1
EXHIBIT 4.1
EXECUTION COPY
AAMES CAPITAL CORPORATION
as Seller and Servicer,
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
as Trustee
and
FAIRBANKS CAPITAL CORP.
as Back-up Servicer
POOLING AND SERVICING AGREEMENT
Dated as of July 1, 1999
Aames Mortgage Trust 1999-1
Mortgage Pass-Through Certificates,
Series 1999-1
2
TABLE OF CONTENTS
ARTICLE I DEFINITIONS
Section 1.01 Definitions................................................................. 1
Section 1.02 Interest Calculations....................................................... 34
Section 1.03 Determination of Material Adverse Effect.................................... 34
ARTICLE II CONVEYANCE OF THE TRUST; ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01 Conveyance of the Trust..................................................... 35
Section 2.02 Conveyance of the Subsequent Mortgage Loans; Fixed Price
Contract................................................................... 38
Section 2.03 Acceptance by the Trustee; Repurchase or Substitution of
Mortgage Loans............................................................. 41
Section 2.04 Representations and Warranties Regarding the Servicer and
the Seller................................................................. 43
Section 2.05 Representations and Warranties of the Seller Regarding the
Mortgage Loans............................................................. 45
Section 2.06 Execution and Authentication of Certificates................................ 56
Section 2.07 Representations and Warranties Regarding the Back-up Servicer............... 56
Section 2.08 Indemnification of the Trust................................................ 57
ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE LOANS; CERTIFICATE ACCOUNT
Section 3.01 The Servicer and the Sub-Servicers.......................................... 58
Section 3.02 Collection of Certain Mortgage Loan Payments; Collection
Account and Certificate Account........................................... 60
Section 3.03 Additional Servicing Responsibilities for the Adjustable
Rate Mortgage Loans........................................................ 63
Section 3.04 Hazard Insurance Policies................................................... 63
Section 3.05 Enforcement of Due-on-Sale Clauses; Assumption and
Modification Agreements.................................................... 64
Section 3.06 Realization upon Liquidated Mortgage Loans.................................. 64
Section 3.07 Trustee to Cooperate; Release of Mortgage Files............................. 66
Section 3.08 Servicing Compensation; Payment of Certain Expenses by the
Servicer................................................................... 67
Section 3.09 Annual Statement as to Compliance........................................... 67
Section 3.10 Annual Independent Public Accountant's Servicing Report..................... 68
Section 3.11 Access to Certain Documentation and Information Regarding
the Mortgage Loans......................................................... 69
Section 3.12 Maintenance of Fidelity Bond and Errors and Omissions Policy................ 69
Section 3.13 Notices to the Rating Agencies, the Trustee and the
Certificate Insurer........................................................ 69
i
3
Section 3.14 Reports of Foreclosures and Abandonment of Mortgaged
Properties................................................................. 69
Section 3.15A Sub-Servicers and Sub-Servicing Agreements.................................. 70
Section 3.15B Assumption or Termination of Sub-Servicing Agreements by the
Back-up Servicer........................................................... 71
Section 3.16 Prefunding Account.......................................................... 71
Section 3.17 Capitalized Interest Account................................................ 72
Section 3.18 Payments on the Certificate Insurance Policy................................ 73
Section 3.19 Rights of the Certificate Insurer to Exercise Rights of
Offered Certificateholders................................................. 75
Section 3.20 Trust and Accounts Held for Benefit of the Certificate
Insurer.................................................................... 75
Section 3.21 Supplemental Interest Reserve Fund.......................................... 76
Section 3.22. Covenants and Representations of the Servicer Regarding
Prepayment Charges......................................................... 76
ARTICLE IV REMITTANCE REPORT
Section 4.01 Servicer Remittance Report.................................................. 77
Section 4.02 Trustee Distribution Date Statement......................................... 78
ARTICLE V PAYMENTS AND STATEMENTS TO CERTIFICATEHOLDERS
Section 5.01 Distributions............................................................... 79
Section 5.02 Monthly Advances; Servicing Advances........................................ 82
Section 5.03 Statements to Certificateholders............................................ 83
Section 5.04 The Certificate Insurer; Use of Information................................. 85
ARTICLE VI THE CERTIFICATES
Section 6.01 The Certificates............................................................ 86
Section 6.02 Registration of Transfer and Exchange of Certificates....................... 86
Section 6.03 Mutilated, Destroyed, Lost or Stolen Certificates........................... 91
Section 6.04 Persons Deemed Owners....................................................... 92
Section 6.05 Actions of Certificateholders............................................... 92
ARTICLE VII THE SERVICER AND THE SELLER
Section 7.01 Liability of the Servicer................................................... 93
Section 7.02 Merger or Consolidation of, or Assumption of the Obligations
of, the Servicer........................................................... 93
Section 7.03 Limitation on Liability of the Servicer and Others.......................... 93
Section 7.04 Servicer Not to Resign...................................................... 93
Section 7.05 Merger or Consolidation of the Seller....................................... 95
ARTICLE VIII DEFAULT
Section 8.01 Events of Default........................................................... 95
ii
4
Section 8.01A Retention and Termination of Servicer....................................... 97
Section 8.02 Back-up Servicer to Act; Appointment of Successor........................... 98
Section 8.03 Notifications to Certificateholders......................................... 99
Section 8.04 Assumption or Termination of Sub-Servicing Agreements by the
Trustee or any Successor Servicer.......................................... 99
Section 8.05 The Back-up Servicer........................................................ 99
ARTICLE IX THE TRUSTEE
Section 9.01 Duties of the Trustee....................................................... 101
Section 9.02 Certain Matters Affecting the Trustee....................................... 102
Section 9.03 Trustee Not Liable for Certificates or Mortgage Loans....................... 103
Section 9.04 Trustee May Own Certificates................................................ 104
Section 9.05 Payment of the Trustee's Fees and Expenses.................................. 104
Section 9.06 Eligibility Requirements for the Trustee.................................... 105
Section 9.07 Resignation or Removal of the Trustee....................................... 105
Section 9.08 Successor Trustee........................................................... 106
Section 9.09 Merger or Consolidation of the Trustee...................................... 106
Section 9.10 Appointment of Co-Trustee or Separate Trustee............................... 106
Section 9.11 Compliance with REMIC Provisions............................................ 108
Section 9.12 Trustee May Enforce Claims Without Possession of Certificates............... 109
Section 9.13 Exercise of Trustee Powers by Certificate Insurer and
Certificateholders......................................................... 109
Section 9.14 Tax Returns................................................................. 109
Section 9.15 Taxpayer Identification Number.............................................. 110
Section 9.16 Miscellaneous REMIC Matters................................................. 110
ARTICLE X TERMINATION
Section 10.01 Termination Upon Purchase or Liquidation of All Mortgage
Loans...................................................................... 113
Section 10.02 Additional Termination Requirements......................................... 116
ARTICLE XI MISCELLANEOUS PROVISIONS
Section 11.01 Amendment................................................................... 116
Section 11.02 Recordation of Agreement.................................................... 118
Section 11.03 Limitation on Rights of Certificateholders.................................. 118
Section 11.04 Governing Law............................................................... 119
Section 11.05 Notices..................................................................... 119
Section 11.06 Severability of Provisions.................................................. 120
Section 11.07 Assignment.................................................................. 120
Section 11.08 Certificates Nonassessable and Fully Paid................................... 120
Section 11.09 Third Party Beneficiary; Rating............................................. 120
Section 11.10 Counterparts................................................................ 121
iii
5
SCHEDULES AND EXHIBITS
Schedule I List of Sub-Servicers
Schedule II [Reserved]
Schedule III Schedule of Restricted Mortgage Loans
Exhibit A-1 Form of Class A-F Certificate
Exhibit A-2 Form of Class A-V Certificate
Exhibit B-1 Form of Class C Certificate
Exhibit B-2 Form of Class R Certificate
Exhibit B-3 Form of Class P Certificate
Exhibit C Form of Subsequent Transfer Agreement
Exhibit D Certificate Insurance Policy
Exhibit E Mortgage Loan Schedule
Exhibit F Form of Annual Statement as to Compliance
Exhibit G Form of Transfer Affidavit
Exhibit H Form of Payoff Notice
Exhibit I Form of Liquidation Report
Exhibit J Form of Officer's Certificate as to Charge-offs
Exhibit K Form of Transferor Affidavit
Exhibit L Insurance and Indemnity Agreement
and Indemnification Agreement
Exhibit M Form of Transferor Letter
Exhibit N-1 Form of Investment Letter [Non-Rule 144A]
Exhibit N-2 Form of Rule 144A Letter
Exhibit O Section 3.10(b) Agreed Upon Procedures
iv
6
THIS POOLING AND SERVICING AGREEMENT (this "Agreement"), dated as of
July 1, 1999, between Aames Capital Corporation, as seller (in such capacity,
the "Seller") and as servicer (in such capacity, together with permitted
successors hereunder, the "Servicer"), Bankers Trust Company of California,
N.A., as trustee (the "Trustee"), and Fairbanks Capital Corp., as back-up
servicer (the "Back-up Servicer").
W I T N E S S E T H T H A T:
In consideration of the mutual agreements herein contained, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions Whenever used in this Agreement, the following
words and phrases, unless the context otherwise requires, shall have the
meanings specified in this Article.
Accrued Certificate Interest: With respect to any Class and Distribution
Date, means the amount of interest due for any Class of Certificates in respect
of any Interest Period at the applicable Pass-Through Rate, less the related pro
rata share of Interest Shortfalls (but in the case of the Class A-V
Certificates, without consideration of the Supplemental Interest Amount). All
calculations of interest on the Class A-F Certificates will be made on the basis
of a 360-day year assumed to consist of twelve 30-day months, and all
calculations of interest on the Class A-V Certificates will be made on the basis
of the actual number days elapsed in the related Interest Period and a year of
360 days.
Addition Notice: With respect to the transfer of Subsequent Mortgage
Loans to the Trust pursuant to Section 2.02 of this Agreement, notice of the
Seller's designation of Subsequent Mortgage Loans to be sold to the Trust and
the aggregate Subsequent Cut-off Date Principal Balance of such Subsequent
Mortgage Loans, which notice shall be given to the Trustee and to the
Certificate Insurer not later than one Business Day prior to the related
Subsequent Transfer Date.
Adjustable Rate Group: The group of Mortgage Loans comprised of
adjustable rate mortgage loans identified in the Mortgage Loan Schedule as
having been assigned to the Adjustable Rate Group and any Subsequent Mortgage
Loans identified in a Subsequent Transfer Agreement as having been assigned to
the Adjustable Rate Group, including any Qualified Replacement Mortgage Loans
delivered in replacement thereof.
Adjustable Rate Group Available Funds Cap: With respect to any
Distribution Date and the Class A-V Certificates, the per annum rate equal to
the lesser of (A) the percentage obtained by (I) dividing (x) the amount of
interest that accrued with respect to the Class LT-AV and Class LT-MV REMIC I
Regular Interests with respect to the related Interest Period at the related
Pass-Through Rates, where the Pass-Through Rate of the Class LT-MV REMIC I
Regular Interest is
1
7
first reduced by 0.50 %, by (y) the product of (i) the Adjustable Rate Group
Certificate Balance as of the first day of such Interest Period, (ii) the actual
number of days elapsed during such Interest Period divided by 360 and (II)
multiplying the result by 100 and (B) 14%.
Adjustable Rate Group Balance: As to any Distribution Date, the sum of
the aggregate of the Principal Balances of the Mortgage Loans in the Adjustable
Rate Group as of the end of the related Collection Period plus, in the case of
any Distribution Date relating to a Collection Period that includes any part of
the Funding Period, any portion of the Prefunding Account Deposit remaining on
deposit in the Prefunding Account or Certificate Account as of the last day of
such Collection Period.
Adjustable Rate Group Certificate Principal Balance: As to any
Distribution Date, the Class A-V Certificate Principal Balance.
Adjustable Rate Group Certificates: The Class A-V Certificates.
Adjustable Rate Group Principal Distribution Amount: With respect to any
Distribution Date, the Principal Distribution Amount with respect to the
Adjustable Rate Group Certificates and the related Collection Period.
Adjustable Rate Mortgage Loan: Any Mortgage Loan with a Mortgage Loan
Rate that is adjustable at regular periodic intervals, based on the Index plus
the related Gross Margin subject to any Minimum Rate, Maximum Rate and any
periodic limitations on adjustment from time to time, all as set forth in the
Mortgage Loan Schedule. All Adjustable Rate Mortgage Loans will be included in
the Adjustable Rate Group.
Adjustable Rate Turbo Amount: As defined in Section 9.16.
Adjustment Date: With respect to any Adjustable Rate Mortgage Loan, the
date on which a change to the Mortgage Loan Rate on a Mortgage Loan becomes
effective.
Affiliate: With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings corresponding to the foregoing.
Agreement: This Pooling and Servicing Agreement and all amendments
hereof and supplements hereto.
Annual Loss Percentage: With respect to any Distribution Date, a
fraction, expressed as a percentage, the numerator of which is the aggregate of
all Realized Losses for the twelve months ending on the last day of the
preceding month and the denominator of which is the Pool Balance and the
aggregate of the principal balances of any REO Properties as of the first day of
the
2
8
twelfth preceding calendar month.
Annual Statement of Compliance: The annual statement to be prepared and
delivered by the Servicer in accordance with Section 3.09.
Appraised Value: The appraised value of any Mortgaged Property based
upon the appraisal made at the time of origination of the related Mortgage Loan
or, in the case of a Mortgage Loan that is a purchase money mortgage loan, the
sales price of the related Mortgaged Property if such sales price is less than
such appraised value.
Available Funds: With respect to either Mortgage Loan Group and any
Distribution Date, the sum, without duplication of the following amounts with
respect to the Mortgage Loans in such Mortgage Loan Group:
(i) scheduled and unscheduled payments of principal and interest
on the Mortgage Loans received by the Servicer, including amounts
deposited in respect of the Closing Date Deposit (net of amounts
representing the Monthly Servicing Fee with respect to each Mortgage
Loan to the extent previously paid to the Servicer and reimbursement for
Monthly Advances and Servicing Advances);
(ii) Net Liquidation Proceeds and Insurance Proceeds with respect
to the Mortgage Loans (net of amounts applied to the restoration or
repair of a Mortgaged Property);
(iii) amounts payable in connection with each such Mortgage Loan
that was repurchased from the Trust, and all amounts payable in respect
any Mortgage Loan in the related Mortgage Loan Group in connection with
a substitution of a Qualified Replacement Mortgage Loan therefor;
(iv) payments from the Servicer in connection with (a) Monthly
Advances, (b) Compensating Interest and (c) the termination of the Trust
with respect to the Mortgage Loans as provided in this Agreement;
(v) in the case of the Adjustable Rate Group Certificates, on the
Distribution Dates during and immediately following the Funding Period,
amounts from the Capitalized Interest Account for the payment of
interest on the Adjustable Rate Group Certificates; and
(vi) in the case of the Adjustable Rate Group Certificates, on
the Distribution Date at or immediately following the end of the Funding
Period, amounts remaining on deposit in the Prefunding Account.
Available Funds Shortfall: With respect to either Mortgage Loan Group
and any Distribution Date, the excess, if any, of (x) the aggregate of the
amounts required to be
3
9
distributed pursuant to clauses (1) through (4) of Section 5.01(b), over (y) the
Available Funds for such Mortgage Loan Group and Distribution Date.
Back-up Servicer: Fairbanks.
Back-up Servicing Fee: With respect to each Collection Period and each
Mortgage Loan Group, 1/12 of the product of the Back-up Servicing Fee Rate and
the aggregate Principal Balance of the Mortgage Loans in such Mortgage Loan
Group as of the close of business on the Determination Date occurring in the
preceding month (or, in the case of the first Collection Period, the aggregate
Principal Balance of the related Mortgage Loans as of the Closing Date).
Back-up Servicing Fee Rate: With respect to each Mortgage Loan Group and
each Collection Period, 0.025% per annum.
Basic Principal Amount: With respect to either Mortgage Loan Group and
any Distribution Date, an amount equal to the sum of the following amounts
(without duplication) with respect to the Mortgage Loans in such Mortgage Loan
Group and the immediately preceding Collection Period:
(i) each payment of principal on a Mortgage Loan received by the
Servicer during such Collection Period, including all full and partial
principal prepayments;
(ii) the Net Liquidation Proceeds and Insurance Proceeds
allocable to principal received by the Servicer with respect to any
Mortgage Loan during such Collection Period;
(iii) all amounts allocable to principal payable in connection
with each such Mortgage Loan that was repurchased from the Trust during
such Collection Period, and all amounts allocable to principal payable
in respect any Mortgage Loan in the related Mortgage Loan Group in
connection with a substitution of a Qualified Replacement Mortgage Loan
therefor; and
(iv) in the case of the Adjustable Rate Group Certificates, any
amounts remaining in the Prefunding Account after the Funding Period.
Bloomberg: The on-line computer based information network maintained by
Bloomberg L.P., or any successor thereto.
Book-Entry Certificate: Any Certificate registered in the name of the
Depository or its nominee, ownership of which is reflected on the books of the
Depository or on the books of a person maintaining an account with such
Depository (directly or as an indirect participant in accordance with the rules
of such Depository). As of the Closing Date, only the Offered Certificates
constitute Book-Entry Certificates.
Book-Entry Nominee: As defined in Section 6.02(b).
4
10
Business Day: Any day other than (a) a Saturday or a Sunday or (b) a day
on which banking institutions in the State of California, the State of New York
or, if Fairbanks becomes the servicer, the State of Utah are required or
authorized by law, executive order or governmental decree to be closed.
Capitalized Interest Account: The segregated account, which shall be an
Eligible Account, established and maintained pursuant to Section 3.17 and
entitled "Bankers Trust Company of California, N.A., as Trustee for Aames
Mortgage Trust 1999-1 Mortgage Pass-Through Certificates, Series 1999-1,
Capitalized Interest Account".
Capitalized Interest Account Deposit: The amount deposited in the
Capitalized Interest Account for the benefit of the Class A-V
Certificateholders, which amount is $161,573.25.
Capitalized Interest Requirement: With respect to each Prefunding
Distribution Date and Class A-V Certificates, an amount equal to (A) interest on
the remainder of the Prefunding Account Deposit at the beginning of the related
Collection Period at a rate equal to the Class A-V Formula Pass-Through Rate at
the beginning of such Collection Period plus the Insurer Premium Rate, net of
reinvestment interest at a rate of 2.50% per annum minus (B) 30 days' interest
on each Subsequent Mortgage Loan transferred during the related Collection
Period that has a due date during such Collection Period.
Certificate: Any Class A-F, Class A-V, Class C, Class P or Class R
Certificate issued pursuant to this Agreement.
Certificate Account: The segregated account, which shall be an Eligible
Account, established and maintained pursuant to Section 3.02(e) and entitled
"Bankers Trust Company of California, N.A., as Trustee for Aames Mortgage Trust
1999-1 Mortgage Pass-Through Certificates, Series 1999-1, Certificate Account".
Certificate Group: The Fixed Rate Group Certificates or the Adjustable
Rate Certificates, as applicable.
Certificateholder: The Person in whose name a Certificate is registered
in the Certificate Register, except that, solely for the purpose of taking any
action under Article Eight or giving any consent pursuant to this Agreement, any
Certificate registered in the name of the Seller or the Servicer or any Person
actually known to a Responsible Officer of the Trustee to be an Affiliate of the
Seller or the Servicer shall be deemed not to be outstanding and the Percentage
Interest evidenced thereby shall not be taken into account in determining
whether Holders of the requisite Percentage Interests necessary to take any such
action or effect any such consent have acted or consented unless the Seller, the
Servicer or any such Person is an owner of record of all of the Certificates.
Certificate Insurance Policy: The Certificate Insurance Policy (No.
50839-N), dated August 5, 1999, issued by the Certificate Insurer for the
benefit of the Holders of the Offered
5
11
Certificates, pursuant to which the Certificate Insurer guarantees payment of
Insured Payments. A copy of the Certificate Insurance Policy is attached hereto
as Exhibit D.
Certificate Insurer: Financial Security Assurance Inc., a stock
insurance company organized and created under the laws of the State of New York,
and any successors thereto.
Certificate Insurer Default: The existence and continuance of any of the
following:
(a) the Certificate Insurer fails to make a payment required
under the Certificate Insurance Policy in accordance with its terms;
(b) the Certificate Insurer (i) files any petition or commences
any case or proceeding under any state or federal law relating to
insolvency or bankruptcy, (ii) consents to the entry of any decree or
order for relief in an involuntary case or proceeding under any state or
federal bankruptcy or insolvency law, (iii) makes a general assignment
for the benefit of its creditors or (iv) admits in writing its inability
to pay its debts as they come due; or
(c) a court of competent jurisdiction, the New York Department
of Insurance or other competent regulatory agency enters an order,
judgment or decree under any state or federal bankruptcy or insolvency
law which has continued in effect and unstayed for a period of 60 or
more consecutive days (i) appointing a custodian, trustee, agent or
receiver for the Certificate Insurer or for all or any material portion
of its property or (ii) authorizing the taking of possession by a
custodian, trustee, agent or receiver of the Certificate Insurer or the
taking of possession of all or any material portion of its property.
Certificate Insurer Parties: The Certificate Insurer or its respective
agents, representatives, directors, officers or employees.
Certificate Insurer Premium: With respect to the Fixed Rate Group
Certificates, the premium due to the Certificate Insurer on each Distribution
Date, which amount shall be equal to 1/12 of the product of the applicable
Insurer Premium Rate and the Fixed Rate Group Certificate Principal Balance
immediately prior to such Distribution Date. With respect to the Adjustable Rate
Group Certificates, the premium due to the Certificate Insurer on each
Distribution Date, which amount shall be equal to 1/12 of the product of the
applicable Insurer Premium Rate and the Adjustable Rate Group Certificate
Principal Balance immediately prior to such Distribution Date. The Certificate
Insurer Premium shall also include any premium supplement for either Certificate
Group imposed under the Insurance Agreement.
Certificate Owner: With respect to any Book-Entry Certificate, the
Person who is the beneficial owner thereof.
Certificate Principal Balance: With respect to the Class A-F
Certificates, the Class A-F Certificate Principal Balance; with respect to the
Class A-V Certificates, the Class A-V
6
12
Certificate Principal Balance; with respect to the Class C Certificates, the
Class C Certificate Principal Balance; and with respect to the Class P
Certificates, the Class P Certificate Principal Balance.
Certificate Register: The register maintained pursuant to Section 6.02.
Class: The Fixed Rate Group Certificates, the Adjustable Rate Group
Certificates, the Class C Certificate, the Class P Certificate, the Class R-I
Certificate or the Class R-II Certificate, as the case may be, taken as a whole.
Class A-F Certificate: Any one of the Certificates executed by the
Trustee on behalf of the Trust, not in its individual capacity, but solely as
Trustee, authenticated by the Trustee and in substantially the form set forth in
Exhibit A-1 hereto. The Class A-F Certificates are the only Class of the Fixed
Rate Group Certificates.
Class A-F Certificate Principal Balance: As to any Distribution Date,
the Initial Certificate Principal Balance of the Class A-F Certificates less the
Fixed Rate Group Principal Distribution Amounts actually distributed to the
holders of the Class A-F Certificates on previous Distribution Dates.
Class A-F Pass-Through Rate: The lesser of (x) 7.29% per annum and (y)
the Fixed Rate Group Available Funds Cap.
Class A-V Certificate: Any one of the Certificates executed by the
Trustee on behalf of the Trust, not in its individual capacity, but solely as
Trustee, authenticated by the Trustee and in substantially the form set forth in
Exhibit A-2 hereto. The Class A-V Certificates are the only Class of the
Adjustable Rate Group Certificates.
Class A-V Certificate Principal Balance: As to any Distribution Date,
the Initial Certificate Principal Balance of the Class A-V Certificates less the
Adjustable Rate Group Principal Distribution Amounts actually distributed to the
holders of the Class A-V Certificates on previous Distribution Dates.
Class A-V Formula Pass-Through Rate: With respect to each Interest
Period ending prior to the Clean-up Call Date, LIBOR plus 0.40% per annum and
for any Interest Period thereafter, LIBOR plus 0.80% per annum.
Class A-V Pass-Through Rate: With respect to each Interest Period, to
the lesser of (x) the Class A-V Formula Pass-Through Rate and (y) the Adjustable
Rate Group Available Funds Cap.
Class C Certificate: Any one of the Certificates executed by the Trustee
on behalf of the Trust, not in its individual capacity, but solely as Trustee,
authenticated by the Trustee and in substantially the form set forth in Exhibit
B-1 hereto.
7
13
Class C Certificate Principal Balance: As to any Distribution Date, the
Initial Certificate Principal Balance of the Class C Certificates less any
amounts distributed to the holders of the Class C Certificates on previous
Distribution Dates with respect to principal on the Class C Certificates.
Class C Carryforward Amount: With respect to any Distribution Date, the
amount by which the aggregate of the amount by which the Class C Distribution
Amount for each prior Distribution Date exceeded the amount actually distributed
in respect of the Class C Distribution Amount on each such date, reduced by the
aggregate of the amounts distributed in respect of the Class C Carryforward
Amount on each such prior Distribution Dates, and reduced by the aggregate of
the amounts of Realized Losses that have resulted in the reduction of the
Overcollateralization Amount on each such prior Distribution Date.
Class C Distribution Amount: With respect to any Distribution Date,
means the interest allocated to the Class C Certificates as separate components
in accordance with note (7) of Section 9.16(e) with respect to such Distribution
Date and additionally, with respect to the first Distribution Date, an amount
equal to the Class C Certificate Principal Balance.
Class P Certificate: Any one of the Certificates executed by the Trustee
on behalf of the Trust, not in its individual capacity, but solely as Trustee,
authenticated by the Trustee and in substantially the form set forth in Exhibit
B-3 hereto.
Class P Certificate Principal Balance: As to any Distribution Date, the
Initial Certificate Principal Balance of the Class P Certificates less any
amounts distributed to the holders of the Class P Certificates on previous
Distribution Dates with respect to principal on the Class P Certificates.
Class P Deposit: $100.00, to be deposited into the Certificate Account.
Class R Certificate: Any one of the Certificates executed by the Trustee
on behalf of the Trust, not in its individual capacity, but solely as Trustee,
authenticated by the Trustee and in substantially the form set forth in Exhibit
B-2 hereto representing both the Class R-I and Class R-II Certificates.
Class R-I Certificate: Any one of the Certificates described in Section
9.16 as representing the "residual interest" in REMIC I, as such term is defined
in Code Section 860G(a)(2). The Class R-I Certificate shall be certificated
together with the Class R-II Certificate, in the form of the Class R
Certificate.
Class R-II Certificate: Any one of the Certificates described in Section
9.16 as representing the "residual interest" in REMIC II, as such term is
defined in Code Section 860G(a)(2). The Class R-II Certificate shall be
certificated together with the Class R-I Certificate, in the form of the Class R
Certificate.
8
14
Clean-up Call Date: The first Distribution Date on which the Pool
Balance is less than 10% of the sum of the Original Pool Balance and the
Prefunding Account Deposit.
Closing Date: August 5, 1999.
Closing Date Deposit: With respect to the Adjustable Rate Group, such
amount shall be equal to the aggregate of the amounts of interest that would
have accrued (at the related Mortgage Loan Rate net of the Servicing Fee Rate)
on each Initial Mortgage Loan in the Adjustable Rate Group for each 30-day
period from the Cut-off Date through the end of the last Collection Period
preceding the Collection Period in which such Mortgage Loan has its first
Monthly Payment due, minus reinvestment interest on such Closing Date Deposit
related to such Mortgage Loans. With respect to the Fixed Rate Group, such
amount shall be equal to the aggregate of the amounts of interest that would
have accrued (at the related Mortgage Loan Rate net of the Servicing Fee Rate)
on each Mortgage Loan in the Fixed Rate Group for each 30-day period from the
Cut-off Date through the end of the last Collection Period preceding the
Collection Period in which such Mortgage Loan has its first Monthly Payment due,
minus reinvestment interest on such Closing Date Deposit related to such
Mortgage Loans.
Code: The Internal Revenue Code of 1986, as amended.
Collection Account: The segregated account, which shall at all times be
an Eligible Account, established and maintained pursuant to Section 3.02(a) and
entitled "Bankers Trust Company of California, N.A., in trust for the benefit of
Holders of Aames Mortgage Trust 1999-1 Mortgage Pass-Through Certificates,
Series 1999-1, Collection Account". References herein to the Collection Account
shall include any Sub-Servicing Account as the context requires.
Collection Period: As to any Distribution Date, the period beginning on
the first day of the calendar month immediately preceding the month in which
such Distribution Date occurs and ending on the last day of such calendar month.
Combined Loan-to-Value Ratio: With respect to a Mortgage Loan, the ratio
(expressed as a percentage) of (i) the sum of the Original Principal Amount of
such related Mortgage Loan plus the outstanding principal balance (at the time
of origination of such Mortgage Loan) of each mortgage loan secured by the
related Mortgaged Property that is senior to such Mortgage Loan to (ii) the
Appraised Value of the related Mortgaged Property determined by the Seller at
the time of origination of such Mortgage Loan.
Company: Aames Capital Corporation, a California corporation.
Compensating Interest: As to any Distribution Date and each Mortgage
Loan Group, an amount equal to the lesser of (a) the related Monthly Servicing
Fee (calculated with a Servicing Fee Rate of 0.50% per annum) for the related
Collection Period and (b) the difference between (i) 30 days' interest (at the
related Mortgage Loan Rates, net of the Servicing Fee Rate) on the Principal
Balance of each Mortgage Loan in such Mortgage Loan Group as to which a
Principal Prepayment was received or that became a Liquidated Mortgage Loan or
that was otherwise
9
15
charged-off (before giving effect to any related reduction in the Principal
Balance of such Mortgage Loan) by the Servicer during the related Collection
Period and (ii) the amount of interest actually collected by the Servicer for
such Mortgage Loans in such Mortgage Loan Group during such Collection Period.
Corporate Trust Office: The principal office of the Trustee at which at
any particular time its corporate trust business with respect to this Agreement
shall be principally administered, which office at the date of the execution of
this Agreement is located at ▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Attention:
Aames Mortgage Loan Pass-Through Certificates, Series 1999-1.
Coverage Deficit: With respect to either Class of Offered Certificates
and any Distribution Date, such Class' allocable percentage of the excess, if
any, of (i) the aggregate of the Certificate Principal Balances of each Class of
Offered Certificates (after taking into account all distributions thereto in
respect of principal on such Distribution Date other than any amounts paid by
the Certificate Insurer) over (ii) the Pool Balance as of the last day of the
related Collection Period (plus, in the case of the first Collection Period,
amounts on deposit in the Prefunding Account).
Current WAC Excess: With respect to any Distribution Date for which the
Pass-Through Rate of the Class A-V Certificates exceeds the Weighted Average
Coupon Cap, a portion of the Accrued Certificate Interest being distributed with
respect to those Certificates equal to the amount of interest accrued on those
Certificates at a rate equal to the excess of their Pass-Through Rate over the
Weighted Average Coupon Cap.
Cut-off Date: With respect to the Initial Mortgage Loans in each
Mortgage Loan Group, July 1, 1999. With respect to the Subsequent Mortgage Loans
in the Adjustable Rate Group,the Subsequent Cut-off Date.
Cut-off Date Principal Balance: As to any Mortgage Loan, its Principal
Balance as of the related Cut-off Date.
Defective Mortgage Loan: Any Mortgage Loan that is required to be
repurchased or substituted by the Seller pursuant to Section 2.03 or 2.05.
Deficiency Amount: As to any Distribution Date and for the Offered
Certificates, the excess, if any, of (A) the sum of (i) the Accrued Certificate
Interest for each Class of Offered Certificates plus any Interest Carry Forward
Amount for each Class of Offered Certificates and (ii) the Guaranteed Principal
Amount over (B) Available Funds for both Mortgage Loan Groups (after payment of
the Trustee Fee, the Monthly Servicing Fee, the Back-up Servicing Fee and the
Certificate Insurer Premium).
Definitive Certificates: As defined in Section 6.02(e).
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced by a
Qualified Replacement Mortgage Loan.
10
16
Delinquency Percentage: As to any Distribution Date, the average of the
percentage obtained by dividing (i) the aggregate of the Principal Balances of
all Mortgage Loans that were then 90 or more days contractually delinquent as of
the end of the related Collection Period, were in bankruptcy and 90 or more days
delinquent under the related Mortgage Note, or were REO Properties or were
either foreclosed upon or transferred pursuant to Section 3.06 during such
Collection Period, by (ii) the Pool Balance as of such Distribution Date.
Deposit Date: As to any Distribution Date, the third Business Day prior
to such Distribution Date.
Depository: The initial depository shall be The Depository Trust
Company, the nominee of which is Cede & Co. The Depository shall at all times be
a "clearing corporation" as defined in Section 8102(3) of the Uniform Commercial
Code of the State of California, as amended, or any successor provisions
thereto.
Depository Participant: A broker, dealer, bank or other financial
institution or other person for which, from time to time, the Depository effects
book-entry transfers and pledges of securities deposited with such Depository.
Determination Date: As to any Distribution Date, the last day of the
calendar month immediately preceding the calendar month in which such
Distribution Date occurs.
Disqualified Organization: Any Person that is (i) the United States, any
state or any political subdivision thereof, any possession of the United States,
or any agency or instrumentality of any of the foregoing (other than an
instrumentality of a governmental unit that is a corporation if all of its
activities are subject to tax and, except in the case of the Federal Home Loan
Mortgage Corporation, a majority of its board of directors is not selected by
such governmental unit), (ii) a foreign government, international organization
or any agency or instrumentality of either of the foregoing, (iii) an
organization (except certain farmers' cooperatives described in Code Section
521) exempt from tax imposed by Chapter 1 of the Code (including the tax imposed
by Code Section 511 on unrelated business taxable income), (iv) rural electric
and telephone cooperatives described in Code Section 1381(a)(2)(C), and (v) any
other Person so designated by the Trustee based upon an Opinion of Counsel that
the holding of an ownership interest in a Class R Certificate by such Person may
cause any REMIC Pool or any Person having an ownership interest in any Class R
Certificate, other than such Person, to incur a liability for any tax imposed
under the Code that would not otherwise be imposed but for the transfer of an
ownership interest in a Class R Certificate to such Person. The terms "United
States", "state" and "international organization" shall have the meanings set
forth in Code Section 7701 or successor provisions.
Distribution Date: The 15th day of each month or, if such day is not a
Business Day, the Business Day immediately following such 15th day, beginning
August 16, 1999.
11
17
Eligible Account: Either (A) a segregated account or accounts maintained
with an institution the deposits of which are insured by the Bank Insurance Fund
or the Savings Association Insurance Fund of the FDIC, the unsecured and
uncollateralized debt obligations of which shall be rated "AA" or better by
Standard & Poor's and "A2" or better by Moody's and in the highest short term
rating category by Standard & Poor's and Moody's, and that is either (i) a
federal savings and loan association duly organized, validly existing and in
good standing under the federal banking laws, (ii) an institution duly
organized, validly existing and in good standing under the applicable banking
laws of any state, (iii) a national banking association duly organized, validly
existing and in good standing under the federal banking laws, (iv) a principal
subsidiary of a bank holding company, and (v) approved in writing by the
Certificate Insurer or (B) a segregated trust account maintained with the trust
department of a federal or state chartered depository institution or trust
company, having capital and surplus of not less than $50,000,000, acting in its
fiduciary capacity, the unsecured and uncollateralized debt obligations of which
shall be rated "Baa3" or better by Moody's. Any Eligible Accounts maintained
with the Trustee shall conform to the preceding clause (B).
ERISA: The Employee Retirement Income Security Act of 1974, as amended.
ERISA Plan: Any Person that is an employee benefit plan within the
meaning of Section 3(3) of ERISA or any Person that is an individual retirement
account or employee benefit plan, trust or account subject to Section 4975 of
the Code.
ERISA Prohibited Holder: As defined in Section 6.02(b).
Event of Default: As defined in Section 8.01.
Extra Principal Distribution Amount: With respect to a Certificate Group
and any Distribution Date, means the lesser of (x) the related Monthly Excess
Cashflow Amount available for distribution to such Certificate Group from the
related Mortgage Loan Group and the other Mortgage Loan Group on such
Distribution Date and (y) the related Target Deficiency.
Fairbanks: Fairbanks Capital Corp. and its permitted successors and
assigns.
FDIC: The Federal Deposit Insurance Corporation and its successors in
interest.
FEMA: The Federal Emergency Management Agency and its successors in
interest.
FHLMC: The Federal Home Loan Mortgage Corporation and its successors in
interest.
Final Scheduled Distribution Date: The Final Scheduled Distribution Date
for each of the Classes of Certificates are as set forth below:
Final Scheduled Distribution Date
Class A-F July 15, 2029
Class A-V July 15, 2029
12
18
Class C July 15, 2029
Class P July 15, 2029
Class R July 15, 2029
Fixed Rate Group: The group of Mortgage Loans comprised of fixed rate
mortgage loans identified in the Mortgage Loan Schedule as having been assigned
to the Fixed Rate Group, including any Qualified Replacement Mortgage Loans
delivered in replacement thereof.
Fixed Rate Group Available Funds Cap: With respect to any Distribution
Date and the Class A-F Certificates, the per annum rate equal to the weighted
average of the Pass-Through Rates of the Class LT-AF and Class LT-▇▇ ▇▇▇▇▇ I
Regular Interests.
Fixed Rate Group Balance: As to any Distribution Date, the sum of the
aggregate of the Principal Balances of the Mortgage Loans in the Fixed Rate
Group as of the end of the related Collection Period.
Fixed Rate Group Certificate Principal Balance: As to any Distribution
Date, the Class A-F Certificate Principal Balance.
Fixed Rate Group Certificates: The Class A-F Certificates.
Fixed Rate Group Principal Distribution Amount: With respect to any
Distribution Date, the Principal Distribution Amount with respect to the Fixed
Rate Group Certificates and the related Collection Period.
Fixed Rate Turbo Amount: As defined in Section 9.16.
FNMA: The Federal National Mortgage Association and its successors in
interest.
Foreign Person: A Person that is not (i) a citizen or resident of the
United States, (ii) a corporation or partnership (including an entity treated as
a corporation or partnership for U.S. federal income tax purposes) created in
the United States or organized under the laws of the United States or any state
thereof or the District of Columbia (except, in the case of a partnership, as
otherwise provided by Treasury regulations), (iii) an estate that is subject to
United States federal income tax regardless of the source of its income, or (iv)
a trust whose administration may be subject to the primary supervision of a
court within the United States and for which one or more United States persons
have the authority to control all substantial decisions of the trust.
Funding Period: The period beginning on the Closing Date and ending on
the earlier of (a) the date on which the amount on deposit in the Prefunding
Account is zero and (b) the close of business on August 31, 1999.
Gross Margin: With respect to any Adjustable Rate Mortgage Loan, the
fixed percentage amount set forth in the related Mortgage Note, which amount is
added to the Index in accordance with the terms of the related Mortgage Note to
determine the applicable Mortgage Loan Rate.
13
19
Group Factor: As to any Distribution Date and each Mortgage Loan Group,
the percentage (carried to eight places, rounded down) obtained by dividing the
aggregate Principal Balances of the Mortgage Loans in the related Mortgage Loan
Group (after giving effect to any distribution of principal on the related
Certificates on such Distribution Date) by the Original Fixed Rate Group Balance
or by the sum of the Original Adjustable Rate Group Balance and the Prefunding
Account Deposit, as applicable.
Group Pool Balance: The Fixed Rate Group Balance or the Adjustable Rate
Group Balance, as applicable.
Guaranteed Principal Amount: As to any Distribution Date, (a) the
amount, if any, by which the aggregate Certificate Principal Balance of the
Offered Certificates exceeds the Pool Balance at the end of the previous month
(after giving effect to all distributions of principal on the Offered
Certificates on such Distribution Date) and (b) on the Distribution Date in July
2029 (after giving effect to all other distributions of principal on the Offered
Certificates), an amount equal to the aggregate Certificate Principal Balance of
the Offered Certificates.
Holder: A Certificateholder.
Index: With respect to any Adjustable Rate Mortgage Loan, the applicable
index for computing the Mortgage Loan Rate as specified in the Mortgage Note.
Initial Certificate Principal Balance: As to the Class P Certificates,
$100. As to the Class C Certificates, $6,795,043.05. As to the Class R
Certificates, $0. As to any Class of Offered Certificates, the respective amount
set forth below opposite such Class:
Initial Certificate
Class Principal Balance
Class A-F Certificates $191,235,000
Class A-V Certificates $202,035,000
Initial Mortgage Loan: Any Mortgage Loan in either Mortgage Loan Group
included in the assets of the Trust as of the Closing Date that is indicated as
such on the Mortgage Loan Schedule.
Insurance Agreement: The Insurance and Indemnity Agreement, dated as of
July 1, 1999, among the Certificate Insurer, the Company and the Trustee, a copy
of which is attached hereto as Exhibit L.
Insurance Proceeds: With respect to any Distribution Date, proceeds paid by any
insurer (other than the Certificate Insurer) and received by the Servicer during
the related Collection Period pursuant to any insurance policy covering a
Mortgage Loan or the related Mortgaged Property, including any deductible
payable by the Servicer with respect to a blanket insurance policy pursuant to
Section 3.04 and the proceeds from any fidelity bond or errors and omission
14
20
policy pursuant to Section 3.12 (to the extent such payments compensate for
losses that would otherwise be payable to Certificateholders pursuant to this
Agreement), net of any component thereof covering any expenses incurred by or on
behalf of the Servicer and specifically reimbursable under this Agreement.
Insured Payment: As of any Distribution Date, (i) any Deficiency Amount
and (ii) any Preference Amount.
Insurer Premium Rate: With respect to any Distribution Date, the
percentage for the computation of the Certificate Insurer Premium as set forth
in the Insurance Agreement.
Interest Carry Forward Amount: With respect to any Class of Offered
Certificates on any Distribution Date, means the amount, if any, by which (i)
the Accrued Certificate Interest on such Class for the preceding Distribution
Date plus any outstanding Interest Carry Forward Amount with respect to such
Class from the second preceding Distribution Date (together with interest on
such outstanding Interest Carry Forward Amount at the related Pass-Through Rate
for the related Interest Period to the extent lawful) exceeds (ii) the amount of
interest actually distributed to the holders of such Certificates on such
Distribution Date.
Interest Period: With respect to the Fixed Rate Group Certificates and
the Class LT-AF and LT-▇▇ ▇▇▇▇▇ I Regular Interests, the calendar month
preceding the month in which such Distribution Date occurs; and with respect to
the Class A-V Certificates and the Class LT-AV and Class LT-MV REMIC I Regular
Interests and the first Interest Period, the period beginning on the Closing
Date and ending on the day preceding the Distribution Date in August 1999, and
as to any subsequent Distribution Date, the period beginning on the immediately
preceding Distribution Date and ending on the day prior to the related
Distribution Date.
Interest Shortfall: As to any Distribution Date, the amount of any (i)
Prepayment Interest Shortfall which is not reimbursable to Certificateholders
under the Certificate Insurance Policy and (ii) Relief Act Shortfall for the
related Mortgage Loan Group. So long as Financial Security Assurance Inc. is the
Certificate Insurer, the Certificate Insurance Policy will cover Prepayment
Interest Shortfalls to the extent not covered by Compensating Interest paid by
the Servicer.
Investment Company Act: The Investment Company Act of 1940, as amended.
Junior Mortgage Loan: Any Mortgage Loan secured by a Mortgage with a
lien of other than first priority.
Late Payment Rate: With respect to any date of determination, the rate
of interest as it is publicly announced by Citibank, N.A. at its principal
office in New York, New York on its prime rate (any change in such prime rate of
interest to be effective on the date such change is announced by Citibank, N.A.)
plus 3%.
LIBOR: With respect to the August 1999 Distribution Date, 5.20875% per
annum. With respect to any subsequent Distribution Date, the per annum rate
determined by the Trustee on the
15
21
related LIBOR Determination Date on the basis of the offered rate for one-month
U.S. dollar deposits as such rate appears on the Dow ▇▇▇▇▇ Telerate Service Page
3750 (or any replacement page on that service for the purpose of displaying
London Interbank Offered Rates of major banks) as of 11:00 a.m. (London time) on
such LIBOR Determination Date.
On each LIBOR Determination Date, in the event that Dow ▇▇▇▇▇ Telerate
Service Page 3750 (or any replacement page on that service for the purpose of
displaying London Interbank Offered Rates of major banks) is not available, the
Trustee will establish LIBOR as follows:
(a) If on such LIBOR Determination Date two or more Reference Banks
provide such offered quotations, LIBOR shall be the arithmetic mean (rounded
upwards if necessary to the nearest whole multiple of 0.0625%) of such offered
quotations.
(b) If on such LIBOR Determination Date fewer than two Reference Banks
provide such offered quotations, LIBOR shall be the greater of (x) LIBOR as
determined on the previous LIBOR Determination Date and (y) the Reserve Interest
Rate. The "Reserve Interest Rate" shall be the rate per annum that the Trustee
determines to be either (i) the arithmetic mean (rounded upwards if necessary to
the nearest whole multiple of 0.0625%) of the one-month U.S. dollar lending
rates that New York City banks selected by the Trustee are quoting on the
relevant LIBOR Determination Date to the principal London offices of leading
banks in the London interbank market or, in the event that the Trustee can
determine no such arithmetic mean, (ii) the lowest one-month U.S. dollar lending
rate that New York City banks selected by the Trustee are quoting on such LIBOR
Determination Date to leading European banks.
As used in this definition, "Reference Banks" means leading banks
selected by the Trustee and engaged in transactions in Eurodollar deposits in
the international Eurocurrency market (i) with an established place of business
in London, (ii) whose quotations appear on such page on the LIBOR Determination
Date in question, (iii) that have been designated as such by the Trustee and
(iv) not controlling, controlled by or under common control with the Sponsor or
any of its affiliates.
LIBOR Determination Date: With respect to any Interest Period after the
first Interest Period, the second London Business Day immediately preceding the
first day of such Interest Period.
Liquidated Mortgage Loan: As to any Distribution Date, any Mortgage Loan
as to which the Servicer has determined, in accordance with the servicing
procedures specified herein, during the related Collection Period that all
Liquidation Proceeds that it expects to recover from or on account of such
Mortgage Loan have been recovered.
Liquidation Expenses: Expenses that are incurred by the Servicer in
connection with the liquidation of any Mortgage Loan and not recovered under any
insurance policy or from any Mortgagor. Such expenses shall include, without
limitation, legal fees and expenses, real estate brokerage commissions, any
unreimbursed amount expended by the Servicer pursuant to Section 3.06 with
respect to the related Mortgage Loan (including, without limitation, amounts
16
22
voluntarily advanced to correct defaults on each mortgage loan that is senior to
such Mortgage Loan), any other related and previously unreimbursed Servicing
Advances and any related and previously unreimbursed Property Protection
Expenses.
Liquidation Proceeds: Cash (other than Insurance Proceeds) received in
connection with the liquidation of any Mortgaged Property, whether through
trustee's sale, foreclosure sale, condemnation, taking by eminent domain or
otherwise received in respect of any Mortgage Loan foreclosed upon as described
in Section 3.06 (including, without limitation, proceeds from the rental of the
related Mortgaged Property).
Liquidation Report: A liquidation report in the form of Exhibit I
attached hereto.
Loan-to-Value Ratio: The Original Principal Amount of a Mortgage Loan as
a percentage of the Appraised Value of the related Mortgaged Property determined
by the Seller at the time of origination of such Mortgage Loan.
London Business Day: A day on which banks are open for dealing in
foreign currency and exchange in London and New York City.
Loss Percentage: As to any Distribution Date, the percentage equivalent
of the fraction obtained by dividing (i) the principal amount of cumulative
Realized Losses on all Mortgage Loans from the Cut-off Date through the end of
the related Collection Period by (ii) the Pool Balance and the Prefunding
Account Deposit.
Maximum Rate: With respect to an Adjustable Rate Mortgage Loan, any
absolute maximum Mortgage Loan Rate set by provisions in the related Mortgage
Note.
Minimum Rate: With respect to an Adjustable Rate Mortgage Loan, any
absolute minimum Mortgage Loan Rate, set by provisions in the related Mortgage
Note, subject to the initial Mortgage Loan Rate first adjusting to a level in
excess of such minimum Mortgage Loan Rate in accordance with the terms of the
Mortgage Note.
Monthly Advance: As defined in Section 5.02(a).
Monthly Excess Cashflow Amount: With respect to either Mortgage Loan
Group and any Distribution Date, the Available Funds remaining after the
application of payments in clauses (1) through (5) of Section 5.01(b).
Monthly Mortgage Payment: With respect to any Mortgage Note, the amount
of each monthly payment (other than any final balloon payment) payable under
such Mortgage Note in accordance with its terms by the Mortgagor, including one
month's accrued interest on the related Principal Balance at the then applicable
Mortgage Loan Rate, but net of any portion of such monthly payment that
represents late payment charges, prepayment or extension fees or collections
allocable to payments to be made by Mortgagors for payment of insurance premiums
or similar items.
