOWEVER, that
the Trustee shall not be liable for any such Losses attributable to the action
or inaction of the Depositor, the Seller, the Originator, ARCMI, the Servicer,
the Class X Certificateholder or the Owner of such Class R Certificate, as
applicable, nor for any such Losses resulting from misinformation provided by
any of such Persons on which the Trustee has relied. The foregoing shall not
be deemed to limit or restrict the rights and remedies of the Owner of such
Class R Certificate now or hereafter existing at law or in equity.
Notwithstanding the foregoing, however, in no event shall the Trustee have any
liability (1) for any action or omission that is taken in accordance with and
in compliance with the express terms of, or which is expressly permitted by
the terms of, this Agreement, (2) for any Losses other than arising out of a
negligent performance by the Trustee of its duties and obligations set forth
herein, and (3) for any special or consequential damages to Certificateholders
(in addition to payment of principal and interest on the Certificates).
Section 11.19. Attorneys' Fees.
Any party successfully asserting a claim for a breach of this
Agreement against another party (other than the Trustee) is entitled to
receive all reasonable attorneys' fees incurred by such party in asserting
such claim.
Section 11.20. Notices.
All notices hereunder shall be given as follows, until any
superseding instructions are given to all other Persons listed below:
The Trustee: Norwest Bank Minnesota, National Association
11000 Broken Land Parkway
Columbia, Maryland 21044-3562
Attn: AMRESCO 1999-1
Tel: (410) 884-2000
Fax: (410) 884-2360
with a copy to: Norwest Bank Minnesota, National Association
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479-1026
Attn: AMRESCO 1999-1
Tel: (612) 667-9378
Fax: (612) 667-3539
The Depositor: AMRESCO Residential Securities Corporation
700 North Pearl Street
Suite 2400, LB #342
Dallas, Texas 75201-7424
Attn: General Counsel
Tel: (214) 953-7700
Fax: (214) 953-7757
The Originator: AMRESCO Residential Mortgage Corporation
16800 Aston Street
Irvine, California 92606
Attn: President
Tel: (714) 440-1000
Fax: (714) 440-1535
with a copy to: AMRESCO, INC.
700 North Pearl Street
Suite 2400; LB #342
Dallas, Texas 75201-7424
Attn: General Counsel
Tel: (214) 953-7700
Fax: (214) 953-7757
ARCMI: AMRESCO Residential Capital Markets, Inc.
700 North Pearl Street
Suite 2400, LB #342
Dallas, Texas 75201-7424
Attn: General Counsel
Tel: (214) 953-7700
Fax: (214) 953-7757
The Seller: Finance America, LLC
16802 Aston Street
Irvine, California 92606
Attn: President
Tel: (949) 440-1036
Fax: (949) 440-1230
with a copy to: AMRESCO, INC.
700 North Pearl Street
Suite 2400; LB #342
Dallas, Texas 75201-7424
Attn: Karen H. Cornell
Tel: (214) 953-7724
Fax: (214) 953-7757
The Servicer: Ocwen Federal Bank FSB
1675 Palm Beach Lakes Boulevard
Suite 1002
West Palm Beach, Florida 33401
Attn: Secretary
Tel: (561) 682-8000
Fax: (561) 682-8177
with a copy to: Ocwen Federal Bank FSB
1675 Palm Beach Lakes Boulevard
Suite 532
West Palm Beach, Florida 33401
Attn: Law Department
Tel: (561) 682-8820
Fax: (561) 682-8163
DCR: Duff & Phelps Credit Rating Co.
55 East Monroe Street
35th Floor
Chicago, Illinois 60603
Attn: ABS Morning
Tel: (312) 368-3100
Fax: (312) 368-3155
Standard and Poor's: Standard and Poor's Ratings Services,
a division of the McGraw-Hill Companies, Inc.
26 Broadway
15th Floor
New York, New York 10004
Attn: Residential Mortgage Group
Tel: (212) 208-8000
Fax: (212) 208-8365
Custodian: Bankers Trust Company of California N.A.
176 East St. Andrew Place
Santa Ana, California 92705
Attn: Mortgage Custody AMRESCO 1999-1
Tel: (714) 247-6000
Fax: (714) 247-6009
Underwriter: Lehman Brothers
200 Vesey Street
12th Floor
New York, New York 10285
Attn: Stanley P. Labanowski
Tel: (212) 526-7000
Fax: (212) 526-7010
Owners: As set forth in the Register.
END OF ARTICLE XI
<PAGE>
IN WITNESS WHEREOF, the Depositor, the Originator, ARCMI, the Seller,
the 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: /s/ Janice M. Cott
-------------------------------------
Name: Janice M. Cott
Title: Vice President
AMRESCO RESIDENTIAL MORTGAGE
CORPORATION, as Originator
By: /s/ Janice M. Cott
-------------------------------------
Name: Janice M. Cott
Title: Senior Vice President
FINANCE AMERICA LLC,
as Seller
By: /s/ Brian Libman
-------------------------------------
Name: Brian Libman
Title: Chief Executive Officer
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Trustee
By: /s/ Amy Wahl
-------------------------------------
Name: Amy Wahl
Title: Assistant Vice President
OCWEN FEDERAL BANK FSB,
as Servicer
By: /s/ Ronald M. Faris
-------------------------------------
Name: Ronald M. Faris
Title: Executive Vice President
AMRESCO RESIDENTIAL CAPITAL MARKETS, INC.
By: /s/ Janice M. Cott
-------------------------------------
Name: Janice M. Cott
Title: Vice President
<PAGE>
STATE OF )
) ss:
COUNTY OF )
On the ____ day of October, 1999, before me personally came Janice M.
Cott, to me known, who, being by me duly sworn, did depose and say that she
resides at Costa Mesa, California, that she is a Vice President of AMRESCO
Residential Securities Corporation, a Delaware corporation; and that she
signed her 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
My Commission Expires ______________
<PAGE>
STATE OF )
) ss:
COUNTY OF )
On the ____ day of October, 1999, 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 Senior Vice President of AMRESCO Residential Mortgage Corporation,
a Delaware corporation; and that he/she signed his/her 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
My Commission Expires ______________
<PAGE>
STATE OF )
) ss:
COUNTY OF )
On the ____ day of October, 1999, before me personally came
_____________________, to me known, who, being by me duly sworn, did depose
and say that he/she resides at ____________ ___________________, that he is a
________________________ of Ocwen Federal Bank FSB, a federal savings bank;
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
My Commission Expires ______________
<PAGE>
STATE OF )
) ss:
COUNTY OF )
On the ____ of October, 1999, 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 Vice President of Norwest Bank Minnesota, National Association, a
national banking association; 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
My Commission Expires ______________
<PAGE>
STATE OF )
) ss:
COUNTY OF )
On the ____ day of October, 1999, before me personally came
_____________________, to me known, who, being by me duly sworn, did depose
and say that he resides at ____________ ___________________, that he is a
________________________ of AMRESCO Residential Capital Markets, Inc., 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
My Commission Expires ______________
<PAGE>
STATE OF )
) ss:
COUNTY OF )
On the ____ day of October, 1999, before me personally came
_____________________, to me known, who, being by me duly sworn, did depose
and say that he resides at ____________ ___________________, that he is a
________________________ of Finance America LLC, a Delaware limited liability
company; 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
My Commission Expires ______________
SCHEDULE I
SCHEDULE OF MORTGAGE LOANS
<PAGE>
EXHIBIT A
FORM OF CLASS A CERTIFICATE
THIS CERTIFICATE IS A REMIC REGULAR INTEREST CERTIFICATE. THIS
CERTIFICATE DOES NOT EVIDENCE AN OBLIGATION OF, OR AN INTEREST IN, AND IS NOT
GUARANTEED BY, THE DEPOSITOR, THE TRUSTEE, OR ANY AFFILIATE OF ANY OF THEM AND
IS NOT INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR PRIVATE INSURER.
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF
THIS CERTIFICATE MAY BE MADE IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY,
THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE AT ANY TIME MAY BE LESS
THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC AND ANY PAYMENT IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC, ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL, INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1999-1
PASS-THROUGH CERTIFICATE, CLASS A
Evidencing a beneficial interest in a pool consisting primarily of
certain fixed and adjustable rate, fully amortizing and balloon,
conventional, first and second lien residential mortgage loans and
other assets in a trust fund established by
AMRESCO RESIDENTIAL SECURITIES CORPORATION
Initial Certificate Initial Certificate
Principal Balance of the Class A Principal Balance of this
Certificates: $176,863,000.00 Certificate: [ ]
Certificate Cut-off Date: September 1, 1999
Pass-through Rate: Variable
Number [ ] CUSIP: 03215PFN4
ISIN: US03215PFN42
Common Code: 010330700
<PAGE>
THIS CERTIFIES THAT [ ____ ] is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
initial Certificate Principal Balance of this Certificate by the initial
Certificate Principal Balance of all of the Class A Certificates, both as
specified above) in (i) certain distributions of principal and interest on
certain fixed and adjustable rate, fully amortizing and balloon, conventional,
first and second lien residential mortgage loans (the "Mortgage Loans")
acquired from AMRESCO Residential Securities Corporation (the "Depositor"), a
Delaware corporation, (ii) such amounts and investments as from time to time
may be held in the Trust Fund established pursuant to the Pooling and
Servicing Agreement (as defined on the reverse hereof) and (iii) certain other
assets as described in the Pooling and Servicing Agreement (the foregoing
assets hereinafter collectively referred to as the "Trust Fund").
Distributions on this Certificate will initially be made on October
27, 1999, and thereafter will be made on the 25th day of each month or, if
such a day is not a Business Day, then on the next succeeding Business Day,
commencing in November 1999 (each, a "Payment Date"), to the Person in whose
name this Certificate is registered at the close of business on the day
immediately preceding such Payment Date (the "Record Date"), in an amount
equal to the product of the Percentage Interest evidenced by this Certificate
and the amount, if any, required to be distributed to all the Certificates of
the Class represented by this Certificate. All sums distributable on this
Certificate are payable in the coin or currency of the United States of
America which at the time of payment is legal tender for the payment of public
and private debts.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which shall have the same effect
as though fully set forth on the face of this Certificate.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee, whose name appears below by manual signature,
this Certificate shall not be entitled to any benefit under the Pooling and
Servicing Agreement or be valid for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION,
as Trustee
By: _____________________________________
AUTHORIZED SIGNATORY
Dated:____________________________
CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned
Pooling and Servicing Agreement.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION,
as Trustee
By:______________________________________
AUTHORIZED SIGNATORY
Dated:____________________________
<PAGE>
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1999-1
PASS-THROUGH CERTIFICATE
This Certificate is one of a duly authorized issue of certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1999-1 Pass-Through Certificates (the "Certificates"), representing all or
part of a beneficial ownership interest in a Trust Fund established pursuant
to a Pooling and Servicing Agreement dated as of September 1, 1999 (the
"Pooling and Servicing Agreement"), among AMRESCO Residential Securities
Corporation, as depositor (the "Depositor"), AMRESCO Residential Mortgage
Corporation, as originator (the "Originator"), AMRESCO Residential Capital
Markets, Inc., Finance America, LLC, as seller (the "Seller"), Ocwen Federal
Bank FSB, as servicer (the "Servicer"), and Norwest Bank Minnesota, National
Association, as trustee (the "Trustee"), to which terms, provisions and
conditions thereof the Owner of this Certificate by virtue of the acceptance
hereof assents, and by which such Owner is bound. The Certificates consist of
the following Classes: the Class A, Class M1, Class M2, Class B, Class X and
Class R.
