AMRESCO RESIDENTIAL SECURITIES CORPORATION
AND
PRUDENTIAL SECURITIES INCORPORATED
As Representative of the several Underwriters
UNDERWRITING AGREEMENT
FOR
AMRESCO RESIDENTIAL SECURITIES CORPORATION MORTGAGE LOAN TRUST 1998-2
MORTGAGE LOAN PASS THROUGH CERTIFICATES, SERIES 1998-2
May 28, 1998
AMRESCO RESIDENTIAL SECURITIES CORPORATION MORTGAGE LOAN TRUST 1998-2
MORTGAGE LOAN PASS THROUGH CERTIFICATES, SERIES 1998-2
UNDERWRITING AGREEMENT
May 28, 1998
Prudential Securities Incorporated
as Representative of the
several Underwriters
One Xxx Xxxx Xxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
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 1998-2, Class A-1, Class X-0, Xxxxx X-0, Class A-4, Class
A-5, Class A-6, Class A-7, Class A-8 (the "Class A Certificates"), Class M-1F
and Class M-1A (the "Class M-1 Certificates"), Class M-2F and Class M-2A (the
"Class M-2 Certificates" and, collectively with the Class M-1 Certificates, the
"Mezzanine Certificates"), Class B-1F and Class B-1A (the "Class B-1
Certificates"), Class C-FIO and Class C-AIO Certificates (collectively, the
"Class C-IO Certificates" and, collectively, with the Mezzanine Certificates and
the Class B-1 Certificates, the "Subordinate Certificates") and the Class S
Certificates, the Class D and the Class R Certificates (the "Retained
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-1 Certificates (collectively, the
"Offered Certificates") will be publicly offered pursuant to the Prospectus
described below. The Class C-IO Certificates and the Retained Certificates will
not be publicly offered.
Only the Offered Certificates are being purchased by the Underwriters
named in Schedule A hereto, and the Underwriters are purchasing, severally, only
the Offered Certificates set forth opposite their names in Schedule A, except
that the amounts purchased by the Underwriters may change in accordance with
Section X of this Agreement. Prudential Securities Incorporated is acting as
representative of the several Underwriters and in such capacity, is hereinafter
referred to as the "Representative."
The Certificates will be issued under a pooling and servicing agreement
(the "Pooling and Servicing Agreement"), dated as of June 1, 1998 among the
Depositor, AMRESCO Residential Capital Markets, Inc., as Seller (the "Seller"),
Advanta Mortgage Corp. USA ("Advanta"), Ameriquest Mortgage Company
("Ameriquest") and Wendover Funding Inc. ("Wendover") as Servicers (the
"Servicers"), AMRESCO Residential Capital Markets, Inc., as Master Servicer (the
"Master Servicer") and Norwest Bank Minnesota, National Association, as trustee
(the "Trustee"). The Certificates will evidence fractional undivided interests
in the trust (the "Trust"). The assets of the Trust will initially include,
among other things, a pool of fixed and adjustable rate Mortgage Loans (the
"Initial Mortgage Loans") and such amounts as may be held by the Trustee in the
Pre-Funding Account (the "Pre-Funding Account"), the Capitalized Interest
Account (the
"Capitalized Interest Account") and any other accounts held by the Trustee for
the Trust. The Initial Mortgage Loans will be acquired, in part, from the
various Originators pursuant to the various "Transfer Agreements" as such term
is defined in the Pooling and Servicing Agreement.
On the Closing Date, approximately $850,000,000 will be deposited by the
Depositor in the name of the Trustee in the Pre-Funding Account from the sale of
the Certificates. It is intended that additional Mortgage Loans satisfying the
criteria specified in the Pooling and Servicing Agreement (the "Subsequent
Mortgage Loans") will be purchased by the Trust for inclusion in the Trust from
the Depositor from time to time on or before July 20, 1998 from funds on deposit
in the Pre-Funding Account at the time of execution and delivery of each
Subsequent Transfer Agreement ("Subsequent Transfer Agreement"). Funds in the
Capitalized Interest Account will be applied by the Trustee to cover shortfalls
in interest during the Funding Period. The Initial Mortgage Loans will consist
of a pool of Mortgage Loans in an amount of approximately $763,555,638.06 as of
the close of business on June 1, 1998 (the "Statistical Calculation Date") and a
pool of additional Mortgage Loans delivered by the Depositor for inclusion in
the Trust on the Closing Date. The Depositor expects that the actual pool of
Initial Mortgage Loans will represent approximately $850,000,000 as of the
Closing Date. The Certificates will initially represent an undivided ownership
interest in the sum of (i) the pool of Initial Mortgage Loans and (ii)
approximately $150,000,000 on deposit in the Pre-Funding Account. A form of the
Pooling and Servicing Agreement has been filed as an exhibit to the Registration
Statement (hereinafter defined).
The Offered Certificates are more fully described in a Registration
Statement which the Depositor has furnished to the Underwriters. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Pooling and Servicing Agreement.
SECTION I. Representations and Warranties of the Depositor. The Depositor
represents and warrants to, and agrees with the Underwriters that:
A. A Registration Statement on Form S-3 (No. 333-30759) has (i) been
prepared by the Depositor in conformity with the requirements of the Securities
Act of 1933 (the "Securities Act") and the rules and regulations (the "Rules and
Regulations") of the United States Securities and Exchange Commission (the
"Commission") thereunder, (ii) been filed with the Commission under the
Securities Act and (iii) become effective under the Securities Act. Copies of
such Registration Statement have been delivered by the Depositor to the
Representative. As used in this Agreement, "Effective Time" means the date and
the time as of which such Registration Statement, or the most recent
post-effective amendment thereto, if any, was declared effective by the
Commission; "Effective Date" means the date of the Effective Time; "Registration
Statement" means such registration statement, at the Effective Time, including
any documents incorporated by reference therein at such time; "Basic Prospectus"
means such final prospectus dated September 4, 1997; 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
2
Rules and Regulations which have not been so filed or incorporated by reference
therein on or prior to the Effective Date of the Registration Statement other
than such documents or materials, if any, as any Underwriter delivers to the
Depositor pursuant to Section VIII D hereof for filing on Form 8-K.
B. The Registration Statement conforms, and the Prospectus and any further
amendments or supplements to the Registration Statement or the Prospectus will,
when they become effective or are filed with the Commission, as the case may be,
conform in all respects to the requirements of the Securities Act and the Rules
and Regulations. The Registration Statement, as of the Effective Date thereof
and of any amendment thereto, did not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading. The Prospectus as of its date,
and as amended or supplemented as of the Closing Date does not and will not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that no
representation or warranty is made as to information contained in or omitted
from the Registration Statement or the Prospectus in reliance upon and in
conformity with written information furnished to the Depositor in writing by the
Underwriters expressly for use therein.
C. The documents incorporated by reference in the Prospectus, when they
became effective or were filed with the Commission, as the case may be,
conformed in all material respects to the requirements of the Securities Act or
the Exchange Act, as applicable, and the rules and regulations of the Commission
thereunder, and none of such documents contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading; and any further
documents so filed and incorporated by reference in the Prospectus, when such
documents become effective or are filed with the Commission, as the case may be,
will conform in all material respects to the requirements of the Securities Act
or the Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder and will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading; provided that no representation
is made as to documents deemed to be incorporated by reference in the Prospectus
as the result of filing a Form 8-K at the request of the Underwriters except to
the extent such documents reflect information furnished by the Depositor to the
Underwriters for the purpose of preparing such documents.
D. Since the respective dates as of which information is given in the
Prospectus, there has not been any material adverse change, or any development
involving a prospective material adverse change, in the general affairs,
management, financial condition, or results of operations of the Depositor,
otherwise than as set forth or contemplated in the Prospectus as supplemented or
amended as of the Closing Date.
E. The Depositor has been duly incorporated and is validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation, is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction in which its ownership or lease of
property or the conduct of its business requires such qualification, and has all
power and authority necessary to own or hold its properties, to conduct the
business in which it is engaged and to enter into and perform its obligations
under this Agreement, the Pooling and Servicing Agreement or any Subsequent
Transfer Agreement and to cause the Certificates to be issued.
F. There are no actions, proceedings or investigations pending with
respect to which the Depositor has received service of process before or
threatened by any court, administrative agency or other tribunal to which the
Depositor is a party or of which any of its properties is the subject (a) which
if determined adversely to the Depositor would have a material adverse effect on
the business or financial condition of the Depositor, (b) asserting the
invalidity of this Agreement, the Pooling and Servicing
3
Agreement, the Certificates, or any Subsequent Transfer Agreement, (c) seeking
to prevent the issuance of the Certificates or the consummation by the Depositor
of any of the transactions contemplated by the Pooling and Servicing Agreement,
this Agreement or any Subsequent Transfer Agreement, as the case may be, (d)
which might individually or in the aggregate materially and adversely affect the
performance by the Depositor of its obligations under, or the validity or
enforceability of, the Pooling and Servicing Agreement, and this Agreement, the
Certificates or any Subsequent Transfer Agreement or (e) which might adversely
affect the federal income tax attributes of the Certificates as described in the
Prospectus.