17
23
Monthly Servicing Fee: With respect to any Collection Period and each
Mortgage Loan Group, 1/12 of the product of the Servicing Fee Rate and the
aggregate Principal Balance of the Mortgage Loans in such Mortgage Loan Group as
of the close of business on the Determination Date occurring in the preceding
month (or, in the case of the first Collection Period, the aggregate Principal
Balance of the related Mortgage Loans as of the Closing Date). The Monthly
Servicing Fee shall be payable on the following Deposit Date to the Servicer as
servicing compensation hereunder pursuant to Section 3.08.
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc. and its successors in interest.
Mortgage: The mortgage, deed of trust or other instrument creating a
first, second or third lien on an estate in fee simple in real property securing
a Mortgage Loan.
Mortgage File: The mortgage documents listed in Section 2.01 pertaining
to a particular Mortgage Loan and any additional documents required to be added
to such Mortgage File pursuant to this Agreement.
Mortgage Loan: Each of the Mortgage Loans transferred and assigned to
the Trustee pursuant to Section 2.01 or 2.02 that from time to time comprise
part of the Trust, the Mortgage Loans originally so held being identified in the
Mortgage Loan Schedule attached hereto as Exhibit E.
Mortgage Loan Group: Either the Fixed Rate Group or the Adjustable Rate
Group. References herein to any Class or Classes of Certificates being related
to a Mortgage Loan Group, shall mean (A) in the case of the Fixed Rate Group,
the Class A-F Certificates, the Class C Certificates, the Class P Certificates
and the Class R Certificates and (B) in the case of the Adjustable Rate Group
Certificates, the Class A-V Certificates, the Class C Certificates, the Class P
Certificates and the Class R Certificates.
Mortgage Loan Rate: With respect to any Adjustable Rate Mortgage Loan,
the per annum rate of interest computed in accordance with the provisions of the
related Mortgage Note as the sum of the Index and the Gross Margin, subject to
any Minimum Rate, the Maximum Rate or periodic limitation on adjustments to such
rate applicable from time to time to the calculation of interest thereon. As to
any Fixed Rate Mortgage Loan, the fixed per annum rate of interest applicable to
the calculation of interest thereon specified in the related Mortgage Note.
Mortgage Loan Schedule: As of any date, the schedule of Mortgage Loans
as amended by each subsequently delivered schedule of Subsequent Mortgage Loans
separated by Mortgage Loan Group. The initial schedule of Mortgage Loans as of
the related Cut-off Date is attached hereto as Exhibit E and sets forth as to
each such Mortgage Loan, among other things, (a) its identifying number and the
name of the related Mortgagor; (b) the street address of the related Mortgaged
Property including the state, county and zip code; (c) its date of origination;
(d) the original number of months to stated maturity; (e) its original stated
maturity; (f) its Original Principal Amount; (g) its Cut-off Date Principal
Balance; (h) the related Mortgage Loan Rate as
18
24
of the related Cut-off Date and, with respect to any Adjustable Rate Mortgage
Loan, the related Index, Gross Margin, Minimum Rate, Maximum Rate and any
periodic limitations on adjustment; (i) the scheduled Monthly Mortgage Payment
as of the related Cut-off Date; (j) the date in each month on which the related
Monthly Mortgage Payments are due; (k) its Combined Loan-to-Value Ratio or the
ratio, expressed as a percentage, of the Original Principal Amount of such
Mortgage Loan to the Appraised Value of the related Mortgaged Property, as
applicable; (l) the lien status of the related Mortgage and, with respect to any
Junior Mortgage Loan, the principal amount (as of the date of origination) of
all related Senior Liens; (m) whether the related Mortgaged Property is
owner-occupied or non-owner-occupied; (n) whether the related Mortgaged Property
is a single-family residence, a two- to four-family residence, a unit in a
condominium or planned unit development, or manufactured housing; (o) whether
the Mortgage Loan has been originated by an Affiliate of the Company; and (p)
the related Cut-off Date (unless specified in a related Subsequent Transfer
Agreement).
Mortgage Note: The note or other instrument evidencing the indebtedness
of a Mortgagor under the related Mortgage Loan.
Mortgaged Property: The underlying property securing a Mortgage Loan.
Mortgagor: The obligor under a Mortgage Note.
Net Liquidation Proceeds: As to any Mortgage Loan, Liquidation Proceeds
net of Liquidation Expenses. If Liquidation Expenses exceed Liquidation Proceeds
as to any Mortgage Loan, Net Liquidation Proceeds shall be zero. For all
purposes of this Agreement, Net Liquidation Proceeds shall be allocated first to
accrued and unpaid interest on the related Mortgage Loan and then to the
Principal Balance thereof.
Non-permitted Foreign Holder: As defined in Section 6.02(c).
Nonrecoverable Advance: Any Servicing Advance that, in the Servicer's
reasonable judgment, would not be ultimately recoverable by the Servicer from
late collections, Insurance Proceeds or Liquidation Proceeds on the related
Mortgage Loan or otherwise, as evidenced by an Officer's Certificate delivered
to the Certificate Insurer and the Trustee no later than the Business Day
following the Servicer's determination thereof.
Notice of Claim: The notice required to be furnished by the Trustee to
the Certificate Insurer in the event an Insured Payment is required to be paid
under the Certificate Insurance Policy with respect to any Distribution Date, in
the form set forth as an exhibit to the Certificate Insurance Policy.
Offered Certificateholder: A holder of an Offered Certificate.
Offered Certificates: The Certificates other than the Retained
Certificates.
19
25
Officer's Certificate: A certificate signed by the Chairman of the
Board, the Vice Chairman of the Board, the President or a Vice President of the
Seller or the Servicer, as the case may be, and delivered to the Trustee,
Certificate Insurer or each Rating Agency, as the case may be.
Opinion of Counsel: A written opinion of counsel reasonably acceptable
to the Trustee and, in the case of opinions delivered to Certificate Insurer,
reasonably acceptable to it, who may be in-house counsel for the Seller or the
Servicer (except with respect to any opinion with respect to or concerning the
REMIC status of any REMIC Pool). Any expense related to obtaining an Opinion of
Counsel for an action requested by a party shall be borne by the party required
to obtain such opinion or seeking to effect the action that requires the
delivery of such Opinion of Counsel.
Original Adjustable Rate Group Balance: Means the aggregate of the
outstanding principal amounts of each Initial Mortgage Loan that is an
Adjustable Rate Mortgage Loan as of its related Cut-off Date, which amount is
$163,359,100.25.
Original Fixed Rate Group Balance: Means the aggregate of the
outstanding principal amounts of each Initial Mortgage Loan that is a Fixed Rate
Mortgage Loan as of its related Cut-off Date, which amount is $196,707,741.38.
Original Pool Balance: Means the aggregate outstanding principal amounts
of each Initial Mortgage Loan as of its related Cut-off Date, which amount is
$360,066,841.63.
Original Principal Amount: With respect to any Mortgage Loan, the
original principal amount due under the related Mortgage Note as of its date of
origination.
Overcollateralization Amount: With respect to a Mortgage Loan Group and
as of any Distribution Date, the excess of (x) the aggregate of the outstanding
Principal Balances of the Mortgage Loans in such Mortgage Loan Group as of the
last day of the immediately preceding Collection Period (plus, in the case of
the Adjustable Rate Group during the Funding Period, amounts on deposit in the
Prefunding Account on such date) over (y) the aggregate Certificate Principal
Balance of the related Offered Certificates (after taking into account all
distributions in respect of principal collections on such Distribution Date).
Overcollateralization Release Amount: With respect to each Certificate
Group and any Distribution Date (A) prior to the occurrence of a Step Down
Trigger, zero, and (B) on or after the occurrence of a Step Down Trigger, the
lesser of (x) the related Basic Principal Amount for such Distribution Date and
(y) the excess, if any, of (i) the related Overcollateralization Amount for such
Distribution Date, assuming that 100% of the related Basic Principal Amount is
applied as a principal payment on the related Certificate Group on such
Distribution Date over (ii) the related Targeted Overcollateralization Amount
for such Distribution Date.
Pass-Through Rate: The Class A-F Pass-Through Rate or the Class A-V
Pass-Through Rate, as applicable.
20
26
Payment Ahead: Any payment of one or more Monthly Mortgage Payments
remitted by a Mortgagor with respect to a Mortgage Note in excess of the Monthly
Mortgage Payment due during such Collection Period with respect to such Mortgage
Note, which sums the related Mortgagor has instructed the Servicer to apply to
Monthly Mortgage Payments due in one or more subsequent Collection Periods. A
Monthly Mortgage Payment that was a Payment Ahead shall, for purposes of
computing certain amounts under this Agreement, be deemed to have been received
by the Servicer on the date in the related Collection Period on which such
Monthly Mortgage Payment would have been due if such Monthly Mortgage Payment
was not a Payment Ahead.
Payoff Notice: The certification delivered by the Servicer in connection
with any payment in full of the outstanding principal balance of a Mortgage Loan
pursuant to Section 3.07, to be substantially in the form of Exhibit H.
Percentage Interest: With respect to any Certificate, the undivided
percentage interest (carried to eight places, rounded down) obtained by dividing
the original principal balance of such Certificate by the Initial Certificate
Principal Balance of the related Class, as applicable, and multiplying the
result by 100; provided that with respect to a Class C Certificate, a Class P
Certificate or a Class R Certificate, Percentage Interest means the undivided
percentage interest set forth on the face of such Certificate, which in the
aggregate shall not exceed 100%.
Permitted Investments: One or more of the following obligations,
instruments and securities:
(A) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and
interest by, the United States or any agency or instrumentality thereof,
provided such obligations are backed by the full faith and credit of the
United States;
(B) Federal Housing Administration debentures, FHLMC senior debt
obligations and FNMA senior debt obligations, but excluding any of such
securities whose terms do not provide for payment of a fixed dollar
amount upon maturity or call for redemption or that are not rated in the
highest rating category by each Rating Agency;
(C) federal funds, certificates of deposit, time and demand
deposits and banker's acceptances (in each case having original
maturities of not more than 365 days) of any bank or trust company
incorporated under the laws of the United States or any state thereof,
provided that the short-term debt obligations of such bank or trust
company at the date of acquisition thereof have been rated "A-1" or
better by Standard & Poor's and Prime-1 or better by Moody's;
(D) deposits of any bank or savings and loan association that has
combined capital, surplus and undivided profits of at least
$100,000,000, which deposits are held up
21
27
to the applicable limits insured by the Bank Insurance Fund or the
Savings Association Insurance Fund of the FDIC;
(E) commercial paper (having original maturities of not more than
180 days) that has the highest short term rating of each of Standard &
Poor's and Moody's;
(F) investments in money market funds rated "AAAm" or "AAAm-G" by
Standard & Poor's and Aaa by Moody's (any such money market funds that
provide for demand withdrawals without penalty being conclusively deemed
to satisfy any maturity requirement for Permitted Investments set forth
herein); and
(G) investments approved in writing all Rating Agencies and the
Certificate Insurer;
provided that no investment described hereunder shall evidence either the right
to receive (i) only interest with respect to obligations underlying such
instrument or (ii) both principal and interest payments derived from obligations
underlying such instrument and the principal and interest payments with respect
to such instrument provided a yield to maturity at par greater than 120% of the
yield to maturity of the underlying obligations; and provided, further, that no
instrument described hereunder may be purchased at a price greater than par if
such instrument may be prepaid or called at a price less than its purchase price
prior to stated maturity. Permitted Investments shall mature not later than the
Business Day prior to the date on which such monies will be needed to make
payments, or in the case of Permitted Investments held in the Prefunding
Account, shall be available on the Business Day next succeeding the date the
Trustee receives the Addition Notice that such monies will be needed.
Notwithstanding the foregoing, with respect to investment of amounts in any
account, any of the foregoing obligations, instruments or securities will not be
Permitted Investments to the extent that an investment therein will cause the
then outstanding principal amount thereof in which such funds are then invested
to exceed $25,000,000 (such investments being valued at par).
Person: Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
Policy Payments Account: The segregated account, which shall be an
Eligible Account, established and maintained pursuant to Section 3.18(a) and
entitled "Bankers Trust Company of California, N.A., as Trustee for Aames
Mortgage Trust 1999-1 Mortgage Pass-Through Certificates, Series 1999-1, Policy
Payments Account".
Pool Balance: As to any Distribution Date, the sum of the Fixed Rate
Group Balance and the Adjustable Rate Group Balance.
Preference Amount: Any avoided payment required to be paid pursuant to
Section 3 of Endorsement No. 1 to the Certificate Insurance Policy.
22
28
Prefunding Account: The segregated account, which shall be an Eligible
Account, established and maintained pursuant to Section 3.16 and entitled
"Bankers Trust Company of California, N.A., as Trustee for Aames Mortgage Trust
1999-1 Mortgage Pass-Through Certificates, Series 1999-1, Prefunding Account".
Prefunding Account Deposit: The amount deposited in the Prefunding
Account on the Closing Date and allocated for the purchase of Subsequent
Mortgage Loans having adjustable Mortgage Loan Rates to be included in the
Adjustable Rate Group, which amount is $39,998,201.42.
Prefunding Account Release: Means the amount to be released from the
Prefunding Account (or, if the Subsequent Mortgage Loans are purchased by the
Trust on the Closing Date, from the Certificate Account) on the Distribution
Date in September 1999, equal to the portion of the Prefunding Account Deposit
not used to purchase Subsequent Mortgage Loans during the Funding Period.
Prefunding Distribution Date: Each of the Distribution Date during the
Funding Period and the Distribution Date in the month following the end of the
Funding Period.
Prepayment Assumption: Means the prepayment assumptions described in the
Prospectus Supplement as having been used to generate the prepayment scenarios
therein described.
Prepayment Charge: As to a Mortgage Loan, any charge paid by a Mortgagor
in connection with certain partial prepayments and all prepayments in full made
within the related Prepayment Charge Period, the Prepayment Charges with respect
to each applicable Mortgage Loan so held by the Trust being identified in a
prepayment charge schedule (other than any Servicer Prepayment Charge Payment
Amount).
Prepayment Charge Period: As to any Mortgage Loan, the period of time,
if any, during which a Prepayment Charge may be imposed.
Prepayment Interest Shortfall: As to any Distribution Date and either
Mortgage Loan Group, the amount, if any, by which the amount described in clause
(b) of the first sentence of the definition of Compensating Interest for such
Distribution Date exceeds the Monthly Servicing Fee (calculated with a Servicing
Fee Rate of 0.50% per annum) for such Mortgage Loan Group and the related
Collection Period.
Principal Balance: As to any Mortgage Loan and any Determination Date,
the actual outstanding principal amount thereof as of the close of business on
the Determination Date in the preceding month (or, in the case of the first
Determination Date, as of the related Cut-off Date) less (i) any Principal
Payments received in respect of such Mortgage Loan during the related Collection
Period, (ii) Net Liquidation Proceeds and Trust Insurance Proceeds allocable to
principal recovered or collected in respect of such Mortgage Loan during the
related Collection Period, (iii) the portion of the Purchase Price allocable to
principal to be remitted by the Seller or
23
29
the Servicer to the Trustee on the next succeeding Deposit Date in connection
with a purchase or repurchase of such Mortgage Loan pursuant to Section 2.03,
2.05, 3.01, 3.06 or 10.01, to the extent such amount is actually received by the
Trustee on such Deposit Date, (iv) the amount to be remitted by the Seller to
the Trustee on the next succeeding Deposit Date in connection with a
substitution of a Qualified Replacement Mortgage Loan for such Mortgage Loan
pursuant to Section 2.03 or 2.05, to the extent such amount is actually received
by the Trustee on such Deposit Date and (v) the amount to be remitted by the
Certificate Insurer to the Trustee on the next succeeding Deposit Date in
connection with a purchase of such Mortgage Loan pursuant to Section 10.01;
provided, however that a Mortgage Loan that has become a Liquidated Mortgage
Loan since the preceding Determination Date (or, in the case of the first
Determination Date, since the related Cut-off Date) will be deemed to have a
Principal Balance of zero on the current Determination Date.
Principal Distribution Amount: As to any Distribution Date and either
Certificate Group, the lesser of (a) the aggregate Certificate Principal
Balances of the related Certificate Group immediately preceding such
Distribution Date and (b) the Basic Principal Amount of the related Certificate
Group minus the related Overcollateralization Release Amount.
Principal Payment: As to any Mortgage Loan and Collection Period, all
amounts received or, in the case of the principal portion of any Payment Ahead,
deemed to have been received by the Servicer from or on behalf of the related
Mortgagor during such Collection Period (including Principal Prepayments) that,
at the time of receipt or, in the case of any Payment Ahead, at the time such
Payment Ahead is deemed to have been received, were applied or were required to
be applied by the Servicer in reduction of the Principal Balance of such
Mortgage Loan.
Principal Prepayment: As to any Mortgage Loan and Collection Period, any
payment by a Mortgagor or other recovery in respect of principal on a Mortgage
Loan (including Net Liquidation Proceeds) that, in the case of a payment by a
Mortgagor, is received in advance of its scheduled due date and is not a Payment
Ahead.
Property Protection Expenses: Expenses (exclusive of overhead expenses)
reasonably paid or incurred by or for the account of the Servicer in connection
with the preservation or protection of a Mortgaged Property or the security of a
Mortgaged Property, including (a) hazard insurance policy premiums, (b) real
estate taxes and property repair, replacement, protection and preservation
expenses, (c) amounts expended to cure or prevent any default with respect to
any mortgage loan senior to the related Mortgage Loan and (d) similar expenses
reasonably paid or incurred to preserve or protect the value of such Mortgaged
Property or security (including but not limited to reasonable legal fees and
expenses).
Prospectus: That certain Prospectus dated as of July 28, 1999 relating
to the asset-backed bonds and certificates to be sold by the Company.
Prospectus Supplement: That certain Prospectus Supplement dated as of
July 28, 1999 relating to $393,270,000 principal amount of Mortgage Pass-Through
Certificates, Series 1999-1.
24
30
Purchase Price: With respect to (a) any Defective Mortgage Loan or (b)
any Mortgage Loan to be purchased by the Servicer pursuant to Section 3.01 or
Section 3.06, an amount equal to (i) the sum of (A) the Principal Balance of
such Mortgage Loan or Defective Mortgage Loan, as the case may be, as of the
beginning of the Collection Period next preceding the Deposit Date on which such
repurchase or purchase is required to occur, (B) interest computed at the
applicable Mortgage Loan Rate on such Principal Balance from the date to which
interest was last paid by the Mortgagor to the last day of the Collection Period
immediately preceding the Deposit Date on which such repurchase or purchase
occurs and (C) any previously unreimbursed Servicing Advances made on or in
respect of such Defective Mortgage Loan or Mortgage Loan, as the case may be,
less (ii) any payments of principal and interest in respect of such Defective
Mortgage Loan or Mortgage Loan, as the case may be, made by or on behalf of the
related Mortgagor during such Collection Period; provided that the Purchase
Price with respect to any Restricted Mortgage Loan to be purchased by the
Servicer pursuant to Section 3.06 will be the fair market value of the related
Mortgaged Property as described in such Section 3.06.
Qualified Replacement Mortgage Loan: A Mortgage Loan that is substituted
for a Deleted Mortgage Loan pursuant to Section 2.03 or Section 2.05 that must,
at the end of the Collection Period preceding the date of such substitution, (i)
have an outstanding principal balance (when taken together with any other
Qualified Replacement Mortgage Loan being substituted for such Deleted Mortgage
Loan), not in excess of and not substantially less than the unpaid principal
balance of the Deleted Mortgage Loan at the end of the Collection Period
preceding the date of substitution, (ii) if the Deleted Mortgage Loan is an
Adjustable Rate Mortgage Loan, have the Mortgage Loan Rate computed on the same
basis as the Mortgage Loan Rate on the related Mortgage Loan, utilizing the same
Index and having a Gross Margin or Minimum Rate not less than (and not more than
one percentage point in excess of) the Gross Margin and Minimum Rate applicable
to the Deleted Mortgage Loan and if the Deleted Mortgage Loan is a Fixed Rate
Mortgage Loan, have a Mortgage Loan Rate not less than (and not more than one
percentage point in excess of) the Mortgage Loan Rate of the Deleted Mortgage
Loan, (iii) have a remaining term to maturity not greater than (and not more
than one year less than) that of the Deleted Mortgage Loan, (iv) have a Combined
Loan-to-Value Ratio equal to or lower than the Combined Loan-to-Value Ratio of
the Deleted Mortgage Loan, (v) satisfy the criteria set forth from time to time
in the definition "qualified replacement mortgage" at Section 860G(a)(4) of the
Code, (vi) have the same or a superior lien priority as the Deleted Mortgage
Loan, (vii) comply as of the date of substitution with each representation and
warranty set forth in Section 2.05, (viii) have the same or better property type
as the Deleted Mortgage Loan and (ix) have the same or better occupancy status.
In the event that one or more mortgage loans are proposed to be substituted for
one or more Deleted Mortgage Loans, the foregoing tests may be met on a weighted
average basis or other aggregate basis (which, in the case of the Adjustable
Rate Mortgage Loans, must be acceptable to the Certificate Insurer), except that
the requirements of clauses (iv) through (viii) hereof must be satisfied as to
each Qualified Replacement Mortgage Loan.
Rating Agencies: Standard & Poor's and Moody's (each, a "Rating
Agency"). If either such agency or a successor is no longer in existence,
"Rating Agency" shall be such nationally
25
31
recognized statistical credit rating agency, or other comparable Person,
designated by the Servicer, notice of which designation shall be given to the
Trustee and that shall be acceptable to the Certificate Insurer.
Realized Loss: With respect to any Liquidated Mortgage Loan, the amount,
if any, by which the Principal Balance of such Mortgage Loan and accrued and
unpaid interest thereon (determined as of the Determination Date immediately
prior to such Mortgage Loan becoming a Liquidated Mortgage Loan) exceeds the Net
Liquidation Proceeds, if any, in respect of such Mortgage Loan, which amount
shall in no event exceed the Principal Balance of such Mortgage Loan (determined
as of the Determination Date immediately prior to such Mortgage Loan becoming a
Liquidated Mortgage Loan).
Record Date: As to any Distribution Date, (a) for the Fixed Rate Group
Certificates the close of business, on the last Business Day of the calendar
month immediately preceding such Distribution Date, except for the first record
date, which is the Closing Date and (b) for the Adjustable Rate Group
Certificates, the Business Day immediately preceding such Distribution Date so
long as the Adjustable Rate Group Certificates remain in book-entry form and,
otherwise, the last Business Day of the calendar month immediately preceding
such Distribution Date.
Relief Act: The Soldiers' and Sailors' Civil Relief Act of 1940, as
amended.
Relief Act Shortfall: As to any Distribution Date and either Mortgage
Loan Group, the amount of any reduction of interest collectible on any Mortgage
Loan in either Mortgage Loan Group for the related Collection Period due to the
application of the Relief Act.
REMIC: A "real estate mortgage investment conduit" as defined in Code
Section 860D, and in particular, either of REMIC I or REMIC II as indicated by
context.
REMIC Pool: With respect to REMIC I, the assets of the Trust other than
the Prefunding Account, Capitalized Interest Account, Supplemental Interest
Reserve Fund and REMIC I Regular Interests, and with respect to REMIC II, the
REMIC I Regular Interests, other than the Class P Certificates.
REMIC I Interests: As defined in Section 9.16(b) and described in
Section 9.16.
REMIC I Regular Interests: As defined in Section 9.16(b) and described
in Section 9.16.
REMIC Provisions: Provisions of the federal income tax law relating to
REMICs that appear at Sections 860A through 860G of Part IV of Subchapter M of
Chapter 1 of Subtitle A of the Code, and related provisions, and U.S. Department
of the Treasury proposed, temporary or final regulations and rulings promulgated
thereunder, as the foregoing may be in effect from time to time.
REO Property: As defined in Section 5.02(a).
26
32
Responsible Officer: When used with respect to the Trustee, any Vice
President or Assistant Vice President, any Assistant Secretary, any Assistant
Treasurer or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated officers and to whom,
with respect to a particular matter, such matter is referred because of such
officer's knowledge of and familiarity with the particular subject.
Restricted Mortgage Loan: A Mortgage Loan that as of the Closing Date
was 90 or more days contractually delinquent. As of the date hereof, there are
no Restricted Mortgage Loans in either Mortgage Loan Group.
Restricted Mortgaged Property: With respect to any Restricted Mortgage
Loan, the Mortgaged Property securing such Restricted Mortgage Loan.
Retained Certificates: The Class C Certificates, the Class P
Certificates and the Class R Certificates.
Rolling Delinquency Percentage: With respect to any Distribution Date,
the average of the Delinquency Percentages as of the last day of each of the
three (or one or two, in the case of the first and second Distribution Dates)
preceding calendar months.
Securities Act: The Securities Act of 1933, as amended.
Seller: The Company.
Senior Lien: With respect to any Junior Mortgage Loan, any liens on the
related Mortgaged Property of higher priority.
Servicer Prepayment Charge Payment Amount: The amounts payable by the
Servicer in respect of any waived Prepayment Charges pursuant to Section 3.22.
Servicer: The Company or any successor servicer appointed as provided
pursuant to this Agreement.
Servicer Cumulative Loss Event: The Servicer Cumulative Loss Event will
have occurred with respect to a Distribution Date as follows: (i) for the 1st
through the 12th Distribution Dates, if the Loss Percentage for such
Distribution Date is more than 1.25%; (ii) for the 13th through the 24th
Distribution Dates, if the Loss Percentage for such Distribution Date is more
than 1.75%; (iii) for the 25th through the 36th Distribution Dates, if the Loss
Percentage for such Distribution Date is more than 2.75%; (iv) for the 37th
through the 48th Distribution Dates, if the Loss Percentage for such
Distribution Date is more than 3.50%; and (v) for the 49th Distribution Date and
any Distribution Date thereafter, if the Loss Percentage for such Distribution
Date is more than 4.50%.
27
33
Servicer Rolling Delinquency Event: The Servicer Rolling Delinquency
Event will have occurred with respect to a Distribution Date if the Rolling
Delinquency Percentage for such Distribution Date is more than 15%.
Servicer Rolling Loss Event: The Servicer Rolling Loss Event will have
occurred with respect to a Distribution Date, if the Annual Loss Percentage is
equal to or more than 1.50%
Servicer Remittance Report: The monthly report prepared by the Servicer
and delivered to the Trustee pursuant to Section 4.01.
Servicing Advances: All reasonable and customary "out-of-pocket" costs
and expenses incurred in the performance by the Servicer of its servicing
obligation, including, but not limited to, the cost of (i) the preservation,
restoration and protection of the Mortgaged Property, including without
limitation advances in respect of real estate taxes and assessments and
insurance premiums on fire, hazard and, if applicable, flood insurance policies,
(ii) any enforcement or judicial proceedings, including foreclosures, (iii) the
management and liquidation of any REO Property, (iv) compliance with the
obligations under Section 3.04 and (v) expenditures relating to the correction
of a default on any Senior Lien pursuant to Section 3.06 in connection with the
liquidation of a Mortgage Loan.
Servicing Fee Rate: With respect to each Mortgage Loan Group and each
Collection Period, 0.50% per annum; provided, however, that if the Back-up
Servicer has assumed the duties of Servicer and (i) the Mortgage Loans that are
more than 30 days delinquent are equal to or greater than 12% but less than 18%
of all Mortgage Loans (measured by the aggregate Principal Balance as of the
time of servicing transfer), the Servicing Fee Rate shall increase to 0.65% per
annum or (ii) if the Mortgage Loans that are more than 30 days delinquent are
equal to or exceed 18% of all Mortgage Loans (measured by the aggregate
Principal Balance as of the time of servicing transfer) the Servicing Fee Rate
shall increase to 0.75% per annum.
Servicing Officer: Any officer of the Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name and specimen signature appear on a list of servicing officers annexed to an
Officer's Certificate furnished to the Trustee by the Servicer, as such list may
from time to time be amended.
Spread Squeeze Condition: The Spread Squeeze Condition will be applied
with respect to Distribution Dates on or after August 2000, and will be met with
respect to a Distribution Date if the Spread Squeeze Percentage for such
Distribution Date is less than 3.00% for any such Distribution Date with respect
to the Adjustable Rate Group and 1.50% for any such Distribution Date with
respect to the Fixed Rate Group.
Spread Squeeze Overcollateralization Increase Amount: For any
Distribution Date, an amount determined as follows:
(a) if the Spread Squeeze Condition is met for such Distribution
Date, the Spread Squeeze Overcollateralization Increase Amount for such
Distribution Date shall
28
34
be equal to the product obtained by multiplying (i) three, (ii) the
excess, if any, of the percentage applicable to such Distribution Date
set forth in the definition of "Spread Squeeze Condition" over the
Spread Squeeze Percentage for such Distribution Date and (iii) the
aggregate Principal Balance of the related Mortgage Loan Group as of the
Cut-off Date plus, in the case of the Adjustable Rate Group, the
Prefunding Account Deposit; or
(b) if the Spread Squeeze Condition is not met but has occurred
in the prior six months for such Distribution Date, the Spread Squeeze
Overcollateralization Increase Amount for such Distribution Date shall
be equal to (A) the Spread Squeeze Overcollateralization Increase Amount
for the most recent Distribution Date for which the Spread Squeeze
Condition was met minus (B) the product obtained by multiplying (i) one
sixth of the amount determined under clause (A) above and (ii) the
number of consecutive Distribution Dates through and including the
current Distribution Date for which the Spread Squeeze Condition was not
met.
Spread Squeeze Percentage: With respect to any Distribution Date, the
percentage equivalent of a fraction, the numerator of which is the product of 12
and the Monthly Excess Cashflow Amount for the related Mortgage Loan Group for
such Distribution Date, and the denominator of which is the aggregate Principal
Balance of the related Mortgage Loan Group and REO Properties as of such
Distribution Date.
Standard & Poor's: Standard & Poor's Rating Service, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., and its successors in interest.
Startup Day: As defined in Section 9.16(f).
Statement to Certificateholders: As defined in Section 5.03.
Step Down Cumulative Loss Test: The Step Down Cumulative Loss Test will
be met with respect to a Distribution Date as follows: (i) for the 31st through
the 42nd Distribution Dates, if the Loss Percentage for such Distribution Date
is 1.75% or less; (ii) for the 43rd through the 54th Distribution Dates, if the
Loss Percentage for such Distribution Date is 2.50% or less; (iii) for the 55th
through the 66th Distribution Dates, if the Loss Percentage for such
Distribution Date is 3.15% or less; and (iv) for any Distribution Date after the
66th Distribution Date, if the Loss Percentage for such Distribution Date is
3.50% or less.
Step Down Rolling Delinquency Test: The Step Down Rolling Delinquency
Test will be met with respect to a Distribution Date if the Rolling Delinquency
Percentage for such Distribution Date is 10.50% or less.
Step Down Rolling Loss Test: The Step Down Rolling Loss Test will be met
with respect to a Distribution Date if the Annual Loss Percentage is less than
1.00%.
Step Down Trigger: For any Distribution Date after the 30th Distribution
Date, the Step Down Trigger will have occurred if each of the Step Down
Cumulative Loss Test, the Step Down
29
35
Rolling Delinquency Test and the Step Down Rolling Loss Test is met. In no event
will the Step Down Trigger be deemed to have occurred on or before the 30th
Distribution Date.
Stepped Down Required Overcollateralized Percentage: For any
Distribution Date for which the Step Down Trigger has occurred, a percentage
equal to (i) the percentage equivalent of a fraction, the numerator of which is
5.65% of the initial aggregate Principal Balance of the Adjustable Rate Group
plus the Prefunding Account Deposit and 5.50% of the initial aggregate Principal
Balance of the Fixed Rate Group and the denominator of which is the aggregate
Principal Balance of the related Mortgage Loan Group and REO Properties as of
such Distribution Date, minus (ii) the percentage equivalent of a fraction, the
numerator of which is the product of (A) the percentage calculated under clause
(i) above minus 11.30% with respect to the Adjustable Rate Group and 11.00% with
respect to the Fixed Rate Group, multiplied by (B) the number of consecutive
Distribution Dates through and including the Distribution Date for which the
Stepped Down Required Overcollateralized Percentage is being calculated, up to a
maximum of six, for which the Step Down Trigger has occurred, and the
denominator of which is six.
Step Up Cumulative Loss Test: The Step Up Cumulative Loss Test will be
met with respect to a Distribution Date as follows: (i) for the 1st through the
12th Distribution Dates, if the Loss Percentage for such Distribution Date is
more than 1.25%; (ii) for the 13th through the 24th Distribution Dates, if the
Loss Percentage for such Distribution Date is more than 1.50%; (iii) for the
25th through the 36th Distribution Dates, if the Loss Percentage for such
Distribution Date is more than 2.50%; (iv) for the 37th through the 48th
Distribution Dates, if the Loss Percentage for such Distribution Date is more
than 3.25%; and (v) for the 49th Distribution Date and any Distribution Date
thereafter, if the Loss Percentage for such Distribution Date is more than
4.00%.
Step Up Rolling Delinquency Test: The Step Up Rolling Delinquency Test
will be met with respect to a Distribution Date if the Rolling Delinquency
Percentage for such Distribution Date is more than 12.25%.
Step Up Rolling Loss Test: The Step Up Rolling Loss Test will be met
with respect to a Distribution Date, if the Annual Loss Percentage is equal to
or more than 1.25%.
Step Up Spread Squeeze Test: The Step Up Spread Squeeze Test will be met
with respect to a Distribution Date if the Spread Squeeze Condition is met for
such Distribution Date or was met for any of the five preceding Distribution
Dates.
Step Up Trigger: For any Distribution Date, the Step Up Trigger will
have occurred if any one of the Step Up Cumulative Loss Test, the Step Up
Rolling Delinquency Test or the Step Up Rolling Loss Test is met.
Sub-Servicer: Any Person, including an Affiliate of the Servicer, with
whom the Servicer has entered into a Sub-Servicing Agreement and who satisfies
the requirements set forth in Section 3.15 hereof in respect of the
qualification of a Sub-Servicer. The Sub-Servicers with
30
36
respect to any of the Mortgage Loans as of the related Cut-off Date are listed
on Schedule I attached to this Agreement.
Sub-Servicing Account: Any segregated account, which shall at all times
be an Eligible Account, established and maintained pursuant to Section 3.02(b)
and entitled "Sub-Servicer, in trust for the benefit of Holders of Aames
Mortgage Trust 1999-1 Mortgage Pass-Through Certificates, Series 1999-1,
Collection Account". References herein to the Collection Account shall include
any Sub-Servicing Account as the context requires.
Sub-Servicing Agreement: A written contract between the Servicer and any
Sub-Servicer relating to the servicing and/or administration of certain Mortgage
Loans.
Subsequent Cut-off Date: With respect to any Subsequent Mortgage Loan,
the date specified as such in the related Subsequent Mortgage Loan Schedule.
Subsequent Cut-off Date Principal Balance: As to any Subsequent Mortgage
Loan, the actual outstanding principal balance due thereunder from the Mortgagor
as specified in the related Addition Notice.
Subsequent Mortgage Loan: An adjustable rate Mortgage Loan sold to the
Trust for inclusion in the Adjustable Rate Group pursuant to Section 2.02 of
this Agreement, which shall be listed on the Subsequent Mortgage Loan Schedule
attached to a Subsequent Transfer Agreement.
Subsequent Mortgage Loan Schedule: As of any Subsequent Transfer Date,
the schedule of Subsequent Mortgage Loans as of the related Subsequent Cut-off
Date being transferred to the Trust on such Subsequent Transfer Date pursuant to
a Subsequent Transfer Agreement. Each Subsequent Mortgage Loan Schedule shall
contain information regarding the related Subsequent Mortgage Loans of the type
included in the Mortgage Loan Schedule attached hereto as Exhibit E.
Subsequent Purchase Price: As of any Subsequent Transfer Date and with
respect to the Subsequent Mortgage Loans to be included in the Adjustable Rate
Group, an amount equal to 100% of the Principal Balances as of the Subsequent
Cut-off Date of such Subsequent Mortgage Loans listed in the related Subsequent
Transfer Agreement.
Subsequent Transfer Agreement: With respect to any Subsequent Mortgage
Loan, the agreement pursuant to which such Subsequent Mortgage Loan is
transferred to the Trust, in substantially the form attached hereto as Exhibit
C.
Subsequent Transfer Date: The date specified in each Subsequent Transfer
Agreement, but no later than August 31, 1999.
Supplemental Interest Amount: With respect to the Class A-V Certificates
on any Distribution Date, the sum of (i) the positive excess, if any, of the
amount of interest that would
31
37
have accrued thereon during the related Interest Period calculated at the lesser
of (x) the Class A-V Formula Pass-Through Rate and (y) 14%, over the amount of
interest that did accrue thereon at the Class A-V Pass-Through Rate and (ii) any
Supplemental Interest Amount remaining unpaid from a prior Distribution Date
(and in the case of any Supplemental Interest Amount remaining unpaid from a
prior Distribution Date, interest thereon calculated at the lesser of (x) the
Class A-V Formula Pass-Through Rate and (y) 14%, to the extent lawful). The
Certificate Insurance Policy will not cover any Supplemental Interest Amount.
Supplemental Interest Reserve Fund: The Supplemental Interest Reserve
Fund established and maintained as described in Section 3.21.
Target Deficiency: With respect to any Distribution Date and each
Certificate Group, the amount, if any, by which the related Targeted
Overcollateralization Amount exceeds the related Overcollateralization Amount on
such Distribution Date (after giving effect to distributions in respect of the
related Basic Principal Distribution Amount on such Distribution Date).
Targeted Overcollateralization Amount: With respect to each Certificate
Group and any Distribution Date, an amount equal to 5.65% of the initial
Adjustable Rate Group Balance plus Prefunding Account Deposit or 5.50% of the
initial Fixed Rate Group Balance, respectively, subject to the following: (i) if
the Step Up Trigger has occurred, the Targeted Overcollateralization Amount with
respect to each Certificate Group for such Distribution Date will be the sum of
(A) 2.5 times the respective percentages provided above with respect to the
aggregate Pool Balance outstanding as of such Distribution Date and (B) 50% of
the outstanding Group Pool Balance of the Mortgage Loans in the related Mortgage
Loan Group that are (1) 90 days or more delinquent as of the close of business
of the last Business Day of the calendar month preceding such Distribution Date
and (2) REO Properties and Mortgage Loans subject to foreclosure proceeding in
respect of the related Mortgage Loan Group; (ii) if the Step Up Trigger has not
occurred but the Step Up Spread Squeeze Test is met or has occurred in the prior
six months, the Targeted Overcollateralization Amount with respect to the either
Mortgage Loan Group for such Distribution Date will be an amount equal to the
sum of (A) the related Targeted Overcollateralization Amount for such
Distribution Date determined as though the related Step Up Spread Squeeze Test
were not met plus (B) the related Spread Squeeze Overcollateralization Increase
Amount; or (iii) if neither the Step Up Trigger has occurred nor the Step Up
Spread Squeeze Test is met but the Step Down Trigger has occurred, the Targeted
Overcollateralization Amount with respect to each Certificate Group for such
Distribution Date will be an amount equal to the greater of (A) the greater of
(1) 0.50% of the initial Fixed Rate Group Balance in the case of the Fixed Rate
Group and the initial Adjustable Rate Group Balance plus the Prefunding Account
Deposit in the case of the Adjustable Rate Group and (2) the aggregate Principal
Balance, as of such Distribution Date, of the three largest outstanding Mortgage
Loans in the related Mortgage Loan Group and (B) the lesser of (x) 5.65% of the
initial Adjustable Rate Group Balance plus the Prefunding Account Deposit or
5.50% of the initial Fixed Rate Group Balance, as applicable, and (y) the
Stepped Down Required Overcollateralized Percentage of the aggregate Group Pool
Balance of the Mortgage Loans and REO Properties in respect of the related
Mortgage Loan Group as of such Distribution Date.
32
38
The Certificate Insurer may, in its sole discretion, at the request of
the Seller, modify the Targeted Overcollateralization Amount above for the
purpose of reducing or eliminating, in whole or in part, the application of any
Step Up Trigger, and the Trustee and the Rating Agencies shall be notified in
writing of such modification prior to the related Distribution Date and such
modification shall not result in a downgrading of the then-current ratings of
the Certificates.
Transfer Affidavit: The affidavit to be delivered by any transferee of
an interest in a Class R Certificate pursuant to Section 6.02(b), to be
substantially in the form attached hereto as Exhibit G.
Transferor Affidavit: The affidavit to be delivered by any transferor of
an interest in a Class R Certificate pursuant to Section 6.02(b), to be
substantially in the form attached hereto as Exhibit K.
Transition Cost: Any documented expenses reasonably incurred by the
Back-up Servicer or Trustee in connection with a transfer of servicing from the
Servicer to a successor Servicer as successor Servicer pursuant to Section 8.02,
but not to exceed $5,000 with respect to any single succession.
Trust: The trust created by this Agreement and the corpus thereof, which
consists of, to the extent described herein, the Mortgage Loans, such assets as
shall from time to time be identified or shall be required by this Agreement to
be deposited in the Collection Account, the Certificate Account, the Policy
Payments Account, the Prefunding Account or the Capitalized Interest Account or
invested in Permitted Investments in accordance with this Agreement, all rights
under any insurance policy covering a Mortgage Loan or the related Mortgaged
Property and property and any proceeds thereof that secured a Mortgage Loan and
that has been acquired by foreclosure, deed in lieu of foreclosure or by a
comparable conversion, and the Certificate Insurance Policy.
Trust Insurance Proceeds: Insurance Proceeds that (a) are applied by the
Servicer to reduce the Principal Balance of the related Mortgage Loan or pay
interest due on the related Mortgage Loan and (b) not applied to the restoration
or repair of the related Mortgaged Property or released to the related Mortgagor
in accordance with the Servicer's normal servicing procedures or the terms of
the related Mortgage Loan.
Trust Parties: As defined in Section 5.04.
Trustee: Bankers Trust Company of California, N.A., a national banking
association, and its successors in interest or any successor trustee appointed
as provided pursuant to this Agreement.
Trustee Fee: (i) The annual fee of the Trustee, which shall be $7,000,
payable from each Mortgage Loan Group in the proportion that the Principal
Balance of the Mortgage Loans in the related Mortgage Loan Group bear to the
aggregate Principal Balance of the Mortgage Loans as of the close of business on
the Determination Date occurring in the month, preceding the
33
39
Distribution Date on which such fee is to be paid and (ii) any file access fees
or other fees and expenses payable pursuant to Section 9.05(b).
Vice President: Any vice president, whether or not designated by a
number or a word or words added before or after the title "vice president".
Voting Interest: With respect to any provisions hereof providing for the
action, consent or approval of the Holders of all Certificates evidencing
specified Voting Interests in the Trust, the Holders of the Offered Certificates
will collectively be entitled to 100% of the aggregate Voting Interests
represented by all Certificates. Voting Interests will be allocated to the
Certificateholders of each Class pro rata, based on the respective Certificate
Principal Balances thereof. Each Certificateholder of a Class will have a Voting
Interest equal to the product of the Voting Interest to which such Class is
collectively entitled and the Percentage Interest in such Class represented by
such Holder's Certificates. With respect to any provision hereof providing for
action, consent or approval of each Class of Certificates or specified Classes
of Certificates, each Certificateholder of a Class will have a Voting Interest
in such Class equal to such Holder's Percentage Interest in such Class.
Weighted Average Coupon Cap: With respect to any Distribution Date and
the Class A-V Certificates, the per annum rate equal to the lesser of (A) the
weighted average of the Pass-Through Rates of the Class LT-AV and Class LT-MV
REMIC I Regular Interests, where the Pass-Through Rate of the Class LT-MV REMIC
I Regular Interest is first reduced by 0.50%, and (B) 14%.
Section 1.02 Interest Calculations All calculations of interest at the
Mortgage Loan Rate that are made in respect of the Principal Balance of a
Mortgage Loan, shall be made on a daily basis using a 360-day year of twelve
30-day months.
All calculations of interest on the Class A-F Certificates will be
computed on the basis of a 360-day year of twelve 30-day months and all
calculations of interest on the Class A-V Certificates will be made on the basis
of the actual number of days elapsed in the related Interest Period and a year
of 360 days.
Section 1.03 Determination of Material Adverse Effect Whenever a
determination is to be made under this Agreement as to whether a given action,
course of conduct, event or set of facts or circumstances could or would have a
material adverse effect on the Trust or the Certificateholder (or any similar or
analogous determination), such determination shall be made without giving effect
to the insurance provided by the Certificate Insurance Policy.
34
40
ARTICLE II
CONVEYANCE OF THE TRUST;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01 Conveyance of the Trust The Seller, concurrently with the
execution and delivery of this Agreement, does hereby irrevocably sell,
transfer, assign, set over and otherwise convey to the Trustee, in trust for the
benefit of the Certificateholders, without recourse (except as otherwise
explicitly provided for herein), all of its right, title and interest in and to
the Trust, including specifically, without limitation, the Mortgage Loans, the
Mortgages, the Mortgage Files and the Mortgage Notes, including all interest and
principal (whether in the form of payments by Mortgagors or other proceeds)
received or deemed to be received by the Seller on or with respect to the
Mortgage Loans on or after the related Cut-off Date net of amounts in respect of
interest accrued on the Mortgage Loans in periods prior to the related Cut-off
Date, (whether in the nature of amounts held by the Seller for application on
behalf of the related Mortgagor as a Monthly Mortgage Payment that is due on any
date on or after the related Cut-off Date or otherwise), and the Class P
Deposit, together with all of its right, title and interest in and to the
proceeds received on or after the related Cut-off Date of any related insurance
policies, other than any primary mortgage insurance policies purchased by the
Seller and Servicer or any of its affiliates with respect to any of the Mortgage
Loans. In addition, on or prior to the Closing Date the Seller shall (i) cause
the Certificate Insurance Policy to be delivered to the Trustee and (ii) deposit
the Closing Date Deposit in the Collection Account.
In the event that, notwithstanding the intent of the parties hereto to
effect a sale and assignment of the Trust by the Seller to the Trustee, such
sale and assignment is deemed to constitute a pledge of security for a loan, it
is the intent of this Agreement that the Seller shall be deemed to have granted
to the Trustee for the benefit of the Certificateholders a first priority
perfected security interest in all of the Seller's right, title and interest in
and to the Mortgage Loans, the Mortgages, the Mortgage Files and the Mortgage
Notes, all payments of principal or interest on the Mortgage Loans received on
or after the related Cut-off Date net of amounts in respect of interest accrued
on the Mortgage Loans in periods prior to the related Cut-off Date, all other
payments (exclusive of assumption fees, late payment charges, charges for checks
returned for insufficient funds, if any, and extension and other administrative
charges other than Prepayment Charges) made in respect of such Mortgage Loans on
or after the related Cut-off Date and all proceeds of any thereof, including all
amounts on deposit in the Certificate Account, the Collection Account, the
Policy Payments Account, the Prefunding Account and the Capitalized Interest
Account and amounts invested in Permitted Investments (but excluding all
investment income with respect to the Prefunding Account and Capitalized
Interest Account), and that this Agreement shall constitute a security agreement
under applicable law. The Seller shall file financing statements and
continuation statements as necessary to maintain the perfection of such security
interest.
The Company confirms to the Trustee that it has caused its computer
records relating to the Initial Mortgage Loans to indicate by a code that the
Initial Mortgage Loans have been sold to the Trustee on behalf of the Trust and
constitute part of the Trust in accordance with the terms of this Agreement. The
Company further confirms to the Trustee that it will cause its computer
35
41
records relating to each Subsequent Mortgage Loan to indicate by a code that
such Subsequent Mortgage Loan has been sold to the Trustee on behalf of the
Trust and that it constitutes part of the Trust in accordance with the terms of
this Agreement. The Company confirms that it will treat the conveyance
transactions contemplated hereby and in each Subsequent Transfer Agreement as
sales in accordance with generally accepted accounting principles and will
reflect such transactions as sales on its primary accounting records.
In connection with each such sale and assignment, the Company, in its
capacity as Seller hereunder, does hereby deliver to, and deposit with, the
Trustee the originals of the following documents or instruments with respect to
each Mortgage Loan so assigned:
(a) The original Mortgage Note, with all intervening endorsements
sufficient to show a complete chain of endorsement to the Seller,
endorsed (which endorsement may be by manual or facsimile signature) by
the Seller without recourse to the order of the Trustee in the following
form: "Pay to the order of Bankers Trust Company of California, N.A., in
trust for the benefit of holders of Aames Mortgage Trust 1999-1 Mortgage
Pass-Through Certificates, Series 1999-1, without recourse", except with
respect to 2 Mortgage Loans identified to the Trustee by loan number, an
original lost note affidavit has been supplied in lieu of the original
Mortgage Note and a copy of the original Mortgage Note has been
delivered to the Trustee;
(b) The original Mortgage with evidence of recording indicated
thereon;
(c) The original assignment of the Mortgage executed by the
Seller in recordable form;
(d) Originals of all assumption, modification and substitution
agreements in those instances where the terms or provisions of a
Mortgage or Mortgage Note have been modified or such Mortgage or
Mortgage Note has been assumed;
(e) Originals of all intervening mortgage assignments with
evidence of recording indicated thereon sufficient to show a complete
chain of assignment from the originator of the Mortgage Loan to the
Seller; and
(f) Original lender's title insurance policy issued on the date
of the origination of such Mortgage Loan.
