<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)
JUNE 30, 1998
AAMES CAPITAL ACCEPTANCE CORP. ON BEHALF OF
AAMES MORTGAGE TRUST 1998-B
-----------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
DELAWARE 333-46893-01 95-4619902
(State or other jurisdiction (Commission (I.R.S. employer
of incorporation) file number) identification no.)
350 SOUTH GRAND AVENUE, 52ND FLOOR
LOS ANGELES, CALIFORNIA 90071
- ---------------------------------------- ----------
(Address of principal executive offices) (ZIP Code)
(213) 210-5270
-------------------------------------------------------------
(Registrant's telephone number, including area code)
NA
-------------------------------------------------------------
(Former name or former address, if changed since last report)
================================================================================
<PAGE> 2
Item 5. Other Events
Aames Capital Acceptance Corp. (the "Transferor") and an affiliate,
Aames Capital Corporation, registered up to $2,500,000,000 principal amount of
asset-backed certificates and asset-backed bonds under Rule 415 of the
Securities Act of 1933, as amended (the "Act"), pursuant to a Registration
Statement on Form S-3, including a prospectus (Registration Statement File No.
333-46893-01) (the "Registration Statement"). Pursuant to the Registration
Statement, the Transferor filed a Prospectus Supplement dated June 15, 1998, and
a Prospectus, dated April 20, 1998 (collectively, the "Prospectus"), relating to
$625,000,000 aggregate principal amount of Mortgage Pass-Through Certificates,
Series 1998-B (the "Certificates"), issued by Aames Mortgage Trust 1998-B
("Trust") on June 18, 1998 (the "Closing Date"). The Certificates consist of the
Class A-1F, Class A-2F, Class A-3F, Class A-4F, Class A-5F, Class A-6F, Class
A-IO, Class A-1A, Class M-1A, Class M-2A and Class B-IA Certificates (together,
the "Offered Certificates"), Class R Certificates and Class C Certificates. Only
the Offered Certificates were offered by the Prospectus.
The Certificates represent the entire undivided interest in the Trust
created pursuant to the Pooling and Servicing Agreement dated as of June 1, 1998
(the "Pooling and Servicing Agreement") between the Transferor, Aames Capital
Corporation, as Servicer, and Bankers Trust Company of California, N.A., as
trustee (the "Trustee"). On the Closing Date, the corpus of the Trust consisted
primarily of (i) a pool (the "Mortgage Pool") of home equity mortgage loans
(together, the "Initial Mortgage Loans"), (ii) amounts on deposit in a
prefunding account (the "Prefunding Account") and a capitalized interest account
held by the Trustee. On the Closing Date, cash in the amount of $99,971,063 (the
"Prefunding Account Deposit") was deposited in the Prefunding Account in the
name of the Trustee. The Prefunding Account Deposit was intended to be used for
the purchase of additional home equity mortgage loans satisfying the criteria
specified in the Pooling and Servicing Agreement (the "Subsequent Mortgage
Loans") on or before July 14, 1998. All of the Prefunding Account Deposit was
allocated for the purchase of Subsequent Mortgage Loans bearing adjustable rates
of interest to be included in the Adjustable Rate Group.
On June 30, 1998, the Trustee, on behalf of the Trust, and the
Transferor entered into a Subsequent Transfer Agreement, dated as of such date
(the "Subsequent Transfer Agreement"). Pursuant to the Subsequent Transfer
Agreement, the Trust purchased $99,970,375.68 aggregate principal balance of
Subsequent Mortgage Loans to be included in the Adjustable Rate Group for a
purchase price equal to such balance.
The description of the Mortgage Pool in the Prospectus contained
information only with respect to the Initial Mortgage Loans as of the date of
the Prospectus. This Current Report on Form 8-K is being filed to update the
description of the Mortgage Pool contained in the Prospectus and to file copies
of certain final agreements executed in connection with the issuance of the
Certificates. Annex A which follows contains a description of the final Mortgage
Pool.
Capitalized terms used but not otherwise defined herein shall have the
same meaning ascribed to them in the Prospectus. The Prospectus has been filed
with the Securities and Exchange Commission pursuant to Rule 424(b)(2) under
file number 333-46893-01.
-2-
<PAGE> 3
ANNEX A:
DESCRIPTION OF THE MORTGAGE POOL
The following is a brief description of certain terms of the Mortgage
Loans, including the Subsequent Mortgage Loans. Information contained herein is
presented with respect to the Initial Mortgage Loans as of the Cut-off Date (as
defined in the Pooling and Servicing Agreement) and with respect to the
Subsequent Mortgage Loans as of June 30, 1998 ("the Subsequent Cut-off Date").
The description of the Mortgage Pool below does not reflect any payments with
respect to the Mortgage Loans after the Cut-off Date or the Subsequent Cut-off
Date. The Mortgage Pool consists of 7,710 Mortgage Loans and has an aggregate
principal balance of $625,050,261.33.
FIXED RATED GROUP
The Aggregate Principal Balance of the Mortgage Loans in the Fixed Rate
Group was $250,051,092.47. Approximately 89.14%, 6.55% and 4.31% of the
Mortgaged Properties (by Cut-off Date or Subsequent Cut-off Date Principal
Balance, as applicable), were single family residences, two- to four-family
residences and units in condominium developments, respectively, and no more than
0.46% of the Mortgage Loans in the Fixed Rate Group by applicable Cut-off Date
Principal Balance) were secured by Mortgaged Properties located in any single
postal ZIP code.
The original Combined Loan-to-Value Ratio of any Mortgage Loan in the
Fixed Rate Group did not exceed 100% and the original weighted average Combined
Loan-to-Value Ratio of all Mortgage Loans in the Fixed Rate Group was
approximately 73.43%. The maximum and average loan sizes of the Mortgage Loans
in the Fixed Rate Group were $399,274.84 and $64,713.02, respectively. The
average appraised value of the Mortgaged Properties securing Mortgage Loans in
the Fixed Rate Group at origination of the related Mortgage Loans was
approximately $108,837.92.
The interest rates borne by the Mortgage Loans (each, a "Mortgage
Interest Rate") in the Fixed Rate Group ranged from 6.500% per annum to 18.220%
per annum. The weighted average Mortgage Interest Rate of the Mortgage Loans in
the Fixed Rate Group was approximately 10.322% per annum.
The weighted average remaining term to stated maturity of the Mortgage
Loans in the Fixed Rate Group was approximately 310 months. The weighted average
original term to maturity of the Mortgage Loans in the Fixed Rate Group was
approximately 311 months. The weighted average seasoning of the Mortgage Loans
in the Fixed Rate Group was approximately two months.
Based on the Aggregate Principal Balance of the Mortgage Loans in the
Fixed Rate Group, 97.38% of the Mortgage Loans provide for the payment of
principal and interest on a level basis to fully amortize such Mortgage Loans
over their respective stated terms. The remaining 2.62% of the Mortgage Loans in
the Fixed Rate Group are Balloon Loans which will provide for regular monthly
payments of principal and interest computed on the basis of an amortization term
of 360 months that is longer than the related term to stated maturity, with a
"balloon payment" due at stated maturity that will be significantly larger than
the monthly payments. The Mortgage Loans in the Fixed Rate Group have original
terms to maturity of up to 30 years.
-3-
<PAGE> 4
ADJUSTABLE RATE GROUP
The Aggregate Principal Balance of the Mortgage Loans in the Adjustable
Rate Group was $374,999,168.86. Approximately 85.78%, 6.37% and 7.84% of the
Mortgaged Properties (by Cut-off Date or Subsequent Cut-off Date Principal
Balance) were single family residences, two- to four-family residences and units
in condominium developments, respectively, and no more than 0.37% of the
Mortgage Loans in the Adjustable Rate Group (by applicable Cut-off Date
Principal Balance) were secured by Mortgaged Properties located in any single
postal ZIP code.
The original Loan-to-Value Ratio of any Mortgage Loan in the Adjustable
Rate Group did not exceed 90.26% and the original weighted average original
Loan-to-Value Ratio of all Mortgage Loans in the Adjustable Rate Group was
approximately 78.14%. The maximum and average loan size of the Mortgage Loans in
the Adjustable Rate Group were $500,000.00 and $97,503.68, respectively. The
average appraised value of the Mortgaged Properties was $127,958.37.
The Mortgage Loans in the Adjustable Rate Group bear interest rates
that, after a period of approximately six months, one year, two years, three
years or five years after the related date of origination, adjust based on
six-month LIBOR. The Mortgage Loans in the Adjustable Rate Group have
semi-annual interest rate and payment adjustment frequencies after the first
interest rate adjustment date. The weighted average Mortgage Interest Rate of
the Mortgage Loans in the Adjustable Rate Group was approximately 9.775% per
annum. The Mortgage Loans in the Adjustable Rate Group had a weighted average
gross margin of approximately 6.018%. The gross margin for the Mortgage Loans in
the Adjustable Rate Group ranged from 3.625% to 10.625%. For each Mortgage Loan
in the Adjustable Rate Group that has an initial rate adjustment date that is
six months, two years, three years or five years from the date of origination,
the related Mortgage Note provides for a rate cap as to its first Adjustment
Date of from 1.000% to 3.000% and a rate cap as to each subsequent Adjustment
Date of from 0.5000% to 6.000%. The maximum rates at which interest may accrue
on the Mortgage Loans in the Adjustable Rate Group (the "Maximum Rates") ranged
from 12.250% per annum to 21.740% per annum. The Mortgage Loans in the
Adjustable Rate Group have a weighted average Maximum Rate of approximately
16.405% per annum. The minimum rates at which interest may accrue on the
Mortgage Loans in the Adjustable Rate Group (the "Minimum Rates") ranged from
4.950% per annum to 15.740% per annum. The weighted average Minimum Rate was
approximately 9.877% per annum.
Mortgage Loans in the Adjustable Rate Group have original terms to
maturity of up to 30 years. The weighted average remaining term to stated
maturity of the Mortgage Loans in the Adjustable Rate Group was approximately
357 months. The weighted average original term to maturity of the Mortgage Loans
in the Adjustable Rate Group was approximately 358 months. The weighted average
seasoning of the Mortgage Loans in the Adjustable Rate Group was 0.974 months.
None of the Mortgage Loans in the Adjustable Rate Group are Balloon
Loans.
-4-
<PAGE> 5
FIXED RATE GROUP
TYPE OF MORTGAGED PROPERTIES
<TABLE>
<CAPTION>
Percentage of
Aggregate Cut-Off Date
Number of Unpaid Aggregate
Mortgage Principal Principal
Property Type Loans Balance Balance
- ------------- --------- --------------- -------------
<S> <C> <C> <C>
Single-family 3491 222,890,907.23 89.14
Condominiums 150 10,779,461.21 4.31
2 to 4 Family 223 16,380,724.03 6.55
- --------------------------------------------------------------------------
Total............... 3864 $250,051,092.47 100.00%
==========================================================================
</TABLE>
FIXED RATE GROUP
OCCUPANCY STATUS
<TABLE>
<CAPTION>
Percentage of
Aggregate Cut-Off Date
Number of Unpaid Aggregate
Mortgage Principal Principal
Occupancy Status Loans Balance Balance
- ---------------- --------- --------------- -------------
<S> <C> <C> <C>
Owner Occ./Prim. Resid. 3794 246,226,971.48 98.47
Non Own Occ/Investor 70 3,824,120.99 1.53
- ----------------------------------------------------------------------------
Total.................. 3864 $250,051,092.47 100.00%
============================================================================
</TABLE>
FIXED RATE GROUP
PRIORITY OF LIEN
<TABLE>
<CAPTION>
Percentage of
Aggregate Cut-Off Date
Number of Unpaid Aggregate
Mortgage Principal Principal
Lien Priority Loans Balance Balance
- ------------- --------- --------------- -------------
<S> <C> <C> <C>
First Lien 3360 234,856,033.91 93.92
Second Lien 498 15,065,457.99 6.02
Third Lien3 5 120,248.50 0.05
Fourth Lien 1 9,352.07 0.00
- --------------------------------------------------------------------------
Total............... 3864 $250,051,092.47 100.00%
==========================================================================
</TABLE>
-5-
<PAGE> 6
FIXED RATE GROUP
TYPE OF LOAN BY AMORTIZATION METHOD
<TABLE>
<CAPTION>
Percentage of
Aggregate Cut-Off Date
Number of Unpaid Aggregate
Mortgage Principal Principal
Amortization Method Loans Balance Balance
- ------------------- --------- --------------- -------------
<S> <C> <C> <C>
Fully Amortizing 3772 243,495,843.73 97.38
Partially Amortizing 92 6,555,248.74 2.62
- ----------------------------------------------------------------------------
Total.................. 3864 $250,051,092.47 100.00%
============================================================================
</TABLE>
FIXED RATE GROUP
COMBINED LOAN-TO-VALUE RATIOS
<TABLE>
<CAPTION>
Percentage of
Aggregate Cut-Off Date
Number of Unpaid Aggregate
Range of Combined Mortgage Principal Principal
Loan-to-Value Ratios Loans Balance Balance
- -------------------- --------- --------------- -------------
<S> <C> <C> <C>
5.001% to 10.000% 5 108,409.77 0.04
10.001% to 15.000% 18 281,223.13 0.11
15.001% to 20.000% 34 867,568.23 0.35
20.001% to 25.000% 37 1,229,532.67 0.49
25.001% to 30.000% 56 1,653,214.16 0.66
30.001% to 35.000% 51 1,883,895.82 0.75
35.001% to 40.000% 91 3,600,298.42 1.44
40.001% to 45.000% 90 3,377,599.38 1.35
45.001% to 50.000% 139 6,543,312.85 2.62
50.001% to 55.000% 134 6,552,661.73 2.62
55.001% to 60.000% 205 9,898,987.16 3.96
60.001% to 65.000% 444 24,967,927.10 9.99
65.001% to 70.000% 435 23,898,018.64 9.56
70.001% to 75.000% 707 41,443,494.13 16.57
75.001% to 80.000% 711 54,928,886.06 21.97
80.001% to 85.000% 258 22,537,969.71 9.01
85.001% to 90.000% 444 45,922,544.87 18.37
90.001% to 95.000% 1 21,465.89 0.01
95.001% to 100.000% 4 334,082.75 0.13
- --------------------------------------------------------------------------
Total.................... 3864 $250,051,092.47 100.00%
==========================================================================
</TABLE>
-6-
<PAGE> 7
FIXED RATE GROUP
ORIGINAL TERM TO MATURITY
<TABLE>
<CAPTION>
Percentage of
Aggregate Cut-Off Date
Range of Number of Unpaid Aggregate
Original Terms to Mortgage Principal Principal
Maturity (months) Loans Balance Balance
- ----------------- --------- --------------- -------------
<S> <C> <C> <C>
49 to 60 38 826,875.44 0.33%
61 to 72 5 90,804.83 0.04%
73 to 84 14 304,748.26 0.12%
85 to 96 7 184,282.66 0.07%
97 to 108 2 66,783.89 0.03%
109 to 120 158 4,622,890.92 1.85%
121 to 132 6 303,123.63 0.12%
133 to 144 4 125,307.43 0.05%
145 to 156 2 102,017.33 0.04%
169 to 180 1,208 53,569,993.51 21.42%
181 to 192 21 1,137,393.22 0.45%
193 to 204 1 76,500.00 0.03%
229 to 240 72 4,938,088.71 1.97%
265 to 276 1 76,920.71 0.03%
289 to 300 9 529,814.13 0.21%
349 to 360 2,316 183,095,547.80 73.22%
- --------------------------------------------------------------------------
Total............ 3,864 $250,051,092.47 100.00%
==========================================================================
</TABLE>
FIXED RATE GROUP
ORIGINAL TERM TO MATURITY
(BALLOON)
<TABLE>
<CAPTION>
Percentage of
Aggregate Cut-Off Date
Range of Number of Unpaid Aggregate
Original Terms to Mortgage Principal Principal
Maturity (months) Loans Balance Balance
- ----------------- --------- ------------- ------------
<S> <C> <C> <C>
109 to 120 2 71,359.38 1.09%
121 to 132 4 201,668.45 3.08%
169 to 180 66 5,153,654.82 78.62%
181 to 192 20 1,128,566.09 17.22%
- ------------------------------------------------------------------------
Total............ 92 $6,555,248.74 100.00%
========================================================================
</TABLE>
-7-
<PAGE> 8
FIXED RATE GROUP
REMAINING TERM TO MATURITY
<TABLE>
<CAPTION>
Percentage of
Aggregate Cut-Off Date
Range of Number of Unpaid Aggregate
Remaining Terms to Mortgage Principal Principal
Maturity (months) Loans Balance Balance
- ----------------- --------- --------------- -------------
<S> <C> <C> <C>
24 to 36 3 19,773.00 0.01%
36 to 48 6 59,942.03 0.02%
48 to 60 43 923,597.17 0.37%
60 to 72 10 304,819.59 0.12%
72 to 84 16 341,100.33 0.14%
84 to 96 7 212,624.90 0.09%
96 to 108 8 243,983.70 0.10%
108 to 120 160 4,732,382.14 1.89%
120 to 132 11 347,954.10 0.14%
132 to 144 11 389,518.91 0.16%
144 to 156 6 262,372.97 0.10%
156 to 168 3 277,230.64 0.11%
168 to 180 1,179 53,114,832.76 21.24%
180 to 192 4 152,500.00 0.06%
192 to 204 1 76,500.00 0.03%
228 to 240 70 4,889,677.59 1.96%
264 to 276 1 76,920.71 0.03%
288 to 300 9 529,814.13 0.21%
312 to 324 1 87,257.95 0.03%
336 to 348 2 61,642.58 0.02%
348 to 360 2,313 182,946,647.27 73.16%
- ----------------------------------------------------------------------
Total............ 3,864 $250,051,092.47 100.00%
======================================================================
</TABLE>
-8-
<PAGE> 9
FIXED RATE GROUP
RANGE OF MORTGAGE INTEREST RATES
<TABLE>
<CAPTION>
Percentage of
Aggregate Cut-Off Date
Number of Unpaid Aggregate
Range of Mortgage Mortgage Principal Principal
Interest Rates Loans Balance Balance
-------------- --------- ----------------- -------------
<S> <C> <C> <C>
6.001% to 6.500% 9 2,051,758.17 0.82
6.501% to 7.000% 5 540,276.58 0.22
7.001% to 7.500% 12 1,266,510.90 0.51
7.501% to 7.750% 11 1,514,045.30 0.61
7.751% to 8.000% 44 4,786,477.61 1.91
8.001% to 8.250% 65 5,877,377.11 2.35
8.251% to 8.500% 88 8,944,521.24 3.58
8.501% to 8.750% 116 11,563,157.65 4.62
8.751% to 9.000% 193 17,059,856.13 6.82
9.001% to 9.250% 161 11,496,323.56 4.60
9.251% to 9.500% 207 16,740,849.48 6.69
9.501% to 9.750% 218 18,056,770.48 7.22
9.751% to 10.000% 247 19,462,182.25 7.78
10.001% to 10.250% 203 11,816,529.12 4.73
10.251% to 10.500% 316 18,917,365.42 7.57
10.501% to 10.750% 272 17,336,889.12 6.93
10.751% to 11.000% 259 15,387,206.00 6.15
11.001% to 11.250% 161 8,335,117.84 3.33
11.251% to 11.500% 206 10,406,097.14 4.16
11.501% to 11.750% 180 9,287,171.97 3.71
11.751% to 12.000% 166 8,474,813.71 3.39
12.001% to 12.250% 146 6,638,598.36 2.65
12.251% to 12.500% 115 4,860,308.23 1.94
12.501% to 12.750% 81 3,533,344.36 1.41
12.751% to 13.000% 63 2,596,525.12 1.04
13.001% to 13.250% 75 3,291,320.56 1.32
13.251% to 13.500% 55 1,936,294.76 0.77
13.501% to 13.750% 34 1,251,455.78 0.50
13.751% to 14.000% 38 1,646,590.58 0.66
14.001% to 14.250% 34 1,292,582.90 0.52
14.251% to 14.500% 15 655,128.04 0.26
14.501% to 14.750% 28 1,018,314.28 0.41
14.751% to 15.000% 9 580,093.83 0.23
15.001% to 15.250% 10 433,933.93 0.17
15.251% to 15.500% 10 575,772.70 0.23
15.501% to 15.750% 5 173,930.24 0.07
16.501% to 16.750% 2 25,696.16 0.01
16.751% to 17.000% 3 169,612.71 0.07
17.501% to 18.000% 1 40,293.15 0.02
18.001% to 18.500% 1 10,000.00 0.00
- --------------------------------------------------------------------------
Total.......... 3864 $250,051,092.47 100.00%
==========================================================================
</TABLE>
-9-
<PAGE> 10
FIXED RATE GROUP
CUT-OFF DATE PRINCIPAL BALANCE
<TABLE>
<CAPTION>
Percentage of
Aggregate Cut-Off Date
Range of Number of Unpaid Aggregate
Cut-Off Date Mortgage Principal Principal
Principal Balance Loans Balance Balance
----------------- --------- --------------- -------------
<S> <C> <C> <C>
$ .01 to 25,000.00 651 12,030,221.53 4.81
$ 25,000.01 to 50,000.00 1,244 46,765,457.41 18.70
$ 50,000.01 to 75,000.00 854 52,215,381.86 20.88
$ 75,000.01 to 100,000.00 459 39,944,855.92 15.97
$ 100,000.01 to 150,000.00 425 50,984,933.28 20.39
$ 150,000.01 to 191,250.00 120 20,024,129.38 8.01
$ 191,250.01 to 200,000.00 20 3,934,771.72 1.57
$ 200,000.01 to 250,000.00 44 9,742,104.78 3.90
$ 250,000.01 to 300,000.00 22 5,956,685.92 2.38
$ 300,000.01 to 350,000.00 20 6,592,498.39 2.64
$ 350,000.01 to 400,000.00 5 1,860,052.28 0.74
- --------------------------------------------------------------------------
Total.................... 3864 $250,051,092.47 100.00%
==========================================================================
</TABLE>
FIXED RATE GROUP
ORIGINATORS OF THE MORTGAGE LOANS
<TABLE>
<CAPTION>
Percentage of
Aggregate Cut-Off Date
Number of Unpaid Aggregate
Mortgage Principal Principal
Originator Loans Balance Balance
- ---------- --------- --------------- -------------
<S> <C> <C> <C>
Affiliated:
RETAIL 2168 113,498,152.78 45.39
BROKERS NETWORK 1127 81,559,016.83 32.62
Unaffiliated: 569 54,993,922.86 21.99
- --------------------------------------------------------------------------
Total............... 3864 $250,051,092.47 100.00%
==========================================================================
</TABLE>
-10-
<PAGE> 11
FIXED RATE GROUP
GEOGRAPHICAL DISTRIBUTION OF MORTGAGED PROPERTIES
<TABLE>
<CAPTION>
Percentage of
Aggregate Cut-Off Date
Number of Unpaid Aggregate
Mortgage Principal Principal
State Loans Balance Balance
- ----- --------- --------------- -------------
<S> <C> <C> <C>
Alaska 1 47,230.22 0.02
Arizona 147 8,940,499.86 3.58
Arkansas 11 562,194.60 0.22
California 578 48,851,101.82 19.54
Colorado 98 7,730,576.95 3.09
Connecticut 30 1,782,610.64 0.71
Dist of Col 11 845,235.52 0.34
Florida 495 33,661,772.03 13.46
Georgia 81 4,683,450.40 1.87
Hawaii 33 6,488,031.99 2.59
Idaho 4 304,807.72 0.12
Illinois 148 7,735,854.03 3.09
Indiana 94 4,717,956.79 1.89
Iowa 6 281,346.83 0.11
Kansas 29 1,295,984.84 0.52
Kentucky 39 1,580,863.08 0.63
Louisiana 79 3,898,951.66 1.56
Maryland 69 4,400,012.66 1.76
Massachusetts 32 2,760,096.96 1.10
Michigan 236 10,450,431.30 4.18
Minnesota 38 2,499,808.02 1.00
Mississippi 22 1,138,649.73 0.46
Missouri 129 5,017,120.29 2.01
Montana 2 220,510.26 0.09
Nebraska 8 505,211.02 0.20
Nevada 31 2,408,972.60 0.96
New Hampshire 1 179,250.31 0.07
New Jersey 80 5,138,425.85 2.05
New Mexico 9 798,450.00 0.32
New York 172 13,966,509.29 5.59
North Carolina 78 4,636,549.22 1.85
Ohio 186 9,573,031.33 3.83
Oklahoma 18 792,383.93 0.32
Oregon 78 6,464,086.60 2.59
Pennsylvania 151 6,155,960.77 2.46
Rhode Island 15 942,014.28 0.38
South Carolina 37 1,757,798.72 0.70
Tennessee 90 5,959,988.53 2.38
Texas 280 16,274,947.63 6.51
Utah 48 3,467,453.53 1.39
Vermont 1 22,490.78 0.01
Virginia 33 2,433,262.75 0.97
Washington 107 7,202,207.73 2.88
West Virginia 1 145,000.00 0.06
Wisconsin 28 1,331,999.40 0.53
- ------------------------------------------------------------------------
Total............... 3864 $250,051,092.47 100.00%
========================================================================
</TABLE>
-11-
<PAGE> 12
ADJUSTABLE RATE GROUP
TYPE OF MORTGAGED PROPERTIES
<TABLE>
<CAPTION>
Percentage of
Aggregate Cut-Off Date
Number of Unpaid Aggregate
Mortgage Principal Principal
Property Type Loans Balance Balance
- ------------- --------- --------------- -------------
<S> <C> <C> <C>
Single-family 3298 321,687,158.92 85.78
Condominiums 291 29,409,605.74 7.84
2 to 4 Family 257 23,902,404.20 6.37
- -------------------------------------------------------------------------
Total............... 3846 $374,999,168.86 100.00%
=========================================================================
</TABLE>
ADJUSTABLE RATE GROUP
OCCUPANCY STATUS
<TABLE>
<CAPTION>
Percentage of
Aggregate Cut-Off Date
Number of Unpaid Aggregate
Mortgage Principal Principal
Occupancy Status Loans Balance Balance
- ---------------- --------- --------------- -------------
<S> <C> <C> <C>
Owner Occ./Prim. Resid. 3740 368,308,690.36 98.22
Non Own Occ/Investor 106 6,690,478.50 1.78
- ----------------------------------------------------------------------------
Total.................. 3846 $374,999,168.86 100.00%
============================================================================
</TABLE>
ADJUSTABLE RATE GROUP
AMORTIZATION METHOD
<TABLE>
<CAPTION>
Percentage of
Aggregate Cut-Off Date
Number of Unpaid Aggregate
Mortgage Principal Principal
Amortization Method Loans Balance Balance
- ------------------- --------- --------------- ------------
<S> <C> <C> <C>
Fully Amortizing 3845 374,898,379.86 99.97
Partially Amortizing 1 100,789.00 0.03
- ---------------------------------------------------------------------------
Total.................. 3846 $374,999,168.86 100.00%
===========================================================================
</TABLE>
-12-
<PAGE> 13
ADJUSTABLE RATE GROUP
COMBINED LOAN-TO-VALUE RATIOS
<TABLE>
<CAPTION>
Percentage of
Aggregate Cut-Off Date
Number of Unpaid Aggregate
Range of Combined Mortgage Principal Principal
Loan-To-Value Ratios Loans Balance Balance
-------------------- --------- --------------- ------------
<S> <C> <C> <C>
10.001% to 15.000% 3 150,967.40 0.04
15.001% to 20.000% 4 132,391.02 0.04
20.001% to 25.000% 7 269,075.17 0.07
25.001% to 30.000% 8 559,893.48 0.15
30.001% to 35.000% 9 336,212.41 0.09
35.001% to 40.000% 12 585,181.42 0.16
40.001% to 45.000% 28 2,092,208.34 0.56
45.001% to 50.000% 49 3,425,980.63 0.91
50.001% to 55.000% 42 3,166,406.83 0.84
55.001% to 60.000% 123 9,342,955.98 2.49
60.001% to 65.000% 396 29,712,616.40 7.92
65.001% to 70.000% 356 28,021,237.40 7.47
70.001% to 75.000% 649 59,710,089.93 15.92
75.001% to 80.000% 1074 111,781,685.87 29.81
80.001% to 85.000% 345 35,916,028.61 9.58
85.001% to 90.000% 739 89,507,024.89 23.87
90.001% to 95.000% 2 289,213.08 0.08
- --------------------------------------------------------------------------
Total.................... 3846 $374,999,168.86 100.00%
==========================================================================
</TABLE>
ADJUSTABLE RATE GROUP
ORIGINAL TERM TO MATURITY
<TABLE>
<CAPTION>
Percentage of
Aggregate Cut-Off Date
Number of Unpaid Aggregate
Original Term Mortgage Principal Principal
to Maturity (months) Loans Balance Balance
- -------------------- --------- --------------- ------------
<S> <C> <C> <C>
168 to 180 79 4,413,710.07 1.18%
228 to 240 2 293,582.51 0.08%
348 to 360 3,765 370,291,876.28 98.74%
- ------------------------------------------------------------------------------
Total............ 3,846 $374,999,168.86 100.00%
==============================================================================
</TABLE>
-13-
<PAGE> 14
ADJUSTABLE RATE GROUP
REMAINING TERM TO MATURITY
<TABLE>
<CAPTION>
Aggregate Percentage of
Range of Unpaid Cut-Off Date
Remaining Terms Number of Principal Aggregate
to Maturity (months) Mortgage Loans Balance Principal Balance
- -------------------- -------------- --------------- -----------------
<S> <C> <C> <C>
168 to 180 79 4,413,710.07 1.18%
228 to 240 2 293,582.51 0.08%
336 to 348 4 277,167.78 0.07%
348 to 360 3,761 370,014,708.50 98.67%
- -----------------------------------------------------------------------------
Total............ 3,846 $374,999,168.86 100.00%
=============================================================================
</TABLE>
ADJUSTABLE RATE GROUP
RANGE OF MORTGAGE INTEREST RATES
<TABLE>
<CAPTION>
Aggregate Percentage of
Number of Unpaid Cut-Off Date
Range of Mortgage Mortgage Principal Aggregate
Interest Rates Loans Balance Principal Balance
-------------- --------- --------------- -----------------
<S> <C> <C> <C>
5.501% to 6.000% 1 142,355.13 0.04
6.001% to 6.500% 2 325,000.00 0.09
6.501% to 7.000% 23 3,011,581.96 0.80
7.001% to 7.500% 43 4,961,283.49 1.32
7.501% to 7.750% 44 5,498,191.75 1.47
7.751% to 8.000% 98 12,515,938.24 3.34
8.001% to 8.250% 86 10,392,929.59 2.77
8.251% to 8.500% 142 18,520,681.22 4.94
8.501% to 8.750% 197 23,991,746.21 6.40
8.751% to 9.000% 331 39,947,800.50 10.65
9.001% to 9.250% 217 24,040,514.62 6.41
9.251% to 9.500% 334 36,684,796.88 9.78
9.501% to 9.750% 320 31,558,557.45 8.42
9.751% to 10.000% 369 37,182,207.00 9.92
10.001% to 10.250% 190 17,228,963.88 4.59
10.251% to 10.500% 269 21,606,842.15 5.76
10.501% to 10.750% 218 17,664,441.09 4.71
10.751% to 11.000% 210 15,793,685.67 4.21
11.001% to 11.250% 121 9,787,892.25 2.61
11.251% to 11.500% 86 6,131,511.78 1.64
11.501% to 11.750% 78 6,118,339.41 1.63
11.751% to 12.000% 86 6,125,922.04 1.63
12.001% to 12.250% 55 3,868,963.57 1.03
12.251% to 12.500% 59 3,990,359.55 1.06
12.501% to 12.750% 44 3,326,678.20 0.89
12.751% to 13.000% 50 3,951,293.08 1.05
13.001% to 13.250% 28 1,672,825.57 0.45
13.251% to 13.500% 41 2,539,613.72 0.68
13.501% to 13.750% 40 2,567,053.36 0.68
13.751% to 14.000% 23 1,284,957.98 0.34
14.001% to 14.250% 21 1,171,519.60 0.31
14.251% to 14.500% 15 948,972.00 0.25
14.501% to 14.750% 1 30,200.00 0.01
14.751% to 15.000% 3 341,758.88 0.09
15.501% to 15.750% 1 73,791.04 0.02
- ----------------------------------------------------------------------------
Total.......... 3846 $374,999,168.86 100.00%
============================================================================
</TABLE>
-14-
<PAGE> 15
ADJUSTABLE RATE GROUP
CUT-OFF DATE PRINCIPAL BALANCE
<TABLE>
<CAPTION>
Percentage of
Aggregate Cut-Off Date
Number of Unpaid Aggregate
Range of Cut-Off Date Mortgage Principal Principal
Principal Balances Loans Balance Balance
------------------ --------- --------------- -------------
<S> <C> <C> <C>
$ .01 to 25,000.00 90 1,910,382.47 0.51
$ 25,000.01 to 50,000.00 777 29,752,464.03 7.93
$ 50,000.01 to 75,000.00 853 53,866,899.31 14.36
$ 75,000.01 to 100,000.00 702 61,788,744.82 16.48
$ 100,000.01 to 150,000.00 831 101,141,490.99 26.97
$ 150,000.01 to 191,250.00 264 44,035,804.85 11.74
$ 191,250.01 to 200,000.00 52 10,196,617.12 2.72
$ 200,000.01 to 250,000.00 150 33,578,606.01 8.95
$ 250,000.01 to 300,000.00 76 20,740,019.99 5.53
$ 300,000.01 to 350,000.00 37 12,186,196.27 3.25
$ 350,000.01 to 400,000.00 9 3,398,231.39 0.91
$ 450,000.01 to 500,000.00 5 2,403,711.61 0.64
- --------------------------------------------------------------------------
Total.................... 3846 $374,999,168.86 100.00%
==========================================================================
</TABLE>
ADJUSTABLE RATE GROUP
RANGE OF GROSS MARGINS
<TABLE>
<CAPTION>
Aggregate Percentage of
Unpaid Cut-Off Date
Range of Number of Principal Aggregate
Gross Margin Mortgage Loans Balance Principal Balance
------------ -------------- --------------- -----------------
<S> <C> <C> <C>
3.501% to 4.000% 4 305,972.88 0.08
4.001% to 4.500% 16 2,033,701.75 0.54
4.501% to 5.000% 806 82,381,373.03 21.97
5.001% to 5.500% 696 72,290,278.06 19.28
5.501% to 6.000% 856 77,938,028.98 20.78
6.001% to 6.500% 298 37,098,104.89 9.89
6.501% to 7.000% 733 61,458,946.02 16.39
7.001% to 7.500% 146 15,583,310.57 4.16
7.501% to 8.000% 113 10,974,713.30 2.93
8.001% to 8.500% 60 4,679,494.82 1.25
8.501% to 9.000% 46 4,369,756.49 1.17
9.001% to 9.500% 38 2,637,846.16 0.70
9.501% to 10.000% 27 2,732,784.39 0.73
10.001% to 10.500% 6 465,905.87 0.12
10.501% to 11.000% 1 48,951.65 0.01
- ------------------------------------------------------------------------------
Total................. 3,846 $374,999,168.86 100.00%
==============================================================================
</TABLE>
-15-
<PAGE> 16
ADJUSTABLE RATE GROUP
RANGE OF MAXIMUM MORTGAGE INTEREST RATES
<TABLE>
<CAPTION>
Aggregate Percentage of
Number of Unpaid Cut-Off Date
Range of Maximum Mortgage Principal Aggregate
Mortgage Rates Loans Balance Principal Balance
- -------------- --------- --------------- -----------------
<S> <C> <C> <C>
12.001% to 12.500% 2 180,460.34 0.05
12.501% to 13.000% 7 892,691.34 0.24
13.001% to 13.500% 10 1,276,637.46 0.34
13.501% to 14.000% 59 7,409,947.84 1.98
14.001% to 14.500% 109 14,063,970.23 3.75
14.501% to 15.000% 297 39,732,561.94 10.60
15.001% to 15.500% 379 48,101,514.64 12.83
15.501% to 16.000% 565 65,340,235.52 17.42
16.001% to 16.500% 429 41,968,320.01 11.19
16.501% to 17.000% 546 48,791,306.74 13.01
17.001% to 17.500% 411 33,631,880.94 8.97
17.501% to 18.000% 382 28,337,899.44 7.56
18.001% to 18.500% 194 14,486,603.77 3.86
18.501% to 19.000% 147 11,158,242.51 2.98
19.001% to 19.500% 87 5,364,839.14 1.43
19.501% to 20.000% 83 5,906,826.20 1.58
20.001% to 20.500% 67 3,825,735.88 1.02
20.501% to 21.000% 43 2,597,167.52 0.69
21.001% to 21.500% 27 1,828,336.36 0.49
21.501% to 22.000% 2 103,991.04 0.03
- ----------------------------------------------------------------------------
Total................. 3846 $374,999,168.86 100.00%
=============================================================================
</TABLE>
-16-
<PAGE> 17
ADJUSTABLE RATE GROUP
RANGE OF MINIMUM MORTGAGE RATES
<TABLE>
<CAPTION>
Aggregate Percentage of
Unpaid Cut-Off Date
Range of Minimum Number of Principal Aggregate
Mortgage Rates Mortgage Loans Balance Principal Balance
- -------------- -------------- --------------- -----------------
<S> <C> <C> <C>
4.501% to 5.000% 5 686,743.90 0.18
5.001% to 5.500% 5 558,760.96 0.15
5.501% to 6.000% 1 142,355.13 0.04
6.001% to 6.500% 2 325,000.00 0.09
6.501% to 7.000% 22 3,025,118.83 0.81
7.001% to 7.500% 41 4,832,454.55 1.29
7.501% to 8.000% 123 16,320,903.60 4.35
8.001% to 8.500% 203 26,460,071.62 7.06
8.501% to 9.000% 485 58,868,939.94 15.70
9.001% to 9.500% 512 56,793,940.21 15.15
9.501% to 10.000% 656 65,619,621.04 17.50
10.001% to 10.500% 450 38,032,581.20 10.14
10.501% to 11.000% 457 36,821,326.62 9.82
11.001% to 11.500% 258 21,326,660.92 5.69
11.501% to 12.000% 186 14,771,464.78 3.94
12.001% to 12.500% 138 10,107,261.49 2.70
12.501% to 13.000% 113 8,530,297.86 2.27
13.001% to 13.500% 78 4,902,148.60 1.31
13.501% to 14.000% 68 4,180,276.09 1.11
14.001% to 14.500% 37 2,217,491.60 0.59
14.501% to 15.000% 3 329,097.37 0.09
15.001% to 15.500% 2 72,861.51 0.02
15.501% to 16.000% 1 73,791.04 0.02
- --------------------------------------------------------------------------------------
Total................. 3846 $374,999,168.86 100.00%
======================================================================================
</TABLE>
ADJUSTABLE RATE GROUP
ORIGINATORS OF THE MORTGAGE LOANS
<TABLE>
<CAPTION>
Percentage of
Aggregate Cut-Off
Number of Unpaid Aggregate
Mortgage Principal Principal
Originator Loans Balance Balance
- ---------- --------- --------------- -------------
<S> <C> <C> <C>
Affiliated :
RETAIL 227 21,172,245.97 5.65
BROKERS NETWORK 2552 225,524,943.69 60.14
Unaffiliated 1067 128,301,979.20 34.21
- --------------------------------------------------------------------------
Total............... 3846 $374,999,168.86 100.00%
==========================================================================
</TABLE>
-17-
<PAGE> 18
ADJUSTABLE RATE GROUP
GEOGRAPHICAL DISTRIBUTION OF MORTGAGED PROPERTIES
<TABLE>
<CAPTION>
Percentage of
Aggregate Cut-Off Date
Number of Unpaid Aggregate
Mortgage Principal Principal
State Loans Balance Balance
- ----- --------- --------------- -------------
<S> <C> <C> <C>
Alaska 2 173,366.17 0.05
Arizona 133 12,039,520.16 3.21
Arkansas 5 548,059.64 0.15
California 329 49,450,336.76 13.19
Colorado 100 10,824,583.35 2.89
Connecticut 105 10,655,405.01 2.84
Delaware 4 319,380.19 0.09
Dist of Col 40 3,887,567.28 1.04
Florida 524 48,050,971.46 12.81
Georgia 55 5,320,003.74 1.42
Hawaii 35 6,286,301.81 1.68
Idaho 17 1,324,452.95 0.35
Illinois 113 9,813,821.95 2.62
Indiana 152 9,756,649.98 2.60
Iowa 26 1,429,611.53 0.38
Kansas 25 1,736,525.10 0.46
Kentucky 42 2,580,383.27 0.69
Louisiana 69 5,596,300.22 1.49
Maine 1 31,185.64 0.01
Maryland 154 14,847,708.94 3.96
Massachusetts 34 4,307,617.47 1.15
Michigan 141 9,351,571.21 2.49
Minnesota 75 7,996,104.31 2.13
Mississippi 20 1,866,869.01 0.50
Missouri 80 4,975,974.93 1.33
Montana 1 68,323.03 0.02
Nebraska 39 2,699,742.79 0.72
Nevada 34 3,740,640.37 1.00
New Jersey 72 7,811,627.07 2.08
New Mexico 37 3,572,626.69 0.95
New York 58 6,630,723.65 1.77
North Carolina 91 7,167,022.45 1.91
Ohio 234 16,649,197.73 4.44
Oklahoma 5 247,997.34 0.07
Oregon 115 13,218,113.91 3.52
Pennsylvania 141 12,505,427.34 3.33
Rhode Island 14 1,259,254.29 0.34
South Carolina 103 5,710,141.45 1.52
Tennessee 41 3,872,604.10 1.03
Texas 156 15,980,118.08 4.26
Utah 141 17,578,887.49 4.69
Virginia 56 5,648,276.12 1.51
Washington 183 24,811,348.30 6.62
West Virginia 3 112,410.74 0.03
Wisconsin 39 2,436,047.49 0.65
Wyoming 2 108,366.35 0.03
- --------------------------------------------------------------------------
Total............... 3846 $374,999,168.86 100.00%
==========================================================================
</TABLE>
-18-
<PAGE> 19
Item 7. Financial Statements: Pro Forma Financial Information and
Exhibits.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits:
1.1 Underwriting Agreement, dated May 22, 1998, between Aames
Capital Acceptance Corp., as Transferor, and Prudential Securities Incorporated,
as Representative of the several Underwriters named in Schedule I to the Pricing
Agreement.
1.2 Pricing Agreement, dated May 22, 1998, between Aames
Capital Acceptance Corp., as Transferor, and Prudential Securities Incorporated,
as Representative of the several Underwriters named in Schedule I thereto.
4.1 Pooling and Servicing Agreement, dated as of June 1,
1998, between Aames Capital Acceptance Corp., as Transferor, Aames Capital
Corporation, as Servicer, and Bankers Trust Company of California, N.A., as
Trustee.
4.2 Financial Guaranty Insurance Policy issued by the
Financial Guaranty Insurer, Financial Security Assurance Inc.
10.1 Initial Mortgage Loan Conveyance Agreement, dated as of
June 1, 1998, between Aames Capital Corporation, as Seller, and Aames Capital
Acceptance Corp., as Transferor.
10.2 Subsequent Mortgage Loan Conveyance Agreement, dated as
of June 30, 1998, between Aames Capital Corporation, as Seller, and Aames
Capital Acceptance Corp., as Transferor.
10.3 Subsequent Transfer Agreement, dated as of June 30,
1998, between Aames Capital Acceptance Corp., as Transferor, and Bankers Trust
Company of California, N.A., as Trustee.
-19-
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has dully caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AAMES CAPITAL ACCEPTANCE CORP.
By: /s/ Joseph Magnus
-------------------------------------
Joseph Magnus
Executive Vice President
Dated: July 24, 1998
-20-
<PAGE> 21
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
----------- ----------------------
<S> <C>
1.1 Underwriting Agreement, dated May 22, 1998, between Aames
Capital Acceptance Corp., as Transferor, and Prudential
Securities Incorporated, as Representative of the several
Underwriters named in Schedule I to the Pricing Agreement.
1.2 Pricing Agreement, dated May 22, 1998, between Aames
Capital Acceptance Corp., as Transferor, and Prudential
Securities Incorporated, as Representative of the several
Underwriters named in Schedule I thereto.
4.1 Pooling and Servicing Agreement, dated as of June 1, 1998,
between Aames Capital Acceptance Corp., as Transferor,
Aames Capital Corporation, as Servicer, and Bankers Trust
Company of California, N.A., as Trustee.
4.2 Financial Guaranty Insurance Policy issued by the Financial
Guaranty Insurer, Financial Security Assurance Inc.
10.1 Initial Mortgage Loan Conveyance Agreement, dated as of
June 1, 1998, between Aames Capital Corporation, as Seller,
and Aames Capital Acceptance Corp., as Transferor.
10.2 Subsequent Mortgage Loan Conveyance Agreement, dated as of
June 30, 1998, between Aames Capital Corporation, as
Seller, and Aames Capital Acceptance Corp., as Transferor
10.3 Subsequent Transfer Agreement, dated as of June 30, 1998,
between Aames Capital Acceptance Corp., as Transferor, and
Bankers Trust Company of California, N.A., as Trustee.
</TABLE>
<PAGE> 1
EXHIBIT 1.1
AAMES CAPITAL ACCEPTANCE CORP.
AND
THE UNDERWRITERS
UNDERWRITING AGREEMENT
FOR
AAMES MORTGAGE TRUSTS
MORTGAGE PASS-THROUGH CERTIFICATES,
ISSUABLE IN SERIES
MAY 22, 1998
<PAGE> 2
May 22, 1998
Prudential Securities Incorporated
as Representative of the several Underwriters
named in Schedule I to the Pricing Agreement
c/o Prudential Securities Incorporated
One New York Plaza, 17th Floor
New York, New York 10292
Aames Capital Acceptance Corp. (the "Company") proposes, from time to
time, to enter into one or more pricing agreements (each a "Pricing Agreement")
in the form of Annex A hereto, with such additions and deletions as the parties
thereto may determine, and, subject to the terms and conditions stated herein
and therein, to issue in series (each a "Series") and to sell to the
Underwriters (as hereinafter defined), mortgage pass-through certificates, each
Series of which is to be issued pursuant to an applicable pooling and servicing
agreement (a "Pooling and Servicing Agreement") to be dated as of the applicable
Cut-off Date (as defined in the Pricing Agreement), between the Company, as
seller, Aames Capital Corporation ("ACC"), as servicer, and Bankers Trust
Company of California, N.A., as trustee (the "Trustee"). Prudential Securities
Incorporated, will act as underwriter and as Representative (in such capacity,
the "Representative") of the several underwriters named in Schedule I hereto
(the "Underwriters"). Each Series of Certificates (as defined below) will
evidence an undivided beneficial ownership interest in a separate Trust (as
defined in the related Pooling and Servicing Agreement) consisting primarily of
a pool (the "Pool") of mortgage loans (the "Mortgage Loans") listed in an
attachment to such Pooling and Servicing Agreement. The Mortgage Loans sold by
the Company to the Trust will be acquired by the Company from ACC pursuant to an
applicable initial mortgage loan conveyance agreement (an "Initial Mortgage Loan
Conveyance Agreement") to be dated as of the applicable Cut-off Date between the
Company and ACC. The Certificates will be issued in one or more classes (each a
"Class"), which may be divided into one or more subclasses (each a "Subclass").
Any rights of holders of Certificates of a particular Class or Subclass to
receive certain distributions with respect to the Mortgage Loans that are senior
to such rights of holders of Certificates of any other Class or Subclass of the
same Series shall be specified in the Pricing Agreement. The Certificates of a
Series to be purchased pursuant to a Pricing Agreement will be described more
fully in the base Prospectus and the related Prospectus Supplement (each of
which terms is defined below) which the Company will furnish to the
Underwriters.
On or prior to the date of issuance of the Certificates of any Class, if
specified in the Pricing Agreement, the Company will obtain a certificate
guaranty insurance policy satisfying the description thereof in the Offering
Document.
1
<PAGE> 3
As used herein, the term "Execution Time" shall mean the date and time
that the Pricing Agreement is executed and delivered by the parties thereto; the
term "Agreement," "this Agreement" and terms of similar import shall mean this
Underwriting Agreement including the Pricing Agreement; and the term "Closing
Date" shall mean the Closing Date specified in the Pricing Agreement. All
capitalized terms used but not otherwise defined herein have the respective
meanings set forth in the form of Pooling and Servicing Agreement heretofore
delivered to the Representative.
1. Securities. Unless otherwise specified in the Pricing Agreement, the
Certificates of each Series will be issued in classes as follows: (i) one or
more classes of securities rated in the highest category by the Rating Agencies
(which may include two or more subclasses) with respect to the Fixed Rate
Certificates (collectively, the "Fixed Rate Group Certificates") and a senior
class of Adjustable Rate Certificates (the "Class A-1A Certificates"), (ii) if
so specified, one or more mezzanine classes (which may include two or more
subclasses) with respect to the Adjustable Rate Group (collectively, the "Class
M Certificates"), (iii) if so specified, a subordinate class (which may include
two or more subclasses) with respect to the Adjustable Rate Group (collectively,
the "Class B Certificates" and together with the "Class A-1A Certificates" and
the "Class M Certificates", the "Adjustable Rate Certificates"), (iv) the Class
C Certificates (the "Class C Certificates"), and (v) a residual class with
respect to each REMIC election made with respect to the Trust (the "Class R
Certificates"). The Fixed Rate Group Certificates, the Class A-1A Certificates,
the Class M Certificates and the Class B Certificates specified in the Pricing
Agreement are hereinafter referred to as the "Offered Certificates." The Offered
Certificates, the Class C Certificates and the Class R Certificates are
hereinafter referred to as the "Certificates."
2. Representations and Warranties of the Company. The Company represents
and warrants to, and covenants with, each Underwriter that:
A. A registration statement on Form S-3 (Registration No.
333-46893-01), including a prospectus and a form of prospectus
supplement that contemplates the offering of mortgage pass-through
certificates from time to time, has been filed by the Company and ACC
with the Securities and Exchange Commission (the "Commission"), pursuant
to the Securities Act of 1933, as amended and the rules and regulations
of the Commission thereunder (collectively, the "1933 Act"), and as
amended from time to time by one or more amendments, including
post-effective amendments, has been declared effective by the Commission
prior to the date of the Pricing Agreement. The Company will cause to be
filed with the Commission, after effectiveness of such registration
statement (and any such post-effective amendments), a final prospectus
in accordance with Rules 415 and 424(b)(2) under the 1933 Act, relating
to the Offered Certificates.
As used herein, the term "Effective Date" shall mean the date
that the Registration Statement (including the most recently filed
post-effective amendment, if any) became effective. "Registration
Statement" shall mean the registration statement referred to in the
preceding paragraph, including the exhibits thereto and any documents
2
<PAGE> 4
incorporated by reference therein pursuant to Item 12 of Form S-3 under
the 1933 Act specifically relating to the terms of the Offered
Certificates or the Pool and filed with the Commission pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), except
that if the Registration Statement is amended by the filing with the
Commission of a post-effective amendment thereto, the term "Registration
Statement" shall mean collectively the Registration Statement, as
amended by the most recently filed post-effective amendment thereto, in
the form in which it was declared effective by the Commission. The
prospectus dated the date specified in the Pricing Agreement (which if
not so specified shall be the date of such Pricing Agreement), which
constitutes a part of the Registration Statement, together with the
prospectus supplement dated the date specified in the Pricing Agreement
(which if not so specified shall be the date of such Pricing Agreement)
(the "Prospectus Supplement"), relating to the offering of the Offered
Certificates, including any document incorporated therein by reference
pursuant to the Exchange Act, are hereinafter referred to collectively
as the "Prospectus," except that if the Prospectus is thereafter amended
or supplemented pursuant to Rule 424(b), the term "Prospectus" shall
mean the prospectus, as so amended or supplemented pursuant to Rule
424(b), from and after the date on which such amended prospectus or
supplement is filed with the Commission. Any preliminary form of the
Prospectus Supplement which has heretofore been filed pursuant to Rule
402(a) or Rule 424 is hereinafter called a "Preliminary Prospectus
Supplement." Any reference herein to the terms "amend," "amendment" or
"supplement" with respect to the Registration Statement, the Prospectus
or the Prospectus Supplement shall be deemed to refer to and include the
filing of any document under the Exchange Act after the effective date
of the Registration Statement or the issue date of the Prospectus or
Prospectus or Prospectus Supplement, as the case may be, incorporated
therein by reference.
B. As of the date hereof, and as of the dates when the
Registration Statement became effective, when the Prospectus Supplement
is first filed pursuant to Rule 424(b) under the 1933 Act, when, prior
to the Closing Date, any other amendment to the Registration Statement
becomes effective, and when any supplement to the Prospectus is filed
with the Commission, and at the Closing Date, (i) the Registration
Statement, as amended, as of any such time, and the Prospectus, as
amended or supplemented as of any such time, complied or will comply in
all material respects with the applicable requirements of the 1933 Act,
and (ii) the Registration Statement, as amended as of any such time, did
not and will not contain any untrue statement of a material fact and did
not and will not omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading and
the Prospectus, as amended or supplemented as of any such time, did not
and will not contain an untrue statement of a material fact and did not
and will not omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that the Company
makes no representations or warranties as to the information contained
in or omitted from (i) the Registration Statement or the Prospectus in
reliance upon and in conformity with written information furnished to
the Company by or on behalf of the Underwriters as set forth in this
3
<PAGE> 5
Agreement or the Pricing Agreement specifically for use in connection
with the preparation of the Registration Statement or the Prospectus and
(ii) the Form 8-K - Computational Materials (as defined in Section 5K
below) or Form 8-K - ABS Term Sheets (as defined in Section 5L below),
or in any amendment thereof or supplement thereto, incorporated by
reference in such Registration Statement or such Prospectus (or any
amendment thereof or supplement thereto).
C. The Company is duly organized, validly existing and in good
standing under the laws of the State of Delaware, has full power and
authority (corporate and other) to own its properties and conduct its
business as now conducted by it, and as described in the Prospectus, and
is duly qualified to do business in each jurisdiction in which it owns
or leases real property (to the extent such qualification is required by
applicable law) or in which the conduct of its business requires such
qualification except where the failure to be so qualified does not
involve (i) a material risk to, or a material adverse effect on, the
business, properties, financial position, operation or results of
operations of the Company or (ii) any risk whatsoever as to the
enforceability of any Mortgage Loan.
D. There are no actions, proceedings or investigations pending,
or, to the knowledge of the Company, threatened, before any court,
governmental agency or body or other tribunal (i) asserting the
invalidity of this Agreement, the Certificates or of the Pooling and
Servicing Agreement, (ii) seeking to prevent the issuance of the
Certificates or the consummation of any of the transactions contemplated
by this Agreement or the Pooling and Servicing Agreement, (iii) which
may, individually or in the aggregate, materially and adversely affect
the validity or enforceability of, this Agreement, the Certificates or
the Pooling and Servicing Agreement, or the performance by the Company
of its obligations under this Agreement or the Pooling and Servicing
Agreement or (iv) which may affect adversely the federal income tax
attributes of the Offered Certificates as described in the Prospectus.
E. The execution and delivery by the Company of this Agreement
and the Pooling and Servicing Agreement, the direction by the Company to
the Trustee to execute, countersign, authenticate and deliver the
Certificates and the transfer and delivery of the Mortgage Loans to the
Trust by the Company are within the corporate power of the Company and
have been, or will be, prior to the Closing Date duly authorized by all
necessary corporate action on the part of the Company and the execution
and delivery of such instruments, the consummation of the transactions
therein contemplated and compliance with the provisions thereof will not
result in a breach or violation of any of the terms and provisions of,
or constitute a default under, any statute or any agreement or
instrument to which the Company or any of its affiliates is a party or
by which it or any of them is bound or to which any of the property of
the Company or any of its affiliates is subject, the Company's
certificate of incorporation or bylaws, or any order, rule or regulation
of any court, governmental agency or body or other tribunal having
jurisdiction over the Company, any of its affiliates or any of its or
their properties; and no consent, approval, authorization or order of,
or filing with, any court
4
<PAGE> 6
or governmental agency or body or other tribunal is required for the
consummation of the transactions contemplated by this Agreement or the
Prospectus in connection with the sale of the Certificates by the
Company. Neither the Company nor any of its affiliates is a party to,
bound by or in breach or violation of any indenture or other agreement
or instrument, or subject to or in violation of any statute, order, rule
or regulation of any court, governmental agency or body or other
tribunal having jurisdiction over the Company or any of its affiliates,
which materially and adversely affects, or may in the future materially
and adversely affect, (i) the ability of the Company to perform its
obligations under the Pooling and Servicing Agreement or this Agreement
or (ii) the business, operations, results of operations, financial
position, income, properties or assets of the Company.
F. This Agreement has been duly and validly authorized, executed
and delivered by the Company. The Pooling and Servicing Agreement will
be duly executed and delivered by the Company and will constitute the
legal, valid and binding obligation of the Company enforceable in
accordance with its terms, except as enforceability may be limited by
(i) bankruptcy, insolvency, liquidation, receivership, moratorium,
reorganization or other similar laws affecting the enforcement of the
rights of creditors, and (ii) general principles of equity, whether
enforcement is sought in a proceeding at law or in equity.
G. The Offered Certificates will conform in all material
respects to the description thereof contained in the Prospectus, and the
direction by the Company to the Trustee to execute, countersign,
authenticate and deliver the Certificates will be duly and validly
authorized and, when the Offered Certificates have been duly and validly
executed, authenticated, issued and delivered in accordance with the
Pooling and Servicing Agreement and sold to the Underwriters as provided
herein and the Pricing Agreement, the Offered Certificates have been
validly issued and outstanding and entitled to the benefits of the
Pooling and Servicing Agreement.
H. At the Closing Date, the Mortgage Loans will conform in all
material respects to the description thereof contained in the Prospectus
and the representations and warranties contained in this Agreement will
be true and correct in all material respects. The representations and
warranties set out in the Pooling and Servicing Agreement are hereby
made to the Underwriters as though set out herein, and at the dates
specified in the Pooling and Servicing Agreement, such representations
and warranties were or will be true and correct in all material
respects.
I. The transfer of the Mortgage Loans to the Trust created by
the related Pooling and Servicing Agreement (the "Trust") at the Closing
Date will be treated by the Company for financial accounting and
reporting purposes as a sale of assets and not as a pledge of assets to
secure debt.
J. The Company possesses all material licenses, certificates,
permits or other authorizations issued by the appropriate state, federal
or foreign regulatory agencies or
5
<PAGE> 7
bodies necessary to conduct the business now operated by it and as
described in the Prospectus and there are no proceedings, pending or, to
the best knowledge of the Company, threatened, relating to the
revocation or modification of any such license, certificate, permit or
other authorization which singly or in the aggregate, if the subject of
an unfavorable decision, ruling or finding, would materially and
adversely affect the business, operations, results of operations,
financial position, income, property or assets of the Company.
K. Any taxes, fees and other governmental charges in connection
with the execution and delivery of this Agreement and the Pooling and
Servicing Agreement, or the execution and issuance of the Certificates
have been or will be paid at or prior to the Closing Date.
L. There has not been any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company, its parent company or its subsidiaries, taken
as a whole, from the date of the end of the most recent fiscal quarter
of the Company for which financial statements (whether audited or
unaudited) have been made publicly available (the "Date of Recent
Company Financial Statements"), to the date hereof.
M. The Pooling and Servicing Agreement will conform in all
material respects to the description thereof contained in the
Prospectus.
N. The Company is not aware of (i) any request by the Commission
for any further amendment of the Registration Statement or the
Prospectus or for any additional information with respect to the
offering of the Offered Certificates, (ii) the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution or threatening of any
proceeding for that purpose or (iii) any notification with respect to
the suspension of the qualification of the Offered Certificates for sale
in any jurisdiction or the initiation or threatening of any proceeding
for such purpose.
O. Each assignment of Mortgage required to be prepared pursuant
to the Pooling and Servicing Agreement is based on forms recently
utilized by the the Company or ACC with respect to mortgaged properties
located in the appropriate jurisdiction and used in the regular course
of the Company's or ACC's business. Based on the Company's or ACC's
experience with such matters it is reasonable to believe that upon
execution each such assignment will be in recordable form and will be
sufficient to effect the assignment of the Mortgage to which it relates
as provided in the Pooling and Servicing Agreement.
P. Neither the Company nor the Trust will be subject to
registration as an "investment company" under the Investment Company Act
of 1940, as amended (the "Investment Company Act"). The Pooling and
Servicing Agreement is not required to
6
<PAGE> 8
be qualified under the Trust Indenture Act of 1939, as amended, and the
Trust is not required to be registered.
Q. In connection with the offering of the Certificates in the
State of Florida, the Company hereby certifies that it has complied with
all provisions of Section 5.17.075 of the Florida Securities and
Investor Protection Act.
Any certificate signed by any officer of the Company and delivered to
the Underwriters in connection with the sale of the Offered Certificates to such
Underwriters shall be deemed a representation and warranty as to the matters
covered thereby by the Company to each person to whom the representations and
warranties in this Section 2 are made.
3. Agreements of the Underwriters.
A. The several Underwriters agree with the Company that upon the
execution of the Pricing Agreement and authorization by the Underwriters
of the release of the Offered Certificates of the related Series, the
Underwriters shall offer such Offered Certificates for sale upon the
terms and conditions set forth in the prospectus as amended or
supplemented.
B. Each Underwriter severally represents and agrees that:
(i) it has not offered or sold and will not offer or
sell, prior to the date six months after their
date of issuance, any Offered Certificates to
persons in the United Kingdom, except to persons
whose activities involve them in acquiring,
holding, managing or disposing of investments
(as principal or agent) for the purposes of
their businesses or otherwise in circumstances
which have not resulted in and will not result
in an offer to the public in the United Kingdom
within the meaning of the Public Offers of
Securities Regulations 1995;
(ii) it has complied and will comply with all
applicable provisions of the Financial Services
Act of 1986 with respect to anything done by it
in relation to the Offered Certificates in, from
or otherwise involving the United Kingdom;
(iii) it has only issued or passed on and will only
issue or pass on to any person in the United
Kingdom any document received by it in
connection with the issuance of the Offered
Certificates only if that person is of a kind
described in Article 11(3) of the Financial
Services Act of 1986 (Investment Advertisements)
(Exemptions) Order 1997, or such person is one
to whom the document can lawfully be issued or
passed on;
7
<PAGE> 9
(iv) no action has been or will be taken by such
Underwriter that would result in a public
offering of the Offered Certificates or
distribution of the Prospectus or Prospectus
Supplement or any Computational Materials or any
other offering material in relation to the
Offered Certificates in any non-U.S.
jurisdiction where action for that purpose is
required unless the Company has agreed to such
actions and such actions have been taken; and
(v) it understands that, in connection with the
issuance, offer and sale of the Offered
Certificates and with the distribution of the
Prospectus or Prospectus Supplement or any
Computational Materials or any other offering
material in relation to the Offered Certificates
in, to or from any non-U.S. jurisdiction, the
Company has not taken and will not take any
action, and such Underwriter will not offer,
sell or deliver any Offered Certificates or
distribute the Prospectus or Prospectus
Supplement or any Computational Materials or any
other offering material relating to the Offered
Certificates in, to or from any non-U.S.
jurisdiction except under circumstances which
will result in compliance with applicable laws
and regulations and which will not impose any
liability, obligation or responsibility on the
Company or the other Underwriters.