On each Payment Date, the Total Distribution Amount for such date
will be distributed from the Certificate Account to Owners of the Certificates
according to the terms of the Pooling and Servicing Agreement. All
distributions or allocations made with respect to each Class of Certificates
on each Payment Date shall be allocated among the outstanding Certificates of
such Class based on the Percentage Interest of each such Certificate.
Distributions on this Certificate will be made by check or draft
mailed to the Owner of record of this Certificate on the immediately preceding
Record Date at the address of such Owner as it appears on the Register or,
with respect to any Owner of a Certificate evidencing not less than $1,000,000
in initial Certificate Principal Balance or, with respect to the Class X or
Class R Certificate, having a Percentage Interest of not less than 10%, by
wire transfer in immediately available funds, upon written request made to the
Trustee pursuant to the terms of the Pooling and Servicing Agreement. The
final distribution on this Certificate will be made, after due notice to the
Owner of the pendency of such distribution, only upon presentation and
surrender of this Certificate at the Corporate Trust Office (as defined
below).
The Corporate Trust Office with respect to the presentment and
surrender of Certificates for the final distribution thereon and the
presentment and surrender of the Certificates for any other purpose is the
corporate trust office of the Trustee at Sixth and Marquette Street,
Minneapolis, Minnesota 55479. The Trustee may designate another address from
time to time by notice to the Owners of the Certificates and the Depositor.
The Pooling and Servicing Agreement permits with certain exceptions
as therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Servicer,
the Originator, the Seller, ARCMI and the Trustee at any time and from time to
time, and without the consent of the Owners; PROVIDED, that in certain
circumstances provided for in the Pooling and Servicing Agreement, such
consent of the Owners will be required prior to amendments. Any such consent
by the Owner of this Certificate at the time of the giving thereof shall be
conclusive and binding upon such Owner and upon all future Owners of this
Certificate and of any Certificate issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of
such consent is made upon this Certificate.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, the transfer of this Certificate is
registerable in the Register upon surrender of this Certificate for
registration of transfer, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar, duly executed by
the Owner hereof or such Owner's attorney duly authorized in writing, and
thereupon one or more new Certificates of the same Class of authorized
denominations evidencing the same initial Certificate Principal Balance (or
Percentage Interest) will be issued to the designated transferee or
transferees. As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, this Certificate is exchangeable for
new Certificates of the same Class evidencing the same aggregate initial
Certificate Principal Balance (or Percentage Interest) as requested by the
Owner surrendering the same. No service charge will be made for any such
registration of transfer or exchange, but the Registrar may require payment of
a sum sufficient to cover any tax or other governmental charge payable in
connection therewith.
The Class A, Class M1, Class M2 and Class B Certificates are issuable
only in registered form, in minimum denominations of $100,000 in initial
Certificate Principal Balance and in integral multiples of $1 in excess
thereof registered in the name of the nominee of the Clearing Agency, which
shall maintain such Certificates through its book-entry facilities. The Class
X Certificate shall be issued in minimum percentage interests of 20%. The
Class R Certificate shall be issued as a single Certificate with a percentage
interest of 100%.
The Certificates are subject to optional prepayment in full in
accordance with the Pooling and Servicing Agreement on any Payment Date on
which the Certificate Principal Balance of the Class A Certificates is less
than 35% of its initial Certificate Principal Balance for an amount as
specified in the Pooling and Servicing Agreement. In no event will the trust
created by the Pooling and Servicing Agreement continue beyond the expiration
of 21 years from the death of the last survivor of the descendants living at
the date of the Pooling and Servicing Agreement of a certain person named in
the Pooling and Servicing Agreement.
The Depositor, the Trustee and the Registrar and any agent of any of
them may treat the Person in whose name this Certificate is registered as the
owner hereof for all purposes, and neither the Depositor, the Trustee, nor the
Registrar nor any such agent shall be affected by any notice to the contrary.
As provided in the Pooling and Servicing Agreement, this Certificate
and the Pooling and Servicing Agreement shall be construed in accordance with
and governed by the laws of the State of New York. In the event of any
conflict between the provisions of this Certificate and the Pooling and
Servicing Agreement, the Pooling and Servicing Agreement shall be controlling.
Any term used herein and not otherwise defined shall be as defined in the
Pooling and Servicing Agreement.
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s) and assign(s) and
transfer(s) unto
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
(Please print or type name and address, including postal zip code, of assignee
and social security number or employer identification number)
- -----------------------------------------------------------------------------
the within Certificate stating in the names of the undersigned in the Register
and does hereby irrevocably constitute and appoint
- -----------------------------------------------------------------------------
to transfer such Certificate in such Register.
I [we] further direct the Registrar to issue a new Certificate of the same
Class of like principal to the above-named assignee and deliver such
Certificate to the following address:
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Dated:____________________ ___________________________________
Signature by or on behalf of Assignor
- --------------------------
Authorized Officer ___________________________________
Signature Guaranteed
- -------------------------- -----------------------------------
Name of Institution NOTICE: The signature(s) of
this assignment must correspond
with the name(s) on the face of
this Certificate without
alteration or any change
whatsoever. The signature must be
guaranteed by a participant in the
Securities Transfer Agents
Medallion Program, the New York
Stock Exchange Medallion Signature
Program or the Stock Exchanges
Medallion Program. Notarized or
witnessed signatures are not
acceptable as guaranteed
signatures.
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for the information of the
Registrar. Distributions shall be made by wire transfer in immediately
available funds to
_______________________________________________________________________________
for the account of ____________________________________________________________
account number __________________ or, if mailed by check, to __________________
_______________________________________________________________________________
Applicable reports and statements should be mailed to _________________________
_______________________________________________________________________________
This information is provided by _______________________________________________
the assignee named above, or ____________________________________ as its agent.
<PAGE>
EXHIBIT B
FORM OF CLASS M1, M2, AND B CERTIFICATES
THIS CERTIFICATE IS A REMIC REGULAR INTEREST CERTIFICATE. THIS
CERTIFICATE DOES NOT EVIDENCE AN OBLIGATION OF, OR AN INTEREST IN, AND IS NOT
GUARANTEED BY, THE DEPOSITOR, THE TRUSTEE, OR ANY AFFILIATE OF ANY OF THEM AND
IS NOT INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR PRIVATE INSURER.
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF
THIS CERTIFICATE MAY BE MADE IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY,
THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE AT ANY TIME MAY BE LESS
THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
THIS CERTIFICATE IS SUBORDINATE IN RIGHT OF PAYMENT AS DESCRIBED IN
THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC AND ANY PAYMENT IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC, ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL, INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
NO TRANSFER OF THIS CERTIFICATE SHALL BE REGISTERED UNLESS THE
PROSPECTIVE TRANSFEREE PROVIDES THE TRUSTEE AND THE DEPOSITOR WITH (A) A
CERTIFICATION TO THE EFFECT THAT (1) SUCH TRANSFEREE IS NEITHER AN EMPLOYEE
BENEFIT PLAN SUBJECT TO SECTION 406 OR SECTION 407 OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), THE TRUSTEE OF ANY
SUCH PLAN OR A PERSON ACTING ON BEHALF OF ANY SUCH PLAN NOR A PERSON USING THE
ASSETS OF ANY SUCH PLAN OR (2) IF SUCH TRANSFEREE IS AN INSURANCE COMPANY,
SUCH TRANSFEREE IS PURCHASING SUCH CERTIFICATES WITH FUNDS CONTAINED IN AN
"INSURANCE COMPANY GENERAL ACCOUNT" (AS SUCH TERM IS DEFINED IN SECTION V(e)
OF THE PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ("PTCE 95-60")) AND THAT
THE PURCHASE AND HOLDING OF SUCH CERTIFICATES ARE COVERED UNDER PTCE 95-60; OR
(B) AN OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE AND THE DEPOSITOR, AND
UPON WHICH THE TRUSTEE AND THE DEPOSITOR SHALL BE ENTITLED TO RELY, TO THE
EFFECT THAT THE PURCHASE OR HOLDING OF SUCH CERTIFICATE BY THE PROSPECTIVE
TRANSFEREE WILL NOT RESULT IN THE ASSETS OF THE TRUST FUND BEING DEEMED TO BE
PLAN ASSETS AND SUBJECT TO THE PROHIBITED TRANSACTION PROVISIONS OF ERISA OR
THE CODE AND WILL NOT SUBJECT THE TRUSTEE OR THE DEPOSITOR TO ANY OBLIGATION
IN ADDITION TO THOSE UNDERTAKEN BY SUCH ENTITIES IN THE POOLING AND SERVICING
AGREEMENT, WHICH OPINION OF COUNSEL SHALL NOT BE AN EXPENSE OF THE TRUST FUND,
THE TRUSTEE OR THE DEPOSITOR.
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1999-1
PASS-THROUGH CERTIFICATE, CLASS [M1, M2, B]
Evidencing a beneficial interest in a pool consisting primarily of
certain fixed and adjustable rate, fully amortizing and balloon,
conventional, first and second lien residential mortgage loans and
other assets in a trust fund established by
AMRESCO RESIDENTIAL SECURITIES CORPORATION
Initial Certificate Initial Certificate
Principal Balance of the Class [M1, M2, B] Principal Balance of this
Certificates: [ ] Certificate: [ ]
Certificate Cut-off Date: September 1, 1999
Pass-through Rate: Variable
Number [ ] CUSIP: [ ]
ISIN: [ ]
Common Code: [ ]
<PAGE>
THIS CERTIFIES THAT [ ]is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the initial
Certificate Principal Balance of this Certificate by the initial Certificate
Principal Balance of all of the Class [M1, M2, B] Certificates, both as
specified above) in (i) certain distributions of principal and interest on
certain fixed and adjustable rate, fully amortizing and balloon, conventional,
first and second lien residential mortgage loans (the "Mortgage Loans")
acquired from AMRESCO Residential Securities Corporation (the "Depositor"), a
Delaware corporation, (ii) such amounts and investments as from time to time
may be held in the Trust Fund established pursuant to the Pooling and
Servicing Agreement (as defined on the reverse hereof) and (iii) certain other
assets as described in the Pooling and Servicing Agreement (the foregoing
assets hereinafter collectively referred to as the "Trust Fund").
Distributions on this Certificate will initially be made on October
27, 1999, and thereafter will be made on the 25th day of each month or, if
such a day is not a Business Day, then on the next succeeding Business Day,
commencing in November 1999 (each, a "Payment Date"), to the Person in whose
name this Certificate is registered at the close of business on the day
immediately preceding such Payment Date (the "Record Date"), in an amount
equal to the product of the Percentage Interest evidenced by this Certificate
and the amount, if any, required to be distributed to all the Certificates of
the Class represented by this Certificate. All sums distributable on this
Certificate are payable in the coin or currency of the United States of
America which at the time of payment is legal tender for the payment of public
and private debts.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which shall have the same effect
as though fully set forth on the face of this Certificate.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee, whose name appears below by manual signature,
this Certificate shall not be entitled to any benefit under the Pooling and
Servicing Agreement or be valid for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION,
as Trustee
By:__________________________________
AUTHORIZED SIGNATORY
Dated:__________________________
CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned
Pooling and Servicing Agreement.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION,
as Trustee
By:___________________________________
AUTHORIZED SIGNATORY
Dated:___________________________
<PAGE>
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1999-1
PASS-THROUGH CERTIFICATE
This Certificate is one of a duly authorized issue of certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1999-1 Pass-Through Certificates (the "Certificates"), representing all or
part of a beneficial ownership interest in a Trust Fund established pursuant
to a Pooling and Servicing Agreement dated as of September 1, 1999 (the
"Pooling and Servicing Agreement"), among AMRESCO Residential Securities
Corporation, as depositor (the "Depositor"), AMRESCO Residential Mortgage
Corporation, as originator (the "Originator"), AMRESCO Residential Capital
Markets, Inc., Finance America, LLC, as seller (the "Seller"), Ocwen Federal
Bank FSB, as servicer (the "Servicer"), and Norwest Bank Minnesota, National
Association, as trustee (the "Trustee"), to which terms, provisions and
conditions thereof the Owner of this Certificate by virtue of the acceptance
hereof assents, and by which such Owner is bound. The Certificates consist of
the following Classes: the Class A, Class M1, Class M2, Class B, Class X and
Class R.
