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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
March 19, 1999
First Alliance Mortgage Loan Trust 1999-1
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(Exact name of registrant as specified in its charter)
APPLICATION
New York 333-44585 PENDING
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(State or Other Jurisdiction of (Commission File (I.R.S. Employer
Incorporation) Number) Identification No.)
c/o Norwest Bank Minnesota, National Association,
as Trustee
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (612) 667-1234
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N/A
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(Former name or former address, if changed since last report)
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<PAGE>
Item 5. Other Events.
Reference is hereby made to the Registration Statement on Form S-3
(Registration File No. 333- 44585) filed by First Alliance Mortgage Company
("First Alliance") with the Securities and Exchange Commission (the
"Commission") on January 21, 1998, as amended by Amendment No. 1 to the
Registration Statement on Form S-3 dated February 3, 1998, pursuant to which
First Alliance registered $750,000,000 aggregate principal amount of its
mortgage loan asset-backed certificates and notes, issuable in various series,
for sale in accordance with the provisions of the Securities Act of 1933, as
amended (the "Act"). Reference is also hereby made to the Prospectus dated March
11, 1999, and the related Prospectus Supplement, dated March 11, 1999, which
were previously filed with the Commission pursuant to Rule 424(b)(5), with
respect to the FIRST ALLIANCE MORTGAGE LOAN TRUST 1999-1 Mortgage Loan Asset
Backed Certificates, Series 1999-1 (the "Certificates").
The Certificates were issued pursuant to a Pooling and Servicing
Agreement (the "Pooling and Servicing Agreement") attached hereto as Exhibit
4.1, dated as of March 1, 1999, between First Alliance Mortgage Company in its
capacities as the Seller (the "Seller") and the Servicer (the "Servicer") and
Norwest Bank Minnesota, National Association, in its capacity as trustee (the
"Trustee") and the Oversight Agent (the "Oversight Agent"). The Certificates
consist of two classes: the Class A-1 and Class A-2 Certificates (the "Class A
Certificates") and the Class R Certificates (the "Class R Certificates" and,
together with the Class A Certificates, the "Certificates"). Only the Class A
Certificates were issued pursuant to the Registration Statement. The
Certificates initially evidence, in the aggregate, 100% of the undivided
beneficial ownership interests in the Trust.
The assets of the Trust initially will include two pools (each, a
"Mortgage Loan Group") of closed-end mortgage loans (the "Mortgage Loans")
secured by mortgages or deeds of trust on one-to-four family residential
properties. The Class A-1 Fixed Rate Group Certificates represent undivided
ownership interests in a pool of fixed rate Mortgage Loans secured by mortgages
that may be either in a first or in a junior lien position. The Class A-2
Variable Rate Group Certificates represent undivided ownership interests in a
pool of variable rate Mortgage Loans secured by mortgages in a first lien
position.
Interest distributions on the Class A Certificates are based on the
Certificate Principal Balance thereof and the then applicable Pass-Through Rate
thereof. The Pass-Through Rate for the Class A-1 Certificates will be 6.68% per
annum. The Pass-Through Rate for the Class A-2 Certificates adjusts monthly
based on one-month LIBOR and with respect to the first Payment Date will be
5.25625% per annum.
The Class A-1 Certificates have an aggregate principal amount of
$85,000,000. The Class A-2 Certificates have an aggregate principal amount of
$30,000,000.
As of the Startup Day, the Mortgage Loans possessed the
characteristics described in the Prospectus dated March 11, 1999 and the
Prospectus Supplement dated March 11, 1999, filed pursuant to Rule 424(b)(5) of
the Act on March 19, 1999.
On March 30, 1999, the Trust acquired $24,967,101.18 of Subsequent
Mortgage Loans pursuant to the terms of the Pooling and Servicing Agreement and
the Subsequent Transfer Agreement attached hereto as Exhibit 10.1, dated March
30, 1999, among the Seller, the Servicer, the Oversight Agent and the Trustee on
behalf of the Trust. The Subsequent Mortgage Loans possess the characteristics
required by the Prospectus dated March 11, 1999 and the Prospectus Supplement
dated March 11, 1999, filed pursuant to Rule 424(b)(5) of the Act on March 19,
1999.
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Not applicable
(b) Not applicable
(c) Exhibits:
1.1 Underwriting Agreement, dated March 11, 1999,
between First Alliance Mortgage Company and Lehman
Brothers Inc.
4.1 Pooling and Servicing Agreement, dated as of March
1, 1999, between First Alliance Mortgage Company,
as Seller and Servicer, and Norwest Bank Minnesota,
National Association, as Trustee and Oversight
Agent.
10.1 Subsequent Transfer Agreement dated March 30, 1999,
between First Alliance Mortgage Company, as Seller
and Servicer and Norwest Bank Minnesota, National
Association, as Oversight Agent and as Trustee for
First Alliance Mortgage Loan Trust 1999-1.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
By: FIRST ALLIANCE MORTGAGE COMPANY
By: /s/ Francisco Nebot
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Name: Francisco Nebot
Title: Executive Vice President and
Chief Financial Officer
Dated: April 2, 1999
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Page No.
- - ----------- ----------- --------
<S> <C> <C>
1.1 Underwriting Agreement, dated March 11, 1999, between First Alliance
Mortgage Company and Lehman Brothers Inc.
4.1 Pooling and Servicing Agreement, dated as of March 1, 1999,
between First Alliance Mortgage Company, as Seller and
Servicer, and Norwest Bank Minnesota, National Association, as
Trustee and Oversight Agent.
10.1 Subsequent Transfer Agreement dated March 30, 1999, between
First Alliance Mortgage Company, as Seller and Servicer and
Norwest Bank Minnesota, National Association, as Oversight
Agent and as Trustee for First Alliance Mortgage Loan Trust
1999-1.
</TABLE>
Execution Copy
Exhibit 1.1
FIRST ALLIANCE MORTGAGE COMPANY
AND
LEHMAN BROTHERS INC.
UNDERWRITING AGREEMENT
FOR
FIRST ALLIANCE MORTGAGE LOAN TRUST 1999-1
MORTGAGE LOAN ASSET BACKED CERTIFICATES
6.68% CLASS A-1 FIXED RATE GROUP CERTIFICATES
CLASS A-2 VARIABLE RATE GROUP CERTIFICATES
March 11, 1999
<PAGE>
Execution Copy
March 11, 1999
First Alliance Mortgage Company
17305 Von Karman Avenue
Irvine, California 92614
Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
First Alliance Mortgage Company (the "Seller") hereby confirms its
agreement to sell certain mortgage loan asset backed certificates to Lehman
Brothers Inc. (the "Underwriter") as described herein relating to the First
Alliance Mortgage Loan Trust 1999-1 (the "Trust"). The certificates, together
with certain subordinate certificates to be issued by the Trust, will evidence
in the aggregate the entire beneficial interest in a trust estate (the "Trust")
consisting of two pools (the "Mortgage Pools") of closed-end mortgage loans (the
"Initial Mortgage Loans") and such amounts as may be held by the Trustee in the
Pre-Funding Account (the "Pre-Funding Account"), the Capitalized Interest
Account (the "Capitalized Interest Account") and any other accounts held by the
Trustee for the Trust. The Initial Mortgage Loans shall have, as of the close of
business on March 1, 1999 (the "Cut-Off Date"), an aggregate principal balance
of $90,033,901.09. The certificates are to be issued under a pooling and
servicing agreement dated as of March 1, 1999 (the "Pooling and Servicing
Agreement"), among the Seller, in its individual capacity and in its capacity as
servicer (the "Servicer") and Norwest Bank Minnesota, National Association, in
its capacity as trustee (the "Trustee") and in its capacity as master servicer
(the "Master Servicer"). On the Closing Date, approximately $24,966,099 will be
deposited in the name of the Trustee in the Pre-Funding Account from the sale of
the Certificates. It is intended that additional Mortgage Loans satisfying the
criteria specified in the Pooling and Servicing Agreement (the "Subsequent
Mortgage Loans") will be purchased by the Trust for inclusion in both Group I
and Group II from the Seller from time to time on or before April 30, 1999 from
funds on deposit in the Pre-Funding Account at the time of execution and
delivery of each Subsequent Transfer Agreement ("Subsequent Transfer
Agreement"). Funds in the Capitalized Interest Account will be applied by the
Trustee to cover shortfalls in interest during the Funding Period.
On or prior to the date of issuance of the Certificates, the Seller
will obtain two certificate guaranty insurance policies (the "Policies") issued
by MBIA Insurance Corporation (the "Insurer") which will unconditionally and
irrevocably guarantee to the Trustee for the benefit of the holders of the Class
A-1 Certificates and the Class A-2 Certificates full and complete payment of all
amounts payable on the Class A-1 Certificates and the Class A-2 Certificates.
All
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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 Underwriter.
1. Securities. The certificates will be issued in classes as follows:
(i) a senior class with respect to each Mortgage Loan Group consisting of the
Class A-1 Fixed Rate Group Certificates (the "Class A-1 Certificates") and the
Class A-2 Variable Rate Group Certificates (the "Class A-2 Certificates" and
collectively with the Class A-1 Certificates, the "Class A Certificates") and
(ii) a residual class (the "Class R Certificates"). The Class A Certificates and
the Class R Certificates are hereinafter referred to as the "Certificates."
2. Representations and Warranties of the Seller. The Seller represents
and warrants to, and covenants with, the Underwriter that:
A. The Seller has filed with the Securities and Exchange Commission
(the "Commission"), a registration statement (No. 333-44585) on Form S-3 for the
registration under the Securities Act of 1933, as amended (the "Act"), of
Mortgage Loan Asset Backed Certificates and Notes (issuable in series), which
registration statement, as amended at the date hereof, has become effective.
Such registration statement, as amended to the date of this Agreement, meets the
requirements set forth in Rule 415(a)(1)(vii) under the Act and complies in all
other material respects with such Rule. The Seller proposes to file with the
Commission pursuant to Rule 424(b)(5) under the Act, a supplement dated March
11, 1999 to the prospectus dated March 11, 1999 relating to the Certificates and
the method of distribution thereof and has previously advised the Underwriter of
all further information (financial and other) with respect to the Certificates
to be set forth therein. Such registration statement, including the exhibits
thereto, as amended at the date hereof, is hereinafter called the "Registration
Statement"; such prospectus dated March 11, 1999, in the form in which it will
be filed with the Commission pursuant to Rule 424(b)(5) under the Act is
hereinafter called the "Basic Prospectus"; such supplement dated March 11, 1999
to the Basic Prospectus, in the form in which it will be filed with the
Commission pursuant to Rule 424(b)(5) of the Act, is hereinafter called the
"Prospectus Supplement"; and the Basic Prospectus and the Prospectus Supplement
together are hereinafter called the "Prospectus." There are no contracts or
documents of the Seller which are required to be filed as exhibits to the
Registration Statement pursuant to the Act or the Rules and Regulations which
have not been so filed or incorporated by reference therein on or prior to the
effective date of the Registration Statement. The conditions for use by the
Seller of the Registration Statement on Form S-3 under the Act have been
satisfied. The Seller will file with the Commission (i) promptly after receipt
from the Underwriter of any Derived Information (as defined herein) a Form 8-K
incorporating such Derived Information and (ii) within fifteen days of the
issuance of the Certificates a report on Form 8-K setting forth specific
information concerning the related Mortgage Loans (the "8-K").
B. As of the date hereof, when the Registration Statement became
effective, when the Prospectus Supplement is first filed pursuant to Rule
424(b)(5) under the Act 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, will comply in all material respects with the applicable
requirements of the Act and the rules and regulations thereunder 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
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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
light of the circumstances under which they were made, not misleading; provided,
however, that the Seller makes no representations or warranties as to the
information contained in or omitted from the Prospectus Supplement or any
amendment thereof or supplement thereto in reliance upon and in conformity with
the information furnished in writing to the Seller by or on behalf of the
Underwriter specifically for use in connection with the preparation of the
Prospectus Supplement.
C. The Seller is duly organized, validly existing and in good standing
under the laws of the State of California, 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, operations or results of
operations of the Seller 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 Seller, threatened, before any court, governmental agency
or body or other tribunal (i) asserting the invalidity of this Agreement, the
Certificates, the Insurance Agreement, the Indemnification Agreement 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, the Pooling and Servicing Agreement or any Subsequent Transfer
Agreement, (iii) which (except as noted in the Prospectus Supplement under the
Caption "Risk Factors--Litigation") may, individually or in the aggregate,
materially and adversely affect the performance by the Seller of its obligations
under, or the validity or enforceability of, this Agreement, the Certificates,
the Pooling and Servicing Agreement or any Subsequent Transfer Agreement, or
(iv) which may affect adversely the federal income tax attributes of the
Certificates as described in the Prospectus.
E. The execution and delivery by the Seller of this Agreement, the
Indemnification Agreement, the Insurance Agreement and the Pooling and Servicing
Agreement, the issuance of the Certificates and the transfer and delivery of the
Mortgage Loans to the Trustee by the Seller are within the corporate power of
the Seller and have been, or will be, prior to the Closing Date duly authorized
by all necessary corporate action on the part of the Seller 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 Seller 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 Seller or any of its affiliates is subject, the
Seller's charter or bylaws, or any order, rule or regulation of any court,
governmental agency or body or other tribunal having jurisdiction over the
Seller, any of its affiliates or any of its or their properties; and no consent,
approval, authorization or order of, or filing with, any court or governmental
agency or body or other tribunal is required for the consummation of the
transactions
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contemplated by this Agreement or the Prospectus in connection with the issuance
and sale of the Certificates by the Seller except pursuant to the Act. Neither
the Seller 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 Seller or any of
its affiliates, which materially and adversely affects, or may in the future
materially and adversely affect, (i) the ability of the Seller to perform its
obligations under the Pooling and Servicing Agreement, this Agreement, the
Insurance Agreement, the Indemnification Agreement and any Subsequent Transfer
Agreement or (ii) the business, operations, results of operations, financial
position, income, properties or assets of the Seller, taken as a whole.
F. This Agreement and the Indemnification Agreement have been duly
executed and delivered by the Seller, and on or prior to the Closing Date the
Pooling and Servicing Agreement, the Insurance Agreement and any Subsequent
Transfer Agreement will be duly executed and delivered by the Seller, and each
constitutes and/or will constitute, as applicable, the legal, valid and binding
obligation of the Seller enforceable in accordance with their respective 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 Certificates will conform in all material respects to the
description thereof to be contained in the Prospectus and will be duly and
validly authorized and, when duly and validly executed, authenticated, issued
and delivered in accordance with the Pooling and Servicing Agreement and sold to
the Underwriter as provided herein, will be validly issued and outstanding and
entitled to the benefits of the Pooling and Servicing Agreement.
H. No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body of the United
States is required for the issuance of the Certificates and the sale of the
Certificates to the Underwriter, or for the consummation by the Seller, of the
other transactions contemplated by this Agreement, the Indemnification
Agreement, the Pooling and Servicing Agreement, the Insurance Agreement and any
Subsequent Transfer Agreement, other than those that have been obtained.
I. On the Closing Date, the Initial 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 Underwriter as though
set out herein, and at the dates specified in the Pooling and Servicing
Agreement, and in any Subsequent Transfer Agreement, such representations and
warranties were, or will be, true and correct in all material respects.
J. On the Closing Date, (x) the Seller will have good title to the
Initial Mortgage Loans free of any liens, (y) the Trustee on behalf of the Trust
will have acquired beneficial ownership of the Seller's right, title and
interest in the Initial Mortgage Loans and (z) the Underwriter will have good
title to the Certificates free of any liens. The transfer of the Initial
Mortgage Loans to
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the Trust on the Closing Date will be treated by the Seller for financial
accounting and reporting purposes as a sale of assets and not as a pledge of
assets to secure debt.
K. The Seller possesses all material licenses, certificates, permits or
other authorizations issued by the appropriate state, federal or foreign
regulatory agencies or bodies necessary to conduct the business now operated by
it and as described in the Prospectus and, except as noted in the Prospectus
Supplement under the caption "RISK FACTORS--Litigation", there are no
proceedings, pending or, to the best knowledge of the Seller, 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 Seller taken as a whole.
L. Any taxes, fees and other governmental charges in connection with
the execution and delivery of this Agreement, the Insurance Agreement, the
Indemnification Agreement, and the Pooling and Servicing Agreement or the
execution and issuance of the Certificates have been or will be paid on or prior
to the Closing Date.
M. 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 Seller or its
subsidiaries, taken as a whole, from December 31, 1998, to the date hereof.
N. This Agreement and the Pooling and Servicing Agreement will conform
in all material respects to the descriptions thereof contained in the
Prospectus.
O. The Seller 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, (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 Certificates for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose.
P. Each assignment of Mortgages required to be prepared pursuant to the
Pooling and Servicing Agreement is based on forms recently utilized by the
Seller with respect to mortgaged properties located in the appropriate
jurisdiction and used in the regular course of the Seller's business. Based on
the Seller'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.
Q. The Seller is eligible to use the Registration Statement.
R. Neither the Seller nor the Trust created by the Pooling and
Servicing Agreement is an "investment company" within the meaning of such term
under the Investment Company Act of 1940 (the "1940 Act") and the rules and
regulations of the Commission thereunder.
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S. On the Closing Date, the Class A Certificates shall have been rated
in the highest rating category by at least two nationally recognized rating
agencies.
T. The Seller is not in violation of its articles of incorporation or
by-laws or, to our knowledge, in default in the performance or observance of any
material obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other instrument to which
the Seller is a party or by which it or its properties may be bound, which
default might result in any material adverse changes in the financial condition,
earnings, affairs or business of the Seller or which might materially and
adversely affect the properties or assets, taken as a whole, of the Seller.
U. To the best knowledge of the Seller, Deloitte & Touche LLP are
independent public accountants with respect to the Sellers as required by the
Securities Act and the Rules and Regulations.
Any certificate signed by any officer of the Seller and delivered to
the Underwriter in connection with the sale of the Certificates hereunder shall
be deemed a representation and warranty as to the matters covered thereby by the
Seller to each person to whom the representations and warranties in this Section
2 are made.
3. Agreements of the Underwriter. The Underwriter agrees with the
Seller that upon the execution of this Agreement and authorization by the
Underwriter of the release of the Class A Certificates, the Underwriter shall
offer the Class A Certificates for sale upon the terms and conditions set forth
in the Prospectus as amended or supplemented.
4. Purchase, Sale and Delivery of the Class A Certificates. The Seller
hereby agrees, subject to the terms and conditions hereof, to sell the Class A
Certificates to the Underwriter, who, upon the basis of the representations and
warranties herein contained, but subject to the conditions hereinafter stated,
hereby agrees to purchase the entire aggregate principal amount of the Class A
Certificates, consisting of the Class A-1 Certificates in the amount of
$85,000,000 and the Class A-2 Certificates in the amount of $30,000,000. At the
time of issuance of the Certificates, the Initial Mortgage Loans will be sold by
the Seller to the Trust pursuant to the Pooling and Servicing Agreement. The
Subsequent Mortgage Loans will be purchased by the Trust for inclusion in both
Mortgage Loan Groups, from time to time on or before April 30, 1999. The
Servicer and the Master Servicer will be obligated, under the Pooling and
Servicing Agreement, to service the Mortgage Loans either directly or through
sub-servicers.
The Class A Certificates to be purchased by the Underwriter will be
delivered by the Seller to the Underwriter (which delivery shall be made through
the facilities of The Depository Trust Company ("DTC")) against payment of the
purchase price therefor, equal to 99.60% of the aggregate principal amount of
each Class of the Class A Certificates, including accrued interest at the Class
A-1 Pass-Through Rate on the Class A-1 Certificates from March 1, 1999 to, but
not including, the Closing Date, by a same day federal funds wire payable to the
order of the Seller. No accrued interest will be payable on the Class A-2
Variable Rate Group Certificates, which shall be dated their date of delivery.
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Settlement shall take place at the offices of Arter & Hadden LLP, 1801
K Street, N.W., Washington, D.C. 20006, at 10:00 a.m. (E.S.T.), on March 19,
1999, or at such other time thereafter as the Underwriter and the Seller
determine (such time being herein referred to as the "Closing Date"). The Class
A Certificates will be prepared in definitive form and in such authorized
denominations as the Underwriter may request, registered in the name of Cede &
Co., as nominee of DTC.
The Seller agrees to have the Class A Certificates available for
inspection and review by the Underwriter in New York City not later than 1:00
p.m. (E.S.T.) on the business day prior to the Closing Date.
5. Covenants of the Seller. The Seller covenants and agrees with the
Underwriter that:
A. The Seller will promptly advise the Underwriter and its counsel (i)
when any amendment to the Registration Statement 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, (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) of the receipt by the Seller of any notification with
respect to the suspension of the qualification of the Class A Certificates for
sale in any jurisdiction or the initiation or threatening of any proceeding for
such purpose. The Seller will not file any amendment to the Registration
Statement or supplement to the Prospectus after the date hereof and prior to the
Closing Date for the Certificates unless the Seller has furnished the
Underwriter and its counsel 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 Underwriter reasonably objects, unless such filing is
required by law. The Seller will use its best 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 Act or the rules under the Act, the Seller will
promptly prepare and file with the Commission, 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 the
Registration Statement, will use its best efforts to cause such amendment of the
Registration Statement to be made effective as soon as possible.
C. The Seller will furnish to the Underwriter, without charge, executed
copies of the Registration Statement (including exhibits thereto) and, so long
as delivery of a Prospectus by the Underwriter or a dealer may be required by
the Act, as many copies of the Prospectus, as amended or supplemented, and any
amendments and supplements thereto as the Underwriter
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may reasonably request. The Seller will pay the expenses of printing (or
otherwise reproducing) all offering documents relating to the offering of the
Class A Certificates.
D. As soon as practicable, but not later than sixteen months after the
date hereof, the Seller will cause the Trust to make generally available to
Owners of the Certificates an earning statement of the Trust covering a period
of at least 12 months beginning after the effective date of the Registration
Statement which will satisfy the provisions of Section 11(a) of the Act and, at
the option of the Seller, will satisfy the requirements of Rule 158 under the
Act.
E. During a period of 20 calendar days from the date as of which this
Agreement is executed, neither the Seller nor any affiliate of the Seller will,
without the Underwriter's prior written consent (which consent shall not be
unreasonably withheld), enter into any agreement to offer or sell mortgage loan
asset-backed securities backed by mortgage loans, except pursuant to this
Agreement.
F. So long as any of the Class A Certificates are outstanding, the
Seller will cause to be delivered to the Underwriter (i) all documents required
to be distributed to Owners of the Class A Certificates and (ii) from time to
time, any other information concerning the Trust filed with any government or
regulatory authority that is otherwise publicly available.
G. The Seller, whether or not the transactions contemplated hereunder
are consummated or this Agreement is terminated, will pay all expenses in
connection with the transactions contemplated herein, including, but not limited
to, the expenses of printing (or otherwise reproducing) all documents relating
to the offering, the reasonable fees and disbursements of its counsel and
expenses of the Underwriter (including the reasonable fees and disbursements of
Brown & Wood LLP, as special counsel to the Underwriter) incurred in connection
with (i) the issuance and delivery of the Certificates, (ii) preparation,
printing, reproducing and delivery of all documents specified in this Agreement,
(iii) any fees and expenses of the Trustee, the Insurer and any other credit
support provider (including legal fees), accounting fees and disbursements, and
(iv) any fees charged by investment rating agencies for rating the Class A
Certificates.
H. The Seller agrees that, so long as any of the Class A Certificates
shall be outstanding, it will deliver or cause to be delivered to the
Underwriter (i) the annual statement as to compliance delivered to the Trustee
pursuant to the Pooling and Servicing Agreement, (ii) 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 furnished to the
Seller and (iii) any information required to be delivered by the Seller or the
Servicer to the Trustee in order for the Trustee to prepare the report required
pursuant to Section 7.8 of the form of Pooling and Servicing Agreement
heretofore delivered to the Underwriter.
I. The Seller will enter into the Pooling and Servicing Agreement, the
Insurance Agreement, and all related agreements on or prior to the Closing Date.
J. The Seller will endeavor to qualify the Class A Certificates for
sale to the extent necessary under any state securities or Blue Sky laws in any
jurisdictions as may be reasonably requested by the Underwriter, if any, and
will pay all expenses (including fees and disbursements
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of counsel) in connection with such qualification and in connection with the
determination of the eligibility of the Class A Certificates for investment
under the laws of such jurisdictions as the Underwriter may reasonably
designate, if any.
6. Conditions of the Underwriter's Obligation. The obligation of the
Underwriter to purchase and pay for the Class A Certificates as provided herein
shall be subject to the accuracy as of the date hereof and the Closing Date (as
if made at the Closing Date) of the representations and warranties of the Seller
contained herein (including those representations and warranties set forth in
the Pooling and Servicing Agreement and incorporated herein), to the accuracy of
the statements of the Seller made in any certificate or other document delivered
pursuant to the provisions hereof, to the performance by the Seller 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).
B. The Underwriter shall have received the Pooling and Servicing
Agreement and the Class A Certificates in form and substance satisfactory to the
Underwriter, duly executed by all signatories required pursuant to the
respective terms thereof.
C.1. The Underwriter shall have received the favorable opinion of the
General Counsel to the Seller, with respect to the following items, dated the
Closing Date, to the effect that:
(a) The Seller has been duly organized and is validly existing as
a corporation in good standing under the laws of the State of
California, and is qualified to do business in each state necessary to
enable it to perform its obligations as Servicer under the Pooling and
Servicing Agreement. The Seller has the requisite power and authority
to execute and deliver, engage in the transactions contemplated by, and
perform and observe the conditions of, this Agreement, the Pooling and
Servicing Agreement, any Subsequent Transfer Agreement, the Insurance
Agreement and the Indemnification Agreement.
(b) This Agreement, the Certificates, the Pooling and Servicing
Agreement, the Insurance Agreement and the Indemnification Agreement
have been duly and validly authorized, executed and delivered by the
Seller, all requisite corporate action having been taken with respect
thereto, and each (other than the Certificates) constitutes the valid,
legal and binding agreement of the Seller enforceable against the
Seller in accordance with its respective terms.
(c) Neither the transfer of the Initial Mortgage Loans to the
Trust, the issuance or sale of the Certificates nor the execution,
delivery or performance by the Seller of the Pooling and Servicing
Agreement, this Agreement, any Subsequent Transfer Agreement, the
Insurance Agreement or the Indemnification Agreement (A) conflicts or
will conflict with or results or will result in a breach of, or
constitutes or will constitute a default under, (i) any term or
provision of the articles of incorporation or bylaws of the Seller;
(ii) any term or provision of any material agreement, contract,
instrument or
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indenture, to which the Seller is a party or is bound; or (iii) any
order, judgment, writ, injunction or decree of any court or
governmental agency or body or other tribunal having jurisdiction over
the Seller; or (B) results in, or will result in the creation or
imposition of any lien, charge or encumbrance upon the Trust or upon
the Certificates, except as otherwise contemplated by the Pooling and
Servicing Agreement.
(d) The endorsement and delivery of each Note, and the
preparation, delivery and recording of an Assignment in recordable
form, with respect to each Mortgage (in the absence of the delivery of
the opinions described in Section 3.5(b)(ii)(y) of the Pooling and
Servicing Agreement), as and in the manner contemplated by the Pooling
and Servicing Agreement, is sufficient fully to transfer to the Trustee
for the benefit of the Owners all right, title and interest of the
Seller in the Note and Mortgage, as noteholder and mortgagee or
assignee thereof, and will be sufficient to permit the Trustee to avail
itself of all protection available under applicable law against the
claims of any present or future creditors of the Seller and to prevent
any other sale, transfer, assignment, pledge or other encumbrance of
the Mortgage Loans by the Seller from being enforceable.
(e) No consent, approval, authorization or order of, registration
or filing with, or notice to, courts, governmental agency or body or
other tribunal is required under the laws of the State of California,
for the execution, delivery and performance of the Pooling and
Servicing Agreement, the Insurance Agreement, this Agreement, the
Indemnification Agreement or the offer, issuance, sale or delivery of
the Certificates or the consummation of any other transaction
contemplated thereby by the Seller, except such which have been
obtained.
(f) The Seller possesses all material licenses, certificates,
permits or other authorizations issued by the appropriate state,
federal or foreign regulatory agencies or bodies necessary to conduct
the business now operated by it and as described in the Prospectus and,
except as noted in the Prospectus Supplement under the caption "RISK
FACTORS--Litigation", there are no proceedings, pending or, to the
best knowledge of the Seller, 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 Seller taken as a whole.
(g) There are no actions, proceedings or investigations pending
or, to such counsel's knowledge, threatened against the Seller before
any court, governmental agency or body or other tribunal (i) asserting
the invalidity of the Pooling and Servicing Agreement, the Insurance
Agreement, this Agreement, the Indemnification Agreement or the
Certificates, (ii) seeking to prevent the issuance of the Certificates
or the consummation of any of the transactions contemplated by the
Pooling and Servicing Agreement, the Indemnification Agreement, the
Insurance Agreement or this Agreement or (iii) which (except as noted
in the Prospectus Supplement under the caption "RISK
FACTORS--Litigation") would materially and adversely affect the
performance by the Seller of obligations under, or the validity or
enforceability of, the Pooling and Servicing
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Agreement, the Certificates, the Indemnification Agreement, the
Insurance Agreement or this Agreement.
(h) The statements in the Prospectus under the caption "CERTAIN
LEGAL ASPECTS OF MORTGAGE LOANS AND RELATED MATTERS", to the extent
that statements in such section constitute matters of law or legal
conclusions with respect thereto, have been reviewed by attorneys under
the supervision of General Counsel to the Seller and are complete and
correct in all material respects.
2. The Underwriter shall have received the favorable opinion of Arter &
Hadden LLP, special counsel to the Seller, dated the Closing Date, to the effect
that:
(a) The Certificates, assuming due execution and authentication by
the Trustee, and delivery and payment therefor pursuant to this
Agreement are validly issued and outstanding and are entitled to the
benefits of the Pooling and Servicing Agreement.
(b) No consent, approval, authorization or order of, registration
or filing with, or notice to, any governmental authority or court is
required under federal laws or the laws of the State of New York, for
the execution, delivery and performance by the Seller of the Pooling
and Servicing Agreement, this Agreement, any Subsequent Transfer
Agreement, the Indemnification Agreement, the Insurance Agreement or
the offer, issue, sale or delivery of the Certificates or the
consummation of any other transaction contemplated thereby by the
Seller, except such which have been obtained.
(c) Neither the transfer of the Initial Mortgage Loans to the
Trustee, the issuance or sale of the Class A Certificates, nor the
execution, delivery or performance by the Seller of the Pooling and
Servicing Agreement, the Insurance Agreement, any Subsequent Transfer
Agreement, the Indemnification Agreement or this Agreement will (a)
conflict with or result in a breach of, or constitute a default under
any law, rule or regulation of the State of New York or the federal
government, or (b) to such counsel's knowledge, without independent
investigation, results in, or will result in, the creation or
imposition of any lien, charge or encumbrance upon the Trust or upon
the Certificates, except as otherwise contemplated by the Pooling and
Servicing Agreement.
(d) Each Subsequent Transfer Agreement at the time of its
execution and delivery will be sufficient to convey all of the Seller's
right, title and interest in the Subsequent Mortgage Loans to the
Trustee and following the consummation of the transaction contemplated
by each Subsequent Transfer Agreement, the transfer of the Subsequent
Mortgage Loans by the Seller to the Trustee will be a sale thereof.
(e) The Registration Statement has become effective under the Act,
no objection to the use of Form S-3 with respect to the Registration
Statement was made by the Commission prior to the time it became
effective and, to the best of such counsel's knowledge, no stop order
has been issued and no proceedings therefor initiated or threatened and
the Registration Statement, the Basic Prospectus and the Prospectus
Supplement (other than the financial and statistical data included
therein, as to which such counsel need express no opinion), as of the
date on which the Registration
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Statement was declared effective and as of the date hereof, comply as
to form in all material respects with the requirements of the Act and
the rules and regulations thereunder, and such counsel does not know of
any amendment to the Registration Statement required to be filed, or of
any contracts, indentures or other documents of a character required to
be filed as an exhibit to the Registration Statement or required to be
described in the Registration Statement, the Basic Prospectus or the
Prospectus Supplement which has not been filed or described as
required.
(f) Neither the qualification of the Pooling and Servicing
Agreement under the Trust Indenture Act of 1939 nor the registration of
the Trust created by such Agreement under the 1940 Act is presently
required.
(g) The statements in the Basic Prospectus set forth under the
captions "DESCRIPTION OF THE SECURITIES" and "THE POOLING AND SERVICING
AGREEMENT" and the statements in the Prospectus Supplement set forth
under the captions "DESCRIPTION OF THE CLASS A CERTIFICATES" and "THE
POOLING AND SERVICING AGREEMENT," to the extent such statements purport
to summarize certain provisions of the Certificates or of the Pooling
and Servicing Agreement, are fair and accurate in all material
respects.
(h) Except as to any financial or statistical data contained in
the Registration Statement, the statements set forth in the Basic
Prospectus under the caption "DESCRIPTION OF CREDIT ENHANCEMENT," and
in the Prospectus Supplement under the caption "THE CERTIFICATE
INSURANCE POLICIES AND THE CERTIFICATE INSURER," and any Derived
Information as to which no opinion or belief need be expressed, to the
best of such counsel's knowledge, the Registration Statement, the Basic
Prospectus and the Prospectus Supplement do not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements
therein not misleading.
(i) Upon receipt by the Trustee, on behalf of the Owners of the
Certificates, of the related Notes, endorsed as described in the
Pooling and Servicing Agreement, and the receipt by the Seller of the
purchase price for the Certificates and for so long as the Trustee
maintains actual physical possession of such Notes, (i) the Trustee
shall be vested with good and indefeasible title to, and shall be the
sole owner of, and shall obtain all right, title and interest of the
Seller in, each Mortgage Loan, (ii) in the event that the sale of the
Mortgage Loans were to be recharacterized as a financing secured by the
Mortgage Loans, the Trustee has a first perfected security interest in
the Mortgage Loans and (iii) in the jurisdictions listed in such
opinion, the recordation of the assignments of the Mortgages is not
required for the Trustee to obtain such rights, as against creditors
of, and purported transferees of, the Seller.
(j) To the best of the knowledge of such counsel, the Commission
has not issued any stop order suspending the effectiveness of the
Registration Statement or any order directed to any prospectus relating
to the Certificates (including the Prospectus), and has not initiated
or threatened any proceeding for that purpose.
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3. The Underwriter shall have received the favorable opinion of Arter &
Hadden LLP, special tax and bankruptcy counsel to the Seller, dated the Closing
Date, to the effect that:
(a) Assuming the REMIC election is made in compliance with the
Pooling and Servicing Agreement, (i) the Trust, exclusive of the
Pre-Funding Account and the Capitalized Interest Account (as defined in
the Prospectus Supplement) will qualify as a real estate mortgage
investment conduit ("REMIC") (as defined in the Internal Revenue Code
of 1986, as amended (the "Code")) for Federal income tax purposes and
(ii) each Class of the Class A Certificates (as defined in the
Prospectus Supplement) will be treated as "regular interests" in the
REMIC and the Class R Certificates will be treated as the sole
"residual interest" in the REMIC.
(b) To the best of such counsel's knowledge, there are no actions,
proceedings or investigations pending that would adversely affect the
Trust Estate (exclusive of the Pre-Funding Account and the Capitalized
Interest Account) as a real estate mortgage investment conduit
("REMIC") as such term is defined in the Code.
(c) The statements under the captions "SUMMARY OF PROSPECTUS--
CERTAIN FEDERAL INCOME TAX CONSEQUENCES", "--ERISA CONSIDERATIONS",
"CERTAIN FEDERAL INCOME TAX CONSEQUENCES" and "ERISA CONSIDERATIONS" in
the Basic Prospectus and under the captions "SUMMARY--TAX ASPECTS",
"--ERISA", "CERTAIN FEDERAL INCOME TAX CONSEQUENCES" and "ERISA
CONSIDERATIONS" in the Prospectus Supplement as they relate to federal
tax matters are true and correct in all material respects.
(d) As a consequence of the qualification of the Trust (exclusive
of the Pre-Funding Account and the Capitalized Interest Account) as a
REMIC, the Class A Certificates will be treated as "regular . . .
interest(s) in a REMIC" under Section 7701(a)(19)(C) of the Code and
"real estate assets" under Section 856(c) of the Code in the same
proportion that the assets in the Trust consist of qualifying assets
under such Sections. In addition, as a consequence of the qualification
of the Trust (exclusive of the Pre-Funding Account and the Capitalized
Interest Account) as a REMIC, interest on the Class A Certificates will
be treated as "interest on obligations secured by mortgages on real
property" under Section 856(c) of the Code to the extent that such
Class A Certificates are treated as "real estate assets" under Section
856(c) of the Code.
(e) The Trust will not be subject to tax upon its income or assets
by the taxing authority of New York State or New York City.
(f) The Trust will not be subject to the California state income
tax. While REMICs are subject to the California state minimum franchise
tax imposed under Article 2, Section 23153 of the California Revenue
and Taxation Code, such counsel does not express an opinion as to
whether the Trust is subject to such tax.
(g) A court would hold that the conveyance by the Seller of all
right, title and interest in the Mortgage Loans to the Trustee (except
for the Seller's right, title and interest in the principal and
interest due on such Mortgage Loans on or prior to the Cut-
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Off Date), constitutes a sale of the Mortgage Loans and not a borrowing
by the Seller secured by the pledge of the Mortgage Loans. A court
would find that, following such conveyance, the Mortgage Loans and
proceeds thereof (net of payments of principal and interest due on such
Mortgage Loans on or prior to the Cut-Off Date) are not property of the
estate of the Seller within the meaning of Section 541 of the
Bankruptcy Code, and, further that the Trustee's rights with respect to
the Mortgage Loans and the proceeds thereof would not subject it to the
automatic stay provisions of Section 362 of the Bankruptcy Code. Since
the conveyance of the Mortgage Loans (net of payments of scheduled
principal due and interest accrued on or prior to the Cut-Off Date)
constitutes a sale of said Mortgage Loans then the payments thereunder
(net of payments of scheduled principal due on and interest accrued on
or prior to the Cut-Off Date) are not property of the estate of the
Seller and the distributions of such payments by the Trustee to the
Owners of the Certificates are not preferential payments made by, for,
or on behalf of the Seller under the provisions of Section 547 of the
Bankruptcy Code.
(h) If a court characterized the transfer of the Mortgage Loans to
the Trustee, on behalf of the Owners of the Certificates, as a pledge
of collateral rather than an absolute sale or assignment, with respect
to the Mortgage Loans and other property included in the Trust on the
date hereof, to the extent governed by the laws of the State of New
York, a valid security interest has been created in favor of the
Trustee, which security interest of the Trustee will be perfected and
will constitute a first perfected security interest, with respect to
the Seller's right, title and interest in and to the Notes, upon
endorsement and delivery thereof to the Trustee. With respect to the
security interest of the Trustee in the Notes, New York law would
govern.
4. The Underwriter shall have received the favorable opinion of Brown &
Wood LLP, special counsel to the Underwriter, dated the Closing Date, to the
effect that:
(a) The Certificates, assuming due execution and authentication by
the Trustee, and delivery and payment therefor pursuant to this
Agreement, are validly issued and outstanding and are entitled to the
benefits of the Pooling and Servicing Agreement.
(b) No fact has come to such counsel's attention which causes them
to believe that the Prospectus (other than the financial statement and
other financial and statistical data contained therein, as to which
such counsel need express no opinion), as of the date thereof,
contained any untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(c) Such other matters as the Underwriter may reasonably request.
In rendering their opinions, the counsels described in this Paragraph
(C) may rely, as to matters of fact, on certificates of responsible officers of
the Seller, 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 Seller.
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D. The Underwriter shall have received a letter from Deloitte & Touche
LLP, dated on or before the Closing Date, in form and substance satisfactory to
the Underwriter and counsel for the Underwriter, to the effect that they have
performed certain specified procedures requested by the Underwriter with respect
to the information set forth in the Prospectus and certain matters relating to
the Seller.
E. The Class A Certificates shall have been rated in the highest rating
category by Moody's Investors Service, Inc., and by Standard & Poor's Ratings
Service, a division of The McGraw-Hill Companies, Inc., and such ratings shall
not have been rescinded. The Underwriter and its counsel shall have received
copies of any opinions of counsel supplied to the rating organizations relating
to any matters with respect to the Class A Certificates. Any such opinions shall
be dated the Closing Date and addressed to the Underwriter or accompanied by
reliance letters to the Underwriter or shall state that the Underwriter may rely
upon them.
F. The Underwriter shall have received from the Seller a certificate,
signed by the president, a senior vice president or a vice president of the
Seller, dated the Closing Date, to the effect that the signer of such
certificate has carefully examined the Registration Statement, the Pooling and
Servicing Agreement and this Agreement and that, to the best of his or her
knowledge based upon reasonable investigation:
1. the representations and warranties of the Seller in this Agreement,
and in the Indemnification Agreement, as of the Closing Date, in the
Pooling and Servicing Agreement, in the Insurance Agreement and in all
related agreements, as of the date specified in such agreements, are
true and correct, and 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;
2. except as noted in the Prospectus Supplement under the caption "RISK
FACTORS--Litigation", there are no actions, suits or proceedings
pending, or to the best of such officer's knowledge, threatened against
or affecting the Seller which if adversely determined, individually or
in the aggregate, would be reasonably likely to adversely affect the
Seller's obligations under the Pooling and Servicing Agreement, the
Insurance Agreement, this Agreement or under the Indemnification
Agreement in any material way; and no merger, liquidation, dissolution
or bankruptcy of the Seller is pending or contemplated;
3. the information contained in the Registration Statement and
Prospectus relating to the Seller, the Mortgage Loans or the servicing
procedures of it or its affiliates or the subservicer is true and
accurate in all material respects and nothing has come to his or her
attention that would lead such officer to believe that the Registration
Statement and Prospectus includes any untrue statement of a material
fact or omits to state a material fact necessary to make the statements
therein not misleading;
4. the information set forth in the Schedules of Mortgage Loans
required to be furnished pursuant to the Pooling and Servicing
Agreement is true and correct in all material respects;
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5. there has been no amendment or other document filed affecting the
articles of incorporation or bylaws of the Seller since August 1, 1996,
and no such amendment has been authorized. No event has occurred since
March 16, 1999, which has affected the good standing of the Seller
under the laws of the State of California;
6. there has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Seller and its subsidiaries, taken as a whole, from
December 31, 1998;
7. on or prior to the Closing Date, there has been no downgrading, nor
has any notice been given of (A) any intended or potential downgrading
or (B) any review or possible changes in rating, the direction of which
has not been indicated, in the rating, if any, accorded the Seller or
in any rating accorded any securities of the Seller, if any, by any
"nationally recognized statistical rating organization," as such term
is defined for purposes of the Act; and
8. each person who, as an officer or representative of the Seller,
signed or signs the Registration Statement, the Pooling and Servicing
Agreement, this Agreement, the Indemnification Agreement, the Insurance
Agreement, or any other document delivered pursuant hereto, on the date
of such execution, or on the Closing Date, as the case may be, in
connection with the transactions described in the Pooling and Servicing
Agreement, the Indemnification Agreement, the Insurance Agreement and
this 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.
The Seller shall attach to such certificate a true and correct copy of
its certificate or articles of incorporation, as appropriate, and bylaws which
are in full force and effect 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 Underwriter shall have received an opinion of counsel to the
Trustee, dated the Closing Date and in form and substance satisfactory to the
Underwriter and its counsel, to the effect that:
1. the Trustee is a national banking association duly organized,
validly existing and in good standing under the laws of the United
States and has the power and authority to enter into and to take all
actions required of it under the Pooling and Servicing Agreement;
2. the Pooling and Servicing Agreement has been duly authorized,
executed and delivered by the Trustee and the Pooling and Servicing
Agreement constitutes the legal, valid and binding obligation of the
Trustee, enforceable against the Trustee in accordance with its terms,
except as enforceability thereof may be limited by (A) bankruptcy,
insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally, as such laws would apply in
the event of a bankruptcy, insolvency or
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reorganization or similar occurrence affecting the Trustee, and (B)
general principles of equity regardless of whether such enforcement is
sought in a proceeding at law or in equity;
3. no consent, approval, authorization or other action by any
governmental agency or body or other tribunal is required on the part
of the Trustee in connection with its execution and delivery of the
Pooling and Servicing Agreement or the performance of its obligations
thereunder;
4. the Certificates have been duly executed, authenticated and
delivered by the Trustee;
5. the execution and delivery of, and performance by the Trustee of its
obligations under, the Pooling and Servicing Agreement do not conflict
with or result in a violation of any statute or regulation applicable
to the Trustee, or the articles or bylaws of the Trustee, or to the
best knowledge of such counsel, any governmental authority having
jurisdiction over the Trustee or the terms of any indenture or other
agreement or instrument to which the Trustee is a party or by which it
is bound; and
6. in the event that the Servicer defaults in its obligation to make
advances under the Pooling and Servicing Agreement, the Trustee or any
affiliate of the Trustee, is not prohibited by a provision of its
Articles of Incorporation or Bylaws or by any provision of the banking
and trust laws of the United States of America or the State of New
York, as the case may be (or any rule, regulation, decree or order
thereunder), from assuming its obligation to make such advances.
In rendering such opinion, such counsel may rely, as to matters of
fact, on certificates of responsible officers of the Seller, 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 Underwriter shall have received from the Trustee a certificate,
signed by the President, a senior vice president or an assistant 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 date hereof or on the Closing Date, in connection with the
transactions Tescribed 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 Policies relating to the Class A Certificates 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.
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J. The Underwriter shall have received a favorable opinion of Kutak
Rock, counsel to the Insurer, dated the Closing Date and in form and substance
satisfactory to counsel for the Underwriter, to the effect that:
1. The Insurer is a stock insurance corporation, duly incorporated and
validly existing under the laws of the State of New York. The Insurer
is validly licensed and authorized to issue the Policies and perform
its obligations under the Policies in accordance with the terms
thereof, under the laws of the State of New York.
2. The execution and delivery by the Insurer of the Policies, the
Insurance Agreement and the Indemnification Agreement are within the
corporate power of the Insurer and have been authorized by all
necessary corporate action on the part of the Insurer; the Policies
have been duly executed and are the valid and binding obligations of
the Insurer enforceable in accordance with their terms except that the
enforcement of the Policies may be limited by laws relating to
bankruptcy, insolvency, reorganization, moratorium, receivership and
other similar laws affecting creditors' rights generally and by general
principles of equity.
3. The Insurer is authorized to deliver the Insurance Agreement, and
the Indemnification Agreement, and the Insurance Agreement and the
Indemnification Agreement have been duly executed and are the valid and
binding obligations of the Insurer enforceable in accordance with their
terms except that the enforcement of the Insurance Agreement and the
Indemnification Agreement may be limited by laws relating to
bankruptcy, insolvency, reorganization, moratorium, receivership and
other similar laws affecting creditors' rights generally and by general
principles of equity and by public policy considerations relating to
indemnification for securities law violations.
4. No consent, approval, authorization or order of any state or federal
court or governmental agency or body is required on the part of the
Insurer, the lack of which would adversely affect the validity or
enforceability of the Policies; to the extent required by applicable
legal requirements that would adversely affect validity or
enforceability of the Policies, the form of the Policies has been filed
with, and approved by, all governmental authorities having jurisdiction
over the Insurer in connection with such Policies.
5. To the extent any Policy constitutes a security within the meaning
of Section 2(1) of the Act, it is a security that is exempt from the
registration requirements of the Act.
6. The information set forth under the caption "THE CERTIFICATE
INSURANCE POLICIES AND THE CERTIFICATE INSURER" in the Prospectus
Supplement dated March 11, 1999, insofar as such statements constitute
a description of the Policies, accurately summarizes the Policies.
In rendering this opinion, such counsel may rely, as to matters of
fact, on certificates of responsible officers of the Seller, 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.
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K. On or prior to the Closing Date, there has been no downgrading, nor
has any notice been given of (A) any intended or potential downgrading or (B)
any review or possible changes in rating, the direction of which has not been
indicated, in the rating, if any, accorded the Seller or in any rating accorded
any securities of the Seller, if any, by any "nationally recognized statistical
rating organization," as such term is defined for purposes of the Act.
L. On or prior to the Closing Date there shall not have occurred any
downgrading, nor shall any notice have been given of (A) any intended or
potential downgrading or (B) 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 Act.
M. There has not occurred any change, or any development involving a
prospective change, in the condition, financial or otherwise, or in the
earnings, business or operations, since December 31, 1998, (A) of the Seller or
its subsidiaries and affiliates, or (B) of the Insurer, that is in the
Underwriter's judgment material and adverse and that makes it in the
Underwriter's judgment impracticable to market the Class A Certificates on the
terms and in the manner contemplated in the Prospectus.
N. The Underwriter shall have received from the Insurer a certificate,
signed by the President, a senior vice president or a vice president of the
Insurer, dated the Closing Date, to the effect that the signer of such
certificate has carefully examined the Policies, the Insurance Agreement, the
Indemnification Agreement and the related documents and that, to the best of his
or her knowledge based on reasonable investigation:
1. each person who as an officer or representative of the Insurer,
signed or signs the Policies, the Insurance Agreement, the
Indemnification Agreement or any other document delivered pursuant
hereto, on the date thereof, or on the Closing Date, in connection with
the transactions described in this Agreement was, at the respective
times of such signing and delivery, and is now a duly authorized
representative of the Insurer and is authorized to execute and deliver
this certificate.
2. The financial data presented in the table set forth under the
heading "THE CERTIFICATE INSURANCE POLICIES AND THE CERTIFICATE
INSURER" in the Prospectus Supplement presents fairly the
capitalization of the Insurer and its wholly-owned subsidiaries as of
December 31, 1997 and September 30, 1998, respectively, and to the best
of the Insurer's knowledge since such date, no material and adverse
change has occurred in the financial position of the Insurer other than
as set forth in the Prospectus Supplement.
3. The audited financial statements dated as of December 31, 1997 and
the unaudited financial statements dated as of September 30, 1998
incorporated by reference into the Prospectus Supplement are true and
accurate.
4. The information which relates to the Insurer or the Policies under
the caption titled "THE CERTIFICATE INSURANCE POLICIES AND THE
CERTIFICATE INSURER" in the Prospectus Supplement is true and correct
in all material respects.
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5. There are no actions, suits, proceedings or investigations pending
or, to the best of the Insurer's knowledge, threatened against it at
law or in equity or before or by any court, governmental agency, board
or commission or any arbitrator which, if decided adversely, would
materially and adversely affect its condition (financial or otherwise)
or operations or which would materially and adversely affect its
ability to perform its obligations under the Policies or the Insurance
Agreement.
6. The execution and delivery of the Insurance Agreement and the
Policies and the compliance with the terms and provisions thereof will
not conflict with, result in a breach of, or constitute a default under
any of the terms, provisions or conditions of the Restated Charter or
By-Laws of the Insurer or of any agreement, indenture or instrument to
which the Insurer is a party.
7. The issuance of the Policies and the execution, delivery and
performance of the Insurance Agreement have been duly authorized by all
necessary corporate proceedings. No further approvals or filings of any
kind, including, without limitation, any further approvals or further
filing with any governmental agency or other governmental authority, or
any approval of the Insurer's board of directors or stockholders, are
necessary for the Policies and the Insurance Agreement to constitute
the legal, valid and binding obligations of the Insurer.
The officer of the Insurer certifying to items 2 and 3 shall be an
officer in charge of a principal financial function.
The Insurer shall attach to such certificate a true and correct copy of
its certificate or articles of incorporation, as appropriate, and its bylaws,
all of which are in full force and effect on the date of such certificate.
O. The Underwriter shall have received from Brown & Wood LLP, special
counsel to the Underwriter, such opinion or opinions, dated the Closing Date,
with respect to the issuance and sale of the Certificates, the Prospectus and
such other related matters as the Underwriter shall reasonably require.
P. The Underwriter and its counsel shall have received copies of any
opinions of counsel to the Seller or the Insurer supplied to the Trustee
relating to matters with respect to the Certificates or the Policies. Any such
opinions shall be dated the Closing Date and addressed to the Underwriter or
accompanied by reliance letters to the Underwriter or shall state that the
Underwriter may rely thereon.
Q. The Underwriter shall have received such further information,
certificates and documents as the Underwriter may reasonably have requested not
fewer than three (3) full business days prior to the Closing Date.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all respects when and as provided in this Agreement, if the
Seller is in breach of any covenants or agreements contained herein or if any of
the opinions and certificates mentioned above or elsewhere in this Agreement
shall not be in all material respects reasonably satisfactory in form
20
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and substance to the Underwriter and its counsel, this Agreement and all
obligations of the Underwriter hereunder, may be canceled on, or at any time
prior to, the Closing Date by the Underwriter. Notice of such cancellation shall
be given to the Seller in writing, or by telephone or telegraph confirmed in
writing.
7. Expenses. If the sale of the Class A Certificates provided for
herein is not consummated by reason of a default by the Seller in its
obligations hereunder, then the Seller will reimburse the Underwriter, upon
demand, for all reasonable out-of-pocket expenses (including, but not limited
to, the reasonable fees and expenses of Brown & Wood LLP) that shall have been
incurred by the Underwriter in connection with its investigation with regard to
the Seller, the Class A Certificates and the proposed purchase and sale of the
Class A Certificates.
8. Indemnification and Contribution. A. Regardless of whether any Class
A Certificates are sold, the Seller will indemnify and hold harmless the
Underwriter, each of its respective officers and directors and each person who
controls the Underwriter within the meaning of the Act or the Securities
Exchange Act of 1934 (the "1934 Act"), against any and all losses, claims,
damages, or liabilities (including the cost of any investigation, legal and
other expenses incurred in connection with any amounts paid in settlement of any
action, suit, proceeding or claim asserted), joint or several, to which they may
become subject, under the Act, the 1934 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 any amendment thereof or supplement thereto, 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 (ii)
in the Basic Prospectus or the Prospectus Supplement or any amendment thereto or
supplement thereto, 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, and will promptly reimburse each such indemnified party upon demand
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 the Seller shall not be liable in any such case
to 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 in reliance upon and in conformity with written
information furnished to the Seller by or on behalf of the Underwriter
specifically for use in connection with the preparation thereof.