4. Purchase, Sale and Delivery of the Offered Certificates. The Company
hereby agrees, subject to the terms and conditions hereof, to sell the Offered
Certificates specified in the Pricing Agreement to the Underwriters, who, upon
the basis of the representations and warranties herein contained, but subject to
the conditions hereinafter stated, hereby agree, severally and not jointly, to
purchase the entire aggregate principal amount of the Offered Certificates in
the amounts set forth in Schedule I to such Pricing Agreement. At the time of
issuance of the Certificates, the Mortgage Loans will be sold by the Company to
the Trust pursuant to the Pooling and Servicing Agreement. ACC will be
obligated, under the Pooling and Servicing Agreement, to service the Mortgage
Loans either directly or through subservicers.
The Offered Certificates to be purchased by the Underwriters will be
delivered by the Company to the Underwriters (which delivery shall be made
through the facilities of The Depository Trust Company ("DTC") or Cedel Bank,
societe anonyme or the Euroclear System) against payment of the purchase price
therefor, in an amount equal to the percentage of the aggregate original
principal amount thereof as specified in the Pricing Agreement, plus interest
accrued, if any, at the rate on the aggregate original principal amount thereof
from the date specified in such Pricing Agreement to, but not including, the
Closing Date, by a same day federal funds wire payable to the order of the
Company.
Settlement shall take place at the specified offices of O'Melveny &
Myers LLP at 10:00 a.m., New York City time, on the date specified in the
Pricing Agreement, or at such other place and at such other time thereafter
(such time being herein referred to as the "Closing Date"), in each case as the
Underwriters and the Company shall determine. The Offered Certificates will
8
<PAGE> 10
be prepared in definitive form and in such authorized denominations as the
Underwriters may request, registered in the name of Cede & Co., as nominee of
DTC.
It is a condition to the purchase and sale of each Class of Offered
Certificates that the purchase and sale of each other Class of Offered
Certificates occurs simultaneously.
The Company agrees to have the Offered Certificates available for
inspection and review by the Underwriters in Los Angeles not later than 11:00
a.m. New York City time on the business day prior to the Closing Date.
5. Covenants of the Company. The Company covenants and agrees with each
Underwriter that:
A. The Company will promptly advise the Representative and
counsel to the Underwriters (i) when any amendment to the Registration
Statement relating to the offering of the Offered Certificates shall
have become effective, (ii) of any request by the Commission for any
amendment to the Registration Statement or the Prospectus or for any
additional information to the extent applicable to the offering of the
Offered Certificates, (iii) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or
the institution or threatening of any proceeding for that purpose and
(iv) or the receipt by the Company of any notification with respect to
the suspension of the qualification of the Offered Certificates for sale
in any jurisdiction or the initiation or threatening of any proceeding
for such purpose. The Company will not file, and will use its
commercially reasonable efforts to prevent ACC from filing, any
amendment to the Registration Statement or supplement to the Prospectus
after the date of the Pricing Agreement and prior to the related Closing
Date for the Offered Certificates unless the Company has furnished the
Representative and counsel to the Underwriters copies of such amendment
or supplement for their review prior to filing and will not file any
such proposed amendment or supplement to which the Representative
reasonably and promptly objects, unless such filing is required by law.
The Company will use its commercially reasonable efforts to prevent the
issuance of any stop order suspending the effectiveness of the
Registration Statement and, if issued, to obtain as soon as possible the
withdrawal thereof.
B. If, at any time during the period in which the Prospectus is
required by law to be delivered, any event occurs as a result of which
the Prospectus as then amended or supplemented would include any untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it shall
be necessary to amend or supplement the Prospectus to comply with the
1933 Act or the rules under the 1933 Act, the Company will promptly
prepare and file with the Commission and shall use its commercially
reasonable efforts to cause ACC to promptly prepare and file, subject to
Paragraph A of this Section 5, an amendment or supplement that will
correct such statement or omission or an amendment that will effect such
compliance and, if such amendment or supplement is required to be
contained in a post-effective amendment to
9
<PAGE> 11
the Registration Statement, will use its commercially reasonable efforts
to cause such post-effective amendment of the Registration Statement to
become effective as soon as possible, provided, however, that the
Company will not be required to file any such amendment or supplement
with respect to any Computational Materials or ABS Term Sheets
incorporated by reference in the Prospectus other than any amendments or
supplements of such Computational Materials or ABS Term Sheets that are
furnished to the Company by the Underwriters pursuant to Section 9A
hereof which the Company is required to file in accordance with Section
5K or 5L.
C. The Company will furnish to the Underwriters, without charge,
copies of the Registration Statement (including exhibits thereto), any
documents incorporated therein by reference, and, so long as delivery of
a prospectus by the Underwriters or a dealer may be required by the 1933
Act, as many copies of the Prospectus, as amended or supplemented, and
any amendments and supplements thereto as the Underwriters may
reasonably request. The Company will pay the expenses of printing all
offering documents relating to the offering of the Offered Certificates.
D. As soon as practicable, but not later than sixteen months
after the effective date of the Registration Statement, the Company will
cause the Trust to make generally available to holders of Offered
Certificates statements of the Trust collectively covering a period of
at least 12 months beginning after the effective date of the
Registration Statement. Such statements will be filed with the
Commission pursuant to the provisions of the Exchange Act.
E. During a period of 20 calendar days from the Execution Time,
neither the Company nor any affiliate of the Company will, without the
Representative's prior written consent (which consent shall not be
unreasonably withheld), enter into any agreement to offer or sell
mortgage pass-through certificates backed by mortgage loans, except
pursuant to this Agreement.
F. So long as any of the Offered Certificates are outstanding,
the Company will cause to be delivered to the Underwriters, (i) all
documents required to be distributed to the holders of the Offered
Certificates, (ii) from time to time, any other information concerning
the Trust filed with any government or regulatory authority that is
otherwise publicly available, as the Underwriters may reasonably
request, (iii) the annual statement as to compliance delivered to the
Trustee pursuant to the Pooling and Servicing Agreement, (iv) the annual
statement of a firm of independent public accountants furnished to the
Trustee pursuant to the Pooling and Servicing Agreement as soon as such
statement is filed by the Company with the Commission and (v) any
information required to be delivered by the Company or the Servicer
pursuant to Section 4.01 of the form of Pooling and Servicing Agreement
heretofore delivered to the Representative.
G. The Company, whether or not the transactions contemplated
hereunder are consummated or this Agreement or the Pricing Agreement is
consummated, will pay all
10
<PAGE> 12
expenses in connection with the transactions contemplated herein,
including but not limited to (i) the expenses of printing (or otherwise
reproducing) all documents relating to the offering and the fees and
disbursements of its counsel incurred in connection with the issuance
and delivery of the Offered Certificates, (ii) the preparation of all
documents specified in this Agreement, (iii) any fees and expenses of
the Trustee (including legal fees) that are not payable by or from the
Trust, (iv) any accounting fees and disbursements relating to the
offering of Offered Certificates, (v) any fees charged by rating
agencies for rating the Offered Certificates, (vi) any reasonable fees
and disbursements of counsel to the Underwriters relating to Blue Sky
undertakings (vii) any reasonable fees and disbursements of counsel to
the Underwriters in an amount not to exceed $5,000 per Series relating
to the representation of the Underwriters with respect to the offering
of the Offered Certificates of such Series and (viii) the fees and
charges related to the filing with the Commission of such Current
Reports on Form 8-K and such other materials as are contemplated hereby,
whether pursuant to EDGAR or otherwise. Subject to the provisions of
Section 7 hereof, the Company will not pay the fees and expenses of the
Underwriters or their counsel except as specified above.
H. The Company will enter into the Pooling and Servicing
Agreement and all related agreements on or prior to the Closing Date.
I. The Company will endeavor to qualify the Offered Certificates
for sale to the extent necessary under any state securities or Blue Sky
laws in any jurisdiction as may be reasonably requested by the
Underwriters, if any, and will pay all expenses (including reasonable
fees and disbursements of counsel to the Underwriters) in connection
with such qualification and in connection with the determination of the
eligibility of the Offered Certificates for investment under the laws of
such jurisdiction as the Underwriters may reasonably designate, if any.
J. The Company will file or cause to be filed with the
Commission within fifteen days of the termination of the Commitment
Period (as such term is defined in the related Pooling and Servicing
Agreement), a Current Report on Form 8-K setting forth specific
information concerning the description of the Mortgage Pool (the "Form
8-K - Mortgage Pool"). Without limiting the generality of any other
provision hereof, such Form 8-K - Mortgage Pool shall be deemed to be a
part of the Registration Statement and Prospectus from and after the
date it is first filed with the Commission.
K. The Company will cause any Computational Materials (as
defined in Section 9A hereof) with respect to the Offered Certificates
which are delivered by any Underwriter to the Company pursuant to
Section 9A hereof to be filed with the Commission on a Current Report on
Form 8-K (the "Form 8-K - Computational Materials") at or before the
time of filing of the Prospectus pursuant to Rule 424(b) under the 1933
Act; provided, however, that the Company shall have no obligation to
file any such materials which, in the reasonable determination of the
Company after consultation with such Underwriter (i) are not, based upon
the advice of outside counsel to the Company, required to be filed
pursuant to the Kidder Letters (as defined in
11
<PAGE> 13
Section 9A hereof) or (ii) contain any erroneous information or untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; it being understood, however, that the Company shall have no
obligation to review or pass upon the accuracy or adequacy of, or to
correct, any Computational Materials provided by any Underwriter to the
Company pursuant to Section 9A hereof. The Company will notify the
Underwriters promptly in the event that the Company does not make any
such filing. The parties hereto agree that the Company shall have no
liability for any failure to file such Computational Materials on such
date if the related Underwriter has not delivered such materials to the
Company one business day prior to the date such filing is to be made.
L. The Company will cause any ABS Term Sheets (as defined in
Section 9A hereof) with respect of the Offered Certificates which are
delivered by any Underwriter to the Company pursuant to Section 9A
hereof to be filed with the Commission on one or more Current Reports on
Form 8-K (collectively, the "Form 8-K - ABS Term Sheets") (i) at or
before the time of filing of the Prospectus pursuant to Rule 424(b)
under the 1933 Act, in the case of Structural Term Sheets (as defined in
Section 9A hereof) and (ii) within two business days of first use in the
case of Collateral Term Sheets (as defined in Section 9A hereof);
provided, however, that the Company shall have no obligation to file any
such materials which, in the reasonable determination of the Company
after consultation with such Underwriter (i) are not, based upon advice
of outside counsel to the Company, required to be filed pursuant to the
PSA Letter (as defined in Section 9A hereof), (ii) do not contain the
legends required by the PSA Letter or (iii) contain erroneous
information or contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; it being understood,
however, that the Company shall have no obligation to review or pass
upon the accuracy or adequacy of, or to correct, any ABS Term Sheets
provided by any Underwriter to the Company pursuant to Section 9A
hereof. The Company will notify the Underwriters promptly in the event
that the Company does not make any such filing. The parties hereto agree
that the Company shall have no liability for any failure to file such
ABS Term Sheets on such dates if the related Underwriter has not
delivered such materials to the Company one business day prior to the
date such filing is to be made.
6. Conditions of the Underwriters' Obligation. The obligation of the
Underwriters to purchase and pay for the Offered Certificates of a Series as
provided herein and the Pricing Agreement shall be subject to the accuracy as of
the date hereof, the Execution Time and the applicable Closing Date (as if made
at such Closing Date) of the representations and warranties of the Company
contained herein (including those representations and warranties set forth in
the Pooling and Servicing Agreement and incorporated herein; provided that any
representation or warranty made therein with respect to Mortgage Loans or Notes
where a remedy provided in the Pooling and Servicing Agreement is for the
repurchase by the Company of the related Mortgage Loans, only to the extent that
such representations or warranties are inaccurate in any material respect), to
the accuracy of the statements of the Company made in any certificate or other
12
<PAGE> 14
document delivered pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder, and to the following additional
conditions:
A. The Registration Statement shall have become effective no
later than the date hereof, and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and
no proceedings for that purpose shall have been instituted or
threatened, and the Prospectus shall have been filed pursuant to Rule
424(b) of the 1933 Act as shall be required pursuant to such Rule.
B. The Underwriters shall have received the Pooling and
Servicing Agreement and the Offered Certificates in form and substance
satisfactory to the Underwriters, duly executed by all signatories
required pursuant to respective terms thereof.
C. (1) The Underwriters shall have received the favorable
opinion of O'Melveny & Myers LLP, special counsel to the Company and
ACC, or of such other counsel to the Company as shall be acceptable to
the Underwriters, such opinion or opinions, dated the Closing Date, in
form and substance satisfactory to the Underwriters, and collectively
covering the substantive matters referred to in Appendix A attached
hereto.
(2) The Underwriters shall have received the favorable opinion
of Stroock & Stroock & Lavan LLP, special counsel to the Underwriters,
dated the Closing Date, with respect to the Pooling and Servicing
Agreement, the Certificates of such Series, the due authorization,
execution and delivery of this Agreement and the Pricing Agreement, and
such other matters as the Underwriters may reasonably request.
In rendering their opinions, the counsel described in this
Paragraph C may rely, as to matters of fact, on certificates of
responsible officers of the Company and ACC, the Trustee and public
officials. Such opinions may also assume the due authorization,
execution and delivery of the instruments and documents referred to
therein by the parties thereto other than the Company and ACC.
D. The Underwriters shall have received a letter from Price
Waterhouse LLP, dated the date of the Prospectus Supplement, in form and
substance satisfactory to the Underwriters, to the effect that they have
performed certain specified procedures requested by the Underwriters
with respect to the information set forth in the Prospectus and certain
matters relating to the Company.
E. The Fixed Rate Group Certificates, shall have been rated in
the highest rating category by Moody's Investors Service, Inc.
("Moody's"), Standard & Poor's Ratings Services, a division of the
McGraw-Hill Companies, Inc. ("S&P") and Fitch IBCA, Inc. ("Fitch"), and
such ratings shall not have been rescinded. The Class A-1A Certificates
shall have been rated "Aaa" by Moody's and "AAA" by Fitch, and such
ratings shall not have been rescinded. The Class M-1A Certificates shall
have been rated
13
<PAGE> 15
"Aa2 by Moody's and "AA+" by Fitch, and such ratings shall not have been
rescinded. The Class M-2A Certificates shall have been rated "A2" by
Moody's and "A+" by Fitch and such ratings shall not have been
rescinded. The Class B-1A Certificates shall have been rated "Baa3" by
Moody's and "BBB" by Fitch, and such ratings shall not have been
rescinded. The Underwriters and counsel for the Underwriters shall have
received copies, addressed to the Underwriters and upon which they may
rely, of any opinions of counsel supplied to the rating organizations
relating to any matters with respect to the Certificates. Any such
opinions shall be dated the Closing Date.
F. The Underwriters shall have received from the Company a
certificate, signed by the president, an executive vice president or a
vice president of the Company, dated the Closing Date, to the effect
that the signer of such certificate has carefully examined the
Registration Statement (excluding Form 8-K - Computational Materials and
Form 8-K ABS Term Sheets), the Pooling and Servicing Agreement and this
Agreement and that, to the best of his or her knowledge based upon
reasonable investigation, the representations and warranties of the
Company in this Agreement, as of the Closing Date, in the Pooling and
Servicing Agreement; provided that any representation or warranty made
therein with respect to Mortgage Loans or Notes where a remedy provided
in the Pooling and Servicing Agreement is for the repurchase by the
Company of the related Mortgage Loans, only to the extent that such
representations or warranties are inaccurate in any material respect,
and in all related agreements, as of the date specified in such
agreements, are true and correct and the Company has complied with all
the agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to the Closing Date and that no stop
order suspending the effectiveness of the Registration Statement has
been issued and no proceedings for that purpose have been instituted or,
to the best of his or her knowledge, are contemplated by the Commission.
The Company shall attach to such certificate an incumbency
certificate and shall certify in an officer's certificate a true and
correct copy of its certificate of incorporation and bylaws which are in
full force and effect as of each relevant date and on the date of such
certificate and a certified true copy of the resolutions of its Board of
Directors with respect to the transactions contemplated herein.
G. The Underwriters shall have received a favorable opinion of
counsel to the Trustee, dated the Closing Date, in form and substance
satisfactory to the Underwriters and covering the substantive matters
referred to in Appendix B attached hereto.
In rendering such opinion, such counsel may rely, as to matters
of fact, on certificates of responsible officers of the Company, the
Trustee and public officials. Such opinion may also assume the due
authorization, execution and delivery of the instruments and documents
referred to therein by the parties thereto other than the Trustee.
H. The Underwriters shall have received from the Trustee a
certificate, signed
14
<PAGE> 16
by the president, a senior vice president or a vice president of the
Trustee, dated the Closing Date, to the effect that each person who, as
an officer or representative of the Trustee, signed or signs the
Certificates, the Pooling and Servicing Agreement or any other document
delivered pursuant hereto, on the Execution Time or on the Closing Date,
in connection with the transactions described in the Pooling and
Servicing Agreement was, at the respective times of such signing and
delivery, and is now, duly elected or appointed, qualified and acting as
such officer or representative, and the signatures of such persons
appearing on such documents are their genuine signatures.
I. The Policy relating to the Fixed Rate Group Certificates of
such Series shall have been duly executed and issued at or prior to the
Closing Date and shall conform in all material respects to the
description thereof in the Prospectus.
J. The Underwriters shall have received a favorable opinion of
counsel to the Insurer, dated the Closing Date, in form and substance
satisfactory to the Underwriters and covering the substantive matters
referred to in Appendix C attached hereto.
In rendering such opinion, such counsel may rely, as to matters
of fact, on certificates of responsible officers of the Company, the
Trustee, the Insurer and public officials. Such opinion may assume the
due authorization, execution and delivery of the instruments and
documents referred to therein by the parties thereto other than the
Insurer.
K. On or prior to the Closing Date, there has been no
downgrading, nor has any notice been given of (i) any intended or
potential downgrading or (ii) any review or possible changes in rating
the direction of which has not been indicated, in the rating accorded
and originally requested by the Company relating to any previously
issued mortgage pass-through securities of the Company by any
"nationally recognized statistical rating organization" (as such term is
defined for purposes of the Exchange Act).
L. On or prior to the Closing Date there has been no
downgrading, nor shall any notice have been given of (i) any intended or
potential downgrading or (ii) any review or possible change in rating
the direction of which has not been indicated, in the rating accorded
the Insurer's claims paying ability by any "nationally recognized
statistical rating organization" (as such term is defined for purposes
of the Exchange Act).
M. There has not occurred any change, or any development
involving a prospective change, in the condition, financial or
otherwise, in the earnings, business or operations (i) of the Company,
its parent company or its subsidiaries, since the date of the Company's
Recent Financial Statements, filed with the Commission, (ii) of ACC,
since the date of ACC's Recent Financial Statements or (iii) the
Insurer, that is in the Representative's judgment material and adverse
and that makes it in the Representative's
15
<PAGE> 17
judgment impractical to market the Offered Certificates on the terms and
in the manner contemplated in the Prospectus.
N. The Underwriters and counsel for the Underwriters shall have
received copies of any separate opinions of counsel to the Company or
the Insurer supplied to the Trustee or any of S&P, Moody's or Fitch
relating to matters with respect to the Offered Certificates or the
Policy, and such opinions shall be dated the Closing Date and addressed
to the Underwriters and upon which they may rely.
O. The Underwriters shall have received such further
information, certificates and documents as the Underwriters may
reasonably have requested not less than one (1) full business day prior
to the Closing Date.
P. There shall have been executed and delivered by Aames
Financial Corporation, the corporate parent of the Company ("AFC"), a
letter agreement with the Underwriters, pursuant to which AFC agrees to
become jointly and severally liable with the Company for the payment of
the Joint and Several Obligations (as defined in such letter agreement).
Such letter agreement with the Underwriters is substantially in the form
of Exhibit A hereto.
Q. The Underwriters shall have received from ACC a certificate,
signed by the president, an executive vice president or a vice president
of ACC, dated the Closing Date, to the effect that the signer of such
certificate has carefully examined the Pooling and Servicing Agreement,
Initial Mortgage Loan Conveyance Agreement and any other documents
relating to these agreements to which it is a party (the "Basic
Documents"), and that, to the best of his or her knowledge based upon
reasonable investigation, the representations and warranties of ACC in
the Basic Documents to which it is a party and in all related
agreements, as of the date specified in such agreements, are true and
correct, ACC has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to the
Closing Date, that there has not been any material adverse change, or
any development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of ACC, its parent company or its subsidiaries or affiliates,
taken as a whole, from the Date of Recent ACC Financial Statements to
the date hereof, that the transfer of the Mortgage Loans by ACC to the
Company at the Closing Date will be treated by ACC for financial
accounting and reporting purposes as a sale of assets and not as a
pledge of assets to secure debt, and that no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or, to the best of his
or her knowledge, are contemplated by the Commission.
ACC shall attach to such certificate an incumbency certificate
and shall certify in an officer's certificate a true and correct copy of
its articles of incorporation and bylaws which are in full force and
effect as of each relevant date and on the date of such certificate.
16
<PAGE> 18
If any of the conditions specified in this Section 6 shall not have been
fulfilled in all material respects, as determined by the Representative and
counsel to the Underwriters, when and as provided in this Agreement, this
Agreement and/or Pricing Agreement and all obligations of the Underwriters
hereunder and thereunder, may be canceled on, or at any time prior to, the
Closing Date by the Representative. Notice of such cancellation shall be given
to the Company in writing, or by telephone or telegraph confirmed in writing.
The Underwriters and the Company shall receive, subsequent to the
Closing Date, a letter from Price Waterhouse LLP, dated on or before the filing
of the Form 8-K - Mortgage Pool in form and substance satisfactory to the
Underwriters, to the effect that they have performed certain specified
procedures requested by the Underwriters with respect to the information set
forth in such Form 8-K - Mortgage Pool.
7. Expenses. If the sale of the Certificates of any Series provided for
herein is not consummated by reason of a default by the Company in its
obligations hereunder (including the failure to satisfy any of the conditions
specified in Section 6), except in the case of a termination of this Agreement
in accordance with Section 12 hereof, then the Company will reimburse the
Underwriters, upon demand, for all reasonable out-of-pocket expenses (including,
but not limited to, the reasonable fees and expenses of their counsel) that
shall have been incurred by them in connection with their investigation with
regard to the Company and the Offered Certificates and the proposed purchase and
sale of the Offered Certificates.
8. Indemnification and Contribution.
A. Regardless of whether any Offered Certificates are sold, the
Company will indemnify and hold harmless each Underwriter, each of their
respective officers and directors and each person who controls any
Underwriter within the meaning of the 1933 Act or the Exchange Act,
against any and all losses, claims, damages, or liabilities (including
the cost of any investigation, legal and other expenses incurred in
connection with and amounts paid in settlement of any action, suit,
proceeding or claim asserted), joint or several, to which they or any of
them may become subject, under the 1933 Act, the Exchange Act or other
federal or state law or regulation, at common law or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained (i) in the Registration
Statement or arise out of or are based upon the omission or alleged
omission (and in the case of any Computational Materials, as to which a
Mortgage Pool Error (as defined below) occurred) to state therein a
material fact necessary to make the statements therein not misleading or
(ii) in the Prospectus or arise out of or are based upon the omission or
alleged omission (and in the case of any Computational Materials, as to
which a Mortgage Pool Error occurred) to state therein a material fact
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, and will reimburse each such
indemnified party for any legal or other expenses reasonably incurred by
it in connection with investigating or defending against such loss,
claim, damage, liability or action; provided, however, that (a) the
Company shall not be liable in any such case to
17
<PAGE> 19
the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made therein (x) in reliance upon and in
conformity with written information furnished to the Company by or on
behalf of an Underwriter, as described (and to the extent described) in
Section 9A of this Agreement, or (y) in the Form 8-K - Computational
Materials or in any Form 8-K - ABS Term Sheet, or any amendment or
supplement thereof, except to the extent that any untrue statement or
alleged untrue statement therein results (or is alleged to have
resulted) directly from, in the case of the Form 8-K - Computational
Materials, any Mortgage Pool Error, or, in the case of any Form 8-K -
ABS Term Sheets, any error in Company Provided Information that was used
in the preparation of (X) any Computational Materials or ABS Term Sheets
(or amendments or supplements thereof) included in the Form 8-K -
Computational Materials or Form 8-K - ABS Term Sheets (or amendment or
supplement thereof), or (Y) any written or electronic materials
furnished to prospective investors on which the Computational Materials
or Collateral Term Sheets (or amendments or supplements) were based, (b)
such indemnity with respect to any Corrected Statement (as defined
below) in such Prospectus (or supplement thereto) shall not inure to the
benefit of such Underwriter (or any person controlling such Underwriter)
from whom the person asserting any loss, claim, damage or liability
purchased the Offered Certificates that are the subject thereof if such
person did not receive a copy of a supplement to such Prospectus at or
prior to the confirmation of the sale of such Offered Certificates and
the untrue statement or omission of a material fact contained in such
Prospectus (or supplement thereto) was corrected (a "Corrected
Statement") in such other supplement and such supplement timely was
furnished by the Company to such Underwriter within a reasonable time
prior to the delivery of such confirmation, and (c) such indemnity with
respect to any error in Company Provided Information or any Mortgage
Pool Error shall not inure to the benefit of such Underwriter (or any
person controlling such Underwriter) from whom the person asserting any
loss, claim, damage or liability received any Computational Materials or
ABS Term Sheets (or any written or electronic materials on which the
Computational Materials or any ABS Term Sheets are based) that were
prepared on the basis of such erroneous Company Provided Information or
Mortgage Pool Error, if, within a reasonable time prior to the time of
confirmation of the sale of the applicable Offered Certificates to such
person, the Company notified such Underwriter in writing of such error
or provided in written or electronic form information superseding or
correcting such error (in any such case, a "Corrected Error"), and such
Underwriter failed to notify such person thereof or to actually or
constructively deliver to such person corrected Computational Materials
or ABS Term Sheets (or underlying written or electronic materials). This
indemnity agreement will be in addition to any liability which the
Company may otherwise have. "Mortgage Pool Error" shall mean any error
or omission in the information concerning the characteristics of the
Mortgage Loans furnished by or on behalf of the Company to any of the
Underwriters in writing or by electronic transmission.
B. Regardless of whether any Offered Certificates are sold, each
Underwriter will severally indemnify and hold harmless the Company, each
of its officers and
18
<PAGE> 20
directors and each person, if any, who controls the Company within the
meaning of the 1933 Act or the Exchange Act against any losses, claims,
damages or liabilities to which they or any of them become subject under
the 1933 Act, the Exchange Act or other federal or state law or
regulation, at common law or otherwise, to the same extent as the
foregoing indemnity, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in (i) the Registration Statement or arise out of or are based
upon the omission or alleged omission to state therein a material fact
necessary to make the statements therein not misleading or in (ii) the
Prospectus or arise out of or are based upon the omission or alleged
omission to state therein a material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made therein (a) in reliance upon and
in conformity with written information relating to such Underwriter
furnished to the Company by or on behalf of such Underwriter, as
described in Section 9A of this Agreement, specifically for use in the
preparation thereof and so acknowledged in writing, or (b) any
Computational Materials or ABS Term Sheet (or amendments or supplements
thereof) furnished to the Company by such Underwriter pursuant to
Section 9A hereof and incorporated by reference in such Registration
Statement or the related Prospectus or any amendment or supplement
thereof (except that no such indemnity shall be available for any
losses, claims, damages or liabilities, or actions in respect thereof
resulting from any error in Company Provided Information or any Mortgage
Pool Error, other than a Corrected Error), and such Underwriter or the
Underwriters, as the case may be, will reimburse the Company for any
legal or other expenses reasonably incurred by the Company in connection
with investigating or defending against such loss, claim, damage,
liability or action.
C. In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of
which indemnity may be sought pursuant to Paragraphs A and B above, such
person (hereinafter called the indemnified party) shall promptly notify
the person against whom such indemnity may be sought (hereinafter called
the indemnifying party) in writing thereof; but the omission to notify
the indemnifying party shall not relieve such indemnifying party from
any liability which it may have to any indemnified party otherwise than
under such Paragraph. The indemnifying party, upon request of the
indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the
fees and disbursements of such counsel related to such proceeding. In
any such proceeding any indemnified party shall have the right to retain
its own counsel, but the fees and expenses of such counsel shall be at
the expense of such indemnified party unless (i) the indemnifying party
and the indemnified party shall have mutually agreed to the retention of
such counsel, or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party
and the indemnified party and representation of both parties by the same
counsel would be inappropriate due to actual or potential differing
interests between them or because
19
<PAGE> 21
different defenses are available to such parties. It is understood that
the indemnifying party shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the fees and
expenses of more than one separate firm (in addition to any local
counsel) for all such indemnified parties, and that all such fees and
expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by the Representative in the case of parties
indemnified pursuant to Paragraph A and by the Company in the case of
parties indemnified pursuant to Paragraph B. The indemnifying party
shall not be liable for any settlement of any proceeding effected
without its written consent, but if settled with such consent or if
there is a final judgment for the plaintiff, the indemnifying party
agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have
requested an indemnifying party to reimburse the indemnified party for
fees and expenses of counsel as contemplated above, the indemnifying
party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement
is entered into more than 30 days after receipt by such indemnifying
party of the aforesaid request and (ii) such indemnifying party shall
not have reimbursed the indemnified party in accordance with such
request prior to the date of such settlement. No indemnifying party
shall, without the prior written consent of the indemnified party,
effect any settlement of any pending or threatened proceeding in respect
of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject
matter of such proceeding.
D. If the indemnification provided for in this Section 8 is
unavailable to an indemnified party in respect of any losses, claims,
damages or liabilities referred to herein, then each indemnifying party,
in lieu of indemnifying such indemnified party, shall:
(i) in the case of any such losses, claims, damages or
liabilities which do not arise out of or are not based upon any
untrue statement or omission of a material fact in any
Computational Materials or ABS Term Sheet (or any amendments or
supplements thereof) contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims,
damages or liabilities in such proportion as is appropriate to
reflect the relative benefits received by the Company and the
Underwriters from the sale of the Offered Certificates; and
(ii) in the case of any such losses, claims, damages or
liabilities which arise out of or are based upon any untrue
statements or omissions of a material fact in any Computational
Materials or ABS Term Sheet (or any amendments or supplements
thereof), contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect both
the relative benefits received by the Company and the
Underwriters from the sale of the Offered Certificates and the
20
<PAGE> 22
relative fault of the Company and of the applicable Underwriter
or Underwriters in connection with the statements or omissions
that resulted in such losses, claims, damages or liabilities as
well as any other relevant equitable considerations.
The relative benefits received by the Company and the
Underwriters shall be deemed to be in such proportion so that the
Underwriters are responsible for that portion determined by multiplying
the total amount of such losses, claims, damages or liabilities,
including legal and other expenses, by a fraction, the numerator of
which is (x) the excess of the Aggregate Resale Price of the Offered
Certificates of the related Series over the aggregate purchase price of
the Offered Certificates specified in the Pricing Agreement and the
denominator of which is (y) the Aggregate Resale Price of such Offered
Certificates, and the Company is responsible for the balance, provided,
however, that no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of the immediately preceding sentence,
the "Aggregate Resale Price" of the Offered Certificates at the time of
any determination shall be the weighted average of the purchase prices
(in each case expressed as a percentage of the aggregate principal
amount of the Offered Certificates so purchased), determined on the
basis of such principal amounts, paid to the Underwriters by all initial
purchasers of the Offered Certificates from the Underwriters. The
relative fault of the Company and the Underwriters shall be determined
by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact of the omission or alleged omission
to state a material fact relates to information supplied by the Company
or by the applicable Underwriter or Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Underwriters'
obligations in this Paragraph D to contribute are several in proportion
to their respective underwriting obligations and are not joint.
E. The Company and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section 8 were
determined by pro rata allocation or by any other method of allocation
that does not take account of the equitable considerations referred to
in Paragraph D. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages or liabilities referred to in
Paragraph D shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of Section 8D(i), no
Underwriter shall be required to contribute any amount by which the
difference between the Aggregate Resale Price and the aggregate purchase
price of the Offered Certificates specified in the Pricing Agreement
exceeds the amount of any damages that such Underwriter has otherwise
been required to pay by reason of any untrue or alleged untrue statement
or omission or alleged omission.
F. The Company and the Underwriters each expressly waive, and
agree not to assert, any defense to their respective indemnification and
contribution obligations under
21
<PAGE> 23
this Section 8 which they might otherwise assert based upon any claim
that such obligations are unenforceable under federal or state
securities laws or by reasons of public policy.
G. The obligations of the Company under this Section 8 shall be
in addition to any liability which the Company may otherwise have and
shall extend, upon the same terms and conditions, to each person, if
any, who controls the Underwriters within the meaning of the 1933 Act or
the Exchange Act; and the obligations of the Underwriters under this
Section 8 shall be in addition to any liability that the Underwriters
may otherwise have and shall extend, upon the same terms and conditions,
to each director of the Company and to each person, if any, who controls
the Company within the meaning of the 1933 Act or the Exchange Act;
provided, however, that in no event shall the Company or the
Underwriters be liable for double indemnification.
9. Information Supplied by Underwriters; Representations and Warranties
of the Underwriters.
A. The Underwriters and the Company agree that the following
constitute the only information furnished by or on behalf of the
Underwriters to the Company for the purposes of Sections 2B and 8A
hereof:
(i) the statements set forth in the last paragraph on the
front cover page of the Prospectus Supplement regarding market
making, and information under the heading "Underwriting" in the
Prospectus Supplement, to the extent such information relates to
all of the Underwriters and not to any particular Underwriter or
affiliate of any particular Underwriter, have been supplied by
or on behalf of all of the Underwriters jointly;
(ii) the information under the heading "Underwriting" in the
Prospectus Supplement, to the extent such information relates to
a particular Underwriter or affiliate of such Underwriter, and
the information contained in any Form 8-K - Computational
Materials and in any Form 8-K - ABS Term Sheets to the extent
supplied to the Company by or on behalf of such Underwriter to
be filed in the related Current Report on Form 8-K, in each case
excluding any Company Provided Information and only to the
extent not substantially identical in form, substance, scope,
content and context to any information set forth in the
Prospectus, has been supplied by such Underwriter and shall
relate to and be the several responsibility of such Underwriter
and no other Underwriter.
"Computational Materials" shall mean those materials delivered by an
Underwriter to the Company within the meaning of the no-action letter dated May
20, 1994 issued by the Division of Corporation Finance of the Commission to
Kidder, Peabody Acceptance Corporation I, Kidder, Peabody & Co. Incorporated,
and Kidder Structured Asset Corporation and the no-action letter dated May 27,
1994 issued by the Division of Corporation Finance of the Commission to the
Public Securities Association (together, the "Kidder Letters") for which the
filing of such
22
<PAGE> 24
material is a condition of the relief granted in such letters. "ABS Term Sheet"
shall mean those materials delivered by an Underwriter to the Company in the
form of "Structural Term Sheets" or "Collateral Term Sheets", in each case
within the meaning of the no-action letter dated February 13, 1995 issued by the
Division of Corporation Finance of the Commission to the Public Securities
Association (the "PSA Letter") for which the filing of such material is a
condition of the relief granted in such letter. "Company Provided Information"
shall mean any information presented in any ABS Term Sheet (or underlying
materials) provided to the Underwriters by or on behalf of the Company
specifically for use in ABS Term Sheets in writing or through electronic or
magnetic data storage or transmission methods, in tabular, graphic or textual
form, regardless of whether or not such information is presented in any ABS Term
Sheets in the same format in which such information was provided to the
Underwriters, but shall not include (i) any such information to the extent that,
as presented in any ABS Term Sheet, such information contains, or is alleged to
contain, any untrue statement of a material fact or omits, or is alleged to
omit, to state any material fact required to be stated therein or necessary to
make the statements therein not misleading due to any (a) typographical or
similar error caused by any party other than the Company or (b) stylistic,
contextual or other presentational considerations with respect to such ABS Term
Sheets, including the format of tables, the phraseology of text or the placement
or juxtaposition of such information in relation to any other information
presented therein (whether or not Company Provided Information), in each case,
not present in such information (in the aggregate), or in the manner of
presentation or communication thereof to the Underwriters, when provided to the
Underwriters by the Company or (ii) any information set forth in an ABS Term
Sheet to the extent that such information, as presented in the Prospectus is not
substantially identical in form, substance, scope, content or context thereto.
Each Underwriter shall deliver to the Company (or counsel to the Company) a
complete copy of all materials (which, if reasonably requested by the Company,
shall be on computer compatible disk or such other acceptable electronic form)
provided by such Underwriter to prospective investors in such Offered
Certificates which constitute or are deemed to constitute Computational
Materials or ABS Term Sheets, at least one business day before the date or dates
on which the related Form 8-K - Computational Materials or Form 8-K - ABS Term
Sheets relating to the Offered Certificates are required to be filed by the
Company with the Commission pursuant to Section 5K or 5L hereof.
B. Each Underwriter severally represents and warrants to and
agrees with the Company, that, as of the date of the related Closing
Date:
(i) any Computational Materials and ABS Term Sheets
furnished by it to the Company pursuant to Section 9A hereof
constitute (either in original, aggregated or consolidated form)
all of the materials furnished by it to prospective investors
prior to the time of delivery thereof to the Company and that it
reasonably believes that such materials constitute the type of
materials contemplated by the Kidder Letters and the PSA Letter;
and
(ii) on the date of delivery of any such Computational
Materials or ABS Term Sheets to the Company pursuant to this
Section 9 and on the related Closing Date such Computational
Materials and ABS Term Sheets (or materials)
23
<PAGE> 25
did not and will not include any untrue statement of a material
fact, or, when read in conjunction with the related Prospectus
and Prospectus Supplement, omit to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading.
Notwithstanding the foregoing, the Underwriters make no representation
or warranty as to whether any Computational Materials or ABS Term Sheets (or any
written or electronic materials on which such Computational Materials or ABS
Term Sheets are based) included or will include any untrue statement resulting
directly from any Mortgage Pool Error or, in the case of an ABS Term Sheet, any
error in Company Provided Information.
Each Underwriter agrees that it will not represent to investors that any
Computational Materials or ABS Term Sheets delivered thereto were prepared by,
or disseminated on behalf of, the Company.
10. Notices. All communications hereunder shall be in writing and, if
sent to the Underwriters, shall be mailed or delivered or telecopied and
confirmed in writing to the Representative at One New York Plaza, 17th Floor,
New York, New York 10172, Attention: Mortgage & Asset-Backed Finance Group, and,
if sent to the Company, shall be telegraphed and confirmed in writing to the
Company at 350 South Grand Avenue, Los Angeles, California 90071, Attention:
Mark E. Elbaum; with a copy addressed to O'Melveny & Myers LLP, 400 S. Hope
Street, Los Angeles, California, 90071, Attention: David J. Johnson, Jr.
11. Survival. All representations, warranties, covenants and agreements
of the Company contained herein or in agreements or certificates delivered
pursuant hereto, the agreements of the Underwriters and the Company contained in
Section 8 hereof, and the representations, warranties and agreements of the
Underwriters contained in Section 3 hereof, shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of the
Underwriters or any controlling persons, or any subsequent purchaser or the
Company or any of its officers, directors or any controlling persons, and shall
survive delivery of and payment for the Certificates. The provisions of Sections
5, 7 and 8 hereof shall survive the termination or cancellation of this
Agreement or any Pricing Agreement.
12. Termination. The Underwriters shall have the right to terminate this
Agreement and/or the Pricing Agreement by giving notice as hereinafter specified
at any time at or prior to the applicable Closing Date if (a) trading generally
shall have been suspended or materially limited on or by, as the case may be,
any of the New York Stock Exchange, the American Stock Exchange, the Nasdaq
National Market, the Chicago Board Options Exchange, the Chicago Board of Trade
or the London Stock Exchange Limited, (b) trading of any securities of the
Company or AFC shall have been suspended on any exchange or in any
over-the-counter market, (c) a general moratorium on commercial banking
activities shall have been declared by any of the federal, California or New
York State authorities, (d) there shall have occurred any outbreak or escalation
of hostilities or any change in the national or international financial markets
or any calamity or crisis which, in the Representative's reasonable judgment, is
material and adverse, and, in the case of any of the events specified in clauses
(a) through (d), such event singly or
24
<PAGE> 26
together with any other such event makes it in the Representative's reasonable
judgment impractical to market the Offered Certificates. Any such termination
shall be without liability of any other party except that the provisions of
Paragraph G of Section 5 (except with respect Section 5G(vii)) and Section 8
hereof shall at all times be effective. If the Underwriters elect to terminate
this Agreement and/or the Pricing Agreement as provided in this Section 12, the
Company shall be notified promptly by the Representative by telephone, telegram
or facsimile transmission, in any case, confirmed by letter.
13. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and assigns
(which successors and assigns do not include any person on purchasing a
Certificate from the Underwriters), and the officers and directors and
controlling persons referred to in Section 8 hereof and their respective
successors and assigns, and no other persons will have any right or obligations
hereunder.
14. Applicable Law; Venue. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York. Any
action or proceeding brought to enforce or arising out of any provision of this
Agreement shall be brought only in a state or federal court located in the
Borough of Manhattan, New York City, New York, and the parties hereto expressly
consent to the jurisdiction of such courts and agree to waive any defense or
claim of forum non conveniens they may have with respect to any such action or
proceeding brought.
15. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall together constitute but one and the same
instrument.
25
<PAGE> 27
16. Amendments and Waivers. This Agreement may be amended, modified,
altered or terminated, and any of its provisions waived, only in a writing
signed on behalf of the parties hereto.
Very truly yours,
AAMES CAPITAL ACCEPTANCE CORP.
By: /s/ Mark E. Elbaum
-------------------------------
Name: Mark E. Elbaum
Title: Senior Vice President-Finance
PRUDENTIAL SECURITIES INCORPORATED
By: /s/ Mary Alice Kohs
-------------------------------
Name: Mary Alice Kohs
Title: Vice President
For itself and as
Representative of the several
Underwriters named in Schedule I
to the Pricing Agreement
26
<PAGE> 28
EXHIBIT A
May 22, 1998
Prudential Securities Incorporated
as Representative of the several Underwriters
named in Schedule I to the Pricing Agreement
c/o Prudential Securities Incorporated
One New York Plaza, 17th Floor
New York, New York 10292
Re: Underwriting Agreement for Aames Mortgage Trust, dated May 22, 1998 the
"Underwriting Agreement") between Aames Capital Acceptance Corp.
("Aames") and Prudential Securities Incorporated, as Representative of
the several Underwriters named in Schedule I to the Pricing Agreement
dated May 22, 1998 (the "Pricing Agreement")
Ladies and Gentlemen:
Pursuant to the Underwriting Agreement and Pricing Agreement
(collectively, the "Designated Agreement"), Aames has undertaken certain
financial obligations with respect to the indemnification of the Underwriters
with respect to the Registration Statement, and the Prospectus described in the
Designated Agreement. Any financial obligations of Aames under the Designated
Agreement, whether or not specifically enumerated in this paragraph, are
hereinafter referred to as the "Joint and Several Obligations;" provided,
however, that "Joint and Several Obligations" shall mean only the financial
obligations of Aames under the Designated Agreement (including the payment of
money damages for a breach of any of Aames' obligations under the Designated
Agreement, whether financial or otherwise) but shall not include any obligations
not relating to the payment of money.
As a condition of its execution of the Designated Agreement, the
Underwriters have required the undersigned, Aames Financial Corporation ("AFC"),
the parent corporation of Aames, to acknowledge its joint and several liability
with Aames for the payment of the Joint and Several Obligations under the
Designated Agreement.
Now, therefore, the Underwriters and AFC do hereby agree that:
(i) AFC hereby agrees to be absolutely and unconditionally
jointly and severally liable with Aames to the Underwriters for the
payment of the Joint and Several Obligations under the Designated
Agreement.
Exhibit A-1
<PAGE> 29
(ii) AFC may honor its obligations hereunder either by direct
payment of any Joint and Several Obligations or by causing any Joint and
Several Obligations to be paid to the Underwriters by Aames or another
affiliate of AFC; provided however that this subparagraph shall not
require the Underwriters to seek satisfaction from any party other than
Aames or AFC with respect to the Joint and Several Obligations under the
Designated Agreement.
Exhibit A-2
<PAGE> 30
Capitalized terms used herein and not defined herein shall have their
respective meanings as set forth in the Designated Agreement.
Very truly yours,
AAMES FINANCIAL CORPORATION
By:
-------------------------------
Name:
Title:
PRUDENTIAL SECURITIES INCORPORATED
By:
-------------------------------
Name:
Title:
For itself and as
Representative of the several
Underwriters named in Schedule I
to the Pricing Agreement
Exhibit A-3
<PAGE> 31
APPENDIX A
FORM OF OPINION OF
COUNSEL TO THE COMPANY
1. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware.
2. AFC is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware.
3. ACC is a corporation duly organized, validly existing and in good
standing under the laws of the State of California.
4. The Company has full corporate power and corporate authority to own
its assets and to conduct its business as described in the Prospectus and to
enter into and perform its obligations under the Pooling and Servicing
Agreement, the Initial Mortgage Loan Conveyance Agreement, the Underwriting
Agreement and Pricing Agreement (the "Documents").
5. AFC has full corporate power and corporate authority to own its
assets and to conduct its business as now being conducted and to enter into and
perform its obligations under the Letter Agreement.
6. ACC has full corporate power and corporate authority to own its
assets and to conduct its business as now being conducted and to enter into and
perform its obligations under the Documents to which it is a party.
7. Each of ACC and the Company is duly qualified as a foreign
corporation and is in good standing under the laws of each jurisdiction where it
owns or leases any real property or has any permanently located employees.
8. Each of ACC and the Company has all material licenses, franchises and
permits of and from all public, regulatory or governmental officials or bodies,
necessary to (i) conduct its business as now being conducted and as described in
the Prospectus, and (ii) perform its obligations under the Documents.
9. The execution, acknowledgment, delivery and performance by ACC and
the Company of the Documents to which it is a party have been duly authorized by
all requisite corporate action.
10. The execution, acknowledgment, delivery and performance by AFC of
the Letter Agreement have been duly authorized by all requisite corporate
action.
11. Neither the execution or delivery of, nor the performance by the
Company or ACC of its obligations under, the Documents to which it is a party,
nor the offer, issuance, sale or
Appendix A-1
<PAGE> 32
delivery of the Certificates (i) violates any of the provisions of the Company's
or ACC's Certificate or Articles of Incorporation or By-laws, (ii) violates any
judgment, decree, writ, injunction, award, determination or order known to such
counsel which is applicable to the Company or ACC or any of its properties, or
by which the Company or ACC or any of its properties are bound or affected,
(iii) conflicts with, or results in a breach of, or constitutes a default under,
any of the provisions of any of the Company's or ACC's material contracts, or
(iv) results in the creation or imposition of any lien on any of its properties
pursuant to the terms of any of the Company's or ACC's material contracts.
12. Neither the execution or delivery of, nor the performance by AFC of
its obligations under, the Letter Agreement (i) violates any of the provisions
of AFC's Certificate of Incorporation or By-laws, (ii) violates any judgment,
decree, writ, injunction, award, determination or order known to such counsel
which is applicable to AFC or any of its properties, or by which AFC or any of
its properties are bound or affected, (iii) conflicts with, or results in a
breach of, or constitutes a default under, any of the provisions of any of AFC's
material contracts, or (iv) results in the creation or imposition of any lien on
any of its properties pursuant to the terms of any of AFC's material contracts.
13. No consent, approval or authorization from, or registration or
filing with or notice to, any court or governmental body is required to be
obtained, made or given by the Company in connection with its authorization,
execution, delivery of, or performance of its obligations under the Documents or
in connection with the issuance, sale or delivery of the Offered Certificates.
14. No consent, approval or authorization from, or registration or
filing with or notice to, any court or governmental body is required to be
obtained, made or given by AFC in connection with its authorization, execution,
delivery of, or performance of its obligations under the Letter Agreement.
15. No consent, approval or authorization from, or registration or
filing with or notice to, any court or governmental body is required to be
obtained, made or given by ACC in connection with its authorization, execution,
delivery of, or performance of its obligations under Documents.
16. Based upon such counsel's knowledge, there is no pending or
threatened action, suit, proceeding or investigation before or by any court,
administrative agency, arbitrator or governmental body against or affecting the
Company or ACC which, if decided adversely, would materially and adversely
affect (i) the ability of the Company or ACC to perform its obligations under,
or the validity or enforceability of, the Documents, (ii) any mortgaged property
or title of any mortgagor to such mortgaged property, or (iii) the Trustee's
ability to foreclose or otherwise enforce the liens of the mortgage loans.
17. The Registration Statement is effective under the 1933 Act and, to
the best of such counsel's knowledge, no stop order suspending the effectiveness
of the Registration Statement has been issued, or proceeding for that purpose
instituted or threatened by the Commission.
18. The Registration Statement as of its effective date and the
Prospectus as of the date there of, other than the Computational Materials,
numerical, financial and statistical data
Appendix A-2
<PAGE> 33
included or incorporated by reference in the Registration Statement and the
Prospectus, as to which such counsel need not express an opinion, appeared on
its face to be appropriately responsive in all material respects to the
applicable requirements of the 1933 Act and the rules and regulations
thereunder, except that such counsel need not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus except for those as contemplated by
paragraph 20 and 21 below.
19. The execution and delivery of each of the Underwriting Agreement and
the Pricing Agreement has been duly authorized by all necessary corporate action
of the Company and each of the Underwriting Agreement and the Pricing Agreement
has been duly executed and delivered by the Company; the execution and delivery
of the Letter Agreement has been duly authorized by all necessary corporate
action of AFC and the Letter Agreement has been duly executed and delivered by
AFC.
20. The execution and delivery of the Pooling and Servicing Agreement
has been duly authorized by the Company and the Agreement has been duly executed
and delivered by the Company and constitutes a valid, legal and binding
agreement of the Company, enforceable against the Company in accordance with its
terms except as enforcement thereof may be limited by (a) bankruptcy,
insolvency, reorganization, liquidation, receivership, moratorium or other
similar laws relating to or affecting creditors' rights generally or (b) general
principles of equity or public policy, regardless of whether such enforceability
is considered in a proceeding in equity or at law.
21. The execution and delivery of the Documents to which it is a party
have been duly authorized by ACC and each of the Documents to which it is a
party have been duly executed and delivered by ACC and constitutes a valid,
legal and binding agreement of ACC, enforceable against ACC in accordance with
their terms except as enforcement thereof may be limited by (a) bankruptcy,
insolvency, reorganization, liquidation, receivership, moratorium or other
similar laws relating to or affecting creditors' rights generally or (b) general
principles of equity or public policy, regardless of whether such enforceability
is considered in a proceeding in equity or at law.
22. The Offered Certificates will, when duly executed and authenticated
as specified in the Pooling and Servicing Agreement and delivered by the Trustee
on behalf of the Trust in exchange for the Mortgage Loans in the related
Mortgage Loan Group and the other assets conveyed by the Company to the Trust
pursuant to the Pooling and Servicing Agreement, be entitled to the benefits of
the Pooling and Servicing Agreement afforded to the related Class.
23. The Offered Certificates and the Pooling and Servicing Agreement
conform in all material respects to the descriptions thereof contained in the
Prospectus.
24. The statements in the base Prospectus and the Prospectus Supplement,
as the case may be, under the headings "Risk Factors," "Certain Legal Aspects of
the Mortgage Loans," "Certain Federal Income Tax Considerations," and "ERISA
Considerations," to the extent that they constitute matters of California, New
York or federal law or legal conclusions with respect
Appendix A-3
<PAGE> 34
thereto, are correct in all material respects to the extent of those
consequences or aspects that are discussed.
25. Each of the REMIC Pools as described in the Pooling and Servicing
Agreement will qualify as a "real estate mortgage investment conduit" ("REMIC")
within the meaning of Section 860D of the Internal Revenue Code of 1986, as
amended (the "Code"), the Offered Certificates and Class C Certificates
described in the Prospectus and issued pursuant to the Pooling and Servicing
Agreement will be treated as "regular interests" in the REMIC for purposes of
Code Section 860G(a)(1) and the Class R Certificates issued pursuant to the
Pooling and Servicing Agreement will be treated as the "residual interest" in
the REMIC for purposes of Code Section 860G(a)(2), assuming: (i) an election is
made to treat each REMIC Pool as a REMIC, (ii) compliance with the Pooling and
Servicing Agreement and compliance with changes in the law, including any
amendments to the Code or applicable Treasury regulations thereunder. None of
the REMIC Pools will be subject to California income or franchise tax in effect
on the date of such opinion, as long as such REMIC Pool complies with any
changes in the statutory and regulatory requirements of California law. Such
counsel may state that a REMIC Pool may, however, be subject to California
income or franchise tax in certain circumstances where federal income tax is
also imposed, such as in the case of net income from foreclosure property; and
in addition, a REMIC Pool may be subject to the minimum tax imposed under the
California Revenue and Taxation Code Sections specified therein.
26. The Pooling and Servicing Agreement is not required to be qualified
under the Trust Indenture Act of 1939, as amended, and the Trust created thereby
is not required to be registered, and neither the Company nor AFC is an
"investment company" as such term is defined, under the Investment Company Act
of 1940, as amended.
27. Neither the transfer of the Mortgage Loans to the Trust, the
issuance and sale of the Offered Certificates to the Underwriters pursuant to
the Underwriting Agreement, the compliance by the Company with other provisions
of the Underwriting Agreement, the Pooling and Servicing Agreement and the
Certificates, nor the consummation of the transactions therein contemplated as
to the transfer of the Mortgage Loans and the sale of the Offered Certificates
by the Company require the consent, approval, authorization, order, registration
or qualification of or with any court or governmental authority, except such as
have been obtained or effected under the 1933 Act (and except with respect to
any consent, approval, authorization, registration or qualification which may be
required under state securities or Blue Sky laws or with respect to the purchase
and sale of the retained Certificates, as to which matters such counsel need not
express an opinion) and such other approvals as have been obtained, or conflict
with or result in a breach or violation of any of the terms and provisions of,
or constitute a default under, the charter or bylaws of the Company, or any
statute or regulation applicable to the Company or, to the best of such
counsel's knowledge, any judgment, decree or order applicable to the Company of
any court, regulatory body, administrative agency or other governmental
authority.
28. Assuming compliance with the provisions of the Pooling and Servicing
Agreement, and subject to the limitations and conditions set forth therein, the
Trustee and ACC, acting in its capacity as Servicer under the terms of the
Pooling and Servicing Agreement, will be entitled to
Appendix A-4
<PAGE> 35
enforce the terms of each Note and Mortgage in accordance with their respective
terms, except to the extent such enforcement may be limited by (a) bankruptcy,
insolvency, reorganization, liquidation, receivership, moratorium or other
similar laws relating to or affecting creditors' rights generally or (b) general
principles of equity or public policy, regardless of whether such enforceability
is considered in a proceeding in equity or at law.
In addition, such counsel shall state that nothing has come to their
attention that would lead them to believe that the Registration Statement (other
than the Computational Materials, the financial, numerical, statistical and
quantitative information included or incorporated by reference therein, as to
which such counsel need not make any statement), at the Effective Time,
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, or that the Prospectus (other than the Computational Materials,
the financial, numerical, statistical and quantitative information included or
incorporated by reference therein, and the information with respect to the
Certificate Insurer, as to which such counsel need not make any statement), at
its issue date or at the date of the Closing, contained an untrue statement of a
material fact or omitted to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
Appendix A-5
<PAGE> 36
APPENDIX B
FORM OF OPINION OF COUNSEL TO TRUSTEE
1. The Trustee is a national banking association with trust powers, duly
organized and validly existing in good standing under the laws of the United
States of America, and has all requisite power and authority to enter into the
Pooling and Servicing Agreement and perform the obligations of trustee
thereunder.
2. The Pooling and Servicing Agreement has been duly authorized,
executed, and delivered by the Trustee and constitutes the legal, valid, and
binding obligation of the Trustee enforceable against the Trustee in accordance
with its terms, except as enforceability may be limited by applicable bankruptcy
and insolvency laws and other similar laws affecting the enforcement of
creditors' rights generally and by general equity principles.
3. The execution and delivery of the Pooling and Servicing Agreement by
the Trustee and the performance by the Trustee of its terms do not conflict with
or result in a violation (A) of any law or regulation of the United States of
America or the State of California governing the banking or trust powers of the
Trustee, or (B) the Articles of Association or By-laws of the Trustee.
4. No approval, authorization, or other action by, or filing with, any
governmental authority of the United States of America or the State of
California having jurisdiction over the banking or trust powers of the Trustee
is required in connection with its execution and delivery of the Pooling and
Servicing Agreement or the performance by the Trustee of the terms of the
Pooling and Servicing Agreement.
5. The Trustee has the power and authority to perform its duties
pursuant to Sections 8.01 and 8.02 of the Pooling and Servicing Agreement to act
as a successor servicer, including the making of advances as described in
Sections 8.01 and 8.02 of the Pooling and Servicing Agreement.
6. The Certificates have been duly executed, authenticated and delivered
by the Trustee.
Appendix B-1
<PAGE> 37
APPENDIX C
FORM OF OPINION OF COUNSEL TO INSURER
1. The Insurer is a stock insurance company duly organized, validly
existing and authorized to conduct financial guaranty insurance business under
the laws of the State of New York.
2. The Policy, the Insurance and Indemnity Agreement and the
Indemnification Agreement (the "Agreements") have been duly authorized, executed
and delivered by the Insurer.
3. The Policy and the Agreements constitute valid and binding
obligations of the Insurer, enforceable against the Insurer in accordance with
their terms subject, as to the enforcement of remedies, bankruptcy, insolvency,
reorganization, rehabilitation, moratorium and other similar laws affecting the
enforceability of creditors' rights generally applicable in the event of the
bankruptcy or insolvency of the Insurer and to the application of general
principles of equity and subject, in the case of the Indemnification Agreement,
to principles of public policy limiting the right to enforce the indemnification
provision contained therein insofar as they relate to indemnification for
liabilities arising under applicable securities laws.
4. The Policy is exempt from registration under the 1933 Act.
5. Neither the execution or delivery by the Insurer of the Policy or the
Agreements, nor the performance by the Insurer of its obligations thereunder,
will conflict with any provision of the certificate of incorporation or the
by-laws of the Insurer or, to the best of such counsel's knowledge, result in a
breach of, or constitute a default under any agreement or other instrument to
which the Insurer is a party to which it or any of its property is bound, or to
the best of such counsel's knowledge, violate any consent, order to decree
applicable to the Insurer of any governmental or regulatory body, administrative
agency, court or arbitrator having jurisdiction over the Insurer (except that in
the published opinion of the Commission the indemnification provisions of the
Indemnification Agreement, insofar as they relate to indemnification or
liabilities arising under the 1933 Act, are against public policy as expressed
in the 1933 Act and are therefore unenforceable).
In addition, please be advised such counsel has reviewed the description
of the Insurer under the caption "Certificate Insurer" in the Prospectus
Supplement (the "Offering Document") of the Transferor with respect to the
securities. The information provided in the Offering Document with respect to
the Insurer is limited and does not purport to provide the scope of disclosure
required to be included in a prospectus with respect to a registrant under the
1933 Act in connection with the public offer and sale of securities of such
registrant. Within such limited scope of disclosure, however, there has not come
to such counsel's attention any information which would cause such counsel to
believe that the description of the Insurer referred to above, as of the date of
the Offering Document or as of the date of such opinion, contained or contains
any untrue statement of a material fact or omitted or omits to state a material
fact necessary to make the statements therein, in the light of the circumstances
under which they are made, not
Appendix C-1
<PAGE> 38
misleading (except that such counsel need not express an opinion with respect to
any financial statements or other financial information contained or referred to
therein).
Appendix C-2
<PAGE> 39
ANNEX A
AAMES CAPITAL ACCEPTANCE CORP.
Mortgage Pass-Through Certificates
PRICING AGREEMENT
May 22, 1998
Prudential Securities Incorporated,
as Representative of the several Underwriters
named in Schedule I hereto
c/o Prudential Securities Incorporated
One New York Plaza, 17th Floor
New York, New York 10292
Ladies and Gentlemen:
Aames Capital Acceptance Corp. (the "Company") proposes, subject to the
terms and condition stated herein and the Underwriting Agreement, dated May 22,
1998 (the "Underwriting Agreement"), between the Company and Prudential
Securities Incorporated, as underwriter and as Representative (in such capacity,
the "Representative" of the several underwriters named in Schedule I hereto
(together with the Representative, the "Underwriters"), to issue and sell to the
Underwriters the series of mortgage pass-through certificates specified in
Schedule II hereto (the "Certificates"). Each of the provisions of the
Underwriting Agreement is incorporated herein by reference in its entirety, and
shall be deemed to be a part of this Agreement to the same extent as if such
provisions had been set forth in full herein; and each of the representations
and warranties set forth therein shall be deemed to have been made at and as of
the date of this Pricing Agreement, except that each representation and warranty
with respect to the Prospectus in Section 1 of the Underwriting Agreement shall
be deemed to be a representation or warranty as of the date of the Underwriting
Agreement in relation to the Prospectus (as therein defined), and also a
representation and warranty as of the date of this Pricing Agreement in relation
to the Prospectus as amended or supplemented with respect to the Certificates.
Each reference to Representative contained in the Underwriting Agreement shall
be deemed to refer to the Representative named herein. Unless otherwise defined
herein, terms in the Underwriting Agreement are used herein as therein defined.
An amendment to the Registration Statement, or a supplement to the
Prospectus, as the case may be, relating to the Certificates in the form
heretofore delivered to you is now proposed to be filed or, in the case of a
supplement, mailed for filing with the Commission.
Annex A-1
<PAGE> 40
Subject to the terms and conditions set forth herein and in the
Underwriting Agreement incorporated herein by reference, the Company agrees to
issue and sell to the Underwriters, and the Underwriters, severally and not
jointly, agree to purchase from the Company, at the time and at the purchase
price set forth in Schedule II hereto, the aggregate amount of each Class of
Certificates set forth opposite the name of such Underwriter set forth in
Schedule I hereto plus, in the case of the Fixed Rate Group Certificates,
accrued interest at the applicable Pass-Through Rate from June 1, 1998.