G. This Agreement has been, and the Pooling and Servicing Agreement and
each Subsequent Transfer Agreement when executed and delivered as contemplated
hereby and thereby will have been, duly authorized, executed and delivered by
the Depositor, and this Agreement constitutes, and the Pooling and Servicing
Agreement when executed and delivered as contemplated herein, will constitute,
legal, valid and binding instruments enforceable against the Depositor in
accordance with their respective terms, subject as to enforceability to (x)
applicable bankruptcy, reorganization, insolvency, moratorium or other similar
laws affecting creditors' rights generally, (y) general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or at
law), and (z) with respect to rights of indemnity under this Agreement,
limitations of public policy under applicable securities laws.
H. The execution, delivery and performance of this Agreement, the Pooling
and Servicing Agreement and any Subsequent Transfer Agreement by the Depositor
and the consummation of the transactions contemplated hereby and thereby,
compliance with the provisions thereof, and the issuance and delivery of the
Certificates do not and will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Depositor is a party, by which the Depositor is bound or
to which any of the properties or assets of the Depositor or any of its
subsidiaries is subject, which breach or violation would have a material adverse
effect on the business, operations or financial condition of the Depositor, nor
will such actions result in any violation of the provisions of the articles of
incorporation or by-laws of the Depositor (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 this Agreement and the Pooling and Servicing
Agreement or (ii) the business, operations, results of operations, financial
position, income, properties or assets of the Depositor.
I. The Depositor has no reason to know that Deloitte & Touche, LLP are not
independent public accountants with respect to the Depositor as required by the
Securities Act and the Rules and Regulations.
J. The direction by the Depositor to the Trustee to execute, authenticate,
issue and deliver the Certificates has been duly authorized by the Depositor,
and assuming the Trustee has been duly authorized to do so, when executed,
authenticated, issued and delivered by the Trustee in accordance with the
Pooling and Servicing Agreement, the Certificates will be validly issued and
outstanding and will be entitled to the benefits provided by the Pooling and
Servicing Agreement.
K. No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body of the United
States is required for the issuance of the Certificates and the sale of the
Offered Certificates to the Underwriters, or the consummation by the Depositor
of the other
4
transactions contemplated by this Agreement, the Pooling and Servicing Agreement
and any Subsequent Transfer Agreement, except such consents, approvals,
authorizations, registrations or qualifications as may be required under State
securities or Blue Sky laws in connection with the purchase and distribution of
the Offered Certificates by the Underwriters or as have been obtained.
L. The Depositor possesses all material licenses, certificates,
authorities or permits issued by the appropriate State, Federal or foreign
regulatory agencies or bodies necessary to conduct the business now conducted by
it and as described in the Prospectus, and there are no proceedings pending with
respect to which the Depositor has received service of process or, to the best
knowledge of the Depositor threatened, relating to the revocation or
modification of any such license, certificate, authority or permit which if
decided adversely to the Depositor would, singly or in the aggregate, materially
and adversely affect the conduct of its business, operations or financial
condition.
M. At the time of execution and delivery of the Pooling and Servicing
Agreement, the Depositor will: (i) have good title to the Initial Mortgage Loans
conveyed by the Seller, free and clear of any lien, mortgage, pledge, charge,
encumbrance, adverse claim or other security interest (collectively, "Liens");
(ii) not have assigned to any person any of its right or title in the Initial
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 Initial Mortgage Loans to the Trustee and to sell the
Offered Certificates to the Underwriters. Upon execution and delivery of the
Pooling and Servicing Agreement by the Trustee, the Trustee will have acquired
beneficial ownership of all of the Depositor's right, title and interest in and
to the Initial Mortgage Loans. Upon delivery to the Underwriters of the Offered
Certificates, the Underwriters will have good title to the Offered Certificates,
free of any Liens.
N. At the time of execution and delivery of any Subsequent Transfer
Agreement, the Depositor will: (i) have good title to the Subsequent Mortgage
Loans conveyed by the Seller, free and clear of any Liens; (ii) not have
assigned to any person any of its right or title in the Subsequent Mortgage
Loans or in the Pooling and Servicing Agreement; and (iii) have the power and
authority to sell the Subsequent Mortgage Loans to the Trustee. Upon execution
and delivery of the Subsequent Transfer 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 Subsequent Mortgage Loans.
O. As of the Closing Date, each of the Initial Mortgage Loans will meet
the eligibility criteria described in the Prospectus and will conform to the
descriptions thereof contained in the Prospectus.
P. As of any Subsequent Transfer Date, each of the Subsequent Mortgage
Loans will meet the eligibility criteria described in the Prospectus and will
conform to the descriptions thereof contained in the Pooling and Servicing
Agreement.
Q. Neither the Depositor nor the Trust created by the Pooling and
Servicing Agreement is an "investment company" within the meaning of such term
under the Investment Company Act of 1940 (the "1940 Act") and the rules and
regulations of the Commission thereunder.
R. At the Closing Date, the Offered Certificates, each Transfer Agreement
and the Pooling and Servicing Agreement will conform in all material respects to
the descriptions thereof contained in the Prospectus.
S. At the Closing Date, the Class A Certificates shall have been rated in
the highest rating category by Xxxxx'x Investors Service, Inc. ("Moody's") and
Fitch IBCA, Inc. ("Fitch"). In addition, the
5
Class M-1, Class M-2 and Class B-1 Certificates shall receive ratings of at
least "Xx0," "X0" and "Baa3," respectively from Moody's and at least "AA," "A"
and "BBB-," respectively, from Fitch.
T. Any taxes, fees and other governmental charges in connection with the
execution, delivery and issuance of this Agreement, the Pooling and Servicing
Agreement and the Certificates have been paid or will be paid at or prior to the
Closing Date.
U. 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.
V. The transfer of the Initial Mortgage Loans to the Trust at the Closing
Date and Subsequent Mortgage Loans on each Subsequent Transfer Date, will be
treated by the Depositor for financial accounting and reporting purposes as a
sale of assets and not as a pledge of assets to secure debt.
W. 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.
X. The Pooling and Servicing Agreement is not required to be qualified
under the Trust Indenture Act of 1939, as amended.
Any certificate signed by an officer of the Depositor and delivered to the
Representative or counsel for the Representative in connection with an offering
of the Offered Certificates shall be deemed, and shall state that it is, a
representation and warranty as to the matters covered thereby to each person to
whom the representations and warranties in this Section I are made.
SECTION II. Purchase and Sale. The commitment of the Underwriters to
purchase the Offered Certificates pursuant to this Agreement shall be deemed to
have been made on the basis of the representations and warranties herein
contained and shall be subject to the terms and conditions herein set forth. The
Depositor agrees to instruct the Trustee to issue the Offered Certificates and
agrees to sell to the Underwriters, and the Underwriters agree (except as
provided in Sections X and XI hereof) severally and not jointly to purchase from
the Depositor the aggregate initial principal amounts or percentage interests of
the Offered Certificates set forth opposite their names on Schedule A, at the
purchase price or prices set forth in Schedule A.
SECTION III. Delivery and Payment. Delivery of and payment for the Offered
Certificates to be purchased by the Underwriters shall be made at the offices of
Xxxxx & Xxxxxx LLP in Irvine, California, or at such other place as shall be
agreed upon by the Representative and the Depositor at 8:00 A.M. pacific
standard time on June 11, 1998 or at such other time or date as shall be agreed
upon in writing by the Representative and the Depositor (such date being
referred to as the "Closing Date"). Payment shall be made to the Depositor by
wire transfer of same day funds payable to the account of the Depositor.
Delivery of the Offered Certificates shall be made to the Representative for the
accounts of the Underwriters against payment of the purchase price thereof. The
Certificates shall be in such authorized denominations and registered in such
names as the Underwriters may request in writing at least two business days
prior to the Closing Date. The Offered Certificates will be made available for
examination by the Representative no later than 2:00 p.m. eastern time on the
first business day prior to the Closing Date.
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SECTION IV. Offering by the Underwriters.
A. It is understood that, subject to the terms and conditions hereof, the
Underwriters propose to offer the Offered Certificates for sale to the public as
set forth in the Prospectus.
B. It is understood that the Underwriters may prepare and provide to
prospective investors certain Computational Materials and ABS Term Sheets in
connection with the offering of the Offered Certificates, subject to the
following conditions:
1. In connection with the use of Computational Materials, the
Underwriters shall comply with all applicable requirements of the
No-Action Letter, dated May 20, 1994, issued by the Division of
Corporation Finance of the Commission to Xxxxxx, Peabody Acceptance
Corporation I, Xxxxxx, Xxxxxxx & Co. Incorporated and Xxxxxx Structured
Asset Corporation, as made applicable to other issuers and underwriters by
the Division of Corporation Finance of the Commission in response to the
request of the Public Securities Association ("PSA"), dated May 23, 1994
(collectively, the "Xxxxxx/PSA Letters"), as well as the PSA Letter
referred to below. In connection with the use of ABS Term Sheets, the
Underwriters shall comply with all applicable requirements of the
No-Action Letter, dated February 17, 1995, issued by the Division of
Corporation Finance to the Commission to PSA (the "PSA Letter" and,
together with the Xxxxxx/PSA Letters, the "No-Action Letters").
2. The term "Computational Materials" as used herein shall have the
meaning given to such term in the No-Action Letters, but shall include
only those Computational Materials that have been prepared or delivered to
prospective investors by or at the direction of the Underwriters. The
terms "ABS Term Sheets," "Collateral Term Sheets" and "Structural Term
Sheets" as used herein shall have the meanings given to such terms in the
PSA Letter, but shall include only those ABS Term Sheets, Collateral Term
Sheets or Structural Term Sheets that have been prepared or delivered to
prospective investors by or at the direction of the Underwriters.