On each Payment Date, the Total Distribution Amount for such date
will be distributed from the Certificate Account to Owners of the Certificates
according to the terms of the Pooling and Servicing Agreement. All
distributions or allocations made with respect to each Class of Certificates
on each Payment Date shall be allocated among the outstanding Certificates of
such Class based on the Percentage Interest of each such Certificate.
Distributions on this Certificate will be made by check or draft
mailed to the Owner of record of this Certificate on the immediately preceding
Record Date at the address of such Owner as it appears on the Register or,
with respect to any Owner of a Certificate evidencing not less than $1,000,000
in initial Certificate Principal Balance or, with respect to the Class X or
Class R Certificate, having a Percentage Interest of not less than 10%, by
wire transfer in immediately available funds, upon written request made to the
Trustee pursuant to the terms of the Pooling and Servicing Agreement. The
final distribution on this Certificate will be made, after due notice to the
Owner of the pendency of such distribution, only upon presentation and
surrender of this Certificate at the Corporate Trust Office (as defined
below).
The Corporate Trust Office with respect to the presentment and
surrender of Certificates for the final distribution thereon and the
presentment and surrender of the Certificates for any other purpose is the
corporate trust office of the Trustee at Sixth and Marquette Street,
Minneapolis, Minnesota 55479. The Trustee may designate another address from
time to time by notice to the Owners of the Certificates and the Depositor.
The Pooling and Servicing Agreement permits with certain exceptions
as therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Servicer,
the Originator, the Seller, ARCMI and the Trustee at any time and from time to
time, and without the consent of the Owners; PROVIDED, that in certain
circumstances provided for in the Pooling and Servicing Agreement, such
consent of the Owners will be required prior to amendments. Any such consent
by the Owner of this Certificate at the time of the giving thereof shall be
conclusive and binding upon such Owner and upon all future Owners of this
Certificate and of any Certificate issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of
such consent is made upon this Certificate.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, the transfer of this Certificate is
registerable in the Register upon surrender of this Certificate for
registration of transfer, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar, duly executed by
the Owner hereof or such Owner's attorney duly authorized in writing, and
thereupon one or more new Certificates of the same Class of authorized
denominations evidencing the same initial Certificate Principal Balance (or
Percentage Interest) will be issued to the designated transferee or
transferees. As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, this Certificate is exchangeable for
new Certificates of the same Class evidencing the same aggregate initial
Certificate Principal Balance (or Percentage Interest) as requested by the
Owner surrendering the same. No service charge will be made for any such
registration of transfer or exchange, but the Registrar may require payment of
a sum sufficient to cover any tax or other governmental charge payable in
connection therewith.
The Class A, Class M1, Class M2 and Class B Certificates are issuable
only in registered form, in minimum denominations of $100,000 in initial
Certificate Principal Balance and in integral multiples of $1 in excess
thereof registered in the name of the nominee of the Clearing Agency, which
shall maintain such Certificates through its book-entry facilities. The Class
X Certificate shall be issued in minimum percentage interests of 20%. The
Class R Certificate shall be issued as a single Certificate with a percentage
interest of 100%.
The Certificates are subject to optional prepayment in full in
accordance with the Pooling and Servicing Agreement on any Payment Date on
which the Certificate Principal Balance of the Class A Certificates is less
than 35% of its initial Certificate Principal Balance for an amount as
specified in the Pooling and Servicing Agreement. In no event will the trust
created by the Pooling and Servicing Agreement continue beyond the expiration
of 21 years from the death of the last survivor of the descendants living at
the date of the Pooling and Servicing Agreement of a certain person named in
the Pooling and Servicing Agreement.
The Depositor, the Trustee and the Registrar and any agent of any of
them may treat the Person in whose name this Certificate is registered as the
owner hereof for all purposes, and neither the Depositor, the Trustee, nor the
Registrar nor any such agent shall be affected by any notice to the contrary.
As provided in the Pooling and Servicing Agreement, this Certificate
and the Pooling and Servicing Agreement shall be construed in accordance with
and governed by the laws of the State of New York. In the event of any
conflict between the provisions of this Certificate and the Pooling and
Servicing Agreement, the Pooling and Servicing Agreement shall be controlling.
Any term used herein and not otherwise defined shall be as defined in the
Pooling and Servicing Agreement.
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s) and assign(s) and
transfer(s) unto
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or type name and address, including postal zip code, of assignee
and social security number or employer identification number)
_______________________________________________________________________________
the within Certificate stating in the names of the undersigned in the Register
and does hereby irrevocably constitute and appoint
_______________________________________________________________________________
to transfer such Certificate in such Register.
I [we] further direct the Registrar to issue a new Certificate of the same
Class of like principal to the above-named assignee and deliver such
Certificate to the following address:
_______________________________________________________________________________
_______________________________________________________________________________
Dated:____________________ ___________________________________
Signature by or on behalf of Assignor
__________________________
Authorized Officer ___________________________________
Signature Guaranteed
__________________________ ____________________________________
Name of Institution NOTICE: The signature(s) of
this assignment must correspond
with the name(s) on the face of
this Certificate without
alteration or any change
whatsoever. The signature must be
guaranteed by a participant in the
Securities Transfer Agents
Medallion Program, the New York
Stock Exchange Medallion Signature
Program or the Stock Exchanges
Medallion Program. Notarized or
witnessed signatures are not
acceptable as guaranteed
signatures.
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for the information of the
Registrar. Distributions shall be made by wire transfer in immediately
available funds to
_______________________________________________________________________________
for the account of ____________________________________________________________
account number __________________ or, if mailed by check, to __________________
_______________________________________________________________________________
Applicable reports and statements should be mailed to _________________________
_______________________________________________________________________________
This information is provided by _______________________________________________
the assignee named above, or ____________________________________ as its agent.
<PAGE>
EXHIBIT C
FORM OF CLASS X CERTIFICATE
THIS CERTIFICATE IS A REMIC REGULAR INTEREST CERTIFICATE. THIS
CERTIFICATE DOES NOT EVIDENCE AN OBLIGATION OF, OR AN INTEREST IN, AND IS NOT
GUARANTEED BY, THE DEPOSITOR, THE TRUSTEE, OR ANY AFFILIATE OF ANY OF THEM AND
IS NOT INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR PRIVATE INSURER.
THIS CERTIFICATE IS NOT ENTITLED TO DISTRIBUTIONS OF PRINCIPAL AND
WILL NOT ACCRUE INTEREST. THE HOLDER OF THIS CERTIFICATE WILL BE ENTITLED TO
CERTAIN DISTRIBUTIONS AS PROVIDED IN THE POOLING AND SERVICING AGREEMENT.
THIS CERTIFICATE IS SUBORDINATE IN RIGHT OF PAYMENT AS DESCRIBED IN
THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "1933 ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
CERTIFICATE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION, UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS CERTIFICATE BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH CERTIFICATE ONLY (A) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE 1933 ACT,
(B) TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS
DEFINED IN RULE 144A UNDER THE 1933 ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF A "QUALIFIED INSTITUTIONAL BUYER" TO WHOM NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A UNDER THE 1933 ACT,
(C) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF
SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE 1933 ACT THAT IS
ACQUIRING THE CERTIFICATE FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE 1933 ACT, OR (D) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE 1933 ACT, SUBJECT TO THE TRUSTEE'S RIGHT
PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO AN OPINION OF COUNSEL AND SUBJECT
TO THE DELIVERY OF A CERTIFICATE OF TRANSFER OR REPRESENTATION LETTER IN THE
FORM APPEARING IN THE POOLING AND SERVICING AGREEMENT.
NO TRANSFER OF THIS CERTIFICATE SHALL BE REGISTERED UNLESS THE
PROSPECTIVE TRANSFEREE PROVIDES THE TRUSTEE AND THE DEPOSITOR WITH (A) A
CERTIFICATION TO THE EFFECT THAT (1) SUCH TRANSFEREE IS NEITHER AN EMPLOYEE
BENEFIT PLAN SUBJECT TO SECTION 406 OR SECTION 407 OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), THE TRUSTEE OF ANY
SUCH PLAN OR A PERSON ACTING ON BEHALF OF ANY SUCH PLAN NOR A PERSON USING THE
ASSETS OF ANY SUCH PLAN OR (2) IF SUCH TRANSFEREE IS AN INSURANCE COMPANY,
SUCH TRANSFEREE IS PURCHASING SUCH CERTIFICATES WITH FUNDS CONTAINED IN AN
"INSURANCE COMPANY GENERAL ACCOUNT" (AS SUCH TERM IS DEFINED IN SECTION V(e)
OF THE PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ("PTCE 95-60")) AND THAT
THE PURCHASE AND HOLDING OF SUCH CERTIFICATES ARE COVERED UNDER PTCE 95-60; OR
(B) AN OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE AND THE DEPOSITOR, AND
UPON WHICH THE TRUSTEE AND THE DEPOSITOR SHALL BE ENTITLED TO RELY, TO THE
EFFECT THAT THE PURCHASE OR HOLDING OF SUCH CERTIFICATE BY THE PROSPECTIVE
TRANSFEREE WILL NOT RESULT IN THE ASSETS OF THE TRUST FUND BEING DEEMED TO BE
PLAN ASSETS AND SUBJECT TO THE PROHIBITED TRANSACTION PROVISIONS OF ERISA OR
THE CODE AND WILL NOT SUBJECT THE TRUSTEE OR THE DEPOSITOR TO ANY OBLIGATION
IN ADDITION TO THOSE UNDERTAKEN BY SUCH ENTITIES IN THE POOLING AND SERVICING
AGREEMENT, WHICH OPINION OF COUNSEL SHALL NOT BE AN EXPENSE OF THE TRUST FUND,
THE TRUSTEE OR THE DEPOSITOR.
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1999-1
PASS-THROUGH CERTIFICATE, CLASS X
Evidencing a beneficial interest in a pool consisting primarily of
certain fixed and adjustable rate, fully amortizing and balloon,
conventional, first and second lien residential mortgage loans and
other assets in a trust fund established by
AMRESCO RESIDENTIAL SECURITIES CORPORATION
Percentage Interest: [ ] Cut-off Date: September 1, 1999
NUMBER [ ]
<PAGE>
THIS CERTIFIES THAT [ ] is the registered owner of the Percentage
Interest evidenced by this Certificate in (i) certain distributions of
principal and interest on certain fixed and adjustable rate, fully amortizing
and balloon, conventional, first and second lien residential mortgage loans
(the "Mortgage Loans") acquired from AMRESCO Residential Securities
Corporation (the "Depositor"), a Delaware corporation, (ii) such amounts and
investments as from time to time may be held in the Trust Fund established
pursuant to the Pooling and Servicing Agreement (as defined on the reverse
hereof) and (iii) certain other assets as described in the Pooling and
Servicing Agreement (the foregoing assets hereinafter collectively referred to
as the "Trust Fund").