Annex A-2
<PAGE> 41
If the foregoing is in accordance with your understanding, please sign
and return to us five counterparts hereof, and upon acceptance hereof by you,
this letter and such acceptance hereof, including the provisions of the
Underwriting Agreement incorporated herein by reference, shall constitute a
binding agreement between the Underwriters and the Company.
Very truly yours,
AAMES CAPITAL ACCEPTANCE CORP.
By: _________________________________________
Name:
Title:
CONFIRMED AND ACCEPTED, as of the date first above written:
PRUDENTIAL SECURITIES INCORPORATED
By: _____________________________________
Name:
Title:
For itself and as
Representative of the several
Underwriters named in
Schedule I hereto
Annex A-3
<PAGE> 42
SCHEDULE I
<TABLE>
<CAPTION>
Principal Principal Principal Principal Principal
Amount of Amount of Amount of Amount of Amount of
Class A-1F Class A-2F Class A-3F Class A-4F Class A-5F
Underwriter Certificates Certificates Certificates Certificates Certificates
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Prudential
Securities
Incorporated 49,500,000 7,000,000 28,000,000 14,500,000 13,500,000
Donaldson, Lufkin
& Jenrette
Securities
Corporation 16,500,000 2,333,334 9,333,334 4,833,334 4,500,000
Lehman Brothers Inc. 16,500,000 2,333,334 9,333,334 4,833,334 4,500,000
NationsBanc
Montgomery
Securities LLC 16,500,000 2,333,334 9,333,334 4,833,334 4,500,000
</TABLE>
<TABLE>
<CAPTION>
Principal Principal Principal Principal
Amount of Amount of Amount of Amount of
Class A-6F Class A-IO Class A-1A Class M-1A
Underwriter Certificates Certificates Certificates Certificates
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Prudential
Securities
Incorporated 12,500,000 12,500,000 138,750,000 18,750,000
Donaldson, Lufkin
& Jenrette
Securities
Corporation 4,166,667 4,166,667 46,250,000 6,250,000
Lehman Brothers Inc. 4,166,667 4,166,667 46,250,000 6,250,000
NationsBanc
Montgomery
Securities LLC 4,166,667 4,166,667 46,250,000 6,250,000
</TABLE>
<PAGE> 43
<TABLE>
<CAPTION>
Principal Principal
Amount of Amount of
Class M-2A Class B-1A
Underwriter Certificates Certificates
------------ ------------
<S> <C> <C>
Prudential
Securities
Incorporated 15,937,500 14,062,500
Donaldson, Lufkin
& Jenrette
Securities
Corporation 5,312,500 4,687,500
Lehman Brothers
Inc 5,312,500 4,687,500
NationsBanc
Montgomery
Securities LLC 5,312,500 4,687,500
</TABLE>
<PAGE> 44
SCHEDULE II
Registration Statement No. 333-21219
Base Prospectus December 16, 1997
Prospectus Supplement dated June 15, 1998
Mortgage Pass-Through Certificates, Series 1998-B
<TABLE>
<S> <C>
Title of Certificates: Class A-1F
Amount of Certificates: $99,000,000
Pass-Through Rate: 6.325%
Purchase Price Percentage: 99.75%
Cut-off Date: June 1, 1998
Closing: June 18, 1998
Denominations: $1,000.00 and integral multiples of $1.00 in
excess thereof.
Insurer: Financial Security Assurance Inc.
Title of Certificates: Class A-2F
Amount of Certificates: $14,000,000
Pass-Through Rate: 6.210%
Purchase Price Percentage: 99.75%
Cut-off Date: June 1, 1998
Closing: June 18, 1998
Denominations: $1,000.00 and integral multiples of $1.00 in
excess thereof.
Insurer: Financial Security Assurance Inc.
Title of Certificates: Class A-3F
Amount of Certificates: $56,000,000
Pass-Through Rate: 6.335%
Purchase Price Percentage: 99.75%
</TABLE>
<PAGE> 45
<TABLE>
<S> <C>
Cut-off Date: June 1, 1998
Closing: June 18, 1998
Denominations: $1,000.00 and integral multiples of $1.00 in
excess thereof.
Insurer: Financial Security Assurance Inc.
Title of Certificates: Class A-4F
Amount of Certificates: $29,000,000
Pass-Through Rate: 6.475%
Purchase Price Percentage: 99.75%
Cut-off Date: June 1, 1998
Closing: June 18, 1998
</TABLE>
<PAGE> 46
<TABLE>
<S> <C>
Denominations: $1,000.00 and integral multiples of $1.00 in
excess thereof.
Insurer: Financial Security Assurance Inc.
Title of Certificates: Class A-5F
Amount of Certificates: $27,000,000
Pass-Through Rate: 6.890%
Purchase Price Percentage: 99.75%
Cut-off Date: June 1, 1998
Closing: June 18, 1998
Denominations: $1,000.00 and integral multiples of $1.00 in
excess thereof.
Insurer: Financial Security Assurance Inc.
</TABLE>
<PAGE> 47
<TABLE>
<S> <C>
Title of Certificates: Class A-6F
Amount of Certificates: $25,000,000
Pass-Through Rate: 6.455%
Purchase Price Percentage: 99.75%
Cut-off Date: June 1, 1998
Closing: June 18, 1998
Denominations: $1,000.00 and integral multiples of $1.00 in
excess thereof.
Insurer: Financial Security Assurance Inc.
Title of Certificates: Class A-IO
Amount of Certificates: $25,000,000
</TABLE>
<PAGE> 48
<TABLE>
<S> <C>
Pass-Through Rate: 5.00% on any Distribution Date before July
2001; thereafter 0.0%.
Purchase Price Percentage: 99.017%
Cut-off Date: June 1, 1998
Closing: June 18, 1998
Denominations: $1,000.00 and integral multiples of $1.00 in
excess thereof.
Insurer: Financial Security Assurance Inc.
Title of Certificates: Class A-1A
Amount of Certificates: $277,500,000
Pass-Through Rate: LIBOR + 0.165% with respect to each Interest
period preceding the Clean-up Call Date and
LIBOR + 0.33% thereafter.
</TABLE>
<PAGE> 49
<TABLE>
<S> <C>
Purchase Price Percentage: 99.75%
Cut-off Date: June 1, 1998
Closing: June 18, 1998
Denominations: $25,000.00 and integral multiples of $1.00 in
excess thereof.
Title of Certificates: Class M-1A
Amount of Certificates: $37,500,000
Pass-Through Rate: LIBOR + 0.35% with respect to each Interest
period preceding the Clean-up Call Date and
LIBOR + 0.525% thereafter.
Purchase Price Percentage: 99.75%
Cut-off Date: June 1, 1998
</TABLE>
<PAGE> 50
<TABLE>
<S> <C>
Closing: June 18, 1998
Denominations: $25,000.00 and integral multiples of $1.00 in
excess thereof.
Title of Certificates: Class M-2A
Amount of Certificates: $31,875,000
Pass-Through Rate: LIBOR + 0.56% with respect to each Interest
period preceding the Clean-up Call Date and
LIBOR + 0.84% thereafter.
Purchase Price Percentage: 99.75%
Cut-off Date: June 1, 1998
Closing: June 18, 1998
</TABLE>
<PAGE> 51
<TABLE>
<S> <C>
Denominations: $1,000.00 and integral multiples of $1.00 in
excess thereof.
Title of Certificates: Class B-1A
Amount of Certificates: $28,125,000
Pass-Through Rate: LIBOR + 1.17% with respect to each Interest
period preceding the Clean-up Call Date and
LIBOR + 1.755% thereafter.
Purchase Price Percentage: 99.75%
Cut-off Date: June 1, 1998
Closing: June 18, 1998
Denominations: $25,000.00 and integral multiples of $1.00 in
excess thereof.
</TABLE>
<PAGE> 52
Representative with respect to the Offered Certificates: Prudential Securities
Incorporated
Location of Settlement: The offices of O'Melveny & Myers LLP, 400
S. Hope Street, Los Angeles, California
<PAGE> 1
EXHIBIT 1.2
AAMES CAPITAL ACCEPTANCE CORP.
Mortgage Pass-Through Certificates
PRICING AGREEMENT
May 22, 1998
Prudential Securities Incorporated,
as Representative of the several Underwriters
named in Schedule I hereto
c/o Prudential Securities Incorporated
One New York Plaza, 17th Floor
New York, New York 10292
Ladies and Gentlemen:
Aames Capital Acceptance Corp. (the "Company") proposes, subject to the
terms and condition stated herein and the Underwriting Agreement, dated May 22,
1998 (the "Underwriting Agreement"), between the Company and Prudential
Securities Incorporated, as underwriter and as Representative (in such capacity,
the "Representative" of the several underwriters named in Schedule I hereto
(together with the Representative, the "Underwriters"), to issue and sell to the
Underwriters the series of mortgage pass-through certificates specified in
Schedule II hereto (the "Certificates"). Each of the provisions of the
Underwriting Agreement is incorporated herein by reference in its entirety, and
shall be deemed to be a part of this Agreement to the same extent as if such
provisions had been set forth in full herein; and each of the representations
and warranties set forth therein shall be deemed to have been made at and as of
the date of this Pricing Agreement, except that each representation and warranty
with respect to the Prospectus in Section 1 of the Underwriting Agreement shall
be deemed to be a representation or warranty as of the date of the Underwriting
Agreement in relation to the Prospectus (as therein defined), and also a
representation and warranty as of the date of this Pricing Agreement in relation
to the Prospectus as amended or supplemented with respect to the Certificates.
Each reference to Representative contained in the Underwriting Agreement shall
be deemed to refer to the Representative named herein. Unless otherwise defined
herein, terms in the Underwriting Agreement are used herein as therein defined.
An amendment to the Registration Statement, or a supplement to the
Prospectus, as the case may be, relating to the Certificates in the form
heretofore delivered to you is now proposed to be filed or, in the case of a
supplement, mailed for filing with the Commission.
Subject to the terms and conditions set forth herein and in the
Underwriting Agreement incorporated herein by reference, the Company agrees to
issue and sell to the Underwriters, and
Annex A-1
<PAGE> 2
the Underwriters, severally and not jointly, agree to purchase from the Company,
at the time and at the purchase price set forth in Schedule II hereto, the
aggregate amount of each Class of Certificates set forth opposite the name of
such Underwriter set forth in Schedule I hereto plus, in the case of the Fixed
Rate Group Certificates, accrued interest at the applicable Pass-Through Rate
from June 1, 1998.
Annex A-2
<PAGE> 3
If the foregoing is in accordance with your understanding, please sign
and return to us five counterparts hereof, and upon acceptance hereof by you,
this letter and such acceptance hereof, including the provisions of the
Underwriting Agreement incorporated herein by reference, shall constitute a
binding agreement between the Underwriters and the Company.
Very truly yours,
AAMES CAPITAL ACCEPTANCE CORP.
By: /s/ Mark E. Elbaum
------------------------------------------
Name: Mark E. Elbaum
Title: Senior Vice President-Finance
CONFIRMED AND ACCEPTED,
as of the date first above written:
PRUDENTIAL SECURITIES INCORPORATED
By: /s/ Mary Alice Kohs
-------------------------------
Name: Mary Alice Kohs
Title: Vice President
For itself and as
Representative of the several
Underwriters named in
Schedule I hereto
Annex A-3
<PAGE> 4
SCHEDULE I
<TABLE>
<CAPTION>
Principal Principal Principal Principal Principal
Amount of Amount of Amount of Amount of Amount of
Class A-1F Class A-2F Class A-3F Class A-4F Class A-5F
Underwriter Certificates Certificates Certificates Certificates Certificates
---------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Prudential
Securities
Incorporated 49,500,000 7,000,000 28,000,000 14,500,000 13,500,000
Donaldson, Lufkin
& Jenrette
Securities
Corporation 16,500,000 2,333,334 9,333,334 4,833,334 4,500,000
Lehman Brothers
Inc. 16,500,000 2,333,334 9,333,334 4,833,334 4,500,000
NationsBanc
Montgomery
Securities LLC 16,500,000 2,333,334 9,333,334 4,833,334 4,500,000
</TABLE>
<TABLE>
<CAPTION>
Principal Principal Principal Principal
Amount of Amount of Amount of Amount of
Class A-6F Class A-IO Class A-1A Class M-1A
Underwriter Certificates Certificates Certificates Certificates
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Prudential
Securities
Incorporated 12,500,000 12,500,000 138,750,000 18,750,000
Donaldson, Lufkin
& Jenrette
Securities
Corporation 4,166,667 4,166,667 46,250,000 6,250,000
Lehman Brothers
Inc. 4,166,667 4,166,667 46,250,000 6,250,000
NationsBanc
Montgomery
Securities LLC 4,166,667 4,166,667 46,250,000 6,250,000
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
Principal Principal
Amount of Amount of
Class M-2A Class B-1A
Underwriter Certificates Certificates
------------ ------------
<S> <C> <C>
Prudential
Securities
Incorporated 15,937,500 14,062,500
Donaldson, Lufkin
& Jenrette
Securities
Corporation 5,312,500 4,687,500
Lehman Brothers
Inc 5,312,500 4,687,500
NationsBanc
Montgomery
Securities LLC 5,312,500 4,687,500
</TABLE>
<PAGE> 6
SCHEDULE II
Registration Statement No. 333-21219
Base Prospectus December 16, 1997
Prospectus Supplement dated June 15, 1998
Mortgage Pass-Through Certificates, Series 1998-B
<TABLE>
<S> <C>
Title of Certificates: Class A-1F
Amount of Certificates: $99,000,000
Pass-Through Rate: 6.325%
Purchase Price Percentage: 99.75%
Cut-off Date: June 1, 1998
Closing: June 18, 1998
Denominations: $1,000.00 and integral multiples of $1.00 in
excess thereof.
Insurer: Financial Security Assurance Inc.
Title of Certificates: Class A-2F
Amount of Certificates: $14,000,000
Pass-Through Rate: 6.210%
Purchase Price Percentage: 99.75%
Cut-off Date: June 1, 1998
Closing: June 18, 1998
Denominations: $1,000.00 and integral multiples of $1.00 in
excess thereof.
Insurer: Financial Security Assurance Inc.
Title of Certificates: Class A-3F
Amount of Certificates: $56,000,000
Pass-Through Rate: 6.335%
Purchase Price Percentage: 99.75%
Cut-off Date: June 1, 1998
</TABLE>
<PAGE> 7
<TABLE>
<S> <C>
Closing: June 18, 1998
Denominations: $1,000.00 and integral multiples of $1.00 in
excess thereof.
Insurer: Financial Security Assurance Inc.
Title of Certificates: Class A-4F
Amount of Certificates: $29,000,000
Pass-Through Rate: 6.475%
Purchase Price Percentage: 99.75%
Cut-off Date: June 1, 1998
Closing: June 18, 1998
Denominations: $1,000.00 and integral multiples of $1.00 in
excess thereof.
</TABLE>
<PAGE> 8
<TABLE>
<S> <C>
Insurer: Financial Security Assurance Inc.
Title of Certificates: Class A-5F
Amount of Certificates: $27,000,000
Pass-Through Rate: 6.890%
Purchase Price Percentage: 99.75%
Cut-off Date: June 1, 1998
Closing: June 18, 1998
Denominations: $1,000.00 and integral multiples of $1.00 in
excess thereof.
Insurer: Financial Security Assurance Inc.
Title of Certificates: Class A-6F
</TABLE>
<PAGE> 9
<TABLE>
<S> <C>
Amount of Certificates: $25,000,000
Pass-Through Rate: 6.455%
Purchase Price Percentage: 99.75%
Cut-off Date: June 1, 1998
Closing: June 18, 1998
Denominations: $1,000.00 and integral multiples of $1.00 in
excess thereof.
Insurer: Financial Security Assurance Inc.
Title of Certificates: Class A-IO
Amount of Certificates: $25,000,000
Pass-Through Rate: 5.00% on any Distribution Date before July
2001; thereafter 0.0%.
</TABLE>
<PAGE> 10
<TABLE>
<S> <C>
Purchase Price Percentage: 99.017%
Cut-off Date: June 1, 1998
Closing: June 18, 1998
Denominations: $1,000.00 and integral multiples of $1.00 in
excess thereof.
Insurer: Financial Security Assurance Inc.
Title of Certificates: Class A-1A
Amount of Certificates: $277,500,000
Pass-Through Rate: LIBOR + 0.165% with respect to each Interest
period preceding the Clean-up Call Date and
LIBOR + 0.33% thereafter.
Purchase Price Percentage: 99.75%
</TABLE>
<PAGE> 11
<TABLE>
<S> <C>
Cut-off Date: June 1, 1998
Closing: June 18, 1998
Denominations: $25,000.00 and integral multiples of $1.00 in
excess thereof.
Title of Certificates: Class M-1A
Amount of Certificates: $37,500,000
Pass-Through Rate: LIBOR + 0.35% with respect to each Interest
period preceding the Clean-up Call Date and
LIBOR + 0.525% thereafter.
Purchase Price Percentage: 99.75%
Cut-off Date: June 1, 1998
Closing: June 18, 1998
</TABLE>
<PAGE> 12
<TABLE>
<S> <C>
Denominations: $25,000.00 and integral multiples of $1.00 in
excess thereof.
Title of Certificates: Class M-2A
Amount of Certificates: $31,875,000
Pass-Through Rate: LIBOR + 0.56% with respect to each Interest
period preceding the Clean-up Call Date and
LIBOR + 0.84% thereafter.
Purchase Price Percentage: 99.75%
Cut-off Date: June 1, 1998
Closing: June 18, 1998
Denominations: $1,000.00 and integral multiples of $1.00 in
excess thereof.
</TABLE>
<PAGE> 13
<TABLE>
<S> <C>
Title of Certificates: Class B-1A
Amount of Certificates: $28,125,000
Pass-Through Rate: LIBOR + 1.17% with respect to each Interest
period preceding the Clean-up Call Date and
LIBOR + 1.755% thereafter.
Purchase Price Percentage: 99.75%
Cut-off Date: June 1, 1998
Closing: June 18, 1998
Denominations: $25,000.00 and integral multiples of $1.00 in
excess thereof.
</TABLE>
<PAGE> 14
<TABLE>
<S> <C>
Title of Certificates: Class B-1A
Amount of Certificates: $28,125,000
Pass-Through Rate: LIBOR + 1.17% with respect to each Interest
period preceding the Clean-up Call Date and
LIBOR + 1.755% thereafter.
Purchase Price Percentage: 99.75%
Cut-off Date: June 1, 1998
Closing: June 18, 1998
Denominations: $25,000.00 and integral multiples of $1.00 in
excess thereof.
</TABLE>
<PAGE> 1
EXHIBIT 4.1
================================================================================
AAMES CAPITAL ACCEPTANCE CORP.
as Transferor
AAMES CAPITAL CORPORATION
as Servicer
and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
as Trustee
POOLING AND SERVICING AGREEMENT
Dated as of June 1, 1998
Aames Mortgage Trust 1998-B
Mortgage Pass-Through Certificates,
Series 1998-B
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE ONE DEFINITIONS....................................................1
Section 1.01. Definitions ....................................................1
Section 1.02. Interest Calculations.............................................43
ARTICLE TWO CONVEYANCE OF THE TRUST; ORIGINAL ISSUANCE OF
CERTIFICATES...................................................43
Section 2.01. Conveyance of the Trust...........................................46
Section 2.02. Conveyance of the Subsequent Mortgage Loans; Fixed Price
Contract..........................................................49
Section 2.03. Acceptance by the Trustee; Repurchase or Substitution of
Mortgage Loans....................................................48
Section 2.04. Representations and Warranties Regarding the Servicer and
the Seller........................................................52
Section 2.04. Representations and Warranties Regarding the Servicer and
the Seller........................................................54
Section 2.05. Representations and Warranties of the Seller Regarding the
Mortgage Loans....................................................55
Section 2.06. Execution and Authentication of Certificates......................66
Section 2.07. [Reserved]........................................................66
Section 2.08. Indemnification of the Trust......................................66
ARTICLE THREE ADMINISTRATION AND SERVICING OF MORTGAGE LOANS;
CERTIFICATE ACCOUNT............................................66
Section 3.01. The Servicer and the Sub-Servicers................................66
Section 3.02. Collection of Certain Mortgage Loan Payments; Collection
Account and Certificate Account...................................68
Section 3.03. Additional Servicing Responsibilities for the Adjustable
Rate Mortgage Loans...............................................71
Section 3.04. Hazard Insurance Policies.........................................71
Section 3.05. Enforcement of Due-on-Sale Clauses; Assumption and
Modification Agreements...........................................72
Section 3.06. Realization upon Liquidated Mortgage Loans........................72
Section 3.07. Trustee to Cooperate; Release of Mortgage Files...................75
Section 3.08. Servicing Compensation; Payment of Certain Expenses by
the Servicer......................................................76
Section 3.09. Annual Statement as to Compliance.................................76
Section 3.10. Annual Independent Public Accountants' Servicing Report...........77
Section 3.11. Access to Certain Documentation and Information Regarding
the Mortgage Loans................................................77
Section 3.12. Maintenance of Fidelity Bond and Errors and Omission Policy.......77
Section 3.13. Notices to the Rating Agencies and the Trustee....................77
Section 3.14. Reports of Foreclosures and Abandonment of Mortgaged
Properties........................................................78
Section 3.15. Sub-Servicers and Sub-Servicing Agreements........................78
Section 3.16. Prefunding Account................................................79
Section 3.17. Capitalized Interest Account......................................80
Section 3.18. [Reserved]........................................................81
Section 3.19. Payments on the Financial Guaranty Insurance Policy...............81
Section 3.20. Rights of the Financial Guaranty Insurer to Exercise Rights
of Fixed Rate Group Certificateholders............................85
Section 3.21. Trust and Accounts Held for Benefit of the Certificateholders
and Financial
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
Guaranty Insurer..................................................86
ARTICLE FOUR REMITTANCE REPORT..............................................87
Section 4.01. Servicer Remittance Report........................................87
Section 4.02. Trustee Distribution Date Statement...............................87
ARTICLE FIVE PAYMENTS AND STATEMENTS TO CERTIFICATEHOLDERS.................89
Section 5.01. Distributions ....................................................89
Section 5.02. Monthly Advances; Servicing Advances..............................93
Section 5.03. Statements to Certificateholders..................................94
Section 5.04. Applied Realized Loss Amount......................................96
Section 5.05. Financial Guaranty Insurer's Use of Information...................96
ARTICLE SIX THE CERTIFICATES...............................................97
Section 6.01. The Certificates..................................................97
Section 6.02. Registration of Transfer and Exchange of Certificates.............98
Section 6.03. Mutilated, Destroyed, Lost or Stolen Certificates................103
Section 6.04. Persons Deemed Owners............................................103
Section 7.01. Liability of the Servicer........................................104
Section 7.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer.....................................104
Section 7.03. Limitation on Liability of the Servicer and Others...............104
Section 7.04. Servicer Not to Resign...........................................105
Section 7.05. Merger or Consolidation of the Seller............................105
Section 7.06. Term To Term Servicing...........................................105
ARTICLE EIGHT DEFAULT..........................................................106
Section 8.01. Events of Default................................................106
Section 8.02. Trustee to Act; Appointment of Successor.........................108
Section 8.03. Notifications to Certificateholders..............................108
Section 8.04. Assumption or Termination of Sub-Servicing Agreements by
the Trustee or any Successor Servicer............................109
ARTICLE NINE THE TRUSTEE...................................................109
Section 9.01. Duties of the Trustee............................................109
Section 9.02. Certain Matters Affecting the Trustee............................111
Section 9.03. Trustee Not Liable for Certificates or Mortgage Loans............112
Section 9.04. Trustee May Own Certificates.....................................112
Section 9.05. Payment of the Trustee's Fees and Expenses.......................112
Section 9.06. Eligibility Requirements for the Trustee.........................113
Section 9.07. Resignation or Removal of the Trustee............................113
Section 9.08. Successor Trustee................................................114
Section 9.09. Merger or Consolidation of the Trustee..........................114
Section 9.10. Appointment of Co-Trustee or Separate Trustee...................115
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
Section 9.11. Compliance with REMIC Provisions.................................116
Section 9.12. Trustee May Enforce Claims Without Possession of
Certificates.....................................................117
Section 9.13. Exercise of Trustee Powers by Financial Guaranty Insurer
and Certificateholders...........................................117
Section 9.14. Tax Returns......................................................117
Section 9.15. Taxpayer Identification Number...................................118
Section 9.16 Miscellaneous REMIC Provisions...................................118
ARTICLE TEN TERMINATION....................................................126
Section 10.01. Termination Upon Purchase or Liquidation of Mortgage Loans.......126
Section 10.02. Additional Termination Requirements..............................129
ARTICLE ELEVEN MISCELLANEOUS PROVISIONS......................................129
Section 11.01. Amendment........................................................129
Section 11.02. Recordation of Agreement.........................................131
Section 11.03. Limitation on Rights of Certificateholders.......................131
Section 11.04. Governing Law....................................................132
Section 11.05. Notices..........................................................132
Section 11.06. Severability of Provisions.......................................132
Section 11.07. Assignment.......................................................132
Section 11.08. Certificates Nonassessable and Fully Paid........................133
Section 11.09. Third Party Beneficiary; Rating..................................133
</TABLE>
iii
<PAGE> 5
SCHEDULES AND EXHIBITS
Schedule I List Of Sub-servicers
Schedule II Representations and Warranties With Respect to Subsequent
Mortgage Loans
Schedule III Mortgage Loan Schedule
Schedule IV Subsequent Mortgage Loan Schedule
Schedule V Schedule of Restricted Mortgage Loans
Schedule VI Schedule of Escrowed Mortgage Loans
Exhibit A Forms of Certificates
Exhibit B Form of Transferor Affidavit
Exhibit C Form of Transferee Affidavit
Exhibit D Form of Subsequent Transfer Agreement
Exhibit E Form of Annual Statement as to Compliance
Exhibit F Form of Payoff Notice
Exhibit G Form of Liquidation Report
Exhibit H Form of Officer's Certificate as to Charge-offs
Exhibit I Financial Guaranty Insurance Policy
Exhibit J Insurance And Indemnity Agreement
Exhibit K Form of Notice of Claim and Certificate
iv
<PAGE> 6
THIS POOLING AND SERVICING AGREEMENT (this "Agreement"), dated as of
June 1, 1998, between Aames Capital Acceptance Corp., as transferor (in such
capacity, the "Transferor"), Aames Capital Corporation, as servicer (in such
capacity, together with permitted successors hereunder, the "Servicer"), and
Bankers Trust Company of California, N.A., as trustee (the "Trustee"),
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 ONE
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 Offered
Certificates in respect of any Interest Period at the applicable Pass-Through
Rate, less the related pro rata share of Interest Shortfalls. All calculations
of interest on the Fixed Rate Group 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 Adjustable Rate Group 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
Transferor's designation of Subsequent Mortgage Loans to be sold to the Trust
separated by Mortgage Loan Group and the aggregate Subsequent Cut-off Date
Principal Balance of such Subsequent Mortgage Loans in each Mortgage Loan Group,
which notice shall be given to the Trustee and Financial Guaranty Insurer not
later than one Business Day prior to the related Subsequent Transfer Date.
Additional Insurer Payments: Shall have the meaning assigned in the
definition of Insured Amount.
Adjustable Rate Group: The Mortgage Loan Group comprised of all
Mortgage Loans identified in the Mortgage Loan Schedule as having been assigned
to the Adjustable Rate Group, including any Qualified Replacement Mortgage Loans
delivered in replacement thereof.
Adjustable Rate Group 90+ Delinquency Percentage: As to any
Distribution Date, the percentage equivalent of the fraction obtained by
dividing (i) the aggregate of the Principal Balances of all Mortgage Loans in
the Adjustable Rate Group that were than 90 or more days
1
<PAGE> 7
contractually delinquent as of the end of the related Collection Period or were
either foreclosed upon or transferred pursuant to Section 3.06 during such
Collection Period, by (ii) the Principal Balance of the Mortgage Loans included
in the Adjustable Rate Group as of the last day of such Collection Period.
Adjustable Rate Group Available Funds Cap: With respect to any
Distribution Date, the per annum rate expressed as the percentage obtained by
(A) dividing (x) the amount of interest that accrued on the Mortgage Loans in
the Adjustable Rate Group in respect of the related Collection Period at the
weighted average of the related Mortgage Loan Rates applicable to Monthly
Mortgage Payments due on such Mortgage Loans during such Collection Period, and
reduced by the Monthly Servicing Fee for such Collection Period and (y) the
product of (i) the Adjustable Rate Group Balance as of the first day of the
related Collection Period and (ii) the actual number of days elapsed during such
Interest Period divided by 360 and (B) multiplying the result by 100.
Adjustable Rate Group Balance: With respect 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 Adjustable Rate Group Prefunding
Account Deposit remaining on deposit in the Prefunding Account or Certificate
Account as of the related Determination Date.
Adjustable Rate Group Capitalized Interest Account Deposit: The
amount deposited in the Capitalized Interest Account for the benefit of the
Adjustable Rate Group Certificateholders, which amount will be $507,977.96.
Adjustable Rate Group Certificates: The Class A-1A Certificates, the
Class M-1A Certificates, the Class M-2A Certificates and the Class B-1A
Certificates.
Adjustable Rate Group Principal Distribution Amount: With respect to
any Distribution Date, generally means the Principal Distribution Amount with
respect to the Adjustable Rate Group and the related Collection Period.
Adjustable Rate Group Prefunding Account Deposit: The amount
deposited in the Prefunding Account that is allocated for the purchase of
Subsequent Mortgage Loans having adjustable Mortgage Loan Rates to be included
in the Adjustable Rate Group, which amount is $99,971,063.
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 and subject to any Minimum Rate, Maximum Rate and
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.
2
<PAGE> 8
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.
Aggregate Certificate Principal Balance: With respect to any
Distribution Date means the sum of the Certificate Principal Balances of all
Classes of the Offered Certificates. The Aggregate Certificate Principal Balance
for a particular Mortgage Loan Group is the sum of the Certificate Principal
Balances of all Classes of the Offered Certificates relating to such Group.
Agreement: This Pooling and Servicing Agreement and all amendments
hereof and supplements hereto.
Annual Statement of Compliance: The annual statement to be prepared
and delivered by the Servicer in accordance with Section 3.09.
Applied Realized Loss Amount: With respect to the Adjustable Rate
Group and any Distribution Date, means the excess of the related Realized Losses
over the amount, if any, by which the related Overcollateralization Amount
exceeds zero after taking into account the application of the Adjustable Rate
Group Principal Distribution Amount, as appropriate, on such Distribution Date
and the application of any Monthly Excess Cashflow Amount available from the
Fixed Rate Group to cover such Realized Losses as set forth in Section 5.01(d).
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.
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(c).
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 or the State of New
York are required or authorized
3
<PAGE> 9
by law, executive order or governmental decree to be closed.
Capitalized Interest Account: The segregated account, which, if
utilized, 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 1998-B Mortgage Pass-Through Certificates, Series
1998-B, Capitalized Interest Account".
Capitalized Interest Account Deposit: $507,977.96.
Certificate: Any Fixed Rate Group, Adjustable Rate Group or Retained
Certificate.
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 1998-B Mortgage Pass-Through Certificates, Series 1998-B,
Certificate Account".
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-1F
Certificates, the Class A-1F Certificate Principal Balance; with respect to the
Class A-2F Certificates, the Class A-2F Certificate Principal Balance; with
respect to the Class A-3F Certificates, the Class A-3F Certificate Principal
Balance; with respect to the Class A-4F Certificates, the Class A-4F Certificate
Principal Balance; with respect to the Class A-5F Certificates, the Class A-5F
Certificate Principal Balance; with respect to the Class A-6F Certificates, the
Class A-6F Certificate Principal Balance; with respect to the Class A-1A
Certificates, the Class A-1A Certificate Principal Balance; with respect to the
Class M-1A Certificates, the Class M-1A Certificate Principal Balance; with
respect to the Class M-2A Certificates, the Class M-2A Certificate Principal
Balance, with respect to the Class B-1A Certificates, the Class B-1A Certificate
Principal Balance. The Class A-IO Certificates do not have a Certificate
Principal Balance but bear interest based upon the Class A-IO Notional Amount.
The Class C Certificates have a Certificate Principal Balance only to the extent
described in Section 9.16. The Class R Certificates do not have a Certificate
Principal Balance. With respect to any other designation (e.g. the Fixed Rate
Group Certificate Principal Balance), the sum of the Certificate Principal
Balances of each Class contemplated by such designation, in each case excluding
the Certificate Principal Balances of the Class C Certificates and Class R
Certificates.
Certificate Register: The register maintained pursuant to Section
6.02.
Certificateholder or Holder: 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 Transferor, the
Servicer or any Person actually known to a Responsible Officer of the Trustee to
be an Affiliate of the Transferor 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
4
<PAGE> 10
Holders of the requisite Percentage Interests necessary to take any such action
or effect any such consent have acted or consented unless the Transferor or the
Servicer or any such Person is an owner of record of all of the Certificates of
any Class.
Class: All of the Class A-1F Certificates, Class A-2F Certificates,
Class A-3F Certificates, Class A-4F Certificates, Class A-5F Certificates, Class
A-6F Certificates, Class A-IO Certificates, Class A-1A Certificates, Class M-1A
Certificates, Class M-2A Certificates, Class B-1A Certificates, Class C
Certificates or any of the Class R Certificates, as the case may be, taken as a
whole.
Class A-1A Principal Distribution Amount: With respect to each
Distribution Date on or after the Step Down Date, the excess of (x) the
Certificate Principal Balance of the Class A-1A Certificates immediately prior
to such Distribution Date over (y) the lesser of (A) the product of (i) the
lesser of (1) the Stepped Up Enhancement Percentage and (2) 48% minus the
applicable Targeted Step Down Percentage and (ii) the aggregate of the Principal
Balance of the Mortgage Loans in the Adjustable Rate Group as of the last day of
the related Collection Period (plus any portion of the Adjustable Rate Group
Prefunding Account Deposit remaining on deposit in the Prefunding Account or
Escrow Account as of such date allocable to the Adjustable Rate Group), and (B)
the excess of the aggregate amount described in clause (y)(A)(ii) above over
$1,875,000.
Class A-1A Certificate: Any one of the Class A-1A 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 with respect thereto in Exhibit A.
Class A-1A Certificate Principal Balance: As to any Distribution
Date, the Initial Certificate Principal Balance of the Class A-1A Certificates
less the Adjustable Rate Group Principal Distribution Amounts actually
distributed to Holders of Class A-1A Certificates on previous Distribution
Dates.
Class A-1A Formula Pass-Through Rate: The interest rate described in
clause (x) of the definition of Class A-1A Pass-Through Rate.
Class A-1A Pass-Through Rate: With respect to each Interest Period
will be the lesser of (x) with respect to each Interest Period preceding the
Clean-up Call Date, LIBOR plus 0.165% per annum and for any Interest Period
thereafter, LIBOR plus 0.33% per annum and (y) the Adjustable Rate Group
Available Funds Cap.
Class A-1F Certificate: Any one of the Class A-1F 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 with respect thereto in Exhibit A.
Class A-1F Certificate Principal Balance: As to any Distribution
Date, the Initial Certificate Principal Balance of the Class A-1F Certificates
less the Fixed Rate Group Principal Distribution Amounts actually distributed to
Holders of Class A-1F Certificates on previous
5
<PAGE> 11
Distribution Dates.
Class A-1F Pass-Through Rate: With respect to any Interest Period,
6.325% per annum.
Class A-2F Certificate: Any one of the Class A-2F 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 with respect thereto in Exhibit A.
Class A-2F Certificate Principal Balance: As to any Distribution
Date, the Initial Certificate Principal Balance of the Class A-2F Certificates
less the Fixed Rate Group Principal Distribution Amounts actually distributed to
Holders of Class A-2F Certificates on previous Distribution Dates.
Class A-2F Pass-Through Rate: With respect to any Interest Period,
6.210% per annum.
Class A-3F Certificate: Any one of the Class A-3F 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 with respect thereto in Exhibit A.
Class A-3F Certificate Principal Balance: As to any Distribution
Date, the Initial Certificate Principal Balance of the Class A-3F Certificates
less the Fixed Rate Group Principal Distribution Amounts actually distributed to
Holders of Class A-3F Certificates on previous Distribution Dates.
Class A-3F Pass-Through Rate: With respect to any Interest Period,
6.335% per annum.
Class A-4F Certificate: Any one of the Class A-4F 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 with respect thereto in Exhibit A.
Class A-4F Certificate Principal Balance: As to any Distribution
Date, the Initial Certificate Principal Balance of the Class A-4F Certificates
less the Fixed Rate Group Principal Distribution Amounts actually distributed to
Holders of Class A-4F Certificates on previous Distribution Dates.
Class A-4F Pass-Through Rate: With respect to any Interest Period,
the lesser of (x) 6.475% per annum and (y) the Fixed Rate Net WAC.
Class A-5F Certificate: Any one of the Class A-5F 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 with respect thereto in Exhibit A.
Class A-5F Certificate Principal Balance: As to any Distribution
Date, the Initial Certificate Principal Balance of the Class A-5F Certificates
less the Fixed Rate Group Principal
6
<PAGE> 12
Distribution Amounts actually distributed to Holders of Class A-5F Certificates
on previous Distribution Dates.
Class A-5F Pass-Through Rate: With respect to any Interest Period,
the lesser of (x) 6.890% per annum and (y) the Fixed Rate Net WAC.
Class A-6F Certificate: Any one of the Class A-6F 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 with respect thereto in Exhibit A.
Class A-6F Certificate Principal Balance: As to any Distribution
Date, the Initial Certificate Principal Balance of the Class A-6F Certificates
less the Fixed Rate Group Principal Distribution Amounts actually distributed to
Holders of Class A-6F Certificates on previous Distribution Dates.
Class A-6F Lockout Distribution Amount: With respect to any
Distribution Date means the lesser of (a) product of (i) the applicable Class
A-6F Lockout Percentage for such Distribution Date and (ii) the Class A-6F
Lockout Pro Rata Distribution Amount for such Distribution Date, not to exceed
the Fixed Rate Group Principal Distribution Amount or (b) the Fixed Rate Group
Principal Distribution Amount.
Class A-6F Lockout Percentage: With respect to each Distribution Date
occurring during the indicated periods means the indicated percentage:
<TABLE>
<CAPTION>
Class A-6F
Period Lockout Percentage
------ ------------------
<S> <C>
July 1998 - June 2001 0%
July 2001 - June 2003 45%
July 2003 - June 2004 80%
July 2004 - June 2005 100%
July 2005 and thereafter 300%
</TABLE>
Class A-6F Lockout Pro Rata Distribution Amount: With respect to any
Distribution Date means an amount equal to the product of (x) a fraction, the
numerator of which is the Certificate Principal Balance of the Class A-6F
Certificates immediately prior to such Distribution Date and the denominator of
which is the aggregate Certificate Principal Balance of the Fixed Rate Group
Certificates immediately prior to such Distribution Date, and (y) the Fixed Rate
Group Principal Distribution Amount for such Distribution Date.
Class A-6F Pass-Through Rate: With respect to any Interest Period,
the lesser of (i) 6.455% per annum and (ii) the Fixed Rate Net WAC.
Class A-IO Certificate: Any one of the Class A-IO Certificates
executed by the Trustee on behalf of the Trust, not in its individual capacity,
but solely as Trustee, authenticated by the Trustee
7
<PAGE> 13
and in substantially the form set forth with respect thereto in Exhibit A.
Class A-IO Notional Amount or Notional Amount: The notional principal
amount equal to the outstanding Certificate Principal Balance of the Class A-6F
Certificates immediately prior to the related Distribution Date.
Class A-IO Pass-Through Rate: With respect to any Distribution Date
before July 2001, 5.00% per annum, and with respect to any subsequent
Distribution Date in or after July 2001, 0.00% per annum.
Class B-1A Applied Realized Loss Amount: With respect to any
Distribution Date, the lesser of (x) the related Class B-1A Certificate
Principal Balance (after taking into account the distribution of the related
Principal Distribution Amount on such Distribution Date, but prior to the
application of the Class B-1A Applied Realized Loss Amount, if any, on such
Distribution Date) and (y) the related Applied Realized Loss Amount as of such
Distribution Date.
Class B-1A Certificate Principal Balance: With respect to any
Distribution Date means the Initial Certificate Principal Balance of the Class
B-1A Certificates as reduced by the sum of (x) all Adjustable Rate Group
Principal Distribution Amounts actually distributed to the Class B-1A
Certificateholders on all prior Distribution Dates and (y) the aggregate
cumulative amount of Class B-1A Applied Realized Loss Amounts on all prior
Distribution Dates.
Class B-1A Principal Distribution Amount: With respect to any
Distribution Date on or after the Step Down Date, means the excess of (x) the
sum of (i) the Certificate Principal Balance of the Class A-1A Certificates
(after application of the Class A-1A Principal Distribution Amount on such
Distribution Date), (ii) the Class M-2A Certificate Principal Balance (after
application of the Class M-2A Principal Distribution Amount on such Distribution
Date), (iii) the Class M-1A Certificate Principal Balance (after application of
the Class M-1A Principal Distribution Amount on such Distribution Date) and (iv)
the Class B-1A Certificate Principal Balance immediately prior to such
Distribution Date, over (y) the lesser of (A) the product of (i) 100% minus the
applicable Targeted Step Down Percentage and (ii) the aggregate amount of the
outstanding Principal Balances of the Mortgage Loans in the Adjustable Rate
Group as of the last day of the related Collection Period (plus any portion of
the Adjustable Rate Group Prefunding Account Deposit remaining on deposit in the
Prefunding Account or Escrow Account as of such date allocable to the Adjustable
Rate Group) and (B) the excess of the aggregate amount described in clause
(y)(A)(ii) above over $1,875,000.
Class B-1A Realized Loss Amortization Amount: With respect to any
Distribution Date, the lesser of (x) the Class B-1A Unpaid Realized Loss Amount
as of such Distribution Date and (y) the related Monthly Excess Cashflow Amount
remaining after distribution of any Interest Carry Forward Amount payable to the
Class A-1A Certificateholders, the related Extra Principal Distribution Amount,
the Class M-1A Realized Loss Amortization Amount, the Interest Carry Forward
Amount payable to the Class M-1A Certificateholders, Class M-2A Realized Loss
Amortization Amount, the Interest Carry Forward Amount payable to the Class M-2A
8
<PAGE> 14
Certificateholders and the Interest Carry Forward Amount payable to the Class
B-1A Certificateholders, for each such Distribution Date.
Class B-1A Certificates: Any one of the Class B-1A 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 with respect thereto in Exhibit A.
Class B-1A Pass Through Rate: With respect to any Interest Period,
the lesser of (i) with respect to each Interest Period preceding the Clean-up
Call Date, LIBOR plus 1.17% and for any Interest Period thereafter, LIBOR plus
1.755% per annum and (ii) the Adjustable Rate Group Available Funds Cap.
Class C Certificates: Any one of the Class C 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
with respect thereto in Exhibit A.
Class C Carryforward Amount: With respect to any Distribution Date,
means 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 Section 9.16 with respect to such Distribution Date.
Class M Certificates: Collectively, the Class M-1A and Class M-2A
Certificates.
Class M-1A Applied Realized Loss Amount: With respect to any
Distribution Date, means the lesser of (x) the Class M-1A Certificate Principal
Balance (after taking into account the distribution of the related Principal
Distribution Amount on such Distribution Date, but prior to the application of
the Class M-1A Applied Realized Loss Amount, if any, on such Distribution Date),
and (y) the excess of (i) the related Applied Realized Loss Amount over (ii) the
sum of the Class M-2A Applied Realized Loss Amount and the Class B-1A Applied
Realized Loss Amount, as of such Distribution Date.
Class M-1A Certificates: Any one of the Class M-1A 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 with respect thereto in Exhibit A.
Class M-1A Certificate Principal Balance: With respect to any date of
determination, means the Initial Certificate Principal Balance of the Class M-1A
Certificates as reduced by the
9
<PAGE> 15
sum of (x) all Adjustable Rate Group Principal Distribution Amounts actually
distributed to the Class M-1A Certificateholders on all prior Distribution Dates
and (y) the aggregate cumulative amount of related Class M-1A Applied Realized
Loss Amounts on all prior Distribution Dates.
Class M-1A Pass-Through Rate: With respect to any Interest Period,
the lesser of (i) with respect to each Interest Period preceding the Clean-up
Call Date, LIBOR plus 0.35% per annum and for any Interest Period thereafter,
LIBOR plus 0.525% per annum and (ii) the Adjustable Rate Group Available Funds
Cap.
Class M-1A Principal Distribution Amount: With respect to each
Distribution Date on or after the Step Down Date, the excess of (x) the sum of
(i) the Certificate Principal Balance of the Class A-1A Certificates (after
application of the related Class A-1A Principal Distribution Amount on such
Distribution Date), and (ii) the related Class M-1A Certificate Principal
Balance immediately prior to such Distribution Date over (y) the lesser of (A)
the product of (i) 68% minus the applicable Targeted Step Down Percentage and
(ii) the aggregate amount of the outstanding Principal Balances of the Mortgage
Loans in the Adjustable Rate Group as of the last day of the related Collection
Period (plus any portion of the Adjustable Rate Group Prefunding Account Deposit
remaining on deposit in the Prefunding Account or Escrow Account as of such date
allocable to the Adjustable Rate Group) and (B) the excess of the aggregate
amount described in clause (y)(A)(ii) above over $1,875,000.
Class M-1A Realized Loss Amortization Amount: With respect to any
Distribution Date means the lesser of (x) the Class M-1A Unpaid Realized Loss
Amount and (y) the related Monthly Excess Cashflow Amount remaining after
distribution of the Interest Carry Forward Amount payable to the Class A-1A
Certificateholders, the related Extra Principal Distribution Amount and the
related Interest Carry Forward Amount payable to the Class M-1A
Certificateholders.
Class M-2A Applied Realized Loss Amount: With respect to any
Distribution Date means the lesser of (x) the Class M-2A Certificate Principal
Balance (after taking into account the distribution of the related Principal
Distribution Amount, but prior to the application of the Class M-2A Applied
Realized Loss Amount, if any, on such Distribution Date) and (y) the excess of
(i) the related Applied Realized Loss Amount over (ii) the Class B-1A Applied
Realized Loss Amounts, as of such Distribution Date.
Class M-2A Certificates: Any one of the Class M-2A 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 with respect thereto in Exhibit A.
Class M-2A Certificate Principal Balance: With respect to any date of
determination means, the Initial Certificate Principal Balance of the Class M-2A
Certificates as reduced by the sum of (x) all Adjustable Rate Group Principal
Distribution Amounts actually distributed to the Class M-2A Certificateholders
on all prior Distribution Dates and (y) the aggregate, cumulative amount of
related Class M-2A Applied Realized Loss Amounts on all prior Distribution
Dates.
10
<PAGE> 16
Class M-2A Pass-Through Rate: With respect to any Interest Period,
the lesser of (i) with respect to each Interest Period preceding the Clean-up
Call Date, LIBOR plus 0.56% per annum and for any Interest Period thereafter,
LIBOR plus 0.84% per annum and (ii) Adjustable Rate Group Available Funds Cap.
Class M-2A Principal Distribution Amount: With respect to any
Distribution Date on or after the related Step Down Date means the excess of (x)
the sum of (i) the Certificate Principal Balance of the Class A-1A Certificates
(after application of the related Class A-1A Principal Distribution Amount on
such Distribution Date), (ii) the Class M-1A Certificate Principal Balance
(after application of the M-1A Principal Distribution Amount on such
Distribution Date) and (iii) the related Class M-2A Certificate Principal
Balance immediately prior to such Distribution Date over (y) the lesser of (A)
the product of (i) 85% minus the applicable Targeted Step Down Percentage and
(ii) the aggregate amount of the outstanding Principal Balances of the Mortgage
Loans in the Adjustable Rate Group as of the last day of the related Collection
Period (plus any portion of the Adjustable Rate Group Prefunding Account Deposit
remaining on deposit in the Prefunding Account or Escrow Account as of such date
allocable to the Adjustable Rate Group) and (B) the excess of the aggregate
amount described in clause (y)(A)(ii) above over $1,875,000.
Class M-2A Realized Loss Amortization Amount: With respect to any
Distribution Date, means the lesser of (x) the Class M-2A Unpaid Realized Loss
Amount and (y) the related Monthly Excess Cashflow Amount remaining after
distribution of the related Interest Carry Forward payable to the Class A-1A
Certificateholders, the related Extra Principal Distribution Amount, the Class
M-1A Realized Loss Amortization Amount, the Interest Carry Forward Amount
payable to the Class M-1A Certificateholders and the Interest Carry Forward
Amount payable to the Class M-2A Certificateholders.
Class R Certificate: Any one of the Class R-1, Class R-2, Class R-3
or Class R-4 Certificates.
Class R-1 Certificates: That certificate representing certain
residual rights to distribution from the REMIC I in substantially the form set
forth as Exhibit A hereto.
Class R-2 Certificates: That certificate representing certain
residual rights to distribution from the REMIC II in substantially the form set
forth as Exhibit A hereto.
Class R-3 Certificates: That certificate representing certain
residual rights to distribution from the REMIC III in substantially the form set
forth as Exhibit A hereto.
Class R-4 Certificates: That certificate representing certain
residual rights to distribution from the REMIC IV in substantially the form set
forth as Exhibit A hereto.
Clean-up Call Date: The first Distribution Date on which the
aggregate of the principal balances of the Mortgage Loans is less than 10% of
the Original Pool Balance plus the Prefunding Account Deposit.
11
<PAGE> 17
Closing Date: June 18, 1998.
Closing Date Deposit: The aggregate amount deposited by the
Transferor in the Collection Account on or prior to the Closing Date pursuant to
Section 2.01. 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
related 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 the
aggregate of the amounts of interest that would have accrued (at a per annum
rate of o%) on each Mortgage Loan in the Fixed Rate Group for each 30-day period
from the related 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 "[Servicer], in trust for the benefit of Holders of Aames Mortgage
Trust 1998-B Mortgage Pass-Through Certificates, Series 1998-B, 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 Company 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 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
12
<PAGE> 18
that was otherwise 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 3 Park Plaza, Irvine, California 92614
Attention: Aames Mortgage Loan Pass-Through Certificates, Series 1998-B.
Coverage Deficit: With respect to the Fixed Rate Group and any
Distribution Date, means the excess, if any, of (i) the aggregate of the
Certificate Principal Balances of each Class of Fixed Rate Group Certificates
(after taking into account all distributions thereto in respect of principal on
such Distribution Date other than any amounts paid by the Financial Guaranty
Insurer) over (ii) the Fixed Rate Group Balance as of the last day of the
related Collection Period.
Cut-off Date: June 1, 1998.
Cut-off Date Principal Balance: As to any Mortgage Loan, its
Principal Balance as of the open of business on the related Cut-off Date.
Defective Mortgage Loan: Any Mortgage Loan that is required to be
repurchased or substituted by the Transferor pursuant to Section 2.03 or 2.05.
Definitive Certificates: As defined in Section 6.02(f).
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced by
a Qualified Replacement Mortgage Loan.
Delinquency Percentage: As to any Distribution Date and (a) the Fixed
Rate Group, the percentage equivalent of the fraction obtained by dividing (i)
the aggregate of the Principal Balances of all Mortgage Loans in such Mortgage
Loan Group, as the case may be, that were then 90 days contractually delinquent
as of the end of the related Collection Period or were either foreclosed upon or
transferred pursuant to Section 3.06 during such Collection Period, by (ii) the
Principal Balance of the Mortgage Loans included in such Mortgage Loan Group as
of the last day of such Collection Period or (b) the Adjustable Rate Group, the
percentage equivalent of the fraction obtained by dividing (i) the aggregate of
the Principal Balances of all Mortgage Loans in such Mortgage Loan Group, as the
case may be, that were then 60 days contractually delinquent as of the end of
the related Collection Period or were either foreclosed upon or transferred
pursuant to Section 3.06 during such Collection Period, by (ii) the Principal
Balance of the Mortgage Loans included in such Mortgage Loan Group as of the
last day of such Collection Period.
Deposit Date: As to any Distribution Date, the third Business Day
prior to such Distribution Date.
13
<PAGE> 19
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 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 any such governmental
unit), (ii) a foreign government, international organization or any agency or
instrumentality of either of the foregoing (other than an instrumentality that
is a corporation if all of its activities are subject to tax and a majority of
its board of directors is not selected by any such governmental unit), (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
July 15, 1998.
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 "A-2" or
better by S&P and "A2" or better by Moody's and in the highest short term rating
category by S&P 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 and (iv) a principal subsidiary of a
bank holding company, or (B)
14
<PAGE> 20
segregated 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(c).
Escrow Account: The segregated account, which shall be an Eligible
Account, established and maintained pursuant to Section 3.16(d) and entitled
"Bankers Trust Company of California, N.A., as Trustee for Aames Mortgage Trust
1998-B Mortgage Pass-Through Certificates, Series 1998-B, 1998-A Escrow Amount."
Escrowed Amount: $0.
Event of Default: As defined in Section 8.01.
Extra Principal Distribution Amount: With respect to a Mortgage Loan
Group and any Distribution Date, means the lesser of (x) the related Monthly
Excess Interest Amount for such Mortgage Loan Group and any portion of the
Monthly Excess Cashflow Amount available for such purpose from the other
Mortgage Loan Group on such date and (y) the related Overcollateralization
Deficiency.
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.
FNMA: The Federal National Mortgage Association and its successors in
interest.
15
<PAGE> 21
Final Scheduled Distribution Date: with respect to each Class of
Offered Certificates shall mean:
<TABLE>
<CAPTION>
Class Final Scheduled Distribution Date
----- ---------------------------------
<S> <C>
Class A-1F Certificates September 15, 2016
Class A-2F Certificates December 15, 2018
Class A-3F Certificates August 15, 2024
Class A-4F Certificates August 15, 2026
Class A-5F Certificates September 15, 2028
Class A-6F Certificates September 15, 2028
Class A-IO Certificates June 15, 2001
Class A-1A Certificates June 15, 2028
Class M-1A Certificates June 15, 2028
Class M-2A Certificates June 15, 2028
Class B-1A Certificates June 15, 2028
</TABLE>
Financial Guaranty Insurance Policy: The Financial Guaranty Insurance
Policy (No. 50689-N), dated June 18, 1998, including any endorsements thereto,
issued by the Financial Guaranty Insurer for the benefit of the Holders of the
Fixed Rate Group Certificates, pursuant to which the Financial Guaranty Insurer
guarantees payment of the Insured Amounts. A form of the Financial Guaranty
Insurance Policy is attached hereto as Exhibit I.
Financial Guaranty 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.
Financial Guaranty Insurer Default: The existence and continuance of
any of the following:
(a) the Financial Guaranty Insurer fails to make a payment required
under the Financial Guaranty Insurance Policy in accordance with its terms;
(b) the Financial Guaranty Insurer shall have (i) filed a petition or
commenced any case or proceeding under any provision or chapter of United States
Bankruptcy Code, the New York Insurance Law or other similar federal or state
law relating to insolvency, bankruptcy, rehabilitation, liquidation, or
reorganization, (ii) made a general assignment for the benefit of its creditors,
or (iii) had an order for relief entered against it under the United States
Bankruptcy Code, the New York Insurance Law or any other similar federal or
state law relating to insolvency, bankruptcy, rehabilitation, liquidation, or
reorganization that is final and nonappealable; or
(c) a court of competent jurisdiction, the New York Department of
Insurance or any other competent regulatory authority shall have entered a final
and nonappealable order, judgment or decree (i) appointing a custodian, trustee,
agent, or receiver for the Financial
16
<PAGE> 22
Guaranty 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 Financial Guaranty Insurer of all or any material portion of its
property.
Financial Guaranty Insurer Parties: The Financial Guaranty Insurer or
its respective agents, representatives, directors, officers or employees.
Financial Guaranty Insurer Premium: With respect to the Fixed Rate
Group, the premium due to the Financial Guaranty Insurer on each Distribution
Date, which amount shall be equal to 1/12 of the product of the applicable
Financial Guaranty Insurer Premium Rate and the sum of Certificate Principal
Balances of each Class of Fixed Rate Group Certificates immediately prior to
such Distribution Date.
Financial Guaranty Insurer Premium Rate: With respect to each
Collection Period, the rate specified in the Premium Letter, which rate shall
not exceed 0.62% for any Collection Period.
Fitch: Fitch IBCA, Inc.
Fixed Rate Group Certificates: Any or all of the Class A-1F
Certificates, Class A-2F Certificates, Class A-3F Certificates, Class A-4F
Certificates, Class A-5F Certificates, Class A-6F Certificates or Class A-IO
Certificates, as the case may be.
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 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 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 Fixed Rate Group Prefunding Account Deposit
remaining on deposit in the Prefunding Account or Certificate Account as of the
last day of such Collection Period.
Fixed Rate Group Capitalized Interest Account Deposit: The amount
deposited in the Capitalized Interest Account for the benefit of the Fixed Rate
Certificateholders, which amount is $0.
Fixed Rate Group Certificate Principal Balance: With respect to any
Distribution Date and the Fixed Rate Group Certificates, means the aggregate of
the Initial Certificate Principal Balances of the Fixed Rate Group Certificates
as reduced by Principal Distribution Amounts actually distributed to the related
Fixed Rate Group Certificateholders on all prior Distribution Dates.
Fixed Rate Group Principal Distribution Amount: With respect to any
Distribution Date,
17
<PAGE> 23
generally means the sum, without duplication, of (i) the Principal Distribution
Amount with respect to the Fixed Rate Group and the related Collection Period,
(ii) the principal portion of any Insured Amount, and (iii) any optional payment
by the Financial Guaranty Insurer of Realized Losses prior to any Coverage
Deficit with respect to the Fixed Rate Group during the related Collection
Period.
Fixed Rate Group Prefunding Account Deposit: The amount deposited in
the Prefunding Account that is allocated for the purchase of Subsequent Mortgage
Loans having fixed Mortgage Loan Rates to be included in the Fixed Rate Group,
which amount is $0.
Fixed Rate Group Subsequent Purchase Price: With respect to any
Subsequent Mortgage Loan to be included in the Fixed Rate Group, means an amount
equal to 100% of the Principal Balance of such Subsequent Mortgage Loan.
Fixed Rate Net WAC: With respect to any Distribution Date, means the
weighted average Mortgage Loan Rate of the Mortgage Loans in the Fixed Rate
Group as of the first day of the related Collection Period less (i) the
Servicing Fee Rate, (ii) the Financial Guaranty Insurance Premium Rate, and
(iii) for the first 36 Interest Periods, the product of (a) 5.00% and (b) the
Class A-IO Notional Amount divided by the Fixed Rate Group Balance as of the
first day of the related Collection Period.
Fixed Rate Turbo Amount: As defined in Section 9.16.
Foreign Person: A Person that is not a citizen or resident of the
United States, a corporation, partnership, or other entity created or organized
in or under the laws of the United States or any political subdivision thereof,
an estate that is subject to United States federal income tax regardless of the
source of its income or a trust if (a) a court within the United States is able
to exercise primary supervision of the Administration thereof and (b) one or
more United States fiduciaries have the authority to control all substantial
decisions of the trust.
Formula Pass-Through Rate: With respect to any Class of Adjustable
Rate Group Certificates, the Pass-Through Rate in effect for such Class if the
Adjustable Rate Group Available Funds Cap is disregarded.
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 July 14, 1998.
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.
Group Balance: As of any date of determination, the related Fixed
Rate Group Balance or Adjustable Rate Group Balance.
18
<PAGE> 24
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 sum of the Original Fixed
Rate Group Balance and the Fixed Rate Group Prefunding Account Deposit or by the
sum of the Original Adjustable Rate Group Balance and the Adjustable Rate Group
Prefunding Account Deposit, as applicable.
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: With respect to each Class of
Certificates that has a Certificate Principal Balance, means:
<TABLE>
<CAPTION>
Initial Certificate
Class Principal Balance
----- --------------------
<S> <C>
Class A-1F Certificates $99,000,000
Class A-2F Certificates $14,000,000
Class A-3F Certificates $56,000,000
Class A-4F Certificates $29,000,000
Class A-5F Certificates $27,000,000
Class A-6F Certificates $25,000,000
Class A-1A Certificates $277,500,000
Class M-1A Certificates $37,500,000
Class M-2A Certificates $31,875,000
Class B-1A Certificates $28,125,000
</TABLE>
Initial Mortgage Loan: Means 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.
Initial Mortgage Loan Conveyance Agreement: Means that Initial
Mortgage Loan Conveyance Agreement dated as of June 1, 1998 between the Company,
as seller, and the Transferor, as purchaser, with respect to the purchase and
sale of the Initial Mortgage Loans.
Insurance and Indemnity Agreement: The Insurance and Indemnity
Agreement, dated as of June 1, 1998, between the Financial Guaranty Insurer and
the Company, a copy of which is attached hereto as Exhibit J.
Insurance Proceeds: With respect to any Distribution Date, proceeds
paid by any 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 (excluding the Financial Guaranty Insurance Policy),
including any deductible payable by the Servicer with respect to a blanket
19
<PAGE> 25
insurance policy pursuant to Section 3.04 and the proceeds from any fidelity
bond or errors and omission 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 Amount: With respect to the Fixed Rate Group and any
Distribution Date, the amount to be paid by the Financial Guaranty Insurer under
the Financial Guaranty Insurance Policy (in the manner described in Section
3.19) pursuant to a Notice of Claim presented by the Trustee. The Insured Amount
as of any Distribution Date shall be equal to the sum of (i) the amount by which
the Accrued Certificate Interest with respect to each Class of Fixed Rate Group
Certificates exceeds (a) the Monthly Interest with respect to the Fixed Rate
Group available therefor pursuant to Section 5.01(a) and (b) the amount of any
Monthly Excess Cashflow Amount with respect to the Fixed Rate Group available to
cover any Interest Carry Forward Amount with respect to each Class of Fixed Rate
Group Certificates pursuant to Section 5.01(d) clause (1) with respect to the
Fixed Rate Group, (ii) the Coverage Deficit with respect to such Distribution
Date, if any, after giving effect to all distributions of principal (including
any Excess Principal Distribution Amount), (iii) on the Final Scheduled
Distribution Date of each class of Fixed Rate Group Certificates, the
outstanding Certificate Principal Balance with respect to each applicable Class
of Fixed Rate Group Certificates (after giving effect to all others
distributions thereto) and (iv) the Preference Amount for the Fixed Rate Group
Certificates with respect to such Distribution Date, if any, in each case as
determined by the Trustee on the date a Notice of Claim is required to be made
in respect of such Distribution Date. Pursuant to the Financial Guaranty
Insurance Policy, the Financial Guaranty Insurer also has the option, but not
the obligation, to fund any Realized Losses with respect to the Adjustable Rate
Group and the related Collection Period ("Additional Insurer Payments"), which
amounts will not be "Insured Amounts" as used herein.
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 as of such Distribution Date plus
any outstanding Interest Carry Forward Amount with respect to such Class from
the 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 Monthly
Interest or Insured Amounts actually distributed to the holders of such
Certificates on such Distribution Date.