As promptly as practicable subsequent to the Closing Date, and in any
event, within 30 days thereafter, the Company, in its capacity as Servicer shall
(i) affix the Trustee's name to each assignment of Mortgage, as the assignee
thereof in the following form: "Bankers Trust Company of California, N.A., in
trust for the benefit of holders of Aames Mortgage Trust 1999-1 Mortgage
Pass-Through Certificates, Series 1999-1, without recourse", (ii) cause such
assignment to be in proper form for recording in the appropriate public office
for real property records, and (iii) cause to be delivered for recording in the
appropriate public office for real property records the assignments of the
Mortgages to the Trustee, except that, with respect to any assignments of
36
42
Mortgage as to which the Servicer has not received the information required to
prepare such assignment in recordable form, the Servicer shall be obligated to
prepare and to deliver such assignment for such recording as soon as practicable
after receipt of such information and in any event within 30 days after receipt
thereof (and in no event more than one year after the Closing Date) and that the
Servicer need not cause to be recorded any assignment that relates to a Mortgage
Loan in any jurisdiction under the laws of which, as evidenced by an Opinion of
Counsel delivered to the Trustee at Seller's expense to the effect that the
recordation of such assignment is not necessary to protect the Trustee's and the
Certificateholders' interest in the related Mortgage Loan; provided, however,
notwithstanding the delivery of any legal opinions, each assignment of mortgage
shall be recorded if the Certificate Insurer reasonably determines based upon a
change of any law (including case law) or fact, including any fact referenced or
assumed in any such Opinion of Counsel, that it no longer is satisfied with the
conclusion drawn in such Opinion of Counsel, and delivers notice to such effect
to the Seller and the Seller does not promptly deliver to the Certificate
Insurer a new Opinion of Counsel reasonably satisfactory to the Certificate
Insurer reaffirming each of the opinions contained in the original Opinion of
Counsel delivered at the Closing Date in lieu of such recordation. All recording
of assignments of mortgages shall be at the expense of the Seller without any
right of reimbursement from the Trust. Notwithstanding anything herein to the
contrary, in the event that the Certificate Insurer, in its reasonable
discretion, determines that the laws of a particular jurisdiction require
recordation of assignments of Mortgage Loans in order to protect the interests
of the Trust, the Certificateholders and the Certificate Insurer in the Mortgage
Loans, then the Seller shall be required to record assignments of Mortgage Loans
in such jurisdiction.
In addition, in connection with such sales and assignments, the Company,
in its capacity as Seller hereunder, does hereby deliver to, and deposit with,
the Trustee the Certificate Insurance Policy for the benefit of the
Certificateholders.
If the Company cannot deliver the original Mortgage or any intervening
mortgage assignment with evidence of recording thereon concurrently with the
execution and delivery of this Agreement solely because of a delay caused by the
public recording office where such original Mortgage or mortgage assignment has
been delivered for recordation, the Company shall deliver to the Trustee an
Officer's Certificate, with a photocopy of such Mortgage or mortgage assignment,
as the case may be, attached thereto, stating that such original Mortgage or
mortgage assignment has been delivered to the appropriate public recording
official for recordation. The Company shall promptly deliver to the Trustee such
original Mortgage or intervening mortgage assignment with evidence of recording
indicated thereon upon receipt thereof from the public recording official. If
the Company within six months from the Closing Date shall not have received such
original Mortgage or intervening mortgage assignment from the public recording
official, it shall obtain, and deliver to the Trustee within eight months from
the Closing Date, a copy of such original Mortgage or mortgage assignment
certified by such public recording official to be a true and complete copy of
such original Mortgage or mortgage assignment as recorded by such public
recording office.
The costs relating to the delivery of the documents specified in this
Section shall be borne by the Seller.
37
43
Section 2.02 Conveyance of the Subsequent Mortgage Loans; Fixed Price
Contract Subject to the conditions set forth in the paragraphs below, in
consideration of the Trustee's delivery on the Closing Date or related
Subsequent Transfer Dates to or upon the order of the Seller of the Subsequent
Purchase Price of the related Subsequent Mortgage Loans from amounts on deposit
in the Prefunding Account (or other amounts payable to the Seller if such
purchases of all Subsequent Mortgage Loans occur on the Closing Date) with
respect to the Adjustable Rate Group, the Seller shall, from time to time, on
the Closing Date or any Subsequent Transfer Date, sell, transfer, assign, set
over and otherwise convey without recourse, to the Trustee, all right, title and
interest of the Seller in and to each Subsequent Mortgage Loan identified on the
Subsequent Mortgage Loan Schedule attached to the related Subsequent Transfer
Agreement delivered by the Seller on the Closing Date or such Subsequent
Transfer Date, including all of its right, title and interest in and to
principal and interest (whether in the form of payments by Mortgagors or other
proceeds) received or deemed to be received by the Seller on each such
Subsequent Mortgage Loan on and after the related Subsequent Cut-off Date, net
of amounts in respect of interest accrued on such Subsequent Mortgage Loans in
periods prior to the related Subsequent Cut-off Date (whether in the nature of
amounts held by the Seller for application on behalf of the related Mortgagor as
a Monthly Mortgage Payment that is due on any date on or after the related
Subsequent Cut-off Date or otherwise); provided, however, that the Seller
reserves and retains all of its right, title and interest in and to principal
(including prepayments) and interest collected on each such Subsequent Mortgage
Loan prior to the related Subsequent Cut-off Date (except for amounts held by
the Seller for application on or after the related Subsequent Cut-off Date). The
transfer by the Seller of the Subsequent Mortgage Loans set forth on the
Subsequent Mortgage Loan Schedule to the Trustee shall be absolute and shall be
intended by the parties hereto to be treated as a sale by the Seller. On or
before the last day of the Funding Period, the Seller shall convey to the
Trustee pursuant to this Section 2.02 the lesser of: (i) all Mortgage Loans then
in its possession that satisfy the requirements of this Section 2.02 or (ii) the
maximum principal balance of Mortgage Loans as determined by Seller that satisfy
the requirements of this Section 2.02 whose aggregate Subsequent Purchase Price
does not exceed the Prefunding Account Deposit. Subsequent Mortgage Loans to be
conveyed on a given Subsequent Transfer Date must have an aggregate Subsequent
Cut-off Date Principal Balance of not less than $500,000; provided, however,
that the Subsequent Mortgage Loans to be conveyed on the final Subsequent
Transfer Date may have an aggregate Subsequent Cut-off Date Principal Balance of
less than $500,000.
In the event that, notwithstanding the intent of the parties hereto to
effect a sale and assignment of the Subsequent Mortgage Loans on the related
Subsequent Transfer Date by the Seller to the Trustee, such sale and assignment
will be deemed to constitute a pledge of security for a loan, it is the intent
of this Agreement that the Seller shall be deemed to have granted to the Trustee
for the benefit of the Certificateholders a first priority perfected security
interest in all of the Seller's right, title and interest in and to the
Subsequent Mortgage Loans, the Mortgages, the Mortgage Files and the Mortgage
Notes, all payments of principal and interest on the Subsequent Mortgage Loans
received on or after their respective Subsequent Cut-off Dates, net of amounts
in respect of interest accrued on such Subsequent Mortgage Loans in periods
prior to the related Subsequent Cut-off Date, all other payments (provided that
the parties to this Agreement
38
44
acknowledge that the Servicer is entitled to receive all assumption fees, late
payment charges, charges for checks returned for insufficient funds, if any, and
extension and other administrative charges other than Prepayment Charges) made
in respect of such Subsequent Mortgage Loans on or after the related Subsequent
Cut-off Date, and that this Agreement and the related Subsequent Transfer
Agreement shall each constitute a security agreement with respect to the related
Subsequent Mortgage Loans under applicable law. The Seller shall file financing
statements and continuation statements as necessary to maintain the perfection
of such security interest.
The amount released to the Seller from the Prefunding Account on any
Subsequent Transfer Date (or from other amounts payable to the Seller on the
Closing Date) in connection with any conveyance of Subsequent Mortgage Loans to
be included in the Adjustable Rate Group shall be equal to the aggregate of the
Subsequent Purchase Prices for such Subsequent Mortgage Loans, which amounts, in
the aggregate, shall not exceed the Prefunding Account Deposit. The amount so
released to the Seller in connection with any conveyance of Subsequent Mortgage
Loans shall, for federal income tax purposes, be considered cash contributed to
REMIC I by the Seller and used by the Trustee to acquire the related Subsequent
Mortgage Loans pursuant to a fixed price contract established pursuant to this
Section 2.02.
On the Closing Date or other related Subsequent Transfer Date, the
Seller shall transfer to the Trustee the Subsequent Mortgage Loans and the other
property and rights related thereto described in the first paragraph in this
section only upon the satisfaction of each of the following conditions on or
prior to the related Subsequent Transfer Date:
(a) the Seller shall provide the Trustee and the Certificate
Insurer with an Addition Notice and shall provide any information
reasonably requested by the Trustee or the Certificate Insurer with
respect to the Subsequent Mortgage Loans;
(b) the Seller shall deliver to the Trustee, the Certificate
Insurer and the Rating Agencies a duly executed Subsequent Transfer
Agreement and any other related documentation in the forms of the
exhibits listed thereon;
(c) the Seller shall deposit in the Collection Account all
collections in respect of the Subsequent Mortgage Loans received or
deemed received by the Seller on or after the related Subsequent Cut-off
Date (whether in the nature of amounts held by the Seller for later
application on behalf of the related Mortgagor in respect of a Monthly
Payment due on or after the related Subsequent Cut-off Date or
otherwise) except for amounts in respect of interest accrued on such
Subsequent Mortgage Loans prior to the related Cut-off Date;
(d) the Seller shall certify that, as of the Subsequent Transfer
Date, the Seller was not insolvent, was not made insolvent by such
transfer and is not aware of any pending insolvency;
(e) the Seller shall certify that such addition of Subsequent
Mortgage Loans will not result in a material adverse tax consequence to
the Trust or the Certificateholders;
39
45
(f) the Funding Period shall not have expired; and
(g) the Subsequent Mortgage Loans shall satisfy the criteria set
forth on page S-47 of the Prospectus Supplement.
In addition, the Seller will provide the Certificate Insurer and the
Trustee with data regarding all Subsequent Mortgage Loans to be transferred to
the Trust on any Subsequent Transfer Date at least 10 Business Days prior to the
end of the Funding Period or, if such Subsequent Transfer Date is the Closing
Date, on the Closing Date. No later than the end of the Funding Period, the
following conditions shall have been satisfied with respect to all Subsequent
Mortgage Loans to be transferred to the Trust on any Subsequent Transfer Date:
(A) the Seller shall have delivered to the Certificate Insurer
and the Trustee an Officer's Certificate confirming the satisfaction of
each condition precedent specified in this Section 2.02 and in the
related Subsequent Transfer Agreements;
(B) the Seller shall have delivered to the Certificate Insurer
and the Trustee Opinions of Counsel with respect to the transfer of all
of the Subsequent Mortgage Loans to the Trust on any Subsequent Transfer
Date substantially in the form of the Opinions of Counsel delivered to
the Trustee and the Certificate Insurer on the Closing Date regarding
bankruptcy, corporate and tax matters;
(C) the Trustee shall deliver to the Rating Agencies, the
Certificate Insurer and the Seller an Opinion of Counsel with respect to
the enforceability of each of the Subsequent Transfer Agreements
substantially in the form of the Opinion of Counsel delivered to the
Seller and the Certificate Insurer on the Closing Date;
(D) the Seller shall represent and warrant that the Subsequent
Mortgage Loans satisfy the criteria set forth in on page S-47 of the
Prospectus Supplement; and
(E) the Certificate Insurer shall deliver to the Seller, the
Trustee and the Rating Agencies a written notice confirming the
Certificate Insurer's consent and approval to the addition of all
Subsequent Mortgage Loans purchased by the Trust on any Subsequent
Transfer Date.
On or prior to the Closing Date, the Seller shall provide to the Trustee
and the Certificate Insurer a schedule of mortgage loans that are expected to be
Subsequent Mortgage Loans, and Subsequent Mortgage Loans transferred to the
Trust shall be taken only from such schedule; provided, however, if any such
identified mortgage loans do not satisfy the requirements of Subsequent Mortgage
Loans as set forth in this Section 2.02 or if any such mortgage loans are
rejected as Subsequent Mortgage Loans by the Certificate Insurer, mortgage loans
acceptable to the Certificate Insurer may be substituted for such defective or
rejected mortgage loans. The Seller shall certify that the Subsequent Mortgage
Loans will be transferred to the Trust in
40
46
accordance with the foregoing and that such Subsequent Mortgage Loans satisfy
the requirements of Subsequent Mortgage Loans as set forth in this Section 2.02
as of the Closing Date.
Subject to Section 3.16, if all of the Subsequent Mortgage Loans are
transferred to the Trust on the Closing Date, then the remaining portion of the
Prefunding Account Deposit will be deposited into the Certificate Account and
held there, without investment thereof, until the first Distribution Date. On
such first Distribution Date, such amounts will be deemed to comprise a portion
of the Adjustable Rate Group Principal Distribution Amount and will be
distributable to the Class A-V Certificateholders.
Section 2.03 Acceptance by the Trustee; Repurchase or Substitution of
Mortgage Loans. The Trustee acknowledges the sale and assignment to the Trust
and receipt by it of the original Mortgage Notes, Assignments and Mortgages
pursuant to this Agreement and the delivery to it of the Certificate Insurance
Policy, and subject to (i) the provisions of the penultimate paragraph of
Section 2.01, (ii) the review provided for in this Section of the documents
referred to in clauses (a) through (f) of Section 2.01 and (iii) delivery of the
Officer's Certificates pursuant to Section 2.01, declares that it will hold the
Trust in trust upon the terms herein set forth for the use and benefit of all
present and future Certificateholders. The Trustee agrees, for the benefit of
Certificateholders, to review each Mortgage File within 45 days after the
Closing Date (or, 45 days after the Subsequent Transfer Date, with respect to
the Subsequent Mortgage Loans) to determine whether the documents described in
Section 2.01(a)-(c), (e) and (f) have been executed and received, and whether
such documents relate to the Mortgage Loans identified in the Mortgage Loan
Schedule, or the Subsequent Mortgage Loan Schedule, as applicable, and in so
doing the Trustee may rely on the purported due execution and genuineness of any
such document and on the purported genuineness of any signature thereon. If
within such 45-day period the Trustee finds any document constituting a part of
a Mortgage File not to have been executed or received or to be unrelated to the
Mortgage Loans identified in the Mortgage Loan Schedule or the Subsequent
Mortgage Loan Schedule, as applicable, the Trustee shall promptly notify the
Seller of such findings and shall provide a copy of such notice to the
Certificate Insurer. The Seller shall have a period equal to the lesser of (i)
60 days from the date of such notice and (ii) 90 days from the Trustee's
discovery of the defect to correct or cure any such defect. Notwithstanding the
second paragraph of Section 9.01, the Trustee shall be under no duty or
obligation to inspect, review or examine any such documents, instruments,
certificates or other papers to determine that they are genuine, enforceable, or
appropriate for the represented purpose or that they have actually been recorded
or that they are other than what they purport to be on their face.
If the Trustee has notified the Seller of a defect in a Mortgage File
that materially and adversely affects the value of the related Mortgage Loan or
the interests of the Certificateholders or the Certificate Insurer in the
related Mortgage Loan, and such defect remains uncured after such 60-day or
90-day period, the Seller shall, (i) in the case of a defect consisting solely
of the failure of the Company to deliver the original Mortgage or any
intervening mortgage assignment with evidence of recording thereon for reasons
set forth in Section 2.01, on the first Deposit Date occurring after the
expiration of eight months from the Closing Date, and (ii) in the case of all
other defects, on the Deposit Date occurring not later than 60 days after
receipt of notice of such
41
47
defect from the Trustee and 90 days from the Trustee's discovery of the defect,
as the case may be, either (I) repurchase the related Mortgage Loan (including
any property acquired in respect thereof and any insurance policy or current or
future insurance proceeds with respect thereto) from the Trust at a price equal
to the Purchase Price, which shall be accomplished by deposit of monies by the
Seller in the Certificate Account on such Deposit Date, or (II) substitute one
or more Qualified Replacement Mortgage Loans for the related Mortgage Loan.
Upon receipt by the Trustee of an Officer's Certificate of the Servicer
to the effect that the Purchase Price for a Defective Mortgage Loan (other than
a Defective Mortgage Loan that is a Deleted Mortgage Loan) has been deposited in
the Certificate Account, and upon confirmation by the Trustee that such Purchase
Price has been received by it, the Trustee shall execute and deliver such
instrument of transfer or assignment presented to it by the Seller, in each case
without recourse, as shall be necessary to vest in the Seller legal and
beneficial ownership of such repurchased Defective Mortgage Loan (including any
property acquired in respect thereof or insurance policy or current or future
insurance proceeds with respect thereto).
Payments received with respect to Qualified Replacement Mortgage Loans
in the Collection Period prior to the Deposit Date on which such substitution
occurs will not be part of the Trust and will be retained by the Seller. For the
Distribution Date following the Deposit Date on which such substitution occurs,
distributions to Certificateholders will reflect the payments received on such
Deleted Mortgage Loan in the related Collection Period representing amounts due
or accrued thereon prior to such Deposit Date, and the Seller shall thereafter
be entitled to retain all amounts subsequently received in respect of such
Deleted Mortgage Loan. In the case of a Qualified Replacement Mortgage Loan, the
Mortgage File relating thereto shall be delivered to the Trustee and the amount,
if any, by which the Principal Balance of the related Deleted Mortgage Loan as
of the related Deposit Date exceeds the Principal Balance of the Qualified
Replacement Mortgage Loan as of the first day of the related Collection Period
shall be remitted by the Seller to the Trustee for deposit in the Certificate
Account on the Deposit Date on which the substitution occurs. For purposes of
this Agreement, any such amount so deposited in the Certificate Account shall be
deemed a prepayment of the related Deleted Mortgage Loan received by the
Servicer as of the prior Determination Date. Upon receipt by the Trustee of an
Officer's Certificate certifying that the Qualified Replacement Mortgage Loan
conforms to the requirements of this Agreement and (a) written notification of
such deposit signed by a Servicing Officer and (b) the new Mortgage File
(containing all of the documents referred to in clauses (a), (b), (c), (d), (e)
and (f) of Section 2.01), the Trustee shall release or cause to be released to
the Seller the Mortgage File related to the Deleted Mortgage Loan or property
and shall execute and deliver or cause to be executed and delivered such
instrument of transfer or assignment presented to it by the Seller, without
recourse, as shall be necessary to vest in the Seller all of the legal and
beneficial ownership of such Deleted Mortgage Loan or property and the Trustee
shall have no further responsibility with respect to said Mortgage File. It is
understood and agreed that the obligation of the Seller to substitute a
Qualified Replacement Mortgage Loan for or repurchase any Defective Mortgage
Loan (or any property acquired in respect thereof or insurance policy or current
or future insurance proceeds with respect thereto) shall constitute the sole
remedy against it respecting such defect available to the Certificateholders or
the Trustee, and such obligation on the part of the Seller shall survive any
resignation or termination of the Company as Servicer
42
48
under this Agreement. Notwithstanding the foregoing, a substitution by the
Seller for a defect in a constituent document will not be made unless the
Trustee and the Certificate Insurer receive an Officer's Certificate certifying
that the Qualified Replacement Mortgage Loan conforms to the requirements of
this Agreement and an Opinion of Counsel that such substitution will not be a
"prohibited transaction" as defined in Section 860F(a)(2) of the Code. Any
substitution must be effected not later than two years after the Closing Date,
or within such longer period of time as may be permitted under the REMIC
Provisions for substitution of mortgage loans.
On or prior to the 90th day after the Closing Date (or the 90th day
after the applicable Subsequent Transfer Date with respect to the Subsequent
Mortgage Loans), the Trustee shall certify to the Certificate Insurer, the
Seller and the Servicer that it has received all of the documents referred to in
clauses (a) (b), (c), (e) and (f) of Section 2.01 and that all corrections or
curative actions required to be taken by the Seller within the 60-day or 90-day
period referred to in the first paragraph of this Section have been completed or
effected, or the related Mortgage Loans have been repurchased or substituted, in
accordance with the provisions of this Section or, if any deficiencies in the
Mortgage Files or other omissions of the Seller with respect to the Mortgage
Files are known to the Trustee at the time of such certification, the Trustee
shall make such certification only with respect to those Mortgage Loans as to
which no such defects or omissions are known, and shall qualify such
certification with respect to the remaining Mortgage Loans, identifying the
related defects or omissions. Thereafter, the Trustee shall provide the
Certificate Insurer, the Seller and the Servicer with monthly exception reports
indicating the status of any exceptions until all such exceptions have been
eliminated. Such monthly exception reports shall be distributed by the Trustee
on the related Distribution Date with the Statement to Certificateholders.
Section 2.04 Representations and Warranties Regarding the Servicer and
the Seller The Company, as Seller and Servicer hereby represents and warrants to
the Trustee, the Certificate Insurer and the Certificateholders that, as of the
Closing Date:
(i) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of California. The
Company is in compliance with the laws of each state in which it is
acting as Servicer with respect to a Mortgage Loan to the extent
necessary to perform all servicing obligations with respect to the
related Mortgaged Property hereunder. Each Sub-Servicer is in compliance
with the laws of each state where the Mortgaged Properties under the
applicable Sub-Servicing Agreement are located to the extent necessary
to perform the servicing obligations hereunder; the Company has the
power and authority to execute and deliver this Agreement and to perform
its obligations in accordance herewith; the execution, delivery and
performance of this Agreement (including all instruments of transfer to
be delivered pursuant to this Agreement) by the Company and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action; this Agreement
evidences the valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, subject to the effect
of bankruptcy, insolvency, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally or the
application of equitable principles in any proceeding,
43
49
whether at law or in equity; and the consummation of the transactions
contemplated hereby will not result in the breach of any terms or
provisions of the articles of incorporation or by-laws of the Company or
result in the breach of any term or provision of, or conflict with or
constitute a default under or result in the acceleration of any
obligation under, any material agreement, indenture or loan or credit
agreement or other material instrument to which the Company or its
property is subject, or result in the violation of any law, rule,
regulation, order, judgment or decree to which the Company or its
property is subject. Each Sub-Servicer has all requisite corporate power
and authority to conduct its business and perform the obligations under
the Sub-Servicing Agreement to which such Sub-Servicer is a party;
(ii) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits authorizations, rights and
licenses required to be taken, given or obtained, as the case may be, by
or from any federal, state or other governmental authority or agency,
that are necessary in connection with the execution and delivery by the
Company of this Agreement, have been duly taken, given or obtained, as
the case may be, are in full force and effect, are not subject to any
pending proceedings or appeals (administrative, judicial or otherwise)
and either the time within which any appeal therefrom may be taken or
review thereof may be obtained has expired or no review thereof may be
obtained or appeal therefrom taken, and are adequate to authorize the
consummation of the transactions contemplated by this Agreement on the
part of the Company and the performance by the Company of its
obligations as Servicer under this Agreement;
(iii) There is no action, suit, proceeding or investigation
pending or, to the best of the Company's knowledge, threatened against
the Company that, either in any one instance or in the aggregate, may
result in any material adverse change in the business, operations,
financial condition, properties or assets of the Company or in any
material impairment of the right or ability of the Company to carry on
its business substantially as now conducted, or in any material
liability on the part of the Company or that would draw into question
the validity of this Agreement or the Mortgage Loans or of any action
taken or to be taken in connection with the obligations of the Company,
in its capacity as Servicer, contemplated herein, or that would be
likely to impair the ability of the Company to perform under the terms
of this Agreement;
(iv) The Company is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal,
state, municipal or governmental agency, which default might have
consequences that would materially and adversely affect the condition
(financial or other) or operations of the Company or its properties or
might have consequences that would adversely affect its performance as
Servicer hereunder;
(v) The transfer, assignment and conveyance of the Mortgage Loans
by the Company, as Seller, pursuant to this Agreement are not subject to
the bulk transfer laws
44
50
or any similar statutory provisions in effect in any applicable
jurisdiction and are not being transferred with the intent to hinder,
delay or defraud any creditors;
(vi) The collection practices used by the Company and any
Sub-Servicer are in all material respects legal, proper, prudent and
customary in the home equity mortgage loan servicing business; and
(vii) Each Sub-Servicer engaged by the Servicer has obtained all
licenses and approvals required under state or federal law to service
the Mortgage Loans specified in the Sub-Servicing Agreement to which the
Sub-Servicer is a party.
The representations and warranties set forth in this Section shall survive the
sale and assignment of the Mortgage Loans to the Trust and the issuance, sale
and delivery of the Certificates. Upon discovery of a breach of any of the
foregoing representations and warranties that materially and adversely affects
the value of such Mortgage Loans or the interests of the Certificateholders or
the Certificate Insurer in such Mortgage Loans, the party discovering such
breach shall give prompt written notice to the other parties and the Certificate
Insurer. Within 60 days of its discovery or its receipt of notice of breach, the
Company shall cure such breach in all material respects.
Section 2.05 Representations and Warranties of the Seller Regarding the
Mortgage Loans The Seller represents and warrants to the Trustee, the
Certificate Insurer and the Certificateholders as of the Closing Date and, with
respect to any Subsequent Mortgage Loan, as of the Subsequent Transfer Date (in
either case except as otherwise expressly stated) that, as to each Mortgage Loan
conveyed to the Trust by it:
(i) The information with respect to each Mortgage Loan set forth
in the Mortgage Loan Schedule or Subsequent Mortgage Loan Schedule is
true and correct as of the related Cut-off Date or related Subsequent
Transfer Date;
(ii) All of the original or certified documentation set forth in
Section 2.01 (including all material documents related thereto), with
respect to each Mortgage Loan has been or will be delivered to the
Trustee on the Closing Date or as otherwise provided in Section 2.01 or
Section 2.02, as applicable and no more than 2 Mortgage Loans are the
subject of lost note affidavits;
(iii) Each related Mortgaged Property is improved by a one- to
four-family residential dwelling owned by the related Mortgagor in fee
simple that is permanently affixed to the land and constitutes real
property under the laws of the state in which the Mortgaged Property is
located but shall not include co-operatives or mobile homes;
(iv) Each Mortgage Loan is a "qualified mortgage" as defined in
Section 860G(a)(3) of the Code and no such Mortgage Loan has a
loan-to-value ratio (calculated in accordance with the REMIC Provisions)
in excess of 125%; none of the Mortgage Loans are either "consumer
credit contracts" or "purchase money loans" as such terms are
45
51
defined in 16 C.F.R. Section 433; with respect to each Mortgage Loan
that is a "mortgage" as such term is defined in 15 U.S.C. 1602(aa), no
obligor has or will have a claim or defense under such Mortgage Loan;
(v) As of the Cut-off Date, no Initial Mortgage Loan included in
the Fixed Rate Group has a Combined Loan-to-Value Ratio in excess of 90%
and no Initial Mortgage Loan included in the Adjustable Rate Group has a
Loan-to-Value Ratio in excess of 90%; except that Mortgage Loans in the
Fixed Rate Group representing not more than 2.00% of the Original Fixed
Rate Group Balance have Combined Loan-to-Value Ratios between 90.00% and
99.00% and Mortgage Loans in the Adjustable Rate Group representing not
more than 0.50% of the Original Adjustable Rate Group Balance have
Combined Loan-to-Value Ratios between 90.00% and 95.00%;
(vi) Each Mortgage Loan was originated by the Seller, an
Affiliate of the Seller or by an originator not affiliated with the
Seller authorized to originate such Mortgage Loan and is being serviced
by the Seller;
(vii) Each Initial Mortgage Loan included in the Fixed Rate Group
as of the Cut-off Date bears a fixed Mortgage Loan Rate of at least
6.700% per annum and each Initial Mortgage Loan included in the
Adjustable Rate Group as of the Cut-off Date is an Adjustable Rate
Mortgage Loan that has a Minimum Rate of not less than 5.050% per annum
and a Mortgage Loan Rate as of the Cut-off Date of not less than 5.750%
per annum; the terms of each Mortgage Loan included in the Adjustable
Rate Group require that adjustments in the related Mortgage Loan Rate be
made employing the related Index measured as of a date not more than
three months prior to the related adjustment date;
(viii) Each Mortgage Note provides for a schedule of
substantially level and equal Monthly Mortgage Payments (subject, in the
case of an Adjustable Rate Mortgage Loan, to periodic adjustments
relating to changes in the Mortgage Loan Rate) that are sufficient to
amortize fully the principal balance of such Mortgage Note on or before
its maturity date, except that, Mortgage Notes with respect to Initial
Mortgage Loans in the Fixed Rate Group representing not more than 0.50%
of the initial Fixed Rate Group Balance, provide for level and equal
Monthly Mortgage Payments that are sufficient to amortize fully the
principal balances of such Notes over a period not exceeding 30 years,
with "balloon" payments at stated maturity that are substantially in
excess of the Monthly Mortgage Payments;
(ix) Each Mortgage is a valid and subsisting lien of record on
the Mortgaged Property having the priority indicated on the Mortgage
Loan Schedule, subject, in the case of any Junior Mortgage Loan, only to
any Senior Lien or Senior Liens on such Mortgaged Property and subject
in all cases to the exceptions to title set forth in the title insurance
policy with respect to the related Mortgage Loan, which exceptions are
generally acceptable to home equity mortgage lending institutions, and
such other exceptions to which similar properties are commonly subject
and that do not individually,
46
52
or in the aggregate, materially and adversely affect the benefits of the
security intended to be provided by such Mortgage;
(x) Immediately prior to the sale, transfer and assignment herein
contemplated, the Seller held good and indefeasible title to, and was
the sole owner of, each Mortgage Loan conveyed by the Seller subject to
no liens, charges, mortgages, encumbrances or rights of others, except
with respect to liens that will be released simultaneously with such
transfer and assignment; and immediately upon the transfer and
assignment herein contemplated, the Trustee will hold good and
indefeasible title to, and be the sole owner of, each Mortgage Loan
subject to no liens, charges, mortgages, encumbrances or rights of
others;
(xi) The Mortgage Loan Rate for each Adjustable Rate Mortgage
Loan will be adjustable on each related Adjustment Date and will equal
the sum, rounded upward to the nearest three decimal places, of the
Index plus the related Gross Margin, subject to any related Minimum
Rates, Maximum Rates or any limitations or periodic adjustments, in each
case as specified in the related Mortgage Loan Schedule. No Mortgage
Loans in the Fixed Rate Group are subject to negative amortization and
no Mortgage Loans in the Adjustable Rate Group are subject to negative
amortization. As of the Cut-off Date, the Mortgage Notes relating to not
more than 86% of the Initial Mortgage Loans in the Adjustable Rate
Group, by Original Adjustable Rate Group Balance, provide for initial
Adjustment Dates that are more than two or more years from their
respective origination dates;
(xii) With respect to any Adjustable Rate Mortgage Loan, no
mortgage document in the Mortgage File contains any provision permitting
or requiring conversion of the Mortgage Loan to a fixed interest rate
nor is the Mortgage Loan Rate conditioned upon Mortgagor maintaining
accounts with Seller;
(xiii) As of the Closing Date or Subsequent Cut-off Date, as
appropriate (a) no Mortgage Loan had two or more Monthly Mortgage
Payments past due and (b) not more than 2.04% of the Initial Mortgage
Loans (by Original Pool Balance) had one or more Monthly Payments past
due;
(xiv) As of the related Cut-off Date or Subsequent Cut-off Date,
as appropriate, there is no delinquent tax or assessment lien on any
Mortgaged Property, and, to the best knowledge of the Seller, each
Mortgaged Property is free of damage and is in good repair and is not
affected by hazardous or toxic wastes or substances;
(xv) There is no offset, right of rescission, counterclaim or
defense, including the defense of usury, with respect to any Mortgage
Note or Mortgage, nor will the operation of any of the terms of the
Mortgage Note or the Mortgage, or the exercise of any right thereunder,
render either the Mortgage Note or the Mortgage unenforceable in whole
or in part, or subject to any right to rescission, set-off, counterclaim
or defense,
47
53
including the defense of usury, and no such right of rescission,
set-off, counterclaim or defense has been asserted with respect thereto;
(xvi) As of the related Cut-off Date or Subsequent Cut-off Date,
as appropriate, there is no mechanic's lien or claim for work, labor or
material affecting any Mortgaged Property that is or may be a lien prior
to, or equal to or on a parity with, the lien of the related Mortgage
except those that are insured against by any title insurance policy
referred to in paragraph (xvii) below;
(xvii) To the best of the Seller's knowledge, each Mortgage Loan
at the time it was made complied in all material respects with
applicable local, state and federal laws and regulations, including,
without limitation, the federal Truth-in-Lending Act and other consumer
protection laws, real estate settlement procedure, usury, equal credit
opportunity, disclosure and recording laws;
(xviii) With respect to each Mortgage Loan, a lender's title
insurance policy (issued in standard form by a title insurance company
authorized to transact business in the state where the related Mortgaged
Property is located), in an amount at least equal to the Original
Principal Amount of such Mortgage Loan insuring the mortgagee's interest
under the related Mortgage Loan as the holder of a valid lien of record
on the real property described in the related Mortgage (subject only to
exceptions of the character referred to in paragraph (viii) above), was
effective on the date of the origination of such Mortgage Loan, and, as
of the Closing Date, such policy is in full force and effect and
thereafter such policy shall continue in full force and effect and shall
inure to the benefit of the Certificateholders upon consummation of the
transactions contemplated by this Agreement;
(xix) As of the related Cut-off Date or Subsequent Cut-off Date,
as appropriate, either (a) the improvements upon each Mortgaged Property
are covered by a valid and existing hazard insurance policy (which may
be a blanket policy) with a generally acceptable carrier that provides
for fire and extended coverage representing coverage not less than the
least of (a) the outstanding principal balance of the related Mortgage
Loan (together, in the case of a Junior Mortgage Loan, with the
outstanding principal balance of the Senior Lien), (b) the minimum
amount required to compensate for damage or loss on a replacement cost
basis or (c) the full insurable value of the Mortgaged Property or (b)
in the case of a Junior Mortgage Loan, a policy has been issued by a
generally acceptable carrier that will cover the full Principal Balance
of such Junior Mortgage Loan in the event of a loss covered by a hazard
typically insured against by the type of policy referred to in clause
(xviii)(a);
(xx) If any Mortgaged Property is in an area identified in the
Federal Register by FEMA as having special flood hazards, a flood
insurance policy in a form meeting the requirements of the current
guidelines of the Federal Insurance Administration, if obtainable with
respect to such Mortgaged Property, is in effect with respect to such
Mortgaged Property with a generally acceptable carrier in an amount
representing
48
54
coverage not less than the least of (A) the outstanding principal
balance of the related Mortgage Loan (together, in the case of a Junior
Mortgage Loan, with the outstanding principal balance of the Senior
Lien), (B) the minimum amount required to compensate for damage or loss
on a replacement cost basis or (C) the maximum amount of insurance that
is available under the Flood Disaster Protection Act of 1973;
(xxi) Each Mortgage and Mortgage Note or, in the case of 2
Mortgage Loans which are subject to lost note affidavits, the copy of
the Mortgage Note, is the legal, valid and binding obligation of the
maker thereof and is enforceable in accordance with its terms, except
only as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general principles of
equity (whether considered in a proceeding or action in equity or at
law), and all parties to each Mortgage Loan had full legal capacity to
execute all documents relating to such Mortgage Loan and convey the
estate therein purported to be conveyed; with respect to each Mortgage
Loan, only one original Mortgage Note exists;
(xxii) The Seller has caused and will cause to be performed any
and all acts required to be performed to preserve the rights and
remedies of the Trustee in any insurance policies applicable to each
Mortgage Loan, including any necessary notifications of insurers,
assignments of policies or interests therein, and establishment of
co-insured, joint loss payee and mortgagee rights in favor of the
Trustee;
(xxiii) As of the Cut-off Date, Initial Mortgage Loans
representing no more than 1.00% of the Original Fixed Rate Group Balance
is secured by Mortgaged Properties located within any single zip code
area and Initial Mortgage Loans representing no more than 1.00% of the
Original Adjustable Rate Group Balance is secured by Mortgaged
Properties located within any single zip code area;
(xxiv) Each original Mortgage has been recorded or is in the
process of being recorded, and all subsequent assignments of the
original Mortgage (other than the assignment from the Seller to the
Trustee and any assignment to the Seller or an affiliate thereof) have
been recorded in the appropriate jurisdictions as to which no Opinion of
Counsel was delivered pursuant to Section 2.01 or 2.02, as applicable,
or such Mortgages and assignments are in the process of being recorded);
(xxv) The terms of each Mortgage Note and each Mortgage have not
been impaired, altered or modified in any respect, except by a written
instrument that has been recorded, if necessary, to protect the interest
of the Certificateholders and the Certificate Insurer and that has been
delivered to the Trustee. The substance of any such alteration or
modification is reflected on the Mortgage Loan Schedule and has been
approved by the primary mortgage guaranty insurer, if any;
(xxvi) The proceeds of each Mortgage Loan have been fully
disbursed, and there is no obligation on the part of the mortgagee to
make future advances thereunder.
49
55
Any and all requirements as to completion of any on-site or off-site
improvements and as to disbursements of any escrow funds therefor either
have been complied with or are not yet required to be complied with but
will be complied with as and when required. All costs, fees and expenses
incurred in making or closing or recording such Mortgage Loans were
paid;
(xxvii) No Mortgage Note is or has been secured by any
collateral, pledged account or other security other than the lien of the
corresponding Mortgage;
(xxviii) No Mortgage Loan was originated under a buydown plan;
(xxix) No Mortgage Loan has a shared appreciation feature or
other contingent interest feature;
(xxx) Each Mortgaged Property consists of one or more contiguous
parcels of real property with a residential dwelling erected thereon;
(xxxi) Each Mortgage Loan contains a provision for the
acceleration of the payment of the unpaid principal balance of such
Mortgage Loan in the event the related Mortgaged Property is sold
without the prior consent of the mortgagee thereunder;
(xxxii) Any advances made to the Mortgagor after the date of
origination of a Mortgage Loan but prior to the related Cut-off Date or
Subsequent Cut-off Date, as appropriate, have been consolidated with the
outstanding principal amount secured by the related Mortgage, and the
secured principal amount, as consolidated, bears a single interest rate
and single repayment term reflected on the Mortgage Loan Schedule. The
consolidated principal amount as of the related Cut-off Date or
Subsequent Cut-off Date, as appropriate, does not exceed the original
principal amount of the related Mortgage Loan and is reflected as the
current principal amount of such Mortgage Loan on the Mortgage Loan
Schedule;
(xxxiii) To the best knowledge of the Seller, there is no
proceeding pending or threatened for the total or partial condemnation
of any Mortgaged Property, nor is such a proceeding currently occurring;
(xxxiv) To the best knowledge of the Seller, all of the
improvements that were included for the purposes of determining the
Appraised Value of any Mortgaged Property lie wholly within the
boundaries and building restriction lines of such Mortgaged Property,
and no improvements on adjoining properties encroach upon such Mortgaged
Property except those that are identified in the related title insurance
policy and affirmatively insured;
(xxxv) To the best knowledge of the Seller, no improvement
located on or being part of any Mortgaged Property is in violation of
any applicable zoning law or regulation, all inspections, licenses and
certificates required to be made or issued with respect to all
50
56
occupied portions of each Mortgaged Property and, with respect to the
use and occupancy of the same, including but not limited to certificates
of occupancy and fire underwriting certificates, have been made or
obtained from the appropriate authorities and such Mortgaged Property is
lawfully occupied under applicable law;
(xxxvi) With respect to each Mortgage that is a deed of trust, a
trustee, duly qualified under applicable law to serve as such, has been
properly designated and currently so serves and is named in such
Mortgage, and no fees or expenses are or will become payable by the
Certificateholders or the Trust to any trustee under any deed of trust,
except in connection with a trustee's sale after default by the related
Mortgagor;
(xxxvii) With respect to each Junior Mortgage Loan, either (A) no
consent for such Mortgage Loan was required by the holder of the related
Senior Lien prior to the making of such Mortgage Loan or (B) such
consent has been obtained and is contained in the related Mortgage File;
(xxxviii) Each Mortgage contains customary and enforceable
provisions that render the rights and remedies of the holder thereof
adequate for the realization against the related Mortgaged Property of
the benefits of the security, including by trustee's sale and by
judicial foreclosure and there is no homestead or other exemption
available to the related Mortgagor that would materially interfere with
the right to sell the related Mortgaged Property at a trustee's sale or
the right to foreclose upon the related Mortgaged Property;
(xxxix) There is no default, breach, violation or event of
acceleration existing under any Mortgage or the related Note and no
event that, with the passage of time or with notice and the expiration
of any grace or cure period, would constitute a default, breach,
violation or event of acceleration; and the Seller has not waived any
default, breach violation or event of acceleration;
(xl) No instrument of release or waiver has been executed in
connection with any Mortgage Loan, and no Mortgagor has been released,
in whole or in part, except in connection with an assumption agreement
that has been approved by the primary mortgage guaranty insurer, if any,
and the Certificate Insurer, and that has been delivered to the Trustee;
(xli) The maturity date of each Junior Mortgage Loan is at least
12 months prior to the maturity date of the related Senior Lien if such
Senior Lien provides for a balloon payment;
(xlii) As of the Cut-off Date, at least 93% of the Initial
Mortgage Loans in the Fixed Rate Group (by Original Fixed Rate Group
Balance) and at least 94% of the Initial Mortgage Loans in the
Adjustable Rate Group (by Original Adjustable Rate Group Balance) are
secured by Mortgaged Properties that are maintained by the related
Mortgagors as primary residences;
51
57
(xliii)There are no defaults (other than delinquencies) in
complying with the terms of the Mortgage, and all taxes, governmental
assessments, insurance premiums, water, sewer and municipal charges,
leasehold payments or ground rents that previously became due and owing
have been paid, or an escrow of funds has been established in an amount
sufficient to pay for every such item that remains unpaid; the Seller
has not advanced funds, or induced, solicited or knowingly received any
advance of funds by a party other than the Mortgagor, directly or
indirectly, for the payment of any amount required by the Mortgage,
other than interest accruing from the date of the Mortgage Note or date
of disbursement of the Mortgage proceeds, whichever is greater, to the
date that precedes by one month the due date of the first installment of
principal and interest;
(xliv) To the best of the Seller's knowledge, all parties that
have had any interest in the Mortgage Loan, whether as mortgagee,
assignee, pledgee or otherwise during the period in which they held and
disposed of such interest, were and either are now or, in the case of
subclause (1) of this clause, will be within 30 days of the Closing Date
or Subsequent Cut-off Date, as appropriate, (1) in compliance with any
and all applicable licensing requirements of the laws of the state
wherein the Mortgaged Property is located, and (2) (A) organized under
the laws of such state, or (B) qualified to do business in such state,
or (C) federal savings and loan associations or national banks having
principal offices in such state, or (D) not doing business in such state
so as to require qualification or licensing;
(xlv) No Mortgage Loan was selected by the Seller for inclusion
in the Trust on any basis intended to adversely affect the Trust;
(xlvi) A full appraisal of each Mortgaged Property was performed
in connection with the origination of the related Mortgage Loan, and
such appraisal is the appraisal referred to in determining the Appraised
Value of such Mortgaged Property;
(xlvii) With respect to each Junior Mortgage Loan, the related
Senior Lien requires equal monthly payments or, if such Senior Lien
bears an adjustable interest rate, the monthly payments for such Senior
Lien may be adjusted no more frequently than monthly;
(xlviii) With respect to any Junior Mortgage Loan with a related
Senior Lien that provides for negative amortization or an open-end
feature that permits additional borrowings, the balance of such Senior
Lien reflected on the Mortgage Loan Schedule and used to calculate the
Combined Loan-to-Value Ratio for such Junior Mortgage Loan is based on
the maximum amount of negative amortization, deferred interest or
maximum amount of borrowings permitted under such Senior Lien;
(xlix) The Company has not required the Mortgagor to sign a
letter in connection with the origination of any Mortgage Loan in which
such Mortgagor indicates its inability to repay such Mortgage Loan in
accordance with the terms of the related Mortgage Note;
52
58
(l) Each Adjustable Rate Mortgage Loan that (i) has a first
Adjustment Date within six months of its origination date was
underwritten or re-underwritten as though such Mortgage Loan would bear
a rate of interest equal to related Index plus the related Gross Margin
and (ii) has a first Adjustment Date more than six months after its
origination date was underwritten or re-underwritten as though such
Mortgage Loan would bear a rate of interest equal to its specified
initial interest rate;
(li) As of the related Cut-off Date or Subsequent Cut-off Date,
as appropriate, no Mortgage Loan in the Fixed Rate Group or the
Adjustable Rate Group
was secured by more than one Mortgaged Property;
(lii) With respect to each Adjustable Rate Mortgage Loan, all of
the terms of the Mortgage pertaining to interest rate adjustments,
payment adjustments and adjustments of the outstanding principal balance
are enforceable; such adjustments will not affect the priority of the
Mortgage lien and all of the adjustments have been properly calculated,
recorded, reported and applied in accordance with the Mortgage and
applicable law;
(liii) All insurance policies, other than any primary mortgage
insurance policies purchased by the Seller or Servicer or any of its
affiliates, are the valid and binding obligation of the insurer and
contain a standard mortgagee clause naming the originator, its
successors and assigns, as mortgagee. Such insurance policies require
prior notice to the insured of termination or cancellation and no such
notice has been received, each Mortgage obligates the Mortgagor
thereunder to maintain all such insurance at the Mortgagor's cost and
expense, and upon the Mortgagor's failure to do so, authorizes the
holder of the Mortgage to obtain and maintain such insurance at the
Mortgagor's cost and expense and to seek reimbursement therefor from the
Mortgagor;
(liv) None of the Mortgage Loans is subject to a plan of
bankruptcy and no Mortgagor has sought protection or relief under any
state or federal bankruptcy or insolvency law during the term of the
related Mortgage;
(lv) At least 6.00% of the Initial Mortgage Loans in the Fixed
Rate Group (by Original Fixed Rate Group Balance) and at least 10.50% of
the Initial Mortgage Loans in the Adjustable Rate Group (by Original
Adjustable Rate Group Balance) have Monthly Mortgage Payments due during
the first Collection Period commencing after the calendar month during
which such Mortgage Loan is included in the Trust;
(lvi) All Mortgage Loans were underwritten or re-underwritten in
accordance with the underwriting guidelines of the Company;
(lvii) To the knowledge of the Seller, no misrepresentation,
negligence, fraud or similar occurrence with respect to a Mortgage Loan
has taken place on the part of the Mortgagor, any appraiser, any builder
or developer, or any other party having statutory or
53
59
common law liabilities with respect to the origination of the Mortgage
Loan or in any related application for insurance in relation to such
Mortgage Loan;
(lviii)To the knowledge of the Seller, certain Mortgage Loans are
secured by Mortgaged Properties upon which are affixed manufactured
housing or modular homes, provided that it is the intent and agreement
of the parties hereto that this representation shall be deemed breached
if any Mortgage Loan is determined to be secured by a Mortgaged Property
upon which is affixed manufactured housing or a modular home and such
Mortgage Loan is subject to a foreclosure which results in a Realized
Loss;
(lix) As of the Cut-off Date, Initial Mortgage Loans in the Fixed
Rate Group and the Adjustable Rate Group, representing not less than the
indicated percentages, or in the case of credit grades "C-" and "D" not
more than the indicated percentages, of the Original Fixed Rate Group
Balance and the Original Adjustable Rate Group Balance, respectively,
were assigned the corresponding credit grades by the Company at the time
such Mortgage Loans were originated or acquired. Each credit grade so
assigned to any Mortgage Loan has been determined in accordance with the
Company's internal credit grading system and not pursuant to any other
scale or objective standard;
Fixed Adjustable
Credit Grade Rate Group Rate Group
------------ ---------- ----------
A+ 0.13% 0%
A 30.00% 24.00%
A- 31.00% 23.00%
B 20.00% 25.00%
C 5.50% 6.00%
C- 3.25% 4.00%
D 7.50% 14.00%
(lx) There was no fraud involved in the origination of any
Mortgage Loans by the mortgagee or the Mortgagor, any appraiser or any
other party involved in the origination of the Mortgage Loans; and
(lxi) No Mortgage Loan is 90 days or more contractually
delinquent as of the Closing Date and no Subsequent Mortgage Loan will
be 90 days or more contractually delinquent as of its Subsequent
Transfer Date (and accordingly there are no Restricted Mortgage Loans
required to be listed in Schedule III).