3. All Computational Materials and ABS Term Sheets provided to
prospective investors that are required to be filed pursuant to the
No-Action Letters shall bear a legend on each page in a form previously
agreed upon by the Depositor and the Underwriters.
4. Any Computational Materials and ABS Term Sheets are subject to
review by and approval of the Depositor prior to their distribution to any
prospective investors and a copy of such Computational Materials and ABS
Term Sheets as are delivered to prospective investors shall, in addition
to the foregoing delivery requirements, be delivered to the Depositor
simultaneously with delivery to prospective investors.
5. The Underwriters shall provide to the Depositor, for filing on
Form 8-K as provided in Section V.M, five copies (in such format as
required by the Depositor) of all Computational Materials and ABS Term
Sheets that are required to be filed with the Commission pursuant to the
No-Action Letters. Each delivery of Computational Materials or ABS Term
Sheets to the Depositor pursuant to this paragraph shall be effected by
delivering four copies of such material to counsel for the Depositor on
behalf of the Depositor and one copy of such materials to the Depositor.
The Underwriters may provide copies of the foregoing in a consolidated or
aggregate form that includes all information required to be filed. All
Computational Materials and ABS Term Sheets described in this Section must
be provided to the Depositor not later than 10:00 a.m., New York time, on
the Business Day before the date on which filing thereof is required
pursuant to the terms of this Agreement. Each Underwriter agrees that it
will not provide to any investor or prospective investor
7
in the Offered Certificates any Computational Materials or ABS Term Sheets
on or after the day on which Computational Materials and ABS Term Sheets
are required to be provided to the Depositor pursuant to this Section
(other than copies of Computational Materials or ABS Term Sheets
previously submitted to the Depositor in accordance with this Section for
filing pursuant to Section V.M), unless such Computational Materials or
ABS Term Sheets are preceded or accompanied by the delivery of a
Prospectus to such investor or prospective investor.
6. All information included in the Computational Materials and ABS
Term Sheets shall be generated based on substantially the same methodology
and assumptions that are used to generate the information in the
Prospectus Supplement as set forth therein; provided, however, that the
Computational Materials and ABS Term Sheets may include information based
on alternative methodologies or assumptions specified therein. If any
Computational Materials or ABS Term Sheets that are required to be filed
were based on assumptions with respect to the Mortgage Loans that are
incorrect, that differ from the final information about the Mortgage Pool
in any material respect or on Certificate structuring terms that were
revised in any material respect prior to the printing of the Prospectus,
to the extent the Prospectus Supplement does not specifically correct such
inaccuracies, the Underwriters shall prepare revised Computational
Materials or ABS Term Sheets, as the case may be, based on the final
information about the Mortgage Pool and structuring assumptions, circulate
such revised Computational Materials or ABS Term Sheets, as the case may
be, to all recipients of the preliminary versions thereof that indicated
orally to an Underwriter that they would purchase all or any portion of
the Offered Certificates and include such revised Computational Materials
or ABS Term Sheets (marked "as revised") in the materials delivered to the
Depositor pursuant to IV.B.5.
7. The Depositor shall not be obligated to file any Computational
Materials or ABS Term Sheets that (i) in the reasonable determination of
the Depositor and the Underwriters and their respective counsel are not
required to be filed pursuant to the No-Action Letters or (ii) have been
determined to contain any material error or omission, provided that, at
the request of an Underwriter, the Depositor will file Computational
Materials or ABS Term Sheets that contain a material error or omission if
clearly marked "superseded by materials dated _____________" and
accompanied by corrected Computational Materials or ABS Term Sheets that
are marked "material previously dated __________________, as corrected."
In the event that at any time when a prospectus relating to the Offered
Certificates is required to be delivered under the Securities Act, any
Computational Materials or ABS Term Sheets are determined, in the
reasonable judgment of the Depositor or the Underwriters to contain a
material error or omission, the applicable Underwriter shall prepare a
corrected version of such Computational Materials or ABS Term Sheets,
shall circulate such corrected version of such Computational Materials or
ABS Term Sheets to all recipients of the prior version thereof that either
indicated orally to such Underwriter that they would purchase all or any
portion of the Offered Certificates, or actually purchased all or any
portion thereof, and shall deliver copies of such Computational Materials
or ABS Term Sheets (marked "as corrected") to the Depositor for filing
with the Commission is a subsequent Form 8-K submission (subject to the
Depositor's obtaining an accountant's comfort letter in respect of such
corrected Computational Materials or ABS Term Sheets, which shall be at
the expense of the applicable Underwriter or Underwriters).
C. Each Underwriter represents and warrants and agrees with the Depositor
that, as of the date hereof and as of the Closing Date, that: (i) the
Computational Materials and ABS Term Sheets furnished to the Depositor pursuant
to Section IV.B.5 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 Offered Certificates
8
in accordance with the No-Action Letters, and such Computational Materials and
ABS Term Sheets comply with the requirements of the No-Action Letters; (ii) on
the date any such Computational Materials and ABS Term Sheets with respect to
such Certificates (or any written or electronic materials furnished to
prospective investors on which the Computational Materials and ABS Term Sheets
are based) were last furnished to each prospective investor and on the date of
delivery thereof to the Depositor pursuant to Section IV.B.5 and on the related
Closing Date, such Computational Materials and ABS Terms Sheets (or materials)
were accurate in all material respects when read in conjunction with the
Prospectus (taking into account the assumptions explicitly set forth in the
Computational Materials), except to the extent of any errors therein that are
caused by errors in the Mortgage Pool information provided to the Underwriters
by the Depositor; (iii) the Underwriters have not and will not represent to
potential investors that any Computational Materials or ABS Term Sheets were
prepared or disseminated on behalf of the Depositor; and (iv) all Computational
Materials and ABS Term Sheets (or underlying materials distributed to
prospective investors on which the Computational Materials and ABS Term Sheets
were based) contained and will contain the legend in the form previously agreed
upon by the Depositor and the Underwriters as required by Section IV.B.3.
Notwithstanding the foregoing, the Underwriters make no representation or
warranty as to whether any Computational Materials or ABS Term Sheets (or any
written or electronic materials furnished to prospective investors on which the
Computational Materials or ABS Term Sheets are based) included or will include
any inaccurate statement resulting directly from any error contained in the
Mortgage Pool information provided to the Underwriters by the Depositor.
D. Each Underwriter that delivers any Computational Materials and ABS Term
Sheets to the Depositor shall deliver to the Depositor a certificate, dated as
of the date hereof, to the effect that the representations and warranties of the
Underwriter contained in this Section IV are true and correct as of such date.
If an Underwriter does not provide any Computational Materials or ABS Term
Sheets to the Depositor pursuant to Section IV.B.4, the Underwriter shall be
deemed to have represented, as of the Closing Date, that it did not provide any
prospective investors with any information in written or electronic form in
connection with the offering of the Offered Certificates that is required to be
filed with the Commission in accordance with the No-Action Letters.
SECTION V. Covenants of the Depositor. The Depositor agrees as follows:
A. To prepare the Prospectus in a form approved by the Underwriters and to
file such Prospectus pursuant to Rule 424(b) under the Securities Act not later
than the Commission's close of business on the second business day following the
availability of the Prospectus to the Underwriters; to make no further amendment
or any supplement to the Registration Statement or to the Prospectus prior to
the Closing Date except as permitted herein; to advise the Underwriters,
promptly after it receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective prior to the Closing
Date or any supplement to the Prospectus or any amended Prospectus has been
filed prior to the Closing Date and to furnish the Underwriters with copies
thereof; to file promptly all reports and any definitive proxy or information
statements required to be filed by the Depositor with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
the Prospectus and, for so long as the delivery of a prospectus is required in
connection with the offering or sale of the Offered Certificates; to promptly
advise the Underwriters of its receipt of notice of the issuance by the
Commission of any stop order or of: (i) any order preventing or suspending the
use of the Prospectus; (ii) the suspension of the qualification of the Offered
Certificates for offering or sale in any jurisdiction; (iii) the initiation of
or threat of any proceeding for any such purpose; (iv) any request by the
Commission for the amending or supplementing of the Registration Statement or
the Prospectus or for additional information. In the event of the issuance of
any stop order or of any order preventing or suspending the use of the
9
Prospectus or suspending any such qualification, the Depositor promptly shall
use its best efforts to obtain the withdrawal of such order by the Commission.
B. To furnish promptly to the Underwriters and to counsel for the
Underwriters a signed copy of the Registration Statement as originally filed
with the Commission, and of each amendment thereto filed with the Commission,
including all consents and exhibits filed therewith.
