MANAGEMENT AGREEMENT
This Agreement (the "Agreement") is made as of June 1, 1998 by and between
American Residential Investment Trust, Inc., a Maryland corporation ("Manager"),
and American Residential Eagle Bond Trust 1998-1, a Delaware statutory business
trust (the "Issuer"), pursuant to the Deposit Trust Agreement, dated as of June
1, 1998 (the "Trust Agreement"), between American Residential Eagle, Inc. (the
"Company"), as depositor, and Wilmington Trust Company, a Delaware banking
corporation as Owner Trustee ("Owner Trustee").
WITNESSETH:
WHEREAS, the Issuer intends to issue a Collateralized Callable Mortgage
Bond (the "Bond"), collateralized by a pool of adjustable rate mortgage loans
owned by the Issuer ("Mortgage Loans"), as more particularly set forth in the
Indenture (the "Indenture"), dated as of June 1, 1998, between the Issuer and
First Union National Bank, a national banking association, in its capacity as
indenture trustee (the "Indenture Trustee"); and
WHEREAS, the Issuer desires to retain Manager to provide certain management
services to the Issuer in connection with the Bond; and
WHEREAS, Manager is prepared to perform such services for the benefit of
the Issuer;
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
1. Definitions. Capitalized terms not otherwise defined in this Agreement
shall have the meanings set forth in the Indenture and the Master Servicing
Agreement, dated as of June 1, 1998 (the "Master Servicing Agreement"), among
Norwest Bank Minnesota, National Association, the Issuer and the Indenture
Trustee.
2. Manager. Manager will serve as the manager of the Issuer.
3. Management Services. The Manager will:
(a) provide the following services to the Issuer without the Issuer's
further direction:
(i) cause the Bond executed by the Issuer to be delivered to the
Indenture Trustee for authentication;
(ii) cause a definitive Bond to be prepared;
(iii) cause to be kept a Bond Register and appoint successor Bond
Registrars, if any;
(iv) in connection with the original issuance of the Bond,
prepare all Issuer Requests and Issuer Orders in connection with
authentication and delivery of the Bond; obtain Opinions of Counsel;
prepare Officers' Certificates and supply necessary supporting
documents; supply insurance policies, surety bonds, instructions,
opinions and such other documents as may be required by the terms of
the Indenture or by the Indenture Trustee;
(v) appoint a Bond Paying Agent, if different from the Indenture
Trustee, and direct the Indenture Trustee to deposit funds with such
Bond Paying Agent, if required; cause the Bond Paying Agent to execute
and deliver instruments to the Indenture Trustee, if required;
(vi) prepare for execution by the Issuer and file or record all
supplements, amendments, financing statements, continuation
statements, instruments of further assurance and other instruments
necessary for the protection of the Trust Estate;
(vii) supply Opinions of Counsel as to the Trust Estate;
(viii) monitor the Issuer's and other Persons' (including the
Master Servicer's) performance of obligations and notify the Issuer
and the Indenture Trustee of any event of default;
(ix) prepare and deliver on behalf of the Issuer annual
statements as to compliance with the Indenture and other documents to
which the Issuer is a party;
(x) record the Assignments of Mortgage and deliver the recorded
Assignments to the Indenture Trustee;
(xi) monitor the Issuer's obligations as to satisfaction and
discharge of the Indenture and report to the Issuer any failure in the
satisfaction of such obligations;
(xii) give notice to the Bondholder of the resignation of the
Indenture Trustee and the appointment of any successor Indenture
Trustee;
(xiii) furnish the Indenture Trustee with names and addresses of
the Bondholder to the extent required;
(xiv) prepare for execution by the Issuer and file all documents
required to be filed on a periodic basis with the Securities and
Exchange Commission and file such documents with the Indenture Trustee
and deliver summaries of such documents to the Bondholder; monitor the
Issuer's compliance with provisions of TIA Section 314(a);
(xv) prepare and deliver to the Issuer for execution, as
appropriate, and then deliver to the Indenture Trustee all documents
and opinions and take all appropriate action with respect to the
release of the Mortgage Loans;
(xvi) with the consent of the Issuer, appoint Independent
accountants and any successors and direct such Independent accountants
or successors to prepare and deliver reports or certificates to the
extent required by the Indenture;
(xvii) prepare for execution and deliver on behalf of the Issuer
certificates or Opinions of Counsel with respect to compliance with
the Indenture;
(xiii) record the Indenture, if required;
(xix) cause to be prepared for execution by the Issuer and
delivered or filed, all tax returns, financial statements and such
annual or other reports of the Issuer or the Owner Trustee, in its