It is understood and agreed that the representations and warranties set
forth in this Section shall survive the sale and assignment of the Mortgage
Loans to the Trust and the issuance, sale and delivery of the Certificates. Upon
discovery by the Seller, the Servicer or a Responsible Officer of the Trustee of
a breach of any of the foregoing representations and warranties, without regard
to any limitation set forth in such representation or warranty concerning the
knowledge of the Seller as to the facts stated therein, which breach materially
and adversely affects the value of the related Mortgage Loan or the interests of
the Certificateholders or the Certificate Insurer in
54
60
the related Mortgage Loan, the party discovering such breach shall give prompt
written notice to the other parties hereto, to each of the Rating Agencies and
to the Certificate Insurer.
Within 60 days of its discovery or its receipt of notice of such breach,
the Seller shall use all reasonable efforts to cure such breach in all material
respects. Unless, prior to the expiration of such 60-day period, such breach has
been cured in all material respects or otherwise does not exist or continue to
exist, the Seller shall, not later than the Deposit Date in the month following
the related Collection Period in which any such cure period expired, but in all
events within 90 days of the earlier of the discovery of the breach or the
Seller's receipt of notice of breach (or at the election of the Seller, an
earlier Collection Period), either (I) repurchase such Mortgage Loan (or, in the
case of any representation and warranty stated above in terms of minimum or
maximum aggregate percentage amounts, repurchase Mortgage Loans such that, after
giving effect to such repurchase, the related representation and warranty would
be complied with) (including any property acquired in respect thereof and any
insurance policy or insurance proceeds with respect thereto) from the Trust in
the same manner and subject to the same conditions as set forth in Section 2.03
or (II) remove such Mortgage Loan and substitute in its place a Qualified
Replacement Mortgage Loan (or, in the case of any representation and warranty
stated above in terms of minimum or maximum aggregate percentage amounts, remove
such Mortgage Loans and substitute in their place Qualified Replacement Mortgage
Loans such that, after giving effect to such substitution, the related
representation and warranty would be complied with) in the same manner and
subject to the same conditions as set forth in Section 2.03. Upon making any
such repurchase or substitution, the Seller shall be entitled to receive an
instrument of assignment or transfer from the Trustee, without recourse to the
Trustee, to the same extent as set forth in Section 2.03 with respect to the
repurchase of or substitution for Defective Mortgage Loans under that Section.
It is understood and agreed that the obligation of the Seller to repurchase or
substitute any such Defective Mortgage Loan (or property acquired in respect
thereof or insurance policy or current or future insurance proceeds with respect
thereto) shall constitute the sole remedy against it respecting such breach of
the foregoing representations or warranties available to the Certificateholders
or the Trustee, as the case may be, and such obligation shall survive any
resignation or termination of the Company as Servicer under this Agreement.
Notwithstanding the foregoing, a substitution of a Mortgage Loan by the
Seller for a breach will not be made unless the Trustee and the Certificate
Insurer receive an Officer's Certificate certifying that the Qualified
Replacement Mortgage Loan conforms to the requirements of this Agreement and an
Opinion of Counsel that such substitution will not be a "prohibited transaction"
as defined in Section 860F(a)(2) of the Code. Any substitution must be effected
not later than two years after the Closing Date, or within such longer period of
time as may be permitted under the REMIC Provisions for substitution of mortgage
loans.
Section 2.06 Execution and Authentication of Certificates The Trustee
shall deliver to or upon the order of the Seller, in exchange for the Mortgage
Loans and the other assets comprising the Trust, simultaneously with the sale,
assignment and transfer to the Trustee of the Mortgage Loans, Certificates duly
executed by the Trustee, on behalf of the Trust, not in its individual capacity
but solely as Trustee, and authenticated by the Trustee, pursuant to Section
55
61
6.01, in authorized denominations, equaling, 100% of the Percentage Interests in
each Class, and collectively evidencing the entire ownership of the Trust.
Section 2.07 Representations and Warranties Regarding the Back-up
Servicer. The Back-up Servicer hereby represents and warrants to the Trustee,
the Certificate Insurer and the Certificateholders that, as of the Closing Date:
(i) The Back-up Servicer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Utah. The
Back-up Servicer is in compliance with the laws of each state to the
extent necessary to perform all servicing obligations hereunder. The
Back-up Servicer has the power and authority to execute and deliver this
Agreement and to perform its obligations in accordance herewith; the
execution, delivery and performance of this Agreement (including all
instruments of transfer to be delivered pursuant to this Agreement) by
the Back-up Servicer and the consummation of the transactions
contemplated hereby have been duly and validly authorized by all
necessary corporate action; this Agreement evidences the valid and
binding obligation of the Back-up Servicer enforceable against the
Back-up Servicer in accordance with its terms, subject to the effect of
bankruptcy, insolvency, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally or the
application of equitable principles in any proceeding, whether at law or
in equity; and the consummation of the transactions contemplated hereby
will not result in the breach of any terms or provisions of the articles
of incorporation or by-laws of the Back-up Servicer or result in the
breach of any term or provision of, or conflict with or constitute a
default under or result in the acceleration of any obligation under, any
material agreement, indenture or loan or credit agreement or other
material instrument to which the Back-up Servicer or its property is
subject, or result in the violation of any law, rule, regulation, order,
judgment or decree to which the Back-up Servicer or its property is
subject;
(ii) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and
licenses required to be taken, given or obtained, as the case may be, by
or from any federal, state or other governmental authority or agency,
that are necessary in connection with the execution and delivery by the
Back-up Servicer of this Agreement, have been duly taken, given or
obtained, as the case may be, are in full force and effect, are not
subject to any pending proceedings or appeals (administrative, judicial
or otherwise) and either the time within which any appeal therefrom may
be taken or review thereof may be obtained has expired or no review
thereof may be obtained or appeal therefrom taken, and are adequate to
authorize the consummation of the transactions contemplated by this
Agreement on the part of the Back-up Servicer and the performance by the
Back-up Servicer of its obligations as Back-up Servicer under this
Agreement;
(iii) There is no action, suit, proceeding or investigation
pending or, to the best of the Back-up Servicer's knowledge, threatened
against the Back-up Servicer that, either in any one instance or in the
aggregate, may result in any material adverse change in the business,
operations, financial condition, properties or assets of the Back-up
Servicer or
56
62
in any material impairment of the right or ability of the Back-up
Servicer to carry on its business substantially as now conducted, or in
any material liability on the part of the Back-up Servicer or that would
draw into question the validity of this Agreement or the Mortgage Loans
or of any action taken or to be taken in connection with the obligations
of the Back-up Servicer, in its capacity as Back-up Servicer,
contemplated herein, or that would be likely to impair the ability of
the Back-up Servicer to perform under the terms of this Agreement;
(iv) The Back-up Servicer is not in default with respect to any
order or decree of any court or any order, regulation or demand of any
federal, state, municipal or governmental agency, which default might
have consequences that would materially and adversely affect the
condition (financial or other) or operations of the Back-up Servicer or
its properties or might have consequences that would adversely affect
its performance as Back-up Servicer hereunder; and
(v) The collection practices used by the Back-up Servicer are in
all material respects legal, proper, prudent and customary in the home
equity mortgage loan servicing business.
The representations and warranties set forth in this Section shall survive the
sale and assignment of the Mortgage Loans to the Trust and the issuance, sale
and delivery of the Certificates. Upon discovery of a breach of any of the
foregoing representations and warranties that materially and adversely affects
the value of such Mortgage Loans or the interests of the Certificateholders or
the Certificate Insurer in such Mortgage Loans, the party discovering such
breach shall give prompt written notice to the other parties and the Certificate
Insurer. Within 60 days of its discovery or its receipt of notice of breach, the
Back-up Servicer shall cure such breach in all material respects.
Section 2.08 Indemnification of the Trust The Seller shall indemnify the
Trust for any liability incurred thereby as a result of a breach of the
representation and warranty set forth in clause (xvii) of Section 2.05 (without
regard to any limitation therein relating to the knowledge of the Seller). This
indemnity obligation shall be in addition to any other obligation the Seller may
have in connection with any such breach.
ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS;
CERTIFICATE ACCOUNT
Section 3.01 The Servicer and the Sub-Servicers Acting directly or
through one or more Sub-Servicers as provided in Section 3.15, the Servicer, as
servicer, shall administer the Mortgage Loans with reasonable care, using that
degree of skill and attention that the Servicer exercises with respect to all
comparable home equity mortgage loans that it services for itself or others. The
duties of the Servicer shall include collecting and posting of all payments,
responding to inquiries of Mortgagors or by federal, state or local government
authorities with
57
63
respect to the Mortgage Loans, investigating delinquencies, reporting tax
information to Mortgagors in accordance with its customary practices and
accounting for collections and furnishing monthly and annual statements to the
Trustee with respect to distributions and making Monthly Advances and Servicing
Advances pursuant to Section 5.02. The Servicer shall follow its customary
standards, policies and procedures in performing its duties as Servicer, to the
extent not in conflict with the provisions of this Agreement. Notwithstanding
the appointment of any Sub-Servicer, the Servicer shall remain liable for the
performance of all of the servicing obligations and responsibilities under this
Agreement. The Servicer shall maintain all licenses and qualifications necessary
to perform its servicing obligations hereunder in the jurisdictions in which it
services Mortgage Loans. If the Servicer commences directly to service a
material number or principal amount of Mortgage Loans with related Mortgaged
Properties located in any other state, the Servicer will use its reasonable
efforts promptly to obtain, and thereafter to maintain, all licenses and
qualifications necessary to perform its servicing obligations hereunder in each
such state. Each Sub-Servicer shall maintain all licenses and qualifications
necessary to perform its servicing obligations in the states where the Mortgaged
Properties to which the applicable Sub-Servicing Agreement relates are located.
The Servicer shall cooperate with the Trustee and furnish to the Trustee such
information in its possession as may be necessary or appropriate to enable the
Trustee to perform its tax reporting duties hereunder. The Trustee shall furnish
the Servicer with any powers of attorney and other documents necessary or
appropriate to enable the Servicer to carry out its servicing and administrative
duties hereunder.
Without limiting the generality of the foregoing, the Servicer (i) shall
continue, and is hereby authorized and empowered by the Trustee, to execute and
deliver, on behalf of itself, the Certificateholders and the Trustee or any of
them, any and all instruments of satisfaction or cancellation, or of partial or
full release or discharge and all other comparable instruments, with respect to
the Mortgage Loans and with respect to the related Mortgaged Properties (ii) may
consent to any modification of the terms of any Mortgage Note not expressly
prohibited hereby if the effect of any such modification will not be to
materially and adversely affect the security afforded by the related Mortgaged
Property or to decrease or slow (other than as permitted by Section 3.02(a)(ii))
the timing of receipt of any payments required thereunder and (iii) shall not
consent to the placing of a lien senior to or on parity with that of the
Mortgage on the related Mortgaged Property. In the event that notwithstanding
the provisions of clause (iii) above the Servicer shall consent to the placing
of a lien senior to or on a parity with that of the Mortgage on a Mortgaged
Property, the Servicer shall purchase on the next Deposit Date such Mortgage
Loan (including any property acquired in respect thereof and any insurance
policy or insurance proceeds with respect thereto) from the Trust at a price
equal to the Purchase Price and deposit such amount in the Certificate Account
on such Deposit Date pursuant to Section 3.02. For purposes of this Agreement,
any such purchase shall be deemed to be a prepayment of such Mortgage Loan. It
is understood and agreed that the obligation of the Servicer to purchase any
Mortgage Loan (or property acquired in respect thereof or insurance policy or
insurance proceeds with respect thereto) pursuant to the second immediately
preceding sentence shall constitute the sole remedy against it respecting such
breach available to the Certificateholders or the Trustee and such obligation
shall survive any resignation or termination of the consenting Servicer under
this Agreement.
58
64
The Servicer may ▇▇▇ to enforce or collect on any of the Mortgage Loans
or any insurance policy covering a Mortgage Loan, in its own name if possible,
or on behalf of the Trust. If the Servicer commences a legal proceeding to
enforce a Mortgage Loan or any such insurance policy, the Trustee shall
thereupon be deemed to have automatically assigned the Mortgage Loan or the
rights under such insurance policy to the Servicer for purposes of collection
only. If, however, in any suit or legal proceeding for enforcement, it is held
that the Servicer may not enforce or collect on a Mortgage Loan or any insurance
policy covering a Mortgage Loan on the ground that it is not a real party in
interest or a holder entitled to enforce such Mortgage Loan or such insurance
policy, as the case may be, then the Trustee shall, upon the written request of
a Servicing Officer, furnish the Servicer with such powers of attorney and other
documents as are necessary or appropriate to enable the Servicer to enforce such
Mortgage Loan or insurance policy, as the case may be.
The relationship of the Servicer to the Trustee under this Agreement is
intended by the parties to be that of an independent contractor and not that of
a joint venturer, partner or agent.
The parties intend that each REMIC Pool shall constitute a REMIC, and
that the affairs of each REMIC Pool shall be conducted so as to qualify it as a
REMIC. In furtherance of such intention, the Servicer covenants and agrees that
it shall act as agent (and the Servicer is hereby appointed to act as agent) on
behalf of each REMIC Pool, and that in such capacity it shall: (a) use its best
efforts to conduct the affairs of such REMIC Pool at all times that any
Certificates are outstanding so as to maintain the status thereof as a REMIC
under the REMIC Provisions; (b) not knowingly or intentionally take any action
or omit to take any action that would cause the termination of the REMIC status
of any REMIC Pool or that would subject such REMIC Pool to tax, including the
modification of a qualified mortgage that would subject such REMIC Pool to tax;
(c) exercise reasonable care not to allow such REMIC Pool to receive income from
the performance of services or from assets not permitted under the REMIC
Provisions to be held by a REMIC; (d) pay the amount of any federal income tax,
including, without limitation, prohibited transaction taxes, taxes on net income
from foreclosure property, and taxes on certain contributions to a REMIC after
the Startup Day, imposed on any REMIC Pool when and as the same shall be due and
payable (but such obligation shall not prevent the Servicer or any other
appropriate Person from contesting any such tax in appropriate proceedings and
shall not prevent the Servicer from withholding or depositing payment of such
tax, if permitted by law, pending the outcome of such proceedings); and (e) pay
the amount of any and all taxes imposed on any REMIC Pool pursuant to Sections
24870, 24874 and 23153 of the California Revenue and Taxation Code. The Servicer
shall not be entitled to reimbursement for any taxes paid pursuant to this
Section.
Section 3.02 Collection of Certain Mortgage Loan Payments; Collection
Account and Certificate Account
(a) The Servicer shall, to the extent such procedures shall be
consistent with this Agreement, follow such collection procedures as it follows
from time to time with respect to home equity mortgage loans in its servicing
portfolio that are comparable to the Mortgage Loans; provided that the Servicer
shall always at least follow collection procedures that are consistent
59
65
with or better than standard industry practices. Consistent with the foregoing,
the Servicer may in its discretion (i) waive any assumption fees, late payment
charges, charges for checks returned for insufficient funds, if any, excluding
Prepayment Charges, or other fees that may be collected in the ordinary course
of servicing the Mortgage Loans, (ii) if a Mortgagor is in default or about to
be in default because of a Mortgagor's financial condition, arrange with the
Mortgagor a schedule for the payment of delinquent payments due on the related
Mortgage Loan, or (iii) modify payments of monthly principal and interest on any
Mortgage Loan becoming subject to the terms of the Relief Act in accordance with
the Servicer's general policies for comparable home equity mortgage loans
subject to such Act; provided further, that with respect to any arrangement
referred to in clause (ii) above, the Servicer shall not agree to any extension
or modification of the related Mortgage Note unless the Servicer shall have
first given the Certificate Insurer telephonic and telecopied notice of its
intention to make such extension or modification and the Certificate Insurer,
within two Business Days after such notice is given, has not given telephonic
and telecopied notice to the Servicer that it does not approve of such extension
or modification.
(b) The Trustee shall establish and maintain, or cause to be established
and maintained, one or more Eligible Accounts that in the aggregate are the
Collection Account. All amounts held in the Collection Account shall be invested
by the depository institution or trust company then maintaining the account at
the written direction of the Servicer in Permitted Investments that mature not
later than the Deposit Date next succeeding the date of investment. No Permitted
Investment shall be sold or disposed of at a gain prior to maturity unless the
Servicer has obtained an Opinion of Counsel that such sale or disposition will
not cause any REMIC Pool to be subject to the tax on income from prohibited
transactions imposed by Code Section 860F(a)(1), or otherwise subject any REMIC
Pool to tax or cause any REMIC Pool to fail to qualify as a REMIC and delivered
copies thereof to the Trustee and the Certificate Insurer. The Servicer shall
not retain any cash or investment in the Collection Account for a period in
excess of 12 months and cash therein shall be considered transferred to
Certificate Account on a first-in, first-out basis. All net income and gain
realized from any such investment shall be for the benefit of the Servicer as
additional servicing compensation and shall be subject to its withdrawal or
order from time to time. Any losses realized in connection with any such
investment shall be for the account of the Servicer and the Servicer shall
deposit or cause to be deposited the amount of such loss (to the extent not
offset by income from other investments) in the Collection Account immediately
upon the realization of such loss.
(c) Subject to Section 3.02(d), the Servicer shall deposit in the
Collection Account each of the following payments on and collections in respect
of the Mortgage Loans as soon as practicable, but in no event later than the
close of business on the second Business Day after its receipt thereof:
(i) all payments in respect of or allocable to interest on the
Mortgage Loans (including any net income from REO Properties);
(ii) all Principal Payments;
60
66
(iii) all Payments Ahead;
(iv) all Net Liquidation Proceeds; and
(v) all Trust Insurance Proceeds (including, for this purpose,
any amounts required to be credited by the Servicer pursuant to the last
sentence of Section 3.04).
The Servicer shall replace such amounts previously withdrawn from the
Collection Account and applied by the Servicer towards the payment of a Monthly
Advance pursuant to Section 5.02(a) or towards the payment of a Servicing
Advance pursuant to Section 5.02(b) by depositing into the Collection Account on
or prior to the Deposit Date immediately following such withdrawal an amount
equal to the total of all such amounts applied to the payment of a Servicing
Advance and those amounts applied to the payment of a Monthly Advance required
to be deposited pursuant to Section 5.01(b).
The foregoing requirements respecting deposits to the Collection Account
are exclusive, it being understood that, without limiting the generality of the
foregoing, the Servicer need not deposit in the Collection Account amounts
representing fees, late payment charges, charges for checks returned for
insufficient funds, if any, or extension or other administrative charges
(excluding Prepayment Charges) paid by Mortgagors or amounts received by the
Servicer for the account of Mortgagors for application towards the payment of
taxes, insurance premiums, assessments and similar items. The amounts deposited
in the Collection Account are subject to withdrawal, from time to time, to make
deposits into the Certificate Account pursuant to Section 3.02(e), to pay itself
the Monthly Servicing Fee pursuant to Section 3.08 and to make Servicing
Advances or to reimburse itself for Servicing Advances, as applicable, in either
case in accordance with Section 5.02(b), to make Monthly Advances or to
reimburse itself for payments of Monthly Advances, as applicable, in either case
in accordance with Section 5.02(a). In addition, if the Servicer deposits in the
Collection Account any amount not required to be so deposited or any amount in
respect of payments by Mortgagors made by checks subsequently returned for
insufficient funds or other reason for non-payment, it may at any time withdraw
such amount from the Collection Account, any provision herein to the contrary
notwithstanding.
(d) Upon such terms as the Certificate Insurer and the Rating Agencies
may approve, the Servicer may make the deposits to the Collection Account
referred to in Section 3.02(c) on a later day than the second Business Day after
receipt of the amounts required to be so deposited, which terms and later day
shall be specified by the Certificate Insurer and the Rating Agencies and
confirmed to the Trustee and the Servicer in writing.
(e) The Trustee shall establish and maintain the Certificate Account.
The Certificate Account shall be an Eligible Account segregated on the books of
the Trustee and held by the Trustee in trust, and the Certificate Account and
the amounts deposited therein shall not be subject to any claim, liens or
encumbrances of any creditors or depositors of the Trustee or the Company
(whether made directly or indirectly through a liquidator, receiver or trustee
in bankruptcy of the Trustee or the Company). At or before 11:00 a.m. Los
Angeles time on each Deposit Date, the Servicer shall withdraw from the
Collection Account all amounts on deposit
61
67
therein that constitute any portion of Available Funds for a Mortgage Loan Group
and the related Distribution Date (including any amounts therein that are being
held for distribution on a subsequent Distribution Date and are applied toward
the Monthly Advance for the related Distribution Date pursuant to Section
5.02(a)) and remit such amounts to the Trustee for deposit in the Certificate
Account. In addition, any Compensating Interest and Monthly Advances required to
be made by the Servicer for the related Mortgage Loan Group in respect of the
related Distribution Date and any amounts required to be deposited into the
Certificate Account in connection with a purchase or repurchase of any Mortgage
Loans in such Mortgage Loan Group or any shortage on such Mortgage Loans by the
Seller or the Servicer pursuant to Section 2.03, 2.05, 3.01, 3.06 or 10.01 or a
substitution of a Qualified Replacement Mortgage Loan pursuant to Section 2.03
or 2.05, or in connection with a purchase of Mortgage Loans by the Holder of the
Class R Certificate pursuant to Section 10.01 or in connection with the
Servicer's failure to adjust the Mortgage Loan Rate on an Adjustable Rate
Mortgage Loan, shall be remitted to the Trustee for deposit in the Certificate
Account on the applicable Deposit Date. On the Closing Date, the Class P Deposit
shall be deposited into the Certificate Account. Any amounts held in the
Certificate Account (other than the Class P Deposit) may be invested at the
written direction of the Servicer in Permitted Investments upon the same terms
and conditions as those specified in clause (b) above with respect to the
Collection Account except that such investments shall mature not later than the
Business Day preceding the Distribution Date next succeeding the date of
investment, and in the absence of such direction the Trustee shall invest in
Permitted Investments described in clause (e) of the definition of Permitted
Investments. All net income and gain realized from any such investment shall be
for the benefit of the Servicer as additional servicing compensation and shall
be subject to its withdrawal or order from time to time. Any losses realized in
connection with any such investment shall be for the account of the Servicer and
the Servicer shall deposit or cause to be deposited the amount of such loss (to
the extent not offset by income from other investments) in the Certificate
Account immediately upon the realization of such loss.
Section 3.03 Additional Servicing Responsibilities for the Adjustable
Rate Mortgage Loans The Servicer shall enforce each Adjustable Rate Mortgage
Loan and shall timely calculate, record, report and apply all Mortgage Loan Rate
adjustments in accordance with the related Mortgage Note. The Servicer's records
shall, at all times, reflect then-current Mortgage Loan Rate and Monthly
Mortgage Payment and the Servicer shall timely notify the Mortgagor of any
changes to the Mortgage Loan Rate and the Monthly Mortgage Payment. If the
Servicer fails to adjust the Mortgage Loan Rate or the Monthly Mortgage Payment
in accordance with the terms of the Mortgage Note for the related Adjustable
Rate Mortgage Loan, or if the Servicer fails to notify the related Mortgagor of
any such adjustment as required under the terms of such Mortgage Note, or if any
liability, claim or defense arises with respect to any Adjustable Rate Mortgage
Loan solely as a result of any such failure, the Servicer shall pay, from its
own funds and without right of reimbursement therefor, any shortage in amounts
collected or collectible on the related Adjustable Rate Mortgage Loan that
results. The Servicer shall deposit any amounts in respect of such shortage in
the Certificate Account on the Deposit Date with respect to the related
Collection Period.
62
68
Section 3.04 Hazard Insurance Policies The Servicer shall cause to be
maintained for each Mortgage Loan (including Mortgage Loans as to which the
related Mortgaged Property has been acquired by the Trust upon foreclosure, by
deed in lieu of foreclosure or comparable conversion), hazard insurance
(including flood insurance coverage, if obtainable, to the extent such property
is located in a federally designated flood area in such amount as is required
under applicable FEMA guidelines) with extended coverage in an amount that is
not less than the least of (i) the maximum insurable value from time to time of
the improvements that are a part of such property, or (ii) the combined
principal balance of such Mortgage Loan and the principal balance of each
mortgage loan senior to such Mortgage Loan at the time of such foreclosure plus
accrued interest and the good-faith estimate of the Servicer of related
Liquidation Expenses to be incurred in connection therewith; provided, further
that such hazard insurance shall be in an amount not less than such amount as is
necessary to avoid the application of any coinsurance clause contained in the
related hazard insurance policy. Each such hazard insurance policy shall contain
a standard mortgagee clause naming the originator, its successors and assigns,
as mortgagee and shall require prior notice to the insured of termination or
cancellation. The Servicer shall be under no obligation to require that any
Mortgagor maintain earthquake or other additional insurance and shall be under
no obligation itself to maintain any such additional insurance on property
acquired in respect of a Mortgage Loan, other than pursuant to such applicable
laws and regulations as shall at any time be in force and as shall require such
additional insurance. Amounts collected by the Servicer under any such policies
shall be deposited in the Collection Account or Certificate Account, as the case
may be, in accordance with Section 3.02 to the extent that they constitute Net
Liquidation Proceeds or Trust Insurance Proceeds. If the Servicer shall obtain
and maintain a blanket policy, issued by an insurer acceptable to each Rating
Agency and the Certificate Insurer, insuring against such hazard losses, it
shall conclusively be deemed to have satisfied its obligations as set forth in
the first sentence of this Section, it being understood and agreed that such
policy may contain a deductible clause that is in form and substance consistent
with standard industry practice, in which case the Servicer shall, in the event
that there shall not have been maintained on the related Mortgaged Property a
policy complying with the first sentence of this Section, and there shall have
been a loss that would have been covered by such policy, deposit in the
Collection Account in accordance with Section 3.02 the amount not otherwise
payable under the blanket policy because of such deductible clause.
Section 3.05 Enforcement of Due-on-Sale Clauses; Assumption and
Modification Agreements In any case in which property subject to a Mortgage is
voluntarily conveyed by the Mortgagor, the Servicer shall enforce any
due-on-sale clause contained in the related Mortgage Note or Mortgage, to the
extent permitted by such Mortgage Note or Mortgage, applicable law and
governmental regulations, but only to the extent that such enforcement will not
adversely affect or jeopardize coverage under any related insurance policy or
result in legal action by the Mortgagor. Subject to the foregoing, the Servicer
may, with the prior written consent of the Certificate Insurer, take or enter
into an assumption and modification agreement from or with the Person to whom
such Mortgaged Property has been or is about to be conveyed, pursuant to which
such Person becomes liable under the related Mortgage Note and the Mortgagor
remains liable thereon or, if the Person to whom such Mortgaged Property has
been or is about to be conveyed satisfies the Servicer's then-current
underwriting standards for home equity mortgage loans similar to the Mortgage
Loans, and the Servicer in its reasonable judgment finds it appropriate, is
63
69
released from liability thereon. If the Trustee is holding the Mortgage Files,
the Servicer shall notify the Trustee that any assumption and modification
agreement has been completed by delivering to the Trustee an Officer's
Certificate certifying that such agreement is in compliance with this Section
and the Servicer shall forward to the Trustee the original of such assumption
and modification agreement. Such assumption and modification agreement shall,
for all purposes, be considered a part of the related Mortgage File to the same
extent as all other documents and instruments constituting a part thereof. In
connection with any such agreement, the Mortgage Loan Rate shall not be reduced
(but may be increased), the Principal Balance of such Mortgage Loan shall not be
changed and the term of such Mortgage Loan will not be extended beyond the
existing term of such Mortgage Loan. Any fee collected by the Servicer for
entering into any such agreement shall be retained by the Servicer as additional
servicing compensation.
Notwithstanding the foregoing paragraph of this Section 3.05 or any
other provision of this Agreement, the Servicer shall not be deemed to be in
default, breach or any other violation of its obligations hereunder by reasons
of any assumption of a Mortgage Loan, or transfer of any Mortgaged Property
without the assumption thereof, by operation of law or any assumption or
transfer that the Servicer reasonably believes it may be restricted by law from
preventing, for any reason whatsoever.
Section 3.06 Realization upon Liquidated Mortgage Loans Subject to the
limitations set forth in this Section 3.06 with respect to Restricted Mortgage
Loans, the Servicer, on behalf of the Trust, shall foreclose upon or otherwise
comparably convert to ownership Mortgaged Properties securing such of the
Mortgage Loans as come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments
pursuant to Section 3.02(a); provided that if the Servicer has actual knowledge
or reasonably believes that any Mortgaged Property is affected by hazardous or
toxic wastes or substances, then the Servicer shall not cause the Trust to
acquire title to such Mortgaged Property in a foreclosure or similar proceeding,
unless otherwise directed in writing by the Certificate Insurer. In connection
with such foreclosure or other conversion, the Servicer shall follow such
practices (including, in the case of any default on a related Senior Lien, the
advancing of funds to correct such default) and procedures as it shall deem
necessary or advisable and as shall be normal and usual in its general first,
second and third lien one- to four-family mortgage loan servicing activities
(including the procurement of a drive-by appraisal of the related Mortgaged
Property prior to foreclosure or other conversion). The foregoing is subject to
the proviso that neither the Servicer nor the Trustee shall be required to
expend its own funds in connection with any foreclosure or towards the
correction of any default on a related Senior Lien or restoration of any
Mortgaged Property unless, in the reasonable judgment of the Servicer, such
foreclosure, correction or restoration will increase Net Liquidation Proceeds
(taking into account any unreimbursed Monthly Advances made or expected to be
made with respect to such Mortgage Loan).
To the extent the Net Liquidation Proceeds derived from any such
foreclosure or conversion exceed the unpaid Principal Balance of the related
Mortgage Loan and accrued interest thereon at the applicable Mortgage Loan Rate
to the related due date during the Collection Period in which such foreclosure
or conversion occurs (net of any related Monthly
64
70
Advances or Servicing Advances that were unreimbursed prior to the receipt of
such Net Liquidation Proceeds), such excess shall be paid to the Holder of the
Class R-I Certificate.
Neither the Trust nor the Trustee on behalf of the Trust shall complete
foreclosure proceedings with respect to any Restricted Mortgage Loan. In lieu of
foreclosure, any Restricted Mortgage Loan shall be repurchased or substituted in
accordance with and subject to the limitations contained in Section 2.05.
Notwithstanding the foregoing, the Servicer, at its sole option, may
purchase from the Trust on any Deposit Date any Mortgage Loan as to which the
related Mortgagor has failed to make full Monthly Mortgage Payments as required
under the related Mortgage Note for three consecutive months at any time
following the Cut-off Date and prior to such Deposit Date at a price equal to
the Purchase Price by depositing such amount in the Certificate Account on such
Deposit Date pursuant to Section 3.02; provided, however, that the aggregate
Principal Balances of the Mortgage Loans purchased by the Servicer pursuant to
the exercise of the option granted in this sentence shall not exceed 3% of the
sum of the Original Pool Balance plus the amount of the Prefunding Account
Deposit and such Mortgage Loans may purchased only in the orders of the most
delinquent to the least delinquent, unless otherwise approved by the Certificate
Insurer.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be issued to the Trustee, or to its nominee, on behalf of the
Certificateholders, and the Servicer shall manage, conserve, protect and operate
each such Mortgaged Property for the Certificateholders solely for the purpose
of its prompt disposition and sale. The Servicer shall use its best efforts to
dispose of each such Mortgaged Property as expeditiously as possible consistent
with the goal of maximizing Net Liquidation Proceeds (taking into account any
unreimbursed Monthly Advances made or expected to be made with respect to such
Mortgage Loan). Neither the Trustee nor the Servicer, acting on behalf of the
Trust, shall provide financing from the Trust to any purchaser of any such
Mortgaged Property.
In the event that the Trust acquires any Mortgaged Property as aforesaid
or otherwise in connection with a default or imminent default on a Mortgage
Loan, such Mortgaged Property shall be disposed of by the Servicer on behalf of
the Trust before the last day of the third calendar year following the year in
which the foreclosure occurred (the "grace period") unless (i) the Servicer on
behalf of the REMIC Pools has applied for and received an extension of such
grace period pursuant to Code Sections 856(e)(3) and 860G(a)(8)(A), in which
case the Servicer shall sell such Mortgaged Property within the applicable
extension period or (ii) the Trustee and the Certificate Insurer shall have
received an Opinion of Counsel to the effect that the holding by the Trust of
such Mortgaged Property subsequent to the expiration of the grace period will
not result in a tax on prohibited transactions imposed by Code Section
860F(a)(1), or otherwise subject any REMIC Pool to tax or cause any REMIC Pool
to fail to qualify as a REMIC at any time that any Certificates are outstanding.
The Servicer shall further ensure that the Mortgaged Property is administered so
that it constitutes "foreclosure property" within the meaning of Code Section
860G(a)(8) at all times, that the sale of such property does not result in the
receipt by any REMIC Pool of any income from non-permitted assets as described
in Code Section 860F(a)(2)(B), and
65
71
that no REMIC Pool derives any "net income from foreclosure property" within the
meaning of Code Section 860G(c)(2) with respect to such property.
Section 3.07 Trustee to Cooperate; Release of Mortgage Files Upon the
payment in full of the principal balance of any Mortgage Loan, if the Trustee is
holding the Mortgage Files, the Servicer shall notify the Trustee by a
certification in the form of Exhibit H hereto (which certification shall include
a statement to the effect that all amounts received in connection with such
payment which are required to be deposited to the Collection Account pursuant to
Section 3.02 have been so deposited) of a Servicing Officer. Such notification
shall be made each month at the time that the Servicer delivers its Servicer
Remittance Report to the Trustee pursuant to Section 4.01. Upon any such payment
in full, the Servicer is authorized to procure from such trustee under the
Mortgage that secured the related Mortgage Note a deed of full reconveyance
covering the related Mortgaged Property encumbered by such Mortgage, which deed,
except as otherwise provided in Section 2941(c) of the California Civil Code or
other applicable law, shall be recorded by such trustee in the office of the
County Recorder in which the Mortgage is recorded, or, as the case may be, to
procure from such trustee an instrument of satisfaction or, if the related
Mortgagor so requests, an assignment without recourse, in each case prepared by
the Servicer at its expense and executed by the Trustee, which deed of
reconveyance, instrument of satisfaction or assignment shall be delivered by the
Servicer to the Person entitled thereto, it being understood and agreed that no
expenses incurred in connection with such deed of reconveyance, assignment or
instrument of satisfaction shall be reimbursed from amounts at the time on
deposit in the Collection or Certificate Account. From time to time and as
appropriate for the servicing or foreclosure of any Mortgage Loan, the Trustee
shall, upon written request of the Servicer and delivery to the Trustee of a
trust receipt signed by a Servicing Officer, release the related Mortgage File
to the Servicer and shall execute such documents prepared by the Servicer as
shall be necessary to the prosecution of any such proceedings. Such trust
receipt shall state that the Servicer is holding the Mortgage File in trust for
the Trustee and shall obligate the Servicer to return the Mortgage File to the
Trustee when the need therefor by the Servicer no longer exists unless the
Mortgage Loan shall be liquidated, in which case, upon receipt of a certificate
of a Servicing Officer similar to that herein above specified, the trust receipt
shall be released by the Trustee to the Servicer.
Section 3.08 Servicing Compensation; Payment of Certain Expenses by the
Servicer On each Deposit Date, the Servicer shall be entitled to receive, by
withdrawal by the Servicer from the Collection Account, out of collections of
interest on the Mortgage Loans for the related Collection Period, as servicing
compensation for such Collection Period, the Monthly Servicing Fee. Additional
servicing compensation shall be assumption fees, late payment charges, charges
for checks returned for insufficient funds, or extension and other
administrative charges received by the Servicer (excluding Prepayment Charges)
and any earnings on investments by the Servicer of amounts held in escrow
accounts established thereby on behalf of Mortgagors (any such investments to be
made in compliance with applicable law). The Servicer is obligated to pay
Compensating Interest out of the related Monthly Servicing Fee on each Deposit
Date, to the extent of the amount of the Monthly Servicing Fee, and shall not be
entitled to reimbursement therefor; provided that if Fairbanks becomes the
Servicer, Fairbanks will be entitled to reimbursment for any Compensating
Interest payments made by it from amounts otherwise
66
72
payable to Fairbanks as its Monthly Servicing Fee. The Servicer shall be
required to pay all expenses incurred by it in connection with its activities
hereunder (including payment of the fees and expenses relating to the Annual
Independent Public Accountant's Servicing Report described in Section 3.10, and
all other fees and expenses not otherwise expressly stated hereunder for the
account of the Certificateholders) and shall not be entitled to reimbursement
therefor except as specifically provided herein.
As compensation for the activities of the Back-up Servicer hereunder,
the Back-up Servicer shall be entitled to the Back-up Servicing Fee. The Back-up
Servicer shall also be paid upon the execution of this Agreement a one-time set
up fee of $5,000. The Back-up Servicer shall cease to be entitled to the Back-up
Servicing Fee in the event it shall become the successor Servicer hereunder (in
which case it shall be entitled to the Monthly Servicing Fee, as provided
herein).
Section 3.09 Annual Statement as to Compliance
(a) The Servicer will deliver to the Trustee, the Back-up Servicer, the
Certificate Insurer and each Rating Agency, on or before September 30 of each
year, beginning with September 30, 2000, an Officer's Certificate of the
Servicer substantially in the form set forth in Exhibit F hereto stating that
(a) a review of the activities of the Servicer during the preceding calendar
year (or since the Closing Date in the case of the first such statement) and of
its performance under this Agreement has been made under such officer's
supervision and (b) to the best of such officer's knowledge, based on such
review, the Servicer has fulfilled all its material obligations under this
Agreement throughout such year (or since the Closing Date in the case of the
first such statement), or, if there has been a default in the fulfillment of any
such obligation, specifying each such default known to such officer and the
nature and status thereof.
(b) The Servicer shall deliver to the Trustee, with a copy to the
Certificate Insurer the Back-up Servicer, and each Rating Agency, promptly after
having obtained knowledge thereof, but in no event later than five Business Days
thereafter, written notice by means of an Officer's Certificate of any event
that with the giving of notice or the lapse of time, or both, would become an
Event of Default.
Section 3.10 Annual Independent Public Accountants' Servicing Report
(a) On or before September 30 of each year, beginning with September 30,
2000, the Servicer at its expense shall cause a firm of nationally recognized
independent public accountants (who may also render other services to the
Servicer) to furnish a report to the Trustee, the Back-up Servicer, the
Certificate Insurer and each Rating Agency to the effect that such firm has
examined certain documents and records (including the Servicer Remittance
Reports delivered by the Servicer during the period covered by such reports)
relating to the servicing activities of the Servicer (which would include
servicing of Mortgage Loans under this Agreement) for the period covered by such
report, and that such examination (which will have been conducted substantially
in compliance with the Uniform Single Attestation Program for Mortgage Bankers
to the extent that the procedures in such audit guide are applicable to the
servicing obligations set
67
73
forth in this Agreement), has disclosed no exceptions or errors in records
relating to the servicing activities of the Servicer, including servicing of
Mortgage Loans subject to this Agreement, that, in the opinion of such firm, are
material, except for such exceptions as shall be set forth in such report.
(b) The Servicer, at its expense, shall cause a firm of nationally
recognized independent public accountants (who may also render other services to
the Servicer) to furnish a report to the Certificate Insurer and to ▇▇▇▇▇▇
Brothers Inc. to the extent that such persons have agreed the procedures to be
employed with such accountants, to the effect that such firm has obtained copies
of records of the Servicer and the Trustee relating to the calculation of (i)
amounts remitted by the Servicer to either the Collection Account or the
Certificate Account as Monthly Advances, Servicing Advances and Compensating
Interest and (ii) amounts withdrawn or transferred from either such account as
reimbursements in respect of previously unreimbursed Monthly Advances or
Servicing Advances for the period covered by such report. In such report, such
accountants shall state that they have performed the procedures described in
such report, which procedures shall be substantially in accordance with those
procedures listed in Exhibit O hereto. Such report shall state the findings of
such accountants pursuant to such procedures. Such report shall be furnished on
or before February 28, 2000 for the period ending December 31, 1999. Thereafter,
such report shall be provided on a semi-annual basis unless and except to the
extent that such accountants report that in connection with the examination
performed under Section 3.10(a) hereto or their examination of the Servicer's
financial statements nothing has come to their attention to indicate that the
Servicer is not in material compliance with Section 3.08 hereto as it relates to
the payment of Compensating Interest by the Servicer or Section 5.02 hereto
during the period covered by such examination.
Section 3.11 Access to Certain Documentation and Information Regarding
the Mortgage Loans
(a) The Servicer shall provide to Certificateholders that are federally
insured savings associations and the FDIC and its supervisory agents and
examiners access to the documentation regarding the Mortgage Loans required by
applicable regulations of the Office of Thrift Supervision, and to the Trustee
and the Certificate Insurer all documentation relating to the Mortgage Loans
that is in the possession of the Servicer, such access being afforded without
charge but only upon reasonable request and during normal business hours at the
offices of the Servicer. Nothing in this Section shall derogate from the
obligation of the Servicer to observe any applicable law prohibiting disclosure
of information regarding the Mortgagors and the failure of the Servicer to
provide access as provided in this Section as a result of such obligation shall
not constitute a breach of this Section.
(b) The Servicer shall supply information to the Trustee in such form as
the Trustee shall reasonably request, by the start of the third Business Day
preceding each Distribution Date, as is required in the Trustee's reasonable
judgment to enable the Trustee to make required distributions and to furnish the
certificates, statements and reports to Certificateholders required pursuant to
this Agreement.
68
74
Section 3.12 Maintenance of Fidelity Bond and Errors and Omissions
Policy The Servicer shall during the term of its service as Servicer maintain in
force a (a) policy or policies of insurance covering errors and omissions in the
performance of its obligations as Servicer hereunder and (b) fidelity bond in
respect of its officers, employees and agents, in each case having coverage
amounts that satisfy FNMA or FHLMC requirements for mortgage loan originators
and servicers.
Section 3.13 Notices to the Rating Agencies, the Trustee and the
Certificate Insurer In addition to the other notices required to be given to the
Rating Agencies, the Trustee and the Certificate Insurer by the provisions of
this Agreement, the Servicer shall give notice to each Rating Agency, the
Trustee, the Back-up Servicer and the Certificate Insurer of (a) any amendment
to this Agreement, (b) the final distribution on the Offered Certificates, (c)
the occurrence of an Event of Default and (d) the repurchase, purchase or
substitution, as applicable, of any Mortgage Loan pursuant to Section 2.03,
2.05, 3.01 or 3.06 by the Seller or Servicer, as the case may be.
Section 3.14 Reports of Foreclosures and Abandonment of Mortgaged
Properties Each calendar year beginning in 2000 the Servicer shall make the
reports of foreclosures and abandonments of any Mortgaged Property required by
Code Section 6050J. In order to facilitate this reporting process, the Servicer,
on or before February 28th of each year, shall provide to the Internal Revenue
Service and the Trustee reports relating to each instance occurring during the
previous calendar year in which the Servicer (i) on behalf of the Trustee
acquired an interest in a Mortgaged Property through foreclosure or other
comparable conversion in full or partial satisfaction of a Mortgage Loan, or
(ii) knows or has reason to know that a Mortgaged Property has been abandoned.
The reports from the Servicer shall be in form and substance sufficient to meet
the reporting requirements imposed by such Section 6050J.
Section 3.15A Sub-Servicers and Sub-Servicing Agreements
(a) The Servicer may enter into Sub-Servicing Agreements for any
servicing and administration of Mortgage Loans with any institution that is
acceptable to the Certificate Insurer and that is in compliance with the laws of
each state necessary to enable it to perform its obligations under such
Sub-Servicing Agreement. The Servicer shall give notice to the Certificate
Insurer and the Back-up Servicer of the appointment of any Sub-Servicer. The
Servicer shall not enter into any Sub-Servicing Agreement that does not provide
for the servicing of the Mortgage Loans specified therein on a basis consistent
with the terms of this Agreement or that otherwise violates the provisions of
this Agreement. The Servicer may enter into, and make amendments to, any
Sub-Servicing Agreement or enter into different forms of Sub-Servicing
Agreements; provided, however, that any such amendments or forms shall be
consistent with and not violate the provisions of this Agreement.
(b) For purposes of this Agreement the Servicer shall be deemed to have
received payments on Mortgage Loans when any Sub-Servicer has received such
payments. With respect to the Servicer's obligations under Section 3.01 to make
deposits in the Collection Account, the
69
75
Servicer shall be deemed to have made such deposits when any Sub-Servicer has
made such deposits into a Sub-Servicing Account if permitted by the related
Sub-Servicing Agreement.
(c) Any Sub-Servicing Agreement and any other transactions or services
relating to the Mortgage Loans involving a Sub-Servicer shall be deemed to be
between the Sub-Servicer and the Servicer alone and the Certificate Insurer and
the Trustee shall not be deemed parties thereto and shall have no claims,
rights, obligations, duties or liabilities with respect to any Sub-Servicer,
except that the Trustee and the Certificate Insurer shall have such claims or
rights that arise as a result of any funds held by a Sub-Servicer in trust for
or on behalf of the Trust. Notwithstanding the execution of any Sub-Servicing
Agreement, the Servicer shall not be relieved of any liability hereunder and
shall remain obligated and liable for the servicing and administration of the
Mortgage Loans.
(d) The Servicer shall be entitled to terminate any Sub-Servicing
Agreement and the rights and obligations of any Sub-Servicer pursuant to any
Sub-Servicing Agreement in accordance with the terms and conditions of such
Sub-Servicing Agreement but only with the prior consent of the Certificate
Insurer. In the event of termination of any Sub-Servicer, all servicing
obligations of such Sub-Servicer shall be assumed simultaneously by the Servicer
without any act or deed on the part of such Sub-Servicer or the Servicer, and
the Servicer either shall service directly the related Mortgage Loans or shall
enter into a Sub-Servicing Agreement with a successor Sub-Servicer. The
Sub-Servicer shall give written notice to the Back-up Servicer, the Trustee and
the Certificate Insurer of the termination of any Sub-Servicer.
(e) Any Sub-Servicing Agreement shall include the provision that (i)
such agreement may be immediately terminated by the Back-up Servicer or the
Trustee without fee, in accordance with the terms of this Agreement, in the
event that the Servicer shall, for any reason, no longer be the Servicer
(including termination due to an Event of Default) or (ii) clearly and
unambiguously states that any termination fee is the sole responsibility of the
Servicer and none of the Trust, the Back-up Servicer, the Trustee, the
Certificateholders or the Certificate Insurer has any liability therefor,
regardless of the circumstances surrounding such termination.
Section 3.15B Assumption or Termination of Sub-Servicing Agreements by
the Back-up Servicer.
In the event the original Servicer shall for any reason no longer be the
servicer (including by reason of the occurrence of an Event of Default), the
Back-up Servicer or its designee shall thereupon assume all of the rights and
obligations of the Servicer under each Sub-Servicing Agreement that the Servicer
may have entered into, unless the Back-up Servicer (at the direction of the
Certificate Insurer) elects to terminate any Sub-Servicing Agreement in
accordance with its terms as provided in Section 3.15A. Upon such assumption,
the Back-up Servicer, its designee or the successor servicer for the Back-up
Servicer appointed pursuant to Section 8.02 shall be deemed, subject to Section
3.15A, to have assumed all of the Servicer's interest therein and to have
replaced the Servicer as a party to each Sub-Servicing Agreement to the same
extent as if each Sub-Servicing Agreement had been assigned to the assuming
party, except that the Servicer shall not thereby be relieved of any liability
or obligations under any Sub-Servicing Agreement.
70
76
The Servicer at its expense shall, upon request of the Trustee or the
Back-up Servicer, deliver to the assuming party all documents and records
relating to each Sub-Servicing Agreement and the Mortgage Loans then being
serviced and an accounting of amounts collected and held by or on behalf of it,
and otherwise use its best efforts to effect the orderly and efficient transfer
of the Sub-Servicing Agreements to the assuming party.
Section 3.16 Prefunding Account
(a) The Trustee will establish and maintain the Prefunding Account. No
later than the Closing Date, the Trustee will deposit in the Prefunding Account
the Prefunding Account Deposit from the proceeds of the sale of the Adjustable
Rate Group Certificates. Subject to this Section, upon the conveyance of
Subsequent Mortgage Loans to the Trust on any Subsequent Transfer Date, the
Seller shall instruct the Trustee to withdraw from the Prefunding Account (i) an
amount equal to the Subsequent Purchase Price for the Subsequent Mortgage Loans
bearing adjustable Mortgage Loan Rates to be included in the Adjustable Rate
Group and make a corresponding reduction in the amount on deposit in the
Prefunding Account, and to pay such amount to or upon the order of the Seller
upon satisfaction of the conditions set forth in Section 2.02 of this Agreement
with respect to such transfer.
(b) The Prefunding Account will be part of the Trust but not part of any
REMIC Pool. Amounts held in the Prefunding Account shall be invested in
Permitted Investments of the type specified in clause (f) of the definition of
Permitted Investments. The Trustee shall not be liable for any losses on amounts
invested in accordance with the provisions hereof. Any losses realized in
connection with any such investment shall be for the account of the Seller and
the Seller shall deposit the amount of such loss (to the extent not offset by
income from other investments) in the Prefunding Account immediately upon the
realization of such loss. All interest and any other investment earnings on
amounts held in the Prefunding Account shall be taxed to the Seller and for
federal and state income tax purposes the Seller shall be deemed to be the owner
of the Prefunding Account. All interest and any other investment earnings on
amounts held in the Prefunding Account shall be paid by the Trustee to the
Seller on the September 1999 Distribution Date.