C. To deliver promptly to the Underwriters such number of the following
documents as the Underwriters shall reasonably request: (i) conformed copies of
the Registration Statement as originally filed with the Commission and each
amendment thereto (in each case including exhibits); (ii) the Prospectus and any
amended or supplemented Prospectus; and (iii) any document incorporated by
reference in the Prospectus (including exhibits thereto). If the delivery of a
prospectus is required at any time prior to the expiration of nine months after
the Effective Time in connection with the offering or sale of the Offered
Certificates, and if at such time any events shall have occurred as a result of
which the Prospectus as then amended or supplemented would include any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made when such Prospectus is delivered, not misleading, or, if
for any other reason it shall be necessary during such same period to amend or
supplement the Prospectus or to file under the Exchange Act any document
incorporated by reference in the Prospectus in order to comply with the
Securities Act or the Exchange Act, the Depositor shall notify the Underwriters
and, upon any Underwriter's request, shall file such document and prepare and
furnish without charge to the Underwriters and to any dealer in securities as
many copies as the Underwriters may from time to time reasonably request of an
amended Prospectus or a supplement to the Prospectus which corrects such
statement or omission or effects such compliance, and in case the Underwriters
are required to deliver a Prospectus in connection with sales of any of the
Offered Certificates at any time nine months or more after the Effective Time,
upon the request of an Underwriter but at its expense, the Depositor shall
prepare and deliver to such Underwriter as many copies as such Underwriter may
reasonably request of an amended or supplemented Prospectus complying with
Section 10(a)(3) of the Securities Act. If such amendment or supplement to the
Prospectus is required to be contained in a post-effective amendment to the
Registration Statement, the Depositor will use its best efforts to cause such
amendment of the Registration Statement to be made effective as soon as
possible.
D. To file promptly with the Commission any amendment to the Registration
Statement or the Prospectus or any supplement to the Prospectus that may, in the
judgment of the Depositor or the Underwriters, be required by the Securities Act
or requested by the Commission.
E. To furnish the Underwriters and counsel for the Underwriters, prior to
filing with the Commission, and to obtain the consent of the Underwriters for
the filing of the following documents relating to the Certificates: (i)
amendment to the Registration Statement or supplement to the Prospectus, or
document incorporated by reference in the Prospectus, or (ii) Prospectus
pursuant to Rule 424 of the Rules and Regulations.
F. To make generally available to holders of the Offered Certificates as
soon as practicable, but in any event not later than 90 days after the close of
the period covered thereby, a statement of earnings of the Trust (which need not
be audited) complying with Section 11(a) of the Securities Act and the Rules and
Regulations (including, at the option of the Depositor, Rule 158) and covering a
period of at least twelve consecutive months beginning not later than the first
day of the first fiscal quarter following the Closing Date.
G. To use its best efforts, in cooperation with the Underwriters, to
qualify the Offered Certificates for offering and sale under the applicable
securities laws of such states and other jurisdictions
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of the United States or elsewhere as the Underwriters may designate, and
maintain or cause to be maintained such qualifications in effect for as long as
may be required for the distribution of the Offered Certificates. The Depositor
will file or cause the filing of such statements and reports as may be required
by the laws of each jurisdiction in which the Offered Certificates have been so
qualified.
H. So long as the Offered Certificates shall be outstanding, and pursuant
to the Pooling and Servicing Agreement, the Depositor shall cause the Trustee or
the Master Servicer, as soon as such statements are furnished to the Trustee or
the Master Servicer, as applicable, to deliver to the Underwriters 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 each Servicer to the Master
Servicer pursuant to Section 8.29(a) of the Pooling and Servicing Agreement,
(iv) the Aggregate Monthly Servicing Report furnished by the Master Servicer to
the Trustee pursuant to Section 8.29(g) of the Pooling and Servicing Agreement;
(v) the monthly reports furnished to the Owners of the Offered Certificates
pursuant to Section 7.09 of the Pooling and Servicing Agreement; and (vi) from
time to time, any other information concerning the Trust filed with any
government or regulatory authority that is otherwise publicly available, as the
Representative may reasonably request.
I. To apply the net proceeds from the sale of the Offered Certificates in
the manner set forth in the Prospectus.
J. During a period of seven calendar days from the Closing Date, neither
the Depositor nor any trust established, directly or indirectly, by the
Depositor will, without the Representative's prior written consent (which
consent shall not be unreasonably withheld), offer or sell mortgage pass-through
certificates backed by mortgage loans, except pursuant to this Agreement.
K. The Depositor will enter into the applicable agreements, to which it is
a party pursuant to the Pooling and Servicing Agreement, on or prior to the
Closing Date.
L. On each Subsequent Transfer Date, the Depositor shall cause its special
counsel to deliver a favorable opinion substantially to the effect set forth in
Section VI.G (except as it applies to subdivisions 5 and 6 therein) hereof,
appropriately modified to refer to the applicable Subsequent Mortgage Loans,
Subsequent Transfer Agreement, Subsequent Cut-Off Date and Subsequent Transfer
Date.
M. To cause any Computational Materials with respect to the Certificates
that are delivered to the Depositor as provided in Section IV.B.5 to be filed
with the Commission on a Current Report on Form 8-K at or before the time of
filing of the Prospectus pursuant to Rule 424(b) under the Securities Act; to
cause any ABS Term Sheets with respect to the Certificates that are delivered to
the Depositor as provided in Section IV.B.5 to be filed with the Commission on
one or more Current Reports on Form 8-K (i) at or before the time of filing of
the Prospectus pursuant to Rule 424(b) of the Rules and Regulations in the case
of Structural Term Sheets, and (ii) within two Business Days of first use in the
case of Collateral Term Sheets. Prior to any such filing of Computational
Materials or ABS Term Sheets (other than any Collateral Term Sheets that are not
based on Mortgage Pool information provided to the Underwriters by the
Depositor) by the Depositor, however, the Underwriters must comply with their
obligations pursuant to Section IV.B and the Depositor must receive a letter
from independent, certified public accountants, satisfactory in form and
substance to the Depositor and its counsel, to the effect that such accountants
have performed certain specified procedures, all of which have been agreed to by
the Depositor, as a result of which they determined that all information that is
included in the Computational Materials and ABS Term Sheets (if any) provided by
the Underwriters to the Depositor for filing on Form 8-K, as provided in Section
IV.B and this Section
11
V.M, is accurate except as to such matters that are not deemed by the Depositor
to be material. The Depositor shall file any corrected Computational Materials
or ABS Term Sheets described in Section IV.B.7 as soon as practicable following
receipt thereof.
SECTION VI. Conditions to the Underwriters' Obligations. The obligations
of the Underwriters to purchase the Offered Certificates pursuant to this
Agreement are subject to: (i) the accuracy on and as of the Closing Date of the
representations and warranties on the part of the Depositor herein contained
(including those representations and warranties set forth in the Pooling and
Servicing Agreement and incorporated herein); (ii) the performance by the
Depositor of all of its obligations hereunder; (iii) the accuracy of the
statements of the Depositor made in any certificate or other document delivered
pursuant to the provisions hereof; and (iv) the following conditions as of the
Closing Date:
A. The Underwriters shall have received confirmation of the effectiveness
of the Registration Statement. No stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been issued and no
proceeding for that purpose shall have been initiated or threatened by the
Commission. Any request of the Commission for inclusion of additional
information in the Registration Statement or the Prospectus shall have been
complied with. The Prospectus shall have been filed pursuant to Rule 424(b).
B. The Underwriters shall not have discovered and disclosed to the
Depositor on or prior to the Closing Date that the Registration Statement or the
Prospectus or any amendment or supplement thereto contains an untrue statement
of a fact or omits to state a fact which, in the opinion of Xxxxx Xxxxxxxxxx
LLP, counsel for the Underwriters, is material and is required to be stated
therein or is necessary to make the statements therein not misleading.
C. All corporate proceedings and other legal matters relating to the
authorization, form and validity of this Agreement, the Pooling and Servicing
Agreement, the Certificates, the Registration Statement and the Prospectus, and
all other legal matters relating to this Agreement and the transactions
contemplated hereby shall be satisfactory in all respects to counsel for the
Underwriters, and the Depositor shall have furnished to such counsel all
documents and information that they may reasonably request to enable them to
pass upon such matters. The Representative shall have received the Pooling and
Servicing Agreement and the Offered Certificates in form and substance
satisfactory to the Representative, duly executed by all signatories required
pursuant to the respective terms thereof.
X. Xxxxx & Xxxxxx LLP shall have furnished to the Underwriters their
written opinion, as counsel to the Depositor, addressed to the Underwriters and
dated the Closing Date, in form and substance satisfactory to the Underwriters,
to the effect that:
1. The conditions to the use by the Depositor of a registration
statement on Form S-3 under the Securities Act, as set forth in the
General Instructions to Form S-3, have been satisfied with respect to the
Registration Statement and the Prospectus.
2. The Registration Statement and any amendments thereto have become
effective under the 1933 Act; to the best of such counsel's knowledge, no
stop order suspending the effectiveness of the Registration Statement has
been issued and not withdrawn and no proceedings for that purpose have
been instituted or threatened and not terminated; and the Registration
Statement, the Prospectus and each amendment or supplement thereto, as of
their respective effective or issue dates (other than the financial and
statistical information contained therein, as to which such counsel need
express no opinion), complied as to form in all material respects with the
applicable requirements of the 1933 Act and the rules and regulations
12
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 Offered 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
Trust Indenture Act of 1939, as amended, and the Trust is not required to
be registered under the Investment Company Act of 1940, as amended.
7. Neither the Depositor nor the Trust is an "investment company" or
under the "control" of an "investment company" as such terms are defined
in the 1940 Act.