B. Regardless of whether any Class A Certificates are sold, the
Underwriter agrees to indemnify and hold harmless the Seller, each of its
officers and directors and each person, if any, who controls the Seller within
the meaning of the Act or the 1934 Act against any losses, claims, damages or
liabilities to which they or any of them become subject under the Act, the 1934
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 any amendment thereof or
supplement thereto, 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 Basic Prospectus or the Prospectus
Supplement or any amendment thereto or supplement thereto, or
21
<PAGE>
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 in reliance upon and
in conformity with written information furnished to the Seller by or on behalf
of the Underwriter specifically for use in the preparation thereof and so
acknowledged in writing, and will promptly reimburse the Seller upon demand for
any legal or other expenses reasonably incurred by the Seller 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 has not retained counsel reasonably
satisfactory to the indemnified party, (ii) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of such counsel,
or (iii) 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. 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 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 Underwriter in the case of parties indemnified
pursuant to Paragraph A and by the Seller 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
22
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includes an unconditional release of such indemnified party from all liability
on claims that are the subject matter of such proceeding.
D. The Underwriter agrees to provide the Seller, for its review, no
later than two Business Days prior to the date on which the information required
to be filed in accordance with the terms of the No-Action Letters (as defined
herein) with a copy of its Derived Information for filing with the Commission on
Form 8-K.
E. The Underwriter agrees, assuming all Seller-Provided Information (as
defined below) is accurate and complete in all material respects, to indemnify
and hold harmless the Seller, each of the Seller's officers and directors and
each person who controls the Seller within the meaning of Section 15 of the
Securities Act against any and all losses, claims, damages or liabilities, joint
or several, to which they may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement of a
material fact contained in the Derived Information provided by the Underwriter,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and agrees to reimburse such indemnified party for any
legal or other expenses reasonably incurred by him, her or it in connection with
investigating or defending or preparing to defend any such loss, claim, damage,
liability or action as such expenses are incurred. The obligations of the
Underwriter under this Section 8(E) shall be in addition to any liability which
the Underwriter may otherwise have.
The procedures set forth in Section 8(C) shall be equally applicable to
this Section 8(E).
F. 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 contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (i)
in such proportion as is appropriate to reflect the relative benefits received
by the Seller and the Underwriter from the sale of the Class A Certificates or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only
relative benefits referred to in clause (i) above but also the relative fault of
the Seller and of the Underwriter 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 Seller and the Underwriter shall
be deemed to be in such proportion so that the Underwriter is responsible for
that portion determined by multiplying the total amount of such losses, claims,
damages and liabilities, including legal and other expenses, by a fraction, the
numerator of which is (x) the excess of the Aggregate Resale Price of the Class
A Certificates purchased by the Underwriter over the aggregate purchase price of
the Class A Certificates specified in Section 4 of this Agreement and the
denominator of which is (y) the Aggregate Resale Price of the Class A
Certificates purchased by the Underwriter and the Seller is responsible for the
balance, provided, however, that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to
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<PAGE>
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 Class A 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 Class A
Certificates so purchased), determined on the basis of such principal amounts,
paid to the Underwriter by all subsequent purchasers that purchased the Class A
Certificates on or prior to such date of determination. The relative fault of
the Seller and the Underwriter shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Seller or by the Underwriter and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
G. The Seller and the Underwriter 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 and
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 this Section 8, the
Underwriter shall not be required to contribute any amount in excess of the
amount of the underwriting discounts and commissions received by the Underwriter
in connection with its purchase of the Certificates.
H. For purposes of this Section VIII, the term "Derived Information"
means such portion, if any, of the information delivered to the Seller pursuant
to Section 8(D) for filing with the Commission on Form 8-K as:
(i) is not contained in the Prospectus without taking into account
information incorporated therein by reference; and
(ii) does not constitute Seller-Provided Information.
(iii) is of the type of information defined as Collateral term
sheets, structural term sheets or Computational Materials (as such
terms are interpreted in the No-Action Letters (as defined below)).
"Seller-Provided Information" means the information contained on any computer
tape furnished to the Underwriter by the Seller concerning the assets comprising
the Trust.
The terms "Collateral term sheet" and "Structural term sheet" shall
have the respective meanings assigned to them in the February 13, 1995 letter
(the "PSA Letter") of Cleary, Gottlieb, Steen & Hamilton on behalf of the Public
Securities Association (which letter, and the SEC staff's response thereto, were
publicly available February 17, 1995). The term "Collateral term sheet" as used
herein includes any subsequent Collateral term sheet that reflects a substantive
change in the information presented. The term "Computational Materials" has the
meaning assigned to it in the May 17, 1994 letter (the "Kidder letter" and
together with the PSA Letter,
24
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the "No-Action Letters") of Brown & Wood LLP on behalf of Kidder, Peabody & Co.,
Inc. (which letter, and the SEC staff's response thereto, were publicly
available May 20, 1994).
I. The Seller and the Underwriter each expressly waive, and agree not
to assert, any defense to their respective indemnification and contribution
obligations under 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.
J. The obligations of the Seller under this Section 8 shall be in
addition to any liability which the Seller may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls the
Underwriter within the meaning of the Act or the 1934 Act; and the obligations
of the Underwriter under this Section 8 shall be in addition to any liability
that the Underwriter may otherwise have and shall extend, upon the same terms
and conditions, to each director of the Seller and to each person, if any, who
controls the Seller within the meaning of the Act or the 1934 Act; provided,
however, that in no event shall the Seller or the Underwriter be liable for
double indemnification.
9. Information Supplied by the Underwriter. The statements set forth in
the first sentence of the second and seventh paragraphs under the heading
"UNDERWRITING" in the Prospectus Supplement (to the extent such statements
relate to the Underwriter), constitute the only information furnished by the
Underwriter to the Seller for the purposes of Sections 2(B) and 8(A) hereof.
10. Notices. All communications hereunder shall be in writing and, if
sent to the Underwriter, shall be mailed or delivered or telecopied and
confirmed in writing to the Underwriter at Lehman Brothers Inc., Three World
Financial Center, New York, New York 10285, Attention: Samir Tabet, and, if sent
to the Seller, shall be mailed, delivered or telegraphed and confirmed in
writing to the Seller at the address set forth above, Attention: Director of
Secondary Marketing.
11. Survival. All representations, warranties, covenants and agreements
of the Seller contained herein or in agreements or certificates delivered
pursuant hereto, the agreements of the Underwriter and the Seller contained in
Section 8 hereof, and the representations, warranties and agreements of the
Underwriter 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
Underwriter or any controlling persons, or any subsequent purchaser or the
Seller or any of its officers, directors or any controlling persons, and shall
survive delivery of and payment for the Class A Certificates. The provisions of
Sections 5, 7 and 8 hereof shall survive the termination or cancellation of this
Agreement.
12. Termination. The Underwriter shall have the right to terminate this
Agreement by giving notice as hereinafter specified at any time at or prior to
the 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 National Association of Securities
Dealers, Inc., the Chicago Board Options Exchange, the Chicago Mercantile
Exchange or the Chicago Board of Trade, (b) trading of any securities of the
Seller shall have been suspended on any exchange or in any over-the-counter
market, (c) a general moratorium on
25
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commercial banking activities shall have been declared by either federal or New
York State authorities, (d) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
which, in the Underwriter'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 together with any other such event makes it in the Underwriter's
reasonable judgment impractical to market the Class A 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 to expenses of the
Underwriter) and Sections 7 and 8 hereof shall at all times be effective. If the
Underwriter elects to terminate this Agreement as provided in this Section 12,
the Seller shall be notified promptly by the Underwriter 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 purchasing a Class A
Certificate from the Underwriter), 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.
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.
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IN WITNESS WHEREOF, the parties hereto hereby execute this Underwriting
Agreement, as of the day and year first above written.
FIRST ALLIANCE MORTGAGE COMPANY
By: /s/ Francisco Nebot
---------------------------
Francisco Nebot
LEHMAN BROTHERS INC.
By: /s/ Martin P. Harding
---------------------------
Martin P. Harding
Exhibit 4.1
POOLING AND SERVICING AGREEMENT
Relating to
FIRST ALLIANCE MORTGAGE LOAN TRUST
1999-1
Among
FIRST ALLIANCE MORTGAGE COMPANY,
as Seller and Servicer
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee and Oversight Agent
Dated as of March 1, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
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ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION.......................................................................1
1.1. Definitions.....................................................................................1
1.2. Use of Words and Phrases.......................................................................26
1.3. Captions; Table of Contents....................................................................26
1.4. Opinions.......................................................................................26
ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST.............................................................26
2.1. Establishment of the Trust.....................................................................26
2.2. Office.........................................................................................26
2.3. Purposes and Powers............................................................................27
2.4. Appointment of the Trustee; Declaration of Trust...............................................27
2.5. Expenses of Trustee............................................................................27
2.6. Ownership of the Trust.........................................................................27
2.7. Situs of the Trust.............................................................................27
2.8. Miscellaneous REMIC Provisions.................................................................27
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE SELLER, THE SERVICER AND THE OVERSIGHT AGENT;
COVENANT OF SELLER TO CONVEY MORTGAGE LOANS.............................................................28
3.1. Representations and Warranties of the Seller...................................................28
3.2A. Representations and Warranties of the Servicer.................................................30
3.2B. Representations and Warranties of the Oversight Agent..........................................33
3.3. Representations and Warranties of the Seller with Respect to the Mortgage Loans................34
3.4. Covenants of the Seller to Take Certain Actions with Respect to the
Mortgage Loans In Certain Situations........................................................37
3.5. Conveyance of the Mortgage Loans...............................................................38
3.6. Acceptance by Trustee; Certain Substitutions of Mortgage Loans;
Certification by Trustee....................................................................42
3.7. Cooperation Procedures.........................................................................43
3.8. Conveyance of the Subsequent Mortgage Loans....................................................44
3.9. Books and Records..............................................................................46
ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES.......................................................................46
4.1. Issuance of Certificates.......................................................................46
4.2. Sale of Certificates...........................................................................46
ARTICLE V
CERTIFICATES AND TRANSFER OF INTERESTS..................................................................47
5.1. Terms..........................................................................................47
5.2. Forms..........................................................................................47
5.3. Execution, Authentication and Delivery.........................................................47
5.4. Registration and Transfer of Certificates......................................................48
</TABLE>
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<TABLE>
<S> <C>
5.5. Mutilated, Destroyed, Lost or Stolen Certificates..............................................49
5.6. Persons Deemed Owners..........................................................................50
5.7. Cancellation...................................................................................50
5.8. Limitation on Transfer of Ownership Rights.....................................................50
5.9. Assignment of Rights...........................................................................51
ARTICLE VI
COVENANTS...............................................................................................51
6.1. Distributions..................................................................................51
6.2. Money for Distributions to be Held in Trust; Withholding.......................................51
6.3. Protection of Trust Estate.....................................................................52
6.4. Performance of Obligations.....................................................................52
6.5. Negative Covenants.............................................................................53
6.6. No Other Powers................................................................................53
6.7. Limitation of Suits............................................................................53
6.8. Unconditional Rights of Owners to Receive Distributions........................................54
6.9. Rights and Remedies Cumulative.................................................................54
6.10. Delay or Omission Not Waiver...................................................................54
6.11. Control by Owners..............................................................................54
6.12. Access to Owners of Certificates' Names and Addresses..........................................55
ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES....................................................................55
7.1. Collection of Money............................................................................55
7.2. Establishment of Accounts......................................................................55
7.3. The Certificate Insurance Policies.............................................................55
7.4 Pre-Funding Account and Capitalized Interest Account...........................................57
7.5. Flow of Funds..................................................................................57
7.6. Investment of Accounts.........................................................................60
7.7. Eligible Investments...........................................................................62
7.8. Reports by Trustee.............................................................................63
7.9. Additional Reports by Trustee..................................................................65
ARTICLE VIII
SERVICING AND ADMINISTRATION OF MORTGAGE LOANS..........................................................65
8.1. Servicer and Sub-Servicers.....................................................................65
8.2. Collection of Certain Mortgage Loan Payments...................................................67
8.3. Sub-Servicing Agreements Between Servicer and Sub-Servicers....................................67
8.4. Successor Sub-Servicers........................................................................67
8.5. Liability of Servicer..........................................................................67
8.6. No Contractual Relationship Between Sub-Servicer and Trustee,
Oversight Agent or the Owners...............................................................68
8.7. Assumption or Termination of Sub-Servicing Agreement by Oversight Agent........................68
8.8. Principal and Interest Account.................................................................68
8.9. Delinquency Advances, Compensating Interest and Servicing Advances.............................70
8.10. Purchase of Delinquent Mortgage Loans..........................................................70
8.11. Maintenance of Insurance.......................................................................71
8.12. Due-on-Sale Clauses; Assumption and Substitution Agreements....................................71
8.13. Realization Upon Defaulted Mortgage Loans......................................................72
8.14. Trustee to Cooperate; Release of Files.........................................................73
</TABLE>
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<TABLE>
<S> <C>
8.15. Servicing Compensation.........................................................................74
8.16. Annual Statement as to Compliance..............................................................74
8.17. Annual Independent Certified Public Accountants' Reports.......................................74
8.18. Access to Certain Documentation and Information Regarding the Mortgage Loans...................74
8.19. Assignment of Agreement........................................................................75
8.20. Events of Servicing Termination................................................................75
8.21. Resignation of Servicer and Appointment of Successor...........................................78
8.22. Waiver of Past Events of Servicing Termination.................................................81
8.23. Inspections by Certificate Insurer; Errors and Omissions Insurance.............................81
8.24. Merger, Conversion, Consolidation or Succession to Business of Servicer........................81
8.25. Notices of Material Events.....................................................................81
8.26. Monthly Servicing Report and Servicing Certificate.............................................82
8.27. Indemnification by the Seller..................................................................84
8.28. Indemnification by the Servicer................................................................85
8.29. Appointment and Term of the Servicer...........................................................85
8.30. Appointment and Duties of the Oversight Agent..................................................86
8.31. Removal of Oversight Agent for Cause...........................................................87
ARTICLE IX
TERMINATION OF TRUST....................................................................................88
9.1. Termination of Trust...........................................................................88
9.2. Termination Upon Option of Servicer............................................................89
9.3. Termination Upon Loss of REMIC Status..........................................................89
9.4. Disposition of Proceeds........................................................................91
9.5. Netting of Amounts.............................................................................91
ARTICLE X
THE TRUSTEE.............................................................................................91
10.1. Certain Duties and Responsibilities............................................................91
10.2. Removal of Trustee for Cause...................................................................93
10.3. Certain Rights of the Trustee..................................................................94
10.4. Not Responsible for Recitals or Issuance of Certificates.......................................95
10.5. May Hold Certificates..........................................................................95
10.6. Money Held in Trust............................................................................95
10.7. No Lien for Fees...............................................................................96
10.8. Corporate Trustee Required; Eligibility........................................................96
10.9. Resignation and Removal; Appointment of Successor..............................................96
10.10. Acceptance of Appointment by Successor Trustee.................................................97
10.11. Merger, Conversion, Consolidation or Succession to Business of the Trustee.....................98
10.12. Reporting; Withholding.........................................................................98
10.13. Liability of the Trustee.......................................................................98
10.14. Appointment of Co-Trustee or Separate Trustee..................................................98
ARTICLE XI
MISCELLANEOUS..........................................................................................100
11.1. Compliance Certificates and Opinions..........................................................100
11.2. Form of Documents Delivered to the Trustee....................................................100
11.3. Acts of Owners................................................................................101
11.4. Notices, etc. to Trustee......................................................................101
11.5. Notices and Reports to Owners; Waiver of Notices..............................................101
</TABLE>
<PAGE>
<TABLE>
<S> <C>
11.6. Rules by Trustee and the Seller...............................................................102
11.7. Successors and Assigns........................................................................102
11.8. Severability..................................................................................102
11.9. Benefits of Agreement.........................................................................102
11.10. Legal Holidays................................................................................102
11.11. Governing Law.................................................................................102
11.12. Counterparts..................................................................................102
11.13. Usury.........................................................................................102
11.14. Amendment.....................................................................................103
11.15. REMIC Status; Taxes...........................................................................103
11.16. Additional Limitation on Action and Imposition of Tax.........................................105
11.17. Appointment of Tax Matters Person.............................................................105
11.18. The Certificate Insurer.......................................................................105
11.19. Maintenance of Records........................................................................105
11.20. Notices.......................................................................................105
EXHIBIT A-1 -- Form of Class A-1 Certificate EXHIBIT A-2 -- Form of Class A-2 Certificate
EXHIBIT B -- Form of Class R Certificate EXHIBIT C -- Mortgage Loan Schedule
EXHIBIT D -- Form of Certificate Re: Mortgage Loans Prepaid in full After the Cut-Off Date
EXHIBIT E -- Form of Initial Certification
EXHIBIT F -- Form of Final Certification
EXHIBIT G -- Form of Delivery Order
EXHIBIT H -- Form of Class R Tax Matters Transfer Certificate
EXHIBIT I -- Form of Notice for Certificate Insurance Policy
EXHIBIT J -- Form of Request for Release
EXHIBIT K -- Form of Servicer Renewal Notice
</TABLE>
<PAGE>
POOLING AND SERVICING AGREEMENT, relating to FIRST ALLIANCE
MORTGAGE LOAN TRUST 1999-1, dated as of March 1, 1999, by and among FIRST
ALLIANCE MORTGAGE COMPANY, a California corporation in its capacities as the
Seller and the Servicer (respectively, the "Seller" and the "Servicer"), and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, a national banking association, in
its capacities as the Trustee and the Oversight Agent (respectively, the
"Trustee" and the "Oversight Agent").
WHEREAS, the Seller wishes to establish the Trust and two
subtrusts and provide for the allocation and sale of the beneficial interests
therein and the maintenance and distribution thereof;
WHEREAS, the Servicer has agreed to service the Mortgage
Loans, which constitute the principal assets of the trust estate;
WHEREAS, all things necessary to make the Certificates, when
executed and authenticated by the Trustee, valid instruments, and to make this
Agreement a valid agreement, in accordance with their and its terms, have been
done;
WHEREAS, Norwest Bank Minnesota, National Association is
willing to serve in the capacities of Trustee and Oversight Agent hereunder; and
WHEREAS, MBIA Insurance Corporation (the "Certificate
Insurer") is intended to be a third party beneficiary of this Agreement and is
hereby recognized by the parties hereto to be a third-party beneficiary of this
Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained, the Seller, the Servicer and the Trustee
hereby agree as follows:
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
Section 1.1. Definitions. For all purposes of this Agreement,
the following terms shall have the meanings set forth below, unless the context
clearly indicates otherwise:
"2/28 Loans": Mortgage Loans that bear interest at a fixed
rate for two years after origination and thereafter have periodic adjustments at
frequencies in the same manner as Six Month LIBOR Loans.
"Account": Any account established in accordance with Section
7.2 or 8.8 hereof.
"Addition Notice": With respect to the transfer of Subsequent
Mortgage Loans to the Trust for inclusion in Group I or Group II pursuant to
Section 3.8 hereof, notice given not less than two Business Days prior to the
Subsequent Transfer Date of the Seller's designation of Subsequent Mortgage
Loans to be sold to the Trust for inclusion in Group I or Group II and the
aggregate Loan Balance of such Subsequent Mortgage Loans to be delivered for
inclusion in each such Group.
"Agreement": This Pooling and Servicing Agreement, as it may
be amended from time to time, and including the Exhibits hereto.
"Appraised Value": The appraised value of any Property based
upon the appraisal or other valuation made at the time of the origination of the
related Mortgage Loan, or, in the case of a Mortgage
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Loan which is a purchase money mortgage, the sales price of the Property at such
time of origination, if such sales price is less than such appraised value.
"Authorized Officer": With respect to any Person, any person
who is authorized to act for such Person in matters relating to this Agreement,
and whose action is binding upon such Person and, with respect to the Seller and
the Servicer, initially including those individuals whose names appear on the
lists of Authorized Officers delivered on the Startup Day, and with respect to
the Trustee, any Vice President, Assistant Vice President, Assistant Treasurer,
Assistant Secretary or Trust Officer of the Trustee, and with respect to the
Oversight Agent, any Vice President, Assistant Vice President or Trust Officer.
"Available Funds": With respect to Group I, the Group I
Available Funds and with respect to Group II, the Group II Available Funds.
"Available Funds Shortfall": Any of the Group I Available
Funds Shortfall or the Group II Available Funds Shortfall.
"Business Day": Any day that is not a Saturday, Sunday or
other day on which commercial banking institutions in the States of New York,
Minnesota or California or in the city in which the Corporate Trust Office is
located or the city in which the principal office of the Certificate Insurer is
located are authorized or obligated by law or executive order to be closed.
"Capitalized Interest Account": The Capitalized Interest
Account established in accordance with Section 7.2 hereof and maintained by the
Trustee.
"Certificate": Any one of the Class A Certificates or the
Class R Certificates, each representing the interests and the rights described
in this Agreement.
"Certificate Account": The Certificate Account established in
accordance with Section 7.2 hereof and maintained by the Trustee; provided that
the funds in such account shall not be commingled with any other funds held by
the Trustee.
"Certificate Insurance Policies": The Group I Certificate
Insurance Policy and the Group II Certificate Insurance Policy.
"Certificate Insurer": MBIA Insurance Corporation or any
successor thereto, as issuer of the Certificate Insurance Policies.
"Certificate Insurer Default": The existence and continuance
of any of the following:
(a) the failure of the Certificate Insurer to make a payment
required under a Certificate Insurance Policy in accordance with the terms
thereof; or
(b) (i) the entry by a court having jurisdiction in the
premises of (A) a decree or order for relief in respect of the Certificate
Insurer in an involuntary case or proceeding under any applicable United States
federal or state bankruptcy, insolvency, rehabilitation, reorganization or other
similar law or (B) a decree or order adjudging the Certificate Insurer as
bankrupt or insolvent, or approving as properly filed a petition seeking
reorganization, rehabilitation, arrangement, adjustment or composition of or in
respect of the Certificate Insurer under any applicable United States, federal
or state law, or appointing a custodian, receiver, liquidator, rehabilitator,
assignee, trustee, sequestrator or other similar official of any substantial
part of the Certificate Insurer's property, or ordering the winding-up or
liquidation of its affairs, and the continuance of any such decree or order for
relief or any such other decree or order unstayed and in effect for a period of
90 consecutive days; or
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(ii) the commencement by the Certificate Insurer of a
voluntary case or proceeding under any applicable United States federal or state
bankruptcy, insolvency, reorganization or other similar law or of any other case
or proceeding to be adjudicated as bankrupt or insolvent, or the consent of the
Certificate Insurer to the entry of a decree or order for relief in respect of
the Certificate Insurer in an involuntary case or proceeding under any
applicable United States federal or state bankruptcy, insolvency case or
proceeding against the Certificate Insurer, or the filing by the Certificate
Insurer to the filing of such petition or to the appointment of or the taking
possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator
or similar official of the Certificate Insurer of any substantial part of its
property, or the failure of the Certificate Insurer to pay debts generally as
they become due, or the admission by the Certificate Insurer in writing of its
inability to pay its debts generally as they become due.
"Certificate Principal Balance": As to the Class A-1
Certificates, the Class A-1 Certificate Principal Balance and as to the Class
A-2 Certificates, the Class A-2 Certificate Principal Balance. The Class R
Certificates do not have a Certificate Principal Balance.
"Class": All of the Class A-1 Certificates or all of the Class
A-2 Certificates.
"Class A Certificate": Any one of the Class A-1 Certificates
or the Class A-2 Certificates.
"Class A Distribution Amount": Any of the Class A-1
Distribution Amount or the Class A-2 Distribution Amount.
"Class A-1 Certificate": Any Certificate designated as a
"Class A-1 Certificate" on the face thereof, in the form of Exhibit A-1 hereto,
representing the right to distributions as set forth herein. The Class A-1
Certificates shall be issued with an initial aggregate Certificate Principal
Balance equal to the Original Certificate Principal Balance therefor.
"Class A-1 Certificate Principal Balance": As of any time of
determination, the Original Certificate Principal Balance of the Class A-1
Certificates less any amounts actually distributed on account of the Group I
Principal Distribution Amount to the Owners of the Class A-1 Certificates
pursuant to Section 7.5(d)(iv)(C) hereof with respect to principal thereon on
all prior Payment Dates.
"Class A-1 Certificate Termination Date": The Payment Date on
which the Class A-1 Certificate Principal Balance is reduced to zero.
"Class A-1 Current Interest": With respect to interest
accruing after the Cut-Off Date and as of any Payment Date, the sum of (i) the
aggregate amount of interest accrued on the Class A-1 Certificate Principal
Balance immediately prior to such Payment Date during the related Interest
Accrual Period at the Class A-1 Pass-Through Rate and (ii) any Class A-1
Interest Carry-Forward Amount for such Payment Date.
"Class A-1 Distribution Amount": With respect to a Payment
Date, the sum of (x) the Group I Principal Distribution Amount payable to the
Owners of the Class A-1 Certificates pursuant to Section 7.5(d)(iv)(C) on such
Payment Date and (y) the Class A-1 Current Interest payable to the Owners of the
Class A-1 Certificates pursuant to Section 7.5(d)(iv)(B).
"Class A-1 Interest Carry Forward Amount": With respect to the
Class A-1 Certificates and any Payment Date, the sum of (x) the amount, if any,
by which (i) the Class A-1 Current Interest as of the immediately preceding
Payment Date exceeded (ii) the amount of the actual payments of interest made to
the Owners of the Class A-1 Certificates on such immediately preceding Payment
Date and (y) interest on such amount, calculated at the Class A-1 Pass-Through
Rate for the number of days in the related Interest Accrual Period.
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"Class A-1 Pass-Through Rate": For any Payment Date on or
prior to the Clean-Up Call Date 6.68% per annum or in the case of any Payment
Date thereafter, 7.18% per annum.
"Class A-1 Principal Carry-Forward Amount": With respect to
any Payment Date, the amount, if any, by which (i) the portion of the Group I
Principal Distribution Amount described in clause (y) thereof as of the
immediately preceding Payment Date exceeded (ii) the amount of the actual
payment of principal made to the Owners of the Class A-1 Certificates on such
immediately preceding Payment Date.
"Class A-2 Certificate": Any Certificate designated as a
"Class A-2 Certificate" on the face thereof, in the form of Exhibit A-2 hereto,
representing the right to distributions as set forth herein. The Class A-2
Certificates shall be issued with an initial aggregate Certificate Principal
Balance equal to the Original Certificate Principal Balance therefor.
"Class A-2 Certificate Principal Balance": As of any time of
determination, the Original Certificate Principal Balance of the Class A-2
Certificates less any amounts actually distributed on account of the Group II
Principal Distribution Amount to the Owners of the Class A-2 Certificates
pursuant to Section 7.5(d)(iv)(E) hereof with respect to principal thereon on
all prior Payment Dates.
"Class A-2 Certificate Termination Date": The Payment Date on
which the Class A-2 Certificate Principal Balance is reduced to zero.
"Class A-2 Current Interest": With respect to interest
accruing after the Cut-Off Date and as of any Payment Date, the sum of (i) the
aggregate amount of interest accrued on the Class A-2 Certificate Principal
Balance immediately prior to such Payment Date during the related Interest
Accrual Period at the Class A-2 Pass-Through Rate and (ii) any Class A-2
Interest Carry-Forward Amount for such Payment Date.
"Class A-2 Distribution Amount": With respect to a Payment
Date, the sum of (x) the Group II Principal Distribution Amount payable to the
Owners of the Class A-2 Certificates pursuant to Section 7.5(d)(iv)(E) on such
Payment Date and (y) the Class A-2 Current Interest payable to the Owners of the
Class A-2 Certificates pursuant to Section 7.5(d)(iv)(D).
"Class A-2 Formula Pass-Through Rate": For any Payment Date,
the lesser of (x)(i) with respect to any Payment Date which occurs on or prior
to the Clean Up Call Date, LIBOR plus 0.32% or (ii) with respect to any Payment
Date thereafter, LIBOR plus 0.64% and (y) 15.00% per annum.
"Class A-2 Interest Carry Forward Amount": With respect to the
Class A-2 Certificates and any Payment Date, the sum of (x) the amount, if any,
by which (i) the Class A-2 Current Interest as of the immediately preceding
Payment Date exceeded (ii) the amount of the actual payments of interest made to
the Owners of the Class A-2 Certificates on such immediately preceding Payment
Date and (y) interest on such amount, calculated at the Class A-2 Pass-Through
Rate for the number of days in the related Interest Accrual Period.
"Class A-2 Pass-Through Rate": For the initial Payment Date,
5.25625%. As of any Payment Date thereafter, the lesser of (i) the Class A-2
Formula Pass-Through Rate and (ii) the Group II Available Funds Cap for such
Payment Date.
"Class A-2 Principal Carry-Forward Amount": With respect to
any Payment Date, the amount, if any, by which (i) the Group II Principal
Distribution Amount described in clause (y) thereof as of the immediately
preceding Payment Date exceeded (ii) the amount of the actual payment of
principal made to the Owners of the Class A-2 Certificates on such immediately
preceding Payment Date.
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"Class R Certificate": Any of those Certificates representing
certain residual rights to distributions from the REMIC, designated as a "Class
R Certificate" on the face thereof, in the form of Exhibit B hereto and
evidencing an interest designated as the "residual interest" in the Trust for
purposes of the REMIC Provisions.
"Clean-Up Call Date": The first Payment Date on which the
aggregate outstanding Loan Balance of the Mortgage Loans has declined to less
than $11,500,000.
"Code": The Internal Revenue Code of 1986, as amended and any
successor statute.
"Combined Loan-to-Value Ratio": With respect to any First
Mortgage Loan, the percentage equal to the Original Principal Amount of the
related Note divided by the Appraised Value of the related Property. With
respect to any Second Mortgage Loan, the percentage equal to (a) the sum of (i)
the remaining principal balance, as of origination of the Second Mortgage Loan,
of the Senior Lien note(s) relating to such Second Mortgage Loan and (ii) the
Original Principal Amount of the Note relating to such Second Mortgage Loan
divided by (b) the Appraised Value of the related Property. With respect to any
Third Mortgage Loan, the percentage equal to (a) the sum of (i) the remaining
principal balance, as of origination of the Third Mortgage Loan, of the Senior
Lien note(s) relating to such Third Mortgage Loan and (ii) the Original
Principal Amount of the Note relating to such Third Mortgage Loan divided by (b)
the Appraised Value of the related Property.
"Compensating Interest": As defined in Section 8.9(b) hereof.
"Corporate Trust Office": The principal office of the Trustee
at Sixth Street and Marquette Avenue, Minneapolis, Minnesota 55479-0113,
Attention: First Alliance Mortgage Loan Trust 1999-1 or any other office of the
Trustee designated as such hereunder.
"Coupon Rate": The annual rate of interest borne by each Note.
"Current Interest": As of any Payment Date, the sum of the
Class A-1 Current Interest and the Class A-2 Current Interest.
"Curtailment": With respect to a Mortgage Loan, any payment of
principal received during a Remittance Period as part of a payment that is in
excess of the amount of the monthly payment due for such Remittance Period and
which is not a Prepaid Installment or made in respect of a Paid-in-Full Mortgage
Loan, nor is intended to cure a delinquency.
"Cut-Off Date": March 1, 1999.
"Delinquency Advance": As defined in Section 8.9(a) hereof.
"Delinquent": A Mortgage Loan is "Delinquent" if any payment
due thereon is not made by the close of business on the day such payment is
scheduled to be due. A Mortgage Loan is "30 days Delinquent" if such payment has
not been received by the close of business on the second day of the month
immediately succeeding the month in which such payment was due. Similarly for
"60 days Delinquent," "90 days Delinquent" and so on.
"Delivery Order": The delivery order in the form set forth as
Exhibit G hereto and delivered by the Seller to the Trustee on the Startup Day
pursuant to Section 4.1 hereof.
"Depository": The Depository Trust Company, 7 Hanover Square,
New York, New York 10004 and any successor Depository hereafter named.
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"Designated Depository Institution": With respect to any
Account, an institution whose deposits are insured by the Bank Insurance Fund or
the Savings Association Insurance Fund of the FDIC, the long-term deposits of
which shall be rated (x) A or better by Standard & Poor's and (y) A2 or better
by Moody's and in one of the highest short-term rating categories, unless
otherwise approved in writing by the Certificate Insurer and each of Moody's and
Standard & Poor's, and which is any of the following: (i) a federal savings and
loan association duly organized, validly existing and in good standing under the
federal banking laws, (ii) an institution duly organized, validly existing and
in good standing under the applicable banking laws of any state, (iii) a
national banking association duly organized, validly existing and in good
standing under the federal banking laws, (iv) a principal subsidiary of a bank
holding company, or (v) approved in writing by the Certificate Insurer, Moody's
and Standard & Poor's and, in each case acting or designated by the Servicer as
the depository institution for the Principal and Interest Account; provided,
however, that any such institution or association shall have combined capital,
surplus and undivided profits of at least $100,000,000. Notwithstanding the
foregoing, any Account may be held by (a) the Trustee or (b) an institution
otherwise meeting the preceding requirements except that the only applicable
rating requirement shall be that the unsecured and uncollateralized debt
obligations thereof shall be rated Baa3 or better by Moody's if such institution
has trust powers and the Principal and Interest Account is held by such
institution in its trust capacity and not in its commercial capacity.
"Determination Date": The 10th day of each month, or if such
day is not a Business Day, the next succeeding Business Day.
"Direct Participant" or "DTC Participant": Any broker-dealer,
bank or other financial institution for which the Depository holds Class A
Certificates from time to time as a securities depository.
"Disqualified Organization": "Disqualified Organization" shall
have the meaning set forth from time to time in the definition thereof at
Section 860E(e)(5) of the Code (or any successor statute thereto) and applicable
to the Trust.
"Due Date": The first day of the month of the related Payment
Date.
"Due Period": With respect to any Payment Date, the period
commencing on the second day of the month preceding the month of such Payment
Date (or, with respect to the first Due Period, the day following the Cut-Off
Date) and ending on the first day of the month of such Payment Date.
"Eligible Investments": Those investments so designated
pursuant to Section 7.7 hereof.
"Event of Default": Any event described in clauses (a) or (b)
of Section 8.20 hereof.
"Event of Servicing Termination": Any event as described in
Section 8.20 hereof.
"Excess Subordinated Amount": With respect to any Mortgage
Loan Group and Payment Date, the excess, if any, of (x) the Subordinated Amount
that would apply to such Mortgage Loan Group on such Payment Date after taking
into account the payment of the related Class A Distribution Amount on such
Payment Date (before giving effect to any related Subordination Reduction Amount
on such Payment Date) over (y) the related Specified Subordinated Amount for
such Payment Date.
"Fannie Mae": The Federal National Mortgage Association, a
federally-chartered and privately-owned corporation existing under the Federal
National Mortgage Association Charter Act, as amended, or any successor thereof.
"FDIC": The Federal Deposit Insurance Corporation, or any
successor thereto.
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"Fees and Expenses": With respect to any Payment Date, and
Group I, the sum of the Group I Premium Amount and the portion of the Oversight
Agent Fee applicable to Group I; and with respect to any Payment Date and Group
II, the sum of the Group II Premium Amount and the portion of the Oversight
Agent Fee applicable to Group II.
"FHLMC": The Federal Home Loan Mortgage Corporation, a
corporate instrumentality of the United States created pursuant to the Emergency
Home Finance Act of 1970, as amended, or any successor thereof.
"File": The documents delivered to the Trustee pursuant to
Section 3.5 hereof pertaining to a particular Mortgage Loan and any additional
documents required to be added to the mortgage file pursuant to this Agreement.
"Final Certification": The final certification in the form set
forth as Exhibit F hereto and delivered by the Trustee to the Seller within 90
days after the Startup Day pursuant to Section 3.6 hereof.
"Final Determination": As defined in Section 9.3(a) hereof.
"First Mortgage Loan": A Mortgage Loan which constitutes a
first priority mortgage lien with respect to any Property.
"Funding Period": With respect to each of Group I and Group
II, the period commencing on the Startup Day and ending on the earliest to occur
of (i) the date on which the amount on deposit in the Pre-Funding Account with
respect to such Group (exclusive of any Pre-Funding Account Earnings with
respect to such Group) is less than $100,000, (ii) the date on which the
Servicer may be removed pursuant to Section 8.20(a) hereof and (iii) April 30,
1999.
"Group I": The pool of Mortgage Loans identified in the
related Schedules of Mortgage Loans as having been assigned to Group I,
including any Qualified Replacement Mortgages delivered in replacement thereof
and each Subsequent Mortgage Loan delivered to the Trust for inclusion therein.
"Group I Amortized Subordinated Amount Requirement": As of any
date of determination, the product of (x) 1.50% and (y) the Group I Maximum
Collateral Amount.
"Group I Available Funds": As defined in Section 7.3(a)(i)
hereof.
"Group I Available Funds Shortfall": As defined in Section
7.5(d)(ii)(A).
"Group I Capitalized Interest Requirement": With respect to
the Payment Dates in April and May 1999, an amount equal to interest accruing
from the related Due Date through the Subsequent Transfer Date at a rate equal
to the sum of the Class A-1 Pass-Through Rate plus the Fees and Expenses related
to Group I (expressed as a per annum rate), less the portion of the Pre-Funding
Account earnings allocable to Group I (expressed as a per annum rate), on the
amount by which the Class A-1 Certificate Principal Balance exceeds the
aggregate Loan Balance of the Mortgage Loans in Group I at the date of
determination.
"Group I Certificate Insurance Policy": The certificate
guaranty insurance policy (number 28787) dated March 19, 1999 issued by the
Certificate Insurer to the Trustee for the benefit of the Owners of the Class
A-1 Certificates.
"Group I Initial Specified Subordinated Amount": $1,275,000.
"Group I Insured Payment": As defined in the Group I
Certificate Insurance Policy.
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"Group I Interest Remittance Amount": As of any Remittance
Date, the sum, without duplication, of (i) all scheduled interest due on the Due
Date occurring during the related Due Period, with respect to the Group I
Mortgage Loans to the extent collected by the Servicer during the related Due
Period, (ii) all Delinquency Advances relating to interest made by the Servicer
on such Remittance Date with respect to the Group I Mortgage Loans and (iii) all
Compensating Interest paid by the Servicer on such Remittance Date with respect
to the Group I Mortgage Loans, which sum shall be net of the Group I Servicing
Fee retained by the Servicer pursuant to Sections 8.8(c)(i) and 8.15 hereof.
"Group I Maximum Collateral Amount": $85,000,000.
"Group I Monthly Remittance Amount": As of any Remittance
Date, the sum of (i) the Group I Interest Remittance Amount for such Remittance
Date and (ii) the Group I Principal Remittance Amount for such Remittance Date.
"Group I Original Aggregate Loan Balance": The aggregate Loan
Balance of all Initial Mortgage Loans in Group I as of the Cut-Off Date, i.e.,
$65,528,894.36.
"Group I Original Capitalized Interest Amount": $137,487.64,
which represents the amount of interest accruing from March 1, 1999 to April 30,
1999, at a rate equal to the sum of the Class A-1 Pass-Through Rate plus the
Fees and Expenses related to Group I (expressed as a per annum rate), less the
portion of the Pre-Funding Account earnings allocable to Group I (expressed as a
per annum rate), on the amount by which the Class A-1 Certificate Principal
Balance exceeds the Initial Mortgage Loans in Group I.
"Group I Overfunded Interest Amount": The portion of the Group
I Original Capitalized Interest Amount in the Capitalized Interest Account
remaining on deposit on the second Payment Date after the Startup Day, after
taking into account the distribution of the Class A-1 Distribution Amount.
"Group I Preference Amount": As defined in the Group I
Certificate Insurance Policy.
"Group I Premium Amount": As to any Payment Date, the product
of one-twelfth of (x) the Group I Premium Percentage and (y) the Class A-1
Certificate Principal Balance on such Payment Date (before taking into account
any distributions of principal to be made to the Owners of the Class A-1
Certificates on such Payment Date).
"Group I Premium Percentage": As defined in the Group I
Certificate Insurance Policy.
"Group I Principal Distribution Amount": With respect to the
Class A-1 Certificates for any Payment Date, the lesser of:
(x) the Group I Total Available Funds plus any Group I Insured
Payment minus the Class A-1 Current Interest and any Fees
and Expenses related to Group I for such Payment Date; and
(y) the excess, if any, of
(i) the sum, without duplication of:
(a) the Class A-1 Principal Carry Forward Amount for
such Payment Date,
(b) the principal portion of all scheduled monthly
payments on the Mortgage Loans in Group I due on
the related Due Date during the
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related Due Period, to the extent actually
received by the Servicer on or prior to the
related Remittance Date or to the extent advanced
by the Servicer on or prior to the related
Remittance Date and the principal portion of any
Prepayments made by the respective Mortgagors
during the related Remittance Period,
(c) the Loan Balance of each Mortgage Loan in Group I
that either was repurchased by the Seller or an
Originator or purchased by the Servicer on the
related Remittance Date,
(d) any Substitution Amounts delivered by the Seller
or an Originator on the related Remittance Date
in connection with a substitution of a Mortgage
Loan in Group I (to the extent such Substitution
Amounts relate to principal),
(e) all Net Liquidation Proceeds actually collected
by the Servicer with respect to the Mortgage
Loans in Group I during the related Remittance
Period (to the extent such Net Liquidation
Proceeds relate to principal),
(f) the amount of any Group I Subordination Deficit
for such Payment Date,
(g) the proceeds received by the Trustee of any
termination as set forth in Article IX hereof of
Group I (to the extent such proceeds related to
principal),
(h) any moneys released from the Pre-Funding Account
as a prepayment of the Class A-1 Certificates on
the Payment Date that immediately follows the end
of the Funding Period; and
(i) the amount of any Subordination Increase Amount
with respect to Group I for such Payment Date, to
the extent of any Net Monthly Excess Cashflow
available for such purpose;
over
(ii) the amount of any Subordination Reduction Amount with
respect to Group I for such Payment Date.
"Group I Principal Remittance Amount": As of any Remittance
Date, the sum, without duplication, of (i) the scheduled principal due on the
Due Date occurring during the related Due Period with respect to Mortgage Loans
in Group I to the extent actually collected by the Servicer during the related
Due Period, (ii) Prepayments collected in the related Remittance Period and
relating to principal on the Mortgage Loans in Group I, (iii) the Loan Balance
of each such Mortgage Loan in Group I that either was repurchased by an
Originator or by the Seller or purchased by the Servicer on such Remittance
Date, to the extent such Loan Balance was actually deposited in the Principal
and Interest Account, (iv) any Substitution Amounts delivered by the Seller in
connection with a substitution of a Mortgage Loan in Group I, to the extent such
Substitution Amounts relate to principal, (v) all Net Liquidation Proceeds
actually collected by the Servicer with respect to such Mortgage Loans in Group
I during the related Remittance Period (to the extent such Liquidation Proceeds
are related to principal), (vi) all Delinquency Advances relating to principal
made by
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the Servicer on such Remittance Date with respect to Group I and (vii) the
amount of any investment losses required to be deposited by the Seller or the
Servicer pursuant to Sections 7.6(f) or 8.8(b) hereof.
"Group I Projected Net Monthly Excess Cashflow": As of any
date of calculation, Net Monthly Excess Cashflow relating to Group I (other than
any Subordination Reduction Amount included therein), as calculated pursuant to
Section 7.5(d)(iii) hereof on the Payment Date immediately preceding such date
of calculation.
"Group I Reimbursement Amount": As of any Payment Date, the
sum of (x)(i) all Group I Insured Payments previously received by the Trustee
and not previously repaid to the Certificate Insurer pursuant to Section
7.5(d)(iv)(A)(I) hereof plus (ii) interest accrued on each such Group I Insured
Payment not previously repaid calculated at the Late Payment Rate from the date
the Trustee received the related Group I Insured Payment to, but not including,
such Payment Date and (y)(i) any amounts then due and owing to the Certificate
Insurer relating to Group I under the Insurance Agreement plus (ii) interest on
such amounts at the Late Payment Rate. The Certificate Insurer shall notify the
Trustee and the Seller of the amount of any Group I Reimbursement Amount.
"Group I Servicing Fee": With respect to Group I, as to any
Remittance Period, the product of (x) the Servicing Fee Rate over such period
and (y) the aggregate Loan Balances of the Mortgage Loans in Group I as of the
opening of business on the first day of the related Remittance Period. Such
Group I Servicing Fee is retained by the Servicer pursuant to Sections 8.8(c)(i)
and 8.15 hereof.
"Group I Specified Subordinated Amount": Means (a) for any
Payment Date occurring during the period commencing on the Startup Day and
ending on the later of (i) the date on which principal equal to one-half of the
Group I Maximum Collateral Amount has been received and (ii) the 30th Payment
Date following the Startup Day, the greater of (A) the Group I Amortized
Subordinated Amount Requirement and (B) two times the excess, if any, of (x)
one-half of the aggregate Loan Balances of all Mortgage Loans in Group I which
are 90 or more days Delinquent (including REO Properties and Mortgage Loans in
foreclosure or bankruptcy) over (y) five times the Group I Projected Net Monthly
Excess Cashflow as of such Payment Date; and (b) for any Payment Date occurring
after the end of the period in clause (a) above, the greatest of (i) the lesser
of (A) the Group I Amortized Subordinated Amount Requirement and (B) 3.00% times
the current Class A-1 Certificate Principal Balance, (ii) two times the excess
of (A) one-half of the aggregate Loan Balances of all Mortgage Loans in Group I
which are 90 or more days Delinquent (including REO Properties and Mortgage
Loans in foreclosure or bankruptcy) over (B) five times the Group I Projected
Net Monthly Excess Cashflow as of such Payment Date and (iii) an amount equal to
0.50% of the Group I Maximum Collateral Amount; provided, however,
notwithstanding the above, in the event that any Group I Insured Payment or
Group II Insured Payment is made by the Certificate Insurer, the amount
described in this clause (b) shall remain equal to the Group I Amortized
Subordinated Amount Requirement. The Group I Specified Subordinated Amount may
be reduced or eliminated by the Certificate Insurer in its sole discretion.
Prior to any such reduction or elimination, the Servicer and the Certificate
Insurer shall give written notice to the Rating Agencies.
"Group I Subordinated Amount": As of any Payment Date, the
positive difference, if any, between (x) the sum of (i) the aggregate Loan
Balances of the Mortgage Loans in Group I as of the close of business on the
last day of the related Remittance Period, after taking into account payments of
scheduled principal on the Mortgage Loans in Group I due on the Due Date which
immediately follows the last day of such Remittance Period, and (ii) any amount
on deposit in the Pre-Funding Account relating to Group I less any Pre-Funding
Account Earnings related to Group I on the last day of the related Remittance
Period and (y) the Class A-1 Certificate Principal Balance as of such Payment
Date (after taking into account the payment of the Group I Principal
Distribution Amount (except payment to be made as to principal on such Payment
Date from the proceeds of the Group I Certificate Insurance Policy) on such
Payment Date).
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"Group I Subordination Deficit": With respect to any Payment
Date, the amount, if any, by which (x) the Class A-1 Certificate Principal
Balance, after taking into account the payment of the Group I Principal
Distribution Amount on such Payment Date (except any payment to be made as to
principal on such Payment Date from the proceeds of the Group I Certificate
Insurance Policy), exceeds the sum of (y) the aggregate Loan Balance of the
Mortgage Loans in Group I as of the close of business on the last day of the
preceding Remittance Period after taking into account payments of scheduled
principal on such Mortgage Loans due on the Due Date in the calendar month in
which such Payment Date occurs and (z) the portion of the Pre-Funded Amount
related to Group I as of the close of business on the last day of the related
Remittance Period; provided that for the purpose of calculating Loan Balances to
determine if a Group I Subordination Deficit exists, the aggregate amount of the
principal component of all unreimbursed Delinquency Advances relating to Group I
shall be deducted from the related actual Loan Balances.
"Group I Total Available Funds": As defined in Section
7.3(a)(i) hereof.
"Group I Total Available Funds Shortfall": As defined in
Section 7.3(b) hereof.
"Group I Total Monthly Excess Spread": With respect to any
Payment Date, the positive difference between (i) the Group I Interest
Remittance Amount for the Due Period relating to such Payment Date plus any
amount transferred from the Capitalized Interest Account relating to Group I and
(ii) the sum of (x) the interest due on the Class A-1 Certificates on such
Payment Date, (y) the Fees and Expenses related to Group I, if any, for such
Payment Date and (z) the Group I Servicing Fee for such Payment Date.
"Group II": The pool of Mortgage Loans identified in the
related Schedules of Mortgage Loans as having been assigned to Group II,
including any Qualified Replacement Mortgages delivered in replacement thereof
and each Subsequent Mortgage Loan delivered to the Trust for inclusion therein.
"Group II Amortized Subordinated Amount Requirement": As of
any date of determination, the product of (x) 3.25% and (y) the Group II Maximum
Collateral Amount.
"Group II Available Funds": As defined in Section 7.3(a)(ii)
hereof.
"Group II Available Funds Cap": As of any Payment Date, the
weighted average of the Coupon Rates on the Mortgage Loans in Group II less the
sum of (a) the Group II Servicing Fee Rate and (b) the rates at which the Fees
and Expenses applicable to Group II are determined and (b) beginning on the
thirteenth Payment Date following the Startup Day, 0.50% per annum.
"Group II Available Funds Cap Carry-Forward Amortization
Amount": As of any Payment Date, any Group II Available Funds Cap Carry-Forward
Amount distributed to the Owners of the Class A-2 Certificates on such Payment
Date pursuant to Section 7.5(d)(iii) hereof.
"Group II Available Funds Cap Carry-Forward Amount": As of any
Payment Date, the sum of (A) an amount equal to (x) the excess, if any, of (a)
the aggregate amount of interest accrued on the Class A-2 Certificates on all
prior Payment Dates, calculated at the Class A-2 Formula Pass-Through Rate
applicable to each such Payment Date over (b) the aggregate amount of interest
accrued on the Class A-2 Certificates on all prior Payment Dates, calculated at
the Class A-2 Pass-Through Rate applicable to each such Payment Date, minus (y)
all Group II Available Funds Cap Carry-Forward Amortization Amounts actually
paid on or before such Payment Date, and (B) the product of (x) one-twelfth of
the Class A-2 Formula Pass-Through Rate on such Payment Date and (y) the amounts
described in clause (A).
"Group II Available Funds Shortfall": As defined in Section
7.5(d)(ii)(A).
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"Group II Capitalized Interest Requirement": With respect to
the Payment Dates in April and May 1999, an amount equal to interest accruing
from the related Due Date (or from the Startup Day, in the case of the April
1999 Payment Date) through the Subsequent Transfer Date at a rate equal to the
sum of the Class A-2 Pass-Through Rate plus the Fees and Expenses related to
Group II (expressed as a per annum rate), less the portion of the Pre-Funding
Account earnings allocable to Group II (expressed as a per annum rate), on the
amount by which the Class A-2 Certificate Principal Balance exceeds the
aggregate Loan Balance of the Mortgage Loans in Group II at the date of
determination.
"Group II Certificate Insurance Policy": The certificate
guaranty insurance policy (number 28788) dated March 19, 1999 issued by the
Certificate Insurer to the Trustee for the benefit of the Owners of the Class
A-2 Certificates.
"Group II Initial Specified Subordinated Amount": $975,000.
"Group II Insured Payment": As defined in the Group II
Certificate Insurance Policy.
"Group II Interest Remittance Amount": As of any Remittance
Date, the sum, without duplication, of (i) all scheduled interest due on the Due
Date occurring during the related Due Period, with respect to the Group II
Mortgage Loans to the extent collected by the Servicer during the related Due
Period, (ii) all Delinquency Advances relating to interest made by the Servicer
on such Remittance Date with respect to the Group II Mortgage Loans and (iii)
all Compensating Interest paid by the Servicer on such Remittance Date with
respect to the Group II Mortgage Loans, which sum shall be net of the Group II
Servicing Fee retained by the Servicer pursuant to Sections 8.8(c)(i) and 8.15
hereof.
"Group II Maximum Collateral Amount": $30,000,000.
"Group II Monthly Remittance Amount": As of any Remittance
Date, the sum of (i) the Group II Interest Remittance Amount for such Remittance
Date and (ii) the Group II Principal Remittance Amount for such Remittance Date.
"Group II Original Aggregate Loan Balance": The aggregate Loan
Balance of all Initial Mortgage Loans in Group II as of the Cut-Off Date, i.e.,
$24,505,006.73.
"Group II Original Capitalized Interest Amount": $10,935.42,
which represents the amount of interest accruing from the Startup Day to April
30, 1999, at a rate equal to the sum of the Class A-2 Pass-Through Rate plus the
Fees and Expenses related to Group II (expressed as a per annum rate), less the
amount of the Pre-Funding Account earnings allocable to Group II (expressed as a
per annum rate), on the amount by which the Class A-2 Certificate Principal
Balance exceeds the Initial Mortgage Loans in Group II.
"Group II Overfunded Interest Amount": The portion of the
Group II Original Capitalized Interest Amount in the Capitalized Interest
Account remaining on deposit on the second Payment Date after the Startup Day,
after taking into account the distribution of the Class A-2 Distribution Amount.
"Group II Preference Amount": As defined in the Group II
Certificate Insurance Policy.
"Group II Premium Amount": As to any Payment Date, the product
of one-twelfth of (x) the Group II Premium Percentage and (y) the Class A-2
Certificate Principal Balance on such Payment Date (before taking into account
any distributions of principal to be made to the Owners of Class A-2
Certificates on such Payment Date).
"Group II Premium Percentage": As defined in the Group II
Certificate Insurance Policy.
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<PAGE>
"Group II Principal Distribution Amount": With respect to the
Class A-2 Certificates for any Payment Date, the lesser of:
(x) the Group II Total Available Funds plus any Group II
Insured Payment minus the Class A-2 Current Interest
and any Fees and Expenses related to Group II for
such Payment Date; and
(y) the excess, if any, of
(i) the sum, without any duplication of:
(a) the Class A-2 Principal Carry-Forward Amount for
such Payment Date,
(b) the principal portion of all scheduled monthly
payments on the Mortgage Loans in Group II due on
the related Due Date during the related Due
Period, to the extent actually received by the
Servicer on or prior to the related Remittance
Date or to the extent advanced by the Servicer on
or prior to the related Remittance Date and the
principal portion of any Prepayments made by the
respective Mortgagors during the related
Remittance Period,
(c) the Loan Balance of each Mortgage Loan in Group
II that either was repurchased by the Seller or
an Originator or purchased by the Servicer on the
related Remittance Date,
(d) any Substitution Amounts delivered by the Seller
or an Originator on the related Remittance Date
in connection with a substitution of a Mortgage
Loan in Group II (to the extent such Substitution
Amounts relate to principal),
(e) all Net Liquidation Proceeds actually collected
by the Servicer with respect to the Mortgage
Loans in Group II during the related Remittance
Period (to the extent such Net Liquidation
Proceeds relate to principal),
(f) the amount of any Group II Subordination Deficit
for such Payment Date,
(g) the proceeds received by the Trustee of any
termination as set forth in Article IX hereto of
Group II (to the extent such proceeds related to
principal),
(h) any moneys released from the Pre-Funding Account
as a prepayment of the Class A-2 Certificates on
the Payment Date that immediately follows the end
of the Pre-Funding Period, and
(i) the amount of any Subordination Increase Amount
with respect to Group II for such Payment Date,
to the extent of any Net Monthly Excess Cashflow
available for such purpose;
over
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(ii) the amount of any Subordination Reduction Amount with
respect to Group II for such Payment Date.