Interest Period: With respect to the Fixed Rate Group Certificates,
the calendar month preceding the month in which such Distribution Date occurs;
and with respect to any Adjustable Rate Group Certificate and the first Interest
Period, the period beginning on the Closing Date and ending on the day preceding
the Distribution Date in July 1998, 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
Prepayment Interest
20
<PAGE> 26
Shortfall and Relief Act Shortfall for the related Mortgage Loan Group.
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.
LIBOR: With respect to the July 1998 Distribution Date, 6.65234% per
annum. With respect to any subsequent Distribution Date, the per annum rate
determined by the Trustee on the related LIBOR Determination Date on the basis
of the offered rates of the Reference Banks for one-month U.S. dollar deposits
as such rates appear on the Dow Jones 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, LIBOR will be established
by the Trustee as follows:
(i) 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.
(ii) 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.
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 respecting
the related Mortgage Loan (including, without limitation, amounts 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
21
<PAGE> 27
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 G
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 Transferor 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 and either Mortgage Loan
Group, the percentage equivalent of the fraction obtained by dividing (i) the
principal amount of cumulative Realized Losses on Mortgage Loans in such
Mortgage Loan Group from June 1, 1998, through the end of the related Collection
Period by (ii) the sum of the Original Fixed Rate Group Balance plus the Fixed
Rate Group Prefunding Account Deposit, or the sum of the Original Adjustable
Rate Group Balance plus the Adjustable Rate Group Prefunding Account Deposit, as
the case may be.
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 Excess Spread Percentage: As to any Distribution Date and
with respect to the Adjustable Rate Group, the percentage equal to the Monthly
Excess Interest Amounts for the Adjustable Rate Group minus the Realized Loss
amounts for the Adjustable Rate Group divided by the Adjustable Rate Group
Balance as of the last day of the related Collection Period multiplied by 360
and divided by the actual number of days in the related Interest Period.
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 means the sum of (x) the amount, if any, of
Monthly Interest remaining in the Certificate Account with respect to such
Mortgage Loan Group after application with respect to the priorities set forth
in Section 5.01(a), clause First through Fifth, plus (y) the amount of any
Overcollateralization Release Amount with respect to such Mortgage Loan Group
for such Distribution Date plus (z) in the case of the Fixed Rate Group only,
amounts available, if any, pursuant to Section 5.01(d), clause (6), or in the
case of the Adjustable Rate Group only, amounts available, if any, pursuant to
Section 5.01(d), clause (11).
22
<PAGE> 28
Monthly Excess Interest Amount: With respect to either Mortgage Loan
Group and any Distribution Date means the excess, if any, of the interest
collected with respect to the related Mortgage Loans during the related
Collection Period at the weighted average net Mortgage Loan Rate for the
Mortgage Loans in such Mortgage Loan Group over the Accrued Certificate Interest
for the related Offered Certificates during the related Interest Period.
Monthly Interest: With respect to either Mortgage Loan Group and any
Distribution Date, means the aggregate of the following amounts in respect of
interest and such Mortgage Loan Group:
(i) all payments in respect of or allocable to interest received or
deemed to have been received during the related Collection Period, net of
amounts representing interest accrued in respect of any period prior to the
related Cut-off Date or related Subsequent Cut-off Date;
(ii) all Trust Insurance Proceeds received during the related
Collection Period;
(iii) all Net Liquidation Proceeds received during the related
Collection Period (excluding any amount distributed to the Holders of the Class
C Certificates pursuant to Section 3.06)
(iv) the aggregate of the amounts deposited in the Certificate
Account on the related Deposit Date by the Transferor or the Servicer, as
applicable, in connection with any purchase, repurchase, shortage or
substitution pursuant to Section 2.03, 2.05, 3.01, 3.03 or 3.06;
(v) the aggregate of the amounts deposited in the Certificate Account
by the Servicer in connection with a purchase pursuant to Section 10.01;
(vi) the amount of Monthly Advances made by the Servicer in respect
of such Distribution Date pursuant to Section 5.02(a);
(vii) the amount of any Compensating Interest paid by the Servicer in
respect of such Distribution Date;
(viii) in the case of the July 1998 Distribution Date, amounts, if
any, remaining in the Prefunding Account and the Capitalized Interest Account
immediately prior to such Distribution Date (in each case net of reinvestment
income payable to the Transferor); and
(ix) the aggregate of amounts deposited in respect of interest on any
Mortgage Loan that does not have a monthly payment due in the Collection Period
relating to the related Distribution Date.
reduced by the sum of:
(X) the Monthly Servicing Fee and any other compensation payable to
the Servicer
23
<PAGE> 29
pursuant to Section 3.08 for the related Collection Period (without regard to
any Compensating Interest payable therefrom) to the extent not previously paid
to the Servicer;
(Y) the aggregate amount of Monthly Advances and Servicing Advances
(other than those included in the Liquidation Expenses for any Liquidated
Mortgage Loan and reimbursed from the related Liquidation Proceeds) reimbursable
to the Servicer on such Distribution Date pursuant to the provisions of this
Agreement; and
(Z) the aggregate amounts (i) deposited into the Collection Account
or Certificate Account that may not be withdrawn therefrom pursuant to a final
and nonappealable order of a United States bankruptcy court of competent
jurisdiction imposing a stay pursuant to Section 362 of the United States
Bankruptcy Code and that would otherwise have been included in Monthly Interest
on such Distribution Date and (ii) received by the Trustee that are recoverable
and sought to be recovered from the Trustee as a voidable preference by a
trustee in bankruptcy pursuant to the United States Bankruptcy Code in
accordance with a final, nonappealable order of a court of competent
jurisdiction.
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, including one month's
accrued interest on the related Principal Balance at 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.
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 Balances 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 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: 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
24
<PAGE> 30
Schedule III.
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 Fixed Rate Group Certificates, the Class C Certificates and the Class
R-III Certificates and (B) in the case of the Adjustable Rate Group
Certificates, the Class A-1A Certificates, the Class M-1A Certificates, the
Class M-2A Certificates, the Class B-1A Certificates, the Class C Certificates
and the Class R-III 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 other 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 Schedule III 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 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; (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 or a unit in a condominium or planned unit development; (o) whether
the Mortgage Loan has been originated by an Affiliate of the Company; (p)
whether the Mortgage Loan is being serviced by a Sub-Servicer and, if so, the
identity of such Sub-Servicer; and (q) 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.
25
<PAGE> 31
Net Liquidation Proceeds: As to any Mortgage Loan, Liquidation
Proceeds net of Liquidation Expenses. 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 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 Financial Guaranty Insurer in the event an Insured Amount is required to
be paid under the Financial Guaranty Insurance Policy with respect to any
Distribution Date, in the form set forth as Exhibit K hereto.
Offered Certificates: The Certificates other than the Retained
Certificates.
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
Transferor or the Servicer, as the case may be, and delivered to the Trustee or
each Rating Agency, as the case may be.
Opinion of Counsel: A written opinion of counsel reasonably
acceptable to the Trustee (and the Financial Guaranty Insurer, if such opinion
is to be delivered thereto), who may be in-house counsel for the Transferor 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
$275,028,937.98.
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 $250,055,829.25.
Original Pool Balance: Means the aggregate of the outstanding
principal amounts of each Initial Mortgage Loan as of its related Cut-off Date,
which amount is $525,084,767.23.
Original Principal Amount: With respect to any Mortgage Loan, the
original principal
26
<PAGE> 32
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 means 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 Collection Periods during the Funding Period, the portion, if any, of
the Prefunding Account Deposit relating to such Mortgage Loan Group remaining on
deposit in the Prefunding Account of 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 and all
amounts paid by the Financial Guaranty Insurer in respect of principal on such
Distribution Date).
Overcollateralization Deficiency: With respect to either Mortgage
Loan Group and any Distribution Date, means the excess, if any, of (x) the
related Targeted Overcollateralization Amount over (y) the related
Overcollateralization Amount, calculated for this purpose after taking into
account the reduction on such Distribution Date of the Certificate Principal
Balances of all related Classes of Offered Certificates resulting from principal
distributions (other than reductions resulting from the distribution of any
related Extra Principal Distribution Amount), but before taking into account any
related Applied Realized Loss Amount or amount paid by the Financial Guaranty
Insurer in respect of principal for such Distribution Date.
Overcollateralization Release Amount: With respect to either Mortgage
Loan Group and any Distribution Date, means, the lesser of (x) the related Fixed
Rate Group or Adjustable Rate Group Principal Distribution Amount (other than
any related Extra Principal Distribution Amount), ignoring clause (Z) of the
definition of Principal Distribution Amount in the case of the Adjustable Rate
Group, and (y) the excess of (i) the related Overcollateralization Amount,
assuming that 100% of such related Principal Distribution Amount (excluding the
application of any Extra Principal Distribution Amount and ignoring clause (Z)
of Principal Distribution Amount) is applied to the payment of principal on the
related Offered Certificates on such Distribution Date over (ii) the related
Targeted Overcollateralization Amount.
Pass-Through Rate: As indicated by the context (or as otherwise
defined in Section 9.16 for purposes of that section), the Class A-1F
Pass-Through Rate, Class A-2F Pass- Through Rate, Class A-3F Pass-Through Rate,
Class A-4F Pass-Through Rate, Class A-5F Pass-Through Rate, Class A-6F
Pass-Through Rate, Class A-IO Pass-Through Rate, Class A- 1A Pass-Through Rate,
Class M-1A Pass-Through Rate, Class M-2A Pass-Through Rate, or Class B-1A
Pass-Through Rate.
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
27
<PAGE> 33
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 F.
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 or Class R
Certificate, Percentage Interest means the undivided percentage interest set
forth on the face of such Class R 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 one of the two highest long-term rating categories 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 S& P and Prime-1 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 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
S&P and Moody's;
(f) investments in money market funds rated "AAAm" or
"AAAm-G" by S&P and Aaa by Moody's; and
28
<PAGE> 34
(g) investments approved in writing by each of the Rating
Agencies;
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 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 3.19(a) and
entitled "Bankers Trust Company of California, N.A., as Trustee for Aames
Mortgage Trust 1998-B Mortgage Pass-Through Certificates, Series 1998-B, 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: With respect to any Distribution Date and any
Class of Certificates, any amounts included in previous distributions that are
recovered from the related Certificateholders as a voidable preference by a
trustee in bankruptcy pursuant to the United States Bankruptcy Code in
accordance with a final, nonappealable order of a court having competent
jurisdiction and that have not therefore been repaid to such Certificateholders,
provided such Certificateholders have complied with the provisions of Section
3.19(b).
Prefunding Account: The segregated account, which, if utilized 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 1998-B Mortgage Pass-Through Certificates, Series 1998-B,
Prefunding Account".
Prefunding Account Deposit: $99,971,063.
29
<PAGE> 35
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 July 1998, equal to the portion of the Prefunding Account Deposit not
used to purchase Subsequent Mortgage Loans during the Prefunding Period.
Prepayment Assumption: Means the prepayment assumptions described in
the Prospectus Supplement as having been used to generate the prepayment
scenarios therein described (i.e. a Constant Prepayment Rate of 27% with respect
to the Adjustable Rate Group Certificates, and 24% HEP with respect to the Fixed
Rate Group Certificates, in each case as such terms are defined in the
Prospectus Supplement).
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 definition of Compensating Interest for such Distribution Date
exceeds the Monthly Servicing Fee 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 Transferor, the Company, or 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 Transferor
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 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: With respect to either Mortgage Loan
Group and any Distribution Date, means the aggregate of the following amounts in
respect of principal and such Mortgage Loan Group:
(i) Principal Payments received or deemed to have been received
during the related Collection Period;
(ii) all Trust Insurance Proceeds received during the related
Collection Period;
30
<PAGE> 36
(iii) all Net Liquidation Proceeds received during the related
Collection Period (excluding any amount distributed to the Holders of the Class
R-1 Certificates pursuant to Section 3.06)
(iv) the aggregate of the amounts deposited in the Certificate
Account on the related Deposit Date by the Transferor, the Company or the
Servicer, as applicable, in connection with any purchase, repurchase, shortage
or substitution pursuant to Section 2.03, 2.05, 3.01, 3.03 or 3.06;
(v) the aggregate of the amounts deposited in the Certificate Account
in respect of principal by the Servicer in connection with a purchase pursuant
to Section 10.01;
(vi) the amount of Monthly Advances made by the Servicer in respect
of such Distribution Date pursuant to Section 5.02(a);
(vii) in the case of the July 1998 Distribution Date, the amount, if
any, remaining on deposit in the Prefunding Account (net of any investment
income with respect thereto at the end of the Funding Period) or the Escrow
Account; and
(viii) Extra Principal Distribution Amounts to the extent provided in
Section 5.01(d).
reduced by the sum of:
(X) the aggregate amount of Servicing Advances (other than those
included in the Liquidation Expenses for any Liquidated Mortgage Loan and
reimbursed from the related Liquidation Proceeds) reimbursable to the Servicer
on such Distribution Date pursuant to the provisions of this Agreement;
(Y) the aggregate amounts (i) deposited into the Collection Account
or Certificate Account that may not be withdrawn therefrom pursuant to a final
and nonappealable order of a United States bankruptcy court of competent
jurisdiction imposing a stay pursuant to Section 362 of the United States
Bankruptcy Code and that would otherwise have been included in Monthly Interest
on such Distribution Date and (ii) received by the Trustee that are recoverable
and sought to be recovered from the Trustee as a voidable preference by a
trustee in bankruptcy pursuant to the United States Bankruptcy Code in
accordance with a final, nonappealable order of a court of competent
jurisdiction; and
(Z) 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
31
<PAGE> 37
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 April 20, 1998
relating to $2,000,000,000 principal amount of asset-backed bonds and
certificates to be sold by the Transferor or the Company.
Prospectus Supplement: That certain Prospectus Supplement dated as of
June 15, 1998 relating to $625,000,000 principal amount of Mortgage Pass-Through
Certificates, Series 1998-B.
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
32
<PAGE> 38
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 not an Adjustable 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 Financial Guaranty Insurer),
except that the requirements of clauses (iv) through (viii) hereof must be
satisfied as to each Qualified Replacement Mortgage Loan.
Rating Agencies: With respect to the Fixed Rate Group Certificates,
Moody's, Fitch and S&P (each, a "Rating "Agency") and with respect to the
Adjustable Rate Group Certificates, Moody's and Fitch. If any such agency or a
successor is no longer in existence, "Rating Agency" shall be such nationally
recognized statistical credit rating agency, or other comparable Person,
designated by the Servicer, notice of which designation shall be given to the
Trustee.
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, the close of business, if
applicable, on the last Business Day of the calendar month immediately preceding
such Distribution Date.
Reference Banks: Bankers Trust Company, Barclay's Bank Plc. and
National Westminster Bank Plc.; provided that, if any of the foregoing banks are
deemed by the Servicer (as indicated in writing to the Trustee) not suitable to
serve as a Reference Bank, then any 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 the Dow Jones Telerate Service Page 3750 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
33
<PAGE> 39
common control with the Company or any originator.
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, any of the REMIC I, REMIC II, REMIC III and
REMIC IV as indicated by the context.
REMIC Pool: With respect to the REMIC IV, the REMIC IV Pool which
shall be the REMIC III Regular Interests; with respect to the REMIC III, the
REMIC III Pool which shall be the REMIC II Regular Interests; with respect to
REMIC II, the REMIC II Pool which shall be the REMIC I Regular Interests; with
respect to REMIC I, the REMIC I Pool which shall be the assets of the Trust
attributable to the Fixed Rate Group and Adjustable Rate Group, other than the
Prefunding Account, Capitalized Interest Account and Escrow Account.
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).
Reserve Interest Rate: With respect to any LIBOR Determination Date,
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 (ii) in the
event that the Trustee can determine no such arithmetic mean, the lowest
one-month U.S. dollar lending rate that New York City banks selected by the
Trustee are quoting on such LIBOR Determination Dates to leading European banks.
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. Each Restricted Mortgage Loan is
listed on Schedule V.
34
<PAGE> 40
Restricted Mortgaged Property: With respect to any Restricted
Mortgage Loan, means the Mortgaged Property securing such Restricted Mortgage
Loan.
Retained Certificates: Collectively, each of the Class C Certificates
and Class R Certificates.
Rolling Delinquency Percentage: For any Distribution Date and either
Mortgage Loan Group, the average of the Delinquency Percentages for such
Mortgage Loan Group as of the last day of each of the three (or one or two in
the case of the first three Distribution Dates, as applicable) most recently
ended Collection Periods.
Rolling Loss Percentage: With respect to either Mortgage Loan Group
and any Distribution Date, the percentage equivalent of a fraction, the
numerator of which is the aggregate amount of Realized Losses incurred with
respect to such Mortgage Loan Group during the preceding twelve Collection
Periods (or with respect to the first eleven Distribution Dates, since the
related Cut-off Date) and the denominator of which is the related Group Balance
as of the first day of such twelfth preceding Collection Period (or with respect
to the first eleven Distribution Dates, as of the related Cut-off Date).
Securities Act: The Securities Act of 1933, as amended.
S&P: Standard and Poor's Ratings Group, a division of The McGraw-Hill
Companies, Inc.
Senior Enhancement Percentage: With respect to the Adjustable Rate
Group and any Distribution Date means the percentage obtained by dividing (x)
the sum of (i) the Aggregate Certificate Principal Balance of the Subordinate
Certificates (or, after the Class A-1A Certificate Principal Balance has been
reduced to zero, the Aggregate Certificate Principal Balance of the Subordinate
Certificates other than the most senior Class of such Subordinate Certificates
then outstanding) and (ii) the related Overcollateralization Amount, in each
case after taking into account distributions in respect of the Principal
Distribution Amount relating to the Adjustable Rate Group Certificates to the
related Offered Certificateholders on such Distribution Date by (y) the
aggregate of the outstanding Principal Balances of the Mortgage Loans in the
Adjustable Rate Group as of the last day of the related Collection Period (plus,
in the case of Collection Periods during the Funding Period, the portion, if
any, of the Adjustable Rate Group Prefunding Account Deposit remaining on
deposit in the Prefunding Account or Escrow Account).
Senior Lien: With respect to any Junior Mortgage Loan, any liens on
the related Mortgaged Property of higher priority.
Servicer: The Company or any successor servicer appointed as provided
pursuant to this Agreement.
35
<PAGE> 41
Servicer Cumulative Loss Rate Event: With respect to the Fixed Rate
Group and any Distribution Date occurring during the periods indicated in the
following table, the Loss Percentage exceeds the percentage indicated:
<TABLE>
<CAPTION>
from and including: to but excluding Loss Percentage
------------------- ---------------- ---------------
<S> <C> <C>
July 1998 July 1999 .90%
July 1999 July 2000 1.25%
July 2000 July 2001 2.00%
July 2001 July 2002 2.50%
</TABLE>
and, with respect to any Distribution Date in July 2002 or thereafter, the Loss
Percentage exceeds 3.25%.
Servicer Delinquency Rate Event: With respect to the Fixed Rate
Group, on any Distribution Date the Rolling Delinquency Percentage for such
Mortgage Loan Group equals or exceeds 15%.
Servicer Remittance Report: The monthly report prepared by the
Servicer and delivered to the Trustee and Financial Guaranty Insurer pursuant to
Section 4.01.
Servicer Rolling Loss Rate Event: With respect to the Fixed Rate
Group, on any Distribution Date, the Rolling Loss Percentage for such Mortgage
Loan Group exceeds 1.25%.
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%.
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.
Specified Senior Enhancement Percentage: With respect to any date of
determination, 52.00%, plus the applicable Targeted Stepdown Percentage.
36
<PAGE> 42
Startup Day: As defined in Section 2.07.
Statement to Certificateholders: As defined in Section 5.03.
Step Down Cumulative Loss Test: With respect to any Distribution Date
and the Fixed Rate Group, a determination as to whether: (i) for the
Distribution Dates occurring in July 2001 through and including June 2002, the
Loss Percentage for such Mortgage Loan Group and such Distribution Date is 1.25%
or less, (ii) for the Distribution Dates occurring in July 2002 through and
including June 2003, the Loss Percentage for such Mortgage Loan Group and such
Distribution Date is 1.75% or less, (iii) for any Distribution Date occurring in
or July 2003 through and including June 2004, the Loss Percentage for such
Mortgage Loan Group and such Distribution Date is 2.25% or less and (iv) for any
Distribution Date occurring in or after July 2004, the Loss Percentage for such
Mortgage Loan Group and such Distribution Date is 2.50% or less, for any
Distribution Date occurring before July 2001, the Step Down Cumulative Loss Test
will not apply .
Step Down Date: The later to occur of (x) the Distribution Date in
July 2001 or (y) the first Distribution Date after the Distribution Date on
which the Senior Enhancement Percentage (after taking into account distributions
on such Distribution Date in respect of principal) is greater than or equal to
the Specified Senior Enhancement Percentage
Step Down Rolling Delinquency Test: On any relevant Distribution Date
and with respect to the Fixed Rate Group, the related Rolling Delinquency
Percentage is less than 9.50%.
Step Down Rolling Loss Test: On any relevant Distribution Date and
with respect to the Fixed Rate Group, the related Rolling Loss Percentage is
less than 0.50%.
Stepped Down Targeted Overcollateralization Amount: With respect to
the Fixed Rate Group and any Distribution Date, the product of the Fixed Rate
Group Balance and the Stepped Down Targeted Overcollateralization Percentage.
Stepped Down Targeted Overcollateralization Percentage: With respect
to the Fixed Rate Group and any Distribution Date on or after the thirty-seventh
Distribution Date on which the related Step Down Trigger has occurred a
percentage equal to the difference, if positive, of (i) the percentage
equivalent of a fraction, the numerator of which is 3.25% of the Original Fixed
Rate Group Balance plus the Fixed Rate Group Prefunding Account Deposit and the
denominator of which is the Fixed Rate Group Balance 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
6.50%, multiplied by (B) the number of consecutive Distribution Dates through
and including the Distribution Date for which such calculation is made, up to a
maximum of twelve, from and including the thirty-seventh Distribution Date (or
the date on which all tests contained in the definition Step Down Trigger have
been met, if later), and the denominator of which is twelve.
37
<PAGE> 43
Step Down Trigger: With respect to any Distribution Date and the
Fixed Rate Group, the Step Down Trigger will have occurred if each of the Step
Down Rolling Delinquency Test, Step Down Rolling Loss Test and the Step Down
Cumulative Loss Test is satisfied.
Step Up Cumulative Loss Test: With respect to the Fixed Rate Group
and any Distribution Date, a determination as to whether: (i) for any
Distribution Date occurring prior to June 1999, the Loss Percentage for such
Mortgage Loan Group and Distribution Date is greater than 0.85%; (ii) for any
Distribution Date occurring in or after June 1999 but prior to June 2000, the
Loss Percentage for such Mortgage Loan Group and Distribution Date is greater
than 1.00%; (iii) for any Distribution Date occurring in or after June 2000 but
prior to June 2001, the Loss Percentage for such Mortgage Loan Group and
Distribution Date is greater than 1.75%; (iv) for any Distribution Date
occurring in or after June 2001 but prior to June 2002, the Loss Percentage for
such Mortgage Loan Group and Distribution Date is greater than 2.25%; and (v)
for any Distribution Date occurring in or after June 2002, the Loss Percentage
for such Mortgage Loan Group and Distribution Date is greater than 2.75%.
Stepped Up Enhancement Percentage: With respect to the Adjustable
Rate Group on any Distribution Date, a percentage equal to (x) 100% minus (y)
2.5 times the Rolling Delinquency Percentage.
Step Up Rolling Delinquency Test: With respect to the Fixed Rate
Group and any Distribution Date, a determination that the Rolling Delinquency
Percentage is more than 11.75%.
Step Up Rolling Loss Test: With respect to the Fixed Rate Group and
any Distribution Date, a determination that the Rolling Loss Percentage is equal
to or greater than 1.00%.
Step Up Trigger Event: With respect to the Adjustable Rate Group and
any Distribution Date, either (i) the Adjustable Rate Group 90+ Rolling
Delinquency Percentage with respect to the Adjustable Rate Group equals or
exceeds 10% or (ii) the Minimum Excess Spread Percentage is less than 2%.
Subordinate Certificates: The Class M-1A, Class M-2A and Class B-1A
Certificates.
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 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 1998-B Mortgage Pass-Through Certificates, Series 1998-B,
Collection Account". References herein to the Collection Account shall include
any Sub-Servicing Account as the context requires.
38
<PAGE> 44
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 in the related Addition Notice.
Subsequent Mortgage Loan: A Mortgage Loan sold to the Trust 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 Conveyance Agreement: Means that Subsequent
Mortgage Loan Conveyance Agreement dated as of June 30, 1998 between the
Company, as seller, and the Transferor, as purchaser, with respect to the
purchase and sale of mortgage loans with effective transfer dates after the
Closing Date.
Subsequent Mortgage Loan Schedule: As of any Subsequent Transfer
Date, the schedule of Subsequent Mortgage Loans separated by Mortgage Loan Group
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 Schedule III, and shall be substantially in the form
of Schedule IV.
Subsequent Purchase Price: As of any Subsequent Transfer Date, with
respect to the Subsequent Mortgage Loans to be included in either Mortgage Loan
Group, an amount equal to 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
D.
Subsequent Transfer Date: The date specified in each Subsequent
Transfer Agreement, but no later than July 14, 1998.
Subsequent Transfer Deposit: The amount deposited by the Transferor
in the Collection Account in connection with each conveyance of Subsequent
Mortgage Loans pursuant to Section 2.02, which amount shall be the aggregate of
the amounts of interest that would have accrued (at the related Mortgage Loan
Rates net of the Servicing Fee Rate) on each such Subsequent Mortgage Loan for
each 30-day period from the related Subsequent Transfer Date through the end of
the last
39
<PAGE> 45
Collection Period preceding the Collection Period in which such
Mortgage Loan has its first Monthly Payment Due. Each Subsequent Transfer
Deposit shall be allocated to the Fixed Rate Group or the Adjustable Rate Group,
as appropriate.
Targeted Overcollateralization Amount: (a) With respect to the
Adjustable Rate Group (i) prior to the Step Down Date, 3.50% or upon the
occurrence and continuance of a Step-up Trigger Event, 4.00% of the Initial
Certificate Principal Balances of the Adjustable Rate Group Certificates as of
the Closing Date, and (ii) on and after the Step Down Date, the greater of (A)
7.00% or upon the occurrence and continuance of a Step-up Trigger Event, 8.00%
of Adjustable Rate Group Balance as of the last day of the related Collection
Period and (B) $1,875,000; and
(b) With respect to the Fixed Rate Group on any Distribution Date,
(i) 3.25% of the sum of the Original Fixed Rate Group Balance and the Fixed Rate
Group Prefunding Account Deposit, and (ii) on each Distribution Date in or after
July 2000 as to which the Step Down Trigger has occurred, an amount equal to the
greater of (A) 0.50% of the Original Fixed Rate Group Balance and (B) the lesser
of (x) 3.25% of the sum of the Original Fixed Rate Group Balance and the Fixed
Rate Group Prefunding Account Deposit and (y) the product of the Stepped Down
Targeted Overcollateralization Percentage and the Fixed Rate Group Balance as of
the last day of the related Collection Period, except that on any Distribution
Date as to which any of the Step Up Cumulative Loss Test, Step Up Rolling
Delinquency Test or Step Up Rolling Loss Test is satisfied, and through the
Distribution Date on which each such test is no longer met, the Targeted
Overcollateralization Amount for the Fixed Rate Group will be the sum of (i) the
product of 6.50% and the Fixed Rate Group Balance and (ii) the product of 0.50
and the aggregate of the Principal Balances of all Fixed Rate Mortgage Loans
that are 90 or more days contractually delinquent (including Mortgage Loans in
foreclosure or as to which the related Mortgagor is in bankruptcy proceedings or
the related Mortgaged Property is an REO Property);
provided, however, that if a Trigger Event has occurred and is continuing for
either Mortgage Loan Group, the applicable Targeted Overcollateralization Amount
for such Mortgage Loan Group will not be reduced to less than the applicable
Targeted Overcollateralization Amount in effect on the Distribution Date
preceding the occurrence of such Trigger Event.
Targeted 60+ Delinquency Event: With respect to the Adjustable Rate
Group and any Distribution Date during the indicated period, a determination
that the Delinquency Percentage with respect to the Mortgage Loans in the
Adjustable Rate Group equals or exceeds the following percentages:
<TABLE>
<CAPTION>
Period Percentage
------ ----------
<S> <C>
Through December 2001 8%
January 2002 - December 2002 12%
January 2003 and thereafter 16%
</TABLE>
40
<PAGE> 46
Targeted Overcollateralization Loss Event: With respect to any
Distribution Date during the indicated period and the Adjustable Rate Group,
means that the related Loss Percentage equals or exceeds the indicated Loss
Percentage.
<TABLE>
<CAPTION>
Period Loss Percentage
------ ---------------
<S> <C>
Through December 2001 2.3%
January 2001 - December 2002 3.8%
January 2002 - December 2003 4.8%
January 2003 - December 2004 5.4%
January 2004 - December 2005 5.8%
January 2005 and thereafter 6.1%
</TABLE>
Targeted Stepdown Percentage: With respect to the Adjustable Rate
Group and any Distribution Date, means 7.00%, or on or after any Distribution
Date upon the occurrence and during the continuance of a Step Up Trigger Event,
8.00%.
Telerate Page 120: The display designated as "Page 120" on the Dow
Jones Telerate Service (or such other page selected by the Servicer as may
replace Page 120 on that service for the purpose of displaying daily Federal
Funds rates).
Transferee 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 C.
Transferor: Aames Capital Acceptance Corp.
Transferor Affidavit: The affidavit to be delivered by any transferor
of an interest in a Class R Certificate pursuant to Section 6.02(c), to be
substantially in the form attached hereto as Exhibit B.
Trigger Event: With respect to the Adjustable Rate Group and any
Distribution Date, (a) on such Distribution Date the Rolling Delinquency
Percentage equals or exceeds 40% of the Senior Enhancement Percentage, (b) the
occurrence and continuance of a Targeted Overcollateralization Loss Event with
respect to the Adjustable Rate Group, or (c) the occurrence of a Targeted 60+
Delinquency Event with respect to the Adjustable Rate Group; provided that,
notwithstanding the foregoing, with respect to clause (a), a Trigger Event will
not be in effect on any Distribution Date as to which the percentage equivalent
of a fraction, the numerator of which is the Certificate Principal Balance of
the Class A-1A Certificates and the denominator of which is the Adjustable Rate
Group Balance as of the last day of the related Collection Period is less than
or equal to the related Stepped Up Enhancement Percentage after all
distributions thereon in respect of principal. With respect to the Fixed Rate
Group and any Distribution Date, means that any of the Step Down Rolling Loss
Test, the Step Down Rolling Delinquency Test or the Step Down Cumulative Loss
Test is not satisfied.
41
<PAGE> 47
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 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 all of the rights of the Transferor under the Initial Mortgage
Loan Conveyance Agreement and each Subsequent Mortgage Loan Conveyance
Agreement.
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: The annual fee of the Trustee, which shall be $5,000,
and any annual file access fees or other fees and expenses, payable by the
Servicer pursuant to Section 9.05.
Unpaid Realized Loss Amount: With respect to any Class of the
Subordinate Certificates and as to any Distribution Date means, the excess of
(x) the aggregate cumulative amount of related Applied Realized Loss Amounts
with respect to such Class for all prior Distribution Dates over (y) the
aggregate cumulative amount of related Realized Loss Amortization Amounts with
respect to such Class for all prior Distribution Dates.
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
42
<PAGE> 48
Class.
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 Fixed Rate Group Certificates
will be computed on the basis of a 360-day year of twelve 30- day months. All
calculations of interest on the Adjustable Rate Group Certificates will be
computed on the basis of the actual number of days elapsed in the related
Interest Period and a year of 360 days.
ARTICLE TWO
CONVEYANCE OF THE TRUST;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Conveyance of the Trust. The Transferor, 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 Transferor 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 Transferor 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), 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, and together with its
rights, as purchaser, under the Initial Mortgage Loan Conveyance Agreement and
each Subsequent Mortgage Loan Conveyance Agreement. In addition, on or prior to
the Closing Date the Transferor shall (i) cause the Financial Guaranty 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 thereof by the Transferor 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 Transferor 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 Transferor'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, prepayment fees, if any, and
extension and other administrative charges) made in respect of such Mortgage
Loans on or after the related Cut-off Date, together with its
43
<PAGE> 49
rights, as purchaser, under the Initial Mortgage Loan Conveyance Agreement and
each Subsequent Mortgage Loan Conveyance Agreement, and all proceeds of each of
the foregoing, including all amounts on deposit in the Certificate Account, the
Collection 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 Company confirms 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 Transferor pursuant to the Initial Mortgage Loan
Conveyance Agreement, and the Transferor confirms that it has caused its
computer records relating to the Mortgage Loans to indicate by a code that the
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 Pooling and
Servicing Agreement. Each of the Company and the Transferor confirm that they
will cause their respective computer records relating to each Subsequent
Mortgage Loan to indicate by a code that such Subsequent Mortgage Loans have
been sold to the Transferor pursuant to the Subsequent Mortgage Loan Conveyance
Agreement, or by the Transferor to the Trustee on behalf of the Trust (and that
they thereupon constitute part of the Trust) in accordance with the terms of
this Pooling and Servicing Agreement. Each of the Company and the Transferor
confirm that they will treat the relevant conveyance transaction as a sale in
accordance with generally accepted accounting principles and will reflect such
sale on its primary accounting records.
In connection with each such sale and assignment by the Transferor,
the Transferor does hereby deliver to, and deposit with, the Trustee (or in the
case of any Subsequent Mortgage Loan, the Transferor undertakes to deliver to
and deposit with the Trustee) the originals of the following documents or
instruments with respect to each Mortgage Loan so assigned (with the exception
of those Mortgage Loans subject to the Escrow Account listed on Schedule VI and
the provisions of Section 3.16(d) herein):
(a) The original Mortgage Note, with all intervening
endorsements sufficient to show a complete chain of endorsement to
the Transferor, endorsed (which endorsement may be by manual or
facsimile signature) by the Transferor 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 1998-B Mortgage Pass-Through
Certificates, Series 1998-B, without recourse"; except that with
respect to 19 Mortgage Loans identified to the Trustee by loan
number, an original lost note affidavit has been supplied in lieu of
the original Mortgage Note;
(b) The original Mortgage with evidence of recording
indicated thereon;
(c) The original assignment of the Mortgage executed by
Aames Capital Corporation, in blank, in recordable form;
(d) Originals of all assumption, modification and
substitution agreements in
44
<PAGE> 50
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 Aames
Capital Corporation; 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, pursuant to its undertakings
under the Initial Mortgage Loan Conveyance Agreement or related Subsequent
Mortgage Loan Conveyance Agreement, and in its capacity as Servicer hereunder,
shall (i) affix the Trustee's name to each assignment of Mortgage, as the
assignee thereof, (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 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 or advice of counsel
satisfactory to the Trustee rendered to the Trustee by independent counsel (in
each case at the Transferor'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. Aames Capital
Corporation hereby acknowledges and reaffirms its grant, pursuant to the Initial
Mortgage Loan Conveyance Agreement and each Subsequent Mortgage Loan Conveyance
Agreement, to the Trustee (in its capacity as such) of full power, authority and
right to complete any or all such assignments and to record the same, and hereby
reaffirms its undertakings therein contained to take no action or make any claim
inconsistent with any interest created by such completion or recordation.
In addition, in connection with such sales and assignments, the
Transferor does hereby deliver to and deposit with the Trustee, for the benefit
of the Fixed Rate Group Certificateholders, the Financial Guaranty Insurance
Policy.
If the Transferor cannot deliver the original Mortgage or any
intervening mortgage assignment to the benefit of the Transferor or one of its
affiliates 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 Transferor 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
45
<PAGE> 51
recording official for recordation. The Transferor shall promptly deliver to the
Trustee any such original Mortgage or intervening mortgage assignment with
evidence of recording indicated thereon upon receipt thereof from the public
recording official. If the Transferor 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 Transferor.
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 Transferor 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 Transferor
if such purchases of all Subsequent Mortgage Loans occur on the Closing Date)
with respect to the related Mortgage Loan Group, the Transferor shall, from time
to time, on any Subsequent Transfer Date, sell, transfer, assign, set over and
otherwise convey without recourse, to the Trustee, all right, title and interest
of the Transferor in and to each Subsequent Mortgage Loan identified on the
Subsequent Mortgage Loan Schedule attached to the related Subsequent Transfer
Agreement delivered by the Transferor 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 Transferor 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 Transferor 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), plus any Subsequent Transfer
Deposit relating to such Subsequent Mortgage Loan, all rights of the Transferor
under the related Subsequent Mortgage Loan Conveyance Agreement, and all items
with respect to such Subsequent Mortgage Loan to be delivered pursuant to
Section 2.01 and other items in the related Mortgage File; provided, however,
that the Transferor 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 Transferor for application on or after the related
Subsequent Cut-off Date). The transfer by the Transferor 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 Transferor. On or before the last day of the Funding Period, the
Transferor 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 Transferor that satisfy the requirements of this Section 2.02
whose aggregate Subsequent Purchase Price does not exceed the Prefunding Account
Deposit. Subsequent
46
<PAGE> 52
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 connection with each conveyance of
Subsequent Mortgage Loans, the Transferor shall deposit any applicable
Subsequent Transfer Deposit in the Collection Account on the related Subsequent
Transfer Date.
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 Transferor 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 Transferor 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 Transferor'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 acknowledge that the Servicer is
entitled to receive all assumption fees, late payment charges, charges for
checks returned for insufficient funds, prepayment fees, if any, and extension
and other administrative charges pursuant to Section 2.01 hereof), made in
respect of such Subsequent Mortgage Loans on or after the related Subsequent
Cut-off Date, plus any Subsequent Transfer Deposit relating to such Subsequent
Mortgage Loan and all proceeds of any thereof, and all rights of the Transferor
under the related Subsequent Mortgage Loan Conveyance Agreement, 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 amount released to the Transferor from the Prefunding Account on
any Subsequent Transfer Date (or from other amounts payable to the Transferor on
the Closing Date) in connection with any conveyance of Subsequent Mortgage Loans
to be included in the Fixed 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 Fixed Rate Group Prefunding Account Deposit.
The amount released to the Transferor from the Prefunding Account on any
Subsequent Transfer Date (or from other amounts payable to the Transferor 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 Adjustable Rate Group Prefunding Account
Deposit. The amounts so released to the Transferor in connection with any
conveyance of Subsequent Mortgage Loans shall, for federal income tax purposes,
be considered cash contributed to the related REMIC I Pool by the Transferor 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
Transferor shall transfer to the Trustee the Subsequent Mortgage Loans and the
other property and rights related thereto
47
<PAGE> 53
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 Transferor shall provide the Trustee and Financial
Guaranty Insurer with an Addition Notice and shall provide any information
reasonably requested by the Trustee with respect to the Subsequent Mortgage
Loans;
(b) the Transferor shall deliver to the Trustee, the
Financial Guaranty 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 Transferor shall deposit in the Collection Account
all collections in respect of the Subsequent Mortgage Loans received or deemed
received by the Transferor on or after the related Subsequent Cut-off Date
(whether in the nature of amounts held by the Transferor for later application
on behalf of the related Mortgagor in respect of a Monthly Payment due after the
related Subsequent Cut-off Date or otherwise);
(d) the Transferor shall certify that, as of such date, the
Transferor was not insolvent, was not made insolvent by such transfer and is not
aware of any pending insolvency;
(e) the Transferor shall certify that such addition of
Subsequent Mortgage Loans will not result in a material adverse tax consequence
to the Trust or the Certificateholders;
(f) the Funding Period shall not have expired;
(g) the Transferor shall make the representations and
warranties set forth in Section (A) of Schedule II to this Agreement with
respect to such Subsequent Mortgage Loans; and
(h) on such date, the Transferor shall deposit any
applicable Subsequent Transfer Deposit in the Collection Account.
In addition, the Transferor will provide the Trustee and Moody's 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 Data 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 Transferor shall have delivered to 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 Transferor shall have delivered to the Trustee
Opinions of Counsel with respect to the transfer of all of the Subsequent
Mortgage Loans to the Trust on any Subsequent
48
<PAGE> 54
Transfer Date substantially in the form of the Opinions of Counsel delivered to
the Trustee on the Closing Date regarding bankruptcy, corporate and tax matters;
(c) the Trustee shall deliver to the Rating Agencies and
the Transferor an Opinion of Counsel with respect to each of the Subsequent
Transfer Agreements substantially in the form of the Opinion of Counsel
delivered to the Transferor on the Closing Date;
(d) the Transferor shall make the representations and
warranties set forth in Section B of Schedule II to this Agreement;
(e) the Financial Guaranty Insurer shall deliver to the
Transferor, the Trustee and the Rating Agencies a written notice confirming the
Financial Guaranty Insurer's consent and approval to the addition of all
Subsequent Mortgage Loans purchased by the Trust for inclusion in the Fixed Rate
Group on any Subsequent Transfer Date; and
(f) the Transferer shall deliver, or cause to be delivered,
at the end of the Funding Period, to the Trustee, the Rating Agencies, the
Certificate Insurer, Prudential Securities Incorporated, Donaldson, Lufkin &
Jenrette Securities Corporation, Lehman Brothers Inc. and NationsBanc Montgomery
Securities LLC, a letter of an independent accountant addressed to the
Transferer as described in the Prospectus Supplement.
The Transferor shall certify that the Subsequent Mortgage Loans will
be transferred to the Trust in accordance with the foregoing and that all
mortgage loans identified in the Subsequent Mortgage Loan Schedule satisfy the
requirements of Subsequent Mortgage Loans as set forth in this Section 2.02 as
of the related Subsequent Transfer Date.
Subject to Section 3.16(d), if all of the Subsequent Mortgage Loans
are transferred to the Trust on the Closing Date, then the remaining portion of
each of the Fixed Rate Group Prefunding Account Deposit and the Adjustable Rate
Group 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 Fixed Rate Group Principal Distribution Amount or Adjustable Rate
Group Principal Distribution Amount, as appropriate, and will be distributable
to the 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, 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
49
<PAGE> 55
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 Transferor of such findings with notification with respect
to any particular defect being in all events within 30 days of discovery of such
defect. The Transferor shall have a period of 60 days from the date of such
notice 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 Transferor of a defect in a Mortgage
File that materially and adversely affects the interests of the
Certificateholders or the Financial Guaranty Insurer in the related Mortgage
Loan, and such defect remains uncured after such 60-day period, the Transferor
shall, (i) in the case of a defect consisting solely of the failure of the
Seller 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 (and in any case that
the Servicer at any time becomes aware or the Trustee has actual knowledge that
a lost note affidavit is fraudulent or will not be enforceable), on the Deposit
Date occurring not later than 60 days after receipt of notice of such defect (or
the Servicer becomes aware of or the Trustee comes to have actual knowledge of
such defect and gives notice thereof to the Servicer) 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 Transferor in the
Certificate Account on such Deposit Date, or (II) substitute one or more
Qualified Replacement Mortgage Loan 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
Transferor, in each case without recourse, as shall be necessary to vest in the
Transferor 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
50
<PAGE> 56
will be retained by the Transferor. 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 Transferor 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 Transferor 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 Transferor 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
Transferor, without recourse, as shall be necessary to vest in the Transferor
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
Transferor 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
Transferor shall survive any resignation or termination of the Company as
Servicer under this Agreement. Notwithstanding the foregoing, a substitution by
the Transferor for a defect in a constituent document will not be made unless
the Trustee receives 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 September 30, 1998 (October 31, 1998 in the case of
the Subsequent Mortgage Loans), the Trustee shall certify to the Servicer and
the Financial Guaranty Insurer 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 Transferor within
the 60-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 Transferor 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
51
<PAGE> 57
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 Transferor 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.
It is the express intent of the parties hereto that the rights of the
Transferor to enforce against the Company the obligations set forth in the
Initial Mortgage Loan Conveyance Agreement and the Subsequent Mortgage Loan
Conveyance Agreement to repurchase the Initial Mortgage Loans and the Subsequent
Mortgage Loans as to which certain representations, warranties or covenants are
determined to be incorrect or to have been breached by the Company or to
substitute therefor Qualified Replacement Mortgage Loans (which obligations,
representations, warranties and covenants will be substantially identical to
those of the Transferor made herein and in the Initial Mortgage Loan Conveyance
Agreement and the Subsequent Transfer Agreement with respect to the Transferor's
transfers of the Initial Mortgage Loans and the Subsequent Mortgage Loans to the
Trust) are hereby transferred to the Trustee, on behalf of the Trust, such that
the Trustee may enforce such rights directly against the Company.
Section 2.04(a). Representations and Warranties Regarding the
Servicer. The Company, as Servicer hereby represents and warrants to the Trustee
and the Certificateholders that, as of the Closing Date:
(i) The Servicer is a corporation duly organized,
validly existing and in good standing under the laws of the State of
California. The Servicer 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 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 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 Servicer
enforceable against the 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 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 Servicer or its property is subject, or result in the
violation of any law, rule, regulation, order, judgment or decree to
which the Servicer or its property
52
<PAGE> 58
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 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 Servicer and the performance by the Servicer of its
obligations as Servicer under this Agreement;
(iii) There is no action, suit, proceeding or
investigation pending or, to the best of the Servicer's knowledge,
threatened against the 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 Servicer or in any material impairment of the right or ability of
the Servicer to carry on its business substantially as now conducted,
or in any material liability on the part of the 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 Servicer, in its capacity as Servicer,
contemplated herein, or that would be likely to impair the ability of
the Servicer to perform under the terms of this Agreement;
(iv) The Servicer is not in default with respect to any
order or decree of any court or any order, regulation or demand of
any federal, state, municipal or governmental agency, which default
might have consequences that would materially and adversely affect
the condition (financial or other) or operations of the Servicer or
its properties or might have consequences that would adversely affect
its performance as Servicer hereunder;
(v) The collection practices used by the Servicer and
any Sub-Servicer are in all material respects legal, proper, prudent
and customary in the home equity mortgage loan servicing business;
and
(vi) 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.
Section 2.04(b). Representations and Warranties Regarding the
Transferor. The Transferor hereby represents and warrants to the Trustee and the
Certificateholders that, as of the Closing Date:
53
<PAGE> 59
(i) The Transferor is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware. The Transferor 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 Transferor 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 Transferor
enforceable against the Transferor 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 Transferor 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 Transferor or its property is subject, or result in the
violation of any law, rule, regulation, order, judgment or decree to
which the Transferor 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 Transferor 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
Transferor;
(iii) There is no action, suit, proceeding or
investigation pending or, to the best of the Transferor's knowledge,
threatened against the Transferor 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 Transferor or in any material impairment of the right or ability
of the Transferor to carry on its business substantially as now
conducted, or in any material liability on the part of the Transferor
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 Transferor contemplated
herein, or that would be likely to impair the ability of the
Transferor to perform under the terms of this Agreement;
(iv) The Transferor 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
54
<PAGE> 60
agency, which default might have consequences that would materially
and adversely affect the condition (financial or other) or operations
of the Transferor or its properties or might have consequences that
would adversely affect its performance as Servicer hereunder; and
(v) The transfer, assignment and conveyance of the
Mortgage Loans by the Transferor pursuant to this Agreement are not
subject to the bulk transfer laws or any similar statutory provisions
in effect in any applicable jurisdiction.
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 interests of the Certificateholders or the Financial Guaranty Insurer, the
party discovering such breach shall give prompt written notice to the other
parties. Within 60 days of its discovery or its receipt of notice of breach, the
Servicer or the Transferor, as the case may be, shall cure such breach in all
material respects.
Section 2.05. Representations and Warranties of the Transferor
Regarding the Mortgage Loans. The Transferor represents and warrants to the
Trustee and the Certificateholders and the Financial Guaranty Insurer 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;
(iii) Each related Mortgaged Property is improved by a
one- to four-family residential dwelling owned by the related
Mortgagor in fee simple, which may include condominiums, townhouses
and manufactured housing or modular homes that are permanently
affixed to the land and constitute 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) As of the related Cut-off Date or Subsequent
Cut-off Date, as appropriate, no Mortgage Loan included in the Fixed
Rate Group has a Combined Loan-to-Value Ratio in excess of 90% and no
Mortgage Loan included in the Adjustable Rate Group has a
Loan-to-Value Ratio in excess of 90%, except that 5 Mortgage Loans
representing not more than 2% of the initial Fixed Rate Group Balance
have Combined Loan-to- Value Ratios of up to 95% and 1 Mortgage Loan
representing not more than 1% of the initial Adjustable
55
<PAGE> 61
Rate Group Balance has a Combined Loan-to-Value Ratio of up to 95%;
(v) Each Mortgage Loan was originated by an Affiliate
of the Transferor or by an originator not affiliated with the
Transferor authorized to originate such Mortgage Loan and is being
serviced by the Transferor;
(vi) Each Mortgage Loan included in the Fixed Rate Group
as of the related Cut-off Date bears a fixed Mortgage Loan Rate of at
least 6.500% per annum and each Mortgage Loan included in the
Adjustable Rate Group as of the related Cut-off Date is an Adjustable
Rate Mortgage Loan that has a Minimum Rate of not less than 4.950%
per annum and a Mortgage Loan Rate as of the related Cut-off Date of
not less than 9.775% 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;
(vii) 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
Mortgage Loans in the Fixed Rate Group representing not more than
2.54% 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;
(viii) 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, or in the aggregate, materially and adversely affect
the benefits of the security intended to be provided by such
Mortgage;
(ix) Immediately prior to the sale, transfer and
assignment herein contemplated, the Transferor held good and
indefeasible title to, and was the sole owner of, each Mortgage Loan
conveyed by the Transferor 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;
(x) The Mortgage Loan Rate for each Adjustable Rate
Mortgage Loan will be
56
<PAGE> 62
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. 38 Mortgage
Loans are subject to negative amortization. The Mortgage Notes
relating to not more than 80.86% of the Mortgage Loans in the
Adjustable Rate Group, by Original Adjustable Rate Group Balance or
by the Adjustable Rate Group Balance as of the Closing Date, provide
for initial Adjustment Dates that are more than one year and less
than three years from the related Cut-off Date;
(xi) 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 Transferor;
(xii) As of the related Cut-off Date or Subsequent
Cut-off Date, as appropriate (a) no Mortgage Loan had two or more
Monthly Mortgage Payments past due (and therefore there are no
Restricted Mortgage Loans required to be listed on Schedule V) and
not more than 1.04% of the Mortgage Loans (by Original Pool Balance)
had one or more Monthly Payments past due, (b) no Mortgage Loan has
been 60 or more days contractually delinquent more than once during
the 12-month period immediately preceding the related Cut-off Date
and (c) no Mortgage Loan has been 90 or more days delinquent in the
12 months preceding the related Cut-off Date;
(xiii) 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 Transferor, each Mortgaged Property is free of damage and is
in good repair and is not affected by hazardous or toxic wastes or
substances;
(xiv) 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, including the defense
of usury, and no such right of rescission, set-off, counterclaim or
defense has been asserted with respect thereto;
(xv) 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;
(xvi) To the best of the Transferor's knowledge, each
Mortgage Loan at the time
57
<PAGE> 63
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;
(xvii) 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;
(xviii) 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);
(xix) 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 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;
(xx) Each Mortgage and 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
58
<PAGE> 64
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;
(xxi) The Transferor 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;
(xxii) As of the related Cut-off Date no more than .38% of
the Original Fixed Rate Group Balance is secured by Mortgaged
Properties located within any single zip code area and no more than
.47% of the Original Adjustable Rate Group Balance is secured by
Mortgaged Properties located within any single zip code area;
(xxiii) 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 Transferor to
the Trustee and any assignment to the Transferor 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);
(xxiv) 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 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;
(xxv) 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. 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;
(xxvi) No Mortgage Note is or has been secured by any
collateral, pledged account or other security other than the lien of
the corresponding Mortgage;
(xxvii) No Mortgage Loan was originated under a buydown
plan;
(xxviii) No Mortgage Loan has a shared appreciation feature
or other contingent
59
<PAGE> 65
interest feature;
(xxix) Each Mortgaged Property consists of one or more
contiguous parcels of real property with a residential dwelling
erected thereon;
(xxx) 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;
(xxxi) 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;
(xxxii) To the best knowledge of the Transferor, there is
no proceeding pending or threatened for the total or partial
condemnation of any Mortgaged Property, nor is such a proceeding
currently occurring;
(xxxiii) To the best knowledge of the Transferor, 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;
(xxxiv) To the best knowledge of the Transferor, 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 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;
(xxxv) 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;
(xxxvi) 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
60
<PAGE> 66
such Mortgage Loan or (B) such consent has been obtained and is
contained in the related Mortgage File;
(xxxvii) 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;
(xxxviii) 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 Transferor has
not waived any default, breach violation or event of acceleration;
(xil) 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 Financial Guaranty Insurer, and
that has been delivered to the Trustee;
(xl) 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;
(xli) At least 98.51% of the Mortgage Loans in the Fixed
Rate Group (by Original Fixed Rate Group Balance) and at least 98.33%
of the 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;
(xlii) 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 Transferor 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;
(xliii) To the best of the Transferor's knowledge, all
parties that have had any interest in the Mortgage Loan, whether as
mortgagee, assignee, pledgee or otherwise during
61
<PAGE> 67
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
(xliii), 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;
(xliv) No Mortgage Loan was selected by the Transferor
for inclusion in the Trust on any basis intended to adversely affect
the Trust;
(xlv) 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;
(xlvi) 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;
(xlvii) 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;
(xlviii) 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;
(xlix) 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;
(l) 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;
(li) 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
62
<PAGE> 68
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;
(lii) All insurance policies 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;
(liii) 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;
(liv) Each Mortgage Loan has a Monthly Mortgage Payment
due during the first Collection Period commencing after the calendar
month during which such Mortgage Loan is included in the Trust;
(lv) All Mortgage Loans were underwritten or
re-underwritten in accordance with the underwriting guidelines of the
Company;
(lvi) To the knowledge of the Transferor, 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 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;
(lvii) To the knowledge of the Transferor, 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; and
(lviii) Mortgage Loans in the Fixed Rate Group representing
not less than 25.00% of the aggregate Principal Balance thereof were
assigned a credit grade of "A" by the Company at the time such
Mortgage Loans were originated or acquired, as applicable, by the
Company; Mortgage Loans in the Fixed Rate Group representing not less
than 35.00% of the aggregate Principal Balance thereof were assigned
a credit grade of "A-" by the Company at the time such Mortgage Loans
were originated or acquired, as applicable, by the Company; Mortgage
Loans in the Fixed Rate Group representing not less than 23.00%
63
<PAGE> 69
of the aggregate Principal Balance thereof were assigned a credit
grade of "B" by the Company at the time such Mortgage Loans were
originated or acquired, as applicable, by the Company; Mortgage Loans
in the Fixed Rate Group representing not less than 5.00% of the
aggregate Principal Balance thereof were assigned a credit grade of
"C" by the Company at the time such Mortgage Loans were originated or
acquired, as applicable, by the Company; Mortgage Loans in the Fixed
Rate Group representing not more than 3.00% of the aggregate
Principal Balance thereof were assigned a credit grade of "C-" by the
Company at the time such Mortgage Loans were originated or acquired,
as applicable, by the Company; and Mortgage Loans in the Fixed Rate
Group representing not more than 4.00% of the aggregate Principal
Balance thereof were assigned a credit grade of "D" by the Company at
the time such Mortgage Loans were originated or acquired, as
applicable, by the Company. Mortgage Loans in the Adjustable Rate
Group representing not less than 27.00 % of the Aggregate Principal
Balance thereof were assigned a credit grade of "A" by the Company at
the time such Mortgage Loans originated or acquired, as applicable,
by the Company; Mortgage Loans in the Adjustable Rate Group
representing not less than 30.00% of the aggregate Principal Balance
thereof were assigned a credit grade of "A-" by the Company at the
time such Mortgage Loans were originated or acquired, as applicable,
by the Company; Mortgage Loans in the Adjustable Rate Group
representing not less than 24.00% of the aggregate Principal Balance
thereof were assigned a credit grade of "B" by the Company at the
time such Mortgage Loans were originated or acquired, as applicable,
by the Company; Mortgage Loans in the Adjustable Rate Group
representing not less than 5.00% of the aggregate Principal Balance
thereof were assigned a credit grade of "C" by the Company at the
time such Mortgage Loans were originated or acquired, as applicable,
by the Company; Mortgage Loans in the Adjustable Rate Group
representing not more than 2.00% of the aggregate Principal Balance
thereof were assigned a credit grade of "C-" by the Company at the
time such Mortgage Loans were originated or acquired, as applicable,
by the Company; and Mortgage Loans in the Adjustable Rate Group
representing not more than 8.00% of the aggregate Principal Balance
thereof were assigned a credit grade of "D" by the Company at the
time such Mortgage Loans were originated or acquired, as applicable,
by the Company. 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.
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 Transferor, 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 Transferor as to the facts stated therein, which
breach materially and adversely affects the interests of the Certificateholders
or the Financial Guaranty Insurer in the related Mortgage Loan or Mortgage
Loans, the party discovering such breach shall give prompt written notice to the
other parties hereto and to each of the Rating Agencies.
Within 60 days of its discovery or its receipt of notice of such
breach, the Transferor shall
64
<PAGE> 70
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
Transferor 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 its discovery or receipt of notice of
breach (or at the election of the Transferor, 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
Transferor 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 Transferor 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 Transferor for a breach will not be made unless the Trustee receives 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 Transferor, 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 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. [Reserved].
65
<PAGE> 71
Section 2.08. Indemnification of the Trust. The Transferor shall
indemnify the Trust for any liability incurred thereby as a result of a breach
of the representation and warranty set forth in clause (xvi) of Section 2.05.
This indemnity obligation shall be in addition to any other obligation the
Transferor may have in connection with any such breach.
ARTICLE THREE
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS;
CERTIFICATE ACCOUNT
Section 3.01. The Servicer and the Sub-Servicers. (a) 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 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 the 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
66
<PAGE> 72
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.
The Servicer may sue 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.
(b) 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)
67
<PAGE> 73
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 Section 24874 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 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, prepayment fees, if any, 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.
(b) The Servicer 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. 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
68
<PAGE> 74
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;
(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 all 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 so applied since the immediately
preceding Deposit Date.
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, prepayment fees, if any, or extension or other
administrative 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 in accordance
with Section 5.02(a) or to reimburse itself for payments of Monthly Advances to
the extent of recoveries of interest relating to the Mortgage Loans that were
the subject of such Monthly Advances. 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 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
Rating Agencies and confirmed to the Trustee and the Servicer in writing.
69
<PAGE> 75
(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 therein that constitute any portion of
Monthly Interest and Principal Distribution Amounts 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 or any shortage on Mortgage Loans in such Mortgage Loan Group by the
Transferor or the Servicer pursuant to Section 2.03, 2.05, 3.01, 3.03, 3.06 or
10.01 or a substitution of a Qualified Replacement Mortgage Loan pursuant to
Section 2.03 or 2.05, shall be remitted to the Trustee for deposit in the
Certificate Account on the applicable Deposit Date. Any amounts held in the
Certificate Account 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 (f) 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
70
<PAGE> 76
shortage in the Certificate Account on the Deposit Date with respect to the
related Collection Period.
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, 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
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. The Servicer with the consent of the Financial Guaranty Insurer with
respect to any Mortgage Loans in the Fixed Rate Group, may 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
71
<PAGE> 77
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
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 Properties, 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.
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. 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
72
<PAGE> 78
such foreclosure or conversion occurs (net of any related Monthly 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-1
Certificate.
Neither the Trust nor the Trustee on behalf of the Trust shall
complete foreclosure proceedings with respect to any Restricted Mortgage Loan
that has not, at any time after the related Cut-off Date, been brought current,
or take title to any Mortgaged Property securing a Restricted Mortgage Loan
(each, a "Restricted Mortgaged Property"), if, as a result of such foreclosure
or taking of title, the aggregate value of the Restricted Mortgaged Properties
(computed on the basis of the outstanding Principal Balance of such Restricted
Mortgage Loan immediately prior to such foreclosure or taking of title) then
owned by the Trust or the Trustee on behalf of the Trust would exceed 0.80% of
the aggregate of the Principal Balances of the Mortgage Loans as of the
preceding Determination Date.
If at any time the Trust or the Trustee on behalf of the Trust holds
title to Restricted Mortgaged Properties that have an aggregate value (computed
on the basis of the outstanding Principal Balance of each related Restricted
Mortgage Loan immediately prior to the time the Trust or the Trustee on behalf
of the Trust acquired title to the related Restricted Mortgaged Property) that
exceeds 0.95% of the aggregate of the Principal Balance of the Mortgage Loans
as of the preceding Determination Date, then the Transferor shall, on or prior
to the next succeeding Deposit Date, purchase one or more of such Restricted
Mortgaged Properties at a price equal to the fair market value of the related
Restricted Mortgaged Property (calculated by the Servicer in a manner consistent
with the Servicer's customary practice of making valuation determinations in
foreclosure proceedings relating to residential mortgage loans in its servicing
portfolio at the time of such purchase) so that the aggregate value of such
Restricted Mortgaged Properties (calculated as specified above) then owned by
the Trust or the Trustee on behalf of the Trust after such purchase or purchases
does not exceed 0.90% of the then aggregate of the Principal Balance of the
Mortgage Loans.
Such purchase price shall be deposited in the Certificate Account on
the date of such purchase in the manner described in Section 2.03. For purposes
of this Agreement, any purchase effected in accordance with this paragraph shall
be deemed to be a prepayment of the related Restricted Mortgage Loan. Upon
receipt of the related purchase price and written notification of such deposit
signed by a Servicing Officer, the Trustee shall release or cause to be released
to the Transferor the related Mortgage File and other property (including any
insurance policy or related present or future insurance proceeds with respect
thereto) and shall execute and deliver or cause to be executed and delivered
such instruments of transfer or assignment presented to it by the Transferor,
without recourse, as shall be necessary to vest in the Transferor, all of the
legal and beneficial ownership of each such Restricted Mortgaged Property and
the Trustee shall have no further responsibility with respect to said Mortgage
File.
Notwithstanding the foregoing, the Servicer 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
73
<PAGE> 79
any time following the related 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
5% of the sum of the Original Pool Balance and the Prefunding Account Deposit.
In addition, the Servicer, with the consent of the Financial Guaranty Insurer,
may purchase from the Trust on any Deposit Date occurring during the 90-day
period following the Closing Date any Mortgage Loan as to which a Monthly
Mortgage Payment becomes 60 or more days contractually delinquent at any time
following the related 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
5% of the sum of the Original Pool Balance and the Prefunding Account Deposit.
For purposes of this Agreement, any purchase effected in accordance with this
paragraph shall be deemed to be a prepayment of each Mortgage Loan so purchased.