8. Assuming that (a) the Trustee causes certain assets of the Trust
Estate, as the Trustee has covenanted to do in the Pooling and Servicing
Agreement, to be treated as a "real estate mortgage investment conduit"
("REMIC"), as such term is defined in the Internal Revenue Code of 1986,
as amended (the "Code"), and (b) the parties to the Pooling and Servicing
Agreement comply with the terms thereof, the Lower-Tier REMIC and the
Upper-Tier REMIC will be treated as a REMIC, each Class of the Offered
Certificates, the Class C-IO Certificates, the Class S Certificates and
the Class D Certificates will be treated as the "regular interests" in the
Upper-Tier REMIC and the Class R Certificates will be treated as the sole
"residual interest" in the Upper-Tier REMIC and each Lower-Tier Interest
will be treated as the "regular interests" in the Lower-Tier REMIC and the
Lower-Tier REMIC Residual Class will be the sole "residual interest" in
the Lower-Tier REMIC. Neither the Trust nor certain assets and accounts
are subject to tax upon its income or assets by any taxing authority of
the State of New York or the City of New York.
9. Assuming that the Class A-7 Certificates, the Class A-8
Certificates and the Class M-1A Certificates are rated at the time of
issuance in one of the two highest rating categories by a nationally
recognized statistical rating organization, such Certificates at such time
will be a "mortgage related security" as such term is defined in Section
3(a)(41) of the Securities Exchange Act of 1934, as amended.
10. To the best of such counsel's knowledge, there are no actions,
proceedings or investigations pending that would adversely affect the
status of the Lower-Tier REMIC and the Upper-Tier REMIC as a REMIC.
11. As a consequence of the qualification of the Upper-Tier REMIC as
a REMIC, the Offered Certificates will be treated as "regular . . .
interest(s) in a REMIC" under Section 7701(a)(19)(C) of
13
the Code and "real estate assets" under Section 856(c) of the Code in the
same proportion that the assets in the Trust consist of qualifying assets
under such Sections. In addition, as a consequence of the qualification of
the Upper-Tier REMIC and the Lower-Tier REMIC as a REMIC, interest on the
Offered Certificates will be treated as "interest on obligations secured
by mortgages on real property" under Section 856(c) of the Code to the
extent that such Offered Certificates are treated as "real estate assets"
under Section 856(c) of the Code.
12. The Certificates will, when issued, conform to the description
thereof contained in the Prospectus.
Such counsel shall also have furnished to the Underwriters a written
statement, addressed to the Underwriters and dated the Closing Date, in form and
substance satisfactory to the Underwriters to the effect that no facts have come
to the attention of such counsel which lead them to believe that: (a) the
Registration Statement, at the time such Registration Statement became
effective, contained an untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading (except as to financial or statistical data
contained in the Registration Statement); (b) the Prospectus, as of its date and
as of the Closing Date, contained or contains an untrue statement of a material
fact or omitted or omits to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; or (c) any document
incorporated by reference in the Prospectus or any further amendment or
supplement to any such incorporated document made by the Depositor prior to the
Closing Date (other than any document filed at the request of an Underwriter to
the extent such document relates to Computational Materials) contained, as of
the time it became effective or was filed with the Commission, as the case may
be, an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
E. The Underwriters shall have received the favorable opinion, dated the
Closing Date, of Xxxxx & Xxxxxx LLP, special counsel to the Depositor, addressed
to the Depositor and satisfactory to Xxxxx'x, Fitch and the Underwriters, with
respect to certain matters relating to the transfer of the Mortgage Loans to the
Depositor and from the Depositor to the Trust, and such counsel shall have
consented to reliance on such opinion by Xxxxx'x, Fitch and the Underwriters as
though such opinion had been addressed to each such party.
F. Xxxxx Xxxxxxxxxx LLP, counsel for Advanta, Xxxxxxxx Xxxxx, General
Counsel for Wendover and Xxxxxxx Xxxxxxxx and Wood, counsel for Ameriquest, each
shall have furnished to the Underwriters their written opinion, as counsel to
the related Servicer, addressed to the Underwriters and the Depositor and dated
the Closing Date, in form and substance satisfactory to the Underwriters, to the
effect that:
1. Each Servicer is validly existing in good standing as a
corporation under the laws of its State of incorporation.
2. Each Servicer has full corporate power and authority to serve in
the capacity of servicers of the related Mortgage Loans as contemplated in
the Pooling and Servicing Agreement.
3. The Pooling and Servicing Agreement has been duly authorized,
executed and delivered by each Servicer, and, assuming the due
authorization, execution and delivery of such agreements by the other
parties thereto, constitute the legal, valid and binding agreements of
each Servicer, enforceable against them in accordance with their terms,
subject as to enforceability to (x) bankruptcy, insolvency,
14
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 each Servicer is required for the consummation by either
of them 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 each 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 such Servicer; (ii) any term or provision of any material
agreement, deed of trust, mortgage loan agreement, contract, instrument or
indenture, or other agreement to which such Servicer is a party or is
bound or to which any of the property or assets of such Servicer or any of
its subsidiaries is subject; (iii) to the best of such firm's knowledge
without independent investigation any order, judgment, writ, injunction or
decree of any court or governmental authority having jurisdiction over
such Servicer; or (iv) any law, rule or regulations applicable to such
Servicer; or (B) to the best of such firm's knowledge without independent
investigation, results in the creation or imposition of any lien, charge
or encumbrance upon the Trust Estate or upon the Certificates.
6. There are no actions, proceedings or investigations pending or,
to the best of such counsel's knowledge without independent investigation,
threatened against a Servicer before any court, administrative agency or
other tribunal (a) asserting the validity 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 Servicers of its obligations under, or the validity or
enforceability of, the Pooling and Servicing Agreement.
G. Counsel for the Depositor, the Seller and the Master Servicer (which
may be in-house counsel) shall have furnished to the Underwriters such counsel's
written opinion, addressed to the Underwriters and dated the Closing Date, in
form and substance satisfactory to the Underwriters, to the effect that:
1. The Depositor has been duly organized and is validly existing as
a corporation in good standing under the laws of the State of Delaware and
is duly qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which its ownership or lease of
property or the conduct of its business requires such qualification
(except where any such failure would not have a material adverse effect on
the Depositor's ability to perform its obligations under this Agreement or
the Pooling and Servicing Agreement) and has all power and authority
necessary to own or hold its properties and to conduct the business in
which it is engaged and to enter into and perform its obligations under
this Agreement and the Pooling and Servicing Agreement, and to cause the
Certificates to be issued.
2. The Depositor is not in violation of its articles of
incorporation or by-laws or in default in the performance or observance of
any material obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which the Depositor is a party or by which it or its
properties may be bound, which default might result in any material
adverse change in the financial condition of the Depositor or which might
materially and adversely affect the properties or assets, taken as a
whole, of the Depositor.
15
3. This Agreement and the Pooling and Servicing Agreement have been
duly authorized, executed and delivered by the Depositor and the
Subsequent Transfer Agreements have been duly authorized, and when duly
executed and delivered by the Depositor and, assuming the due
authorization, execution and delivery of such agreements by the other
parties thereto, such agreements constitute and in the case of any
Subsequent Transfer Agreement will constitute valid and binding
obligations, enforceable against the Depositor in accordance with their
respective terms, subject as to enforceability to (x) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally, (y) general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law) and (z) with respect to rights of
indemnity under this Agreement, limitations of public policy under
applicable securities laws.
4. The execution, delivery and performance of this Agreement, the
Pooling and Servicing Agreement and each Subsequent Transfer Agreement by
the Depositor, the consummation of the transactions contemplated hereby
and thereby, and the issuance and delivery of the Certificates (i) do not
and will not conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument
to which the Depositor is a party or by which the Depositor is bound or to
which any of the property or assets of the Depositor or any of its
subsidiaries is subject, which breach or violation would have a material
adverse effect on the business, operations or financial condition of the
Depositor, (ii) nor will such actions result in a violation of the
provisions of the articles of incorporation or by-laws of the Depositor,
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
Estate or upon the Certificates, except as otherwise contemplated by the
Pooling and Servicing Agreement.
5. The direction by the Depositor to the Trustee to execute, issue,
authenticate and deliver the Certificates has been duly authorized by the
Depositor and, assuming that the Trustee has been duly authorized to do
so, when executed, authenticated and delivered by the Trustee in
accordance with the Pooling and Servicing Agreement, the Certificates will
be validly issued and outstanding and will be entitled to the benefits of
the Pooling and Servicing Agreement.
6. No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body of the
United States is required for the issuance of the Certificates, and the
sale of the Offered Certificates to the Underwriters, or the consummation
by the Depositor of the other transactions contemplated by this Agreement
and the Pooling and Servicing Agreement, except such consents, approvals,
authorizations, registrations or qualifications as may be required under
the 1933 Act or State securities or Blue Sky laws in connection with the
purchase and distribution of the Offered Certificates by the Underwriters
or as have been previously obtained.
7. There are no actions, proceedings or investigations pending with
respect to which the Depositor has received service of process before or,
to the best of such counsel's knowledge, without independent
investigation, 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 Pooling and
Servicing Agreement or this Agreement, as the case may be; or (d) which
might materially and adversely affect the performance by the Depositor of
its obligations under, or the validity or enforceability of, the Pooling
and Servicing Agreement, this Agreement or the Certificates.
16
8. The Certificates have been duly and validly authorized and
issued, and, immediately prior to the sale of the Offered Certificates to
the Underwriters, such Certificates are owned by the Depositor, free and
clear of all Liens.