"Group II Principal Remittance Amount": As of any Remittance
Date, the sum, without duplication, of (i) the scheduled principal due on the
Due Date occurring during the related Due Period with respect to Mortgage Loans
in Group II to the extent actually collected by the Servicer during the related
Due Period, (ii) Prepayments collected in the related Remittance Period and
relating to principal on the Mortgage Loans in Group II, (iii) the Loan Balance
of each such Mortgage Loan in Group II that either was repurchased by an
Originator or by the Seller or purchased by the Servicer on such Remittance
Date, to the extent such Loan Balance was actually deposited in the Principal
and Interest Account, (iv) any Substitution Amounts delivered by the Seller in
connection with a substitution of a Mortgage Loan in Group II, to the extent
such Substitution Amounts relate to principal, (v) all Net Liquidation Proceeds
actually collected by the Servicer with respect to such Mortgage Loans in Group
II during the related Remittance Period (to the extent such Liquidation Proceeds
are related to principal), (vi) all Delinquency Advances relating to principal
made by the Servicer on such Remittance Date with respect to Group II and (vii)
the amount of any investment losses required to be deposited by the Seller or
the Servicer pursuant to Sections 7.6(f) and 8.8(b) hereof.
"Group II Projected Net Monthly Excess Cashflow": As of any
date of calculation, Net Monthly Excess Cashflow relating to Group II (other
than any Subordination Reduction Amount included therein), as calculated
pursuant to Section 7.5(d)(iii) hereof on the Payment Date immediately preceding
such date of calculation.
"Group II Reimbursement Amount": As of any Payment Date, the
sum of (x)(i) all Group II Insured Payments previously received by the Trustee
and not previously repaid to the Certificate Insurer pursuant to Section
7.5(d)(iv)(A)(1) hereof plus (ii) interest accrued on each such Group II Insured
Payment not previously repaid calculated at the Late Payment Rate from the date
the Trustee received the related Group II Insured Payment to, but not including,
such Payment Date and (y)(i) any amounts then due and owing to the Certificate
Insurer relating to Group II under the Insurance Agreement plus (ii) interest on
such amounts at the Late Payment Rate. The Certificate Insurer shall notify the
Trustee and the Seller of the amount of any Group II Reimbursement Amount.
"Group II Servicing Fee": With respect to Group II, as to any
Remittance Period, the product of (x) the Servicing Fee Rate over such period
and (y) the aggregate Loan Balances of the Mortgage Loans in Group II as of the
opening of business on the first day of the related Remittance Period. Such
Group II Servicing Fee is retained by the Servicer pursuant to Sections
8.8(c)(i) and 8.15 hereof.
"Group II Specified Subordinated Amount": Means (a) for any
Payment Date occurring during the period commencing on the Startup Day and
ending on the later of (i) the date on which principal equal to one-half of the
Group II Maximum Collateral Amount has been received and (ii) the 30th Payment
Date following the Startup Day, the greater of (A) the Group II Amortized
Subordinated Amount Requirement and (B) two times the excess, if any, of (x)
one-half of the aggregate Loan Balances of all Mortgage Loans in Group II which
are 90 or more days Delinquent (including REO Properties and Mortgage Loans in
foreclosure or bankruptcy) over (y) three times the Group II Projected Net
Monthly Excess Cashflow as of such Payment Date; and (b) for any Payment Date
occurring after the end of the period in clause (a) above, the greatest of (i)
the lesser of (A) the Group II Amortized Subordinated Amount Requirement and (B)
6.50% times the current Class A-2 Certificate Principal Balance, (ii) two times
the excess of (A) one-half of the aggregate Loan Balances of all Mortgage Loans
in Group II which are 90 or more days Delinquent (including REO Properties and
Mortgage Loans in foreclosure or bankruptcy) over (B) three times the Group II
Projected Net Monthly Excess Cashflow as of such Payment Date and (iii) an
amount equal to 0.50% of the Group II Maximum Collateral Amount; provided,
however, notwithstanding the above, in the event that any Group I Insured
Payment or Group II Insured Payment is made by the
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<PAGE>
Certificate Insurer, the amount described in this clause (b) shall remain equal
to the Group II Amortized Subordinated Amount Requirement. The Specified
Subordinated Amount may be reduced or eliminated by the Certificate Insurer in
its sole discretion. Prior to any such reduction or elimination, the Servicer
and the Certificate Insurer shall give written notice to the Rating Agencies.
"Group II Subordinated Amount": As of any Payment Date, the
difference, if any, between (x) the sum of (i) the aggregate Loan Balances of
the Mortgage Loans in Group II as of the close of business on the last day of
the related Remittance Period, after taking into account payments of scheduled
principal on the Mortgage Loans in Group II due on the Due Date which
immediately follows the last day of such Remittance Period, and (ii) any amount
on deposit in the Pre-Funding Account relating to Group II less any Pre-Funding
Account Earnings related to Group II on the last day of the related Remittance
Period and (y) the Class A-2 Certificate Principal Balance as of such Payment
Date (after taking into account the payment of the Class Group II Principal
Distribution Amount (except any payment to be made as to principal on such
Payment Date from the proceeds of the Group II Certificate Insurance Policy) on
such Payment Date).
"Group II Subordination Deficit": With respect to any Payment
Date, the amount, if any, by which (x) the Class A-2 Certificate Principal
Balance, after taking into account the payment of the Group II Principal
Distribution Amount on such Payment Date (except any payment to be made as to
principal on such Payment Date from the proceeds of the Group II Certificate
Insurance Policy), exceeds the sum of (y) the aggregate Loan Balance of the
Mortgage Loans in Group II as of the close of business on the last day of the
preceding Remittance Period after taking into account payments of scheduled
principal on such Mortgage Loans due on the Due Date in the calendar month in
which such Payment Date occurs and (z) the portion of the Pre-Funded Amount
related to Group II as of the close of business on the last day of the related
Remittance Period; provided that for the purpose of calculating Loan Balances to
determine if a Group II Subordination Deficit exists, the aggregate amount of
the principal component of all unreimbursed Delinquency Advances relating to
Group II shall be deducted from the related actual Loan Balances.
"Group II Total Available Funds": As defined in Section
7.3(a)(ii) hereof.
"Group II Total Available Funds Shortfall": As defined in
Section 7.3(b) hereof.
"Group II Total Monthly Excess Spread": With respect to any
Payment Date, the positive difference between (i) the Group II Interest
Remittance Amount for the Due Period relating to such Payment Date plus any
amount transferred from the Capitalized Interest Account relating to Group II
and (ii) the sum of (x) the interest due on the Class A-2 Certificates on such
Payment Date, (y) the Fees and Expenses related to Group II, if any, for such
Payment Date and (z) the Group II Servicing Fee for such Payment Date.
"Highest Lawful Rate": As defined in Section 11.13.
"Indemnification Agreement": The Indemnification Agreement
dated as of March 11, 1999, among the Certificate Insurer, the Seller and the
Underwriter.
"Indirect Participant": Any financial institution for whom any
Direct Participant holds an interest in a Class A Certificate.
"Initial Certification": The initial certification in the form
set forth as Exhibit E hereto and delivered by the Trustee to the Seller on the
Startup Day pursuant to Section 3.6 hereof.
"Initial Mortgage Loans": The Mortgage Loans to be sold to the
Trust by the Seller on the Startup Day.
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"Initial Premium": The initial premium (covering one month)
for Group I and Group II payable by the Seller on behalf of the Trust to the
Certificate Insurer in consideration of the delivery to the Trustee of the
Certificate Insurance Policies.
"Insurance Agreement": The Insurance Agreement dated as of
March 1, 1999, among the Seller, the Servicer, the Trustee, the Oversight Agent
and the Certificate Insurer, as it may be amended from time to time.
"Insurance Policy": Any hazard, flood, title or primary
mortgage insurance policy relating to a Mortgage Loan.
"Insured Payment": A Group I Insured Payment or a Group II
Insured Payment.
"Interest Accrual Period": With respect to the Class A-1
Certificates and any Payment Date, the calendar month immediately preceding such
Payment Date. A "Calendar Month" shall be deemed to be 30 days. With respect to
the Class A-2 Certificates and any Payment Date, the period commencing on the
immediately preceding Payment Date (or in the case of the first Payment Date,
the Startup Day) and ending on the day immediately preceding the current Payment
Date. All calculations of interest on the Class A-1 Certificates will be made on
the basis of a 360-day year assumed to consist of twelve 30-day months and all
calculations of interest on the Class A-2 Certificates will be made on the basis
of the actual number of days elapsed in the related Interest Accrual Period and
in a year of 360 days.
"Interest Determination Date": With respect to any Interest
Accrual Period for the Class A-2 Certificates, the second London Business Day
preceding such Interest Accrual Period or, in case of the first Payment Date,
March 17, 1999.
"Late Payment Rate": For any Payment Date, the rate of
interest, as it is publicly announced by Citibank, N.A. at its principal office
in New York, New York as its prime rate (any change in such prime rate of
interest to be effective on the date such change is announced by Citibank, N.A.)
plus 3%. The Late Payment Rate shall be computed on the basis of a year of 365
days calculating the actual number of days elapsed. In no event shall the Late
Payment Rate exceed the maximum rate permissible under any applicable law
limiting interest rates.
"LIBOR": With respect to any Interest Accrual Period for the
Class A-2 Certificates, the rate determined by the Trustee on the related
Interest Determination Date on the basis of the British Bankers Association's
"Interest Settlement Rate" for one-month U.S. dollar deposits as such rate
appears on Telerate Page 3750 as of 11:00 a.m. (London time) on such date;
provided that if such rate does not appear on Telerate Page 3750, the rate for
such date will be determined on the basis of the rates at which one-month U.S.
dollar deposits are offered by the Reference Banks at approximately 11:00 a.m.
(London time) on such date to prime banks in the London interbank market. In
such event, the Trustee will request the principal London office of each of the
Reference Banks to provide a quotation of its rate. If at least two such
quotations are provided, the rate for that date will be the arithmetic mean of
the quotations (rounded upwards if necessary to the nearest whole multiple of
1/16%). If fewer than two quotations are provided as requested, the rate for
that date will be the arithmetic mean of the rates quoted by major banks in New
York City, selected by the Servicer, at approximately 11:00 a.m. (New York City
time) on such date for one-month U.S. dollar loan to leading European banks.
"Liquidated Loan": As defined in Section 8.13(b) hereof. A
Mortgage Loan which is purchased from the Trust pursuant to Section 3.4, 3.6 or
8.10 hereof is not a "Liquidated Loan".
"Liquidation Expenses": Expenses which are incurred by the
Servicer in connection with the liquidation of any defaulted Mortgage Loan, such
expenses, including, without limitation, legal fees and
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expenses, and any unreimbursed Servicing Advances expended by the Servicer
pursuant to Sections 8.9(c) and 8.13 with respect to the related Mortgage Loan.
"Liquidation Proceeds": With respect to any Liquidated Loan,
as of any date of determination any amounts (including the proceeds of any
Insurance Policy) recovered by the Servicer in connection with such Liquidated
Loan, whether through trustee's sale, foreclosure sale or otherwise.
"Loan Balance": With respect to a Mortgage Loan and a date of
determination, the principal balance thereof on the Cut-Off Date with respect to
the Initial Mortgage Loans or the relevant Subsequent Cut-Off Date with respect
to the Subsequent Mortgage Loans after giving effect to all principal payments
due on or before the Cut-Off Date or Subsequent Cut-Off Date, as applicable,
whether or not received, less any related Principal Remittance Amounts relating
to such Mortgage Loan included in previous related Monthly Remittance Amounts
that were received by the Servicer or any Sub-Servicer whether or not delivered
to the Trustee, provided, that the Loan Balance for any Mortgage Loan which has
become a Liquidated Loan shall be zero as of the first day of the Remittance
Period following the Remittance Period in which such Mortgage Loan becomes a
Liquidated Loan, and at all times thereafter.
"Loan Purchase Price": With respect to any Mortgage Loan
purchased from the Trust on a Remittance Date pursuant to Section 3.4, 3.6 or
8.10 hereof, an amount equal to the Loan Balance of such Mortgage Loan as of the
date of purchase, plus one month's interest on the outstanding Loan Balance
thereof as of the beginning of the preceding Remittance Period computed at the
then applicable Coupon Rate less the Servicing Fee Rate, if any, together with,
without duplication, the aggregate amount of (i) all delinquent interest, all
Delinquency Advances and Servicing Advances theretofore made with respect to
such Mortgage Loan and not subsequently recovered from the related Mortgage Loan
and (ii) the interest portion of any Delinquency Advances which the Servicer or
any Sub-Servicer has theretofore failed to remit with respect to 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.
"Monthly Exception Report": The monthly report delivered by
the Servicer to the Trustee and the Oversight Agent on each Determination Date,
pursuant to Section 8.8(d)(ii). Each Monthly Exception Report shall cover the
immediately preceding Remittance Period (or, as necessary, the related Due
Period) and shall consist of, for each Mortgage Loan Group and in the aggregate
(i) an activity report of the Mortgage Loans setting forth the Loan Balance of
Mortgage Loans as of the first day of the related Remittance Period (or, as
necessary, the related Due Period), scheduled payments due, Prepayments,
Liquidated Loan balances, and the resulting Loan Balance of the Mortgage Loans
as of the last day of the related Remittance Period (or, as necessary, the
related Due Period) and (ii) separate reports of (a) payoffs, Curtailments,
foreclosures and bankruptcies, such reports to provide the payment details for
each Mortgage Loan covering the immediately preceding Remittance Period and any
Prepayments not previously reported from a prior Remittance Period (or, as
necessary, the related Due Period), and (b) Prepayments and delinquencies, such
reports to reflect the current status of each Mortgage Loan with payment details
as of the last day of the related Remittance Period (or, as necessary, the
related Due Period).
"Monthly Remittance Amount": With respect to Group I, the
Group I Monthly Remittance Amount and with respect to Group II, the Group II
Monthly Remittance Amount.
"Monthly Servicing Report": The monthly report required to be
furnished by the Servicer pursuant to Section 8.26(a) hereof.
"Moody's": Moody's Investors Service, Inc., and any successor
thereto.
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"Mortgage": The mortgage, deed of trust, deed to secure debt
or other instrument creating a first, second or third lien on an estate in fee
simple interest in real property securing a Note.
"Mortgage Loans": Such of the mortgage loans (including
Initial Mortgage Loans and Subsequent Mortgage Loans) transferred and assigned
to the Trust pursuant to Section 3.5(a) and Section 3.8 hereof, together with
any Qualified Replacement Mortgages substituted therefor in accordance with this
Agreement, as from time to time are held as a part of the Trust Estate, the
Mortgage Loans originally so held being identified in the Schedule of Mortgage
Loans. The term "Mortgage Loan" includes the terms "First Mortgage Loan",
"Second Mortgage Loan" and "Third Mortgage Loan". The term "Mortgage Loan"
includes any Mortgage Loan which is Delinquent, which relates to a foreclosure
or which relates to a Property which is REO Property prior to such Property's
disposition by the Trust. Any mortgage loan which, although intended by the
parties hereto to have been, and which purportedly was, transferred and assigned
to the Trust by the Seller, in fact was not transferred and assigned to the
Trust for any reason whatsoever shall nevertheless be considered a "Mortgage
Loan" for all purposes of this Agreement.
"Mortgage Loan Group": Either Group I or Group II. References
herein to the related Class of Class A Certificates, when used with respect to a
Mortgage Loan Group, shall mean (A) in the case of Group I, the Class A-1
Certificates and (B) in the case of Group II, the Class A-2 Certificates.
"Mortgagor": The obligor on a Note.
"Net Liquidation Proceeds": As to any Liquidated Loan,
Liquidation Proceeds net of, without duplication, Liquidation Expenses and
unreimbursed Servicing Advances, unreimbursed Delinquency Advances and accrued
and unpaid Servicing Fees through the date of liquidation relating to such
Liquidated Loan. In no event shall Net Liquidation Proceeds with respect to any
Liquidated Loan be less than zero.
"Net Monthly Excess Cashflow": As defined in Section
7.5(d)(iii) hereof.
"Non-REMIC Accounts": Collectively, the Pre-Funding Account
and the Capitalized Interest Account.
"Note": The note or other evidence of indebtedness evidencing
the indebtedness of a Mortgagor under a Mortgage Loan.
"Officer's Certificate": A certificate signed by any
Authorized Officer of any Person delivering such certificate and delivered to
the Trustee.
"Operative Documents": Collectively, this Agreement, the
Certificate Insurance Policies, the Certificates, the Insurance Agreement, the
Underwriting Agreement, any Sub-Servicing Agreement, any Subsequent Transfer
Agreement, the Registration Statement and the Indemnification Agreement.
"Original Aggregate Loan Balance": The aggregate Loan Balances
of all Initial Mortgage Loans as of the Cut-Off Date, i.e., $90,033,901.09.
"Original Certificate Principal Balance": As of the Startup
Day and as to each Class of Class A Certificates, the original Certificate
Principal Balances thereof, as follows:
Class A-1 Certificates $85,000,000.
Class A-2 Certificates $30,000,000.
The Class R Certificates do not have an Original Certificate
Principal Balance.
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"Original Group I Pre-Funded Amount": $19,471,105.64.
"Original Group II Pre-Funded Amount": $5,494,993.27.
"Original Pre-Funded Amount": The amount deposited in the
Pre-Funding Account on the Startup Day from the proceeds of the sale of the
Certificates, which amount is $24,966,098.91.
"Original Principal Amount": With respect to each Note, the
principal amount of such Note on the date of origination thereof.
"Originator": The Seller and any entity from which the Seller
acquires Mortgage Loans, provided that in the case of a Mortgage Loan previously
owned by a securitization trust created by the Seller, the Seller shall be
deemed the Originator of such Mortgage Loan.
"Outstanding": With respect to all Certificates of a Class, as
of any date of determination, all such Certificates theretofore executed and
delivered hereunder except:
(i) Certificates theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Certificates or portions thereof for which full and final
payment of money in the necessary amount has been theretofore deposited
with the Trustee in trust for the Owners of such Certificates;
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to this
Agreement, unless proof satisfactory to the Trustee is presented that
any such Certificates are held by a bona fide purchaser; and
(iv) Certificates alleged to have been destroyed, lost or
stolen for which replacement Certificates have been issued as provided
for in Section 5.5 hereof.
(v) Certificates as to which the Trustee has made the final
distribution thereon, whether or not such Certificates have been
returned to the Trustee.
"Oversight Agent": Norwest Bank Minnesota, National
Association, a national banking association, as Oversight Agent hereunder, or
any successor Oversight Agent hereunder.
"Oversight Agent Fee": The fee payable monthly to the
Oversight Agent on each Payment Date, which shall equal the product of (a)
one-twelfth (1/12) of 0.03% and (b) the aggregate Certificate Principal Balance
of the Class A Certificates at the date of determination.
"Owner": The Person in whose name a Certificate is registered
in the Register, to the extent described in Section 5.6.
"Paid-in-Full Mortgage Loan": With respect to any Payment
Date, a Mortgage Loan on which the entire obligation of the related Mortgagor
has been satisfied and the lien on the property may be removed during the
related Remittance Period.
"Pass-Through Rate": As to the Class A-1 Certificates, the
Class A-1 Pass-Through Rate and as to the Class A-2 Certificates, the Class A-2
Pass-Through Rate.
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"Payment Date": Any date on which the Trustee is required to
make distributions to the Owners, which shall be the 20th day of each month, or
if such day is not a Business Day, the next succeeding Business Day, commencing
in the month following the Startup Day.
"Percentage Interest": As to any Class of Class A Certificate,
that percentage, expressed as a fraction, the numerator of which is the
Certificate Principal Balance set forth on such Certificate as of the Startup
Day and the denominator of which is the Original Certificate Principal Balance
of all Class A Certificates of the same Class as of the Startup Day; and as to
any Class R Certificate, that Percentage Interest set forth on such Class R
Certificate.
"Person": Any individual, corporation, partnership, joint
venture, limited liability company, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Pool Cumulative Expected Losses": With respect to a Mortgage
Loan Group and any period, the sum of (i) all Realized Losses with respect to
the Mortgage Loans in such Mortgage Loan Group experienced during such period
and (ii) the product of (A) 0.43 and (B) with respect to any date of
determination, the sum of (x) 25% of the Loan Balances of all Mortgage Loans
which are 30-59 days Delinquent (inclusive), (y) 50% of the Loan Balances of all
Mortgage Loans which are 60-89 days Delinquent (inclusive), and (z) 100% of the
Loan Balances of all Mortgage Loans which are 90 or more days Delinquent
(including, without duplication, REO Properties and Mortgage Loans in
foreclosure or bankruptcy).
"Pool Cumulative Realized Losses": With respect to a Mortgage
Loan Group and any period, the sum of all Realized Losses experienced since the
Startup Day with respect to the Mortgage Loans in such Mortgage Loan Group.
"Pool Delinquency Rate": With respect to any Remittance
Period, the fraction, expressed as a percentage, equal to (x) the aggregate
principal balances of all Mortgage Loans in a Mortgage Loan Group 90 or more
days Delinquent (including, without duplication, Mortgage Loans in foreclosure,
bankruptcy or REO Properties) as of the close of business on the last day of
such Remittance Period over (y) the Pool Principal Balance of such Mortgage Loan
Group as of the close of business on the last day of such Remittance Period.
"Pool Principal Balance": With respect to any date of
determination thereof, the aggregate principal balances of the Group I Mortgage
Loans or the Group II Mortgage Loans as of such date of determination.
"Pool Rolling Three Month Delinquency Rate": As of any Payment
Date, and for either Mortgage Loan Group, the fraction, expressed as a
percentage, equal to the average of the Pool Delinquency Rates for such Mortgage
Loan Group for each of the three (or one and two, in the case of the first and
second Payment Dates) immediately preceding Remittance Periods.
"Preference Amount": Either of the Group I Preference Amount
or the Group II Preference Amount.
"Pre-Funded Amount": With respect to any date of
determination, the amount remaining on deposit in the Pre-Funding Account.
"Pre-Funding Account": The Pre-Funding Account established in
accordance with Section 7.2 hereof and maintained by the Trustee.
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"Pre-Funding Account Earnings": With respect to the initial
Payment Date, the actual investment earnings earned during the period from the
Startup Day through March 31, 1999 (inclusive) on the Pre-Funding Account during
such period as calculated by the Trustee pursuant to Section 3.8(e) hereof; and
with respect to the May 1999 Payment Date, the actual investment earnings earned
during the period from the April 1, 1999 through April 30, 1999 (inclusive) on
the Pre-Funding Account during such period as calculated by the Trustee pursuant
to Section 3.8(e) hereof.
"Prepaid Installment": With respect to any Mortgage Loan, any
installment of principal thereof and interest thereon received by the Servicer
prior to the scheduled due date for such installment, intended by the Mortgagor
as an early payment thereof and not as a Prepayment with respect to such
Mortgage Loan.
"Prepayment": A Curtailment or a payment causing a Mortgage
Loan to become a Paid-in- Full Mortgage Loan.
"Preservation Expenses": Expenditures made by the Servicer in
connection with a foreclosed Mortgage Loan prior to the liquidation thereof,
including, without limitation, expenditures for real estate property taxes,
hazard insurance premiums, property restoration or preservation.
"Principal and Interest Account": Collectively, each principal
and interest account created by the Servicer pursuant to Section 8.8(a) hereof,
or pursuant to any Sub-Servicing Agreement.
"Principal Remittance Amount": As applicable, the Group I
Principal Remittance Amount or the Group II Principal Remittance Amount.
"Prohibited Transaction": As defined at Section 860F(a)(2) of
the Code (or any successor statute thereto) and applicable to the Trust.
"Property": The underlying property securing a Mortgage Loan.
"Prospectus": The Seller's Prospectus dated March 11, 1999.
"Prospectus Supplement": The First Alliance Mortgage Loan
Trust 1999-1 Prospectus Supplement dated March 11, 1999 to the Prospectus.
"Qualified Liquidation": As defined at Section 860F(a)(4) of
the Code (or any successor statute thereto) and applicable to the Trust and the
Trust Estate.
"Qualified Mortgage": As defined at Section 860G(a)(4) of the
Code (or any successor statute thereto) and applicable to the Trust and the
Mortgage Loan Groups.
"Qualified Replacement Mortgage": A Mortgage Loan substituted
for another pursuant to Section 3.4 or 3.6 hereof, which (i) bears a fixed rate
of interest if the Mortgage Loan to be substituted for is in Group I or bears a
variable rate of interest if the Mortgage Loan to be substituted for is in Group
II, (ii) has a Coupon Rate at least equal to the Coupon Rate of the Mortgage
Loan being replaced (which, in the case of a Mortgage Loan in Group II, shall
mean a Mortgage Loan having the same interest rate index, a margin over such
index and a maximum interest rate at least equal to those applicable to the
Mortgage Loan being replaced), (iii) is of the same or better property type and
the same or better occupancy status as the replaced Mortgage Loan, (iv) shall be
of the same or better credit quality classification (determined in accordance
with the Originators' credit underwriting guidelines) as the Mortgage Loan being
replaced, (v) shall mature no later than June 1, 2029, (vi) has a Combined
Loan-to-Value Ratio as of the Cut-Off Date, no higher than the Combined
Loan-to-Value Ratio of the replaced Mortgage Loan at such time, (vii) has a Loan
Balance
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as of the related Replacement Cut-Off Date equal to or less than the Loan
Balance of the replaced Mortgage Loan as of such Replacement Cut-Off Date,
(viii) satisfies the criteria set forth from time to time in the definition
thereof at Section 860G(a)(4) of the Code (or any successor statute thereto) and
applicable to the Trust, all as evidenced by an Officer's Certificate of the
Seller delivered to the Trustee and the Certificate Insurer prior to any such
substitution, (ix) is of the same lien status or better lien status (x) is not
Delinquent, (xi) meets the representations and warranties set out in Section 3.3
hereof and (xii) is a valid fixed rate Mortgage Loan, if the Mortgage Loan to be
substituted for is in Group I, and is a valid variable rate Mortgage Loan, if
the Mortgage Loan to be substituted for is in Group II. In the event that one or
more mortgage loans are proposed to be substituted for one or more mortgage
loans, the Certificate Insurer may allow the foregoing tests to be met on a
weighted average basis or other aggregate basis acceptable to the Certificate
Insurer, as evidenced by a written approval delivered to the Trustee by the
Certificate Insurer, except that the requirement of clauses (vi) and (viii)
hereof must be satisfied as to each Qualified Replacement Mortgage.
"Rating Agencies": Moody's and Standard & Poor's or any
successors thereto.
"Realized Loss": As to any Liquidated Loan, the amount, if
any, by which the Loan Balance thereof as of the date of liquidation is in
excess of Net Liquidation Proceeds realized thereon.
"Record Date": With respect to each Payment Date, the last
Business Day of the calendar month immediately preceding the calendar month in
which such Payment Date occurs.
"Reference Banks": Bankers Trust Company, Barclay's Bank PLC
and National Westminster Bank PLC; provided that if any of the foregoing banks
are not suitable to serve as a Reference Bank, then any leading banks selected
by the Trustee which are engaged in transactions in Eurodollar deposits in the
international Eurocurrency market (i) with an established place of business in
London, (ii) not controlling, under the control of or under common control with
the Seller or any affiliate thereof and (iii) which have been designated as such
by the Trustee.
"Register": The register maintained by the Trustee in
accordance with Section 5.4 hereof, in which the names of the Owners are set
forth.
"Registrar": The Trustee, acting in its capacity as Trustee
appointed pursuant to Section 5.4 hereof, or any duly appointed and eligible
successor thereto.
"Registration Statement": The Registration Statement filed by
the Seller with the Securities and Exchange Commission (Registration Statement
Number 333-44585), including all amendments thereto and including the Prospectus
and Prospectus Supplement constituting a part thereof.
"Reimbursement Amount": A Group I Reimbursement Amount or a
Group II Reimbursement Amount.
"REMIC": A "real estate mortgage investment conduit" within
the meaning of Section 860D of the Code.
"REMIC Provisions": Provisions of the federal income tax law
relating to real estate mortgage investment conduits, which appear at Sections
860A through 860G of the Code, and related provisions, and regulations and
rulings promulgated thereunder, as the foregoing may be in effect from time to
time.
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"Remittance Date": Any date on which the Servicer is required
to remit moneys on deposit in the Principal and Interest Account to the
Certificate Account, which shall be the day five Business Days prior to each
Payment Date.
"Remittance Period": The period (inclusive) beginning on the
first day of the calendar month immediately preceding the month in which a
Remittance Date occurs and ending on the last day of such immediately preceding
calendar month.
"REO Property": A Property acquired by the Servicer or any
Sub-Servicer on behalf of the Trust through foreclosure or deed-in-lieu of
foreclosure in connection with a defaulted Mortgage Loan.
"Replacement Cut-Off Date": With respect to any Qualified
Replacement Mortgage, the first day of the calendar month in which such
Qualified Replacement Mortgage is conveyed to the Trust.
"Representation Letter": Letters to, or agreements with, the
Depository to effectuate a book entry system with respect to the Class A
Certificates registered in the Register under the nominee name of the
Depository.
"Request for Release": The request for release in the form set
forth as Exhibit J hereto.
"Residual Net Monthly Excess Cashflow": With respect to any
Payment Date, the aggregate Net Monthly Excess Cashflow, if any, remaining with
respect to each of the Mortgage Loan Groups after the making of all applications
described in Sections 7.5(d)(i), 7.5(d)(ii), 7.5(d)(iii) and 7.5(d)(iv) hereof.
"Responsible Officer": When used with respect to the Trustee,
any officer assigned to the corporate trust group (or any successor thereto),
including any vice president, assistant vice president, trust officer, any
assistant secretary, any assistant treasurer, any trust officer or any other
officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and having direct
responsibility for the administration of this Agreement. When used with respect
to the Oversight Agent, the president, any vice president or any other officer
of the Oversight Agent customarily performing functions with respect to the
Oversight Agent's monitoring of loan servicing.
"Schedule of Mortgage Loans": The Schedule of Mortgage Loans,
separated by Mortgage Loan Group, with respect to the Mortgage Loans listing
each Mortgage Loan in the related Group to be conveyed on the Startup Day (or
Subsequent Transfer Date). Such Schedule of Mortgage Loans shall identify each
Mortgage Loan by the Servicer's loan number and address (including the state) of
the Property and shall set forth as to each Mortgage Loan the lien status, the
Combined Loan-to-Value Ratio, the Loan Balance as of the Cut-Off Date or
Subsequent Cut-Off Date, as the case may be, the Coupon Rate thereof (and, with
respect to Mortgage Loans in Group II, the index and the margin), the current
scheduled monthly payment of principal and interest and the maturity of the
related Note, the property type, occupancy status, Appraised Value and the
Originator of the Mortgage Loan, all as delivered to the Trustee in physical and
computer readable form and delivered to the Certificate Insurer in physical
form.
"Second Mortgage Loan": A Mortgage Loan that constitutes a
second priority mortgage lien with respect to the related Property.
"Securities Act": The Securities Act of 1933, as amended.
"Seller": First Alliance Mortgage Company, a California
corporation, and its permitted successors and assigns.
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"Senior Lien": With respect to any Second Mortgage Loan, the
mortgage loan relating to the corresponding Property having a first priority
lien and with respect to any Third Mortgage Loan, the mortgage loans relating to
the corresponding Property having a first priority lien and a second priority
lien.
"Servicer": First Alliance Mortgage Company, a California
corporation, and its permitted successors and assigns.
"Servicer Affiliate": A Person (i) controlling, controlled by
or under common control with the Servicer and (ii) which is qualified to service
residential mortgage loans.
"Servicing Advance": As defined in Section 8.9(c) and Section
8.13 hereof.
"Servicing Certificate": A certificate completed by and
executed by an Authorized Officer of the Trustee.
"Servicing Fee": The sum of the Group I Servicing Fee and the
Group II Servicing Fee.
"Servicing Fee Rate": 0.50% per annum.
"Six Month LIBOR Loans": Mortgage Loans, other than the 2/28
Loans, whose interest rates adjust semi-annually based on the London interbank
offered rate for six-month United States Dollar deposits in the London Market
and as published in The Wall Street Journal.
"Specified Subordinated Amount": As applicable, the Group I
Specified Subordinated Amount or the Group II Specified Subordinated Amount.
"Standard & Poor's": Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc., and any successor thereto.
"Startup Day": March 19, 1999.
"Subordinated Amount": As applicable, the Group I Subordinated
Amount or the Group II Subordinated Amount.
"Subordination Deficiency Amount": With respect to any
Mortgage Loan Group and Payment Date, the excess, if any, of (i) the related
Specified Subordinated Amount applicable to such Payment Date over (ii) the
related Subordinated Amount applicable to such Payment Date prior to taking into
account the payment of any related Subordination Increase Amount on such Payment
Date.
"Subordination Deficit": As applicable, the Group I
Subordination Deficit or the Group II Subordination Deficit.
"Subordination Increase Amount": With respect to any Mortgage
Loan Group and Payment Date, the lesser of (i) the related Subordination
Deficiency Amount as of such Payment Date (after taking into account the payment
of the related Class A Distribution Amount on such Payment Date (except for any
related Subordination Increase Amount)) and (ii) the aggregate amount of Net
Monthly Excess Cashflow to be allocated to such Mortgage Loan Group pursuant to
either Section 7.5(d)(iii)(A) or Section 7.5(d)(iii)(B) on such Payment Date.
"Subordination Reduction Amount": With respect to any Mortgage
Loan Group and Payment Date, an amount equal to the lesser of (x) the Excess
Subordinated Amount for such Mortgage Loan
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Group and Payment Date and (y) the Principal Remittance Amount for such Mortgage
Loan Group for the related Remittance Date.
"Subsequent Cut-Off Date": The beginning of business on the
date specified in the Subsequent Transfer Agreement with respect to the
Subsequent Mortgage Loans which are transferred and assigned to the Trust
pursuant to the related Subsequent Transfer Agreement.
"Subsequent Mortgage Loans": The Mortgage Loans sold to the
Trust for inclusion in Group I or Group II pursuant to Section 3.8 hereof, which
shall be listed on the Schedules of Mortgage Loans attached to a Subsequent
Transfer Agreement.
"Subsequent Transfer Agreement": The Subsequent Transfer
Agreement dated as of the Subsequent Transfer Date executed by the Trustee and
the Seller, by which Subsequent Mortgage Loans are sold and assigned to the
Trust.
"Subsequent Transfer Date": The date so specified in each
Subsequent Transfer Agreement, which shall be no later than April 30, 1999.
"Sub-Servicer": Any Person with whom the Servicer has entered
into a Sub-Servicing Agreement and who satisfies any requirements set forth in
Section 8.3 hereof in respect of the qualification of a Sub-Servicer.
"Sub-Servicing Agreement": The written contract between the
Servicer and any Sub-Servicer relating to servicing and/or administration of
certain Mortgage Loans as permitted by Section 8.3.
"Substitution Amount": In connection with the delivery of any
Qualified Replacement Mortgage, if the outstanding principal amount of such
Qualified Replacement Mortgage as of the applicable Replacement Cut-Off Date is
less than the Loan Balance of the Mortgage Loan being replaced as of such
Replacement Cut-Off Date, an amount equal to such difference together with
accrued and unpaid interest on such amount calculated at the Coupon Rate (net of
the Servicing Fee Rate) of the Mortgage Loan being replaced.
"Tax Matters Person": The Tax Matters Person appointed
pursuant to Section 11.17 hereof.
"Telerate Page 3750": The display designated as page "3750" on
the Bridge Telerate Capital Markets Report (or such other page as may replace
page 3750 on that report for the purpose of displaying London interbank offered
rates of major banks).
"Termination Notice": As defined in Section 9.3(b) hereof.
"Termination Price": As defined in Section 9.2(a) hereof.
"Third Mortgage Loan": A Mortgage Loan that constitutes a
third priority mortgage lien with respect to the related Property.
"Total Monthly Excess Cashflow": As defined in Section
7.5(d)(ii) hereof.
"Total Monthly Excess Spread": As applicable, the Group I
Total Monthly Excess Spread or the Group II Total Monthly Excess Spread.
"Trust": First Alliance Mortgage Loan Trust 1999-1, the trust
created under this Agreement.
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"Trust Estate": Collectively, all money, instruments and other
property, to the extent such money, instruments and other property are subject
or intended to be held in trust, and in the subtrusts, for the benefit of the
Owners, including all proceeds thereof, including, without limitation, (i) the
Mortgage Loans, (ii) such amounts, including Eligible Investments, as from time
to time may be held in all Accounts, (iii) any Property, the ownership of which
has been effected on behalf of the Trust as a result of foreclosure or
acceptance by the Servicer of a deed in lieu of foreclosure and that has not
been withdrawn from the Trust, (iv) any Insurance Policies relating to the
Mortgage Loans and any rights of the Seller under such Insurance Policies, (v)
Net Liquidation Proceeds with respect to any Liquidated Loan, (vi) the
Certificate Insurance Policies and (vii) the proceeds of any of the above.
"Trustee": Norwest Bank Minnesota, National Association
located on the date of execution of this Agreement at Sixth Street and Marquette
Avenue, Minneapolis, Minnesota 55479-0113, not in its individual capacity but
solely as Trustee under this Agreement, and any successor hereunder.
"Underwriter": Lehman Brothers Inc.
"Underwriting Agreement": The Underwriting Agreement dated as
of March 11, 1999 between the Underwriter and the Seller.
Section 1.2. Use of Words and Phrases. "Herein", "hereby",
"hereunder", "hereof", "hereinbefore", "hereinafter" and other equivalent words
refer to this Agreement as a whole and not solely to the particular section of
this Agreement in which any such word is used. The definitions set forth in
Section 1.1 hereof include both the singular and the plural. Whenever used in
this Agreement, any pronoun shall be deemed to include both singular and plural
and to cover all genders.
Section 1.3. Captions; Table of Contents. The captions or
headings in this Agreement and the Table of Contents are for convenience only
and in no way define, limit or describe the scope and intent of any provisions
of this Agreement.
Section 1.4. Opinions. Each opinion with respect to the
validity, binding nature and enforceability of documents or Certificates may be
qualified to the extent that the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law) and may state
that no opinion is expressed on the availability of the remedy of specific
enforcement, injunctive relief or any other equitable remedy. Any opinion
required to be furnished by any Person hereunder must be delivered by counsel
upon whose opinion the addressee of such opinion may reasonably rely, and such
opinion may state that it is given in reasonable reliance upon an opinion of
another, a copy of which must be attached, concerning the laws of a foreign
jurisdiction.
ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST
Section 2.1. Establishment of the Trust. The parties hereto do
hereby create and establish, pursuant to the laws of the State of New York and
this Agreement, the Trust, which, for convenience, shall be known as "First
Alliance Mortgage Loan Trust 1999-1" and which shall contain two subtrusts.
Section 2.2. Office. The office of the Trust shall be in care
of the Trustee, at Sixth Street and Marquette Avenue, Minneapolis, Minnesota
55479-0113, or at such other address as the Trustee may designate by notice to
the Seller, the Servicer, the Owners and the Certificate Insurer.
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Section 2.3. Purposes and Powers. The purpose of the Trust is
to engage in the following activities and only such activities: (i) the issuance
of the Certificates and the acquiring, owning and holding of Mortgage Loans and
the Trust Estate in connection therewith; (ii) activities that are necessary,
suitable or convenient to accomplish the foregoing or are incidental thereto or
connected therewith, including the investment of moneys in accordance with this
Agreement; and (iii) such other activities as may be required in connection with
conservation of the Trust Estate and distributions to the Owners; provided,
however, that nothing contained herein shall permit the Trustee to take any
action which would result in the loss of REMIC status for the Trust (other than
the Non-REMIC Accounts).
Section 2.4. Appointment of the Trustee; Declaration of Trust.
The Seller hereby appoints the Trustee as trustee of the Trust effective as of
the Startup Day, to have all the rights, powers and duties set forth herein. The
Trustee hereby acknowledges and accepts such appointment, represents and
warrants its eligibility as of the Startup Day to serve as Trustee pursuant to
Section 10.8 hereof and declares that it will hold the Trust Estate in trust
upon and subject to the conditions set forth herein for the benefit of the
Owners and the Certificate Insurer, as their interests may appear.
Section 2.5. Expenses of Trustee. The expenses of the Trust,
including (i) any reasonable expenses of the Trustee, and (ii) any other
expenses of the Trust that have been reviewed by the Servicer, which review
shall not be required in connection with the enforcement of a remedy by the
Trustee resulting from a default under this Agreement, shall be paid directly by
the Servicer. The Servicer shall pay directly the reasonable fees and expenses
of counsel to the Trustee. The reasonable fees and expenses of the Trustee's
counsel in connection with the review and delivery of this Agreement and related
documentation shall be paid by the Servicer on the Startup Day.
Section 2.6. Ownership of the Trust. On the Startup Day the
ownership interests in the Trust and the subtrusts shall be transferred as set
forth in Section 4.2 hereof, such transfer to be evidenced by sale of the
Certificates as described therein. Thereafter, transfer of any ownership
interest shall be governed by Sections 5.4 and 5.8 hereof.
Section 2.7. Situs of the Trust. It is the intention of the
parties hereto that the Trust constitute a trust under the laws of the State of
New York. The Trust will be created and administered in, the State of Minnesota.
The Trust's only office will be at the office of the Trustee as set forth in
Section 2.2 hereof.
Section 2.8. Miscellaneous REMIC Provisions. (a) The Trust
(other than the Non-REMIC Accounts) shall elect to be treated as a REMIC under
Section 860D of the Code, as described in Section 11.15. 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 the election of the Trust
(other than the Non-REMIC Accounts) to be treated as a REMIC.
(b) The Class A Certificates are hereby designated as "regular
interests" in the REMIC and the Class R Certificates are hereby
designated as the "residual interest" in the REMIC, as defined in
Section 860G(a) of the Code.
(c) The Startup Day is hereby designated as the "startup day"
of the REMIC within the meaning of Section 860G(a)(9) of the Code.
(d) The final scheduled Payment Date for any Class of Class A
Certificates is hereby set to be the Payment Date succeeding by one
year the latest maturity date of any Mortgage Loan in the related
Mortgage Loan Group, as follows:
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Class Final Scheduled Payment Date
Class A-1 Certificates June 20, 2030
Class A-2 Certificates June 20, 2030
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE SELLER, THE SERVICER AND THE OVERSIGHT AGENT;
COVENANT OF SELLER TO CONVEY MORTGAGE LOANS
Section 3.1. Representations and Warranties of the Seller. The
Seller hereby represents, warrants and covenants to the Trustee, the Oversight
Agent, the Certificate Insurer and to the Owners as of the Startup Day that:
(a) The Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of California
and is in good standing as a foreign corporation in each jurisdiction
in which the nature of its business, or the properties owned or leased
by it, make such qualification necessary. The Seller has all requisite
corporate power and authority to own and operate its properties, to
carry out its business as presently conducted and as proposed to be
conducted and to enter into and discharge its obligations under this
Agreement and the other Operative Documents to which it is a party.
(b) The execution and delivery of this Agreement and the other
Operative Documents to which it is a party by the Seller and its
performance and compliance with the terms of this Agreement and of the
other Operative Documents to which it is a party have been duly
authorized by all necessary corporate action on the part of the Seller
and will not violate the Seller's Articles of Incorporation or Bylaws
or constitute a default (or an event which, with notice or lapse of
time, or both, would constitute a default) under, or result in the
breach of, any material contract, agreement or other instrument to
which the Seller is a party or by which the Seller is bound, or violate
any statute or any order, rule or regulation of any court, governmental
agency or body or other tribunal having jurisdiction over the Seller or
any of its properties.
(c) This Agreement and the other Operative Documents to which
the Seller is a party, assuming due authorization, execution and
delivery by the other parties hereto and thereto, each constitutes a
valid, legal and binding obligation of the Seller, enforceable against
it in accordance with the terms hereof and thereof, except as the
enforcement hereof and thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
(d) The Seller is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal,
state, municipal or governmental agency, which might have consequences
that would materially and adversely affect the condition (financial or
otherwise) or operations of the Seller or its properties or might have
consequences that would materially and adversely affect its performance
hereunder or under the other Operative Documents to which it is a
party.
(e) Except as noted in the Prospectus Supplement under the
caption "RISK FACTORS--Litigation," no action, suit, proceeding or
investigation is pending or, to the best of the Seller's
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knowledge, threatened against the Seller which, individually or in the
aggregate, might have consequences that would prohibit the Seller from
entering into this Agreement or any other Operative Document to which
it is a party or that would materially and adversely affect the
condition (financial or otherwise) or operations of the Seller or its
properties or might have consequences that would materially and
adversely affect the validity or enforceability of Mortgage Loans or
the Seller's performance hereunder or under the other Operative
Documents to which it is a party.
(f) No certificate of an officer, statement furnished in
writing or report delivered pursuant to the terms hereof by the Seller
contains any untrue statement of a material fact or omits to state any
material fact necessary to make the certificate, statement or report
not misleading.
(g) The statements contained in the Registration Statement
which describe the Seller or matters or activities for which the Seller
is responsible in accordance with the Operative Documents or which are
attributed to the Seller therein are true and correct in all material
respects, and the Registration Statement does not contain any untrue
statement of a material fact with respect to the Seller or omit to
state a material fact required to be stated therein or necessary in
order to make the statements contained therein with respect to the
Seller not misleading. With respect to matters other than those
referred to in the immediately preceding sentence, to the best of the
Seller's knowledge and belief, the Registration Statement does not
contain any untrue statement of a material fact required to be stated
therein or omit to state any material fact required to be stated
therein or necessary to make the statements contained therein not
misleading.
(h) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and
licenses required to be taken, given or obtained, as the case may be,
by or from any federal, state or other governmental authority or agency
(other than any such actions, approvals, etc. under any state
securities laws, real estate syndication or "Blue Sky" statutes, as to
which the Seller makes no such representation or warranty), that are
necessary or advisable in connection with the purchase and sale of the
Certificates and the execution and delivery by the Seller of the
Operative Documents to which it is a party, have been duly taken, given
or obtained, as the case may be, are in full force and effect on the
Startup Day and, except as noted in the Prospectus Supplement under the
caption "RISK FACTORS--Litigation," 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 and the
other Operative Documents on the part of the Seller and the performance
by the Seller of its obligations under this Agreement and such of the
other Operative Documents to which it is a party.
(i) The transactions contemplated by this Agreement are in the
ordinary course of business of the Seller.
(j) The Seller received fair consideration and reasonably
equivalent value in exchange for the sale of the interests in the
Mortgage Loans.
(k) The Seller did not sell any interest in any Mortgage Loan
with any intent to hinder, delay or defraud any of its creditors.
(l) The Seller is solvent and the Seller will not be rendered
insolvent as a result of the sale of the Mortgage Loans.
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(m) On the Startup Day, the Trustee will have good title on
behalf of the Trust to each Initial Mortgage Loan and such other items
comprising the corpus of the Trust Estate free and clear of any lien.
(n) There has been no material adverse change in any
information submitted by the Seller in writing to the Certificate
Insurer.
(o) To the best knowledge of the Seller, no document
(including any information provided in electronic form) submitted by or
on behalf of the Seller to the Certificate Insurer contains any untrue
or misleading statement of a material fact or fails to state a material
fact required to be stated therein or necessary in order to make the
statements therein not misleading.
(p) To the best knowledge of the Seller, no material adverse
change affecting any security for the Class A Certificates has occurred
prior to delivery of and payment for the Class A Certificates.
(q) The Seller is not in default under any agreement involving
financial obligations or on any outstanding obligation which would
materially adversely impact the financial condition or operations of
the Seller or legal documents associated with the transaction
contemplated in this Agreement.
(r) The Seller shall not generally solicit any refinancing of
any of the Mortgage Loans; provided however, that this covenant shall
not prevent or restrict: (1) the Seller from making general
solicitations, by mail, advertisement or otherwise of the general
public or persons on a targeted list, so long as the list was not
generated from the Mortgage Loan Schedule, (2) any refinancing in
connection with a Mortgagor's unsolicited request for refinancing, (3)
any refinancing in connection with the Seller's policy to solicit (i)
Mortgagors who indicate to the Seller their intent to refinance their
Mortgage Loans, (ii) with respect to Mortgage Loans in Group II,
Mortgagors with Mortgage Loans for which the next interest rate
adjustment is determined by the Seller to be higher than the current
market rate for a fixed rate mortgage loan with the same risk
qualifications or (iii) in connection with the general solicitation
described in (1) above, and (4) as otherwise disclosed in the
Prospectus Supplement or the Prospectus.
It is understood and agreed that the representations and
warranties set forth in this Section 3.1 shall survive delivery of the Mortgage
Loans to the Trustee.
Section 3.2A. Representations and Warranties of the Servicer.
The Servicer hereby represents, warrants and covenants to the Trustee, the
Certificate Insurer, the Oversight Agent and to the Owners as of the Startup Day
that:
(a) 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 any Property is located to the extent necessary to enable it
to perform its obligations hereunder and is in good standing as a
foreign corporation in each jurisdiction in which the nature of its
business, or the properties owned or leased by it, make such
qualification necessary. The Servicer has all requisite corporate power
and authority to own and operate its properties, to carry out its
business as presently conducted and as proposed to be conducted and to
enter into and discharge its obligations under this Agreement and the
other Operative Documents to which it is a party. The Servicer has
equity of at least $20,000,000, as determined in accordance with
generally accepted accounting principles.
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(b) The execution and delivery of this Agreement by the
Servicer and its performance and compliance with the terms of this
Agreement and the other Operative Documents to which it is a party have
been duly authorized by all necessary corporate action on the part of
the Servicer and will not violate the Servicer's Articles of
Incorporation or Bylaws or constitute a default (or an event which,
with notice or lapse of time, or both, would constitute a default)
under, or result in the breach of, any material contract, agreement or
other instrument to which the Servicer is a party or by which the
Servicer is bound or violate any statute or any order, rule or
regulation of any court, governmental agency or body or other tribunal
having jurisdiction over the Servicer or any of its properties.
(c) This Agreement and the other Operative Documents to which
the Servicer is a party, assuming due authorization, execution and
delivery by the other parties hereto and thereto, each constitutes a
valid, legal and binding obligation of the Servicer, enforceable
against it in accordance with the terms hereof and thereof, except as
the enforcement hereof and thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and by general principles of
equity (whether considered in a proceeding or action in equity or at
law).
(d) The 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 might have
consequences that would materially and adversely affect the condition
(financial or otherwise) or operations of the Servicer or its
properties or might have consequences that would materially and
adversely affect its performance hereunder or under the other Operative
Documents to which the Servicer is a party.
(e) Except as noted in the Prospectus Supplement under the
caption "RISK FACTORS--Litigation," no action, suit, proceeding or
investigation is pending or, to the best of the Servicer's knowledge,
threatened against the Servicer which, individually or in the
aggregate, might have consequences that would prohibit its entering
into this Agreement or any other Operative Document to which it is a
party or that would materially and adversely affect the condition
(financial or otherwise) or operations of the Servicer or its
properties or might have consequences that would materially and
adversely affect the validity or the enforceability of the Mortgage
Loans or the Servicer's performance hereunder or under the other
Operative Documents to which the Servicer is a party.
(f) No certificate of an officer, statement furnished in
writing or report delivered pursuant to the terms hereof by the
Servicer contains any untrue statement of a material fact or omits to
state any material fact necessary to make the certificate, statement or
report not misleading.
(g) The statements contained in the Registration Statement
which describe the Servicer or matters or activities for which the
Servicer is responsible in accordance with the Operative Documents or
which are attributed to the Servicer therein are true and correct in
all material respects, and the Registration Statement does not contain
any untrue statement of a material fact with respect to the Servicer or
omit to state a material fact required to be stated therein or
necessary to make the statements contained therein with respect to the
Servicer not misleading. With respect to matters other than those
referred to in the immediately preceding sentence, to the best of the
Servicer's knowledge and belief, the Registration Statement does not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements contained therein not misleading.
(h) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and
licenses required to be taken, given or obtained, as the case may
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be, by or from any federal, state or other governmental authority or
agency (other than any such actions, approvals, etc. under any state
securities laws, real estate syndication or "Blue Sky" statutes, as to
which the Servicer makes no such representation or warranty), that are
necessary or advisable in connection with the execution and delivery by
the Servicer of the Operative Documents to which it is a party, have
been duly taken, given or obtained, as the case may be, are in full
force and effect on the date hereof, and, except as noted in the
Prospectus Supplement under the caption "RISK FACTORS--Litigation,"
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 and the other Operative Documents on the part of the
Servicer and the performance by the Servicer of its obligations under
this Agreement and such of the other Operative Documents to which it is
a party.
(i) The collection practices used by the Servicer with respect
to the Mortgage Loans directly serviced by it have been, and are in all
material respects, legal, proper, prudent and customary in the mortgage
loan servicing business.
(j) The transactions contemplated by this Agreement are in the
ordinary course of business of the Servicer.
(k) There are no Sub-Servicers as of the Startup Day.
(l) The Servicer covenants that it will terminate any
Sub-Servicer within ninety (90) days after being directed by the
Certificate Insurer to do so.
(m) There has been no material adverse change in any
information submitted by the Servicer in writing to the Certificate
Insurer.
(n) To the best knowledge of the Servicer, no document
(including any information provided in electronic form) submitted by or
on behalf of the Servicer to the Certificate Insurer contains any
untrue or misleading statement of a material fact or fails to state a
material fact required to be stated therein or necessary in order to
make the statements therein not misleading.
(o) To the best knowledge of the Servicer, no material adverse
change affecting any security for the Class A Certificates has occurred
prior to delivery of and payment for the Class A Certificates.
(p) The Servicer is not in default under any agreement
involving financial obligations or on any outstanding obligation which
would materially and adversely impact the financial condition or
operations of the Servicer or legal documents associated with the
transaction contemplated in this Agreement.
(q) The Servicer's computer and other systems used in
servicing the Mortgage Loans currently are capable of operating in a
manner so that on and after January 1, 2000 (i) the Servicer can
service the Mortgage Loans in accordance with the terms of this
Agreement and (ii) the Servicer can operate its business in the same
manner as it is operating on the date hereof.