Distributions on this Certificate will initially be made on October
27, 1999, and thereafter will be made on the 25th day of each month or, if
such a day is not a Business Day, then on the next succeeding Business Day,
commencing in November 1999 (each, a "Payment Date"), to the Person in whose
name this Certificate is registered at the close of business on the day
immediately preceding such Payment Date (the "Record Date"), in an amount
equal to the product of the Percentage Interest evidenced by this Certificate
and the amount, if any, required to be distributed to all the Certificates of
the Class represented by this Certificate. All sums distributable on this
Certificate are payable in the coin or currency of the United States of
America which at the time of payment is legal tender for the payment of public
and private debts.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which shall have the same effect
as though fully set forth on the face of this Certificate.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee, whose name appears below by manual signature,
this Certificate shall not be entitled to any benefit under the Pooling and
Servicing Agreement or be valid for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION,
as Trustee
By:____________________________________
AUTHORIZED SIGNATORY
Dated:__________________________
CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned
Pooling and Servicing Agreement.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION,
as Trustee
By:____________________________________
AUTHORIZED SIGNATORY
Dated:__________________________
<PAGE>
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1999-1
PASS-THROUGH CERTIFICATE
This Certificate is one of a duly authorized issue of certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1999-1 Pass-Through Certificates (the "Certificates"), representing all or
part of a beneficial ownership interest in a Trust Fund established pursuant
to a Pooling and Servicing Agreement dated as of September 1, 1999 (the
"Pooling and Servicing Agreement"), among AMRESCO Residential Securities
Corporation, as depositor (the "Depositor"), AMRESCO Residential Mortgage
Corporation, as originator (the "Originator"), AMRESCO Residential Capital
Markets, Inc., Finance America, LLC, as seller (the "Seller"), Ocwen Federal
Bank FSB, as servicer (the "Servicer"), and Norwest Bank Minnesota, National
Association, as trustee (the "Trustee"), to which terms, provisions and
conditions thereof the Owner of this Certificate by virtue of the acceptance
hereof assents, and by which such Owner is bound. The Certificates consist of
the following Classes: the Class A, Class M1, Class M2, Class B, Class X and
Class R.
On each Payment Date, the Total Distribution Amount for such date
will be distributed from the Certificate Account to Owners of the Certificates
according to the terms of the Pooling and Servicing Agreement. All
distributions or allocations made with respect to each Class of Certificates
on each Payment Date shall be allocated among the outstanding Certificates of
such Class based on the Percentage Interest of each such Certificate.
Distributions on this Certificate will be made by check or draft
mailed to the Owner of record of this Certificate on the immediately preceding
Record Date at the address of such Owner as it appears on the Register or,
with respect to any Owner of a Certificate evidencing not less than $1,000,000
in initial Certificate Principal Balance or, with respect to the Class X or
Class R Certificate, having a Percentage Interest of not less than 10%, by
wire transfer in immediately available funds, upon written request made to the
Trustee pursuant to the terms of the Pooling and Servicing Agreement. The
final distribution on this Certificate will be made, after due notice to the
Owner of the pendency of such distribution, only upon presentation and
surrender of this Certificate at the Corporate Trust Office (as defined
below).
The Corporate Trust Office with respect to the presentment and
surrender of Certificates for the final distribution thereon and the
presentment and surrender of the Certificates for any other purpose is the
corporate trust office of the Trustee at Sixth and Marquette Street,
Minneapolis, Minnesota 55479. The Trustee may designate another address from
time to time by notice to the Owners of the Certificates and the Depositor.
The Pooling and Servicing Agreement permits with certain exceptions
as therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Servicer,
the Originator, the Seller, ARCMI and the Trustee at any time and from time to
time, and without the consent of the Owners; PROVIDED, that in certain
circumstances provided for in the Pooling and Servicing Agreement, such
consent of the Owners will be required prior to amendments. Any such consent
by the Owner of this Certificate at the time of the giving thereof shall be
conclusive and binding upon such Owner and upon all future Owners of this
Certificate and of any Certificate issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of
such consent is made upon this Certificate.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, the transfer of this Certificate is
registerable in the Register upon surrender of this Certificate for
registration of transfer, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar, duly executed by
the Owner hereof or such Owner's attorney duly authorized in writing, and
thereupon one or more new Certificates of the same Class of authorized
denominations evidencing the same initial Certificate Principal Balance (or
Percentage Interest) will be issued to the designated transferee or
transferees. As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, this Certificate is exchangeable for
new Certificates of the same Class evidencing the same aggregate initial
Certificate Principal Balance (or Percentage Interest) as requested by the
Owner surrendering the same. No service charge will be made for any such
registration of transfer or exchange, but the Registrar may require payment of
a sum sufficient to cover any tax or other governmental charge payable in
connection therewith.
The Class A, Class M1, Class M2 and Class B Certificates are issuable
only in registered form, in minimum denominations of $100,000 in initial
Certificate Principal Balance and in integral multiples of $1 in excess
thereof registered in the name of the nominee of the Clearing Agency, which
shall maintain such Certificates through its book-entry facilities. The Class
X Certificate shall be issued in minimum percentage interests of 20%. The
Class R Certificate shall be issued as a single Certificate with a percentage
interest of 100%.
The Certificates are subject to optional prepayment in full in
accordance with the Pooling and Servicing Agreement on any Payment Date on
which the Certificate Principal Balance of the Class A Certificates is less
than 35% of its initial Certificate Principal Balance for an amount as
specified in the Pooling and Servicing Agreement. In no event will the trust
created by the Pooling and Servicing Agreement continue beyond the expiration
of 21 years from the death of the last survivor of the descendants living at
the date of the Pooling and Servicing Agreement of a certain person named in
the Pooling and Servicing Agreement.
The Depositor, the Trustee and the Registrar and any agent of any of
them may treat the Person in whose name this Certificate is registered as the
owner hereof for all purposes, and neither the Depositor, the Trustee, nor the
Registrar nor any such agent shall be affected by any notice to the contrary.
As provided in the Pooling and Servicing Agreement, this Certificate
and the Pooling and Servicing Agreement shall be construed in accordance with
and governed by the laws of the State of New York. In the event of any
conflict between the provisions of this Certificate and the Pooling and
Servicing Agreement, the Pooling and Servicing Agreement shall be controlling.
Any term used herein and not otherwise defined shall be as defined in the
Pooling and Servicing Agreement.
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s) and assign(s) and
transfer(s) unto
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or type name and address, including postal zip code, of assignee
and social security number or employer identification number)
_______________________________________________________________________________
the within Certificate stating in the names of the undersigned in the Register
and does hereby irrevocably constitute and appoint
_______________________________________________________________________________
to transfer such Certificate in such Register.
I [we] further direct the Registrar to issue a new Certificate of the same
Class of like principal to the above-named assignee and deliver such
Certificate to the following address:
_______________________________________________________________________________
_______________________________________________________________________________
Dated:____________________ ___________________________________
Signature by or on behalf of Assignor
__________________________
Authorized Officer ___________________________________
Signature Guaranteed
__________________________ ___________________________________
Name of Institution NOTICE: The signature(s) of
this assignment must correspond
with the name(s) on the face of
this Certificate without alteration
or any change whatsoever. The
signature must be guaranteed by a
participant in the Securities
Transfer Agents Medallion Program,
the New York Stock Exchange
Medallion Signature Program or the
Stock Exchanges Medallion Program.
Notarized or witnessed signatures
are not acceptable as guaranteed
signatures.
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for the information of the
Registrar. Distributions shall be made by wire transfer in immediately
available funds to
_______________________________________________________________________________
for the account of ____________________________________________________________
account number __________________ or, if mailed by check, to __________________
_______________________________________________________________________________
Applicable reports and statements should be mailed to _________________________
_______________________________________________________________________________
This information is provided by _______________________________________________
the assignee named above, or ____________________________________ as its agent.
<PAGE>
EXHIBIT D
FORM OF CLASS R CERTIFICATE
THIS CERTIFICATE IS A REMIC RESIDUAL INTEREST CERTIFICATE. THIS
CERTIFICATE DOES NOT EVIDENCE AN OBLIGATION OF, OR AN INTEREST IN, AND IS NOT
GUARANTEED BY, THE DEPOSITOR, THE TRUSTEE, OR ANY AFFILIATE OF ANY OF THEM AND
IS NOT INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR PRIVATE INSURER.
THIS CERTIFICATE IS NOT ENTITLED TO DISTRIBUTIONS OF PRINCIPAL AND
WILL NOT ACCRUE INTEREST. THE HOLDER OF THIS CERTIFICATE WILL BE ENTITLED ONLY
TO CERTAIN LIMITED DISTRIBUTIONS AS PROVIDED IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE IS SUBORDINATE IN RIGHT OF PAYMENT AS DESCRIBED IN
THE POOLING AND SERVICING AGREEMENT.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "1933 ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
CERTIFICATE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION, UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS CERTIFICATE BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH CERTIFICATE ONLY (A) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE 1933 ACT,
(B) TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS
DEFINED IN RULE 144A UNDER THE 1933 ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF A "QUALIFIED INSTITUTIONAL BUYER" TO WHOM NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A UNDER THE 1933 ACT,
(C) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF
SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE 1933 ACT THAT IS
ACQUIRING THE CERTIFICATE FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE 1933 ACT, OR (D) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE 1933 ACT, SUBJECT TO THE TRUSTEE'S RIGHT
PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO AN OPINION OF COUNSEL AND SUBJECT
TO THE DELIVERY OF A CERTIFICATE OF TRANSFER OR REPRESENTATION LETTER IN THE
FORM APPEARING IN THE POOLING AND SERVICING AGREEMENT.
NEITHER THIS CERTIFICATE, NOR ANY BENEFICIAL INTEREST IN THIS
CERTIFICATE, MAY BE TRANSFERRED, SOLD, PLEDGED, OR OTHERWISE DISPOSED OF
UNLESS PRIOR TO SUCH DISPOSITION, THE PROPOSED TRANSFEREE DELIVERS TO THE
TRUSTEE AN AFFIDAVIT STATING (A) THAT THE PROPOSED TRANSFEREE IS NOT A
"DISQUALIFIED ORGANIZATION" WITHIN THE MEANING OF SECTION 860E(E)(5) OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") AND IS NOT PURCHASING
THE CERTIFICATE ON BEHALF OF A DISQUALIFIED ORGANIZATION, (B) THAT THE
PROPOSED TRANSFEREE (1) IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), (2) IS
NOT INVESTING THE ASSETS OF ANY SUCH PLAN, (3) IS NOT A PLAN SUBJECT TO CODE
SECTION 4975 OR (4) A PERSON OR ENTITY THAT IS USING THE ASSETS OF ANY
EMPLOYEE BENEFIT PLAN OR OTHER PLAN TO ACQUIRE THIS CERTIFICATE, (C) THAT NO
PURPOSE OF SUCH TRANSFER IS TO AVOID OR IMPEDE THE ASSESSMENT OR COLLECTION OF
TAX, AND (D) IN THE CASE OF A NON-U.S. PERSON, IS A NON-U.S. PERSON THAT HOLDS
A RESIDUAL CERTIFICATE IN CONNECTION WITH THE CONDUCT OF A TRADE OR BUSINESS
WITHIN THE UNITED STATES AND HAS FURNISHED THE TRANSFEROR AND THE TRUSTEE WITH
AN EFFECTIVE INTERNAL REVENUE SERVICE FORM 4224 OR SUCCESSOR FORM AT THE TIME
AND IN THE MANNER REQUIRED BY THE CODE. IN ADDITION, THIS CERTIFICATE MAY NOT
BE HELD BY A NOMINEE.