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 Pool 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 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
the REMIC Pool to tax or cause the 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 the
REMIC Pool of any income from non-permitted assets as described in Code Section
860F(a)(2)(B), and that the REMIC Pool does not derive any "net income from
foreclosure property" within the meaning of Code Section 860G(c)(2) with respect
to such property.
74
<PAGE> 80
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 F 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 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 in the related Mortgage Loan Group for the
related Collection Period, as servicing compensation for such Collection Period,
the Monthly Servicing Fee for such Mortgage Loan Group. Additional servicing
compensation shall be assumption fees, late payment charges, charges for checks
returned for insufficient funds, prepayment fees, if any, or extension and other
administrative charges received by the Servicer and any earnings on investment
by the Servicer of amounts held in escrow accounts established thereby on behalf
of Mortgagors (any such investment to be made in compliance with applicable
law). The Servicer is obligated to pay Compensating Interest for the related
Mortgage Loan Group 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. 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.
75
<PAGE> 81
Section 3.09. Annual Statement as to Compliance. (a) The Servicer
will deliver to the Trustee, the Financial Guaranty Insurer and each Rating
Agency, on or before September 30 of each year, beginning with September 30,
1998, an Officer's Certificate of the Servicer substantially in the form set
forth in Exhibit E 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 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. On or before September 30 of each year, beginning with September 30,
1998, 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 Financial Guaranty 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
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.
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 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
76
<PAGE> 82
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.
Section 3.12. Maintenance of Fidelity Bond and Errors and Omission
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 and the Trustee. In
addition to the other notices required to be given to the Rating Agencies, the
Financial Guaranty Insurer and the Trustee by the provisions of this Agreement,
the Servicer shall give notice to each Rating Agency, the Financial Guaranty
Insurer and the Trustee 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 Transferor or
Servicer, as the case may be.
Section 3.14. Reports of Foreclosures and Abandonment of Mortgaged
Properties. Each calendar year beginning in 1999 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 3.15. 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
Financial Guaranty Insurer in the case of Sub-Servicing of Mortgage Loans in the
Fixed Rate Group, 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 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
77
<PAGE> 83
the Servicer's obligations under Section 3.01 to make deposits in the Collection
Account, the 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 Trustee shall not
be deemed party thereto and shall have no claims, rights, obligations, duties or
liabilities with respect to any Sub-Servicer, except that the Trustee 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.
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: (i) the Fixed Rate Group Prefunding
Account Deposit from the proceeds of the sale of the Fixed Rate Group
Certificates and (ii) the Adjustable Rate Group Prefunding Account Deposit from
the proceeds of the sale of the Adjustable Rate Group Certificates. Subject to
Section 3.16(d), upon the conveyance of Subsequent Mortgage Loans to the Trust
on any Subsequent Transfer Date, the Transferor shall instruct the Trustee to
withdraw from the Prefunding Account (i) an amount equal to the Fixed Rate Group
Subsequent Purchase Price for the Subsequent Mortgage Loans bearing fixed
Mortgage Loan Rates to be included in the Fixed Rate Group and make a
corresponding reduction in the amount of the Fixed Rate Group Prefunding Account
Deposit and (ii) an amount equal to the Adjustable Rate Group 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 of the Adjustable Rate Group Prefunding Account Deposit,
and to pay such amount to or upon the order of the Transferor 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 Transferor
and the Transferor 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
Transferor and for federal and state income tax purposes the Transferor 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 Transferor on the July 1998 Distribution Date.
(c) On the Distribution Date in July 1998, any amounts remaining in
the Prefunding Account (i) in respect of the Fixed Rate Group Prefunding Account
Deposit at such time (net of
78
<PAGE> 84
reinvestment earnings payable to the Transferor) shall be deposited at such time
into the Certificate Account for distribution as part of the Fixed Rate Group
Principal Distribution Amount on the July 1998 Distribution Date and (ii) in
respect of the Adjustable Rate Group Prefunding Account Deposit at such time
(net of reinvestment earnings payable to the Transferor) shall be deposited at
such time into the Certificate Account for distribution as part of the
Adjustable Rate Group Principal Distribution Amount on the July 1998
Distribution Date.
(d) The Trustee will establish and maintain the Escrow Account as an
Eligible Account for the benefit of the Certificateholders. The Trustee shall
deposit or cause to be deposited any Escrowed Amounts received by or on behalf
of the Transferor in respect of the Mortgage Loans on the Closing Date.
Thereafter, 100% of the Escrowed Amounts with respect to the Mortgage Loans will
be released to the Company upon completion of the Trustee of its review of the
Mortgage Loan Documents and either (i) its determination that the conditions set
forth in Section 2.02 for inclusion of such Mortgage Loans in the Trust have
been satisfied as therein described or (ii) delivery of Qualified Replacement
Mortgage Loans and related Mortgage Loan Documents and the Trustee is satisfied
that such Mortgage Loans satisfy the conditions set forth in Section 2.02. The
Escrow Account will be an asset of the Trust but not of any REMIC.
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
Fixed Rate Group Capitalized Interest Account Deposit for the benefit of the
Fixed Rate Group Certificateholders and the Adjustable Rate Group Capitalized
Interest Account Deposit for the benefit of the Adjustable Rate Group
Certificateholders. If none or less than all of the Subsequent Mortgage Loans
are transferred to the Trust on the Closing Date, then on the July 1998 Deposit
Date, amounts equal to (i) the Fixed Rate Group Capitalized Interest Account
Deposit and (ii) the Adjustable Rate Group Capitalized Interest Account Deposit
shall be withdrawn from the Capitalized Interest Account and deposited into the
Certificate Account in respect of the related Monthly Interest for the Fixed
Rate Group and the Adjustable Rate Group, respectively, for such Distribution
Date. If all of the Subsequent Mortgage Loans are transferred to the Trust on
the Closing Date, then the sum of the Fixed Rate Group Capitalized Interest
Account Deposit and the Adjustable Rate Group Capitalized Interest Account
Deposit will be deposited into the Certificate Account on the Closing Date and
held there until the Distribution Date in July 1998. On such first Distribution
Date, such amounts will be deemed to be available in respect of Monthly Interest
for the Fixed Rate Group or Adjustable Rate Group, as appropriate, and will be
distributable to the Certificateholders. Any amounts so deposited in the
Certificate Account shall not be invested in Permitted Investments or otherwise.
(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
79
<PAGE> 85
Permitted Investments, which Permitted Investments shall mature no later than
the Deposit Date in July 1998. 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 Transferor on the July 1998 Distribution Date and
for federal and state income tax purposes the Transferor 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 Transferor and the
Transferor 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 Transferor.
Section 3.18. [Reserved].
Section 3.19. Payments on the Financial Guaranty Insurance Policy.
(a) The Trustee will establish and maintain the Policy Payments Account, a
separate special purpose trust account for the benefit of the Fixed Rate Group
Certificateholders and the Financial Guaranty Insurer. The Trustee shall deposit
or cause to be deposited any Insured Amounts or Additional Insurer Payments paid
under the Financial Guaranty Insurance Policy in the Policy Payments Accounts
and distribute such amounts only for the purpose of payment to the related Fixed
Rate Group Certificateholders of the related Insured Amounts or Additional
Insurer Payments and such amounts may not be used to satisfy any costs, expenses
or liabilities of the Servicer, the Trustee or the Trust. Insured Amounts or
Additional Insurer 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 Fixed Rate Group 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 third Business Day immediately preceding the related
Distribution Date, the Trustee shall determine whether an Insured Amount is
required to be paid under the Financial Guaranty Insurance Policy with respect
to such Distribution Date and, if so, shall immediately notify the Servicer and
the Financial Guaranty Insurer 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 an Insured Amount is still required to be paid under the Financial Guaranty
Insurance Policy with respect to such Distribution Date, the Trustee shall
furnish the Financial Guaranty Insurer with a completed Notice of Claim in
respect of such Insured 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 Financial Guaranty
Insurer. The Notice of Claim shall constitute a claim therefor pursuant to the
Financial Guaranty 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 Financial
Guaranty Insurer, and such funds reduce the amount of the Insured Amount to
which such Notice of Claim relates, the
80
<PAGE> 86
Insured 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 Insured Amount. Notification of
any such reduction in the Insured Amount shall be given to the Financial
Guaranty Insurer by the Trustee by no later than 8:00 A.M., Los Angeles time, on
the related Distribution Date. The Financial Guaranty Insurer shall, pursuant to
the Financial Guaranty Insurance Policy, pay to the Trustee the Insured Amount
by 2:00 P.M., New York City time, on the later of (i) the Business Day following
receipt of such Notice of Claim and (ii) such Distribution Date. The Trustee
shall deposit or cause to be deposited such Insured Amount in the Certificate
Account.
(b) Each Fixed Rate Group Certificateholder shall promptly notify the
Trustee in writing upon the receipt of a court order as described in the
definition of Preference Amount and shall enclose a copy of such order with such
notice to the Trustee. The Trustee shall promptly notify the Financial Guaranty
Insurer upon its receipt of any such court order. If the payment of any portion
of Insured Amount distributable to a Fixed Rate Group Certificateholder on any
Distribution Date is avoided as a preference pursuant to a final, nonappealable
order under the Bankruptcy Code (the "Order"), the Financial Guaranty Insurer
shall cause such payment to be made on the later of (a) the date when due to be
paid pursuant to the Order or (b) the first to occur of (i) the fourth Business
Day following receipt by the Financial Guaranty Insurer from the Trustee of (A)
a copy of the final nonappealable order of the court pursuant to the United
States Bankruptcy Code to the effect that the related Certificateholder is
required to return distributions paid on a Certificate held thereby during the
term of the Financial Guaranty Insurance Policy because such payments were
avoidable as preference payments pursuant to an Order, (B) a certificate of such
Certificateholder that the Order has been entered and is not subject to any stay
and (C) an assignment duly executed and delivered by such Certificateholder in
such form as is reasonably required by the Financial Guaranty Insurer and
provided thereto by the Financial Guaranty Insurer, irrevocably assigning to the
Financial Guaranty Insurer all rights and claims of (i) such Certificateholder
relating to or arising under the Certificate held thereby against the debtor
that made such preference payment or otherwise with respect to such preference
payment or (ii) the date of receipt by the Financial Guaranty Insurer from the
Trustee of the items referred to in clauses (A), (B) and (C) above if, at least
four Business Days prior to such date of receipt, the Financial Guaranty Insurer
shall have received written notice from the Trustee that such items were to be
delivered on such date and such date was specified in the notice. Such payment
shall be disbursed to the receiver, conservator, debtor-in-possession or trustee
in named in the Order and not to the Trustee or any Fixed Rate Group
Certificateholder directly (unless a Fixed Rate Group Certificateholder has
previously paid such amount to the receiver, conservator, debtor-in-possession
or trustee in bankruptcy named in the Order, in which case such payment shall be
disbursed to the Trustee for distribution to such Certificateholder upon proof
of such payment reasonably satisfactory to the Financial Guaranty Insurer).
(c) The Trustee shall receive, as attorney-in-fact for each Fixed
Rate Group Certificateholder, any Insured Amount allocable to the Fixed Rate
Group Certificates held thereby, from the Financial Guaranty 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
81
<PAGE> 87
any Accrued Certificate Interest or Coverage Deficit of the Certificate
Principal Balance of any class of Fixed Rate Group Certificates on the Final
Scheduled Distribution Date of such class or payment of Additional Insurer
Payments by the Financial Guaranty Insurer from proceeds of the Financial
Guaranty Insurance Policy shall not be considered payment by the Trust, nor
shall such payments discharge the obligation of the Trust with respect to such
Certificateholders, and the Financial Guaranty Insurer shall become the owner of
such unpaid amounts in respect of the Fixed Rate Group Certificates with respect
to which they are made. The Trustee hereby agrees on behalf of each Fixed Rate
Group Certificateholder for the benefit of the Financial Guaranty Insurer that
it recognizes that: (i) to the extent the Financial Guaranty Insurer pays any
Insured Amounts in respect of the Class A-1F Certificates, either directly or
indirectly (as by paying through the Trustee), to the Class A-1F
Certificateholders, the Financial Guaranty Insurer will be subrogated to the
rights of the Class A-1F Certificateholders with respect to such Insured Amounts
paid in respect of such Certificateholders, shall be deemed to the extent of the
Insured Amounts so paid in respect of such Certificateholders, to be a
registered Class A-1F Certificateholder and shall be entitled to receive all
future distributions on the Class A-1F Certificates until all such Insured
Amounts (together with interest thereon at the Class A-1F Pass-Through Rate from
the date paid until the date of reimbursement thereof) have been fully
reimbursed; (ii) to the extent the Financial Guaranty Insurer pays any Insured
Amounts in respect of the Class A-2F Certificates, either directly or indirectly
(as by paying through the Trustee), to the Class A-2F Certificateholders, the
Financial Guaranty Insurer will be subrogated to the rights of the Class A-2F
Certificateholders with respect to such Insured Amounts paid in respect of such
Certificateholders, shall be deemed to the extent of the Insured Amounts so paid
in respect of such Certificateholders, to be a registered Class A-2F
Certificateholder and shall be entitled to receive all future distributions on
the Class A-2F Certificates until all such Insured Amounts (together with
interest thereon at the Class A-2F Pass-Through Rate from the date paid until
the date of reimbursement thereof) have been fully reimbursed; (iii) to the
extent the Financial Guaranty Insurer pays any Insured Amounts in respect of the
Class A-3F Certificates, either directly or indirectly (as by paying through the
Trustee), to the Class A-3F Certificateholders, the Financial Guaranty Insurer
will be subrogated to the rights of the Class A-3F Certificateholders with
respect to such Insured Amounts paid in respect of such Certificateholders,
shall be deemed to the extent of the Insured Amounts so paid in respect of such
Certificateholders, to be a registered Class A-3F Certificateholder and shall be
entitled to receive all future distributions on the Class A-3F Certificates
until all such Insured Amounts (together with interest thereon at the Class A-3F
Pass-Through Rate from the date paid until the date of reimbursement thereof)
have been fully reimbursed, in each case subject to the following paragraph;
(iv) to the extent the Financial Guaranty Insurer pays any Insured Amounts in
respect of the Class A-4F Certificates, either directly or indirectly (as by
paying through the Trustee), to the Class A-4F Certificateholders, the Financial
Guaranty Insurer will be subrogated to the rights of the Class A-4F
Certificateholders with respect to such Insured Amounts paid in respect of such
Certificateholders, shall be deemed to the extent of the Insured Amounts so paid
in respect of such Certificateholders, to be a registered Class A-4F
Certificateholder and shall be entitled to receive all future distributions on
the Class A-4A Certificates until all such Insured Amounts (together with
interest thereon at the Class A-4F Pass-Through Rate from the date paid until
the date of reimbursement thereof) have been fully reimbursed, in each case
subject to the following
82
<PAGE> 88
paragraph; (v) to the extent the Financial Guaranty Insurer pays any Insured
Amounts in respect of the Class A-5F Certificates, either directly or indirectly
(as by paying through the Trustee), to the Class A-5F Certificateholders, the
Financial Guaranty Insurer will be subrogated to the rights of the Class A-5F
Certificateholders with respect to such Insured Amounts paid in respect of such
Certificateholders, shall be deemed to the extent of the Insured Amounts so paid
in respect of such Certificateholders, to be a registered Class A-5F
Certificateholder and shall be entitled to receive all future distributions on
the Class A-5F Certificates until all such Insured Amounts (together with
interest thereon at the Class A-5F Pass-Through Rate from the date paid until
the date of reimbursement thereof) have been fully reimbursed, in each case
subject to the following paragraph; (vi) to the extent the Financial Guaranty
Insurer pays any Insured Amounts in respect of the Class A-6F Certificates,
either directly or indirectly (as by paying through the Trustee), to the Class
A-6F Certificateholders, the Financial Guaranty Insurer will be subrogated to
the rights of the Class A-6F Certificateholders with respect to such Insured
Amounts paid in respect of such Certificateholders, shall be deemed to the
extent of the Insured Amounts so paid in respect of such Certificateholders, to
be a registered Class A-6F Certificateholder and shall be entitled to receive
all future distributions on the Class A-6F Certificates until all such Insured
Amounts (together with interest thereon at the Class A-6F Pass-Through Rate from
the date paid until the date of reimbursement thereof) have been fully
reimbursed, and (vii) to the extent the Financial Guaranty Insurer pays any
Insured Amounts in respect of the Class A-IO Certificates, either directly or
indirectly (as by paying through the Trustee), to the Class A-IO
Certificateholders, the Financial Guaranty Insurer will be subrogated to the
rights of the Class A-IO Certificateholders with respect to such Insured Amounts
paid in respect of such Certificateholders, shall be deemed to the extent of the
Insured Amounts so paid in respect of such Certificateholders, to be a
registered Class A-IO Certificateholder and shall be entitled to receive all
future distributions on the Class A-IO Certificates until all such Insured
Amounts (together with interest thereon at the Class A-IO Pass-Through 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 Financial Guaranty Insurer's rights as
subrogee on the registration books maintained by the Trustee. Except as
otherwise described herein, the Financial Guaranty 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 Amount made by it on
each Distribution Date, the Financial Guaranty Insurer shall be paid before any
other distributions are made to the related Fixed Rate Group Certificateholders,
in each case subject to the following paragraph.
Notwithstanding the provisions of the preceding paragraph, it is
understood and agreed that the intention of the parties is that the Financial
Guaranty Insurer shall not be entitled to reimbursement on any Distribution Date
for amounts previously paid by it (i) in respect of the Class A-1F Certificates
unless on such Distribution Date the Class A-1F Certificateholders shall also
have received the full amount of the Class A-1F Accrued Certificate Interest and
the amount of any Extra Principal Distribution Amount sufficient to fund any
related Overcollateralization Deficit allocated for distribution to such Class
A-1F Certificateholders for such Distribution Date, (ii) in respect of the Class
A-2F Certificates unless on such Distribution Date the Class A-2F
Certificateholders shall also have received the full amount of the Class A-2F
Accrued
83
<PAGE> 89
Certificate Interest and the amount of any Extra Principal Distribution Amount
sufficient to fund any related Overcollateralization Deficit allocated for
distribution to such Class A-2F Certificateholders for such Distribution Date,
(iii) in respect of the Class A-3F Certificates unless on such Distribution Date
the Class A-3F Certificateholders shall also have received the full amount of
the Class A-3F Accrued Certificate Interest and the amount of any Extra
Principal Distribution Amount or Realized Losses sufficient to fund any related
Overcollateralization Deficit allocated for distribution to such Class A-3F
Certificateholders for such Distribution Date, (iv) in respect of the Class A-4F
Certificates unless on such Distribution Date the Class A-4F Certificateholders
shall also have received the full amount of the Class A-4F Accrued Certificate
Interest and the amount of any Extra Principal Distribution Amount sufficient to
fund any related Overcollateralization Deficit allocated for distribution to
such Class A-4F Certificateholders for such Distribution Date, (v) in respect of
the Class A-5F Certificates unless on such Distribution Date the Class A-5F
Certificateholders shall also have received the full amount of the Class A-5F
Accrued Certificate Interest and the amount of any Extra Principal Distribution
Amount sufficient to fund any related Overcollateralization Deficit allocated
for distribution to such Class A-5F Certificateholders for such Distribution
Date, (vi) in respect of the Class A-6F Certificates unless on such Distribution
Date the Class A-6F Certificateholders shall also have received the full amount
of the Class A-6F Accrued Certificate Interest and the amount of any Extra
Principal Distribution Amount sufficient to fund any related
Overcollateralization Deficit allocated for distribution to such Class A-6F
Certificateholders for such Distribution Date, and (vii) in respect of the Class
A-IO Certificates unless on such Distribution Date the Class A-IO
Certificateholders shall also have received the full amount of the Class A-IO
Accrued Certificate Interest.
(d) The Trustee shall be entitled to enforce on behalf of the Fixed
Rate Group Certificateholders the obligations of the Financial Guaranty Insurer
under the Financial Guaranty Insurance Policy. The Fixed Rate Group
Certificateholders are not entitled to institute proceedings directly against
the Financial Guaranty Insurer. Each Fixed Rate Group Certificateholder, by its
purchase of any of the Fixed Rate Group Certificates, the Transferor, the
Servicer and the Trustee hereby agree that the Financial Guaranty 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 Financial
Guaranty Insurer shall be subrogated to the rights of the Servicer, the Trustee
and each Fixed Rate Group 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 of the Fixed Rate Group
Certificates from monies received under the Financial Guaranty Insurance Policy.
The Financial Guaranty 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.
84
<PAGE> 90
Section 3.20. Rights of the Financial Guaranty Insurer to Exercise
Rights of Fixed Rate Group Certificateholders. By accepting its Certificate,
each Fixed Rate Group Certificateholder agrees that unless a Financial Guaranty
Insurer Default exists, the Financial Guaranty Insurer shall have the right to
exercise all rights of the Fixed Rate Group Certificateholders under this
Agreement without any further consent of the Fixed Rate Group
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 Transferor to repurchase or substitute
for, or to require the Servicer to purchase, Mortgage Loans pursuant to Sections
2.03 and 2.05; and
(iii) the right to direct the actions of the Trustee during the
continuance of an Event of Default.
In addition, each Fixed Rate Group Certificateholder agrees that, unless a
Financial Guaranty Insurer Default exists, the rights specifically set forth
above may be exercised by the Fixed Rate Group Certificateholders only with the
prior written consent of the Financial Guaranty Insurer.
Section 3.21. Trust and Accounts Held for Benefit of the
Certificateholders and Financial Guaranty Insurer. The Trustee shall hold the
Trust and the Mortgage Files for the benefit of the Certificateholders and,
provided there does not exist a Financial Guaranty Insurer Default, the
Financial Guaranty 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, provided there does not exist
a Financial Guaranty Insurer Default, also be deemed to be for the benefit of
the Financial Guaranty Insurer. 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, provided there does not exist a Financial Guaranty Insurer Default, for the
benefit of the Financial Guaranty Insurer, and all references in this Agreement
to the benefit of or actions on behalf of the Certificateholders shall, provided
there does not exist a Financial Guaranty Insurer Default, also be deemed to be
for the benefit of the Financial Guaranty 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
Financial Guaranty Insurer.
85
<PAGE> 91
ARTICLE FOUR
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 a computer-readable
magnetic tape containing the Servicer Remittance Report relating to the Fixed
Rate Group and the Servicer Remittance Report relating to the Adjustable Rate
Group detailing the payments and collections received in respect of the Mortgage
Loans in the related Mortgage Loan Group during the immediately preceding
Collection Period. The computer-readable magnetic tape 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 and the Trustee from time to time.
In addition to the foregoing, the Servicer shall provide the Trustee
at the time the tape is delivered to the Trustee a Liquidation Report for the
Fixed Rate Group, with respect to each Mortgage Loan in the Fixed Rate Group
that became a Liquidated Mortgage Loan during the related Collection Period and
a Liquidation Report for the Adjustable Rate Group, with respect to each
Mortgage Loan in the Adjustable Rate Group that became a Liquidated Mortgage
Loan during the related Collection Period, in either case substantially in the
form of Exhibit G 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, Financial Guaranty Insurer and each Rating Agency a statement
derived from information on the Servicer Remittance Report for each Mortgage
Loan Group and the related 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;
86
<PAGE> 92
(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;
(h) the aggregate Purchase Prices for (i) any Defective
Mortgage Loans that the Transferor 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 Transferor
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 FIVE
PAYMENTS AND STATEMENTS TO
CERTIFICATEHOLDERS
Section 5.01. Distributions. On each Distribution Date, the Trustee
shall distribute to each
87
<PAGE> 93
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
following 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.
(a) On each Distribution Date interest distributions will be made in
the following order of priority:
First, with respect to the Fixed Rate Group from related Monthly
Interest, if no Financial Guaranty Insurer Default has occurred or is
continuing, to the Financial Guaranty Insurer the amount of any unreimbursed
payments of the Insured Amounts (together with interest thereon at the Class
A-1F Pass-Through Rate, Class A-2F Pass-Through Rate, Class A-3F Pass-Through
Rate, Class A-4F Pass-Through Rate, Class A-5F Pass-Through Rate, Class A-6F
Pass-Through Rate, or Class A-IO Pass-Through Rate, as specified in Section
3.19(c), if such amounts remain unpaid from any prior Distribution Date) and any
accrued and unpaid Financial Guaranty Insurer Premium;
Second, (i) with respect to the Fixed Rate Group Certificateholders,
Monthly Interest with respect to the Fixed Rate Group on a pro rata basis based
on the aggregate amount of Accrued Certificate Interest to the holders of the
Certificate of each such Class, up to the amount of Accrued Certificate Interest
with respect to such Class plus any outstanding Interest Carry Forward Amount
with respect to such Class, and concurrently (ii) to the Class A-1A
Certificateholders, Monthly Interest with respect to the Adjustable Rate Group
up to the amount of Accrued Certificate Interest for such Class plus any
outstanding Interest Carry Forward Amount with respect to such Class;
Third, with respect to the Class M-1A Certificateholders, Monthly
Interest with respect to the Adjustable Rate Group then remaining, up to the
amount of Accrued Certificate Interest with respect to such Class;
Fourth, with respect to the Class M-2A Certificateholders, Monthly
Interest with respect to the Adjustable Rate Group then remaining, up to the
amount of Accrued Certificate Interest with respect to such Class;
Fifth, with respect to the Class B-1A Certificateholders, Monthly
Interest with respect to the
88
<PAGE> 94
Adjustable Rate Group then remaining, up to the amount of Accrued Certificate
Interest with respect to such Class;
Sixth, any Monthly Excess Cashflow Amount will be applied as set
forth in Section 5.01(d).
(b) With respect to the Fixed Rate Group and each Distribution Date,
the Fixed Rate Group Certificateholders will be entitled to receive 100% of the
Fixed Rate Group Principal Distribution Amount for such Distribution Date as
follows: first, to the Class A-6F Certificateholders, the Class A-6F Lockout
Distribution Amount, and then to all Fixed Rate Group Certificateholders, by
Class in sequential order until the Certificate Principal Balance of each such
Class has been reduced to zero and then to Class A-6F Certificateholders until
the Certificate Principal Balance has been reduced to zero.
Any remaining Fixed Rate Group Principal Distribution Amount shall be
distributed as part of the Monthly Excess Cashflow Amount with respect to the
Fixed Rate Group as set forth in Section 5.01(d).
(c) with respect to the Adjustable Rate Group and each Distribution
Date before the related Step Down Date, the Adjustable Rate Group
Certificateholders will be entitled to receive payment of 100% of the priority
and amounts set forth below up to the Adjustable Rate Group Principal
Distribution Amount for such Distribution Date by Class in sequential order
(i.e., first to the Class A-1A Certificates, then to the Class M-1A
Certificates, and so forth) until the Certificate Principal Balance of each of
such Class has been reduced to zero. With respect to the Adjustable Rate Group
and each Distribution Date on or after the Step Down Date, the Adjustable Rate
Group Certificateholders will be entitled to receive payments of principal in
the order of priority and amounts set forth below up to the Principal
Distribution Amount with respect to the Adjustable Rate Group:
First, the Adjustable Rate Group Principal Distribution Amount not to
exceed the related Class A-1A Principal Distribution Amount, shall be
distributed to the Class A-1A Certificateholders until the Certificate Balance
thereof has been reduced to zero;
Second, any remaining Principal Distribution Amount related to the
Class M-1A Certificates, not to exceed the Class M-1A Principal Distribution
Amount, shall be distributed until the Certificate Balance thereof has been
reduced to zero;
Third, any remaining Principal Distribution Amount related to the
Class M-2A Certificates, not to exceed the Class M-2A Principal Distribution
Amount, shall be distributed until the Certificate Balance thereof has been
reduced to zero;
Fourth, any remaining Principal Distribution Amount related to the
Class B-1A Certificates, not to exceed the Class B-1A Principal Distribution
Amount, shall be distributed until the Certificate Balance thereof has been
reduced to zero; and
89
<PAGE> 95
Fifth, any remaining Adjustable Rate Group Principal Distribution
Amount shall be distributed as part of the Monthly Excess Cashflow Amount with
respect to such Mortgage Loan Group as set forth in Section 5.01(d).
(d) The Monthly Excess Cashflow Amount with respect to each Mortgage
Loan Group shall be applied in the following order of priority on any
Distribution Date:
Any Monthly Excess Cashflow Amount with respect to the
Fixed Rate Group shall be applied in the following order of priority on any
Distribution Date:
(1) to fund any Interest Carry Forward Amount for the Fixed
Rate Group Certificates pro rata based upon the outstanding Interest Carry
Forward Amounts for each Class of such Certificates;
(2) If no Financial Guaranty Insurer Default has occurred
or is continuing, to reimburse the Financial Guaranty Insurer for any
unreimbursed Insured Amounts (together with interest thereon at the Class A-1F
Pass-Through Rate, Class A-2F Pass-Through Rate, Class A-3F Pass-Through Rate,
Class A-4F Pass-Through Rate, Class A-5F Pass-Through Rate, Class A-6F
Pass-Through Rate, or a Class A-IO Pass-Through Rate as specified in Section
3.19(c) if such amounts remain unpaid from any prior Distribution Date) and any
accrued and unpaid Financial Guaranty Insurer Premium;
(3) to fund the related Extra Principal Distribution Amount
for such Distribution Date;
(4) to reimburse the Financial Guaranty Insurer for any
amounts due and owing under the Financial Guaranty Insurance Agreement to the
extent not paid pursuant to clause (2) above;
(5) to the Servicer to the extent of any unreimbursed
Monthly Advances or Servicing Advances with respect to the Fixed Rate Group;
(6) to fund the amounts, if any, described in clauses (4),
(6) and (8) below with respect to the Adjustable Rate Group, to the extent that
such amounts have not been funded in full through the application of any Monthly
Excess Cashflow Amount with respect to the Adjustable Rate Group on such
Distribution Date provided that any portion of the Monthly Excess Cashflow
Amount with respect to the Fixed Rate Group Certificates that consists of any
payment by the Financial Guaranty Insurer will be excluded from such funding;
(7) to fund a distribution to Class C Certificateholders of
the Class C Distribution Amount plus any Class C Carryforward Amount; and
(8) to fund a distribution to the Class R Certificates.
90
<PAGE> 96
Any Monthly Excess Cashflow Amount with respect to the Adjustable
Rate Group shall be applied in the following order of priority on any
Distribution Date:
(1) to fund any Interest Carry Forward Amount for the Class
A-1A Certificates;
(2) to fund the related Extra Principal Distribution for
such Distribution Date;
(3) to fund any Interest Carry Forward Amount for the M-1A
Certificates.
(4) to fund any Class M-1A Realized Loss Amortization
Amount;
(5) to fund any Interest Carry Forward Amount for the Class
M-2A Certificates;
(6) to fund any Class M-2A Realized Loss Amortization
Amount;
(7) to fund any Interest Carry Forward Amount for the Class
B-1A Certificates;
(8) to fund any Class B-1A Realized Loss Amortization
Amount;
(9) if a Trigger Event has occurred and is continuing, an
amount equal to the excess of the Adjustable Rate Group Principal Distribution
Amount over the sum of the Class A-1A Principal Distribution Amount, the Class
M-1A Principal Distribution Amount, the Class M-2A Principal Distribution Amount
and the Class B-1A Principal Distribution Amount will be distributed to the
Class B-1A Certificateholders, Class M-2A Certificateholders, Class M-1A
Certificateholders and Class A-1A Certificateholders, in that order, until the
Certificate Principal Balance of the related Class of Certificates has been
reduced to zero;
(10) to the Servicer to the extent of any unreimbursed
Monthly Advances or Servicing Advances with respect to the Adjustable Rate
Group;
(11) to fund any amounts described in clauses (2) and (4)
above for such Distribution Date and the Fixed Rate Group (but not to exceed
unreimbursed Insured Amounts relating to claims with respect to Coverage
Deficits) and to fund any amount described in clause (3) above for the Fixed
Rate Group and such Distribution Date only to the extent a Coverage Deficit
exist, in each case to the extent such amounts have not been funded in full
through the application of any Monthly Excess Cashflow Amount with respect to
the Adjustable Rate Group on such Distribution Date; provided that any portion
of Monthly Excess Cashflow Amount with respect to the Fixed Rate Group
Certificates that consists of amounts paid by the Financial Guaranty Insurer
will be excluded from such funding;
(12) to fund a distribution to Class C Certificateholders
of the Class C Distribution Amount plus any Class C Carryforward Amount; and
(13) to fund a distribution to one or more of the Class R
Certificateholders.
91
<PAGE> 97
(e) In addition to the foregoing, on each Distribution Date the
Trustee shall include in the distribution (i) to each holder of Fixed Rate Group
Certificates, such Certificateholder's Percentage Interest of any Insured Amount
allocable to the Fixed Rate Group Certificates, as the case may be, received
from the Financial Guaranty Insurer in respect of such Distribution Date, first
to cover any shortfalls in the Monthly Interest available to cover distributions
in respect of Accrued Certificate Interest with respect thereto for such
Distribution Date and then to reduce the Certificate Principal Balances of the
Fixed Rate Group Certificates on a pro rata basis (based on their respective
outstanding Certificate Principal Balances) by an amount equal to the Coverage
Deficit with respect to such Distribution Date.
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 Financial Guaranty 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
Collection Period, an amount equal to the excess, if any, of interest on the
Principal Balance of such REO Property at the related Mortgage Interest 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 the final
due date with respect to any Mortgage Loan. All or a portion of any Monthly
Advance required to be made on a Deposit Date may be paid out of amounts on
deposit in the Collection Account in respect of the related Mortgage Loan Group
that are not required to be deposited on such Deposit Date in the Certificate
Account as any portion of Monthly Interest for such Mortgage Loan Group and the
related Distribution Date; provided,
92
<PAGE> 98
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, if not theretofore recovered from the Mortgagor on whose behalf such
Monthly Advance was made, 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 or, as provided in clause (10) of Section 5.01(d), from amounts in
respect of the related Mortgage Loan Group that would otherwise be distributed
to the Class C Certificateholder on such Distribution Date.
(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 or, as provided
in clause (10) of Section 5.01(d) with respect to the Adjustable Rate Group
Mortgage Loans, from amounts that would otherwise be distributed to the Class C
Certificateholder on a Distribution Date. Notwithstanding anything herein to the
contrary, no Servicing Advances need by made hereunder if such Servicing Advance
would, if made, constitute a Nonrecoverable Advance.
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 Financial Guaranty 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 Class 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;
(d) the Interest Carry Forward Amount for each Class;
(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
93
<PAGE> 99
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 Transferor 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 Trigger Event has occurred and, if so, what
event;
(k) the Senior Enhancement Percentage and the Stepped Up
Enhancement Percentage for each Mortgage Loan Group;
(l) the amount of any Extra Principal Distribution Amount
included in such distribution;
(m) the related Overcollateralization Amount and Targeted
Overcollateralization Amount for each Mortgage Loan Group and all
delinquency and loss information necessary to calculate the Targeted
Overcollateralization Amount for each Mortgage Loan Group;
(n) the amount, if any, of Insured Amounts distributable to
each Class of Adjustable Rate Group Certificates on such Distribution
Date, the Financial Guaranty Insurer Premium paid on such
Distribution Date, and the aggregate amount of Insured Amounts,
interest thereon and previously unpaid Financial Guaranty Insurer
Premiums paid on such Distribution Date and remaining to be paid on
such Distribution Date or any future Distribution Date;
(o) the amount of any Applied Realized Loss Amount,
Realized Loss Amortization Amount and Unpaid Realized Loss Amount for
each Class of Fixed Rate Group Certificates as of the close of such
Distribution Date; and
(p) such other information as the Financial Guaranty
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.
94
<PAGE> 100
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 Prudential Securities Incorporated,
One New York Plaza, 17th Floor, New York New York 10292, Attention:
Mary Alice Kohs (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. Applied Realized Loss Amount. On each Distribution
Date, based on the information furnished by the Servicer, the Trustee shall
determine the total Applied Realized Loss Amounts for the Fixed Rate Group for
such Distribution Date. Such Applied Realized Loss Amounts shall be applied by
reducing the Certificate Principal Balance of each Class of Subordinate
Certificates beginning with the Class B-1A Certificates, and then the Class M
Certificates then outstanding with the highest numerical Class designation, in
each case until the respective Certificate Principal Balance thereof is reduced
to zero. Any Applied Realized Loss Amount allocated to a Class of Certificates
shall be allocated among the Certificates of such Class in proportion to their
respective Percentage Interests.
Section 5.05. Financial Guaranty Insurer's Use of Information. The
Transferor, the Servicer and the Trustee on behalf of Certificateholders and the
Trust (the "Trust Parties") hereby authorize the Financial Guaranty Insurer to
include the information contained in reports provided to the Financial Guaranty
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 Financial Guaranty
Insurer or its Affiliates or any of the Financial Guaranty Insurer Parties,
arising out of, or related to or in connection with the dissemination and/or use
of any information by the Financial Guaranty Insurer as contemplated in this
Section, including, but not limited to, claims based on allegations of
inaccurate, incomplete or erroneous transfer of information by the Financial
Guaranty Insurer to Bloomberg or otherwise (other than in connection with the
Financial Guaranty Insurer's gross negligence or willful misconduct). The Trust
Parties waive their rights to assert any such claims against the Financial
Guaranty Insurer Parties and fully and finally release the Financial Guaranty
Insurer Parties from any and all such claims, demands, obligations, actions and
liabilities (other than in connection with the Financial Guaranty Insurer's
gross negligence or willful misconduct). The Financial Guaranty Insurer makes no
representations or warranties,
95
<PAGE> 101
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 Financial
Guaranty Insurer reserves the right at any time to withdraw or suspend the
dissemination of the Information by the Financial Guaranty 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 SIX
THE CERTIFICATES
Section 6.01. The Certificates. (a) The Certificates of each Class
shall be substantially in the forms set forth with respect thereto in Exhibit A
hereto, respectively, 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 Transferor 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 (i) in the case of the
Fixed Rate Group Certificates and the Class A-1A Certificates, in minimum dollar
denominations of $1,000 and integral multiples of $1 in excess thereof; and (ii)
in the case of the Subordinate Certificates, in minimum dollar denominations of
$25,000 and integral multiples of $1 in excess thereof. Each of the Class C
Certificates shall be issuable with a face amount expressed as a Percentage
Interest not less than 1.00%. Each of the Class R Certificates shall be issuable
solely as a single Class R Certificate evidencing the entire Percentage Interest
of such Class R Certificates.
(c) The Certificates shall be executed by manual or facsimile
signature by 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.
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.
96
<PAGE> 102
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 Transferee 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 Transferee Affidavit shall not
be obtained at the expense of the Trustee, the Trust, the Transferor 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 Transferor 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 Transferor, 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.
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
97
<PAGE> 103
(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 Transferee Affidavit
substantially in the form attached as Exhibit C 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 Transferor 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 Transferor
Affidavit, if 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 B, 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.
98
<PAGE> 104
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 any
transferor of the Class R Certificate or such agent or such pass-through entity
such as may be required to be delivered thereto by the Code as necessary to the
application of Code Section 860E(e) 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. 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.
(d) No transfer of a Subordinate Certificate or Class C Certificate,
or beneficial interest therein, shall be made unless the Trustee shall have
received a representation from the transferee thereof to the effect that:
(i) such transferee (A) is not an employee benefit plan or
arrangement subject to Section 406 of ERISA or a plan subject to
Section 4975 of the Code (a "Plan"), nor a person acting on behalf of
a Plan nor using the assets of a Plan to effect such transfer, or (B)
is an insurance company purchasing a Class B Certificate or 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; or
(ii) such transferee is a Plan or a person acting on behalf
of a Plan or using the assets of a Plan to effect such transfer, or
is an insurance company purchasing such Certificate with funds
contained in an insurance company general account, having attached
thereto an opinion of counsel satisfactory to the Trustee, which
opinion shall not be an expense of either the Trustee or the Trust,
addressed to the Trustee, the Transferor and the Servicer, to the
effect that the purchase or holding of such Certificate will not
result in the assets of the Trust being deemed to be "plan assets"
and subject to the prohibited transaction provisions of ERISA and the
Code and will not subject the Trustee, the Transferor or the Servicer
to any obligation in addition to those expressly undertaken in this
Agreement or to any liability.
For purposes of the preceding sentence, with respect to a Subordinate
Certificate that is a Book-Entry Certificate, the representations contained in
clause (i) above shall be deemed to have been
99
<PAGE> 105
made to the Trustee by the transferee's (including an initial acquiror's)
acceptance of such Certificate. Notwithstanding anything else to the contrary
herein, any purported transfer of a Subordinate Certificate or Class C
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 a
Plan or using the assets of a Plan to effect such transfer or to an insurance
company purchasing with funds from a general account not exempt pursuant to PTCE
95-60 without the delivery to the Trustee of an opinion of counsel described in
clause (ii) above 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 Subordinate Certificate or Class C
Certificate that is in fact not permitted by Section 6.02(d) 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 the Pooling and
Servicing Agreement so long as the transfer was registered by the Trustee in
accordance with the foregoing requirements.
The Subordinate Certificates and Class C 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 Subordinate
Certificates and Class C Certificates 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.
(e) 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
100
<PAGE> 106
the Depository's normal procedures.
(f) If (x)(i) the Transferor 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 Transferor is unable
to locate a qualified successor, (y) the Transferor at its option advises the
Trustee in writing that it elects to terminate the book-entry system through the
Depository or (z) after the occurrence of an Event of Default, Certificate
Owners representing not less than 51% of the aggregate Fixed Rate Group
Certificate Principal Balance and the Class A-1A 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. Neither the
Transferor 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.
(g) On or prior to the Closing Date, there shall be delivered to 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 Transferor, the
Servicer and, in the case of the Fixed Rate Group Certificates, the Financial
Guaranty 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
101
<PAGE> 107
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.
Section 6.04. Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, the Servicer, the Transferor, the
Trustee, the Financial Guaranty 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
Transferor, the Trustee or the Financial Guaranty 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, in
the case of the Fixed Rate Group Certificates, also to the Financial Guaranty
Insurer, and, when required, to the Transferor 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 Financial Guaranty Insurer, the Transferor and the Servicer, 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 Transferor, the Servicer or the Financial Guaranty Insurer
in reliance thereon, whether or not notation of such action is made upon such
Certificate.
ARTICLE SEVEN
THE SERVICER AND THE TRANSFEROR
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.
102
<PAGE> 108
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. No resignation pursuant to this Section 7.04 (a) shall become
effective until 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
the Servicer. Each of the Rating Agencies shall be given written notice of a
resignation of the Servicer pursuant to this Section.
Section 7.05. Merger or Consolidation of the Transferor. Any
corporation or other entity (i) into which the Transferor may be merged or
consolidated, (ii) that may result from any merger, conversion or consolidation
to which the Transferor shall be a party, or (iii) that may
103
<PAGE> 109
succeed to all or substantially all of the business of the Transferor, 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 Transferor under this Agreement, shall be the successor
to the Transferor 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
Transferor 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 Transferor hereunder.
Section 7.06. Term To Term Servicing. (a) Upon the occurrence and
continuance of any Event of Default, if the Servicer is not removed as provided
in Section 8.01, the Servicer shall act as servicer under this Agreement,
subject to the continuing right of removal set forth in Section 8.01, in the
case of the Fixed Rate Group for (i) an initial period commencing on the date of
such Event of Default through the end of the quarter that includes such date and
ends on March 31, June 30, September 30 or December 31, as the case may be, and
(ii) if the Servicer receives from the Financial Guaranty Insurer (or Trustee if
there shall exist any Financial Guaranty Insurer Default) at least fifteen days
prior to the end of such term or any subsequent term notice of renewal of its
right to act as Servicer, such term shall be extended for one or more succeeding
quarterly periods thereafter commencing on the last day of the preceding
quarterly period as specified in such notice, but any such extension shall be
revocable at any time by the Financial Guaranty Insurer (or Trustee if there
shall exist any Financial Guaranty Insurer Default), but absent delivery of such
notice, the Servicer will be automatically removed at the end of such quarterly
term pursuant to Section 8.02.
(b) The Financial Guaranty Insurer agrees to use its best efforts to
inform the Trustee of any materially adverse information regarding the
Servicer's servicing activities that comes to the attention of the Financial
Guaranty Insurer from time to time.
ARTICLE EIGHT
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 Financial Guaranty Insurer or to the Servicer and the
Trustee by Holders of Certificates evidencing Voting Interests
represented by all Certificates aggregating not less than
51%;
104
<PAGE> 110
(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 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 Financial Guaranty Insurer, or to the Servicer and the Trustee
by the Holders of Certificates evidencing Voting Interests
represented by all Certificates aggregating not less than 51%;
(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) Failure on the part of the Servicer duly to observe or
perform in any material respect any covenants or agreements of the
Servicer set forth in the Certificates or in this Agreement, which
failure (i) materially and adversely affects the Certificateholders
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 Financial
Guaranty Insurer, or to the Servicer and the Trustee by the Holders
of Certificates evidencing Voting Interests represented by all
Certificates aggregating not less than 51%;
(f) The occurrence of a material default of the Servicer
under this Agreement or the Insurance and Indemnity Agreement or the
occurrence of a Servicer Delinquency Rate Event, a Servicer
Cumulative Loss Rate Event or a Servicer Rolling Loss Rate Event; or
(g) the Financial Guaranty Insurer shall be obligated to
pay any Insured Amount.
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 Trustee or (2) the
Holders of Certificates evidencing Voting Interests with respect to the Fixed
Rate Group Certificates, with the prior written consent of the
105
<PAGE> 111
Financial Guaranty Insurer, or the Adjustable Rate Group Certificates
aggregating not less than 51%, by notice then given in writing to the Servicer
with a copy to the Trustee, may terminate all of the rights, responsibilities
and obligations of the Servicer as servicer under this Agreement with respect to
the related Mortgage Loan Group (or, in the case of the Event of Default
described in clause (f), all such rights, responsibilities and obligations with
respect to the Fixed Rate Group), provided that if a Financial Guaranty Insurer
Default has not occurred or is not continuing, any such termination with respect
to the Fixed Rate Group will not be effective without the prior written consent
of the Financial Guaranty Insurer. On or after the receipt by the Servicer of
such written notice, all authority and power of the Servicer under this
Agreement (or, in the case of the Event of Default described in clause (f), all
such rights, responsibilities and obligations with respect to the Fixed Rate
Group), whether with respect to the affected Certificates or the Mortgage Loans
or otherwise, shall pass to and be vested in the Trustee pursuant to and under
this Section and, without limitation, the Trustee 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 related Mortgage Loans and related documents, or otherwise.
The Servicer agrees to cooperate with the Trustee in effecting the termination
of its responsibilities and rights as Servicer hereunder with respect to either
or both Mortgage Loan Groups, including, without limitation, the transfer to the
Trustee 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 with respect thereto or thereafter
received by the Servicer with respect to the affected Mortgage Loans.
All reasonable costs and expenses (including attorneys' fees)
incurred in connection with transferring the Mortgage Files to a successor
Servicer, amending this Agreement to reflect the appointment of a successor as
Servicer pursuant to this Section 8.01 or otherwise in connection with the
assumption by 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.
Section 8.02. Trustee to Act; Appointment of Successor. On and after
the time the Servicer receives a notice of full or partial termination pursuant
to Section 8.01 or an extension of the servicing term is not delivered pursuant
to Section 7.06, the Trustee shall be the successor in all respects to the
Servicer in its capacity as servicer under this Agreement with respect to the
whole Trust or the affected Mortgage Loan Group, as appropriate 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 Trustee 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, the Trustee may, if it shall be unwilling
so to act, or shall, if it is legally unable so to act, promptly appoint, or
petition a court of competent jurisdiction to appoint, 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
106
<PAGE> 112
law, and having a net worth of not less than $10,000,000 as the successor to the
Servicer hereunder with respect to the whole Trust or the affected Mortgage Loan
Group, as appropriate, 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 Financial Guaranty
Insurer, 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 Class
of related Offered Certificates by any Rating Agency. Pending appointment of a
successor to the Servicer hereunder, unless the Trustee is prohibited by law
from so acting, 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
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 Transferor 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.
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 the
Financial Guaranty Insurer and to the Certificateholders at their respective
addresses appearing in the Certificate Register 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 and the Financial Guaranty Insurer 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 related 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.
107
<PAGE> 113
ARTICLE NINE
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 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.
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
108
<PAGE> 114
any proceeding for any remedy available to the Trustee, or exercising any trust
or power conferred upon the Trustee, under this Agreement; 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 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
Financial Guaranty 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
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 and any advice obtained from
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 any of the Certificateholders or the Financial Guaranty Insurer,
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
109
<PAGE> 115
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;
(d) 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
Holders of Certificates evidencing Voting Interests representing all
Certificates (or all affected Certificates, as appropriate) aggregating not less
than 51% provided that such action has been approved by the Financial Guaranty
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 Financial Guaranty Insurer or 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 Financial Guaranty 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. 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.
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
110
<PAGE> 116
if it were not Trustee.
Section 9.05. Payment of the Trustee's Fees and Expenses. (a) On or
before each Distribution Date occurring in July, beginning with the July 1998
Distribution Date, the Servicer shall pay to the Trustee without any right of
reimbursement from the Trust or otherwise, an amount equal to the Trustee Fee,
any reasonable expenses as agreed to by the Servicer and Trustee (including any
fees and expenses of a co-trustee or separate trustee appointed under Section
9.10) and, with respect to the July 1998 Distribution Date, all loan file review
fees, 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 Trustee Fee and
such expenses and loan file review fees (including any fees and expenses of a
co-trustee or separate trustee appointed under Section 9.10) are an obligation
solely of the Servicer and neither the Trustee nor any co-trustee or separate
trustee appointed hereunder has or will have any lien on the Trust for payment
of any such fees or expenses. It is anticipated that the Servicer will utilize a
portion of the Monthly Servicing Fee for payment of such fees and expenses.
(b) The Trust shall pay or reimburse the Trustee upon its request for
all 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. The right of the
Trustee to recover such amounts from the Trust shall be subordinate to the
rights of the Financial Guaranty Insurer and the Holders of the Offered
Certificates under this Agreement including, without limitation, to the prior
payment in full of all amounts payable as of any Distribution Date.
(c) The Servicer agrees to indemnify the Trustee and its employees,
officers, directors and agents 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 S&P 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
111
<PAGE> 117
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.
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 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
Financial Guaranty Insurer, which approval shall not be unreasonably withheld)
by written instrument original copies of which instrument shall be delivered to
the Financial Guaranty Insurer, the resigning Trustee, the successor trustee and
the Servicer. 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 Financial Guaranty 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 shall remove the Trustee and appoint a successor
trustee satisfying the criteria set forth in Section 9.06 (approved by the
Financial Guaranty Insurer, which approval shall not be unreasonably withheld)
by written instrument, original copies of which instrument shall be delivered to
the Financial Guaranty Insurer, the Trustee so removed and the successor
trustee.
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 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 Transferor, 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.
112
<PAGE> 118
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 the Financial Guaranty Insurer and to all Holders of Certificates
at their addresses as shown in the Certificate Register and to each Rating
Agency. 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 Financial
Guaranty 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 Financial Guaranty 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. The Financial Guaranty Insurer and 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.
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
113
<PAGE> 119
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-trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the 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 the
Servicer and the Financial Guaranty 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 REMIC Pool from failing to qualify as a REMIC
and to prevent the imposition of a tax on the 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 the 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
114
<PAGE> 120
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
each 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
REMIC IV Interests in the case of the REMIC IV Pool, the REMIC III Interests in
the case of the REMIC III Pool, the REMIC II Interests in the case of the REMIC
II Pool or the REMIC I Interests in the case of the REMIC I Pool; 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 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 (including in respect of the Financial Guaranty
Insurer's rights of subrogation), 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 in respect of
which such judgment has been recovered (or the Financial Guaranty Insurer in
respect of any right or interest as to which the Financial Guaranty Insurer is
subrogated) in accordance with the terms of this Agreement.
Section 9.13. Exercise of Trustee Powers by Financial Guaranty
Insurer and Certificateholders. The Financial Guaranty Insurer, in the case of
the Fixed Rate Group Certificates or the Holders of Certificates evidencing
Voting Interests represented by all Certificates aggregating not less than 51%
of the Voting Interests with respect to the Fixed Rate Group Certificates, as
the case may be, in each case with the consent of the Financial Guaranty Insurer
(which consent may not be unreasonably withheld) may direct the time, method and
place of conducting any proceeding relating to the Fixed Rate Group Certificates
or the Trust, as appropriate, or the Fixed Rate Group Certificates, or for any
remedy available to the Trustee with respect to the Fixed Rate Group
Certificates, or exercising any trust or power conferred on the Trustee with
respect to the Fixed Rate Group Certificates, of the Trust provided that:
115
<PAGE> 121
(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 determines might involve it in
liability or 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, exclusive of the Prefunding Account and the
Capitalized Interest Account), and pursuant to Section 24874 of the California
Revenue and Taxation Code and its successors, 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, Treas. Reg. Section
1.860D-1(d)(2) and Treas. Reg. Section 1.860F-4(b)(2). The Servicer shall report
all required tax information to Mortgagors in accordance with applicable law. To
the extent directly applicable, the Prepayment Assumption will be used in
preparing any reports concerning or touching on interest payments made or
original issue discount with respect to the Offered 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 Provisions.
(i) The Trustee shall elect that REMIC I, REMIC II, REMIC III and
REMIC IV shall be treated as REMICs under Section 860D of the Code, as described
in Section 9.11. 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.
(ii) REMIC I will be evidenced by (y)(A) the Class IF-A and Class
IF-B Regular Interests (the "IF Regular Interests") and (B) the Class IA Regular
Interest (the "IA Regular Interest") and, together with the IF Regular
Interests, the "REMIC I Regular Interests"), which will be uncertificated and
non-transferable and are hereby designated as the "regular interests" in REMIC
I, and (z) the Class R-1 Certificate, which is hereby designated as the single
"residual interest" in REMIC I (together with the REMIC I Regular Interests, the
"REMIC I Interests"). The REMIC I Regular Interests shall be recorded on the
records of REMIC I as being issued to and held by the Trustee on behalf of REMIC
II.
116
<PAGE> 122
(iii) REMIC II will be evidenced by (y)(A) the Class LT-FM, Class
LT-A1F, Class LT-A2F, Class LT-A3F, Class LT-A4F, Class LT-A5F, Class LT-A6F and
Class LT-AIO Regular Interests (the "LTF Regular Interests"), and (B) the Class
LT-AM, Class LT-A1A, Class LT-M1A, Class LT-M2A and Class LF-B1A Regular
Interests (the "LTA Regular Interests", and, together with the LTF Regular
Interests, the "REMIC II Regular Interests"), which will be uncertificated and
non-transferable and are hereby designated at the "regular interests" in REMIC
II, and (z) the Class R-2 Certificate, which is hereby designated as the single
"residual interest" in REMIC II (together with the REMIC II Regular Interests,
the "REMIC II Interests"). The REMIC II Regular Interests shall be recorded on
the records of REMIC II as being issued to and held by the Trustee on behalf of
REMIC III.
(iv) REMIC III will be evidenced by (y)(A) the Class MT-FM, Class
MT-A1F, Class MT-A2F, Class MT-A3F, Class MT-A4F, Class MT-A5F, Class MT-A6F,
Class MT-AIO and Class MT-FIO Regular Interests (the "MTF Regular Interests")
and (ii) the Class MT-AM, Class MT-A1A, Class MT-M1A, Class MT-M2A, Class MT-B1A
and Class MT-AdjIO Regular Interests (the "MTA Regular Interests" and together
with the MTF Regular Interests, the "REMIC III Regular Interests"), which will
be uncertificated and non-transferable and are hereby designated as the "regular
interests" in REMIC III, and (z) the Class R-3 Certificate, which is hereby
designated as the single "residual interest" in REMIC III (together with the
REMIC III Regular Interests, the "REMIC III Interests"). The REMIC III Regular
Interests shall be recorded on the records of REMIC III as being issued to and
held by the Trustee on behalf of REMIC IV.
(v) The Class A-1F, Class A-2F, Class A-3F, Class A-4F, Class A-5F,
Class A-6F, Class A-IO, Class A-1A, Class M-1A, Class M-2A, Class B-1A and Class
C Certificates, consisting of two components (the Class C-F Component and the
Class C-A Component as defined in clause (ix) below), are hereby designated as
"regular interests" in REMIC IV (the "REMIC IV Regular Interests") and the Class
R-4 Certificate is hereby designated as the single "residual interest" with
respect to the REMIC IV (together with the REMIC IV Regular Interests, the
"REMIC IV Interests"). The Class R-4 Certificate shall have no Pass-Through Rate
and shall have no principal balance.
(vi) The Class IF-A Regular Interest shall have an initial principal
balance equal to the initial principal balance of the Class A-6F Certificates.
The Class IF-B Regular interest shall have an initial principal balance equal to
the aggregate initial principal balances of the Class A-1F, Class A-2F, Class
A-3F, Class A-4F and Class A-5F Certificates. The Class IA Regular Interest
shall have an initial principal balance equal to the initial principal balance
of the Class A-1A, Class M-1A, Class M-2A and Class B-1A Certificates. On each
Distribution Date principal collection (i) on the Fixed Rate Group shall be
allocated as follows: an amount equal to the principal payable on the Class A-6F
Certificates shall be payable on the Class IF- A Regular Interest and the
remaining principal collections shall be allocated to the Class IF-B Regular
Interest; and (ii) on the Adjustable Rate Group shall be allocated to the IA
Regular Interest. On each Distribution Date to the extent that any Extra
Principal Distribution Amount is paid to the Class A-6F Certificates an amount
of interest otherwise payable on the Class IF- B Regular Interest equal to such
Extra Principal
117
<PAGE> 123
Distribution Amount shall instead be paid as principal on the Class IF-A Regular
Interest (and will be accrued and added to principal on the Class IF-B Regular
Interest). Realized Losses on the Fixed Rate Group shall be allocated as
follows: an amount equal to the Realized Losses allocable to the Class A-6F
Certificates shall be allocable to the Class IF-A Regular Interest and the
remaining Realized Losses shall be allocable to the Class IF-B Regular Interest.
Realized Losses on the Adjustable Rate Group shall be allocated to the Class IA
Regular Interest. The Class IF-A and Class IF-B Regular Interests shall each
have Pass-Through Rates equal to the weighted average Mortgage Loan Rate of the
Fixed Rate Group, after subtracting therefrom (i) the Servicing Fee Rate and
(ii) the Financial Guaranty Insurer Premium, and the Class IA Regular Interest
shall have a Pass- Through Rate equal to the weighted average Mortgage Loan Rate
of the Adjustable Rate Group, after subtracting therefrom the Servicing Fee
Rate. The Class R-1 Certificate shall have no principal balance and no
Pass-Through Rate and shall be entitled to only those distributable assets, if
any, remaining in the REMIC I on each Distribution Date after all amounts
require to be distributed to the REMIC I Regular Interests and applicable Trust
expenses have been paid.
(vii) REMIC II Interests. The REMIC II Interests will have the
following designations and pass-through rates, and distributions of principal
and interest thereon shall be allocated to the Certificates in the following
manner:
<TABLE>
<CAPTION>
==============================================================================================================
LTF Regular Interests
- ---------------------------------------------------------------------------------------------------------------
LTF Regular Initial Balance Pass-Through Rate Corollary REMIC IV
Interest Certificate
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LT-FM $ 247,500,000.00 (1) None
- ---------------------------------------------------------------------------------------------------------------
LT-A1F $ 990,000.00 (1) A-1F
- ---------------------------------------------------------------------------------------------------------------
LT-A2F $ 140,000.00 (1) A-2F
- ---------------------------------------------------------------------------------------------------------------
LT-A3F $ 560,000.00 (1) A-3F
- ---------------------------------------------------------------------------------------------------------------
LT-A4F $ 290,000.00 (1) A-4F
- ---------------------------------------------------------------------------------------------------------------
LT-A5F $ 270,000.00 (1) A-5F
- ---------------------------------------------------------------------------------------------------------------
LT-A6F $ 250,000.00 (1) A-6F
- ---------------------------------------------------------------------------------------------------------------
LT-AIO $ 25,000,000.00 (1) A-IO
(Notional Amount)(2)
===============================================================================================================
Total $ 250,000,000.00
===============================================================================================================
</TABLE>
(1) The pass-through rate ("Pass-Through Rate") on each of the
LTF Regular Interests shall at any time of determination
equal the weighted average of (i) the Class IF-B
Pass-Through Rate and (ii) the excess of the IF-A
Pass-Through Rate over (a) 5.0% for the first 36
Distribution Dates and (b) 0.0% thereafter. Interest on the
Class LT-AIO shall equal 5.0% for the first 36 Distribution
Dates and 0.0% thereafter . 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 shortfalls will
118
<PAGE> 124
proportionally reduce the interest accrual on these
Certificates.
(2) The LT-AIO will at all times have a notional principal
amount equal to the principal amount of the Class IF-A
Regular Interest.
Except as provided below with respect to the "Fixed Rate Turbo
Amount," payments of interest from the IF Regular Interests on any Distribution
Date shall be allocated to the LTF Regular Interests in proportion to their
respective principal balances.
The "Fixed Rate Turbo Amount" means, with respect to any Distribution
Date, the amount of the Extra Principal Distribution Amount for the Fixed Rate
Group for such Distribution Date. On each Distribution Date, an amount of
interest received on the IF Regular Interests equal to one percent (1%) of the
Fixed Rate Turbo Amount for such Distribution Date shall not be paid to the
LT-FM Regular Interest as described above, but instead will be payable as a
reduction of the principal balances of the LT-A1F, LT-A2F, LT-A3F, LT-A4F,
LT-A5F and LT-A6F Regular Interests in the same manner in which the Fixed Rate
Turbo Amount is allocated to the Corollary REMIC IV Certificate for each such
REMIC II Regular Interest. Amounts not paid to the LT-FM Regular Interest as a
result of the preceding sentence shall be accrued and added to the principal of
the LT-FM Regular Interest.
Principal payments on the IF Regular Interests shall be allocated (i)
99% to the Class LT-FM, and (ii) 1% to the other LTF Regular Interests,
apportioned among such Classes in the same manner in which principal is payable
with respect to the Corollary REMIC IV Certificate for each such Class;
provided, however, that any principal payments on the IF Regular Interests that
are attributable to an Overcollateralization Release Amount with respect to the
Fixed Rate Group shall be allocated exclusively to the Class LT-FM Regular
Interest.
Realized Losses on the IF Regular Interests shall be applied such
that after all distributions have been made on such Distribution Date each LTF
Regular Interest other than the LT-FM Regular Interest shall have a principal
balance equal to one percent (1%) of the Certificate Principal Balance of its
Corollary REMIC IV Certificate, and the LT-FM Regular Interest shall have a
principal balance equal to the excess of the principal balance of the IF Regular
Interests over the sum of the principal balances of the other LTF Regular
Interests.