(r) The Servicer shall not generally solicit any refinancing
of any of the Mortgage Loans; provided however, that this covenant
shall not prevent or restrict: (1) the Servicer from making general
solicitations, by mail, advertisement or otherwise of the general
public or persons on a targeted list, so long as the list was not
generated from the Mortgage Loan Schedule, (2) any
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refinancing in connection with a Mortgagor's unsolicited request for
refinancing, (3) any refinancing in connection with the Servicer's
policy to solicit (i) Mortgagors who indicate to the Servicer their
intent to refinance their Mortgage Loans, (ii) with respect to Mortgage
Loans in Group II, Mortgagors with Mortgage Loans for which the next
interest rate adjustment is determined by the Servicer to be higher
than the current market rate for a fixed rate mortgage loan with the
same risk qualifications or (iii) in connection with the general
solicitation described in (1) above, and (4) as otherwise disclosed in
the Prospectus Supplement or the Prospectus.
It is understood and agreed that the representations and
warranties set forth in this Section 3.2A shall survive delivery of the Mortgage
Loans to the Trustee.
Upon discovery by any of the Originators, the Servicer, the
Oversight Agent, the Seller, any Sub-Servicer, the Certificate Insurer or the
Trustee of a breach of any of the representations and warranties set forth in
this Section 3.2A or in Section 3.1 hereof which materially and adversely
affects the interests of the Owners or of the Certificate Insurer, without
regard to any limitation set forth in such representation or warranty concerning
the knowledge of the party making such representation or warranty as to the
facts stated therein, the party discovering such breach shall give prompt
written notice to the other parties hereto and the Certificate Insurer. Within
30 days of its discovery or its receipt of notice of breach, the breaching party
shall cure such breach in all material respects and, if such breaching party is
the Servicer and upon the Servicer's continued failure to cure such breach, the
Servicer may be removed by the Trustee, the Oversight Agent or the Certificate
Insurer pursuant to Section 8.20 hereof; provided, however, that if the Servicer
can demonstrate to the reasonable satisfaction of the Certificate Insurer that
it is diligently pursuing remedial action, then the cure period may be extended
with the written approval of the Certificate Insurer.
Section 3.2B. Representations and Warranties of the Oversight
Agent. The Oversight Agent hereby represents, warrants and covenants to the
Trustee, the Servicer, the Certificate Insurer and to the Owners as of the
Startup Day that:
(a) The Oversight Agent is a national banking association duly
organized, validly existing and in good standing under the laws of the
United States of America. The Oversight Agent has all requisite
corporate power and authority to own and operate its properties, to
carry out its business as presently conducted and as proposed to be
conducted and to enter into and discharge its obligations under this
Agreement and the other Operative Documents to which it is a party.
(b) The execution and delivery of this Agreement by the
Oversight Agent and its performance and compliance with the terms of
this Agreement and the other Operative Documents to which it is a party
have been duly authorized by all necessary action on the part of the
Oversight Agent and will not violate the Oversight Agent's articles of
association or bylaws or constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, or
result in the breach of, any material contract, agreement or other
instrument to which the Oversight Agent is a party or by which the
Oversight Agent is bound or violate any statute or any order, rule or
regulation of any court, governmental agency or body or other tribunal
having jurisdiction over the Oversight Agent or any of its properties.
(c) This Agreement and the other Operative Documents to which
the Oversight Agent is a party, assuming due authorization, execution
and delivery by the other parties hereto and thereto, each constitutes
a valid, legal and binding obligation of the Oversight Agent,
enforceable against it in accordance with the terms hereof and thereof,
except as the enforcement hereof and thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally and by general
principles of equity (whether considered in a proceeding or action in
equity or at law).
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(d) The Oversight Agent 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 might have
consequences that would materially and adversely affect the condition
(financial or otherwise) or operations of the Oversight Agent or its
properties or might have consequences that would materially and
adversely affect its performance hereunder or under the other Operative
Documents to which the Oversight Agent is a party.
(e) No action, suit, proceeding or investigation is pending
or, to the best of the Oversight Agent's knowledge, threatened against
the Oversight Agent which, individually or in the aggregate, might have
consequences that would prohibit its entering into this Agreement or
any other Operative Document to which it is a party or that would
materially and adversely affect the condition (financial or otherwise)
or operations of the Oversight Agent or its properties or the Oversight
Agent's performance hereunder or under the other Operative Documents to
which the Oversight Agent is a party.
(f) No certificate of an officer, statement furnished in
writing or written report delivered pursuant to the terms hereof by the
Oversight Agent contains any untrue statement of a material fact or
omits to state any material fact necessary to make the certificate,
statement or report not misleading.
(g) The statements contained in the Prospectus Supplement
which describe the Oversight Agent are true and correct in all material
respects, and such statements do not contain any untrue statement of a
material fact with respect to the Oversight Agent or omit to state a
material fact required to be stated therein or necessary to make the
statements contained therein with respect to the Oversight Agent not
misleading.
(h) To the best knowledge of the Oversight Agent, no
circumstances exist which would prohibit the Oversight Agent from
performing its obligations under this Agreement.
(i) The transactions contemplated by this Agreement are in the
ordinary course of business of the Oversight Agent.
(j) The Oversight Agent has undertaken a firmwide initiative
to address the year 2000 issue. The Oversight Agent does not believe
that the year 2000 issue will materially affect its ability to perform
its functions on behalf of the Trust Estate or have a material
financial impact on the Trust Estate. However, there can be no
guarantee that the systems of other companies, on which the Oversight
Agent's systems rely, will be timely converted or that a failure to
convert by another company or a conversion that is incompatible with
the Oversight Agent's systems will not have a material adverse effect
on the Trust Estate.
(k) The Oversight Agent shall not solicit any refinancing of
any of the Mortgage Loans; provided, however, that this covenant shall
not prevent or restrict either (1) the Oversight Agent from making
general solicitations, by mail, advertisement or otherwise of the
general public or persons on a targeted list, so long as the list was
not generated from the Mortgage Loan Schedule or (2) any refinancing in
connection with a Mortgagor's unsolicited request for refinancing.
(l) The Oversight Agent shall not sell, transfer, assign or
otherwise dispose of a customer or similar list comprised of the names
of the Mortgagors under the Mortgage Loans to any third party.
It is understood and agreed that the representations and
warranties set forth in this Section 3.2B shall survive delivery of the Mortgage
Loans to the Trustee.
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Section 3.3. Representations and Warranties of the Seller with
Respect to the Mortgage Loans. (a) The Seller makes the following
representations and warranties as to the Mortgage Loans on which the Certificate
Insurer relies in issuing the Certificate Insurance Policies. Such
representations and warranties speak as of the Cut-Off Date (with respect to the
Initial Mortgage Loans) and as of the respective Subsequent Cut-Off Date (with
respect to the Subsequent Mortgage Loans) but shall survive the sale, transfer,
and assignment of the related Mortgage Loans to the Trust:
(i) The information with respect to each Initial
Mortgage Loan and Subsequent Mortgage Loan set
forth in the related Schedule of Mortgage Loans
is true and correct as of the Cut-Off Date (or in
the case of the Subsequent Mortgage Loans, on the
related Subsequent Transfer Date); the Group I
Original Aggregate Loan Balance in the Trust as
of the Cut-Off Date is $65,528,894.36 and the
Group II Original Aggregate Loan Balance in the
Trust as of the Cut-Off Date is $24,505,006.73.
(ii) All of the original or certified documentation
set forth in Section 3.5 (including all material
documents related thereto) with respect to each
Initial Mortgage Loan has been or will be
delivered to the Trustee on the Startup Day (or
in the case of the Subsequent Mortgage Loans, as
of the related Subsequent Transfer Date) or as
otherwise provided in Section 3.5;
(iii) Each Mortgage Loan is being serviced by the
Servicer or a Servicer Affiliate;
(iv) The Note related to each Initial Mortgage Loan in
Group I bears a fixed Coupon Rate of at least
6.00% per annum and the Note related to each
Mortgage Loan in Group II bears a current Coupon
Rate of at least 6.99% per annum;
(v) No more than 1.46% of the Initial Mortgage Loans
in Group I were 30-59 days Delinquent and, no
more than 0.46% of the Initial Mortgage Loans in
Group II were 30-59 days Delinquent. None of the
Initial Mortgage Loans in either Group I or Group
II were 60 or more days Delinquent.
(vi) As of the Cut-Off Date, no more than 0.95% of the
Group I Original Aggregate Loan Balance is
secured by Properties located within any single
zip code area, and no more than 1.54% of the
Group II Original Aggregate Loan Balance is
secured by Properties located within any single
zip code area.
(vii) Each Mortgage Loan conforms, and all such
Mortgage Loans in the aggregate conform, in all
material respects, to the description thereof set
forth in the Registration Statement and
Prospectus Supplement;
(viii) As of the Cut-Off Date, no more than 2.51% and
5.19% of the Group I Original Aggregate Loan
Balance and the Group II Original Aggregate Loan
Balance, respectively, are secured by
condominiums, townhouses, or planned unit
developments;
(ix) As of the Cut-Off Date, no more than 3.04% and
1.73% of the Group I Original Aggregate Loan
Balance and the Group II Original Aggregate Loan
Balance, respectively, are secured by
investor-owned Properties;
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(x) The credit underwriting guidelines applicable to
each Mortgage Loan conform in all material
respects to the description thereof set forth in
the Prospectus;
(xi) No funds provided to borrower from a Second
Mortgage Loan or a Third Mortgage Loan originated
by the Seller were concurrently used as a down
payment for a First Mortgage Loan or a Second
Mortgage Loan, as applicable, originated by the
Seller;
(xii) All of the Mortgage Loans in Group I and Group II
are actuarial loans;
(xiii) All of the Group II Mortgage Loans are First
Mortgage Loans, and 97.69% of the Group I
Mortgage Loans are First Mortgage Loans. The
liens on the related First Mortgage Loans are
subject only to any exceptions to title set forth
in the title insurance policy, which exceptions
are generally acceptable to mortgage lending
companies, as applicable, and such other
exceptions to which similar properties are
commonly subject and which do not individually,
or in the aggregate, materially and adversely
affect the benefits of the security intended to
be provided by such Mortgage. The lien on each
junior Mortgage Loan is subject to any related
Senior Liens, and to the exceptions to title
described above;
(xiv) As of the Cut-Off Date, all of the Mortgage Loans
in Group II were Six Month LIBOR Loans or 2/28
Loans and had interest rates which were not fully
indexed;
(xv) The gross margin range for the Six Month LIBOR
Loans is 4.49% to 8.79%, and the gross margin for
all Six Month LIBOR Loans when added to the
current index, creates the fully-indexed range
for the Six Month LIBOR Loans;
(xvi) The gross margin range for the 2/28 Loans is
5.50% to 6.25%, and the gross margin for all 2/28
Loans when added to the current index, creates
the fully-indexed range for the 2/28 Loans.
(xvii) No Mortgage Loan has a remaining term in excess
of 360 months;
(xviii) With respect to each Mortgage Loan in Group II,
each Mortgagor's debt-to-income ratio will
qualify for the related Originator's underwriting
guidelines for a similar credit grade borrower
when the related Mortgage Loan in Group II is at
a rate equal to the applicable initial Coupon
Rate plus 2%;
(xix) There is no proceeding pending or to the best of
the Seller's knowledge threatened for the total
or partial condemnation of any Property. No
Property is damaged by waste, fire, earthquake or
earth movement, windstorm, flood, other types of
water damage, tornado, or other casualty so as to
affect adversely the value of such Property as
security for the Mortgage Loans or the use for
which the premises were intended and each
Property free of material damage and in good
repair;
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(xx) The origination and servicing of each Mortgage
Loan complies, and at all times has complied, in
all material respects with all applicable federal
and state laws and regulations including without
limitation the Truth-in-Lending Act, as amended;
(xxi) Each Mortgage Loan is secured by a Property
having an appraised value of $604,500 or less;
(xxii) The first Due Date of each Initial Mortgage Loan
is no later than June 1, 1999;
(xxiii) On the Startup Day with respect to each Initial
Mortgage Loan and on the related Subsequent
Transfer Date with respect to each Subsequent
Mortgage Loan, the Trustee will have good title
on behalf of the Trust to each Mortgage Loan
transferred on such date free and clear of all
liens, encumbrances, mortgages or rights of
others; and
(xxiv) Each Mortgage Loan constitutes a qualified
mortgage under Section 860G(a)(3)(A) of the Code
and Treasury Regulations Section 1.860G- 2(a)(1).
(b) Upon the discovery by the Seller, the Servicer, the
Oversight Agent, the Certificate Insurer or the Trustee of a breach of
any of the representations and warranties made herein in respect of any
Mortgage Loan, 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 materially and adversely affects the
interests of the Owners or of the Certificate Insurer in such Mortgage
Loan the party discovering such breach shall give prompt written notice
to the other parties hereto and the Certificate Insurer, as their
interests may appear. The Servicer shall promptly notify the related
Originator of such breach and request that such Originator cure such
breach or take the actions described in Section 3.4(b) hereof within
the time periods required thereby, and if such Originator does not cure
such breach in all material respects, the Seller shall cure such breach
or take such actions within the time periods specified in Section 3.4.
Except as set forth in Section 3.4, the obligations of the Seller or
Servicer, as the case may be, shall be limited to the remedies for cure
set forth in Section 3.4 with respect to any Mortgage Loan as to which
such a breach has occurred and is continuing; the remedies set forth in
Section 3.4 shall constitute the sole remedy with respect to such
breach available to the Owners, the Trustee and the Certificate
Insurer; provided, however, that the Seller shall indemnify the Trust
for any fines, fees and penalties incurred by the Trust by reason of
the Seller's breach of the representation set forth in Section
3.3(a)(xix) hereof.
Section 3.4. Covenants of the Seller to Take Certain Actions
with Respect to the Mortgage Loans In Certain Situations. (a) With the provisos
and limitations as to remedies set forth in this Section 3.4, upon the discovery
by any Originator, the Seller, the Servicer, the Oversight Agent, the
Certificate Insurer, any Sub-Servicer or the Trustee that the representations
and warranties set forth in Section 3.3 of this Agreement were untrue in any
material respect as of the Cut-Off Date (or in the case of the Subsequent
Mortgage Loans, as of the respective Subsequent Cut-Off Date), and that such
breach of the representations and warranties materially and adversely affects
the interests of the Owners or of the Certificate Insurer, the party hereto
discovering such breach shall give prompt written notice to the other parties
hereto and to the Certificate Insurer.
(b) Upon the earliest to occur of the Seller's discovery, its
receipt of notice of breach from any one of the other parties hereto or
from the Certificate Insurer or such time as a breach of any
representation and warranty materially and adversely affects the
interests of the Owners or of the
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Certificate Insurer as set forth above, the Seller hereby covenants and
warrants that it shall promptly cure such breach in all material
respects or it shall (or shall cause an affiliate of the Seller to or
an Originator to), subject to the further requirements of this
paragraph, on the second Remittance Date next succeeding such
discovery, receipt of notice or such other time (i) substitute in lieu
of each Mortgage Loan in the related Mortgage Loan Group which has
given rise to the requirement for action by the Seller a Qualified
Replacement Mortgage and deliver the Substitution Amount applicable
thereto, together with the aggregate amount of all Delinquency Advances
and Servicing Advances theretofore made with respect to such Mortgage
Loan, to the Servicer for deposit in the Principal and Interest Account
or (ii) purchase such Mortgage Loan from the Trust at a purchase price
equal to the Loan Purchase Price thereof, which purchase price shall be
delivered to the Servicer for deposit in the Principal and Interest
Account. In connection with any such proposed purchase or substitution,
the Seller, at its expense, shall cause to be delivered to the Trustee,
the Oversight Agent and the Certificate Insurer an opinion of counsel
experienced in federal income tax matters stating whether or not such a
proposed purchase or substitution would constitute a Prohibited
Transaction for the Trust or would jeopardize the status of the Trust
(other than the Non-REMIC Accounts) as a REMIC, and the Seller shall
only be required to take either such action to the extent such action
would not constitute a Prohibited Transaction for the Trust or would
not jeopardize the status of the Trust (other than the Non-REMIC
Accounts) as a REMIC. Any required purchase or substitution, if delayed
by the absence of such opinion shall nonetheless occur upon the earlier
of (i) the occurrence of a default or imminent default with respect to
the Mortgage Loan or (ii) the delivery of such opinion. It is
understood and agreed that the obligation of the Seller to cure the
defect, or substitute for or purchase any Mortgage Loan as to which a
representation or warranty is untrue in any material respect and has
not been remedied shall constitute the sole remedy available to the
Owners, the Trustee, the Oversight Agent and the Certificate Insurer.
(c) In the event that any Qualified Replacement Mortgage is
delivered by an Originator or by the Seller to the Trust pursuant to
this Section 3.4 or Section 3.6 hereof, the related Originator and the
Seller shall be obligated to take the actions described in Section
3.4(b) with respect to such Qualified Replacement Mortgage upon the
discovery by any of the Owners, the Seller, the Servicer, the Oversight
Agent the Certificate Insurer, any Sub-Servicer or the Trustee that any
of the representations and warranties set forth in Section 3.3 above
are untrue in any material respect on the date such Qualified
Replacement Mortgage is conveyed to the Trust such that the interests
of the Owners or the Certificate Insurer in the related Qualified
Replacement Mortgage are materially and adversely affected; provided,
however, that for the purposes of this subsection (c) the
representations and warranties in Section 3.3 above referring to items
"as of the Cut-Off Date" or "as of the Startup Day" shall be deemed to
refer to such items as of the date such Qualified Replacement Mortgage
is conveyed to the Trust.
(d) It is understood and agreed that the covenants set forth
in this Section 3.4 shall survive delivery of the respective Mortgage
Loans (including Qualified Replacement Mortgages) to the Trustee.
(e) Neither the Trustee nor the Oversight Agent shall have any
duty to conduct any affirmative investigation other than as
specifically set forth in this Agreement as to the occurrence of any
condition requiring the repurchase or substitution of any Mortgage Loan
pursuant to this section or the eligibility of any Mortgage Loan for
purposes of this Agreement.
Section 3.5. Conveyance of the Mortgage Loans. (a) The Seller,
concurrently with the execution and delivery hereof, hereby transfers, assigns,
sets over and otherwise conveys without recourse, to the Trustee for the benefit
of the Owners of the Certificates and the Certificate Insurer, all right, title
and interest of the Seller in and to each Initial Mortgage Loan listed on the
Schedule of Mortgage Loans delivered by the Seller on the Startup Day, all
right, title and interest in and to principal and interest
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(including prepaid interest) due on each such Initial Mortgage Loan after the
Cut-Off Date (other than payments of principal and interest due on or before the
Cut-Off Date) and all its right, title and interest in and to all Insurance
Policies; provided, however, that the Seller reserves and retains all its right,
title and interest in and to principal (including Prepayments) collected and
principal and interest due on each Initial Mortgage Loan on or prior to the
Cut-Off Date. The transfer by the Seller of the Initial Mortgage Loans and the
Subsequent Mortgage Loans set forth on the Schedule of Mortgage Loans is
absolute and is intended by the Owners and all parties hereto to be treated as a
sale by the Seller.
It is intended that the sale, transfer, assignment and
conveyance herein contemplated constitute a sale of the Mortgage Loans conveying
good title thereto free and clear of any liens and encumbrances from the Seller
to the Trust and that the Mortgage Loans not be part of the Seller's estate in
the event of an insolvency. In the event that any such conveyance or a
conveyance pursuant to Section 3.8 and any Subsequent Transfer Agreement is
deemed to be a loan, the parties intend that the Seller shall be deemed to have
granted to the Trustee a security interest of first priority in all of the
Seller's right, title and interest in the Mortgage, Note and the File, and that
this Agreement shall constitute a security agreement under applicable law.
In connection with the sale, transfer, assignment, and
conveyance, from the Seller to the Trustee, the Seller has filed, in the
appropriate office or offices in the State of California, a UCC-1 financing
statement executed by the Seller as debtor, naming the Trustee as secured party
and listing the Mortgage Loans (both Initial Mortgage Loans and Subsequent
Mortgage Loans) and the other property described above as collateral. The
characterization of the Seller as a debtor and the Trustee as the secured party
in such financing statements is solely for protective purposes and shall in no
way be construed as being contrary to the intent of the parties that this
transaction be treated as a sale of the Seller's entire right, title and
interest in the Mortgage Loans and the related Files to the Trust. In connection
with such filing, the Seller shall cause to be filed all necessary continuation
statements thereof and to take or cause to be taken such actions and execute
such documents as are necessary to perfect and protect the Trustee's and the
Owners' interests in the Mortgage Loans and the related Files.
(b) In connection with the transfer and assignment of the
Mortgage Loans, the Seller agrees to:
(i) cause to be delivered, on or prior to the Startup Day
(except as otherwise stated below) without recourse
to the Trustee on the Startup Day with respect to
each Initial Mortgage Loan listed on the Schedule of
Mortgage Loans or on each Subsequent Transfer Date
with respect to each Subsequent Mortgage Loan:
(a) the original Notes, endorsed without recourse by
the related Originator, "Pay to the order of
Norwest Bank Minnesota, National Association, as
trustee for the First Alliance Mortgage Loan
Trust 1999-1, without recourse" or "Pay to the
order of holder, without recourse." In the event
that the Mortgage Loan was acquired by the
related Originator in a merger, the endorsement
must be by the "(related Originator), successor
by merger to (name of predecessor)"; and in the
event that the Mortgage Loan was acquired or
originated by the related Originator while doing
business under another name, the endorsement must
be by the "(related Originator), formerly known
as (previous name)";
(b) originals of all intervening assignments, showing
a complete chain of assignment from origination
to the related Originator, if any,
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including warehousing assignments, with evidence
of recording thereon (or, if an original
intervening assignment has not been returned from
the recording office, a certified copy thereof,
the original to be delivered to the Trustee
forthwith after return);
(c) originals of all assumption and modification
agreements, if any (or, if an original assumption
and/or modification agreement has not been
returned from the recording office, a certified
copy thereof, the original to be delivered to the
Trustee forthwith after return);
(d) either (A) the original Mortgage with evidence of
recording thereon or a certified copy of the
Mortgage as recorded, or (B) if the original
Mortgage has not yet been returned from the
recording office, a certified copy of the
Mortgage, together with a receipt from the
recording office or from a title insurance
company or a certificate of an Authorized Person
of the related Originator indicating that such
Mortgage has been delivered for recording;
(e) the original assignment of Mortgage for each
Mortgage Loan conveying the Mortgage from the
Seller to "Norwest Bank Minnesota, National
Association, as Trustee of the First Alliance
Mortgage Loan Trust 1999-1, without recourse,"
which assignment shall be in form and substance
acceptable for recording in the state or other
jurisdiction where the mortgaged property is
located and, within 75 Business Days following
the Startup Day with respect to the Initial
Mortgage Loans, or within 75 Business Days of
each Subsequent Transfer Date with respect to the
Subsequent Mortgage Loans, a recorded assignment
of each such Mortgage; provided that in the event
that the Mortgage Loan was acquired by the
related Originator in a merger, the assignment of
Mortgage must be by the "(related Originator),
successor by merger to (name of predecessor)";
and in the event that the Mortgage Loan was
acquired or originated by the related Originator
while doing business under another name, the
assignment of Mortgage must be by the "(related
Originator), formerly known as (previous name)"
(subject to the foregoing, and where permitted
under the applicable laws of the jurisdiction
where the mortgaged property is located, the
assignments of Mortgage may be made by blanket
assignments for Mortgage Loans covering mortgaged
properties situated within the same county or
other permitted governmental subdivision); and
(f) evidence of title insurance with respect to the
mortgaged property in the form of a binder or
commitment.
(ii) except with respect to Mortgage Loans covered by
opinions of counsel delivered in the manner set forth
below ("Assignment Opinions"), cause, as soon as
possible but no more than 75 Business Days following
the Startup Day with respect to the Initial Mortgage
Loans, or within 75 Business Days of each Subsequent
Transfer Date with respect to the Subsequent Mortgage
Loans, the Originators to deliver to the Trustee
copies of all Mortgage assignments described in
Section 3.5(b)(i)(e) above submitted for recording,
together with a list of (x) all Mortgages for which
no Mortgage assignment has yet been
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submitted for recording by the related Originator (y)
reasons why the related Originator has not yet
submitted such Mortgage assignments for recording;
provided, however, that with respect to Mortgage
Loans relating to Properties located in the states of
Arizona, California, Colorado, District of Columbia,
Georgia, Idaho, Illinois, Maryland, Massachusetts,
Ohio, Oregon, Pennsylvania, Virginia and Washington,
an Originator shall not be required to record an
assignment of a Mortgage if the Seller furnishes to
the Trustee and the Certificate Insurer, on or before
the Startup Day with respect to the Initial Mortgage
Loans, or on each Subsequent Transfer Date with
respect to the Subsequent Mortgage Loans, at the
Seller's expense, the Assignment Opinions for the
relevant jurisdictions which opine that recording is
not necessary to perfect the rights of the Trustee in
the related Mortgage (in form satisfactory to the
Certificate Insurer, Moody's and Standard & Poor's);
provided further, however, notwithstanding the
delivery of any legal opinions, each assignment of
mortgage shall be recorded upon the earliest to occur
of: (i) the instructions by the Certificate Insurer
to so record such assignments (such instructions
shall be given by the Certificate Insurer using
reasonable discretion) or (ii) the occurrence of an
Event of Servicing Termination. With respect to any
Mortgage assignment set forth on the aforementioned
list which has not been submitted for recording for a
reason other than a lack of original recording
information or with respect to Mortgages not covered
by the Assignment Opinions, the Trustee shall make an
immediate demand on the Seller to cause such Mortgage
assignments to be prepared and shall inform the
Certificate Insurer of the Seller's failure to cause
such Mortgage assignments to be prepared. Thereafter,
the Trustee shall cooperate in executing any
documents prepared by the Certificate Insurer and
submitted to the Trustee in connection with this
provision. Following the expiration of the
75-Business Day period following the Startup Day with
respect to the Initial Mortgage Loans, or within 75
Business Days of each Subsequent Transfer Date with
respect to the Subsequent Mortgage Loans and except
with respect to Mortgages covered by the Assignment
Opinions, the Seller shall cause to be prepared a
Mortgage assignment for any Mortgage for which
original recording information is subsequently
received by the related Originator and shall promptly
deliver a copy of such Mortgage assignment to the
Trustee.
All recording required pursuant to this Section 3.5 shall be
accomplished at the expense of the Originators or of the Seller. Notwithstanding
anything to the contrary contained in this Section 3.5, in those instances where
the public recording office retains the original Mortgage, the assignment of a
Mortgage or the intervening assignments of the Mortgage after it has been
recorded, the Seller shall be deemed to have satisfied its obligations hereunder
upon delivery to the Trustee of a copy of such Mortgage, such assignment or
assignments of Mortgage certified by the public recording office to be a true
copy of the recorded original thereof.
Copies of all Mortgage assignments received by the Trustee
shall be kept in the related File.
(c) In the case of Initial Mortgage Loans which have been
prepaid in full on or after the Cut-Off Date and prior to the Startup
Day, the Seller, in lieu of the foregoing, will deliver within 15
Business Days after the Startup Day to the Trustee a certification of
an Authorized Officer in the form set forth in Exhibit D.
(d) The Seller shall transfer, assign, set over and otherwise
convey without recourse, to the Trustee all right, title and interest
of the Seller in and to any Qualified Replacement Mortgage
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delivered to the Trustee on behalf of the Trust by the Seller pursuant
to Section 3.4 or Section 3.6 hereof and all its right, title and
interest to principal and interest due on such Qualified Replacement
Mortgage after the applicable Replacement Cut-Off Date; provided,
however, that the Seller shall reserve and retain all right, title and
interest in and to payments of principal and interest due on such
Qualified Replacement Mortgage on and prior to the applicable
Replacement Cut-Off Date.
(e) As to each Mortgage Loan released from the Trust in
connection with the conveyance of a Qualified Replacement Mortgage
therefor, the Trustee will transfer, assign, set over and otherwise
convey without recourse, on the Seller's order, all of its right, title
and interest in and to such released Mortgage Loan and all the Trust's
right, title and interest to principal and interest due on such
released Mortgage Loan after the applicable Replacement Cut-Off Date;
provided, however, that the Trust shall reserve and retain all right,
title and interest in and to payments of principal and interest due on
such released Mortgage Loan after the related Cut-Off Date or
Subsequent Cut-Off Date, as applicable, but on and prior to the
applicable Replacement Cut-Off Date.
(f) In connection with any transfer and assignment of a
Qualified Replacement Mortgage to the Trustee on behalf of the Trust,
the Seller agrees to cause to be delivered to the Trustee the items
described in Section 3.5(b) on the date of such transfer and assignment
or if a later delivery time is permitted by Section 3.5(b) then no
later than such later delivery time.
(g) As to each Mortgage Loan released from the Trust in
connection with the conveyance of a Qualified Replacement Mortgage the
Trustee shall deliver on the date of conveyance of such Qualified
Replacement Mortgage, and on the order of the Seller (i) the original
Note, or the certified copy, relating thereto, endorsed without
recourse, to the Seller and (ii) such other documents as constituted
the File with respect thereto.
(h) If a Mortgage assignment is lost during the process of
recording, or is returned from the recorder's office unrecorded due to
a defect therein, the Seller shall prepare a substitute assignment or
cure such defect, as the case may be, and thereafter cause each such
assignment to be duly recorded.
(i) The Seller shall reflect on its records that the Mortgage
Loans have been sold to the Trust.
Section 3.6. Acceptance by Trustee; Certain Substitutions of
Mortgage Loans; Certification by Trustee.
(a) The Trustee agrees to execute and deliver to the Seller,
the Servicer and the Certificate Insurer on the Startup Day an Initial
Certification in the form annexed hereto as Exhibit E to the effect
that, as to each Mortgage Loan listed in the Schedule of Mortgage Loans
(other than any Mortgage Loan paid in full or any Mortgage Loan
specifically identified in such certification as not covered by such
certification), (i) all documents required to be delivered to it
pursuant to this Agreement with respect to such Mortgage Loan are in
its possession, (ii) such documents have been reviewed by it and appear
regular on their face and relate to such Mortgage Loan and (iii) based
on its examination and only as to the foregoing documents, the
information set forth on the Schedule of Mortgage Loans as to loan
number and address accurately reflects information set forth in the
File. The Trustee shall not be under any duty or obligation to inspect,
review or examine said documents, instruments, certificates or other
papers to determine that the same 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. Within 90 days of the Startup Day (or, with respect to any
document delivered after the Startup Day, within 45 days of receipt or
90 days
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after the Startup Day, whichever is later and with respect to any
Subsequent Mortgage Loan or Qualified Replacement Mortgage, within 45
days after the assignment thereof or 90 days after the Startup Day,
whichever is later) the Trustee shall deliver to the Seller,
Certificate Insurer and the Servicer a Final Certification in the form
annexed hereto as Exhibit F evidencing the completeness of the Files,
with any applicable exceptions noted thereon.
(b) If in the process of reviewing the Files and preparing the
certifications referred to above, the Trustee finds any document or
documents constituting a part of a File (which the Trustee is required
to review) which is not properly executed, has not been received within
the specified period or is unrelated to the Mortgage Loans identified
in the Schedule of Mortgage Loans, or that any Mortgage Loan does not
conform as to loan number and address as set forth in the Schedule of
Mortgage Loans, the Trustee shall promptly notify the Seller and the
Certificate Insurer. The Seller shall use reasonable efforts to cure
any such defect within 60 days from the date on which the Seller was
notified of such defect, and if the Seller does not cure such defect in
all material respects during such period, the Seller will (or will
cause the related Originator or an affiliate of the Seller to) on the
next succeeding Remittance Date (i) substitute in lieu of such Mortgage
Loan a Qualified Replacement Mortgage and deliver the Substitution
Amount applicable thereto to the Servicer for deposit in the Principal
and Interest Account or (ii) purchase such Mortgage Loan at a purchase
price equal to the Loan Purchase Price thereof, which purchase price
shall be delivered to the Servicer for deposit in the Principal and
Interest Account. In connection with any such proposed purchase or
substitution the Seller shall cause at the Seller's expense to be
delivered to the Trustee and to the Certificate Insurer an opinion of
counsel experienced in federal income tax matters stating whether or
not such a proposed purchase or substitution would constitute a
Prohibited Transaction for the Trust or would jeopardize the status of
the Trust (other than the Non-REMIC Accounts) as a REMIC, and the
Seller shall only be required to take either such action to the extent
such action would not constitute a Prohibited Transaction for the Trust
or would not jeopardize the status of the Trust (other than the
Non-REMIC Accounts) as a REMIC. Any required purchase or substitution,
if delayed by the absence of such opinion shall nonetheless occur upon
the earlier of (i) the occurrence of a default or imminent default with
respect to the Mortgage Loan or (ii) the delivery of such opinion.
Section 3.7. Cooperation Procedures. (a) The Seller shall, in
connection with the delivery of each Qualified Replacement Mortgage to the
Trustee, provide the Trustee with the information set forth in the Schedule of
Mortgage Loans with respect to such Qualified Replacement Mortgage.
(b) The Seller, the Servicer, the Oversight Agent and the
Trustee covenant to provide each other with all data and information
required to be provided by them hereunder at the times required
hereunder, and additionally covenant reasonably to cooperate with each
other in providing any additional information required to be obtained
by any of them in connection with their respective duties hereunder.
(c) The Servicer shall maintain such accurate and complete
accounts, records and computer systems pertaining to each File as shall
enable it and the Trustee to comply with this Agreement. In performing
its recordkeeping duties the Servicer shall act in accordance with the
servicing standards set forth in this Agreement. The Servicer shall
conduct, or cause to be conducted, periodic audits of its accounts,
records and computer systems as set forth in Sections 8.16 and 8.17
hereof. The Servicer shall promptly report to the Trustee and the
Oversight Agent any failure on its part to maintain its accounts,
records and computer systems as herein provided and promptly take
appropriate action to remedy any such failure.
(d) The Seller further confirms to the Trustee that it has
caused the portions of the electronic ledger relating to the Mortgage
Loans to be clearly and unambiguously marked to indicate
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that such Mortgage Loans have been sold, transferred, assigned and
conveyed to the Trustee and constitute part of the Trust Estate in
accordance with the terms of the trust created hereunder and that the
Seller will treat the transaction contemplated by such sale, transfer,
assignment and conveyance as a sale for accounting purposes.
Section 3.8. Conveyance of the Subsequent Mortgage Loans. (a)
Subject to the satisfaction of the conditions set forth in Sections 3.5(b) and
3.5(i) with respect to the Subsequent Mortgage Loans and paragraphs (b), (c) and
(d) below (based on the Trustee's review of such conditions) in consideration of
the Trustee's delivery on the Subsequent Transfer Date to or upon the order of
the Seller of all or a portion of the balance of funds in the Pre-Funding
Account, the Seller shall on the Subsequent Transfer Date sell, transfer,
assign, set over and otherwise convey without recourse, to the Trustee, all of
the Seller's right, title and interest in and to principal and interest
(including prepaid interest) due on each Subsequent Mortgage Loan after the
Subsequent Cut-Off Date (other than payments of principal and interest due on or
before the Subsequent Cut-Off Date) which Subsequent Mortgage Loans shall have
been approved by the Certificate Insurer and which the Seller is causing to be
delivered to the Trustee with the related Subsequent Transfer Agreement (and all
substitutions therefor as provided by Sections 3.3, 3.4 and 3.6) together with
the related Subsequent Mortgage Loan documents and the Seller's interest in any
Property which secures a Subsequent Mortgage Loan but which is acquired by
foreclosure or deed in lieu of foreclosure, and all payments thereon and
proceeds of the conversion, voluntary or involuntary, of the foregoing and
proceeds of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, hazard insurance and title insurance policy
relating to the Subsequent Mortgage Loans, cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit accounts,
rights to payment of any and every kind, and other forms of obligations and
receivables which at any time constitute all or part of or are included in the
proceeds of any of the foregoing).
The transfer by the Seller of the Subsequent Mortgage Loans
set forth on the related Schedule of Mortgage Loans to the Trust shall be
absolute and shall be intended by the Owners and all parties hereto to be
treated as a sale by the Seller to the Trust. Any Subsequent Mortgage Loan so
transferred will be included in one (and only one) of either Group I or Group
II. The amount released from the Pre-Funding Account shall be one hundred
percent (100%) of the aggregate principal balances of the Subsequent Mortgage
Loans so transferred. Upon the transfer by the Seller of the Subsequent Mortgage
Loans hereunder, such Subsequent Mortgage Loans (and all principal and interest
due thereon subsequent to the Subsequent Cut Off Date) and all other rights and
interests with respect to such Subsequent Mortgage Loans transferred pursuant to
a Subsequent Transfer Agreement shall be deemed for all purposes hereunder to be
part of the Trust Estate. The Seller hereby covenants and agrees to use its best
efforts to ensure that a sufficient amount of Subsequent Mortgage Loans will be
transferred to the Trust during the Funding Period to reduce the Pre-Funded
Amount to less than $100,000 for each Group.
(b) The obligation of the Trustee to accept the transfer of
the Subsequent Mortgage Loans and the other property and rights related
thereto described in paragraph (a) above is subject to the satisfaction
of each of the following conditions on or prior to the related
Subsequent Transfer Date:
(i) the Seller shall have provided the Trustee, the
Oversight Agent and the Certificate Insurer with
an Addition Notice and shall have provided any
information reasonably requested by any of the
foregoing with respect to the Subsequent Mortgage
Loans; provided, however, that the parties hereto
agree that the initial Subsequent Transfer Date
is March 30, 1999 and that no Addition Notice is
necessary in connection with the Subsequent
Mortgage Loans to be transferred on such date;
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(ii) the Seller shall have delivered to the Trustee a
duly executed Subsequent Transfer Agreement
(including an acceptance by the Trustee) which
shall include a Schedule of Mortgage Loans,
listing the Subsequent Mortgage Loans and any
other exhibits listed thereon;
(iii) the Seller shall have caused to be delivered to
the Trustee all the documents required for the
transfer and assignment of the Subsequent
Mortgage Loans, as set forth in Section 3.5(b)
hereof;
(iv) the Seller shall have deposited in the Principal
and Interest Account all principal collected and
interest due in respect of such Subsequent
Mortgage Loans on or after the Subsequent Cut Off
Date, including prepaid interest collected
through the first due date of the Subsequent
Mortgage Loans;
(v) as of the Subsequent Transfer Date, the Seller is
not insolvent, nor will it be made insolvent by
such transfer, nor is it aware of any pending
insolvency;
(vi) the Funding Period shall not have ended;
(vii) the Seller shall have delivered to the Trustee,
the Oversight Agent and the Certificate Insurer
an Officer's Certificate confirming the
satisfaction of each condition precedent
specified in items (i) through (v) of this
paragraph (b) and paragraphs (c) and (d) below
and in the Subsequent Transfer Agreement;
(viii) the Seller shall have delivered to the Trustee,
the Oversight Agent, the Rating Agencies and the
Certificate Insurer opinions of counsel with
respect to the transfer of the Subsequent
Mortgage Loans substantially in the form of the
opinions of counsel delivered to the Certificate
Insurer and the Trustee on the Startup Day with
respect to the Initial Mortgage Loans
(bankruptcy, corporate and tax); and
(ix) the Certificate Insurer retains the right to
adjust the loss coverage requirements, including,
but not limited to the related Specified
Subordinated Amount, if a final Mortgage Loan
Group differs materially from the Initial
Mortgage Loans in such Mortgage Loan Group. Prior
to any such adjustment, the Certificate Insurer
shall give written notice to the Rating Agencies.
(c) The obligation of the Trust to purchase Subsequent
Mortgage Loans on the Subsequent Transfer Date for inclusion in Group I
is subject to the following requirements: (i) such Subsequent Mortgage
Loan may not be 30 or more days contractually delinquent as of the
Subsequent Cut Off Date; (ii) the remaining term to maturity of such
Subsequent Mortgage Loan may not exceed 30 years; (iii) such Subsequent
Mortgage Loan will have a Combined Loan-to-Value Ratio of not more than
85% and; (iv) the Certificate Insurer shall have given its consent to
the inclusion of such Subsequent Mortgage Loan; and, (v) following the
purchase of such Subsequent Mortgage Loans by the Trust, the Mortgage
Loans in Group I (including the Subsequent Mortgage Loans in Group I)
(a) will have a weighted average Coupon Rate of at least 9.46% (b) will
have a weighted average Combined Loan-to-Value Ratio of not more than
60.99% (c) will have an average current loan balance of not greater
than $107,333 and not more than 10% of the Mortgage Loans in
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Group I may have a principal balance greater than $200,000; (d) will
satisfy the representations and warranties set forth in Section 3.3
hereof; and (e) have a first due date no later than July 1, 1999.
(d) The obligation of the Trust to purchase Subsequent
Mortgage Loans on the Subsequent Transfer Date for inclusion in Group
II is subject to the following requirements: (i) such Subsequent
Mortgage Loan may not be 30 or more days contractually delinquent as of
the Subsequent Cut Off Date; (ii) the remaining term to maturity of
such Subsequent Mortgage Loan may not exceed 30 years; (iii) such
Subsequent Mortgage Loan will have a Loan to Value Ratio of not more
than 85%; and (iv) the Certificate Insurer shall have given its consent
to the inclusion of such Subsequent Mortgage Loan; and, (v) following
the purchase of such Subsequent Mortgage Loans by the Trust, the
Mortgage Loans in Group II (including the Subsequent Mortgage Loans in
Group II): (a) will have a weighted average coupon rate of at least
8.41%; (b) will have a weighted average Loan to Value Ratio of not more
than 66.66%; and (c) will have an average current loan balance not
greater than $142,810 and not more than 20% of the Mortgage Loans in
Group II may have a principal balance in excess of $200,000; (d) will
satisfy the representations and warranties set forth in Section 3.3
hereof; and (e) have a first due date no later than July 1, 1999.
(e) In connection with each Subsequent Transfer Date and, if
applicable, on the Payment Dates occurring in April and May 1999, as
applicable, the Trustee shall determine: (i) the amount and correct
dispositions of the Group I Capitalized Interest Requirement and the
Group II Capitalized Interest Requirement, the Group I Overfunded
Interest Amount, the Group II Overfunded Interest Amount, the
Pre-Funding Account Earnings and the Pre-Funded Amount (and the portion
of such amounts allocable to Group I and Group II) and (ii) any other
necessary matters in connection with the administration of the
Pre-Funding Account and of the Capitalized Interest Account. In the
event that any amounts are released as a result of an error in
calculation to the Owners or the Seller from the Pre-Funding Account or
from the Capitalized Interest Account, such Owners or the Seller shall
immediately repay such amounts to the Trustee.
Section 3.9. Books and Records. The sale of each Mortgage Loan
shall be reflected in the Seller's balance sheets and other financial statements
as a sale of assets by the Seller under generally accepted accounting
principles.
ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES
Section 4.1. Issuance of Certificates. On the Startup Day,
upon the Trustee's receipt from the Seller of an executed Delivery Order in the
form set forth as Exhibit G hereto, the Trustee shall execute, authenticate and
deliver the Certificates on behalf of the Trust in accordance with the
directions set forth in such Delivery Order.
Section 4.2. Sale of Certificates. At 10:00 a.m. Eastern Time
on the Startup Day, at the offices of Arter & Hadden LLP, 1801 K Street, N.W.,
Washington, D.C. 20006, the Seller will sell and convey the Mortgage Loans and
the money, instruments and other property related thereto to the Trustee, and
the Trustee will (i) deliver to the Underwriter the Class A Certificates with an
aggregate Percentage Interest in each Class equal to 100%, registered in the
name of Cede & Co. or in such other names as the Underwriter shall direct,
against payment of the purchase price thereof by wire transfer of immediately
available funds to the Trustee, and (ii) deliver to First Alliance Portfolio
Services, Inc. a Class R Certificate, with a Percentage Interest equal to 100%.
Upon the Trustee's receipt of the entire net proceeds of the sale of the Class A
Certificates the Seller shall instruct the Trustee to: (a) deposit (i) an amount
equal to the Original Pre-Funded Amount in the Pre-Funding Account and (ii) an
amount equal to the sum of the Group
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I Original Capitalized Interest Amount and the Group II Original Capitalized
Interest Amount in the Capitalized Interest Account contributed by the Seller
out of such proceeds or otherwise,(b) pay any fees and expenses identified by
the Seller and (c) pay to the Seller the balance after deducting such amounts.
The Seller shall pay directly to the Certificate Insurer the Initial Premium.
ARTICLE V
CERTIFICATES AND TRANSFER OF INTERESTS
Section 5.1. Terms. (a) The Certificates are pass-through
securities having the rights described therein and herein. Notwithstanding
references herein or therein with respect to the Certificates as to "principal"
and "interest" no debt of any Person is represented thereby, nor are the
Certificates or the underlying Notes guaranteed by any Person (except that the
Notes may be recourse to the Mortgagors thereof to the extent permitted by law
and except for the rights of the Trustee with respect to the Certificate
Insurance Policies). Distributions on the Certificates are payable solely from
payments received on or with respect to the Mortgage Loans (other than the
Servicing Fees), moneys in the Principal and Interest Account, except as
otherwise provided herein, moneys in the Pre-Funding Account and the Capitalized
Interest Account from earnings on moneys and the proceeds of property held as a
part of the Trust Estate and, upon the occurrence of certain events, from
Insured Payments. Each Certificate entitles the Owner thereof to receive monthly
on each Payment Date, in order of priority of distributions with respect to such
Class of Certificates a specified portion of such payments with respect to the
Mortgage Loans in the related Mortgage Loan Group and certain related Insured
Payments, pro rata in accordance with such Owner's Percentage Interest.
(b) Each Owner is required, and hereby agrees, to return to
the Trustee at the Corporate Trust Office any Certificate prior to the
final distribution due thereon. Any such Certificate as to which the
Trustee has made the final distribution thereon shall be deemed
canceled and shall no longer be Outstanding for any purpose of this
Agreement.
Section 5.2. Forms. The Class A-1 Certificates, the Class A-2
Certificates and the Class R Certificates shall be in substantially the forms
set forth in Exhibits A-1, A-2 and B hereof, respectively, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Agreement or as may in the Seller's judgment be necessary,
appropriate or convenient to comply, or facilitate compliance, with applicable
laws, and may have such letters, numbers or other marks of identification and
such legends or endorsements placed thereon as may be required to comply with
the rules of any applicable securities laws or as may, consistently herewith, be
determined by the Authorized Officer of the Trustee executing such Certificates,
as evidenced by his execution thereof.
Section 5.3. Execution, Authentication and Delivery. Each
Certificate shall be executed on behalf of the Trust, by the manual or facsimile
signature of one of the Trustee's Authorized Officers and shall be authenticated
by the manual or facsimile signature of one of the Trustee's Authorized
Officers.
Certificates bearing the manual signature of individuals who
were at any time the proper officers of the Trustee shall, upon proper
authentication by the Trustee, bind the Trust, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
execution and delivery of such Certificates or did not hold such offices at the
date of authentication of such Certificates.
The initial Certificates shall be dated as of the Startup Day
and delivered at the Closing to the parties specified in Section 4.2 hereof.
No Certificate shall be valid until executed and authenticated
as set forth above.
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Section 5.4. Registration and Transfer of Certificates. (a)
The Trustee, as registrar, shall cause to be kept a register (the "Register") in
which, subject to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and the registration of
transfer of Certificates. The Trustee is hereby appointed registrar (the
"Registrar") for the purpose of registering Certificates and transfers of
Certificates as herein provided. The Owners and the Certificate Insurer shall
have the right to inspect the Register during business hours upon reasonable
notice (but no less than 2 Business Days) and to obtain copies thereof.
(b) Subject to the provisions of Section 5.8 hereof, upon
surrender for registration of transfer of any Certificate at the office
designated as the location of the Register, the Trustee shall execute,
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Certificates of a like Class and in the
aggregate principal amount of the Certificate so surrendered.
(c) At the option of any Owner, Certificates of any Class
owned by such Owner may be exchanged for other Certificates authorized
of like Class, tenor, aggregate original principal amount and bearing
numbers not contemporaneously outstanding, upon surrender of the
Certificates to be exchanged at the office designated as the location
of the Register. Whenever any Certificate is so surrendered for
exchange, the Trustee shall execute, authenticate and deliver the
Certificate or Certificates which the Owner making the exchange is
entitled to receive.
(d) All Certificates issued upon any registration of transfer
or exchange of Certificates shall be valid evidence of the same
ownership interests in the Trust and entitled to the same benefits
under this Agreement as the Certificates surrendered upon such
registration of transfer or exchange.
(e) Every Certificate presented or surrendered for
registration of transfer or exchange shall be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to
the Trustee duly executed by the Owner thereof or his attorney duly
authorized in writing.
(f) No service charge shall be made to an Owner for any
registration of transfer or exchange of Certificates, but the Trustee
may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any
registration of transfer or exchange of Certificates; any other
expenses in connection with such transfer or exchange shall be an
expense of the Trust.
(g) It is intended that the Class A Certificates be registered
so as to participate in a global book-entry system with the Depository,
as set forth herein. Each Class of Class A Certificates shall, except
as otherwise provided in the next paragraph, be initially issued in the
form of a single fully registered Class A Certificate with a
denomination equal to the Original Certificate Principal Balance of
such Class. Upon initial issuance, the ownership of each such Class A
Certificate shall be registered in the Register in the name of Cede &
Co., or any successor thereto, as nominee for the Depository.
On the Startup Day, no Class A Certificates shall be issued in
denominations of less than $25,000 except for one Certificate of each Class
which may be in a denomination of less than $1,000; accordingly the Trust shall
not issue tail certificates on the Startup Day.
The Seller and the Trustee are hereby authorized to execute
and deliver the Representation Letter with the Depository.
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With respect to Class A Certificates registered in the
Register in the name of Cede & Co., as nominee of the Depository, the Seller,
the Servicer, the Oversight Agent and the Trustee shall have no responsibility
or obligation to Direct or Indirect Participants or beneficial owners for which
the Depository holds Class A Certificates from time to time as a Depository.
Without limiting the immediately preceding sentence, the Seller, the Servicer,
the Oversight Agent and the Trustee shall have no responsibility or obligation
with respect to (i) the accuracy of the records of the Depository, Cede & Co.,
or any Direct or Indirect Participant with respect to the ownership interest in
the Class A Certificates, (ii) the delivery to any Direct or Indirect
Participant or any other Person, other than a registered Owner of a Class A
Certificate as shown in the Register, of any notice with respect to the Class A
Certificates or (iii) the payment to any Direct or Indirect Participant or any
other Person, other than a registered Owner of a Class A Certificate as shown in
the Register, of any amount with respect to any distribution of principal or
interest on the Class A Certificates. No Person other than a registered Owner of
a Class A Certificate as shown in the Register shall receive a certificate
evidencing such Class A Certificate.
Upon delivery by the Depository to the Trustee of written
notice to the effect that the Depository has determined to substitute a new
nominee in place of Cede & Co., and subject to the provisions hereof with
respect to the payment of interest by the mailing of checks or drafts to the
registered Owners of Class A Certificates appearing as registered Owners in the
registration books maintained by the Trustee at the close of business on a
Record Date, the name "Cede & Co." in this Agreement shall refer to such new
nominee of the Depository.
(h) In the event that (i) the Depository or the Seller advises
the Trustee and the Certificate Insurer in writing that the Depository
is no longer willing or able to discharge properly its responsibilities
as nominee and depository with respect to the Class A Certificates and
the Seller or the Trustee is unable to locate a qualified successor or
(ii) the Seller at its sole option elects to terminate the book-entry
system through the Depository, the Class A Certificates shall no longer
be restricted to being registered in the Register in the name of Cede &
Co. (or a successor nominee) as nominee of the Depository. At that
time, the Seller may determine that the Class A Certificates shall be
registered in the name of and deposited with a successor depository
operating a global book-entry system, as may be acceptable to the
Seller and at the Seller's expense, or such depository's agent or
designee but, if the Seller does not select such alternative global
book-entry system, then the Class A Certificates may be registered in
whatever name or names registered Owners of Class A Certificates
transferring Class A Certificates shall designate, in accordance with
the provisions hereof.
(i) Notwithstanding any other provision of this Agreement to
the contrary, so long as any Class A Certificate is registered in the
name of Cede & Co., as nominee of the Depository, all distributions of
principal or interest on such Class A Certificates and all notices with
respect to such Class A Certificates shall be made and given,
respectively, in the manner provided in the Representation Letter.
Section 5.5. Mutilated, Destroyed, Lost or Stolen
Certificates. If (i) any mutilated Certificate is surrendered to the Trustee, or
the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Certificate, and (ii) in the case of any mutilated Certificate,
such mutilated Certificate shall first be surrendered to the Trustee, and in the
case of any destroyed, lost or stolen Certificate, there shall be first
delivered to the Trustee such security or indemnity as may be reasonably
required by it to hold the Trustee harmless, then, in the absence of notice to
the Trustee that such Certificate has been acquired by a bona fide purchaser,
the Trustee shall execute, authenticate and deliver, in exchange for or in lieu
of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate
of like Class, tenor and aggregate principal amount, bearing a number not
contemporaneously outstanding.
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Upon the issuance of any new Certificate under this Section,
the Trustee may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto; any other
expenses in connection with such issuance shall be an expense of the Trust.
Every new Certificate issued pursuant to this Section in
exchange for or in lieu of any mutilated, destroyed, lost or stolen Certificate
shall constitute evidence of a substitute interest in the Trust and shall be
entitled to all the benefits of this Agreement equally and proportionately with
any and all other Certificates of the same Class duly issued hereunder and such
mutilated, destroyed, lost or stolen Certificate shall not be valid for any
purpose.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Certificates.
Section 5.6. Persons Deemed Owners. The Trustee and any agent
of the Trustee may treat the Person in whose name any Certificate is registered
as the Owner of such Certificate for the purpose of receiving distributions with
respect to such Certificate and for all other purposes whatsoever, and neither
the Trustee nor any agent of the Trustee shall be affected by notice to the
contrary.
Section 5.7. Cancellation. All Certificates surrendered for
registration of transfer or exchange shall, if surrendered to any Person other
than the Trustee, be delivered to the Trustee and shall be promptly canceled by
it. No Certificate shall be authenticated in lieu of or in exchange for any
Certificate canceled as provided in this Section, except as expressly permitted
by this Agreement. All canceled Certificates may be held by the Trustee in
accordance with its standard retention policy.
Section 5.8. Limitation on Transfer of Ownership Rights. (a)
No sale or other transfer of any Class A Certificate shall be made to the
Seller, any Originator or any of their respective affiliates.