(c) On the September 1999 Distribution Date, any amounts remaining in
the Prefunding Account (net of reinvestment earnings payable to the Seller)
shall be deposited at such time into the Certificate Account for distribution as
part of the Principal Distribution Amount for the Adjustable Rate Certificate
Group on such Distribution Date.
71
77
Section 3.17 Capitalized Interest Account
(a) Unless all Subsequent Mortgage Loans are purchased by the Trust on
the Closing Date, the Trustee shall establish and maintain the Capitalized
Interest Account. On the Closing Date, the Trustee will deposit the Capitalized
Interest Account Deposit in the Capitalized Interest Account or, if all
Subsequent Mortgage Loans are purchased on the Closing Date, in the Certificate
Account. The Trustee shall hold the Capitalized Interest Account Deposit for the
benefit of the Adjustable Rate Group Certificateholders.
(b) The Capitalized Interest Account will be part of the Trust but not
part of any REMIC Pool. Amounts held in the Capitalized Interest Account prior
to the first Deposit Date shall be invested in Permitted Investments of the type
specified in clause (e) of the definition of Permitted Investments, which
Permitted Investments shall mature no later than the Deposit Date immediately
following the end of the Funding Period. The Trustee shall not be liable for any
losses on amounts invested in accordance with the provisions hereof. All
interest and other investment earnings on amounts held in the Capitalized
Interest Account (and any other amounts remaining on deposit therein in excess
of the amounts to be so withdrawn and deposited into the Certificate Account)
shall be paid or released by the Trustee to the Seller on the Distribution Date
immediately following the end of the Funding Period and taxed to the Seller. For
federal and state income tax purposes the Seller shall be deemed to be the owner
of the Capitalized Interest Account. Any losses realized in connection with any
such investment shall be for the account of the Seller and the Seller shall
deposit the amount of such loss (to the extent not offset by income from other
investments) in the Capitalized Interest Account immediately upon the
realization of such loss. All amounts earned on deposit in the Capitalized
Interest Account shall be taxed to the Seller.
(c) On each Prefunding Distribution Date, the Trustee shall transfer
from the Capitalized Interest Account to the Certificate Account the Capitalized
Interest Requirement, if any, for such Distribution Date; provided, however,
that on the final Subsequent Transfer Date the Trustee shall (i) transfer the
Capitalized Interest Requirement, if any, for the following Distribution Date
from the Capitalized Interest Account to the Certificate Account, (ii) remit the
balance of the funds on deposit in the Capitalized Interest Account to the
Seller and (iii) close the Capitalized Interest Account.
(d) The Capitalized Interest Account shall be closed on the Distribution
Date immediately following the end of the Funding Period. All amounts, if any,
remaining in the Capitalized Interest Account on such day shall be paid to the
Seller.
Section 3.18 Payments on the Certificate Insurance Policy
(a) The Trustee will establish and maintain the Policy Payments Account,
a separate special purpose trust account for the benefit of the Offered
Certificateholders and the Certificate Insurer. The Trustee shall deposit or
cause to be deposited any Insured Payments paid under the Certificate Insurance
Policy and received by the Trustee in the Policy Payments Account and distribute
such amounts only for the purpose of payment to the related Offered
Certificateholders of the related Insured Payments and such amounts may not be
used to satisfy any costs, expenses
72
78
or liabilities of the Servicer, the Trustee or the Trust. Insured Payments
deposited in the Policy Payments Account shall not be invested in Permitted
Investments or otherwise, and shall be transferred to the Certificate Account on
the related Distribution Date and disbursed by the Trustee to the related
Offered Certificateholders in accordance with Section 5.01.
As soon as possible, and in no event later than 9:00 a.m. (Los Angeles
time) on the fourth Business Day immediately preceding the related Distribution
Date, the Trustee shall determine whether a Deficiency Amount is required to be
paid under the Certificate Insurance Policy with respect to such Distribution
Date and, if so, shall immediately notify the Servicer by telephone, which
notice shall be confirmed in writing by facsimile transmission, of the Trustee's
intention so to file the applicable Notice of Claim. If by the close of business
in Los Angeles on such date a Deficiency Amount is still required to be paid
under the Certificate Insurance Policy with respect to such Distribution Date,
the Trustee shall furnish the Certificate Insurer (or an agent of the
Certificate Insurer designated to the Trustee in writing) with a completed
Notice of Claim in respect of such Deficiency Amount by 12:00 noon New York City
time on the next succeeding Business Day and shall provide a copy thereof to the
Servicer at or prior to the time such Notice of Claim is received by the
Certificate Insurer. The Notice of Claim shall constitute a claim therefor
pursuant to the Certificate Insurance Policy. In the event any funds are
received by the Trustee from the Servicer prior to the close of business in Los
Angeles on the Business Day following the transmission of a Notice of Claim to
the Certificate Insurer (or an agent of the Certificate Insurer designated to
the Trustee in writing), and such funds reduce the amount of the Deficiency
Amount to which such Notice of Claim relates, the Deficiency Amount to which
such Notice of Claim relates shall be reduced by a corresponding amount, and the
Notice of Claim shall be deemed to have been rescinded to the extent of the
reduction of the Deficiency Amount. Notification of any such reduction in the
Insured Payment shall be given to the Certificate Insurer (or an agent of the
Certificate Insurer designated to the Trustee in writing) by the Trustee by no
later than 9:00 A.M., New York time, on the related Distribution Date. The
Certificate Insurer shall pay amounts due pursuant to the Certificate Insurance
Policy in accordance with the terms of the Certificate Insurance Policy.
(b) The Trustee shall, as necessary, make a claim on the Certificate
Insurance Policy in respect of Preference Amounts in accordance with the terms
of the Certificate Insurance Policy.
(c) The Trustee shall receive, as attorney-in-fact for each Offered
Certificateholder, any Insured Payment allocable to such Offered Certificates,
from the Certificate Insurer and disburse the same in accordance with the
provisions of Section 5.01. Any portion of the distributions made by the Trustee
in respect of any Insured Payment, from proceeds of the Certificate Insurance
Policy shall not be considered payment by the Trust, nor shall such payments
discharge the obligation of the Trust with respect to such Offered
Certificateholders, and the Certificate Insurer shall become the owner of such
unpaid amounts in respect of such Offered Certificates. The Trustee hereby
agrees on behalf of each Offered Certificateholder for the benefit of the
Certificate Insurer that it recognizes that: to the extent the Certificate
Insurer pays any Insured Payments in respect of the Offered Certificates, either
directly or indirectly (as by paying through the Trustee), to the Offered
Certificateholders, the Certificate Insurer will be
73
79
subrogated to the rights of such Offered Certificateholders with respect to such
Insured Payments paid in respect of such Offered Certificateholders, shall be
deemed to the extent of the Insured Payments so paid in respect of such
Certificateholders, to be a registered Holder of such Offered Certificates and
shall be entitled to receive all future distributions on such Offered
Certificates until all such Insured Payments (together with interest thereon at
the related Late Payment Rate from the date paid until the date of reimbursement
thereof) have been fully reimbursed, in each case subject to the following
paragraph. To evidence such subrogation, the Trustee shall note the Certificate
Insurer's rights as subrogee on the registration books maintained by the
Trustee. Except as otherwise described herein, the Certificate Insurer shall not
acquire any voting rights hereunder as a result of such subrogation. The effect
of the foregoing provisions is that, to the extent of any Insured Payments made
by it on each Distribution Date, the Certificate Insurer shall be paid before
any other distributions are made to the Offered Certificateholders.
(d) The Trustee shall be entitled to enforce on behalf of the Offered
Certificateholders the obligations of the Certificate Insurer under the
Certificate Insurance Policy. The Offered Certificateholders are not entitled to
institute proceedings directly against the Certificate Insurer. Each Offered
Certificateholder, by its purchase of Offered Certificates, the Servicer and the
Trustee hereby agree that the Certificate Insurer may at any time during the
continuation of any proceeding relating to a preference claim direct all matters
relating to such preference claim, including, without limitation, the direction
of any appeal of any order relating to such preference claim and the posting of
any surety, supersedeas or performance bond pending any such appeal. In addition
and without limitation of the foregoing, the Certificate Insurer shall be
subrogated to the rights of the Servicer, the Trustee and each Offered
Certificateholder in the conduct of any such preference claim, including,
without limitation, all rights of any party to an adversary proceeding action
with respect to any court order issued in connection with any such preference
claim.
(e) The Trustee shall keep a complete and accurate record of the amount
of interest and principal paid in respect of any Offered Certificate from monies
received under the Certificate Insurance Policy. The Certificate Insurer shall
have the right to inspect such records at reasonable times during normal
business hours upon one Business Day's notice to the Trustee.
Section 3.19 Rights of the Certificate Insurer to Exercise Rights of
Offered Certificateholders By accepting its Certificate, each Offered
Certificateholder agrees that unless a Certificate Insurer Default exists, the
Certificate Insurer shall have the right to exercise all rights of the Offered
Certificateholders under this Agreement without any further consent of the
Offered Certificateholders, including, without limitation:
(i) the right to direct foreclosures upon Mortgage Loans upon
failure of the Servicer to do so;
(ii) the right to require the Seller to repurchase or substitute
for, or to require the Servicer to purchase, Mortgage Loans pursuant to
Sections 2.05 and 2.09; and
74
80
(iii) the right to direct the actions of the Trustee during the
continuance of an Event of Default.
In addition, each Offered Certificateholder agrees that, unless a
Certificate Insurer Default exists, the rights specifically set forth above may
be exercised by the Offered Certificateholders only with the prior written
consent of the Certificate Insurer.
Section 3.20 Trust and Accounts Held for Benefit of the Certificate
Insurer Provided there does not exist a Certificate Insurer Default, the Trustee
shall hold the Trust and the Mortgage Files for the benefit of the
Certificateholders and the Certificate Insurer and all references in this
Agreement (including, without limitation, in Sections 2.01, 2.02 and 2.03) and
in the Certificates to the benefit of Holders of the Certificates shall be
deemed to include the Certificate Insurer.
Provided there does not exist a Certificate Insurer Default, the
Servicer hereby acknowledges and agrees that it shall service and administer the
Mortgage Loans and any REO Properties, and shall maintain the Collection Account
for the benefit of the Certificateholders and for the benefit of the Certificate
Insurer, and all references in this Agreement to the benefit of or actions on
behalf of the Certificateholders shall be deemed to include the Certificate
Insurer.
All notices, statements, reports, certificates or opinions required by
this Agreement to be sent to any other party hereto or to the Certificateholders
shall also be sent to the Certificate Insurer.
Section 3.21 Supplemental Interest Reserve Fund The Trustee will
establish the Supplemental Interest Reserve Fund on the Closing Date. On the
Closing Date, the Class C Certificateholders will deposit, or cause to be
deposited, into the Supplemental Interest Reserve Fund $10,000. On each
Distribution Date as to which there is Current WAC Excess or a Supplemental
Interest Amount, the Trustee has been directed by the Class C Certificateholders
to, and therefor will, deposit into the Supplemental Interest Reserve Fund the
amounts described in Section 5.01(b)(9) as well as the amount of any Current WAC
Excess, rather than distributing such amounts to the Class C Certificateholders.
On each such Distribution Date, the Trustee shall hold all such amounts for the
benefit of the Adjustable Rate Group Certificateholders, and will distribute
such amounts to the Class A-V Certificateholders pursuant to Section 5.01(b)(9)
and, in the case of the Current WAC Excess, Section 5.01(b)(2) as part of the
Accrued Certificate Interest on the Class A-V Certificates. If no Current WAC
Excess or Supplemental Interest Amounts are payable on a Distribution Date, the
Trustee shall deposit into the Supplemental Interest Reserve Fund on behalf of
the Class C Certificateholders an amount such that when added to other amounts
already on deposit in the fund, the aggregate amount on deposit therein is equal
to $10,000. For federal and state income tax purposes, the Class C
Certificateholders will be deemed to be the owners of the Supplemental Interest
Reserve Fund and all amounts deposited into the Supplemental Interest Reserve
Fund (other than the initial $10,000 deposit) shall be treated as amounts
distributed by REMIC II with respect to the Class C Distribution Amount and
Class C Carryforward Amount. Amounts held in the Supplemental Interest Reserve
Fund and not distributable to the Class A-V Certificateholders on any
Distribution Date will be
75
81
invested by the Trustee in investments designated by the Class C
Certificateholders having maturities on or prior to the next succeeding
Distribution Date on which such amounts will be distributable to the Class A-V
Certificateholders. Upon the termination of the Trust, or the payment in full of
the Class A-V Certificates, all amounts remaining on deposit in the Supplemental
Interest Reserve Fund will be released from the lien of the Trust and
distributed to the Class C Certificateholders or their designees. The
Supplemental Interest Reserve Fund will be part of the Trust but not part of any
REMIC Pool and any payments to the Class A-V Certificates of Current WAC Excess
and Supplemental Interest Amounts will not be payments with respect to a
"regular interest" in a REMIC within the meaning of Code Section 860G(a)(1).
Section 3.22. Covenants and Representations of the Servicer Regarding
Prepayment Charges (a) The Servicer will not waive any Prepayment Charge or part
of a Prepayment Charge unless such waiver would maximize recovery of total
proceeds taking into account the value of such Prepayment Charge and related
Mortgage Loan and doing so is standard and customary in servicing similar
Mortgage Loans (including any waiver of a Prepayment Charge in connection with a
refinancing of a Mortgage Loan that is related to a default or a reasonably
foreseeable default) and in no event will it waive a Prepayment Charge in
connection with a refinancing of a Mortgage Loan that is not related to a
default or a reasonably foreseeable default.
(b) The information set forth in the prepayment charge schedule
(including the prepayment charge summary attached thereto) is complete, true and
correct in all material respects at the date or dates respecting which such
information is furnished and each Prepayment Charge is permissible and
enforceable in accordance with its terms (except to the extent that the
enforceability thereof may be limited by bankruptcy, insolvency, moratorium,
receivership and other similar laws relating to creditors' rights generally)
under applicable state law.
(c) Upon discovery by the Seller or a Responsible Officer of the Trustee
of a breach of the foregoing, which materially and adversely affects the Holders
of the Class P Certificates to any Prepayment Charge, the party discovering such
breach shall give prompt written notice to the other parties. Within 60 days of
the earlier of discovery by the Servicer or receipt of notice by the Servicer of
breach, the Servicer shall cure such breach in all material respects. If the
covenant made by the Servicer in clause (a) above is breached the Servicer must
pay into the Collection Account the amount of the waived Prepayment Charge. If
the representation made by the Servicer in clause (b) above is breached, the
Servicer must pay into the Collection Account the amount of the scheduled
Prepayment Charge, less any amount previously collected and paid by the Servicer
into the Collection Account.
ARTICLE IV
REMITTANCE REPORT
Section 4.01 Servicer Remittance Report With respect to each
Distribution Date, not later than the fifth Business Day prior to the related
Deposit Date the Servicer shall deliver to the Trustee, the Back-up Servicer and
the Certificate Insurer a computer-readable magnetic tape or disk containing the
Servicer Remittance Report detailing the payments and collections received
76
82
in respect of the Mortgage Loans in each Mortgage Loan Group during the
immediately preceding Collection Period. The computer-readable magnetic tape or
disk shall include loan-by-loan information that specifies account number,
borrower name, outstanding principal balance and activity since the last
Distribution Date. Such tape shall be in the form and have the specifications as
may be agreed to between the Servicer, the Trustee, the Back-up Servicer and the
Certificate Insurer from time to time and shall include information concerning
original loan-to-value ratios, the lien positions of and number of days
contractually delinquent of the Mortgage Loans and information necessary to
calculate Delinquency Rate Events, Cumulative Loss Rate Events, Rolling Loss
Rate Events and Targeted Overcollateralization Amounts.
In addition to the foregoing, the Servicer shall provide the Trustee,
the Back-up Servicer and the Certificate Insurer at the time the tape is
delivered to the Trustee a Liquidation Report with respect to each Mortgage Loan
that became a Liquidated Mortgage Loan during the related Collection Period
substantially in the form of Exhibit I hereto.
Section 4.02 Trustee Distribution Date Statement The Trustee shall, not
later than the Business Day prior to each Deposit Date, furnish by telecopy to
the Servicer, the Back-up Servicer and the Certificate Insurer a statement
derived from information on the Servicer Remittance Report that sets forth the
following information for the Offered Certificates relating to the next
succeeding Distribution Date:
(a) the total amount of payments in respect of or allocable to
interest on the Mortgage Loans received or deemed to have been received
from the related Mortgagors by the Servicer during such Collection
Period (including any net income from REO Properties received during the
related Collection Period);
(b) the aggregate amount of all Principal Prepayments received
from the related Mortgagors by the Servicer during such Collection
Period;
(c) the aggregate amount of all Principal Payments received or
deemed to have been received from the related Mortgagors by the Servicer
during such Collection Period;
(d) the total amount of Payments Ahead received during the
related Collection Period;
(e) the aggregate of any Trust Insurance Proceeds received by the
Servicer during such Collection Period;
(f) the aggregate of any Net Liquidation Proceeds received by the
Servicer during such Collection Period;
(g) the total amount of Compensating Interest payments to be paid
by the Servicer pursuant to Section 3.08;
77
83
(h) the aggregate Purchase Prices for (i) any Defective Mortgage
Loans that the Seller is required to repurchase on the related Deposit
Date pursuant to Section 2.03 or 2.05 and (ii) any Mortgage Loan that
the Servicer is required to purchase on the related Deposit Date
pursuant to Section 3.01 or 3.06;
(i) any amounts required to be deposited by the Seller on the
related Deposit Date in connection with the substitution of a Qualified
Replacement Mortgage Loan pursuant to Section 2.03 or 2.05;
(j) the amount of Monthly Advances to be made by the Servicer
pursuant to Section 5.02(a);
(k) the related Monthly Servicing Fee attributable to the
Mortgage Loans in the related Mortgage Loan Group;
(l) the amount of Monthly Advances reimbursable to the Servicer
in such Collection Period pursuant to Section 5.02(a) and not previously
reimbursed;
(m) the amount of any Servicing Advance made by the Servicer
pursuant to Section 5.02(b) and not previously reimbursed;
(n) the amount of any Interest Shortfall for the related
Distribution Date; and
(o) the number and Principal Balance of Mortgage Loans in each
Mortgage Loan Group that, as of the related Determination Date were (i)
30 or more days contractually delinquent, (ii) 60 or more days
contractually delinquent, (iii) 90 or more days contractually
delinquent, (iv) in foreclosure, (v) as to which the Mortgagor is in
bankruptcy to the knowledge of the Servicer, or (vi) as to which the
related Mortgaged Property was an REO Property.
ARTICLE V
PAYMENTS AND STATEMENTS TO CERTIFICATEHOLDERS
Section 5.01 Distributions. (a) On each Distribution Date, the Trustee
shall distribute to each Certificateholder of record on the related Record Date
(other than as provided in Section 10.01 respecting the final distribution to
Certificateholders if the termination of the Trust is in connection with a
purchase of the assets of the Trust by the Servicer pursuant to Section 10.01)
by check or money order mailed to such Certificateholder at the address
appearing in the Certificate Register, or upon written request by a Holder of a
Certificate, by wire transfer (in the event such Certificateholder owns of
record one or more Certificates that have principal denominations aggregating at
least $5,000,000 and has given the Trustee, at least five Business Days prior to
the related Record Date, written instruction for making such wire transfer to a
bank account maintained in the United States), or by such other means of payment
as such Certificateholder and the Trustee shall agree, such Certificateholder's
Percentage Interest of the
78
84
amounts (to the extent applicable to the Class of such Holder's Certificate) and
in the following orders of priority with respect to each Mortgage Loan Group.
Notwithstanding such priorities, the aggregate of amounts distributed on all
Distribution Dates in reduction of the Certificate Principal Balance of any
Class shall not exceed the Certificate Principal Balance of such Class as of the
Closing Date.
(b) On each Distribution Date, the Trustee shall withdraw the
Available Funds for each Mortgage Loan Group from the Certificate
Account plus any amounts paid under the Certificate Insurance Policy and
apply such amounts in the following order of priority, in each case, to
the extent of the funds remaining therefor:
1. Concurrently, to the Trustee, the Servicer, the Back-up
Servicer and the Certificate Insurer, the Trustee Fee, the
Monthly Servicing Fee (to the extent not otherwise reimbursed
from the Collection Account), the Back-up Servicing Fee and the
Certificate Insurer Premium for such Mortgage Loan Group and
Distribution Date.
2. Concurrently, to the Class of Offered Certificates in the
related Certificate Group, the related Accrued Certificate
Interest and Interest Carry Forward Amount for such Class of
Certificates for such Distribution Date.
3. To the Class of Offered Certificates in the related
Certificate Group, an amount up to the related Principal
Distribution Amount in the following order of priority:
A. Fixed Rate Group:
The Fixed Rate Group Principal Distribution Amount to
the Class A-F Certificates, until the Certificate
Principal Balance thereof has been reduced to zero.
B. Adjustable Rate Group:
The Adjustable Rate Group Principal Distribution Amount
to the Class A-V Certificates, until the Certificate
Principal Balance thereof has been reduced to zero.
4. To the Certificate Insurer, any amounts owing under the
Insurance Agreement.
5. To the Holders of Certificates in the other Certificate
Group, the amount of Available Funds Shortfall for such other
Certificate Group.
6. To the Class of Offered Certificates in the related
Certificate Group, an amount up to the Extra Principal
Distribution Amount for such
79
85
Certificate Group and Distribution Date until the related
Targeted Overcollateralization Amount is reached.
7. To the Class of Offered Certificates in the other
Certificate Group, any Target Deficiency for such Certificate
Group remaining after the distributions pursuant to clause 6.
above.
8. In the event that Fairbanks has become the Servicer, to
Fairbanks to the extent of any Compensating Interest paid out of
servicing fees otherwise payable to Fairbanks as Servicer.
9. To fund a distribution to Class C Certificateholders of
the Class C Distribution Amount plus any Class C Carryforward
Amount; provided that, pursuant to Section 3.21 hereof, on any
Distribution Date as to which there is any unpaid Supplemental
Interest Amount, the Trustee will deposit from amounts that would
otherwise be distributable to the Class C Certificateholders
funds into the Supplemental Interest Reserve Fund for immediate
application pursuant to this clause of the distribution of the
Supplemental Interest Amount to the Class A-V Certificates, and
such deposit, together with the Current WAC Excess which is
deposited into the Supplemental Interest Reserve Fund pursuant to
Section 3.21 and distributed pursuant to Section 5.01(b)(2), will
constitute payment in full of and satisfaction of all obligations
hereunder to distribute amounts equal to the Current WAC Excess
and Supplemental Interest Amounts to the Class C
Certificateholders, including for purposes of Section 9.16, and
the Trustee, Servicer and Class C Certificateholders agree hereby
appropriately to report any deposit of Current WAC Excess and
Supplemental Interest Amounts as if corresponding distributions
had been made to the Class C Certificateholders for federal
income tax and accounting purposes with respect to the Class C
Distribution Amount and Class C Carryforward Amount. (All
distributions or deemed distributions with respect to the Class C
Distribution Amount and Class C Carryforward Amount shall be
applied first to the interest components of such amounts and
second to reduce the Class C Certificate Principal Balance).
10. To the Class R Certificates, the remainder.
(c) Distribution of Insured Payments. With respect to any
Distribution Date, in the event of an Insured Payment, the Trustee shall
make such payments from the amount drawn under the Certificate Insurance
Policy for such Distribution Date pursuant to Section 5.01. Any Insured
Payment not required to make distributions pursuant to Section 5.01
shall be returned to the Certificate Insurer.
(d) By accepting a Class C Certificate, each Class C
Certificateholder hereby agrees to direct the Trustee, and the Trustee
hereby is directed, to deposit into the Supplemental Interest Reserve
Fund the amounts described in Section 3.21 on each Distribution Date as
to which there is any Current WAC Excess or Supplemental Interest
80
86
Amount rather than distributing such amounts to the Class C
Certificateholders. By accepting a Class C Certificate, each Class C
Certificateholder further agrees that such direction is given for good
and valuable consideration, the receipt and sufficiency of which is
acknowledged by such acceptance.
(e) On each Distribution Date, the Trustee shall make
distributions to the Holders of the Class P Certificates of all
Prepayment Charges on deposit in the Certificate Account with respect to
the Mortgage Loans in each Mortgage Loan Group during the related
Collection Period. Such Prepayment Charges will not be available for
distributions to the Holders of the other Classes of Certificates and
shall not reduce the Class P Certificate Principal Balance. If at any
time the Pool Balance is $15,000 or less, the Trustee shall withdraw a
portion of the Class P Deposit from the Certificate Account and apply
such amount to the Class P Certificate Principal Balance such that the
remaining Class P Deposit is always less than 0.66% of the sum of the
Pool Balance and the remaining Class P Deposit. After all of the
Certificates (other than the Class P Certificates) have been paid in
full, the Trustee shall withdraw the remaining Class P Deposit from the
Certificate Account and apply such amount to reduce the Class P
Certificate Principal Balance to zero.
Notwithstanding any of the foregoing, the aggregate of amounts
distributed on all Distribution Dates in reduction of the Certificate
Principal Balance of any Class of Certificates shall not exceed the
Certificate Principal Balance of such Class as of the Closing Date.
Amounts to be paid to the Certificate Insurer by the Trustee
under this Agreement will be paid by wire transfer of same day funds.
Section 5.02 Monthly Advances; Servicing Advances
(a) On or before each Deposit Date, the Servicer will deposit in the
Certificate Account in respect of the Fixed Rate Group and the Adjustable Rate
Group, in same day funds, an amount, if any (a "Monthly Advance"), equal to the
sum of (i) with respect to all Mortgage Loans that are delinquent as of the
close of business on the related Determination Date, the aggregate of the
interest portions of each Monthly Mortgage Payment in respect of the related
Mortgage Loan Group due during the related Collection Period (net of the
aggregate of the Monthly Servicing Fees for each Mortgage Loan Group
attributable to such Mortgage Loans), inclusive of those amounts representing
the interest portions of Monthly Mortgage Payments due during the first
Collection Period, plus (ii) with respect to all Mortgage Loans that are not
delinquent Mortgage Loans as of the close of business on the last day of such
Collection Period, an amount equal to the amount of interest that would accrue
on each such Mortgage Loan at the related Mortgage Loan Rate (net of the
aggregate of the Monthly Servicing Fees for each Mortgage Loan Group
attributable to such Mortgage Loans) in a period of 30 days minus the number of
days from the first day of such Collection Period to the related due date for
such Mortgage Loan during such Collection Period, plus (iii) with respect to
each Mortgaged Property that was acquired in foreclosure or similar action
(each, an "REO Property") during or prior to the related Collection Period and
as to which a final sale did not occur during the related
81
87
Collection Period, an amount equal to the excess, if any, of interest on the
Principal Balance of such REO Property at the related Mortgage Loan Rate (net of
the Monthly Servicing Fee attributable to such REO Property) over the net income
from such REO Property transferred to the Collection Account or the Certificate
Account, as the case may be, for such Distribution Date; provided, however, that
in no case will the Servicer be required to make advances with respect to any
period or portion of any Collection Period following (i) the final due date with
respect to any Mortgage Loan and (ii) to the extent that the Servicer reasonably
believes that the amount of such advance will not be recoverable from subsequent
collections on the related Mortgage Loan or from Liquidation Proceeds from the
related Mortgage Loan in the event such Mortgage Loan is liquidated.
The Servicer shall be permitted to fund all or a portion of any Monthly
Advance required to be made on a Deposit Date on any Business Day and to
reimburse itself for any Monthly Advance paid from the Servicer's own funds out
of amounts on deposit in the Collection Account in respect of collections on any
Mortgage Loan in the related Mortgage Loan Group that are not required to be
deposited on such Deposit Date in the Certificate Account as any portion of
Available Funds for such Mortgage Loan Group and the related Distribution Date;
provided, however, that the Servicer shall be required to replace any such
amounts by deposit to the Collection Account on or before the next Deposit Date
and the amount of such deposit shall thereafter be considered a Monthly Advance
for purposes of reimbursement under this Agreement. The Servicer may recover
Monthly Advances made from its own funds (i) from the Mortgagor on whose behalf
such Monthly Advance was made and from collections on the related Mortgage Loan,
including Liquidation Proceeds, Insurance Proceeds and such other amounts as may
be collected by the Servicer from the Mortgagor or otherwise relating to the
Mortgage Loan and (ii) in the case of a Monthly Advance that the Servicer
reasonably believes will not be recoverable from the related Mortgage Loan, from
collections or recoveries on any Mortgage Loan in the related Mortgage Loan
Group, in each case prior to the payment of such amounts to the Collection
Account or to any other party to this Agreement.
(b) The Servicer shall from time to time during the term of this
Agreement make such Servicing Advances as the Servicer shall deem appropriate or
advisable under the circumstances and are required pursuant to the terms of this
Agreement. Servicing Advances may be paid by the Servicer out of amounts on
deposit in the Collection Account in respect of the related Mortgage Loan Group
from time to time; provided, however, that the Servicer shall be required to
replace any such amounts by deposit to the Collection Account in respect of the
related Mortgage Loan Group on or before the first Deposit Date occurring after
the payment of a Servicing Advance with such amounts, and the amount of such
deposit shall thereafter be considered a Servicing Advance for purposes of
reimbursement under this Agreement. All Servicing Advances made by the Servicer
shall be reimbursable from collections or recoveries relating to the Mortgage
Loans in respect of which such Servicing Advances have been made prior to the
payment of such amounts to the Collection Account or to any other party to this
Agreement. Notwithstanding anything herein to the contrary, no Servicing
Advances need by made hereunder if such Servicing Advance would, if made,
constitute a Nonrecoverable Advance.
82
88
Section 5.03 Statements to Certificateholders Concurrently with each
distribution charged to the Certificate Account on a Distribution Date the
Trustee shall forward to the Certificate Insurer and each Rating Agency and
shall mail to each Holder of a Certificate, a written statement setting forth
the following information with respect to the applicable subclass of Offered
Certificates to which such statement (a "Statement to Certificateholders")
relates:
(a) the amount of the distribution with respect to each Class of
Certificates;
(b) the amount of such distributions allocable to principal on
the related Mortgage Loans in each Mortgage Loan Group, separately
identifying the aggregate amount of any Prepayments or other recoveries
of principal included therein;
(c) the amount of such distributions allocable to interest on the
Mortgage Loans in each Mortgage Loan Group;
(d) the Accrued Certificate Interest and Interest Carry Forward
Amount for each Class of Certificates;
(e) the outstanding Certificate Principal Balance of each Class
of Offered Certificates which will be outstanding after giving effect to
any payment of principal on such Distribution Date;
(f) the aggregate of the Principal Balances of all Mortgage Loans
after giving effect to any payments of principal on such Distribution
Date by Mortgage Loan Group and for the entire Trust, and each Group
Factor;
(g) based upon information furnished by the Servicer, such
information as may be required by Section 6049(d)(7)(C) of the Code and
the regulations promulgated thereunder to assist the Certificateholders
in computing their market discount;
(h) the total of all amounts paid by the Seller and the Servicer
during the related Collection Period in connection with purchases or
repurchases from the Trust of Mortgage Loans and substitutions for
Mortgage Loans of Qualified Replacement Mortgage Loans with respect to
each Mortgage Loan Group and by reason for such purchase;
(i) the weighted average Mortgage Loan Rate of the Mortgage Loans
with respect to each Mortgage Loan Group;
(j) whether a Delinquency Rate Event, a Cumulative Loss Rate
Event, or a Rolling Loss Rate Event has occurred and, if so, what event;
(k) the amount of any Extra Principal Distribution Amount
included in such distribution;
83
89
(l) the related Overcollateralization Amount and Targeted
Overcollateralization Amount for each Mortgage Loan Group, Realized
Losses, the Loss Percentage, the Annual Loss Percentage, and the
Delinquency Percentage;
(m) the amount, if any, of Insured Payments distributable to each
Class of Certificates on such Distribution Date, the Certificate Insurer
Premium paid on such Distribution Date, and the aggregate amount of
Insured Payments, interest thereon and previously unpaid Certificate
Insurer Premiums paid on such Distribution Date and remaining to be paid
on such Distribution Date or any future Distribution Date;
(n) the amount of any Supplemental Interest Amounts paid and
remaining unpaid as of such Distribution Date;
(o) the Capitalized Interest Requirement and amounts remaining in
the Prefunding Account each as of such Distribution Date; and
(p) such other information as the Certificate Insurer may
reasonably request to the extent such information is available to the
Trustee from the Servicer and is produced by the Servicer in the
ordinary course of the Servicer's business.
In the case of information furnished pursuant to subclauses (a), (b),
(c) and (d) above, the amounts shall be expressed as a dollar amount per
Certificate with a $1,000 principal denomination.
Within 90 days after the end of each calendar year, the Trustee shall
mail such report to ▇▇▇▇▇▇ Brothers Inc., Three World Financial Center, ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: Mortgage Finance, (which report
shall include, in addition to the information contained in reports to others
hereunder, the total amount of interest on the Mortgage Loans for the period
covered by such report), and to each Person who at any time during the calendar
year was an Offered Certificateholder, a statement for each Certificateholder
containing the information set forth in subclauses (a) through (c) above,
aggregated for such calendar year or, in the case of each Person who was an
Offered Certificateholder for a portion of such calendar year, setting forth
such information for each month thereof for the portion of the year during which
such Person was a Certificateholder. The Servicer shall provide any other
information necessary in order to report income in respect of the
Certificateholders for federal income tax purposes.
Section 5.04 The Certificate Insurer; Use of Information The Company and
the Trustee on behalf of Certificateholders and the Trust (the "Trust Parties")
hereby authorize the Certificate Insurer to include the information contained in
reports provided to the Certificate Insurer hereunder (the "Information") on
Bloomberg, or in other electronic or print information services. The Trust
Parties agree not to commence any actions or proceedings, or otherwise assert
any claims, against the Certificate Insurer or its Affiliates or any of the
Certificate Insurer or the Certificate Insurer Parties, arising out of, or
related to or in connection with the dissemination and/or use of any information
by the Certificate Insurer as contemplated in this Section 5.04, including, but
not limited to, claims based on allegations of inaccurate, incomplete or
erroneous
84
90
transfer of information by the Certificate Insurer to Bloomberg or otherwise
(other than in connection with the Certificate Insurer's gross negligence or
willful misconduct). The Trust Parties waive their rights to assert any such
claims against the Certificate Insurer Parties and fully and finally release the
Certificate Insurer Parties from any and all such claims, demands, obligations,
actions and liabilities (other than in connection with the Certificate Insurer's
gross negligence or willful misconduct). The Certificate Insurer makes no
representations or warranties, expressed or implied, of any kind whatsoever with
respect to the accuracy, adequacy, timeliness, completeness, merchantability or
fitness for any particular purpose of any Information in any form or manner. The
Certificate Insurer reserves the right at any time to withdraw or suspend the
dissemination of the Information by the Certificate Insurer. The authorizations,
covenants and obligations of the Trust Parties under this section shall be
irrevocable and shall survive the termination of this Agreement.
ARTICLE VI
THE CERTIFICATES
Section 6.01 The Certificates
(a) The Certificates shall be substantially in the forms set forth in
Exhibits ▇-▇, ▇-▇, ▇-▇, ▇-▇, ▇-▇ and B-4 hereto, and shall, on original issue,
be executed and delivered by the Trustee on behalf of the Trust, not
individually but solely as Trustee to or upon the order of the Seller
concurrently with the sale and assignment to the Trustee of the Trust.
(b) The Book-Entry Certificates will be evidenced by one or more
certificates, beneficial ownership of which will be held in minimum dollar
denominations of $1,000 and integral multiples of $1 in excess thereof. The
Class P Certificates, the Class R-I Certificate and the Class R-II Certificate
shall be issuable solely as single certificates evidencing the entire Percentage
Interests of the Class P Certificates, the Class R-I Certificates and the Class
R-II Certificates, respectively, and the Class C Certificates shall be initially
issued as two certificates evidencing a Percentage Interest thereof of 96.00%
and 4.00%, respectively.
(c) The Certificates shall be executed by manual or facsimile signature
1by the Trustee on behalf of the Trust (not in its individual capacity but
solely as Trustee) by an authorized officer of the Trustee. Certificates bearing
the manual or facsimile signatures of individuals who were, at the time when
such signatures were affixed, authorized to sign on behalf of the Trustee shall
bind the Trust, notwithstanding that such individuals or any of them have ceased
to be so authorized prior to the countersigning and delivery of such
Certificates or did not hold such offices at the date of such Certificate. No
Certificate shall be entitled to any benefit under this Agreement, or be valid
for any purpose, unless such Certificate shall have been manually authenticated
by the Trustee substantially in the form provided for herein, and such signature
upon any Certificate shall be conclusive evidence, and the only evidence, that
such Certificate has been duly authenticated and delivered hereunder. All
Certificates shall be dated the date of their authentication. The textual
supplement entitled "Statement of Insurance" supplied to the Sponsor by the
Certificate Insurer shall be attached to each Offered Certificate.
85
91
Section 6.02 Registration of Transfer and Exchange of Certificates
(a) The Trustee shall cause to be kept at the Corporate Trust Office a
Certificate Register in which, subject to such reasonable regulations as it may
prescribe, the Trustee shall provide for the registration of Certificates and of
transfers and exchanges of Certificates as herein provided.
Upon surrender for registration of transfer of any Certificate at any
office or agency of the Trustee maintained for such purpose pursuant to the
foregoing paragraph and upon satisfaction of the conditions set forth in Section
6.02(b) and (c), the Trustee shall execute, authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Certificates
of the same Class and of a like aggregate Percentage Interest.
At the option of the Certificateholders, Certificates may be exchanged
for other Certificates of authorized denominations of the same Class and of a
like aggregate Percentage Interest, upon surrender of the Certificates to be
exchanged at any such office or agency. Whenever any Certificates are so
surrendered for exchange the Trustee shall execute, authenticate and deliver the
Certificates that the Certificateholder making the exchange is entitled to
receive.
Every Certificate presented or surrendered for transfer or exchange
shall (if so required by the Company or the Trustee) be duly endorsed by, or be
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by the Holder thereof or his attorney duly authorized in
writing.
No service charge shall be made to a Certificateholder for any transfer
or exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of certificates.
All Certificates surrendered for transfer or exchange shall be canceled
by the Trustee in accordance with its standard procedures.
(b) No transfer of a Class R Certificate shall be made unless, as
evidenced by an Opinion of Counsel and Transfer Affidavit delivered to the
Trustee, each in form and substance satisfactory to the Trustee, such transfer
is not subject to registration under the Securities Act or any applicable state
securities laws. Any such Opinion of Counsel and Transfer Affidavit shall not be
obtained at the expense of the Trustee, the Trust, the Seller or the Servicer.
The Holder of a Class R Certificate desiring to effect such transfer shall, and
does hereby agree to, indemnify the Trustee, the Certificate Insurer, the Seller
and the Servicer against any liability that may result if the transfer is not so
exempt or is not made in accordance with the Securities Act and such state laws.
Neither the Seller, the Servicer nor the Trustee or the Trust is under an
obligation to register the Class R Certificates under the Securities Act or any
state securities law.
86
92
The Class R Certificates, this Agreement and related documents may be
amended or supplemented from time to time to modify restrictions on and
procedures for resale and other transfer of such Class R Certificate to reflect
any change in applicable law or regulation (or the interpretation thereof) or
practices relating to the resale or transfers of restricted securities
generally.
No legal or beneficial interest in all or any of the Class R
Certificates may be transferred directly or indirectly to: (i) a Disqualified
Organization or an agent of a Disqualified Organization (including a broker,
nominee or middleman), (ii) to an entity that holds REMIC residual securities as
nominee to facilitate the clearance and settlement of such securities through
electronic book-entry changes in accounts of participating organizations (a
"Book-Entry Nominee"), (iii) an individual, corporation, partnership or other
Person unless such transferee (A) is not a Foreign Person or (B) is a Foreign
Person that will hold such Class R Certificate in connection with the conduct of
a trade or business within the United States and has furnished the transferor
and the Trustee with, and agrees to periodically furnish in accordance with
Treasury regulations, an effective Internal Revenue Service Form 4224 (or any
applicable successor form) or (C) is a Foreign Person that has delivered (at the
expense of the transferee) to both the transferor and the Trustee an opinion of
a nationally recognized tax counsel to the effect that the transfer of the Class
R Certificate to it is in accordance with the requirements of the Code and the
regulations promulgated thereunder and that such transfer of the Class R
Certificate will not be disregarded for federal income tax purposes (any such
Person who is not covered by clause (A), (B) or (C) above being referred to
herein as a "Non-permitted Foreign Holder") or (iv) to an ERISA Plan or an
entity, including an insurance company separate account or general account,
whose underlying assets include ERISA Plan assets by reason of an ERISA Plan's
investment in the entity or a Person investing the assets of an ERISA Plan or
such an entity, whether as nominee, trustee, agent or otherwise (such plan,
entity or Person, an "ERISA Prohibited Holder"), and any such purported transfer
shall be void and have no effect.
The Trustee shall not execute, and shall not authenticate and deliver, a
new Class R Certificate in connection with any registration of transfer to a
Person known to a Responsible Officer of the Trustee to be a Disqualified
Organization or agent thereof (including a broker, nominee or middleman), to a
Book-Entry Nominee, a Non-permitted Foreign Holder or an ERISA Prohibited
Holder, and the Trustee shall not accept a surrender for the registration of
transfer or register the transfer of, any Class R Certificate, unless the
transferor shall have provided to the Trustee a Transfer Affidavit substantially
in the form attached as Exhibit G hereto, signed by the transferee, to the
effect that the transferee is not a Disqualified Organization and is not a
nominee for a beneficial owner of the Class R Certificate from which the
transferee has not received a substantially similar affidavit, a Book-Entry
Nominee, a Non-permitted Foreign Holder or an ERISA Prohibited Holder. Such
Transfer Affidavit shall contain (i) the consent of the transferee to any such
amendments of this Agreement as may be required to further effectuate the
foregoing restrictions on transfer of the Class R Certificates to Disqualified
Organizations, Book-Entry Nominees, Non-permitted Foreign Holders or ERISA
Prohibited Holders and (ii) a representation from the transferee that such
transferee does not have the intent or purpose to impede the assessment or
collection of any federal, state or local income taxes legally required to be
paid with respect to the Class R Certificates. Such Transfer Affidavit, if
87
93
not executed in connection with the initial issuance of the Class R
Certificates, also shall be accompanied by a Transferor Affidavit, substantially
in the form attached hereto as Exhibit K, signed by the transferor to the effect
that as of the time of the transfer, the transferor has no actual knowledge that
such affidavit is false and that the transferor does not have the intent or
purpose to impede the assessment or collection of any federal, state or local
income taxes legally required to be paid with respect to the Class R
Certificate.
Each Class R Certificate shall bear a legend referring to the foregoing
restrictions. Any Person acquiring the Class R Certificate, or beneficial
ownership thereof, agrees to give the Servicer written notice that it is a
"pass-through interest holder" within the meaning of Treasury Regulation Section
1.67-3T(a)(2)(i)(A) immediately upon acquiring the Class R Certificate, or
beneficial ownership thereof, if it is, or is acquiring the Class R Certificate
on behalf of, a "pass-through interest holder."
Upon notice to the Servicer that any legal or beneficial interest in any
Class R Certificate has been transferred, directly or indirectly, to a
Disqualified Organization in contravention of the foregoing restrictions or to a
pass-through entity as defined in the REMIC Provisions an interest of which is
held by a Disqualified Organization, the Servicer agrees to furnish to the
Internal Revenue Service and to any transferor of the Class R Certificate or
such agent or such pass-through entity such information as may be required to be
delivered thereto by the Code as necessary to the application of Code Section
860E(e) and described in Treasury regulations Section 1.860D-1(b)(5)(ii), or any
successor provision, including, but not limited to, the present value of the
total anticipated excess inclusions with respect to the Class R Certificate (or
portion thereof) for periods after such transfer. Such information shall be
provided in the manner described in Treasury regulations Section 1.860E-2(a)(5),
or any successor provision. At the election of the Servicer, the cost to the
Servicer of computing and furnishing such information may be charged to the
transferor or such agent referred to above; provided, however, that the Servicer
shall in no event be excused from furnishing such information.
The Class R Certificates, this Agreement and related documents may be
amended or supplemented from time to time to modify restrictions on and
procedures for resale and other transfer of the Class R Certificates to reflect
any change in applicable law or regulation (or the interpretation thereof) or
practices relating to the resale or transfer of restricted securities generally.
(c) No transfer of a Class C Certificate, or a Class P Certificate, or
beneficial interest therein shall be made unless the Trustee shall have received
(i) a letter from the transferor, substantially in the form attached hereto as
Exhibit M, and (ii) a representation letter from the transferee, substantially
in the form attached hereto as either Exhibit N-1 or Exhibit N-2, as applicable:
Notwithstanding anything else to the contrary herein, any purported
transfer of a Class C Certificate or Class P Certificate, or a beneficial
interest therein to or on behalf of an employee benefit plan subject to ERISA or
to the Code or a person acting on behalf of an ERISA Plan or using the assets of
an ERISA Plan to effect such transfer other than an insurance company
88
94
purchasing with funds from a general account not exempt pursuant to Prohibited
Transaction Class 95-60 shall be void and of no effect.
To the extent permitted under applicable law (including, but not limited
to, ERISA), the Trustee shall be under no liability to any Person for any
registration of transfer of any Class C Certificate or any Class P Certificate
that is in fact not permitted by Section 6.02(c) or for making any payments due
on such Certificate to the holder thereof or taking any other action with
respect to such holder under the provisions of this Agreement so long as the
transfer was registered by the Trustee in accordance with the foregoing
requirements.
The Class C Certificates, the Class P Certificate, this Agreement and
related documents may be amended or supplemented from time to time to modify
restrictions on and procedures for resale and other transfer of such Class C
Certificates or a Class P Certificate to reflect any change in applicable law or
regulation (or the interpretation thereof) or practices relating to the resale
or transfers of restricted securities generally.
(d) The Book-Entry Certificates shall, subject to Section 6.02(e), at
all times remain registered in the name of the Depository or its nominee and at
all times: (i) registration thereof may not be transferred by the Trustee except
to another Depository; (ii) the Depository shall maintain book-entry records
with respect to the Certificate Owners and with respect to ownership and
transfers of such Certificates; (iii) ownership and transfers of registration of
the Certificates issued in book-entry form on the books of the Depository shall
be governed by applicable rules established by the Depository and the rights of
Certificate Owners with respect to Book-Entry Certificates shall be governed by
applicable law and agreements between such Certificate Owners and the
Depository, Depository Participants, and indirect participating firms; (iv) the
Depository may collect its usual and customary fees, charges and expenses from
its Depository Participants; (v) the Trustee shall deal with the Depository as
the authorized representative of the Certificate Owners of the Book-Entry
Certificates for all purposes including the making of payments due on the
Book-Entry Certificates and exercising the rights of Holders of Book-Entry
Certificates under this Agreement; (vi) the Trustee may rely and shall be fully
protected in relying upon information furnished by the Depository; (vii)
Certificate Owners shall not be entitled to certificates for the Book-Entry
Certificates and (viii) the Trustee may establish a reasonable record date in
connection with solicitations of consents from or voting by holders of
Book-Entry Certificates and give notice to the Depository of such record date.
All transfers by Certificate Owners of Book-Entry Certificates shall be
made in accordance with the procedures established by the Depository Participant
or brokerage firm representing such Certificate Owner. Each Depository
Participant shall only transfer Book-Entry Certificates of Certificate Owners it
represents or of brokerage firms for which it acts as agent in accordance with
the Depository's normal procedures.
(e) If (x)(i) the Company or the Depository advises the Trustee in
writing that the Depository is no longer willing, qualified or able to properly
discharge its responsibilities as Depository, and (ii) the Trustee or the
Company is unable to locate a qualified successor, (y) the Company at its option
advises the Trustee in writing that it elects to terminate the book-entry
89
95
system through the Depository or (z) after the occurrence of an Event of
Default, Certificate Owners representing not less than 51% of the aggregate
Certificate Principal Balance of the Book-Entry Certificates together advise the
Trustee and the Depository in writing that the continuation of a book-entry
system through the Depository is no longer in the best interests of the
Certificate Owners, the Trustee shall notify all Certificate Owners, through the
Depository, of the occurrence of any such event and of the availability of
definitive, fully registered Certificates ("Definitive Certificates") to
Certificate Owners requesting the same. Upon surrender to the Trustee of such
Certificates by the Depository, accompanied by registration instructions from
the Depository for registration, the Trustee shall issue the Definitive
Certificates and the expense of any such issuance shall be reimbursed by the
Trust pursuant to Section 9.05 and shall notify the Certificate Insurer of such
event. Neither the Company nor the Trustee shall be liable for any delay in
delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Certificates all references herein to obligations imposed upon or to be
performed by the Depository shall be deemed applicable with respect to such
Definitive Certificates and the Certificates as Certificateholders hereunder.