119
<PAGE> 125
<TABLE>
<CAPTION>
==========================================================================================================
LTA Regular Interests
- ----------------------------------------------------------------------------------------------------------
LTA Regular Initial Balance Pass-Through Rate Corollary REMIC IV
Interest Certificate
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LT-AM $ 371,250,000.00 (1) None
- ----------------------------------------------------------------------------------------------------------
LT-A1A $ 2,775,000.00 (1) A-1A
- ----------------------------------------------------------------------------------------------------------
LT-M1A $ 375,000.00 (1) M-1A
- ----------------------------------------------------------------------------------------------------------
LT-M2A $ 318,750.00 (1) M-2A
- ----------------------------------------------------------------------------------------------------------
LT-B1A $ 281,250.00 (1) B-1A
- ----------------------------------------------------------------------------------------------------------
Total $ 375,000,000.00
==========================================================================================================
</TABLE>
(1) The pass-through rate ("Pass-Through Rate") on each of the
LTA Regular Interests shall at any time of determination
equal the Pass-Through Rate payable on the IA Regular
Interest. If there are any prepayment interest shortfalls
with respect to the Adjustable Rate Group not covered by
Compensating Interest for the Adjustable Rate Group,
such shortfall will proportionally reduce the interest
accrual on these Certificates.
Except as provided below with respect to the "Adjustable Rate Turbo
Amount," payments of interest from the IA Regular Interest on any Distribution
Date shall be allocated to the LTA Regular Interests in proportion to their
respective principal balances.
The "Adjustable Rate Turbo Amount" means, with respect to any
Distribution Date, the amount of the Extra Principal Distribution Amount for the
Adjustable Rate Group for such Distribution Date. On each Distribution Date, an
amount of interest received on the IA Regular Interest equal to one percent (1%)
of the Adjustable Rate Turbo Amount for such Distribution Date shall not be paid
to the LT-AM Regular Interest as described above, but instead will be payable as
a reduction of the principal balances of the LT-A1A, LT-M1A, LT- M2A and LT-B1A
Regular Interests in the same manner in which the Adjustable Rate Turbo Amount
is allocated to the Corollary REMIC IV Certificate for each such REMIC II
Regular Interest. Amounts not paid to the LT-AM Regular Interest as a result of
the preceding sentence shall be accrued and added to the principal of the LT-AM
Regular Interest.
Principal payments on the IA Regular Interest shall be allocated (i)
99% to the Class LT-AM, and (ii) 1% to the other LTA Regular Interests,
apportioned among such Classes in the same manner in which principal is payable
with respect to the Corollary REMIC IV Certificate for each such Class;
provided, however, that any principal payments on the IA Regular Interest that
are attributable to an Overcollateralization Release Amount with respect to the
Adjustable Rate Group (other than any such amount distributed pursuant to clause
(9) of Section 5.01(d)) shall be allocated exclusively to the Class LT-AM
Regular Interest.
Realized Losses on the IA Regular Interest shall be applied such that
after all distributions
120
<PAGE> 126
have been made on such Distribution Date each LTA Regular Interest other than
the LT-AM Regular Interest shall have a principal balance equal to one percent
(1%) of the Certificate Principal Balance of its Corollary REMIC IV Certificate,
and the LT-AM Regular Interest shall have a principal balance equal to the
excess of the principal balance of the IA Regular Interest over the sum of the
principal balances of the other LTA Regular Interests.
On each Distribution Date, available funds, if any, remaining in
REMIC II after payments of interest and principal, as designated above, will be
distributed to the Class R-2 Certificate.
(viii) REMIC III Interests. The REMIC III Interests will have the
following designations and Pass-Through Rates, and distributions of principal
and interest thereon shall be allocated to the REMIC III Interests in the
following manner:
MTF Regular Interests
Each MTF Regular Interest shall be considered to have a Corollary
REMIC II Regular Interest and a Corollary REMIC IV Certificate as follows:
<TABLE>
<CAPTION>
================================================================================================================
MTF Regular Interest Corollary REMIC II Regular Interest Corollary REMIC IV Certificate
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MT-FM LT-FM None
- ----------------------------------------------------------------------------------------------------------------
MT-A1F LT-A1F A-1F
- ----------------------------------------------------------------------------------------------------------------
MT-A2F LT-A2F A-2F
- ----------------------------------------------------------------------------------------------------------------
MT-A3F LT-A3F A-3F
- ----------------------------------------------------------------------------------------------------------------
MT-A4F LT-A4F A-4F
- ----------------------------------------------------------------------------------------------------------------
MT-A5F LT-A5F A-5F
- ----------------------------------------------------------------------------------------------------------------
MT-A6F LT-A6F A-6F
- ----------------------------------------------------------------------------------------------------------------
MT-AIO LT-AIO A-IO
- ----------------------------------------------------------------------------------------------------------------
MT-FIO None None
=================================================================================================================
</TABLE>
The initial balance of each MTF Regular Interest other than the
MT-AIO and MT-FIO Regular Interest shall equal the Initial Balance of the
Corollary REMIC II Regular Interest for such MTF Regular Interest. The balance
of the MT-AIO and MT-FIO Regular Interests shall at all times equal zero.
The Pass-Through Rate on each MTF Regular Interest other than the
MT-FM Regular Interest, the MT-FIO Regular Interest and the MT-AIO Regular
Interest shall equal the weighted average rate payable on the LT-A1F, LT-A2F,
LT-A3F, LT-A4F, LT-A5F, LT-A6F Regular Interests; provided, however, that prior
to calculating such weighted average rate each such LTF Regular Interest shall
be subject to a cap equal to the Pass-Through Rate on the Corollary REMIC
121
<PAGE> 127
IV Certificate with respect to such LTF Regular Interest. The Pass-Through Rate
on the MT-FM Regular Interest shall equal the Pass-Through Rate on the LT-FM
Regular Interest.
The MT-FIO Regular Interest shall be entitled to interest accruing on
each of the LT- A1F, LT-A2F, LT-A3F, LT-A4F, LT-A5F, LT-A6F Regular Interests in
excess of the Pass- Through Rates of the MT-A1F, MT-A2F, MT-A3F, MT-A4F, MT-A5F
and MT-A6F Regular Interests, respectively.
The MT-AIO Regular Interest shall be entitled to interest accruing on
the LT-AIO Regular Interest.
Each MTF Regular Interest other than the MT-FIO and MT-AIO Regular
Interests shall be allocated the principal payments received on its Corollary
REMIC II Regular Interest. Except as described in the preceding paragraphs, each
MTF Regular Interest shall be allocated the interest payments received on its
Corollary REMIC II Regular Interest.
MTA Regular Interests
Each MTA Regular Interest shall be considered to have a Corollary
REMIC II Regular Interest and a Corollary REMIC IV Certificate as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
MTA Regular Interest Corollary REMIC II Regular Interest Corollary REMIC IV Certificate
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MT-AM LT-AM None
- --------------------------------------------------------------------------------------------------------------------
MT-A1A LT-A1A A-1A
- --------------------------------------------------------------------------------------------------------------------
MT-M1A LT-M1A M-2A
- --------------------------------------------------------------------------------------------------------------------
MT-M2A LT-M2A M-2A
- --------------------------------------------------------------------------------------------------------------------
MT-B1A MT-B1A B-1A
- --------------------------------------------------------------------------------------------------------------------
MT-AdjIO None None
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
The Initial Balance of each MTA Regular Interest other than the
MT-AdjIO Regular Interest shall equal the Initial Balance of the Corollary REMIC
II Certificate for such MTA Regular Interest. The balance of the MT-AdjIO
Regular Interest shall at all times equal zero.
The Pass-through Rate on each MTA Regular Interest other than the
MT-AM Regular Interest and the MT-AdjIO Regular Interest shall equal the
weighted average rate payable on the LT-A1A, LT-M1A, LT-M2A and LT-B1A Regular
Interests; provided, however, that prior to calculating such weighted average
rate each such LTA Regular Interest shall be subject to a cap equal to the
Pass-Through Rate on the Corollary REMIC IV Certificate with respect to such LTA
Regular Interest. The Pass-Through Rate on the MT-AM Regular Interest shall
equal the Pass-Through Rate on the LT-AM Regular Interest.
122
<PAGE> 128
The MT-AdjIO shall be entitled to interest accruing on each of the
LT-A1A, LT-M1A, LT-M2A and LT-B1A Regular Interests in excess of the
Pass-Through Rates of the MT-A1A, MT-M1A, MT-M2A and LT-B1A Regular Interests,
respectively.
Each MTA Regular Interest other than the MT-AdjIO Regular Interest
shall be allocated the principal payments received on its Corollary REMIC II
Regular Interest. Except as described in the preceding paragraph, each MTA
Regular Interest shall be allocated the interest payments received on its
Corollary REMIC II Regular Interest.
On each Distribution Date, available funds, if any, remaining in
REMIC III after payments of interest and principal, as designated above, will be
distributed to the Class R-3 Certificate.
(ix) REMIC IV Interests. The REMIC IV Interests will have the
following designations and Pass-Through Rates, and distributions of principal
and interest thereon shall be allocated to the Certificates as follows:
Except as described below with respect to the Class C Certificates,
(i) interest on the MTF Regular Interests (other than the MT-AIO) shall be
allocated among the Class A-1F, Class A-2F, Class A-3F, Class A-4F, Class A-5F
and Class A-6F Certificates in the same proportion as interest is payable on
such Certificates pursuant to Section 5.01(a), and (ii) interest on the MT-AIO
Regular Interest shall be allocated to the Class A-IO Regular Interest.
Similarly, except as described below with respect to the Class C Certificates,
interest on the MTA Regular Interests shall be allocated among the Class A-1A,
Class M-1A, Class M-2A and Class B-1A Certificates in the same proportion as
interest is payable on such Certificates pursuant to Section 5.01(a).
Principal on the MTF Regular Interests will be allocated to and
apportioned among the Class A-1F, Class A-2F, Class A-3F, Class A-4F, Class A-5F
and Class A-6F Certificates in the same proportion as principal is payable with
respect to such Certificates pursuant to Section 5.01, except that a portion of
such principal in an amount equal to the Overcollateralization Release Amount
related to the Fixed Rate Group shall be allocated to the Class C Certificates
until the balance thereof is zero and then to the Class R-4 Certificate and all
principal will be allocated to the Class C Certificates after the Certificate
Principal Balance of the Fixed Rate Certificates has been reduced to zero until
its Certificate Principal Balance is reduced to zero, and then to the Class R-4
Certificate. Similarly, principal on the MTA Regular Interests will be allocated
to and apportioned among the Class A-1A, Class M-1A, Class M-2A and Class B-1A
Certificates in the same proportion as principal is payable with respect to such
Certificates pursuant to Section 5.01, except that a portion of such principal
in an amount equal to the Overcollateralization Release Amount related to the
Adjustable Rate Group (other than any such amount distributed pursuant to clause
(9) of Section 5.01(d)) shall be allocated to the Class C Certificates until the
balance thereof is zero and then to the Class R-4 Certificate and all principal
will be allocated to the Class C Certificates after the Certificate Principal
Balance of the Adjustable Rate Certificates has been reduced to zero until its
Certificate Principal Balance is reduced to zero, and then to the Class R-4
Certificate.
The Class C Certificates will consist of two components, the Class
C-F Component and the
123
<PAGE> 129
Class C-A Component, determined as follows:
(A) The "Class C-F Component" shall equal the sum of (1)
amounts payable on the MT-FIO Regular Interest, and (2) with respect to each of
the MT-FM, MT-A1F, MT- A2F, MT-A3F, MT-A4F, MT-A5F and MT-A6F Regular Interests,
interest payable on such REMIC III Regular Interest in excess of the product of
(i) one hundred (100) times the weighted average coupon of the MT-FM, MT-A1F,
MT-A2F, MT-A3F, MT-A4F, MT-A5F and Class MT-A6F Regular Interests, where the
MT-FM Regular Interest is first subject to a cap equal to 0%, and (ii) the
principal balance of such REMIC III Regular Interest.
(B) The "Class C-A Component" shall equal the sum of (1)
amounts payable on the MT-AdjIO Regular Interest, and (2) with respect to each
of the MT-AM, MT-A1A, MT- M1A, MT-M2A and MT-B1A Regular Interests, interest
payable on such REMIC III Regular Interest in excess of the product of (i) one
hundred (100) times the weighted average coupon of the MT-AM, MT-A1A, MT-M1A,
MT-M2A and MT-B1A Regular Interests, where the MT- AM Certificate is subject to
a cap equal to 0%, and (ii) the principal balance of such REMIC III Regular
Interest.
On each Distribution Date, to the extent that any Monthly Excess
Interest Amount with respect to a Mortgage Loan Group is applied to cover Carry
Forward Shortfalls on any Certificates and the interest allocable to the related
Class C Component is not otherwise reduced for such amount due to an allocation
of Realized Losses, the related Class C Component shall be reduced.
On each Distribution Date, available funds, if any, remaining in
REMIC IV after payments of interest and principal, as designated above, will be
distributed to the Class R-4 Certificate.
(x) The Startup Day is hereby designated as the "startup day" of each
of REMIC I, REMIC II, REMIC III and REMIC IV within the meaning of Section
860G(a)(9) of the Code. The "latest possible maturity date" for purposes of
Treasury Regulation Section 1.860G- 1(a)(4)(iii) for the regular interests are
as follows: with respect to each of the REMIC IV Regular Interests, the Final
Scheduled Distribution Date of such Certificates, and with respect to each of
the REMIC I Regular Interests, REMIC II Regular Interests, and REMIC III Regular
Interests, September 15, 2028.
ARTICLE TEN
TERMINATION
Section 10.01. Termination Upon Purchase or Liquidation of Mortgage
Loans. Subject to Section 10.02, the respective obligations and responsibilities
hereunder of the Servicer, the Transferor 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 Transferor 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
124
<PAGE> 130
Date pursuant to this Article following the earlier of (a) the purchase by the
Servicer of all Mortgage Loans then remaining in the Trust and all property
acquired 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
Joseph P. Kennedy, the late ambassador of the United States to the Court of St.
James, 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
Servicer 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
Financial Guaranty Insurer, which consent shall not be unreasonably withheld. In
the event that the Financial Guaranty Insurer does not consent to the fair
market value determined by the Servicer within three business days of receiving
notice of such determination, the Financial Guaranty Insurer and the Servicer
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
Financial Guaranty Insurer and the Servicer, the expense of such appraisal being
borne equally by the Servicer and the Financial Guaranty Insurer and not being
an expense of the Trust.
The right of the Servicer 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, the Servicer 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 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 Servicer as are
necessary to transfer the Trustee's interest in the Mortgage Loans to the
Servicer.
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 Servicer, if the
125
<PAGE> 131
Servicer is exercising its right to purchase such assets of the Trust as
provided above, given not later than the 10th day of the month preceding the
month of such final distribution) by letter to the 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 the Certificates at the office or agency of the Trustee therein
designated, (b) the amount of any the 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 Servicer to the Trustee as
described in the preceding sentence, the Servicer 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. Any such deposit
by the Servicer 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 the Certificateholders.
In connection with a termination of the Trust under this Section, the
Trustee shall cause to be distributed to Certificateholders on the final
Distribution Date an amount equal to (i) as to the Fixed Rate Group
Certificates, and upon presentation and surrender of the related Certificates,
in proportion to their respective Percentage Interests the related Aggregate
Certificate Principal Balance, and the Accrued Certificate Interest, and/or (ii)
as to the Adjustable Rate Group Certificates, and upon presentation and
surrender of the related Certificates, in proportion to their respective
Percentage Interests, the related Aggregate Certificate Principal Balance and
Accrued Certificate Interest, (iii) as to the Financial Guaranty Insurer, any
amounts necessary to reimburse becomes due to the Financial Guaranty Insurer
pursuant to the Insurance and Indemnity Agreement, together with interest
thereon, and any accrued and unpaid Financial Guaranty Insurer Premium after
application pursuant to clauses (i) and (ii) above and (iv) as to the Servicer,
any additional servicing compensation with respect to such 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 (iv) as to the Class C
Certificateholders and upon presentation and surrender of the Class C
Certificate, any amounts remaining after application pursuant to the preceding
clauses (i) through (iii); 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 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 Servicer 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 Servicer shall provide in writing to the
Trustee and the Financial Guaranty Insurer the information with respect to the
amounts so to be paid.
126
<PAGE> 132
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 Servicer (if
the Servicer 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 Servicer and thereafter
Certificateholders shall look only to the Servicer with respect to any claims in
respect of such funds.
Section 10.02. Additional Termination Requirements. In the event the
Servicer exercises its purchase option as provided in Section 10.01, each
relevant REMIC Pool shall be terminated in accordance with the following
additional requirements, and the Trustee shall receive an Opinion of Counsel to
the effect that the termination of such REMIC Pool (i) will constitute a
"qualified liquidation" of such 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
of a Mortgage Loan given by the Servicer under Section 10.01, the
Trustee, at the direction of the Servicer, shall adopt a plan of
complete liquidation of each REMIC Pool being liquidated on behalf of
the related 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 being
liquidated to the Servicer 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 ELEVEN
MISCELLANEOUS PROVISIONS
Section 11.01. Amendment. This Agreement may be amended from time to
time by the Servicer, the Transferor and the Trustee, without the consent of any
of the Certificateholders but with the prior written consent of the Financial
Guaranty 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
127
<PAGE> 133
duties or obligations of the Servicer hereunder; (c) to maintain or improve any
rating then assigned by any Rating Agency to any of the Certificates; or (d) to
add any other provisions with respect to matters or questions arising under this
Agreement or the Financial Guaranty 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
any 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 such REMIC Pool, provided
that in the case of this clause (e) the Trustee has received an Opinion of
Counsel 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; or (f) to modify, eliminate or add to the provisions of Section
6.02(c) or any other provisions hereof restricting transfer of Class R
Certificates; 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 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 Organization; provided, further, that in all such cases such action
shall not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interests of any Certificateholder or the Financial
Guaranty Insurer.
This Agreement may also be amended from time to time by the Servicer,
the Transferor and the Trustee, with the consent of the Financial Guaranty
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 Financial Guaranty Insurer and
Certificateholders shall be subject to such reasonable requirements as the
Trustee may prescribe.
128
<PAGE> 134
Prior to the execution of any amendment to this Agreement the Trustee
and the Financial Guaranty 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 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.
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
Section 3.01, 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 Section 3.01, 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 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
129
<PAGE> 135
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 and the Trustee, 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 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.
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 Transferor and the Servicer, at 350 South
Grand Avenue, Los Angeles, California 90071, Attention: David A. Sklar; (b) in
the case of the Trustee, at the Corporate Trust Office at 3 Park Plaza, 16th
Floor, Irvine, California 92614, Attention: Aames Capital Acceptance Corp.,
Series 1998-B; (c) in the case of Fitch, to Fitch IBCA, Inc., One State Street
Plaza, New York, New York 10004, Attention: Mortgage Surveillance Group; (d) in
the case of Moody's, to Moody's Investors Service Inc., 99 Church Street, New
York, New York 10007, Attention: Residential Mortgage Pass-Through Monitoring;
(e) in the case of S&P, to S&P, 25 Broadway, 12th Floor, New York, New York
10004, Attention: Mortgage Surveillance Group; and (f) in the case of the
Financial Guaranty Insurer, Financial Security Assurance Inc., 350 Park Avenue,
New York, New York 10022, Attention: Senior Vice President, Surveillance
Department; 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.
130
<PAGE> 136
Section 11.07. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 7.02, 7.04 and 7.05, this
Agreement may not be assigned by the Transferor or the Servicer without the
prior written consent of the Financial Guaranty Insurer and Holders of
Certificates evidencing not less than 66% of the Voting Interests of all
Certificates.
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.
Section 11.09. Third Party Beneficiary; Rating. (a) The Financial
Guaranty Insurer is an intended third-party beneficiary of this Agreement. This
Agreement shall be binding upon and inure to the benefit of the Financial
Guaranty Insurer; provided that, notwithstanding the foregoing, for so long as a
Financial Guaranty Insurer Default is continuing under its obligations under the
Financial Guaranty Insurance Policy, the Fixed Rate Group Certificateholders
shall succeed to the Financial Guaranty Insurer's rights hereunder provided
however that the Financial Guaranty Insurer shall be entitled to payments and
reimbursements as set forth in this Agreement. Without limiting the generality
of the foregoing, all covenants and agreements in this Agreement that expressly
confer rights upon the Financial Guaranty Insurer shall be for the benefit of
and run directly to the Financial Guaranty Insurer, and the Financial Guaranty
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 Financial Guaranty 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 Fixed Rate Group Certificates (apart
from the rating related to the Financial Guaranty Insurance Policy) from such
Rating Agency.
[Signatures follow.]
131
<PAGE> 137
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 ACCEPTANCE CORP.,
as Transferor
By: \s\ Mark Elbaum
------------------------------------
Name: Mark Elbaum
Title: Senior Vice President -- Finance
AAMES CAPITAL CORPORATION,
as Servicer
By: \s\ Mark Elbaum
------------------------------------
Name: Mark Elbaum
Title: Senior Vice President -- Finance
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.,
as Trustee and not in its
individual capacity
By: \s\ Stephen Hessler
--------------------------------------
Name: Stephen Hessler
Title: Vice President
S-1
<PAGE> 138
State of California )
) ss.:
County of Orange )
On June 18, 1998, before me, Michelle L. Adams, personally appeared
Mark E. Elbaum, 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 his authorized
capacity, 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/ Michelle L. Adams
---------------------
Notary Public
[Notary Seal]
S-2
<PAGE> 139
State of California )
) ss.:
County of Los Angeles )
On June 18, 1998, before me, David C. West, personally appeared
Stephen Hessler 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 his authorized
capacity, 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/ David C. West
------------------
Notary Public
[Notary Seal]
S-3
<PAGE> 140
Schedule I
List of Sub-Servicers
Advanta
Schedule I-1
<PAGE> 141
Schedule II
REPRESENTATIONS AND WARRANTIES WITH RESPECT
TO SUBSEQUENT MORTGAGE LOANS
A. The Transferor represents and warrants to the Trustee, the Financial Guaranty
Insurer and the Certificateholders as of any Subsequent Transfer Date (except as
otherwise expressly stated) that as to each Subsequent Mortgage Loan conveyed to
the Trust by it:
(i) no Subsequent Mortgage Loan provides for negative amortization;
(ii) with respect to the Adjustable Rate Group and each Subsequent Mortgage Loan
if such Mortgage Loan has an initial Adjustment Date of six months, two years,
three years, or five years from the date of origination, the related Mortgage
Note provides for a rate cap as to its first Adjustment Date of from 1.00% to
3.00% and a rate cap as to each subsequent Adjustment Date of from 1.00% to
2.00%;
(iii) no Subsequent Mortgage Loan has a Gross Margin less than 6.00%;
(iv) each Subsequent Mortgage Loan will have been serviced by the Servicer or a
Sub-Servicer since origination or purchase by the Servicer;
(v) no Subsequent Mortgage Loan has been originated for the purpose of
facilitating the purchase of real estate owned by the originator; and
(vi) no Subsequent Mortgage Loan will have a Cut-off Date of later than June 30,
1998.
B. The Transferor represents and warrants to the Trustee, the Financial Guaranty
Insurer and the Certificateholders, that following the purchase of all
Subsequent Mortgage Loans by the Trust and the assignment of such Subsequent
Mortgage Loans to the appropriate Mortgage Loan Group, as of the end of the
Funding Period:
(i) the Mortgage Loans in the Fixed Rate Group (including the Subsequent
Mortgage Loans):
(a) will have a weighted average Mortgage Loan Rate of at least 9.340%;
(b) will have a weighted average original term to stated maturity of not more
than 360 months;
(c) will have a weighted average Combined Loan-to-Value Ratio of not more than
90.00% except that five Mortgage Loans in the Fixed Rate Group have Combined
Loan-to-Value Ratios of up to 95%;
Schedule II-1
<PAGE> 142
(d) will have no Mortgage Loan with an Aggregate Principal Balance in excess of
$500,000;
(e) will not have in excess of 2.00% by Aggregate Principal Balance of Mortgage
Loans secured by non-owner occupied Mortgaged Properties;
(f) will not have a concentration in a single ZIP code in excess of 0.38% by
Aggregate Principal Balance;
(g) will not have an aggregate concentration in excess of 0.50% by Aggregate
Principal Balance in ZIP codes beginning with the following three digits:
900-919, 922-925, 930-931 and 935;
(h) will not have a concentration in a single State, other than California,
Florida, New York or Texas in excess of 5% by Aggregate Principal Balance;
(i) will not have a concentration in California in excess of 20.00%, in Florida
in excess of 15.00%, in New York in excess of 6.00%, or in Texas in excess of
7.00% by Aggregate Principal Balance;
(j) will not have in excess of 5.00% or 7.00% by Aggregate Principal Balance of
Mortgage Loans secured by Mortgaged Properties that are two family properties or
condominiums (less than four stories), three and four family properties or
condominiums (greater than four stories), respectively, and will have none
secured by mobile homes treated as real estate under applicable state law;
(k) will have at least 85.00% by Aggregate Principal Balance of Mortgage Loans
secured by fee simple interests in detached single family dwelling units
(including units in de minimis planned unit developments);
(l) will have no more than 1.00% by Aggregate Principal Balance Mortgage Loans
that are based on a 360-month amortization schedule with balloon payments prior
to month 60;
(m) will have no more than 4.00% by Aggregate Principal Balance of Mortgage
Loans that are based on a 360-month amortization schedule and have a balloon
payment between month 61-120;
(n) will have no more than 30.00% by Aggregate Principal Balance of Mortgage
Loans that are based on a 360-month amortization schedule and have a balloon
payment between month 121-180; and
(o) will have no more than 2.00% by Aggregate Principal Balance of Mortgage
Loans that are based on a 360-month amortization schedule and have a balloon
payment between month 181-240;
Schedule II-2
<PAGE> 143
(p) will have no less than 95.00% by Aggregate Principal Balance of Mortgage
Loans that provide for the payment of principal and interest on a level basis to
fully amortize such Mortgage Loan over its stated maturity; and
(q) will have a weighted average term since origination not in excess of six
months.
(ii) the Mortgage Loans in the Adjustable Rate Group (including the Subsequent
Mortgage Loans):
(a) will have a weighted average Mortgage Loan Rate of at least 8.90%;
(b) will have a weighted average original term to stated maturity of not more
than 360 months;
(c) will have a weighted average Loan-to-Value Ratio of not more than 90.00%
except that one Mortgage Loan in the Adjustable Rate Group has a Combined
Loan-to-Value Ratio of up to 95.00%;
(d) will have no Mortgage Loan with an Aggregate Principal Balance in excess of
$500,000;
(e) will have not in excess of 2.00% by Aggregate Principal Balance of Mortgage
Loans secured by non-owner occupied Mortgage Properties;
(f) will not have a concentration in a single ZIP code in excess of 0.47% by
Aggregate Principal Balance;
(g) will not have an aggregate concentration in excess of 0.50% in ZIP codes
beginning with the following three digits: 900-919, 922-925, 930, 931, 935;
(h) will not have a concentration in a single State, other than California and
Florida in excess of 5.00% by Aggregate Principal Balance;
(i) will not have a concentration in California in excess of 15.00% or in
Florida in excess of 14.00% by Aggregate Principal Balance;
(j) will not have in excess of 9.00% or 6.00% by Aggregate Principal Balance
Mortgage Loans secured by Mortgaged Properties that are two family properties or
condominiums (less than four stories) and three and four family properties or
condominiums (greater than four stories), respectively, and none will be secured
by mobile homes or manufactured housing treated as real estate under applicable
state law;
(k) will have at least 85.00% by Aggregate Principal Balance Mortgage Loans
secured by fee simple interests in detached single family dwelling units
(including units in de minimis planned unit developments);
Schedule II-3
<PAGE> 144
(l) will have a weighted average margin of at least 5.00%;
(m) will contain no Mortgage Loans that are not based on a 360-month
amortization schedule of level payments;
(n) will have a weighted average term since origination not in excess of three
months.
For purposes of this Schedule II, "Aggregate Principal Balance" means the
aggregate of the Principal Balances of the Mortgage Loans (determined as of the
related Cut-off Date but aggregated as of the Closing Date, for the Initial
Mortgage Loans, and determined as of the Subsequent Cut-off Date for the
Subsequent Mortgage Loans) in the related Mortgage Loan Group.
Schedule II-4
<PAGE> 145
Schedule III
MORTGAGE LOAN SCHEDULE
Schedule III-1
<PAGE> 146
Schedule IV
SCHEDULE OF SUBSEQUENT MORTGAGE LOANS
Schedule IV-1
<PAGE> 147
Schedule V
Schedule of Restricted Mortgage Loans
Schedule V-1
<PAGE> 148
Schedule VI
Schedule of Escrowed Mortgage Loans
Schedule VI-1
<PAGE> 149
EXHIBIT A
FORMS OF CERTIFICATES
A-1
<PAGE> 150
CLASS A-1F CERTIFICATE
Date of Pooling and Servicing Initial Class A-1F Certificate
Agreement: Balance: $99,000,000.00
June 1, 1998
First Distribution Date: CUSIP No. 00253C ES2
July 15, 1998
Denomination: $99,000,000.00 Certificate No.: 1
Class A-1F Pass-Through Rate: 6.325%
AAMES MORTGAGE TRUST 1998-B
PASS-THROUGH CERTIFICATE,
SERIES 1998-B, CLASS A-1F
evidencing a percentage interest in the distributions allocable to
the Class A- 1F Certificates with respect to a Trust consisting
primarily of a pool of conventional, closed-end, fixed and adjustable
rate, residential mortgage loans, sold by Aames Capital Acceptance
Corp. and serviced by Aames Capital Corporation.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL ACCEPTANCE CORP., 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 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 Initial Class A-1F
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 by Aames Capital Acceptance Corp.
(the "Transferor") and serviced by Aames Capital Corporation, the "Servicer",
which term includes
A-1
<PAGE> 151
any successor Servicer under the Agreement referred to below). The Percentage
Interest evidenced by this Certificate represents an interest in the group of
fixed rate Mortgage Loans. The Trust was created pursuant to a Pooling and
Servicing Agreement dated as specified above (the "Agreement") between the
Transferor, the Servicer and Bankers Trust Company of California, N.A., as
trustee (the "Trustee"), 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 Class A-1F 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 Mortgage Pass-Through Certificates, Series
1998-B, Class A-1F" (herein called the "Class A-1F 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, 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 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-1F Certificates are limited in right of payment to
certain payments on and collections in respect of the Fixed Rate Group and in
certain limited circumstances, the Adjustable Rate Group, all 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
A-2
<PAGE> 152
deposit in the Certificate Account in respect of the Fixed Rate Group and, in
certain limited circumstances, the Adjustable Rate Group, allocable to Class
A-1F 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
Transferor, 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
Holders of Certificates evidencing Voting Interests of each Class affected
thereby 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.
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 Transferor 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 Transferor, the Trustee nor any of
their respective agents shall be affected by any notice to the contrary.
A-3
<PAGE> 153
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 Servicer 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 Servicer 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 Servicer to purchase the
Mortgage Loans is subject to the Principal Balances of such Mortgage Loans at
the time of purchase being less than 10% of the Initial Pool Balance plus 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-4
<PAGE> 154
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: June 18, 1998
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.
as Trustee
By:____________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION:
This is one of the Class A-1F
Certificates referred to in
the within named Agreement
By:___________________________________________
Authorized Officer of Bankers Trust Company
of California, N.A., as Trustee
A-5
<PAGE> 155
CLASS A-2F CERTIFICATE
Date of Pooling and Servicing Initial Class A-2F Certificate
Agreement: Balance: $14,000,000.00
June 1, 1998
First Distribution Date: CUSIP No. 00253C ET0
July 15, 1998
Denomination: $14,000,000.00 Certificate No.: 1
Class A-2F Pass-Through Rate: 6.210%
AAMES MORTGAGE TRUST 1998-B
PASS-THROUGH CERTIFICATE,
SERIES 1998-B, CLASS A-2F
evidencing a percentage interest in the distributions allocable to
the Class A- 2F Certificates with respect to a Trust consisting
primarily of a pool of conventional, closed-end, fixed and adjustable
rate, residential mortgage loans, sold by Aames Capital Acceptance
Corp. and serviced by Aames Capital Corporation.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL ACCEPTANCE CORP., 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 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 Initial Class A-2F
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 by Aames Capital Acceptance Corp.
(the
A-6
<PAGE> 156
"Transferor") and serviced by Aames Capital Corporation, the "Servicer", which
term includes any successor Servicer under the Agreement referred to below). The
Percentage Interest evidenced by this Certificate represents an interest in the
group of fixed rate Mortgage Loans. The Trust was created pursuant to a Pooling
and Servicing Agreement dated as specified above (the "Agreement") between the
Transferor, the Servicer and Bankers Trust Company of California, N.A., as
trustee (the "Trustee"), 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 Class A-2F 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 Mortgage Pass-Through Certificates, Series
1998-B, Class A-2F" (herein called the "Class A-2F 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, 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 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-2F Certificates are limited in right of payment to
certain payments on and collections in respect of the Fixed Rate Group and in
certain limited circumstances, the Adjustable Rate Group, all as more
specifically set forth in the Agreement. The Holder of this
A-7
<PAGE> 157
Certificate, by its acceptance of this Certificate, agrees that it will look
solely to the funds on deposit in the Certificate Account in respect of the
Fixed Rate Group and, in certain limited circumstances, the Adjustable Rate
Group, allocable to Class A-2F 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
Transferor, 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
Holders of Certificates evidencing Voting Interests of each Class affected
thereby 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.
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 Transferor 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 Transferor, the Trustee nor any of
their respective agents shall be affected by any notice to the contrary.
A-8
<PAGE> 158
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 Servicer 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 Servicer 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 Servicer to purchase the
Mortgage Loans is subject to the Principal Balances of such Mortgage Loans at
the time of purchase being less than 10% of the Initial Pool Balance plus 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-9
<PAGE> 159
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: June 18, 1998
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.
as Trustee
By: ____________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION:
This is one of the Class A-2F
Certificates referred to in
the within named Agreement
By: _______________________________________________
Authorized Officer of Bankers Trust Company
of California, N.A., as Trustee
A-10
<PAGE> 160
CLASS A-3F CERTIFICATE
Date of Pooling and Servicing Initial Class A-3F Certificate
Agreement: Balance: $56,000,000.00
June 1, 1998
First Distribution Date: CUSIP No. 00253C EU7
July 15, 1998
Denomination: $56,000,000.00 Certificate No.: 1
Class A-3F Pass-Through Rate: 6.335%
AAMES MORTGAGE TRUST 1998-B
PASS-THROUGH CERTIFICATE,
SERIES 1998-B, CLASS A-3F
evidencing a percentage interest in the distributions allocable to
the Class A- 3F Certificates with respect to a Trust consisting
primarily of a pool of conventional, closed-end, fixed and adjustable
rate, residential mortgage loans, sold by Aames Capital Acceptance
Corp. and serviced by Aames Capital Corporation.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL ACCEPTANCE CORP., 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 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 Initial Class A-3F
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 by Aames Capital Acceptance Corp.
(the
A-11
<PAGE> 161
"Transferor") and serviced by Aames Capital Corporation, the "Servicer", which
term includes any successor Servicer under the Agreement referred to below). The
Percentage Interest evidenced by this Certificate represents an interest in the
group of fixed rate Mortgage Loans. The Trust was created pursuant to a Pooling
and Servicing Agreement dated as specified above (the "Agreement") between the
Transferor, the Servicer and Bankers Trust Company of California, N.A., as
trustee (the "Trustee"), 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 Class A-3F 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 Mortgage Pass-Through Certificates, Series
1998-B, Class A-3F" (herein called the "Class A-3F 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, 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 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-3F Certificates are limited in right of payment to
certain payments on and collections in respect of the Fixed Rate Group and in
certain limited circumstances, the Adjustable Rate Group, all as more
specifically set forth in the Agreement. The Holder of this
A-12
<PAGE> 162
Certificate, by its acceptance of this Certificate, agrees that it will look
solely to the funds on deposit in the Certificate Account in respect of the
Fixed Rate Group and, in certain limited circumstances, the Adjustable Rate
Group, allocable to Class A-3F 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
Transferor, 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
Holders of Certificates evidencing Voting Interests of each Class affected
thereby 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.
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 Transferor 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 Transferor, the Trustee nor any of
their respective agents shall be affected by any notice to the contrary.
A-13
<PAGE> 163
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 Servicer 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 Servicer 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 Servicer to purchase the
Mortgage Loans is subject to the Principal Balances of such Mortgage Loans at
the time of purchase being less than 10% of the Initial Pool Balance plus 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-14
<PAGE> 164
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: June 18, 1998
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.
as Trustee
By: ____________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION:
This is one of the Class A-3F
Certificates referred to in
the within named Agreement
By: _______________________________________________
Authorized Officer of Bankers Trust Company
of California, N.A., as Trustee
A-15
<PAGE> 165
CLASS A-4F CERTIFICATE
Date of Pooling and Servicing Initial Class A-4F Certificate
Agreement: Balance: $29,000,000.00
June 1, 1998
First Distribution Date: CUSIP No. 00253C EV5
July 15, 1998
Denomination: $29,000,000.00 Certificate No.: 1
Class A-4F Pass-Through Rate: 6.475%(1)
AAMES MORTGAGE TRUST 1998-B
PASS-THROUGH CERTIFICATE,
SERIES 1998-B, CLASS A-4F
evidencing a percentage interest in the distributions allocable to
the Class A- 4F Certificates with respect to a Trust consisting
primarily of a pool of conventional, closed-end, fixed and adjustable
rate, residential mortgage loans, sold by Aames Capital Acceptance
Corp. and serviced by Aames Capital Corporation.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL ACCEPTANCE CORP., 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 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
- ----------
(1) The Pass-Through Rate for the Class A-4F Certificates is equal to the
lesser of (i) 6.475% and (ii) the Fixed Rate Net WAC.
A-16
<PAGE> 166
above by the Initial Class A-4F 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 by
Aames Capital Acceptance Corp. (the "Transferor") and serviced by Aames Capital
Corporation, the "Servicer", which term includes any successor Servicer under
the Agreement referred to below). The Percentage Interest evidenced by this
Certificate represents an interest in the group of fixed rate Mortgage Loans.
The Trust was created pursuant to a Pooling and Servicing Agreement dated as
specified above (the "Agreement") between the Transferor, the Servicer and
Bankers Trust Company of California, N.A., as trustee (the "Trustee"), 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 Class A-4F 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 Mortgage Pass-Through Certificates, Series
1998-B, Class A-4F" (herein called the "Class A-4F 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, 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 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-17
<PAGE> 167
The Class A-4F Certificates are limited in right of payment to
certain payments on and collections in respect of the Fixed Rate Group and in
certain limited circumstances, the Adjustable Rate Group, all 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 in respect of the Fixed Rate Group and, in
certain limited circumstances, the Adjustable Rate Group, allocable to Class
A-4F 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
Transferor, 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
Holders of Certificates evidencing Voting Interests of each Class affected
thereby 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.
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 Transferor and the Trustee and any of their respective agents may
treat the Person in
A-18
<PAGE> 168
whose name this Certificate is registered as the owner hereof for all purposes,
and neither the Transferor, 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 Servicer 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 Servicer 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 Servicer to purchase the
Mortgage Loans is subject to the Principal Balances of such Mortgage Loans at
the time of purchase being less than 10% of the Initial Pool Balance plus 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-19
<PAGE> 169
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: June 18, 1998
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.
as Trustee
By: _____________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION:
This is one of the Class A-4F
Certificates referred to in
the within named Agreement
By: ________________________________________________
Authorized Officer of Bankers Trust Company
of California, N.A., as Trustee
A-20
<PAGE> 170
CLASS A-5F CERTIFICATE
Date of Pooling and Servicing Initial Class A-5F Certificate
Agreement: Balance: $27,000,000.00
June 1, 1998
First Distribution Date: CUSIP No. 00253C EW3
July 15, 1998
Denomination: $27,000,000.00 Certificate No.: 1
Class A-5F Pass-Through Rate: 6.890%(1)
AAMES MORTGAGE TRUST 1998-B
PASS-THROUGH CERTIFICATE,
SERIES 1998-B, CLASS A-5F
evidencing a percentage interest in the distributions allocable to
the Class A- 5F Certificates with respect to a Trust consisting
primarily of a pool of conventional, closed-end, fixed and adjustable
rate, residential mortgage loans, sold by Aames Capital Acceptance
Corp. and serviced by Aames Capital Corporation.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL ACCEPTANCE CORP., 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 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 Initial Class A-5F
Certificate Principal Balance) in a trust, the assets of which
- ----------
(1) The Pass-Through Rate for the Class A-5F Certificates is equal to the
lesser of (i) 6.890% and (ii) the Fixed Rate Net WAC.
A-21
<PAGE> 171
consist primarily of a pool of conventional, closed-end, fixed and adjustable
rate, residential mortgage loans (the "Mortgage Loans"), sold by Aames Capital
Acceptance Corp. (the "Transferor") and serviced by Aames Capital Corporation,
the "Servicer", which term includes any successor Servicer under the Agreement
referred to below). The Percentage Interest evidenced by this Certificate
represents an interest in the group of fixed rate Mortgage Loans. The Trust was
created pursuant to a Pooling and Servicing Agreement dated as specified above
(the "Agreement") between the Transferor, the Servicer and Bankers Trust Company
of California, N.A., as trustee (the "Trustee"), 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 Class A-5F 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 Mortgage Pass-Through Certificates, Series
1998-B, Class A-5F" (herein called the "Class A-5F 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, 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 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-5F Certificates are limited in right of payment to
certain payments on and
A-22
<PAGE> 172
collections in respect of the Fixed Rate Group and in certain limited
circumstances, the Adjustable Rate Group, all 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 in respect of the Fixed Rate Group and, in certain limited
circumstances, the Adjustable Rate Group, allocable to Class A-5F
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
Transferor, 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
Holders of Certificates evidencing Voting Interests of each Class affected
thereby 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.
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 Transferor 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-23
<PAGE> 173
Transferor, 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 Servicer 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 Servicer 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 Servicer to purchase the
Mortgage Loans is subject to the Principal Balances of such Mortgage Loans at
the time of purchase being less than 10% of the Initial Pool Balance plus 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-24
<PAGE> 174
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: June 18, 1998
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.
as Trustee
By: ____________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION:
This is one of the Class A-5F
Certificates referred to in
the within named Agreement
By: _______________________________________________
Authorized Officer of Bankers Trust Company
of California, N.A., as Trustee
A-25
<PAGE> 175
CLASS A-6F CERTIFICATE
Date of Pooling and Servicing Initial Class A-6F Certificate
Agreement: Balance: $25,000,000.00
June 1, 1998
First Distribution Date: CUSIP No. 00253C EX1
July 15, 1998
Denomination: $25,000,000.00 Certificate No.: 1
Class A-6F Pass-Through Rate: 6.455%(1)
AAMES MORTGAGE TRUST 1998-B
PASS-THROUGH CERTIFICATE,
SERIES 1998-B, CLASS A-6F
evidencing a percentage interest in the distributions allocable to
the Class A- 6F Certificates with respect to a Trust consisting
primarily of a pool of conventional, closed-end, fixed and adjustable
rate, residential mortgage loans, sold by Aames Capital Acceptance
Corp. and serviced by Aames Capital Corporation.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL ACCEPTANCE CORP., 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 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 Initial Class A-6F
Certificate Principal Balance) in a trust, the assets of which
- ----------
(1) The Pass-Through Rate for the Class A-6F Certificates is equal to the
lesser of (i) 6.455% and (ii) the Fixed Rate Net WAC.
A-26
<PAGE> 176
consist primarily of a pool of conventional, closed-end, fixed and adjustable
rate, residential mortgage loans (the "Mortgage Loans"), sold by Aames Capital
Acceptance Corp. (the "Transferor") and serviced by Aames Capital Corporation,
the "Servicer", which term includes any successor Servicer under the Agreement
referred to below). The Percentage Interest evidenced by this Certificate
represents an interest in the group of fixed rate Mortgage Loans. The Trust was
created pursuant to a Pooling and Servicing Agreement dated as specified above
(the "Agreement") between the Transferor, the Servicer and Bankers Trust Company
of California, N.A., as trustee (the "Trustee"), 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 Class A-6F 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 Mortgage Pass-Through Certificates, Series
1998-B, Class A-6F" (herein called the "Class A-6F 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, 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 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-6F Certificates are limited in right of payment to
certain payments on and
A-27
<PAGE> 177
collections in respect of the Fixed Rate Group and in certain limited
circumstances, the Adjustable Rate Group, all 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 in respect of the Fixed Rate Group and, in certain limited
circumstances, the Adjustable Rate Group, allocable to Class A-6F
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
Transferor, 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
Holders of Certificates evidencing Voting Interests of each Class affected
thereby 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.
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 Transferor 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-28
<PAGE> 178
Transferor, 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 Servicer 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 Servicer 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 Servicer to purchase the
Mortgage Loans is subject to the Principal Balances of such Mortgage Loans at
the time of purchase being less than 10% of the Initial Pool Balance plus 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-29
<PAGE> 179
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: June 18, 1998
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.
as Trustee
By: _____________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION:
This is one of the Class A-6F
Certificates referred to in
the within named Agreement
By: ________________________________________________
Authorized Officer of Bankers Trust Company
of California, N.A., as Trustee
A-30
<PAGE> 180
CLASS A-IO CERTIFICATE
Date of Pooling and Servicing Initial Class A-IO Certificate
Agreement: Balance: $25,000,000.00
June 1, 1998
First Distribution Date: CUSIP No. 00253C EY9
July 15, 1998
Denomination: $25,000,000.00 Certificate No.: 1
Class A-IO Pass-Through Rate: 5.00%(1)
AAMES MORTGAGE TRUST 1998-B
PASS-THROUGH CERTIFICATE,
SERIES 1998-B, CLASS A-IO
evidencing a percentage interest in the distributions allocable to
the Class A- IO Certificates with respect to a Trust consisting
primarily of a pool of conventional, closed-end, fixed and adjustable
rate, residential mortgage loans, sold by Aames Capital Acceptance
Corp. and serviced by Aames Capital Corporation.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL ACCEPTANCE CORP., 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.
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 OR 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) DELIVERS AN OPINION OF
COUNSEL, IN EACH CASE IN ACCORDANCE WITH
- ----------
(1) The Pass-Through Rate with respect to the A-IO Certificates on any
Distribution Date before July 2001 will be 5.00% and on any Distribution Date in
or thereafter will be 0.00%, as described in the Agreement.
A-31
<PAGE> 181
THE PROVISIONS OF SECTION 5.03 OF THE AGREEMENT REFERRED TO HEREIN.
NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY HEREIN, ANY PURPORTED TRANSFER OF
THIS CERTIFICATE TO OR ON BEHALF OF AN EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR
TO THE CODE OR A PERSON ACTING ON BEHALF OF A PLAN OR USING THE ASSETS OF A PLAN
TO EFFECT SUCH PURCHASE OR TO AN INSURANCE COMPANY FOR AMOUNTS IN A NON-EXEMPT
INSURANCE COMPANY GENERAL ACCOUNT OR SEPARATE ACCOUNT WITHOUT DELIVERING THE
OPINION OF COUNSEL DESCRIBED ABOVE SHALL BE VOID AND OF NO EFFECT.
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 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 Initial Class A-IO
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 by Aames Capital Acceptance Corp.
(the "Transferor") and serviced by Aames Capital Corporation, the "Servicer",
which term includes any successor Servicer under the Agreement referred to
below). The Percentage Interest evidenced by this Certificate represents an
interest in the group of fixed rate Mortgage Loans. The Trust was created
pursuant to a Pooling and Servicing Agreement dated as specified above (the
"Agreement") between the Transferor, the Servicer and Bankers Trust Company of
California, N.A., as trustee (the "Trustee"), 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 Class A-IO Accrued
Certificate Interest.
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
A-32
<PAGE> 182
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 Mortgage Pass-Through Certificates, Series
1998-B, Class A-IO" (herein called the "Class A-IO 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, 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 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-IO Certificates are limited in right of payment to
certain payments on and collections in respect of the Fixed Rate Group and in
certain limited circumstances, the Adjustable Rate Group, all 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 in respect of the Fixed Rate Group and, in
certain limited circumstances, the Adjustable Rate Group, allocable to Class
A-IO 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
Transferor, 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
Holders of Certificates evidencing Voting Interests of each Class affected
thereby 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.
A-33
<PAGE> 183
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 Transferor 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 Transferor, 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 Servicer 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 Servicer 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 Servicer to purchase the
Mortgage Loans is subject to the Principal Balances of such Mortgage Loans at
the time of purchase being less than 10% of the Initial Pool Balance plus 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-34
<PAGE> 184
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: June 18, 1998
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.
as Trustee
By: _____________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION:
This is one of the Class A-IO
Certificates referred to in
the within named Agreement
By: ________________________________________________
Authorized Officer of Bankers Trust Company
of California, N.A., as Trustee
A-35
<PAGE> 185
CLASS A-1A CERTIFICATE
Date of Pooling and Servicing Initial Class A-1A Certificate
Agreement: Balance: $277,500,000.00
June 1, 1998
First Distribution Date: CUSIP No. 00253C EZ6
July 15, 1998
Denomination: $200,000,000.00 Certificate No.: 2
Class A-1A Adjustable Rate Certificate(1)
AAMES MORTGAGE TRUST 1998-B
MORTGAGE LOAN PASS-THROUGH CERTIFICATE,
SERIES 1998-B, CLASS A-1A
evidencing a percentage interest in the distributions allocable to
the Class A-1A Certificates with respect to a Trust consisting
primarily of a pool of conventional, closed-end, fixed and adjustable
rate, residential mortgage loans, sold by Aames Capital Acceptance
Corp. and serviced by Aames Capital Corporation.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL ACCEPTANCE CORP., 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 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.(2)
- ----------
(1) The Pass-Through Rate for the Class A-1A Certificates with respect to
each Interest Period will be equal to the lesser of (x) with respect to each
Interest period preceding the Clean-up Call Date, the LIBOR Rate plus .165% per
annum and for any Interest Period thereafter, the LIBOR Rate plus .330% per
annum and (y) the Adjustable Rate Group Available Funds Cap.
(2)
A-36
<PAGE> 186
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 Initial Class A-1A
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 by Aames Capital Acceptance Corp.
(the "Transferor") and serviced by Aames Capital Corporation, the "Servicer",
which term includes any successor Servicer under the Agreement referred to
below). The Percentage Interest evidenced by this Certificate represents an
interest in the group of fixed rate Mortgage Loans. The Trust was created
pursuant to a Pooling and Servicing Agreement dated as specified above (the
"Agreement") between the Transferor, the Servicer and Bankers Trust Company of
California, N.A., as trustee (the "Trustee"), 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 Class A-1A 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 Mortgage Pass-Through Certificates, Series
1998-B, Class A-1A" (herein called the "Class A-1A 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, 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 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
A-37
<PAGE> 187
or by a comparable conversion.
The Class A-1A Certificates are limited in right of payment to
certain payments on and collections in respect of the Fixed Rate Group and in
certain limited circumstances, the Adjustable Rate Group, all 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 in respect of the Fixed Rate Group and, in
certain limited circumstances, the Adjustable Rate Group, allocable to Class
A-1A 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
Transferor, 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
Holders of Certificates evidencing Voting Interests of each Class affected
thereby 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.
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-38
<PAGE> 188
The Transferor 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 Transferor, 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 Servicer 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 Servicer 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 Servicer to purchase the
Mortgage Loans is subject to the Principal Balances of such Mortgage Loans at
the time of purchase being less than 10% of the Initial Pool Balance plus 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-39
<PAGE> 189
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: June 18, 1998
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.
as Trustee
By: ____________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION:
This is one of the Class A-1A
Certificates referred to in
the within named Agreement
By: _______________________________________________
Authorized Officer of Bankers Trust Company
of California, N.A., as Trustee
A-40
<PAGE> 190
CLASS A-1A CERTIFICATE
Date of Pooling and Servicing Initial Class A-1A Certificate
Agreement: Balance: $277,500,000.00
June 1, 1998
First Distribution Date: CUSIP No. 00253C EZ6
July 15, 1998
Denomination: $77,500,000.00 Certificate No.: 2
Class A-1A Adjustable Rate Certificate(1)
AAMES MORTGAGE TRUST 1998-B
MORTGAGE LOAN PASS-THROUGH CERTIFICATE,
SERIES 1998-B, CLASS A-1A
evidencing a percentage interest in the distributions allocable to
the Class A-1A Certificates with respect to a Trust consisting
primarily of a pool of conventional, closed-end, fixed and adjustable
rate, residential mortgage loans, sold by Aames Capital Acceptance
Corp. and serviced by Aames Capital Corporation.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL ACCEPTANCE CORP., 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 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.
- ----------
(1) The Pass-Through Rate for the Class A-1A Certificates with respect to
each Interest Period will be equal to the lesser of (x) with respect to each
Interest period preceding the Clean-up Call Date, the LIBOR Rate plus .165% per
annum and for any Interest Period thereafter, the LIBOR Rate plus 0.330% per
annum and (y) the Adjustable Rate Group Available Funds Cap.
A-41
<PAGE> 191
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 Initial Class A-1A
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 by Aames Capital Acceptance Corp.
(the "Transferor") and serviced by Aames Capital Corporation, the "Servicer",
which term includes any successor Servicer under the Agreement referred to
below). The Percentage Interest evidenced by this Certificate represents an
interest in the group of fixed rate Mortgage Loans. The Trust was created
pursuant to a Pooling and Servicing Agreement dated as specified above (the
"Agreement") between the Transferor, the Servicer and Bankers Trust Company of
California, N.A., as trustee (the "Trustee"), 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 Class A-1A 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 Mortgage Pass-Through Certificates, Series
1998-B, Class A-1A" (herein called the "Class A-1A 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, 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 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
A-42
<PAGE> 192
or by a comparable conversion.
The Class A-1A Certificates are limited in right of payment to
certain payments on and collections in respect of the Fixed Rate Group and in
certain limited circumstances, the Adjustable Rate Group, all 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 in respect of the Fixed Rate Group and, in
certain limited circumstances, the Adjustable Rate Group, allocable to Class
A-1A 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
Transferor, 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
Holders of Certificates evidencing Voting Interests of each Class affected
thereby 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.
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-43
<PAGE> 193
The Transferor 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 Transferor, 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 Servicer 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 Servicer 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 Servicer to purchase the
Mortgage Loans is subject to the Principal Balances of such Mortgage Loans at
the time of purchase being less than 10% of the Initial Pool Balance plus 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-44
<PAGE> 194
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: June 18, 1998
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.
as Trustee
By: _____________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION:
This is one of the Class A-1A
Certificates referred to in
the within named Agreement
By: _______________________________________________
Authorized Officer of Bankers Trust Company
of California, N.A., as Trustee
(here)
A-45
<PAGE> 195
CLASS M-1A CERTIFICATE
Date of Pooling and Servicing Initial Class M-1A Certificate
Agreement: Balance: $37,500,000.00
June 1, 1998
First Distribution Date: CUSIP No. 00253C FA0
July 15, 1998
Denomination: $37,500,000.00 Certificate No.: 1
Class M-1A Adjustable Rate Certificate(1)
AAMES MORTGAGE TRUST 1998-B
MORTGAGE LOAN PASS-THROUGH CERTIFICATE,
SERIES 1998-B, CLASS M-1A
evidencing a percentage interest in the distributions allocable to
the Class M-1A Certificates with respect to a Trust consisting
primarily of a pool of conventional, closed-end, fixed and adjustable
rate, residential mortgage loans, sold by Aames Capital Acceptance
Corp. and serviced by Aames Capital Corporation.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL ACCEPTANCE CORP., 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.
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 OR 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
- ----------
(1) The Pass-Through Rate for the Class M-1A Certificates with respect to
each Interest Period will be equal to the lesser of (x) with respect to each
Interest period preceding the Clean-up Call Date, the LIBOR Rate plus 0.35% per
annum and for any Interest Period thereafter, the LIBOR Rate plus 0.525% per
annum and (y) the Adjustable Rate Group Available Funds Cap.
A-46
<PAGE> 196
(2) DELIVERS AN OPINION OF COUNSEL, IN EACH CASE IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.03 OF THE AGREEMENT REFERRED TO HEREIN. NOTWITHSTANDING
ANYTHING ELSE TO THE CONTRARY HEREIN, ANY PURPORTED TRANSFER OF THIS CERTIFICATE
TO OR ON BEHALF OF AN EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR TO THE CODE OR A
PERSON ACTING ON BEHALF OF A PLAN OR USING THE ASSETS OF A PLAN TO EFFECT SUCH
PURCHASE OR TO AN INSURANCE COMPANY FOR AMOUNTS IN A NON-EXEMPT INSURANCE
COMPANY GENERAL ACCOUNT OR SEPARATE ACCOUNT WITHOUT DELIVERING THE OPINION OF
COUNSEL DESCRIBED ABOVE SHALL BE VOID AND OF NO EFFECT.
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 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 Initial Class M-1A
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 by Aames Capital Acceptance Corp.
(the "Transferor") and serviced by Aames Capital Corporation, the "Servicer",
which term includes any successor Servicer under the Agreement referred to
below). The Percentage Interest evidenced by this Certificate represents an
interest in the group of fixed rate Mortgage Loans. The Trust was created
pursuant to a Pooling and Servicing Agreement dated as specified above (the
"Agreement") between the Transferor, the Servicer and Bankers Trust Company of
California, N.A., as trustee (the "Trustee"), 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 Class M-1A Accrued
Certificate Interest and principal distributable thereon, as more specifically
set forth in the Agreement.
A-47
<PAGE> 197
THE CLASS M-1A CERTIFICATES ARE SUBORDINATE IN RIGHT OF
DISTRIBUTION TO THE CLASS A-1A CERTIFICATES, AS DESCRIBED 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 Mortgage Pass-Through Certificates, Series
1998-B, Class M-1A" (herein called the "Class M-1A 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, 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 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 M-1A Certificates are limited in right of payment to
certain payments on and collections in respect of the Adjustable Rate Group and
in certain limited circumstances, the Fixed Rate Group, all 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 in respect of the Adjustable Rate Group and, in certain
limited circumstances, the Fixed Rate Group, allocable to Class M-1A
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
Transferor, 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
Holders of Certificates evidencing Voting Interests of each Class affected
A-48
<PAGE> 198
thereby 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.
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 Transferor 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 Transferor, 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 Servicer 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 Servicer 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 Servicer to purchase the
Mortgage Loans is subject to the Principal Balances of such Mortgage Loans at
the time of purchase being less than 10% of the Initial Pool Balance plus the
Prefunding Account Deposit.
This Certificate constitutes a "regular interest" in a "real estate
mortgage investment
A-49
<PAGE> 199
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-50
<PAGE> 200
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: June 18, 1998
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.
as Trustee
By: ____________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION:
This is one of the Class M-1A
Certificates referred to in
the within named Agreement
By: _______________________________________________
Authorized Officer of Bankers Trust Company
of California, N.A., as Trustee
A-51
<PAGE> 201
CLASS M-2A CERTIFICATE
Date of Pooling and Servicing Initial Class M-2A Certificate
Agreement: Balance: $31,875,000.00
June 1, 1998
First Distribution Date: CUSIP No. 00253C FB8
July 15, 1998
Denomination: $31,875,000.00 Certificate No.: 1
Class M-2A Adjustable Rate Certificate(1)
AAMES MORTGAGE TRUST 1998-B
MORTGAGE LOAN PASS-THROUGH CERTIFICATE,
SERIES 1998-B, CLASS M-2A
evidencing a percentage interest in the distributions allocable to
the Class M-2A Certificates with respect to a Trust consisting
primarily of a pool of conventional, closed-end, fixed and adjustable
rate, residential mortgage loans, sold by Aames Capital Acceptance
Corp. and serviced by Aames Capital Corporation.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL ACCEPTANCE CORP., 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.
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 OR 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
- ----------
(1) The Pass-Through Rate for the Class M-2A Certificates with respect to
each Interest Period will be equal to the lesser of (x) with respect to each
Interest period preceding the Clean-up Call Date, the LIBOR Rate plus 0.56% per
annum and for any Interest Period thereafter, the LIBOR Rate plus 0.84% per
annum and (y) the Adjustable Rate Group Available Funds Cap.
A-52
<PAGE> 202
(2) DELIVERS AN OPINION OF COUNSEL, IN EACH CASE IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.03 OF THE AGREEMENT REFERRED TO HEREIN. NOTWITHSTANDING
ANYTHING ELSE TO THE CONTRARY HEREIN, ANY PURPORTED TRANSFER OF THIS CERTIFICATE
TO OR ON BEHALF OF AN EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR TO THE CODE OR A
PERSON ACTING ON BEHALF OF A PLAN OR USING THE ASSETS OF A PLAN TO EFFECT SUCH
PURCHASE OR TO AN INSURANCE COMPANY FOR AMOUNTS IN A NON-EXEMPT INSURANCE
COMPANY GENERAL ACCOUNT OR SEPARATE ACCOUNT WITHOUT DELIVERING THE OPINION OF
COUNSEL DESCRIBED ABOVE SHALL BE VOID AND OF NO EFFECT.
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 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 Initial Class M-2A
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 by Aames Capital Acceptance Corp.
(the "Transferor") and serviced by Aames Capital Corporation, the "Servicer",
which term includes any successor Servicer under the Agreement referred to
below). The Percentage Interest evidenced by this Certificate represents an
interest in the group of fixed rate Mortgage Loans. The Trust was created
pursuant to a Pooling and Servicing Agreement dated as specified above (the
"Agreement") between the Transferor, the Servicer and Bankers Trust Company of
California, N.A., as trustee (the "Trustee"), 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 Class M-2A Accrued
Certificate Interest and principal distributable thereon, as more specifically
set forth in the Agreement.
A-53
<PAGE> 203
THE CLASS M-2A CERTIFICATES ARE SUBORDINATE IN RIGHT OF DISTRIBUTION
TO THE CLASS M-1A CERTIFICATES, AS DESCRIBED 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 Mortgage Pass-Through Certificates, Series
1998-B, Class M-2A" (herein called the "Class M-2A 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, 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 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 M-2A Certificates are limited in right of payment to
certain payments on and collections in respect of the Adjustable Rate Group and
in certain limited circumstances, the Fixed Rate Group, all 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 in respect of the Adjustable Rate Group and, in certain
limited circumstances, the Fixed Rate Group, allocable to Class M-2A
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
Transferor, 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
Holders of Certificates evidencing Voting Interests of each Class affected
A-54
<PAGE> 204
thereby 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.
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 Transferor 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 Transferor, 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 Servicer 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 Servicer 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 Servicer to purchase the
Mortgage Loans is subject to the Principal Balances of such Mortgage Loans at
the time of purchase being less than 10% of the Initial Pool Balance plus the
Prefunding Account Deposit.