(b) No sale or other transfer of record or beneficial
ownership of a Class R Certificate (whether pursuant to a purchase, a
transfer resulting from a default under a secured lending agreement or
otherwise) shall be made to a Disqualified Organization or agent of a
Disqualified Organization. The transfer, sale or other disposition of a
Class R Certificate (whether pursuant to a purchase, a transfer
resulting from a default under a secured lending agreement or
otherwise) to a Disqualified Organization shall be deemed to be of no
legal force or effect whatsoever and such transferee shall not be
deemed to be an Owner for any purpose hereunder, including, but not
limited to, the receipt of distributions on such Class R Certificate.
Furthermore, in no event shall the Trustee accept surrender for
transfer, registration of transfer, or register the transfer, of any
Class R Certificate nor authenticate and make available any new Class R
Certificate unless the Trustee has received an affidavit from the
proposed transferee that such transferee is not a pension or benefit
plan or individual retirement arrangement that is subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")
or to Section 4975 of the Code or an entity whose underlying assets are
deemed to be assets of such a plan or arrangement by reason of such
plan's or arrangement's investment in the entity, as determined under
U.S. Department of Labor Regulations 29 C.F.R. ss. 2510.3-101 or
otherwise. Each holder of a Class R Certificate, by his acceptance
thereof, shall be deemed for all purposes to have consented to the
provisions of this Section 5.8(b).
(c) No other sale or other transfer of record or beneficial
ownership of a Class R Certificate shall be made unless such transfer
is exempt from the registration requirements of the Securities Act, as
amended, and any applicable state securities laws or is made in
accordance with said Act and laws. In the event such a transfer is to
be made within three years from the Startup Day, (i) the Trustee and
the Seller shall require a written opinion of counsel acceptable to and
in form and substance satisfactory to the Seller and the Certificate
Insurer in the event that such
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transfer may be made pursuant to an exemption, describing the
applicable exemption and the basis therefor, from said Act and laws or
is being made pursuant to said Act and laws, which opinion of counsel
shall not be an expense of the Trustee, the Trust Estate or the
Certificate Insurer, and (ii) the Trustee shall require the Transferee
to execute an investment letter acceptable to and in form and substance
satisfactory to the Seller and the Certificate Insurer certifying to
the Trustee, the Certificate Insurer and the Seller the facts
surrounding such transfer, which investment letter shall not be an
expense of the Trustee, the Trust Estate, the Certificate Insurer or
the Seller. The Owner of a Class R Certificate desiring to effect such
transfer shall, and does hereby agree to, indemnify the Trustee, the
Certificate Insurer and the Seller 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.
Section 5.9. Assignment of Rights. An Owner may pledge,
encumber, hypothecate or assign all or any part of its right to receive
distributions hereunder, but such pledge, encumbrance, hypothecation or
assignment shall not constitute a transfer of an ownership interest sufficient
to render the transferee an Owner of the Trust without compliance with the
provisions of Section 5.4 and Section 5.8 hereof.
ARTICLE VI
COVENANTS
Section 6.1. Distributions. On each Payment Date, the Trustee
will withdraw amounts from the Certificate Account and make the distributions
with respect to the Certificates in accordance with the terms of the
Certificates and this Agreement. Such distributions shall be made (i) by check
mailed on each Payment Date or (ii) if requested by any Owner, to such Owner by
wire transfer to an account within the United States designated no later than
five Business Days prior to the related Record Date, made on each Payment Date,
in each case to each Owner of record on the immediately preceding Record Date;
provided, however, that an Owner of a Class A Certificate shall only be entitled
to payment by wire transfer if such Owner owns Class A Certificates in the
aggregate denomination of at least $5,000,000.
Section 6.2. Money for Distributions to be Held in Trust;
Withholding. (a) All payments of amounts due and payable with respect to any
Certificate that are to be made from amounts withdrawn from the Certificate
Account pursuant to Section 7.5 hereof or from Insured Payments shall be made by
and on behalf of the Trustee, and no amounts so withdrawn from the Certificate
Account for payments of the Certificates and no Insured Payment shall be paid
over to the Trustee except as provided in this Section.
(b) The Trustee on behalf of the Trust shall comply with all
requirements of the Code and applicable state and local law with
respect to the withholding from any distributions made by it to any
Owner of any applicable withholding taxes imposed thereon and with
respect to any applicable reporting requirements in connection
therewith.
(c) Any money held by the Trustee in trust for the payment of
any amount due with respect to any Class A Certificate and remaining
unclaimed by the Owner of such Class A Certificate for the period then
specified in the escheat laws of the State of New York after such
amount has become due and payable shall be discharged from such trust
and be paid first to the Certificate Insurer on account of any
Reimbursement Amounts and second to the Owners of the Class R
Certificates; and the Owner of such Class A Certificate shall
thereafter, as an unsecured general creditor, look only to the
Certificate Insurer or the Owners of the Class R Certificates for
payment thereof (but only to the extent of the amounts so paid to the
Certificate Insurer or the Owners of the Class R Certificates), and all
liability of the Trustee with respect to such trust money shall
thereupon cease; provided, however, that the Trustee, before being
required to make any such
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payment, shall at the expense of the Trust cause to be published once,
in the eastern edition of The Wall Street Journal, notice that such
money remains unclaimed and that, after a date specified therein, which
shall be not fewer than 30 days from the date of such publication, any
unclaimed balance of such money then remaining will be paid to the
Certificate Insurer or the Owners of the Class R Certificates. The
Trustee shall, at the direction of the Seller, also adopt and employ,
at the expense of the Trust, any other reasonable means of notification
of such payment (including but not limited to mailing notice of such
payment to Owners whose right to or interest in moneys due and payable
but not claimed is determinable from the Register at the last address
of record for each such Owner).
Section 6.3. Protection of Trust Estate. (a) The Trustee will
hold the Trust Estate in trust for the benefit of the Owners and, upon request
of the Certificate Insurer, or, with the consent of the Certificate Insurer, at
the request and expense of the Seller, will from time to time execute and
deliver all such supplements and amendments hereto pursuant to Section 11.14
hereof and all instruments of further assurance and other instruments, and will
take such other action upon such request from the Seller or the Certificate
Insurer, to:
(i) more effectively hold in trust all or any portion
of the Trust Estate;
(ii) perfect, publish notice of or protect the
validity of any grant made or to be made by this
Agreement;
(iii) enforce any of the Mortgage Loans; or
(iv) preserve and defend title to the Trust Estate and
the rights of the Trustee, and the ownership
interests of the Owners represented thereby, in
such Trust Estate against the claims of all
Persons and parties.
The Trustee shall send copies of any request received from the
Certificate Insurer or the Seller to take any action pursuant to this Section
6.3 to the other party.
(b) The Trustee shall have the power to enforce, shall enforce
the obligations of the other parties to this Agreement and of the
Certificate Insurer, by action, suit or proceeding at law or equity and
shall also have the power to enjoin, by action or suit in equity, any
acts or occurrences which may be unlawful or in violation of the rights
of the Owners; provided, however, that nothing in this Section shall
require any action by the Trustee unless the Trustee shall first (i)
have been furnished indemnity satisfactory to it and (ii) when required
by this Agreement, have been requested to take such action by a
majority of the Percentage Interests represented by the affected Class
or Classes of Class A Certificates then Outstanding or, if there are no
longer any affected Class A Certificates then outstanding, by such
majority of the Percentage Interests represented by the Class R
Certificates.
(c) The Trustee shall execute any instrument required pursuant
to this Section so long as such instrument does not conflict with this
Agreement or with the Trustee's fiduciary duties.
Section 6.4. Performance of Obligations. The Trustee will not
take any action that would release the Seller, the Servicer, the Oversight Agent
or the Certificate Insurer from any of their respective covenants or obligations
under any instrument or document relating to the Trust Estate or the
Certificates or which would result in the amendment, hypothecation,
subordination, termination or discharge of, or impair the validity or
effectiveness of, any such instrument or document, except as expressly provided
in this Agreement or such other instrument or document.
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The Trustee may contract with other Persons to assist it in
performing its duties hereunder.
Section 6.5. Negative Covenants. The Trustee will not, to the
extent within the control of the Trustee, take any of the following actions:
(i) sell, transfer, exchange or otherwise dispose of any of
the Trust Estate except as expressly permitted by this Agreement;
(ii) claim any credit on or make any deduction from the
distributions payable in respect of, the Certificates (other than
amounts properly withheld from such payments under the Code) or assert
any claim against any present or former Owner by reason of the payment
of any taxes levied or assessed upon any of the Trust Estate;
(iii) incur, assume or guaranty on behalf of the Trust any
indebtedness of any Person except pursuant to this Agreement;
(iv) dissolve or liquidate the Trust Estate in whole or in
part, except pursuant to Article IX hereof; or
(v) (A) impair the validity or effectiveness of this
Agreement, or release any Person from any covenants or obligations with
respect to the Trust or to the Certificates under this Agreement,
except as may be expressly permitted hereby or (B) create or extend any
lien, charge, adverse claim, security interest, mortgage or other
encumbrance to or upon the Trust Estate or any part thereof or any
interest therein or the proceeds thereof.
Section 6.6. No Other Powers. The Trustee will not, to the
extent within the control of the Trustee, permit the Trust to engage in any
business activity or transaction other than those activities permitted by
Section 2.3 hereof.
Section 6.7. Limitation of Suits. No Owner shall have any
right to institute any proceeding, judicial or otherwise, with respect to this
Agreement or the Certificate Insurance Policies or for the appointment of a
receiver or trustee, or for any other remedy hereunder, unless:
(1) such Owner has previously given written notice to the
Seller and the Trustee of such Owner's intention to institute such
proceeding;
(2) the Owners of not less than 25% of the Percentage
Interests represented by the affected Class or Classes of Certificates
then Outstanding or, if there are no affected Classes of Class A
Certificates then Outstanding, by such percentage of the Percentage
Interests represented by the Class R Certificates shall have made
written request to the Trustee to institute such proceeding in respect
of such Event of Default;
(3) such Owner or Owners have offered to the Trustee indemnity
against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute such proceeding;
(5) as long as any Class A Certificates are Outstanding, the
Certificate Insurer has consented in writing thereto (unless the action
is against the Certificate Insurer); and
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(6) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Certificate
Insurer or by the Owners of a majority of the Percentage Interests
represented by the Class A Certificates or, if there are no Class A
Certificates then Outstanding, by such majority of the Percentage
Interests represented by the Class R Certificates;
it being understood and intended that no one or more Owners shall have any right
in any manner whatever by virtue of, or by availing themselves of, any provision
of this Agreement to affect, disturb or prejudice the rights of any other Owner
of the same Class or to obtain or to seek to obtain priority or preference over
any other Owner of the same Class or to enforce any right under this Agreement,
except in the manner herein provided and for the equal and ratable benefit of
all the Owners of the same Class.
In the event the Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Owners, each
representing less than a majority of the applicable Class of Certificates, the
Trustee in its sole discretion may determine what action, if any, shall be
taken, notwithstanding any other provision of this Agreement.
Section 6.8. Unconditional Rights of Owners to Receive
Distributions. Notwithstanding any other provision in this Agreement, the Owner
of any Certificate shall have the right, which is absolute and unconditional, to
receive distributions to the extent provided herein and therein with respect to
such Certificate or to institute suit for the enforcement of any such
distribution, and such right shall not be impaired without the consent of such
Owner.
Section 6.9. Rights and Remedies Cumulative. Except as
otherwise provided herein, no right or remedy herein conferred upon or reserved
to the Trustee, the Certificate Insurer or to the Owners is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. Except as otherwise provided herein, the assertion or employment of
any right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 6.10. Delay or Omission Not Waiver. No delay of the
Trustee, the Oversight Agent, the Certificate Insurer or any Owner of any
Certificate to exercise any right or remedy under this Agreement to any Event of
Default shall impair any such right or remedy or constitute a waiver of any such
Event of Default or an acquiescence therein. Every right and remedy given by
this Article VI or by law to the Trustee, the Oversight Agent, the Certificate
Insurer or the Owners may be exercised from time to time, and as often as may be
deemed expedient, by the Trustee, the Certificate Insurer or the Owners, as the
case may be.
Section 6.11. Control by Owners. The Certificate Insurer or
the Owners of a majority of the Percentage Interests represented by the Class A
Certificates then Outstanding, with the consent of the Certificate Insurer
(which may not be unreasonably withheld), or, if there are no longer any Class A
Certificates then Outstanding, by such majority of the Percentage Interests
represented by the Class R Certificates then Outstanding, with the consent of
the Certificate Insurer (which may not be unreasonably withheld), may direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee with respect to the Certificates or exercising any trust or power
conferred on the Trustee with respect to the Certificates or the Trust Estate,
including, but not limited to, those powers set forth in Section 6.3, Section
8.20 and Section 10.1 hereof, provided that:
(1) such direction shall not be in conflict with any rule of
law or with this Agreement;
(2) the Trustee shall have been provided with indemnity
satisfactory to it; and
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(3) the Trustee may take any other action deemed proper by the
Trustee, which is not inconsistent with such direction; provided,
however, that the Trustee need not take any action which it determines
might involve it in liability or may be unjustly prejudicial to the
Owners not so directing.
Section 6.12. Access to Owners of Certificates' Names and
Addresses. (a) If any Owner (for purposes of this Section 6.12, an "Applicant")
applies in writing to the Trustee, and such application states that the
Applicant desires to communicate with other Owners with respect to their rights
under this Agreement or under the Certificates and is accompanied by a copy of
the communication which such Applicant proposes to transmit, then the Trustee
shall, at the expense of such Applicant, within ten (10) Business Days after the
receipt of such application, furnish or cause to be furnished to such Applicant
a list of the names and addresses of the Owners of record as of the most recent
Payment Date.
(b) Every Owner, by receiving and holding such list, agrees
with the Trustee that the Trustee shall not be held accountable in any
way by reason of the disclosure of any information as to the names and
addresses of the Owners hereunder, regardless of the source from which
such information was derived.
ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 7.1. Collection of Money. Except as otherwise
expressly provided herein, the Trustee shall demand payment or delivery of all
money and other property payable to or receivable by the Trustee pursuant to
this Agreement, including (a) all payments due on the Mortgage Loans in
accordance with the respective terms and conditions of such Mortgage Loans and
required to be paid over to the Trustee by the Servicer or by any Sub-Servicer
and (b) Insured Payments. The Trustee shall hold all such money and property
received by it, other than pursuant to or as contemplated by Section 6.2(b)
hereof as part of the Trust Estate and shall apply it as provided in this
Agreement.
Section 7.2. Establishment of Accounts. The Seller shall cause
to be established, and the Trustee shall maintain, at the Corporate Trust
Office, a Certificate Account, a Pre-Funding Account and a Capitalized Interest
Account to be held by the Trustee so long as the Trustee qualifies as a
Designated Depository Institution and if the Trustee does not so qualify, then
by any Designated Depository Institution in the name of the Trust for the
benefit of the Owners of the Certificates and the Certificate Insurer, as their
interests may appear.
Section 7.3. The Certificate Insurance Policies. (a) Two
Business Days prior to each Payment Date the Trustee shall determine with
respect to the immediately following Payment Date:
(i) the amount on deposit in the Certificate Account
on such Payment Date and available to be
distributed to the Owners on such Payment Date
with respect to Group I (disregarding the sum of
(x) the amount of any Insured Payments and (y)
the amount of any expected investment earnings)
and equal to the sum of (A) such amount excluding
the amount of any Total Monthly Excess Cashflow
from either Group on account of Group I included
in such amount plus (B) any amount of Total
Monthly Excess Cashflow from either Group to be
applied on account of Group I on such Payment
Date to the Class A-1 Certificates. The amount
described in clause (A) of the preceding sentence
with respect to each Payment Date is the "Group I
Available Funds"; the sum
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of the amounts described in clauses (A) and (B)
of the preceding sentence with respect to each
Payment Date is the "Group I Total Available
Funds."
(ii) the amount on deposit in the Certificate Account
on such Payment Date and available to be
distributed to the Owners on such Payment Date
with respect to Group II (disregarding the sum of
(x) the amount of any Insured Payments and (y)
the amount of any expected investment earnings),
and equal to the sum of (A) such amount excluding
the amount of any Total Monthly Excess Cashflow
from either Group on account of Group II included
in such amount plus (B) any amount of Total
Monthly Excess Cashflow from either Group to be
applied on account of Group II on such Payment
Date to the Class A-2 Certificates. The amount
described in clause (A) of the preceding sentence
with respect to each Payment Date is the "Group
II Available Funds"; the sum of the amounts
described in clauses (A) and (B) of the preceding
sentence with respect to each Payment Date is the
"Group II Total Available Funds".
(b) If (i) the Class A-1 Current Interest for any Payment Date
exceeds the Group I Total Available Funds for such Payment Date after
deducting amounts payable therefrom, if any, for the Fees and Expenses
relating to Group I due on such Payment Date and/or (ii) a Group I
Subordination Deficit exists for such Payment Date (any such event
being a "Group I Total Available Funds Shortfall"), the Trustee shall
complete a Notice in the form of Exhibit A to the Group I Certificate
Insurance Policy and submit such notice to the Certificate Insurer no
later than 12:00 noon New York City time on the Business Day preceding
such Payment Date as a claim for an Insured Payment in an amount equal
to such Group I Total Available Funds Shortfall. Similarly, if (x) the
Class A-2 Current Interest for any Payment Date exceeds the Group II
Total Available Funds for such Payment Date after deducting amounts
payable therefrom, if any, for the Fees and Expenses relating to Group
II due on such Payment Date and/or (y) a Group II Subordination Deficit
exists for such Payment Date (any such event being a "Group II Total
Available Funds Shortfall"), the Trustee shall complete a Notice in the
form of Exhibit A to the Group II Certificate Insurance Policy and
submit such notice to the Certificate Insurer no later than 12:00 noon
New York City time on the Business Day preceding such Payment Date as a
claim for an Insured Payment in an amount equal to such Group II Total
Available Funds Shortfall.
(c) The Certificate Insurer shall forward to the Trustee
Insured Payments at such time and in the manner specified in the
related Certificate Insurance Policy. Upon receipt of Insured Payments
from the Certificate Insurer on behalf of Owners, the Trustee shall
deposit such Insured Payments in the Certificate Account and shall
distribute such Insured Payments, or the proceeds thereof, in
accordance with Section 7.5(d)(iv) to the Owners of the Class A
Certificates of the related Class.
(d) The Trustee shall (i) receive Insured Payments as
attorney-in-fact of each Owner of the Class A Certificates of the
related Class receiving any Insured Payment from the Certificate
Insurer and (ii) disburse such Insured Payment to the Owners of Offered
Certificates as set forth in Section 7.5(d)(iv). Insured Payments
disbursed by the Trustee from proceeds of a Certificate Insurance
Policy shall not be considered payment by the Trust nor shall such
payments discharge the obligation of the Trust with respect to the
related Class A Certificates, and the Certificate Insurer shall be
entitled to receive the related Reimbursement Amount pursuant to
Sections 7.5(d)(ii)(C) and 7.5(d)(ii)(D) hereof. Each Owner of Class A
Certificates by its acceptance thereof recognizes that to the extent
the Certificate Insurer makes Insured Payments, either directly or
indirectly (as by paying through the Trustee), to the Owners of such
Class A Certificates the Certificate Insurer will
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be entitled to receive the related Reimbursement Amount pursuant to
Sections 7.5(d)(ii)(C) and 7.5(d)(ii)(D) hereof.
Section 7.4 Pre-Funding Account and Capitalized Interest
Account. (a) On the Startup Day, from the proceeds of the sale of the Class A
Certificates, the Seller will deposit (i) an amount equal to the Original
Pre-Funded Amount in the Pre-Funding Account and (ii) an amount equal to the sum
of the Group I Original Capitalized Interest Amount and the Group II Original
Capitalized Interest Amount in the Capitalized Interest Account.
(b) On any Subsequent Transfer Date, the Seller shall instruct
the Trustee to withdraw from the Pre-Funding Account an amount equal to
100% of the aggregate Loan Balances of the Subsequent Mortgage Loans
sold to the Trust on such Subsequent Transfer Date and pay such amount
to or upon the order of the Seller upon satisfaction of the conditions
set forth in Sections 3.5 and 3.8 hereof with respect to such transfer;
in connection with such instructions the Seller shall additionally
inform the Trustee whether such Subsequent Mortgage Loans are being
transferred to Group I or Group II. In no event shall the Seller be
permitted to instruct the Trustee to release from the Pre-Funding
Account to the Certificate Account with respect to Subsequent Mortgage
Loans to be transferred to Group I an amount in excess of the Original
Group I Pre-Funded Amount or to release from the Pre-Funding Account to
the Certificate Account with respect to Subsequent Mortgage Loans to be
transferred to Group II an amount in excess of the Original Group II
Pre-Funded Amount.
(c) Reserved.
(d) On the Payment Dates during and immediately following the
Funding Period, the Trustee shall transfer from the Pre-Funding Account
to the Capitalized Interest Account, the Pre-Funding Account Earnings,
if any, applicable to such Payment Date.
(e) On each Payment Date during and immediately following the
Funding Period, the Trustee shall transfer from the Capitalized
Interest Account to the Certificate Account, (i) with respect to Group
I, the Group I Capitalized Interest Requirement for such Payment Date,
if any plus the related Pre-Funding Account Earnings transferred to the
Capitalized Interest Account, and (ii) with respect to Group II, the
Group II Capitalized Interest Requirement, if any, for such Payment
Date plus the related Pre-Funding Account Earnings transferred to the
Capitalized Interest Account.
(f) On the second Payment Date after the Startup Day, the
Trustee shall distribute the Group I Overfunded Interest Amount, if
any, and the Group II Overfunded Interest Amount, if any (each
calculated by the Trustee on the day prior to such second Payment Date)
from the Capitalized Interest Account to the Seller. All amounts, if
any, remaining in the Capitalized Interest Account on such day shall be
transferred to the Seller, and the Capitalized Interest Account shall
be closed.
Section 7.5. Flow of Funds. (a) The Trustee shall deposit to
the Certificate Account with respect to Group I, without duplication, upon
receipt, any Group I Insured Payments, the proceeds of any liquidation of the
assets of the Trust, insofar as such assets relate to Group I and the Group I
Monthly Remittance Amount, together with any Substitution Amounts and any Loan
Purchase Price amounts relating to Group I received by the Trustee.
(b) The Trustee shall deposit to the Certificate Account with
respect to Group II, without duplication, upon receipt, any Group II
Insured Payments, the proceeds of any liquidation of the assets of the
Trust, insofar as such assets relate to Group II and the Group II
Monthly Remittance Amount, together with any Substitution Amounts and
any Loan Purchase Price amounts relating to Group II received by the
Trustee.
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(c) [Reserved].
(d) With respect to amounts on deposit in the Certificate
Account, on each Payment Date, the Trustee shall make the following
allocations, disbursements and transfers for each Mortgage Loan Group
from amounts deposited therein pursuant to subsections (a) and (b),
respectively in the following order of priority, and each such
allocation, transfer and disbursement shall be treated as having
occurred only after all preceding allocations, transfers and
disbursements have occurred:
(i) first, on each Payment Date (A) to the Oversight
Agent, the Oversight Agent Fee and beginning on the
second Payment Date after the Startup Day (B) to the
Certificate Insurer, (x) from amounts then on deposit
in the Certificate Account with respect to Group I,
the Group I Premium Amount for such Payment Date and
(y) from amounts then on deposit in the Certificate
Account with respect to Group II, the Group II
Premium Amount for such Payment Date;
(ii) second, on each Payment Date, the Trustee shall
allocate an amount equal to the sum of (x) the Total
Monthly Excess Spread with respect to such Mortgage
Loan Group and Payment Date plus (y) any
Subordination Reduction Amount with respect to such
Mortgage Loan Group and Payment Date (such sum being
the "Total Monthly Excess Cashflow" with respect to
such Mortgage Loan Group and Payment Date) with
respect to each Mortgage Loan Group in the following
order of priority:
(A) first, such Total Monthly Excess Cashflow with
respect to each Group shall be allocated to the
payment of the related Class A Distribution
Amount pursuant to clause (iv) below on such
Payment Date with respect to the related Mortgage
Loan Group in an amount equal to the difference,
if any, between (x) the related Class A
Distribution Amount (calculated only with respect
to clause (y) of the definition of the related
Group I or Group II Principal Distribution Amount
and without any Subordination Increase Amount)
for such Payment Date and (y) the Available Funds
with respect to such Mortgage Loan Group for such
Payment Date (the amount of such difference with
respect to the related Mortgage Loan Group) being
the "Group I Available Funds Shortfall" or the
"Group II Available Funds Shortfall";
(B) second, any portion of the Total Monthly Excess
Cashflow with respect to such Mortgage Loan Group
remaining after the application described in
clause (A) above shall be allocated against any
Available Funds Shortfall with respect to the
other Mortgage Loan Group and to the payment of
the Class A Distribution Amount with respect to
the other Mortgage Loan Group pursuant to clause
(iv) below;
(C) third, any portion of the Total Monthly Excess
Cashflow with respect to such Mortgage Loan Group
remaining after the allocations described in
clauses (A) and (B) above shall be allocated to
the payment of any Reimbursement Amount with
respect to the related Mortgage Loan Group
pursuant to clause
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(iv)(A)(I) below; and
(D) fourth, any portion of the Total Monthly Excess
Cashflow with respect to such Mortgage Loan Group
remaining after the allocations described in
clauses (A), (B) and (C) above shall be allocated
to the payment of any Reimbursement Amount with
respect to the other Mortgage Loan Group pursuant
to clause (iv)(A)(I) below.
(iii) third, the amount, if any, of the Total Monthly
Excess Cashflow with respect to a Mortgage Loan Group
on a Payment Date remaining after the allocations
described in clause (ii) above is the "Net Monthly
Excess Cashflow" with respect to such Mortgage Loan
Group for such Payment Date; such Net Monthly Excess
Cashflow is required to be allocated in the following
order of priority:
(A) first, such Net Monthly Excess Cashflow shall be
used to reduce to zero, through the allocation of
a Subordination Increase Amount to the payment of
the related Class A Distribution Amount pursuant
to clause (iv) below, any Subordination
Deficiency Amount with respect to the related
Mortgage Loan Group as of such Payment Date;
(B) second, the Net Monthly Excess Cashflow remaining
after the application described in clause (A)
above shall be used to reduce to zero, through
the allocation of a Subordination Increase Amount
to the payment of the related Class A
Distribution Amount pursuant to clause (iv)
below, any Subordination Deficiency Amounts with
respect to the other Mortgage Loan Group;
(C) third, an amount equal to the lesser of (i) any
portion of the Net Monthly Excess Cashflow
remaining after the applications described in
clauses (A) and (B) above and (ii) the Group II
Available Funds Cap Carry-Forward Amount for such
Payment Date shall be distributed to the Owners
of the Class A-2 Certificates; and
(D) fourth, any Net Monthly Excess Cashflow remaining
after the applications described in clauses (A),
(B) and (C) above shall be allocated to the
Servicer and distributed pursuant to clause
(iv)(A)(II) to the extent of any unreimbursed
Delinquency Advances, unreimbursed Servicing
Advances and accrued and unpaid Servicing Fees,
in each case as certified to the Trustee by the
Servicer to be owing to it as of such Payment
Date;
(iv) fourth, following the making by the Trustee of all
allocations, transfers and disbursements described
above under Section 7.3 hereof and the prior clauses
of this Section 7.5, from amounts (including any
related Insured Payment which shall be paid only to
the Owners of the Class A Certificates) then on
deposit in the Certificate Account with respect to
the related Mortgage Loan Group, the Trustee shall
distribute in the following order of priority:
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(A) distribute (I) to the Certificate Insurer the
amounts described in clauses (ii)(C) and (ii)(D)
above and (II) to the Servicer the amounts
described in clause (iii)(D) above;
(B) from the amounts then on deposit in the
Certificate Account with respect to Group I, to
the Owners of the Class A-1 Certificates, the
related Class A-1 Current Interest thereon until
the related Class A-1 Certificate Termination
Date;
(C) from the amounts then on deposit in the
Certificate Account with respect to Group I, as a
distribution of principal to the Owners of the
Class A-1 Certificates, the Group I Principal
Distribution Amount until the Class A-1
Certificate Termination Date;
(D) from the amounts then on deposit in the
Certificate Account with respect to Group II, to
the Owners of the Class A-2 Certificates, the
Class A-2 Current Interest until the Class A-2
Certificate Termination Date; and
(E) from the amounts then on deposit in the
Certificate Account with respect to Group II, to
the Owners of the Class A-2 Certificates, the
Group II Principal Distribution Amount until the
Class A-2 Certificate Termination Date;
Notwithstanding anything to the contrary herein, the amounts described
in Section 7.5(d)(iv)(B) and (D) shall be distributed prior to all
other allocations, distributions and transfers described in Section 7.3
and 7.5 hereof (other than the amount described in Section 7.5(d)(i)).
(v) fifth, to the Oversight Agent to reimburse the
Oversight Agent for all costs and expenses incurred
in connection with Sections 8.20(c) and 8.30(h)
hereof.
(vi) sixth, following the making by the Trustee of all
allocations, transfers and disbursements described
above under Section 7.3 hereof and the prior clauses
of this Section 7.5, from amounts then on deposit in
the Certificate Account for both Mortgage Loan
Groups, the Trustee shall distribute to the Owners of
the Class R Certificates, the Residual Net Monthly
Excess Cashflow, if any, for such Payment Date.
(e) Notwithstanding clause (d)(iv) above, the aggregate
amounts distributed on all Payment Dates to the Owners of the related
Class A Certificates on account of principal shall not exceed the
Original Certificate Principal Balance for the related Class A
Certificates.
Section 7.6. Investment of Accounts. (a) So long as no event
described in Sections 8.20(a) or (b) hereof shall have occurred and be
continuing, and consistent with any requirements of the Code, all or a portion
of the Accounts held by the Trustee (except the Certificate Account) shall be
invested and reinvested by the Trustee, for the benefit of the Owners and the
Certificate Insurer, as their interests may appear, as directed in writing by
the Servicer on the Startup Day and from time to time thereafter, in one or more
Eligible Investments bearing interest or sold at a discount. During the
continuance of an event described in Sections 8.20(a) or (b) hereof and
following any removal of the Servicer, the Certificate Insurer shall direct such
investments in the Accounts (except the Certificate Account). No investment in
any Account shall mature later than the second Business Day preceding the next
Payment Date (or, if such
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investment is an obligation of the Trustee or money market funds for which the
Trustee or an affiliate is the manager or the advisor, the investment shall
mature no later than such Payment Date).
(b) The Trustee, for the benefit of the Owners and the
Certificate Insurer, as their interests may appear shall invest and
reinvest all or a portion of the Certificate Account, at its own
discretion, but only in one or more Eligible Investments bearing
interest or sold at a discount.
(c) If any amounts are needed for disbursement from any
Account held by the Trustee and sufficient uninvested funds are not
available to make such disbursement, the Trustee shall cause to be sold
or otherwise converted to cash a sufficient amount of the investments
in such Account. No investments will be liquidated prior to maturity
unless the proceeds thereof are needed for disbursement.
(d) Subject to Section 10.1 hereof, the Trustee shall not in
any way be held liable by reason of any insufficiency in any Account
held by the Trustee (except the Certificate Account) resulting from any
loss on any Eligible Investment included therein.
(e) The Trustee shall hold funds in the Accounts held by the
Trustee (except the Certificate Account) uninvested upon the occurrence
of either of the following events:
(i) the Servicer or the Certificate Insurer, as the case
may be, shall have failed to give investment
directions to the Trustee within ten days after
receipt of a written request for such directions from
the Trustee; or
(ii) the Servicer or the Certificate Insurer, as the case
may be, shall have failed to give investment
directions to the Trustee with respect to any
investment by the Trustee that shall mature during
the ten-day period described in clause (i).
(f) For purposes of investment, the Trustee shall aggregate
all amounts on deposit in each Account (except the Certificate
Account). All income or other gain from investments in any Account
(except the Certificate Account) shall be deposited in such Account
immediately on receipt, and any loss resulting from such investments
shall be charged to the Seller, and upon request by the Trustee, the
Seller shall reimburse the Trust for such losses.
(g) All income or other gain from investments in the
Certificate Account shall be deposited in the Certificate Account
immediately on receipt, and any loss resulting from such investments
shall be charged to the Trustee, which shall reimburse the Trust for
such losses.
(h) Each institution at which the Certificate Account is
maintained shall invest the funds therein in Eligible Investments,
which shall mature not later than the Business Day next preceding the
related Payment Date (except that if such Eligible Investment is an
obligation of the institution that maintains such account, then such
Eligible Investment shall mature not later than such Payment Date) and,
in each case, shall not be sold or disposed of prior to its maturity.
All such Eligible Investments shall be made in the name of the Trustee,
for the benefit of the Owners and the Certificate Insurer. All income
and gain (net of any losses) realized from any such investment of funds
on deposit in the Certificate Account shall be for the benefit of the
Trustee as compensation. The amount of any realized losses in the
Certificate Account incurred in any such account in respect of any such
investments shall promptly be deposited by the Trustee in the
Certificate Account.
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(i) The Servicer shall give notice to the Trustee, the Seller,
the Oversight Agent, the Trust, each Rating Agency, and the Certificate
Insurer of any proposed change of the location of the Certificate
Account not later than 30 days and not more than 45 days prior to any
change thereof.
Section 7.7. Eligible Investments. The following are Eligible
Investments:
(a) Direct general obligations of the United States or the
obligations of any agency or instrumentality of the United States fully
and unconditionally guaranteed, the timely payment or the guarantee of
which constitutes a full faith and credit obligation of the United
States.
(b) Federal funds, certificates of deposit, time and demand
deposits, and bankers' acceptances (having original maturities of not
more than 365 days) of any domestic bank, the short-term debt
obligations of which have been rated A-1 or better by Standard & Poor's
and P-1 by Moody's.
(c) Investment agreements approved by the Certificate Insurer
provided:
1. The agreement is with a bank or insurance company
which has an unsecured, uninsured and unguaranteed
obligation (or claims-paying ability) rated Aa2 or
better by Moody's and AA or better by Standard &
Poor's,
2. Moneys invested thereunder may be withdrawn without
any penalty, premium or charge upon not more than one
day's notice (provided such notice may be amended or
canceled at any time prior to the withdrawal date),
3. The agreement is not subordinated to any other
obligations of such insurance company or bank,
4. The same guaranteed interest rate will be paid on any
future deposits made pursuant to such agreement, and
5. The Trustee and the Certificate Insurer receive an
opinion of counsel that such agreement is an
enforceable obligation of such insurance company or
bank.
(d) Commercial paper (having original maturities of not more
than 365 days) rated A-1 or better by Standard & Poor's and P-1 or
better by Moody's.
(e) Investments in no load money market funds sponsored by the
Trustee or any affiliate of the Trustee or for which the Trustee or any
of its affiliates acts as an advisor, so long as such fund is rated
AAAm or AAAm-G by Standard & Poor's and Aaa by Moody's.
(f) Investments approved in writing by the Certificate Insurer
and acceptable to Moody's and Standard & Poor's.
provided that no instrument described above is permitted to evidence either the
right to receive (a) only interest with respect to obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provided a yield to maturity at par greater than 120% of the
yield to maturity at par of the
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underlying obligations; and provided, further, that no instrument described
above may be purchased at a price greater than par.
Section 7.8. Reports by Trustee. (a) On each Payment Date the
Trustee shall provide to each Owner, the Servicer, the Certificate Insurer, the
Underwriter, the Seller, Standard & Poor's and Moody's a written report (based
solely upon the information contained in the Monthly Servicing Report) in a form
to be agreed upon by the Trustee, the Oversight Agent and the Servicer and
setting forth the following information:
(i) the amount of the distribution with respect to
the related Class of the Class A Certificates and
the Class R Certificates;
(ii) the amount of such distributions allocable to
principal, separately identifying the aggregate
amount of any Prepayments or Prepaid Installments
of principal included therein, and any
Subordination Increase Amounts with respect to
the related Mortgage Loan Group;
(iii) the amount of such distributions allocable to
interest;
(iv) the Certificate Principal Balance for each Class
of Class A Certificates as of such Payment Date
together with the principal amount of such Class
of Class A Certificates (based on a Certificate
in an original principal amount of $1,000) then
outstanding, in each case after giving effect to
any payment of principal on such Payment Date;
(v) the amount of any Insured Payment included in the
amounts distributed with respect to the Class A
Certificates on such Payment Date;
(vi) information to the extent and in the form
furnished by the Seller pursuant to Section
6049(d)(7)(C) of the Code and the regulations
promulgated thereunder to assist the Owners in
computing their market discount;
(vii) the total of any Substitution Amounts and any
Loan Purchase Price amounts included in such
distribution;
(viii) the amount of any Subordination Reduction Amount
with respect to each Mortgage Loan Group;
(ix) the amounts, if any, of any Realized Losses in
each Mortgage Loan Group for the related
Remittance Period and the cumulative amount of
Realized Losses in each Mortgage Loan Group since
the Startup Day;
(x) for the related Remittance Period and
cumulatively since the Startup Day, the number
and aggregate Loan Balance of Mortgage Loans in
each Group bought back by the Servicer or the
Seller pursuant to Sections 3.4, 3.6 and 8.10
(identified separately for each such section);
(xi) the amount of any Group II Available Funds Cap
Carry-Forward Amount;
(xii) identify any loans purchased by the Servicer
pursuant to Section 8.10; and
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(xiii) for each of the Payment Dates during and
immediately after the Funding Period, (A) the
Pre-Funded Amount previously used to purchase
Subsequent Mortgage Loans, (B) the Pre-Funded
Amount distributed as principal, (C) the
Pre-Funding Account Earnings transferred to the
Capitalized Interest Account and (D) the amounts
transferred from the Capitalized Interest Account
to the Certificate Account, the Group I
Overfunded Interest Amount, the Group II
Overfunded Interest Amount and the amount
transferred to the Seller, if any.
Items (i) through (iii) above shall, with respect to each
Class of Class A Certificates, be presented on the basis of a Certificate having
a $1,000 denomination. In addition, by January 31 of each calendar year
following any year during which the Certificates are outstanding, the Trustee
shall furnish a report to each Owner of record requesting the same in writing at
any time during each calendar year as to the aggregate of amounts reported
pursuant to (i), (ii) and (iii) with respect to the Certificates for such
calendar year.
(b) In addition, on each Payment Date the Trustee will
distribute to each Owner, the Certificate Insurer, the Underwriter, the
Servicer, the Seller, Standard & Poor's and Moody's, together with the
information described in Subsection (a) preceding, the following
information with respect to each Mortgage Loan Group as of the last day
of the related Remittance Period, which is hereby required to be
prepared by the Servicer and furnished to the Trustee for such purpose
on or prior to the related Remittance Date:
(i) the total number of Mortgage Loans in each
Mortgage Loan Group and the aggregate Loan
Balances thereof, together with the number,
aggregate principal balances of such Mortgage
Loans in such Mortgage Loan Group and the
percentage (based on the aggregate Loan Balances
of the Mortgage Loans in such Mortgage Loan
Group) (a) 30-59 days Delinquent, (b) 60-89 days
Delinquent and (c) 90 or more days Delinquent;
(ii) the number and aggregate Loan Balances of all
Mortgage Loans in each Mortgage Loan Group and
percentage (based on the aggregate Loan Balances
of the Mortgage Loans in such Mortgage Loan
Group) in foreclosure proceedings (and whether
any such Mortgage Loans are also included in any
of the statistics described in the foregoing
clause (i));
(iii) the number, aggregate Loan Balances of all
Mortgage Loans in each Mortgage Loan Group and
percentage (based on the aggregate Loan Balances
of the Mortgage Loans in such Mortgage Loan
Group) relating to Mortgagors in bankruptcy
proceedings (and whether any such Mortgage Loans
are also included in any of the statistics
described in the foregoing clause (i));
(iv) the number, aggregate Loan Balances of all
Mortgage Loans in each Mortgage Loan Group and
percentage (based on the aggregate Loan Balances
of the Mortgage Loans in such Mortgage Loan
Group) relating to REO Properties and Mortgage
Loans in foreclosure or bankruptcy (and whether
any such Mortgage Loans are also included in any
of the statistics described in the foregoing
clause (i));
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(v) the aggregate Loan Balance of all Mortgage Loans,
in each Mortgage Loan Group after giving effect
to any payment of principal on such Payment Date;
and
(vi) the book value of any REO Property and any
Mortgage Loans in foreclosure in each Mortgage
Loan Group.
(c) The foregoing reports shall be sent to an Owner only
insofar as such Owner owns a Certificate with respect to the related
Mortgage Loan Group.
(d) The Trustee may make available each month, to any
interested party, the monthly statement to Owners via the Trustee's
website, electronic bulletin board and its fax-on-demand service. The
Trustee's website will be located at "www.ctslink.com." The Trustee's
electronic bulletin board may be accessed by calling (301) 815-6620,
and its fax-on-demand service may be accessed by calling (301)
815-6610.
Section 7.9. Additional Reports by Trustee. (a) The Trustee
shall report to the Seller, the Oversight Agent, the Servicer, Standard &
Poor's, Moody's and the Certificate Insurer with respect to the amount then held
in each Account (including investment earnings accrued or scheduled to accrue)
held by the Trustee and the identity of the investments included therein, as the
Seller, the Servicer, the Oversight Agent or the Certificate Insurer may from
time to time request.
(b) Not later than 20 days after each Payment Date, the
Trustee shall forward, upon request, to the Certificate Insurer, the
Seller, the Servicer and the Oversight Agent a statement, setting forth
the status of the Certificate Account as of the close of business on
the last Business Day of the related Remittance Period showing, for the
period covered by such statement, the aggregate of deposits into and
withdrawals from the Certificate Account.
ARTICLE VIII
SERVICING AND ADMINISTRATION OF MORTGAGE LOANS
Section 8.1. Servicer and Sub-Servicers. (a) Acting directly
or through one or more Sub-Servicers as provided in Section 8.3, the Servicer,
as servicer, shall service and administer the Mortgage Loans in accordance with
this Agreement and with reasonable care, and using that degree of skill and
attention that the Servicer exercises with respect to comparable mortgage loans
that it services for itself or others, and shall have full power and authority,
acting alone, to do or cause to be done any and all things in connection with
such servicing and administration which it may deem necessary or desirable.
(b) 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, furnishing monthly and annual statements to the
Trustee and the Oversight Agent with respect to distributions, paying
Compensating Interest and making Delinquency Advances and Servicing
Advances pursuant hereto. The Servicer shall follow its customary
standards, policies and procedures in performing its duties as
Servicer. The Servicer shall cooperate with the Trustee and the
Oversight Agent and furnish to the Trustee and the Oversight Agent with
reasonable promptness information in its possession as may be necessary
or appropriate to enable the Trustee and the Oversight Agent to perform
their respective duties hereunder. The Trustee shall furnish the
Servicer with any powers of attorney and
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other documents necessary or appropriate to enable the Servicer to
carry out its servicing and administrative duties hereunder.
(c) 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 Owners
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 Properties; (ii) may consent to any
modification of the terms of any Note not expressly prohibited hereby
if the effect of any such modification (x) will not be to affect
materially and adversely the security afforded by the related Property,
the timing of receipt of any payments required hereby or the interests
of the Certificate Insurer and (y) will not cause the Trust (other than
the Non-REMIC Accounts) to fail to qualify as a REMIC.
(d) The parties intend that the Trust (other than the
Non-REMIC Accounts) shall constitute and that the affairs of Trust
shall be conducted so as to qualify the Trust (other than the Non-REMIC
Accounts) 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 the Trust and that in
such capacity it shall: (i) use its best efforts to conduct the affairs
of the Trust at all times that any Class of Certificates are
outstanding so as to maintain the status of the Trust (other than the
Non-REMIC Accounts) as a REMIC under the REMIC Provisions; (ii) not
knowingly or intentionally take any action or omit to take any action
that would cause the termination of the REMIC status of the Trust
(other than the Non-REMIC Accounts) or that would subject the Trust to
tax and (iii) exercise reasonable care not to allow the Trust to
receive income from the performance of services or from assets not
permitted under the REMIC Provisions to be held by a REMIC.
(e) With the consent of the Certificate Insurer and the
Oversight Agent, the Servicer may, and is hereby authorized to, perform
any of its servicing responsibilities with respect to all or certain of
the Mortgage Loans through a Sub-Servicer as it may from time to time
designate but no such designation of a Sub-Servicer shall serve to
release the Servicer from any of its obligations under this Agreement.
Such Sub-Servicer shall have all the rights and powers of the Servicer
with respect to such Mortgage Loans under this Agreement.
(f) Without limiting the generality of the foregoing, but
subject to Sections 8.13 and 8.14, the Servicer in its own name or in
the name of a Sub-Servicer may be authorized and empowered pursuant to
a power of attorney executed and delivered by the Trustee to execute
and deliver, on behalf of itself, the Owners and the Trustee or any of
them, (i) 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
Properties, (ii) to institute foreclosure proceedings or obtain a deed
in lieu of foreclosure so as to effect ownership of any Property on
behalf of the Trustee and (iii) to hold title to any Property upon such
foreclosure or deed in lieu of foreclosure on behalf of the Trustee;
provided, however, that Section 8.14(a) shall constitute a power of
attorney from the Trustee to the Servicer to execute an instrument of
satisfaction (or assignment of mortgage without recourse) with respect
to any Mortgage Loan paid in full (or with respect to which payment in
full has been escrowed). Subject to Sections 8.13 and 8.14, the Trustee
shall execute a power of attorney to the Servicer and any Sub-Servicer
and furnish them with any other documents as the Servicer or such
Sub-Servicer shall reasonably request to enable the Servicer and such
Sub-Servicer to carry out their respective servicing and administrative
duties hereunder.
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(g) The Servicer shall give prompt notice to the Trustee and
the Certificate Insurer of any action, of which the Servicer has actual
knowledge, to (i) assert a claim against the Trust or (ii) assert
jurisdiction over the Trust.
(h) Servicing Advances incurred by the Servicer or any
Sub-Servicer in connection with the servicing of the Mortgage Loans
(including any penalties in connection with the payment of any taxes
and assessments or other charges) on any Property shall be recoverable
by the Servicer or such Sub-Servicer to the extent described in Section
8.9(c) and in Section 7.5(d)(iii)(D) hereof.
Section 8.2. Collection of Certain Mortgage Loan Payments. (a)
The Servicer shall, to the extent such procedures shall be consistent with this
Agreement and the terms and provisions of any applicable Insurance Policies
follow such collection procedures as it follows from time to time with respect
to mortgage loans in its servicing portfolio that are comparable to the Mortgage
Loans; provided that the Servicer shall always at least follow collection
procedures that are consistent with 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 which may be
collected in the ordinary course of servicing the Mortgage Loans, (ii) if a
Mortgagor is in default or about to be in default because of a Mortgagor's
financial condition, arrange with the Mortgagor a schedule for the payment of
delinquent payments due on the related Mortgage Loan; provided, however, the
Servicer shall not reschedule the payment of delinquent payments more than one
time in any twelve (12) consecutive months with respect to any Mortgagor or
(iii) modify payments of monthly principal and interest on any Mortgage Loan
becoming subject to the terms of the Soldiers' and Sailors' Civil Relief Act of
1940, as amended, in accordance with the Servicer's general policies of the
comparable mortgage loans subject to such Act.
(b) The Servicer shall hold in escrow on behalf of the related
Mortgagor all Prepaid Installments received by it, and shall apply such
Prepaid Installments as directed by such Mortgagor and as set forth in
the related Note.
Section 8.3. Sub-Servicing Agreements Between Servicer and
Sub-Servicers. The Servicer may enter into Sub-Servicing Agreements for any
servicing and administration of Mortgage Loans with any institution which is
acceptable to the Certificate Insurer and the Oversight Agent and which is in
compliance with the laws of each state necessary to enable it to perform its
obligations under such Sub-Servicing Agreement and (x) has (i) been designated
an approved seller-servicer by FHLMC or Fannie Mae for Mortgage Loans and (ii)
has equity of at least $5,000,000, as determined in accordance with generally
accepted accounting principles or (y) is a Servicer Affiliate. The Servicer
shall give notice to the Certificate Insurer, the Rating Agencies, the Oversight
Agent and the Trustee of the appointment of any Sub-Servicer and shall furnish
to the Certificate Insurer, the Oversight Agent and the Trustee a copy of such
Sub-Servicing Agreement. 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. Any such Sub-Servicing Agreement shall be consistent
with and not violate the provisions of this Agreement.
Section 8.4. Successor Sub-Servicers. With the consent of the
Certificate Insurer, the Servicer may terminate any Sub-Servicing Agreement in
accordance with the terms and conditions of such Sub-Servicing Agreement and
either itself directly service the related Mortgage Loans or enter into a
Sub-Servicing Agreement with a successor Sub-Servicer that qualifies under
Section 8.3.
Section 8.5. Liability of Servicer. The Servicer shall not be
relieved of its obligations under this Agreement notwithstanding any
Sub-Servicing Agreement or any of the provisions of this Agreement relating to
agreements or arrangements between the Servicer and a Sub-Servicer or otherwise,
and the Servicer shall be obligated to the same extent and under the same terms
and conditions as if it alone were servicing and administering the Mortgage
Loans. The Servicer shall be entitled to enter into any
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agreement with a Sub-Servicer for indemnification of the Servicer by such
Sub-Servicer and nothing contained in such Sub-Servicing Agreement shall be
deemed to limit or modify this Agreement. The Trust shall not indemnify the
Servicer for any losses due to the Servicer's or any Sub-Servicer's negligence.
Section 8.6. No Contractual Relationship Between Sub-Servicer
and Trustee, Oversight Agent or the Owners. Any Sub-Servicing Agreement and any
other transactions or services relating to the Mortgage Loans involving a
Sub-Servicer shall be deemed to be between the Sub-Servicer and the Servicer
alone and the Certificate Insurer, the Oversight Agent, the Trustee and the
Owners shall not be deemed parties thereto and shall have no claims, rights,
obligations, duties or liabilities with respect to any Sub-Servicer except as
set forth in Section 8.7.
Section 8.7. Assumption or Termination of Sub-Servicing
Agreement by Oversight Agent. In connection with the assumption, if applicable,
of the responsibilities, duties and liabilities and of the authority, power and
rights of the Servicer hereunder by the Oversight Agent pursuant to Section
8.21, it is understood and agreed that the Servicer's rights and obligations
under any Sub-Servicing Agreement then in force between the Servicer and a
Sub-Servicer may be assumed or terminated by the Oversight Agent at the
Certificate Insurer's option without the payment of a fee notwithstanding any
contrary provision in any Sub-Servicing Agreement.
The Servicer shall, upon reasonable request of the Trustee or
the Oversight Agent, but at the expense of the Servicer, deliver to the assuming
party documents and records relating to each Sub-Servicing Agreement and an
accounting of amounts collected and held by it and otherwise use its best
reasonable efforts to effect the orderly and efficient transfer of the
Sub-Servicing Agreements to the assuming party.
Section 8.8. Principal and Interest Account.
(a) The Servicer shall establish in the name of the Trust for
the benefit of the Owners of the Certificates and the Certificate
Insurer and maintain at one or more Designated Depository Institutions
the Principal and Interest Account. The funds held in the Principal and
Interest Account shall not be commingled with any other funds.
Subject to Subsection (c) below, the Servicer shall deposit
all receipts related to the Mortgage Loans into the Principal and Interest
Account on a daily basis (but no later than the first Business Day after
receipt).
Subject to Subsection (c) below, on the Startup Day, the
Seller and/or the Servicer shall deposit into the Principal and Interest Account
all receipts related to the related Mortgage Loans received after the Cut-Off
Date.
(b) Any investment of funds in the Principal and Interest
Account shall mature or be withdrawable at par on or prior to the
immediately succeeding Remittance Date. All funds in the Principal and
Interest Account may only be held (i) uninvested, up to the limits
insured by the FDIC or (ii) invested in Eligible Investments. The
Principal and Interest Account shall be held in trust in the name of
the Trust and for the benefit of the Owners of the Certificates. Any
investment earnings on funds held in the Principal and Interest Account
shall be for the account of the Servicer and may only be withdrawn from
the Principal and Interest Account by the Servicer on the second
Business Day of the month for the investment earnings for the previous
calendar month. The Servicer shall withdraw from the Principal and
Interest Account, on the second Business Day of the month, investment
earnings for the previous calendar month. The Servicer shall deposit
into the Principal and Interest Account the amount of all losses on
investment of funds in the Principal and Interest Account upon request
from the Trustee. Any references herein to amounts on deposit in the
Principal and Interest Account shall refer to amounts net of investment
earnings.
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(c) The Servicer shall deposit to the Principal and Interest
Account all principal and interest collections on the Mortgage Loans
received after the Cut-Off Date, including any Prepayments and Net
Liquidation Proceeds, all Loan Purchase Prices and Substitution Amounts
received or paid by the Servicer with respect to the Mortgage Loans,
other recoveries or amounts related to the Mortgage Loans received by
the Servicer, Compensating Interest and Delinquency Advances together
with any amounts which are reimbursable from the Principal and Interest
Account but net of (i) the Servicing Fee with respect to each Mortgage
Loan and other servicing compensation to the Servicer as permitted by
Section 8.15 hereof, (ii) principal (including Prepayments) due on the
related Mortgage Loans on or prior to the Cut-Off Date, (iii) interest
due on the related Mortgage Loans on or prior to the Cut-Off Date and
(iv) Net Liquidation Proceeds to the extent such Net Liquidation
Proceeds exceed the Loan Balance of the related Mortgage Loan plus any
accrued and unpaid interest thereon through the Remittance Period in
which the liquidation occurred.
(d) (i) The Servicer may make withdrawals from the Principal
and Interest Account only for the following
purposes:
(A) to effect the timely remittance to the Trustee
of the Group I Monthly Remittance Amount and the
Group II Monthly Remittance Amount due on the
Remittance Date;
(B) to reimburse itself pursuant to Section 8.9(a)
hereof for unrecovered Delinquency Advances and
Servicing Advances;
(C) to withdraw investment earnings on amounts on
deposit in the Principal and Interest Account;
(D) to withdraw amounts that have been deposited to
the Principal and Interest Account in error; and
(E) to clear and terminate the Principal and
Interest Account following the termination of
the Trust Estate pursuant to Article IX hereof.
(ii) On the Determination Date of each month, the
Servicer shall send to the Trustee and the Oversight
Agent the Monthly Exception Report detailing the
payments on the Mortgage Loans during the prior
Remittance Period (or, as necessary, the related Due
Period) and certifying the amounts and purpose of
withdrawals permitted pursuant to (d)(i) above from
the Principal and Interest Account. Such report
shall contain the specified data, as described in
Section 8.26 hereof, and shall be in the form and
have the specifications as may be agreed to between
the Servicer, the Certificate Insurer and the
Trustee from time to time.