(f) On or prior to the Closing Date, there shall be delivered to the
Trustee (as agent for the Depository) one certificate for each Class of
Book-Entry Certificates registered in the name of the Depository's nominee, Cede
& Co. The face amount of each such Certificate shall be equal to the Principal
Balance thereof. Each Certificate issued in book-entry form shall bear the
following legend:
"Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to Issuer or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein."
Section 6.03 Mutilated, Destroyed, Lost or Stolen Certificates If (a)
any mutilated Certificate is surrendered to the Trustee or the Trustee receives
evidence to its satisfaction of the destruction, loss or theft of any
Certificate, and (b) there is delivered to the Trustee, the Servicer, the Seller
and the Certificate Insurer such security or indemnity as may be required by
them to save each of them harmless, then, in the absence of notice to the
Trustee that such Certificate has been acquired by a bona fide purchaser, the
Trustee shall execute, authenticate and deliver, in exchange for or in lieu of
any such mutilated, destroyed, lost or stolen Certificate, a new Certificate of
like Class and Percentage Interest. Upon the issuance of any new Certificate
under this Section, the Trustee may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Trustee)
connected therewith. Any duplicate Certificate issued pursuant to this Section
shall constitute complete and indefeasible evidence of ownership of the Trust,
as if originally issued, whether or not the lost, stolen or destroyed
Certificate shall be found at any time.
90
96
Section 6.04 Persons Deemed Owners Prior to due presentation of a
Certificate for registration of transfer, the Servicer, the Seller, the Trustee,
the Certificate Insurer and any of their respective agents may treat the Person
in whose name any Certificate is registered as the owner of such Certificate for
the purpose of receiving distributions pursuant to Section 5.01 and for all
other purposes whatsoever, and neither the Servicer, the Seller, the Trustee,
the Certificate Insurer nor any of their respective agents shall be affected by
notice to the contrary.
Section 6.05 Actions of Certificateholders
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by
Certificateholders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Certificateholders in person or by
agent duly appointed in writing; and except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered to the Trustee and the Certificate Insurer and, when required, to
the Seller or the Servicer. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any purpose of this
Agreement and conclusive in favor of the Trustee, the Seller, the Servicer and
the Certificate Insurer, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Certificateholder of any
such instrument or writing may be proved in any reasonable manner that the
Trustee deems sufficient.
(c) Any request, demand, authorization, direction, notice, consent,
waiver or other act by a Certificateholder shall bind every Holder of every
Certificate issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof, in respect of anything done, or omitted to be done,
by the Trustee, the Seller or the Servicer in reliance thereon, whether or not
notation of such action is made upon such Certificate.
91
97
ARTICLE VII
THE SERVICER AND THE SELLER
Section 7.01 Liability of the Servicer The Servicer shall be liable in
accordance herewith only to the extent of the obligations specifically imposed
upon and undertaken by the Servicer herein.
Section 7.02 Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer Any corporation or other entity (i) into which the
Servicer may be merged or consolidated, (ii) that may result from any merger,
conversion or consolidation to which the Servicer shall be a party, or (iii)
that may succeed to all or substantially all of the business of the Servicer,
which corporation or other entity shall, in any case where an assumption shall
not be effected by operation of law, execute an agreement of assumption to
perform every obligation of the Servicer under this Agreement, shall be the
successor to the Servicer under this Agreement without the execution or filing
of any document or any further act by any of the parties to this Agreement;
except that if the Servicer is not the surviving entity, then the surviving
entity shall execute and deliver to the Trustee an agreement of assumption to
perform every obligation of the Servicer hereunder.
Section 7.03 Limitation on Liability of the Servicer and Others Neither
the Servicer nor any of its directors, officers, employees or agents shall be
under any liability to the Trustee, the Trust or the Certificateholders for any
action taken or for refraining from the taking of any action by the Servicer
pursuant to this Agreement, or for errors in judgment; provided, however, that
this provision shall not protect the Servicer or any such person against any
liability that would otherwise be imposed by reason of willful misfeasance, bad
faith or negligence in the performance of the duties of the Servicer or by
reason of reckless disregard of the obligations and duties of the Servicer
hereunder. The Servicer and any director, officer, employee or agent of the
Servicer may rely in good faith on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising hereunder.
The Servicer shall not be under any obligation to appear in, prosecute or defend
any legal action that is not incidental to its duties to service the Mortgage
Loans in accordance with this Agreement, and that in its opinion may involve it
in any expense or liability.
Section 7.04 Servicer Not to Resign Subject to the provisions of Section
7.02 regarding the merger or consolidation of the Servicer into or with another
entity, the Servicer shall not resign from the obligations and duties hereby
imposed on it except upon determination that the performance of its duties or
obligations hereunder is no longer permissible under applicable law or
regulation or are in material conflict by reason of applicable law or regulation
with any other activities carried on by it at the date of this Agreement. Any
such determination permitting the resignation of the Servicer pursuant to this
Section shall be evidenced by an Opinion of Counsel to such effect delivered to
the Trustee, the Back-up Servicer and the Certificate Insurer. No resignation
pursuant to this Section 7.04 (a) shall become effective until the Back-up
Servicer, the Trustee or a successor servicer shall have assumed the
responsibilities and obligations of the Servicer in accordance with Section 8.02
or (b) shall relieve the Servicer of responsibility for any obligations pursuant
to this Agreement that specifically survive the resignation or termination of
92
98
the Servicer. Each of the Rating Agencies shall be given written notice of a
resignation of the Servicer pursuant to this Section.
If, at the time the Servicer is removed or resigned, there is no Back-up
Servicer or the Back-up Servicer is unable to act as successor servicer and the
Trustee does not appoint a different successor servicer, then the Trustee shall
become the successor servicer.
Upon the termination or resignation of the Servicer, the Servicer also
shall promptly (and in any event no later than 10 Business Days subsequent to
such termination or resignation) deliver or cause to be delivered to the Back-up
Servicer all the books and records (including, without limitation, records kept
in electronic form) that the Servicer has maintained for the Mortgage Loans,
including all tax bills, assessment notices, insurance premium notices and all
other documents as well as all original documents then in the Servicer's
possession. The Servicer may retain copies of any such books and records.
Any collections received by the Servicer after termination or
resignation shall be endorsed by it and remitted directly and immediately to the
Back-up Servicer. The Servicer shall be entitled to receive the Monthly
Servicing Fee through the day on which it is terminated as Servicer (which may
be pro rated for a partial month).
To the extent that the Servicer, at the time of its termination or
resignation, has therefore expended any amounts as Monthly Advances or Servicing
Advances with respect to any Mortgage Loan, which Monthly Advances or Servicing
Advances remain unreimbursed as of such date ("Unrecovered Advances") the
Servicer shall thereafter be entitled to receive from the Back-up Servicer,
monthly, such information as may be generated by the Back-up Servicer as may be
reasonably necessary to enable the Servicer to monitor the recovery of, and
collection efforts undertaken with respect to, the Unrecovered Advances, which
information will include details of collection activities, payment records and
trial balances. To the extent that the Back-up Servicer or other successor
servicer receives any amounts that relate to reimbursement for Unrecovered
Advances made by the prior Servicer, such amounts shall be remitted to the prior
Servicer on the related Distribution Date. To the extent that the Servicer,
based upon the information supplied by the Back-up Servicer, believes that any
discrepancies exist between actual Unrecovered Advances received by the Back-up
Servicer and the amounts forwarded to the Servicer as recovered Unrecovered
Advances, the Servicer and the Back-up Servicer shall attempt in good faith to
reconcile such discrepancies.
The Back-up Servicer shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any succession to become the
successor servicer. The Servicer agrees to cooperate reasonably with the Back-up
Servicer in effecting the termination of the Servicer's servicing
responsibilities and rights hereunder and shall promptly provide to the Back-up
Servicer all documents and records reasonably requested by it to enable it to
assume the Servicer's functions hereunder and shall promptly also transfer to
the Back-up Servicer all amounts that then have been or should have been
deposited in the Collection Account, or that are thereafter received with
respect to the Mortgage Loans. The Back-up Servicer shall not be held liable by
reason of any failure to make, or any delay in making, any distribution
hereunder or any
93
99
portion thereof caused by (i) the failure of the Servicer to deliver, or any
delay in delivering, cash, documents or records to it, or (ii) restrictions
imposed by any regulatory authority having jurisdiction over the Servicer.
The Servicer which is being terminated or is resigning shall give notice
to the Mortgagors of the transfer of the servicing to the Back-up Servicer. Said
notice shall be a joint notice of servicing transfer in the form required by
applicable law.
Section 7.05 Merger or Consolidation of the Seller Any corporation or
other entity (i) into which the Seller may be merged or consolidated, (ii) that
may result from any merger, conversion or consolidation to which the Seller
shall be a party, or (iii) that may succeed to all or substantially all of the
business of the Seller, which corporation or other entity shall, in any case
where an assumption shall not be effected by operation of law, execute an
agreement of assumption to perform every obligation of the Seller under this
Agreement, shall be the successor to the Seller hereunder without the execution
or filing of any document or any further act by any of the parties to this
Agreement, except that if the Seller in any of the foregoing cases is not the
surviving entity, then the surviving entity shall execute and deliver to the
Trustee an agreement of assumption to perform every obligation of the Seller
hereunder.
ARTICLE VIII
DEFAULT
Section 8.01 Events of Default If any one of the following events (each
an "Event of Default") shall occur and be continuing:
(a) Any failure by the Servicer to (i) make a Monthly Advance on
any Deposit Date or (ii) deposit in the Collection Account or the
Certificate Account any other amount required to be deposited therein
under this Agreement or failure to pay the Trustee Fee, which failure,
in the case of only clause (ii) hereof, continues unremedied for a
period of five Business Days after the date upon which written notice of
such failure shall have been given to the Servicer by the Trustee or the
Certificate Insurer or to the Servicer, the Certificate Insurer and the
Trustee by Holders of Certificates evidencing Voting Interests
represented by all Certificates aggregating not less than 51%;
(b) Failure on the part of the Servicer duly to observe or
perform in any material respect any other covenants or agreements of the
Servicer set forth in the Certificates or in this Agreement, which
failure (i) materially and adversely affects the Certificateholders or
the Certificate Insurer and (ii) continues unremedied for a period of 30
days after the date on which written notice of such failure (which
notice shall refer specifically to this Section), requiring the same to
be remedied, shall have been given to the Servicer by the Trustee or the
Certificate Insurer, or to the Servicer, the Certificate Insurer and the
Trustee by the Holders of Certificates evidencing Voting Interests
represented by all Certificates aggregating not less than 51%;
94
100
(c) The entry against the Servicer of a decree or order by a
court or agency or supervisory authority having jurisdiction in the
premises for the appointment of a trustee, conservator, receiver or
liquidator in any insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings, or for the winding up or
liquidation of its affairs, and the continuance of any such decree or
order unstayed and in effect for a period of 60 consecutive days;
(d) The consent by the Servicer to the appointment of a trustee,
conservator or receiver or liquidator in any bankruptcy, insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings of or relating to the Servicer or of or relating to
substantially all of its property; or the Servicer shall admit in
writing its inability to pay its debts generally as they become due,
file a petition to take advantage of any applicable bankruptcy,
insolvency or reorganization statute, make an assignment for the benefit
of its creditors, or voluntarily suspend payment of its obligations;
(e) The payment by the Certificate Insurer of any Insured
Payment;
(f) For so long as the Company is the Servicer, failure on the
part of the Seller duly to observe or perform in any material respect
any covenants or agreements of the Seller set forth in the Certificates
or in this Agreement, which failure (i) materially and adversely affects
the Certificateholders or the Certificate Insurer and (ii) continues
unremedied for a period of 30 days after the date on which written
notice of such failure (which notice shall refer specifically to this
Section), requiring the same to be remedied, shall have been given to
the Servicer by the Trustee or the Certificate Insurer, or to the
Servicer, the Certificate Insurer and the Trustee by the Holders of
Certificates evidencing Voting Interests represented by all Certificates
aggregating not less than 51%;
(g) The occurrence of a material default of the Servicer under
this Agreement or of an "Event of Default" specified in the Insurance
Agreement or the occurrence of a Servicer Delinquency Rate Event, a
Servicer Cumulative Loss Rate Event or a Servicer Rolling Loss Rate
Event; or
(h) The occurrence of any merger or consolidation of the Servicer
described in Section 7.02 following which the Servicer does not (or if
the Servicer continues to be a subsidiary or affiliate of Aames
Financial Corporation, Aames Financial Corporation and its subsidiaries
and affiliates on a consolidated reporting basis do not) have a net
worth of at least $10,000,000 determined in accordance with generally
accepted accounting principles, unless the Certificate Insurer consents
in writing thereto.
then, and in each and every such case, so long as such Event of Default shall
not have been remedied by the Servicer, either (1) the Certificate Insurer or
(2) with the prior written consent of the Certificate Insurer, either the
Trustee or the Holders of Certificates evidencing Voting Interests represented
by all Certificates aggregating not less than 51%, by notice then given in
writing to the Servicer with a copy to the Certificate Insurer, the Back-up
Servicer and to the Trustee, may terminate all of the rights, responsibilities
and obligations of the Servicer as
95
101
Servicer under this Agreement. On or after the receipt by the Servicer of such
written notice, all authority and power of the Servicer under this Agreement,
whether with respect to the Certificates or the Mortgage Loans or otherwise,
shall pass to and be vested in the Back-up Servicer pursuant to and under this
Section and Section 7.04 and, without limitation, the Back-up Servicer is hereby
authorized and empowered to execute and deliver, on behalf of the Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments, and
to do or accomplish all other acts or things necessary or appropriate to effect
the purposes of such notice of termination, whether to complete the transfer and
endorsement of the Mortgage Loans and related documents, or otherwise. The
Servicer agrees to cooperate with the Back-up Servicer in effecting the
termination of its responsibilities and rights as Servicer hereunder, including,
without limitation, the transfer to the Back-up Servicer for the administration
by it of all cash amounts that shall at the time be held by the Servicer that
have been deposited by the Servicer in the Collection Account or the Certificate
Account or thereafter received by the Servicer with respect to the Mortgage
Loans.
All reasonable costs and expenses (including attorneys' fees) incurred
in connection with transferring the Mortgage Files to the Back-up servicer or a
successor servicer, amending this Agreement to reflect the appointment of a
successor as Servicer pursuant to this Section 8.01 and Section 7.04 or
otherwise in connection with the assumption by the Back-up Servicer or a
successor servicer of the duties of the predecessor servicer hereunder shall be
paid by the predecessor servicer upon presentation of reasonable documentation
of such costs and expenses.
In the event that the Back-up Servicer becomes the Servicer, the parties
hereto agree that there shall no longer be any requirement to have a Back-up
Servicer.
Section 8.01A Retention and Termination of Servicer The Servicer hereby
covenants and agrees to act as such under this Agreement for an initial term,
commencing on the Closing Date and ending on November 30, 1999, which term shall
be extendible by the Certificate Insurer in its sole discretion (provided that
no Certificate Insurer Default has occurred and is continuing) for successive
quarterly terms ending on each successive February 28, May 31, August 31, and
November 30 (or, pursuant to revocable written standing instructions from time
to time to the Servicer and the Trustee for any specific number of terms greater
than one), until the Certificates are paid in full. Each such notice (including
each notice pursuant to standing instructions, which shall be deemed delivered
at the end of successive quarterly terms for so long as such instructions are in
effect) (a "Servicing Extension Notice") shall be delivered by the Certificate
Insurer to the Trustee and the Servicer. The Servicer hereby agrees that, as of
the date hereof and upon its receipt of any such Servicer Extension Notice, the
Servicer shall become bound, for the initial term beginning on the Closing Date
and for the duration of the term covered by such Servicer Extension Notice, to
continue as the Servicer subject to and in accordance with the other provisions
of this Agreement. Until such time as a Certificate Insurer Default shall have
occurred and be continuing, the Trustee agrees that if as of the fifteenth day
prior to the last day of any term of the Servicer the Trustee shall not have
received any Servicer Extension Notice from the Certificate Insurer, the Trustee
will, within five days after, give written notice of such non-receipt to the
Certificate Insurer and Servicer and the Servicer's term shall not be extended
unless a Servicer Extension Notice is received on or before the last day of such
term.
96
102
Notwithstanding the foregoing, in the event a Certificate Insurer Default has
occurred and is continuing, the Servicer Extension Notice shall be deemed to
have been delivered as of last day of the current term of the Servicer and
extended until the next quarterly period.
Section 8.02 Back-up Servicer or Trustee to Act; Appointment of
Successor (a) On and after the time the Servicer receives a notice of
termination pursuant to Section 8.01 or if a Servicer Extension Notice has not
been delivered, the Back-up Servicer shall be the successor in all respects to
the Servicer in its capacity as servicer under this Agreement and the
transactions set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the Servicer
by the terms and provisions hereof, including without limitation, the obligation
to make Monthly Advances and to pay Compensating Interest. As compensation
therefor, the Back-up Servicer shall be entitled to such compensation as the
Servicer would have been entitled to hereunder if no such notice of termination
had been given. Notwithstanding the foregoing, unless the Certificate Insurer
previously shall have appointed a successor servicer, if the Trustee shall be
unwilling so to act, or if the Back-up Servicer or the Trustee is legally unable
so to act, the Trustee with the consent of the Certificate Insurer and the
Rating Agencies may promptly appoint, or petition a court of competent
jurisdiction to appoint (or the Certificate Insurer may with the consent of the
Rating Agencies, but without regard to the inability of the Back-up Servicer to
so act, appoint as an alternative successor servicer in place of the Back-up
Servicer) any established housing and home finance institution or any
institution that regularly services home equity loans that is then servicing a
home equity loan portfolio and having all licenses, permits and approvals
required by applicable law, and having a net worth of not less than $10,000,000
as the successor to the Servicer hereunder in the assumption of all or any part
of the responsibilities, duties or liabilities of the Servicer hereunder;
provided that any such successor Servicer shall be acceptable to the Certificate
Insurer and the Rating Agencies, which acceptance shall not be unreasonably
withheld; and provided further that the appointment of any such successor
Servicer will not result in the qualification, reduction or withdrawal of the
rating assigned to any subclass of Offered Certificates by any Rating Agency.
Pending appointment of a successor to the Servicer hereunder, unless the Back-up
Servicer or the Trustee is prohibited by law from so acting, the Back-up
Servicer or the Trustee shall act in such capacity as hereinabove provided. In
connection with such appointment and assumption, the Trustee may make such
arrangements for the compensation of such successor out of payments on Mortgage
Loans as it and such successor shall agree; provided, however, that no such
compensation shall be in excess of that permitted the Servicer hereunder. The
Back-up Servicer or the Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession. The appointment of a successor Servicer shall not affect any
liability of the predecessor Servicer that may have arisen under this Agreement
prior to its termination as Servicer (including without limitation, any amount
for a deductible amount pursuant to the last sentence of Section 3.04), nor
shall any successor Servicer be liable for any acts or omissions of the
predecessor Servicer or for any breach by such Servicer or the Seller of any of
its representations or warranties contained herein or in any related document or
agreement. Each of the Rating Agencies shall be given written notice of the
appointment of a successor Servicer pursuant to this Section.
97
103
(b) The Back-up Servicer or the Trustee, as the case may be, shall be
reimbursed for Transition Costs, if any, incurred in connection with the
assumption of responsibilities of the successor Servicer, upon receipt of
documentation of such costs and expenses. The Back-up Servicer and the Trustee
shall have no claim against the Servicer, the Trustee, the Certificate Insurer,
any Certificateholder, the Trust or any other party to this Agreement for any
costs and expenses incurred in effecting such succession in excess of the amount
specified in the definition of "Transition Costs."
Section 8.03 Notifications to Certificateholders Upon any termination or
appointment of a successor to the Servicer pursuant to this Article Eight, the
Trustee shall give prompt written notice thereof to Certificateholders at their
respective addresses appearing in the Certificate Register, the Certificate
Insurer and to each Rating Agency.
Within 60 days of obtaining actual knowledge of the occurrence of any
Event of Default that remains uncured, the Trustee shall transmit by mail to all
Certificateholders notice of such Event of Default.
Section 8.04 Assumption or Termination of Sub-Servicing Agreements by
the Trustee or any Successor Servicer Upon the termination of the Servicer as
servicer under this Agreement, the Trustee as successor to the Servicer
hereunder or any other successor to the Servicer hereunder may, subject to the
terms of any Sub-Servicing Agreement, in its sole and absolute discretion elect
to assume or terminate any Sub-Servicing Agreement then in force and effect
between the Servicer and the Sub-Servicer. Notwithstanding the foregoing, any
termination fee due to a Sub-Servicer because of its termination by the Trustee
hereunder shall be the responsibility of the terminated Servicer and not the
Trustee. Upon the assumption of any Sub-Servicing Agreement, the Servicer agrees
to deliver to the assuming party any and all documents and records relating to
the applicable Sub-Servicing Agreement and an accounting of amounts collected
and held by it and otherwise use its best reasonable efforts to effectuate the
orderly transfer of the Sub-Servicing Agreement.
Section 8.05 The Back-up Servicer
Prior to assuming any of the Servicer's rights and obligations
hereunder, the Back-up Servicer shall only be responsible to perform those
duties specifically imposed upon it by the provisions hereof. Such duties
generally relate to the following procedures which would permit the Back-up
Servicer to assume some or all of the Servicer's rights and obligations
hereunder with reasonable dispatch, following notice.
The Back-up Servicer, prior to assuming any of the Servicer's duties
hereunder may not resign hereunder unless it arranges for a successor Back-up
Servicer reasonably acceptable to each Rating Agency, and the Insurer with not
less than 60 day's notice delivered to the Servicer, the Trustee and the Seller.
Prior to its becoming successor servicer, the Back-up Servicer shall have only
those duties and obligations imposed by it under this Agreement, and shall have
no obligations or duties under any agreement to which it is not a party,
including but not limited to the various agreements named herein. In its
capacity as successor servicer and as Back-up
98
104
Servicer, Fairbanks shall in no event be liable for any obligations of
the Seller or the Servicer to any party, whether hereunder or under any other
agreement, which are not related to servicing functions, including, without
limitation, any repurchase obligations.
The Back-up Servicer agrees to indemnify the Trust, the Trustee, the
Seller, the Certificateholders and the Servicer, and any of their respective
directors, officers, employees or agents from, and hold them harmless against,
any and all costs, expenses (including reasonable attorney fees and
disbursements), losses, claims, damages and liabilities to the extent that such
cost, expense, loss, claim, damage or liability arose out of, or was imposed
upon the Trust, the Trustee, the Seller, the Certificateholder or the Servicer
and their respective directors, officers, employees and agents through the
Back-up Servicer's acts or omissions in violation of this Agreement, except to
the extent such indemnified party's own bad faith, willful misconduct or gross
negligence contributes to the cost, loss, claim, damage or liability.
The Back-up Servicer (including the Back-up Servicer in its capacity as
successor servicer) in addition agrees to indemnify the Servicer against any
losses, claims or damages whenever imposed or suffered resulting from the
performance or non-performance by the Back-up Servicer of its duties hereunder
from the date on which it becomes the successor servicer, other than any loss,
claim or damage resulting from the Servicer's negligence, misconduct, bad faith
or failure to comply with this Agreement.
The Servicer shall have no liability, direct or indirect, to any party,
for the acts or omissions of the Back-up Servicer, whenever such acts or
omissions occur whenever such liability is imposed.
No later than the fifth Business Day prior to the Deposit Date in each
calendar month commencing in September 1999, the Servicer shall deliver to the
Back-up Servicer a complete set of servicing records in computer-readable form
with respect to the payment, collection and other servicing activity of the
Mortgage Loans during the preceding calendar month, which records shall contain
sufficient data to permit the Back-up Servicer to assume the duties of the
Servicer hereunder without delay on account of the absence of relevant servicing
information. On at least a quarterly basis, the Back-up Servicer shall convert
and "map" the data contained in such servicing records to its own servicing
system, and shall provide the Certificate Insurer and Trustee not later than
each March 15, June 15, September 15 and December 15, commencing in September
1999, with an officer's certificate, to the effect that it has received from the
Servicer each monthly submission of servicing data, has completed such
conversion and mapping of the data delivered with respect to the three
immediately preceding calendar months, and is capable of assuming the duties of
the Servicer if required to do so hereunder.
ARTICLE IX
THE TRUSTEE
Section 9.01 Duties of the Trustee The Trustee, prior to the occurrence
of an Event of Default and after the curing of all Events of Default that may
have occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement. If an
99
105
Event of Default of which a Responsible Officer of the Trustee shall have actual
knowledge shall have occurred (which has not been cured) and subject to the
provisions of Section 9.13, the Trustee shall exercise such of the rights and
powers vested in it by this Agreement, and use the same degree of care and skill
in their exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee that are specifically required to be furnished pursuant to any provision
of this Agreement, shall examine them to determine whether they substantially
conform to the requirements of this Agreement. If any such document or
instrument is found not to conform to the requirements of this Agreement in a
material manner, the Trustee shall, subject to the provisions of Section 9.13,
take such action as it deems appropriate to have the document or instrument
corrected, and if it is not corrected to the Trustee's reasonable satisfaction,
the Trustee will provide notice thereof to the Certificateholders and the
Certificate Insurer.
No provision of this Agreement shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own misconduct; provided, however, that:
(a) prior to the occurrence of an Event of Default, and after the
curing of all such Events of Default that may have occurred, the duties
and obligations of the Trustee shall be determined solely by the express
provisions of this Agreement, the Trustee shall not be liable except for
the performance of such duties and obligations as are specifically set
forth in this Agreement, no implied covenants or obligations shall be
read into this Agreement against the Trustee and, in the absence of bad
faith on the part of the Trustee, the Trustee may conclusively rely, as
to the truth of the statements and the correctness of the opinions
expressed therein, upon any certificates, filings or opinions furnished
to the Trustee and conforming to the requirements of this Agreement;
(b) the Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer of the Trustee,
unless it shall be proved that the Trustee was negligent in ascertaining
the pertinent facts;
(c) the Trustee shall not be personally liable with respect to
any action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of the Holders of Certificates evidencing
Voting Interests represented by all Certificates (or all affected
Certificates, as appropriate) aggregating not less than 51% relating to
the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred
upon the Trustee, under this Agreement provided that such action has
been approved by the Certificate Insurer; and
(d) the Trustee shall not be charged with knowledge of any
failure by the Servicer to comply with the obligations of the Servicer
referred to in clauses (a) and (b) of Section 8.01 unless a Responsible
Officer obtains actual knowledge of such failure or the
100
106
Trustee receives written notice of such failure from the Servicer, the
Holders of Certificates evidencing Voting Interests represented by all
Certificates aggregating not less than 51% or the Certificate Insurer,
as the case may be.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of, any
of the obligations of the Servicer under this Agreement, except during such
time, if any, as the Trustee shall be the successor to, and be vested with the
rights, duties, powers and privileges of, the Servicer in accordance with the
terms of this Agreement.
Section 9.02 Certain Matters Affecting the Trustee Except as otherwise
provided in Section 9.01:
(a) The Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officer's Certificate,
certificate of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal, bond or
other paper or document reasonably believed by it to be genuine and to
have been signed or presented by the proper party or parties;
(b) The Trustee may consult with counsel selected by it with due
care and any advice obtained from such counsel or Opinion of Counsel
shall be full and complete authorization and protection in respect of
any action taken or suffered or omitted by it hereunder in good faith
and in accordance with such advice or Opinion of Counsel;
(c) The Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement, or to institute,
conduct or defend any litigation hereunder or in relation hereto, at the
request, order or direction of the Certificate Insurer or any of the
Certificateholders, pursuant to the provisions of this Agreement, unless
the Person so requesting, ordering or directing same shall have offered
to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities that may be incurred therein or thereby; the
right of the Trustee to perform any discretionary act enumerated in this
Agreement shall not be construed as a duty, and the Trustee shall not be
answerable for other than its negligence or willful misconduct in the
performance of any such act; nothing contained herein shall, however,
relieve the Trustee of the obligations, upon the occurrence of an Event
of Default known to a Responsible Officer of the Trustee (which has not
been cured), to exercise such of the rights and powers vested in it by
this Agreement, subject to the provisions of Section 9.13, and to use
the same degree of care and skill in their exercise as a prudent man
would exercise or use under the circumstances in the conduct of his own
affairs;
▇▇▇
▇▇▇
(▇) The Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith in accordance with the
direction of the Certificate Insurer or of Holders of Certificates
evidencing Voting Interests representing all Certificates (or all
affected Certificates, as appropriate) aggregating not less than 51%,
with the consent of the Certificate Insurer;
(e) Prior to the occurrence of an Event of Default and after the
curing of all Events of Default that may have occurred, the Trustee
shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, approval, bond or other paper
or documents, unless requested in writing to do so by the Certificate
Insurer or by Holders of Certificates evidencing Voting Interests
represented by all Certificates (or all affected Certificates, as
appropriate) aggregating not less than 51%, with the consent of the
Certificate Insurer; provided, however, that if the payment within a
reasonable time to the Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation is, in
the opinion of the Trustee, not reasonably assured to the Trustee by the
security afforded to it by the terms of this Agreement, the Trustee may
require reasonable indemnity against such cost, expense or liability as
a condition to such proceeding; the reasonable expense of every such
examination shall be paid by the Servicer or, if paid by the Trustee,
shall be reimbursed by the Servicer upon demand; and nothing in this
clause (e) shall derogate from the obligation of the Servicer to observe
any applicable law prohibiting disclosure of information regarding the
Mortgagors; and
(f) The Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents
or attorneys or a custodian. Any appointment of a Custodian hereunder
shall require the prior written consent of the Certificate Insurer. The
Trustee shall not be liable or responsible for the misconduct of the
custodian of the Mortgage Files appointed with due care by the Trustee
hereunder with the prior written consent of the Certificate Insurer.
Section 9.03 Trustee Not Liable for Certificates or Mortgage Loans The
recitals contained herein and in the Certificates (other than the signature and
authentication of the Trustee on the Certificates) shall be taken as the
statements of the Servicer, and the Trustee assumes no responsibility for the
correctness of the same. The Trustee makes no representations as to the validity
or sufficiency of this Agreement or of the Certificates (other than the
signature and authentication of the Trustee on the Certificates and the
signature of the Trustee on this Agreement) or of any Mortgage, Mortgage Loan or
related document. The Trustee shall not be accountable for the use or
application by the Servicer of any of the Certificates or of the proceeds of
such Certificates, or for the use or application of any funds paid to the
Servicer in respect of the Mortgage Loans or deposited in or withdrawn from the
Collection Account by the Servicer.
Section 9.04 Trustee May Own Certificates The Trustee in its individual
or any other capacity may become the owner or pledgee of Certificates with the
same rights as it would have if it were not Trustee.
102
108
Section 9.05 Payment of the Trustee's Fees and Expenses
(a) On each Distribution Date occurring in August, beginning with the
August 1999 Distribution Date, the Trust shall pay to the Trustee an amount
equal to the Trustee Fee described in clause (i) of the definition thereof
(including any fees and expenses of a co-trustee or separate trustee appointed
under Section 9.10) as compensation for all services rendered by the Trustee
(and any such co-trustee or separate trustee) in the execution of the trusts
hereby created and in the exercise and performance of any of the powers and
duties hereunder of the Trustee (and any such co-trustee or separate trustee).
The Servicer shall pay to the Trustee without any right of reimbursement from
the Trust or otherwise the Trustee's acceptance fee as agreed to by the Servicer
and the Trustee and any reasonable out-of-pocket expenses and loan file review
fees as agreed to by the Servicer and the Trustee.
(b) The Trust shall pay or reimburse the Trustee the Trustee Fee
pursuant to Section 5.01 and such other reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any of the
provisions of this Agreement (including the reasonable compensation and the
expenses and disbursements of its counsel and of all persons not regularly in
its employ) except any such expense, disbursement or advance as may arise from
its negligence or bad faith or that is otherwise reimbursable to the Trustee by
the Servicer pursuant to Section 9.05(a) above; provided, however, that the
Trustee shall not refuse to perform any of its duties hereunder solely as a
result of the failure of the Trust to pay or reimburse such expenses,
disbursements or advances.
(c) The Servicer agrees to indemnify the Trustee from, and hold it
harmless against, any and all losses and liabilities, damages, claims or
expenses (including reasonable attorneys' fees) arising in respect of its acts
or omissions in connection with this Agreement or the Certificates except to the
extent the negligence, bad faith or intentional misconduct of the Trustee
contributes to the loss, liability, damage, claim or expense.
(d) This Section 9.05 shall survive the termination of this Agreement or
the resignation or removal of the Trustee as regards rights accrued prior to
such resignation or removal.
Section 9.06 Eligibility Requirements for the Trustee The Trustee
hereunder shall at all times be a bank or other depository institution doing
business under the laws of the United States or any state thereof, authorized
under such laws to exercise corporate trust powers, having a combined capital
and surplus of at least $100,000,000 and subject to supervision or examination
by federal or state authority and rated at least BBB by Standard & Poor's and
Baa2 by Moody's. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, the Trustee shall resign immediately in the manner
and with the effect specified in Section 9.07. Any successor to the Trustee must
be reasonably acceptable to the Certificate Insurer.
103
109
Section 9.07 Resignation or Removal of the Trustee The Trustee may at
any time resign and be discharged from the trusts hereby created by giving
written notice thereof to the Servicer, the Certificate Insurer and each Rating
Agency. Upon receiving such notice of resignation, the Servicer shall promptly
appoint a successor trustee satisfying the criteria set forth in Section 9.06
(approved by the Certificate Insurer, which approval shall not be unreasonably
withheld) by written instrument, copies of which shall be delivered to the
resigning Trustee, the successor trustee, the Servicer and the Certificate
Insurer. If no successor trustee shall have been so appointed and having
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
If at any time the Trustee shall cease to be eligible in accordance with
the provisions of Section 9.06 and shall fail to resign after written request
therefor by the Servicer or the Certificate Insurer, or if at any time the
Trustee shall be legally unable to act, or shall be adjudged a bankrupt or
insolvent, or a receiver of the Trustee or of its property shall be appointed,
or any public officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, or the Trustee shall fail to perform its obligations under this
Agreement, then the Servicer or the Certificate Insurer shall remove the Trustee
and appoint a successor trustee satisfying the criteria set forth in Section
9.06 (approved by the Certificate Insurer, which approval shall not be
unreasonably withheld) by written instrument, in triplicate, one copy of which
instrument shall be delivered to the Trustee so removed, one copy to the
successor trustee and one copy to the Certificate Insurer.
If at any time the Trustee shall fail to duly observe or perform in any
material respect any covenants or agreements of the Trustee set forth in Section
9.01 of this Agreement, which failure (i) materially and adversely affects the
Certificateholders or the Certificate Insurer and (ii) continues unremedied for
a period of 10 days after the date on which written notice of such failure
(which notice shall refer specifically to this Section), requiring the same to
be remedied, shall have been given to the Trustee and the Servicer by the
Certificate Insurer, or to the Trustee, the Certificate Insurer and the Servicer
by the Holders of Certificates evidencing Voting Interests represented by all
Certificates aggregating not less than 51%, then the Servicer or the Certificate
Insurer may remove the Trustee and appoint a successor trustee satisfying the
criteria set forth in Section 9.06 (approved by the Certificate Insurer, which
approval shall not be unreasonably withheld) by written instrument, in
triplicate, one copy of which instrument shall be delivered to Trustee so
removed, one copy to the successor trustee and one copy to the Certificate
Insurer.
Any resignation or removal of the Trustee and appointment of a successor
trustee pursuant to any of the provisions of this Section shall not become
effective until acceptance of appointment by the successor trustee as provided
in Section 9.08. The provisions of Section 9.05 shall survive any such
resignation or removal.
Section 9.08 Successor Trustee Any successor trustee appointed as
provided in Section 9.07 shall execute, acknowledge and deliver to the Servicer
and to its predecessor Trustee an instrument accepting such appointment
hereunder, and thereupon the resignation or removal of
104
110
the predecessor Trustee shall become effective and such successor trustee,
without any further act, deed or conveyance, shall become fully vested with all
the rights, powers, duties and obligations of its predecessor hereunder, with
like effect as if originally named as Trustee. The Seller, the Servicer and the
predecessor Trustee shall execute and deliver such instruments and do such other
things as may reasonably be required for fully and certainly vesting and
confirming in the successor Trustee all such rights, powers, duties and
obligations.
No successor Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance it shall be eligible under the
provisions of Section 9.06.
Upon acceptance of appointment by a successor trustee as provided in
this Section, the Servicer shall mail notice of the succession of such trustee
hereunder to all Holders of Certificates at their addresses as shown in the
Certificate Register, to each Rating Agency and to the Certificate Insurer. If
the Servicer fails to mail such notice within 10 days after acceptance of
appointment by the successor trustee, the successor trustee shall cause such
notice to be mailed at the expense of the Servicer.
Section 9.09 Merger or Consolidation of the Trustee Any corporation into
which the Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation
succeeding to the business of the Trustee or substantially all of the Trustee's
trust business, shall be the successor of the Trustee hereunder, provided such
corporation shall be eligible under the provisions of Section 9.06, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding.
Section 9.10 Appointment of Co-Trustee or Separate Trustee
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust or any Mortgaged Property may at the time be located, the Servicer
and the Trustee acting jointly, with the prior written consent of the
Certificate Insurer, shall have the power and shall execute and deliver all
instruments to appoint one or more Persons approved by the Trustee to act as
co-trustee or co-trustees, jointly with the Trustee, or separate trustee or
separate trustees, of all or any part of the Trust, and to vest in such Person
or Persons, in such capacity and for the benefit of the Certificateholders, such
title to the Trust, or any part thereof, and, subject to the other provisions of
this Section, such powers, duties, obligations, rights, indemnities and trusts
as the Servicer and the Trustee may consider necessary or desirable. If the
Servicer shall not have joined in such appointment within 15 days after the
receipt by it of a request so to do, or in the case an Event of Default shall
have occurred and be continuing, the Trustee alone and with the prior consent of
the Certificate Insurer shall have the power to make such appointment. No
co-trustee or separate trustee hereunder shall be required to meet the terms of
eligibility as a successor trustee under Section 9.06 and no notice to
Certificateholders of the appointment of any co-trustee or separate trustee
shall be required under Section 9.08. Each of the Rating Agencies shall be given
written notice of the appointment of a co-trustee or a separate trustee pursuant
to this Section.
105
111
Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(a) All rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
(whether as Trustee hereunder or as successor to the Servicer
hereunder), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust or any portion
thereof in any such jurisdiction) shall be exercised and performed
singly by such separate trustee or co-trustee, but solely at the
direction of the Trustee;
(b) No trustee hereunder shall be held personally liable by
reason of any act or omission of any other trustee hereunder; and
(c) The Servicer and the Trustee acting jointly may at any time
accept the resignation of or remove any separate trustee or co-trustee,
except that following the occurrence of an Event of Default that has not
been cured, the Trustee, acting alone may accept the resignation of or
remove any separate or co-trustor.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee or separately, as
may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and copies thereof given to each
of the Servicer and the Certificate Insurer.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
No appointment of any separate trustee or co-trustee shall absolve the
Trustee of its duties and obligations under this Agreement.
Section 9.11 Compliance with REMIC Provisions The Trustee shall at all
times act in such a manner in the performance of its duties hereunder as shall
be necessary to prevent any
106
112
REMIC Pool from failing to qualify as a REMIC and to prevent the imposition of a
tax on any REMIC Pool. The Trustee shall: (a) prepare and file, or cause to be
prepared and filed, such federal, state and local income tax and information
returns or reports using the calendar year as the taxable year for each REMIC
Pool when and as required by the REMIC Provisions and other applicable federal,
state and local income tax laws, which returns or reports shall be signed by the
Trustee or such other person as may be required thereby; (b) make an election,
on behalf of each REMIC Pool, to be treated as a REMIC and make the appropriate
designations, if applicable, in accordance with Section 9.16 on the federal
income tax return of the REMIC Pool for its first taxable year, in accordance
with the REMIC Provisions; (c) prepare and forward, or cause to be prepared and
forwarded, to the Certificateholders all information reports, or furnish or
cause to be furnished by telephone, mail, publication or other appropriate
method such information, as and when required to be provided to them in
accordance with the Code; (d) exercise reasonable care not to allow the creation
of any "interests" in any REMIC Pool within the meaning of Code Section
860D(a)(2) other than the interests represented by the Certificates (other than
the Class R-I and Class P Certificates) in the case of REMIC II and the REMIC I
Interests in the case of REMIC I; and (e) within 30 days of the Startup Day,
furnish or cause to be furnished to the Internal Revenue Service, on Form 8811
or as may otherwise be required by the Code, the name, title, address, and
telephone number of the person that Certificateholders may contact for tax
information relating to their Certificates (and the Trustee shall act as the
representative of each REMIC Pool for this purpose), together with such
additional information as may be required by such Form, and shall update such
information at the time and in the manner required by the Code. Each Class R
Certificateholder shall designate the Servicer, if permitted by the Code and
applicable law, to act as "tax matters person" for the related REMIC Pool within
the meaning of Treasury regulations Section 1.860F-4(d), and the Servicer is
hereby designated as agent of each Class R Certificateholder for such purpose
(or if the Servicer is not so permitted, the Holder of the related Class R
Certificate shall be the tax matters person in accordance with the REMIC
Provisions).
Section 9.12 Trustee May Enforce Claims Without Possession of
Certificates All rights of action and claims under this Agreement or the
Certificates (including in respect of the Certificate Insurer's rights of
subrogation) may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceedings relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name or in its capacity as Trustee. Any recovery of
judgment shall, after provision for the payment of the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, be
for the ratable benefit of the Certificateholders (or the Certificate Insurer in
respect of any right or interest as to which the Certificate Insurer is
subrogated) in respect of which such judgment has been recovered in accordance
with the terms of this Agreement.
Section 9.13 Exercise of Trustee Powers by Certificate Insurer and
Certificateholders The Certificate Insurer, or the Holders of Certificates
evidencing Voting Interests represented by all Certificates aggregating not less
than 51% with the consent of the Certificate Insurer, which consent may not be
unreasonably withheld, may direct the time, method and place of conducting any
proceeding relating to the Trust or the Certificates or for any remedy available
to the Trustee
107
113
with respect to the Certificates or exercising any trust or power conferred on
the Trustee with respect to the Certificates of the Trust provided that:
(i) such direction shall not be in conflict with any rule of law
or with this Agreement;
(ii) the Trustee shall have been provided with indemnity
satisfactory to it; and
(iii) the Trustee may take any other action deemed proper by the
Trustee that is not inconsistent with such direction; provided, however,
that the Trustee need not take any action that it reasonably determines
might involve it in liability unless it has been satisfactorily
indemnified and, with respect to actions directed by Certificateholders
and not the Certificate Insurer, may be unjustly prejudicial to the
Holders not so directing.
Section 9.14 Tax Returns The Trustee shall maintain all information in
its possession as may be required in connection with the preparation of all
federal and, if applicable, state and local income tax and information returns
of each REMIC Pool (including, but not limited to, tax reporting under the REMIC
Provisions for each REMIC Pool) and shall prepare, execute and file as required
all such returns. The Trustee shall include in the first federal income tax
return the information required to be included therein under the REMIC
Provisions, including, but not limited to, Treasury regulation Section
1.860D-1(d)(2) and Treasury regulation Section 1.860F-4(b)(2), or any successor
provisions . The Servicer shall report all required tax information to
Mortgagors in accordance with applicable law. To the extent directly applicable,
the Prepayment Assumption used in pricing the Offered Certificates will be used
in preparing any reports concerning or touching on interest payments made or
original issue discount with respect to the Certificates.
Section 9.15 Taxpayer Identification Number The Trustee shall prepare
and file with the Internal Revenue Service, on behalf of each REMIC Pool within
the time period prescribed therefor, an application on IRS Form SS-4 for such
REMIC Pool. The Trustee, upon receipt from the Internal Revenue Service of the
Notice of Taxpayer Identification Number assigned to each REMIC Pool, shall
promptly forward a copy of such notice to the Servicer.
Section 9.16 Miscellaneous REMIC Matters
(a) The Trustee shall elect that REMIC I and REMIC II shall be
treated as REMICs under Section 860D of the Code, as described in
Section 9.11. The REMIC I REMIC Pool and REMIC II REMIC Pool shall
constitute the assets of REMIC I and REMIC II respectively. Any
inconsistencies or ambiguities in this Agreement or in the
administration of the Trust shall be resolved in a manner that preserves
the validity of such REMIC elections.
(b) The REMIC I will be evidenced by (x) the Class LT-AF, Class
LT-MF, Class LT-AV, Class LT-MV and Class P Certificates (the "REMIC I
Regular Interests"), which (i) (except in the case of Class P) will be
uncertificated and non-transferable and (ii) are hereby designated as
the "regular interests" in the REMIC I and (y) the Class R-I
108
114
Certificate, which is hereby designated as the single "residual
interest" in the REMIC I (the REMIC I Regular Interests, together with
the Class R-I Certificate, the "REMIC I Interests"). The REMIC I Regular
Interests (other than the Class P Certificates) shall be recorded on the
records of the REMIC I as being issued to and held by the Trustee on
behalf of the REMIC II.
(c) The Class A-F, Class A-V and Class C Certificates, consisting
of two components (the Class C-F Component and the Class C-V Component
(each as defined in Note 7 of (e) below)), are hereby designated as
"regular interests" with respect to the REMIC II and the Class R-II
Certificate is hereby designated as the single "residual interest" with
respect to the REMIC II. The Class R-II Certificate shall have no
pass-through rate and shall have no principal balance. On each
Distribution Date, available funds, if any, remaining in the REMIC II
after payments of interest and principal on the regular interests in
REMIC II will be distributed to the Class R-II Certificates.
(d) The Basic Principal Amount with respect to the Fixed Rate
Group shall be allocated 99.99% to the Class LT-MF Certificate and 0.01%
to the Class LT-AF Certificates until paid in full. The Basic Principal
Amount with respect to the Adjustable Rate Group shall be allocated
99.99% to the Class LT-MV Certificates and 0.01% to the Class LT-AV
Certificates until paid in full. Notwithstanding the foregoing, 100% of
any portion of the Basic Principal Amount that is attributable to an
Overcollateralization Release Amount shall be allocated to the Class
LT-MF Certificates and Class LT-MV Certificates, until paid in full, to
the extent it relates to the Fixed Rate Group and the Adjustable Rate
Group, respectively.
On any Distribution Date, the Extra Principal Distribution
Amount, if any, for the Fixed Rate Group Certificates (the "Fixed Rate
Turbo Amount") will not be payable to the REMIC I Regular Interests.
Similarly, on any Distribution Date, the Extra Principal Distribution
Amount for the Adjustable Rate Group Certificates (the "Adjustable Rate
Turbo Amount") will not be payable to the REMIC I Regular Interests.
Instead, a portion of the interest payable with respect to the Class
LT-MF Certificate which equals 0.01% of the Fixed Rate Turbo Amount will
be payable as a reduction of the principal balance of the Class LT-AF
Certificates (and will be accrued and added to principal on the Class
LT-MF Certificate) and a portion of the interest payable with respect to
the Class LT-MV Certificate which equals 0.01% of the Adjustable Rate
Turbo Amount will be payable as a reduction of the principal balance of
the Class LT-AV Certificates (and will be accrued and added to principal
on the Class LT-MV Certificate).
Realized Losses on the Mortgage Loans shall be applied such that
after all distributions have been made on such Distribution Date, the
principal balance of the Class LT-AF Certificates equals 0.01% of the
principal balance of the Class A-F Certificates; the principal balance
of the Class LT-MF Certificates equals the Fixed Rate Group Balance less
an amount equal to the principal balance of the Class LT-AF
Certificates, the principal balance of the Class LT-AV Certificates
equals 0.01% of the principal balance of the Class A-V Certificates, and
the principal balance of the Class LT-
109
115
MV Certificates equals the Adjustable Rate Group Balance less an amount
equal to the principal balance of the Class LT-AV Certificates. No
Realized Losses
shall be applied to the Class P Certificates.
On each Distribution Date, available funds, if any, (other than
the Class P Deposit) remaining in the REMIC I after payments of interest
and principal with respect to the REMIC I Regular Interests (other than
the Class P Certificates) will be distributed with respect to the Class
R-I Certificate. If, at any time, the Pool Balance is $15,000 or less, a
portion of the Class P Deposit shall be paid as principal with respect
to the Class P Certificates such that the remaining Class P Deposit is
always less than 0.66% of the sum of the Pool Balance and the remaining
Class P Deposit. After all of the REMIC I Regular Interests (other than
the Class P Certificates) have been paid in full, the remaining
available funds in REMIC I shall first be applied to reduce the
principal balance of the Class P Certificates to zero, and then shall be
payable with respect to the Class R-I Certificates.