9. The Seller has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware and
is duly qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which its ownership or lease of
property or the conduct of its business requires such qualification, and
has all power and authority necessary to own or hold its properties and to
conduct the business in which it is engaged and to enter into and perform
its obligations under the Pooling and Servicing Agreement, the Certificate
Purchase Agreements and the Ameriquest Transfer Agreement.
10. The Seller is not in violation of its articles of incorporation
or by-laws or in default in the performance or observance of any material
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other instrument to
which the Seller is a party or by which it or its properties may be bound,
which default might result in any material adverse changes in the
financial condition, earnings, affairs or business of the Seller or which
might materially and adversely affect the properties or assets, taken as a
whole, of the Seller.
11. The Pooling and Servicing Agreement, the Certificate Purchase
Agreements and the Ameriquest Transfer Agreement have been duly
authorized, executed and delivered by the Seller and, assuming the due
authorization, execution and delivery of such agreements by the parties
thereto other than the Seller, such agreements will constitute valid and
binding obligations, enforceable against the Seller in accordance with
their respective terms, subject as to enforceability to (x) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally (y) general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
12. The execution, delivery and performance of the Pooling and
Servicing Agreement, the Certificate Purchase Agreements and the
Ameriquest Transfer 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 articles of incorporation or by-laws of
the Seller or any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Seller or any of
its properties or assets, which breach or violation would have a material
adverse effect on the business, operations or financial condition of the
Seller.
13. The assignment of rights under the Ameriquest Transfer Agreement
by the Seller to the Depositor and by the Depositor to the Trust is
effective to permit the Trustee to exercise the Seller's rights
thereunder.
14. 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
17
contemplated by the Pooling and Servicing Agreement or this Agreement, as
the case may be; 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.
15. The Master Servicer 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.
16. The Master Servicer 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 Master Servicer 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 Master Servicer or which might materially and adversely affect the
properties or assets, taken as a whole, of the Master Servicer.
17. The Pooling and Servicing Agreement has been duly authorized,
executed and delivered by the Master Servicer and, assuming the due
authorization, execution and delivery of such agreement by the parties
thereto other than the Master Servicer, such agreements will constitute
valid and binding obligations, enforceable against the Master Servicer 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).
18. The execution, delivery and performance of the Pooling and
Servicing Agreement by the Master Servicer 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 Master Servicer is
a party or by which the Master Servicer is bound or to which any of the
property or assets of the Master Servicer 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 Master Servicer,
nor will such actions result in a violation of the provisions of the
articles of incorporation or by-laws of the Master Servicer or any statute
or any order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Master Servicer 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 Master Servicer.
19. There are no actions, proceedings or investigations pending with
respect to which the Master Servicer 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 Master Servicer is a party or of which any of its
properties is the subject: (a) which if determined adversely to the Master
Servicer would have a material adverse effect on the business, results of
operations or financial condition of the Master Servicer; (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 Master Servicer of any of the transactions
contemplated by the Pooling and Servicing Agreement or this Agreement, as
the case may be; or (d) which might materially and adversely affect the
performance by the Master Servicer of its obligations under, or the
validity or enforceability of, the Pooling and Servicing Agreement or the
Certificates.
18
H. The Underwriters shall have received the favorable opinion of Xxxxxxx
X. Xxxxxx, Senior Counsel for the Trustee or of Hunton & Xxxxxxxx, counsel to
the Trustee, dated the Closing Date, addressed to the Underwriters and in form
and scope satisfactory to counsel to the Underwriters, to the effect that:
1. The Trustee is a 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 any 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 such 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.
I. The Underwriters shall have received the favorable opinion or opinions,
dated the date of the Closing Date, of counsel for the Underwriters, with
respect to the issue and sale of the Offered Certificates, this Agreement, the
Prospectus and such other related matters as the Underwriters may reasonably
require.
J. RESERVED.
K. The Depositor shall have furnished to the Underwriters a certificate,
dated the Closing Date and signed by the Chairman of the Board, the President or
a Vice President of the Depositor to the extent that the signer of such
certificate has carefully examined the Registration Statement (excluding any
documents incorporated therein by reference), the Pooling and Servicing
Agreement and this Agreement and that, to the best of his or her knowledge based
upon reasonable investigation:
19
1. The representations and warranties of the Depositor in this
Agreement, the Pooling and Servicing Agreement and all related agreements
are true and correct as of the Closing Date; and the Depositor has
complied with all agreements and satisfied all the conditions on its part
which are to have been complied with on or prior to the Closing Date.
2. There has been no amendment or other document filed affecting the
certificate of incorporation or bylaws of the Depositor since November 9,
1995 and no such amendment has been authorized. No event has occurred
since May 22, 1998, 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 March 31, 1998.
4. There are no actions, suits or proceedings pending with respect
to which it has received service of process or, to the best of such
officer's knowledge, threatened against or affecting the Depositor which
if adversely determined, individually or in the aggregate, would be
reasonably likely to adversely affect the Depositor's obligations under
the Pooling and Servicing Agreement or this Agreement in any material way;
and no merger, liquidation, dissolution or bankruptcy of the Depositor is
pending or contemplated.
L. The Trustee shall have furnished to the Underwriters a certificate of
the Trustee, signed by one or more duly authorized officers of the Trustee,
dated the Closing Date, as to the due authorization, execution and delivery of
the Pooling and Servicing Agreement by the Trustee and the acceptance by the
Trustee of the trusts created thereby and the due execution, authentication and
delivery of the Certificates by the Trustee thereunder and such other matters as
the Representative shall reasonably request.
M. RESERVED.
N. The Class A Certificates shall have been rated "Aaa" by Xxxxx'x and
"AAA" by Fitch. The Class M-1, Class M-2 and Class B-1 Certificates shall have
been rated "Xx0," "X0" and "Baa3," respectively, by Xxxxx'x and "AA," "A" and at
least "BBB-," respectively, by Fitch.
O. The Depositor shall have furnished to the Underwriters such further
information, certificates and documents as the Underwriters may reasonably have
requested not less than three full business days prior to the Closing Date.
P. Prior to the Closing Date, counsel for the Underwriters shall have been
furnished with such documents and opinions as they may reasonably require for
the purpose of enabling them to pass upon the issuance and sale of the
Certificates as herein contemplated and related proceedings or in order to
evidence the accuracy and completeness of any of the representations and
warranties, or the fulfillment of any of the conditions, herein contained, and
all proceedings taken by the Depositor in connection with the issuance and sale
of the Certificates as herein contemplated shall be satisfactory in form and
substance to the Underwriters and counsel for the Underwriters.
Q. Subsequent to the execution and delivery of this Agreement none of the
following shall have occurred: (i) trading in securities generally on the New
York Stock Exchange, the American Stock Exchange or the over-the counter market
shall have been suspended or minimum prices shall have been established on
either of such exchanges or such market by the Commission, by such exchange or
by any other regulatory body or governmental authority having jurisdiction; (ii)
a banking moratorium shall have been declared by
20
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 Representative,
impractical or inadvisable to proceed with the public offering or delivery of
the Certificates on the terms and in the manner contemplated in the Prospectus.
R. The Representative shall have received a letter from Deloitte & Touche,
LLP, dated on or before the Closing Date, in form and substance satisfactory to
the Representative and special counsel for the Underwriters, addressed to each
of the Underwriters to the effect that they have performed certain specified
procedures requested by the Representative with respect to the information set
forth in the Prospectus and certain matters relating to the Depositor.
S. The Representative and special counsel for the Underwriters shall have
received copies of any opinions of counsel supplied to the rating organizations
relating to any matters with respect to the Certificates. Any such opinions
shall be dated the Closing Date and addressed to each of the Underwriters or
accompanied by reliance letters to the Representative or shall state that each
of the Underwriters may rely upon them.
T. RESERVED.
U. There has not occurred any change, or any development involving a
prospective change, in the condition, financial or otherwise, or in the
earnings, business or operations, since March 31, 1998, of the Depositor and its
subsidiaries, that is in the Representative's judgment material and adverse and
that makes it in the Representative's judgment impracticable to market the
Offered Certificates on the terms and in the manner contemplated in the
Prospectus.
If any condition specified in this Section VI shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be terminated
by the Underwriters by notice to the Depositor at any time at or prior to the
Closing Date, and such termination shall be without liability of any party to
any other party except as provided in Section VII.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
SECTION VII. Payment of Expenses. If the transaction closes, or if the
transaction fails to close other than as a result of a failure of the
Underwriters to perform hereunder, the Depositor, agrees to pay: (a) the costs
incident to the authorization, issuance, sale and delivery of the Certificates
and any taxes payable in connection therewith; (b) the costs incident to the
preparation, printing and filing under the Securities Act of the Registration
Statement and any amendments and exhibits thereto (including the Prospectus);
(c) the costs of distributing the Registration Statement as originally filed and
each amendment thereto and any post-effective amendments thereof (including, in
each case, exhibits), the Prospectus and any amendment or supplement to the
Prospectus or any document incorporated by reference therein, all as provided in
this Agreement; (d) the costs of reproducing and distributing this Agreement;
(e) the fees and expenses of qualifying the Certificates under the securities
laws of the several jurisdictions as provided in Section V(G) hereof and of
preparing, printing and distributing a Blue Sky Memorandum and a Legal
Investment Survey (including related fees and expenses of counsel to the
Representative); (f) any fees charged by securities
21
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 Underwriters shall pay their own costs and expenses, including the
costs and expenses of their counsel, any transfer taxes on the Offered
Certificates which they may sell and the expenses of advertising any offering of
the Offered Certificates made by the Underwriters, and the Underwriters shall
pay the cost of any accountant's comfort letters which such Underwriters choose
to request relating to any Computational Materials (as defined herein).