(iii) On each Remittance Date, the Servicer shall remit to
the Trustee by wire transfer, or otherwise make
funds available in immediately available funds for
deposit to the Certificate Account, the Group I
Interest Remittance Amount and the Group I Principal
Remittance Amount for such Remittance Date.
(iv) On each Remittance Date, the Servicer shall remit to
the Trustee by wire transfer or otherwise make funds
available in immediately available funds for deposit
to the Certificate Account, the Group II Interest
Remittance
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Amount and the Group II Principal Remittance Amount
for such Remittance Date, and, if the Trustee and
the Oversight Agent are not the same Person, shall
provide the Oversight Agent with written notice (by
facsimile or electronic mail) of the amount of such
deposit.
Section 8.9. Delinquency Advances, Compensating Interest and
Servicing Advances. (a) The Servicer is required, not later than each Remittance
Date, to deposit into the Principal and Interest Account an amount equal to the
sum of (i) the interest due (net of the Servicing Fees due) but not collected as
of the last day of the related Due Period and, (ii) scheduled principal due but
not collected as of the last day of the related Due Period, with respect to
Delinquent Mortgage Loans during the related Due Period but only if, in its good
faith business judgment, the Servicer reasonably believes that such amount will
ultimately be recovered from the related Mortgage Loan. Such amounts are
"Delinquency Advances".
The Servicer shall be permitted to fund its payment of
Delinquency Advances on any Remittance Date and to reimburse itself for any
Delinquency Advances paid from the Servicer's own funds, from collections on any
Mortgage Loan in the same Mortgage Loan Group deposited to the Principal and
Interest Account subsequent to the related Due Period and shall deposit into the
Principal and Interest Account with respect thereto (i) collections from the
Mortgagor whose Delinquency gave rise to the shortfall which resulted in such
Delinquency Advance, and (ii) Net Liquidation Proceeds recovered on account of
the related Mortgage Loan to the extent of the amount of aggregate Delinquency
Advances related thereto. If not thereto recovered from the related Mortgagor or
the related Net Liquidation Proceeds, Delinquency Advances shall be recoverable
pursuant to Section 7.5(d)(iii)(D).
(b) On or prior to each Remittance Date, the Servicer shall
deposit in the Principal and Interest Account with respect to any
Paid-in-Full Mortgage Loan during the related Remittance Period out of
its own funds without any right of reimbursement therefor an amount
equal to the difference between (x) 30 days' interest at such Mortgage
Loan's Coupon Rate (less the Servicing Fee Rate) on the Loan Balance of
such Mortgage Loan as of the first day of the related Remittance Period
and (y) to the extent not previously advanced, the interest (less the
Servicing Fee) paid by the Mortgagor with respect to the Mortgage Loan
during such Remittance Period (any such amount paid by the Servicer,
"Compensating Interest"). The Servicer shall in no event be required to
pay Compensating Interest with respect to any Remittance Period in an
amount in excess of the aggregate Servicing Fee received by the
Servicer with respect to all Mortgage Loans for such Remittance Period.
Further, the Servicer is not obligated to cover shortfalls in
collections in interest due to Curtailments.
(c) The Servicer will pay all "out-of-pocket" costs and
expenses incurred in the performance of its servicing obligations,
including, but not limited to, the cost of (i) Preservation Expenses,
(ii) any enforcement or judicial proceedings, including foreclosures,
and (iii) the management and liquidation of REO Property, but is only
required to pay such costs and expenses to the extent the Servicer
reasonably believes such costs and expenses will increase Net
Liquidation Proceeds on the related Mortgage Loan. Each such amount so
paid will constitute a "Servicing Advance". The Servicer may recover
Servicing Advances (x) from the Mortgagors to the extent permitted by
the Mortgage Loans, (y) from Liquidation Proceeds realized upon the
liquidation of the related Mortgage Loan, and (z) as provided in
Section 7.5(d)(iii)(D) hereof. In no case may the Servicer recover
Servicing Advances from principal and interest payments on any Mortgage
Loan or from any amounts relating to any other Mortgage Loan except as
provided pursuant to Section 7.5(d)(iii)(D) hereof.
Section 8.10. Purchase of Delinquent Mortgage Loans. The
Servicer may, but is not obligated to, purchase for its own account any Mortgage
Loan which becomes Delinquent, in whole or in part, as to four consecutive
monthly installments or any Mortgage Loan as to which enforcement proceedings
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have been brought by the Servicer or by any Sub-Servicer pursuant to Section
8.13. Any such Mortgage Loan so purchased shall be purchased by the Servicer not
later than the related Remittance Date at a purchase price equal to the Loan
Purchase Price thereof, which purchase price shall be deposited in the Principal
and Interest Account.
Section 8.11. Maintenance of Insurance. (a) The Servicer shall
cause to be maintained with respect to each Mortgage Loan a hazard insurance
policy with a generally acceptable carrier that provides for fire and extended
coverage, and which provides for a recovery by the Servicer on behalf of the
Trust of insurance proceeds relating to such Mortgage Loan in an amount not less
than the least of (i) the outstanding principal balance of the Mortgage Loan,
(ii) the minimum amount required to compensate for damage or loss on a
replacement cost basis and (iii) the full insurable value of the premises.
(b) If the Mortgage Loan at the time of origination relates to
a Property in an area identified in the Federal Register by the Federal
Emergency Management Agency as having special flood hazards, the
Servicer will cause to be maintained with respect thereto a flood
insurance policy in a form meeting the requirements of the current
guidelines of the Federal Insurance Administration with a generally
acceptable carrier in an amount representing coverage, and which
provides for a recovery by the Servicer on behalf of the Trust of
insurance proceeds relating to such Mortgage Loan of not less than the
least of (i) the outstanding principal balance of the Mortgage Loan,
(ii) the minimum amount required to compensate for damage or loss on a
replacement cost basis and (iii) the maximum amount of insurance that
is available under the Flood Disaster Protection Act of 1973. The
Servicer shall indemnify the Trust and the Certificate Insurer out of
the Servicer's own funds for any loss to the Trust and the Certificate
Insurer resulting from the Servicer's failure to maintain the insurance
required by this Section.
(c) In the event that the Servicer shall obtain and maintain a
blanket policy insuring against fire, flood and hazards of extended
coverage on all of the Mortgage Loans, then, to the extent such policy
names the Servicer as loss payee and provides coverage in an amount
equal to the aggregate unpaid principal balance on the Mortgage Loans
without co-insurance and otherwise complies with the requirements of
this Section 8.11, the Servicer shall be deemed conclusively to have
satisfied its obligations with respect to fire and hazard insurance
coverage under this Section 8.11, it being understood and agreed that
such blanket policy may contain a deductible clause, in which case the
Servicer shall, in the event that there shall not have been maintained
on the related Property a policy complying with the preceding
paragraphs of this Section 8.11, and there shall have been a loss which
would have been covered by such policy, deposit in the Principal and
Interest Account from the Servicer's own funds the difference, if any,
between the amount that would have been payable under a policy
complying with the preceding paragraphs of this Section 8.11 and the
amount paid under such blanket policy. Upon the request of the Trustee
or the Certificate Insurer, the Servicer shall cause to be delivered to
the Trustee or the Certificate Insurer a certified true copy of such
policy.
Section 8.12. Due-on-Sale Clauses; Assumption and Substitution
Agreements. When a Property has been or is about to be conveyed by the
Mortgagor, the Servicer shall, to the extent it has knowledge of such conveyance
or prospective conveyance, exercise its rights to accelerate the maturity of the
related Mortgage Loan under any "due-on-sale" clause contained in the related
Mortgage or Note; provided, however, that the Servicer shall not exercise any
such right if (i) the "due-on-sale" clause, in the reasonable belief of the
Servicer, is not enforceable under applicable law or (ii) the Servicer
reasonably believes that to permit an assumption of the Mortgage Loan would not
materially and adversely affect the interest of the Owners or of the Certificate
Insurer. In such event, the Servicer shall enter into an assumption and
modification agreement with the person to whom such property has been or is
about to be conveyed, pursuant to which such Person becomes liable under the
Note and, unless prohibited by applicable law or the related Mortgage Loan
documents, the Mortgagor remains liable thereon. If the foregoing is not
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permitted under applicable law, the Servicer is authorized to enter into a
substitution of liability agreement with such person, pursuant to which the
original Mortgagor is released from liability and such person is substituted as
Mortgagor and becomes liable under the Note; provided, however, that to the
extent any such substitution of liability agreement would be delivered by the
Servicer outside of its usual procedures for mortgage loans held in its own
portfolio the Servicer shall, prior to executing and delivering such agreement,
obtain the prior written consent of the Certificate Insurer. The Mortgage Loan,
as assumed, shall conform in all respects to the requirements, representations
and warranties of this Agreement. The Servicer shall notify the Trustee that any
such assumption or substitution agreement has been completed by forwarding to
the Trustee the original copy of such assumption or substitution agreement,
which copy shall be added by the Trustee to the related File and which shall,
for all purposes, be considered a part of such File to the same extent as all
other documents and instruments constituting a part thereof. The Servicer shall
be responsible for recording any such assumption or substitution agreements. In
connection with any such assumption or substitution agreement, the required
monthly payment on the related Mortgage Loan shall not be changed but shall
remain as in effect immediately prior to the assumption or substitution, the
stated maturity or outstanding principal amount of such Mortgage Loan shall not
be changed nor shall any required monthly payments of principal or interest be
deferred or forgiven. Any fee collected by the Servicer or the Sub-Servicer for
consenting to any such conveyance or entering into an assumption or substitution
agreement shall be retained by or paid to the Servicer as additional servicing
compensation.
Notwithstanding the foregoing paragraph or any other provision
of this Agreement, the Servicer shall not be deemed to be in default, breach or
any other violation of its obligations hereunder by reason of any assumption of
a Mortgage Loan by operation of law or any assumption which the Servicer may be
restricted by law from preventing, for any reason whatsoever.
Section 8.13. Realization Upon Defaulted Mortgage Loans. (a)
The Servicer shall foreclose upon or otherwise comparably effect the ownership
on behalf of the Trust of Properties relating to defaulted Mortgage Loans as to
which no satisfactory arrangements can be made for collection of Delinquent
payments and which the Servicer has not purchased pursuant to Section 8.10. In
connection with such foreclosure or other conversion, the Servicer shall
exercise such of the rights and powers vested in it hereunder, and use the same
degree of care and skill in its exercise or use as prudent mortgage lenders
would exercise or use under the circumstances in the conduct of their own
affairs, including, but not limited to, advancing funds for the payment of
taxes, amounts due with respect to Senior Liens and insurance premiums. Any
amounts so advanced shall constitute "Servicing Advances" within the meaning of
Section 8.9(c) hereof. The Servicer shall sell any REO Property within 35 months
of its acquisition by the Trust, unless the Servicer obtains for the Trustee,
the Oversight Agent and the Certificate Insurer an opinion of counsel
experienced in federal income tax matters and reasonably acceptable to the
Certificate Insurer, addressed to the Trustee, the Oversight Agent, the
Certificate Insurer and the Servicer, to the effect that the holding by the
Trust of such REO Property for any greater period will not result in the
imposition of taxes on "Prohibited Transactions" of the Trust as defined in
Section 860F of the Code or cause the Trust (other than the Non-REMIC Accounts)
to fail to qualify as a REMIC under the REMIC Provisions at any time that any
Certificates are outstanding, in which case the Servicer shall sell any REO
Property by the end of any extended period specified in any such opinion.
Notwithstanding the generality of the foregoing provisions,
the Servicer shall manage, conserve, protect and operate each REO Property for
the Owners solely for the purpose of its prompt disposition and sale in a manner
which does not cause such REO Property to fail to qualify as "foreclosure
property" within the meaning of Section 860G(a)(8) of the Code or result in the
receipt by the Trust of any "income from non-permitted assets" within the
meaning of Section 860F(a)(2)(B) of the Code or any "net income from foreclosure
property" which is subject to taxation under the REMIC Provisions. Pursuant to
its efforts to sell such REO Property, the Servicer shall either itself or
through an agent selected by the Servicer protect and conserve such REO Property
in the same manner and to such extent as is customary in the locality where such
REO Property is located and may, incident to its conservation and protection of
the
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interests of the Owners, rent the same, or any part thereof, as the Servicer
deems to be in the best interest of the Owners for the period prior to the sale
of such REO Property. The Servicer shall take into account the existence of any
hazardous substances, hazardous wastes or solid wastes, as such terms are
defined in the Comprehensive Environmental Response Compensation and Liability
Act, the Resource Conservation and Recovery Act of 1976, or other federal, state
or local environmental legislation, on a Property in determining whether to
foreclose upon or otherwise comparably convert the ownership of such Property.
(b) The Servicer shall determine, with respect to each
defaulted Mortgage Loan, when it has recovered, whether through
trustee's sale, foreclosure sale or otherwise, all amounts it expects
to recover from or on account of such defaulted Mortgage Loan,
whereupon such Mortgage Loan shall become a "Liquidated Loan".
Section 8.14. Trustee to Cooperate; Release of Files. (a) Upon
the payment in full of any Mortgage Loan (including the repurchase of any
Mortgage Loan or any liquidation of such Mortgage Loan through foreclosure or
otherwise) or the receipt by the Servicer of a notification that payment in full
will be escrowed in a manner customary for such purposes, the Servicer shall
deliver to the Trustee a Request for Release. Upon receipt of such Request for
Release, the Trustee shall promptly release the related File, in trust to (i)
the Servicer, (ii) an escrow agent or (iii) any employee, agent or attorney of
the Trustee, in each case pending its release by the Servicer, such escrow agent
or such employee, agent or attorney of the Trustee, as the case may be. Upon any
such payment in full or the receipt of such notification that such funds have
been placed in escrow, the Servicer is authorized to give, as attorney-in-fact
for the Trustee and the mortgagee under the Mortgage which secured the Note, an
instrument of satisfaction (or assignment of Mortgage without recourse)
regarding the Property relating to such Mortgage, which instrument of
satisfaction or assignment, as the case may be, shall be delivered to the Person
or Persons entitled thereto against receipt therefor of payment in full, it
being understood and agreed that no expense incurred in connection with such
instrument of satisfaction or assignment, as the case may be, shall be
chargeable to the Principal and Interest Account. In lieu of executing any such
satisfaction or assignment, as the case may be, the Servicer may prepare and
submit to the Trustee a satisfaction (or assignment without recourse, if
requested by the Person or Persons entitled thereto) in form for execution by
the Trustee with all requisite information completed by the Servicer; in such
event, the Trustee shall execute and acknowledge such satisfaction or
assignment, as the case may be, and deliver the same with the related File, as
aforesaid.
(b) From time to time and as appropriate in the servicing of
any Mortgage Loan, including, without limitation, foreclosure or other
comparable conversion of a Mortgage Loan or collection under any
applicable Insurance Policy, the Trustee shall (except in the case of
the payment or liquidation pursuant to which the related File is
released to an escrow agent or an employee, agent or attorney of the
Trustee), upon request of the Servicer and delivery to the Trustee of a
Request for Release, release the related File to the Servicer and shall
execute such documents as shall be necessary to the prosecution of any
such proceedings, including, without limitation, an assignment without
recourse of the related Mortgage to the Servicer; provided that there
shall not be released and unreturned at any one time more than 10% of
the entire number of Files, in which case the Trustee shall reject the
Request for Release. The Trustee shall complete in the name of the
Trustee any endorsement in blank on any Note prior to releasing such
Note to the Servicer. Such receipt shall obligate the Servicer to
return the File to the Trustee when the need therefor by the Servicer
no longer exists unless the Mortgage Loan shall be liquidated in which
case, upon receipt of the liquidation information, in physical or
electronic form, the Request for Release shall be released by the
Trustee to the Servicer.
(c) The Servicer shall have the right to approve applications
of Mortgagors for consent to (i) partial releases of Mortgages, (ii)
alterations and (iii) removal, demolition or division of properties
subject to Mortgages. No application for approval shall be considered
by the Servicer unless: (x) the provisions of the related Note and
Mortgage have been complied with; (y) the Loan-
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to-Value Ratio or Combined Loan-to-Value Ratio (which may, for this
purpose, be determined at the time of any such action in a manner
reasonably acceptable to the Certificate Insurer) after any release
does not exceed the Loan-to-Value Ratio or the Combined Loan-to-Value
Ratio as of the Cut-Off Date or Subsequent Cut-Off Date, as applicable,
and the Mortgagor's debt-to-income ratio after any release does not
exceed the debt-to-income ratio as of the Cut-Off Date or Subsequent
CutOff Date, as the case may be, and in no event exceeds the maximum
debt-to-income levels under the related Originator's underwriting
guidelines for a similar credit grade borrower and (z) the lien
priority of the related Mortgage is not adversely affected. Upon
receipt by the Trustee of an Officer's Certificate executed on behalf
of the Servicer setting forth the action proposed to be taken in
respect of a particular Mortgage Loan and certifying that the criteria
set forth in the immediately preceding sentence have been satisfied,
the Trustee shall execute and deliver to the Servicer the consent or
partial release so requested by the Servicer. A proposed form of
consent or partial release, as the case may be, shall accompany any
Officer's Certificate delivered by the Servicer pursuant to this
paragraph.
(d) No costs associated with the procedures described in this
Section 8.14 shall be an expense of the Trust.
Section 8.15. Servicing Compensation. As compensation for its
activities hereunder, the Servicer shall be entitled to retain the amount of the
Servicing Fee with respect to each Mortgage Loan. Additional servicing
compensation in the form of prepayment charges, release fees, bad check charges,
assumption fees, late payment charges, prepayment penalties, any other
servicing-related fees, Net Liquidation Proceeds not required to be deposited in
the Principal and Interest Account pursuant to Section 8.8(c)(iv) and similar
items shall, to the extent collected from Mortgagors, be retained by the
Servicer.
Section 8.16. Annual Statement as to Compliance. (a) The
Servicer, at its own expense, will deliver to the Oversight Agent, the Trustee,
the Certificate Insurer, Standard & Poor's and Moody's, on or before the last
day of March of each year, commencing in 2000, an Officer's Certificate stating,
as to each signer thereof, that (i) a review of the activities of the Servicer
during such preceding calendar year and of performance under this Agreement has
been made under such officers' supervision and (ii) to the best of such
officers' knowledge, based on such review, the Servicer has fulfilled all its
obligations under this Agreement for such year, or, if there has been a default
in the fulfillment of all such obligations, specifying each such default known
to such officers and the nature and status thereof including the steps being
taken by the Servicer to remedy such defaults.
(b) The Servicer shall deliver to the Trustee, the Oversight
Agent, the Certificate Insurer, the Owners and the Rating Agencies,
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 which with the giving of notice or
lapse of time, or both, would become an Event of Servicing Termination.
Section 8.17. Annual Independent Certified Public Accountants'
Reports. On or before the last day of March of each year, commencing in 2000,
the Servicer, at its own expense, shall cause to be delivered to the Trustee,
the Oversight Agent, the Certificate Insurer, Standard & Poor's and Moody's a
letter or letters of a firm of independent, nationally- recognized certified
public accountants reasonably acceptable to the Certificate Insurer stating that
such firm has, with respect to the Servicer's overall servicing operations
during the preceding calendar year, examined such operations in accordance with
the requirements of the Uniform Single Audit Program for Mortgage Bankers, and
in either case stating such firm's conclusions relating thereto.
Section 8.18. Access to Certain Documentation and Information
Regarding the Mortgage Loans. The Servicer shall provide to the Trustee, the
Oversight Agent, the Certificate Insurer, the FDIC and
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the supervisory agents and examiners of each of the foregoing access to the
documentation regarding the Mortgage Loans required by applicable state and
federal regulations, such access being afforded without charge but only upon
reasonable request and during normal business hours at the offices of the
Servicer designated by it.
Upon any change in the format of the computer tape maintained
by the Servicer in respect of the Mortgage Loans, the Servicer shall deliver a
copy of such computer tape to the Trustee, the Oversight Agent, and in addition
shall provide a copy of such computer tape to the Trustee, the Oversight Agent
and the Certificate Insurer at such other times as the Trustee, the Oversight
Agent or the Certificate Insurer may reasonably request.
Section 8.19. Assignment of Agreement. The Servicer may not
assign its obligations under this Agreement, in whole or in part, unless it
shall have first obtained the written consent of the Trustee, the Oversight
Agent and the Certificate Insurer, which such consent shall not be unreasonably
withheld; provided, however, that any assignee must meet the eligibility
requirements set forth in Section 8.21(f) hereof for a successor servicer.
Notice of any such assignment shall be given by the Servicer to the Trustee, the
Oversight Agent, the Certificate Insurer and the Rating Agencies.
Section 8.20. Events of Servicing Termination. (a) The Trustee
or the Oversight Agent (each with the consent of the Certificate Insurer) or the
Certificate Insurer (or the Owners pursuant to Section 6.11 hereof) may remove
the Servicer (including any successor entity serving as the Servicer) upon the
occurrence of any of the following events:
(i) The Servicer shall fail to deliver to the Trustee
any proceeds or required payment, which failure
continues unremedied for five Business Days
following written notice to an Authorized Officer
of the Servicer from the Trustee, the Oversight
Agent or from any Owner;
(ii) The Servicer shall (I) apply for or consent to
the appointment of a receiver, trustee,
liquidator or custodian or similar entity with
respect to itself or its property, (II) admit in
writing its inability to pay its debts generally
as they become due, (III) make a general
assignment for the benefit of creditors, (IV) be
adjudicated a bankrupt or insolvent, (V) commence
a voluntary case under the federal bankruptcy
laws of the United States of America or file a
voluntary petition or answer seeking
reorganization, an arrangement with creditors or
an order for relief or seeking to take advantage
of any insolvency law or file an answer admitting
the material allegations of a petition filed
against it in any bankruptcy, reorganization or
insolvency proceeding or (VI) take corporate
action for the purpose of effecting any of the
foregoing;
(iii) If without the application, approval or consent
of the Servicer, a proceeding shall be instituted
in any court of competent jurisdiction, under any
law relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking in
respect of the Servicer an order for relief or an
adjudication in bankruptcy, reorganization,
dissolution, winding up, liquidation, a
composition or arrangement with creditors, a
readjustment of debts, the appointment of a
trustee, receiver, liquidator, custodian or
similar entity with respect to the Servicer or of
all or any substantial part of its assets, or
other like relief in respect thereof under any
bankruptcy or insolvency law, and, if such
proceeding is being contested by the Servicer in
good faith, the same shall (A) result in the
entry of an order for relief or any such
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adjudication or appointment or (B) continue
undismissed or pending and unstayed for any
period of seventy-five (75) consecutive days;
(iv) The Servicer shall fail to perform any one or
more of its obligations hereunder (other than the
obligations set out in (i) above) and shall
continue in default thereof for a period of sixty
(60) days after the earlier of (x) notice by the
Trustee, the Oversight Agent or the Certificate
Insurer of said failure or (y) actual knowledge
of an officer of the Servicer; provided, however,
that if the Servicer can demonstrate to the
reasonable satisfaction of the Certificate
Insurer that it is diligently pursuing remedial
action, then the cure period may be extended with
the written approval of the Certificate Insurer;
or
(v) The Servicer shall fail to cure any breach of any
of its representations and warranties set forth
in Section 3.2A which materially and adversely
affects the interests of the Owners or
Certificate Insurer for a period of sixty (60)
days after the Servicer's discovery or receipt of
notice thereof; provided, however, that if the
Servicer can demonstrate to the reasonable
satisfaction of the Certificate Insurer that it
is diligently pursuing remedial action, then the
cure period may be extended with the written
approval of the Certificate Insurer.
(b) The Certificate Insurer may remove the Servicer upon the
occurrence of any of the following events:
(i) a Group I Total Available Funds Shortfall or a
Group II Total Available Funds Shortfall;
(ii) the failure by the Servicer to make any required
Servicing Advance;
(iii) the failure by the Servicer to perform any one or
more of its obligations hereunder, which failure
materially and adversely affects the interests of
the Certificate Insurer, and the continuance of
such failure for a period of 30 days or such
longer period as agreed to in writing by the
Certificate Insurer.
(iv) the failure by the Servicer to make any required
Delinquency Advance or to pay any Compensating
Interest;
(v) if on any Payment Date the Pool Rolling Three
Month Delinquency Rate exceeds 7.0% for either
Mortgage Loan Group;
(vi) if on any Payment Date occurring in March of any
year, commencing in March 2000, the aggregate
Pool Cumulative Realized Losses for a Mortgage
Loan Group over the prior twelve month period
exceed 2.0% of the average Pool Principal Balance
of such Mortgage Loan Group as of the close of
business on the last day of each of the twelve
preceding Remittance Periods;
(vii) (a) if on any of the first 60 Payment Dates from
the Startup Day the aggregate Pool Cumulative
Expected Losses for a Mortgage Loan Group for all
prior Remittance Periods since the Startup Day
exceed 5.0% of the
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Pool Principal Balance of such Mortgage Loan
Group as of the Cut-Off Date and (b) if on any
Payment Date thereafter the aggregate Pool
Cumulative Expected Losses for a Mortgage Loan
Group for all prior Remittance Periods from the
Startup Day exceed 6.5% of the Pool Principal
Balance of such Mortgage Loan Group as of the
Cut-Off Date, provided, however, with respect to
clauses (v), (vi) and (vii), if the Servicer can
demonstrate to the reasonable satisfaction of the
Certificate Insurer that any such event was due
to circumstances beyond the control of the
Servicer, such event shall not be considered an
event of termination of the Servicer.
(viii) there shall be a change in control of the
Servicer which results in Brian Chisick no longer
being the majority owner;
(ix) commencing June 30, 1999, the Servicer shall fail
to maintain committed "warehouse facility"
line(s) of credit or loan agreements entitling
the Servicer to borrow at least $100 million
against its mortgage loan inventory;
(x) a default shall have occurred or been declared
under any short-term or long-term indebtedness of
the Servicer; or
(xi) the Servicer shall fail to maintain at least the
following financial requirements, based upon its
most recent financial statements:
a) shareholders' equity of at least $70 million
plus 50% of the Servicer's net income since
December 1, 1998; and
b) a ratio of total liabilities to shareholders'
equity of no greater than 3:1.
Upon the Oversight Agent or the Trustee's determination that a required
Delinquency Advance or payment of Compensating Interest has not been made by the
Servicer, the Oversight Agent or the Trustee shall so notify in writing an
Authorized Officer of the Servicer and the Certificate Insurer as soon as is
reasonably practical.
(c) In the case of clauses (i), (ii), (iii), (iv) or (v) of
Subsection (b) the Owners of Certificates evidencing not less than 33
1/3% of the aggregate Class A Certificate Principal Balance (with the
consent of the Certificate Insurer) by notice then given in writing to
the Servicer (and a copy to the Trustee and the Oversight Agent) may
terminate all of the rights and obligations of the Servicer under this
Agreement; provided, however, that the responsibilities and duties of
the initial Servicer with respect to the repurchase of Mortgage Loans
pursuant to Section 3.4 shall not terminate. The Trustee shall mail a
copy of any notice given by it hereunder to the Rating Agencies. On or
after the receipt by the Servicer of such written notice, all authority
and power of the Servicer under this Agreement, whether with respect to
the Certificates or the Mortgage Loans or otherwise, shall without
further action pass to and be vested in the Oversight Agent (for this
purpose, the term includes an affiliate thereof) or such successor
Servicer as may be appointed hereunder, and, without limitation, the
Trustee is hereby authorized and empowered (which authority and power
are coupled with an interest and are irrevocable) to execute and
deliver, on behalf of the predecessor Servicer, as attorney-in-fact or
otherwise, any and all documents and other instruments and to do or
accomplish all other acts or things necessary or appropriate to effect
the purposes of such notice or termination, whether to complete the
transfer and endorsement of the Mortgage Loans and related documents or
otherwise. The predecessor Servicer shall cooperate with the successor
Servicer or
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the Oversight Agent in effecting the termination of the
responsibilities and rights of the predecessor Servicer under this
Agreement including the transfer to the successor Servicer or to the
Oversight Agent for administration by it of all cash accounts that
shall at the time be held by the predecessor Servicer for deposit or
shall thereafter be received with respect to a Mortgage Loan. All
reasonable costs and expenses (including attorneys' fees) incurred in
connection with transferring the Files and the other necessary data to
the successor Servicer and amending this Agreement to reflect such
succession as Servicer pursuant to this Section 8.20 or Section 8.21
shall be paid by the predecessor Servicer upon presentation of
reasonable documentation of such costs and expenses.
(d) If any event described in subsections (a) or (b) above
occurs and is continuing, during the 30 day period following receipt of
notice, the Trustee, the Oversight Agent and the Certificate Insurer
shall cooperate with each other to determine if the occurrence of such
event is more likely than not the result of the acts or omissions of
the Servicer or more likely than not the result of events beyond the
control of the Servicer. If the Trustee, the Oversight Agent and the
Certificate Insurer conclude that the event is the result of the
latter, the Servicer may not be terminated, unless and until some other
event set forth in subsection (a) or (b) has occurred and is
continuing. If the Trustee, the Oversight Agent and the Certificate
Insurer conclude that the event is the result of the former, the
Certificate Insurer may terminate the Servicer in accordance with this
Section, and the Oversight Agent shall act as successor Servicer unless
a successor Servicer is otherwise appointed hereunder.
If the Trustee, the Oversight Agent and the Certificate
Insurer cannot agree, and the basis for such disagreement is not arbitrary or
unreasonable, as to the cause of the event, the decision of the Certificate
Insurer shall control.
For purposes of this Section 8.20, neither the Trustee nor the
Oversight Agent shall be deemed to have knowledge of an Event of Default unless
a Responsible Officer of (i) the Trustee assigned to and working in the
Corporate Trust Office, or (ii) the Oversight Agent, respectively, has actual
knowledge thereof or unless written notice of any event which is in fact such an
Event of Default is received by the Trustee or the Oversight Agent, as
applicable, and such notice references the Certificates, the Trust or this
Agreement.
The Certificate Insurer agrees to use its best efforts to
inform the Trustee and the Oversight Agent of any materially adverse information
regarding the Servicer's servicing activities that comes to the attention of the
Certificate Insurer from time to time.
Section 8.21. Resignation of Servicer and Appointment of
Successor. (a) Upon the Servicer's receipt of notice of termination pursuant to
Section 8.20 or the Servicer's resignation in accordance with the terms of this
Section 8.21, the predecessor Servicer shall continue to perform its functions
as Servicer under this Agreement, in the case of termination, only until the
date specified in such termination notice or, if no such date is specified in a
notice of termination, until receipt of such notice and, in the case of
resignation, until the earlier of (x) the date 90 days from the delivery to the
Certificate Insurer, the Oversight Agent and the Trustee of written notice of
such resignation (or written confirmation of such notice) in accordance with the
terms of this Agreement and (y) the date upon which the predecessor Servicer
shall become unable to act as Servicer, as specified in the notice of
resignation and accompanying opinion of counsel. All collections then being held
by the predecessor Servicer prior to its removal and any collections received by
the Servicer after removal or resignation shall be appropriately endorsed by it
and remitted directly and immediately to the Oversight Agent or the successor
Servicer. In the event of the Servicer's resignation or termination hereunder,
the Oversight Agent shall (at the direction of the Certificate Insurer) appoint
a successor Servicer and the successor Servicer shall accept its appointment by
a written assumption in form acceptable to the Oversight Agent and the
Certificate Insurer, with copies to the
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Certificate Insurer and the Rating Agencies. Pending such appointment, the
Oversight Agent shall act as the Servicer hereunder.
(b) The Servicer shall not resign from the obligations and
duties hereby imposed on it, except (i) upon determination that its
duties hereunder are no longer permissible under applicable law or are
in material conflict by reason of applicable law with any other
activities carried on by it, the other activities of the Servicer so
causing such a conflict being of a type and nature carried on by the
Servicer at the date of this Agreement or (ii) upon written consent of
the Certificate Insurer, the Oversight Agent and the Trustee. Any such
determination permitting the resignation of the Servicer shall be
evidenced by an opinion of counsel to such effect which shall be
delivered to the Trustee, the Oversight Agent and the Certificate
Insurer.
(c) No resignation of the Servicer shall become effective
until the Oversight Agent or a successor Servicer shall have assumed
the Servicer's responsibilities and obligations in accordance with this
Section.
(d) Upon removal or resignation of the Servicer, the Servicer
also shall promptly deliver or cause to be delivered to a successor
Servicer or the Oversight Agent all the books and records (including,
without limitation, records kept in electronic form) that the Servicer
has maintained for the Mortgage Loans, including all tax bills,
assessment notices, insurance premium notices and all other documents
as well as all original documents then in the Servicer's possession.
(e) Any collections received by the Servicer after removal or
resignation shall be appropriately endorsed by it and remitted directly
and immediately to the Oversight Agent, or the successor Servicer.
(f) Upon removal or resignation of the Servicer, the Oversight
Agent (x) shall appoint a successor Servicer in accordance with the
instructions of the Certificate Insurer, or if the Certificate Insurer
fails to provide such instruction, solicit bids for a successor
Servicer as described below and (y) pending the appointment of a
successor Servicer, shall serve as Servicer. The Oversight Agent shall,
if the Certificate Insurer fails to instruct it as to the appointment
of a successor Servicer and if the Oversight Agent is unable to obtain
a qualifying bid and is prevented by law from acting as Servicer, (I)
appoint, or petition a court of competent jurisdiction to appoint, any
housing and home finance institution, bank or mortgage servicing
institution which has been designated as an approved seller-servicer by
Fannie Mae or FHLMC for second mortgage loans and having equity of not
less than $15,000,000 or such lower level as may be acceptable to the
Certificate Insurer as determined in accordance with generally accepted
accounting principles as the successor to the Servicer hereunder in the
assumption of all or any part of the responsibilities, duties or
liabilities of the Servicer hereunder and (II) give notice thereof to
the Certificate Insurer and Rating Agencies. The compensation of any
successor Servicer (including, without limitation, the Oversight Agent)
so appointed shall be the Servicing Fee, together with the other
servicing compensation in the form of assumption fees, late payment
charges or otherwise as provided in Sections 8.8 and 8.15; provided,
however, that if the Oversight Agent acts as successor Servicer, then
the former Servicer agrees to pay to the Oversight Agent at such time
that the Oversight Agent becomes such successor Servicer a set-up fee
of fifteen dollars ($15.00) for each Mortgage Loan then included in the
Trust Estate. The Oversight Agent shall be obligated to serve as
successor Servicer whether or not the fee described in the preceding
sentence is paid by the Seller, but shall in any event be entitled to
receive, and to enforce payment of, such fee from the former Servicer.
(g) In the event the Oversight Agent solicits bids as provided
above, the Oversight Agent shall solicit, by public announcement, bids
from housing and home finance institutions, banks and mortgage
servicing institutions meeting the qualifications set forth above. Such
public
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announcement shall specify that the successor Servicer shall be
entitled to the full amount of the Servicing Fee as servicing
compensation, together with the other servicing compensation in the
form of assumption fees, late payment charges or otherwise as provided
in Sections 8.8 and 8.15. Within thirty days after any such public
announcement, the Oversight Agent shall negotiate and effect the sale,
transfer and assignment of the servicing rights and responsibilities
hereunder to the qualified party submitting the highest satisfactory
bid as to the price they will pay to obtain such servicing. The
Oversight Agent shall deduct from any sum received by the Oversight
Agent from the successor to the Servicer in respect of such sale,
transfer and assignment all costs and expenses of any public
announcement and of any sale, transfer and assignment of the servicing
rights and responsibilities hereunder. After such deductions, the
remainder of such sum shall be paid by the Oversight Agent to the
Servicer at the time of such sale.
(h) The Oversight Agent and such successor shall take such
action consistent with this Agreement as shall be necessary to
effectuate any such succession, including the notification to all
Mortgagors of the transfer of servicing if such notification is not
done by the Servicer as required by subsection (j) below. The Servicer
agrees to cooperate with the Oversight Agent and any successor Servicer
in effecting the termination of the Servicer's servicing
responsibilities and rights hereunder and shall promptly provide the
Oversight Agent or such successor Servicer, as applicable, all
documents and records reasonably requested by it to enable it to assume
the Servicer's functions hereunder and shall promptly also transfer to
the Oversight Agent or such successor Servicer, as applicable, all
amounts which then have been or should have been deposited in the
Principal and Interest Account by the Servicer or which are thereafter
received with respect to the Mortgage Loans. Neither the Oversight
Agent nor any other successor Servicer shall be held liable by reason
of any failure to make, or any delay in making, any distribution
hereunder or any portion thereof caused by (i) the failure of the
Servicer to deliver, or any delay in delivery, cash, documents or
records to it or (ii) restrictions imposed by any regulatory authority
having jurisdiction over the Servicer.
(i) The Oversight Agent or any other successor Servicer, upon
assuming the duties of Servicer hereunder, shall immediately make all
Delinquency Advances and pay all Compensating Interest which the
Servicer has theretofore failed to remit with respect to the Mortgage
Loans; provided, however, that if the Oversight Agent is acting as
successor Servicer, the Oversight Agent shall only be required to make
Delinquency Advances (including the Delinquency Advances described in
this clause (i)) if, in the Oversight Agent's reasonable good faith
judgment, such Delinquency Advances will ultimately be recoverable from
the Mortgage Loans.
(j) The Servicer which is being removed or is resigning shall
give notice to the Mortgagors and to the Rating Agencies of the
transfer of the servicing to the successor Servicer.
(k) Upon appointment, the successor Servicer shall be the
successor in all respects to the predecessor Servicer and shall be
subject to all the responsibilities, duties and liabilities of the
predecessor Servicer including, but not limited to, the maintenance of
the hazard insurance policy(ies), the fidelity bond and an errors and
omissions policy pursuant to Section 8.23 and shall be entitled to the
Servicing Fee and all of the rights granted to the predecessor Servicer
by the terms and provisions of this Agreement. The appointment of a
successor Servicer shall not affect any liability of the predecessor
Servicer which may have arisen under this Agreement prior to its
termination as Servicer (including, without limitation, any deductible
under an insurance policy) nor shall any successor Servicer be liable
for any acts or omissions of the predecessor Servicer or for any breach
by such Servicer of any of its representations or warranties contained
herein or in any related document or agreement.
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(l) The Trustee or the Oversight Agent shall give notice to
the Certificate Insurer, Moody's and Standard & Poor's and the Owners
of the occurrence of any event specified in Section 8.20 of which a
Responsible Officer of the Trustee or the Oversight Agent has actual
knowledge.
Section 8.22. Waiver of Past Events of Servicing Termination.
Subject to the rights of the Certificate Insurer pursuant to Section 8.20 to
terminate all of the rights and obligations of the Servicer under this
Agreement, the Owners of at least 51% of the Class A Certificate Principal
Balance may (with the consent of the Certificate Insurer), on behalf of all
Owners of Certificates, waive any default by the Servicer in the performance of
its obligations hereunder and its consequences, except a default in making any
required deposits to or payments from the Principal and Interest Account in
accordance with this Agreement. Upon any such waiver of a past default, such
default shall cease to exist, and any Event of Servicing Termination arising
therefrom shall be deemed to have been remedied for every purpose of this
Agreement. No such waiver shall extend to any subsequent or other default or
impair any right consequent thereon.
Section 8.23. Inspections by Certificate Insurer; Errors and
Omissions Insurance. (a) At any reasonable time and from time to time upon
reasonable notice, the Certificate Insurer, the Trustee, the Oversight Agent or
any agents or representatives thereof may inspect the Servicer's servicing
operations and discuss the servicing operations of the Servicer with any of its
officers or directors. The costs and expenses incurred by the Servicer or its
agents or representatives in connection with any such examinations or
discussions shall be paid by the Servicer.
(b) The Servicer agrees to maintain errors and omissions
coverage and a fidelity bond, each at least to the extent generally
maintained by prudent mortgage loan servicers having servicing
portfolios of a similar size. Upon request of the Oversight Agent, the
Servicer shall deliver to the Oversight Agent a certified true and
correct copy of such fidelity bond and errors and omissions policy to
the Oversight Agent.
(c) For each year this Agreement is in effect, the Servicer
shall submit to the Oversight Agent, (i) within 120 days of the end of
each calendar year, a copy of the Servicer's annual audited financial
statements and (ii) within 60 days of the end of each calendar quarter,
the Servicer's quarterly unaudited financial statements. Such financial
statements shall include a balance sheet, income statement and
statement of retained earnings.
Section 8.24. Merger, Conversion, Consolidation or Succession
to Business of Servicer. Any corporation into which the Servicer may be merged
or converted or with which it may be consolidated, or corporation resulting from
any merger, conversion or consolidation to which the Servicer shall be a party
or any corporation succeeding to all or substantially all of the business of the
Servicer shall be the successor of the Servicer hereunder, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto provided that such corporation meets the qualifications set forth in
Section 8.21(f).
Section 8.25. Notices of Material Events. The Servicer shall
give prompt notice to the Certificate Insurer, the Trustee, the Oversight Agent,
Moody's and Standard & Poor's of the occurrence of any of the following events:
(a) Any default or any fact or event which results, or which
with notice or the passage of time, or both, would result in the
occurrence of a default by the Seller, any Originator or the Servicer
under any Operative Document or would constitute a material breach of a
representation, warranty or covenant under any Operative Document;
(b) The submission of any claim or the initiation of any legal
process, litigation or administrative or judicial investigation against
the Seller or the Servicer in any federal, state or local
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court or before any governmental body or agency or before any
arbitration board or any such proceedings threatened by any
governmental agency, which, if adversely determined, would have a
material adverse effect upon any the Seller's or the Servicer's ability
to perform its obligations under any Operative Document;
(c) The commencement of any proceedings by or against the
Seller or the Servicer under any applicable bankruptcy, reorganization,
liquidation, insolvency or other similar law now or hereafter in effect
or of any proceeding in which a receiver, liquidator, trustee or other
similar official shall have been, or may be, appointed or requested for
the Seller or the Servicer; and
(d) The receipt of notice from any agency or governmental body
having authority over the conduct of any of the Seller's or the
Servicer's business that the Seller or the Servicer is to cease and
desist, or to undertake any practice, program, procedure or policy
employed by the Seller or the Servicer in the conduct of the business
of any of them, and such cessation or undertaking will materially and
adversely affect the conduct of the Seller's or the Servicer's business
or its ability to perform under the Operative Documents or materially
and adversely affect the financial affairs of the Seller or the
Servicer.
Section 8.26. Monthly Servicing Report and Servicing
Certificate. (a) The Servicer shall, not later than the related Determination
Date, deliver to the Oversight Agent, the Trustee, the Rating Agencies, the
Underwriter and the Certificate Insurer a Monthly Servicing Report, each in a
mutually agreeable electronic and paper format, relating to the Group I Mortgage
Loans and the Group II Mortgage Loans stating the following:
(i) As to the related Due Period, the Interest
Remittance Amount (in both cases specifying the
(a) scheduled interest collected; (b) Delinquency
Advances relating to interest; and (c)
Compensating Interest paid) and the Principal
Remittance Amount (in both cases specifying the
(1) scheduled principal collected; (2)
Delinquency Advance relating to Mortgage
principal; (3) Prepayments; (4) Loan Balance of
Loans repurchased; (5) Substitution Amounts; and
(6) Net Liquidation Proceeds (related to
principal));
(ii) With respect to the related Remittance Period,
the Servicing Fee payable to the Servicer;
(iii) With respect to the related Remittance Period,
the net scheduled principal and interest payments
remitted by the Servicer to the Principal and
Interest Account;
(iv) The scheduled principal and interest payments on
the Mortgage Loans that were not made by the
related Mortgagors as of the last day of the
related Remittance Period;
(v) The number and aggregate Loan Balances (computed
in accordance with the terms of the Mortgage
Loans) and the percentage of the total number of
Mortgage Loans and of the Loan Balance which they
represent of Mortgage Loans Delinquent, if any,
(i) 30-59 days, (ii) 60-89 days and (iii) 90 days
or more, respectively, as of the last day of the
related Remittance Period;
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(vi) The number and aggregate Loan Balances of
Mortgage Loans, if any, in foreclosure and the
book value (within the meaning of 12 Code of
Federal Regulations Section 571.13 or any
comparable provision) of any real estate acquired
through foreclosure or deed in lieu of
foreclosure, including REO Properties as of the
last day of the related Remittance Period;
(vii) The Loan Balances (immediately prior to being
classified as Liquidated Mortgage Loans) of
Liquidated Mortgage Loans as of the last day of
the related Remittance Period;
(viii) Liquidation Proceeds received during the related
Remittance Period;
(ix) The amount of any Liquidation Expenses being
deducted from Liquidation Proceeds or otherwise
being charged to the Principal and Interest
Account with respect to such Determination Date;
(x) Liquidation Expenses incurred during the related
Remittance Period which are not being deducted
from Liquidation Proceeds or otherwise being
charged to the Principal and Interest Account
with respect to such Determination Date;
(xi) Net Liquidation Proceeds as of the last day of
the related Remittance Period;
(xii) Insurance payments received from Insurance
Policies during the related Remittance Period;
(xiii) The number of Mortgage Loans and the aggregate
scheduled Loan Balances as of the last day of the
Due Period relating to the Payment Date;
(xiv) The Group I Total Available Funds and the Group
II Total Available Funds for each Remittance
Date;
(xv) The number and aggregate Loan Balances and Loan
Purchase Prices of Mortgage Loans required to be
repurchased by the Seller or purchased by the
Servicer as of the Replacement Cut-Off Date
occurring during the Remittance Period preceding
such Date;
(xvi) The number and aggregate Loan Balances of
Mortgage Loans (at the time they became Defaulted
Mortgage Loans) which are being carried as REO
Properties;
(xvii) The amount of any Delinquency Advances made by
the Servicer during the related Remittance Period
and any unreimbursed Delinquency Advances as of
such Payment Date;
(xviii) The weighted average Coupon Rates of the Mortgage
Loans;
(xix) The Monthly Exception Report;
(xx) The amount of any Substitution Amounts delivered
by the Seller;
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(xxi) The number and aggregate Loan Balances of
Mortgage Loans, if any, in bankruptcy proceedings
as of the last day of related Remittance Period;
(xxii) The amount of unreimbursed Delinquency Advances
made by the Servicer;
(xxiii) The amounts, if any, of the Realized Losses for
the related Remittance Period and the cumulative
amount of Realized Losses since the Startup Day.
(xxiv) The amount of unreimbursed Servicing Advances
made by the Servicer;
(xxv) Unpaid Servicing Fees;
(xxvi) The amount of Compensating Interest to be paid by
the Servicer during the related Remittance
Period;
(xxvii) The weighted average net Coupon Rate of the
Mortgage Loans;
(xxviii) For the related Remittance Period and
cumulatively since the Startup Day, the number
and aggregate Loan Balance of Mortgage Loans
bought back by the Servicer or the Seller
pursuant to Section 3.4, 3.6 and 8.10 hereof
(identified separately for each such section).
(xxix) Any other information reasonably requested by the
Certificate Insurer or the Trustee;
(xxx) The aggregate actual Loan Balance as of the last
day of the Due Period relating to the Payment
Date; and
(xxxi) For each of the Payment Dates during and
immediately after the Funding Period, (A) the
Pre-Funded Amount previously used to purchase
Subsequent Mortgage Loans, (B) the Pre-Funded
Amount distributed as principal, (C) the
Pre-Funding Account Earnings transferred to the
Capitalized Interest Account and (D) the amounts
transferred from the Capitalized Interest Account
to the Certificate Account and the amount
transferred to the Seller, if any.
(b) On each Payment Date, the Trustee shall provide to the
Certificate Insurer, the Underwriter, the Seller, Standard & Poor's and
Moody's a written report (the "Servicing Certificate"), as such form
may be revised by the Trustee, the Servicer, Moody's and Standard &
Poor's from time to time, but in every case setting forth the
information required under Section 7.8 hereof, based solely on
information contained in the Monthly Servicing Report.
Section 8.27. Indemnification by the Seller. The Seller agrees
to indemnify and hold the Trustee, the Oversight Agent, the Certificate Insurer
and each Owner harmless against any and all claims, losses, penalties, fines,
forfeitures, legal fees and related costs, judgments, and any other costs, fees
and expenses that the Trustee, the Oversight Agent, the Certificate Insurer and
any Owner may sustain in any way related to the failure of the Seller to perform
its duties under this Agreement. A party against whom a claim is brought shall
immediately notify the other parties and the Rating Agencies if a claim is made
by a third party with respect to this Agreement, and the Seller shall assume
(with the consent of the Certificate Insurer and the Trustee) the defense of any
such claim and pay all expenses in connection therewith,
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including reasonable counsel fees, and promptly pay, discharge and satisfy any
judgment or decree which may be entered against the Certificate Insurer, the
Oversight Agent, the Servicer, the Seller, the Trustee and/or Owner in respect
of such claim.
Section 8.28. Indemnification by the Servicer. The Servicer
agrees to indemnify and hold the Trustee, the Oversight Agent, the Certificate
Insurer and each Owner harmless against any and all claims, losses, penalties,
fines, forfeitures, legal fees and related costs, judgments, and any other
costs, fees and expenses that the Trustee, the Oversight Agent, the Certificate
Insurer and any Owner may sustain in any way related to the failure of the
Servicer to perform its duties and service the Mortgage Loans in compliance with
the terms of this Agreement. A party against whom a claim is brought shall
immediately notify the other parties and the Rating Agencies if a claim is made
by a third party with respect to this Agreement, and the Servicer shall assume
(with the consent of the Trustee) the defense of any such claim and pay all
expenses in connection therewith, including reasonable counsel fees, and
promptly pay, discharge and satisfy any judgment or decree which may be entered
against the Certificate Insurer, the Servicer, the Trustee, the Oversight Agent
and/or Owner in respect of such claim.
Section 8.29. Appointment and Term of the Servicer.
(a) Initial Appointment. The Trust, the Owners, the
Certificate Insurer and the Trustee hereby appoint the Servicer to act
as the Servicer for the Mortgage Loans (including all of the duties,
obligations and rights of the Servicer) under this Agreement, which
appointment shall be for an initial term that begins on the Closing
Date and ends on June 30, 1999. The Servicer hereby accepts its
appointment as Servicer hereunder.
(b) Two Month Renewal of Servicer Term. Beginning with July
1999, the term of the Servicer shall be extended for successive two
calendar month terms that end on August 31, October 31, December 31,
February 28, April 30 and June 30 of each year, beginning on August 31,
1999, until the Certificates are paid in full; provided that the
Oversight Agent delivers written notice of renewal in the form attached
hereto as Exhibit K (the "Servicer Renewal Notice") prior to expiration
of the preceding two month term. The Oversight Agent, on behalf of the
Certificate Insurer, shall send such Servicer Renewal Notice at least
30 days prior to the beginning of the next successive two calendar
month term, unless at least 45 days prior to such next two calendar
month term the Certificate Insurer delivers written notice to the
Oversight Agent (with a copy to the Trustee) that instructs the
Oversight Agent not to renew the term of the Servicer hereunder. Each
such Servicer Renewal Notice shall be delivered by the Oversight Agent
to the other parties hereto and the Certificate Insurer.
The Servicer agrees that, as of the date hereof and upon its
receipt of any such Servicer Renewal Notice, the Servicer shall be
bound for the duration of the initial term and each successive two
month term covered by such Servicer Renewal Notice to act as the
Servicer for the Mortgage Loans hereunder, unless the Servicer is
otherwise terminated in accordance with Section 8.20 hereof. If the
Oversight Agent has not sent the Servicer Renewal Notice at least 30
days prior to expiration of the preceding two month term, then the
Certificate Insurer may deliver the Servicer Renewal Notice to the
Servicer, which shall be binding upon the parties hereto, with the same
effect as if the Oversight Agent had delivered such Servicer Renewal
Notice.
(c) Non-renewal or Termination. Upon any non-renewal or
termination of the Servicer pursuant to this Section 8.29, the
servicing of the Mortgage Loans hereunder shall be transferred to a
successor servicer in accordance with Sections 8.21 and 8.30 hereof.
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Section 8.30. Appointment and Duties of the Oversight Agent.
(a) Appointment and Compensation of Oversight Agent. The
Trust, the Owners, the Trustee and the Certificate Insurer hereby
assign and appoint the Oversight Agent to act as the Oversight Agent
for the Mortgage Loans and to perform all of the duties, obligations
and rights of the Oversight Agent expressly set forth in this
Agreement. The Oversight Agent hereby accepts its appointment as the
Oversight Agent hereunder. The Oversight Agent shall not consent to any
material amendment, modification or waiver of the servicing provisions
of this Agreement, without the consent of the Certificate Insurer and
the Trustee.
As compensation for its services hereunder, the Oversight
Agent shall be entitled to receive the Oversight Agent Fee. The
Oversight Agent shall be required to pay all expenses incurred by it in
connection with its Oversight Agent duties and activities hereunder and
shall not be entitled to reimbursement therefor except as specifically
provided for herein.
(b) Oversight Agent Assumes Servicing Responsibility. If a
Servicer Termination Event occurs, or, upon any non-renewal of the
Servicer pursuant to Section 8.29(b), the Oversight Agent shall be
obligated pursuant to Section 8.21, (1) to appoint, or petition a court
to appoint a successor Servicer, as provided therein, or (2) to act as
the Servicer of the Mortgage Loans hereunder.
(c) Monitoring of Servicing. The Oversight Agent shall: (i)
review the servicing reports, loan level information or other relevant
information prepared by the Servicer (1) to determine whether such
reports are inaccurate or incomplete, in any material respect, (2) to
ascertain that the Servicer is in compliance, in all material respects,
with its duties and obligations with respect to such reports under this
Agreement and (3) in the event that any servicing report is inaccurate
or incomplete, to prepare and deliver an exception report to the
Trustee, the Certificate Insurer and the Rating Agencies, which
describes such inaccuracy or incompleteness; (ii) otherwise monitor the
performance by the Servicer of its duties and obligations hereunder
(other than with regard to Sections 8.11, 8.12 and 8.13); and (iii) be
obligated to verify that the Servicer has deposited all payments and
proceeds required to be deposited into the Principal and Interest
Account.
(d) Successor Servicer. The Oversight Agent agrees that it
shall at all times be prepared to perform the duties and obligations of
the Servicer and become the successor servicer, if the Servicer fails
to perform its duties and obligations hereunder.