(e) The REMIC I Interests will have the following designations
and pass-through rates, and distributions of interest thereon shall be
allocated to the Certificates in the following manner:
------------------------------------------------------------------------
REMIC I INTERESTS INITIAL PASS-THROUGH ALLOCATION
BALANCE ($) RATE (%) OF INTEREST
------------------------------------------------------------------------
LT-AF 19,123.50 7.29 (2) (6a), (7a)
------------------------------------------------------------------------
LT-MF 196,688,617.88 (1) (6a), (7a)
------------------------------------------------------------------------
LT-AV 20,203.50 (4) (6b), (7b)
------------------------------------------------------------------------
LT-MV 203,337,098.17 (3) (6b), (7b)
------------------------------------------------------------------------
P 100 0 (5) N/A
------------------------------------------------------------------------
R-I 0 0 (8) N/A
------------------------------------------------------------------------
-------------
(1) The per annum pass-through rate ("Pass-Through Rate") on the Class LT-MF
Certificates shall at any time of determination equal the weighted net
average Mortgage Loan Rate in the Fixed Rate Group ("Fix WAC"). For this
purpose, the Mortgage Loan Rates shall be net of the Monthly Servicing
Fee, the Back-up Servicing Fee, the Trustee Fee and the Certificate
Insurer Premium, each to the extent they are attributable to Mortgage
Loans in the Fixed Rate Group and each expressed as an annual percentage
of the Fixed Rate Group Balance. If there are any prepayment interest
shortfalls with respect to the Fixed Rate Group not covered by
Compensating Interest for the Fixed Rate Group, such shortfall will
proportionally reduce the interest accrued on the Class LT-AF and Class
LT-MF Certificates.
110
116
(2) The per annum pass-through rate ("Pass-Through Rate") on the Class LT-AF
Certificates shall at all times be subject to a maximum per annum rate
equal to Fix WAC (as defined in Note 1 above).
(3) The per annum pass-through rate ("Pass-Through Rate") on the Class LT-MV
Certificates shall at any time of determination equal the weighted net
average Mortgage Loan Rate in the Adjustable Rate Group ("Adj. WAC").
For this purpose, the Mortgage Loan Rates shall be net of the Monthly
Servicing Fee, the Back-up Servicing Fee, the Trustee Fee and the
Certificate Insurer Premium, each to the extent they are attributable to
Mortgage Loans in the Adjustable Rate Group and each expressed as an
annual percentage of the Adjustable Rate Group Balance. If there are any
Prepayment Interest Shortfalls with respect to the Adjustable Rate Group
not covered by Compensating Interest and not covered by the Certificate
Insurance Policy for the Adjustable Rate Group, such shortfall will
proportionally reduce the interest accrued on the Class LT-AV and Class
LT-MV Certificates.
(4) The per annum pass-through rate ("Pass-Through Rate") on the Class LT-AV
Certificates shall equal the lesser of (i) the Class A-V Formula
Pass-Through Rate (ii) Adj. WAC (as defined in Note 3 above) minus 0.50
%, and (iii) 14%.
(5) The Class P Certificates shall be entitled to receive all Prepayment
Charges collected with respect to the Mortgage Loans. Such Prepayment
Charges shall not be available for distribution with respect to any
other Class of REMIC I Interests. The Prepayment Charges received by the
Class P Certificates shall not be applied to the principal balance of
those certificates.
(6) (a) Except as provided in Note 7, interest on the Class LT-AF and Class
LT-MF Certificates will be allocated to the Class A-F Certificates.
(b) Except as provided in Note 7, interest on the Class LT-AV and Class
LT-MV Certificates will be allocated to the Class A-V Certificates.
(7) (a) Any interest with respect to this REMIC I Interest in excess of the
product of (i) 10,000 times the weighted average Pass-Through Rate of
the Class LT-AF and Class LT-MF Certificates, where the Class LT-MF
Certificate Pass-Through Rate is subject to a cap equal to 0%, and (ii)
the principal balance of this REMIC I Interest, shall not be allocated
to the Fixed Rate Certificates but will be allocated to the Class C
Certificates as a separate component (the "Class C-F Component").
(b) Any interest with respect to this REMIC II Interest in excess of the
product of (i) 10,000 times the weighted average Pass-Through Rate of
the Class LT-AV and Class LT-MV Certificates, where the Class LT-MV
Certificate Pass-Through Rate is subject to a cap equal to 0%, and (ii)
the principal balance of this REMIC I Interest, shall not be allocated
to the Adjustable Rate Certificates but will be allocated to the Class C
Certificates as a separate component (the "Class C-V Component").
111
117
(8) On each Distribution Date, available funds, if any, (other than the
Class P Deposit) remaining in the REMIC I after payments of interest and
principal with respect to the REMIC I Regular Interests (other than the
Class P Certificates), as described above, will be distributed with
respect to the Class R-I Certificate.
(f) The Closing Date is hereby designated as the "Startup Day" of
each of REMIC I and REMIC II within the meaning of Section 860G(a)(9) of
the Code. The "latest possible maturity date", solely for purposes of
Treasury regulation Section 1.860G-1(a)(4)(iii), of each of the REMIC I
Regular Interests and each of the "regular interests" with respect to
REMIC II is July 15, 2033.
ARTICLE X
TERMINATION
Section 10.01 Termination Upon Purchase or Liquidation of All Mortgage
Loans Subject to Section 10.02, the respective obligations and responsibilities
hereunder of the Servicer, the Seller and the Trustee (other than the obligation
of the Trustee to make certain payments to Certificateholders after the final
Distribution Date and the obligation of the Seller to send certain notices as
hereinafter set forth) and the Trust created hereby shall terminate with respect
to all Certificates upon the last action required to be taken by the Trustee on
the final Distribution Date pursuant to this Article following the earlier of
(a) the purchase by the Holder of the Class R Certificates of all Mortgage Loans
then remaining in the Trust all property acquired by the Trust in respect of any
such Mortgage Loan at a price equal to the sum of (x) 100% of the Principal
Balance of each such Mortgage Loan (other than any Mortgage Loan as to which
title to the underlying Mortgaged Property has been acquired and whose fair
market value is included pursuant to clause (y) below) as of the final
Distribution Date, and (y) the fair market value of such acquired Mortgaged
Property (determined as described below), plus accrued and unpaid interest at
the applicable Mortgage Loan Rate on the Principal Balance of each such Mortgage
Loan (including any Mortgage Loan as to which title to the underlying Mortgaged
Property has been acquired) through the end of the Collection Period preceding
the date of repurchase and the aggregate amount of unreimbursed Servicing
Advances made in respect of any such Mortgage Loan, less any payments of
principal and interest received during such Collection Period in respect of each
such Mortgage Loan or (b) the final payment or other liquidation of the
Principal Balance of the last Mortgage Loan remaining in the Trust or the
disposition of all property remaining in the Trust acquired upon foreclosure or
deed in lieu of foreclosure of any such Mortgage Loan; provided, however, that
in no event shall the trust created hereby continue beyond the expiration of 21
years from the death of the last survivor of the descendants of ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, the late ambassador of the United States to the Court of St. ▇▇▇▇▇, who
are living on the Closing Date. The fair market value of Mortgaged Properties
pursuant to the foregoing clause (y) shall be determined by the Holder of the
Class R Certificates as of the close of business on the third Business Day next
preceding the date upon which notice of any such termination is furnished to
Certificateholders pursuant to the third paragraph of this Section 10.01. Such
determination shall not be effective unless consented to in writing by the
Certificate Insurer, which consent shall not be unreasonably withheld. In the
event that the
112
118
Certificate Insurer does not consent to the fair market value determined by the
Holder of the Class R Certificates within three business days of receiving
notice of such determination, the Certificate Insurer and the Holder of the
Class R Certificates shall appoint a mutually agreed appraiser to make a
determination as to such fair market value whose determination shall be final
and binding on the Certificate Insurer and the Holder of the Class R
Certificates, the expense of such appraisal being borne equally by the Holder of
the Class R Certificates and the Certificate Insurer and not being an expense of
the Trust.
The right of the Holder of the Class R Certificates to purchase all
outstanding Mortgage Loans pursuant to clause (a) above is exercisable only on
or after the related Clean-up Call Date. If such right is exercised, (i) the
Holder of the Class R Certificates shall remit the purchase price specified in
this Section to the Trustee for deposit in the Certificate Account pursuant to
Section 3.02 (e) on or before the related Deposit Date and (ii) the Trustee, if
it has received the Mortgage Files pursuant to Section 2.01, shall, promptly
following remittance of such purchase price, release to the Servicer the
Mortgage Files pertaining to the Mortgage Loans being purchased and all other
documents furnished by the Holder of the Class R Certificates as are necessary
to transfer the Trustee's interest in the Mortgage Loans to the Holder of the
Class R Certificates.
Notice of any termination, specifying the Distribution Date (which shall
be a date that would otherwise be a Distribution Date) upon which the related
Certificateholders may surrender their Certificates to the Trustee for payment
of the final distribution and cancellation shall be given promptly by the
Trustee (upon receipt of written directions from the Holder of the Class R
Certificates, not later than the 15th day of the month preceding the month of
such final distribution) by letter to Certificateholders mailed not earlier than
the first day and not later than the 10th day of the month of such final
distribution specifying (a) the Distribution Date upon which final distribution
of the related Certificates will be made upon presentation and surrender of
Certificates at the office or agency of the Trustee therein designated, (b) the
amount of any such final distribution and (c) that the Record Date otherwise
applicable to such Distribution Date is not applicable, distributions being made
only upon presentation and surrender of such Certificates at the office or
agency of the Trustee therein specified. In the event written directions are
delivered by the Holder of the Class R Certificates to the Trustee as described
in the preceding sentence, the Holder of the Class R Certificates shall deposit
in the Certificate Account on or before the related Deposit Date for such final
distribution in immediately available funds an amount equal to the purchase
price for such assets of the Trust computed as above provided. Such deposit
shall be in lieu of the deposit otherwise required to be made in respect of such
Distribution Date pursuant to Section 3.02 and the related distribution thereof
to Certificateholders.
If the termination of the Trust is in connection with a purchase of the
assets of the Trust by the Holder of the Class R Certificates pursuant to clause
(a) of the first paragraph in this Section, the Trustee shall cause to be
distributed to Certificateholders on the final Distribution Date, an amount
equal to (i) as to the Offered Certificates, and upon presentation and surrender
thereof, to the Holders thereof in proportion to their respective Percentage
Interests the Certificate Principal Balance, and the Accrued Certificate
Interest applicable to such Offered Certificate and (ii) as to the Servicer, any
additional servicing compensation with respect to such
113
119
Distribution Date (other than amounts retained to meet claims) after application
pursuant to the clauses (i) and (ii) above and payment to the Servicer of any
amounts to which it is entitled as reimbursement hereunder and (iii) as to the
Class C Certificateholders and upon presentation and surrender of the Class C
Certificates, in proportion to their Percentage Interests, any amounts remaining
after application pursuant to clauses (i) and (ii), up to an amount equal to the
Class C Distribution Amount and any Class C Carryforward Amount; provided,
however, that if the fair market value of any acquired property referred to in,
or covered by, clause (a)(y) of the first paragraph of this Section is less than
the Principal Balance of the related Mortgage Loan, then the excess of such
Principal Balance over such fair market value shall be allocated in reduction of
the amounts otherwise distributable on the final Distribution Date in the
following order of priority: first, to the Holders of the applicable Class R
Certificates, second to the Holders of the Class C Certificate and third to the
Holders of the related Offered Certificates, pro rata based on the Certificate
Principal Balances thereof on such Distribution Date. The distribution on the
final Distribution Date in connection with the purchase by the Holder of the
Class R Certificates of the assets in the Trust shall be in lieu of the
distribution otherwise required to be made on such Distribution Date in respect
of each Class of Certificates. The Holder of the Class R Certificates shall
provide in writing to the Trustee and the Certificate Insurer the information
with respect to the amounts so to be paid.
In the event that all of the relevant Certificateholders shall not
surrender their Certificates for final payment and cancellation on or before the
fifth day following such final Distribution Date, the Trustee shall on such date
cause all funds in the Certificate Account not distributed in the final
distribution to Certificateholders to be withdrawn therefrom and credited to the
remaining Certificateholders by holding such funds uninvested in a separate
escrow account for the benefit of such Certificateholders, and the Holder of the
Class R Certificates (if the Holder of the Class R Certificates exercised its
right to purchase the assets of the Trust as provided above) or the Trustee (in
any other case) shall give a second written notice to the remaining
Certificateholders to surrender their Certificates for cancellation and receive
the final distribution with respect thereto. If within one year after the second
notice all the Certificates shall not have been surrendered for cancellation,
any funds deposited in such escrow account and remaining unclaimed shall be paid
by the Trustee to the Holder of the Class R Certificates and thereafter
Certificateholders shall look only to the Holder of the Class R Certificates
with respect to any claims in respect of such funds.
Section 10.02 Additional Termination Requirements In the event the
Holder of the Class R Certificates exercises its purchase option as provided in
Section 10.01, each REMIC Pool shall be terminated in accordance with the
following additional requirements, and the Trustee and the Certificate Insurer
shall receive an Opinion of Counsel to the effect that the termination of such
REMIC Pool (i) will constitute a "qualified liquidation" of each REMIC Pool
within the meaning of Code Section 860F(a)(4)(A), and (ii) will not subject such
REMIC Pool to tax or cause such REMIC Pool to fail to qualify as a REMIC at any
time that any Certificates are outstanding.
(i) Within 90 days prior to the final Distribution Date set forth
in the notice of intention to purchase the Mortgage Loans given by the
Holder of the Class R Certificates under Section 10.01, the Trustee, at
the direction of the Holder of the Class R
114
120
Certificates, shall adopt a plan of complete liquidation of each REMIC
Pool on behalf of the REMIC within the meaning of Code Section
860F(a)(4)(A)(8), which shall be evidenced by such notice; and
(ii) At or after the time of adoption of such a plan of complete
liquidation and at or prior to the final Distribution Date, the Trustee
shall sell all of the assets of each REMIC Pool to the Holder of the
Class R Certificates, as the case may be, for cash at the purchase price
specified in Section 10.01 and shall distribute such cash in the manner
specified in Section 10.01.
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01 Amendment This Agreement may be amended from time to time
by the Servicer, the Seller and the Trustee, without the consent of any of the
Certificateholders but with the prior written consent of the Certificate Insurer
(which consent shall not be unreasonably withheld), (a) to cure any error or any
ambiguity or to correct or supplement any provisions herein which may be
inconsistent with any other provisions herein; (b) to add to the duties or
obligations of the Servicer hereunder; (c) to maintain or improve any rating
then assigned by any Rating Agency to any subclass of the Offered Certificates;
(d) to add any other provisions with respect to matters or questions arising
under this Agreement or the Certificate Insurance Policy, as the case may be
(including specifically amendments or supplements pursuant to the second
paragraph of Section 6.02(b)); (e) to modify, eliminate or add to any of its
provisions to such extent as shall be necessary to maintain the qualification of
each REMIC Pool as a REMIC at all times that any Certificates are outstanding or
to avoid or minimize the risk of the imposition of any tax on any REMIC Pool
pursuant to the Code that would be a claim against any REMIC Pool, provided that
in the case of this clause (e) the Trustee has received an Opinion of Counsel
delivered to the Trustee and the Certificate Insurer to the effect that such
action is necessary or desirable to maintain such qualification or to avoid or
minimize the risk of the imposition of any such tax; (f) to modify, eliminate or
add to the provisions of Section 6.02(c) or any other provisions hereof
restricting transfer of the Class R Certificates or (g) to modify, eliminate or
add to the provisions hereunder in order to provide for one or more third
parties to effect all or a portion of the Monthly Advances or Servicing Advances
and to provide for the reimbursement from the Trust Fund of such third party for
such Monthly Advances or Servicing Advances (i) from amounts payable to the
Servicer, (ii) from collections which the Servicer would have been permitted to
otherwise retain and (iii) from any other amounts that would otherwise be
payable to the Servicer if the Servicer had made such Monthly Advances or
Servicing Advances or from such other funds owed to the Servicer, in each case
as the Servicer shall agree; provided that in all such cases the Trustee has
obtained written confirmation from each Rating Agency that any such
modifications to this Agreement will not result in a qualification, reduction or
withdrawal of the rating assigned to any Class of Offered Certificates by such
Rating Agency and has received an Opinion of Counsel (a copy of which has been
delivered to the Certificate Insurer) to the effect that any such modifications
to this Agreement do not give rise to a risk that any REMIC Pool or any of the
Certificateholders will be subject to a tax caused by a transfer to a
Disqualified
115
121
Organization; provided, further, that in all such cases such action shall not,
as evidenced by an Opinion of Counsel (a copy of which has been delivered to the
Certificate Insurer), adversely affect in any material respect the interests of
any Certificateholder or the Certificate Insurer.
This Agreement may also be amended from time to time by the Servicer,
the Seller and the Trustee, with the consent of the Certificate Insurer (which
consent shall not be unreasonably withheld) and the Holders of Certificates
evidencing Voting Interests of each Class affected thereby aggregating not less
than 51%, for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of this Agreement, or of modifying in any
manner the rights of the Holders of Certificates of such Class; provided,
however, that no such amendment shall (a) reduce in any manner the amount of, or
delay the timing of, collections of payments on Mortgage Loans or distributions
which are required to be made on any Certificate without the consent of the
Holder of such Certificate or (b) reduce the aforesaid percentage of each Class
the Holders of which are required to consent to any such amendment, without the
consent of the Holders of all Certificates of such Class then outstanding.
Promptly after the execution of any such amendment or consent pursuant
to the next preceding paragraph, the Trustee shall furnish written notification
of the substance of such amendment to each affected Certificateholder and each
Rating Agency.
It shall not be necessary for the consent of Certificateholders under
this Section to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject to
such reasonable requirements as the Trustee may prescribe.
Prior to the execution of any amendment to this Agreement, the Trustee
and the Certificate Insurer shall be entitled to receive and rely upon an
Opinion of Counsel stating that the execution of such amendment is authorized or
permitted by this Agreement. The Trustee may, but shall not be obligated to,
enter into any such amendment that affects the Trustee's own rights, duties or
immunities under this Agreement.
Section 11.02 Recordation of Agreement This Agreement is subject to
recordation in all appropriate public offices for real property records in all
the counties or other comparable jurisdictions in which any or all of the
Mortgaged Properties are situated, and in any other appropriate public recording
office or elsewhere, such recordation to be effected by the Servicer, at its
expense but only upon, determination of the Servicer accompanied by an Opinion
of Counsel (a copy of which has been delivered to the Certificate Insurer) to
the effect that such recordation is legally required to protect the Trustee's
interest in the Mortgage Loans.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
116
122
Section 11.03 Limitation on Rights of Certificateholders The death or
incapacity of any Certificateholder shall not operate to terminate this
Agreement, the Trust or any REMIC established pursuant to Section 3.01, nor
entitle such Certificateholder's legal representatives or heirs to claim an
accounting or to take any action or commence any proceeding in any court for a
partition or winding up of the Trust or any REMIC established pursuant to this
Agreement, nor otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them.
Except as otherwise expressly provided herein, no Certificateholder,
solely by virtue of its status as a Certificateholder, shall have any right to
vote or in any manner otherwise control the operation and management of the
Trust or any REMIC established pursuant to this Agreement, or the obligations of
the parties hereto, nor shall anything herein set forth, or contained in the
terms of the Certificates, be construed so as to constitute the
Certificateholders from time to time as partners or members of an association;
nor shall any Certificateholder be under any liability to any third person by
reason of any action taken by the parties to this Agreement pursuant to any
provision hereof.
No Certificateholder, solely by virtue of its status as a
Certificateholder, shall have any right by virtue or by availing itself of any
provisions of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee a written notice of default
and of the continuance thereof, as hereinbefore provided, and unless also the
Holders of Certificates evidencing Voting Interests represented by all
Certificates (or all affected Certificates, as appropriate) aggregating not less
than 51% shall have obtained the prior written consent of the Certificate
Insurer and made written request upon the Trustee to institute such action, suit
or proceeding in its own name as Trustee hereunder and shall have offered to the
Trustee such reasonable indemnity as it may require against the costs, expenses
and liabilities to be incurred therein or thereby, and the Trustee, for 60 days
after its receipt of such notice, request and offer of indemnity, shall have
neglected or refused to institute any such action, suit or proceeding; it being
understood and intended, and being expressly covenanted by each
Certificateholder with every other Certificateholder, the Trustee, and the
Certificate Insurer that no one or more Holders of Certificates shall have any
right in any manner whatever by virtue or by availing itself or themselves of
any provision of this Agreement to affect, disturb or prejudice the rights of
the Holders of any other Certificates, or to obtain or seek to obtain priority
over or preference to any other such Holder, or to enforce any right under this
Agreement, except in the manner herein provided and for the equal, ratable and
common benefit of all Certificateholders. For the protection and enforcement of
the provisions of this Section, each and every Certificateholder, the
Certificate Insurer and the Trustee shall be entitled to such relief as can be
given either at law or in equity.
Section 11.04 Governing Law This Agreement shall be construed in
accordance with the laws of the State of California (without regard to conflict
of laws principles and the application of the laws of any other jurisdiction),
and the obligations, rights and remedies of the parties hereunder shall be
determined in accordance with such laws.
117
123
Section 11.05 Notices All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given when delivered
to (a) in the case of the Seller and the Servicer, at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇; (b) in the case of the
Trustee, at the Corporate Trust Office at ▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attn: Aames Capital Corporation, Series 1999-1; (c) in the
case of the Certificate Insurer, Financial Security Assurance Inc., ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attn: Surveillance Department Re: Aames
Mortgage Trust 1999-1; (d) in the case of the Back-up Servicer, Fairbanks
Capital Corp., if by mail, ▇.▇. ▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ and
if by express delivery service ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (Fax ▇▇▇ ▇▇▇-▇▇▇▇); (e) in the case of S&P, to
Standard & Poor's, ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attn:
Mortgage Surveillance Group; and (f) in the case of Moody's, to ▇▇▇▇▇'▇
Investors Service Inc., ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attn:
Residential Mortgage Pass-Through Monitoring, or, as to each party, at such
other address as shall be designated by such party in a written notice to each
other party. Any notice required or permitted to be mailed to a
Certificateholder shall be given by first class mail, postage prepaid, at its
address shown in the Certificate Register. Any notice so mailed within the time
prescribed in this Agreement shall be conclusively presumed to have been duly
given, whether or not the Certificateholder receives such notice. Any notice or
other document required to be delivered or mailed by the Trustee to any Rating
Agency shall be given on a best efforts basis and only as a matter of courtesy
and accommodation and the Trustee shall have no liability for failure to deliver
such notice or document to any such Rating Agency.
Section 11.06 Severability of Provisions If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the Holders thereof.
Section 11.07 Assignment Notwithstanding anything to the contrary
contained herein, except as provided in this Section and Sections 7.02, 7.04 and
7.05, this Agreement may not be assigned by the Seller or the Servicer without
the prior written consent of the Certificate Insurer and the Holders of
Certificates evidencing not less than 66% of the Voting Interests of all
Certificates. The Servicer may assign the right to reimbursement for Servicing
Advances, Monthly Advances and Nonrecoverable Advances with the consent of the
Certificate Insurer but without the consent of any other Person but with prior
notice thereof to the Trustee. In such event, the Trustee shall remit the amount
of any such reimbursement to the Person(s) to whom such right of reimbursement
has been assigned.
Section 11.08 Certificates Nonassessable and Fully Paid The parties
agree that the Certificateholders shall not be personally liable for obligations
of the Trust, that the beneficial ownership interests represented by the
Certificates shall be nonassessable for any losses or expenses of the Trust or
for any reason whatsoever, and that Certificates upon execution, authentication
and delivery thereof by the Trustee pursuant to Section 2.06 are and shall be
deemed fully paid.
118
124
Section 11.09 Third Party Beneficiary; Rating
(a) The Certificate Insurer is an intended third-party beneficiary of
this Agreement. This Agreement shall be binding upon and inure to the benefit of
the Certificate Insurer; provided that, notwithstanding the foregoing, for so
long as a Certificate Insurer Default is continuing under its obligations under
the Certificate Insurance Policy, the Offered Certificateholders shall succeed
to the Certificate Insurer's rights hereunder; provided, further, that even if a
Certificate Insurer Default is continuing this Agreement may not be amended
except upon delivery to the Certificate Insurer of an Opinion of Counsel
acceptable to the Certificate Insurer to the effect that such amendment shall
not adversely affect in any material respect the interests of the Certificate
Insurer. Without limiting the generality of the foregoing, all covenants and
agreements in this Agreement that expressly confer rights upon the Certificate
Insurer shall be for the benefit of and run directly to the Certificate Insurer,
and the Certificate Insurer shall be entitled to rely on and enforce such
covenants to the same extent as if it were a party to this Agreement.
(b) In the event the rating of the claims paying ability of the
Certificate Insurer by any of the Rating Agencies is reduced to a rating that is
below "investment grade" (as that term is then commonly used), the Servicer
shall, at its own expense, seek to obtain ratings of each Class of Offered
Certificates (apart from the rating related to the Certificate Insurance Policy)
from such Rating Agency.
Section 11.10 Counterparts This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute but
one and the same instrument.
[Signatures follow]
119
125
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers, all as of the day and year first
above written.
AAMES CAPITAL CORPORATION,
as Seller and Servicer
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.,
as Trustee and not in its
individual capacity
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Assistant Secretary
FAIRBANKS CAPITAL CORP.
as Back-up Servicer
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President
▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ )
) ss.:
County of New York )
On the 5th day of August, 1999, before me, a notary public in and for of
the State of California, personally appeared ▇▇▇▇▇ ▇. ▇▇▇▇, personally known to
me (or proved to me on the basis of satisfactory evidence) to be the person
whose name is subscribed to the within instrument and acknowledged to me that he
executed the same in the capacity or capacities indicated in the within
instrument, and that by his signature on the instrument the person, or the
entity upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
/s/ ▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Notary Public
▇▇▇ ▇. ▇▇▇▇▇▇
Notary Public, State of New York
Commission No. OIME5031369
Commission Expires August 1, 2002
[Notary Seal]
127
State of California )
) ss.:
County of Los Angeles )
On the 5th day of August, 1999, before me, a notary public in and for of
the State of California, personally appeared ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, personally known
to me (or proved to me on the basis of satisfactory evidence) to be the person
whose name is subscribed to the within instrument and acknowledged to me that he
executed the same in the capacity or capacities indicated in the within
instrument, and that by his signature on the instrument the person, or the
entity upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
Notary Public
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Notary Public State of California
Commission No. 1145684
Commission Expires July 4, 2001
[Notary Seal]
128
State of Utah )
) ss.:
County of Salt Lake )
On the 5th day of August, 1999, before me, a notary public in and for of
the State of Utah, personally appeared ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, personally known to me
(or proved to me on the basis of satisfactory evidence) to be the person whose
name is subscribed to the within instrument and acknowledged to me that he
executed the same in the capacity or capacities indicated in the within
instrument, and that by his signature on the instrument the person, or the
entity upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Notary Public
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Notary Public State of Utah
Commission Expires January 25, 2003
[Notary Seal]
129
Schedule I
List of Sub-Servicers
None.
130
Schedule II
[Reserved]
131
Schedule III
Schedule of Restricted Mortgage Loans
None.
132
EXHIBIT A-1
FORM OF CLASS A-F CERTIFICATE
Date of Pooling and Servicing Original Class A-F Certificate
Agreement and Cut-off Date: Balance: $191,235,000
July 1, 1999
First Distribution Date: CUSIP No. 00253C FP7
August 16, 1999
Denomination: $191,235,000 Certificate No.: 1
Class A-F Pass-Through Rate: 7.29%
AAMES MORTGAGE TRUST 1999-1
MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1999-1, CLASS A-F
evidencing a percentage interest in the distributions allocable to the
Class A-F Certificates with respect to a Trust consisting primarily of a
pool of conventional, closed-end, fixed and adjustable rate residential
mortgage loans, sold and serviced by Aames Capital Corporation.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL CORPORATION OR THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR
RESPECTIVE AFFILIATES. THIS CERTIFICATE IS NOT A DEPOSIT, AND NEITHER THIS
CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York Corporation ("DTC"), to Issuer or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL in as much as the requested owner
hereof, Cede & Co. has an interest herein.
This certifies that CEDE & CO. is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the denomination of
this Certificate shown
A-1-1
133
above by the Original Class A-F Certificate Principal Balance) in a trust, the
assets of which consist primarily of a pool of conventional, closed-end, fixed
and adjustable rate residential mortgage loans (the "Mortgage Loans"), sold and
serviced by Aames Capital Corporation (in its capacity as seller, the "Seller"
and in its capacity as servicer, the "Servicer," which term includes any
successor Servicer under the Agreement referred to below). The Trust was created
pursuant to a Pooling and Servicing Agreement dated as specified above (the
"Agreement") among the Seller and Servicer, Bankers Trust Company of California,
N.A., as trustee (the "Trustee"), and Fairbanks Capital Corp., as back-up
servicer (the "Back-up Servicer"), a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on
the 15th day of each month (or if any such day is not a Business Day, on the
Business Day immediately following such 15th day) (the "Distribution Date"),
commencing on the first Distribution Date specified above, to the Person in
whose name this Certificate is registered at the close of business on the
applicable Record Date, in an amount equal to the product of (a) the Percentage
Interest evidenced by this Certificate and (b) the sum of the applicable Accrued
Certificate Interest and principal distributable thereon, as more specifically
set forth in the Agreement.
Except as otherwise provided in the Agreement, distributions on this
Certificate will be made by the Trustee by check or money order mailed to the
Person entitled thereto at the address appearing in the Certificate Register, or
upon written request by the Certificateholder, by wire transfer to a bank
account maintained in the United States (in the case of any Holder of
Certificates entitled to such form of payment as provided in the Agreement) or
by such other means of payment as such Person and the Trustee shall agree.
Except as otherwise provided in the Agreement, the final distribution on this
Certificate will be made in the applicable manner described above, after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
maintained for that purpose and as specified in such notice.
This Certificate is one of a duly authorized issue of Certificates
designated as "Aames Mortgage Trust 1999-1 Mortgage Pass-Through Certificates,
Series 1999-1, Class A-F" (herein called the "Class A-F Certificates") and
representing a beneficial ownership interest, in each case subject to the
limitations set forth in the Agreement in, among other things, the Mortgage
Loans in the Fixed Rate Group, such assets as shall from time to time be
identified or shall be required by the Agreement to be identified as deposited
in the Collection and/or Certificate Account or invested in Permitted
Investments in accordance with the Agreement, all rights under any insurance
policy covering a Mortgage Loan in the Fixed Rate Group or the related Mortgaged
Property and property and any proceeds thereof which secured a Mortgage Loan and
which has been acquired by foreclosure, deed in lieu of foreclosure or by a
comparable conversion.
A-1-2
134
The Class A-F Certificates are limited in right of payment to certain
payments on and collections in respect of the Mortgage Loans in the Fixed Rate
Group, as more specifically set forth in the Agreement. The Holder of this
Certificate, by its acceptance of this Certificate, agrees that it will look
solely to the funds on deposit in the Certificate Account and, in certain
limited circumstances, payments made under the Certificate Insurance Policy in
respect of any Insured Payment allocable to Class A-F Certificateholders and
that the Trustee in its individual capacity is not personally liable to the
Certificateholders for any amount payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Seller, the Servicer, and the rights of the Certificateholders under the
Agreement at any time by the Servicer and the Trustee with the consent of the
Certificate Insurer and the Holders of Certificates evidencing Voting Interests
represented by all Certificates aggregating not less than 51%. Any such consent
by the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates but with the prior written
consent of the Certificate Insurer.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registerable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in New York, New
York, accompanied by a written instrument of transfer in form satisfactory to
the Trustee duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class of authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class of authorized denominations
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
A-1-3
135
The Seller and the Trustee and any of their respective agents may treat
the Person in whose name this Certificate is registered as the owner hereof for
all purposes, and neither the Seller, the Trustee nor any of their respective
agents shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon payment to the Certificateholders, or
provision therefor, in accordance with the Agreement upon (a) the purchase by
the Holder of the Class R Certificates of all Mortgage Loans and all property
acquired in respect of any Mortgage Loan remaining in the Trust at a price
determined as provided in the Agreement, or (b) the later of the final payment
or other liquidation of the last Mortgage Loan remaining in the Trust or the
disposition of all property acquired upon foreclosure or by deed in lieu of
foreclosure of any Mortgage Loan. The exercise of the right of the Holder of the
Class R Certificates to purchase all the Mortgage Loans and property in respect
of Mortgage Loans will result in early retirement of the Certificates, the right
of the Holder of the Class R Certificates to purchase being subject to the Pool
Balance at the time of purchase being less than 10% of the sum of the Original
Pool Balance and the Prefunding Account Deposit.
This Certificate constitutes a "regular interest" in a "real estate
mortgage investment conduit" as those terms are defined in Section 860G(a)(1)
and Section 860D, respectively, of the Internal Revenue Code of 1986, as
amended.
This Certificate will not be entitled to any benefit under the Agreement
or be valid for any purpose unless manually countersigned for authenticating
purposes only by any authorized officer of the Trustee.
A-1-4
136
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: August 5, 1999
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A., as Trustee
By:
--------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION:
This is one of the Class A-F
Certificates referred to in
the within named Agreement
By:
-------------------------------------------
Authorized Officer of Bankers Trust Company
of California, N.A., as Trustee
A-1-5
137
EXHIBIT A-2
FORM OF CLASS A-V CERTIFICATE
Date of Pooling and Servicing Original Class A-V Certificate
Agreement and Cut-off Date: Balance: $202,035,000
July 1, 1999
First Distribution Date: CUSIP No. 00253C FQ5
August 16, 1999
Denomination: $202,035,000 Certificate No.: 1
Class A-V Adjustable Rate Certificate
AAMES MORTGAGE TRUST 1999-1
MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1999-1, CLASS A-V
evidencing a percentage interest in the distributions allocable to the
Class A-V Certificates with respect to a Trust consisting primarily of a
pool of conventional, closed-end, fixed and adjustable rate residential
mortgage loans, sold and serviced by Aames Capital Corporation.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL CORPORATION OR THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR
RESPECTIVE AFFILIATES. THIS CERTIFICATE IS NOT A DEPOSIT, AND NEITHER THIS
CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York Corporation ("DTC"), to Issuer or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL in as much as the requested owner
hereof, Cede & Co. has an interest herein.
This certifies that CEDE & CO. is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the denomination of
this Certificate shown above by the Original Class A-V Certificate Principal
Balance) in a trust, the assets of which consist primarily of a pool of
conventional, closed-end, fixed and adjustable rate residential
A-2-1
138
mortgage loans (the "Mortgage Loans"), sold and serviced by Aames Capital
Corporation (in its capacity as seller, the "Seller" and in its capacity as
servicer, the "Servicer," which term includes any successor Servicer under the
Agreement referred to below). The Trust was created pursuant to a Pooling and
Servicing Agreement dated as specified above (the "Agreement") among the Seller
and Servicer, Bankers Trust Company of California, N.A., as trustee (the
"Trustee"), and Fairbanks Capital Corp., as back-up servicer (the "Back-up
Servicer"), a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement. This Certificate is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on
the 15th day of each month (or if any such day is not a Business Day, on the
Business Day immediately following such 15th day) (the "Distribution Date"),
commencing on the first Distribution Date specified above, to the Person in
whose name this Certificate is registered at the close of business on the
applicable Record Date, in an amount equal to the product of (a) the Percentage
Interest evidenced by this Certificate and (b) the sum of the applicable Accrued
Certificate Interest and principal distributable thereon, as more specifically
set forth in the Agreement.
Except as otherwise provided in the Agreement, distributions on this
Certificate will be made by the Trustee by check or money order mailed to the
Person entitled thereto at the address appearing in the Certificate Register, or
upon written request by the Certificateholder, by wire transfer to a bank
account maintained in the United States (in the case of any Holder of
Certificates entitled to such form of payment as provided in the Agreement) or
by such other means of payment as such Person and the Trustee shall agree.
Except as otherwise provided in the Agreement, the final distribution on this
Certificate will be made in the applicable manner described above, after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
maintained for that purpose and as specified in such notice.
This Certificate is one of a duly authorized issue of Certificates
designated as "Aames Mortgage Trust 1999-1 Mortgage Pass-Through Certificates,
Series 1999-1, Class A-V" (herein called the "Class A-V Certificates") and
representing a beneficial ownership interest, in each case subject to the
limitations set forth in the Agreement in, among other things, the Mortgage
Loans in the Adjustable Rate Group, such assets as shall from time to time be
identified or shall be required by the Agreement to be identified as deposited
in the Collection and/or Certificate Account or invested in Permitted
Investments in accordance with the Agreement, all rights under any insurance
policy covering a Mortgage Loan in the Adjustable Rate Group or the related
Mortgaged Property and property and any proceeds thereof which secured a
Mortgage Loan and which has been acquired by foreclosure, deed in lieu of
foreclosure or by a comparable conversion.
The Class A-V Certificates are limited in right of payment to certain
payments on and collections in respect of the Mortgage Loans in the Adjustable
Rate Group, as more specifically
A-2-2
139
set forth in the Agreement. The Holder of this Certificate, by its acceptance of
this Certificate, agrees that it will look solely to the funds on deposit in the
Certificate Account and, in certain limited circumstances, payments made under
the Certificate Insurance Policy in respect of any Insured Payment allocable to
Class A-V Certificateholders and that the Trustee in its individual capacity is
not personally liable to the Certificateholders for any amount payable under
this Certificate or the Agreement or, except as expressly provided in the
Agreement, subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Seller, the Servicer, and the rights of the Certificateholders under the
Agreement at any time by the Servicer and the Trustee with the consent of the
Certificate Insurer and the Holders of Certificates evidencing Voting Interests
represented by all Certificates aggregating not less than 51%. Any such consent
by the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates but with the prior written
consent of the Certificate Insurer.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registerable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in New York, New
York, accompanied by a written instrument of transfer in form satisfactory to
the Trustee duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class of authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class of authorized denominations
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Seller and the Trustee and any of their respective agents may treat
the Person in whose name this Certificate is registered as the owner hereof for
all purposes, and neither the
A-2-3
140
Seller, the Trustee nor any of their respective agents shall be affected by any
notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon payment to the Certificateholders, or
provision therefor, in accordance with the Agreement upon (a) the purchase by
the Holder of the Class R Certificates of all Mortgage Loans and all property
acquired in respect of any Mortgage Loan remaining in the Trust at a price
determined as provided in the Agreement, or (b) the later of the final payment
or other liquidation of the last Mortgage Loan remaining in the Trust or the
disposition of all property acquired upon foreclosure or by deed in lieu of
foreclosure of any Mortgage Loan. The exercise of the right of the Holder of the
Class R Certificates to purchase all the Mortgage Loans and property in respect
of Mortgage Loans will result in early retirement of the Certificates, the right
of the Holder of the Class R Certificates to purchase being subject to the Pool
Balance at the time of purchase being less than 10% of the sum of the Original
Pool Balance and the Prefunding Account Deposit.
This Certificate (except to the extent it represents a right to receive
Current WAC Excess and Supplemental Interest Amounts, as provided in the
Agreement) constitutes a "regular interest" in a "real estate mortgage
investment conduit" as those terms are defined in Section 860G(a)(1) and Section
860D, respectively, of the Internal Revenue Code of 1986, as amended.
This Certificate will not be entitled to any benefit under the Agreement
or be valid for any purpose unless manually countersigned for authenticating
purposes only by any authorized officer of the Trustee.
A-2-4
141
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: August 5, 1999
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A., as Trustee
By:
-------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION:
This is one of the Class A-V
Certificates referred to in
the within named Agreement
By:
-------------------------------------------
Authorized Officer of Bankers Trust Company
of California, N.A., as Trustee
A-2-5
142
EXHIBIT B-1
FORM OF CLASS C CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE EXTENT SET FORTH IN
THE AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND LAWS OR
IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM REGISTRATION UNDER
SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH
THE PROVISIONS OF SECTION 6.02(c) OF THE AGREEMENT REFERRED TO HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE REPRESENTS TO THE TRANSFEROR AND THE TRUSTEE THAT (1) SUCH TRANSFEREE
IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED, OR SECTION 4975 OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED (THE "CODE"), OR A PERSON ACTING ON BEHALF OF A PLAN OR
USING THE ASSETS OF A PLAN TO EFFECT SUCH PURCHASE AND IS NOT AN INSURANCE
COMPANY PURCHASING SUCH CERTIFICATE OR INTEREST FROM FUNDS IN A GENERAL ACCOUNT
OR SEPARATE ACCOUNT (WITH CERTAIN LIMITATIONS) OR (2) SUCH TRANSFEREE IS AN
INSURANCE COMPANY PURCHASING A CLASS C CERTIFICATE WITH FUNDS CONTAINED IN AN
"INSURANCE COMPANY GENERAL ACCOUNT" (AS DEFINED IN SECTION V(E) OF PROHIBITED
TRANSACTION CLASS EXEMPTION 95-60 ("PTCE 95-60")) SATISFYING SECTION III OF PTCE
95-60.
B-1-1
143
Date of Pooling and Servicing Percentage Interest: _____%
Agreement and Cut-off Date:
July 1, 1999 Certificate No.: C-1
First Distribution Date:
August 16, 1999
AAMES MORTGAGE TRUST 1999-1
MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1999-1, CLASS C
evidencing a percentage interest in the distributions allocable to the
Class C Certificate with respect to a Trust consisting primarily of a
pool of conventional, closed-end, fixed and adjustable rate residential
mortgage loans sold and serviced by Aames Capital Corporation.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL CORPORATION OR THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR
RESPECTIVE AFFILIATES. THIS CERTIFICATE IS NOT A DEPOSIT, AND NEITHER THIS
CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
This certifies that Aames Capital Corporation is the registered owner of
the Percentage Interest specified on the face of this Class C Certificate. This
Class C Certificate is one series of Certificates issued by a trust, the assets
of which consist primarily of a pool of conventional, closed-end, fixed rate and
adjustable rate residential mortgage loans (the "Mortgage Loans"), sold and
serviced by Aames Capital Corporation (in its capacity as seller, the "Seller"
and in its capacity as servicer, the "Servicer," which term includes any
successor Servicer under the Agreement referred to below). The Trust was created
pursuant to a Pooling and Servicing Agreement dated as specified above (the
"Agreement") between the Seller and Servicer, Bankers Trust Company of
California, N.A., as trustee (the "Trustee"), and Fairbanks Capital Corp., as
back-up servicer (the "Back-up Servicer"), a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned to such terms in
the Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
No transfer of a Class C Certificate will be made unless such transfer
is exempt from the registration requirements of the Securities Act of 1933, as
amended (the "Act"), and any applicable state securities laws or is made in
accordance with such Act and laws. In the event that such a transfer is desired
to be made by the holder hereof, (i) the transferee will be required to execute
an investment letter in the form described by the Agreement and (ii) if such
transfer is
B-1-2
144
to be made, the Trustee shall require the Holder to deliver an Opinion of
Counsel acceptable to and in form and substance satisfactory to the Trustee and
the Seller that such transfer is exempt (describing the applicable exemption and
the basis therefor) from or is being made pursuant to the registration
requirements of the Act and of any applicable state securities laws. The Holder
hereof desiring to effect such transfer shall, and does hereby agree to,
indemnify the Trustee, the Seller and the Servicer against any liability that
may result if the transfer is not so exempt or is not made in accordance with
such federal and state laws. In connection with any such transfer, the Trustee
will also require an affidavit, in the form as described in the Agreement,
stating the matters set forth on the legend of this Class C Certificate.
The Class C Certificates are entitled to the Class C Distribution Amount
on each Distribution Date. The Class C Certificates are not entitled to any
payments on and collections in respect of the Mortgage Loans on any Distribution
Date until all other distributions on the Offered Certificates for such
Distribution Date and reimbursements of certain advances have been made in
accordance with the Agreement. The Holder of this Certificate, by its acceptance
of this Certificate, agrees that the Trustee in its individual capacity is not
personally liable to the Certificateholders for any amount payable under this
Certificate or the Agreement or, except as expressly provided in the Agreement,
subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Seller, the Servicer, and the rights of the Certificateholders under the
Agreement at any time by the Seller, the Servicer and the Trustee with the
consent of the Certificate Insurer and the Holders of Certificates evidencing
Voting Interests represented by all Certificates aggregating not less than 51%.
The Class C Certificate will have no Voting Interests. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates but with the prior written
consent of the Certificate Insurer.
The Certificates are issuable only as registered Certificates without
coupons in the Percentage Interest specified in the Agreement. As provided in
the Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for a new Certificate evidencing the same aggregate Percentage
Interest, as requested by the Holder surrendering the same.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registerable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in New York, New
York, accompanied by a written instrument of transfer in form satisfactory to
the Servicer, the Trustee, and the Certificate Registrar duly executed by the
Holder hereof or such Holder's attorney duly authorized in writing together with
an affidavit in the form as described in
B-1-3
145
the Agreement, and thereupon a new Certificate evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Seller and the Trustee and any of their respective agents may treat
the Person in whose name this Certificate is registered as the owner hereof for
all purposes, and neither the Seller, the Trustee nor any of their respective
agents shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon payment to the Certificateholders, or
provision therefor, in accordance with the Agreement upon (a) the purchase by
the Holder of the Class R Certificates of all Mortgage Loans and all property
acquired in respect of any Mortgage Loan remaining in the Trust at a price
determined as provided in the Agreement, or (b) the later of the final payment
or other liquidation of the last Mortgage Loan remaining in the Trust or the
disposition of all property acquired upon foreclosure or by deed in lieu of
foreclosure of any Mortgage Loan. The exercise of the right of the Holder of the
Class R Certificates to purchase all the Mortgage Loans and property in respect
of all Mortgage Loans in the Trust will result in early retirement of the
Certificates, the right of the Holder of the Class R Certificates to purchase
being subject to the Pool Balance at the time of purchase being less than 10% of
the sum of the Original Pool Balance and the Prefunding Account Deposit.
This Certificate constitutes a "regular interest" in a "real estate
mortgage investment conduit" as those terms are defined in Section 860G(a)(1)
and Section 860D, respectively, of the Internal Revenue Code of 1986, as
amended.
This Certificate will not be entitled to any benefit under the Agreement
or be valid for any purpose unless manually countersigned for authenticating
purposes only by any authorized officer of the Trustee.
B-1-4
146
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: August 5, 1999
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A., as Trustee
By:
-------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION:
This is the Class C Certificate
referred to in the within named
Agreement
By:
-------------------------------------------
Authorized Officer of Bankers Trust Company
of California, N.A., as Trustee
B-1-5
147
EXHIBIT B-2
FORM OF CLASS P CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE EXTENT SET FORTH IN
THE AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND LAWS OR
IS SOLD OR TRANSFERRED IN TRANSACTIONS THAT ARE EXEMPT FROM REGISTRATION UNDER
SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH
THE PROVISIONS OF SECTION 6.02(c) OF THE AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE DOES NOT BEAR INTEREST AND WILL NOT RECEIVE ANY DISTRIBUTIONS
EXCEPT AS PROVIDED HEREIN.
B-2-1
148
Date of Pooling and Servicing Percentage Interest: 100%
Agreement and Cut-off Date:
July 1, 1999 Certificate No.: P-1
First Distribution Date:
August 16, 1999
AAMES MORTGAGE TRUST 1999-1
MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1999-1, CLASS P
evidencing a percentage interest in the distributions allocable to the
Class P Certificate with respect to a Trust consisting primarily of a
pool of conventional, closed-end, fixed and adjustable rate residential
mortgage loans sold and serviced by Aames Capital Corporation.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL CORPORATION OR THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR
RESPECTIVE AFFILIATES. THIS CERTIFICATE IS NOT A DEPOSIT, AND NEITHER THIS
CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
This certifies that Aames Capital Corporation is the registered owner of
the Percentage Interest specified on the face of this Class P Certificate. This
Class P Certificate is one series of Certificates issued by a trust, the assets
of which consist primarily of a pool of conventional, closed-end, fixed rate and
adjustable rate residential mortgage loans (the "Mortgage Loans"), sold and
serviced by Aames Capital Corporation (in its capacity as seller, the "Seller"
and in its capacity as servicer, the "Servicer," which term includes any
successor Servicer under the Agreement referred to below). The Trust was created
pursuant to a Pooling and Servicing Agreement dated as specified above (the
"Agreement") between the Seller and Servicer, Bankers Trust Company of
California, N.A., as trustee (the "Trustee"), and Fairbanks Capital Corp., as
back-up servicer (the "Back-up Servicer"), a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned to such terms in
the Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
No transfer of a Class P Certificate will be made unless such transfer
is exempt from the registration requirements of the Securities Act of 1933, as
amended (the "Act"), and any applicable state securities laws or is made in
accordance with such Act and laws. In the event that such a transfer is desired
to be made by the holder hereof, (i) the transferee will be required
B-2-2
149
to execute an investment letter in the form described by the Agreement and (ii)
if such transfer is to be made, the Trustee shall require the Holder to deliver
an Opinion of Counsel acceptable to and in form and substance satisfactory to
the Trustee and the Seller that such transfer is exempt (describing the
applicable exemption and the basis therefor) from or is being made pursuant to
the registration requirements of the Act and of any applicable state securities
laws. The Holder hereof desiring to effect such transfer shall, and does hereby
agree to, indemnify the Trustee, the Seller and the Servicer against any
liability that may result if the transfer is not so exempt or is not made in
accordance with such federal and state laws. In connection with any such
transfer, the Trustee will also require an affidavit, in the form as described
in the Agreement, stating the matters set forth on the legend of this Class P
Certificate.