If this Agreement is terminated by the Underwriters in accordance with the
provisions of Section VI or Section XI, whether or not the transactions
contemplated hereunder are consummated, the Depositor shall cause the
Underwriters to be reimbursed for all reasonable out-of-pocket expenses except
that the Depositor shall not be obligated under this Agreement to reimburse such
Underwriter for reasonable out-of-pocket expenses, excluding fees and
disbursements of counsel for such Underwriter, if this Agreement is terminated
by any Underwriter in accordance with Section VI.Q herein.
SECTION VIII. Indemnification and Contribution. A. The Depositor agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls such Underwriter within the meaning of Section 15 of the Securities Act
or Section 12 of the Exchange Act from and against any and all loss, claim,
damage or liability, joint or several, or any action in respect thereof
(including, but not limited to, any loss, claim, damage, liability or action
relating to purchases and sales of the Offered Certificates), to which such
Underwriter or any such controlling person may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement, or
any amendment thereof or supplement thereto, (ii) the omission or alleged
omission to state in the Registration Statement a material fact required to be
stated therein or necessary to make the statements therein not misleading, (iii)
any untrue statement or alleged untrue statement of a material fact contained in
the Prospectus, or any amendment thereof or supplement thereto, or (iv) the
omission or alleged omission to state in the Prospectus a material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading and shall
reimburse such Underwriter and each such controlling person promptly upon demand
for any legal or other expenses reasonably incurred by such Underwriter or such
controlling person in connection with investigating or defending or preparing to
defend against any such loss, claim, damage, liability or action as such
expenses are incurred; provided, however, that the Depositor shall not be liable
in any such case to the extent that any such loss, claim, damage, liability or
action arises out of, or is based upon, any untrue statement or alleged untrue
statement or omission or alleged omission made in the Prospectus, or any
amendment thereof or supplement thereto, or the Registration Statement, or any
amendment thereof or supplement thereto, in reliance upon and in conformity with
written information furnished to the Depositor by or on behalf of such
Underwriter specifically for inclusion therein (except to the extent that any
untrue statement or alleged untrue statement or omission or alleged omission is
a result of Seller Provided Information which is not accurate and complete in
all material respects). The foregoing indemnity agreement is in addition to any
liability which the Depositor may otherwise have to any Underwriter or any
controlling person of any of such Underwriter.
B. Each Underwriter severally agrees to indemnify and hold harmless the
Depositor, each of its directors, each of its officers who signed the
Registration Statement, and each person, if any, who controls the Depositor
within the meaning of Section 15 of the Securities Act or Section 12 of the
Exchange Act against any and all loss, claim, damage or liability, or any action
in respect thereof, to which the Depositor or any such director, officer or
controlling person may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained in the Prospectus, or any amendment thereof or
22
supplement thereto, or (ii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
in the Prospectus, when considered in conjunction with the Prospectus, and in
the light of the circumstances under which they were made, not misleading, but
in each case only to the extent that the untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Depositor by or on behalf
of such Underwriter specifically for inclusion therein, and shall reimburse the
Depositor and any such director, officer or controlling person for any legal or
other expenses reasonably incurred by the Depositor or any director, officer or
controlling person in connection with investigating or defending or preparing to
defend against any such loss, claim, damage, liability or action as such
expenses are incurred, provided, however, that no Underwriter shall be liable to
the extent that such untrue statements or alleged untrue statement or omission
or alleged omission is a result of Seller Provided Information that is not
accurate and complete in all material respects. The foregoing indemnity
agreement is in addition to any liability which any Underwriter may otherwise
have to the Depositor or any such director, officer or controlling person.
C. Promptly after receipt by any indemnified party under this Section VIII
of notice of any claim or the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against any indemnifying
party under this Section VIII, notify the indemnifying party in writing of the
claim or the commencement of that action; provided, however, that the failure to
notify an indemnifying party shall not relieve it from any liability which it
may have under this Section VIII except to the extent it has been materially
prejudiced by such failure and, provided further, that the failure to notify any
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under this Section VIII.
If any such claim or action shall be brought against an indemnified party,
and it shall notify the indemnifying party thereof, the indemnifying party shall
be entitled to participate therein and, to the extent that it wishes, jointly
with any other similarly notified indemnifying party, to assume the defense
thereof with counsel reasonably satisfactory to the indemnified party. After
notice from the indemnifying party to the indemnified party of its election to
assume the defense of such claim or action, except to the extent provided in the
next following paragraph, the indemnifying party shall not be liable to the
indemnified party under this Section VIII for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation.
Any indemnified party shall have the right to employ separate counsel in
any such action and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless: (i) the employment thereof has been specifically authorized by the
indemnifying party in writing; (ii) such indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party and in the reasonable judgment of such counsel it is
advisable for such indemnified party to employ separate counsel; or (iii) the
indemnifying party has failed to assume the defense of such action and employ
counsel reasonably satisfactory to the indemnified party, in which case, if such
indemnified party notifies the indemnifying party in writing that it elects to
employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such action
on behalf of such indemnified party, it being understood, however, the
indemnifying party shall not, in connection with any one such action or separate
but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys (in
addition to one local counsel per jurisdiction) at any time for all such
indemnified parties, which firm shall be designated in writing by the related
Underwriter, if the indemnified parties under this Section VIII consist of one
or more Underwriters or any of its or their
23
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. RESERVED.
E. Each Underwriter severally and not jointly agrees to indemnify and hold
harmless the Depositor, each of the Depositor's officers and directors and each
person who controls the Depositor within the meaning of Section 15 of the
Securities Act and Section 12 of the Exchange Act against any and all losses,
claims, damages or liabilities, joint or several, to which they may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement of a material fact contained in the Computational
Materials provided by such Underwriter, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, when considered in
conjunction with the Prospectus, and in the light of the circumstances under
which they were made, not misleading, and agrees to reimburse each such
indemnified party for any legal or other expenses reasonably incurred by him,
her or it in connection with investigating or defending or preparing to defend
any such loss, claim, damage, liability or action as such expenses are incurred,
provided, however, that no Underwriter shall be liable to the extent that such
untrue statements or alleged untrue statement or omission or alleged omission is
a result of Seller Provided Information that is not accurate and complete in all
material respects. The obligations of an Underwriter under this Section VIII (E)
shall be in addition to any liability which such Underwriter may otherwise have.
The procedures set forth in Section VIII (C) shall be equally applicable
to this Section VIII (E).
F. If the indemnification provided for in this Section VIII shall for any
reason be unavailable to or insufficient to hold harmless an indemnified party
under Section VIII (A), (B) or (E) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Depositor on the one hand and the related Underwriters on the
other from the offering of the related Offered Certificates or (ii) if the
24
allocation provided by clause (i) above is not permitted by applicable law or if
the indemnified party failed to give the notice required under Section VIII (C),
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Depositor on
the one hand and the related Underwriter on the other with respect to the
statements or omissions which resulted in such loss, claim, damage or liability,
or action in respect thereof, as well as any other relevant equitable
considerations.
The relative benefits of an Underwriter and the Depositor shall be deemed
to be in such proportion as the total net proceeds from the offering (before
deducting expenses) received by the Depositor bear to the total underwriting
discounts and commissions received by the related Underwriter from time to time
in negotiated sales of the related Offered Certificates.
The relative fault of an Underwriter and the Depositor shall be determined
by reference to whether the untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact relates to
information supplied or prepared by the Depositor or by such Underwriter, the
intent of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission and other equitable
considerations.
The Depositor and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section VIII(F) were to be
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purposes) or by any other method of allocation which does not
take into account the equitable considerations referred to herein. The amount
paid or payable by an indemnified party as a result of the loss, claim, damage
or liability, or action in respect thereof, referred to above in this Section
VIII(F) shall be deemed to include, for purposes of this Section VIII(F), any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
For purposes of this Section VIII, in no case shall any Underwriter
(except with respect to any document (other than the Computational Materials)
incorporated by reference into the Registration Statement or Prospectus at the
request of such Underwriter and except as may be provided in any agreement among
the Underwriters relating to the offering of the Offered Certificates) be
responsible for any amount in excess of (x) the amount received by such
Underwriter in connection with its resale of the Offered Certificates over (y)
the amount paid by such Underwriter to the Depositor for the Offered
Certificates by such Underwriter hereunder. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
The Depositor and each Underwriter expressly waive, and agree not to
assert, any defense to their respective indemnification and contribution
obligations under this Section VIII which they might otherwise assert based upon
any claim that such obligations are unenforceable under federal or state
securities laws or by reason of public policy.
"Seller-Provided Information" means any computer tape (or other
information) furnished to any Underwriter by the Seller concerning the assets
comprising the Trust.
SECTION IX. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or contained in agreements delivered pursuant hereto or certificates
of officers of the Depositor submitted pursuant hereto shall remain operative
and in full force and effect, regardless of any investigation made by or on
behalf of the Underwriters or
25
controlling persons thereof, or by or on behalf of the Depositor and shall
survive delivery of any Offered Certificates to the Underwriters.