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1999-1
PASS-THROUGH CERTIFICATE, CLASS R
Evidencing a beneficial interest in a pool consisting primarily of
certain fixed and adjustable rate, fully amortizing and balloon,
conventional, first and second lien residential mortgage loans and
other assets in a trust fund established by
AMRESCO RESIDENTIAL SECURITIES CORPORATION
Percentage Interest: [ ] Cut-off Date: September 1, 1999
Number [ ]
<PAGE>
THIS CERTIFIES THAT [ ]is the registered owner of the Percentage
Interest evidenced by this Certificate in (i) certain distributions of
principal and interest on certain fixed and adjustable rate, fully amortizing
and balloon, conventional, first and second lien residential mortgage loans
(the "Mortgage Loans") acquired from AMRESCO Residential Securities
Corporation (the "Depositor"), a Delaware corporation, (ii) such amounts and
investments as from time to time may be held in the Trust Fund established
pursuant to the Pooling and Servicing Agreement (as defined on the reverse
hereof) and (iii) certain other assets as described in the Pooling and
Servicing Agreement (the foregoing assets hereinafter collectively referred to
as the "Trust Fund").
Distributions on this Certificate will initially be made on October
27, 1999, and thereafter will be made on the 25th day of each month or, if
such a day is not a Business Day, then on the next succeeding Business Day,
commencing in November 1999 (each, a "Payment Date"), to the Person in whose
name this Certificate is registered at the close of business on the day
immediately preceding such Payment Date (the "Record Date"), in an amount
equal to the product of the Percentage Interest evidenced by this Certificate
and the amount, if any, required to be distributed to all the Certificates of
the Class represented by this Certificate. All sums distributable on this
Certificate are payable in the coin or currency of the United States of
America which at the time of payment is legal tender for the payment of public
and private debts.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which shall have the same effect
as though fully set forth on the face of this Certificate.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee, whose name appears below by manual signature,
this Certificate shall not be entitled to any benefit under the Pooling and
Servicing Agreement or be valid for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION,
as Trustee
By:____________________________________
AUTHORIZED SIGNATORY
Dated:______________________________
CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned
Pooling and Servicing Agreement.
ORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
By:_____________________________________
AUTHORIZED SIGNATORY
Dated:___________________________
<PAGE>
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1999-1
PASS-THROUGH CERTIFICATE
This Certificate is one of a duly authorized issue of certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1999-1 Pass-Through Certificates (the "Certificates"), representing all or
part of a beneficial ownership interest in a Trust Fund established pursuant
to a Pooling and Servicing Agreement dated as of September 1, 1999 (the
"Pooling and Servicing Agreement"), among AMRESCO Residential Securities
Corporation, as depositor (the "Depositor"), AMRESCO Residential Mortgage
Corporation, as originator (the "Originator"), AMRESCO Residential Capital
Markets, Inc., Finance America, LLC, as seller (the "Seller"), Ocwen Federal
Bank FSB, as servicer (the "Servicer"), and Norwest Bank Minnesota, National
Association, as trustee (the "Trustee"), to which terms, provisions and
conditions thereof the Owner of this Certificate by virtue of the acceptance
hereof assents, and by which such Owner is bound. The Certificates consist of
the following Classes: the Class A, Class M1, Class M2, Class B, Class X and
Class R.
On each Payment Date, the Total Distribution Amount for such date
will be distributed from the Certificate Account to Owners of the Certificates
according to the terms of the Pooling and Servicing Agreement. All
distributions or allocations made with respect to each Class of Certificates
on each Payment Date shall be allocated among the outstanding Certificates of
such Class based on the Percentage Interest of each such Certificate.
Distributions on this Certificate will be made by check or draft
mailed to the Owner of record of this Certificate on the immediately preceding
Record Date at the address of such Owner as it appears on the Register or,
with respect to any Owner of a Certificate evidencing not less than $1,000,000
in initial Certificate Principal Balance or, with respect to the Class X or
Class R Certificate, having a Percentage Interest of not less than 10%, by
wire transfer in immediately available funds, upon written request made to the
Trustee pursuant to the terms of the Pooling and Servicing Agreement. The
final distribution on this Certificate will be made, after due notice to the
Owner of the pendency of such distribution, only upon presentation and
surrender of this Certificate at the Corporate Trust Office (as defined
below).
The Corporate Trust Office with respect to the presentment and
surrender of Certificates for the final distribution thereon and the
presentment and surrender of the Certificates for any other purpose is the
corporate trust office of the Trustee at Sixth and Marquette Street,
Minneapolis, Minnesota 55479. The Trustee may designate another address from
time to time by notice to the Owners of the Certificates and the Depositor.
The Pooling and Servicing Agreement permits with certain exceptions
as therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Servicer,
the Originator, the Seller, ARCMI and the Trustee at any time and from time to
time, and without the consent of the Owners; PROVIDED, that in certain
circumstances provided for in the Pooling and Servicing Agreement, such
consent of the Owners will be required prior to amendments. Any such consent
by the Owner of this Certificate at the time of the giving thereof shall be
conclusive and binding upon such Owner and upon all future Owners of this
Certificate and of any Certificate issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of
such consent is made upon this Certificate.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, the transfer of this Certificate is
registerable in the Register upon surrender of this Certificate for
registration of transfer, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar, duly executed by
the Owner hereof or such Owner's attorney duly authorized in writing, and
thereupon one or more new Certificates of the same Class of authorized
denominations evidencing the same initial Certificate Principal Balance (or
Percentage Interest) will be issued to the designated transferee or
transferees. As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, this Certificate is exchangeable for
new Certificates of the same Class evidencing the same aggregate initial
Certificate Principal Balance (or Percentage Interest) as requested by the
Owner surrendering the same. No service charge will be made for any such
registration of transfer or exchange, but the Registrar may require payment of
a sum sufficient to cover any tax or other governmental charge payable in
connection therewith.
The Class A, Class M1, Class M2 and Class B Certificates are issuable
only in registered form, in minimum denominations of $100,000 in initial
Certificate Principal Balance and in integral multiples of $1 in excess
thereof registered in the name of the nominee of the Clearing Agency, which
shall maintain such Certificates through its book-entry facilities. The Class
X Certificate shall be issued in minimum percentage interests of 20%. The
Class R Certificate shall be issued as a single Certificate with a percentage
interest of 100%.
The Certificates are subject to optional prepayment in full in
accordance with the Pooling and Servicing Agreement on any Payment Date on
which the Certificate Principal Balance of the Class A Certificates is less
than 35% of its initial Certificate Principal Balance for an amount as
specified in the Pooling and Servicing Agreement. In no event will the trust
created by the Pooling and Servicing Agreement continue beyond the expiration
of 21 years from the death of the last survivor of the descendants living at
the date of the Pooling and Servicing Agreement of a certain person named in
the Pooling and Servicing Agreement.
The Depositor, the Trustee and the Registrar and any agent of any of
them may treat the Person in whose name this Certificate is registered as the
owner hereof for all purposes, and neither the Depositor, the Trustee, nor the
Registrar nor any such agent shall be affected by any notice to the contrary.
As provided in the Pooling and Servicing Agreement, this Certificate
and the Pooling and Servicing Agreement shall be construed in accordance with
and governed by the laws of the State of New York. In the event of any
conflict between the provisions of this Certificate and the Pooling and
Servicing Agreement, the Pooling and Servicing Agreement shall be controlling.
Any term used herein and not otherwise defined shall be as defined in the
Pooling and Servicing Agreement.
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s) and assign(s) and
transfer(s) unto
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or type name and address, including postal zip code, of assignee
and social security number or employer identification number)
_______________________________________________________________________________
the within Certificate stating in the names of the undersigned in the Register
and does hereby irrevocably constitute and appoint
_______________________________________________________________________________
to transfer such Certificate in such Register.
I [we] further direct the Registrar to issue a new Certificate of the same
Class of like principal to the above-named assignee and deliver such
Certificate to the following address:
_______________________________________________________________________________
_______________________________________________________________________________
Dated:____________________ ___________________________________
Signature by or on behalf of Assignor
__________________________
Authorized Officer ___________________________________
Signature Guaranteed
__________________________ ____________________________________
Name of Institution NOTICE: The signature(s) of
this assignment must correspond
with the name(s) on the face of
this Certificate without alteration
or any change whatsoever. The
signature must be guaranteed by a
participant in the Securities
Transfer Agents Medallion Program,
the New York Stock Exchange
Medallion Signature Program or the
Stock Exchanges Medallion Program.
Notarized or witnessed signatures
are not acceptable as guaranteed
signatures.
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for the information of the
Registrar. Distributions shall be made by wire transfer in immediately
available funds to
_______________________________________________________________________________
for the account of ____________________________________________________________
account number __________________ or, if mailed by check, to __________________
_______________________________________________________________________________
Applicable reports and statements should be mailed to _________________________
_______________________________________________________________________________
This information is provided by _______________________________________________
the assignee named above, or ____________________________________ as its agent.
<PAGE>
EXHIBIT E
FORM OF SUBSEQUENT TRANSFER AGREEMENT
AMRESCO Residential Mortgage Corporation (the "Originator"), Finance
America, LLC (the "Seller"), AMRESCO Residential Securities Corporation (the
"Depositor") and Norwest Bank Minnesota, National Association, as Trustee (the
"Trustee") under the Pooling and Servicing Agreement (as defined below)
relating to AMRESCO Residential Securities Corporation Mortgage Loan Trust
1999-1 pursuant to the Pooling and Servicing Agreement dated as of September
1, 1999 (the "Pooling and Servicing Agreement"), among the Depositor, the
Originator, the Seller, Ocwen Federal Bank FSB, as Servicer, AMRESCO
Residential Capital Markets, Inc., and the Trustee, each hereby confirm their
understanding with respect to the sale by the Originator and the purchase by
the Seller, the sale by the Seller and the purchase by the Depositor, and the
sale by the Depositor and the purchase by the Trustee, of those Subsequent
Mortgage Loans (the "Subsequent Mortgage Loans") listed on the attached
Schedule of Subsequent Mortgage Loans.
Section 1. Conveyance of Subsequent Mortgage Loans. As of [[
_________________________________ ]] (the "Subsequent Transfer Date"), the
Originator hereby bargains, sells, conveys, assigns and transfers to the
Seller; the Seller, in turn, hereby bargains, sells, conveys, assigns and
transfers to the Depositor; and the Depositor, in turn, hereby bargains,
sells, conveys, assigns and transfers to the Trustee, without recourse (except
as otherwise explicitly provided for in the Pooling and Servicing Agreement),
for the exclusive benefit of the Owners of the Certificates, each of their
respective rights, title and interest in and to any and all benefits accruing
from the Subsequent Mortgage Loans (other than any principal and interest
payments due thereon on or prior to [[ ________________ ]] whether or not
received) (such date, the "Subsequent Cut-Off Date") which the Originator is
causing to be delivered to the Seller; the Seller, in turn, is causing to be
delivered to the Depositor; and the Depositor, in turn, is hereby causing to
be delivered to the Trustee (and all substitutions therefor as provided for by
Sections 3.06, 3.07, 3.08 and 3.09 of the Pooling and Servicing Agreement),
together with the related Subsequent Mortgage Loan documents and each of the
Originator's, the Seller's, and the Depositor's respective interest in any
Property which secured the Subsequent Mortgage Loan, and all payments thereon
and proceeds of the conversion, voluntary or involuntary, of 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). The Depositor shall deliver the original Mortgage or
mortgage assignment with evidence of recording thereon (except as otherwise
provided by the Pooling and Servicing Agreement) and other required
documentation in accordance with the terms set forth in Sections 3.06, 3.07,
3.08 and 3.09 of the Pooling and Servicing Agreement.
The costs relating to the delivery of the documents specified in this
Subsequent Transfer Agreement and the Pooling and Servicing Agreement shall be
borne by the Seller.