capacity as such, as may be required pursuant to the Trust Agreement;
(xx) cause to be calculated the original issue discount with
regard to the Bond as requested from time to time;
(xxi) cause to be prepared for execution by the Issuer and filed,
recorded or delivered, such statements, instruments, notices,
documents, agreements and certificates or other papers required of the
Issuer pursuant to Section 5.1 of the Trust Agreement;
(xxii) deliver, on behalf of the Issuer, all documents and
instruments with respect to each Mortgage Loan as required by the
Master Servicing Agreement; and
(xxiii) deliver, on behalf of the Issuer, a notice of redemption
to the Indenture Trustee and any other notice of exercise of rights to
remove Mortgage Loans from the Indenture;
(b) provide the following services to the Issuer without the Issuer's
further direction:
(i) maintain (or cause to be maintained) the books of the Issuer
on a calendar year basis using the accrual method of accounting;
(ii) deliver (or cause to be delivered) to the Bondholder as may
be required by the Code and applicable Treasury Regulations, such
information as may be required to enable the Bondholder to prepare its
federal and state income tax returns;
(iii) prepare and file or cause to be prepared and filed such tax
returns relating to the Issuer as may be required by the Code and
applicable Treasury Regulations (making such elections as may from
time to time be required or appropriate under any applicable state or
federal statutes, rules or regulations); and
(iv) collect or cause to be collected any withholding tax as
described in and in accordance with Section 5.1 of the Trust Agreement
with respect to income or distributions to the Bondholder and prepare
or cause to be prepared the appropriate forms relating thereto;
(c) otherwise provide such consultation, services and assistance as the
Issuer may from time to time request in connection with the Owner Trustee's
obligations under the Trust Agreement and/or the Issuer's obligations under the
Indenture, the Trust Agreement, and the Master Servicing Agreement, in respect
of the Bond;
The Issuer shall cooperate with the Manager to facilitate the prompt
performance by the Manager of its obligations under this Paragraph 3. The
Manager may provide such services as required by this Paragraph 3 either
directly or may assign such duties to one or more submanagers pursuant to
submanagement agreements; provided, however, that any such submanager shall have
been approved by the Issuer; and provided further that notwithstanding any such
assignment the Manager shall remain liable for performing its duties and
obligations under this Agreement; and
(d) In performing its services hereunder, observe strictly the following:
(i) the Issuer's operating expenses and liabilities will not be
paid by the Manager or any affiliate thereof (excluding the Issuer)
(an "AmREIT Person") except that certain organizational expenses of
the Issuer and expenses relating to creation and initial
implementation of the Issuer have been paid by the Manager;
(ii) the Manager will maintain for the Issuer records and books
of account separate from those of every AmREIT Person and telephone
numbers, mailing addresses, stationery and other business forms that
are separate and distinct from those of every AmREIT Person;
(iii) any financial statements of any AmREIT Person which are
consolidated to include the Issuer will contain detailed notes clearly
stating that (A) all of the Issuer's assets are owned by the Issuer,
and (B) the Issuer is a separate legal entity with its own separate
creditors which will be entitled to be satisfied out of the Issuer's
assets prior to any value in the Issuer becoming available to the
Issuer's equity holders;
(iv) the Issuer's assets will be maintained in a manner that
facilitates their identification and segregation from those of any
AmREIT Person;
(v) the Manager will cause the Issuer to strictly observe
formalities in its dealings with each AmREIT Person (including,
without limitation, formalities in regard to the Issuer's status as a
separate legal entity), and funds or other assets of the Issuer will
not be commingled with those of any AmREIT Person. The Issuer will not
be permitted to maintain joint bank accounts or other depository
accounts to which any AmREIT Person has independent access;
(vi) the Manager will cause any transaction between the Issuer
and an AmREIT Person to be fair and equitable to the Issuer, to be the
type of transaction which would be entered into by a prudent Person to
the position of the Issuer with an AmREIT Person, and will be on terms
which are at least as favorable as may be obtained from a Person which
is not an AmREIT Person;
(vii) any AmREIT Person that renders or otherwise furnishes
services to the Issuer will be compensated by the Issuer at market
rates for such services; and
(viii) the Manager will not permit the Issuer or any AmREIT
Person to be or to hold itself out to be responsible for the debts of
the other.