SECTION X. Default by One or More of the Underwriters. If one or more of
the Underwriters participating in the public offering of the Offered
Certificates shall fail at the Closing Date to purchase the Offered Certificates
which it is (or they are) obligated to purchase hereunder (the "Defaulted
Certificates"), then the non-defaulting Underwriters shall have the right,
within 48 hours thereafter, to make arrangements for one or more of the
non-defaulting Underwriters, or any other underwriters, to purchase all, but not
less than all, of the Defaulted Certificates in such amounts as may be agreed
upon and upon the terms herein set forth (as used in this Agreement, the term
"Underwriter" includes any underwriter substituted for an Underwriter under this
Section X). If, however, the Underwriters have not completed such arrangements
within such 48-hour period, then:
(i) if the aggregate original principal amount of Defaulted
Certificates does not exceed 10% of the aggregate original principal
amount of the Offered Certificates to be purchased pursuant to this
Agreement, the non-defaulting Underwriters named in this Agreement shall
be obligated to purchase the full amount thereof in the proportions that
their respective underwriting obligations hereunder bear to the
underwriting obligations of all such non-defaulting Underwriters, or
(ii) if the aggregate original principal amount of Defaulted
Certificates exceeds 10% of the aggregate original principal amount of the
Offered Certificates to be purchased pursuant to this Agreement, this
Agreement shall terminate, without any liability on the part of any
non-defaulting Underwriters.
No action taken pursuant to this Section X shall relieve any defaulting
Underwriter from the liability with respect to any default of such Underwriter
under this Agreement.
In the event of a default by any Underwriter as set forth in this Section
X, each of the Underwriters and the Depositor shall have the right to postpone
the Closing Date for a period not exceeding seven Business Days in order that
any required changes in the Registration Statement or Prospectus or in any other
documents or arrangements may be effected.
SECTION XI. Termination of Agreement. The Underwriters may terminate this
Agreement immediately upon notice to the Depositor, at any time at or prior to
the Closing Date if any of the events or conditions described in Section VI(Q)
of this Agreement shall occur and be continuing. In the event of any such
termination, the provisions of Section VII, the indemnity agreement set forth in
Section VIII, and the provisions of Sections IX and XIV shall remain in effect.
SECTION XII. Notices. All statements, requests, notices and agreements
hereunder shall be in writing, and:
A. if to the Underwriters, shall be delivered or sent by mail, telex
or facsimile transmission to the Representative at its address set forth
above;
B. if to the Depositor, shall be delivered or sent by overnight mail
or facsimile transmission to 000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000, XX #000,
Xxxxxx, XX 00000-0000, Attn.: General Counsel, Fax No. 000-000-0000.
SECTION XIII. Persons Entitled to the Benefit of this Agreement. This
Agreement shall inure to the benefit of and be binding upon the Underwriters and
the Depositor, and their respective successors. This
26
Agreement and the terms and provisions hereof are for the sole benefit of only
those persons, except that the representations, warranties, indemnities and
agreements contained in this Agreement shall also be deemed to be for the
benefit of the person or persons, if any, who control any of the Underwriters
within the meaning of Section 15 of the Securities Act, and for the benefit of
directors of the Depositor, officers of the Depositor who have signed the
Registration Statement and any person controlling the Depositor within the
meaning of Section 15 of the Securities Act. Nothing in this Agreement is
intended or shall be construed to give any person, other than the persons
referred to in this Section XIII, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision contained herein.
SECTION XIV. Survival. The respective indemnities, representations,
warranties and agreements of the Depositor and the Underwriters contained in
this Agreement, or made by or on behalf of them, respectively, pursuant to this
Agreement, shall survive the delivery of and payment for the Certificates and
shall remain in full force and effect, regardless of any investigation made by
or on behalf of any of them or any person controlling any of them. The
provisions of Sections V, VII and VIII hereof shall survive the termination or
cancellation of this Agreement.
SECTION XV. Definition of the Term "Business Day". For purposes of this
Agreement, "Business Day" means any day on which the New York Stock Exchange,
Inc. is open for trading.
SECTION XVI. Governing Law; Submission to Jurisdiction. This Agreement
shall be governed by and construed in accordance with the laws of the State of
New York without giving effect to the conflict of law rules thereof.
The parties hereto hereby submit to the jurisdiction of the United States
District Court for the Southern District of New York and any court in the State
of New York located in the City and County of New York, and appellate court from
any thereof, in any action, suit or proceeding brought against it or in
connection with this Agreement or any of the related documents or the
transactions contemplated hereunder or for recognition or enforcement of any
judgment, and the parties hereto hereby agree that all claims in respect of any
such action or proceeding may be heard or determined in New York State court or,
to the extent permitted by law, in such federal court.
SECTION XVII. Counterparts. This Agreement may be executed in counterparts
and, if executed in more than one counterpart, the executed counterparts shall
each be deemed to be an original but all such counterparts shall together
constitute one and the same instrument.
SECTION XVIII. Headings. The headings herein are inserted for convenience
of reference only and are not intended to be part of, or to affect the meaning
or interpretation of, this Agreement.
SECTION XIX. Amendments and Waivers. This Agreement may be amended,
modified, altered or terminated, and any of its provisions waived, only in a
writing signed on behalf of the Depositor and the Representative.
27
If the foregoing correctly sets forth the agreement between the Depositor
and the Underwriters, please indicate your acceptance in the space provided for
the purpose below.
Very truly yours,
AMRESCO RESIDENTIAL SECURITIES
CORPORATION
By: /s/ Xxxxxx X. Cott
--------------------------------
Name: Xxxxxx X. Cott
Title: Vice President
CONFIRMED AND ACCEPTED, as
of the date first above written:
PRUDENTIAL SECURITIES INCORPORATED
Acting on its own behalf and as
Representative of the several
Underwriters referred to in the
foregoing Agreement
By: /s/ Xxxxxxx Xxxxx
---------------------------------
Name: Xxxxxxx Xxxxx
Title: Director
28
SCHEDULE A
Class of Certificates Initial Principal Amount Purchase
Name of Purchased by the of Certificates Purchased Price
Underwriter Underwriters by Underwriters (% of Par)
----------- ------------ --------------- ----------
Prudential
Securities
Incorporated
A-1 $ 43,500,000 99.865%
A-2 22,875,000 99.800
A-3 13,500,000 99.775
A-4 13,875,000 99.710
A-5 6,000,000 99.550
A-6 13,125,000 99.625
A-7 56,250,000 99.865
A-8 141,187,500 99.770
M-1F 7,218,750 99.585
M-1A 19,500,000 99.625
M-2F 5,906,250 99.545
M-2A 14,625,000 99.585
B-1F 5,250,000 99.400
B-1A 12,187,500 99.480
------------
TOTAL $375,000,000
----- ============
AMRESCO
Securities, Inc.
A-1 $ 11,600,000 99.865%
A-2 6,100,000 99.800
A-3 3,600,000 99.775
A-4 3,700,000 99.710
A-5 1,600,000 99.550
A-6 3,500,000 99.625
A-7 15,000,000 99.865
A-8 37,650,000 99.770
M-1F 1,925,000 99.585
M-1A 5,200,000 99.625
M-2F 1,575,000 99.545
M-2A 3,900,000 99.585
B-1F 1,400,000 99.400
B-1A 3,250,000 99.480
------------
TOTAL $100,000,000
----- ============
Credit Suisse
First Boston
A-1 $ 20,300,000 99.865%
A-2 10,675,000 99.800
A-3 6,300,000 99.775
A-4 6,475,000 99.710
A-5 2,800,000 99.550
A-6 6,125,000 99.625
A-7 26,250,000 99.865
A-8 65,887,500 99.770
M-1F 3,368,750 99.585
M-1A 9,100,000 99.625
M-2F 2,756,250 99.545
M-2A 6,825,000 99.585
B-1F 2,450,000 99.400
B-1A 5,687,500 99.480
------------
TOTAL $175,000,000
----- ============
29
Class of Certificates Initial Principal Amount Purchase
Name of Purchased by the of Certificates Purchased Price
Underwriter Underwriters by Underwriters (% of Par)
----------- ------------ --------------- ----------
Deutsche
Xxxxxx Xxxxxxxx
X-0 $ 20,300,000 99.865%
A-2 10,675,000 99.800
A-3 6,300,000 99.775
A-4 6,475,000 99.710
A-5 2,800,000 99.550
A-6 6,125,000 99.625
A-7 26,250,000 99.865
A-8 65,887,500 99.770
M-1F 3,368,750 99.585
M-1A 9,100,000 99.625
M-2F 2,756,250 99.545
M-2A 6,825,000 99.585
B-1F 2,450,000 99.400
B-1A 5,687,500 99.480
------------
TOTAL: $175,000,000
Xxxxxx Stanley& Co.
Incorporated
A-1 $ 20,300,000 99.865%
A-2 10,675,000 99.800
A-3 6,300,000 99.775
A-4 6,475,000 99.710
A-5 2,800,000 99.550
A-6 6,125,000 99.625
A-7 26,250,000 99.865
A-8 65,887,500 99.770
M-1F 3,368,750 99.585
M-1A 9,100,000 99.625
M-2F 2,756,250 99.545
M-2A 6,825,000 99.585
B-1F 2,450,000 99.400
B-1A 5,687,000 99.480
------------
TOTAL $175,000,000
----- ============
30