(e) Servicer Termination. At the direction of the Certificate
Insurer, or the Oversight Agent (with the prior consent of the
Certificate Insurer) or the Owners of a majority or 331/3, as
applicable, of the Percentage Interests of the Class A Certificates
(with the prior consent of the Certificate Insurer), the Trustee, on
behalf of the Trust and the Owners, shall terminate the Servicer upon
the occurrence and continuance of an Event of Servicing Termination
pursuant to Section 8.20 hereof.
(f) Servicer Cooperation. The Servicer shall act, in a good
faith and reasonable manner, to assist and cooperate with the Oversight
Agent in performing its duties and obligations under this Section 8.30.
On a monthly basis pursuant to Section 8.26 hereof, the Servicer shall
provide the Oversight Agent with its Monthly Servicing Reports in a
compatible computer readable format.
(g) Resignation of Oversight Agent. The Oversight Agent shall
resign as Oversight Agent hereunder if it determines that its duties
hereunder are no longer permissible under applicable law or are in
material conflict by reason of applicable law with any other activities
carried on by it
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and cannot be cured, provided that such determination shall be
evidenced by an Opinion of Counsel to such effect delivered to the
Trustee and the Certificate Insurer. In addition, the Oversight Agent
may resign for any reason with 30 day's prior written notice to the
Trustee and the Certificate Insurer. No resignation of the Oversight
Agent shall become effective until a successor oversight agent
reasonably acceptable to the Trustee and the Certificate Insurer shall
have assumed the obligations of the Oversight Agent hereunder.
(h) Limitation on Liability of Oversight Agent. Neither the
Oversight Agent nor any directors, officers, employees or agents of the
Oversight Agent shall be under any liability to the Trustee, the
Servicer, the Certificate Insurer, the Owners or any other Person for
any action taken or for refraining from the taking of any action in
good faith pursuant to this Agreement, or for errors in judgment;
provided, however, that this provision shall not protect the Oversight
Agent or any such Person against any liability that would otherwise be
imposed by reason of willful misfeasance, bad faith or negligence in
its performance of its duties or by reason of reckless disregard for
its obligations and duties under this Agreement. The Oversight Agent
and each director, officer, employee and agent of the Oversight Agent
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 Oversight Agent shall be under no obligation to appear
in, prosecute or defend any legal action that is not incidental to its
duties to monitor and oversee the servicing of the Mortgage Loans in
accordance with this Agreement and that in its opinion may involve it
in any expenses or liability; provided, however, that the Oversight
Agent may in its sole discretion undertake any such action that it may
deem necessary or desirable in respect of this Agreement and the rights
and duties of the parties hereto and the interests of the Owners
hereunder. In such event, the legal expenses and costs of such action
and any liability resulting therefrom shall be expenses, costs and
liabilities of the Trust, and the Oversight Agent shall be entitled to
be reimbursed therefor out of the Certificate Account as provided
herein.
Section 8.31. Removal of Oversight Agent for Cause. (a) The
Certificate Insurer, the Trustee (with the consent of the Certificate Insurer),
or the Owners pursuant to Section 6.11 hereof may remove the Oversight Agent
(including any successor entity serving as the Oversight Agent) by notice given
in writing to the Oversight Agent, with a copy to the Trustee, upon the
occurrence of any of the following events (whatever the reason for such event
and whether it shall be voluntary or involuntary or be effected by operation of
law or pursuant to any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body):
(1) the Oversight Agent shall fail in the performance of,
or breach, any covenant or agreement of the Oversight
Agent in this Agreement, or if any representation or
warranty of the Oversight Agent made in this
Agreement or in any certificate or other writing
delivered pursuant hereto or in connection herewith
shall prove to be incorrect in any material respect
as of the time when the same shall have been made,
and such failure or breach shall continue or not be
cured for a period of 30 days after there shall have
been given, by registered or certified mail, to the
Oversight Agent by the Seller, the Trustee, the
Certificate Insurer or by the Owners of at least 25%
of the aggregate Percentage Interests represented by
the Class A Certificates then Outstanding, or, if
there are no Class A Certificates then Outstanding,
by such Percentage Interests represented by the Class
R Certificates, a written notice specifying such
failure or breach and requiring it to be remedied; or
(2) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of
a conservator or receiver or liquidator
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in any insolvency, readjustment of debt, marshalling
of assets and liabilities or similar proceedings, or
for the winding-up or liquidation of its affairs,
shall have been entered against the Oversight Agent,
and such decree or order shall have remained in force
undischarged or unstayed for a period of 75 days; or
(3) a conservator or receiver or liquidator or
sequestrator or custodian of the property of the
Oversight Agent is appointed in any insolvency,
readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating to
the Oversight Agent or relating to all or
substantially all of its property; or
(4) the Oversight Agent shall become insolvent (however
insolvency is evidenced), generally fail to pay its
debts as they come due, file or consent to the filing
of a petition to take advantage of any applicable
insolvency or reorganization statute, make an
assignment for the benefit of its creditors,
voluntarily suspend payment of its obligations or
take corporate action for the purpose of any of the
foregoing.
The Trustee shall give to Moody's and Standard & Poor's notice
of the occurrence of any such event of which the Trustee is aware.
(b) If any event described in Paragraph (a) occurs and is
continuing and the Oversight Agent is acting as successor Servicer,
then and in every such case the Trustee shall, on and after the receipt
by the Oversight Agent of such written notice of removal, become
obligated to assume such servicing duties or appoint a successor
Servicer pursuant to Section 10.1(b), whether or not the Oversight
Agent resigns pursuant to Section 8.30(g) hereof. Upon the removal of
the Oversight Agent hereunder, the Trustee shall appoint a successor
Oversight Agent reasonably acceptable to the Certificate Insurer. Until
the appointment of a successor Oversight Agent and a successor
Servicer, the Oversight Agent Fee and the Servicing Fee shall be paid
to the Trustee as additional compensation for the performance of such
duties.
ARTICLE IX
TERMINATION OF TRUST
Section 9.1. Termination of Trust. The Trust created hereunder
and all obligations created by this Agreement will terminate upon the earliest
of (i) the payment to the Owners of all Certificates from amounts other than
those available under the Certificate Insurance Policies of all amounts held by
the Trustee and required to be paid to such Owners pursuant to this Agreement
upon the later to occur of (a) the final payment or other liquidation (or any
advance made with respect thereto) of the last Mortgage Loan in the Trust Estate
or (b) the disposition of all property acquired in respect of any Mortgage Loan
remaining in the Trust Estate, (ii) at any time when a Qualified Liquidation of
both Mortgage Loan Groups included within the Trust is effected as described
below or (iii) as described in Section 9.2, 9.3 and 9.4 hereof; provided, that
the Trust created hereunder shall not terminate at any time that the Certificate
Principal Balance of any Class of Class A Certificates is greater than zero. To
effect a termination of this Agreement pursuant to clause (ii) above, the Owners
of all Certificates then Outstanding shall (x) unanimously direct the Trustee on
behalf of the Trust to adopt a plan of complete liquidation for both Mortgage
Loan Groups, as contemplated by Section 860F(a)(4) of the Code and (y) provide
to the Trustee an opinion of counsel experienced in federal income tax matters
to the effect that such liquidation constitutes a Qualified Liquidation, and the
Trustee either shall sell the Mortgage Loans and distribute the proceeds of the
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liquidation of the Trust Estate, or shall distribute equitably in kind all of
the assets of the Trust Estate to the remaining Owners of the Certificates based
on their interests in the Trust, each in accordance with such plan, so that the
liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of this Agreement occur no later
than the close of the 90th day after the date of adoption of the plan of
liquidation and such liquidation qualifies as a Qualified Liquidation. In no
event, however, will the Trust created by this Agreement continue beyond the
expiration of twenty-one (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 United Kingdom, living on the date hereof. The Trustee shall give written
notice of termination of the Agreement to each Owner in the manner set forth in
Section 11.5 hereof.
Section 9.2. Termination Upon Option of Servicer. (a) On any
Remittance Date on or after the Clean-Up Call Date, the Servicer (or the
Oversight Agent in the event the Servicer does not exercise its right to
purchase) acting directly or through one or more affiliates may determine to
purchase and may cause the purchase from the Trust of all (but not fewer than
all) of the Mortgage Loans and all property theretofore acquired in respect of
any such Mortgage Loan by foreclosure, deed in lieu of foreclosure, or otherwise
then remaining at a price equal to the sum of (v) the greater of (i) 100% of the
aggregate Loan Balances of the related Mortgage Loans as of the day of purchase
minus amounts actually remitted by the Servicer representing collections of
principal on the Mortgage Loans during the related Remittance Period and (ii)
the greater of (A) the fair market value of such Mortgage Loans (disregarding
accrued interest) and (B) the aggregate outstanding Certificate Principal
Balance of the related Certificates, (w) one month's interest on the purchase
price computed at the weighted average of the Class A-1 Pass-Through Rate and
the Class A-2 Pass-Through Rate, (x) any Group II Available Funds Cap
Carry-Forward Amount at such time, (y) the related Reimbursement Amount, if any,
as of such Remittance Date and (z) the aggregate amount of any Delinquency
Advances and Servicing Advances remaining unreimbursed, together with any
accrued and unpaid Servicing Fees, and Oversight Agent Fees each, relating to
such Mortgage Loan Group as of such Remittance Date (such amount, the
"Termination Price"). In connection with such purchase, the Servicer or the
Oversight Agent, as applicable, shall remit to the Trustee all amounts then on
deposit in the Principal and Interest Account for deposit to the Certificate
Account, which deposit shall be deemed to have occurred immediately preceding
such purchase.
(b) In connection with any such purchase, the Servicer or the
Oversight Agent, as applicable, shall provide to the Trustee an opinion
of counsel experienced in federal income tax matters and reasonably
acceptable to the Certificate Insurer to the effect that such purchase
constitutes a Qualified Liquidation of the Trust Estate.
(c) Promptly following any such purchase, the Trustee will
release the Files to the Servicer, or otherwise upon their order, in a
manner similar to that described in Section 8.14 hereof.
(d) If the Servicer or the Oversight Agent as applicable does
not exercise its option pursuant to this Section 9.2 with respect to
the Trust Estate, then the Certificate Insurer may do so on the same
terms.
Section 9.3. Termination Upon Loss of REMIC Status. (a)
Following a final determination by the Internal Revenue Service, or by a court
of competent jurisdiction, in either case from which no appeal is taken within
the permitted time for such appeal, or if any appeal is taken, following a final
determination of such appeal from which no further appeal can be taken, to the
effect that the Trust (other than the Non-REMIC Accounts) does not and will no
longer qualify as a "REMIC" pursuant to Section 860D of the Code (the "Final
Determination"), at any time on or after the date which is 30 calendar days
following such Final Determination, (i) the Certificate Insurer or the Owners of
a majority in Percentage Interest represented by the Class A Certificates then
Outstanding with the consent of the Certificate Insurer (which consent shall not
be unreasonably withheld) may direct the Trustee on behalf of the Trust to adopt
a plan of complete liquidation, as contemplated by Section 860F(a)(4) of the
Code and (ii) the Certificate
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Insurer may notify the Trustee of the Certificate Insurer's determination to
purchase from the Trust all (but not fewer than all) Mortgage Loans in the Trust
Estate and all property theretofore acquired by foreclosure, deed in lieu of
foreclosure, or otherwise in respect of any Mortgage Loan then remaining in the
Trust Estate at a price equal to the Termination Price. In connection with such
purchase, the Servicer shall remit to the Trustee all amounts then on deposit in
the Principal and Interest Account for deposit in the Certificate Account, which
deposit shall be deemed to have occurred immediately preceding such purchase.
(b) Upon receipt of such direction from the Certificate
Insurer, the Trustee shall notify the holders of the Class R
Certificates of such election to liquidate or such determination to
purchase, as the case may be (the "Termination Notice"). The Owner of a
majority of the Percentage Interest of the Class R Certificates then
Outstanding may, on any Remittance Date, within 60 days from the date
of receipt of the Termination Notice (the "Purchase Option Period"), at
their option, purchase from the Trust all (but not fewer than all)
Mortgage Loans in the Trust Estate, and all property theretofore
acquired by foreclosure, deed in lieu of foreclosure, or otherwise in
respect of any Mortgage Loan then remaining in the Trust Estate at a
purchase price equal to the Termination Price.
(c) If, during the Purchase Option Period, the Owners of the
Class R Certificates have not exercised the option described in the
immediately preceding paragraph, then upon the expiration of the
Purchase Option Period (i) in the event that the Certificate Insurer or
the Owners of the Class A Certificates, with the consent of the
Certificate Insurer have given the Trustee the direction described in
clause (a)(i) above, the Trustee shall sell the Mortgage Loans and
distribute the proceeds of the liquidation of the Trust Estate, each in
accordance with the plan of complete liquidation, such that, if so
directed, the liquidation of the Trust Estate, the distribution of the
proceeds of such liquidation and the termination of this Agreement
occur no later than the close of the 60th day, or such later day as the
Certificate Insurer or the Owners of the Class A Certificates, with the
consent of the Certificate Insurer shall permit or direct in writing,
after the expiration of the Purchase Option Period and (ii) in the
event that the Certificate Insurer has given the Trustee notice of the
Certificate Insurer's determination to purchase the Mortgage Loans in
the Trust Estate described in clause (a)(ii) preceding, the Certificate
Insurer shall, on any Remittance Date within 60 days, purchase all (but
not fewer than all) Mortgage Loans in the Trust Estate, and all
property theretofore acquired by foreclosure, deed in lieu of
foreclosure or otherwise in respect of any Mortgage Loan then remaining
in the Trust Estate. In connection with such purchase, the Servicer
shall remit to the Trustee all amounts then on deposit in the Principal
and Interest Account for deposit to the Certificate Account, which
deposit shall be deemed to have occurred immediately preceding such
purchase.
(d) Following a Final Determination, the Owners of a majority
of the Percentage Interest of the Class R Certificates then Outstanding
may, at their option on any Remittance Date and upon delivery to the
Owners of the Class A Certificates and the Certificate Insurer of an
opinion of counsel experienced in federal income tax matters acceptable
to the Certificate Insurer selected by the Owners of such Class R
Certificates which opinion shall be reasonably satisfactory in form and
substance to the Certificate Insurer, to the effect that the effect of
the Final Determination is to increase substantially the probability
that the gross income of the Trust will be subject to federal taxation,
purchase from the Trust all (but not fewer than all) Mortgage Loans in
the Trust Estate, and all property theretofore acquired by foreclosure,
deed in lieu of foreclosure, or otherwise in respect of any Mortgage
Loan then remaining in the Trust Estate at a purchase price equal to
the Termination Price. In connection with such purchase, the Servicer
shall remit to the Trustee all amounts then on deposit in the Principal
and Interest Account for deposit to the Certificate Account, which
deposit shall be deemed to have occurred immediately preceding such
purchase. The foregoing opinion shall be deemed satisfactory unless the
Certificate Insurer gives the Owners of
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a majority of the Percentage Interest of the Class R Certificates
notice that such opinion is not satisfactory within thirty days after
receipt of such opinion.
In connection with any such purchase, such Owners shall direct
the Trustee to adopt a plan of complete liquidation as contemplated by Section
860F(a)(4) of the Code and shall provide to the Trustee an opinion of counsel
experienced in federal income tax matters to the effect that such purchase
constitutes a Qualified Liquidation.
Section 9.4. Disposition of Proceeds. The Trustee shall, upon
receipt thereof, deposit the proceeds of any liquidation of a Mortgage Loan
Group pursuant to this Article IX to the Certificate Account; provided, however,
that any amounts representing Servicing Fees or Oversight Agent Fees,
unreimbursed Delinquency Advances or unreimbursed Servicing Advances relating to
such Mortgage Loan Group theretofore funded by the Servicer from the Servicer's
own funds shall be paid by the Trustee to the Oversight Agent or Servicer from
the proceeds of the Trust Estate.
Section 9.5. Netting of Amounts. If any Person paying the
Termination Price would receive a portion of the amount so paid, such Person may
net any such amount against the Termination Price otherwise payable.
ARTICLE X
THE TRUSTEE
Section 10.1. Certain Duties and Responsibilities. (a) The
Trustee (i) undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement, and no implied covenants or
obligations shall be read into this Agreement against the Trustee and (ii) in
the absence of bad faith on its part, may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished pursuant to and conforming to the
requirements of this Agreement; but in the case of any such certificates or
opinions which by any provision hereof are specifically required to be furnished
to the Trustee, shall be under a duty to examine the same to determine whether
or not they conform to the requirements of this Agreement.
(b) Following the removal of the Oversight Agent hereunder, in
the event that either (i) prior to such removal, the servicing of the
Mortgage Loans had previously been transferred to the Oversight Agent
or (ii) the Servicer is removed hereunder, and pending the appointment
of any other Person as successor Servicer, the Trustee (for this
purpose, the term includes an affiliate thereof) shall and is hereby
empowered to perform the duties of the Servicer hereunder and shall,
for such period, have all of the rights of the Servicer. Specifically,
and not in limitation of the foregoing, the Trustee shall upon removal
of the Oversight Agent, and pending the appointment of any other Person
as successor Oversight Agent or Servicer, have the power and duty
during its performance as successor Servicer:
(i) to collect Mortgage payments;
(ii) to foreclose on defaulted Mortgage Loans;
(iii) to enforce due-on-sale clauses and to enter into
assumption and substitution agreements as permitted
by Section 8.12 hereof;
(iv) to deliver instruments of satisfaction pursuant to
Section 8.14 hereof;
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(v) to make Delinquency Advances and Servicing Advances
and to pay Compensating Interest, and
(vi) to enforce the Mortgage Loans.
(c) No provision of this Agreement shall be construed to
relieve the Trustee from liability for its own negligent action, its
own negligent failure to act or its own willful misconduct, except
that:
(i) this subsection shall not be construed to
limit the effect of subsection (a) of this
Section;
(ii) the Trustee shall not be liable for any error
of judgment made in good faith by an
Authorized Officer, unless it shall be proved
that the Trustee was negligent in ascertaining
the pertinent facts;
(iii) the Trustee shall not be liable with respect
to any action taken or omitted to be taken by
it in good faith in accordance with the
direction of the Certificate Insurer or of the
Owners of a majority in Percentage Interest of
the Certificates of the affected Class or
Classes and the Certificate Insurer relating
to the time, method and place of conducting
any proceeding for any remedy available to the
Trustee, or exercising any trust or power
conferred upon the Trustee, under this
Agreement relating to such Certificates;
(iv) The Trustee shall not be required to expend or
risk its own funds or otherwise incur
financial liability for the performance of any
of its duties hereunder or 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;
(v) Subject to the other provisions of this
Agreement and without limiting the generality
of this Section 10.1, the Trustee shall have
no duty (A) to see any recording, filing, or
depositing of this Agreement or any agreement
referred to herein or any financing statement
or continuation statement evidencing a
security interest, or to see to the
maintenance of any such recording or filing or
depositing or to any rerecording, refiling or
redepositing of any thereof, (B) to see to any
insurance (C) to see to the payment or
discharge of any tax, assessment, or other
governmental charge or any lien or encumbrance
of any kind owing with respect to, assessed or
levied against, any part of the Trust Estate
from funds available in the Certificate
Account, (D) to confirm or verify the contents
of any reports or certificates of the Servicer
delivered to the Trustee pursuant to this
Agreement believed by the Trustee to be
genuine and to have been signed or presented
by the proper party or parties;
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(vi) The Trustee shall not be accountable for the
use or application of any funds paid to the
Seller or the Servicer in respect of the
Mortgage Loans or withdrawn from the Principal
and Interest Account or the Certificate
Account by the Seller or the Servicer; and
(vii) The Trustee shall not be required to take
notice or be deemed to have notice or
knowledge of any default or any of the events
described in Section 8.20 unless a Responsible
Officer of the Trustee shall have received
written notice thereof or a Responsible
Officer has actual knowledge thereof. In the
absence of receipt of such notice, the Trustee
may conclusively assume that no default or
event described in Section 8.20 has occurred.
(d) Whether or not therein expressly so provided, every
provision of this Agreement relating to the conduct or affecting the
liability of or affording protection to the Trustee shall be subject to
the provisions of this Section.
(e) No provision of this Agreement shall require the Trustee
to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to
it.
(f) The permissive right of the Trustee to take actions
enumerated in this Agreement shall not be construed as a duty and the
Trustee shall not be answerable for other than its own negligence or
willful misconduct.
(g) The Trustee shall be under no obligation to institute any
suit, or to take any remedial proceeding under this Agreement, or to
take any steps in the execution of the trusts hereby created or in the
enforcement of any rights and powers hereunder until it shall be
indemnified to its satisfaction against any and all costs and expenses,
outlays, counsel fees and other reasonable disbursements and against
all liability, except liability which is adjudicated to have resulted
from its negligence or willful misconduct, in connection with any
action so taken.
Section 10.2. Removal of Trustee for Cause. (a) The Trustee
may be removed pursuant to paragraph (b) hereof upon the occurrence of any of
the following events (whatever the reason for such event and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(1) the Trustee shall fail to distribute to the
Owners entitled thereto on any Payment Date
amounts available for distribution received by
the Trustee in accordance with the terms hereof;
or
(2) the Trustee shall fail in the performance of, or
breach, any covenant or agreement of the Trustee
in this Agreement, or if any representation or
warranty of the Trustee made in this Agreement or
in any certificate or other writing delivered
pursuant hereto or in connection herewith shall
prove to be incorrect in any material respect as
of the time when the same shall have been made,
and such failure or breach shall continue or not
be cured for a period of 30 days after there
shall have been given, by registered or certified
mail, to the Trustee by the Seller, the
Certificate Insurer or by the Owners of at least
25% of the aggregate Percentage
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Interests represented by the Class A Certificates
then Outstanding, or, if there are no Class A
Certificates then Outstanding, by such Percentage
Interests represented by the Class R
Certificates, a written notice specifying such
failure or breach and requiring it to be
remedied; or
(3) a decree or order of a court or agency or
supervisory authority having jurisdiction for the
appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of
debt, marshalling of assets and liabilities or
similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been
entered against the Trustee, and such decree or
order shall have remained in force undischarged
or unstayed for a period of 75 days; or
(4) a conservator or receiver or liquidator or
sequestrator or custodian of the property of the
Trustee is appointed in any insolvency,
readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating
to the Trustee or relating to all or
substantially all of its property; or
(5) the Trustee shall become insolvent (however
insolvency is evidenced), generally fail to pay
its debts as they come due, file or consent to
the filing of a petition to take advantage of any
applicable insolvency or reorganization statute,
make an assignment for the benefit of its
creditors, voluntarily suspend payment of its
obligations or take corporate action for the
purpose of any of the foregoing.
The Seller shall give to Moody's and Standard & Poor's notice
of the occurrence of any such event of which the Seller is aware.
(b) If any event described in Paragraph (a) occurs and is
continuing, then and in every such case (i) the Certificate Insurer or
(ii) with the prior written consent (which shall not be unreasonably
withheld) of the Certificate Insurer (x) the Seller or (y) the Owners
of a majority of the Percentage Interests represented by the Class A
Certificates may, whether or not the Trustee resigns pursuant to
Section 10.9 hereof, immediately, concurrently with the giving of
notice to the Trustee, and without delaying the 30 days required for
notice therein, appoint a successor Trustee pursuant to the terms of
Section 10.9 hereof.
Section 10.3. Certain Rights of the Trustee. Except as
otherwise provided in Section 10.1 hereof:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, note or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties;
(b) any request or direction of the Seller, the Certificate
Insurer or the Owners of any Class of Certificates mentioned herein
shall be sufficiently evidenced in writing;
(c) whenever in the administration of this Agreement the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may,
in the absence of bad faith on its part, rely upon an Officer's
Certificate;
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(d) the Trustee may consult with counsel of its selection, and
the written advice of such counsel shall be full and complete
authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in reasonable reliance
thereon;
(e) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Agreement at the request
or direction of any of the Owners pursuant to this Agreement, unless
such Owners shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;
(f) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, note or other paper or document, but the Trustee
in its discretion may make such further inquiry or investigation into
such facts or matters as it may see fit; 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 taking any such action.
The reasonable expense of every such examination shall be paid by the
Servicer or, if paid by the Trustee, shall be repaid by the Servicer
upon demand by the Trustee from the Servicer's own funds;
(g) 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, and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney
appointed and supervised with due care by it hereunder;
(h) the Trustee shall not be personally liable for any action
it takes or omits to take in good faith which it reasonably believes to
be authorized by the Authorized Officer of any Person or within its
rights or powers under this Agreement;
(i) the right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the
Trustee shall not be answerable for other than its negligence or
willful misconduct in the performance of such act; and
(j) the Trustee shall not be required to give any bond or
surety in respect of the execution of the Trust Estate created hereby
or the powers granted hereunder.
Section 10.4. Not Responsible for Recitals or Issuance of
Certificates. The recitals and representations contained herein and in the
Certificates, except any such recitals relating to the Trustee, shall be taken
as the statements of the Seller, and the Trustee assumes no responsibility for
their correctness. The Trustee makes no representation as to the validity or
sufficiency of this Agreement, of the Certificates, of the Mortgage Loans or any
document relating thereto other than as to validity and sufficiency of its
authentication of the Certificates.
Section 10.5. May Hold Certificates. The Trustee or any agent
of the Trust, in its individual or any other capacity, may become an Owner or
pledgee of Certificates and may otherwise deal with the Trust with the same
rights it would have if it were not Trustee or such agent.
Section 10.6. Money Held in Trust. Money held by the Trustee
in trust hereunder need not be segregated from other trust funds except to the
extent required herein or required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed with
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the Seller and except to the extent of income or other gain on investments which
are deposits in or certificates of deposit of the Trustee in its commercial
capacity and income or other gain actually received by the Trustee on Eligible
Investments.
Section 10.7. No Lien for Fees. The Trustee shall have no lien
on the Trust Estate for the payment of any fees and expenses.
Section 10.8. Corporate Trustee Required; Eligibility. There
shall at all times be a Trustee hereunder which shall be a corporation or
association organized and doing business under the laws of the United States of
America or of any State authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at least $100,000,000, subject
to supervision or examination by the United States of America or any such State
having a rating or ratings acceptable to the Certificate Insurer and having a
long-term deposit rating of at least BBB from Standard & Poor's (or such lower
rating as may be acceptable to Standard & Poor's) and at least Baa2 from Moody's
(or such lower rating as may be acceptable to Moody's). If such Trustee
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section, the combined capital and surplus of such corporation
or association shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. If at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section, it shall, upon the request of the Seller with the consent of the
Certificate Insurer (which consent shall not be unreasonably withheld) or of the
Certificate Insurer, resign immediately in the manner and with the effect
hereinafter specified in this Article X.
Section 10.9. Resignation and Removal; Appointment of
Successor. (a) No resignation or removal of the Trustee and no appointment of a
successor trustee pursuant to this Article X shall become effective until the
acceptance of appointment by the successor trustee under Section 10.10 hereof.
(b) The Trustee, or any trustee or trustees hereafter
appointed, may resign at any time by giving written notice of
resignation to the Seller and by mailing notice of resignation by
registered mail, postage prepaid, to the Certificate Insurer and the
Owners at their addresses appearing on the Register. A copy of such
notice shall be sent by the resigning Trustee to Moody's and Standard &
Poor's. Upon receiving notice of resignation, the Seller shall promptly
appoint a successor trustee or trustees reasonably acceptable to the
Certificate Insurer evidenced by its written consent by written
instrument, in duplicate, executed on behalf of the Trust by an
Authorized Officer of the Seller, one copy of which instrument shall be
delivered to the Trustee so resigning and one copy to the successor
trustee or trustees. If no successor trustee shall have been appointed
by the Seller and have accepted appointment within 30 days after the
giving of such notice of resignation, the Trustee shall give notice to
the Certificate Insurer of such failure and the Certificate Insurer
shall have an additional 30 days to appoint a successor trustee. If
after such time no successor has been appointed and accepted then the
resigning trustee may petition any court of competent jurisdiction for
the appointment of a successor trustee. Such court may thereupon, after
such notice, if any, as it may deem proper, appoint a successor
trustee.
(c) If at any time the Trustee shall cease to be eligible
under Section 10.8 hereof and shall fail to resign after written
request therefor by the Seller or by the Certificate Insurer, the
Certificate Insurer or the Seller with the written consent of the
Certificate Insurer may remove the Trustee and appoint a successor
trustee by written instrument, in duplicate, executed on behalf of the
Trust by an Authorized Officer of the Seller, one copy of which
instrument shall be delivered to the Trustee so removed and one copy to
the successor trustee.
(d) The Owners of a majority of the Percentage Interests
represented by the Class A Certificates, or, if there are no Class A
Certificates then Outstanding, by such majority of the
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Percentage Interests represented by the Class R Certificates, may at
any time remove the Trustee and appoint a successor trustee by
delivering to the Trustee to be removed, to the successor trustee so
appointed, to the Seller and to the Certificate Insurer, copies of the
record of the act taken by the Owners, as provided for in Section 11.3
hereof.
(e) If the Trustee fails to perform its duties in accordance
with the terms of this Agreement or becomes ineligible to serve as
Trustee, the Certificate Insurer may remove the Trustee and appoint a
successor trustee by written instrument, in triplicate, signed by the
Certificate Insurer duly authorized, one complete set of which
instruments shall be delivered to the Seller, one complete set to the
Trustee so removed and one complete set to the successor Trustee so
appointed. If no successor is appointed, then the removed trustee may
petition any court of competent jurisdiction for the appointment of a
successor trustee. Such court may thereupon, after such notice, if any,
as it may deem proper and prescribe, appoint a successor trustee.
(f) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of the
Trustee for any cause, the Seller shall promptly appoint a successor
Trustee. If within one year after such resignation, removal or
incapability or the occurrence of such vacancy, a successor Trustee
shall be appointed by act of the Owners of a majority of the Percentage
Interests represented by the Class A Certificates then Outstanding or,
if there are no Class A Certificates then Outstanding, by such majority
of the Percentage Interest of the Class R Certificates delivered to the
Seller and the retiring Trustee, the successor Trustee so appointed
shall forthwith upon its acceptance of such appointment become the
successor Trustee and supersede the successor Trustee appointed by the
Seller. If no successor Trustee shall have been so appointed by the
Seller or the Owners and shall have accepted appointment in the manner
hereinafter provided, any Owner may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction
for the appointment of a successor Trustee. Such court may thereupon,
after such notice, if any, as it may deem proper and prescribe, appoint
a successor Trustee.
(g) The Seller shall give notice of any removal of the Trustee
by mailing notice of such event by registered mail, postage prepaid, to
the Certificate Insurer and to the Owners as their names and addresses
appear in the Register. Each notice shall include the name of the
successor Trustee and the address of its corporate trust office.
Section 10.10. Acceptance of Appointment by Successor Trustee.
Every successor Trustee appointed hereunder shall execute, acknowledge and
deliver to the Seller on behalf of the Trust, to the Certificate Insurer and to
its predecessor Trustee an instrument accepting such appointment hereunder and
stating its eligibility to serve as Trustee hereunder, and thereupon the
resignation or removal of the predecessor Trustee shall become effective and
such successor Trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts, duties and obligations of its
predecessor hereunder; but, on request of the Seller, the Certificate Insurer or
the successor Trustee, such predecessor Trustee shall, upon payment of its
charges then unpaid, execute and deliver an instrument transferring to such
successor Trustee all of the rights, powers and trusts of the Trustee so ceasing
to act, and shall duly assign, transfer and deliver to such successor Trustee
all property and money held by such Trustee so ceasing to act hereunder. Upon
request of any such successor Trustee, the Seller on behalf of the Trust shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts.
Upon acceptance of appointment by a successor Trustee as
provided in this Section, the Seller shall mail notice thereof by first-class
mail, postage prepaid, to the Owners at their last addresses appearing upon the
Register and to the Certificate Insurer. The Seller shall send a copy of such
notice to Moody's and Standard & Poor's. If the Seller fails to mail such notice
within ten days after acceptance of appointment by the successor Trustee, the
successor Trustee shall cause such notice to be mailed at the expense of the
Trust.
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No successor Trustee shall accept its appointment unless at
the time of such acceptance such successor shall be qualified and eligible under
this Article X.
Section 10.11. Merger, Conversion, Consolidation or Succession
to Business of the Trustee. Any corporation or association into which the
Trustee may be merged or converted or with which it may be consolidated, any
corporation or association resulting from any merger, conversion or
consolidation to which the Trustee shall be a party or any corporation or
association succeeding to all or substantially all of the corporate trust
business of the Trustee shall be the successor of the Trustee hereunder, without
the execution or filing of any paper or any further act on the part of any of
the parties hereto; provided, however, that such corporation or association
shall be otherwise qualified and eligible under this Article X. In case any
Certificates have been executed, but not delivered, by the Trustee then in
office, any successor by merger, conversion or consolidation to such Trustee may
adopt such execution and deliver the Certificates so executed with the same
effect as if such successor Trustee had itself executed such Certificates.
Section 10.12. Reporting; Withholding. The Trustee shall
timely provide to the Owners the Internal Revenue Service's Form 1099 and any
other statement required by applicable Treasury regulations as determined by the
Seller and shall withhold, as required by applicable law, federal, state or
local taxes, if any, applicable to distributions to the Owners, including but
not limited to backup withholding under Section 3406 of the Code and the
withholding tax on distributions to foreign investors under Sections 1441 and
1442 of the Code.
Section 10.13. Liability of the Trustee. The Trustee shall be
liable in accordance herewith only to the extent of the obligations specifically
imposed upon and undertaken by the Trustee herein. Neither the Trustee nor any
of the directors, officers, employees or agents of the Trustee shall be under
any liability on any Certificate or otherwise to any Account, the Seller, the
Servicer or any Owner for any action taken or for refraining from the taking of
any action in good faith pursuant to this Agreement, or for errors in judgment;
provided, however, that this provision shall not protect the Trustee or any such
Person against any liability which would otherwise be imposed by reason of
negligent action, negligent failure to act or bad faith in the performance of
duties or by reason of reckless disregard of obligations and duties hereunder.
Subject to the foregoing sentence, the Trustee shall not be liable for losses on
investments of amounts in any Account (except for any losses on investments on
the amounts in the Certificate Account). In addition, the Seller and Servicer
covenant and agree to indemnify the Trustee and the Certificate Insurer, and
when the Trustee is acting as Servicer, the Servicer, from, and hold it harmless
against, any and all losses, liabilities, damages, claims or expenses (including
legal fees and expenses) other than those resulting from the negligence or bad
faith of the Trustee. The Trustee and the Certificate Insurer and any director,
officer, employee or agent thereof may rely and shall be protected in acting or
refraining from acting in good faith on any certificate, notice or other
document of any kind prima facie properly executed and submitted by the
Authorized Officer of any Person respecting any matters arising hereunder.
Provisions of this Section 10.13 shall survive the termination of this
Agreement.
Section 10.14. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust Estate or Property may at the time be located, the Servicer and the
Trustee acting jointly shall have the power and shall execute and deliver all
instruments to appoint one or more Persons approved by the Trustee and the
Certificate Insurer to act as co-Trustee or co-Trustees, jointly with the
Trustee, of all or any part of the Trust Estate or separate Trustee or separate
Trustees of any part of the Trust Estate and to vest in such Person or Persons,
in such capacity and for the benefit of the Owners, such title to the Trust
Estate, or any part thereof, and, subject to the other provisions of this
Section 10.14, such powers, duties, obligations, rights 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 any event indicated in Sections 8.20(a) or
8.20(b) shall have occurred and be continuing, the Trustee alone shall have the
power to make such appointment (with the written consent of the Certificate
Insurer). No co-Trustee or separate Trustee hereunder shall be required to meet
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the terms of eligibility as a successor Trustee under Section 10.8 and no notice
to Owner of the appointment of any co-Trustee or separate Trustee shall be
required under Section 10.8.
Every separate Trustee and co-Trustee shall, to the extent
permitted, be appointed and act subject to the following provisions and
conditions:
(i) All rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be
conferred or imposed upon and exercised or
performed by the Trustee and such separate
Trustee or co-Trustee jointly (it being
understood that such separate Trustee or
co-Trustee is not authorized to act separately
without the Trustee joining in such act), except
to the extent that under any law of any
jurisdiction in which any particular act or acts
are to be performed (whether as Trustee hereunder
or as successor to the Servicer hereunder), the
Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such
rights, powers, duties and obligations (including
the holding of title to the Trust Estate or any
portion thereof in any such jurisdiction) shall
be exercised and performed singly by such
separate Trustee or co-Trustee, but solely at the
direction of the Trustee;
(ii) No co-Trustee hereunder shall be held personally
liable by reason of any act or omission of any
other co-Trustee hereunder; and
(iii) The Servicer and the Trustee acting jointly may
at any time accept the resignation of or remove
any separate Trustee or co-Trustee.
Any notice, request or other writing given to the Trustee
shall be deemed to have been given to each of the then separate Trustees and
co-Trustees, as effectively as if given to each of them. Every instrument
appointing any separate Trustee or co-Trustee shall refer to this Agreement and
the conditions of this Section 10.14. Each separate Trustee and co-Trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the provisions
of this Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of or affording protection
to the Trustee. Every such instrument shall be filed with the Trustee and a copy
thereof given to the Servicer.
Any separate Trustee or co-Trustee may, at any time,
constitute the Trustee, its agent or attorney-in-fact, with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Agreement on its behalf and in its name. If any separate Trustee
or co-Trustee shall die, become incapable of acting, resign or be removed, all
of its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor Trustee.
The Trustee shall give to Moody's, the Seller and the
Certificate Insurer notice of the appointment of any Co-Trustee or separate
Trustee.
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ARTICLE XI
MISCELLANEOUS
Section 11.1. Compliance Certificates and Opinions. Upon any
application or request by the Seller, the Certificate Insurer or the Owners to
the Trustee to take any action under any provision of this Agreement, the
Seller, the Certificate Insurer or the Owners, as the case may be, shall furnish
to the Trustee a certificate stating that all conditions precedent, if any,
provided for in this Agreement relating to the proposed action have been
complied with, except that in the case of any such application or request as to
which the furnishing of any documents is specifically required by any provision
of this Agreement relating to such particular application or request, no
additional certificate need be furnished.
Except as otherwise specifically provided herein, each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Agreement shall include:
(a) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions
herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based; and
(c) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 11.2. Form of Documents Delivered to the Trustee. In
any case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person or that they be
so certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other such Persons
as to other matters, and any such Person may certify or give an opinion as to
such matters in one or several documents.
Any certificate of an Authorized Officer of the Trustee may be
based, insofar as it relates to legal matters, upon an opinion of counsel,
unless such Authorized Officer knows, or in the exercise of reasonable care
should know, that the opinion is erroneous. Any such certificate of an
Authorized Officer of the Trustee or any opinion of counsel may be based,
insofar as it relates to factual matter upon a certificate or opinion of, or
representations by, one or more Authorized Officers of the Seller or of the
Servicer, stating that the information with respect to such factual matters is
in the possession of the Seller or of the Servicer, unless such Authorized
Officer or counsel knows, or in the exercise of reasonable care should know,
that the certificate or opinion or representations with respect to such matters
are erroneous. Any opinion of counsel may also be based, insofar as it relates
to factual matters, upon a certificate or opinion of, or representations by, an
Authorized Officer of the Trustee, stating that the information with respect to
such matters is in the possession of the Trustee, unless such counsel knows, or
in the exercise of reasonable care should know, that the certificate or opinion
or representations with respect to such matters are erroneous. Any opinion of
counsel may be based on the written opinion of other counsel, in which event
such opinion of counsel shall be accompanied by a copy of such other counsel's
opinion and shall include a statement to the effect that such counsel believes
that such counsel and the Trustee may reasonably rely upon the opinion of such
other counsel.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Agreement, they may, but need not, be consolidated
and form one instrument.
Section 11.3. Acts of Owners. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Agreement to be given or taken by the Owners may be
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embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Owners in person or by an agent duly appointed in writing;
and, except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee, and,
where it is hereby expressly required, to the Seller. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "act" of the Owners signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Agreement
and conclusive in favor of the Trustee and the Trust, if made in the manner
provided in this Section.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a witness
of such execution or by the certificate of any notary public or other
officer authorized by law to take acknowledgments of deeds, certifying
that the individual signing such instrument or writing acknowledged to
him the execution thereof. Whenever such execution is by an officer of
a corporation or a member of a partnership on behalf of such
corporation or partnership, such certificate or affidavit shall also
constitute sufficient proof of his authority.
(c) The ownership of Certificates shall be proved by the
Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Owner of any Certificate shall
bind the Owner of every Certificate issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof, in respect
of anything done, omitted or suffered to be done by the Trustee or the
Trust in reliance thereon, whether or not notation of such action is
made upon such Certificates.
Section 11.4. Notices, etc. to Trustee. Any request, demand,
authorization, direction, notice, consent, waiver or act of the Owners or other
documents provided or permitted by this Agreement to be made upon, given or
furnished to or filed with the Trustee by any Owner, the Certificate Insurer or
by the Seller shall be sufficient for every purpose hereunder if made, given,
furnished or filed in writing to or with and received by the Trustee at its
corporate trust office as set forth in Section 2.2 hereof.
Section 11.5. Notices and Reports to Owners; Waiver of
Notices. Where this Agreement provides for notice to Owners of any event or the
mailing of any report to Owners, such notice or report shall be sufficiently
given (unless otherwise herein expressly provided) if mailed, first-class
postage prepaid, to each Owner affected by such event or to whom such report is
required to be mailed, at the address of such Owner as it appears on the
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice or the mailing of such report. In
any case where a notice or report to Owners is mailed in the manner provided
above, neither the failure to mail such notice or report nor any defect in any
notice or report so mailed to any particular Owner shall affect the sufficiency
of such notice or report with respect to other Owners, and any notice or report
which is mailed in the manner herein provided shall be conclusively presumed to
have been duly given or provided.
Where this Agreement provides for notice in any manner, such
notice may be waived in writing by any Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Owners shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
In case, by reason of the suspension of regular mail service
as a result of a strike, work stoppage or similar activity, it shall be
impractical to mail notice of any event to Owners when such notice is required
to be given pursuant to any provision of this Agreement, then any manner of
giving such notice as shall be satisfactory to the Trustee shall be deemed to be
a sufficient giving of such notice.
Where this Agreement provides for notice to any rating agency
that rated any Certificates, failure to give such notice shall not affect any
other rights or obligations created hereunder.
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Section 11.6. Rules by Trustee and the Seller. The Trustee may
make reasonable rules for any meeting of Owners. The Seller may make reasonable
rules and set reasonable requirements for its functions.
Section 11.7. Successors and Assigns. All covenants and
agreements in this Agreement by any party hereto shall bind its successors and
assigns, whether so expressed or not.
Section 11.8. Severability. In case any provision in this
Agreement or in the Certificates shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
Section 11.9. Benefits of Agreement. Nothing in this Agreement
or in the Certificates, expressed or implied, shall give to any Person, other
than the Owners, the Certificate Insurer and the parties hereto and their
successors hereunder, any benefit or any legal or equitable right, remedy or
claim under this Agreement.
Section 11.10. Legal Holidays. In any case where the date of
any Remittance Date, any Payment Date, any other date on which any distribution
to any Owner is proposed to be paid or any date on which a notice is required to
be sent to any Person pursuant to the terms of this Agreement shall not be a
Business Day, then (notwithstanding any other provision of the Certificates or
this Agreement) payment or mailing need not be made on such date but may be made
on the next succeeding Business Day with the same force and effect as if made or
mailed on the nominal date of any such Remittance Date, such Payment Date or
such other date for the payment of any distribution to any Owner or the mailing
of such notice, as the case may be, and no interest shall accrue for the period
from and after any such nominal date, provided such payment is made in full on
such next succeeding Business Day.
Section 11.11. Governing Law. In view of the fact that Owners
are expected to reside in many states and outside the United States and the
desire to establish with certainty that this Agreement will be governed by and
construed and interpreted in accordance with the law of a state having a
well-developed body of commercial and financial law relevant to transactions of
the type contemplated herein, this Agreement and each Certificate shall be
construed in accordance with and governed by the laws of the State of New York
applicable to agreements made and to be performed therein, without regard to the
conflicts of law principles thereof.
Section 11.12. Counterparts. This instrument may be executed
in any number of counterparts, each of which so executed shall be deemed to be
an original, but all such counterparts shall together constitute but one and the
same instrument.
Section 11.13. Usury. The amount of interest payable or paid
on any Certificate under the terms of this Agreement shall be limited to an
amount which shall not exceed the maximum nonusurious rate of interest allowed
by the applicable laws of the State of New York or any applicable law of the
United States permitting a higher maximum nonusurious rate that preempts such
applicable New York laws, which could lawfully be contracted for, charged or
received (the "Highest Lawful Rate"). In the event any payment of interest on
any Certificate exceeds the Highest Lawful Rate, the Trust stipulates that such
excess amount will be deemed to have been paid to the Owner of such Certificate
as a result of an error on the part of the Trustee acting on behalf of the Trust
and the Owner receiving such excess payment shall promptly, upon discovery of
such error or upon notice thereof from the Trustee on behalf of the Trust,
refund the amount of such excess or, at the option of such Owner, apply the
excess to the payment of principal of such Certificate, if any, remaining
unpaid. In addition, all sums paid or agreed to be paid to the Trustee for the
benefit of Owners of Certificates for the use, forbearance or detention of money
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full term of such Certificates.
Section 11.14. Amendment. (a) The Trustee, the Seller, the
Oversight Agent and the Servicer, may at any time and from time to time, with
the prior approval of the Certificate Insurer but
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without the giving of notice to or the receipt of the consent of the Owners,
amend this Agreement for the purposes of (i) removing the restriction against
the transfer of a Class R Certificate to a Disqualified Organization (as such
term is defined in the Code) if accompanied by an opinion of counsel experienced
in federal income tax matters addressed to the Certificate Insurer and the
Trustee that there is or will be no adverse effect as a result of such
amendment, (ii) complying with the requirements of the Code including any
amendments necessary to maintain the treatment of the Trust (other than the
Non-REMIC Accounts) as a REMIC hereunder, (iii) curing any ambiguity and (iv)
correcting or supplementing any provisions of this Agreement which are
inconsistent with any other provisions of this Agreement or adding provisions to
this Agreement which are not inconsistent with the provisions of this Agreement;
(v) adding any other provisions with respect to matters or questions arising
under this Agreement; or (vi) for any other purpose, provided that in the case
of clause (vi), (A) prior to the effectiveness of such amendment, the Seller
delivers an opinion of counsel acceptable to the Trustee and the Certificate
Insurer that such amendment will not adversely affect in any material respect
the interest of the Owners and the Certificate Insurer and (B) such amendment
will not result in a withdrawal or reduction of the rating of the Class A
Certificates without regard to the Certificate Insurance Policies.
Notwithstanding anything to the contrary, no such amendment shall (a) change in
any manner the amount of, or delay the timing of, payments which are required to
be distributed to any Owner without the consent of the Owner of such
Certificate, (b) change the percentages of Percentage Interest which are
required to consent to any such amendments, without the consent of the Owners of
all Certificates of the Class or Classes affected then outstanding or (c) which
affects in any manner the terms or provisions of the related Certificate
Insurance Policy.
(b) This Agreement may be amended from time to time by the
Servicer, the Seller, the Oversight Agent and the Trustee with the
consent of the Certificate Insurer (which consent shall not be withheld
if, in an opinion of counsel addressed to the Trustee and the
Certificate Insurer, failure to amend would adversely affect the
interests of the Owners) and the Owners of 66 2/3% of the Class A
Certificates 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 Owners; provided, however,
that no such amendment shall be made that no such amendment shall
reduce in any manner the amount of, or delay the timing of, payments
received on Mortgage Loans which are required to be distributed on any
Certificate without the consent of the Owner of such Certificate or
reduce the percentage for each Class the Owners of which are required
to consent to any such amendment without the consent of the Owners of
100% of each affected Class of Certificates.
(c) Each proposed amendment to this Agreement shall be
accompanied by an opinion of counsel nationally recognized in federal
income tax matters and reasonably acceptable to the Certificate Insurer
addressed to the Trustee and to the Certificate Insurer to the effect
that such amendment would not adversely affect the status of the Trust
(other than the Non-REMIC Accounts) as a REMIC.
(d) The Certificate Insurer, the Owners, Moody's and Standard
& Poor's shall be provided with copies of any amendments to this
Agreement, together with copies of any opinions or other documents or
instruments executed in connection therewith.
Section 11.15. REMIC Status; Taxes. (a) The Tax Matters Person
shall prepare and file or cause to be filed with the Internal Revenue Service
federal tax or information returns with respect to the Trust and the
Certificates containing such information and at the times and in such manner as
may be required by the Code or applicable Treasury regulations and shall furnish
to Owners such statements or information at the times and in such manner as may
be required thereby. For this purpose, the Tax Matters Person may, but need not,
rely on any proposed regulations of the United States Department of the
Treasury. The Tax Matters Person shall indicate the election to treat the Trust
(other than the Non-REMIC Accounts) as a REMIC (which election shall apply to
the taxable period ending December 31, 1999 and each calendar year thereafter)
in such manner as the Code or applicable Treasury regulations may prescribe.
First Alliance Portfolio Services, Inc., as Tax Matters Person appointed
pursuant to Section 11.17 hereof, shall sign all tax
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information returns filed pursuant to this Section 11.15. The Tax Matters Person
shall provide information necessary for the computation of tax imposed on the
transfer of a Class R Certificate to a Disqualified Organization, an agent of a
Disqualified Organization or a pass-through entity in which a Disqualified
Organization is the record holder of an interest. The Tax Matters Person shall
provide the Trustee with copies of any Federal tax or information returns filed,
or caused to be filed, by the Tax Matters Person with respect to the Trust or
the Certificates.
(b) The Tax Matters Person shall timely file all reports
required to be filed by the Trust with any federal, state or local
governmental authority having jurisdiction over the Trust, including
other reports that must be filed with the Owners, such as the Internal
Revenue Service's Form 1066 and Schedule Q and the form required under
Section 6050K of the Code, if applicable to REMICs. Furthermore, the
Tax Matters Person shall report to Owners, if required, with respect to
the allocation of expenses pursuant to Section 212 of the Code in
accordance with the specific instructions to the Tax Matters Person by
the Seller with respect to such allocation of expenses. The Tax Matters
Person shall collect any forms or reports from the Owners determined by
the Seller to be required under applicable federal, state and local tax
laws.
(c) The Tax Matters Person shall provide to the Internal
Revenue Service and to persons described in Section 860E(e)(3) and (6)
of the Code the information described in Proposed Treasury Regulation
Section 1.860D-1(b)(5)(ii), or any successor regulation thereto. Such
information will be provided in the manner described in Proposed
Treasury Regulation Section 1.860E(2)(a)(5), or any successor
regulation thereto.
(d) The Seller covenants and agrees that within ten Business
Days after the Startup Day it shall provide to the Tax Matters Person
any information necessary to enable the Tax Matters Person to meet its
obligations under subsections (b) and (c) above.
(e) The Trustee, the Seller and the Servicer each covenants
and agrees for the benefit of the Owners and the Certificate Insurer
(i) to take no action which would result in the termination of "REMIC"
status for the Trust (other than the Non-REMIC Accounts) (ii) not to
engage in any "prohibited transaction", as such term is defined in
Section 860F(a)(2) of the Code and (iii) not to engage in any other
action which may result in the imposition on the Trust of any other
taxes under the Code.
(f) The Trust shall, for federal income tax purposes, maintain
books on a calendar year basis and report income on an accrual basis.
(g) Except as otherwise permitted by Section 7.6(b) hereof, no
Eligible Investment shall be sold prior to its stated maturity (unless
sold pursuant to a plan of liquidation in accordance with Article IX
hereof).
(h) Neither the Seller nor the Trustee shall enter into any
arrangement by which the Trustee will receive a fee or other
compensation for services rendered pursuant to this Agreement, which
fee or other compensation is paid from the Trust Estate, other than as
expressly contemplated by this Agreement.
(i) Notwithstanding the foregoing clauses (g) and (h), the
Trustee or the Seller may engage in any of the transactions prohibited
by such clauses, provided that the Trustee shall have received an
opinion of counsel experienced in federal income tax matters and
reasonably acceptable to the Certificate Insurer, which opinion shall
not be at the expense of the Trustee, to the effect that such
transaction does not result in a tax imposed on the Trustee or cause a
termination of REMIC status for the Trust (other than the Non-REMIC
Accounts); provided, however, that such transaction is otherwise
permitted under this Agreement.
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Section 11.16. Additional Limitation on Action and Imposition
of Tax. (a) Any provision of this Agreement to the contrary notwithstanding, the
Trustee shall not, without having obtained an opinion of counsel experienced in
federal income tax matters and reasonably acceptable to the Certificate Insurer,
which opinion shall not be at the expense of the Trustee, to the effect that
such transaction does not result in a tax imposed on the Trust or cause a
termination of REMIC status for the Trust (other than the Non-REMIC Accounts),
(i) sell any assets in the Trust Estate, (ii) accept any contribution of assets
after the Startup Day or (iii) agree to any modification of this Agreement.
(b) In the event that any tax is imposed on "prohibited
transactions" of the Trust as defined in Section 860F(a)(2) of the
Code, on the "net income from foreclosure property" as defined in
Section 860G(c) of the Code, on any contribution to the Trust after the
Startup Day pursuant to Section 860G(d) of the Code or any other tax
(other than any minimum tax imposed by Sections 23151(a) or 23153(a) of
the California Revenue and Taxation Code) is imposed, such tax shall be
paid by (i) the Trustee, if such tax arises out of or results from a
breach by the Trustee of any of its obligations under this Agreement,
(ii) the Servicer, if such tax arises out of or results from a breach
by the Servicer of any of its obligations under this Agreement or (iii)
the Owners of the Class R Certificates in proportion to their
Percentage Interests. To the extent such tax is chargeable against the
Owners of the Class R Certificates, notwithstanding anything to the
contrary contained herein, the Trustee is hereby authorized to retain
from amounts otherwise distributable to the Owners of the Class R
Certificates on any Payment Date sufficient funds to reimburse the
Trustee for the payment of such tax (to the extent that the Trustee has
not been previously reimbursed or indemnified therefor). The Trustee
agrees to first seek indemnification for any such tax payment from any
indemnifying parties before reimbursing itself from amounts otherwise
distributable to the Owners of the Class R Certificates.
Section 11.17. Appointment of Tax Matters Person. A Tax
Matters Person will be appointed for the Trust for all purposes of the Code, and
such Tax Matters Person will perform, or cause to be performed through agents,
such duties and take, or cause to be taken, such actions as are required to be
performed or taken by the Tax Matters Person under the Code. The Tax Matters
Person for the Trust shall be First Alliance Portfolio Services, Inc. as long as
it owns a Class R Certificate or, if First Alliance Portfolio Services, Inc.
does not own a Class R Certificate, may be any other entity selected by First
Alliance Portfolio Services, Inc. that owns a Class R Certificate.