4. Manager Compensation. The Manager shall be entitled to receive from the
Issuer a fee, payable annually in advance, equal to $1,000 per month. In
addition, the Manager will be entitled to certain amounts of income or gain from
the investment of funds on deposit in the Bond Account and the Distribution
Account. The Manager agrees to deposit any losses on such investment of funds
into the account such losses were incurred, pursuant to the terms of the Master
Servicing Agreement.
5. Limitation of Responsibility of the Manager.
(a) The Manager will have no responsibility under this Agreement other
than to render the services called for hereunder. The Manager, its
affiliates, shareholders, directors, officers and employees shall not be
liable to the Issuer, the Owner Trustee, the Indenture Trustee, the
Bondholder or others, except by reason of acts constituting bad faith,
willful misfeasance, gross negligence or reckless disregard of their
duties. The Issuer will reimburse, indemnify and hold harmless the Manager
and its affiliates, shareholders, directors, officers and employees with
respect to all expenses, losses, damages, liabilities, demands, charges and
claims of any nature in respect of any acts or omissions performed or
omitted by the Manager and in accordance with the procedure set forth
below.
(b) Any amount due the Manager or its affiliates, shareholders,
directors, officers and employees under Section 5(a) shall be paid by the
Issuer, solely out of the assets of the Trust Estate that are free of the
lien of the Indenture, promptly after each Payment Date, provided that all
interest and principal due on the Bond on such Payment Date and all amounts
then owing to the Bond Trustee and the Owner Trustee have been paid in
full. Any amount that cannot be paid to the Manager or its affiliates,
shareholders, directors, officers and employees consistent with the
foregoing proviso shall be paid promptly after each succeeding Payment Date
until paid in full, in each case subject to the foregoing proviso.
6. Term. This Agreement shall continue in effect until the termination of
the Trust Agreement. If the date of such termination is not a Distribution Date,
the Manager shall be paid the amount due it pursuant to Section 5(a) as of such
termination promptly after such date of termination. ----
7. Termination.
(a) The Manager, at its election, may resign as Manager hereunder and
be discharged of its duties hereunder upon not less than 30 days' notice to
the Issuer, the Owner Trustee and the Indenture Trustee; provided, however,
that no such resignation and discharge shall become effective until a
Person selected by the Manager, who is acceptable to the Issuer in its
discretion, shall have assumed and agreed to perform the duties of the
Manager hereunder as evidenced by a written instrument to such effect
delivered to the Issuer. Upon delivery of such written instrument to the
Issuer, the Issuer shall promptly deliver to the successor Manager a
written instrument acknowledging and accepting the assignment of the
resigning Manager's rights hereunder to the successor Manager. Each such
successor Manager shall be deemed to be the Manager for all purposes of
this Agreement.
(b) If any of the following events shall occur and be continuing:
(i) the Manager shall violate any provision of this Agreement and
such default is not cured within ten days after written notice thereof
is given to the Manager by the Issuer or the Indenture Trustee;
(ii) a court of competent jurisdiction shall enter a decree or
order for relief in respect of the Manager in an involuntary case
under any applicable bankruptcy, insolvency or other similar law now
or hereafter in effect, or appoint a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or other similar official) of the
Manager or for any substantial part of its property, or order the
winding-up or liquidation of its affairs; or
(iii) the Manager shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or shall consent to the entry of an order for
relief in an involuntary case under any such law, or shall consent to
the appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator (or other similar official)
of the Manager or for any substantial part of its property, or shall
make any general assignment for the benefit of creditors, or shall
fail generally to pay its debts as they become due;
then, in any such event this Agreement may be terminated by the Issuer.