The Class P Certificates do not have a pass-through rate and will be
entitled to distributions only to the extent set forth in the Agreement. The
Holder of this Certificate, by its acceptance of this Certificate, agrees that
the Trustee in its individual capacity is not personally liable to the
Certificateholders for any amount payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Seller, the Servicer, and the rights of the Certificateholders under the
Agreement at any time by the Seller, the Servicer and the Trustee with the
consent of the Certificate Insurer and the Holders of Certificates evidencing
Voting Interests represented by all Certificates aggregating not less than 51%.
The Class P Certificate will have no Voting Interests. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates but with the prior written
consent of the Certificate Insurer.
The Certificates are issuable only as registered Certificates without
coupons in the Percentage Interest specified in the Agreement. As provided in
the Agreement and subject to certain limitations therein set forth, each
Certificate is exchangeable for a new Certificate evidencing the same aggregate
Percentage Interest, as requested by the Holder surrendering the same.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registerable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in New York, New
York, accompanied by a written instrument of transfer in form satisfactory to
the Servicer, the Trustee, and the Certificate Registrar duly executed by the
Holder hereof or such Holder's attorney duly authorized in writing together with
an affidavit in the form as described in the Agreement, and thereupon a new
Certificate evidencing the same aggregate Percentage Interest will be issued to
the designated transferee or transferees.
▇-▇-▇
▇▇▇
▇▇ service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Seller and the Trustee and any of their respective agents may treat
the Person in whose name this Certificate is registered as the owner hereof for
all purposes, and neither the Seller, the Trustee nor any of their respective
agents shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon payment to the Certificateholders, or
provision therefor, in accordance with the Agreement upon (a) the purchase by
the Holder of the Class R Certificates of all Mortgage Loans and all property
acquired in respect of any Mortgage Loan remaining in the Trust at a price
determined as provided in the Agreement, or (b) the later of the final payment
or other liquidation of the last Mortgage Loan remaining in the Trust or the
disposition of all property acquired upon foreclosure or by deed in lieu of
foreclosure of any Mortgage Loan. The exercise of the right of the Holder of the
Class R Certificates to purchase all the Mortgage Loans and property in respect
of all Mortgage Loans in the Trust will result in early retirement of the
Certificates, the right of the Holder of the Class R Certificates to purchase
being subject to the Pool Balance at the time of purchase being less than 10% of
the sum of the Original Pool Balance and the Prefunding Account Deposit.
This Certificate constitutes a "regular interest" in a "real estate
mortgage investment conduit" as those terms are defined in Section 860G(a)(1)
and Section 860D, respectively, of the Internal Revenue Code of 1986, as
amended.
This Certificate will not be entitled to any benefit under the Agreement
or be valid for any purpose unless manually countersigned for authenticating
purposes only by any authorized officer of the Trustee.
B-2-4
151
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: August 5, 1999
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A., as Trustee
By:
-------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION:
This is the Class P Certificate
referred to in the within named
Agreement
By:
-------------------------------------------
Authorized Officer of Bankers Trust Company
of California, N.A., as Trustee
B-2-5
152
EXHIBIT B-3
FORM OF CLASS R CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE EXTENT SET
FORTH IN THE AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND
LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM
REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 6.02(b) OF THE AGREEMENT REFERRED TO
HEREIN.
FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
"RESIDUAL INTEREST" IN EACH OF TWO "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G(A)(2) AND 860D OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"). A TRANSFEREE OF THIS
CERTIFICATE, BY ACCEPTANCE HEREOF, IS DEEMED TO HAVE ACCEPTED THIS CERTIFICATE
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFERABILITY AS SET FORTH IN SECTION
6.02(b) OF THE POOLING AND SERVICING AGREEMENT, AND SHALL BE REQUIRED TO FURNISH
AN AFFIDAVIT TO THE TRANSFEROR AND THE TRUSTEE TO THE EFFECT THAT (I) IT IS NOT
(i) A DISQUALIFIED ORGANIZATION, AS SUCH TERM IS DEFINED IN CODE SECTION
860E(e)(5), OR AN AGENT (INCLUDING A BROKER, NOMINEE OR OTHER MIDDLEMAN) FOR
SUCH DISQUALIFIED ORGANIZATION, (ii) AN ENTITY THAT HOLDS REMIC RESIDUAL
SECURITIES AS NOMINEE TO FACILITATE THE CLEARANCE AND SETTLEMENT OF SUCH
SECURITIES THROUGH BOOK-ENTRY CHANGES IN ACCOUNTS OF PARTICIPATING ORGANIZATIONS
(A "BOOK-ENTRY NOMINEE"), (iii) AN INDIVIDUAL, CORPORATION, PARTNERSHIP OR OTHER
PERSON UNLESS SUCH TRANSFEREE (A) IS NOT A FOREIGN PERSON OR (B) IS A FOREIGN
PERSON THAT WILL HOLD SUCH CLASS R CERTIFICATE IN CONNECTION WITH THE CONDUCT OF
A TRADE OR BUSINESS WITHIN THE UNITED STATES AND HAS FURNISHED THE TRANSFEROR
AND THE TRUSTEE WITH AN EFFECTIVE INTERNAL REVENUE SERVICE FORM 4224 OR (C) IS A
FOREIGN PERSON THAT HAS DELIVERED TO BOTH THE TRANSFEROR AND THE TRUSTEE AN
OPINION OF A NATIONALLY RECOGNIZED TAX COUNSEL TO THE EFFECT THAT THE TRANSFER
OF THE CLASS R CERTIFICATE TO IT IS IN ACCORDANCE WITH THE REQUIREMENTS OF THE
CODE AND THE REGULATIONS PROMULGATED THEREUNDER AND THAT SUCH TRANSFER OF THE
CLASS R CERTIFICATE WILL NOT BE DISREGARDED FOR FEDERAL INCOME TAX PURPOSES (ANY
SUCH PERSON WHO IS NOT COVERED BY
▇-▇-▇
▇▇▇
▇▇▇▇▇▇ (▇), (▇) OR (C) ABOVE BEING REFERRED TO HEREIN AS A "NON-PERMITTED
FOREIGN HOLDER") OR (iv) ANY PERSON WHICH IS AN EMPLOYEE BENEFIT PLAN WITHIN THE
MEANING OF SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974,
AS AMENDED, OR ANY PERSON WHICH IS AN INDIVIDUAL RETIREMENT ACCOUNT OR EMPLOYEE
BENEFIT PLAN, TRUST OR ACCOUNT SUBJECT TO SECTION 4975 OF THE CODE (AN "ERISA
PLAN") OR AN ENTITY, INCLUDING AN INSURANCE COMPANY SEPARATE ACCOUNT OR GENERAL
ACCOUNT, WHOSE UNDERLYING ASSETS INCLUDE ERISA PLAN ASSETS BY REASON OF AN ERISA
PLAN'S INVESTMENT IN THE ENTITY, OR ANY PERSON INVESTING THE ASSETS OF AN ERISA
PLAN OR SUCH AN ENTITY, WHETHER AS NOMINEE, TRUSTEE, AGENT OR OTHERWISE, (II) IT
HAS NO INTENT OR PURPOSE TO IMPEDE THE ASSESSMENT OR COLLECTION OF ANY FEDERAL,
STATE OR LOCAL INCOME TAXES LEGALLY REQUIRED TO BE PAID WITH RESPECT TO THE
CLASS R CERTIFICATE, AND (III) IT HAS AGREED TO SUCH AMENDMENTS TO FURTHER
EFFECTUATE THE RESTRICTIONS ON TRANSFERS TO DISQUALIFIED ORGANIZATIONS, AGENTS
THEREOF, BOOK-ENTRY NOMINEES, NON-PERMITTED FOREIGN HOLDERS OR ERISA PLANS. THE
TERM "FOREIGN PERSON" MEANS A PERSON WHO IS NOT ONE OF THE FOLLOWING: A CITIZEN
OR RESIDENT OF THE UNITED STATES, A CORPORATION OR PARTNERSHIP (OR OTHER ENTITY
CLASSIFIED AS A CORPORATION OR PARTNERSHIP FOR U.S. FEDERAL INCOME TAX PURPOSES)
CREATED OR ORGANIZED IN OR UNDER THE LAWS OF THE UNITED STATES OR ANY POLITICAL
SUBDIVISION THEREOF, AN ESTATE THAT IS SUBJECT TO U.S. FEDERAL INCOME TAX
REGARDLESS OF THE SOURCE OF ITS INCOME, OR TRUST IF (i) A COURT WITHIN THE
UNITED STATES IS ABLE TO EXERCISE PRIMARY SUPERVISION OVER THE ADMINISTRATION OF
THE TRUST, AND (ii) ONE OR MORE UNITED STATES PERSONS HAVE THE AUTHORITY TO
CONTROL ALL SUBSTANTIAL DECISIONS OF THE TRUST.
THE HOLDER OF THIS CLASS R CERTIFICATE, BY ACCEPTANCE HEREOF, IS DEEMED
TO HAVE AGREED TO THE DESIGNATION OF THE SERVICER AS ITS AGENT TO ACT AS "TAX
MATTERS PERSON" TO PERFORM THE FUNCTIONS OF A "TAX MATTERS PARTNER" FOR PURPOSES
OF SUBCHAPTER C OF CHAPTER 63 OF SUBTITLE F OF THE CODE, OR, IF SO REQUESTED BY
THE SERVICER, TO ACT AS TAX MATTERS PERSON.
B-3-2
154
Date of Pooling and Servicing Percentage Interest: 100%
Agreement and Cut-off Date:
July 1, 1999 Certificate No.: 1
First Distribution Date:
August 16, 1999
AAMES MORTGAGE TRUST 1999-1
MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1999-1, CLASS R
evidencing a percentage interest in the distributions allocable to the
Class R Certificate with respect to a Trust consisting primarily of a
pool of conventional, closed-end, fixed rate and adjustable rate
residential mortgage loans sold and serviced by Aames Capital
Corporation.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL CORPORATION OR THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR
RESPECTIVE AFFILIATES. THIS CERTIFICATE IS NOT A DEPOSIT, AND NEITHER THIS
CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
This certifies that Aames Capital Corporation is the registered owner of
the Percentage Interest specified on the face of this Class R Certificate. This
Class R Certificate is one series of Certificates issued by a trust, the assets
of which consist primarily of a pool of conventional, closed-end, fixed rate and
adjustable rate residential mortgage loans (the "Mortgage Loans"), sold and
serviced by Aames Capital Corporation (in its capacity as seller, the "Seller"
and in its capacity as servicer, the "Servicer," which term includes any
successor Servicer under the Agreement referred to below). The Trust was created
pursuant to a Pooling and Servicing Agreement dated as specified above (the
"Agreement") among the Seller and Servicer, Bankers Trust Company of California,
N.A., as trustee (the "Trustee"), and Fairbanks Capital Corp., as back-up
servicer (the "Back-up Servicer"), a summary of certain of the pertinent
provisions of which is set forth hereafter. This Class R Certificate represents
both the Class R-I and Class R-II Certificates issued pursuant to the Agreement.
To the extent not defined herein, the capitalized terms used herein have the
meanings assigned to such terms in the Agreement. This Certificate is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
No transfer of a Class R Certificate will be made unless such transfer
is exempt from the registration requirements of the Securities Act of 1933, as
amended (the "Act"), and any applicable state securities laws or is made in
accordance with such Act and laws. In the event that such a transfer is desired
to be made by the holder hereof, (i) the transferee will be required
B-3-3
155
to execute an investment letter in the form described by the Agreement and (ii)
if such transfer is to be made, the Trustee shall require the Holder to deliver
an Opinion of Counsel acceptable to and in form and substance satisfactory to
the Trustee and the Seller that such transfer is exempt (describing the
applicable exemption and the basis therefor) from or is being made pursuant to
the registration requirements of the Act and of any applicable state securities
laws. The Holder hereof desiring to effect such transfer shall, and does hereby
agree to, indemnify the Trustee, the Seller and the Servicer against any
liability that may result if the transfer is not so exempt or is not made in
accordance with such federal and state laws. In connection with any such
transfer, the Trustee will also require an affidavit, in the form as described
in the Agreement, stating the matters set forth on the legend of this Class R
Certificate.
The Holder of the Class R Certificate, by acceptance hereof, is deemed
to have designated the Servicer, if permitted by the Code and applicable law, to
act as the "tax matters person", to perform the functions of a "tax matters
partner" for purposes of Subchapter C of Chapter 63 of Subtitle F of the Code
and if not so permitted, the Holder of the Class R Certificate, is deemed to
have agreed to act as such "tax matters person".
The Class R Certificate is not entitled to any payments on and
collections in respect of the Mortgage Loans on any Distribution Date until all
other distributions for such Distribution Date have been made in accordance with
the Agreement. The Holder of this Certificate, by its acceptance of this
Certificate, agrees that the Trustee in its individual capacity is not
personally liable to the Certificateholders for any amount payable under this
Certificate or the Agreement or, except as expressly provided in the Agreement,
subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Seller, the Servicer, and the rights of the Certificateholders under the
Agreement at any time by the Seller, the Servicer, and the Trustee with the
consent of the Certificate Insurer and the Holders of Certificates evidencing
Voting Interests represented by all Certificates aggregating not less than 51%.
The Class R Certificate will have no Voting Interests. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of the Certificates but with the prior written consent of
the Certificate Insurer.
This Certificate is issuable only as a registered Certificate without
coupons in the Percentage Interest specified in the Agreement. As provided in
the Agreement and subject to certain limitations therein set forth, the
Certificate is exchangeable for a new Certificate evidencing the same aggregate
Percentage Interest, as requested by the Holder surrendering the same.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender
B-3-4
156
of this Certificate for registration of transfer at the office or agency
maintained by the Trustee in New York, New York, accompanied by a written
instrument of transfer in form satisfactory to the Servicer, the Trustee, and
the Certificate Registrar duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing together with an affidavit in the form as
described in the Agreement, and thereupon a new Certificate evidencing the same
aggregate Percentage Interest will be issued to the designated transferee or
transferees.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Seller and the Trustee and any of their respective agents may treat
the Person in whose name this Certificate is registered as the owner hereof for
all purposes, and neither the Seller, the Trustee nor any of their respective
agents shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon payment to the Certificateholders, or
provision therefor, in accordance with the Agreement upon (a) the purchase by
the Holder of the Class R Certificates of all Mortgage Loans and all property
acquired in respect of any Mortgage Loan remaining in the Trust at a price
determined as provided in the Agreement, or (b) the later of the final payment
or other liquidation of the last Mortgage Loan remaining in the Trust or the
disposition of all property acquired upon foreclosure or by deed in lieu of
foreclosure of any Mortgage Loan. The exercise of the right of the Holder of the
Class R Certificates to purchase all the Mortgage Loans and property in respect
of Mortgage Loans will result in early retirement of the Certificates, the right
of the Servicer to purchase being subject to the Pool Balance at the time of
purchase being less than 10% of the sum of the Original Pool Balance and the
Prefunding Account Deposit.
This Certificate will not be entitled to any benefit under the Agreement
or be valid for any purpose unless manually countersigned for authenticating
purposes only by any authorized officer of the Trustee.
B-3-5
157
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: August 5, 1999
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A., as Trustee
By:
-------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION:
This is the Class R Certificate
referred to in the within named
Agreement
By:
-------------------------------------------
Authorized Officer of Bankers Trust Company
of California, N.A., as Trustee
B-3-6
158
EXHIBIT C
FORM OF SUBSEQUENT TRANSFER AGREEMENT
Pursuant to this Subsequent Transfer Agreement, dated as of [ , 1999] by
and between Aames Capital Corporation (the "Seller") and Bankers Trust Company
of California, N.A., in its capacity as trustee for Aames Mortgage Trust 1999-1
(the "Trustee"), and pursuant to that certain Pooling and Servicing Agreement,
dated as of July 1, 1999 (the "Pooling and Servicing Agreement"), by and among
the Seller, as seller and servicer, the Trustee, as trustee, and Fairbanks
Capital Corp., as back-up servicer, the Seller and the Trustee agree to the sale
by the Seller and the purchase by the Trustee of additional mortgage loans (the
"Subsequent Mortgage Loans") as listed on the Mortgage Loan Schedule attached
hereto as Schedule A.
Capitalized terms used and not defined herein shall have their
respective meanings as set forth in the Pooling and Servicing Agreement.
Section 1. Purchase and Conveyance of Subsequent Mortgage Loans.
(a) The Seller does hereby sell, transfer, assign, set over
and convey to the Trustee:
(i) all right, title and interest of such Seller in and to the
Subsequent Mortgage Loans owned by it and listed on
Schedule A hereto, including without limitation, the
related Mortgages, Mortgage Files and Mortgage Notes, and
all payments on, and proceeds with respect to, such
Subsequent Mortgage Loans received on and after the
Subsequent Cut-off Date except such payments and proceeds
as the Servicer is entitled to retain pursuant to the
express provisions of the Pooling and Servicing Agreement;
(ii) all right, title and interest of such Seller in the
Mortgages on the properties securing the Subsequent
Mortgage Loans, including any related Mortgaged Property
acquired by or on behalf of the Trust by foreclosure or
deed in lieu of foreclosure or otherwise;
(iii) all right, title and interest of such Seller in and to any
rights in or proceeds from any insurance policies
(including title insurance policies) covering the
Subsequent Mortgage Loans, the related Mortgaged
Properties or Mortgagors and any amounts recovered from
third parties in respect of any Subsequent Mortgage Loans
that became Liquidated Mortgage Loans; and
(iv) the proceeds of all of the foregoing.
(b) With respect to each Subsequent Mortgage Loan, the Seller,
contemporaneously with the delivery of this Agreement, has delivered or caused
to be delivered to the Trustee, each item set forth in Section 2.01 of the
Pooling and Servicing Agreement. The transfer to the Trustee by the Seller of
the Subsequent Mortgage Loans identified on the Schedule A hereto
C-1
159
shall be absolute and is intended by the Seller, the Servicer, the Trustee and
the Certificateholders to constitute and to be treated as a sale by the Seller.
(c) The expenses and costs relating to the delivery of the Subsequent
Mortgage Loans, this Agreement and the Pooling and Servicing Agreement shall be
borne by the Seller.
(d) Additional terms of the sale, including the purchase price, are set
forth on Attachment A hereto.
Section 2. Representations and Warranties; Conditions Precedent.
(a) The Seller hereby affirms the representations and warranties set
forth in Section 2.05 of the Pooling and Servicing Agreement that relate to the
Subsequent Mortgage Loans as of the date hereof. The Seller hereby confirms that
each of the conditions set forth in Section 2.02 of the Pooling and Servicing
Agreement (except such conditions that are required to be satisfied as of the
end of the Funding Period) are satisfied as of the date hereof.
(b) All terms and conditions of the Pooling and Servicing Agreement are
hereby ratified and confirmed; provided however, that in the event of any
conflict the provisions of this Agreement shall control over the conflicting
provisions of the Pooling and Servicing Agreement.
Section 3. Recordation of Agreement.
This Agreement is subject to recordation in all appropriate public
offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the Mortgaged Properties are situated, and
in any other appropriate public recording office or elsewhere, such recordation
to be effected by the Servicer and at its expense in the event such recordation
materially and beneficially affects the interests of Certificateholders.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
Section 4. Governing Law.
This Agreement shall be construed in accordance with the laws of the
State of California (without regard to conflict of laws principles and the
application of the laws of any other jurisdiction), and the obligations, rights
and remedies of the parties hereunder shall be determined in accordance with
such laws.
C-2
160
Section 5. Successors and Assigns.
This Agreement shall inure to the benefit of and be binding upon the
Seller and the Purchaser and their respective successors and assigns. The
Certificate Insurer is a third party beneficiary hereto and shall be entitled to
enforce the provisions hereof as if a party hereto.
C-3
161
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers, all as of the day and year first
above written.
AAMES CAPITAL CORPORATION,
as Seller
By:
----------------------------
Name:
Title:
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A., as Trustee
for Aames Mortgage Trust 1999-1
By:
----------------------------
Name:
Title:
C-4
162
SCHEDULE A
SUBSEQUENT MORTGAGE LOAN SCHEDULE
ATTACHMENT A
Subsequent Transfer Date:
Subsequent Cut-off Date:
Aggregate of the Principal Balances of
Subsequent Mortgage Loans:
Aggregate of the Purchase Prices of
Subsequent Mortgage Loans:
Number of Subsequent Mortgage Loans:
C-5
163
EXHIBIT D
CERTIFICATE INSURANCE POLICY
[On file with the Sponsor and the Trustee]
D-1
164
EXHIBIT E
MORTGAGE LOAN SCHEDULE
[On file with Sponsor and Trustee]
E-1
165
EXHIBIT F
FORM OF ANNUAL STATEMENT AS TO COMPLIANCE
The undersigned,_________________ , ________________ of Aames Capital
Corporation (the "Servicer"), in its capacity as Servicer under that certain
Pooling and Servicing Agreement dated as of July 1, 1999 (the "Pooling and
Servicing Agreement") among Aames Capital Corporation, as seller and servicer,
Bankers Trust Company of California, N.A., as trustee, and Fairbanks Capital
Corp., as back-up servicer, does hereby certify pursuant to Section 3.09 of the
Pooling and Servicing Agreement that as of the ___ day of ____________, 199_:
(a) a review of the activities of the Servicer for the year
ended December 31, 199_ and of its performance under the
Pooling and Servicing Agreement has been made under my
supervision, and
(b) to the best of my knowledge, based on such review, the
Servicer has fulfilled all of its material obligations
under the Pooling and Servicing Agreement throughout such
year.
IN WITNESS WHEREOF, I have hereunto signed my name as of this ____day of
___________, 199_.
----------------------------
Name:
Title:
F-1
166
EXHIBIT G
FORM OF AFFIDAVIT PURSUANT TO SECTION 860E(e)(4)
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
STATE OF )
----------------------------
) ss.:
COUNTY OF )
----------------------------
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That he is [Title of Officer] of [Name of Investor] (the "Investor"),
a [savings institution] [corporation] duly organized and existing under the laws
of [the State of ] [the United States], on behalf of which he makes this
affidavit. Capitalized terms used but not defined herein shall have the meanings
ascribed to such terms in the Agreement as defined in the Class R Certificate.
2. That the Investor's Taxpayer Identification Number is [
].
3. That the Investor is not a "Disqualified Organization" within the
meaning of Section 860E(e)(5) of the Internal Revenue Code of 1986, as amended
(the "Code"), or an agent of a Disqualified Organization (including a broker,
nominee or middleman) and will not be a "Disqualified Organization" as of [date
of transfer], and that the Investor is not acquiring a Class R Certificate of
the Aames Mortgage Trust 1999-1 Mortgage Pass-Through Certificates, Series
1999-1 (the "Class R Certificate") for the account of, or as an agent (including
a broker, nominee or middleman) of any entity as to which the Investor has not
received an affidavit substantially in the form of this affidavit. For these
purposes, a "Disqualified Organization" means the United States, any state or
political subdivision thereof, any foreign government, any international
organization, any agency or instrumentality of any of the foregoing (other than
an instrumentality if all of its activities are subject to tax and a majority of
its board of directors is not selected by such governmental entity), any
cooperative organization furnishing electrical energy or providing telephone
service to persons in rural areas as described in Code Section 1381(a)(2)(c), or
any organization (other than a farmers' cooperative described in Code Section
521) that is exempt from federal income tax unless such organization is subject
to the tax on unrelated business income imposed by Code Section 511.
4. That the Investor is not (i) an entity that holds Class R
Certificates as nominee to facilitate the clearance and settlement of such Class
R Certificates through electronic book-entry changes in accounts of
participating organizations (a "Book-Entry Nominee"), (ii) an individual,
corporation, partnership or other person unless such transferee (A) is not a
Foreign Person or (B) is a Foreign Person that will hold such Class R
Certificate in connection with the conduct of a trade or business within the
United States and has furnished the transferor and the Trustee with an effective
Internal Revenue Service Form 4224 or (C) is a Foreign Person that has delivered
to
G-1
167
both the transferor and the Trustee an opinion of a nationally recognized tax
counsel to the effect that the transfer of a Class R Certificate to it is in
accordance with the requirements of the Code and the regulations promulgated
thereunder and that such transfer of a Class R Certificate will not be
disregarded for federal income tax purposes (any such person who is not covered
by clause (A), (B) or (C) above being referred to herein as a "Non-permitted
Foreign Holder") or (iii) a Person that is an employee benefit plan within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended, or any Person that is an individual retirement account or employee
benefit plan, trust or account subject to Section 4975 of the Code (an "ERISA
Plan") or an entity, including an insurance company separate account or general
account, whose underlying assets include ERISA Plan assets by reason of an ERISA
Plan's investment in the entity or a Person investing the assets of an ERISA
Plan or such an entity, whether as nominee, trustee, agent or otherwise (an
"ERISA Prohibited Holder").
5. That the Investor agrees to any such amendments of the Pooling and
Servicing Agreement as may be required to further effectuate the restrictions on
transfer of the Class R Certificate to such a Disqualified Organization or a
Book-Entry Nominee or a Non-permitted Foreign Holder or an ERISA Prohibited
Holder.
6. That the Investor has no intent or purpose to impede the assessment
or collection of any federal, state or local income taxes legally required to be
paid with respect to the Class R Certificate and will not transfer the Class R
Certificate to any Person that it has reason to believe has the intention to
impede the assessment or collection of such taxes and that the Investor
understands that, as the holder of the Class R Certificate, it may incur tax
liabilities in excess of any cash flows generated by the Class R Certificates.
7. The Investor has been advised of, understands and acknowledges that
under the Code, a substantial tax would be imposed on a "pass-through entity"
holding a Class R Certificate if at any time during the taxable year of the
pass-through entity a Person that is a Disqualified Organization is the record
holder of an interest in such entity. (For this purpose, a "pass-through entity"
includes a regulated investment company, a real estate investment trust or
common trust fund, a partnership, trust or estate, and certain cooperatives and,
except as may be provided in Treasury Regulations, persons holding interests in
pass through entities as a nominee for another Person). A pass-through entity
shall be relieved of liability for the tax if it had received from such Person
an affidavit (in substantially the same form as this affidavit) that such Person
is not a Disqualified Organization and the entity had no actual knowledge that
the affidavit was false. The Investor will advise the Trustee and the Servicer
if it becomes a pass-through entity or if it is a pass-through entity, if any of
the interest holders are or become Disqualified Persons.
8. The Investor has reviewed the provisions of Section 6.02 of the
Agreement and understands the legal consequences of the acquisition of a Class R
Certificate including, without limitation, the restrictions on subsequent
transfers. The Investor expressly agrees to be bound by and to abide by the
provisions of Section 6.02 of the Agreement, as such Section may be amended from
time to time.
G-2
168
9. The Investor agrees to require an affidavit substantially similar to
this affidavit from any Person to whom the Investor attempts to transfer its
Class R Certificate including any Person with respect to which the Investor is
then acting as nominee, trustee or agent, and in connection with any transfer by
a Person for whom the Investor is acting as nominee, trustee or agent, and the
Investor will not transfer its Class R Certificate to be transferred to any
Person that the Investor knows is a Disqualified Organization.
10. The Investor is acquiring the Class R Certificate either (i) for its
own account or (ii) as nominee, trustee or agent for another Person and has
attached hereto an affidavit from such Person in substantially the same form as
this affidavit. If clause (ii) of the preceding sentence is applicable, such
Person is not a Disqualified Organization and the Investor has no knowledge that
any such affidavit from such Person is false.
G-3
169
IN WITNESS WHEREOF, the Investor has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
[Title of Officer] and its corporate seal to be hereunto attached, attested by
its [Assistant] Secretary, this ____ day of _________, 199_.
[NAME OF INVESTOR]
By:
-------------------------
Name:
Title:
Personally appeared before me the above-named [Name of Officer], known
or proved to me to be the same person who executed the foregoing instrument and
to be the [Title of Officer] of the Investor, and acknowledged to me that he
executed the same as his free act and deed and the free act and deed of the
Investor.
Subscribed and sworn before me this _____day of ___________, 199_.
NOTARY PUBLIC
COUNTY OF
---------------------------
STATE OF
---------------------------
My Commission expires the day of , 19 .
-------- ---------- ---
G-4
170
EXHIBIT H
FORM OF NOTICE REGARDING PAYMENT IN FULL
OF PRINCIPAL BALANCE OF MORTGAGE LOAN
Bankers Trust Company of California, N.A.,
as Trustee
▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration
Re: Aames Mortgage Trust 1999-1
Mortgage Pass-Through Certificates, Series 1999-1
Ladies and Gentlemen:
Reference is made to Section 3.07 of the Pooling and Servicing Agreement
dated as of July 1, 1999 (the "Pooling and Servicing Agreement") among Aames
Capital Corporation, as Seller and Servicer, Bankers Trust Company of
California, N.A., as Trustee, and Fairbanks Capital Corp., as Back-up Servicer.
All capitalized terms used but not defined herein shall have the meanings given
to such terms in the Pooling and Servicing Agreement.
The undersigned hereby certifies that the Principal Balance of the
Mortgage Loan(s) listed on Schedule A annexed hereto has been paid in full and
that all amounts received in connection with the payment of such Mortgage
Loan(s) that were required to be deposited or credited in the Certificate
Account pursuant to Section 3.02 of the Pooling and Servicing Agreement have
been so deposited or credited.
The undersigned further certifies that he is a Servicing Officer of the
Servicer holding the office set forth beneath his signature and that he is duly
authorized to execute this certificate on behalf of the Servicer.
AAMES CAPITAL CORPORATION
Date: By:
-------------------------- -------------------------
Name:
Title:
H-1
171
EXHIBIT I
FORM OF LIQUIDATION REPORT
1. Type of Liquidation (REO disposition/charge-off/short pay-off)
- Date Last Paid
- Date of Foreclosure
- Date of REO
- Date of REO Disposition
- Property Sale Price; Estimated Market Value at Disposition
2. Liquidation Proceeds
- Principal Prepayment $
-------------
- Property Sale Proceeds
------------
- Insurance Proceeds
------------
- Other (itemize)
------------
- TOTAL $
=============
Liquidation Expenses
- Servicing Advances $
-------------
- Monthly Advances
-------------
- Contingency Fees
-------------
- Servicing Fees
-------------
- Annual Expense Escrow Amount
-------------
- Supplemental Fee (if any)
-------------
- Additional Interest (if any)
-------------
- Monthly Sponsor Fee (if any)
-------------
- TOTAL $
=============
3. Net Liquidation Proceeds* $
-------------
(Total of Item 2 minus total of Item 3)
4. Accrued and Unpaid Interest on Mortgage Loan $
-------------
5. Principal Balance of Mortgage Loan $
-------------
I-1
172
6. Realized Loss on Mortgage Loan $
-------------
(Item 4 plus Item 5 minus Item 3, with
a Realized Loss resulting only if the total
of this calculation is a positive number)
*Applied first to Item 4 and then to Item 5.
I-2
173
EXHIBIT J
OFFICER'S CERTIFICATE
I, _____________________, hereby certify that I am the duly elected
_____________________ of Aames Capital Corporation (the "Company") acting as
seller and servicer pursuant to a Pooling and Servicing Agreement dated as of
July 1, 1999 by and among the Company, Bankers Trust Company of California,
N.A., as Trustee, and Fairbanks Capital Corp., as Back-up Servicer, and further
certify, to the best of my knowledge and after due inquiry that the following is
a summary of the facts and circumstances surrounding the "charge-off" of any
Mortgage Loans during the Collection Period from _____ 1 through _____ 30/31,
199_;
[Insert the following information for each "charged-off" Mortgage Loan]
Loan #
Borrower Name
Property Address
Date of "charge-off"
Original Principal Balance
Outstanding Principal Balance
Mortgage Loan Rate
Accrued Interest at time of "charge off"
Unreimbursed Servicing Advances at time of "charge off" Unreimbursed
Delinquency Advances at time of "charge off" # of days in default at
time of "charge off" Original Appraised Value Current appraised value
based upon "drive by" Amount of outstanding first lien Estimate of
Foreclosure Costs
Broker Fees
Legal Fees
Repair and Miscellaneous Expenses
Projected Marketing Period
Estimate of Loss on Foreclosure and Liquidation
Capitalized terms not otherwise defined herein have the meanings set forth in
the Pooling and Servicing Agreement.
J-1
174
IN WITNESS WHEREOF, I have hereunto signed by name and affixed the seal
of the Servicer.
Dated:
----------------------- ----------------------------------------
Name:
Title:
J-2
175
EXHIBIT K
FORM OF TRANSFEROR AFFIDAVIT
[LETTERHEAD OF TRANSFEROR]
________________, 199_
Bankers Trust Company of California, N.A.,
as Trustee
▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration
Re: Aames Mortgage Trust 1999-1
Mortgage Pass-Through Certificates, Series 1999-1
Ladies and Gentlemen:
We have reviewed the attached affidavit of [NAME OF TRANSFEREE] and have
no actual knowledge that such affidavit is not true and has no reason to believe
that the requirements set forth in paragraph 3, paragraph 4(i) or paragraph
4(ii) are not satisfied and have no reason to believe that the transferee has
the intention to impede the assessment or collection of any federal, state or
local taxes legally required to be paid with respect to a Class R Certificate.
In addition, we have conducted a reasonable investigation at the time of the
transfer and found that the transferee had historically paid its debts as they
came due and found no significant evidence to indicate that the transferee will
not continue to pay its debts as they become due.
Very truly yours,
-----------------------------------
By:
------------------------------
Name:
Title:
K-1
176
EXHIBIT L
INSURANCE AGREEMENT
[On file with the Sponsor and the Trustee]
177
EXHIBIT M
Bankers Trust Company of California, N.A.,
as Trustee
▇ ▇▇▇▇ ▇▇▇▇▇; ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: Aames Mortgage Trust 1999-1,
Mortgage Pass-Through Certificates,
Series, 1999-1, Class C (the "Certificates")
Ladies and Gentlemen:
In connection with our disposition of the above Certificates we
certify that (a) we understand that the Certificates have not been registered
under the Securities Act of 1933, as amended (the "Act"), and are being disposed
by us in a transaction that is exempt from the registration requirements of the
Act, (b) we have not offered or sold any Certificates to, or solicited offers to
buy any Certificates from, any person, or otherwise approached or negotiated
with any person with respect thereto, in a manner that would be deemed, or taken
any other action which would result in, a violation of Section 5 of the Act and
(c) with respect to our disposition of the Certificates, we have no knowledge
that the transferee is not a permitted transferee.
Very truly yours,
------------------------
By: _________________________
Authorized Officer
178
EXHIBIT N-1
FORM OF INVESTMENT LETTER [NON-RULE 144A]
[DATE]
[Seller]
[Seller Address]
Bankers Trust Company of California, N.A.,
as Trustee
▇ ▇▇▇▇ ▇▇▇▇▇; ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: Aames Mortgage Trust 1999-1,
Mortgage Pass-Through Certificates,
Series, 1999-1, Class C (the "Certificates")
Ladies and Gentlemen:
In connection with our acquisition of the above-captioned
Certificates, we certify that (a) we understand that the Certificates are not
being registered under the Securities Act of 1933, as amended (the "Act"), or
any state securities laws and are being transferred to us in a transaction that
is exempt from the registration requirements of the Act and any such laws, (b)
we are an "accredited investor," as defined in Regulation D under the Act, and
have such knowledge and experience in financial and business matters that we are
capable of evaluating the merits and risks of investments in the Certificates,
(c) we have had the opportunity to ask questions of and receive answers from the
Seller concerning the purchase of the Certificates and all matters relating
thereto or any additional information deemed necessary to our decision to
purchase the Certificates, (d) either (i) we are not an employee benefit plan
that is subject to the Employee Retirement Income Security Act of 1974, as
amended, or a plan that is subject to Section 4975 of the Internal Revenue Code
of 1986, as amended, nor are we acting on behalf of any such plan or (ii) the
purchaser is an insurance company which is purchasing such certificates with
funds contained in an "insurance company general account" (as such term is
defined in Section V(e) of Prohibited Transaction Class Exemption 95-60 ("PTCE
95-60")) and that the purchase and holding of such Certificates are covered
under PTCE 95-60, (e) we are acquiring the Certificates for investment for our
own account and not with a view to any distribution of such Certificates (but
without prejudice to our right at all times to sell or otherwise dispose of the
Certificates in accordance with clause (g) below), (f) we have not offered or
sold any Certificates to, or solicited offers to buy any Certificates from, any
person, or otherwise approached or negotiated with any person with respect
thereto, or taken any other action which would result in a violation of Section
5 of the Act, and (g) we will not
N-1-1
179
sell, transfer or otherwise dispose of any Certificates unless (1) such sale,
transfer or other disposition is made pursuant to an effective registration
statement under the Act or is exempt from such registration requirements, and if
requested, we will at our expense provide an opinion of counsel satisfactory to
the addressees of this Certificate that such sale, transfer or other disposition
may be made pursuant to an exemption from the Act, (2) the purchaser or
transferee of such Certificate has executed and delivered to you a certificate
to substantially the same effect as this certificate, and (3) the purchaser or
transferee has otherwise complied with any conditions for transfer set forth in
the Pooling and Servicing Agreement.
Very truly yours,
[NAME OF TRANSFEREE]
By:________________________
Authorized Officer
N-1-2
180
EXHIBIT N-2
FORM OF RULE 144A LETTER
[DATE]
[Seller]
[Seller Address]
Bankers Trust Company of California, N.A.,
as Trustee
▇ ▇▇▇▇ ▇▇▇▇▇; ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: Aames Mortgage Trust 1999-1,
Mortgage Pass-Through Certificates,
Series, 1999-1, Class C (the "Certificates")
Ladies and Gentlemen:
In connection with our acquisition of the above Certificates we
certify that (a) we understand that the Certificates are not being registered
under the Securities Act of 1933, as amended (the "Act"), or any state
securities laws and are being transferred to us in a transaction that is exempt
from the registration requirements of the Act and any such laws, (b) we have had
the opportunity to ask questions of and receive answers from the Seller
concerning the purchase of the Certificates and all matters relating thereto or
any additional information deemed necessary to our decision to purchase the
Certificates, (c) either (i) we are not an employee benefit plan that is subject
to the Employee Retirement Income Security Act of 1974, as amended, or a plan
that is subject to Section 4975 of the Internal Revenue Code of 1986, as
amended, nor are we acting on behalf of any such plan or (ii) the purchaser is
an insurance company which is purchasing such Certificates with funds obtained
in an "insurance company general account" (as such term is defined in Section
V(e)of Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60")) and that the
purchase and holding of such Certificates are covered under ▇▇▇▇ ▇▇-▇▇, (▇) we
have not, nor has anyone acting on our behalf offered, transferred, pledged,
sold or otherwise disposed of the Certificates, any interest in the Certificates
or any other similar security to, or solicited any offer to buy or accept a
transfer, pledge or other disposition of the Certificates, any interest in the
Certificates or any other similar security from, or otherwise approached or
negotiated with respect to the Certificates, any interest in the Certificates or
any other similar security with, any person in any manner, or made any general
solicitation by means of general advertising or in any other manner, or taken
any other action, that would constitute a distribution of the Certificates under
the Act or that would render the disposition of the Certificates a violation of
Section 5 of the Act or
181
require registration pursuant thereto, nor will act, nor has authorized or will
authorize any person to act, in such manner with respect to the Certificates,
(e) we are a "qualified institutional buyer" as that term is defined in Rule
144A under the Act and have completed either of the forms of certification to
that effect attached hereto as Annex 1 or Annex 2. We are aware that the sale to
us is being made in reliance on Rule 144A. We are acquiring the Certificates for
our own account or for resale pursuant to Rule 144A and further, understand that
such Certificates may be resold, pledged or transferred only (i) to a person
reasonably believed to be a qualified institutional buyer that purchases for its
own account or for the account of a qualified institutional buyer to whom notice
is given that the resale, pledge or transfer is being made in reliance on Rule
144A, or (ii) pursuant to another exemption from registration under the Act.
Very truly yours,
[NAME OF TRANSFEREE]
By: _____________________
Authorized Officer
N-2-2
182
ANNEX 1 TO EXHIBIT N-2
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees Other Than Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
(a) As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Buyer.
(b) In connection with purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because (i) the Buyer owned
and/or invested on a discretionary basis $ (1) in securities (except for the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year (such amount being calculated in accordance with Rule 144A and (ii)
the Buyer satisfies the criteria in the category marked below.
___ Corporation, etc. The Buyer is a corporation (other than a
bank, savings and loan association or similar
institution), Massachusetts or similar business trust,
partnership, or charitable organization described in
Section 501(c)(3) of the Internal Revenue Code of 1986, as
amended.
___ Bank. The Buyer (a) is a national bank or banking
institution organized under the laws of any State,
territory or the District of Columbia, the business of
which is substantially confined to banking and is
supervised by the State or territorial banking commission
or similar official or is a foreign bank or equivalent
institution, and (b) has an audited net worth of at least
$25,000,000 as demonstrated in its latest annual financial
statements, a copy of which is attached hereto.
___ Savings and Loan. The Buyer (a) is a
savings and loan association, building and loan
association, cooperative bank, homestead association or
similar institution, which is supervised and examined by a
State or Federal authority having supervision over any
such institutions or is a foreign savings and loan
association or equivalent institution and (b) has an
audited net worth of at
--------------------
(1) Buyer must own and/or invest on a discretionary basis at least
$100,000,000 in securities unless Buyer is a dealer, and, in that case,
Buyer must own and/or invest on a discretionary basis at least
$10,000,000 in securities.
183
least $25,000,000 as demonstrated in its latest annual
financial statements, a copy of which is attached hereto.
___ Broker-dealer. The Buyer is a dealer registered pursuant
to Section 15 of the Securities Exchange Act of 1934.
___ Insurance Company. The Buyer is an insurance company whose
primary and predominant business activity is the writing
of insurance or the reinsuring of risks underwritten by
insurance companies and which is subject to supervision by
the insurance commissioner or a similar official or agency
of a State, territory or the District of Columbia.
___ State or Local Plan. The Buyer is a plan established and
maintained by a State, its political subdivisions, or any
agency or instrumentality of the State or its political
subdivisions, for the benefit of its employees.
___ ERISA Plan. The Buyer is an employee benefit plan within
the meaning of Title I of the Employee Retirement Income
Security Act of 1974.
___ Investment Advisor. The Buyer is an investment advisor
registered under the Investment Advisors Act of 1940.
___ Small Business Investment Company. Buyer is a small
business investment company licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the
Small Business Investment Act of 1958.
___ Business Development Company. Buyer is a business
development company as defined in Section 202(a)(22) of
the Investment Advisors Act of 1940.
(c) The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer, (ii) securities that
are part of an unsold allotment to or subscription by the Buyer, if the Buyer is
a dealer, (iii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iv) bank deposit notes and certificates of deposit,
(v) loan participations, (vi) repurchase agreements, (vii) securities owned but
subject to a repurchase agreement and (viii) currency, interest rate and
commodity swaps.
(d) For purposes of determining the aggregate amount of
securities owned and/or invested on a discretionary basis by the Buyer, the
Buyer used the cost of such securities to the Buyer and did not include any of
the securities referred to in the preceding paragraph, except (i) where the
Buyer reports its securities holdings in its financial statements on the basis
of their market value, and (ii) no current information with respect to the cost
of those securities has been published. If clause (ii) in the preceding sentence
applies, the securities may be valued at market. Further, in determining such
aggregate amount, the Buyer may have included securities owned by subsidiaries
of the Buyer, but only if such subsidiaries are consolidated with the Buyer in
its
184
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the Buyer is
not itself a reporting company under the Securities Exchange Act of 1934, as
amended.
(e) The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Buyer may be in reliance on Rule 144A.
(f) Until the date of purchase of the Rule 144A Securities, the
Buyer will notify each of the parties to which this certification is made of any
changes in the information and conclusions herein. Until such notice is given,
the Buyer's purchase of the Certificates will constitute a reaffirmation of this
certification as of the date of such purchase. In addition, if the Buyer is a
bank or savings and loan is provided above, the Buyer agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.
Print Name of Buyer
By:___________________________
Name:
Title:
Date:
185
ANNEX 2 TO EXHIBIT N-2
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees That are Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
(a) As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the Buyer or, if the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because Buyer is part of a
Family of Investment Companies (as defined below), is such an officer of the
Adviser.
(b) In connection with purchases by Buyer, the Buyer is a
"qualified institutional buyer" as defined in SEC Rule 144A because (i) the
Buyer is an investment company registered under the Investment Company Act of
1940, as amended and (ii) as marked below, the Buyer alone, or the Buyer's
Family of Investment Companies, owned at least $100,000,000 in securities (other
than the excluded securities referred to below) as of the end of the Buyer's
most recent fiscal year. For purposes of determining the amount of securities
owned by the Buyer or the Buyer's Family of Investment Companies, the cost of
such securities was used, except (i) where the Buyer or the Buyer's Family of
Investment Companies reports its securities holdings in its financial statements
on the basis of their market value, and (ii) no current information with respect
to the cost of those securities has been published. If clause (ii) in the
preceding sentence applies, the securities may be valued at market.
186
___ The Buyer owned $_____________ in securities (other than
the excluded securities referred to below) as of the end
of the Buyer's most recent fiscal year (such amount being
calculated in accordance with Rule 144A).
___ The Buyer is part of a Family of Investment Companies
which owned in the aggregate $____________ in securities
(other than the excluded securities referred to below) as
of the end of the Buyer's most recent fiscal year (such
amount being calculated in accordance with Rule 144A).
(c) The term "Family of Investment Companies" as used herein
means two or more registered investment companies (or series thereof) that have
the same investment adviser or investment advisers that are affiliated (by
virtue of being majority owned subsidiaries of the same parent or because one
investment adviser is a majority owned subsidiary of the other).
(d) The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer or are part of the
Buyer's Family of Investment Companies, (ii) securities issued or guaranteed by
the U.S. or any instrumentality thereof, (iii) bank deposit notes and
certificates of deposit, (iv) loan participations, (v) repurchase agreements,
(vi) securities owned but subject to a repurchase agreement and (vii) currency,
interest rate and commodity swaps.
(e) The Buyer is familiar with Rule 144A and under-stands that
the parties listed in the Rule 144A Transferee Certificate to which this
certification relates are relying and will continue to rely on the statements
made herein because one or more sales to the Buyer will be in reliance on Rule
144A. In addition, the Buyer will only purchase for the Buyer's own account.
187
(f) Until the date of purchase of the Certificates, the
undersigned will notify the parties listed in the Rule 144A Transferee
Certificate to which this certification relates of any changes in the
information and conclusions herein. Until such notice is given, the Buyer's
purchase of the Certificates will constitute a reaffirmation of this
certification by the undersigned as of the date of such purchase.
Print Name of Buyer or Adviser
By:___________________________
Name:
Title:
IF AN ADVISER:
------------------------------
Print Name of Buyer
Date:
188
EXHIBIT O
SECTION 3.10(b) AGREED-UPON PROCEDURES
Inquire of management as to the nature and timing of the cash
collections that have been deposited in and were withdrawn from the Collection
Account and Certificate Account during the related reporting period.
Inquire of management as to the manner of calculating or determining the
amount of Monthly Advances, Servicing Advances and Compensating Interest and the
withdrawal or reimbursement of Monthly Advances and Servicing Advances, and
inquire of management as to whether such calculations and determinations,
withdrawals and reimbursements are consistent with the terms of the Pooling and
Servicing Agreement.
Inquire of management as to any changes in policies and procedures in
connection with Monthly Advances, Servicing Advances, and Compensating Interest
from the previous reporting period.
Inquire of management as to any notices, reports or other communications
received by the Servicer from the Trustee, the Certificate Insurer, and any
Rating Agencies, regulatory agencies, internal auditor, external auditor,
accountants, or consultants related to noncompliance with Article III of the
Pooling and Servicing Agreement since the end of the last reporting period or,
in the case of the first reporting period, since the Closing Date.
Obtain an electronic data listing on a loan level basis of the cash
collections including Monthly Advances, Servicing Advances and withdrawals and
reimbursements and Compensating Interest payments during the applicable
reporting period from borrowers with Mortgage Loans owned by the Trust and,
based on such electronic data listing, recalculate the amount of the cash
collections, Monthly Advances, Servicing Advances and Compensating Interest and
withdrawals and reimbursements of Monthly Advances and Servicing Advances.
Obtain a reconciliation of the cash collections during the applicable
month to the cash deposits to the Collection Account and Certificate Account
during the applicable reporting period.
Agree the amount and timing of cash deposits for the applicable
reporting period to copies of bank statements.
Prepare a report on the procedures and findings of the foregoing.