Section 2. Reaffirmation of Representations and Warranties. The
Originator hereby affirms the representations and warranties set forth in the
Pooling and Servicing Agreement made by it that relate to it and the
Subsequent Mortgage Loans as of the date hereof. The Depositor hereby delivers
notice and confirms that each of the conditions set forth in Section 3.09(b)
and 3.09(c) to the Pooling and Servicing Agreement are satisfied as of the
date hereof.
Section 3. Release from Pre-Funding Account. Pursuant to Section
3.09(a) of the Pooling and Servicing Agreement, the Depositor hereby instructs
the Trustee to withdraw one-hundred percent of the aggregate principal
balances of the Subsequent Mortgage Loans so transferred from the Pre-Funding
Account, [[$ ]] pursuant to this Subsequent Transfer Agreement and to include
[[$ ______________________ ]] of the Subsequent Mortgage Loans listed in the
Schedule attached hereto and to pay such amount to the Originator pursuant to
wire transfer instructions provided by it to the Trustee.
All terms and conditions of the Pooling and Servicing Agreement are
hereby ratified, confirmed and incorporated herein, provided that in the event
of any conflict the provisions of this Subsequent Transfer Agreement shall
control over the conflicting provisions of the Pooling and Servicing
Agreement.
Terms capitalized herein and not defined herein shall have their
respective meanings as set forth in the Pooling and Servicing Agreement.
<PAGE>
IN WITNESS WHEREOF, this Subsequent Transfer Agreement is executed as
of the date first above written.
AMRESCO RESIDENTIAL MORTGAGE CORPORATION,
as Originator
By:_______________________________________
Name:
Title:
FINANCE AMERICA, LLC, as Seller
By:_______________________________________
Name:
Title:
AMRESCO RESIDENTIAL SECURITIES
CORPORATION, as Depositor
By:_______________________________________
Name:
Title:
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Trustee under the Pooling
and Servicing Agreement
By:_______________________________________
Name:
Title:
<PAGE>
SCHEDULE OF SUBSEQUENT MORTGAGE LOANS
<PAGE>
EXHIBIT F
FORM OF CERTIFICATE RE: PREPAID LOANS
AMRESCO Residential Securities Corporation (the "Depositor") hereby
certifies that between the Cut-Off Date and the Startup Date, the Mortgage
Loans listed on Exhibit "A" attached hereto have been prepaid in full.
Capitalized terms used herein and not defined herein have the
meanings given to such terms in the Pooling and Servicing Agreement dated as
of September 1, 1999 (the "Pooling and Servicing Agreement"), among the
Depositor, AMRESCO Residential Mortgage Corporation, as originator (the
"Originator"), Finance America, LLC, as seller (the "Seller"), Ocwen Federal
Bank FSB, as servicer (the "Servicer"), AMRESCO Residential Capital Markets,
Inc., and Norwest Bank Minnesota, National Association, as trustee (the
"Trustee").
Dated: October ___, 1999 AMRESCO RESIDENTIAL
SECURITIES CORPORATION, AS DEPOSITOR
By:__________________________________
Name:
Title:
<PAGE>
EXHIBIT G
FORM OF CUSTODIAN'S ACKNOWLEDGMENT OF RECEIPT
Bankers Trust Company of California, N.A., a national banking
association, in its capacity as custodian (the "Custodian") under that certain
Custodial Agreement dated as of September 1, 1999 (the "Custodial Agreement"),
among AMRESCO Residential Securities Corporation, as Depositor, AMRESCO
Residential Mortgage Corporation, as Originator, Finance America, LLC, as
Seller, Ocwen Federal Bank FSB, as Servicer, AMRESCO Residential Capital
Markets, Inc., Norwest Bank Minnesota, National Association, as Trustee, and
the Custodian, hereby acknowledges receipt (subject to review as required by
the Custodial Agreement) of the items delivered to it by the Seller, the
Depositor, and the Originator, as applicable with respect to the Mortgage
Loans pursuant to the Custodial Agreement.
The Schedule of Mortgage Loans for the Mortgage Loans is attached to
this Receipt.
The Custodian hereby additionally acknowledges that it shall review
such items as required by the Custodial Agreement and shall otherwise comply
with all the provisions of the Custodial Agreement as required thereby.
Dated: October ____, 1999 BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., as Custodian
By:_______________________________
Name:
Title:
<PAGE>
EXHIBIT H
FORM OF POOL CERTIFICATION
WHEREAS, the undersigned is an Authorized Officer of Bankers Trust
Company of California, N.A., a national banking association, acting in its
capacity as custodian (the "Custodian") of a certain pool of mortgage loans
(the "Pool") heretofore conveyed in trust to Norwest Bank Minnesota, National
Association, as trustee (the "Trustee"), pursuant to that certain Custodial
Agreement dated as of September 1, 1999 (the "Custodial Agreement"), among the
Custodian, AMRESCO Residential Securities Corporation, as Depositor, AMRESCO
Residential Mortgage Corporation, as Originator, Finance America, LLC, as
Seller, Ocwen Federal Bank FSB, as Servicer, AMRESCO Residential Capital
Markets, Inc., and the Trustee; and
WHEREAS, the Custodian is required, pursuant to the Custodial
Agreement, to review the Mortgage Files relating to the Pool within a
specified period following the Startup Day and to notify the Seller and the
Originator promptly of any defects with respect to the Pool, all as set forth
in Section 2.3 of the Custodial Agreement; and
WHEREAS, the Custodial Agreement requires the Custodian to deliver
this Pool Certification upon the satisfaction of certain conditions set forth
therein.
NOW, THEREFORE, the Custodian hereby certifies that (i) all documents
required to be delivered to it pursuant to Section 3.07(b)(i) of the Pooling
and Servicing 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 (i), (ii), (iii)(A) and (iv) of
the Schedule of Mortgage Loans accurately reflects the information set forth
in the Custodial File. The Custodian makes no certification hereby, however,
with respect to any intervening assignments or assumption and modification
agreements.
All capitalized terms used herein shall have the meanings assigned to
such terms in the Custodial Agreement.
Dated: October ____, 1999 BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., as Custodian
By:____________________________________
Name:
Title
<PAGE>
EXHIBIT I
FORM OF DELIVERY ORDER
AMRESCO RESIDENTIAL SECURITIES CORPORATION
700 N. Pearl Street, Suite 2400
Dallas, Texas 75201-7424
October ____, 1999
Norwest Bank Minnesota, National Association
11000 Broken Land Parkway
Columbia, MD 21044-3562
Attention: Corporate Trust - MBS Securities
DELIVERY ORDER
Dear Ladies and Gentlemen:
Pursuant to the Pooling and Servicing Agreement dated as of September
1, 1999 (the "Pooling and Servicing Agreement"), among AMRESCO Residential
Securities Corporation, as depositor (the "Depositor"), AMRESCO Residential
Mortgage Corporation, as originator (the "Originator"), Finance America, LLC,
as seller (the "Seller"), Ocwen Federal Bank FSB, as servicer (the
"Servicer"), AMRESCO Residential Capital Markets, Inc., and Norwest Bank
Minnesota, National Association, as trustee (the "Trustee"), the Depositor
HEREBY CERTIFIES that all conditions precedent to the issuance of the AMRESCO
Residential Securities Corporation Mortgage Loan Trust 1999-1, Mortgage Loan
Pass-Through Certificates, Class A, Class M1, Class M2, Class B, Class X and
Class R Certificates (the "Certificates") HAVE BEEN SATISFIED, and HEREBY
REQUESTS YOU TO EXECUTE, AUTHENTICATE AND DELIVER said Certificates in
accordance with Schedule 1 attached hereto, and to RELEASE said Certificates
to the owners thereof, or otherwise upon their order.
Very truly yours,
AMRESCO RESIDENTIAL
SECURITIES CORPORATION
By:_______________________________________
Name:
Title:
<PAGE>
EXHIBIT J
FORM OF SERVICER'S TRUST RECEIPT
To: Bankers Trust Company of California, N.A.,
as custodian for Norwest Bank Minnesota, National Association,
As Trustee of the AMRESCO Residential Securities Corporation Mortgage
Loan Trust 1999-1
1761 East St. Andrew Place
Santa Ana, California 92705
Attn: Mortgage Custody - AMRESCO 1999-1
Re: The Pooling and Servicing Agreement, dated as of September 1,
1999 (the "Pooling and Servicing Agreement") among Norwest Bank
Minnesota, National Association, as Trustee, AMRESCO Residential
Securities Corporation, as Depositor, AMRESCO Residential Mortgage
Corporation, as Originator, Finance America, LLC, as Seller, AMRESCO
Residential Capital Markets, Inc. and Ocwen Federal Bank FSB, as
Servicer and the Custodial Agreement, dated as of September 1, 1999
(the "Custodial Agreement"), among Bankers Trust Company of
California, N.A. ("Custodian"), the Trustee, the Depositor, the
Originator, the Seller, AMRESCO Residential Capital Markets, Inc. and
the Servicer
In connection with the administration of the Mortgage Loans held by
you as the Custodian on behalf of the AMRESCO Residential Securities
Corporation Mortgage Loan Trust 1999-1, we hereby request the release, and
acknowledge receipt, of the (Mortgage File/[specify documents]) for the
Mortgage Loan described below, for the reason indicated below.
Mortgagor's Name, Address & Zip Code:
Mortgage Loan Number:
Reason for Requesting Documents
___ 1. Repurchase of Mortgage Loan due to a breach of a Representation or
Warranty under the Pooling and Servicing Agreement. (The Custodian
shall delete the Mortgage Loan from the applicable Mortgage Loan
Schedule and send the amended Mortgage Loan Schedule to the Trustee).
___ 2. Mortgage Loan Liquidated [Paid in Full] By _____________. (The
Custodian is hereby authorized to delete Mortgage Loan from the
applicable Mortgage Loan Schedule attached hereto and send the
amended Mortgage Loan Schedule to the Trustee).
___ 3. Mortgage Loan in Foreclosure
___ 4. Other (explain) ________________________________________
<PAGE>
If 1 or 2 above is checked, and if all or part of the Mortgage Files
were previously released to us, please release to us our previous request and
receipt on file with you, as well as any additional documents in your
possession relating to the specified Mortgage Loan.
If 3 or 4 above is checked, upon our return of all of the above
documents to you as the Custodian, please acknowledge your receipt by signing
in the space indicated below, and returning this form.
Ocwen Financial Bank FSB, as Servicer, understands and agrees that
all documents delivered to the Servicer pursuant to this Request for Release
shall be returned to the Custodian no later than thirty (30) days from the
date hereof. Capitalized terms used and not otherwise defined herein shall
have the meanings set forth in the Custodial Agreement.
OCWEN FEDERAL BANK FSB
By:__________________________________
Name:_______________________________
Title:________________________________
Acknowledgment of Documents returned to the Custodian, for the reasons listed
in items 4.
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
Custodian
By:__________________________________
Name:_______________________________
Title:________________________________
<PAGE>
EXHIBIT K
FORM OF CLASS R TRANSFER AFFIDAVIT AND AGREEMENT
State of ___________)
)ss.:
County of __________)
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That he is [Title of Officer] of [Name of Purchaser] (record or
beneficial owner of the Mortgage Loan Pass-through Certificates, Series
1999-1, Class R (the "Purchaser")), a [savings institution] [corporation] duly
organized and existing under the laws of [the State of __________________]
[the United States], on behalf of which he makes this affidavit and agreement.
2. That the Purchaser (i) is not and will not be a "disqualified
organization" as of [date of transfer] within the meaning of Section
860E(e)(5) of the Internal Revenue Code of 1986, as amended (the "Code"), (ii)
will endeavor to remain other than a disqualified organization for so long as
it retains its ownership interest in the Class R Certificates, and (iii) is
acquiring the Class R Certificates for its own account or for the account of
another Purchaser from which it has received an affidavit and agreement in
substantially the same form as this affidavit and agreement. (For this
purpose, a "disqualified organization" means the United States, any state or
political subdivision thereof, any agency or instrumentality of any of the
foregoing (other than an instrumentality all of the activities of which are
subject to tax and, except for the Federal Home Loan Mortgage Corporation, a
majority of whose board of directors is not selected by any such governmental
entity) or any foreign government, international organization or any agency or
instrumentality of such foreign government or organization, any rural electric
or telephone cooperative, or any organization (other than certain farmers'
cooperatives) that is generally exempt from federal income tax unless such
organization is subject to the tax on unrelated business taxable income).
3. That the Purchaser is aware (i) of the tax that would be imposed
on transfers of Class R Certificates to disqualified organizations under the
Code; (ii) that such tax would be on the transferor, or, if such transfer is
through an agent (which person includes a broker, nominee or middleman) for a
disqualified organization, on the agent; (iii) that the person otherwise
liable for the tax shall be relieved of liability for the tax if the
transferee furnishes to such person an affidavit that the transferee is not a
disqualified organization and, at the time of transfer, such person does not
have actual knowledge that the affidavit is false; and (iv) that the Class R
Certificates may be "noneconomic residual interests" within the meaning of
Treasury regulations promulgated pursuant to the Code and that the transferor
of a noneconomic residual interest will remain liable for any taxes due with
respect to the income on such residual interest, unless no significant purpose
of the transfer was to impede the assessment or collection of tax.
4. That the Purchaser is aware that the Trustee will not register the
transfer of any Class R Certificates unless the transferee, or the
transferee's agent, delivers to it an affidavit and agreement, among other
things, in substantially the same form as this affidavit and agreement. The
Purchaser expressly agrees that it will not consummate any such transfer if it
knows or believes that any of the representations contained in such affidavit
and agreement are false.
5. That the Purchaser has reviewed the restrictions set forth on the
face of the Class R Certificates and the provisions of Section 5.08 of the
Pooling and Servicing Agreement under which the Class R Certificates were
issued (in particular, clause (vi) of Section 5.08(c) which authorize the
Trustee to deliver payments to a person other than the Purchaser in the event
the Purchaser holds such Certificates in violation of Section 5.08). The
Purchaser expressly agrees to be bound by and to comply with such restrictions
and provisions.
6. That the Purchaser consents to any additional restrictions or
arrangements that shall be deemed necessary upon advice of counsel to
constitute a reasonable arrangement to ensure that the Class R Certificates
will only be owned, directly or indirectly, by an Purchaser that is not a
disqualified organization.
7. The Purchaser's Taxpayer Identification Number is ___________.
8. This affidavit and agreement relates only to the Class R
Certificates held by the Purchaser and not to any other holder of the Class R
Certificates. The Purchaser understands that the liabilities described herein
relate only to the Class R Certificates.
9. That no purpose of the Purchaser relating to the transfer of any
of the Class R Certificates by the Purchaser is or will be to impede the
assessment or collection of any tax.
10. That the Purchaser has no present knowledge or expectation that
it will be unable to pay any United States taxes owed by it so long as any of
the Certificates remain outstanding. In this regard, the Purchaser hereby
represents to and for the benefit of the person from whom it acquired the
Class R Certificate that the Purchaser intends to pay taxes associated with
holding such Class R Certificate as they become due, fully understanding that
it may incur tax liabilities in excess of any cash flows generated by the
Class R Certificate.
11. That the Purchaser has no present knowledge or expectation that
it will become insolvent or subject to a bankruptcy proceeding for so long as
any of the Class R Certificates remain outstanding.
12. The Purchaser is (i) a citizen or resident of the United States;
(ii) a corporation (or entity treated as a corporation for tax purposes)
created or organized in the United States or under the laws of the United
States or of any state thereof, including, for this purpose, the District of
Columbia; (iii) a partnership (or entity treated as a partnership for tax
purposes) organized in the United States or under the laws of the United
States or of any state thereof, including, for this purpose, the District of
Columbia (unless provided otherwise by future Treasury regulations); (iv) an
estate whose income is includible in gross income for United States income tax
purposes regardless of its source; or (v) a trust, if a court within the
United States is able to exercise primary supervision over the administration
of the trust and one or more persons described in this Paragraph 12 have
authority to control all substantial decisions of the trust.
13. The Purchaser is not an employee benefit plan subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code"),
nor a Person acting directly on behalf of any such plan.
14. The Purchaser acknowledges that the Trustee is entitled to rely
on this Transfer Affidavit and Agreement in accordance with the provision of
the Pooling and Servicing Agreement.
IN WITNESS WHEREOF, the Purchaser has caused this instrument to be
executed on its behalf, pursuant to the authority of its Board of Directors,
by its [Title of Officer] and its corporate seal to be hereunto attached,
attested by its [Assistant] Secretary, this ____ day of _______________,
199__.
[NAME OF PURCHASER]
By:_________________________________
[Name of Officer]
[Title of Officer]
ATTEST:
_____________________________
STATE OF )
) ss:
COUNTY OF )
Personally appeared before me the above-named ________________, known
or proved to me to be the same person who executed the foregoing instrument
and to be the ____________________ of the Investor, and acknowledged that he
executed the same as his free act and deed and the free act and deed of the
Investor.
Subscribed and sworn before me this _____ day of _________ 199_.
____________________________________
NOTARY PUBLIC
My commission expires the _____ day
of __________, _______.
<PAGE>
EXHIBIT L
FORM OF CLASS R TRANSFEROR CERTIFICATE
__________________, 19__
AMRESCO Residential Securities Corporation
[Address]
[Trustee]
Re: AMRESCO Residential Securities Corporation
Mortgage Loan Trust 1999-1
Ladies and Gentlemen:
This letter is delivered to you in connection with the transfer by
_______________________________ (the "Transferor") to ________________________
(the "Purchaser") of a ____% Percentage Interests of AMRESCO Residential
Securities Corporation Mortgage Loan Pass-through Certificates, Series 1999-1,
Class R Certificates (the "Certificates"), pursuant to Section 5.08 of the
Pooling and Servicing Agreement (the "Pooling and Servicing Agreement"), dated
as of September 1, 1999, among AMRESCO Residential Securities Corporation (the
"Depositor"), AMRESCO Residential Mortgage Corporation, as originator, Finance
America, LLC, as seller, OCWEN Federal Bank FSB, as servicer, AMRESCO
Residential Capital Markets, Inc., and Norwest Bank Minnesota, National
Association, as trustee (the "Trustee"). All terms used herein and not
otherwise defined shall have the meanings set forth in the Pooling and
Servicing Agreement. The Transferor hereby certifies, represents and warrants
to, and covenants with, the Depositor and the Trustee that:
1. No purpose of the Transferor relating to the transfer of the
Certificates by the Transferor to the Purchaser is or will be to impede the
assessment or collection of any tax.
2. The Transferor understands that the Purchaser has delivered to the
Trustee and the Servicer a transfer affidavit and agreement in the form
attached to the Pooling and Servicing Agreement as Exhibit K. The Transferor
does not know or believe that any representation contained therein is false.
3. The Transferor has at the time of the transfer conducted a
reasonable investigation of the financial condition of the Purchaser as
contemplated by Treasury Regulations Section 1.860E-1(c)(4)(i) and, as a
result of that investigation, the Transferor has determined that the Purchaser
has historically paid its debts as they become due and has found no
significant evidence to indicate that the Purchaser will not continue to pay
its debts as they become due in the future. The Transferor understands that
the transfer of a Class R Certificate may not be respected for United States
income tax purposes (and the Transferor may continue to be liable for United
States income taxes associated therewith) unless the Transferor has conducted
such an investigation.
4. The Transferor has no actual knowledge that the proposed Purchaser
is not both a United States Person and a Permitted Transferee.
Very truly yours,
(Transferor)
By:
Name:
Title:
<PAGE>
EXHIBIT M
FORM OF ERISA TRANSFER AFFIDAVIT
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
The undersigned, being first duly sworn, deposes and says as follows:
1. The undersigned is the ______________________ of (the "Investor"), a
[corporation duly organized] and existing under the laws of __________,
on behalf of which he makes this affidavit.
2. The Investor either (x) is not an employee benefit plan subject to
Section 406 or Section 407 of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), or Section 4975 of the Internal Revenue
Code of 1986, as amended (the "Code"), the trustee of any such plan or a
person acting on behalf of any such plan nor a person using the assets of
any such plan or (2) if the Investor is an insurance company, such
Investor is purchasing such Certificates with funds contained in an
"Insurance Company General Account" (as such term is defined in Section
V(e) of the Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60"))
and that the purchase and holding of such Certificates are covered under
Parts I and III in PTCE 95-60; or (y) has delivered to the Trustee and
the Depositor an opinion of counsel (a "Benefit Plan Opinion")
satisfactory to the Trustee and the Depositor, and upon which the Trustee
and the Depositor shall be entitled to rely, to the effect that the
purchase or holding of such Certificate by the Investor will not result
in the assets of the Trust Fund being deemed to be plan assets and
subject to the prohibited transaction provisions of ERISA or the Code and
will not subject the Trustee, the Servicer or the Depositor to any
obligation, which Benefit Plan Opinion shall not be an expense of the
Trustee, the Servicer or the Depositor.
3. The Investor hereby acknowledges that under the terms of the Pooling and
Servicing Agreement (the "Agreement"), dated as of September 1, 1999,
among AMRESCO Residential Securities Corporation (the "Depositor"),
AMRESCO Residential Mortgage Corporation, as originator, Finance America,
LLC, as seller, OCWEN Federal Bank FSB, as servicer (the "Servicer"),
AMRESCO Residential Capital Markets, Inc., and Norwest Bank Minnesota,
National Association, as trustee (the "Trustee"), no transfer of the
ERISA-Restricted Certificates shall be permitted to be made to any person
unless the Trustee has received a certificate from such transferee in the
form hereof.
<PAGE>
IN WITNESS WHEREOF, the Investor has caused this instrument to be
executed on its behalf, pursuant to proper authority, by its duly authorized
officer, duly attested, this ____ day of _______________, 199 .
______________________________________
[Investor]
By:___________________________________
Name:
Title:
ATTEST:
_____________________________
STATE OF )
) ss:
COUNTY OF )
Personally appeared before me the above-named ________________, known
or proved to me to be the same person who executed the foregoing instrument
and to be the ____________________ of the Investor, and acknowledged that he
executed the same as his free act and deed and the free act and deed of the
Investor.
Subscribed and sworn before me this _____ day of _________ 199_.
__________________________________
NOTARY PUBLIC
My commission expires the
_____ day of __________, _______.
<PAGE>
EXHIBIT N
FORM OF LIQUIDATION REPORT
<TABLE>
<CAPTION>
CALCULATION OF REALIZED LOSS
Prepared By:
Phone:
Date:
Period of Servicing:
<S> <C> <C>
________________________________________ ___________________________ __________________________
PORTFOLIO NAME SERVICER NAME SERVICER ADDRESS
________________________________________ ___________________________ __________________________
AMRESCO Residential Securities Corporate Ocwen Federal Bank FSB 1675 Palm Beach Lakes Blvd
________________________________________ ___________________________ __________________________
Mortgage Loan Trust 1999-1 West Palm Beach, Fl 33401
________________________________________ ___________________________ __________________________
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Loan Act Unpaid Interest Interest Attys' Prop MI/Haz Ins Haz Loss Accrued Other TOTAL
Number Prin Balance Adv Thru Amount Fees Taxes Maint Premiums Expense Serv Fee Fees EXPENSES
__________________________________________________________________________________________________________
TABLE CONT.