This Certificate constitutes a "regular interest" in a "real estate
mortgage investment
A-55
<PAGE> 205
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-56
<PAGE> 206
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: June 18, 1998
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.
as Trustee
By: _____________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION:
This is one of the Class M-2A
Certificates referred to in
the within named Agreement
By: ______________________________________________
Authorized Officer of Bankers Trust Company
of California, N.A., as Trustee
A-57
<PAGE> 207
CLASS B-1A CERTIFICATE
Date of Pooling and Servicing Initial Class B-1A Certificate
Agreement: Balance: $28,125,000.00
June 1, 1998
First Distribution Date: CUSIP No. 00253C FC6
July 15, 1998
Denomination: $28,125,000.00 Certificate No.: 1
Class B-1A Adjustable Rate Certificate(1)
AAMES MORTGAGE TRUST 1998-B
MORTGAGE LOAN PASS-THROUGH CERTIFICATE,
SERIES 1998-B, CLASS B-1A
evidencing a percentage interest in the distributions allocable to
the Class B-1A Certificates with respect to a Trust consisting
primarily of a pool of conventional, closed-end, fixed and adjustable
rate, residential mortgage loans, sold by Aames Capital Acceptance
Corp. and serviced by Aames Capital Corporation.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL ACCEPTANCE CORP., 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.
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 OR 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
- ----------
(1) The Pass-Through Rate for the Class B-1A Certificates with respect to
each Interest Period will be equal to the lesser of (x) with respect to each
Interest period preceding the Clean-up Call Date, the LIBOR Rate plus 1.17% per
annum and for any Interest Period thereafter, the LIBOR Rate plus 1.755% per
annum and (y) the Adjustable Rate Group Available Funds Cap.
A-58
<PAGE> 208
(2) DELIVERS AN OPINION OF COUNSEL, IN EACH CASE IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.03 OF THE AGREEMENT REFERRED TO HEREIN. NOTWITHSTANDING
ANYTHING ELSE TO THE CONTRARY HEREIN, ANY PURPORTED TRANSFER OF THIS CERTIFICATE
TO OR ON BEHALF OF AN EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR TO THE CODE OR A
PERSON ACTING ON BEHALF OF A PLAN OR USING THE ASSETS OF A PLAN TO EFFECT SUCH
PURCHASE OR TO AN INSURANCE COMPANY FOR AMOUNTS IN A NON-EXEMPT INSURANCE
COMPANY GENERAL ACCOUNT OR SEPARATE ACCOUNT WITHOUT DELIVERING THE OPINION OF
COUNSEL DESCRIBED ABOVE SHALL BE VOID AND OF NO EFFECT.
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 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 Initial Class B-1A
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 by Aames Capital Acceptance Corp.
(the "Transferor") and serviced by Aames Capital Corporation, the "Servicer",
which term includes any successor Servicer under the Agreement referred to
below). The Percentage Interest evidenced by this Certificate represents an
interest in the group of fixed rate Mortgage Loans. The Trust was created
pursuant to a Pooling and Servicing Agreement dated as specified above (the
"Agreement") between the Transferor, the Servicer and Bankers Trust Company of
California, N.A., as trustee (the "Trustee"), 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 Class B-1A Accrued
Certificate Interest and principal distributable thereon, as more specifically
set forth in the Agreement.
A-59
<PAGE> 209
THE CLASS B-1A CERTIFICATES ARE SUBORDINATE IN RIGHT OF
DISTRIBUTION TO THE CLASS A-1A CERTIFICATES, AS DESCRIBED 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 Mortgage Pass-Through Certificates, Series
1998-B, Class B-1A" (herein called the "Class B-1A 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, 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 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 B-1A Certificates are limited in right of payment to
certain payments on and collections in respect of the Adjustable Rate Group and
in certain limited circumstances, the Fixed Rate Group, all 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 in respect of the Adjustable Rate Group and, in certain
limited circumstances, the Fixed Rate Group, allocable to Class B-1A
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
Transferor, 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
Holders of Certificates evidencing Voting Interests of each Class affected
A-60
<PAGE> 210
thereby 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.
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 Transferor 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 Transferor, 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 Servicer 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 Servicer 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 Servicer to purchase the
Mortgage Loans is subject to the Principal Balances of such Mortgage Loans at
the time of purchase being less than 10% of the Initial Pool Balance plus the
Prefunding Account Deposit.
This Certificate constitutes a "regular interest" in a "real estate
mortgage investment
A-61
<PAGE> 211
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-62
<PAGE> 212
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: June 18, 1998
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.
as Trustee
By: _____________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION:
This is one of the Class B-1A
Certificates referred to in
the within named Agreement
By: ________________________________________________
Authorized Officer of Bankers Trust Company
of California, N.A., as Trustee
A-63
<PAGE> 213
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 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) DELIVERS AN OPINION OF
COUNSEL, IN EACH CASE IN ACCORDANCE WITH THE PROVISIONS OF SECTION 6.02 OF THE
AGREEMENT REFERRED TO HEREIN. NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY
HEREIN, ANY PURPORTED TRANSFER OF THIS CERTIFICATE TO OR ON BEHALF OF AN
EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR TO THE CODE OR A PERSON ACTING ON
BEHALF OF A PLAN OR USING THE ASSETS OF A PLAN TO EFFECT SUCH PURCHASE OR TO AN
INSURANCE COMPANY FOR AMOUNTS IN A NON-EXEMPT INSURANCE COMPANY GENERAL ACCOUNT
OR SEPARATE ACCOUNT WITHOUT DELIVERING THE OPINION OF COUNSEL DESCRIBED ABOVE
SHALL BE VOID AND OF NO EFFECT.
A-64
<PAGE> 214
Date of Pooling and Servicing Percentage Interest: 100%
Agreement:
June 1, 1998
First Distribution Date: Certificate No.: C-1
July 15, 1998
AAMES MORTGAGE TRUST 1998-B
MORTGAGE LOAN PASS-THROUGH CERTIFICATE,
SERIES 1998-B, CLASS C
evidencing a percentage interest in the distributions allocable to
the Class C Certificates with respect to a Trust consisting primarily
of a pool of conventional, closed-end, fixed and adjustable rate,
residential mortgage loans, sold by Aames Capital Acceptance Corp.
and serviced by Aames Capital Corporation.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL ACCEPTANCE CORP., 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 Acceptance Corp. is the registered
owner of the Percentage Interest evidenced by 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 and
adjustable rate, residential mortgage loans (the "Mortgage Loans"), sold by
Aames Capital Acceptance Corp. (the "Transferor") and serviced by Aames Capital
Corporation, 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
Transferor, the Servicer and Bankers Trust Company of California, N.A., as
trustee (the "Trustee"), 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.
No transfer of 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 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 Transferor that such transfer is
A-65
<PAGE> 215
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 Transferor
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
Transferor, the Servicer, and the rights of the Certificateholders under the
Agreement at any time by the Transferor, the Servicer and the Trustee with the
consent of the Holders of Certificates evidencing Voting Interests of each Class
affected thereby 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.
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 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
A-66
<PAGE> 216
Trustee may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.
The Transferor 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 Transferor, 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 Servicer 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 Servicer 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 Servicer to purchase the
Mortgage Loans is subject to the Principal Balances of such Mortgage Loans at
the time of purchase being less than 10% of the Initial Pool Balance plus 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 an authorized officer of the Trustee.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: June 18, 1998
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.
as Trustee
By: _____________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION:
This is one of the Class C Certificate
referred to in the within named
Agreement
A-67
<PAGE> 217
By: ________________________________________________
Authorized Officer of Bankers Trust Company
of California, N.A., as Trustee
A-68
<PAGE> 218
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 IS A "RESIDUAL
INTEREST" IN A "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(c) 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 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 FROM 4424 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 THIS CERTIFICATE TO IT
IS IN ACCORDANCE WITH THE REQUIREMENTS OF THE CODE AND THE REGULATIONS
PROMULGATED THEREUNDER AND THAT SUCH TRANSFER OF THIS 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) ANY PERSON WHICH IS AN EMPLOYEE BENEFIT PLAN WITHIN THE
MEANING OF SECTION 3(3) OF THE EMPLOYEE
A-69
<PAGE> 219
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 ANY 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, AND (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 THIS 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, PARTNERSHIP OR OTHER ENTITY 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
A TRUST IF (A) A COURT WITHIN THE UNITED STATES IS ABLE TO EXERCISE PRIMARY
SUPERVISION OF THE ADMINISTRATION THEREOF AND (B) ONE OR MORE UNITED STATES
FIDUCIARIES HAVE THE AUTHORITY TO CONTROL ALL SUBSTANTIAL DECISIONS OF THE
TRUST.
THE HOLDER OF THIS 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 "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.
A-70
<PAGE> 220
Date of Pooling and Servicing Percentage Interest: 100%
Agreement:
June 1, 1998
First Distribution Date: Certificate No.: R-1
July 15, 1998
AAMES MORTGAGE TRUST 1998-B
MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1998-B, CLASS R-I
evidencing a percentage interest in the distributions allocable to
the Class R-I Certificates with respect to a Trust consisting
primarily of a pool of conventional, closed-end, fixed and adjustable
rate, residential mortgage loans, sold by Aames Capital Acceptance
Corp. and serviced by Aames Capital Corporation.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL ACCEPTANCE CORP., 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 Acceptance Corp. is the registered
owner of the Percentage Interest evidenced by this Class R-I Certificate. This
Class R-I Certificate is one series of Certificates issued by 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 by
Aames Capital Acceptance Corp. (the "Transferor") and serviced by Aames Capital
Corporation, 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
Transferor, the Servicer and Bankers Trust Company of California, N.A., as
trustee (the "Trustee"), 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.
No transfer of this 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 to be made, the Trustee shall require the Holder to deliver an
Opinion of Counsel acceptable to
A-71
<PAGE> 221
and in form and substance satisfactory to the Trustee and the Transferor 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
Transferor 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 Certificate.
The Holder of this Certificate, by acceptance hereof, is deemed to
have designated the Servicer, if permitted by the Code and applicable by 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 this Certificate, is deemed to have
agreed to act as such "tax matters person" in each case with respect to the
REMIC I.
The Class R-I 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 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
Transferor, the Servicer, and the rights of the Certificateholders under the
Agreement at any time by the Transferor, the Servicer and the Trustee with the
consent of the Holders of Certificates evidencing Voting Interests of each Class
affected thereby aggregating not less than 51%. The Class R-I 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.
The Certificate is 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, 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 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
A-72
<PAGE> 222
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 Transferor 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 Transferor, 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 Servicer 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 Servicer 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 Servicer to purchase the
Mortgage Loans is subject to the Principal Balances of such Mortgage Loans at
the time of purchase being less than 10% of the Initial Pool Balance plus 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 an authorized officer of the Trustee.
A-73
<PAGE> 223
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: June 18, 1998
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.
as Trustee
By: _____________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION:
This is one of the Class R-I Certificate
referred to in the within named
Agreement
By: _______________________________________________
Authorized Officer of Bankers Trust Company
of California, N.A., as Trustee
A-74
<PAGE> 224
Date of Pooling and Servicing Percentage Interest: 100%
Agreement:
June 1, 1998
First Distribution Date: Certificate No.: R-2
July 15, 1998
AAMES MORTGAGE TRUST 1998-B
MORTGAGE LOAN PASS-THROUGH CERTIFICATE,
SERIES 1998-B, CLASS R-II
evidencing a percentage interest in the distributions allocable to
the Class R-II Certificates with respect to a Trust consisting
primarily of a pool of conventional, closed-end, fixed and adjustable
rate, residential mortgage loans, sold by Aames Capital Acceptance
Corp. and serviced by Aames Capital Corporation.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL ACCEPTANCE CORP., 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 Acceptance Corp. is the registered
owner of the Percentage Interest evidenced by this Class R-II Certificate. This
Class R-II Certificate is one series of Certificates issued by 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 by
Aames Capital Acceptance Corp. (the "Transferor") and serviced by Aames Capital
Corporation, 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
Transferor, the Servicer and Bankers Trust Company of California, N.A., as
trustee (the "Trustee"), 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.
No transfer of this 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 to be made, the Trustee shall require the Holder to deliver an
Opinion of Counsel acceptable to
A-75
<PAGE> 225
and in form and substance satisfactory to the Trustee and the Transferor 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
Transferor 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 Certificate.
The Holder of this Certificate, by acceptance hereof, is deemed to
have designated the Servicer, if permitted by the Code and applicable by 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 this Certificate, is deemed to have
agreed to act as such "tax matters person" in each case with respect to the
REMIC II.
The Class R-I 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 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
Transferor, the Servicer, and the rights of the Certificateholders under the
Agreement at any time by the Transferor, the Servicer and the Trustee with the
consent of the Holders of Certificates evidencing Voting Interests of each Class
affected thereby aggregating not less than 51%. The Class R-I 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.
The Certificate is 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, 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 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
A-76
<PAGE> 226
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 Transferor 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 Transferor, 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 Servicer 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 Servicer 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 Servicer to purchase the
Mortgage Loans is subject to the Principal Balances of such Mortgage Loans at
the time of purchase being less than 10% of the Initial Pool Balance plus 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 an authorized officer of the Trustee.
A-77
<PAGE> 227
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: June 18, 1998
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.
as Trustee
By: ____________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION:
This is one of the Class R-2 Certificate
referred to in the within named
Agreement
By: ________________________________________________
Authorized Officer of Bankers Trust Company
of California, N.A., as Trustee
A-78
<PAGE> 228
Date of Pooling and Servicing Percentage Interest: 100%
Agreement:
June 1, 1998
First Distribution Date: Certificate No.: R-3
July 15, 1998
AAMES MORTGAGE TRUST 1998-B
MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1998-B, CLASS R-III
evidencing a percentage interest in the distributions allocable to
the Class R-III Certificates with respect to a Trust consisting
primarily of a pool of conventional, closed-end, fixed and adjustable
rate, residential mortgage loans, sold by Aames Capital Acceptance
Corp. and serviced by Aames Capital Corporation.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL ACCEPTANCE CORP., 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 Acceptance Corp. is the registered
owner of the Percentage Interest evidenced by this Class R-III Certificate. This
Class R-III Certificate is one series of Certificates issued by 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 by
Aames Capital Acceptance Corp. (the "Transferor") and serviced by Aames Capital
Corporation, 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
Transferor, the Servicer and Bankers Trust Company of California, N.A., as
trustee (the "Trustee"), 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.
No transfer of this 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 to be made, the Trustee shall require the Holder to deliver an
Opinion of Counsel acceptable to
A-79
<PAGE> 229
and in form and substance satisfactory to the Trustee and the Transferor 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
Transferor 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 Certificate.
The Holder of this Certificate, by acceptance hereof, is deemed to
have designated the Servicer, if permitted by the Code and applicable by 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 this Certificate, is deemed to have
agreed to act as such "tax matters person" in each case with respect to the
REMIC III.
The Class R-III Certificate is in 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 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
Transferor, the Servicer, and the rights of the Certificateholders under the
Agreement at any time by the Transferor, the Servicer and the Trustee with the
consent of the Holders of Certificates evidencing Voting Interests of each Class
affected thereby aggregating not less than 51%. The Class R-III 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.
This Certificate is 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, 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 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
A-80
<PAGE> 230
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 Transferor 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 Transferor, 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 Servicer 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 Servicer 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 Servicer to purchase the
Mortgage Loans is subject to the Principal Balances of such Mortgage Loans at
the time of purchase being less than 10% of the Initial Pool Balance plus 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 an authorized officer of the Trustee.
A-81
<PAGE> 231
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: June 18, 1998
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A.as Trustee
By: ____________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION:
This is one of the Class R-3 Certificate referred to in the within named
Agreement
By: ________________________________________________
Authorized Officer of Bankers Trust Company
of California, N.A., as Trustee
A-82
<PAGE> 232
Date of Pooling and Servicing Percentage Interest: 100%
Agreement:
June 1, 1998
First Distribution Date: Certificate No.: R-4
July 15, 1998
AAMES MORTGAGE TRUST 1998-B
MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1998-B, CLASS R-IV
evidencing a percentage interest in the distributions allocable to
the Class R-IV Certificates with respect to a Trust consisting
primarily of a pool of conventional, closed-end, fixed and adjustable
rate, residential mortgage loans, sold by Aames Capital Acceptance
Corp. and serviced by Aames Capital Corporation.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL ACCEPTANCE CORP., 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 Acceptance Corp. is the registered
owner of the Percentage Interest evidenced by this Class R-IV Certificate. This
Class R-IV Certificate is one series of Certificates issued by 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 by
Aames Capital Acceptance Corp. (the "Transferor") and serviced by Aames Capital
Corporation, 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
Transferor, the Servicer and Bankers Trust Company of California, N.A., as
trustee (the "Trustee"), 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.
No transfer of this 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 to be made, the Trustee shall require the Holder to deliver an
Opinion of Counsel acceptable to
A-83
<PAGE> 233
and in form and substance satisfactory to the Trustee and the Transferor 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
Transferor 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 Certificate.
The Holder of this Certificate, by acceptance hereof, is deemed to
have designated the Servicer, if permitted by the Code and applicable by 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 this Certificate, is deemed to have
agreed to act as such "tax matters person" in each case with respect to the
REMIC IV.
The Class R-IV 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 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
Transferor, the Servicer, and the rights of the Certificateholders under the
Agreement at any time by the Transferor, the Servicer and the Trustee with the
consent of the Holders of Certificates evidencing Voting Interests of each Class
affected thereby aggregating not less than 51%. The Class R-IV 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.
The Certificate is 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, 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 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
A-84
<PAGE> 234
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 Transferor 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 Transferor, 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 Servicer 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 Servicer 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 Servicer to purchase the
Mortgage Loans is subject to the Principal Balances of such Mortgage Loans at
the time of purchase being less than 10% of the Initial Pool Balance plus 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 an authorized officer of the Trustee.
A-85
<PAGE> 235
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: June 18, 1998
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.
as Trustee
By: _____________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION:
This is one of the Class R-4 Certificate
referred to in the within named
Agreement
By: ________________________________________________
Authorized Officer of Bankers Trust Company
of California, N.A., as Trustee
A-86
<PAGE> 236
EXHIBIT B
FORM OF TRANSFEROR AFFIDAVIT
[LETTERHEAD OF TRANSFEROR]
[Date]
Bankers Trust Company of California, N.A.,
as Trustee
3 Park Plaza, 16th Floor
Irvine, California 92614
Attention: Corporate Trust Administration
Re: Aames Mortgage Trust 1998-B
Mortgage Pass-Through Certificates, Series 1998-B
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 have 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:
B-1
<PAGE> 237
EXHIBIT C
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-IA] [R-IF] [R-II] [R-III] (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 1998-B Mortgage Loan Pass-Through Certificates, (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
C-1
<PAGE> 238
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 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.
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.
9. The Investor agrees to require an affidavit substantially similar
to this affidavit from
C-2
<PAGE> 239
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.
C-3
<PAGE> 240
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 appears 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___.
C-4
<PAGE> 241
EXHIBIT D
FORM OF SUBSEQUENT TRANSFER AGREEMENT
Pursuant to this Subsequent Transfer Agreement, dated as of [ , 1998]
by and between Aames Capital Acceptance Corp. (the "Transferor") and Bankers
Trust Company of California, N.A., in its capacity as trustee for Aames Mortgage
Trust 1998-B (the "Trustee"), and pursuant to that certain Pooling and Servicing
Agreement, dated as of June 1, 1998 (the "Pooling and Servicing Agreement"), by
and between the Transferor, Aames Capital Corporation, as servicer, and the
Trustee, as trustee, the Transferor and the Trustee agree to the sale by the
Transferor and the purchase by the Trustee of additional mortgage loans (the
"Subsequent Mortgage Loans") to be included in the Fixed Rate Group or the
Adjustable Rate Group 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 Transferor does hereby sell, transfer, assign, set over and
convey to the Trustee:
(i) all right, title and interest of the Transferor in and
to the Subsequent Mortgage Loans 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 Transferor is entitled to retain pursuant to the express
provisions of the Pooling and Servicing Agreement;
(ii) all right, title and interest of the Transferor 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 the Transferor 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 Transferor,
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
D-1
<PAGE> 242
transfer to the Trustee by the Transferor of the Subsequent Mortgage Loans
identified on the Schedule A hereto shall be absolute and is intended by the
Transferor, the Servicer, the Trustee and the Certificateholders to constitute
and to be treated as a sale by the Transferor.
(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 Transferor.
(d) Additional terms of the sale, including the purchase price, are
set forth on Attachments A and B hereto separated by Mortgage Loan Group.
Section 2. Representations and Warranties; Conditions Precedent.
(a) The Transferor 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 Transferor 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.
D-2
<PAGE> 243
Section 5. Successors and Assigns.
This Agreement shall inure to the benefit of and be binding upon the
Transferor and the Trustee and their respective successors and assigns.
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 ACCEPTANCE CORP.,
as Transferor
By: _____________________________________
Name:
Title:
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A., as Trustee
for Aames Mortgage Trust 1998-B
By: _____________________________________
Name:
Title:
D-3
<PAGE> 244
EXHIBIT E
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 June 1, 1998 (the "Pooling and
Servicing Agreement") between Aames Capital Corporation, as Transferor and
Servicer, and Bankers Trust Company of California, N.A., as Trustee, 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:
E-1
<PAGE> 245
EXHIBIT F
FORM OF NOTICE REGARDING PAYMENT IN FULL
OF PRINCIPAL BALANCE OF MORTGAGE LOAN
Bankers Trust Company of California, N.A.,
as Trustee
3 Park Plaza, 16th Floor
Irvine, California 92614
Attention: Corporate Trust Administration
Re: Mortgage Loan Pass-Through Certificates, Series 1998-B
Ladies and Gentlemen:
Reference is made to Section 3.07 of the Pooling and Servicing
Agreement dated as of June 1, 1998 (the "Pooling and Servicing Agreement")
between Aames Capital Acceptance Corp., as Transferor, Aames Capital
Corporation, as Servicer, and Bankers Trust Company of California, N.A., as
Trustee. 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:
F-1
<PAGE> 246
EXHIBIT G
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 $
========
3. 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 $
========
4. Net Liquidation Proceeds* $________
(Total of Item 2 minus total of Item 3)
5. Accrued and Unpaid Interest on Mortgage Loan $________
6. Principal Balance of Mortgage Loan $________
7. Realized Loss on Mortgage Loan $________
(Item 5 plus Item 6 minus Item 4, with
a Realized Loss resulting only if the total
of this calculation is a positive number)
G-1
<PAGE> 247
*Applied first to Item 5 and then to Item 6.
G-2
<PAGE> 248
EXHIBIT H
OFFICER'S CERTIFICATE
I, _____________________, hereby certify that I am the duly elected
_____________________ of Aames Capital Corporation (the "Company") acting as
servicer pursuant to a Pooling and Servicing Agreement dated as of June 1, 1998
by and among the Company, Aames Capital Acceptance Corp., as Transferor, and
Bankers Trust Company of California, N.A., as Trustee, 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.
IN WITNESS WHEREOF, I have hereunto signed by name and affixed the
seal of the Servicer.
Dated: __________________________ ________________________________________
Name:
Title:
H-1
<PAGE> 249
EXHIBIT I
FINANCIAL GUARANTY INSURANCE POLICY
I-1
<PAGE> 250
EXHIBIT J
INSURANCE AND INDEMNITY AGREEMENT
J-1
<PAGE> 251
EXHIBIT K
FORM OF NOTICE OF CLAIM AND CERTIFICATE
K-1
<PAGE> 1
EXHIBIT 4.2
FINANCIAL GUARANTY
INSURANCE POLICY
Trust: As described in Endorsement No. 1 Policy No.: 50689-N
Certificates: $250,000,000 Aames Mortgage Trust Date of Issuance: 6/18/98
1998-B, Mortgage Pass-Through
Certificates, Series 1998-B, Class A-1F,
Class A-2F, Class A-3F, Class A-4F,
Class A-5F, Class A-6F and Class A-IO
FINANCIAL SECURITY ASSURANCE INC. ("Financial Security"), for
consideration received, hereby UNCONDITIONALLY AND IRREVOCABLY GUARANTEES to the
Trustee for the benefit of each Holder, subject only to the terms of this Policy
(which includes each endorsement hereto), the full and complete payment of
Guaranteed Distributions with respect to the Certificates of the Trust referred
to above.
For the further protection of each Holder, Financial Security
irrevocably and unconditionally guarantees payment of the amount of any
distribution of principal or interest with respect to the Certificates made
during the Term of this Policy to such Holder that is subsequently avoided in
whole or in part as a preference payment under applicable law.
Payment of any amount required to be paid under this Policy will be made
following receipt by Financial Security of notice as described in Endorsement
No. 1 hereto.
Financial Security shall be subrogated to the rights of each Holder to
receive distributions with respect to each Certificate held by such Holder to
the extent of any payment by Financial Security hereunder.
Except to the extent expressly modified by Endorsement No. 1 hereto, the
following terms shall have the meanings specified for all purposes of this
Policy. "Holder" means the registered owner of any Certificate as indicated on
the registration books maintained by or on behalf of the Trustee for such
purpose or, if the Certificate is in bearer form, the holder of the Certificate.
"Trustee", "Guaranteed Distributions" and "Term of this Policy" shall have the
meanings set forth in Endorsement No. 1 hereto.
This Policy sets forth in full the undertaking of Financial Security,
and shall not be modified, altered or affected by any other agreement or
instrument, including any modification or amendment thereto. Except to the
extent expressly modified by an endorsement hereto, the premiums paid in respect
of this Policy are nonrefundable for any reason whatsoever. This Policy may not
be canceled or revoked during the Term of this Policy. An acceleration payment
shall not be due under this Policy unless such acceleration is at the sole
option of Financial Security. THIS POLICY IS NOT COVERED BY THE
PROPERTY/CASUALTY INSURANCE SECURITY FUND SPECIFIED IN ARTICLE 76 OF THE NEW
YORK INSURANCE LAW.
In witness whereof, FINANCIAL SECURITY ASSURANCE INC. has caused this
Policy to be executed on its behalf by its Authorized Officer.
FINANCIAL SECURITY ASSURANCE INC.
By /s/ Russell Brewer
----------------------------------
AUTHORIZED OFFICER
A subsidiary of Financial Security Assurance Holdings Ltd.
350 Park Avenue, New York, N.Y. 10022-6022 (212) 826-0100
Form 101NY (5/89)
<PAGE> 2
ENDORSEMENT NO. 1 TO
FINANCIAL GUARANTY INSURANCE POLICY
FINANCIAL SECURITY ASSURANCE INC.
TRUST: Established pursuant to the Pooling and Servicing
Agreement dated as of June 1, 1998 among Aames Capital
Corporation, as Servicer, Aames Capital Acceptance Corp.
as Transferor, and Bankers Trust Company of California,
N.A., as Trustee
POLICY NO.: 50689-N
CERTIFICATES: $250,000,000 Aames Mortgage Trust 1998-B, Mortgage
Pass-Through Certificates, Series 1998-B, Class A-1F,
Class A-2F, Class A-3F, Class A-4F, Class A-5F, Class
A-6F and Class A-IO.
DATE OF ISSUANCE: June 18, 1998
1. Definitions. For all purposes of this Policy, the terms specified
below shall have the meanings or constructions provided below. Capitalized terms
used herein and not otherwise defined herein shall have the meanings provided in
the Pooling and Servicing Agreement unless the context shall otherwise require.
"Business Day" means any day other than (i) a Saturday or Sunday, or
(ii) a day on which banking institutions in New York or California are
authorized or obligated by law or executive order to be closed.
"Guaranteed Distributions" means, with respect to each Distribution
Date, the distribution to be made to Holders in an aggregate amount equal to the
Insured Amounts, in each case in accordance with the original terms of the
Certificates when issued and without regard to any amendment or modification of
the Certificates or the Pooling and Servicing Agreement except amendments or
modifications to which Financial Security has given its prior written consent.
Guaranteed Distributions shall not include, nor shall coverage be provided under
this Policy in respect of, any taxes, withholding or other charge imposed by any
governmental authority due in connection with the payment of any Guaranteed
Distribution to a Holder.
"Insured Amounts" has the meaning set forth in the Pooling and Servicing
Agreement.
"Policy" means this Financial Guaranty Insurance Policy and includes
each endorsement thereto.
<PAGE> 3
Policy No.: 50689-N Date of Issuance: June 18, 1998
"Pooling and Servicing Agreement" means the Pooling and Servicing
Agreement dated as of June 1, 1998 among Aames Capital Corporation, and
Servicer, Aames Capital Acceptance Corp., as Transferor, and Bankers Trust
Company of California, N.A., as Trustee, as amended from time to time with the
consent of Financial Security.
"Receipt" and "Received" mean actual delivery to Financial Security and
to the Fiscal Agent (as defined below), if any, at or prior to 12:00 noon, New
York City time, on a Business Day; delivery either on a day that is not a
Business Day, or after 12:00 noon, New York City time, shall be deemed to be
Received on the next succeeding Business Day. If any notice or certificate given
hereunder by the Trustee is not in proper form or is not properly completed,
executed or delivered, it shall be deemed not to have been Received, and
Financial Security or its Fiscal Agent shall promptly so advise the Trustee and
the Trustee may submit an amended notice.
"Term of This Policy" means the period from and including the Date of
Issuance to and including the date on which (i) the Certificate Principal
Balance of all the Certificates is zero, (ii) any period during which any
payment on the Certificates could have been avoided in whole or in part as a
preference payment under applicable bankruptcy, insolvency, receivership or
similar law has expired, and (iii) if any proceedings requisite to avoidance as
a preference payment have been commenced prior to the occurrence of (i) and
(ii), a final and non-appealable order in resolution of each such proceeding has
been entered.
"Trustee" means Bankers Trust Company of California, N.A., in its
capacity as Trustee under the Pooling and Servicing Agreement and any successor
in such capacity.
2. Notices and Conditions to Payment in Respect of Insured Amounts.
Following Receipt by Financial Security of a notice and certificate from the
Trustee in the form attached as Exhibit A to this Endorsement, Financial
Security will pay any amount payable hereunder in respect of Insured Amounts out
of the funds of Financial Security on the later to occur of (a) 12:00 noon, New
York City time, on the second Business Day following such Receipt; and (b) 12:00
noon, New York City time, on the Distribution Date to which such claim relates.
Payments due hereunder in respect of Insured Amounts will be disbursed by wire
transfer of immediately available funds to the Policy Payments Account
established pursuant to the Pooling and Servicing Agreement or, if no such
Policy Payments Account has been established, to the Trustee on behalf of the
Aames Mortgage Trust 1998-B (or the related Certificateholder).
Financial Security shall be entitled to pay any amount hereunder in
respect of Insured Amounts, whether or not any notice and certificate shall have
been Received by Financial Security as provided above, provided, however, that
by acceptance of this Policy the Trustee
2
<PAGE> 4
Policy No.: 50689-N Date of Issuance: June 18, 1998
agrees to provide upon request to Financial Security a notice and certificate in
respect of such payments made by Financial Security. Financial Security shall be
entitled to pay hereunder any amount in respect of Guaranteed Distributions on
an accelerated basis at any time or from time to time, in whole or in part,
prior to the scheduled date of payment thereof. Financial Security's obligations
hereunder in respect of Insured Amounts shall be discharged to the extent funds
are disbursed by Financial Security as provided herein whether or not such funds
are properly applied by the Trustee.
3. Notices and Conditions to Payment in Respect of Insured Amounts
Avoided as Preference Payments. If any Insured Amount is avoided as a preference
payment under applicable bankruptcy, insolvency, receivership or similar law,
Financial Security will pay such amount out of the funds of Financial Security
on the later of (a) the date when due to be paid pursuant to the Order referred
to below or (b) the first to occur of (i) the fourth Business Day following
Receipt by Financial Security from the Trustee of (A) a certified copy of the
order of the court or other governmental body which exercised jurisdiction to
the effect that the relevant Certificateholder is required to return principal
or interest distributed with respect to the Certificate during the Term of this
Policy because such distributions were avoidable as preference payments under
applicable bankruptcy law (the "Order"), (B) a certificate of the relevant
Certificateholder that the Order has been entered and is not subject to any stay
and (C) an assignment duly executed and delivered by the relevant
Certificateholder, in such form as is reasonably required by Financial Security
and provided to the relevant Certificateholder by Financial Security,
irrevocably assigning to Financial Security all rights and claims of the
relevant Certificateholder relating to or arising under the Certificate against
the debtor which made such preference payment or otherwise with respect to such
preference payment or (ii) the date of Receipt by Financial Security from the
Trustee of the items referred to in clauses (A), (B) and (C) above if, at least
four Business Days prior to such date of Receipt, Financial Security shall have
Received written notice from the Trustee that such items were to be delivered on
such date and such date was specified in such notice. Such payment shall be
disbursed to the receiver, conservator, debtor-in-possession or trustee in
bankruptcy named in the Order and not to the Trustee or any Certificateholder
directly (unless a Certificateholder has previously paid such amount to the
receiver, conservator, debtor-in-possession or trustee in bankruptcy named in
the Order, in which case such payment shall be disbursed to the Trustee for
distribution to such Certificateholder upon proof of such payment reasonably
satisfactory to Financial Security). In connection with the foregoing, Financial
Security shall have the rights provided pursuant to Section 3.19(d) of the
Pooling and Servicing Agreement.
4. Governing Law. This Policy shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to the
conflict of laws principles thereof.
3
<PAGE> 5
Policy No.: 50689-N Date of Issuance: June 18, 1998
5. Fiscal Agent. At any time during the Term of this Policy, Financial
Security may appoint a fiscal agent (the "Fiscal Agent") for purposes of this
Policy by written notice to the Trustee at the notice address specified in the
Pooling and Servicing Agreement specifying the name and notice address of the
Fiscal Agent. From and after the date of receipt of such notice by the Trustee,
(i) copies of all notices and documents required to be delivered to Financial
Security pursuant to this Policy shall be simultaneously delivered to the Fiscal
Agent and to Financial Security and shall not be deemed Received until Received
by both and (ii) all payments required to be made by Financial Security under
this Policy may be made directly by Financial Security or by the Fiscal Agent on
behalf of Financial Security. The Fiscal Agent is the agent of Financial
Security only and the Fiscal Agent shall in no event be liable to any Holder for
any acts of the Fiscal Agent or any failure of Financial Security to deposit, or
cause to be deposited, sufficient funds to make payments due under this Policy.
6. Waiver of Defenses. To the fullest extent permitted by applicable
law, Financial Security agrees not to assert, and hereby waives, for the benefit
of each Holder, all rights (whether by counterclaim, setoff or otherwise) and
defenses (including, without limitation, the defense of fraud), whether acquired
by subrogation, assignment or otherwise, to the extent that such rights and
defenses may be available to Financial Security to avoid payment of its
obligations under this Policy in accordance with the express provisions of this
Policy.
7. Notices. All notices to be given hereunder shall be in writing
(except as otherwise specifically provided herein) and shall be mailed by
registered mail or personally delivered or telecopied to Financial Security as
follows:
Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022
Attention: Senior Vice President - Surveillance Department
Telecopy No.: (212) 339-3518
Confirmation: (212) 826-0100
Financial Security may specify a different address or addresses by writing
mailed or delivered to the Trustee.
8. Priorities. In the event any term or provision of the face of this
Policy is inconsistent with the provisions of this Endorsement, the provisions
of this Endorsement shall take precedence and shall be binding.
4
<PAGE> 6
Policy No.: 50689-N Date of Issuance: June 18, 1998
9. Exclusions From Insurance Guaranty Funds. This Policy is not covered
by the Property/Casualty Insurance Security Fund specified in Article 76 of the
New York Insurance Law. This Policy is not covered by the Florida Insurance
Guaranty Association created under Part II of Chapter 631 of the Florida
Insurance Code. In the event Financial Security were to become insolvent, any
claims arising under this Policy are excluded from coverage by the California
Insurance Guaranty Association, established pursuant to Article 14.2 of Chapter
1 of Part 2 of Division 1 of the California Insurance Code.
10. Surrender of Policy. The Trustee shall surrender this Policy to
Financial Security for cancellation upon expiration of the Term of this Policy.
IN WITNESS WHEREOF, FINANCIAL SECURITY ASSURANCE INC. has caused this
Endorsement No. 1 to be executed by its Authorized Officer.
FINANCIAL SECURITY ASSURANCE INC.
By: /s/ Russell Brewer
------------------------------------------
Authorized Officer
5
<PAGE> 7
Policy No.: 50689-N Date of Issuance: June 18, 1998
EXHIBIT A
To Endorsement 1
NOTICE OF CLAIM AND CERTIFICATE
Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022
The undersigned, a duly authorized officer of Bankers Trust Company of
California, N.A. (the "Trustee"), hereby certifies to Financial Security
Assurance Inc. ("Financial Security"), with reference to Financial Guaranty
Insurance Policy No. 50689-N dated June 18, 1998, including Endorsement No. 1
thereto, (the "Policy") issued by Financial Security in respect of Aames
Mortgage Trust 1998-B, Mortgage Pass-Through Certificates, Series 1998-B, Class
A-1F, Class A-2F, Class A-3F, Class A-4F, Class A-5F, Class A-6F and Class A-IO
that:
(i) The Trustee is the Trustee under the Pooling and Servicing
Agreement for the Holders.
(ii) With respect to the [Class A-1F Certificates] [Class A-2F
Certificates] [Class A-3F Certificates] [Class A-4F Certificates] [Class
A-5F Certificates] [Class A-6F Certificates] [Class A-IO Certificates]
for the Distribution Date in _______, the related Insured Amount due
under the Policy is $_______.
(iii) The Trustee is making a claim under the Policy for the
Insured Amount to be applied to distributions of principal or interest
or both with respect to the Certificates.
(iv) The Trustee agrees that, following receipt of funds from
Financial Security, it shall (a) hold such amounts in trust and apply
the same directly to the payment of Insured Amounts on the Certificates
when due; (b) not apply such funds for any other purpose; (c) not
commingle such funds with other funds held by the Trustee and (d)
maintain an accurate record of such payments with respect to each
Certificate and the corresponding claim on the Policy and proceeds
thereof and, if the Certificate is required to be surrendered for such
payment, shall stamp on each such Certificate the legend "$[insert
applicable amount] paid by Financial Security and the balance hereof has
been cancelled and reissued" and then shall deliver such Certificate to
Financial Security.
A-1
<PAGE> 8
Policy No.: 50689-N Date of Issuance: June 18, 1998
(v) The Trustee, on behalf of the Certificateholders, hereby
assigns to Financial Security the rights of the Certificateholders with
respect to the Trust Fund to the extent of any payments under the
Policy, including, without limitation, any amounts due to the
Certificateholders in respect of securities law violations arising from
the offer and sale of the Trust Fund, subject to the limitations set
forth in Section 3.19(c) of the Pooling and Servicing Agreement. The
foregoing assignment is in addition to, and not in limitation of, rights
of subrogation otherwise available to Financial Security in respect of
such payments. The Trustee shall take such action and deliver such
instruments as may be reasonably requested or required by Financial
Security to effectuate the purpose or provisions of this clause (v).
(vi) The Trustee, on its behalf and on behalf of the
Certificateholders, hereby appoints Financial Security as agent and
attorney-in-fact for the Trustee and each such Certificateholder in any
legal proceeding with respect to the Trust Fund. The Trustee hereby
agrees that Financial Security may at any time during the continuation
of any proceeding by or against the Seller under the United States
Bankruptcy Code or any other applicable bankruptcy, insolvency,
receivership, rehabilitation or similar law (an "Insolvency Proceeding")
direct all matters relating to such Insolvency Proceeding, including
without limitation, (A) all matters relating to any claim in connection
with an Insolvency Proceeding seeking the avoidance as a preferential
transfer of any payment with respect to the Trust Fund (a "Preference
Claim"), (B) the direction of any appeal of any order relating to any
Preference Claim at the expense of Financial Security but subject to
reimbursement as provided in the Insurance and Indemnity Agreement,
dated as of June 1, 1998, between the Company, the Transferor and
Financial Security and (C) the posting of any surety, supersede as or
performance bond pending any such appeal. In addition, the Trustee
hereby agrees that Financial Security shall be subrogated to, and the
Trustee on its behalf and on behalf of each Certificateholder, hereby
delegates and assigns, to the fullest extent permitted by law, the
rights of the Trustee and each Certificateholder in the conduct of any
Insolvency Proceeding, including, without limitation, all rights of any
party to an adversary proceeding or action with respect to any court
order issued in connection with any such Insolvency Proceeding.
(vii) Payment should be made by wire transfer directed to the
[Policy Payments Account].
Unless the context otherwise requires, capitalized terms used in this
Notice of Claim and Certificate and not defined herein shall have the meanings
provided in the Policy.
A-2
<PAGE> 9
Policy No.: 50689-N Date of Issuance: June 18, 1998
IN WITNESS WHEREOF, the Trustee has executed and delivered this Notice
of Claim and Certificate as of the _______ day of _____________________, _____.
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., as Trustee
By:_________________________
Title:______________________
- --------------------------------------------------------------------------------
For Financial Security or Fiscal Agent Use Only
Wire transfer sent _____________ by _____________________________________
Confirmation Number ___________________________________________
A-3
<PAGE> 1
EXHIBIT 10.1
INITIAL MORTGAGE LOAN CONVEYANCE AGREEMENT
BETWEEN
AAMES CAPITAL CORPORATION
AS SELLER
AND
AAMES CAPITAL ACCEPTANCE CORP.
AS PURCHASER
Dated as of June 1, 1998
<PAGE> 2
Initial Mortgage Loan Conveyance Agreement
This Initial Mortgage Loan Conveyance Agreement (this
"Agreement"), dated as of June 1, 1998, is between Aames Capital Corporation
(the "Seller") and Aames Capital Acceptance Corp. (the "Purchaser").
The Seller intends to convey and the Purchaser intends to acquire
certain home equity mortgage loans (the "Mortgage Loans") as provided in this
Agreement. The Purchaser intends to convey the Mortgage Loans to Bankers Trust
Company of California, N.A., as trustee (the "Trustee") for the Aames Mortgage
Trust 1998-B (the "Trust") under a pooling and servicing agreement, to be dated
as of June 1, 1998 (the "Pooling and Servicing Agreement"), by and among Aames
Capital Acceptance Corp., as transferor, Aames Capital Corporation, as servicer,
and the Trustee, pursuant to which Mortgage Pass-Through Certificates, Series
1998-B (the "Certificates") will be issued.
Now, therefore, in consideration of the premises and the mutual
agreements set forth herein, the parties agree as follows:
SECTION 1. Definitions. Whenever used in this Agreement, the following
words and phrases, unless the context otherwise requires, shall have the
meanings specified in this Section.
Adjustable Rate Group: The Mortgage Loans identified in the Mortgage
Loan Schedule as having been assigned to the Adjustable Rate Group, including
any Qualified Replacement Mortgage Loans delivered in replacement thereof.
Adjustable Mortgage Rate 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 and subject to any Minimum Rate, Maximum Rate and
periodic limitations or adjustment from time to time, all as set forth in the
Mortgage Loan Schedule.
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 Initial Mortgage Loan Conveyance Agreement and all
amendments hereof and supplements hereto.
Appraised Value: The appraised value of any Mortgaged Property based
upon the appraisal made at the time of the origination of the related Mortgage
Loan or, in the case of a
1
<PAGE> 3
Mortgage Loan that is a purchase money mortgage loan, the sales price of the
related Mortgage Property if such sales price is less than the appraised value.
Business Day: Any day other than (a) a Saturday or Sunday or (b) a day
on which banking institutions in the Sate of California or the Sate of New York
are required or authorized by law, executive order or governmental decree to be
closed.
Certificate Account: As defined in Article I of the Pooling and
Servicing Agreement.
Certificateholder or Holder: As defined in Article I of the Pooling and
Servicing Agreement.
Closing: The closing of the conveyance of the Mortgage Loans pursuant
to this Agreement.
Closing Date: June 18, 1998.
Closing Documents: All documents specified in Section 6 of this
Agreement.
Code: The Internal Revenue Code of 1986, as amended.
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.
Cut-off Date: As to each Mortgage Loan, the date specified as the
"Cut-off Date" in the Mortgage Loan Schedule.
Cut-off Date Principal Balance: As to any Mortgage, its principal
balance as of open of business on the Cut-off Date.
Defective Mortgage Loan: Any Mortgage Loan that is required to be
repurchased or substituted by the Seller pursuant to Section 3(g) or Section 5
of this Agreement.
Deleted Mortgage Loan: Any Mortgage Loan replaced or to be replaced by
a Qualified Replacement Mortgage Loan.
FEMA: The Federal Emergency Management Agency and its successors in
interest.
Financial Guaranty 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.
2
<PAGE> 4
Fixed Rate Group: The 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 Loan: Any Mortgage Loan assigned to the Fixed Rate
Group.
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 Mortgage Loan Rate.
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 Pool Balance: $525,084,767.23, which is the aggregate of the
principal balances of the Mortgage Loans pursuant to this Agreement as of the
close of business on the applicable Cut-off Dates, after application of all
payments of principal received in respect of such Mortgage Loans before the
applicable Cut-off Dates.
Lien: As applied to the property or assets (or the income or profits
therefrom) of any Person, in each case whether the same is consensual or
nonconsensual or arises by contract, operation of law, legal process or
otherwise: (a) any mortgage, lien, pledge, attachment, charge, lease,
conditional sale or other title retention agreement, or other security interest
or encumbrance of any kind or (b) any arrangement, express or implied, under
which such property or assets are transferred, sequestered or otherwise
identified for the purpose of subjecting or making available the same for the
payment of debt or performance of any other obligation in priority to the
payment of the general, unsecured creditors of such Person.
Maximum Rate: With respect to any Adjustable Rate Mortgage Loan, any
absolute maximum Mortgage Loan Rate, set by provisions in the related Mortgage
Note.
Minimum Rate: With respect to any 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 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, 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 collection allocable to
payments made by Mortgagors for payment of insurance premiums or similar items.
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.
3
<PAGE> 5
Mortgage File: The file for each Mortgage Loan containing the items
specified on Exhibit C annexed hereto.
Mortgage Loan: Each of the Mortgage Loans listed on the Mortgage Loan
Schedule that are the subject of this Agreement.
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 other 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: The schedule of Mortgage Loans annexed hereto
as Exhibit A setting 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 balance;
(g) its Cut-off Date Principal Balance; (h) the related Mortgage Loan Rate as of
the applicable 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 Payment; (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 balance of such Mortgage Loan to the Appraised Value of the
related Mortgaged Property; (l) the status of Liens on the related Mortgage; (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 manufactured home or a unit in a condominium or
planned unit development; (o) whether the Mortgage Loan has been originated by
an Affiliate of the Seller; and (p) whether the Mortgage Loan is being serviced
by a Sub-Servicer and, if so, the identity of such Sub-Servicer. The Mortgage
Loan Schedule shall be amended from time to time to reflect the repurchase or
substitution of Mortgage Loans pursuant to this 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.
Original Adjustable Rate Group Pool Balance: $275,028,937.98.
Original Fixed Rate Group Pool Balance: $205,055,829.25.
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.
4
<PAGE> 6
Payment Date: The date of payment on the Certificates pursuant to the
Pooling and Servicing Agreement, which date is the 15th day of each month or, if
such day is not a Business Day, the Business Day immediately following such 15th
day, beginning July 15, 1998.
Person: Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
Pooling and Servicing Agreement: That certain pooling and servicing
agreement, to be dated as of June 1, 1998, among the Seller, the Servicer and
the Trustee relating to the acquisition by the Trustee of the Mortgage Loans
from the Purchaser and the servicing of the Mortgage Loans by the Servicer.
Purchaser: Aames Capital Acceptance Corp., a Delaware corporation.
Qualified Replacement Mortgage Loan: Any Mortgage Loan that is
substituted for a Deleted Mortgage Loan pursuant to Section 3(g) or Section 5 of
this Agreement that must, at the end of the calendar month 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
calendar month preceding the date of substitution, (ii) if the Deleted Mortgage
Loan is an Adjustable Rate Mortgage Loan, have the Mortgage Loan Rate computed
on substantially 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 not an Adjustable 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 8606(a)(14) of the Code, (vi) has the same or
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 4,
(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 (which, in the
case of the Adjustable Rate Mortgage Loans, must be acceptable to the Financial
Guaranty Insurer), except that the requirements of clauses (iv) through (viii)
hereof must be satisfied as to each Qualified Replacement Mortgage Loan.
Release Price: With respect to any Defective Mortgage Loan, an amount
equal to (i) the sum of (A) the principal balance of such Defective Mortgage
Loan as of the beginning of the calendar month next preceding the Remittance
Date on which such repurchase is required to
5
<PAGE> 7
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 calendar month immediately preceding the Remittance Date
on which such repurchase occurs and (C) any previously unreimbursed Servicing
Advances made on or in respect of such Defective Mortgage Loan, less (ii) any
payments of principal and interest in respect of such Defective Mortgage Loan
made by or on behalf of the related Mortgagor during such calendar month.
Remittance Date: As to any Payment Date, the third Business Day prior
to such Payment Date.
Seller: Aames Capital Corporation, a California corporation.
Servicer: Aames Capital Corporation or any successor servicer appointed
as provided pursuant to the Pooling and Servicing Agreement.
Servicing Advances: As defined in Article I of the Pooling and
Servicing Agreement.
SECTION 2. Agreement to Acquire. The Seller agrees to convey, and the
Purchaser agrees to acquire, the Mortgage Loans identified on Mortgage Loan
Schedule, as such Mortgage Loan Schedule may be amended to reflect the actual
Mortgage Loans accepted by the Purchaser pursuant to the terms hereof. The
conveyance of the Mortgage Loans shall take place on the Closing Date. The
consideration for the Mortgage Loans conveyed pursuant to this Agreement shall
be specified on Exhibit B annexed hereto, which consideration shall be exchanged
on or prior to the Closing Date.
SECTION 3. Conveyance of Mortgage Loans.
(a) Effective as of the Closing Date, subject only to receipt of the
consideration referred to in Section 2, the Seller does hereby transfer, assign,
set over and otherwise convey to the Purchaser, without recourse, all the right,
title and interest of the Seller in and to the Mortgage Loans identified on the
Mortgage Loan Schedule as of such date.
(b) The Purchaser or its assignee shall be entitled to receive all
payments of principal and interest received or deemed to be received by the
Seller on or with respect to the Mortgage Loans on or after the applicable
Cut-off Dates, and all other recoveries of principal and interest collected on
or after the applicable Cut-off Dates (other than in respect of interest that
accrued on such Mortgage Loans during periods prior to the applicable Cut-off
Dates). All payments of interest due before the applicable Cut-off Dates but
collected after the applicable Cut-off Dates, and recoveries of principal and
interest collected before the applicable Cut-off Dates (other than amounts
representing interest that accrued on the Mortgage Loans during any period on or
after the applicable Cut-off Dates), shall belong to, and be promptly remitted
to, the Seller.
(c) In connection with its conveyance of the Mortgage Loans pursuant to
subsection (a) above, the Seller shall deliver to and deposit with, or cause to
be delivered to and deposited with, the Purchaser or its designee, on or before
the Closing Date, the Mortgage Files. The Seller hereby acknowledges that the
Purchaser intends to transfer the Mortgage Loans to the
6
<PAGE> 8
Trust to be formed pursuant to the Pooling and Servicing Agreement. In order to
relieve the Purchaser of certain administrative burdens and expenses that the
Purchaser otherwise would have to incur in connection with the transfer thereof
under the Pooling and Servicing Agreement, the Seller hereby agrees to deliver
each Mortgage File, including assignments of mortgage executed in blank and in
recordable form, to the Trustee for the benefit of the Trust in satisfaction of
its obligation to deliver the same to the Purchaser hereunder. The Seller
undertakes to complete and to record each such assignment on the terms and
conditions specified in the Pooling and Servicing Agreement, and the parties
hereto expressly agree and acknowledge that the Trustee is intended to be a
third party beneficiary of this undertaking, and hereby grants to the Purchaser
and to the Trustee (in its capacity as such) full power, authority and right to
complete any or all such assignments and to record the same, and hereby
undertakes to take no action or make any claim inconsistent with any interest
created by such completion or recordation. The parties hereto expressly
acknowledge that such actions by the Seller are not intended to evidence, and
shall not be deemed to evidence, any intent contrary to the express intent of
the parties hereto that the transfer pursuant to this Agreement constitute a
sale from Seller to Purchaser. In addition, the Seller shall bear all recording
and/or filing costs related to the Mortgage Loans, and if any document or
instrument indicated on Exhibit C as being required to be recorded or filed, as
the case may be, is lost or returned unrecorded or unfiled, as the case may be,
because of a defect therein, the Seller shall promptly prepare or cause to be
prepared a substitute therefor or cure such defect, as the case may be.
If the Seller 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 Seller shall deliver to the Purchaser or its
designee 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 Seller shall promptly deliver to the
Purchaser or its designee such original Mortgage or intervening mortgage
assignment with evidence of recording indicated thereon upon receipt thereof
from the public recording official. If the Purchaser 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.
(d) All documents and records relating to the Mortgage Loans that are
held by or on behalf of the Seller, but not specified on Exhibit C as required
to be a part of a Mortgage File, shall be delivered to the Purchaser or its
designee on or before the Closing Date.
(e) In connection with its conveyance of the Mortgage Loans pursuant to
subsection (a) above, the Seller shall deliver to the Purchaser or its designee
in respect of the Mortgage Loans, on or before the Closing Date, all amounts, if
any, received on each Mortgage Loan on or after the applicable Cut-off Date
(other than amounts representing interest that
7
<PAGE> 9
accrued during any period prior to the applicable Cut-off Date) and held by or
on behalf of the Seller.
(f) The Seller confirms to the Purchaser that it has caused its
computer records relating to the Mortgage Loans to indicate by a code that the
Mortgage Loans have been sold to the Purchaser and that the Seller will treat
the transaction contemplated by such sale and assignment as a sale in accordance
with generally accepted accounting principles and will reflect such sale on its
primary accounting records.
(g) The Purchaser or its assignees will cause the Trustee, for the
benefit of the Certificateholders, to review each Mortgage File within 45 days
after the Closing Date to determine whether the documents described in items
(a)-(c), (e) and (f) on Exhibit C have been executed and received, and whether
such documents relate to the Mortgage Loans identified in the Mortgage Loan
Schedule 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,
the Purchaser or its assignees shall promptly notify the Seller of such findings
and shall provide a copy of such notice to the Financial Guaranty Insurer. The
Seller shall have a period of 60 days from the date of such notice to correct or
cure any such defect.
The costs relating to the delivery of other documents specified in this
Section shall be borne by the Seller.
If the Seller has been notified of a defect in a Mortgage File that
materially and adversely affects the value of the related Mortgage Loan, and
such defect remains uncured after such 60-day period, the Seller shall, (i) in
the case of a defect consisting solely of the failure of the Seller to deliver
the original Mortgage or any intervening mortgage assignment with evidence of
recording thereon for reasons set forth in Section 3(c), on the first Remittance
Date occurring after the expiration of eight months from the Closing Date, and
(ii) in the case of all other defects, on the Remittance Date occurring not
later than 60 days after receipt of notice of such 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 holder of such Mortgage Loan at such
time at a price equal to the Release Price, which shall be accomplished by
deposit of monies by the Seller in the Certificate Account on such Remittance
Date, or (II) substitute one or more Qualified Replacement Mortgage Loans for
the related Mortgage Loan.
Upon receipt by the Purchaser or its assignees of an officer's
certificate of the Seller to the effect that the Release 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 Release Price has been received by it, the Purchaser shall
cause the execution and delivery of 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
8
<PAGE> 10
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 calendar month prior to the Remittance Date on which such substitution
occurs will be retained by the Seller. No amounts will be remitted to Seller in
respect of the payments received on such Deleted Mortgage Loan in the calendar
month prior to the Remittance Date representing amounts due or accrued thereon
prior to such Remittance Date, but the Seller shall thereafter be entitled to
retain all amounts received subsequent to such Remittance Date 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 Purchaser or
its designee and the amount, if any, by which the principal balance of the
related Deleted Mortgage Loan as of the related Remittance Date exceeds the
principal balance of the Qualified Replacement Mortgage Loan as of the first day
of the calendar month in which such date occurs shall be remitted by the Seller
for deposit in the Certificate Account on the Remittance Date on which the
substitution occurs. Upon receipt by the Purchaser or its assignee 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 by the Trustee and (b) the new Mortgage File (containing all of the
documents referred to in clauses (a), (c), (e) and (f) of Exhibit C), the
Purchaser shall cause to be released to the Seller the Mortgage File related to
the Deleted Mortgage Loan or property and shall cause the execution and delivery
of 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
Purchaser and its assignees 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 Purchaser and its assignees.
(h) The Seller shall, at any time upon the request of the Purchaser or
its assignees, without limiting the obligations of the Seller under this
Agreement, execute, acknowledge and deliver all such additional documents and
instruments and all such further assurances and will do or cause to be done all
such further acts and things as may be proper or reasonably necessary to carry
out the intent of this Agreement.
SECTION 4. Representations, Warranties and Covenants of Seller.
(a) The Seller hereby represents and warrants to and covenants with the
Purchaser, as of the date hereof, and shall be deemed to have represented and
warranted to and covenanted with the Purchaser, as of the Closing Date, that:
(i) The Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of
California. The Seller has the power and authority to execute and
deliver this Agreement and to perform its obligations in accordance
9
<PAGE> 11
herewith; the execution, delivery and performance of this Agreement
(including all instruments of transfer to be delivered pursuant to this
Agreement) by the Seller 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 Seller enforceable against the Seller 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 bylaws of the Seller 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 Seller or its property is subject, or result in
the violation of any law, rule, regulation, order, judgment or decree
to which the Seller 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 Seller 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 Seller;
(iii) There is no action, suit, proceeding or investigation
pending or, to the best of the Seller's knowledge, threatened against
the Seller 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 Seller or in any
material impairment of the right or ability of the Seller to carry on
its business substantially as now conducted, or in any material
liability on the part of the Seller or that would draw into question
the validity of this Agreement or the Mortgage Loans, or that would be
likely to impair the ability of the Seller to perform under the terms
of this Agreement;
(iv) The Seller is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal,
state, municipal or governmental agency, which default might have
consequences that would materially and adversely affect the condition
(financial or other) or operations of the Seller or its properties; and
(v) The transfer, assignment and conveyance of the Mortgage
Loans by the Seller pursuant to this Agreement are not subject to the
bulk transfer laws or any similar
10
<PAGE> 12
statutory provisions in effect in any applicable jurisdiction and are
not being transferred with the intent to hinder, delay or defraud any
creditors.
(b) The Seller hereby represents and warrants to the Purchaser as to
each Mortgage Loan, as of the date specified below or, if no such date is
specified, as of the Closing Date, that:
(i) The information with respect to each Mortgage Loan set
forth in the Mortgage Loan Schedule is true and correct as of the
applicable Cut-off Date;
(ii) All of the original or certified documentation set forth
on Exhibit C (including all material documents related thereto), with
respect to each Mortgage Loan has been or will be delivered to the
Purchaser or its designee on the Closing Date or as otherwise provided
in Section 3 hereof;
(iii) Each Mortgaged Property is improved by a one- to
four-family residential dwelling owned by the related Mortgagor in fee
simple, which may include condominiums, townhouses and manufactured
housing or modular homes that are permanently affixed to the land and
constitute 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) As of the applicable Cut-off Date, no Mortgage Loan in
the Fixed Rate Group has a Combined Loan-to-Value Ratio in excess of
73.45% and no Mortgage Loan in the Adjustable Rate Group has a
Loan-to-Value Ratio in excess of 78.31%;
(v) Each Mortgage Loan was originated by the Seller or an
Affiliate of the Seller or an by an originator not affiliated with the
Seller authorized to originate such Mortgage Loan and is being serviced
by the Seller;
(vi) Each Mortgage Loan included in the Fixed Rate Group as of
the applicable Cut-off Date bears a fixed Mortgage Loan Rate of at
least 6.500% per annum and each Mortgage Loan in the Adjustable Rate
Group has 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 on the Mortgage Loan
Schedule; each Adjustable Rate Mortgage Loan has a Minimum Rate of not
less than 4.950% per annum and a Mortgage Loan Rate as of the
applicable Cut-off Date of not less than 9.775% per annum;
(vii) Each Mortgage Note provides for a schedule of
substantially level and equal Monthly Mortgage Payments (subject, in
the case of the Adjustable Rate Mortgage Loans, 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 Mortgage
Loans in the Fixed Rate Group representing not more than 2.54% of the
Original Fixed Rate Group Pool Balance and not more than 0.04% of the
Original Adjustable Rate Group Pool Balance, provide for level and
equal Monthly Mortgage Payments that are sufficient to amortize
11
<PAGE> 13
fully the principal balances of such Mortgage Notes over a period not
exceeding 30 years, with "balloon" payments at stated maturity that are
substantially in excess of the Monthly Mortgage Payments;
(viii) 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 Mortgage Property, and in
all cases subject 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, or in the aggregate,
materially and adversely affect the benefits of the security intended
to be provided by such Mortgage;
(ix) 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 Purchaser 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;
(x) The Mortgage Loan Rate on each Adjustable Rate Mortgage
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. 38 Mortgage Loans
are subject to negative amortization. The Mortgage Notes relating to
not more than 80.86% of the Mortgage Loans in the Adjustable Rate
Group, by Original Adjustable Rate Pool Balance or by Adjustable Rate
Group Balance as of the Closing Date, provide for initial Adjustment
Dates that are more than one year and less than three years from the
applicable Cut-off Date;
(xi) 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;
(xii) As of the applicable Cut-off Date (a) no Mortgage Loan
had two or more Monthly Mortgage Payments past due and not more than
1.04% of the Mortgage Loans (by Cut-off Date principal balance) had
once or more Monthly Payments past due, (b) no Mortgage Loan has been
60 or more days contractually delinquent more than once during the
12-month period immediately preceding the Cut-off Date, (c) no Mortgage
Loan has
12
<PAGE> 14
been 90 or more days contractually delinquent in the last 12-month
period preceding the applicable Cut-off Date;
(xiii) As of the applicable Cut-off Date, 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
substantial damage and is in good repair and is not affected by
hazardous or toxic wastes or substances;
(xiv) 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 of rescission, set-off,
counterclaim or defense, including the defense of usury, and no such
right of rescission, set-off, counterclaim or defense has been asserted
with respect thereto;
(xv) As of the applicable Cut-off Date, 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;
(xvi) 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;
(xvii) 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 Purchaser or its
assignees upon consummation of the transactions contemplated by this
Agreement;
(xviii) As of the applicable Cut-off Date, 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 (i) 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), (ii) the minimum amount required to
compensate for damage or loss on a replacement cost basis or (iii) the
13
<PAGE> 15
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 loan covered by a hazard
typically insured against it by the type of policy referred to in
clause (xviii)(a);
(xix) 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 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;
(xx) Each Mortgage and 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;
(xxi) 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 Purchaser 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
Purchaser;
(xxii) As of the applicable Cut-off Date, no more than .38% of
the Original Fixed Rate Group Pool Balance is secured by Mortgaged
Properties located within any single zip code area, and no more than
.47% of the Original Adjustable Rate Group Pool Balance is secured by
Mortgaged Properties located within any single zip code area;
(xxiii) 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
Purchaser) have been recorded in the appropriate jurisdictions wherein
such recordation is required to perfect the lien thereof for the
benefit of the Purchaser and it assignees (or, subject to Section 3
hereof, are in the process of being recorded);
(xxiv) 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
14
<PAGE> 16
recorded, if necessary, to protect the interests of the Purchaser and
its assignees and that has been delivered to the Purchaser or its
designee. 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;
(xxv) 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. Any and all requirements as to
completion of any on-site or off-site improvements and as to
disbursements of any escrow funds therefor have been complied with. All
costs, fees and expenses incurred in making or closing or recording
such Mortgage Loans were paid;
(xxvi) No Mortgage Note is or has been secured by any
collateral, pledged account or other security other than the lien of
the corresponding Mortgage;
(xxvii) No Mortgage Loan was originated under a buydown plan;
(xxviii) No Mortgage Loan has a shared appreciation feature or
other contingent interest feature;
(xxix) Each Mortgaged Property consists of one or more
contiguous parcels of real property with a residential dwelling erected
thereon;
(xxx) 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;
(xxxi) Any advances made to the Mortgagor after the date of
origination of a Mortgage Loan but prior to the applicable Cut-off Date
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 applicable Cut-off Date 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;
(xxxii) 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
and no proceedings are pending;
(xxxiii) 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;
15
<PAGE> 17
(xxxiv) 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 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;
(xxxv) 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
Purchaser or its assignees to any trustee under any deed of trust,
except in connection with a trustee's sale after default by the related
Mortgagor;
(xxxvi) 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;
(xxxvii) 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;
(xxxviii) There is no default, breach, violation or event of
acceleration existing under any Mortgage or the related Mortgage 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;
(xxxix) No instrument of release or waiver has been executed
in connection with any Mortgage Loan, and no Mortgagor and no Mortgaged
Property 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 that has been delivered to the
Purchaser or its designee and no Mortgage has been satisfied, canceled,
subordinated or rescinded, in whole or part;
(xl) 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;
(xli) At least 98.51% of the Mortgage Loans in the Fixed Rate
Group (by Original Fixed Rate Group Pool Balance) and at least 98.33%
of the Mortgage Loans in
16
<PAGE> 18
the Adjustable Rate Group (by Original Adjustable Rate Group Pool
Balance) are secured by Mortgaged Properties that are occupied by the
related Mortgagors;
(xlii) 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 Loan proceeds, whichever is greater, to
the date that precedes by one month the due date of the first
installment of principal and interest;
(xliii) 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 (xli), will be within 30 days of the
Closing Date, (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;
(xliv) No Mortgage Loan was selected by the Seller for
conveyance to the Purchaser on any basis intended to adversely affect
the Purchaser or its assignees;
(xlv) 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;
(xlvi) 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;
(xlvii) 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;
(xlviii) The Seller 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;
17
<PAGE> 19
(xlvix) Each Adjustable Rate Mortgage Loan that (i) has a
first Adjustment Date with six months of its origination date was
underwritten or re-underwritten as though such Mortgage Loan would bear
a rate of interest at or equal to the 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 such
Mortgage Loan would bear a rate of interest equal to its specified
initial interest rate;
(xlx) As of the applicable Cut-off Date, no Mortgage Loan is
secured by more than one Mortgaged Property;
(l) 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;
(li) All insurance policies 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;
(lii) 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;
(liii) Each Mortgage Loan has a Monthly Mortgage Payment due
during the first calendar month after such Mortgage Loan was
transferred to the Purchaser.