Section 11.18. The Certificate Insurer. The Certificate
Insurer is a third-party beneficiary of this Agreement. Any right conferred to
the Certificate Insurer shall be suspended during any period in which the
Certificate Insurer is in default in its payment obligations under the
Certificate Insurance Policies. During any period of suspension the Certificate
Insurer's rights hereunder shall vest in the Owners of the Class A Certificates
and shall be exercisable by the Owners of at least a majority in Percentage
Interest of the Class A Certificates then Outstanding. At such time as the Class
A Certificates are no longer Outstanding hereunder and the Certificate Insurer
has been reimbursed for all Insured Payments to which it is entitled hereunder,
the Certificate Insurer's rights hereunder shall terminate.
Section 11.19. Maintenance of Records. Each Owner of a Class R
Certificate shall each continuously keep an original executed counterpart of
this Agreement in its official records.
Section 11.20. Notices. All notices hereunder shall be given
as follows, until any superseding instructions are given to all other Persons
listed below:
The Trustee: Norwest Bank Minnesota, National Association
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479-0113
Attention: First Alliance 1999-1
Tel: (612) 667-9764
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with a copy to:
Norwest Bank Minnesota, National Association
11000 Broken Land Parkway
Columbia, Maryland 21044-3562
Attention: First Alliance 1999-1
Tel: (410) 884-2086
Fax: (410) 884-2360
The Seller: First Alliance Mortgage Company
17305 Von Karman Avenue
Irvine, California 92614-6203
Attention: Director, Secondary Marketing
Tel: (949) 224-8378
Fax: (949) 224-8366
The Servicer: First Alliance Mortgage Company
17305 Von Karman Avenue
Irvine, California 92614-6203
Attention: Manager, Investor Reporting
Tel: (714) 224-8585
Fax: (714) 224-8366
The Oversight Agent: Norwest Bank Minnesota, National Association
11000 Broken Land Parkway
Columbia, Maryland 21044-3562
Attention: First Alliance 1999-1
Tel: (410) 884-2086
Fax: (410) 884-2360
The Certificate
Insurer: MBIA Insurance Corporation
113 King Street
Armonk, New York 10504
Attention: Insured Portfolio Management -
Structured Finance (IPM-SF)
First Alliance Mortgage Loan Trust
1999-1
Tel: (914) 765-3781
Fax: (914) 765-3810
Moody's: Moody's Investors Service
99 Church Street
New York, New York 10007
Attention: The Home Equity Monitoring Department
Standard & Poor's: Standard & Poor's Ratings Services,
a division of The McGraw-Hill Companies
25 Broadway
New York, New York 10004
Attention: Residential Mortgage
Surveillance Dept.
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Underwriter: Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
Attention: Samir Tabet
Tel: (212) 526-7512
Fax: (212) 526-8579
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IN WITNESS WHEREOF, the Seller, the Servicer, the Oversight
Agent and the Trustee have caused this Agreement to be duly executed by their
respective officers thereunto duly authorized, all as of the day and year first
above written.
FIRST ALLIANCE MORTGAGE COMPANY,
as Seller
By: /s/ Francisco Nebot
------------------------------------
Name: Francisco Nebot
Title: Executive Vice President, CFO
FIRST ALLIANCE MORTGAGE COMPANY,
as Servicer
By: /s/ Francisco Nebot
------------------------------------
Name: Francisco Nebot
Title: Executive Vice President, CFO
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Trustee
By: /s/ Peter A. Gobell
------------------------------------
Name: Peter A. Gobell
Title: Trust Officer
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Oversight Agent
By: /s/ Peter A. Gobell
------------------------------------
Name: Peter A. Gobell
Title: Trust Officer
<PAGE>
STATE OF CALIFORNIA )
) ss.:
COUNTY OF ORANGE )
On the 15th day of March, 1999, before me, a Notary Public,
personally appeared Francisco Nebot, 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/ Heidi R. Hopper
------------------------------------
[NOTARIAL SEAL]
<PAGE>
WASHINGTON )
) ss.:
DISTRICT OF COLUMBIA )
On the 19th day of March, 1999, before me, personally came
Peter A. Gobell, to me known, who being by me duly sworn did depose and say that
his office is located at 11000 Broken Land Parkway, Columbia, MD 21044-3562;
that he is a Trust Officer of Norwest Bank Minnesota, National Association, the
national banking association described herein that executed the above instrument
as Trustee and Oversight Agent; and that he signed his name thereto under the
authority granted by the Board of Directors of said national banking
association.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this Certificate first above written.
/s/ Claudia B. Bixler
------------------------------------
[NOTARIAL SEAL]
110
Exhibit 10.1
SUBSEQUENT TRANSFER AGREEMENT
First Alliance Mortgage Company in its capacities as seller (in such
capacity, the "Seller") and as servicer (in such capacity, the "Servicer") and
First Alliance Mortgage Loan Trust 1999-1, as the "Purchaser", pursuant to the
Pooling and Servicing Agreement dated as of March 1, 1999, (the "Pooling and
Servicing Agreement") among the Seller, the Servicer and Norwest Bank Minnesota,
National Association, a national banking association, in its capacities as
Trustee (in such capacity, the "Trustee") and as oversight agent (in such
capacity, the "Oversight Agent"), hereby confirm their understanding with
respect to the sale by the Seller and the purchase by the Purchaser of those
Mortgage Loans (the "Subsequent Mortgage Loans") listed on the attached
Schedules of Mortgage Loans.
Conveyance of Subsequent Mortgage Loans. As of March 30, 1999 (the
"Subsequent Transfer Date"), the Seller does hereby irrevocably transfer,
assign, set over and otherwise convey to the Purchaser, without recourse (except
as otherwise explicitly provided for herein) all of its right, title and
interest in and to any and all benefits accruing from the Subsequent Mortgage
Loans which are delivered to the Trustee herewith (and all substitutions
therefor as provided by Sections 3.3, 3.4 and 3.6 of the Pooling and Servicing
Agreement), together with the related Subsequent Mortgage Loan documents and the
interest in any Property which secured a Subsequent Mortgage Loan but which has
been acquired by foreclosure or deed in lieu of foreclosure, and all payments
thereon and proceeds of the conversion, voluntary or involuntary, of the
foregoing; and proceeds of all the foregoing (including, but not by way of
limitation, all proceeds of any mortgage insurance, hazard insurance and title
insurance policy relating to the Subsequent Mortgage Loans, cash proceeds,
accounts, accounts receivable, notes, drafts, acceptances, chattel paper,
checks, deposit accounts, rights to payment of any and every kind, and other
forms of obligations and receivables which at any time constitute all or part of
or are included in the proceeds of any of the foregoing). The Seller shall
deliver the original Mortgage or mortgage assignment with evidence of recording
thereon (except as otherwise provided by the Pooling and Servicing Agreement)
and other required documentation in accordance with the terms set forth in
Sections 3.5 and 3.8 of the Pooling and Servicing Agreement.
The costs relating to the delivery of the documents specified in this
Subsequent Transfer Agreement and the Pooling and Servicing Agreement shall be
borne by the Seller.
The Seller hereby affirms the representations and warranties set forth
in the Pooling and Servicing Agreement that relate to the Seller and the
Subsequent Mortgage Loans as of the date hereof. The Seller hereby delivers
notice and confirms that each of the conditions set forth in Section 3.8(b),
3.8(c) and 3.8(d) to the Pooling and Servicing Agreement are satisfied as of the
date hereof.
Pursuant to Section 3.8(a) of the Pooling and Servicing Agreement, the
Seller instructs the Trustee to release one-hundred percent of the aggregate
principal balances of the Subsequent Mortgage Loans so transferred from the
Pre-Funding Account, $24,967,101.18 pursuant to this Subsequent Transfer
Agreement and to include $19,471,488.65 of the Subsequent Mortgage Loans
<PAGE>
listed in Exhibit A hereto in Group I and $5,495,612.53 of the Subsequent
Mortgage Loans listed in Exhibit B hereto in Group II.
All terms and conditions of the Pooling and Servicing Agreement are
hereby ratified, confirmed and incorporated herein, provided that in the event
of any conflict the provisions of this Subsequent Transfer Agreement shall
control over the conflicting provisions of the Pooling and Servicing Agreement.
Terms capitalized herein and not defined herein shall have their
respective meanings as set forth in the Pooling and Servicing Agreement.
<PAGE>
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement
this 30th day of March, 1999.
FIRST ALLIANCE MORTGAGE
COMPANY, as Seller and Servicer
By: /s/ Francisco Nebot
------------------------------------
Name: Francisco Nebot
Title: Executive Vice President and
Chief Financial Officer
FIRST ALLIANCE MORTGAGE LOAN
TRUST 1999-1, by Norwest Bank Minnesota,
National Association, as Trustee
By: /s/ Peter A Gobell
------------------------------------
Name: Peter A. Gobell
Title: Trust Officer
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Trustee and Oversight Agent
By: /s/ Peter A Gobell
------------------------------------
Name: Peter A. Gobell
Title: Trust Officer
Dated: March 30, 1999
<PAGE>
EXHIBIT A
LOAN SCHEDULE - 1999-1 (FIXED)
<TABLE>
<CAPTION>
Loan Lien Cut-Off Current Current Mat Pmt
Number Property Address City ST Zip Pos Balance Rate Pmt Date Type
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
105527 4721 W OAKFIELD AVE SANTA ANA CA 92703 2 14,630.22 11.950 181.38 1/1/10 A
106360 5572 VONNIE LN CYPRESS CA 90630 1 19,498.00 8.490 149.78 4/1/29 A
106372 4 OXBOW CREEK LANE (LAGUNA HILLS AREA) CA 92653 1 121,328.00 9.250 998.14 4/1/29 A
106373 9291 KERN AVE WESTMINSTER CA 92683 1 47,938.00 10.490 529.61 5/1/14 A
106375 1025 N. GILBERT STREET AHAHEIM CA 92801 1 56,627.00 8.990 574.01 5/1/14 A
106378 34142 SELVA RD #211 DANA POINT CA 92629 1 124,590.00 10.000 1,093.37 5/1/29 A
205146 709 STORK STREET SAN DIEGO CA 92114 1 28,233.00 9.250 232.27 4/1/29 A
205148 823 DAISY STREET ESCONDIDO CA 92027 1 59,622.00 8.990 479.30 5/1/29 A
304820 8946 HUNT AVENUE SOUTH GATE CA 90280 1 54,677.00 8.990 554.25 5/1/14 A
304836 550 EAST HILLSDALE STREET INGLEWOOD CA 90302 1 57,461.00 8.990 461.93 5/1/29 A
304850 347 EAST 116TH STREET LOS ANGELES CA 90061 1 49,681.00 9.250 408.71 6/1/29 A
304855 1122 253rd St HARBOR CITY AREA CA 90710 1 66,369.00 9.250 546.00 6/1/29 A
404824 8301 IRIS STREET OAKLAND CA 94605 1 55,808.12 11.990 580.79 3/1/26 A
404859 827 46 AVE SAN FRANCISCO CA 94121 1 87,585.08 10.750 830.81 3/1/26 A
405397 1225 MAGNOLIA STREET OAKLAND CA 94607 1 76,133.42 9.250 631.77 7/1/27 A
406002 2625 OCTAVIA STREET OAKLAND CA 94619 1 70,894.00 8.990 569.92 5/1/29 A
406004 515 SHIELDS STREET SAN FRANCISCO CA 94132 1 134,687.00 8.990 1,082.75 5/1/29 A
406006 1051 BROADMOOR BLVD SAN LEANDRO CA 94577 1 132,790.00 9.990 1,164.35 5/1/29 A
406007 2013 WOOLSEY STREET BERKELEY CA 94703 1 84,005.00 8.990 675.32 5/1/29 A
406009 394 50TH STREET OAKLAND CA 94609 2 20,000.00 14.250 269.72 5/1/14 A
406011 2570 WENTWORTH DRIVE SAN BRUNO CA 94066 1 201,483.00 9.250 1,845.32 5/1/19 A
406013 3138 SAN ANGELO WAY UNION CITY CA 94587 1 20,000.00 9.250 205.84 5/1/14 A
406014 964 HENSLEY AVENUE SAN BRUNO CA 94066 1 199,183.00 10.250 1,784.88 5/1/29 A
406015 2145 PALOMINO ROAD LIVERMORE CA 94550 1 162,730.00 9.750 1,398.10 6/1/29 A
505821 6938 Yarmouth Av RESEDA AREA CA 91335 1 87,615.00 10.990 833.72 3/1/29 A
505857 19009 Drycliff St. SANTA CLARITA CA 91351 1 105,911.00 8.990 851.42 5/1/29 A
505861 847 S LONGWOOD AVE. LOS ANGELES CA 90005 1 226,420.00 9.990 1,985.32 5/1/29 A
505862 5633 LA MIRADA AVE LOS ANGELES CA 90038 1 60,376.00 9.250 496.70 5/1/29 A
505863 2800 CANADA BLVD GLENDALE CA 91208 1 144,920.00 9.250 1,192.22 6/1/29 A
603221 2175 DOVER WY PITTSBURG CA 94565 1 63,841.87 11.500 645.37 1/1/25 A
605126 1383 EL CAMINO DRIVE CLAYTON CA 94517 1 59,547.00 8.990 603.61 5/1/14 A
605128 1 SHEFFIELD CT SAN PABLO CA 94806 1 65,590.00 9.990 704.43 5/1/14 A
605129 4319 PALO VERDE DR PITTSBURG CA 94565 1 46,011.00 8.990 466.40 5/1/14 A
605132 932 CAPITOL STREET VALLEJO CA 94590 1 48,523.00 8.990 491.86 4/1/14 A
705149 544 NORTH FOXDALE AVENUE WEST COVINA CA 91790 2 34,771.87 11.550 587.51 10/1/07 A
707361 5608 N. ROCKVALE AVE; AZUSA CA 91702 1 93,257.84 9.490 786.67 8/1/28 A
707574 6382 RATHKE DRIVE RIVERSIDE AREA CA 92509 1 31,248.00 10.490 285.60 4/1/29 A
707575 549 E LA VERNE AVE, POMONA CA 91767 1 28,850.00 8.990 231.93 5/1/29 A
707582 12513, 12515, 12517 14TH STREET YUCAIPA CA 92399 1 93,165.00 9.740 799.75 4/1/29 A
707585 10824 WINDY COURT BLOOMINGTON CA 92316 1 39,900.00 11.240 459.53 5/1/14 A
707586 3012 HERRINGTON AVENUE SAN BERNARDINO CA 92405 1 63,986.00 9.990 561.05 5/1/29 A
707590 6410 PIONEER BLVD, WHITTIER AREA CA 90606 1 111,990.00 10.740 1,044.56 4/1/29 A
707591 1608 RADFORD PLACE MONROVIA CA 91016 1 143,396.00 9.740 1,230.94 5/1/29 A
707593 1009 VINELAND AVENUE LA PUENTE AREA CA 91746 1 49,445.00 10.000 433.92 5/1/29 A
707594 8463 ARTSON ST, ROSEMEAD CA 91770 1 85,086.00 9.250 699.98 5/1/29 A
707595 1838 ANTIOCH RD, CLAREMONT CA 91711 1 182,046.00 9.750 1,564.06 5/1/29 A
707597 16522 ALWOOD ST, LA PUENTE CA 91744 1 80,009.00 10.000 702.14 5/1/29 A
707599 5897 PARAMOUNT DRIVE RIVERSIDE AREA CA 92509 1 37,363.00 10.000 327.89 5/1/29 A
806191 2312 MANHATTAN AVE. MANHATTAN BEACH CA 90266 1 222,230.31 9.990 1,971.70 3/1/27 A
806892 664 SCOTT BLVD SANTA CLARA CA 95050 1 168,835.00 8.490 1,297.00 4/1/29 A
806902 2590 GEORGINIA AVE. SAN JOSE CA 95116 1 176,990.00 9.500 1,488.23 5/1/29 A
806905 1783 LAINE AVE SANTA CLARA CA 95051 1 168,582.00 8.990 1,355.24 5/1/29 A
806906 2428 ILLINOIS STREET EAST PALO ALTO CA 94303 1 146,970.00 8.990 1,489.79 5/1/14 A
806907 1789 BIRD AVE SAN JOSE CA 95125 1 193,799.00 9.740 1,663.61 5/1/29 A
806911 17 STRUVE RD WATSONVILLE CA 95076 1 93,506.00 9.250 769.25 6/1/29 A
806920 1299 MILTON WAY SAN JOSE CA 95125 1 47,398.00 10.250 424.73 4/1/29 A
806927 533 N 19TH ST SAN JOSE CA 95112 1 77,368.00 9.490 649.99 4/1/29 A
806934 1677 CURTNER AVENUE SAN JOSE CA 95125 1 111,342.00 9.250 915.98 6/1/29 A
1301588 3172 GLEN ECHO DR. ATLANTA GA 30311 1 63,147.58 10.875 598.23 3/1/28 A
1301801 1260 PROSPECT RD. LAWRENCEVILLE GA 30043 1 65,590.00 10.490 599.49 5/1/29 A
1401127 243 MUSEUM DRIVE LOS ANGELES CA 90065 1 110,404.31 9.950 992.44 2/1/25 A
1602886 18508 79TH PL W EDMONDS WA 98026 1 83,700.66 9.950 733.80 8/1/28 A
1603107 19904 NE 177TH ST WOODINVILLE WA 98072 1 104,439.00 9.740 896.53 4/1/29 A
1603114 31620 SAUK PRAIRIE RD DARRINGTON WA 98241 1 57,269.00 8.990 460.39 5/1/29 A
1603116 18015 SE 128TH ST RENTON WA 98059 1 45,315.00 9.740 388.99 5/1/29 A
1603117 4837 A STREET TACOMA WA 98408 1 32,207.00 11.240 312.57 5/1/29 A
1603118 1445 166TH PL NE BELLEVUE WA 98008 1 115,507.00 8.990 928.56 5/1/29 A
1603119 7041 SOUTH OAKES ST. TACOMA WA 98409 1 69,740.00 9.500 586.41 5/1/29 A
1603120 6324 SCHOOL ST SW TACOMA WA 98499 1 159,949.00 8.990 1,285.84 5/1/29 A
1703303 3421 S ELM ST DENVER CO 80222 1 71,036.00 9.740 609.79 5/1/29 A
1703307 1450 S FILBERT WY DENVER CO 80222 1 104,990.00 8.990 844.02 5/1/29 A
1703308 5555 POTOMAC WAY DENVER CO 80239 1 67,890.00 8.990 688.18 5/1/14 A
1703311 3368 W 34TH AVE DENVER CO 80211 1 35,353.00 9.250 290.84 5/1/29 A
1703312 1462 S PENNSYLVANIA ST DENVER CO 80210 1 95,769.00 8.990 769.89 5/1/29 A
1703313 1145 W 97TH AVE DENVER CO 80221 1 89,990.00 9.750 773.15 5/1/29 A
1703317 9424 W 64TH AVE ARVADA CO 80004 1 101,490.00 10.000 890.65 5/1/29 A
<PAGE>
<CAPTION>
Loan Prop Occup Appraised Orig
Number Type Type Value Type
- - -------------------------------------------
<S> <C> <C> <C> <C>
105527 S P 135,000 F
106360 S P 114,000 F
106372 S P 225,000 F
106373 S P 161,000 F
106375 S P 154,000 F
106378 C I 181,000 F
205146 S P 59,000 F
205148 S P 129,000 F
304820 S P 123,000 F
304836 S P 110,000 F
304850 S P 81,000 F
304855 S P 110,000 F
404824 S I 110,000 F
404859 S P 251,000 F
405397 S P 115,000 F
406002 S P 113,000 F
406004 S P 237,000 F
406006 S P 166,000 F
406007 S P 168,000 F
406009 S P 238,000 F
406011 S P 335,000 F
406013 S P 244,000 F
406014 S P 249,000 F
406015 S P 205,000 F
505821 S P 117,000 F
505857 S P 156,000 F
505861 S P 450,000 F
505862 F P 225,000 F
505863 S P 298,000 F
603221 S P 124,000 F
605126 S P 250,000 F
605128 C P 82,000 F
605129 S P 142,000 F
605132 S P 125,000 F
705149 S P 180,000 F
707361 S P 138,000 F
707574 S P 85,000 F
707575 S P 115,000 F
707582 F P 135,000 F
707585 S P 93,000 F
707586 S I 83,000 F
707590 S P 140,000 F
707591 S P 205,000 F
707593 S P 134,000 F
707594 S P 145,000 F
707595 S P 245,000 F
707597 S P 150,000 F
707599 S I 70,000 F
806191 F I 525,000 F
806892 S P 265,000 F
806902 S P 230,000 F
806905 S P 242,000 F
806906 S P 195,000 F
806907 S I 321,000 F
806911 S P 145,000 F
806920 S P 205,000 F
806927 S P 260,000 F
806934 S P 350,000 F
1301588 S P 91,000 F
1301801 S P 82,000 F
1401127 S P 156,000 F
1602886 S P 175,000 F
1603107 S P 195,000 F
1603114 S P 98,000 F
1603116 S P 120,000 F
1603117 S P 80,000 F
1603118 S P 185,000 F
1603119 S P 90,000 F
1603120 S P 240,000 F
1703303 S P 122,000 F
1703307 S P 150,000 F
1703308 S P 97,000 F
1703311 S P 80,000 F
1703312 S P 195,000 F
1703313 S P 120,000 F
1703317 S P 145,000 F
</TABLE>
Page 1
<PAGE>
EXHIBIT A
LOAN SCHEDULE - 1999-1 (FIXED)
<TABLE>
<CAPTION>
Loan Lien Cut-Off Current Current Mat Pmt
Number Property Address City ST Zip Pos Balance Rate Pmt Date Type
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1703318 124 W 3RD AVE DENVER CO 80223 1 65,822.00 10.000 577.64 5/1/29 A
1703320 7784 E NAVARRO PL DENVER CO 80237 1 42,756.00 9.250 440.04 5/1/14 A
1802049 8410 S. DORCHESTER AVENUE CHICAGO IL 60619 1 44,864.01 9.990 560.06 6/1/10 A
1803514 8905 S. PAXTON AVENUE CHICAGO IL 60617 1 63,401.02 9.750 547.72 4/1/28 A
1803751 9201 S. BENNETT AVENUE CHICAGO IL 60617 1 76,297.24 10.250 685.46 9/1/28 A
1804061 1901 W. 55TH ST. LAGRANGE IL 60525 1 96,604.00 9.250 794.74 4/1/29 A
1804067 1541 S. TRUMBULL AVE. CHICAGO IL 60623 1 41,039.99 10.750 416.65 5/1/19 A
1804069 22530 LATONIA COURT RICHTON PARK IL 60471 1 108,636.00 10.500 993.74 5/1/29 A
1804072 250 SEABURY ROAD BOLINGBROOK IL 60440 1 78,613.00 9.750 675.41 5/1/29 A
1804074 2803 S. KILDARE AVE. CHICAGO IL 60623 1 85,231.00 10.750 795.62 5/1/29 A
1804075 832 N. CENTRAL PARK AVENUE CHICAGO IL 60651 1 76,714.00 9.990 672.65 5/1/29 A
1804077 8731 S. ADA STREET CHICAGO IL 60620 1 70,468.00 9.375 586.12 5/1/29 A
1804078 7955 SYCAMORE DRIVE ORLAND PARK IL 60462 1 34,857.00 9.250 358.75 5/1/14 A
2101592 2311 NW 119TH ST VANCOUVER WA 98685 1 84,580.25 11.490 844.89 1/1/27 A
2102242 5114 NE 60TH AV PORTLAND OR 97218 1 82,131.00 9.250 675.67 5/1/29 A
2102243 9341 NE BROADWAY ST PORTLAND OR 97220 1 42,988.00 10.000 461.95 5/1/14 A
2102250 11145 SW CABOT ST BEAVERTON OR 97005 1 124,825.00 10.000 1,095.43 5/1/29 A
2102251 4337 NE 34TH AVE PORTLAND OR 97211 1 94,490.00 9.750 811.82 5/1/29 A
2201762 1710 HIGHLAND BLVD. HOFFMAN ESTATES IL 60195 1 99,291.96 10.300 898.55 2/1/28 A
2202107 2970 MALLARD POINT ISLAND LAKE IL 60042 1 208,464.00 9.500 1,752.88 5/1/29 A
2202108 7222 N. CRAWFORD AVE. LINCOLNWOOD IL 60646 1 136,162.00 8.990 1,224.21 5/1/19 A
2401793 5660 BRIARWOOD WAY DAVIE FL 33331 1 86,763.00 8.990 697.49 5/1/29 A
2401794 20920 NW 31 AVE OPA LOCKA FL 33056 1 27,140.00 10.240 243.00 5/1/29 A
2401796 9260 NW 15th STREET CORAL SPRINGS FL 33071 1 96,307.00 9.250 792.29 5/1/29 A
2401798 9013 SW 102 PLACE MIAMI FL 33176 1 147,050.00 9.750 1,263.39 5/1/29 A
2500505 7213 S. GALAHAD PLACE CONCORD OH 44077 1 45,769.00 8.490 567.23 4/1/09 A
2500509 1207 MEADOWBROOK BLVD BRUNSWICK OH 44212 1 62,500.00 8.490 480.13 4/1/29 A
2500515 2340 EDGERTON ROAD UNIVERSITY HTS OH 44118 1 99,990.00 10.740 1,120.21 4/1/14 A
2500517 1048 DELEONE DRIVE KENT OH 44240 1 97,740.00 10.490 893.34 4/1/29 A
2500519 4989 EVERETT ROAD AKRON OH 44333 1 53,373.00 10.490 487.82 4/1/29 A
2500524 5710 PLEASANT AVENUE NORTH RIDGEVILLE OH 44039 1 67,509.00 8.990 684.32 4/1/14 A
2500526 1110 N. CARPENTER ROAD BRUNSWICK OH 44212 1 65,990.00 10.490 729.04 5/1/14 A
2500531 1334 SUMMIT AVENUE LAKEWOOD OH 44107 1 84,740.00 9.750 728.05 5/1/29 A
2600254 1802 E. ARDMORE DR. PHOENIX AZ 85040 1 23,071.37 9.990 205.15 11/1/26 A
2600566 7318 E PUEBLO AVE MESA AZ 85208 1 81,189.03 9.700 696.92 8/1/28 A
2600709 1120 W MORELOS ST CHANDLER AZ 85224 1 35,394.00 10.490 323.50 5/1/29 A
2700199 4166 S 650 E MURRAY UT 84107 1 64,473.06 9.500 968.12 2/1/07 A
2800310 10842 TERNEZ DRIVE MOORPARK CA 93021 1 134,487.77 9.250 1,115.56 7/1/26 A
2800545 3085 ORTHELLO WAY SANTA CLARA CA 95051 1 149,494.49 9.604 1,290.86 10/1/26 A
2900374 1677 PROSPECT AVE WILLOW GROVE PA 19090 1 118,566.65 9.490 1,329.91 2/1/12 A
2900777 713 BRIDGEWATER RD. BENSALEM PA 19020 1 72,499.40 9.250 599.99 4/1/28 A
2901037 1450 WILLOW AVE LAMOTT PA 19027 1 40,785.00 8.990 413.43 5/1/14 A
2901042 54 IDOLSTONE RD LEVITTOWN PA 19057 1 85,388.00 8.990 686.44 5/1/29 A
3100104 132 BAYVIEW AVE JERSEY CITY NJ 07305 1 74,071.91 12.490 796.57 11/1/26 A
3100312 123 WALTER AVE HASBROUCK HTS NJ 07604 1 123,510.32 9.750 1,073.76 4/1/27 A
3101204 263 WINFIELD AVE JERSEY CITY NJ 07305 1 64,022.98 9.240 526.24 4/1/29 A
3101215 17 OAKWOOD AVENUE PEQUANNOCK NJ 07440 1 43,604.00 10.490 398.54 4/1/29 A
3101223 57 ADDICKS RD WESTWOOD NJ 07675 1 53,384.00 8.990 429.16 5/1/29 A
3101228 2405 ROSSETT STREET FORT LEE NJ 07024 1 49,668.00 8.990 503.47 5/1/14 A
3101230 65 HILLSIDE RD SPARTA NJ 07871 1 107,347.00 9.250 1,374.39 5/1/09 A
3101233 296 MIDLAND AVE EAST ORANGE NJ 07017 1 97,990.00 8.990 787.74 5/1/29 A
3101234 211 MADISON AVENUE NEW MILFORD NJ 07646 1 83,124.00 8.990 668.24 5/1/29 A
3101240 422 LIBERTY ROAD ENGLEWOOD NJ 07631 1 125,240.00 9.500 1,053.09 5/1/29 A
3101243 92 LAFAYETTE AVENUE EAST ORANGE NJ 07017 1 45,291.00 9.250 372.60 5/1/29 A
3101245 372 VERMONT AVENUE IRVINGTON NJ 07111 1 68,013.00 9.250 699.98 5/1/14 A
3101253 62 HIGHWOOD TERRACE WEEHAWKEN NJ 07087 1 60,513.00 9.250 497.83 6/1/29 A
3200014 42 BUFFALO STREET ELMONT NY 11003 1 106,495.45 9.750 927.97 12/1/26 A
3200022 47 RIDGE DR WESTBURY NY 11590 1 132,297.68 10.190 1,194.96 12/1/26 A
3200244 18 KATHERINE ST LOCUST VALLEY NY 11560 1 20,987.79 10.490 193.88 3/1/27 A
3200537 114 UTTERBY ROAD MALVERNE NY 11565 1 34,139.50 9.990 385.75 8/1/12 A
3201123 8 DART STREET EAST ROCKAWAY NY 11518 1 102,197.37 9.500 862.37 8/1/28 A
3201284 214 MONTGOMERY AVE WEST BABYLON NY 11704 1 77,524.00 11.240 752.37 4/1/29 A
3201294 5 CATHERINE COURT ELMONT NY 11003 1 127,190.00 10.740 1,186.34 5/1/29 A
3201304 32 SAMMIS PL. HEMPSTEAD NY 11550 1 58,176.00 9.250 598.74 5/1/14 A
3201313 817 DENSFIELD RD W. BABYLON NY 11704 1 90,990.00 8.990 731.47 4/1/29 A
3201316 4 BAY STREET BELLMORE NY 11710 1 181,160.00 9.740 1,555.11 5/1/29 A
3201319 27 PIPER LANE LEVITTOWN NY 11756 1 94,471.00 8.990 759.46 5/1/29 A
3201320 426 MIDWOOD AVE BELLMORE NY 11710 1 125,103.00 9.990 1,343.60 5/1/14 A
3201323 455 MARY ANN LN WEST HEMPSTEAD NY 11552 1 95,190.00 11.240 923.82 5/1/29 A
3201325 1811 GORMLEY AVE MERRICK NY 11566 1 58,813.00 10.000 516.13 5/1/29 A
3201326 31 CANDLE LANE LEVITTOWN NY 11756 1 80,208.00 9.740 688.52 5/1/29 A
3201332 1712 GLENMORE AVE EAST MEADOW NY 11554 1 142,442.00 9.250 1,171.84 5/1/29 A
3201335 35 SYCAMORE RD VALLEY STREAM NY 11581 1 85,511.00 10.000 750.42 5/1/29 A
3300077 522 VERMONT STREET BROOKLYN NY 11207 1 91,886.50 9.750 798.83 4/1/27 A
3300436 1423 AVENUE H BROOKLYN NY 11230 1 63,988.29 10.990 611.65 3/1/28 A
3300734 84-24 108TH AVE OZONE PARK NY 11417 1 86,844.32 9.490 731.81 9/1/28 A
<PAGE>
<CAPTION>
Loan Prop Occup Appraised Orig
Number Type Type Value Type
- - -------------------------------------------
<S> <C> <C> <C> <C>
1703318 S P 168,000 F
1703320 S P 185,000 F
1802049 S P 80,000 F
1803514 S P 98,000 F
1803751 S P 185,000 F
1804061 S P 164,000 F
1804067 F I 68,500 F
1804069 S P 147,000 F
1804072 S P 107,000 F
1804074 F I 127,000 F
1804075 F P 118,000 F
1804077 S P 91,000 F
1804078 S P 188,000 F
2101592 S P 130,000 F
2102242 S P 122,000 F
2102243 S P 110,000 F
2102250 S P 168,000 F
2102251 S P 112,000 F
2201762 S P 170,000 F
2202107 S P 270,000 F
2202108 S P 199,000 F
2401793 S P 187,000 F
2401794 S P 65,000 F
2401796 S P 239,000 F
2401798 S P 173,000 F
2500505 S P 108,000 F
2500509 S P 143,000 F
2500515 S P 125,000 F
2500517 S P 115,000 F
2500519 S P 127,000 F
2500524 S P 99,000 F
2500526 S P 110,000 F
2500531 S P 113,000 F
2600254 S P 85,000 F
2600566 S P 102,000 F
2600709 S P 59,000 F
2700199 C P 180,000 F
2800310 S P 250,000 F
2800545 S P 229,000 F
2900374 S P 162,000 F
2900777 S P 138,000 F
2901037 S P 96,000 F
2901042 S P 122,000 F
3100104 S P 108,000 F
3100312 S P 219,000 F
3101204 F P 91,500 F
3101215 S P 186,000 F
3101223 S P 215,000 F
3101228 S P 225,000 F
3101230 S P 220,000 F
3101233 S P 134,000 F
3101234 S P 192,000 F
3101240 S P 157,000 F
3101243 S P 125,000 F
3101245 S P 114,000 F
3101253 F P 176,000 F
3200014 S P 188,000 F
3200022 S P 187,000 F
3200244 S P 159,000 F
3200537 S P 179,000 F
3201123 S P 159,000 F
3201284 S P 130,000 F
3201294 S P 160,000 F
3201304 S P 100,000 F
3201313 S P 130,000 F
3201316 S P 348,000 F
3201319 S P 155,000 F
3201320 S P 157,000 F
3201323 S P 135,000 F
3201325 S P 160,000 F
3201326 S P 157,000 F
3201332 S P 200,000 F
3201335 S P 181,000 F
3300077 F P 144,000 F
3300436 S P 225,000 F
3300734 S P 130,000 F
</TABLE>
Page 2
<PAGE>
EXHIBIT A
LOAN SCHEDULE - 1999-1 (FIXED)
<TABLE>
<CAPTION>
Loan Lien Cut-Off Current Current Mat Pmt
Number Property Address City ST Zip Pos Balance Rate Pmt Date Type
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3300902 160-27 120 AVE JAMAICA NY 11434 1 92,390.00 9.250 760.07 4/1/29 A
3300969 257 PUTNAM AVENUE BROOKLYN NY 11216 1 39,909.00 10.490 364.76 5/1/29 A
3300976 736 A EVERGREEN AVENUE BROOKLYN NY 11207 1 107,840.00 9.990 945.58 5/1/29 A
3300979 1227 LINCOLN PLACE BROOKLYN NY 11213 1 33,323.00 8.990 267.88 5/1/29 A
3300982 359 REMSEN AVENUE BROOKLYN NY 11212 1 85,766.00 9.490 720.54 5/1/29 A
3300988 1101 BANNER AVENUE BROOKLYN NY 11235 1 132,856.00 10.250 1,190.52 5/1/29 A
3400111 28 WEST DRIVE MARGATE CITY NJ 08402 1 76,957.02 11.990 795.75 8/1/27 A
3400768 23 BUTTONWOOD DR OLD BRIDGE NJ 08857 1 58,777.98 9.490 494.55 12/1/28 A
3400923 198 ARBOR ST CRANFORD NJ 07016 1 143,981.00 10.250 1,290.22 5/1/29 A
3400932 273 PROSPECT ST PERTH AMBOY NJ 08861 1 61,606.00 9.740 528.84 5/1/29 A
3400935 1189 NEW BRUNSWICK AVE RAHWAY NJ 07065 1 67,200.00 9.990 721.72 5/1/14 A
3400937 25 LAVERN ST SAYREVILLE NJ 08872 1 75,281.00 8.990 605.19 5/1/29 A
3400945 47 ADAMS STREET SOMERVILLE NJ 08876 1 13,484.00 9.250 138.78 5/1/14 A
3600160 4708 BANNER ST HYATTSVILLE MD 20781 1 99,921.91 9.490 845.15 2/1/28 A
3600202 12507 GREENLY STREET SILVER SPRING MD 20906 1 91,773.13 8.990 962.43 4/1/13 A
3600408 17611 NORWOOD RD SANDY SPRING MD 20860 1 109,183.00 12.250 1,144.12 6/1/29 A
3600412 822 BOOKER PL SEAT PLEASANT MD 20743 1 38,390.00 9.250 315.83 5/1/29 A
3700239 7530 BLUE ASH ROAD CINCINNATI OH 45236 1 58,100.00 9.250 477.97 5/1/29 A
3800396 7111 JAYHAWK ST ANNANDALE VA 22003 1 88,051.00 9.250 724.37 5/1/29 A
3900421 1018 PARK AVE ANNAPOLIS MD 21403 1 77,194.00 9.740 662.65 5/1/29 A
3900426 7722 ARAGORN CT HANOVER MD 21076 1 120,458.00 9.500 1,012.88 5/1/29 A
3900427 2455 FOREST GREEN RD BALTIMORE MD 21209 1 53,652.00 12.990 593.08 5/1/29 A
4300026 11 WILDCAT ROAD NEWTON CT 06470 1 105,314.00 8.490 809.03 5/1/29 A
4300044 57 PALMER AVENUE SCARSDALE NY 10583 1 256,143.00 9.500 2,153.79 3/1/29 A
4300087 5 STONEHAM LANE NEW CITY NY 10956 1 134,036.00 9.750 1,151.58 5/1/29 A
4400342 2228 TERRACE DR MOUNDS VIEW MN 55112 1 39,554.00 8.990 317.98 5/1/29 A
4400350 2748 221ST AVE CEDAR MN 55011 1 59,038.00 8.990 598.45 5/1/14 A
4400358 8583 IVAN AVE COTTAGE GROVE MN 55016 1 80,490.00 9.490 840.01 5/1/14 A
4400360 5294 CLIFTON DR MOUNDS VIEW MN 55112 1 71,240.00 9.750 612.06 5/1/29 A
4600273 42 W LINCOLN CIRCLE RED BANK(MIDDLETOWN TWP) NJ 07701 1 126,740.00 8.990 1,018.87 5/1/29 A
4600280 122 N. GOUVERNEUR AVE TRENTON NJ 08618 1 52,490.00 9.250 431.82 5/1/29 A
4600281 218 ELMWOOD DR BRICK NJ 08723 1 76,928.00 8.990 779.80 5/1/14 A
4600284 40 STRICKLAND RD FREEHOLD(HOWELL TWP) NJ 07728 1 94,153.00 9.250 774.57 5/1/29 A
4600285 822 WINDSOR ST FORKED RIVER(LACEY TWP) NJ 08731 1 80,218.00 9.750 689.20 5/1/29 A
4800199 30 FIRESIDE LANE E. SETAUKET NY 11733 1 45,752.00 8.490 351.47 4/1/29 A
4800216 30 MALCOLM WAY RIVERHEAD NY 11901 1 75,000.00 8.490 576.15 4/1/29 A
4800231 54 TIBER AVENUE DEER PARK NY 11729 1 102,096.00 8.990 820.75 5/1/29 A
4800234 139 MANHATTAN AVENUE WEST BABYLON NY 11704 1 114,740.00 9.500 964.80 5/1/29 A
4800238 16 GEORGIA STREET EAST NORTHPORT NY 11731 1 93,137.00 9.740 799.51 5/1/29 A
4800240 85 DORCHESTER ROAD LAKE RONKONKOMA NY 11779 1 52,900.00 9.250 484.49 4/1/19 A
4800241 20 ISLIP BLVD ISLIP NY 11751 1 44,303.00 9.250 455.96 5/1/14 A
8301522 9750 SUSAN ROAD PHILADELPHIA PA 19115 1 67,450.12 10.990 647.87 4/1/27 A
8302052 4404 NORTH EAST 12TH. AVENUE VANCOUVER WA 98663 1 60,067.14 10.250 543.18 9/1/27 A
8302371 1286 W. 500 N. PROVO UT 84601 1 64,499.13 9.990 569.00 2/1/28 A
8302739 6954 S. 1620 EAST SALT LAKE CITY UT 84121 1 110,690.94 9.990 976.08 3/1/28 A
8302741 7327 N. WABASH AVE. PORTLAND OR 97217 1 119,456.68 9.990 1,053.30 3/1/28 A
8303058 237 ARAPAHOE CT. LYONS CO 80540 1 107,032.58 9.500 904.60 5/1/28 A
8303347 2083 TICONDEROGA DRIVE SAN MATEO CA 94402 1 170,788.25 10.500 1,567.41 7/1/28 A
8303490 510 CORONA STREET DENVER CO 80218 1 191,986.65 8.590 1,494.83 8/1/28 A
8303495 19807 NE 160TH PLACE WOODINVILLE WA 98072 1 155,795.42 9.500 1,315.51 8/1/28 A
8303506 918 COTTONWOOD COURT PETALUMA CA 94952 1 109,536.36 9.950 960.34 8/1/28 A
8303527 4767 S. ICHABOD PL. SALT LAKE CITY UT 84117 1 155,995.71 9.290 1,296.83 8/1/28 A
8410473 344 WHIPPANY ROAD WHIPPANY NJ 07981 1 49,702.35 9.500 419.84 7/1/28 A
8410522 17 TROILUS DRIVE OLD BRIDGE NJ 08857 1 145,609.77 9.990 1,280.83 8/1/28 A
8410529 27 1ST STREET RUMSON NJ 07760 1 149,376.52 9.850 1,298.61 8/1/28 A
8410533 4601 S.W. 112TH PLACE MIAMI FL 33165 1 64,216.83 9.500 686.70 8/1/13 A
8410579 3010 N.E. 34TH AVENUE PORTLAND OR 97212 1 197,152.16 9.750 1,698.69 9/1/28 A
8500009 410 COOS BAY WAGON ROAD ROSEBURG OR 97470 1 89,700.00 10.500 820.52 3/1/29 A
8900544 2429 PAYNE STREET EVANSTON IL 60201 1 23,975.42 10.490 278.07 8/1/12 A
8900553 234 BRENTWOOD DRIVE DESPLAINES IL 60016 1 116,309.18 9.990 1,021.03 9/1/27 A
14000735 820 A & B FEDORA STREET LOS ANGELES CA 90005 1 105,984.91 10.450 997.60 2/1/24 A
14001021 141 WEST 45TH STREET LOS ANGELES CA 90037 1 77,053.57 9.990 695.11 12/1/24 A
15000979 725 N. LEAF AVENUE WEST COVINA CA 91791 1 139,715.69 9.500 1,173.38 5/1/24 A
91000467 3300 OPAL ST LOS ANGELES CA 90023 1 12,575.71 10.990 376.91 8/18/02 A
92000286 620 NORTH KENWOOD STREET #305 GLENDALE CA 91206 1 97,032.27 9.375 844.42 8/1/23 A
92000632 1455 EAST 121ST STREET LOS ANGELES AREA CA 90059 1 96,745.34 9.625 857.18 10/1/23 A
92001659 16081 EAGLE LANE HUNTINGTON BEACH CA 92649 1 110,895.35 9.850 997.55 1/1/24 A
92001821 1451 WEST 51ST STREET LOS ANGELES CA 90062 1 91,900.93 9.990 835.72 2/1/24 A
- - ------------------------------------------------------------------------------------------------------------------------------------
TOTAL FIXED RATE LOANS: 220 19,471,488.65
<PAGE>
<CAPTION>
Loan Prop Occup Appraised Orig
Number Type Type Value Type
- - -------------------------------------------
<S> <C> <C> <C> <C>
3300902 S P 132,000 F
3300969 F P 120,000 F
3300976 F P 135,000 F
3300979 F P 125,000 F
3300982 F P 155,000 F
3300988 F P 168,000 F
3400111 S S 175,000 F
3400768 S P 135,000 F
3400923 S P 192,000 F
3400932 F P 140,000 F
3400935 S P 84,000 F
3400937 S P 135,000 F
3400945 S P 120,000 F
3600160 S P 140,000 F
3600202 S P 155,000 F
3600408 S P 168,000 F
3600412 S P 98,000 F
3700239 S P 83,000 F
3800396 S P 185,000 F
3900421 S P 128,000 F
3900426 S P 155,000 F
3900427 S P 99,000 F
4300026 S P 220,000 F
4300044 S P 350,000 F
4300087 S P 173,000 F
4400342 S P 93,000 F
4400350 S P 118,000 F
4400358 S P 123,000 F
4400360 S P 95,000 F
4600273 S P 195,000 F
4600280 S P 75,000 F
4600281 S P 110,000 F
4600284 S P 172,000 F
4600285 S P 110,000 F
4800199 S P 150,000 F
4800216 S P 135,000 F
4800231 S P 155,000 F
4800234 S P 165,000 F
4800238 S P 175,000 F
4800240 S P 160,000 F
4800241 S P 130,000 F
8301522 S P 157,000 C
8302052 S P 132,000 C
8302371 S P 103,000 C
8302739 S P 151,000 C
8302741 S P 163,000 C
8303058 S P 205,000 C
8303347 S P 365,000 C
8303490 S P 290,000 C
8303495 S P 228,000 C
8303506 S P 210,000 C
8303527 C P 211,000 C
8410473 S P 217,500 C
8410522 S P 195,000 C
8410529 S P 200,000 C
8410533 S P 102,000 C
8410579 S P 287,000 C
8500009 S P 138,000 C
8900544 S P 230,000 C
8900553 S P 235,000 C
14000735 F P 185,000 C
14001021 S I 145,000 C
15000979 S P 201,000 C
91000467 S P 165,000 C
92000286 C P 145,000 C
92000632 S P 145,000 C
92001659 S I 200,000 C
92001821 S P 148,000 C
- - ------------------------------------------
TOTAL FIXED RATE LOANS:
</TABLE>
Page 3
<PAGE>
EXHIBIT B
LOAN SCHEDULE - 1999-1 (ADJUSTABLE)
<TABLE>
<CAPTION>
Loan Lien Cut-Off Current Current Mat Pmt
Number Property Address City ST Zip Pos Balance Rate Pmt Date Type
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
304816 16108 WOODRUFF AVENUE BELLFLOWER CA 90706 1 90,990.00 9.250 748.55 4/1/29 A
304834 21817 NICOLLE AVENUE CARSON CA 90745 1 46,847.00 8.500 360.21 5/1/29 A
304841 5803 AVENUE A TORRANCE CA 90505 1 254,370.00 9.250 2,092.64 5/1/29 A
304844 2710 DELTA AVENUE LONG BEACH CA 90810 1 111,990.00 9.500 941.67 5/1/29 A
406001 17252 VIA LA JOLLA SAN LORENZO CA 94580 1 135,776.00 8.500 1,337.04 5/1/14 A
406012 6316 THOMAS AVENUE NEWARK CA 94560 1 189,580.00 9.250 1,559.63 5/1/29 A
505864 1979 CHICKASAW AVE LOS ANGELES CA 90041 1 118,231.00 9.490 993.29 6/1/29 A
605124 19 QUAIL HILL LANE EL SOBRANTE CA 94803 1 67,335.00 8.740 529.24 5/1/29 A
605131 175 MOUNTAIN AVE SONOMA CA 95476 1 106,634.00 7.990 781.70 5/1/29 A
707598 9440 GUILFORD AVE, WHITTIER CA 90605 1 87,777.00 8.740 689.92 5/1/29 A
806893 2648 BRAHMS AVE SAN JOSE CA 95122 1 127,855.00 8.500 983.09 4/1/29 A
806899 4986 RUTTNER PL SAN JOSE CA 95111 1 231,667.00 7.990 1,698.28 6/1/29 A
1603071 5620 12TH AVE NE SEATTLE WA 98105 1 202,903.00 7.990 1,487.42 3/1/29 A
1703315 4415 GARDENIA ST GOLDEN CO 80403 1 90,785.00 7.990 665.52 5/1/29 A
1703331 4605 S IVORY CIRCLE AURORA CO 80015 1 88,627.00 8.740 696.60 6/1/29 A
1804057 2653 W. 121ST PLACE BLUE ISLAND IL 60406 1 81,618.00 11.240 792.10 4/1/29 A
2102163 712 NE 61ST AVE PORTLAND OR 97213 1 105,628.10 9.400 881.38 1/1/29 A
2102246 12482 SW BROOK CT TIGARD OR 97223 1 125,290.00 8.740 984.76 5/1/29 A
2202101 3831 N. PACIFIC AVE. CHICAGO IL 60634 1 81,860.00 10.250 733.55 5/1/29 A
2202112 3550 N. LAKE SHORE DR. #2310 CHICAGO IL 60657 1 56,540.00 8.250 424.77 5/1/29 A
2202115 561 ALDINE AVE. CHICAGO IL 60657 1 130,490.00 8.250 980.33 5/1/29 A
2401791 5104 MAGGIORE STREET CORAL GABLES FL 33146 1 318,490.00 7.750 2,281.70 4/1/29 A
2401804 11995 S.W. 6TH STREET MIAMI FL 33184 1 88,786.00 12.500 947.58 5/1/29 A
2500471 6492 COLUMBIA ROAD OLMSTED TOWNSHIP OH 44138 1 110,003.43 8.750 866.90 12/1/28 A
2700761 4911 SOUTH 5415 WEST SALT LAKE CITY UT 84118 1 76,277.00 8.990 613.19 5/1/29 A
2700764 6765 S. SHOOTINGSTAR AVENUE WEST JORDAN UT 84084 1 92,005.00 8.740 723.15 5/1/29 A
2700766 1007 EAST 1st AVENUE SALT LAKE CITY UT 84103 1 30,872.00 7.990 226.31 5/1/29 A
2700767 364 SOUTH 1000 EAST CLEARFIELD UT 84015 1 39,007.00 8.740 306.59 6/1/29 A
2700770 3758 WEST BRANDY BUCK TAYLORSVILLE UT 84118 1 56,374.00 7.990 471.18 5/1/19 A
2700771 4227 WEST 5615 SOUTH SALT LAKE CITY UT 84118 1 62,496.00 8.740 491.21 5/1/29 A
2901040 1363 BYBERRY RD HUNTINGDON VALLEY PA 19006 1 112,684.00 10.490 1,029.92 5/1/29 A
2901048 934 ANDOVER RD LANSDALE PA 19446 1 46,792.00 7.990 343.02 5/1/29 A
2901050 1015 W OXFORD ST PHILADELPHIA PA 19122 1 27,581.00 11.750 278.41 5/1/29 A
3101217 9 BEACH STREET MAPLEWOOD NJ 07040 1 21,846.00 8.500 167.98 4/1/29 A
3101229 448 POST AVE LYNDHURST NJ 07071 1 41,604.00 11.490 411.68 5/1/29 A
3101252 38 SHADYSIDE AVENUE DUMONT NJ 07628 1 68,179.00 7.990 499.80 5/1/29 A
3300945 1078 E 26TH STREET BROOKLYN NY 11210 1 180,464.00 8.000 1,324.18 4/1/29 A
3300972 26-19 12Th Street Astoria NY 11102 1 213,013.00 8.740 1,674.25 5/1/29 A
3600410 5404 WINSTON STREET TEMPLE HILLS MD 20748 1 88,190.00 8.250 662.54 4/1/29 A
3700227 1769 FULLERTON DR. CINCINNATI OH 45240 1 88,490.00 7.990 648.69 4/1/29 A
3700246 2354 IVY CREST DR. BELLBROOK OH 45305 1 72,613.00 7.990 532.30 6/1/29 A
4200024 5490 MILLINGTON RD COLUMBUS OH 43235 1 94,875.00 12.250 994.19 5/1/29 A
4600279 43 ACORN PLACE COLTS NECK NJ 07722 1 204,538.00 8.500 1,572.72 5/1/29 A
4800233 32 AVON PLACE AMITYVILLE NY 11701 1 102,890.00 9.000 827.88 5/1/29 A
8304119 5623 OAK VISTA DRIVE CINCINNATI OH 45227 1 159,250.00 8.750 1,252.82 3/1/29 A
8304141 9456 NORTH CHARLESTON AVENUE PORTLAND OR 97203 1 90,000.00 7.990 659.76 4/1/29 A
8304143 1910 EAST 3RD STREET BENICIA CA 94510 1 109,000.00 7.950 796.01 4/1/29 A
8304165 7607 ROWENA ST. SAN DIEGO CA 92119 1 161,250.00 8.250 1,211.42 4/1/29 A
8304167 3481 ISLE ROYAL COURT PLEASANTON CA 94588 1 205,250.00 8.250 1,541.97 4/1/29 A
- - ------------------------------------------------------------------------------------------------------------------------------------
TOTAL VARIABLE RATE LOANS: 49 5,495,612.53
<PAGE>
<CAPTION>
Loan Prop Occup Appraised Orig
Number Type Type Value Type
- - ---------------------------------------------
<S> <C> <C> <C> <C>
304816 S I 140,000 F
304834 S P 148,000 F
304841 S I 370,000 F
304844 S P 142,000 F
406001 S P 189,000 F
406012 S P 237,000 F
505864 S P 154,000 F
605124 S P 150,000 F
605131 S P 150,000 F
707598 S P 155,000 F
806893 S I 185,000 F
806899 S P 330,000 F
1603071 F P 290,000 F
1703315 S P 148,000 F
1703331 S P 131,000 F
1804057 S P 119,000 F
2102163 S P 141,000 F
2102246 S P 168,000 F
2202101 S P 126,000 F
2202112 C P 87,000 F
2202115 C P 174,000 F
2401791 S P 435,000 F
2401804 S P 150,000 F
2500471 S P 160,000 F
2700761 S P 102,000 F
2700764 S P 123,000 F
2700766 S P 265,000 F
2700767 S P 75,000 F
2700770 S P 115,000 F
2700771 S P 98,000 F
2901040 S P 161,000 F
2901048 S P 78,000 F
2901050 S P 60,000 F
3101217 S P 177,666 F
3101229 S P 160,000 F
3101252 S P 157,000 F
3300945 S P 370,000 F
3300972 S P 285,000 F
3600410 S P 126,000 F
3700227 S P 118,000 F
3700246 S P 128,000 F
4200024 S P 150,000 F
4600279 S P 390,000 F
4800233 S P 150,000 F
8304119 S P 245,000 C
8304141 S P 121,000 C
8304143 S P 165,000 C
8304165 S P 215,000 C
8304167 S P 279,000 C
- - ---------------------------------------------------------
TOTAL VARIABLE RATE LOANS:
</TABLE>
Page 1