Escrow Insurance Rental Haz Loss PMI Proceeds TOTAL TOTAL REALIZED
Balance Claim Receipt Proceeds Proceeds from Sale Other CREDITS LOSS (OR GAIN)
________________________________________________________________________________
</TABLE>
<PAGE>
EXHIBIT O
FORM OF CUSTODIAL AGREEMENT
<PAGE>
EXHIBIT P
FORM OF INVESTOR REPRESENTATION LETTER
[Trustee] ____________, 1999
Re: AMRESCO Residential Securities Corporation Mortgage Loan Trust 1999-1
Ladies and Gentlemen:
_______________________(the "Purchaser") intends to purchase from
____________________ (the "Transferor"), a ____% Percentage Interest of
Certificates, Series 199__-__, Class _____ (the "Certificates"), issued
pursuant to the Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), dated as of October 1, 1999, among AMRESCO Residential Securities
Corporation (the "Depositor"), AMRESCO Residential Mortgage Corporation, as
originator, Finance America, LLC, as seller, OCWEN Federal Bank FSB, as
servicer, and Norwest Bank Minnesota, National Association, as trustee (the
"Trustee"). All terms used herein and not otherwise defined shall have the
meanings set forth in the Pooling and Servicing Agreement. The Purchaser
hereby certifies, represents and warrants to, and covenants with, the
Depositor and the Trustee that:
1. The Purchaser understands that (a) the Certificates have not been
and will not be registered or qualified under the Securities Act of 1933, as
amended (the "Act") or any state securities law, (b) the Depositor is not
required to so register or qualify the Certificates, (c) the Certificates may
be resold only if registered and qualified pursuant to the provisions of the
Act or any state securities law, or if an exemption from such registration and
qualification is available, (d) the Pooling and Servicing Agreement contains
restrictions regarding the transfer of the Certificates and (e) the
Certificates will bear a legend to the foregoing effect.
2. The Purchaser is acquiring the Certificates for its own account
for investment only and not with a view to or for sale in connection with any
distribution thereof in any manner that would violate the Act or any
applicable state securities laws.
3. The Purchaser is (a) a substantial, sophisticated institutional
investor having such knowledge and experience in financial and business
matters, and, in particular, in such matters related to securities similar to
the Certificates, such that it is capable of evaluating the merits and risks
of investment in the Certificates, (b) able to bear the economic risks of such
an investment and (c) an "accredited investor" within the meaning of Rule
501(a)(1), (2), (3) or (7) promulgated pursuant to the Act.
4. The Purchaser has been furnished with, and has had an opportunity
to review a copy of the Pooling and Servicing Agreement and such other
information concerning the Certificates, the Mortgage Loans and the Depositor
as has been requested by the Purchaser from the Depositor or the Transferor
and is relevant to the Purchaser's decision to purchase the Certificates. The
Purchaser has had any questions arising from such review answered by the
Depositor or the Transferor to the satisfaction of the Purchaser.
5. The Purchaser has not and will not nor has it authorized or will
it authorize any person to (a) offer, pledge, sell, dispose of or otherwise
transfer any Certificate, any interest in any Certificate or any other similar
security to any person in any manner, (b) solicit any offer to buy or to
accept a pledge, disposition of other transfer of any Certificate, any
interest in any Certificate or any other similar security from any person in
any manner, (c) otherwise approach or negotiate with respect to any
Certificate, any interest in any Certificate or any other similar security
with any person in any manner, (d) make any general solicitation by means of
general advertising or in any other manner or (e) take any other action, that
(as to any of (a) through (e) above) would constitute a distribution of any
Certificate under the Act, that would render the disposition of any
Certificate a violation of Section 5 of the Act or any state securities law,
or that would require registration or qualification pursuant thereto. The
Purchaser will not sell or otherwise transfer any of the Certificates, except
in compliance with the provisions of the Pooling and Servicing Agreement.
6. The Purchaser either (x) is not an employee benefit plan subject
to Section 406 or Section 407 of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), or Section 4975 of the Internal Revenue Code of
1986, as amended (the "Code"), the Trustee of any such plan or a person acting
on behalf of any such plan nor a person using the assets of any such plan or
(2) if the Purchaser is an insurance company, such Purchaser is purchasing
such Certificates with funds contained in an "Insurance Company General
Account" (as such term is defined in Section v(e) of the Prohibited
Transaction Class Exemption 95-60 ("PTCE 95-60")) and that the purchase and
holding of such Certificates are covered under PTCE 95-60; or (y) shall
deliver to the Trustee and the Depositor an opinion of counsel (a "Benefit
Plan Opinion") satisfactory to the Trustee and the Depositor, and upon which
the Trustee and the Depositor shall be entitled to rely, to the effect that
the purchase or holding of such Certificate by the Purchaser will not result
in the assets of the Trust Fund being deemed to be plan assets and subject to
the prohibited transaction provisions of ERISA or the Code and will not
subject the Trustee, the Servicer or the Depositor to any obligation in
addition to those undertaken by such entities in the Pooling and Servicing
Agreement, which opinion of counsel shall not be an expense of the Trustee,
the Servicer or the Depositor.
Very truly yours,
By:_________________________
Name:
Title:
<PAGE>
EXHIBIT Q
FORM OF TRANSFEROR REPRESENTATION LETTER
[Trustee] ___________, 199__
Re: AMRESCO Residential Securities Corporation Mortgage Loan Trust 1999-1
Ladies and Gentlemen:
In connection with the sale by _____________ (the "Transferor") to
__________________ (the "Purchaser") of ______% Percentage Interest of
Certificates, Series 1999-1, Class ___ (the "Certificates"), issued pursuant
to the Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), dated as of September 1, 1999, among AMRESCO Residential
Securities Corporation (the "Depositor"), AMRESCO Residential Mortgage
Corporation, as originator, Finance America, LLC, as seller, OCWEN Federal
Bank FSB, as servicer, AMRESCO Residential Capital Markets, Inc., and Norwest
Bank Minnesota, National Association, as trustee (the "Trustee"). The
Transferor hereby certifies, represents and warrants to, and covenants with,
the Depositor and the Trustee that:
Neither the Transferor nor anyone acting on its behalf has (a)
offered, pledged, sold, disposed of or otherwise transferred any Certificate,
any interest in any Certificate or any other similar security to any person in
any manner, (b) has solicited any offer to buy or to accept a pledge,
disposition or other transfer of any Certificate, any interest in any
Certificate or any other similar security from any person in any manner, (c)
has otherwise approached or negotiated with respect to any Certificate, any
interest in any Certificate or any other similar security with any person in
any manner, (d) has made any general solicitation by means of general
advertising or in any other manner, or (e) has taken any other action, that
(as to any of (a) through (e) above) would constitute a distribution of the
Certificates under the Securities Act of 1933 (the "Act"), that would render
the disposition of any Certificate a violation of Section 5 of the Act or any
state securities law, or that would require registration or qualification
pursuant thereto. The Transferor will not act in any manner set forth in the
foregoing sentence with respect to any Certificate. The Transferor has not and
will not sell or otherwise transfer any of the Certificates, except in
compliance with the provisions of the Pooling and Servicing Agreement.
Very truly yours,
(Transferor)
By:_______________________________________
Name:
Title:
<PAGE>
EXHIBIT R
FORM OF RULE 144A INVESTMENT REPRESENTATION
Description of Rule 144A Securities, including numbers:
AMRESCO Residential Securities Corporation Mortgage Loan
Pass-through Certificates Series 1999-1, Class ___, No. ___
The undersigned seller, as registered holder (the "Transferor"),
intends to transfer the Rule 144A Securities described above to the
undersigned buyer (the "Buyer").
1. In connection with such transfer and in accordance with the
agreements pursuant to which the Rule 144A Securities were issued, the
Transferor hereby certifies the following facts: Neither the Transferor nor
anyone acting on its behalf has offered, transferred, pledged, sold or
otherwise disposed of the Rule 144A Securities, any interest in the Rule 144A
Securities or any other similar security to, or solicited any offer to buy or
accept a transfer, pledge or other disposition of the Rule 144A Securities, or
otherwise approached or negotiated with respect to the Rule 144A Securities,
any interest in the Rule 144A Securities or any other similar security with,
any person in any manner, or made any general solicitation by means of general
advertising or in any other manner, or taken any other action, which would
constitute a distribution of the Rule 144A Securities under the Securities Act
of 1933, as amended (the "1933 Act"), or which would render the disposition of
the Rule 144A Securities a violation of Section 5 of the 1933 Act or require
registration pursuant thereto, and that the Transferor has not offered the
Rule 144A Securities to any person other than the Buyer or another "qualified
institutional buyer" as defined in Rule 144A under the 1933 Act.
2. The Buyer warrants and represents to, and covenants with,
the Transferor, the Trustee and the Servicer pursuant to Section 5.08 of the
Pooling and Servicing Agreement as follows:
a. The Buyer understands that the Rule 144A Securities have
not been registered under the 1933 Act or the securities laws of any
state.
b. The Buyer considers itself a substantial, sophisticated
institutional investor having such knowledge and experience in
financial and business matters that it is capable of evaluating the
merits and risks of investment in the Rule 144A Securities.
c. The Buyer has been furnished with all information
regarding the Rule 144A Securities that it has requested from the
Transferor, the Trustee or the Servicer.
d. Neither the Buyer nor anyone acting on its behalf has
offered, transferred, pledged, sold or otherwise disposed of the Rule
144A Securities, any interest in the Rule 144A Securities or any
other similar security to, or solicited any offer to buy or accept a
transfer, pledge or other disposition of the Rule 144A Securities,
any interest in the Rule 144A Securities or any other similar
security from, or otherwise approached or negotiated with respect to
the Rule 144A Securities, any interest in the Rule 144A Securities or
any other similar security with, any person in any manner, or made
any general solicitation by means of general advertising or in any
other manner, or taken any other action, that would constitute a
distribution of the Rule 144A Securities under the 1933 Act or that
would render the disposition of the Rule 144A Securities a violation
of Section 5 of the 1933 Act or require registration pursuant
thereto, nor will it act, nor has it authorized or will it authorize
any person to act, in such manner with respect to the Rule 144A
Securities.
e. The Buyer is a "qualified institutional buyer" as that
term is defined in Rule 144A under the 1933 Act. The Buyer is aware
that the sale to it is being made in reliance on Rule 144A. The Buyer
is acquiring the Rule 144A Securities for its own account or the
account of other qualified institutional buyers, understands that
such Rule 144A Securities may be resold, pledged or transferred only
(i) to a person reasonably believed to be a qualified institutional
buyer that purchases for its own account or for the account of a
qualified institutional buyer to whom notice is given that the
resale, pledge or transfer is being made in reliance on Rule 144A, or
(ii) pursuant to another exemption from registration under the 1933
Act.
3. The Buyer warrants and represents to, and covenants with, the
Transferor, the Servicer and the Depositor that either (1) the Buyer is not an
employee benefit plan within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") ("Plan"), or a
plan within the meaning of Section 4975(e)(1) of the Internal Revenue Code of
1986 (the "Code") (also a "Plan"), and the Buyer is not directly or indirectly
purchasing the Rule 144A Securities on behalf of, as investment manager of, as
named fiduciary of, as trustee of, or with assets of a Plan, or (2) the
Buyer's purchase of the Rule 144A Securities will not result in a prohibited
transaction under Section 406 of ERISA or Section 4975 of the Code.
4. This document may be executed in one or more counterparts and by
the different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together,
shall constitute one and the same document.
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IN WITNESS WHEREOF, each of the parties has executed this document as
of the date set forth below.
[Print Name of Transferor] [Print Name of Buyer]
By:___________________________ By:__________________________
Name: Name:
Title: Title:
Taxpayer Identification No: Taxpayer Identification No:
Date: Date