(liv) All Mortgage Loans were underwritten or re-underwritten
in accordance with the underwriting guidelines of the Seller;
(lv) 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, builder or
developer, any other party having statutory or other 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;
(lvi) 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
18
<PAGE> 20
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 loss; and
(lvii) Mortgage Loans in the Fixed Rate Group representing not
less than 25.00% of the aggregate principal balance thereof were
assigned a credit grade of "A" by the Seller at the time such Mortgage
Loans were originated or acquired, as applicable, by the Seller;
Mortgage Loans in the Fixed Rate Group representing not less than
35.00% of the aggregate principal balance thereof were assigned a
credit grade of "A-" by the Seller at the time such Mortgage Loans were
originated or acquired, as applicable, by the Seller; Mortgage Loans in
the Fixed Rate Group representing not less than 23.00% of the aggregate
principal balance thereof were assigned a credit grade of "B" by the
Seller at the time such Mortgage Loans were originated or acquired, as
applicable, by the Seller; Mortgage Loans in the Fixed Rate Group
representing not less than 5.00% of the aggregate principal balance
thereof were assigned a credit grade of "C" by the Seller at the time
such Mortgage Loans were originated or acquired, as applicable, by the
Seller; Mortgage Loans in the Fixed Rate Group representing not more
than 3.00% of the aggregate principal balance thereof were assigned a
credit grade of "C-" by the Seller at the time such Mortgage Loans were
originated or acquired, as applicable, by the Seller; and Mortgage
Loans in the Fixed Rate Group representing not more than 4.00% of the
aggregate principal balance thereof were assigned a credit grade of "D"
by the Seller at the time such Mortgage Loans were originated or
acquired, as applicable, by the Seller. Mortgage Loans in the
Adjustable Rate Group representing not less than 27.00% of the
aggregate principal balance thereof were assigned a credit grade of "A"
by the Seller at the time such Mortgage Loans were originated or
acquired, as applicable, by the Seller; Mortgage Loans in the
Adjustable Rate Group representing not less than 30.00% of the
aggregate principal balance thereof were assigned a credit grade of
"A-" by the Seller at the time such Mortgage Loans were originated or
acquired, as applicable, by the Seller; Mortgage Loans in the
Adjustable Rate Group representing not less than 24.00% of the
aggregate principal balance thereof were assigned a credit grade of "B"
by the Seller at the time such Mortgage Loans were originated or
acquired, as applicable, by the Seller; Mortgage Loans in the
Adjustable Rate Group representing not less than 5.00% of the aggregate
principal balance thereof were assigned a credit grade of "C" by the
Seller at the time such Mortgage Loans were originated or acquired, as
applicable, by the Seller; Mortgage Loans in the Adjustable Rate Group
representing not more than 2.00% of the aggregate principal balance
thereof were assigned a credit grade of "C-" by the Seller at the time
such Mortgage Loans were originated or acquired, as applicable, by the
Seller; and Mortgage Loans in the Adjustable Rate Group representing
not more than 8.00% of the aggregate principal balance thereof were
assigned a credit grade of "D" by the Seller at the time such Mortgage
Loans were originated or acquired, as applicable, by the Seller. Each
credit grade so assigned to any Mortgage Loan has been determined in
accordance with the Seller's internal credit grading system and not
pursuant to any other scale or objective standard.
(c) The Seller shall represent and warrant as to the accuracy of the
matters set forth in Section 6(e) hereof to the Purchaser or any subsequent
holder of the Mortgage Loans.
19
<PAGE> 21
(d) The representations and warranties set forth in this Section 4
shall survive the sale and assignment of the Mortgage Loans to the Purchaser and
any subsequent assignment of the Mortgage Loans by the Purchaser and its
assignees. Upon discovery by the Seller, the Servicer or the Purchaser (or any
assignee of the Purchaser) 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, the party discovering such breach shall give prompt
written notice to the other parties hereto and to the Financial Guaranty
Insurer.
SECTION 5. Reacquisitions and Substitutions.
Within 60 days of its discovery or its receipt of notice of a breach
(including, without limitation, breaches as to which Section 4(d) is applicable)
of any representation or warranty set forth in Section 4, 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 Remittance Date in the month following the calendar
month in which any such cure period expired, but in all events within 90 days of
the earlier of its discovery or 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 holder of such Mortgage Loan at such time in the same
manner and subject to the same conditions as set forth in Section 3(g) 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 3(g). Upon making any
such repurchase or substitution, the Purchaser shall cause the execution and
delivery of an instrument of assignment or transfer, without recourse, to the
same extent as set forth in Section 3(g) 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 Purchaser and its
assignees except as expressly provided in Section 10 with respect to a breach of
the representation and warranty set forth in clause (xvi) of Section 4(b).
SECTION 6. Closing. The Closing shall be held at the offices of
O'Melveny & Myers LLP, 600 South Hope Street, Los Angeles, California at 10:00
a.m., California time, on the Closing Date.
20
<PAGE> 22
The Closing shall be subject to each of the following conditions:
(a) All of the representations and warranties of the Seller set forth
in Sections 4(a) and 4(b) of this Agreement shall be true and correct in all
material respects as of the date or dates made.
(b) All of the obligations of the Seller under Sections 3(c), 3(d) and
3(e) of this Agreement shall have been satisfied.
(c) The Closing Documents, in such forms as are agreed upon and
acceptable to the Purchaser, shall be duly executed and delivered by all
signatories as required pursuant to the respective terms thereof.
(d) All other terms and conditions of this Agreement required to be
complied with on or before the Closing Date shall have been complied with and
the Seller shall have the ability to comply with all terms and conditions and
perform all duties and obligations required to be complied with or performed
after the Closing Date.
(e) The information purporting to describe the Seller and the
characteristics of the Mortgage Loans, the related Mortgaged Properties and the
Mortgagors thereunder contained in the prospectus and prospectus supplement
relating to the Certificates, shall be in such form as is agreed upon and
acceptable to the Purchaser and the Seller.
(f) The Seller shall have paid all fees and expenses payable by it to
the Purchaser or otherwise pursuant to this Agreement.
Both parties shall use their best efforts to perform their respective
obligations hereunder in a manner that will enable the Purchaser to acquire the
Mortgage Loans on the Closing Date. Notwithstanding the foregoing, satisfaction
by the Seller or the Purchaser of its respective obligations under the foregoing
provisions of this Section 6 shall not be conditions precedent to the obligation
of the Seller or the Purchaser, respectively, to close the transactions
contemplated by this Agreement.
SECTION 7. Closing Documents. The Closing Documents shall consist of
the following:
(a) This Agreement duly executed by the Purchaser and the Seller; (b) a
certificate of the Seller, executed by a duly authorized officer of the Seller
and dated the Closing Date, to the effect that: (i) the representations and
warranties of the Seller in this Agreement are true and correct in all material
respects at and as of the Closing Date with the same effect as if made on the
Closing Date and (ii) the Seller has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied at or
prior to the Closing Date;
(c) An officer's certificate from an officer of the Seller, in his or
her individual capacity, dated the Closing Date, and upon which the Purchaser
may rely, to the effect that each individual who, as an officer or
representative of the Seller, signed this Agreement or any other
21
<PAGE> 23
document or certificate delivered on or before the Closing Date in connection
with the transactions contemplated herein, was at the respective times of such
signing and delivery, and is as of the Closing Date, duly elected or appointed,
qualified and acting as such officer or representative, and the signatures of
such persons appearing on such documents and certificates are their genuine
signatures;
(d) The resolutions of the board of directors of the Seller and any
requisite shareholder consent authorizing the Seller to enter into the
transactions contemplated by this Agreement, the articles of incorporation and
bylaws of the Seller, and a certificate of good standing of the Seller issued by
the Secretary of State of the State of California dated not earlier than thirty
days prior to the Closing Date; and
(e) Such further certificates and documents as the Purchaser may
reasonably request.
SECTION 8. Servicing. As of the applicable Cut-off Dates, the Mortgage
Loans will be serviced by the Servicer pursuant to the terms of the Pooling and
Servicing Agreement.
SECTION 9. Grant of a Security Interest. It is the express intent of
the parties hereto that the conveyance of the Mortgage Loans by the Seller to
the Purchaser as provided in Section 3(a) hereof be, and be construed as, a
complete and absolute transfer by the Seller to the Purchaser of all of the
Seller's right, title and interest in and to the Mortgage Loans and not as a
pledge of the Mortgage Loans by the Seller to the Purchaser to secure a debt or
other obligation of the Seller. The Seller will treat such transfer as a sale of
the Mortgage Loans on all relevant books and records and other applicable
documents. However, if, notwithstanding the aforementioned intent of the
parties, the Mortgage Loans are held to be property of the Seller, then, (a) it
is the express intent of the parties that such conveyance be deemed a pledge of
the Mortgage Loans by the Seller to the Purchaser to secure a debt or other
obligation of the Seller and (b) (i) this Agreement shall also be deemed to be a
security agreement within the meaning of Article 9 of the California Uniform
Commercial Code; (ii) the conveyance provided for in Section 3(a) hereof shall
be deemed to be a grant by the Seller to the Purchaser of a security interest in
all of the Seller's right, title and interest in and to the Mortgage Loans, and
all amounts payable to the holder of the Mortgage Loans in accordance with the
terms thereof, and all proceeds of the conversion, voluntary or involuntary, of
the foregoing into cash, instruments, securities or other property, including
without limitation all such amounts, other than investment earnings, from time
to time held or invested pursuant to and in accordance with the provisions of
the Pooling and Servicing Agreement, whether in the form of cash, instruments,
securities or other property; (iii) the subsequent transfer of the Mortgage
Loans by the Purchaser to the Trustee as contemplated by the preamble hereto
shall be deemed in each case to be an assignment of any security interest
created hereunder; (iv) the possession by the Seller or any of their respective
agents, including, without limitation, the Trustee or its agent, of the Mortgage
Notes for the Mortgage Loans, and such other items of property relating to the
Mortgage Loans as constitute instruments, money, negotiable documents or chattel
paper shall be deemed to be "possession by the secured party" for purposes of
perfecting the security interest pursuant to Section 9-305 of the California
Uniform Commercial Code; and (v) notifications to persons (other than the
Trustee) holding such property, and acknowledgments, receipts or confirmations
22
<PAGE> 24
from persons holding such property, shall be deemed notifications to, or
acknowledgments, receipts or confirmations from, financial intermediaries,
bailees or agents (as applicable) of the secured party for the purpose of
perfecting such security interest under applicable law. The Seller and the
Purchaser shall, to the extent consistent with this Agreement, take such actions
as may be necessary to ensure that, if this Agreement were deemed to create a
security interest in the Mortgage Loans, such security interest would be deemed
to be a perfected security interest of first priority under applicable law and
will be maintained as such throughout the term of this Agreement and the Pooling
and Servicing Agreement.
SECTION 10. Indemnification of the Purchaser.
(a) The Seller shall indemnify the Purchaser and its assignees
(including, without limitation, the Trustee) for any liability incurred thereby
as a result of a breach of the representation and warranty set forth in clause
(xvi) of Section 4(b). This indemnity obligation shall be in addition to any
other obligation the Seller may have in connection with any such breach.
(b) The Seller shall defend, indemnify and hold harmless the Purchaser
and its assignees (including, without limitation, the Trustee) from and against
any and all taxes, except for taxes on the net income of the Purchaser or such
assignees, that may at any time be asserted against the Purchaser or its
assignees with respect to the transactions contemplated herein with respect to
the Mortgage Loans and reasonable costs and expenses in defending against the
same.
(c) The Seller shall defend, indemnify and hold harmless the Purchaser
and its assignees (including, without limitation, the Trustee) from and against
any and all reasonable costs, expenses, losses, damages, claims and liabilities
to the extent that such reasonable cost, expense, loss, damage, claim or
liability resulted by reason of reckless disregard of the Seller's obligations
and duties under this Agreement.
SECTION 11. No Petition. The Seller, by entering into this Agreement,
hereby covenants and agrees that it will not at any time institute against the
Purchaser or any of its assignees, or join in any institution against the
Purchaser of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any United States Federal or
state bankruptcy or similar law in connection with any obligations relating to
this Agreement.
SECTION 12. Other Liens or Interests. Except for the conveyances
hereunder, the Seller will not sell, pledge, assign or transfer to any other
Person, or grant, create, incur, assume or suffer to exist any Lien on any
interest therein, and the Seller shall defend the right, title, and interest of
the Purchaser and its assignees in, to and under the Mortgage Loans against all
claims of third parties claiming through or under such Seller; provided,
however, that such Seller's obligations under this Section 12 shall terminate
upon the termination of the Aames Mortgage Trust 1997-B pursuant to the Pooling
and Servicing Agreement.
SECTION 13. Assignment of Purchaser's Rights. The Seller acknowledges
that the Purchaser will, pursuant to the Pooling and Servicing Agreement, convey
the Mortgage Loans to
23
<PAGE> 25
the Trustee and assign its rights (but none of its obligations) under this
Agreement to the Trustee for the benefit of the Certificateholders. The
representations, warranties, covenants and indemnities of the Seller contained
in this Agreement and the rights of the Purchaser under this Agreement,
including under Section 5, are intended to benefit the Trustee and the
Certificateholders. The Seller also acknowledges that the Trustee on behalf of
the Certificateholders as assignee of the Purchaser's rights hereunder may
directly enforce, without making any prior demand on the Purchaser, all the
rights of the Purchaser hereunder including the rights under Section 5 hereof.
The Seller hereby consents to such sale and assignment and acknowledges that it
shall have no recourse hereunder against any Person other than to the Purchaser.
SECTION 14. Notices. All communications provided for or permitted
hereunder shall be in writing and shall be deemed to have been duly given if (a)
personally delivered, (b) mailed by registered or certified mail, postage
prepaid and received by the addressee, (c) sent by express courier delivery
service and received by the addressee or (d) transmitted by telex or facsimile
transmission (or any other type of electronic transmission agreed upon by the
parties) and confirmed by a writing delivered by any of the means described in
(a), (b) or (c), if to the Purchaser, addressed to the Purchaser in care of the
Servicer at 350 Grand Avenue, Los Angeles, California 90071, Attention: Barbara
Polsky, telecopy: (213) 210-5270 (or to such other address as may hereafter be
furnished to the Seller in writing by the Purchaser) and, if to the Seller,
addressed to the Seller in care of the Servicer at 350 Grand Avenue, Los
Angeles, California 90071, Attention: Barbara Polsky, telecopy: (213) 210-5000
(or to such other address as may hereafter be furnished to the Purchaser in
writing by the Seller).
SECTION 15. Representations, Warranties, Indemnities and Agreements to
Survive Delivery. All representations, warranties, indemnities and agreements
contained in this Agreement, incorporated herein by reference or contained in
the certificates of officers of the Seller submitted pursuant hereto, shall
remain operative and in full force and effect and shall survive delivery of the
Mortgage Loans by the Seller to the Purchaser.
SECTION 16. Waivers. No failure or delay on the part of the Purchaser
or its assignees in exercising any power, right or remedy under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such power, right or remedy preclude any other or further exercise thereof
or the exercise of any other power, right or remedy.
SECTION 17. Severability of Provisions. Any part, provision,
representation, warranty or covenant of this Agreement that is prohibited or
which is held to be void or unenforceable shall be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof. Any part, provision, representation, warranty or covenant of
this Agreement that is prohibited or unenforceable or is held to be void or
unenforceable in any particular jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any particular jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable
24
<PAGE> 26
law, the parties hereto waive any provision of law which prohibits or renders
void or unenforceable any provision hereof.
SECTION 18. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be an original, but which together shall
constitute one and the same agreement.
SECTION 19. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS, DUTIES,
OBLIGATIONS AND RESPONSIBILITIES OF THE PARTIES HERETO SHALL BE GOVERNED IN
ACCORDANCE WITH THE INTERNAL LAWS AND DECISIONS OF THE STATE OF CALIFORNIA.
SECTION 20. Further Assurances. The Seller and the Purchaser shall
execute and deliver such instruments and take such further actions as the other
party may, from time to time, reasonably request in order to effectuate the
purposes and to carry out the terms of this Agreement. The Seller hereby
undertakes to execute any additional or replacement assignments of Mortgage
Loans deemed by the Trustee or the Purchaser to be necessary or appropriate to
effectuate the complete sale and transfer of the Seller's rights and interests
therein, including any that are deemed necessary or appropriate in connection
with the completion and recording of assignments made hereunder that are to be
made in blank hereunder but are later to be completed in the name of the Trustee
in satisfaction of the Seller's undertakings as described in Section 3 hereof.
SECTION 21. Successors and Assigns. The rights and obligations of the
Seller under this Agreement shall not be assigned by the Seller without the
prior written consent of the Purchaser, except as provided in Section 22. The
parties hereto hereby expressly acknowledge that the Purchaser shall assign all
of its right, title and interest under this Agreement to the Trustee, for the
benefit of the Certificateholders, to which the Seller hereby expressly
consents. The Seller agrees to perform its obligations hereunder for the benefit
of the Trust and that the Trustee may enforce the provisions of this Agreement,
exercise the rights of the Purchaser and enforce the obligations of the Seller
hereunder without the consent of the Purchaser.
SECTION 22. Merger, Consolidation, etc. The Seller may be merged or
consolidated with or into any person or entity, or transfer all or substantially
all of its assets to any person or entity; provided that the person or entity
resulting from any merger or consolidation to which the Seller shall be a party,
or the person or entity which is the Purchaser of all or substantially all of
the assets of the Seller, shall be the successor to the Seller hereunder without
the execution or filing of any paper or any further act on the part of any of
the parties hereto.
SECTION 23. Amendments. This Agreement may be amended from time to time
by the parties hereto with the consent of the Financial Guaranty Insurer, to
cure any ambiguity, to correct or supplement any provision herein which may be
inconsistent with any other provision herein, or to add any other provision with
respect to matters or questions arising under this Agreement which shall not be
inconsistent with the provisions of this Agreement and the Pooling and Servicing
Agreement; provided, however, that such action shall not, as evidenced by an
Opinion of Counsel to the Purchaser delivered to the Trustee and the Financial
Guaranty Insurer,
25
<PAGE> 27
adversely affect in any material respect the interests of any assignee of the
Mortgage Loans or any third party beneficiary of this Agreement.
SECTION 24. Third Party Beneficiaries. The parties hereby expressly
agree that each of the Financial Guaranty Insurer and the Trustee, for the
benefit of the Certificateholders, shall be third party beneficiaries with
respect to this Agreement, provided, however, that no third party other than the
Trustee or the Financial Guaranty Insurer shall be deemed a third party
beneficiary of this Agreement.
[SIGNATURES FOLLOW]
26
<PAGE> 28
IN WITNESS WHEREOF, the Seller and the Purchaser have caused
their names to be signed hereto by their respective duly authorized officers as
of the date first above written.
AAMES CAPITAL CORPORATION
By: /S/ Mark E. Elbaum
----------------------------------
Name: Mark E. Elbaum
Title: Senior Vice President-Finance
AAMES CAPITAL ACCEPTANCE CORP.
By: /S/ Mark E. Elbaum
----------------------------------
Name: Mark E. Elbaum
Title: Senior Vice President-Finance
27
<PAGE> 29
Exhibit A
Mortgage Loan Schedule
[on file with the Transferor and the Servicer]
A-1
<PAGE> 30
Exhibit B
Consideration for Mortgage Loans
[$o in cash and evidencing a % residual interest in the Aames Mortgage
Trust 1998-B, which together equals the fair market value of the Mortgage Loans
as of the Closing Date.]
B-1
<PAGE> 31
Exhibit C
Contents of Mortgage File
In connection with its conveyance of its interests in the Mortgage
Loans pursuant to the Agreement, the Seller shall deliver to and deposit with,
or cause to be delivered to and deposited with, the Purchaser or its designee,
on or before the Closing Date, for each Mortgage Loan, the Mortgage File
containing the following items:
(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 Seller 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 1998-B Mortgage Pass-Through Certificates,
Series 1998-B, without recourse," except that with respect to 19 Mortgage Loans
identified by the Seller by loan number, an original lost note affidavit has
been supplied in lieu of the original Mortgage Note;
(b) the original Mortgage with evidence of recording indicated thereon;
(c) the original executed assignment of the Mortgage, executed in
blank, 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 or
recording indicated thereon sufficient to show a complete chain of assignment
from the originator of the Mortgage Loan to the Seller or one of its affiliates;
and
(f) original lender's title insurance policy issued on the date of the
origination of such Mortgage Loan.
C-1
<PAGE> 32
AAMES MORTGAGE TRUST 1998-B
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1998-B
Cross Receipt Between Aames Capital Corporation and
Aames Capital Acceptance Corp. Acknowledging Receipt of Mortgage Notes
Reference is made to the Initial Mortgage Loan Conveyance Agreement,
between Aames Capital Corporation (the "Seller") and Aames Capital Acceptance
Corp. (the "Purchaser"), dated as of June 1, 1998 (the "Initial Mortgage Loan
Conveyance Agreement"). Capitalized terms used but not otherwise defined herein
shall have the meanings ascribed to such terms in the Initial Mortgage Loan
Conveyance Agreement.
The Purchaser hereby acknowledges receipt from the Seller of the
Mortgage Notes relating to the Mortgage Loans identified on the Mortgage Loan
Schedule annexed as Exhibit A to the Initial Mortgage Loan Conveyance Agreement.
The Mortgage Loans have an Initial Pool Balance of $525,084,767.23.
AAMES CAPITAL ACCEPTANCE CORP.
By: _________________________________
Name: _________________________________
Title: _________________________________
The Seller hereby acknowledges receipt of consideration for the
Mortgage Loans in the amount specified on Exhibit B to the Initial Mortgage Loan
Conveyance Agreement.
AAMES CAPITAL CORPORATION
By: _________________________________
Name: _________________________________
Title: _________________________________
Dated: June 18, 1998
<PAGE> 1
EXHIBIT 10.2
- --------------------------------------------------------------------------------
SUBSEQUENT MORTGAGE LOAN CONVEYANCE AGREEMENT
Dated as of June 30, 1998
between
AAMES CAPITAL CORPORATION,
as Seller,
and
AAMES CAPITAL ACCEPTANCE CORP.,
as Transferor
---------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
This Subsequent Mortgage Loan Conveyance Agreement (this "Agreement"),
dated as of June 30, 1998, is between Aames Capital Corporation (the "Seller")
and Aames Capital Acceptance Corp. (the "Transferor").
On June 30, 1998 (the "Subsequent Transfer Date"), the Seller intends to
convey and the Transferor intends to acquire certain home equity mortgage loans
(the "Subsequent Mortgage Loans") as provided in this Agreement. Upon receipt of
such Subsequent Mortgage Loans, the Transferor will immediately convey the
Subsequent Mortgage Loans to Bankers Trust Company of California, N.A., in its
capacity as trustee (the "Trustee"), under that certain pooling and servicing
agreement, dated as of June 1, 1998, by and among Aames Capital Acceptance
Corp., as Transferor, Aames Capital Corporation, as Servicer, and the Trustee
(the "Pooling and Servicing Agreement"), pursuant to which $625,000,000
aggregate principal amount of Mortgage Pass-Through Certificates, Series 1998-B
(the "Certificates") are being issued.
Reference is hereby made to the Initial Mortgage Loan Conveyance
Agreement, dated as of June 1, 1998 (the "Initial Mortgage Loan Conveyance
Agreement"), between the Seller and the Transferor pursuant to which certain
home equity mortgage loans identified therein (the "Initial Mortgage Loans")
were conveyed by the Seller to the Transferor. Reference is also hereby made to
the Pooling and Servicing Agreement pursuant to which the Initial Mortgage Loans
were conveyed by the Transferor to the Trustee. The Transferor has transferred
the Initial Mortgage Loans, together with its rights under the Initial Mortgage
Loan Conveyance Agreement and certain other property, to the Trustee as part of
the Trust Estate for the Certificates.
The Seller and the Transferor are entering into this Agreement for the
purpose of establishing the terms under which the Subsequent Mortgage Loans may
be (i) sold by the Seller to the Transferor, and (ii) conveyed by the Transferor
to the Trustee as part of the Trust Estate in exchange for the Subsequent
Purchase Price and any Subsequent Purchase Price to be paid by the Trustee from
amounts on deposit in the Prefunding Account pursuant to and in accordance with
Section 3.16 of the Pooling and Servicing Agreement.
Now, therefore, in consideration of the premises and the mutual
agreements set forth herein, the parties agree as follows:
SECTION 1. Definitions. Capitalized terms used in this Agreement and not
otherwise defined herein shall have the respective meanings ascribed thereto in
the Initial Mortgage Loan Conveyance Agreement or the Pooling and Servicing
Agreement, as the context requires.
1
<PAGE> 3
SECTION 2. Agreements to Acquire.
(a) On the Subsequent Transfer Date, the Seller shall convey, and the
Transferor shall acquire, Subsequent Mortgage Loans having an aggregate
principal balance not in excess of the amount of the Prefunding Account Deposit
and identified on additional Mortgage Loan Schedules delivered to the
Transferor. The conveyance of Subsequent Mortgage Loans by the Seller to the
Transferor shall be effected in accordance with the provisions of Section 3 of
the Initial Mortgage Loan Conveyance Agreement as though such Subsequent
Mortgage Loans were Initial Mortgage Loans. The provisions of Section 3 of the
Initial Mortgage Loan Conveyance Agreement are hereby incorporated by reference
and shall be deemed to refer to the conveyance of the Subsequent Mortgage Loans
by the Seller pursuant to this Section 2(a). The Seller shall be deemed to have
made the representations and warranties set forth in Section 4(b) of the Initial
Mortgage Loan Conveyance Agreement with respect to each Subsequent Mortgage Loan
as of the date specified therein or, if no date is specified, as of the
Subsequent Transfer Date and the Transferor shall have the rights and remedies
for defects in the related Mortgage File or breaches for such representations
and warranties as set forth in Section 3 and Section 5 of the Initial Mortgage
Loan Conveyance Agreement. The consideration for the Subsequent Mortgage Loans
conveyed pursuant to this Agreement shall be specified in each Addition Notice,
which consideration shall be exchanged on or prior to the Subsequent Transfer
Date.
(b) The Transferor shall convey, and the Trustee shall acquire, each
Subsequent Mortgage Loan acquired by the Transferor from the Seller pursuant to
Section 2(a). The conveyance shall occur on the Subsequent Transfer Date for the
Subsequent Mortgage Loans immediately upon the acquisition thereof by the
Transferor and shall be effected in accordance with the provisions of Section 2
of the Pooling and Servicing Agreement as though such Subsequent Mortgage Loan
were an Initial Mortgage Loan. The provisions of Section 2 of the Pooling and
Servicing Agreement are hereby incorporated by reference and shall be deemed to
refer to the conveyance of the Subsequent Mortgage Loans by the Transferor to
the Trustee pursuant to Section 2(b). The Trustee shall acquire all rights and
remedies of the Transferor for defects in the related Mortgage File or breaches
of representations or warranties relating to such Subsequent Mortgage Loans as
and to the extent contemplated in the Pooling and Servicing Agreement with
respect to the Initial Mortgage Loans. The Seller acknowledges the intention of
the Transferor to convey and to assign its rights and remedies to the Trustee
with respect to each Subsequent Mortgage Loan acquired by the Transferor
pursuant to Section 2(a). The consideration for the Subsequent Mortgage Loans
shall be equal to the consideration received by the Seller from the Transferor
in respect of such Subsequent Mortgage Loans pursuant to Section 2(a) and shall
be exchanged on or prior to the Subsequent Transfer Date.
(c) The Transferor shall affirmatively grant and the Trustee, subject
only to the satisfaction of the provisions of this Agreement and the Pooling and
Servicing Agreement, shall accept and include in the Trust Estate for the
benefit of the Certificateholders, each Subsequent Mortgage Loan acquired by the
Transferor pursuant to Section 2(b). Each such grant of a Subsequent Mortgage
Loan by the Transferor to the Trustee shall include the rights and remedies with
respect to such Subsequent Mortgage Loan acquired from the Transferor pursuant
to Section 2(b). Each such grant of a Subsequent Mortgage Loan shall occur on
the Subsequent
2
<PAGE> 4
Transfer Date, and such Subsequent Mortgage Loan shall be included in the Trust
Estate from and after such Subsequent Transfer Date, as evidenced by the
attachment of the Subsequent Mortgage Loan Schedule to the Mortgage Loan
Schedule. On the Subsequent Transfer Date for the Subsequent Mortgage Loans, the
Trustee shall pay from the Prefunding Account the Subsequent Purchase Price for
such Subsequent Mortgage Loans, all in accordance with the provisions of Section
3.16 of the Pooling and Servicing Agreement and subject to the satisfaction of
the conditions set forth in Sections 6 and 7 of this Agreement. The Seller and
the Transferor each acknowledge the intention of the Transferor to grant to the
Trustee each Subsequent Mortgage Loan, and the rights and remedies in respect
thereof, acquired by the Transferor pursuant to Section 2(b).
(d) Subsequent Mortgage Loans to be conveyed on the Subsequent Transfer
Date must (i) have an aggregate principal balance of not less than $99,971,063,
and (ii) satisfy each of the representations and warranties contained in
paragraph A of Schedule I hereto with respect to such Subsequent Mortgage Loans
as of the Subsequent Transfer Date.
(e) The Seller shall, at any time upon the request of the Transferor or
the Trustee, without limiting the obligations of the Seller under this
Agreement, execute, acknowledge and deliver all such additional documents and
instruments and all such further assurances and will do or cause to be done all
such further acts and things as may be proper or reasonably necessary to carry
out the intent of this Agreement. The Transferor shall, at any time upon the
request of the Trustee, without limiting the obligations of the Transferor under
this Agreement, execute, acknowledge and deliver all such additional documents
and instruments and all such further assurances and will do or cause to be done
all such further acts and things as may be proper or reasonably necessary to
carry out the intent of this Agreement. The Seller hereby acknowledges that the
Transferor intends to transfer the Subsequent Mortgage Loans to the Trust formed
pursuant to the Pooling and Servicing Agreement. In order to relieve the
Transferor of certain administrative burdens and expenses that the Transferor
otherwise would have to incur in connection with the transfer thereof under the
Pooling and Servicing Agreement, the Seller hereby agrees to deliver each
Mortgage File, including assignments of mortgage executed in blank and in
recordable form, to the Trustee for the benefit of the Trust in satisfaction of
its obligation to deliver the same to the Transferor hereunder. The Seller
undertakes to complete and to record each such assignment on the terms and
conditions specified in the Pooling and Servicing Agreement, and the parties
hereto expressly agree and acknowledge that the Trustee is intended to be a
third party beneficiary of this undertaking, and hereby grants to the Transferor
and to the Trustee (in its capacity as such) full power, authority and right to
complete any or all such assignments and to record the same, and hereby
undertakes to take no action or make any claim inconsistent with any interest
created by such completion or recordation. The parties hereto expressly
acknowledge that such actions by the Seller are not intended to evidence, and
shall not be deemed to evidence, any intent contrary to the express intent of
the parties hereto that the transfer pursuant to this Agreement constitute a
sale from Seller to the Transferor.
(f) The conveyance by the Seller to the Transferor of Subsequent
Mortgage Loans on the Subsequent Transfer Date pursuant to Section 2(a) shall be
absolute and is intended by the Seller and the Transferor to be treated as a
sale of such Subsequent Mortgage Loans by the
3
<PAGE> 5
Seller. The conveyance by the Transferor to the Trustee of the Subsequent
Mortgage Loans on the Subsequent Transfer Date pursuant to Section 2(b) shall be
absolute and is intended by the Transferor and the Trustee to be treated as a
sale of such Subsequent Mortgage Loans by the Transferor.
SECTION 3. [Reserved.]
SECTION 4. Representations, Warranties and Covenants.
(a) Each representation and warranty set forth in Section 4(b) of the
Initial Mortgage Loan Conveyance Agreement shall be deemed to have been made by
the Seller with respect to each Subsequent Mortgage Loan as of the Subsequent
Transfer Date or, if a different date is specified in the representation or
warranty, the date so specified, unless otherwise specified in the related
Addition Notice, and such representations and warranties are incorporated by
reference herein.
(b) On the Subsequent Transfer Date, the Seller shall be deemed to have
confirmed the representations and warranties of the Seller set forth in Section
4(a) of the Initial Mortgage Loan Conveyance Agreement in connection with the
conveyance of the Subsequent Mortgage Loans on the Subsequent Transfer Date.
(c) The representations and warranties deemed to have been made by the
Seller pursuant to this Section 4 and the representations set forth in Schedule
I annexed hereto shall survive delivery of the respective Mortgage Files by the
transferors thereof to the transferees thereof and their respective assignees,
notwithstanding any restrictive or qualified endorsement or assignment.
SECTION 5. Reacquisitions.
(a) The provisions of Section 5 of the Initial Mortgage Loan Conveyance
Agreement relating to the obligations of the Seller, and the rights and remedies
of the Transferor, in connection with breaches of representations or warranties
in respect of the Initial Mortgage Loans are hereby incorporated by reference
and shall be available in the event of breaches of any representations or
warranties made by the Seller pursuant to Section 4(a) or as set forth in
Schedule I annexed hereto with respect to each Subsequent Mortgage Loan conveyed
by the Seller pursuant to Section 2(a).
(b) This Section 5 provides the sole remedies available against the
Seller respecting any breach on the part of the Seller under Schedule 4(a) or
Schedule I annexed hereto.
SECTION 6. Conditions to Subsequent Transfers. Each transfer of
Subsequent Mortgage Loans pursuant to this Agreement on the Subsequent Transfer
Date shall be subject to each of the following conditions:
4
<PAGE> 6
(a) The Seller shall provide the Transferor and the Trustee with the
related Addition Notice and shall provide any information reasonably requested
by the Trustee with respect to the Subsequent Mortgage Loans at least one
Business Day prior to the Subsequent Transfer Date;
(b) All of the representations and warranties of the Seller referred to
in Section 4(a) and Section 4(b) and set forth in Schedule I annexed hereto
shall be true and correct in all material respects as of the date or dates made;
(c) 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;
(d) The Funding Period shall not have expired;
(e) All of the obligations of the Seller under Section 2(a) (including
the obligations incorporated by reference) with respect to the conveyance of the
Subsequent Mortgage Loans shall have been satisfied and the Transferor shall
have effected the conveyance of such Subsequent Mortgage Loans as provided in
Section 2(b);
(f) The Seller shall deposit in the Collection Account all collections
in respect of each related Subsequent Mortgage Loan received or deemed received
by the Seller on or after the related 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 such Cut-off Date or
otherwise), exclusive of amounts representing interest accrued on such
Subsequent Mortgage Loans for any period prior to such Cut-off Date, and the
Trustee shall have received confirmation of such deposit from the Servicer;
(g) The Seller shall deposit any applicable Subsequent Transfer Deposit
in the Certificate Account;
(h) All other terms and conditions of this Agreement required to be
complied with on or before the Subsequent Transfer Date with respect to the
Subsequent Mortgage Loans shall have been complied with and the Seller shall
have the ability to comply with all terms and conditions and perform all duties
and obligations required to be complied with or performed with respect to the
related Subsequent Mortgage Loans after the Subsequent Transfer Date; and
(i) The Seller shall have paid all fees and expenses relating to the
conveyance of the Subsequent Mortgage Loans pursuant to this Agreement.
The Seller and the Transferor shall use their best efforts to perform
their respective obligations hereunder in a manner that ultimately will enable
the Transferor to acquire the Subsequent Mortgage Loans on the Subsequent
Transfer Date and grant such Subsequent Mortgage Loans to the Trustee as part of
the Trust Estate on such date.
SECTION 7. Conditions to be Satisfied at End of Funding Period. Not
later than the end of the Funding Period, the following conditions shall have
been satisfied with respect to all Subsequent Mortgage Loans granted to the
Trustee hereunder:
5
<PAGE> 7
(a) The Seller shall have delivered to the Transferor and the Trustee a
certificate, executed by a duly authorized officer of the Seller, to the effect
that: (i) the representations and warranties of the Seller in this Agreement
with respect to such Subsequent Mortgage Loans are true and correct in all
material respects at and as of the Subsequent Transfer Date with the same effect
as if made on the Subsequent Transfer Date and (ii) the Seller has complied with
all the agreements and satisfied all the conditions on its part to be performed
or satisfied at or prior to the Subsequent Transfer Date; and
(b) The Seller and the Transferor shall have delivered to the Trustee
Opinions of Counsel with respect to the transfer of the Subsequent Mortgage
Loans hereunder substantially in the form of the Opinions of Counsel delivered
to the Trustee on the Closing Date regarding bankruptcy, corporate and tax
matters.
SECTION 8. Servicing. As of the applicable Cut-off Dates, the Subsequent
Mortgage Loans will be serviced by the Servicer pursuant to the terms of the
Pooling and Servicing Agreement and shall constitute "Mortgage Loans" for all
purposes thereunder from and after the Subsequent Transfer Date.
SECTION 9. Grant of a Security Interest. It is the express intent of the
parties hereto that the conveyance of the Subsequent Mortgage Loans (i) by the
Seller to the Transferor as provided in Section 2(a) and (ii) by the Transferor
to the Trustee as provided in Section 2(b), each be, and be construed as, a
complete and absolute transfer of all right, title and interest in and to the
Subsequent Mortgage Loans held by the Seller or the Transferor, as applicable,
and not as a pledge of the Subsequent Mortgage Loans to secure a debt or other
obligation of the Seller or the Transferor, as applicable. The Seller will treat
such transfer as a sale of the Subsequent Mortgage Loans on all relevant books
and records and other applicable documents. However, if, notwithstanding the
aforementioned intent of the parties, the Subsequent Mortgage Loans are held to
be property of (I) the Seller, then, (a) it is the express intent of the parties
that such conveyance be deemed a pledge of the Subsequent Mortgage Loans by the
Seller to the Transferor to secure a debt or other obligation of the Seller and
(b) (i) this Agreement shall also be deemed to be a security agreement within
the meaning of Article 9 of the California Uniform Commercial Code; (ii) the
conveyance provided for in Section 2(a) hereof shall be deemed to be a grant by
the Seller to the Transferor of a security interest in all of the Seller's
right, title and interest in and to the Subsequent Mortgage Loans, and all
amounts payable to the holder of the Subsequent Mortgage Loans in accordance
with the terms thereof, and all proceeds of the conversion, voluntary or
involuntary, of the foregoing into cash, instruments, securities or other
property, including with out limitation all such amounts, other than investment
earnings, from time to time held or invested pursuant to and in accordance with
the provisions of the Pooling and Servicing Agreement, as applicable, whether in
the form of cash, instruments, securities or other property; (iii) the
assignment of the Subsequent Mortgage Loans by the Transferor to the Trustee as
contemplated by the preamble hereto shall be deemed in each case to be an
assignment of any security interest created hereunder; (iv) the possession by
the Seller or the Trustee or any of their respective agents, including, without
limitation of the Mortgage Notes for the Subsequent Mortgage Loans, and such
other items of property relating to the Subsequent Mortgage Loans as constitute
instruments, money, negotiable documents or chattel paper shall be
6
<PAGE> 8
deemed to be "possession by the secured party" for purposes of perfecting the
security interest pursuant to Section 9-305 of the California Uniform Commercial
Code; and (v) notifications to persons (other than the Trustee) holding such
property, and acknowledgments, receipts or confirmations from persons holding
such property, shall be deemed notifications to, or acknowledgments, receipts or
confirmations from, financial intermediaries, bailees or agents (as applicable)
of the secured party for the purpose of perfecting such security interest under
applicable law and (II) the Transferor, then, (a) it is the express intent of
the parties that such conveyance be deemed a pledge of the Subsequent Mortgage
Loans by the Transferor to the Trustee to secure a debt or other obligation of
the Transferor and (b) (i) this Agreement shall also be deemed to be a security
agreement within the meaning of Article 9 of the California Uniform Commercial
Code; (ii) the assignment of the Subsequent Mortgage Loans by the Transferor to
the Trustee as contemplated by the preamble hereto shall be deemed in each case
to be an assignment of any security interest created hereunder; (iii) the
possession by the Seller or the Trustee or any of their respective agents,
including, without limitation of the Mortgage Notes for the Subsequent Mortgage
Loans, and such other items of property relating to the Subsequent Mortgage
Loans as constitute instruments, money, negotiable documents or chattel paper
shall be deemed to be "possession by the secured party" for purposes of
perfecting the security interest pursuant to Section 9-305 of the California
Uniform Commercial Code; and (iv) notifications to persons (other than the
Trustee) holding such property, and acknowledgments, receipts or confirmations
from persons holding such property, shall be deemed notifications to, or
acknowledgments, receipts or confirmations from, financial intermediaries,
bailees or agents (as applicable) of the secured party for the purpose of
perfecting such security interest under applicable law. The Seller and the
Transferor shall, to the extent consistent with this Agreement, take such
actions as may be necessary to ensure that, if this Agreement were deemed to
create a security interest in the Subsequent Mortgage Loans, such security
interest would be deemed to be a perfected security interest of first priority
under applicable law and will be maintained as such throughout the term of this
Agreement and the Pooling and Servicing Agreement.
SECTION 10. Notices. All communications provided for or permitted
hereunder shall be in writing and shall be deemed to have been duly given if (a)
personally delivered, (b) mailed by registered or certified mail, postage
prepaid and received by the addressee, (c) sent by express courier delivery
service and received by the addressee or (d) transmitted by telex or facsimile
transmission (or any other type of electronic transmission agreed upon by the
parties) and confirmed by a writing delivered by any of the means described in
(a), (b) or (c), if to the Seller, addressed to the Seller at 350 Grand Avenue,
Los Angeles, California 90071, Attention: Joseph Magnus, telecopy: (213)
210-4995 (or to such other address as may hereafter be furnished to the parties
hereto in writing by the Seller), or if to the Transferor, addressed to the
Transferor at 350 Grand Avenue, Los Angeles, California 90071, Attention: Joseph
Magnus, telecopy: (213) 210-4995 (or to such other address as may hereafter be
furnished to the parties hereto in writing by the Transferor).
SECTION 11. Representations, Warranties, Indemnities and Agreements to
Survive Delivery. All representations, warranties, indemnities and agreements
contained in this Agreement, incorporated herein by reference or contained in
the certificates of officers of the Seller or the Transferor submitted pursuant
hereto, shall remain operative and in full force and
7
<PAGE> 9
effect and shall survive delivery of the Subsequent Mortgage Loans by the Seller
to the Transferor and the conveyance of such Subsequent Mortgage Loans by the
Transferor to the Trust as part of the Trust Estate under the Pooling and
Servicing Agreement.
SECTION 12. Severability of Provisions. Any part, provision,
representation, warranty or covenant of this Agreement that is prohibited or
which is held to be void or unenforceable shall be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof. Any part, provision, representation, warranty or covenant of
this Agreement that is prohibited or unenforceable or is held to be void or
unenforce able in any particular jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any particular jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which prohibits
or renders void or unenforceable any provision hereof.
SECTION 13. Indemnification of the Transferor.
(a) The Seller shall indemnify the Transferor and its assignees
(including the Trustee) for any liability incurred thereby as a result of a
breach of the representation and warranty set forth in clause (xvi) of Section
4(b) incorporated by reference herein. This indemnity obligation shall be in
addition to any other obligation the Seller may have in connection with any such
breach.
(b) The Seller shall defend, indemnify and hold harmless the Transferor
and its assignees from and against any and all taxes, except for taxes on the
net income of the Transferor or such assignees, that may at any time be asserted
against the Transferor or its assignees with respect to the transactions
contemplated herein with respect to the Subsequent Mortgage Loans and reasonable
costs and expenses in defending against the same.
(c) The Seller shall defend, indemnify and hold harmless the Transferor
and its assignees from and against any and all reasonable costs, expenses,
losses, damages, claims and liabilities to the extent that such reasonable cost,
expense, loss, damage, claim or liability resulted by reason of reckless
disregard of the Transferor's obligations and duties under this Agreement.
SECTION 14. No Petition. The Seller, by entering into this Agreement,
hereby covenants and agrees that it will not at any time institute against the
Transferor or any of its assignees, or join in any institution against the
Transferor or any of its assignees of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any United States Federal or state bankruptcy or similar law in connection with
any obligations relating to this Agreement.
SECTION 15. Other Liens or Interests. Except for the conveyances
hereunder, neither of the Seller nor the Transferor will sell, pledge, assign or
transfer to any other Person, or grant, create, incur, assume or suffer to exist
any Lien on any interest therein, and each shall defend the
8
<PAGE> 10
right, title, and interest of their respective transferees in, to and under the
Subsequent Mortgage Loans against all claims of third parties claiming through
or under such transferor; provided, however, that such transferor's obligations
under this Section shall terminate upon the termination of the Trust pursuant to
the Pooling and Servicing Agreement.
SECTION 16. Waivers. No failure or delay on the part of any transferee
hereunder in exercising any power, right or remedy under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power, right or remedy preclude any other or further exercise thereof or
the exercise of any other power, right or remedy.
SECTION 17. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be an original, but which together shall
constitute one and the same agreement.
SECTION 18. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS, DUTIES,
OBLIGATIONS AND RESPONSIBILITIES OF THE PARTIES HERETO SHALL BE GOVERNED IN
ACCORDANCE WITH THE INTERNAL LAWS AND DECISIONS OF THE STATE OF CALIFORNIA.
SECTION 19. Further Assurances. The Seller and the Transferor shall
execute and deliver such instruments and take such further actions as any other
party may, from time to time, reasonably request in order to effectuate the
purposes and to carry out the terms of this Agreement.
SECTION 20. Successors and Assigns. The rights and obligations of the
Seller under this Agreement shall not be assigned by the Seller, without the
prior written consent of the Trustee, except as provided in Section 21;
provided, however, that simultaneously with the execution and delivery of this
Agreement, the Transferor shall assign all of its right, title and interest
herein to the Trustee for the benefit of the Certificateholders, to which the
Transferor hereby expressly consents. The Seller agrees to perform its
obligations hereunder for the benefit of the Trust and that the Trustee may
enforce the provisions of this Agreement, exercise the rights of the Transferor
and enforce the obligations of the Seller hereunder without the consent of the
Transferor.
SECTION 21. Merger, Consolidation, etc. The Seller may be merged or
consolidated with or into any person or entity, or transfer all or substantially
all of its assets to any person or entity; provided that the person or entity
resulting from any merger or consolidation to which the Seller shall be a party,
or the person or entity that is the transferee of all or substantially all of
the assets of the Seller, shall be the successor to the Seller hereunder without
the execution or filing of any paper or any further act on the part of any of
the parties hereto.
SECTION 22. Amendments. This Agreement may be amended from time to time
by the parties hereto to cure any ambiguity, to correct or supplement any
provision herein which may be inconsistent with any other provision herein, or
to add any other provision with respect to matters or questions arising under
this Agreement which shall not be inconsistent with the provisions of this
Agreement and the Pooling and Servicing Agreement; provided, however, that such
action
9
<PAGE> 11
shall not, as evidenced by an Opinion of Counsel to the Trustee, adversely
affect in any material respect the interests of any assignee of the Mortgage
Loans or any third party beneficiary of this Agreement.
SECTION 23. Third Party Beneficiaries. The parties hereby expressly
agree that the Trustee, for the benefit of the Certificateholders, shall be a
third party beneficiary with respect to this Agreement, provided, however, that
no third party other than the Trustee shall be deemed a third party beneficiary
of this Agreement.
* * * * *
[SIGNATURES FOLLOW]
10
<PAGE> 12
IN WITNESS WHEREOF, the Seller and the Transferor have caused their
names to be signed hereto by their respective duly authorized officers as of the
date first above written.
AAMES CAPITAL CORPORATION,
as Seller
By: /s/ Joseph Magnus
-------------------------------
Name: Joseph Magnus
Title: Executive Vice President
AAMES CAPITAL ACCEPTANCE CORP.,
as Transferor
By: /s/ Joseph Magnus
-------------------------------
Name: Joseph Magnus
Title: Executive Vice President
11
<PAGE> 13
Schedule I
Representations and Warranties of the Seller Regarding Subsequent Mortgage Loans
A. The Seller represents and warrants to the Transferor as of any Subsequent
Transfer Date (except as otherwise expressly stated) that as to each Subsequent
Mortgage Loan conveyed by the Seller:
(i) no Subsequent Mortgage Loan provides for negative amortization;
(ii) with respect to the Adjustable Rate Group and each Subsequent Mortgage Loan
if such Mortgage Loan has an initial Adjustment Date of six months, two years,
three years or five years from the date of origination, the related Mortgage
Note provides for an initial rate cap as to each subsequent Adjustment Date of
from 1.00% to 3.00% and a rate cap as to each subsequent Adjustment Date of from
1.00% to 2.00%;
(iii) no Subsequent Mortgage Loan has a weighted average gross margin less than
6.00%;
(iv) each Subsequent Mortgage Loan will have been serviced by the Servicer or a
Sub-servicer since origination or purchase by the Seller;
(v) no Subsequent Mortgage Loan has been originated for the purpose of
facilitating the purchase of real estate owned by the originator; and
(vi) no Subsequent Mortgage Loan will have a Cut-off Date of later than June 30,
1998.
B. The Seller represents and warrants to the Transferor that, following the
purchase of all Subsequent Mortgage Loans by the Transferor and the assignment
of such Subsequent Mortgage Loans by the Transferor to the Trustee, as of the
end of the Funding Period:
(i) the Subsequent Mortgage Loans in the Fixed Rate Group:
(a) will have a weighted average Mortgage Loan Rate of at least
9.340%;
(b) will have a weighted average original term to stated maturity
of not more than 360 months;
(c) will have a weighted average Combined Loan-to-Value Ratio of
not more than 90% except that five Mortgage Loans in the Fixed Rate Group have
Combined Loan-to-Value Ratios of up to 95%;
(d) will have no Mortgage Loan with an Aggregate Principal
Balance in excess of $500,000;
1
<PAGE> 14
(e) will not have in excess of 2.00% by Aggregate Principal
Balance of Mortgage Loans secured by non-owner occupied Mortgaged Properties;
(f) will not have a concentration in a single ZIP code in excess
of 38% by Aggregate Principal Balance;
(g) will not have an aggregate concentration in excess of .50% by
Aggregate principal balance in ZIP codes beginning with the following three
digits: 900-919, 922-925, 930-931 and 935;
(h) will not have a concentration in a single state, other than
California, Florida, New York, or Texas in excess of 5.00% by Aggregate
Principal Balance;
(i) will not have a concentration in California in excess of 20%,
in Florida in excess of 15.00%, in New York in excess of 6.00% or in Texas in
excess of 7.00% by Aggregate Principal Balance ;
(j) will not have in excess of 5.00% or 7.00% by Aggregate
Principal Balance of Mortgage Loans secured by Mortgaged Properties that are
two-family properties or condominiums (greater than four stories), three and
four family properties or condominiums (greater than four stories), respectively
and, in either case, will have none secured by mobile homes treated as real
estate under applicable state law;
(k) will have at least 85.00% by Aggregate Principal Balance of
Mortgage Loans secured by fee simple interests in detached single family
dwelling units (including units in de minimis planned unit developments);
(l) will have no more than 1.00% by Aggregate Principal Balance
of Mortgage Loans that are based on a 360-month amortization schedule with
balloon payments prior to month 60;
(m) will have no more than 4.00% by Aggregate Principal Balance
of Mortgage Loans that are based on a 360-month amortization schedule and have a
balloon payment between month 61-120;
(n) will have no more than 30.00% by Aggregate Principal Balance
of Mortgage Loans that are based on a 360-month amortization schedule and have a
balloon payment between month 121-180; and
(o) will have no more than 2.00% by Aggregate Principal Balance
of Mortgage Loans that are based on a 360-month amortization schedule and have a
balloon payment between month 181-240;
(p) will have no less than 95.00% by Aggregate Principal Balance
of Mortgage Loans that provide for the payment of principal and interest on a
level basis to fully amortize such Mortgage Loan over its stated maturity; and
2
<PAGE> 15
(q) will have a weighted average term since origination not in
excess of six months.
(ii) the Subsequent Mortgage Loans in the Adjustable Rate Group:
(a) will have a weighted average Mortgage Loan Rate of at least
8.900%;
(b) will have a weighted average original term to stated maturity
of not more than 360 months;
(c) will have a weighted average Loan-to-Value Ratio of not more
than 90% except that one Mortgage Loan in the Adjustable Rate group has a
Combined Loan to Value Ratio of up to 95%;
(d) will have no Mortgage Loan with an Aggregate Principal
Balance in excess of $500,000;
(e) will have not in excess of 2.00% by Aggregate Principal
Balance of Mortgage Loans secured by non-owner occupied Mortgage Properties;
(f) will not have a concentration in a single ZIP code in excess
of .47% by Aggregate Principal Balance;
(g) will not have an aggregate concentration in excess of .50% in
ZIP codes beginning with the following three digits: 900-919, 922-925, 930, 931,
935;
(h) will not have a concentration in a single State, other than
California and Florida in excess of 5.00% by Aggregate Principal Balance;
(i) will not have a concentration in California in excess of
15.00% or in Florida in excess of 14.00%, by Aggregate Principal Balance;
(j) will not have in excess of 9.00% or 6.00% by Aggregate
Principal Balance Mortgage Loans secured by Mortgaged Properties that are two
family properties or condominiums (less than four stories) and three and four
family properties or condominiums (greater than four stories), respectively, and
none will be secured by mobile homes or manufactured housing treated as real
estate under applicable state law;
(k) will have at least 85.00% by Aggregate Principal Balance
Mortgage Loans secured by fee simple interests in detached single family
dwelling units (including units in de minimis planned unit developments);
(l) will have a weighted average margin of at least 5.00%;
3
<PAGE> 16
(m) will contain no Mortgage Loans that are not based on a
360-month amortization schedule of level payments;
(n) will have a weighted average term since origination not in
excess of three months.
For purposes of this Schedule I, "Aggregate Principal Balance" means the
aggregate of the principal balances of the Mortgage Loans of the related
Mortgage Loan Group as of the applicable Cut-off Date.
4
<PAGE> 17
AAMES MORTGAGE TRUST 1998-B
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1998-B
CROSS RECEIPT
SUBSEQUENT MORTGAGE LOANS
JUNE 30, 1998
Reference is made to the Subsequent Mortgage Loan Conveyance Agreement,
between Aames Capital Corporation (the "Seller") and Aames Capital Acceptance
Corp. (the "Transferor"), dated as of June 30, 1998 (the "Subsequent Mortgage
Loan Conveyance Agreement"). Capitalized terms used but not otherwise defined
herein shall have the meanings ascribed to such terms in the Subsequent Mortgage
Loan Conveyance Agreement.
1. The Seller hereby acknowledges receipt from the Transferor of cash in
the amount of $99,970,375.68 (the aggregate of the amounts specified in each
such Addition Notice) and the Seller hereby affirms that such consideration
represents the fair market value of the Subsequent Mortgage Loans as of the
related Subsequent Transfer Dates.
2. The Transferor hereby acknowledges receipt from the Seller of the
Mortgage Notes relating to the Subsequent Mortgage Loans identified on the
related Subsequent Mortgage Loan Schedules annexed as Schedule A to the
Subsequent Transfer Agreement, dated June 30, 1998, between the Transferor and
Bankers Trust Company of California, N.A., as Trustee. The aggregate principal
balance of the Subsequent Mortgage Loans is $99,970,375.68.
AAMES CAPITAL CORPORATION
By: /s/ Joseph Magnus
-------------------------------
Name: Joseph Magnus
Title: Executive Vice President
AAMES CAPITAL ACCEPTANCE CORP.
By: /s/ Joseph Magnus
-------------------------------
Name: Joseph Magnus
Title: Executive Vice President
<PAGE> 1
EXHIBIT 10.3
SUBSEQUENT TRANSFER AGREEMENT
Pursuant to this Subsequent Transfer Agreement, dated as of June 30,
1998, by and between AAMES CAPITAL ACCEPTANCE CORP. (the "Transferor") and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A., in its capacity as trustee for Aames
Mortgage Trust 1998-B (the "Trustee"), and pursuant to that certain Pooling and
Servicing Agreement dated as of June 1, 1998 (the "Pooling and Servicing
Agreement"), by and among Transferor, as seller, Aames Capital Corporation, as
servicer ("Servicer"), and Trustee, as trustee, Transferor and Trustee agree to
the sale by Transferor and the purchase by 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 Transferor does hereby sell, transfer, assign, set over and
convey to Trustee, as of the Subsequent Transfer Date set forth in Attachment A
hereto (the "Subsequent Transfer Date"):
(i) all right, title and interest of such Transferor 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 Transferor 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 Transferor 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;
(iv) the rights of the Transferor, as purchaser, under that
certain subsequent Mortgage Loan Conveyance Agreement dated June
29, 1998 between the Transferor and Aames Capital Corporation,
as seller; and
(v) the proceeds of all of the foregoing.
<PAGE> 2
(b) With respect to each Subsequent Mortgage Loan, the Transferor,
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 Transferor
of the Subsequent Mortgage Loans identified on Schedule A hereto shall be
absolute and is intended by the Transferor, the Servicer, the Trustee and the
Certificateholders to constitute and to be treated as a sale by the Transferor.
(c) The expenses and costs related to the delivery of the Subsequent
Mortgage Loans, this Agreement and the Pooling and Servicing Agreement shall be
borne by the Transferor.
(d) Additional terms of the sales, including the purchase prices, are
set forth on Attachment A hereto.
Section 2. Representations and Warranties; Conditions Precedent.
(a) The Transferor 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 respective Subsequent Transfer Dates. The
Transferor hereby affirms that each of the conditions set forth in Section 2.02
of the Pooling and Servicing Agreement (except such conditions which are
required to be satisfied as of the end of the Funding Period) is satisfied as of
the respective Subsequent Transfer Dates.
(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 all 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.
2
<PAGE> 3
Section 5. Successors and Assigns.
This Agreement shall inure to the benefit of and be binding upon the
Transferor and the Trustee and their respective successors and assigns.
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 ACCEPTANCE CORP.,
as Transferor
By: /s/ Mark E. Elbaum
-------------------------------
Name: Mark E. Elbaum
Title: Senior Vice President-Finance
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., as
Trustee for Aames Mortgage Trust 1998-B
By: /s/ Stephen Hessler
-------------------------------
Name: Stephen Hessler
Title: Assistant Vice President
3
<PAGE> 4
State of California )
) ss:
County of Los Angeles )
On June 30, 1998, before me, Michelle L. Adams, personally appeared Mark
E. Elbaum, [X] 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 same in his authorized
capacity, 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/ Michelle L. Adams
-------------------------------
Notary Public
[Notarial Seal]
4
<PAGE> 5
State of California )
) ss:
County of Orange )
On June 30, 1998, before me, David C. West, personally appeared Stephen
Hessler, [X] 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 she executed same in her authorized
capacity, and that by her 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/ David C. West
-------------------------------
Notary Public
[Notarial Seal]
5
<PAGE> 6
ATTACHMENT A
<TABLE>
<S> <C>
Subsequent Transfer Date: June 30, 1998
Subsequent Cut-off Date: June 30, 1998
Aggregate of the Principal Balances of
Subsequent Mortgage Loans in the Adjustable Rate Group: $99,970,375.68
Aggregate of the Purchase Prices of
Subsequent Mortgage Loans in the Adjustable Rate Group: $99,970,375.68
Number of Subsequent Mortgage Loans in the Adjustable Rate Group: 1,088
</TABLE>