8. Indenture Trustee as Beneficiary. Each of the Owner Trustee and the
Indenture Trustee shall be an intended third-party beneficiary of this Agreement
and the Indenture Trustee shall be entitled to enforce the rights of the Issuer
hereunder for the benefit of the Bondholder.
9. Assignment. The Manager may not assign this Agreement (other than (i)
the assignment of the duties under this Agreement to one or more submanagers
approved by the Issuer or (ii) to a corporation or other organization which is a
successor by merger, consolidation or purchase of substantially all of the
assets of the Manager) unless such assignment is consented to in writing by both
the Issuer and the Indenture Trustee. Such an assignment, if so consented to,
shall bind the assignee hereunder in the same manner as the Manager is bound
hereunder. This Agreement shall not be assignable by the Issuer without the
consent of the Manager, except for assignment to the Indenture Trustee pursuant
to the Indenture and in the case of assignment to a corporation or other
organization which is a successor by merger, consolidation or purchase of
substantially all of the assets to the Issuer, in which case such successor
organization shall be bound hereunder and by the terms of said assignment in the
same manner as the Issuer is bound hereunder.
10. Heading. The section headings hereof have been inserted for convenience
and reference only and shall not be construed to affect the meaning,
construction or effect of this Agreement.
11. Amendments. This Agreement may not be amended, changed, modified or
terminated except in writing signed by Manager and the Issuer and unless
approved by the Indenture Trustee, such approval not to be unreasonably
withheld.
12. Governing Law. This Agreement shall be governed by and construed under
the substantive laws of the State of New York applicable to agreements made and
to be performed in the State of New York and the obligations, rights and
remedies of the parties hereto shall be determined in accordance with such laws.
13. Notices. All notices, requests and other communications permitted or
required hereunder shall be in writing and shall be deemed to have been duly
given when received.
If to Manager to:
American Residential Investment Trust, Inc.
000 Xxxxxx Xxxx Xxxxxx, Xxxxx 000
Xxx Xxx, XX 00000
Attention: President
If to the Issuer to:
American Residential Eagle Bond Trust 1998-1
c/o Wilmington Trust Company as Owner Trustee
Xxxxxx Square North
0000 X. Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Attention: Corporate Trust Administration
14. Counterparts. This Agreement may be executed in one or more
counterparts, any of which shall constitute an original as against any party
whose signature appears on it, and all of which shall together constitute a
single instrument. This Agreement shall become binding when one or more
counterparts, individually or taken together, bear the signatures of all
parties.
15. Limitation of Liability of Wilmington Trust Company. It is expressly
understood and agreed by the parties hereto that (a) this Agreement is executed
and delivered in the name and on behalf of the Issuer by Wilmington Trust
Company, not individually or personally but solely as owner trustee of American
Residential Eagle Bond Trust 1998-1, in the exercise of the powers and authority
conferred and vested in it under the Trust Agreement, (b) each of the
representations, undertakings and agreements herein made on the part of the
Issuer is made and intended not as a personal representation, undertaking and
agreement by Wilmington Trust Company but is made solely in the name and on
behalf of the Issuer and intended for the purpose of binding only the Issuer,
(c) nothing herein contained shall be construed as creating any liability on the
part of Wilmington Trust Company, other than any liability in connection
herewith arising out of its gross negligence, bad faith or willful misconduct,
and (d) under no circumstances shall Wilmington Trust Company be personally
liable for the payment of any indebtedness or expenses of the Issuer or be
liable for the breach or failure of any obligation, representation, warranty or
covenant made or undertaken by the Issuer under this Agreement or the other
Operative Documents or otherwise.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the day first above written.
AMERICAN RESIDENTIAL RESIDENTIAL
INVESTMENT TRUST, INC.
By____________________________________
Name:
Title:
AMERICAN RESIDENTIAL EAGLE BOND
TRUST 1998-1
By: Wilmington Trust Company,
not in its individual capacity
but solely as Owner Trustee
By_______________________________
Name:
Title:
