<PAGE> 1
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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 AND EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)
OCTOBER 4, 1996
AAMES CAPITAL CORPORATION
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
CALIFORNIA 333-10185 95-4438859
- ---------------------------- ------------ -------------------
(State or other jurisdiction (Commission (I.R.S. employer
of incorporation) file number) identification no.)
AAMES CAPITAL CORPORATION
3731 WILSHIRE BOULEVARD, 10TH FLOOR
LOS ANGELES, CALIFORNIA 90010
- ---------------------------------------- ----------
(Address of principal executive offices) (ZIP Code)
(213) 351-6100
--------------------------------------------------
Registrant's telephone number, including area code
NO CHANGE
-------------------------------------------------------------
(Former name or former address, if changed since last report)
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<PAGE> 2
Item 5. Other Events(1)
Aames Capital Corporation (the "SPONSOR") registered up to
$1,500,000,000 principal amount of Mortgage Pass-Through Certificates pursuant
to Rule 415 of the Securities Act of 1933, as amended (the "ACT"), pursuant to a
Registration Statement on Form S-3, including a prospectus (Registration
Statement File No. 333-10185) (as amended, the "REGISTRATION STATEMENT").
Pursuant to the Registration Statement, the Sponsor filed a Prospectus
Supplement, and a Prospectus, each dated September 11, 1996 (collectively, the
"PROSPECTUS"), relating to $525,000,000 aggregate principal amount of Mortgage
Pass-Through Certificates, Series 1996-C (the "CERTIFICATES"), issued by Aames
Mortgage Trust 1996-C (the "TRUST") on September 17, 1996 (the "CLOSING DATE").
The Certificates consist of the Class A-1A, Class A-1B, Class A-1C, Class A-1D,
Class A-1E and Class A-2 Certificates (together, the "CLASS A CERTIFICATES") and
Class R Certificates. Only the Class A Certificates were offered by the
Prospectus.
The Certificates represent the entire undivided interest in the Trust
created pursuant to the Pooling and Servicing Agreement dated as of September 1,
1996 (the "POOLING AND SERVICING AGREEMENT") between the Sponsor, in the
capacity of Seller and Servicer, and Bankers Trust Company of California, N.A.,
as trustee (the "TRUSTEE"). On the Closing Date, the corpus of the Trust
consisted primarily of (i) a pool (the "MORTGAGE POOL") of two groups (each, a
"MORTGAGE LOAN GROUP") of home equity mortgage loans (together, the "INITIAL
MORTGAGE LOANS"), (ii) amounts on deposit in a purchase account (the "PURCHASE
ACCOUNT") and a capitalized interest account held by the Trustee; and (iii) the
certificate insurance policy issued by Financial Security Assurance Inc. (the
"CERTIFICATE INSURER"). On the Closing Date, cash in the amount of $91,747,837
(the "PURCHASE ACCOUNT DEPOSIT") was deposited in the Purchase Account in the
name of the Trustee. The Purchase Account Deposit was intended to be used for
the purchase of additional home equity mortgage loans satisfying the criteria
specified in the Pooling and Servicing Agreement and subject to the approval of
the Certificate Insurer (the "SUBSEQUENT MORTGAGE LOANS") on or before October
14,1996. Approximately $30,138,045 of the Purchase Account Deposit was allocated
for the purchase of Subsequent Mortgage Loans bearing fixed rates of interest to
be included in the Fixed Rate Group, and approximately $61,609,792 of the
Purchase Account Deposit was allocated for the purchase of Subsequent Mortgage
Loans bearing adjustable rates of interest to be included in the Adjustable Rate
Group.
On September 27 and October 4, 1996, the Trustee, on behalf of the
Trust, and the Sponsor entered into Subsequent Transfer Agreements, dated as of
such respective dates (each, a "SUBSEQUENT TRANSFER AGREEMENT"). Pursuant to the
Subsequent Transfer Agreements, the Trust purchased $30,137,919.11 aggregate
principal balance of Subsequent Mortgage Loans to be included in the Fixed Rate
Group for a purchase price of $28,631,023.15 and $61,252,357.97 aggregate
principal balance of Subsequent Mortgage Loans to be included in the Adjustable
Rate Group for a purchase price of $58,189,740.07.
The description of the Mortgage Pool in the Prospectus contained
information only with respect to the Initial Mortgage Loans as of the date of
the Prospectus. This Current Report on Form 8-K is being filed to update the
description of the Mortgage Pool contained in the Prospectus and to file copies
of certain final agreements executed in connection with the issuance of the
Certificates. Annex A which follows contains a description of the final Mortgage
Pool.
(1) Capitalized terms used but not otherwise defined herein shall have the same
meaning ascribed to them in the Prospectus. The Prospectus has been filed with
the Securities and Exchange Commission pursuant to Rule 424(b)(2) under file
number 333-10185.
Page 2
<PAGE> 3
ANNEX A:
DESCRIPTION OF THE MORTGAGE POOL
The following is a brief description of certain terms of the Mortgage
Loans, including the Subsequent Mortgage Loans. Information contained herein is
presented with respect to the Initial Mortgage Loans as of the Cut-off Date (as
defined in the Pooling and Servicing Agreement) and with respect to the
Subsequent Mortgage Loans as of the Subsequent Cut-off Date (as defined in the
Subsequent Transfer Agreement). The description of the Mortgage Pool below does
not reflect any payments with respect to the Mortgage Loans after the Cut-off
Date or the Subsequent Cut-off Date. The Mortgage Pool consists of 6,896
Mortgage Loans and has an aggregate principal balance of $526,037,917.02. Set
forth below is more detailed information regarding the Mortgage Pool by Mortgage
Loan Group.
FIXED RATE GROUP
The Aggregate Principal Balance of the Mortgage Loans in the Fixed Rate
Group was $174,999,873.92. Approximately 87.98%, 8.09% and 3.92% of the
Mortgaged Properties (by Cut-off Date or Subsequent Cut-off Date Principal
Balance, as applicable), were single family residences, two- to four-family
residences and units in condominium developments, townhouses or modular homes,
respectively, and no more than 0.73% of the Mortgage Loans in the Fixed Rate
Group were secured by Mortgaged Properties located in any single postal ZIP
code.
The original Combined Loan-to-Value Ratio of any Mortgage Loan in the
Fixed Rate Group did not exceed 85.00% and the original weighted average
Combined Loan-to-Value Ratio of all Mortgage Loans in the Fixed Rate Group was
approximately 64.41%. The maximum and average loan sizes of the Mortgage Loans
in the Fixed Rate Group were $305,146.94 and approximately $55,874.80,
respectively. The average appraised value of the Mortgaged Properties securing
Mortgage Loans in the Fixed Rate Group at origination of the related Mortgage
Loans was approximately $117,621.02.
The interest rates borne by the Mortgage Loans (each, a "MORTGAGE
INTEREST RATE") in the Fixed Rate Group ranged from 8.20% per annum to 17.50%
per annum. The weighted average Mortgage Interest Rate of the Mortgage Loans in
the Fixed Rate Group was approximately 11.42% per annum.
The weighted average remaining term to stated maturity of the Mortgage
Loans in the Fixed Rate Group was approximately 300 months. The weighted average
original term to maturity of the Mortgage Loans in the Fixed Rate Group was
approximately 301 months. The weighted average seasoning of the Mortgage Loans
in the Fixed Rate Group was approximately one month.
Based on the Aggregate Principal Balance of the Mortgage Loans in the
Fixed Rate Group, 93.93% of the Mortgage Loans provide for the payment of
principal and interest on a level basis to fully amortize such Mortgage Loans
over their respective stated terms. The remaining 6.07% of the Mortgage Loans in
the Fixed Rate Group are Balloon Loans all but two of which provide for
regular monthly payments of principal and interest computed on the basis of an
amortization term of 360 months that is longer than the related term to stated
maturity, with a "balloon payment" due at stated maturity that will be
significantly larger than the monthly payments. The Mortgage Loans in the
Fixed Rate Group have original terms to maturity of up to 30 years.
Page 3
<PAGE> 4
ADJUSTABLE RATE GROUP
The Aggregate Principal Balance of the Mortgage Loans in the Adjustable
Rate Group was $351,038,043.10. Approximately 88.96%, 6.03% and 5.01% of the
Mortgaged Properties (by Cut-off Date or Subsequent Cut-off Date Principal
Balance, as applicable) were single family residences, two- to four-family
residences and units in condominium developments, townhouses or modular homes,
respectively, and no more than 0.54% of the Mortgage Loans in the Adjustable
Rate Group (by Cut-off Date or Subsequent Cut-off Date Principal Balance, as
applicable) were secured by Mortgaged Properties located in any single postal
ZIP code.
The original Combined Loan-to-Value Ratio of any Mortgage Loan in the
Adjustable Rate Group did not exceed 90.00% and the original weighted average
Combined Loan-to-Value Ratio of all Mortgage Loans in the Adjustable Rate Group
was approximately 68.55%. The maximum and average loan size of the Mortgage
Loans in the Adjustable Rate Group were $543,441.94 and approximately $93,261.97
respectively. The average appraised value of the Mortgaged Properties was
$139,969.66.
The Mortgage Loans in the Adjustable Rate Group bear interest rates
that, after a period of approximately six months, one year, eighteen months, two
years, three years or five years after the related date of origination, adjust
based on either (i) the London interbank offered rate for six-month United
States Dollar deposits (the "SIX MONTH LIBOR INDEX") based on quotations of
major banks as published in the Wall Street Journal, or (ii) the one-year CMT
index. The Mortgage Loans in the Adjustable Rate Group that have interest rates
adjusted on the basis of the six-month LIBOR index have semi-annual interest
rate and payment adjustment frequencies after the first interest rate adjustment
date. The Mortgage Loans that have interest rates adjusted on the basis of the
one-year CMT index have annual interest rate and payment adjustment frequencies
after the applicable next interest rate adjustment date. The weighted average
Mortgage Interest Rate of the Mortgage Loans in the Adjustable Rate Group was
approximately 10.37% per annum. The Mortgage Loans in the Adjustable Rate Group
had a weighted average gross margin of approximately 6.91%. The gross margin for
the Mortgage Loans in the Adjustable Rate Group ranged from 1.50% to 10.875%.
Each Mortgage Loan in the Adjustable Rate Group that has its interest rate
adjusted on the basis of the six-month LIBOR index has a semi-annual adjustment
cap of 1% to 3% above the interest rate in effect for such Mortgage Loan prior
to such adjustment; provided, however, that for certain of such Mortgage Loans
the semi-annual adjustment cap does not apply in the case of the first interest
rate adjustment date. Each Mortgage Loan in the Adjustable Rate Group that has
its interest rate adjusted on the basis of the one-year CMT index has an annual
rate adjustment cap of 2% above the rate in effect for such Mortgage Loan prior
to such adjustment; provided, however, that for certain of such Mortgage Loans
the annual adjustment cap does not apply in the case of the first interest rate
adjustment date. The maximum rates at which interest may accrue on the Mortgage
Loans in the Adjustable Rate Group (the "MAXIMUM RATES") ranged from 11.75% per
annum to 23.30% per annum. The Mortgage Loans in the Adjustable Rate Group have
a weighted average Maximum Rate of approximately 17.04% per annum. The minimum
rates at which interest may accrue on the Mortgage Loans in the Adjustable
Rate Group (the "MINIMUM RATES") ranged from 4.99% per annum to 16.30% per
annum. The weighted average Minimum Rate was approximately 10.40% per annum.
Loans in the Adjustable Rate Group have original terms to maturity of
up to 30 years.
Page 4
<PAGE> 5
The weighted average remaining term to stated maturity of the Mortgage
Loans in the Adjustable Rate Group was approximately 356 months. The weighted
average original term to maturity of the Mortgage Loans in the Adjustable Rate
Group was approximately 358 months. The weighted average seasoning of the
Mortgage Loans in the Adjustable Rate Group was less than two months.
Approximately 0.04 % of the Mortgage Loans in the Adjustable Rate Group
are Balloon Loans.
Page 5
<PAGE> 6
FIXED RATE GROUP
TYPE OF MORTGAGED PROPERTY
<TABLE>
<CAPTION>
PERCENTAGE OF
CUT-OFF DATE
NUMBER OF AGGREGATE UNPAID AGGREGATE
PROPERTY TYPE MORTGAGE LOANS PRINCIPAL BALANCE PRINCIPAL BALANCE
- ------------- -------------- ----------------- -----------------
<S> <C> <C> <C>
Single Family Residence........................ 2,795 $ 153,973,304.24 87.98%
Two- to Four-Family Residence.................. 223 14,161,400.74 8.09
Condominium Unit............................... 114 6,865,168.94 3.92
------ ----------------- ------
Total................................... 3,132 $ 174,999,873.92 100.00%
======== ================ ======
</TABLE>
FIXED RATE GROUP
OCCUPANCY STATUS
<TABLE>
<CAPTION>
PERCENTAGE OF
CUT-OFF DATE
NUMBER OF AGGREGATE UNPAID AGGREGATE
OCCUPANCY STATUS MORTGAGE LOANS PRINCIPAL BALANCE PRINCIPAL BALANCE
- ---------------- -------------- ----------------- -----------------
<S> <C> <C> <C>
Owner Occupied/Primary Residence............... 2,799 $ 156,817,664.77 89.61%
Non-Owner Occupied/Investment Property......... 333 18,182,209.15 10.39
----- ---------------- ------
Total................................... 3,132 $ 174,999,873.92 100.00%
===== ================ ======
</TABLE>
FIXED RATE GROUP
PRIORITY OF LIEN
<TABLE>
<CAPTION>
PERCENTAGE OF
CUT-OFF DATE
NUMBER OF AGGREGATE UNPAID AGGREGATE
LIEN PRIORITY MORTGAGE LOANS PRINCIPAL BALANCE PRINCIPAL BALANCE
- ------------- -------------- ----------------- -----------------
<S> <C> <C> <C>
First Lien..................................... 2,418 $ 153,309,962.35 87.61%
Second Lien.................................... 707 21,531,858.80 12.30
Third Lien..................................... 7 158,052.77 0.09
----- ---------------- ------
Total................................... 3,132 $ 174,999,873.92 100.00%
===== ================ ======
</TABLE>
A-2
<PAGE> 7
FIXED RATE GROUP
TYPE OF LOAN BY AMORTIZATION METHOD
<TABLE>
<CAPTION>
PERCENTAGE OF
CUT-OFF DATE
NUMBER OF AGGREGATE UNPAID AGGREGATE
AMORTIZATION METHOD MORTGAGE LOANS PRINCIPAL BALANCE PRINCIPAL BALANCE
- ------------------- -------------- ----------------- -----------------
<S> <C> <C> <C>
Fully Amortizing............................... 2,958 $ 164,378,395.48 93.93%
Partially Amortizing/Balloon................... 174 10,621,478.44 6.07
----- ---------------- ------
Total................................ 3,132 $ 174,999,873.92 100.00%
===== ================ ======
</TABLE>
FIXED RATE GROUP
COMBINED LOAN-TO-VALUE RATIOS
<TABLE>
<CAPTION>
PERCENTAGE OF
CUT-OFF DATE
RANGE OF COMBINED NUMBER OF AGGREGATE UNPAID AGGREGATE
LOAN-TO-VALUE RATIOS MORTGAGE LOANS PRINCIPAL BALANCE PRINCIPAL BALANCE
- -------------------- -------------- ----------------- -----------------
<S> <C> <C> <C>
4.80% to 5.00%............................... 1 $ 12,000.00 0.01%
5.01% to 10.00%............................... 4 77,622.12 0.04
10.01% to 15.00%............................... 23 403,068.12 0.23
15.01% to 20.00%............................... 42 1,192,796.73 0.68
20.01% to 25.00%............................... 35 1,445,829.79 0.83
25.01% to 30.00%............................... 75 2,488,337.11 1.42
30.01% to 35.00%............................... 72 2,732,809.23 1.56
35.01% to 40.00%............................... 111 4,327,373.36 2.47
40.01% to 45.00%............................... 114 4,887,743.05 2.79
45.01% to 50.00%............................... 151 6,967,327.83 3.98
50.01% to 55.00%............................... 170 8,453,016.84 4.83
55.01% to 60.00%............................... 268 13,545,081.76 7.74
60.01% to 65.00%............................... 633 35,607,085.71 20.35
65.01% to 70.00%............................... 598 33,177,928.49 18.96
70.01% to 75.00%............................... 556 38,086,102.31 21.76
75.01% to 80.00%............................... 267 20,253,270.68 11.57
80.01% to 85.00%............................... 12 1,342,480.79 0.77
----- ---------------- ------
Total................................ 3,132 $ 174,999,873.92 100.00%
===== ================ ======
</TABLE>
A-3
<PAGE> 8
FIXED RATE GROUP
ORIGINAL TERM TO MATURITY
<TABLE>
<CAPTION>
PERCENTAGE OF
RANGE OF CUT-OFF DATE
ORIGINAL TERMS TO NUMBER OF AGGREGATE UNPAID AGGREGATE
MATURITY (MONTHS) MORTGAGE LOANS PRINCIPAL BALANCE PRINCIPAL BALANCE
- ----------------- -------------- ----------------- -----------------
<S> <C> <C> <C>
60............................................ 25 $ 444,838.81 0.25%
61 to 72..................................... 4 75,176.41 0.04
73 to 84..................................... 16 338,069.49 0.19
85 to 96..................................... 7 255,913.85 0.15
109 to 120..................................... 173 4,182,355.88 2.39
121 to 132..................................... 1 37,600.00 0.02
133 to 144..................................... 5 100,392.37 0.06
169 to 180..................................... 1,129 45,765,274.89 26.15
181 to 192..................................... 42 1,950,432.98 1.11
229 to 240..................................... 49 2,649,398.45 1.51
289 to 300..................................... 5 414,788.05 0.24
349 to 360..................................... 1,676 118,785,632.74 67.88
----- ---------------- ------
Total................................ 3,132 $ 174,999,873.92 100.00%
===== ================ ======
</TABLE>
FIXED RATE GROUP
REMAINING TERM TO MATURITY
<TABLE>
<CAPTION>
PERCENTAGE OF
RANGE OF CUT-OFF DATE
REMAINING TERMS TO NUMBER OF AGGREGATE UNPAID AGGREGATE
MATURITY (MONTHS) MORTGAGE LOANS PRINCIPAL BALANCE PRINCIPAL BALANCE
- ------------------ -------------- ----------------- -----------------
<S> <C> <C> <C>
58 to 60..................................... 25 $ 444,838,81 0.25%
61 to 72..................................... 5 107,057.91 0.06
73 to 84..................................... 15 306,187.99 0.17
85 to 96..................................... 7 255,913.85 0.15
109 to 120..................................... 173 4,182,355.88 2.39
121 to 132..................................... 1 37,600.00 0.02
133 to 144..................................... 5 100,392.37 0.06
157 to 168..................................... 2 66,331.71 0.04
169 to 180..................................... 1,147 46,525,676.16 26.59
181 to 192..................................... 22 1,123,700.00 0.64
229 to 240..................................... 49 2,649,398.45 1.51
289 to 300..................................... 5 414,788.05 0.24
349 to 360..................................... 1,676 118,785,632.74 67.88
----- ---------------- ------
Total................................ 3,132 $ 174,999,873.92 100.00%
===== ================ ======
</TABLE>
A-4
<PAGE> 9
FIXED RATE GROUP
RANGE OF MORTGAGE INTEREST RATES
<TABLE>
<CAPTION>
PERCENTAGE OF
CUT-OFF DATE
RANGE OF MORTGAGE NUMBER OF AGGREGATE UNPAID AGGREGATE
INTEREST RATES MORTGAGE LOANS PRINCIPAL BALANCE PRINCIPAL BALANCE
- ------------------ -------------- ----------------- -----------------
<S> <C> <C> <C>
8.20000% to 8.50000%......................... 4 $ 231,842.50 0.13%
8.50001% to 9.00000%......................... 160 11,837,490.94 6.76
9.00001% to 9.50000%......................... 156 11,123,106.98 6.36
9.50001% to 10.00000%......................... 448 31,353,304.16 17.92
10.00001% to 10.50000%......................... 256 18,046,796.03 10.31
10.50001% to 11.00000%......................... 366 19,047,976.08 10.88
11.00001% to 11.50000%......................... 280 15,547,032.30 8.88
11.50001% to 12.00000%......................... 288 13,787,476.01 7.88
12.00001% to 12.50000%......................... 161 8,259,424.55 4.72
12.50001% to 13.00000%......................... 276 11,676,250.08 6.67
13.00001% to 13.50000%......................... 166 6,673,133.95 3.81
13.50001% to 14.00000%......................... 209 8,959,248.46 5.12
14.00001% to 14.50000%......................... 102 5,725,900.98 3.27
14.50001% to 15.00000%......................... 85 3,855,191.61 2.20
15.00001% to 15.50000%......................... 67 3,336,122.45 1.91
15.50001% to 16.00000%......................... 71 3,986,791.39 2.28
16.00001% to 16.50000%......................... 22 893,045.45 0.51
16.50001% to 17.00000%......................... 12 571,942.14 0.33
17.00001% to 17.50000%......................... 3 87,797.86 0.05
------ ---------------- ------
Total................................ 3,132 $ 174,999,873.92 100.00%
===== ================ ======
</TABLE>
A-5
<PAGE> 10
FIXED RATE GROUP
CUT-OFF DATE PRINCIPAL BALANCE
<TABLE>
<CAPTION>
PERCENTAGE OF
RANGE OF CUT-OFF DATE
CUT-OFF DATE NUMBER OF AGGREGATE UNPAID AGGREGATE
PRINCIPAL BALANCES MORTGAGE LOANS PRINCIPAL BALANCE PRINCIPAL BALANCE
- ------------------ -------------- ----------------- -----------------
<S> <C> <C> <C>
$9,731.15 to $50,000.00..................... 1,768 $ 53,288,352.14 30.45%
$50,000.01 to $100,000.00..................... 1,008 70,681,860.90 40.39
$100,000.01 to $150,000.00..................... 249 29,527,997.88 16.87
$150,000.01 to $200,000.00..................... 68 11,841,494,61 6.77
$200,000.01 to $250,000.00..................... 22 4,920,849.19 2.81
$250,000.01 to $300,000.00..................... 16 4,434,172.26 2.53
$300,000.01 to $305,146.94..................... 1 305,146.94 0.17
------ ---------------- -------
Total................................ 3,132 $ 174,999,873.92 100.00%
====== ================ =======
</TABLE>
FIXED RATE GROUP
ORIGINATORS OF THE MORTGAGED LOANS
<TABLE>
<CAPTION>
PERCENTAGE OF
CUT-OFF DATE
NUMBER OF AGGREGATE UNPAID AGGREGATE
ORIGINATOR MORTGAGE LOANS PRINCIPAL BALANCE PRINCIPAL BALANCE
- ---------- -------------- ----------------- -----------------
<S> <C> <C> <C>
Affiliated (other than One Stop)............... 1,602 $ 74,806,100.74 42.75%
One Stop....................................... 821 50,984,031.28 29.13
Unaffiliated................................... 709 49,209,741.90 28.12
------ ---------------- -------
Total................................ 3,132 $ 174,999,873.92 100.00%
====== ================ =======
</TABLE>
A-6
<PAGE> 11
FIXED RATE GROUP
GEOGRAPHICAL DISTRIBUTION OF MORTGAGED PROPERTIES
<TABLE>
<CAPTION>
PERCENTAGE OF
CUT-OFF DATE
NUMBER OF AGGREGATE UNPAID AGGREGATE
STATE MORTGAGE LOANS PRINCIPAL BALANCE PRINCIPAL BALANCE
- ----- -------------- ----------------- -----------------
<S> <C> <C> <C>
California..................................... 875 $ 61,062,161.98 34.89%
Florida........................................ 339 17,566,140.08 10.04
Illinois....................................... 268 12,041,347.14 6.88
Washington..................................... 242 11,970,828.33 6.84
Arizona........................................ 158 8,448,533.69 4.83
New York....................................... 70 6,774,938.95 3.87
Colorado....................................... 121 6,714,487.57 3.84
Oregon......................................... 127 6,708,167.92 3.83
Utah........................................... 139 6,102,128.63 3.49
Ohio........................................... 88 4,785,213.97 2.73
Indiana........................................ 130 4,287,368.52 2.45
Pennsylvania................................... 92 3,343,829.91 1.91
Texas.......................................... 48 3,102,719.67 1.77
Nevada......................................... 55 2,894,893.39 1.65
North Carolina................................. 63 2,694,425.69 1.54
Maryland....................................... 50 2,399,254.67 1.37
Georgia........................................ 46 2,126,001.30 1.21
Hawaii......................................... 10 1,734,332.10 0.99
Michigan....................................... 62 1,676,167.86 0.96
Connecticut.................................... 24 1,408,960.53 0.81
Missouri....................................... 30 1,267,223.92 0.72
Massachusetts.................................. 16 1,253,342.72 0.72
District of Columbia........................... 15 859,622.13 0.49
Minnesota...................................... 17 794,270.03 0.45
Virginia....................................... 11 752,396.82 0.43
New Jersey..................................... 10 653,026.83 0.37
Idaho.......................................... 8 403,180.58 0.23
Alaska......................................... 2 346,950.00 0.20
Rhode Island................................... 3 203,900.00 0.12
South Carolina................................. 4 190,249.54 0.11
Louisiana...................................... 2 96,714.13 0.06
Montana........................................ 2 74,159.81 0.04
West Virginia.................................. 1 58,500.00 0.03
New Mexico..................................... 1 57,293.45 0.03
Wisconsin...................................... 1 50,994.17 0.03
Maine.......................................... 1 49,958.45 0.03
Mississippi.................................... 1 46,189.44 0.03
------ ---------------- -------
Total............................... 3,132 $ 174,999,873.92 100.00%
====== ================ =======
</TABLE>
A-7
<PAGE> 12
ADJUSTABLE RATE GROUP
TYPE OF MORTGAGED PROPERTY
<TABLE>
<CAPTION>
PERCENTAGE OF
CUT-OFF DATE
NUMBER OF AGGREGATE UNPAID AGGREGATE
PROPERTY TYPE MORTGAGE LOANS PRINCIPAL BALANCE PRINCIPAL BALANCE
- ------------- -------------- ----------------- -----------------
<S> <C> <C> <C>
Single Family Residence........................ 3,331 $312,287,757.73 88.96%
Two- to Four-Family Residence.................. 252 21,171,842.95 6.03
Condominium Unit............................... 181 17,578,442.42 5.01
------ ----------------- -------
Total................................ 3,764 $351,038,043.10 100.00%
====== ================= =======
</TABLE>
ADJUSTABLE RATE GROUP
OCCUPANCY STATUS
<TABLE>
<CAPTION>
PERCENTAGE OF
CUT-OFF DATE
NUMBER OF AGGREGATE UNPAID AGGREGATE
OCCUPANCY STATUS MORTGAGE LOANS PRINCIPAL BALANCE PRINCIPAL BALANCE
- ---------------- -------------- ----------------- -----------------
<S> <C> <C> <C>
Owner Occupied/Primary Residence............... 3,112 $ 302,588,220.84 86.20%
Non-Owner Occupied/Investment Property......... 652 48,449,822.26 13.80
------ ----------------- -------
Total................................ 3,764 $ 351,038,043.10 100.00%
====== ================= =======
</TABLE>
ADJUSTABLE RATE GROUP
COMBINED LOAN-TO-VALUE RATIOS
<TABLE>
<CAPTION>
PERCENTAGE OF
CUT-OFF DATE
RANGE OF COMBINED NUMBER OF AGGREGATE UNPAID AGGREGATE
LOAN-TO-VALUE RATIOS MORTGAGE LOANS PRINCIPAL BALANCE PRINCIPAL BALANCE
- -------------------- -------------- ----------------- -----------------
<S> <C> <C> <C>
15.79% to 20.00%............................... 8 $ 259,324.69 0.07%
20.01% to 25.00%............................... 9 566,401.27 0.16
25.01% to 30.00%............................... 18 1,045,742.80 0.30
30.01% to 35.00%............................... 20 940,841.57 0.27
35.01% to 40.00%............................... 51 3,378,377.49 0.96
40.01% to 45.00%............................... 46 4,017,819.82 1.14
45.01% to 50.00%............................... 95 6,905,818.98 1.97
50.01% to 55.00%............................... 117 9,954,849.36 2.84
55.01% to 60.00%............................... 339 25,943,585.69 7.39
60.01% to 65.00%............................... 976 85,104,207.76 24.24
65.01% to 70.00%............................... 680 63,206,037.99 18.01
70.01% to 75.00%............................... 957 101,657,383.29 28.96
75.01% to 80.00%............................... 377 39,858,172.91 11.35
80.01% to 85.00%............................... 61 7,093,622.67 2.02
85.01% to 90.00%............................... 10 1,105,856.81 0.32
------ ----------------- -------
Total................................ 3,764 $351,038,043.10 100.00%
====== ================= =======
</TABLE>
A-8
<PAGE> 13
ADJUSTABLE RATE GROUP
ORIGINAL TERM TO MATURITY
<TABLE>
<CAPTION>
PERCENTAGE OF
CUT-OFF DATE
ORIGINAL TERMS TO NUMBER OF AGGREGATE UNPAID AGGREGATE
MATURITY (MONTHS) MORTGAGE LOANS PRINCIPAL BALANCE PRINCIPAL BALANCE
- ----------------- -------------- ----------------- -----------------
<S> <C> <C> <C>
180............................................ 73 $ 3,973,524.58 1.13%
349 to 360..................................... 3,691 347,064,518.52 98.87
------ ----------------- -------
Total................................ 3,764 $ 351,038,043.10 100.00%
====== ================= =======
</TABLE>
ADJUSTABLE RATE GROUP
REMAINING TERM TO MATURITY
<TABLE>
<CAPTION>
PERCENTAGE OF
RANGE OF CUT-OFF DATE
REMAINING TERMS TO NUMBER OF AGGREGATE UNPAID AGGREGATE
MATURITY (MONTHS) MORTGAGE LOANS PRINCIPAL BALANCE PRINCIPAL BALANCE
- ------------------ -------------- ----------------- -----------------
<S> <C> <C> <C>
167 to 168..................................... 1 $ 34,810.98 0.01
169 to 180..................................... 72 3,938,713.60 1.12
313 to 324..................................... 1 121,960.30 0.03
337 to 348..................................... 5 519,554.82 0.15
349 to 360..................................... 3,685 346,423,003.40 98.69
------ ----------------- -------
Total................................ 3,764 $ 351,038,043.10 100.00%
====== ================= =======
</TABLE>
A-9
<PAGE> 14
ADJUSTABLE RATE GROUP
RANGE OF MORTGAGE INTEREST RATES
AS OF CUT-OFF DATE
<TABLE>
<CAPTION>
PERCENTAGE OF
AGGREGATE UNPAID CUT-OFF DATE
RANGE OF MORTGAGE NUMBER OF PRINCIPAL AGGREGATE
INTEREST RATES MORTGAGE LOANS BALANCE PRINCIPAL BALANCE
- ----------------- ------------- ---------------- -----------------
<S> <C> <C> <C>
4.99000% to 5.00000%........................... 4 $ 353,500.00 0.10%
5.00001% to 5.50000%........................... 7 554,233.29 0.16
5.50001% to 6.00000%........................... 9 946,861.53 0.27
6.00001% to 6.50000%........................... 20 2,353,462.52 0.67
6.50001% to 7.00000%........................... 51 5,340,409.86 1.52
7.00001% to 7.50000%........................... 72 7,862,475.93 2.24
7.50001% to 8.00000%........................... 147 16,252,463.19 4.63
8.00001% to 8.50000%........................... 194 22,144,942.24 6.31
8.50001% to 9.00000%........................... 298 33,097,959.97 9.43
9.00001% to 9.50000%........................... 310 32,838,876.63 9.35
9.50001% to 10.00000%........................... 405 41,451,358.21 11.81
10.00001% to 10.50000%........................... 381 34,936,994.31 9.95
10.50001% to 11.00000%........................... 410 36,465,461.78 10.39
11.00001% to 11.50000%........................... 293 21,712,442.01 6.19
11.50001% to 12.00000%........................... 312 24,087,320.65 6.86
12.00001% to 12.50000%........................... 265 21,659,424.00 6.17
12.50001% to 13.00000%........................... 248 21,101,343.12 6.01
13.00001% to 13.50000%........................... 143 12,581,098.21 3.58
13.50001% to 14.00000%........................... 69 5,881,592.03 1.68
14.00001% to 14.50000%........................... 52 3,848,247.68 1.10
14.50001% to 15.00000%........................... 47 3,103,869.96 0.88
15.00001% to 15.50000%........................... 24 2,158,897.63 0.62
15.50001% to 16.00000%........................... 2 243,064.93 0.07
16.00001% to 16.30000%........................... 1 61,743.42 0.02
------ ---------------- -------
Total.................................. 3,764 $ 351,038,043.10 100.00%
====== ================ =======
</TABLE>
A-10
<PAGE> 15
ADJUSTABLE RATE GROUP
CUT-OFF DATE PRINCIPAL BALANCE
<TABLE>
<CAPTION>
PERCENTAGE OF
CUT-OFF DATE
RANGE OF AGGREGATE
CUT-OFF DATE NUMBER OF AGGREGATE UNPAID PRINCIPAL
PRINCIPAL BALANCES MORTGAGE LOANS PRINCIPAL BALANCE BALANCES
- ------------------ -------------- ----------------- -----------------
<S> <C> <C> <C>
$14,461.65 to $50,000.00..................... 879 $ 32,687,349.19 9.31%
$50,000.01 to $100,000.00..................... 1,652 122,041,049.61 34.77
$100,000.01 to $150,000.00..................... 739 88,873,555.45 25.32
$150,000.01 to $200,000.00..................... 267 46,405,782.85 13.22
$200,000.01 to $250,000.00..................... 104 23,044,792.36 6.56
$250,000.01 to $300,000.00..................... 75 20,564,152.60 5.86
$300,000.01 to $350,000.00..................... 29 9,435,186.17 2.69
$350,000.01 to $400,000.00..................... 9 3,399,997.30 0.97
$400,000.01 to $450,000.00..................... 6 2,524,595.80 0.72
$450,000.01 to $500,000.00..................... 2 976,200.97 0.28
$500,000.01 to $543,441.94..................... 2 1,085,380.80 0.31
------ ----------------- -------
Total................................ 3,764 $ 351,038,043.10 100.00%
====== ================= =======
</TABLE>
ADJUSTABLE RATE GROUP
RANGE OF GROSS MARGINS
<TABLE>
<CAPTION>
PERCENTAGE OF
CUT-OFF DATE
NUMBER OF AGGREGATE UNPAID AGGREGATE
GROSS MARGIN MORTGAGE LOANS PRINCIPAL BALANCE PRINCIPAL BALANCE
- ------------ -------------- ----------------- ------------------
<S> <C> <C> <C>
1.50% to 2.00%............................... 1 $ 60,719.14 0.02%
2.01% to 3.00%............................... 2 453,569.06 0.13
3.01% to 4.00%............................... 25 3,292,073.18 0.94
4.01% to 5.00%............................... 79 8,260,856.42 2.35
5.01% to 6.00%............................... 805 82,562,069.09 23.52
6.01% to 7.00%............................... 1,266 121,814,460.65 34.70
7.01% to 8.00%............................... 916 76,119,581.48 21.68
8.01% to 9.00%............................... 432 36,808,369.59 10.49
9.01% to 10.00%............................... 220 20,385,105.96 5.81
10.01% to 10.88%............................... 18 1,281,238.53 0.36
------ ----------------- -------
Total................................ 3,764 $ 351,038,043.10 100.00%
====== ================= ========
</TABLE>
A-11
<PAGE> 16
ADJUSTABLE RATE GROUP
RANGE OF MAXIMUM MORTGAGE INTEREST RATES
<TABLE>
<CAPTION>
PERCENTAGE OF
CUT-OFF DATE
RANGE OF NUMBER OF AGGREGATE UNPAID AGGREGATE
MAXIMUM RATES MORTGAGE LOANS PRINCIPAL BALANCE PRINCIPAL BALANCE
- ------------- -------------- ----------------- -----------------
<S> <C> <C> <C>
11.75% to 12.00%............................... 5 $ 622,924.14 0.18%
12.01% to 13.00%............................... 16 1,501,094.82 0.43
13.01% to 14.00%............................... 94 9,917,812.37 2.83
14.01% to 15.00%............................... 322 36,365,127.08 10.36
15.01% to 16.00%............................... 537 60,383,667.22 17.20
16.01% to 17.00%............................... 727 74,298,821.64 21.17
17.01% to 18.00%............................... 802 68,252,960.62 19.44
18.01% to 19.00%............................... 644 51,422,177.84 14.65
19.01% to 20.00%............................... 402 33,071,496.74 9.42
20.01% to 21.00%............................... 148 10,239,177.59 2.92
21.01% to 22.00%............................... 54 3,971,513.35 1.13
22.01% to 23.00%............................... 12 929,526.27 0.26
23.01% to 23.30%............................... 1 61,743.42 0.02
------ ----------------- -------
Total................................ 3,764 $351,038,043.10 100.00%
====== ================= =======
</TABLE>
ADJUSTABLE RATE GROUP
RANGE OF MINIMUM MORTGAGE RATES
<TABLE>
<CAPTION>
PERCENTAGE OF
CUT-OFF DATE
RANGE OF MINIMUM NUMBER OF AGGREGATE UNPAID AGGREGATE
MORTGAGE RATES MORTGAGE LOANS PRINCIPAL BALANCE PRINCIPAL BALANCE
- ---------------- -------------- ----------------- -----------------
<S> <C> <C> <C>
4.99% to 5.00%............................... 4 $ 353,500.00 0.10%
5.01% to 6.00%............................... 16 1,501,094.82 0.43
6.01% to 7.00%............................... 70 7,609,389.00 2.17
7.01% to 8.00%............................... 214 23,892,816.00 6.81
8.01% to 9.00%............................... 467 53,807,399.37 15.33
9.01% to 10.00%............................... 703 73,229,140.44 20.86
10.01% to 11.00%............................... 795 71,561,556.25 20.39
11.01% to 12.00%............................... 609 46,049,683.89 13.12
12.01% to 13.00%............................... 546 44,796,893.80 12.76
13.01% to 14.00%............................... 211 18,439,579.06 5.25
14.01% to 15.00%............................... 102 7,333,284.49 2.09
15.01% to 16.00%............................... 26 2,401,962.56 0.68
16.01% to 16.30%............................... 1 61,743.42 0.02
------ ----------------- -------
Total................................ 3,764 $351,038,043.10 100.00%
====== ================= =======
</TABLE>
A-12
<PAGE> 17
ADJUSTABLE RATE GROUP
ORIGINATORS OF THE MORTGAGE LOANS
<TABLE>
<CAPTION>
PERCENTAGE OF
CUT-OFF DATE
NUMBER OF AGGREGATE UNPAID AGGREGATE
ORIGINATOR MORTGAGE LOANS PRINCIPAL BALANCE PRINCIPAL BALANCE
- ---------- -------------- ----------------- -----------------
<S> <C> <C> <C>
Affiliated (other than One Stop)............... 84 $ 5,859,078.99 1.67%
One Stop....................................... 1,605 142,971,865.15 40.73
Unaffiliated................................... 2,075 202,207,098.96 57.60
------ ----------------- -------
3,764 $ 351,038,043.10 100.00%
====== ================= =======
</TABLE>
A-13
<PAGE> 18
ADJUSTABLE RATE GROUP
GEOGRAPHICAL DISTRIBUTION OF MORTGAGED PROPERTIES
<TABLE>
<CAPTION>
PERCENTAGE OF
CUT-OFF DATE
NUMBER OF AGGREGATE UNPAID AGGREGATE
STATE MORTGAGE LOANS PRINCIPAL BALANCE PRINCIPAL BALANCE
- ----- -------------- ----------------- -----------------
<S> <C> <C> <C>
California..................................... 644 $ 79,862,430.08 22.75%
Florida........................................ 395 32,294,696.64 9.20
Illinois....................................... 331 27,625,476.86 7.87
Washington..................................... 236 26,744,305.32 7.62
Oregon......................................... 211 21,058,094.31 6.00
Colorado....................................... 220 20,909,583.42 5.96
Arizona........................................ 151 15,533,369.60 4.42
Maryland....................................... 132 11,384,000.90 3.24
Utah........................................... 119 11,000,877.36 3.13
Ohio........................................... 177 10,189,967.60 2.90
New Jersey..................................... 89 9,382,421.76 2.67
Georgia........................................ 111 9,367,949.64 2.67
Connecticut.................................... 116 9,236,279.61 2.63
New York....................................... 80 9,211,305.68 2.62
Pennsylvania................................... 110 8,759,057.88 2.50
North Carolina................................. 135 8,164,225.90 2.33
Texas.......................................... 84 6,679,160.96 1.90
Indiana........................................ 90 5,325,300.08 1.52
Hawaii......................................... 27 4,586,427.60 1.31
Missouri....................................... 79 4,496,377.80 1.28
District of Columbia........................... 46 4,052,512.22 1.15
Massachusetts.................................. 37 3,543,748.50 1.01
Wisconsin...................................... 30 1,960,088.66 0.56
Virginia....................................... 16 1,670,743.97 0.48
Idaho.......................................... 15 1,196,212.42 0.34
Rhode Island................................... 17 1,082,806.96 0.31
Nevada......................................... 9 1,056,363.08 0.30
Delaware....................................... 12 1,013,382.31 0.29
Michigan....................................... 12 1,000,064.77 0.28
Minnesota...................................... 14 955,845.39 0.27
Mississippi.................................... 1 293,800.00 0.08
South Carolina................................. 4 286,244.01 0.08
Montana........................................ 4 261,925.41 0.07
New Hampshire.................................. 1 185,942.70 0.05
Oklahoma....................................... 2 156,839.10 0.04
Kansas......................................... 2 142,469.60 0.04
Alaska......................................... 1 118,257.82 0.03
Kentucky....................................... 1 110,205.23 0.03
Wyoming........................................ 1 53,900.00 0.02
New Mexico..................................... 1 48,981.95 0.01
Maine.......................................... 1 36,400.00 0.01
------ ----------------- -------
Total................................ 3,764 $ 351,038,043.10 100.00%
====== ================= ======
</TABLE>
A-14
<PAGE> 19
Item 7. Financial Statements: Pro Forma Financial Information and Exhibits.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits:
1.1 Underwriting Agreement, dated September 11, 1996, between Aames
Capital Corporation, as Sponsor, and Lehman Brothers Inc. and Greenwich
Capital Markets, Inc., as Representatives of the several Underwriters.
1.2 Pricing Agreement, dated September 11, 1996, between Aames Capital
Corporation, as Sponsor, and Lehman Brothers Inc. and Greenwich Capital
Markets, Inc., as Representatives of the several Underwriters.
4.1 Pooling and Servicing Agreement, dated as of September 1, 1996,
between Aames Capital Corporation, as Seller and Servicer, and Bankers
Trust Company of California, N.A., as Trustee.
4.2 Certificate Insurance Policy issued by the Certificate Insurer,
Financial Security Assurance Inc.
10.1 Subsequent Transfer Agreement, dated as of September 27, 1996,
between Aames Capital Corporation, as Seller, and Bankers Trust Company of
California, N.A., as Trustee for Aames Mortgage Trust 1996-C.
10.2 Subsequent Transfer Agreement, dated as of October 4, 1996,
between Aames Capital Corporation, as Seller, and Bankers Trust Company of
California, N.A., as Trustee for Aames Mortgage Trust 1996-C.
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has dully caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AAMES CAPITAL CORPORATION
By: /s/ Gregory J. Witherspoon
--------------------------------------
Gregory J. Witherspoon
Executive Vice President - Finance and
Chief Financial Officer
Dated: October 29, 1996
<PAGE> 21
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Numbered Page
Exhibit -------------
Index
-------
<S> <C> <C>
1.1 Underwriting Agreement, dated September 11, 1996, between
Aames Capital Corporation, as Sponsor, and Lehman Brothers
Inc. and Greenwich Capital Markets, Inc., as Representatives
of the several Underwriters.
1.2 Pricing Agreement, dated September 11, 1996, between Aames
Capital Corporation, as Sponsor, and Lehman Brothers Inc.
and Greenwich Capital Markets, Inc., as Representatives of
the several Underwriters.
4.1 Pooling and Servicing Agreement, dated as of September 1,
1996, between Aames Capital Corporation, as Seller and
Servicer, and Bankers Trust Company of California, N.A., as
Trustee.
4.2 Certificate Insurance Policy issued by the Certificate
Insurer, Financial Security Assurance Inc.
10.1 Subsequent Transfer Agreement, dated as of September 27,
1996, between Aames Capital Corporation, as Seller, and
Bankers Trust Company of California, N.A., as Trustee for
Aames Mortgage Trust 1996-C.
10.2 Subsequent Transfer Agreement, dated as of October 4, 1996,
between Aames Capital Corporation, as Seller, and Bankers
Trust Company of California, N.A., as Trustee for Aames
Mortgage Trust 1996-C.
</TABLE>
<PAGE> 1
EXHIBIT 1.1
AAMES CAPITAL CORPORATION
AND
THE UNDERWRITERS
UNDERWRITING AGREEMENT
FOR
AAMES MORTGAGE TRUSTS
MORTGAGE PASS-THROUGH CERTIFICATES,
ISSUABLE IN SERIES
September 11, 1996
<PAGE> 2
September 11, 1996
Lehman Brothers Inc.
as Representative of the Several Underwriters
named in Schedule I-A-1 to the applicable Pricing Agreement
c/o Lehman Brothers Inc.
3 World Financial Center
200 Vesey Street
New York, New York 10285
Greenwich Capital Markets, Inc.
as Representative of the several Underwriters
named in Schedule I-A-2 to the applicable Pricing Agreement
c/o Greenwich Capital Markets, Inc.
600 Steamboat Road
Greenwich, Connecticut 06830
Aames Capital Corporation (the "Company") proposes, from time to time,
to enter into one or more pricing agreements (each a "Pricing Agreement") in
the form of Annex A hereto, with such additions and deletions as the parties
thereto may determine, and, subject to the terms and conditions stated herein
and therein, to issue in series (each a "Series") and to sell to the
Underwriters (as hereinafter defined), mortgage pass-through certificates, each
Series of which is to be issued pursuant to an applicable pooling and servicing
agreement (a "Pooling and Servicing Agreement") to be dated as of the
applicable Cut-off Date (as defined in the applicable Pricing Agreement),
between the Company, as seller and servicer, and Bankers Trust Company of
California, N.A., as trustee (the "Trustee"). Lehman Brothers Inc., will act
as underwriter and as Representative (in such capacity, the "Class A-1
Representative") of the several underwriters named in Schedule I-A-1 to the
applicable Pricing Agreement (the "Class A-1 Underwriters"), and Greenwich
Capital Markets, Inc., will act as underwriter and as Representative (in such
capacity, the "Class A-2 Representative"; each of the Class A-1 Representative
and the Class A-2 Representative, a "Representative" and together, the
"Representatives") of the several underwriters named in Schedule I-A-2 hereto
(the "Class A-2 Underwriters", and together with the Class A-1 Underwriters,
the "Underwriters"). Each Series of Certificates (as defined below) will
evidence an undivided beneficial ownership interest in a separate Trust (as
defined in the related Pooling and Servicing Agreement) consisting primarily of
a pool (the "Pool") of mortgage loans (the "Mortgage Loans") listed in an
attachment to such Pooling and Servicing Agreement. The Certificates will be
issued in one or more classes (each a "Class"), which may be divided into one
or more subclasses (each a "Subclass"). Any rights of holders of Certificates
of a particular Class or Subclass to receive certain distributions with respect
to the Mortgage Loans that are senior to such rights of holders of Certificates
of any other Class or Subclass of the same Series shall be specified in the
related Pricing Agreement. The Certificates of a Series to be purchased
pursuant to an applicable Pricing Agreement will be described more fully in the
Basic Prospectus and the related Prospectus Supplement (each of which terms is
defined below) which the Company will furnish to the Underwriters. If the
firms listed in Schedule I to the applicable Pricing Agreement include only the
Representative with respect to the applicable Class of Class A Certificates as
set forth above, then the terms "Underwriters" and "Representative," as used
herein, shall each be deemed to refer only to such Underwriter or
Representative, as the case may be.
<PAGE> 3
On or prior to the date of issuance of the Certificates of any Series,
if specified in the related Pricing Agreement, the Company will obtain one or
more certificate guaranty insurance policies (each a "Policy") issued by an
insurance provider specified in the applicable Pricing Agreement (the
"Insurer") which will unconditionally and irrevocably guarantee for the benefit
of the holders of each Class of Certificates to be purchased pursuant to this
Agreement, full and complete payment of the amounts payable on the Certificates
of the related Series.
As used herein, the term "Execution Time" shall mean the date and time
that the applicable Pricing Agreement is executed and delivered by the parties
thereto; the term "Agreement," "this Agreement" and terms of similar import
shall mean this Underwriting Agreement including the Pricing Agreement with
respect to the Certificates of the applicable Class and Series; and the term
"Closing Date" shall mean the Closing Date specified in the applicable Pricing
Agreement. All capitalized terms used but not otherwise defined herein have
the respective meanings set forth in the form of Pooling and Servicing
Agreement heretofore delivered to the Representatives.
1. Securities. Unless otherwise specified in the applicable
Pricing Agreement, the Certificates of each Series will be issued in classes as
follows: (i) a senior class with respect to each Mortgage Loan Group consisting
of the Class A-1 Certificates (which may include two or more subclasses) and
the Class A-2 Certificates (which may include two or more subclasses)
(collectively, the "Class A Certificates") and (ii) a residual class (the
"Class R Certificates"). The Class A Certificates and the Class R Certificates
specified in the applicable Pricing Agreement are hereinafter referred to as
the "Certificates."
2. Representations and Warranties of the Company. The Company
represents and warrants to, and covenants with, each Underwriter that:
A. A registration statement on Form S-3 (Registration
No. 333-10185), including a prospectus and a form of prospectus
supplement that contemplates the offering of mortgage pass-through
certificates from time to time, has been filed by the Company with the
Securities and Exchange Commission (the "Commission"), pursuant to the
Securities Act of 1933, as amended and the rules and regulations of
the Commission thereunder (collectively, the "1933 Act"), and as
amended from time to time by one or more amendments, including
post-effective amendments, has been declared effective by the
Commission prior to the date of the related Pricing Agreement. The
Company will cause to be filed with the Commission, after
effectiveness of such registration statement (and any such
post-effective amendments), a final prospectus in accordance with
Rules 415 and 424(b)(2) under the 1933 Act, relating to the Class A
Certificates.
As used herein, the term "Effective Date" shall mean the date
that the Registration Statement (including the most recently filed
post-effective amendment, if any) became effective. "Registration
Statement" shall mean the registration statement referred to in the
preceding paragraph, including the exhibits thereto and any documents
incorporated by reference therein pursuant to Item 12 of Form S-3
under the 1933 Act specifically relating to the terms of the
Certificates or the Pool and filed with the Commission pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
except that if the Registration Statement is amended by the filing
with the Commission of a post-effective amendment thereto, the term
"Registration Statement" shall mean collectively the Registration
Statement, as amended by the most recently filed post-effective
amendment thereto, in the form in which it was declared effective by
the Commission. The prospectus dated the date specified in the
related Pricing Agreement (which if not so specified shall be the date
of such Pricing Agreement), which constitutes a part of the
Registration Statement, together with the prospectus supplement dated
the date specified in the related Pricing Agreement (which if not so
specified shall be the date of such Pricing Agreement) (the
"Prospectus Supplement"),
2
<PAGE> 4
relating to the offering of the Class A Certificates, including any
documents incorporated therein by reference pursuant to the Exchange
Act, are hereinafter referred to collectively as the "Prospectus,"
except that if the Prospectus is thereafter amended or supplemented
pursuant to Rule 424(b), the term "Prospectus" shall mean the
prospectus, as so amended or supplemented pursuant to Rule 424(b),
from and after the date on which such amended prospectus or supplement
is filed with the Commission. Any preliminary form of the Prospectus
Supplement which has heretofore been filed pursuant to Rule 402(a) or
Rule 424 is hereinafter called a "Preliminary Prospectus Supplement."
Any reference herein to the terms "amend," "amendment" or "supplement"
with respect to the Registration Statement, the Prospectus or the
Prospectus Supplement shall be deemed to refer to and include the
filing of any document under the Exchange Act after the effective date
of the Registration Statement or the issue date of the Prospectus or
Prospectus Supplement, as the case may be, incorporated therein by
reference.
B. As of the date hereof, and as of the dates when the
Registration Statement became effective, when the Prospectus
Supplement is first filed pursuant to Rule 424(b) under the 1933 Act,
when, prior to the Closing Date, any other amendment to the
Registration Statement becomes effective, and when any supplement to
the Prospectus is filed with the Commission, and at the Closing Date,
(i) the Registration Statement, as amended, as of any such time, and
the Prospectus, as amended or supplemented as of any such time,
complied or will comply in all material respects with the applicable
requirements of the 1933 Act, and (ii) the Registration Statement, as
amended as of any such time, did not and will not contain any untrue
statement of a material fact and did not and will not omit to state
any material fact required to be stated therein or necessary to make
the statements therein not misleading and the Prospectus, as amended
or supplemented as of any such time, did not and will not contain an
untrue statement of a material fact and did not and will not omit to
state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; provided, however, that the Company makes no
representations or warranties as to the information contained in or
omitted from (i) the Registration Statement or the Prospectus in
reliance upon and in conformity with written information furnished to
the Company by or on behalf of the Underwriters as set forth in this
Agreement or any applicable Pricing Agreement specifically for use in
connection with the preparation of the Registration Statement or the
Prospectus and (ii) the Form 8-K -- Computational Materials (as
defined in Section 5K below) or Form 8-K -- ABS Term Sheets (as
defined in Section 5L below), or in any amendment thereof or
supplement thereto, incorporated by reference in such Registration
Statement or such Prospectus (or any amendment thereof or supplement
thereto).
C. The Company is duly organized, validly existing and
in good standing under the laws of the State of 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 Company or (ii)
any risk whatsoever as to the enforceability of any Mortgage Loan.
D. There are no actions, proceedings or investigations
pending, or, to the knowledge of the Company, threatened, before any
court, governmental agency or body or other tribunal (i) asserting the
invalidity of this Agreement, the Certificates, the Indemnification
Agreement dated as of the Execution Time (the "Indemnification
Agreement") among the Company, the Insurer and
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<PAGE> 5
the Underwriters, or of the Pooling and Servicing Agreement, (ii)
seeking to prevent the issuance of the Certificates or the
consummation of any of the transactions contemplated by this Agreement
or the Pooling and Servicing Agreement, (iii) which may, individually
or in the aggregate, materially and adversely affect the validity or
enforceability of, this Agreement, the Certificates or the Pooling and
Servicing Agreement, or the performance by the Company of its
obligations under this Agreement or the Pooling and Servicing
Agreement or (iv) which may affect adversely the federal income tax
attributes of the Class A Certificates as described in the Prospectus.
E. The execution and delivery by the Company of this
Agreement, the Indemnification Agreement and the Pooling and Servicing
Agreement, the direction by the Company to the Trustee to execute,
countersign, authenticate and deliver the Certificates and the
transfer and delivery of the Mortgage Loans to the Trustee by the
Company are within the corporate power of the Company and have been,
or will be, prior to the Closing Date duly authorized by all necessary
corporate action on the part of the Company and the execution and
delivery of such instruments, the consummation of the transactions
therein contemplated and compliance with the provisions thereof will
not result in a breach or violation of any of the terms and provisions
of, or constitute a default under, any statute or any agreement or
instrument to which the Company or any of its affiliates is a party or
by which it or any of them is bound or to which any of the property of
the Company or any of its affiliates is subject, the Company's
articles of incorporation or bylaws, or any order, rule or regulation
of any court, governmental agency or body or other tribunal having
jurisdiction over the Company, any of its affiliates or any of its or
their properties; and no consent, approval, authorization or order of,
or filing with, any court or governmental agency or body or other
tribunal is required for the consummation of the transactions
contemplated by this Agreement or the Prospectus in connection with
the sale of the Certificates by the Company. Neither the Company nor
any of its affiliates is a party to, bound by or in breach or
violation of any indenture or other agreement or instrument, or
subject to or in violation of any statute, order, rule or regulation
of any court, governmental agency or body or other tribunal having
jurisdiction over the Company or any of its affiliates, which
materially and adversely affects, or may in the future materially and
adversely affect, (i) the ability of the Company to perform its
obligations under the Pooling and Servicing Agreement, this Agreement
or the Indemnification Agreement or (ii) the business, operations,
results of operations, financial position, income, properties or
assets of the Company.
F. This Agreement and the Indemnification Agreement have
been duly and validly authorized, executed and delivered by the
Company. The Pooling and Servicing Agreement will be duly executed
and delivered by the Company and will constitute the legal, valid and
binding obligation of the Company enforceable in accordance with 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 Class A Certificates will conform in all material
respects to the description thereof contained in the Prospectus, and
the direction by the Company to the Trustee to execute, countersign,
authenticate and deliver the Certificates will be duly and validly
authorized and, when the Class A Certificates have been duly and
validly executed, authenticated, issued and delivered in accordance
with the Pooling and Servicing Agreement and sold to the Underwriters
as provided herein and the applicable Pricing Agreement, the Class A
Certificates have been validly issued and outstanding and entitled to
the benefits of the Pooling and Servicing Agreement.
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<PAGE> 6
H. At the Closing Date, the Mortgage Loans will conform
in all material respects to the description thereof contained in the
Prospectus and the representations and warranties contained in this
Agreement will be true and correct in all material respects. The
representations and warranties set out in the Pooling and Servicing
Agreement are hereby made to the Underwriters as though set out
herein, and at the dates specified in the Pooling and Servicing
Agreement, such representations and warranties were or will be true
and correct in all material respects.
I. The transfer of the Mortgage Loans to the Trust
created by the related Pooling and Servicing Agreement (the "Trust")
at the Closing Date will be treated by the Company for financial
accounting and reporting purposes as a sale of assets and not as a
pledge of assets to secure debt.
J. The Company possesses all material licenses,
certificates, permits or other authorizations issued by the
appropriate state, federal or foreign regulatory agencies or bodies
necessary to conduct the business now operated by it and as described
in the Prospectus and there are no proceedings, pending or, to the
best knowledge of the Company, threatened, relating to the revocation
or modification of any such license, certificate, permit or other
authorization which singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would materially and
adversely affect the business, operations, results of operations,
financial position, income, property or assets of the Company.
K. Any taxes, fees and other governmental charges in
connection with the execution and delivery of this Agreement, the
Indemnification Agreement and the Pooling and Servicing Agreement, or
the execution and issuance of the Certificates have been or will be
paid at or prior to the Closing Date.
L. There has not been any material adverse change, or
any development involving a prospective material adverse change, in
the condition, financial or otherwise, or in the earnings, business or
operations of the Company, its parent company or its subsidiaries,
taken as a whole, from the date of the end of the most recent fiscal
quarter of the Company for which financial statements (whether audited
or unaudited) have been made publicly available (the "Date of Recent
Company Financial Statements"), to the date hereof.
M. The Pooling and Servicing Agreement will conform in
all material respects to the description thereof contained in the
Prospectus.
N. The Company is not aware of (i) any request by the
Commission for any further amendment of the Registration Statement or
the Prospectus or for any additional information with respect to the
offering of the Class A Certificates, (ii) the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution or threatening of any
proceeding for that purpose or (iii) any notification with respect to
the suspension of the qualification of the Class A Certificates for
sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose.
O. Each assignment of Mortgage required to be prepared
pursuant to the Pooling and Servicing Agreement is based on forms
recently utilized by the Company with respect to mortgaged properties
located in the appropriate jurisdiction and used in the regular course
of the Company's business. Based on the Company's experience with
such matters it is reasonable to believe that upon
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<PAGE> 7
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.
Any certificate signed by any officer of the Company and delivered to
the Underwriters in connection with the sale of the Class A Certificates to
such Underwriters shall be deemed a representation and warranty as to the
matters covered thereby by the Company to each person to whom the
representations and warranties in this Section 2 are made.
3. Agreements of the Underwriters.
A. The several Underwriters agree with the Company that upon the
execution of the applicable Pricing Agreement and
authorization by the Underwriters of the release of the
Class A Certificates of the related Series, the Underwriters
shall offer such Class A Certificates for sale upon the terms
and conditions set forth in the Prospectus as amended or
supplemented.
B. Each Underwriter represents and agrees that:
(i) it has not offered or sold and will not offer or
sell, prior to the date six months after their date of
issuance, any Class A Certificates to persons in the United
Kingdom, except to persons whose activities involve them in
acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their businesses or
otherwise in circumstances which have not resulted in and will
not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities
Regulations 1995;
(ii) it has complied and will comply with all
applicable provisions of the Financial Services Act of 1986
with respect to anything done by it in relation to the Class A
Certificates in, from or otherwise involving the United
Kingdom;
(iii) it has only issued or passed on and will only
issue or pass on to any person in the United Kingdom any
document received by it in connection with the issuance of the
Class A Certificates only if that person is of a kind
described in Article 11(3) of the Financial Services Act of
1986 (Investment Advertisements) (Exceptions) Order 1995, as
amended, or such person is one to whom the document can
lawfully be issued or passed on;
(iv) no action has been or will be taken by such
Underwriter that would permit a public offering of the Class A
Certificates or distribution of the Prospectus or Prospectus
Supplement or any Computational Materials or any other
offering material in relation to the Class A Certificates in
any non-U.S. jurisdiction where action for that purpose is
required unless the Company has agreed to such actions and
such actions have been taken; and
(v) it understands that, in connection with the
issuance, offer and sale of the Class A Certificates and with
the distribution of the Prospectus or Prospectus Supplement or
any Computational Materials or any other offering material in
relation to the Class A Certificates in, to or from any
non-U.S. jurisdiction, the Company has not taken and will not
take any action, and such Underwriter will not offer, sell or
deliver any Class A Certificates or distribute the Prospectus
or Prospectus Supplement or any Computational Materials or any
other offering material relating to the Class A Certificates
in, to or from any non-U.S. jurisdiction except under
circumstances which will
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<PAGE> 8
result in compliance with applicable laws and regulations and
which will not impose any liability, obligation or
responsibility on the Company or the other Underwriters.
4. Purchase, Sale and Delivery of the Class A Certificates. The
Company hereby agrees, subject to the terms and conditions hereof, to sell the
Class A Certificates specified in the related Pricing Agreement to the
Underwriters, who, upon the basis of the representations and warranties herein
contained, but subject to the conditions hereinafter stated, hereby agree,
severally and not jointly, to purchase the entire aggregate principal amount of
the Class A Certificates in the amounts set forth in Schedule I to such Pricing
Agreement. At the time of issuance of the Certificates, the Mortgage Loans
will be sold by the Company to the Trust pursuant to the Pooling and Servicing
Agreement. The Company will be obligated, under the Pooling and Servicing
Agreement, to service the Mortgage Loans either directly or through
subservicers.
The Class A Certificates to be purchased by the Underwriters will be
delivered by the Company to the Underwriters (which delivery shall be made
through the facilities of The Depository Trust Company ("DTC") or Cedel Bank,
societe anonyme or the Euroclear System) against payment of the purchase price
therefor, in an amount equal to the percentage of the aggregate original
principal amount thereof as specified in the applicable Pricing Agreement, plus
interest accrued, if any, at the rate on the aggregate original principal
amount thereof from the date specified in such Pricing Agreement to, but not
including, the Closing Date, by a same day federal funds wire payable to the
order of the Company.
Settlement shall take place at the specified offices of Andrews &
Kurth L.L.P., at 10:00 a.m., New York City time, on the date specified in the
applicable Pricing Agreement, or at such other place and at such other time
thereafter (such time being herein referred to as the "Closing Date"), in each
case as the Underwriters and the Company shall determine. The Class A
Certificates will be prepared in definitive form and in such authorized
denominations as the Underwriters may request, registered in the name of Cede &
Co., as nominee of DTC.
It is a condition to the purchase and sale of the Class A-1
Certificates that the purchase and sale of the Class A-2 Certificates occurs
simultaneously, and visa versa.
The Company agrees to have the Class A Certificates available for
inspection and review by the Underwriters in New York City not later than 11:00
a.m. New York City time on the business day prior to the Closing Date.
5. Covenants of the Company. The Company covenants and agrees
with each Underwriter that:
A. The Company will promptly advise the Representatives
and counsel to the Underwriters (i) when any amendment to the
Registration Statement relating to the offering of the Class A
Certificates shall have become effective, (ii) of any request by the
Commission for any amendment to the Registration Statement or the
Prospectus or for any additional information to the extent applicable
to the offering of the Class A Certificates, (iii) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution or threatening of any
proceeding for that purpose and (iv) of the receipt by the Company 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
Company will not file any amendment to the Registration Statement or
supplement to the Prospectus after the date of the applicable Pricing
Agreement and prior to the related Closing Date for the Class A
Certificates unless the Company has furnished the Representatives and
counsel to the Underwriters copies of such amendment or supplement for
their review prior to filing and will not file any such proposed
amendment or supplement to which the Representatives reasonably and
promptly objects,
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<PAGE> 9
unless such filing is required by law. The Company 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 1933 Act or the rules under the 1933 Act, the Company 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 post-effective amendment of the
Registration Statement to become effective as soon as possible,
provided, however, that the Company will not be required to file any
such amendment or supplement with respect to any Computational
Materials or ABS Term Sheets incorporated by reference in the
Prospectus other than any amendments or supplements of such
Computational Materials or ABS Term Sheets that are furnished to the
Company by the Underwriters pursuant to Section 9A hereof which the
Company determines to file in accordance therewith.
C. The Company will furnish to the Underwriters, without
charge, copies of the Registration Statement (including exhibits
thereto), any documents incorporated therein by reference, and, so
long as delivery of a prospectus by the Underwriters or a dealer may
be required by the 1933 Act, as many copies of the Prospectus, as
amended or supplemented, and any amendments and supplements thereto as
the Underwriters may reasonably request. The Company will pay the
expenses of printing all offering documents relating to the offering
of the Class A Certificates.
D. As soon as practicable, but not later than sixteen
months after the effective date of the Registration Statement, the
Company will cause the Trust to make generally available to holders of
Class A Certificates statements of the Trust collectively covering a
period of at least 12 months beginning after the effective date of the
Registration Statement. Such statements will be filed with the
Commission pursuant to the provisions of the Exchange Act.
E. During a period of 20 calendar days from the
Execution Time, neither the Company nor any affiliate of the Company
will, without the Representative's prior written consent (which
consent shall not be unreasonably withheld), enter into any agreement
to offer or sell mortgage pass-through certificates backed by mortgage
loans, except pursuant to this Agreement.
F. So long as any of the Class A Certificates are
outstanding, the Company will cause to be delivered to the
Underwriters, (i) all documents required to be distributed to the
holders of the Class A Certificates, (ii) from time to time, any other
information concerning the Trust filed with any government or
regulatory authority that is otherwise publicly available, as the
Underwriters may reasonably request, (iii) the annual statement as to
compliance delivered to the Trustee pursuant to the Pooling and
Servicing Agreement, (iv) the annual statement of a firm of
independent public accountants furnished to the Trustee pursuant to
the Pooling and Servicing Agreement as soon as such statement is filed
by the Company with the Commission and (v) any information required to
be delivered by the Company or the Servicer pursuant to Section 4.01
of the form of Pooling and Servicing Agreement heretofore delivered to
the Representatives.
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<PAGE> 10
G. The Company, whether or not the transactions
contemplated hereunder are consummated or this Agreement or any
Pricing Agreement is terminated, will pay all expenses in connection
with the transactions contemplated herein, including but not limited
to (i) the expenses of printing (or otherwise reproducing) all
documents relating to the offering and the fees and disbursements of
its counsel incurred in connection with the issuance and delivery of
the Class A Certificates, (ii) the preparation 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) that are not payable by or from the Trust, (iv) any
accounting fees and disbursements relating to the offering of Class A
Certificates, (v) any fees charged by rating agencies for rating the
Class A Certificates, (vi) any reasonable fees and disbursements of
counsel to the Underwriters relating to Blue Sky undertakings, (vii)
any reasonable fees and disbursements of counsel to the Underwriters
in an amount not to exceed $5,000 per Series relating to the
representation of the Underwriters with respect to the offering of the
Class A Certificates of such Series and (viii) the fees and charges
related to the filing with the Commission of such Current Reports on
Form 8-K and such other materials as are contemplated hereby, whether
pursuant to EDGAR or otherwise. Subject to the provisions of Section
7 hereof, the Company will not pay the fees and expenses of the
Underwriters or their counsel except as specified above.
H. The Company will enter into the Pooling and Servicing
Agreement and all related agreements on or prior to the Closing Date.
I. The Company will endeavor to qualify the 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 Underwriters, if any, and will pay all expenses
(including reasonable fees and disbursements of counsel to the
Underwriters) in connection with such qualification and in connection
with the determination of the eligibility of the Class A Certificates
for investment under the laws of such jurisdictions as the
Underwriters may reasonably designate, if any.
J. The Company will file with the Commission within
fifteen days of the termination of the Commitment Period (as such term
is defined in the related Pooling and Servicing Agreement), a Current
Report on Form 8-K setting forth specific information concerning the
description of the Mortgage Pool (the "Form 8-K -- Mortgage Pool").
Without limiting the generality of any other provision hereof, such
Form 8-K -- Mortgage Pool shall be deemed to be a part of the
Registration Statement and Prospectus from and after the date it is
first filed with the Commission.
K. The Company will cause any Computational Materials
(as defined in Section 9A hereof) with respect to the Class A
Certificates which are delivered by any Underwriter to the Company
pursuant to Section 9A hereof to be filed with the Commission on a
Current Report on Form 8-K (the "Form 8-K -- Computational Materials")
at or before the time of filing of the Prospectus pursuant to Rule
424(b) under the 1933 Act; provided, however, that the Company shall
have no obligation to file any such materials which, in the reasonable
determination of the Company after consultation with such Underwriter
(i) are not, based upon the advice of outside counsel to the Company,
required to be filed pursuant to the Kidder Letters (as defined in
Section 9A hereof) or (ii) contain any erroneous information or untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; it being understood, however, that the Company shall have
no obligation to review or pass upon the accuracy or adequacy of, or
to correct, any Computational Materials provided by any Underwriter to
the Company pursuant to Section 9A hereof. The parties hereto agree
that the Company shall have no
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<PAGE> 11
liability for any failure to file such Computational Materials on such
date if the related Underwriter has not delivered such materials to
the Company one business day prior to the date such filing is to be
made.
L. The Company will cause any ABS Term Sheets (as
defined in Section 9A hereof) with respect to the Class A Certificates
which are delivered by any Underwriter to the Company pursuant to
Section 9A hereof to be filed with the Commission on one or more
Current Reports on Form 8-K (collectively, the "Form 8-K -- ABS Term
Sheets") (i) at or before the time of filing of the Prospectus
pursuant to Rule 424(b) under the 1933 Act, in the case of Structural
Term Sheets (as defined in Section 9A hereof) and (ii) within two
business days of first use in the case of Collateral Term Sheets (as
defined in Section 9A hereof); provided, however, that the Company
shall have no obligation to file any such materials which, in the
reasonable determination of the Company after consultation with such
Underwriter (i) are not, based upon advice of outside counsel to the
Company, required to be filed pursuant to the PSA Letter (as defined
in Section 9A hereof), (ii) do not contain the legends required by the
PSA Letter or (iii) contain erroneous information or contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading; it being understood, however, that the Company
shall have no obligation to review or pass upon the accuracy or
adequacy of, or to correct, any ABS Term Sheets provided by any
Underwriter to the Company pursuant to Section 9A hereof. The parties
hereto agree that the Company shall have no liability for any failure
to file such ABS Term Sheets on such dates if the related Underwriter
has not delivered such materials to the Company one business day prior
to the date such filing is to be made.
6. Conditions of the Underwriters' Obligation. The obligation of
the Underwriters to purchase and pay for the Class A Certificates of a Series
as provided herein and the related Pricing Agreement shall be subject to the
accuracy as of the date hereof, the Execution Time and the applicable Closing
Date (as if made at such Closing Date) of the representations and warranties of
the Company contained herein (including those representations and warranties
set forth in the Pooling and Servicing Agreement and incorporated herein), to
the accuracy of the statements of the Company made in any certificate or other
document delivered pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder, and to the following additional
conditions:
A. The Registration Statement shall have become
effective no later than the date hereof, and no stop order suspending
the effectiveness of the Registration Statement shall have been issued
and no proceedings for that purpose shall have been instituted or
threatened, and the Prospectus shall have been filed pursuant to Rule
424(b) of the 1933 Act as shall be required pursuant to such Rule.
B. The Underwriters shall have received the Pooling and
Servicing Agreement and the Class A Certificates in form and substance
satisfactory to the Underwriters, duly executed by all signatories
required pursuant to the respective terms thereof.
C. (1) The Underwriters shall have received the
favorable opinion of Andrews & Kurth L.L.P., special counsel to the
Company, or of such other counsel to the Company as shall be
acceptable to the Underwriters, such opinion or opinions, dated the
Closing Date, in form and substance satisfactory to the Underwriters,
and collectively covering the substantive matters referred to in
Appendix A attached hereto.
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<PAGE> 12
(2) The Underwriters shall have received the favorable
opinion of Andrews & Kurth L.L.P., special counsel to the
Underwriters, dated the Closing Date, with respect to the Pooling and
Servicing Agreement, the Certificates of such Series, the due
authorization, execution and delivery of this Agreement and the
applicable Pricing Agreement, and such other matters as the
Underwriters may reasonably request.
In rendering their opinions, the counsel described in this
Paragraph C may rely, as to matters of fact, on certificates of
responsible officers of the Company, the Trustee and public officials.
Such opinions may also assume the due authorization, execution and
delivery of the instruments and documents referred to therein by the
parties thereto other than the Company.
D. The Underwriters shall have received a letter from
Price Waterhouse LLP, dated the date of the Prospectus Supplement, in
form and substance satisfactory to the Underwriters, to the effect
that they have performed certain specified procedures requested by the
Underwriters with respect to the information set forth in the
Prospectus and certain matters relating to the Company.
E. The Class A Certificates shall have been rated in the
highest rating category by Standard & Poor's, a division of the
McGraw-Hill Companies, Inc. and Moody's Investors Service, Inc., and
such ratings shall not have been rescinded. The Underwriters and
counsel for the Underwriters shall have received copies of any
opinions of counsel supplied to the rating organizations relating to
any matters with respect to the Certificates. Any such opinions shall
be dated the Closing Date.
F. The Underwriters shall have received from the Company
a certificate, signed by the president, an executive vice president or
a vice president of the Company, dated the Closing Date, to the effect
that the signer of such certificate has carefully examined the
Registration Statement (excluding Form 8-K -- Computational Materials
and Form 8-K -- ABS Term Sheets), the Pooling and Servicing Agreement
and this Agreement and that, to the best of his or her knowledge based
upon reasonable investigation, the representations and warranties of
the Company in this Agreement, as of the Closing Date, in the Pooling
and Servicing Agreement and in all related agreements, as of the date
specified in such agreements, are true and correct, and the Company
has complied with all the agreements and satisfied all the conditions
on its part to be performed or satisfied at or prior to the Closing
Date.
The Company shall attach to such certificate an incumbency
certificate and shall certify in an officer's certificate a true and
correct copy of its articles of incorporation and bylaws which are in
full force and effect as of each relevant date and on the date of such
certificate and a certified true copy of the resolutions of its Board
of Directors with respect to the transactions contemplated herein.
G. The Underwriters shall have received a favorable
opinion of counsel to the Trustee, dated the Closing Date, in form and
substance satisfactory to the Underwriters and covering the
substantive matters referred to in Appendix B attached hereto.
In rendering such opinion, such counsel may rely, as to
matters of fact, on certificates of responsible officers of the
Company, the Trustee and public officials. Such opinion may also
assume the due authorization, execution and delivery of the
instruments and documents referred to therein by the parties thereto
other than the Trustee.
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<PAGE> 13
H. The Underwriters shall have received from the Trustee
a certificate, signed by the president, a senior vice president or a
vice president of the Trustee, dated the Closing Date, to the effect
that each person who, as an officer or representative of the Trustee,
signed or signs the Certificates, the Pooling and Servicing Agreement
or any other document delivered pursuant hereto, on the Execution Time
or on the Closing Date, in connection with the transactions described
in the Pooling and Servicing Agreement was, at the respective times of
such signing and delivery, and is now, duly elected or appointed,
qualified and acting as such officer or representative, and the
signatures of such persons appearing on such documents are their
genuine signatures.
I. The Policy relating to the Class A Certificates of
such Series shall have been duly executed and issued at or prior to
the Closing Date and shall conform in all material respects to the
description thereof in the Prospectus.
J. The Underwriters shall have received a favorable
opinion of counsel to the Insurer, dated the Closing Date, in form and
substance satisfactory to the Underwriters and covering the
substantive matters referred to in Appendix C attached hereto.
In rendering such opinion, such counsel may rely, as to
matters of fact, on certificates of responsible officers of the
Company, the Trustee, the Insurer and public officials. Such opinion
may assume the due authorization, execution and delivery of the
instruments and documents referred to therein by the parties thereto
other than the Insurer.
K. On or prior to the Closing Date, there has been no
downgrading, nor has any notice been given of (i) any intended or
potential downgrading or (ii) any review or possible changes in rating
the direction of which has not been indicated, in the rating accorded
and originally requested by the Company relating to any previously
issued mortgage pass-through securities of the Company by any
"nationally recognized statistical rating organization" (as such term
is defined for purposes of the Exchange Act).
L. On or prior to the Closing Date there shall not have
occurred any downgrading, nor shall any notice have been given of (i)
any intended or potential downgrading or (ii) any review or possible
change in rating the direction of which has not been indicated, in the
rating accorded the Insurer's claims paying ability by any "nationally
recognized statistical rating organization" (as such term is defined
for purposes of the Exchange Act).
M. There has not occurred any change, or any development
involving a prospective change, in the condition, financial or
otherwise, or in the earnings, business or operations, since the Date
of the Company's Recent Financial Statements, of (i) the Company, its
parent company or its subsidiaries or (ii) the Insurer, that is in the
Representative's judgment material and adverse and that makes it in
the Representative's judgment impracticable to market the Class A
Certificates on the terms and in the manner contemplated in the
Prospectus.
N. The Underwriters and counsel for the Underwriters
shall have received copies of any separate opinions of counsel to the
Company or the Insurer supplied to the Trustee relating to matters
with respect to the Certificates or the Policy, and such opinions
shall be dated the Closing Date.
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O. The Underwriters shall have received such further
information, certificates and documents as the Underwriters may
reasonably have requested not less than one (1) full business day
prior to the Closing Date.
P. There shall have been executed and delivered by Aames
Financial Corporation, the corporate parent of the Company ("AFC"), a
letter agreement with the Underwriters, pursuant to which AFC agrees
to become jointly and severally liable with the Company for the
payment of the Joint and Several Obligations (as defined in such
letter agreement). Such letter agreement with the Underwriters is
substantially in the form of Exhibit A hereto.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects, as determined by the Representative
and counsel to the Underwriters, when and as provided in this Agreement, this
Agreement and/or the applicable Pricing Agreement and all obligations of the
Underwriters hereunder and thereunder, may be canceled on, or at any time prior
to, the Closing Date by the Representative. Notice of such cancellation shall
be given to the Company in writing, or by telephone or telegraph confirmed in
writing.
The Underwriters shall receive, subsequent to the Closing Date, a
letter from Price Waterhouse LLP, dated on or before the filing of the Form 8-K
- -- Mortgage Pool, in form and substance satisfactory to the Underwriters, to
the effect that they have performed certain specified procedures requested by
the Underwriters with respect to the information set forth in such Form 8-K --
Mortgage Pool.
7. Expenses. If the sale of the Certificates of any Series
provided for herein is not consummated by reason of a default by the Company in
its obligations hereunder, except in the case of a termination of this
Agreement in accordance with Section 12 hereof, then the Company will reimburse
the Underwriters, upon demand, for all reasonable out-of-pocket expenses
(including, but not limited to, the reasonable fees and expenses of their
counsel) that shall have been incurred by them in connection with their
investigation with regard to the Company and the 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 Company will indemnify and hold
harmless each Underwriter, each of their respective officers
and directors and each person who controls any Underwriter
within the meaning of the 1933 Act or the Exchange Act,
against any and all losses, claims, damages, or liabilities
(including the cost of any investigation, legal and other
expenses incurred in connection with and amounts paid in
settlement of any action, suit, proceeding or claim asserted),
joint or several, to which they or any of them may become
subject, under the 1933 Act, the Exchange Act or other federal
or state law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material
fact contained (i) in the Registration Statement or arise out
of or are based upon the omission or alleged omission (and in
the case of any Computational Materials, as to which a
Mortgage Pool Error occurred) to state therein a material fact
necessary to make the statements therein not misleading or
(ii) in the Prospectus or arise out of or are based upon the
omission or alleged omission (and in the case of any
Computational Materials, as to which a Mortgage Pool Error
occurred) to state therein a material fact necessary to make
the statements therein, in light of the circumstances under
which they were made, not misleading, and will reimburse each
such indemnified party for any legal or other expenses
reasonably incurred by it in connection with investigating or
defending against such loss, claim, damage, liability or
action; provided, however, that (a) the Company shall not be
liable in any such case to the extent
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<PAGE> 15
that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made therein (x) in
reliance upon and in conformity with written information
furnished to the Company by or on behalf of an Underwriter, as
described (and to the extent described) in Section 9A of this
Agreement, or (y) in the Form 8-K -- Computational Materials
or in any Form 8-K -- ABS Term Sheet, or any amendment or
supplement thereof, except to the extent that any untrue
statement or alleged untrue statement therein results (or is
alleged to have resulted) directly from, in the case of the
Form 8-K -- Computational Materials, any Mortgage Pool Error,
or, in the case of any Form 8- K -- ABS Term Sheets, any error
in Company Provided Information that was used in the
preparation of (X) any Computational Materials or ABS Term
Sheets (or amendments or supplements thereof) included in the
Form 8-K -- Computational Materials or Form 8-K -- ABS Terms
Sheets (or amendment or supplement thereof), or (Y) any
written or electronic materials furnished to prospective
investors on which the Computational Materials or Collateral
Term Sheets (or amendments or supplements) were based, (b)
such indemnity with respect to any Corrected Statement (as
defined below) in such Prospectus (or supplement thereto)
shall not inure to the benefit of such Underwriter (or any
person controlling such Underwriter) from whom the person
asserting any loss, claim, damage or liability purchased the
Class A Certificates that are the subject thereof if such
person did not receive a copy of a supplement to such
Prospectus at or prior to the confirmation of the sale of such
Class A Certificates and the untrue statement or omission of a
material fact contained in such Prospectus (or supplement
thereto) was corrected (a "Corrected Statement") in such other
supplement and such supplement timely was furnished by the
Company to such Underwriter within a reasonable time prior to
the delivery of such confirmation, and (c) such indemnity with
respect to any error in Company Provided Information or any
Mortgage Pool Error shall not inure to the benefit of such
Underwriter (or any person controlling such Underwriter) from
whom the person asserting any loss, claim, damage or liability
received any Computational Materials or ABS Term Sheets (or
any written or electronic materials on which the Computational
Materials or any ABS Term Sheets are based) that were prepared
on the basis of such erroneous Company Provided Information or
Mortgage Pool Error, if, within a reasonable time prior to the
time of confirmation of the sale of the applicable Class A
Certificates to such person, the Company notified such
Underwriter in writing of such error or provided in written or
electronic form information superseding or correcting such
error (in any such case, a "Corrected Error"), and such
Underwriter failed to notify such person thereof or to
actually or constructively deliver to such person corrected
Computational Materials or ABS Term Sheets (or underlying
written or electronic materials). This indemnity agreement
will be in addition to any liability which the Company may
otherwise have. "Mortgage Pool Error" shall mean any error or
omission in the information concerning the characteristics of
the Mortgage Loans furnished by the Company to the
Underwriters in writing or by electronic transmission.
B. Regardless of whether any Class A
Certificates are sold, each Underwriter, will severally
indemnify and hold harmless the Company, each of its officers
and directors and each person, if any, who controls the
Company within the meaning of the 1933 Act or the Exchange Act
against any losses, claims, damages or liabilities to which
they or any of them become subject under the 1933 Act, the
Exchange Act or other federal or state law or regulation, at
common law or otherwise, to the same extent as the foregoing
indemnity, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement
of a material fact contained in (i) the Registration Statement
or arise out of or are based upon the omission or alleged
omission to state therein a material fact necessary to make
the statements therein not misleading or in (ii) the
Prospectus or arise out of or are based upon the omission or
alleged omission to state therein a material fact necessary to
make the statements therein,
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<PAGE> 16
in light of the circumstances under which they were made, not
misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement
or omission or alleged omission was made therein (a) in
reliance upon and in conformity with written information
relating to such Underwriter furnished to the Company by or on
behalf of such Underwriter, as described in Section 9A of this
Agreement, specifically for use in the preparation thereof and
so acknowledged in writing, or (b) any Computational Materials
or ABS Term Sheet (or amendments or supplements thereof)
furnished to the Company by such Underwriter pursuant to
Section 9A hereof and incorporated by reference in such
Registration Statement or the related Prospectus or any
amendment or supplement thereof (except that no such indemnity
shall be available for any losses, claims, damages or
liabilities, or actions in respect thereof resulting from any
error in Company Provided Information or any Mortgage Pool
Error, other than a Corrected Error), and such Underwriter or
the Underwriters, as the case may be, will reimburse the
Company for any legal or other expenses reasonably incurred by
the Company in connection with investigating or defending
against such loss, claim, damage, liability or action.
C. In case any proceeding (including
any governmental investigation) shall be instituted involving
any person in respect of which indemnity may be sought
pursuant to Paragraphs A and B above, such person (hereinafter
called the indemnified party) shall promptly notify the person
against whom such indemnity may be sought (hereinafter called
the indemnifying party) in writing thereof; but the omission
to notify the indemnifying party shall not relieve such
indemnifying party from any liability which it may have to any
indemnified party otherwise than under such Paragraph. The
indemnifying party, upon request of the indemnified party,
shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any
others the indemnifying party may designate in such proceeding
and shall pay the fees and disbursements of such counsel
related to such proceeding. In any such proceeding any
indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at
the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have
mutually agreed to the retention of such counsel, or (ii) the
named parties to any such proceeding (including any impleaded
parties) include both the indemnifying party and the
indemnified party and representation of both parties by the
same counsel would be inappropriate due to actual or potential
differing interests between them or if different defenses are
available to such parties. It is understood that the
indemnifying party shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be
liable for the fees and expenses of more than one separate
firm (in addition to any local counsel) for all such
indemnified parties, and that all such fees and expenses shall
be reimbursed as they are incurred. Such firm shall be
designated in writing by the applicable Representative in the
case of parties indemnified pursuant to Paragraph A and by the
Company in the case of parties indemnified pursuant to
Paragraph B. The indemnifying party shall not be liable for
any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there is a
final judgment for the plaintiff, the indemnifying party
agrees to indemnify the indemnified party from and against any
loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an
indemnified party shall have requested an indemnifying party
to reimburse the indemnified party for fees and expenses of
counsel as contemplated above, the indemnifying party agrees
that it shall be liable for any settlement of any proceeding
effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified
party in accordance with such request prior to the date of
such settlement. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect
of which any indemnified party is or could have been a party
and
15
<PAGE> 17
indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional
release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
D. If the indemnification provided for in this
Section 8 is unavailable to an indemnified party in respect of
any losses, claims, damages or liabilities referred to herein,
then each indemnifying party, in lieu of indemnifying such
indemnified party, shall:
(i) in the case of any such losses, claims,
damages or liabilities which do not arise out of or
are not based upon any untrue statement or omission
of a material fact in any Computational Materials or
ABS Term Sheet (or any amendments or supplements
thereof) contribute to the amount paid or payable by
such indemnified party as a result of such losses,
claims, damages or liabilities in such proportion as
is appropriate to reflect the relative benefits
received by the Company and the Underwriters from the
sale of the Class A Certificates; and
(ii) in the case of any such losses, claims,
damages or liabilities which arise out of or are
based upon any untrue statements or omissions of a
material fact in any Computational Materials or ABS
Term Sheet (or any amendments or supplements
thereof), contribute to the amount paid or payable by
such indemnified party as a result of such losses,
claims, damages or liabilities in such proportion as
is appropriate to reflect the relative fault of the
Company and of the applicable Underwriter or
Underwriters in connection with the statements or
omissions that resulted in such losses, claims,
damages or liabilities, as well as any other relevant
equitable considerations.
The relative benefits received by the Company and the
Underwriters shall be deemed to be in such proportion so that the
Underwriters are responsible for that portion determined by
multiplying the total amount of such losses, claims, damages 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 of the related Series over the aggregate
purchase price of the Class A Certificates specified in the applicable
Pricing Agreement and the denominator of which is (y) the Aggregate
Resale Price of such Class A Certificates and the Company is
responsible for the balance, provided, however, that no person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f)
of the 1933 Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. For purposes of
the immediately preceding sentence, the "Aggregate Resale Price" of
the 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 Underwriters by all initial purchasers of the
Class A Certificates from the Underwriters. The relative fault of the
Company and the Underwriters shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of
a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company or by the
applicable Underwriter or Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
E. The Company and the Underwriters agree that it would
not be just and equitable if contribution pursuant to this Section 8
were determined by pro rata allocation or by any other method of
allocation that does not take account of the equitable considerations
referred to in Paragraph D. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages and
16
<PAGE> 18
liabilities referred to in Paragraph D shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding
the provisions of Section 8D(i), the Underwriters shall not be required
to contribute any amount by which the Aggregate Resale Price exceeds
the amount of any damages that the Underwriters have otherwise been
required to pay by reason of any untrue or alleged untrue statement or
omission or alleged omission.
F. The Company and the Underwriters each expressly
waive, and agree not to assert, any defense to their respective
indemnification and contribution obligations under this Section 8
which they might otherwise assert based upon any claim that such
obligations are unenforceable under federal or state securities laws
or by reasons of public policy.
G. The obligations of the Company under this Section 8
shall be in addition to any liability which the Company may otherwise
have and shall extend, upon the same terms and conditions, to each
person, if any, who controls the Underwriters within the meaning of
the 1933 Act or the Exchange Act; and the obligations of the
Underwriters under this Section 8 shall be in addition to any
liability that the Underwriters may otherwise have and shall extend,
upon the same terms and conditions, to each director of the Company
and to each person, if any, who controls the Company within the
meaning of the 1933 Act or the Exchange Act; provided, however, that
in no event shall the Company or the Underwriters be liable for double
indemnification.
9. Information Supplied by Underwriters; Representations and Warranties of
the Underwriters.
A. The Underwriters and the Company agree that the following
constitute the only information furnished by the Underwriters to the Company
for the purposes of Sections 2B and 8A hereof:
(i) the statements set forth in the last paragraph on
the front cover page of the Prospectus Supplement regarding
market making, and information under the heading
"Underwriting" in the Prospectus Supplement, to the extent
such information relates to all of the Underwriters and not to
any particular Underwriter or affiliate of any particular
Underwriter, have been supplied by or on behalf of all of the
Underwriters jointly;
(ii) the information under the heading "Underwriting"
in the Prospectus Supplement, to the extent such information
relates to a particular Underwriter or affiliate of such
Underwriter, and the information contained in any Form 8-K --
Computational Materials and in any Form 8-K -- ABS Term Sheets
to the extent supplied to the Company by or on behalf of such
Underwriter to be filed in the related Current Report on Form
8-K, in each case excluding any Company Provided Information
and only to the extent not substantially identical in form,
substance, scope, content and context to any information set
forth in the Prospectus, has been supplied by such Underwriter
and shall relate to and be the several responsibility of such
Underwriter and no other Underwriter.
"Computational Materials" shall mean those materials delivered by an
Underwriter to the Company within the meaning of the no-action letter dated May
20, 1994 issued by the Division of Corporation Finance of the Commission to
Kidder, Peabody Acceptance Corporation I, Kidder, Peabody & Co. Incorporated,
and Kidder Structured Asset Corporation and the no-action letter dated May 27,
1994 issued by the Division of Corporation Finance of the Commission to the
Public Securities Association (together, the "Kidder Letters") for which the
filing of such material is a condition of the relief granted in such letters.
"ABS Term Sheet" shall mean those
17
<PAGE> 19
materials delivered by an Underwriter to the Company in the form of "Structural
Term Sheets" or "Collateral Term Sheets", in each case within the meaning of
the no-action letter dated February 13, 1995 issued by the Division of
Corporation Finance of the Commission to the Public Securities Association (the
"PSA Letter") for which the filing of such material is a condition of the
relief granted in such letter. "Company Provided Information" shall mean any
information presented in any ABS Term Sheet (or underlying materials) provided
to the Underwriters by the Company specifically for use in ABS Term Sheets in
writing or through electronic or magnetic data storage or transmission methods,
in tabular, graphic or textual form, regardless of whether or not such
information is presented in any ABS Term Sheets in the same format in which
such information was provided to the Underwriters, but shall not include (i)
any such information to the extent that, as presented in any ABS Term Sheet,
such information contains, or is alleged to contain, any untrue statement of a
material fact or omits, or is alleged to omit, to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading due to any (a) typographical or similar error or (b) stylistic,
contextual or other presentational considerations with respect to such ABS Term
Sheets, including the format of tables, the phraseology of text or the
placement or juxtaposition of such information in relation to any other
information presented therein (whether or not Company Provided Information), in
each case, not present in such information (in the aggregate), or in the manner
of presentation or communication thereof to the Underwriters, when provided to
the Underwriters by the Company or (ii) any information set forth in an ABS
Term Sheet to the extent that such information, as presented in the Prospectus
is not substantially identical in form, substance, scope, content or context
thereto. Each Underwriter shall deliver to the Company (or counsel to the
Company) a complete copy of all materials (which, if reasonably requested by
the Company, shall be on computer compatible disk or such other acceptable
electronic form) provided by such Underwriter to prospective investors in such
Class A Certificates which constitute or are deemed to constitute Computational
Materials or ABS Term Sheets, at least one business day before the date or
dates on which the related Form 8-K -- Computational Materials or Form 8-K --
ABS Term Sheets relating to the Class A Certificates are required to be filed
by the Company with the Commission pursuant to Sections 5K or 5L hereof.
B. Each Underwriter represents and warrants to and agrees with the
Company, that, as of the date of the related Closing Date:
(i) any Computational Materials and ABS Term Sheets
furnished by it to the Company pursuant to Section 9A hereof
constitute (either in original, aggregated or consolidated form) all
of the materials furnished by it to prospective investors prior to the
time of delivery thereof to the Company and that it reasonably
believes that such materials constitute the type of materials
contemplated by the Kidder Letters and the PSA Letter; and
(ii) on the date of delivery of any such Computational
Materials or ABS Term Sheets to the Company pursuant to this Section 9
and on the related Closing Date, such Computational Materials and ABS
Term Sheets (or materials) did not and will not include any untrue
statement of a material fact, or, when read in conjunction with the
related Prospectus and Prospectus Supplement, omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading.
Notwithstanding the foregoing, the Underwriters make no representation
or warranty as to whether any Computational Materials or ABS Term Sheets (or
any written or electronic materials on which such Computational Materials or
ABS Term Sheets are based) included or will include any untrue statement
resulting directly from any Mortgage Pool Error or, in the case of an ABS Term
Sheet, any error in Company Provided Information.
18
<PAGE> 20
Each Underwriter agrees that it will not represent to investors that
any Computational Materials or ABS Term Sheets delivered thereto were prepared
by, or disseminated on behalf of, the Company.
10. Notices. All communications hereunder shall be in writing
and, if sent to the Underwriters, shall be mailed or delivered or telecopied
and confirmed in writing to the Representative set forth in the applicable
Pricing Agreement, and, if sent to the Company, shall be mailed, delivered or
telegraphed and confirmed in writing to the Company at 3731 Wilshire Boulevard,
Los Angeles, California 90010, Attention: Gregory J. Witherspoon; with a copy
addressed to Andrews & Kurth L.L.P., 1701 Pennsylvania Avenue, N.W., Second
Floor, Washington, D.C. 20006, Attention: James A. Blalock III.
11. Survival. All representations, warranties, covenants and
agreements of the Company contained herein or in agreements or certificates
delivered pursuant hereto, the agreements of the Underwriters and the Company
contained in Section 8 hereof, and the representations, warranties and
agreements of the Underwriters contained in Section 3 hereof, shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of the Underwriters or any controlling persons, or any subsequent
purchaser or the Company or any of its officers, directors or any controlling
persons, and shall survive delivery of and payment for the Certificates. The
provisions of Sections 5, 7 and 8 hereof shall survive the termination or
cancellation of this Agreement or any Pricing Agreement.
12. Termination. The Underwriters shall have the right to
terminate this Agreement and/or the related Pricing Agreement by giving notice
as hereinafter specified at any time at or prior to the applicable Closing Date
if (a) trading generally shall have been suspended or materially limited on or
by, as the case may be, any of the New York Stock Exchange, the American Stock
Exchange, the Nasdaq National Market, the Chicago Board Options Exchange, the
Chicago Board of Trade or the London Stock Exchange Limited, (b) trading of any
securities of the Company or AFC shall have been suspended on any exchange or
in any over-the-counter market, (c) a general moratorium on commercial banking
activities shall have been declared by any of the federal, California or New
York State authorities, (d) there shall have occurred any outbreak or
escalation of hostilities or any change in the national or international
financial markets or any calamity or crisis which, in the Representative's
reasonable judgment, is material and adverse, and, in the case of any of the
events specified in clauses (a) through (d), such event singly or together with
any other such event makes it in the Representative'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 Underwriters) and Section
8 hereof shall at all times be effective. If the Underwriters elect to
terminate this Agreement and/or the related Pricing Agreement as provided in
this Section 12, the Company shall be notified promptly by the Representatives
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
Certificate from the Underwriters), and the officers and directors and
controlling persons referred to in Section 8 hereof and their respective
successors and assigns, and no other persons will have any right or obligations
hereunder.
14. Applicable Law; Venue. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of New York.
Any action or proceeding brought to enforce or arising out of any provision of
this Agreement shall be brought only in a state or federal court located in the
Borough of Manhattan, New York City, New York, and the parties hereto expressly
consent to the jurisdiction of such courts and agree
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<PAGE> 21
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.
Very truly yours,
AAMES CAPITAL CORPORATION
By: /s/ Mark E. Elbaum
---------------------------------------
Name: Mark E. Elbaum
Title: Senior Vice President - Finance
Confirmed as of the date first above written:
LEHMAN BROTHERS INC.
By: /s/ Martin P. Harding
----------------------------------------------
Name: Martin P. Harding
Title: Managing Director
For itself and as Representative of the several
Underwriters named in Schedule I-A-1 to the
applicable Pricing Agreement
GREENWICH CAPITAL MARKETS, INC.
By: /s/ Michael S. McMahon
-----------------------------------------------
Name: Michael S. McMahon
Title: Vice President
For itself and as Representative of the several
Underwriters named in Schedule I-A-2 to the
applicable Pricing Agreement
20
<PAGE> 22
EXHIBIT A
September 11, 1996
Lehman Brothers Inc.
as Representative of the Several Underwriters
named in Schedule I-A-1 to the applicable Pricing Agreement
c/o Lehman Brothers Inc.
3 World Financial Center
200 Vesey Street
New York, NY 10285
Greenwich Capital Markets, Inc.
as Representative of the several Underwriters
named in Schedule I-A-2 to the applicable Pricing Agreement
c/o Greenwich Capital Markets, Inc.
600 Steamboat Road
Greenwich, Connecticut 06830
Re: Underwriting Agreement for Aames Mortgage Trust, dated September 11,
1996 the "Underwriting Agreement") between Aames Capital Corporation
("Aames") and Lehman Brothers Inc. as Representative of the Underwriters
named in Schedule I-A-1 and Greenwich Capital Markets, Inc. as
Representative of the several Underwriters named in Schedule I-A-2 to
the Pricing Agreement dated September 11, 1996 (the "Pricing Agreement")
Gentlemen:
Pursuant to the Underwriting Agreement and above-referenced Pricing
Agreement (collectively, the "Designated Agreement"), Aames has undertaken
certain financial obligations with respect to the indemnification of the
Underwriters with respect to the Registration Statement, and the Prospectus
described in the Designated Agreement. Any financial obligations of Aames
under the Designated Agreement, whether or not specifically enumerated in this
paragraph, are hereinafter referred to as the "Joint and Several Obligations;"
provided, however, that "Joint and Several Obligations" shall mean only the
financial obligations of Aames under the Designated Agreement (including the
payment of money damages for a breach of any of Aames' obligations under the
Designated Agreement, whether financial or otherwise) but shall not include any
obligations not relating to the payment of money.
As a condition of its execution of the Designated Agreement, the
Underwriters have required the undersigned, Aames Financial Corporation
("AFC"), the parent corporation of Aames, to acknowledge its joint and several
liability with Aames for the payment of the Joint and Several Obligations under
the Designated Agreement.
Exhibit A-1
<PAGE> 23
Now, therefore, the Underwriters and AFC do hereby agree that:
(i) AFC hereby agrees to be absolutely and
unconditionally jointly and severally liable with Aames to the
Underwriters for the payment of the Joint and Several Obligations
under the Designated Agreement.
(ii) AFC may honor its obligations hereunder either by
direct payment of any Joint and Several Obligations or by causing any
Joint and Several Obligations to be paid to the Underwriters by Aames
or another affiliate of AFC.
Capitalized terms used herein and not defined herein shall have their
respective meanings as set forth in the Designated Agreement.
Very truly yours,
AAMES FINANCIAL CORPORATION
By: ___________________________________
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
LEHMAN BROTHERS INC.
By: _______________________________________________
Name:
Title:
For itself and as Representative of the several
Underwriters named in Schedule I-A-1 to the
applicable Pricing Agreement
GREENWICH CAPITAL MARKETS, INC.
By: _______________________________________________
Name:
Title:
For itself and as Representative of the several
Underwriters named in Schedule I-A-2 to the
applicable Pricing Agreement
Exhibit A-2
<PAGE> 24
APPENDIX A
FORM OF OPINION OF
COUNSEL TO THE COMPANY
1. The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of California;
2. AFC is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware;
3. The Company has full corporate power and corporate authority to
own its assets and to conduct its business as described in the Prospectus and
to enter into and perform its obligations under the Pooling and Servicing
Agreement, the Underwriting Agreement and related Pricing Agreement and the
Indemnification Agreement (the "Documents");
4. AFC has full corporate power and corporate authority to own its
assets and to conduct its business as now being conducted and to enter into and
perform its obligations under the Letter Agreement;
5. The Company is duly qualified as a foreign corporation and is in
good standing under the laws of each jurisdiction where it owns or leases any
real property or has any permanently located employees;
6. The Company has all material licenses, franchises and permits of
and from all public, regulatory or governmental officials or bodies, necessary
to (i) conduct its business as now being conducted and as described in the
Prospectus, and (ii) perform its obligations under the Documents;
7. The execution, acknowledgment, delivery and performance by the
Company of the Documents have been duly authorized by all requisite corporate
action;
8. The execution, acknowledgment, delivery and performance by AFC of
the Letter Agreement have been duly authorized by all requisite corporate
action;
9. Neither the execution or delivery of, nor the performance by the
Company of its obligations under, the Documents, nor the offer, issuance, sale
or delivery of the Certificates (i) violates any of the provisions of the
Company's Articles of Incorporation or By-laws, (ii) violates any judgment,
decree, writ, injunction, award, determination or order known to such counsel
which is applicable to Company or any of its properties, or by which the
Company or any of its properties are bound or affected, (iii) conflicts with,
or results in a breach of, or constitutes a default under, any of the
provisions of any of the Company's material contracts, or (iv) results in the
creation or imposition of any lien on any of its properties pursuant to the
terms of any of the Company material contracts;
10. Neither the execution or delivery of, nor the performance by AFC
of its obligations under, the Letter Agreement (i) violates any of the
provisions of AFC's Certificate of Incorporation or By-laws, (ii) violates any
judgment, decree, writ, injunction, award, determination or order known to such
counsel which is applicable to AFC or any of its properties, or by which AFC or
any of its properties are bound or affected, (iii) conflicts with, or results
in a breach of, or constitutes a default under, any of the provisions of any of
AFC's material contracts,
Appendix A-1
<PAGE> 25
or (iv) results in the creation or imposition of any lien on any of its
properties pursuant to the terms of any of AFC's material contracts;
11. No consent, approval or authorization from, or registration or
filing with or notice to, any court or governmental body is required to be
obtained, made or given by the Company in connection with its authorization,
execution, delivery of, or performance of its obligations under the Documents
or in connection with the issuance, sale or delivery of the Certificates;
12. No consent, approval or authorization from, or registration or
filing with or notice to, any court or governmental body is required to be
obtained, made or given by AFC in connection with its authorization, execution,
delivery of, or performance of its obligations under the Letter Agreement; and
13. Based upon such counsel's knowledge, there is no pending or
threatened action, suit, proceeding or investigation before or by any court,
administrative agency, arbitrator or governmental body against or affecting the
Company which, if decided adversely, would materially and adversely affect (i)
the ability of the Company to perform its obligations under, or the validity or
enforceability of, the Documents, (ii) any mortgaged property or title of any
mortgagor to such mortgaged property, or (iii) the Trustee's ability to
foreclose or otherwise enforce the liens of the mortgage loans.
14. The Registration Statement is effective under the 1933 Act
and, to the best of such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued, or proceeding for
that purpose instituted or threatened by the Commission.
15. The Registration Statement as of its effective date and the
Prospectus as of the date thereof, other than the Computational Materials,
numerical, financial and statistical data included or incorporated by reference
in the Registration Statement and the Prospectus, as to which such counsel need
not express an opinion, complied as to form in all material respects with the
requirements of the 1933 Act and the rules thereunder.
16. The execution and delivery of each of the Underwriting
Agreement, the Pricing Agreement and the Indemnification Agreement has been
duly authorized by all necessary corporate action of the Company and each of
the Underwriting Agreement, the Pricing Agreement and the Indemnification
Agreement has been duly executed and delivered by the Company; the execution
and delivery of the Letter Agreement has been duly authorized by all necessary
corporate action of AFC and the Letter Agreement has been duly executed and
delivered by AFC.
17. The execution and delivery of the Pooling and Servicing
Agreement has been duly authorized by the Company and the Agreement has been
duly executed and delivered by the Company and constitutes a valid, legal and
binding agreement of the Company, enforceable against the Company in accordance
with its terms except as enforcement thereof may be limited by (a) bankruptcy,
insolvency, reorganization, liquidation, receivership, moratorium or other
similar laws relating to or affecting creditors' rights generally or (b)
general principles of equity or public policy, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
18. The execution and delivery of the Insurance and Indemnity
Agreement has been duly authorized by the Sponsor and the Insurance and
Indemnity Agreement has been duly executed and delivered by the Sponsor and
constitutes a valid, legal and binding agreement of the Sponsor, enforceable
against the Sponsor in accordance with its terms except (i) as enforcement
thereof may be limited by (a) bankruptcy, insolvency, reorganization,
liquidation, receivership, moratorium or other similar laws relating to or
affecting creditors' rights generally or
Appendix A-2
<PAGE> 26
(b) general principles of equity or public policy, regardless of whether such
enforceability is considered in a proceeding in equity or at law, and (ii) as
the rights to indemnification or contribution thereunder may be limited by
federal or state securities laws.
19. The Class A Certificates will, when duly executed and
authenticated as specified in the Pooling and Servicing Agreement and delivered
by the Trustee on behalf of the Trust in exchange for the Mortgage Loans in the
related Mortgage Loan Group and the other assets conveyed by the Company to the
Trust pursuant to the Pooling and Servicing Agreement, be entitled to the
benefits of the Pooling and Servicing Agreement afforded to the related Class.
20. The Class A Certificates and the Pooling and Servicing
Agreement conform in all material respects to the descriptions thereof
contained in the Prospectus.
21. The statements in the Basic Prospectus and the Prospectus
Supplement, as the case may be, under the headings "Risk Factors," "Certain
Legal Aspects of the Mortgage Loans," "Certain Federal Income Tax
Considerations," and "ERISA Considerations," to the extent that they constitute
matters of California, New York or federal law or legal conclusions with
respect thereto, are correct in all material respects to the extent of those
consequences or aspects that are discussed.
22. The REMIC Pool as described in the Pooling and Servicing
Agreement will qualify as a "real estate mortgage investment conduit" ("REMIC")
within the meaning of Section 860D of the Internal Revenue Code of 1986, as
amended (the "Code"), the Class A Certificates described in the Prospectus and
issued pursuant to the Pooling and Servicing Agreement will be treated as
"regular interests" in the REMIC for purposes of Code Section 860G(a)(l) and
the Residual Certificate issued pursuant to the Pooling and Servicing Agreement
will be treated as the "residual interest" in the REMIC for purposes of Code
Section 860G(a)(2), assuming: (i) an election is made to treat the REMIC Pool
as a REMIC, (ii) compliance with the Pooling and Servicing Agreement and (iii)
compliance with changes in the law, including any amendments to the Code or
applicable Treasury regulations thereunder. The REMIC Pool will not be subject
to California income or franchise tax in effect on the date of such opinion, as
long as such REMIC Pool complies with any changes in the statutory and
regulatory requirements of California law. Such counsel may state that the
REMIC Pool may, however, be subject to California income or franchise tax in
certain circumstances where federal income tax is also imposed, such as in the
case of net income from foreclosure property; and in addition, the REMIC Pool
may be subject to the minimum tax imposed under the California Revenue and
Taxation Code Sections specified therein.
23. The Pooling and Servicing Agreement is not required to be
qualified under the Trust Indenture Act of 1939, as amended, and the Trust
created thereby is not required to be registered, and neither the Company nor
AFC is an "investment company" as such term is defined, under the Investment
Company Act of 1940, as amended.
24. Neither the transfer of the Mortgage Loans to the Trust, the
issuance and sale of the Class A Certificates to the Underwriters pursuant to
the Underwriting Agreement, the compliance by the Company with other provisions
of the Underwriting Agreement, the Pooling and Servicing Agreement and the
Certificates, nor the consummation of the transactions therein contemplated as
to the transfer of the Mortgage Loans and the sale of the Class A Certificates
by the Company require the consent, approval, authorization, order,
registration or qualification of or with any court or governmental authority,
except such as have been
Appendix A-3
<PAGE> 27
obtained or effected under the 1933 Act (and except with respect to any
consent, approval, authorization, registration or qualification which may be
required under state securities or Blue Sky laws or with respect to the
purchase and sale of the Residual Certificate, as to which matters such counsel
need not express an opinion) and such other approvals as have been obtained, or
conflict with or result in a breach or violation of any of the terms and
provisions of, or constitute a default under, the charter or bylaws of the
Company, or any statute or regulation applicable to the Company or, to the best
of such counsel's knowledge, any judgment, decree or order applicable to the
Company of any court, regulatory body, administrative agency or other
governmental authority.
25. Assuming compliance with the provisions of the Pooling and
Servicing Agreement, and subject to the limitations and conditions set forth
therein, the Trustee and the Company, acting in its capacity as Servicer under
the terms of the Pooling and Servicing Agreement, will be entitled to enforce
the terms of each Note and Mortgage in accordance with their respective terms,
except to the extent such enforcement may be limited by (a) bankruptcy,
insolvency, reorganization, liquidation, receivership, moratorium or other
similar laws relating to or affecting creditors' rights generally or (b)
general principles of equity or public policy, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
In addition, such counsel shall state that nothing has come to their
attention that would lead them to believe that the Registration Statement
(other than the Computational Materials, the financial, numerical, statistical
and quantitative information included or incorporated by reference therein, as
to which such counsel need not make any statement), at the Effective Time,
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, or that the Prospectus (other than the Computational Materials,
the financial, numerical, statistical and quantitative information included or
incorporated by reference therein, and the information with respect to the
Certificate Insurer, as to which such counsel need not make any statement), at
its issue date or at the date of the Closing, contained an untrue statement of
a material fact or omitted to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading.
Appendix A-4
<PAGE> 28
APPENDIX B
FORM OF OPINION OF COUNSEL TO TRUSTEE
1. The Trustee is a national banking association with trust
powers, duly organized and validly existing in good standing under the laws of
the United States of America, and has all requisite power and authority to
enter into the Pooling and Servicing Agreement and perform the obligations of
trustee thereunder.
2. The Pooling and Servicing Agreement has been duly authorized,
executed, and delivered by the Trustee and constitutes the legal, valid, and
binding obligation of the Trustee enforceable against the Trustee in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy and insolvency laws and other similar laws affecting the enforcement
of creditors' rights generally and by general equity principles.
3. The execution and delivery of the Pooling and Servicing
Agreement by the Trustee and the performance by the Trustee of its terms do not
conflict with or result in a violation (A) of any law or regulation of the
United States of America or the State of California governing the banking or
trust powers of the Trustee, or (B) the Articles of Association or By-laws of
the Trustee.
4. No approval, authorization, or other action by, or filing
with, any governmental authority of the United States of America or the State
of California having jurisdiction over the banking or trust powers of the
Trustee is required in connection with its execution and delivery of the
Pooling and Servicing Agreement or the performance by the Trustee of the terms
of the Pooling and Servicing Agreement.
5. The Trustee has the power and authority to perform its duties
pursuant to Sections 8.01 and 8.02 of the Pooling and Servicing Agreement to
act as a successor servicer, including the making of advances as described in
Sections 8.01 and 8.02 of the Pooling and Servicing Agreement.
6. The Certificates have been duly executed, authenticated and
delivered by the Trustee.
Appendix B-1
<PAGE> 29
APPENDIX C
FORM OF OPINION OF COUNSEL TO INSURER
1. The Insurer is a stock insurance company duly organized, validly
existing and authorized to conduct financial guaranty insurance business under
the laws of the State of New York.
2. The Policy, the Insurance and Indemnity Agreement and the
Indemnification Agreement (the "Agreements") have been duly authorized,
executed and delivered by the Insurer.
3. The Policy and the Agreements constitute valid and binding
obligations of the Insurer, enforceable against the Insurer in accordance with
their terms subject, as to the enforcement of remedies, bankruptcy, insolvency,
reorganization, rehabilitation, moratorium and other similar laws affecting the
enforceability of creditors' rights generally applicable in the event of the
bankruptcy or insolvency of the Insurer and to the application of general
principles of equity and subject, in the case of the Indemnification Agreement,
to principles of public policy limiting the right to enforce the
indemnification provision contained therein insofar as they relate to
indemnification for liabilities arising under applicable securities laws.
4. The Policy is exempt from registration under the 1933 Act.
5. Neither the execution or delivery by the Insurer of the Policy
or the Agreements, nor the performance by the Insurer of its obligations
thereunder, will conflict with any provision of the certificate of
incorporation or the by-laws of the Insurer or, to the best of such counsel's
knowledge, result in a breach of, or constitute a default under any agreement
or other instrument to which the Insurer is a party to which it or any of its
property is bound, or to the best of such counsel's knowledge, violate any
consent, order or decree applicable to the Insurer of any governmental or
regulatory body, administrative agency, court or arbitrator having jurisdiction
over the Insurer (except that in the published opinion of the Commission the
indemnification provisions of the Indemnification Agreement, insofar as they
relate to indemnification for liabilities arising under the 1933 Act, are
against public policy as expressed in the 1933 Act an are therefore
unenforceable).
In addition, please be advised such counsel has reviewed the
description of the Insurer under the caption "Certificate Insurer" in the
Prospectus Supplement (the "Offering Document") of the Company with respect to
the securities. The information provided in the Offering Document with respect
to the Insurer is limited and does not purport to provide the scope of
disclosure required to be included in a prospectus with respect to a registrant
under the 1933 Act in connection with the public offer and sale of securities
of such registrant. Within such limited scope of disclosure, however, there
has not come to such counsel's attention any information which would cause such
counsel to believe that the description of the Insurer referred to above, as of
the date of the Offering Document or as of the date of such opinion, contained
or contains any untrue statement of a material fact or omitted or omits to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they are made, not misleading (except that such
counsel need not express an opinion with respect to any financial statements or
other financial information contained or referred to therein).
Appendix C-1
<PAGE> 30
ANNEX A
AAMES CAPITAL CORPORATION
Mortgage Pass-Through Certificates
PRICING AGREEMENT
September 11, 1996
Lehman Brothers Inc.
as Representative of the several Underwriters
named in Schedule I-A-1 to the applicable Pricing Agreement
c/o Lehman Brothers Inc.
3 World Financial Center
200 Vesey Street
New York, NY 10285
Greenwich Capital Markets, Inc.
as Representative of the several Underwriters
named in Schedule I-A-2 to the applicable Pricing Agreement
c/o Greenwich Capital Markets, Inc.
600 Steamboat Road
Greenwich, Connecticut 06830
Gentlemen:
Aames Capital Corporation (the "Company") proposes, subject to the
terms and conditions stated herein and the Underwriting Agreement, dated
September 11, 1996 (the "Underwriting Agreement"), between the Company and
Lehman Brothers Inc., underwriter and as Representative (in such capacity, the
"Class A-1 Representative) of the several underwriters named in Schedule I-A-1
hereto, and Greenwich Capital Markets Limited, as underwriter and as
Representative (in such capacity, the "Class A-2 Representative"; each of the
Class A-1 Representative and the Class A-2 Representative, a "Representative"
and together, the "Representatives") of the several underwriters named in
Schedule I-A-2 hereto (together with the Class A-1 Representative and the Class
A-2 Representative, the "Underwriters"), to issue and sell to the Underwriters
the series of mortgage pass-through certificates specified in Schedule II
hereto (the "Certificates"). Each of the provisions of the Underwriting
Agreement is incorporated herein by reference in its entirety, and shall be
deemed to be a part of this Agreement to the same extent as if such provisions
had been set forth in full herein; and each of the representations and
warranties set forth therein shall be deemed to have been made at and as of the
date of this Pricing Agreement, except that each representation and warranty
with respect to the Prospectus in Section 1 of the Underwriting Agreement shall
be deemed to be a representation or warranty as of the date of the Underwriting
Agreement in relation to the Prospectus (as therein defined), and also a
representation and warranty as of the date of this Pricing Agreement in
relation to the Prospectus as amended or supplemented with respect to the
Certificates. Each reference to Representatives contained in the Underwriting
Agreement shall be deemed to refer to the Representatives named herein. Unless
otherwise defined herein, terms defined in the Underwriting Agreement are used
herein as therein defined.
Annex A-1
<PAGE> 31
An amendment to the Registration Statement, or a supplement to the
Prospectus, as the case may be, relating to the Certificates in the form
heretofore delivered to you is now proposed to be filed or, in the case of a
supplement, mailed for filing with the Commission.
Subject to the terms and conditions set forth herein and in the
Underwriting Agreement incorporated herein by reference, the Company agrees to
issue and sell to the Underwriters, and the Underwriters, severally and not
jointly, agree to purchase from the Company, at the time and at the purchase
price set forth in Schedule II hereto, the aggregate amount of each Class of
Certificates set forth opposite the name of such Underwriter set forth in
Schedule I hereto.
If the foregoing is in accordance with your understanding, please sign
and return to us five counterparts hereof, and upon acceptance hereof by you,
this letter and such acceptance hereof, including the provisions of the
Underwriting Agreement incorporated herein by reference, shall constitute a
binding agreement between the Underwriters and the Company.
Very truly yours,
AAMES CAPITAL CORPORATION
By: __________________________________
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
LEHMAN BROTHERS INC.
By: _______________________________________________
Name:
Title:
For itself and as Representative of the several
Underwriters named in Schedule I-A-1 to the
applicable Pricing Agreement
GREENWICH CAPITAL MARKETS, INC.
By: _______________________________________________
Name:
Title:
For itself and as Representative of the several
Underwriters named in Schedule I-A-2 to the
applicable Pricing Agreement
Annex A-2
<PAGE> 32
SCHEDULE I-A-1
<TABLE>
<CAPTION>
Principal Amount Principal Amount Principal Amount Principal Amount Principal Amount
of Class A-1A of Class A-1B of Class A-1C of Class A-1D of Class A-1E
Underwriter Certificates Certificates Certificates Certificates Certificates
----------- ---------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
Lehman Brothers $20,760,000 $16,440,000 $5,235,000 $5,970,000 $4,095,000
Inc.
Greenwich Capital $20,760,000 $16,440,000 $5,235,000 $5,970,000 $4,095,000
Markets, Inc.
Bear, Stearns & Co. $13,840,000 $10,960,000 $3,490,000 $3,980,000 $2,730,000
Inc.
Prudential $13,840,000 $10,960,000 $3,490,000 $3,980,000 $2,730,000
Securities
Incorporated
Total $69,200,000 $54,800,000 $17,450,000 $19,990,000 $13,650,000
</TABLE>
Schedule I-A-1
<PAGE> 33
SCHEDULE I-A-2
<TABLE>
<CAPTION>
Underwriter Principal Amount of
----------- Class A-2 Certificates
----------------------
<S> <C>
Greenwich Capital Markets, Inc. $105,000,000
Lehman Brothers Inc. $105,000,000
Bear, Stearns & Co. Inc. $ 70,000,000
Prudential Securities Incorporated $ 70,000,000
------------
TOTAL: $350,000,000
</TABLE>
Schedule I-A-2
<PAGE> 34
SCHEDULE II
Registration Statement No. 333-10185
Basic Prospectus dated September 11, 1996
Prospectus Supplement dated September 11, 1996
<TABLE>
<CAPTION>
Title of Certificates: Class A-1A
----------
<S> <C>
Amount of Certificates: $69,200,000 (approximate)
Pass-Through Rate: LIBOR as of September 13, 1996 for the initial Interest Period;
LIBOR plus 0.10% thereafter
Purchase Price Percentage: 100%
Cut-off Date: September 1, 1996
Closing: September 17, 1996
Denominations: $1,000.00 and integral multiples of $1.00 in excess thereof.
Title of Certificates: Class A-1B
----------
Amount of Certificates: $54,800,000 (approximate)
Pass-Through Rate: 99.984375%
Purchase Price Percentage: 7.22% (plus accrued interest from Cut-off Date at applicable
Pass-Through Rate)
Cut-off Date: September 1, 1996
Closing: September 17, 1996
Denominations: $1,000.00 and integral multiples of $1.00 in excess thereof.
Title of Certificates: Class A-1C
----------
Amount of Certificates: $17,450,00 (approximate)
Pass-Through Rate: 7.57%
Purchase Price Percentage: 99.984375% (plus accrued interest from Cutoff Date at applicable
Pass-Through Rate)
Cut-off Date: September 1, 1996
Closing: September 17, 1996
Denominations: $1,000.00 and integral multiples of $1.00 in excess thereof.
</TABLE>
Schedule II-1
<PAGE> 35
<TABLE>
<CAPTION>
Title of Certificates: Class A-1D
----------
<S> <C>
Amount of Certificates: $19,900,000 (approximate)
Pass-Through Rate: 7.87%
Purchase Price Percentage: 99.953125% (plus accrued interest from Cutoff Date at
applicable Pass-Through Rate)
Cut-off Date: September 1, 1996
Closing: September 17, 1996
Denominations: $1,000.00 and integral multiples of $1.00 in excess thereof.
Title of Certificates: Class A-1E
----------
Amount of Certificates: $13,650,000 (approximate)
Pass-Through Rate: 8.04%
Purchase Price Percentage: 99.984375% (plus accrued interest from Cutoff Date at
applicable Pass-Through Rate)
Cut-off Date: September 1, 1996
Closing: September 17, 1996
Denominations: $1,000.00 and integral multiples of $1.00 in excess thereof.
Title of Certificates: Class A-2
---------
Amount of Certificates: $350,000,000 (approximate)
Initial Pass-Through Rate: LIBOR + .31% for each Interest Period on or prior to the Call
Date; LIBOR + .62% thereafter
Purchase Price Percentage: 100%
Cut-off Date: September 1, 1996
Settlement Date September 17, 1996
Closing: September 17, 1996
Denominations: $1,000.00 and integral multiples of $1.00 in excess thereof.
Representative with respect to the Class A-1 Certificates: Lehman Brothers Inc.
Representative with respect to the Class A-2 Certificates: Greenwich Capital Markets, Inc.
Insurer: Financial Security Assurance Inc.
Location of Settlement: The offices of Andrews & Kurth L.L.P., 601 South Figueroa Street, Los Angeles, California
</TABLE>
Schedule II-2
<PAGE> 1
EXHIBIT 1.2
AAMES CAPITAL CORPORATION
Mortgage Pass-Through Certificates
PRICING AGREEMENT
September 11, 1996
Lehman Brothers Inc.
as Representative of the several Underwriters
named in Schedule I-A-1 to the applicable Pricing Agreement
c/o Lehman Brothers Inc.
3 World Financial Center
200 Vesey Street
New York, NY 10285
Greenwich Capital Markets, Inc.
as Representative of the several Underwriters
named in Schedule I-A-2 to the applicable Pricing Agreement
c/o Greenwich Capital Markets, Inc.
600 Steamboat Road
Greenwich, Connecticut 06830
Gentlemen:
Aames Capital Corporation (the "Company") proposes, subject to the
terms and conditions stated herein and the Underwriting Agreement, dated
September 11, 1996 (the "Underwriting Agreement"), between the Company and
Lehman Brothers Inc., underwriter and as Representative (in such capacity, the
"Class A-1 Representative) of the several underwriters named in Schedule I-A-1
hereto, and Greenwich Capital Markets Limited, as underwriter and as
Representative (in such capacity, the "Class A-2 Representative"; each of the
Class A-1 Representative and the Class A-2 Representative, a "Representative"
and together, the "Representatives") of the several underwriters named in
Schedule I-A-2 hereto (together with the Class A-1 Representative and the Class
A-2 Representative, the "Underwriters"), to issue and sell to the Underwriters
the series of mortgage pass-through certificates specified in Schedule II
hereto (the "Certificates"). Each of the provisions of the Underwriting
Agreement is incorporated herein by reference in its entirety, and shall be
deemed to be a part of this Agreement to the same extent as if such provisions
had been set forth in full herein; and each of the representations and
warranties set forth therein shall be deemed to have been made at and as of the
date of this Pricing Agreement, except that each representation and warranty
with respect to the Prospectus in Section 1 of the Underwriting Agreement shall
be deemed to be a representation or warranty as of the date of the Underwriting
Agreement in relation to the Prospectus (as therein defined), and also a
representation and warranty as of the date of this Pricing Agreement in
relation to the Prospectus as amended or supplemented with respect to the
Certificates. Each reference to Representatives contained in the Underwriting
Agreement shall be deemed to refer to the Representatives named herein. Unless
otherwise defined herein, terms defined in the Underwriting Agreement are used
herein as therein defined.
<PAGE> 2
An amendment to the Registration Statement, or a supplement to the
Prospectus, as the case may be, relating to the Certificates in the form
heretofore delivered to you is now proposed to be filed or, in the case of a
supplement, mailed for filing with the Commission.
Subject to the terms and conditions set forth herein and in the
Underwriting Agreement incorporated herein by reference, the Company agrees to
issue and sell to the Underwriters, and the Underwriters, severally and not
jointly, agree to purchase from the Company, at the time and at the purchase
price set forth in Schedule II hereto, the aggregate amount of each Class of
Certificates set forth opposite the name of such Underwriter set forth in
Schedule I hereto.
If the foregoing is in accordance with your understanding, please sign
and return to us five counterparts hereof, and upon acceptance hereof by you,
this letter and such acceptance hereof, including the provisions of the
Underwriting Agreement incorporated herein by reference, shall constitute a
binding agreement between the Underwriters and the Company.
Very truly yours,
AAMES CAPITAL CORPORATION
By: /s/ Mark E. Elbaum
-----------------------------------
Name: Mark E. Elbaum
Title: Senior Vice President - Finance
CONFIRMED AND ACCEPTED,
as of the date first above written:
LEHMAN BROTHERS INC.
By: /s/ Martin P. Harding
---------------------------------
Name: Martin P. Harding
Title: Managing Director
For itself and as Representative of the several
Underwriters named in Schedule I-A-1 to the
applicable Pricing Agreement
GREENWICH CAPITAL MARKETS, INC.
By: /s/ Michael S. McMahon
---------------------------------
Name: Michael S. McMahon
Title: Vice President
For itself and as Representative of the several
Underwriters named in Schedule I-A-2 to the
applicable Pricing Agreement
2
<PAGE> 3
SCHEDULE I-A-1
<TABLE>
<CAPTION>
Principal Principal Principal
Principal Amount Amount of Amount of Principal Amount Amount of
of Class A-1A Class A-1B Class A-1C of Class A-1D Class A-1E
Underwriter Certificates Certificates Certificates Certificates Certificates
----------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Lehman Brothers $20,760,000 $16,440,000 $ 5,235,000 $ 5,970,000 $ 4,095,000
Inc.
Greenwich Capital $20,760,000 $16,440,000 $ 5,235,000 $ 5,970,000 $ 4,095,000
Markets, Inc.
Bear, Stearns & Co. $13,840,000 $10,960,000 $ 3,490,000 $ 3,980,000 $ 2,730,000
Inc.
Prudential $13,840,000 $10,960,000 $ 3,490,000 $ 3,980,000 $ 2,730,000
Securities
Incorporated
Total $69,200,000 $54,800,000 $17,450,000 $19,990,000 $13,650,000
</TABLE>
Schedule I-A-1
<PAGE> 4
SCHEDULE I-A-2
<TABLE>
<CAPTION>
Principal Amount of
Underwriter Class A-2 Certificates
----------- ----------------------
<S> <C>
Greenwich Capital Markets, Inc. $105,000,000
Lehman Brothers Inc. $105,000,000
Bear, Stearns & Co. Inc. $ 70,000,000
Prudential Securities Incorporated $ 70,000,000
------------
TOTAL: $350,000,000
</TABLE>
Schedule I-A-2
<PAGE> 5
SCHEDULE II
Registration Statement No. 333-10185
Basic Prospectus dated September 11, 1996
Prospectus Supplement dated September 11, 1996
<TABLE>
<S> <C>
Title of Certificates: Class A-1A
----------
Amount of Certificates: $69,200,000 (approximate)
Pass-Through Rate: LIBOR as of September 13, 1996 for the initial Interest
Period; LIBOR plus 0.10% thereafter
Purchase Price Percentage: 100%
Cut-off Date: September 1, 1996
Closing: September 17, 1996
Denominations: $1,000.00 and integral multiples of $1.00 in excess thereof.
Title of Certificates: Class A-1B
----------
Amount of Certificates: $54,800,000 (approximate)
Pass-Through Rate: 99.984375%
Purchase Price Percentage: 7.22% (plus accrued interest from Cut-off Date
at applicable Pass-Through Rate)
Cut-off Date: September 1, 1996
Closing: September 17, 1996
Denominations: $1,000.00 and integral multiples of $1.00 in excess thereof.
Title of Certificates: Class A-1C
----------
Amount of Certificates: $17,450,00 (approximate)
Pass-Through Rate: 7.57%
Purchase Price Percentage: 99.984375% (plus accrued interest from Cutoff Date
at applicable Pass-Through Rate)
Cut-off Date: September 1, 1996
Closing: September 17, 1996
Denominations: $1,000.00 and integral multiples of $1.00 in excess thereof.
</TABLE>
Schedule II-1
<PAGE> 6
<TABLE>
<S> <C>
Title of Certificates: Class A-1D
----------
Amount of Certificates: $19,900,000 (approximate)
Pass-Through Rate: 7.87%
Purchase Price Percentage: 99.953125% (plus accrued interest from Cutoff Date
at applicable Pass-Through Rate)
Cut-off Date: September 1, 1996
Closing: September 17, 1996
Denominations: $1,000.00 and integral multiples of $1.00 in excess
thereof.
Title of Certificates: Class A-1E
----------
Amount of Certificates: $13,650,000 (approximate)
Pass-Through Rate: 8.04%
Purchase Price Percentage: 99.984375% (plus accrued interest from Cutoff Date
at applicable Pass-Through Rate)
Cut-off Date: September 1, 1996
Closing: September 17, 1996
Denominations: $1,000.00 and integral multiples of $1.00 in excess
thereof.
Title of Certificates: Class A-2
---------
Amount of Certificates: $350,000,000 (approximate)
Initial Pass-Through Rate: LIBOR + .31% for each Interest Period on or prior to
the Call Date; LIBOR + .62% thereafter
Purchase Price Percentage: 100%
Cut-off Date: September 1, 1996
Settlement Date September 17, 1996
Closing: September 17, 1996
Denominations: $1,000.00 and integral multiples of $1.00 in excess
thereof.
Representative with respect to the Class A-1 Certificates: Lehman Brothers Inc.
Representative with respect to the Class A-2 Certificates: Greenwich Capital Markets, Inc.
</TABLE>
Insurer: Financial Security Assurance Inc.
Location of Settlement: The offices of Andrews & Kurth L.L.P., 601 South
Figueroa Street, Los Angeles, California
Schedule II-2
<PAGE> 1
EXHIBIT 4.1
AAMES CAPITAL CORPORATION
as Seller and Servicer
and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
as Trustee
POOLING AND SERVICING AGREEMENT
Dated as of September 1, 1996
Aames Mortgage Trust 1996-C
Mortgage Pass-Through Certificates,
Series 1996-C
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE ONE
DEFINITIONS
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02. Interest Calculations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 1.03. Determination of Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE TWO
CONVEYANCE OF THE TRUST;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Conveyance of the Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 2.02. Conveyance of the Subsequent Mortgage Loans; Fixed Price Contract . . . . . . . . . . . . . . . . . . . . . 41
Section 2.03. Acceptance by the Trustee; Repurchase or Substitution of Mortgage Loans . . . . . . . . . . . . . . . . . . 44
Section 2.04. Representations and Warranties Regarding the Servicer and the Seller . . . . . . . . . . . . . . . . . . . . 47
Section 2.05. Representations and Warranties of the Seller Regarding the Mortgage Loans . . . . . . . . . . . . . . . . . 48
Section 2.06. Execution and Authentication of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 2.07. Designation of Certificates; Designation of Startup Day . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 2.08. Indemnification of the Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 2.09. Repurchase of Certain Delinquent Mortgage Loans by the Seller . . . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE THREE
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS;
CERTIFICATE ACCOUNT
Section 3.01. The Servicer and the Sub-Servicers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 3.02. Collection of Certain Mortgage Loan Payments;
Collection Account and Certificate Account . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 3.03. Additional Servicing Responsibilities for the
Adjustable Rate Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 3.04. Hazard Insurance Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 3.05. Enforcement of Due-on-Sale Clauses;
Assumption and Modification Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 3.06. Realization upon Liquidated Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 3.07. Trustee to Cooperate; Release of Mortgage Files . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 3.08. Servicing Compensation; Payment of Certain Expenses by the Servicer . . . . . . . . . . . . . . . . . . . . 68
Section 3.09. Annual Statement as to Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 3.10. Annual Independent Public Accountants' Servicing Report . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 3.11. Access to Certain Documentation and Information
Regarding the Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 3.12. Maintenance of Fidelity Bond and Errors and Omission Policy . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 3.13. Notices to the Rating Agencies, the Trustee and the Certificate Insurer . . . . . . . . . . . . . . . . . . 70
Section 3.14. Reports of Foreclosures and Abandonment of Mortgaged Properties . . . . . . . . . . . . . . . . . . . . . . 70
Section 3.15. Sub-Servicers and Sub-Servicing Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
</TABLE>
ii
<PAGE> 3
<TABLE>
<S> <C> <C>
Section 3.16. Purchase Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 3.17. Capitalized Interest Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 3.18. Payments on the Certificate Insurance Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 3.19. Rights of the Certificate Insurer to Exercise
Rights of Class A Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 3.20. Trust and Accounts Held for Benefit of the Certificate Insurer . . . . . . . . . . . . . . . . . . . . . . . 78
ARTICLE FOUR
REMITTANCE REPORT
Section 4.01. Servicer Remittance Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 4.02. Trustee Distribution Date Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
ARTICLE FIVE
PAYMENTS AND STATEMENTS TO CERTIFICATE HOLDERS
Section 5.01. Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 5.02. Monthly Advances; Servicing Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 5.03. Statements to Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 5.04. The Certificate Insurer; Use of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
ARTICLE SIX
THE CERTIFICATES
Section 6.01. The Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Section 6.02. Registration of Transfer and Exchange of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Section 6.03. Mutilated, Destroyed, Lost or Stolen Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Section 6.04. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Section 6.05. Actions of Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
ARTICLE SEVEN
THE SERVICER AND THE SELLER
Section 7.01. Liability of the Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Section 7.02. Merger or Consolidation of, or Assumption of
the Obligations of, the Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Section 7.03. Limitation on Liability of the Servicer and Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Section 7.04. Servicer Not to Resign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Section 7.05. Merger or Consolidation of the Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Section 7.06. Term of Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
</TABLE>
iii
<PAGE> 4
<TABLE>
<S> <C> <C>
ARTICLE EIGHT
DEFAULT
Section 8.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Section 8.02. Trustee to Act; Appointment of Successor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Section 8.03. Notifications to Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Section 8.04. Assumption or Termination of Sub-Servicing Agreements
by the Trustee or any Successor Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
ARTICLE NINE
THE TRUSTEE
Section 9.01. Duties of the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Section 9.02. Certain Matters Affecting the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Section 9.03. Trustee Not Liable for Certificates or Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Section 9.04. Trustee May Own Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Section 9.05. Payment of the Trustee's Fees and Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Section 9.06. Eligibility Requirements for the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Section 9.07. Resignation or Removal of the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Section 9.08. Successor Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Section 9.09. Merger or Consolidation of the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Section 9.10. Appointment of Co-Trustee or Separate Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Section 9.11. Compliance with REMIC Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
Section 9.12. Trustee May Enforce Claims Without Possession of Certificates . . . . . . . . . . . . . . . . . . . . . . . 105
Section 9.13. Exercise of Trustee Powers by Certificate Insurer and Certificateholders . . . . . . . . . . . . . . . . . . 105
Section 9.14. Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
Section 9.15. Taxpayer Identification Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
ARTICLE TEN
TERMINATION
Section 10.01. Termination Upon Purchase or Liquidation of All Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . 106
Section 10.02. Additional Termination Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
ARTICLE ELEVEN
MISCELLANEOUS PROVISIONS
Section 11.01. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Section 11.02. Recordation of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
Section 11.03. Limitation on Rights of Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
Section 11.04. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
Section 11.05. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
Section 11.06. Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
Section 11.07. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
Section 11.08. Certificates Nonassessable and Fully Paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
Section 11.09. Third Party Beneficiary; Rating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
</TABLE>
iv
<PAGE> 5
<TABLE>
<S> <C>
SCHEDULES AND EXHIBITS
Schedule I List of Sub-Servicers
Schedule II Representations and Warranties of the Seller Regarding Subsequent Mortgage Loans
Schedule III Schedule of Certain Delinquent Mortgage Loans
Exhibit A-1A Form of Class A-1A Certificate
Exhibit A-1B Form of Class A-1B Certificate
Exhibit A-1C Form of Class A-1C Certificate
Exhibit A-1D Form of Class A-1D Certificate
Exhibit A-1E Form of Class A-1E Certificate
Exhibit A-2 Forms of Class A-2 Certificates
Exhibit B Form of Class R Certificate
Exhibit C Form of Subsequent Transfer Agreement
Exhibit D Form of Certificate Insurance Policy
Exhibit E Form of Notice of Claim and Certificate
Exhibit F Mortgage Loan Schedule
Exhibit G Form of Annual Statement as to Compliance
Exhibit H Form of Transfer Affidavit
Exhibit I Form of Payoff Notice
Exhibit J Form of Liquidation Report
Exhibit K Form of Officer's Certificate as to Charge-offs
Exhibit L Form of Transferor Affidavit
Exhibit M Insurance and Indemnity Agreement
</TABLE>
v
<PAGE> 6
THIS POOLING AND SERVICING AGREEMENT (this "Agreement"), dated as of
September 1, 1996, between Aames Capital Corporation, as seller (in such
capacity, the "Seller") and as servicer (in such capacity, together with
permitted successors hereunder, the "Servicer"), and Bankers Trust Company of
California, N.A., as trustee (the "Trustee"),
W I T N E S S E T H T H A T:
In consideration of the mutual agreements herein contained, the
parties hereto agree as follows:
ARTICLE ONE
DEFINITIONS
Section 1.01. Definitions. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the meanings specified in this Article.
Addition Notice: With respect to the transfer of Subsequent Mortgage
Loans to the Trust pursuant to Section 2.02 of this Agreement, notice of the
Seller's designation of Subsequent Mortgage Loans to be sold to the Trust
separated by Mortgage Loan Group and the aggregate Subsequent Cut-off Date
Principal Balance of such Subsequent Mortgage Loans in each Mortgage Loan
Group, which notice shall be given to the Trustee and to the Certificate
Insurer not later than one Business Day prior to the related Subsequent
Transfer Date.
Additional Subsequent Purchase Price: As to the last Subsequent
Transfer Date occurring during the Commitment Period with respect to Group I,
the amount, if any, specified by the Certificate Insurer in connection with its
approval of the Subsequent Mortgage Loans to be included in Group I pursuant to
Section 2.02 using criteria established on or before the Closing Date. As to
the last Subsequent Transfer Date occurring during the Commitment Period with
respect to Group II, the amount, if any, specified by the Certificate Insurer
in connection with its approval of the Subsequent Mortgage Loans to be included
in Group II pursuant to Section 2.02 using criteria established on or before
the Closing Date.
Adjustable Rate Mortgage Loan: Any Mortgage Loan with a Mortgage Loan
Rate that is adjustable at regular periodic intervals, based on the Index plus
the related Gross Margin subject to any Minimum Rate, Maximum Rate and any
periodic limitations on adjustment from time to time, all as set forth in the
Mortgage Loan Schedule. All Adjustable Rate Mortgage Loans will be included in
Group II.
Adjustment Date: With respect to any Adjustable Rate Mortgage Loan,
the date on which a change to the Mortgage Loan Rate on a Mortgage Loan becomes
effective.
Affiliate: With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect
to any specified Person means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings corresponding to the foregoing.
<PAGE> 7
Agreement: This Pooling and Servicing Agreement and all amendments
hereof and supplements hereto.
Annual Statement of Compliance: The annual statement prepared and
delivered by the Servicer in accordance with Section 3.09.
Appraised Value: The appraised value of any Mortgaged Property based
upon the appraisal made at the time of origination of the related Mortgage Loan
or, in the case of a Mortgage Loan that is a purchase money mortgage loan, the
sales price of the related Mortgaged Property if such sales price is less than
such appraised value.
Available Funds: With respect to the Class A-1 Certificates and any
Distribution Date, the aggregate of the following amounts in respect of Group I
available to be distributed on such Distribution Date, and with respect to the
Class A-2 Certificates and any Distribution Date, the aggregate of the
following amounts in respect of Group II available to be distributed on such
Distribution Date:
(I) the sum of (i) all payments in respect of or allocable to interest
received or deemed to have been received during the related Collection
Period, (ii) all Principal Payments received or deemed to have been
received during the related Collection Period, (iii) all Trust
Insurance Proceeds received during the related Collection Period, (iv)
all Net Liquidation Proceeds received during the related Collection
Period (excluding any amount distributed to the Holder of the Class R
Certificate pursuant to Section 3.06), (v) the aggregate of the
amounts deposited in the Certificate Account on the related Deposit
Date by the Seller or the Servicer, as applicable, in connection with
any purchase, repurchase, shortage or substitution pursuant to Section
2.03, 2.05, 2.09, 3.01, 3.03 or 3.06, (vi) the aggregate of the
amounts deposited in the Certificate Account by the Servicer or the
Certificate Insurer in connection with a purchase pursuant to Section
10.01, (vii) the amount of Monthly Advances made by the Servicer in
respect of such Distribution Date pursuant to Section 5.02(a), (viii)
the amount of any Compensating Interest paid by the Servicer in
respect of such Distribution Date, (ix) in the case of the
Distribution Date occurring in October 1996, (a) the amount deposited
in the Certificate Account by the Trustee from the Capitalized
Interest Account pursuant to Section 3.17 and the amount, if any,
deposited in the Certificate Account by the Trustee from the Purchase
Account pursuant to Section 3.16 and (b) the Closing Date Deposit and
(x) in the case of the Distribution Date occurring in November 1996,
the aggregate amount of Subsequent Transfer Deposits; reduced by (II)
the sum of (X) the Monthly Servicing Fee for the related Collection
Period (without regard to any Compensating Interest payable therefrom)
to the extent not previously paid to the Servicer, (Y) the aggregate
amount of Monthly Advances and Servicing Advances (other than those
included in the Liquidation Expenses for any Liquidated Mortgage Loan
and reimbursed from the related Liquidation Proceeds) reimbursable to
the Servicer pursuant to the provisions of this Agreement and (Z) the
aggregate amounts (i) deposited into the Collection Account or
Certificate Account that may not be withdrawn therefrom pursuant to a
final and nonappealable order of a United States bankruptcy court of
competent jurisdiction imposing a stay pursuant to Section 362 of the
United States Bankruptcy Code and that would otherwise have been
included in Available Funds on such Distribution Date and (ii)
received by the
2
<PAGE> 8
Trustee that are recoverable and sought to be recovered from the Trustee as a
voidable preference by a trustee in bankruptcy pursuant to the United States
Bankruptcy Code in accordance with a final, nonappealable order of a court of
competent jurisdiction.
Bloomberg: The on-line computer based information network maintained
by Bloomberg L.P., or any successor thereto.
Book-Entry Certificate: Any Certificate registered in the name of the
Depository or its nominee, ownership of which is reflected on the books of the
Depository or on the books of a person maintaining an account with such
Depository (directly or as an indirect participant in accordance with the rules
of such Depository). As of the Closing Date, only the Class A Certificates
constitute Book-Entry Certificates.
Book-Entry Nominee: As defined in Section 6.02(c).
Business Day: Any day other than (a) a Saturday or a Sunday or (b) a
day on which banking institutions in the State of California or the State of
New York are required or authorized by law, executive order or governmental
decree to be closed.
Capitalized Interest Account: The segregated account, which shall be
an Eligible Account, established and maintained pursuant to Section 3.17 and
entitled "Bankers Trust Company of California, N.A., as Trustee for Aames
Mortgage Trust 1996-C Mortgage Pass-Through Certificates, Series 1996-C,
Capitalized Interest Account".
Capitalized Interest Account Deposit: $452,795.35.
Certificate: Any Class A Certificate or Class R Certificate.
Certificate Account: The segregated account, which shall be an
Eligible Account, established and maintained pursuant to Section 3.02(e) and
entitled "Bankers Trust Company of California, N.A., as Trustee for Aames
Mortgage Trust 1996-C Mortgage Pass-Through Certificates, Series 1996-C,
Certificate Account".
Certificate Insurance Policy: The Financial Guaranty Insurance Policy
(No. 50506-N), dated September 17, 1996, including any endorsements thereto,
issued by the Certificate Insurer for the benefit of the Holders of the Class A
Certificates, pursuant to which the Certificate Insurer guarantees payment of
Insured Amounts. A copy of the Certificate Insurance Policy is attached hereto
as Exhibit D.
Certificate Insurer: Financial Security Assurance Inc., a stock
insurance company organized and created under the laws of the State of New
York, and any successors thereto.
Certificate Insurer Default: The existence and continuance of any of
the following:
3
<PAGE> 9
(a) the Certificate Insurer fails to make a payment required
under the Certificate Insurance Policy in accordance with its terms;
(b) the entry by a court having jurisdiction in the premises
of (i) 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 of (ii) a decree or order
adjudging the Certificate Insurer 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 the Certificate Insurer or of any substantial part of its
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 60
consecutive days; or
(c) 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
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 Certificate Insurer, or the filing by the
Certificate Insurer of a petition or answer or consent seeking
reorganization or relief under any applicable United States federal or
state law, or the consent 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 or of any substantial part
of its property, or the failure by 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, or the taking of corporate action by the
Certificate Insurer in furtherance of any such action.
Certificate Insurer Parties: The Certificate Insurer or its
respective agents, representatives, directors, officers or employees.
Certificate Insurer Premium: With respect to Group I, the premium due
to the Certificate Insurer on each Distribution Date, which amount shall be
equal to 1/12 of the product of the applicable Insurer Premium Rate and the
Class A-1 Certificate Principal Balance immediately prior to such Distribution
Date. With respect to Group II, the premium due to the Certificate Insurer on
each Distribution Date, which amount shall be equal to 1/12 of the product of
the applicable Insurer Premium Rate and the Class A-2 Certificate Principal
Balance immediately prior to such Distribution Date.
Certificate Owner: With respect to any Book-Entry Certificate, the
Person who is the beneficial owner thereof.
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Certificate Principal Balance: With respect to the Class A-1A
Certificates, the Class A-1A Certificate Principal Balance; with respect to the
Class A-1B Certificates, the Class A-1B Certificate Principal Balance; with
respect to the Class A-1C Certificates, the Class A-1C Certificate Principal
Balance; with respect to the Class A-1D Certificates, the Class A-1D
Certificate Principal Balance; with respect to the Class A-1E Certificates, the
Class A-1E Certificate Principal Balance; and with respect to the Class A-2
Certificates, the Class A-2 Certificate Principal Balance.
Certificate Register: The register maintained pursuant to Section
6.02.
Certificateholder or Holder: The Person in whose name a Certificate
is registered in the Certificate Register, except that, solely for the purpose
of taking any action under Article Eight or giving any consent pursuant to this
Agreement, any Certificate registered in the name of the Seller or the Servicer
or any Person actually known to a Responsible Officer of the Trustee to be an
Affiliate of the Seller or the Servicer shall be deemed not to be outstanding
and the Percentage Interest evidenced thereby shall not be taken into account
in determining whether Holders of the requisite Percentage Interests necessary
to take any such action or effect any such consent have acted or consented
unless the Seller, the Servicer or any such Person is an owner of record of all
of the Certificates of any Class.
Class: All of the Class A-1A Certificates, Class A-1B Certificates,
Class A-1C Certificates, Class A-1D Certificates, Class A-1E Certificates, the
Class A-2 Certificates or the Class R Certificate, as the case may be, taken as
a whole.
Class A Certificates: All of the Class A-1A Certificates, Class A-1B
Certificates, Class A-1C Certificates, Class A-1D Certificates, Class A-1E
Certificates and Class A-2 Certificates, taken as a whole.
Class A Certificate Principal Balance: With respect to the Class A-1
Certificates, the Class A-1 Certificate Principal Balance and with respect to
the Class A-2 Certificates, the Class A-2 Certificate Principal Balance.
Class A Monthly Interest: With respect to the Class A-1 Certificates,
the Class A-1 Monthly Interest and with respect to the Class A-2 Certificates,
the Class A-2 Monthly Interest.
Class A Monthly Principal: With respect to the Class A-1
Certificates, the Class A-1 Monthly Principal and with respect to the Class A-2
Certificates, the Class A-2 Monthly Principal.
Class A-1 Additional Coverage Requirement: As to any Subsequent
Transfer Date and any Distribution Date thereafter, the percentage, if any,
specified as such by the Certificate Insurer in connection with its approval of
the Subsequent Mortgage Loans to be included in Group I pursuant to Section
2.02 using criteria established on or before the Closing Date multiplied by the
outstanding Principal Balance of the Subsequent Mortgage Loans to be included
in Group I.
Class A-1 Certificates: Any or all of the Class A-1A Certificates,
Class A-1B Certificates, Class A-1C Certificates, Class A-1D Certificates or
Class A-1E Certificates, as the case may be.
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Class A-1 Certificate Principal Balance: As to any Distribution Date,
the sum of the Class A-1A Certificate Principal Balance, the Class A-1B
Certificate Principal Balance, the Class A-1C Certificate Principal Balance,
the Class A-1D Certificate Principal Balance and the Class A-1E Certificate
Principal Balance.
Class A-1 Coverage Amount: As to any Distribution Date, the amount,
if any, by which the Group I Balance exceeds the Class A-1 Certificate
Principal Balance for such Distribution Date, after taking into account the
Class A-1 Monthly Principal (prior to any reduction thereof in respect of any
Class A-1 Coverage Surplus pursuant to clause II of the definition of Class A-1
Monthly Principal) to be applied in reduction of the Class A-1 Certificate
Principal Balance on such Distribution Date. If the Group I Balance is less
than the Class A-1 Certificate Principal Balance for such Distribution Date
determined as provided above, the Class A-1 Coverage Amount for such
Distribution Date shall be zero.
Class A-1 Coverage Deficit: As to any Distribution Date, the amount,
if any, by which the Class A-1 Certificate Principal Balance for such
Distribution Date (after taking into account any Class A-1 Monthly Principal
and Class A-1 Excess Cash Distribution to be applied in reduction of the Class
A-1 Certificate Principal Balance on such Distribution Date) exceeds the Group
I Balance. If the Group I Balance is greater than the Class A-1 Certificate
Principal Balance for such Distribution Date, determined as provided above, the
Class A-1 Coverage Deficit for such Distribution Date shall be zero.
Class A-1 Coverage Surplus: As to any Distribution Date, the amount,
if any, by which the Class A-1 Coverage Amount for such Distribution Date
exceeds the Class A-1 Required Coverage Amount for such Distribution Date.
Class A-1 Excess Cash: With respect to any Distribution Date, the
amount, if any, by which Available Funds in respect of Group I for such
Distribution Date exceed the sum of (i) the Certificate Insurer Premium for
Group I and such Distribution Date, (ii) the Class A-1 Monthly Interest for
such Distribution Date, (iii) the Class A-1 Monthly Principal for such
Distribution Date and (iv) the aggregate amount payable to the Certificate
Insurer on such Distribution Date pursuant to clause first of subsection (A) of
Section 5.01.
Class A-1 Excess Cash Distribution: With respect to any Distribution
Date on which a Class A-1 Coverage Surplus does not exist, an amount equal to
the lesser of (i) the amount, if any, by which the Class A-1 Required Coverage
Amount for such Distribution Date exceeds the Class A-1 Coverage Amount for
such Distribution Date, or, if after taking into account the Class A-1 Monthly
Principal applied in reduction of the Class A-1 Certificate Principal Balance
on such Distribution Date, the Class A-1 Certificate Principal Balance exceeds
the Group I Balance, the sum of the Class A-1 Required Coverage Amount for such
Distribution Date plus the amount by which the Class A-1 Certificate Principal
Balance, determined as provided above, exceeds the Group I Balance and (ii)
Class A-1 Excess Cash for such Distribution Date. With respect to any
Distribution Date on which a Class A-1 Coverage Surplus exists, the Class A-1
Excess Cash Distribution shall be zero. The Class A-1 Excess Cash Distribution
for any Distribution Date shall be allocated for distribution to Class A-1A
Certificateholders, Class A-1B Certificateholders, Class A-1C
Certificateholders, Class A-1D Certificateholders and Class A-1E
Certificateholders in accordance with Section 5.01.
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Class A-1 Insured Amount: As to any Distribution Date, the amount to
be paid by the Certificate Insurer under the Certificate Insurance Policy (in
the manner described in Section 3.18) pursuant to a Notice of Claim presented
by the Trustee. The Class A-1 Insured Amount as of any Distribution Date shall
be equal to the sum of (i) the amount by which the Class A-1 Monthly Interest
exceeds the amount of Available Funds for Group I remaining after distribution
of amounts pursuant to clauses first and second in subsection (A) of Section
5.01, reduced by any amount of Class A-2 Overflow Distribution for such
Distribution Date applied in respect of the Class A-1 Monthly Interest, (ii)
the Class A-1 Coverage Deficit, if any, on such Distribution Date reduced by
any amount of Class A-2 Overflow Distribution for such Distribution Date
applied to reduce the Class A-1 Certificate Principal Balance and (iii) the
Preference Amount for the Class A-1 Certificates for such Distribution Date, in
each case as determined by the Trustee on the date a Notice of Claim is
required to be made in respect of such Distribution Date. The Class A-1
Insured Amount for any Distribution Date shall be allocated for distribution to
Class A-1A Certificateholders, Class A-1B Certificateholders, Class A-1C
Certificateholders, Class A-1D Certificateholders and Class A-1E
Certificateholders in accordance with Section 5.01.
Class A-1 Monthly Interest: As to any Distribution Date, the sum of
Class A-1A Monthly Interest, Class A-1B Monthly Interest, Class A- 1C Monthly
Interest, Class A-1D Monthly Interest and Class A-1E Monthly Interest. Class
A-1 Monthly Interest shall be allocated for distribution to Class A-1A
Certificateholders, Class A-1B Certificateholders, Class A-1C
Certificateholders, Class A-1D Certificateholders and Class A-1E
Certificateholders pro rata in proportion to Class A-1A Monthly Interest, Class
A-1B Monthly Interest, Class A-1C Monthly Interest, Class A-1D Monthly Interest
and Class A-1E Monthly Interest.
Class A-1 Monthly Principal: As to any Distribution Date, (I) the
aggregate of (i) all Principal Payments received or deemed to have been
received during the related Collection Period in respect of the Mortgage Loans
in Group I, (ii) all Trust Insurance Proceeds received during the related
Collection Period and allocable to principal of the related Mortgage Loans in
Group I, (iii) all Net Liquidation Proceeds received during the related
Collection Period and allocable to principal of the related Mortgage Loans in
Group I, (iv) the aggregate of the amounts deposited in the Certificate Account
on the related Deposit Date by the Seller or the Servicer, as applicable, in
connection with any purchase, repurchase or substitution of any Mortgage Loan
in Group I pursuant to Section 2.03, 2.05, 3.01 or 3.06, net of any amounts
allocable to interest in respect thereof, (v) the aggregate of the amounts
deposited in the Certificate Account by the Servicer or the Certificate Insurer
in connection with a purchase pursuant to Section 10.01 during the related
Collection Period of any Mortgage Loan in Group I, net of any amounts allocable
to interest in respect thereof, and (vi) the amount, if any, deposited during
the related Collection Period in the Certificate Account by the Trustee in
respect of the Group I Purchase Account Deposit pursuant to Section 3.16,
reduced by (II) the amount of any Class A-1 Coverage Surplus with respect to
such Distribution Date. For the limited purpose of stating the obligations of
the Trust with respect to distributions in reduction of principal on the Class
A-1 Certificates, Class A-1 Monthly Principal for any Distribution Date shall
be deemed to include the Class A-1 Coverage Deficit for such Distribution Date
and any Preference Amount relating to the Class A-1 Certificates. Class A-1
Monthly Principal for any Distribution Date shall be allocated for distribution
to Class A-1A Certificateholders, Class A-1B Certificateholders, Class A-1C
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<PAGE> 13
Certificateholders, Class A-1D Certificateholders and Class A-1E
Certificateholders in accordance with Section 5.01.
Class A-1 Overflow Distribution: With respect to any Distribution
Date, an amount equal to the lesser of (i) the amount by which the Class A-1
Excess Cash for such Distribution Date exceeds the Class A-1 Excess Cash
Distribution for such Distribution Date and (ii) the sum of (a) the amount by
which Class A-2 Monthly Interest exceeds the amount available for distribution
pursuant to clause third of subsection (B) of Section 5.01, (b) the amount by
which the Class A-2 Required Coverage Amount for such Distribution Date exceeds
the Class A-2 Coverage Amount for such Distribution Date after taking into
account distribution of the Class A-2 Excess Cash Distribution on such
Distribution Date or, if after taking into account the Class A-2 Monthly
Principal to be applied in reduction of the Class A-2 Certificate Principal
Balance on such Distribution Date, the Class A-2 Certificate Principal Balance
exceeds the Group II Balance, the sum of the Class A-2 Required Coverage Amount
for such Distribution Date plus the amount by which the Class A-2 Certificate
Principal Balance, determined as provided above, exceeds the Group II Balance,
(c) any amounts payable to the Certificate Insurer on such Distribution Date
pursuant to clause first of subsection (B) of Section 5.01 after giving effect
to any other distributions to the Certificate Insurer on such Distribution Date
in respect thereof. With respect to any Distribution Date on which a Class A-2
Coverage Surplus exists, the Class A-1 Overflow Distribution Amount shall be
zero.
Class A-1 Principal Distribution Amount: As to any Distribution Date,
the sum of the Class A-1 Monthly Principal and the Class A-1 Excess Cash
Distribution.
Class A-1 Required Coverage Amount: With respect to the Class A-1
Certificates and any Distribution Date, an amount equal to 3.25% of the
aggregate Principal Balances of the Mortgage Loans in Group I as of the Cut-off
Date plus the amount of the Group I Purchase Account Deposit (plus any Class
A-1 Additional Coverage Requirement with respect to Subsequent Mortgage Loans
included in Group I), subject to the following: (i) if the Step Up Trigger has
occurred, the Class A-1 Required Coverage Amount for such Distribution Date
will be an amount equal to 8.125% of the aggregate Principal Balances of the
Mortgage Loans in Group I as of such Distribution Date, plus the product of 50%
and the aggregate Principal Balances of all Mortgage Loans in Group I that are
90 or more days contractually delinquent as of such Distribution Date, such sum
not to exceed an amount equal to 20% of the aggregate Principal Balances of all
Mortgage Loans in Group I as of such Distribution Date or (ii) if the Step Up
Trigger has not occurred but the Step Down Trigger has occurred, the Class A-1
Required Coverage Amount for such Distribution Date will be an amount equal to
the greater of (a) 0.50% of the aggregate of the Principal Balances of the
Mortgage Loans in Group I as of the Cut-off Date plus the amount of the Group I
Purchase Account Deposit and (b) the lesser of (x) 3.25% of the aggregate
Principal Balances of the Mortgage Loans in Group I as of the Cut-off Date plus
the amount of the Group I Purchase Account Deposit (plus any Class A-1
Additional Coverage Requirement with respect to Subsequent Mortgage Loans
included in Group I) and (y) the Class A-1 Stepped Down Required Coverage
Percentage of the aggregate Principal Balances of the Mortgage Loans in Group I
as of such Distribution Date.
Class A-1 Stepped Down Required Coverage Percentage: With respect to
the Class A-1 Certificates and any Distribution Date for which the Step Down
Trigger for the Mortgage Loans in
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<PAGE> 14
Group I has occurred, a percentage equal to (A) the percentage equivalent of a
fraction, the numerator of which is 3.25% of the aggregate Principal Balance of
the Mortgage Loans in Group I as of the Cut-off Date plus the amount of the
Group I Purchase Account Deposit (plus any Class A-1 Additional Coverage
Requirement with respect to Subsequent Mortgage Loans included in Group I), and
the denominator of which is the aggregate Principal Balances of the Mortgage
Loans in Group I as of such Distribution Date, minus (so long as the difference
is a positive figure) (B) the percentage equivalent of a fraction, the
numerator of which is the product of (1) the percentage calculated under clause
(A) above, minus 8.125%, multiplied by (2) the number of consecutive
Distribution Dates through and including the Distribution Date for which the
Stepped Down Required Coverage Percentage is being calculated, up to a maximum
of 12, for which the Step Down Trigger has occurred, and the denominator of
which is 12.
Class A-1A Certificate: Any one of the Certificates executed by the
Trustee on behalf of the Trust, not in its individual capacity, but solely as
Trustee, authenticated by the Trustee and in substantially the form set forth
in Exhibit A-1A hereto. The Class A-1A Certificates are a subclass of the
Class A-1 Certificates.
Class A-1A Certificate Principal Balance: As to any Distribution
Date, the Original Class A-1A Certificate Principal Balance less all amounts
distributed to Holders of Class A-1A Certificates on previous Distribution
Dates on account of Class A-1 Monthly Principal, any Class A-1 Excess Cash
Distribution, any Class A-2 Overflow Distribution and any payments made by the
Certificate Insurer in respect of principal on the Class A-1A Certificates
under the Certificate Insurance Policy in each case to the extent allocable to
Class A-1A Certificateholders and applied in reduction of the Class A-1A
Certificate Principal Balance.
Class A-1A Monthly Interest: As to any Distribution Date, the amount
of interest distributable to Holders of the Class A-1A Certificates on such
Distribution Date, which amount shall be equal to (i) in the case of the
October 1996 Distribution Date, interest on the Original Class A-1A Certificate
Principal Balance computed at the Class A-1A Pass-Through Rate for the number
of days in the period commencing on the Closing Date and ending on the day
prior to such Distribution Date, and (ii) in the case of each subsequent
Distribution Date, interest on the Class A-1A Certificate Principal Balance as
of the preceding Distribution Date (after giving effect to any distributions
made in reduction of the Class A-1A Certificate Principal Balance on such
preceding Distribution Date) computed at the Class A-1A Pass-Through Rate for
the number of days in the related Interest Period, in either case net of any
Interest Shortfall.
Class A-1A Pass-Through Rate: With respect to the Distribution Date
in October 1996, 5.56875% per annum. With respect to each Distribution Date
thereafter, the per annum rate equal to the lesser of (x) LIBOR plus 0.10% per
annum and (y) the product of (a) the weighted average of the Mortgage Loan
Rates used to determine interest due on the Mortgage Loans in Group I during
the related Collection Period, reduced by the sum of (i) the applicable
Servicing Fee Rate with respect to Group I for the related Collection Period
and (ii) the applicable Insurer Premium Rate with respect to Group I for the
related Collection Period and (b) a fraction, the numerator of which is 30 and
the denominator of which is the actual number of days in the related Collection
Period.
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<PAGE> 15
Class A-1B Certificate: Any one of the Certificates executed by the
Trustee on behalf of the Trust, not in its individual capacity, but solely as
Trustee, authenticated by the Trustee and in substantially the form set forth
in Exhibit A-1B hereto. The Class A-1B Certificates are a subclass of the
Class A-1 Certificates.
Class A-1B Certificate Principal Balance: As to any Distribution
Date, the Original Class A-1B Certificate Principal Balance less all amounts
distributed to Holders of Class A-1B Certificates on previous Distribution
Dates on account of Class A-1 Monthly Principal, any Class A-1 Excess Cash
Distribution, any Class A-2 Overflow Distribution and any payments made by the
Certificate Insurer in respect of principal on the Class A-1B Certificates
under the Certificate Insurance Policy in each case to the extent allocable to
Class A-1B Certificateholders and applied in reduction of the Class A-1B
Certificate Principal Balance.
Class A-1B Monthly Interest: As to any Distribution Date, the amount
of interest distributable to Holders of the Class A-1B Certificates on such
Distribution Date, which amount shall be equal to (i) in the case of the
October 1996 Distribution Date, 30 days of interest on the Original Class A-1B
Certificate Principal Balance computed at the Class A-1B Pass-Through Rate and
(ii) in the case of each subsequent Distribution Date, 30 days of interest on
the Class A-1B Certificate Principal Balance as of the preceding Distribution
Date (after giving effect to any distributions made in reduction of the Class
A-1B Certificate Principal Balance on such preceding Distribution Date)
computed at the Class A-1B Pass-Through Rate, in either case net of any
Interest Shortfall.
Class A-1B Pass-Through Rate: 7.22% per annum.
Class A-1C Certificate: Any one of the Certificates executed by the
Trustee on behalf of the Trust, not in its individual capacity, but solely as
Trustee, authenticated by the Trustee and in substantially the form set forth
in Exhibit A-1C hereto. The Class A-1C Certificates are a subclass of the
Class A-1 Certificates.
Class A-1C Certificate Principal Balance: As to any Distribution
Date, the Original Class A-1C Certificate Principal Balance less all amounts
distributed to Holders of Class A-1C Certificates on previous Distribution
Dates on account of Class A-1 Monthly Principal, any Class A-1 Excess Cash
Distribution, any Class A-2 Overflow Distribution and any payments made by the
Certificate Insurer in respect of principal on the Class A-1C Certificates
under the Certificate Insurance Policy in each case to the extent allocable to
Class A-1C Certificateholders and applied in reduction of the Class A-1C
Certificate Principal Balance.
Class A-1C Monthly Interest: As to any Distribution Date, the amount
of interest distributable to Holders of the Class A-1C Certificates on such
Distribution Date, which amount shall be equal to (i) in the case of the
October 1996 Distribution Date, 30 days of interest on the Original Class A-1C
Certificate Principal Balance computed at the Class A-1C Pass-Through Rate and
(ii) in the case of each subsequent Distribution Date, 30 days of interest on
the Class A-1C Certificate Principal Balance as of the preceding Distribution
Date (after giving effect to any distributions made in reduction of the
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<PAGE> 16
Class A-1C Certificate Principal Balance on such preceding Distribution Date)
computed at the Class A-1C Pass-Through Rate, in either case net of any
Interest Shortfall.
Class A-1C Pass-Through Rate: 7.57% per annum.
Class A-1D Certificate: Any one of the Certificates executed by the
Trustee on behalf of the Trust, not in its individual capacity, but solely as
Trustee, authenticated by the Trustee and in substantially the form set forth
in Exhibit A-1D hereto. The Class A-1D Certificates are a subclass of the
Class A-1 Certificates.
Class A-1D Certificate Principal Balance: As to any Distribution
Date, the Original Class A-1D Certificate Principal Balance less all amounts
distributed to Holders of Class A-1D Certificates on previous Distribution
Dates on account of Class A-1 Monthly Principal, any Class A-1 Excess Cash
Distribution, any Class A-2 Overflow Distribution and any payments made by the
Certificate Insurer in respect of principal on the Class A-1D Certificates
under the Certificate Insurance Policy in each case to the extent allocable to
Class A-1D Certificateholders and applied in reduction of the Class A-1D
Certificate Principal Balance.
Class A-1D Monthly Interest: As to any Distribution Date, the amount
of interest distributable to Holders of the Class A-1D Certificates on such
Distribution Date, which amount shall be equal to (i) in the case of the
October 1996 Distribution Date, 30 days of interest on the Original Class A-1D
Certificate Principal Balance computed at the Class A-1D Pass-Through Rate and
(ii) in the case of each subsequent Distribution Date, 30 days of interest on
the Class A-1D Certificate Principal Balance as of the preceding Distribution
Date (after giving effect to any distributions made in reduction of the Class
A-1D Certificate Principal Balance on such preceding Distribution Date)
computed at the Class A-1D Pass-Through Rate, in either case net of any
Interest Shortfall.
Class A-1D Pass-Through Rate: 7.87% per annum.
Class A-1E Certificate: Any one of the Certificates executed by the
Trustee on behalf of the Trust, not in its individual capacity, but solely as
Trustee, authenticated by the Trustee and in substantially the form set forth
in Exhibit A-1E hereto. The Class A-1E Certificates are a subclass of the
Class A-1 Certificates.
Class A-1E Certificate Principal Balance: As to any Distribution
Date, the Original Class A-1E Certificate Principal Balance less all amounts
distributed to Holders of Class A-1E Certificates on previous Distribution
Dates on account of Class A-1 Monthly Principal, any Class A-1 Excess Cash
Distribution, any Class A-2 Overflow Distribution and any payments made by the
Certificate Insurer in respect of principal on the Class A-1E Certificates
under the Certificate Insurance Policy in each case to the extent allocable to
Class A-1E Certificateholders and applied in reduction of the Class A-1E
Certificate Principal Balance.
Class A-1E Monthly Interest: As to any Distribution Date, the amount
of interest distributable to Holders of the Class A-1E Certificates on such
Distribution Date, which amount shall be equal to (i) in the case of the
October 1996 Distribution Date, 30 days of interest on the Original Class A-1E
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<PAGE> 17
Certificate Principal Balance computed at the Class A-1E Pass-Through Rate and
(ii) in the case of each subsequent Distribution Date, 30 days of interest on
the Class A-1E Certificate Principal Balance as of the preceding Distribution
Date (after giving effect to any distributions made in reduction of the Class
A-1E Certificate Principal Balance on such preceding Distribution Date)
computed at the Class A-1E Pass-Through Rate, in either case net of any
Interest Shortfall.
Class A-1E Pass-Through Rate: 8.04% per annum.
Class A-2 Additional Coverage Requirement: As to any Subsequent
Transfer Date and any Distribution Date thereafter, the percentage, if any,
specified as such by the Certificate Insurer in connection with its approval of
the Subsequent Mortgage Loans to be included in Group II pursuant to Section
2.02 using criteria established on or before the Closing Date multiplied by the
outstanding Principal Balance of the Subsequent Mortgage Loans to be included
in Group II.
Class A-2 Certificates: Any or all of the Certificates executed by
the Trustee on behalf of the Trust, not in its individual capacity, but solely
as Trustee, authenticated by the Trustee and in substantially the form set
forth in Exhibit A-2 hereto.
Class A-2 Certificate Principal Balance: As to any Distribution Date,
the Original Class A-2 Certificate Principal Balance less all amounts
previously distributed to Holders of Class A-2 Certificates on previous
Distribution Dates on account of Class A-2 Monthly Principal, any Class A-2
Excess Cash Distribution, any Class A-1 Overflow Distribution applied in
reduction of the Class A-2 Certificate Principal Balance and any payments made
by the Certificate Insurer in respect of principal on the Class A-2
Certificates under the Certificate Insurance Policy.
Class A-2 Coverage Amount: As to any Distribution Date, the amount,
if any, by which the Group II Balance exceeds the Class A-2 Certificate
Principal Balance for such Distribution Date, after taking into account the
Class A-2 Monthly Principal (prior to any reduction thereof in respect of any
Class A-2 Coverage Surplus pursuant to clause (II) of the definition of Class
A-2 Monthly Principal) to be applied in reduction of the Class A-2 Certificate
Principal Balance on such Distribution Date. If the Group II Balance is less
than the Class A-2 Certificate Principal Balance for such Distribution Date,
determined as provided above, the Class A-2 Coverage Amount for such
Distribution Date shall be zero.
Class A-2 Coverage Deficit: As to any Distribution Date, the amount,
if any, by which the Class A-2 Certificate Principal Balance for such
Distribution Date (after taking into account any Class A-2 Monthly Principal
and Class A-2 Excess Cash Distribution to be applied in reduction of the Class
A-2 Certificate Principal Balance on such Distribution Date) exceeds the Group
II Balance. If the Group II Balance is greater than the Class A-2 Certificate
Principal Balance for such Distribution Date determined as provided above, the
Class A-2 Coverage Deficit for such Distribution Date shall be zero.
Class A-2 Coverage Surplus: As to any Distribution Date, the amount,
if any, by which the Class A-2 Coverage Amount for such Distribution Date
exceeds the Class A-2 Required Coverage Amount for such Distribution Date.
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<PAGE> 18
Class A-2 Excess Cash: With respect to any Distribution Date, the
amount, if any, by which Available Funds in respect of Group II for such
Distribution Date exceed the sum of (i) the Certificate Insurer Premium for
Group II and such Distribution Date, (ii) the Class A-2 Monthly Interest for
such Distribution Date, (iii) the Class A-2 Monthly Principal for such
Distribution Date, and (iv) the aggregate amount payable to the Certificate
Insurer on such Distribution Date pursuant to clause first of subsection (B) of
Section 5.01.
Class A-2 Excess Cash Distribution: With respect to any Distribution
Date on which a Class A-2 Coverage Surplus does not exist, an amount equal to
the lesser of (a) the amount, if any, by which the Class A-2 Required Coverage
Amount for such Distribution Date exceeds the Class A-2 Coverage Amount for
such Distribution Date, or, if after taking into account the Class A-2 Monthly
Principal to be applied in reduction of the Class A-2 Certificate Principal
Balance on such Distribution Date the Class A-2 Certificate Principal Balance
exceeds the Group II Balance, the sum of the Class A-2 Required Coverage Amount
for such Distribution Date plus the amount by which the Class A-2 Certificate
Principal Balance, determined as provided above, exceeds the Group II Balance
and (b) the Class A-2 Excess Cash for such Distribution Date.
Class A-2 Insured Amount: As to any Distribution Date, the amount to
be paid by the Certificate Insurer under the Certificate Insurance Policy (in
the manner described in Section 3.18) pursuant to a Notice of Claim presented
by the Trustee. The Class A-2 Insured Amount as of any Distribution Date shall
be equal to the sum of (i) the amount by which the Class A-2 Monthly Interest
exceeds the amount of Available Funds for Group II remaining after distribution
of amounts pursuant to clauses first and second in subsection (B) of Section
5.01 reduced by any amount of Class A-1 Overflow Distribution for such
Distribution Date applied in respect of Class A-2 Monthly Interest, (ii) the
Class A-2 Coverage Deficit, if any, on such Distribution Date reduced by any
amount of Class A-1 Overflow Distribution for such Distribution Date applied to
reduce the Class A-2 Certificate Principal Balance and (iii) the Preference
Amount for the Class A-2 Certificates for such Distribution Date, in each case
as determined by the Trustee on the date a Notice of Claim is required to be
made in respect of such Distribution Date.
Class A-2 Monthly Interest: As to any Distribution Date, the amount
of interest distributable to Holders of the Class A-2 Certificates on such
Distribution Date, which amount shall be equal to (i) in the case of the
October 1996 Distribution Date, interest on the Original Class A-2 Certificate
Principal Balance for the number of days from and including the Closing Date to
and including the day prior to such Distribution Date, computed at the Class
A-2 Pass-Through Rate and (ii) in the case of each subsequent Distribution
Date, interest for the number of days in the related Interest Period on the
Class A-2 Certificate Principal Balance as of the preceding Distribution Date
(after giving effect to any distributions made in reduction of the Class A-2
Certificate Principal Balance on such preceding Distribution Date) computed at
the Class A-2 Pass-Through Rate. The Class A-2 Monthly Interest in each case
will be net of any Interest Shortfall.
Class A-2 Monthly Principal: As to any Distribution Date, (I) the
aggregate of (i) all Principal Payments received or deemed to have been
received during the related Collection Period in respect of the Mortgage Loans
in Group II, (ii) all Trust Insurance Proceeds received during the related
Collection Period and allocable to principal of the related Mortgage Loans in
Group II, (iii) all Net
13
<PAGE> 19
Liquidation Proceeds received during the related Collection Period and
allocable to principal of the related Mortgage Loans in Group II, (iv) the
aggregate of the amounts deposited in the Certificate Account on the related
Deposit Date by the Seller or the Servicer, as applicable, in connection with
any purchase, repurchase or substitution of any Mortgage Loan in Group II
pursuant to Section 2.03, 2.05, 2.09, 3.01 or 3.06, net of any amounts
allocable to interest in respect thereof, (v) the aggregate of the amounts
deposited in the Certificate Account by the Servicer or the Certificate Insurer
in connection with a purchase pursuant to Section 10.01 during the related
Collection Period of any Mortgage Loan in Group II, net of any amounts
allocable to interest in respect thereof, and (vi) the amount, if any,
deposited during the related Collection Period in the Certificate Account by
the Trustee in respect of the Group II Purchase Account Deposit pursuant to
Section 3.16, reduced by (II) the amount of any Class A-2 Coverage Surplus with
respect to such Distribution Date. For the limited purpose of stating the
obligations of the Trust with respect to distributions in reduction of
principal on the Class A-2 Certificates, Class A-2 Monthly Principal for any
Distribution Date shall be deemed to include the Class A-2 Coverage Deficit for
such Distribution Date and any Preference Amount relating to the Class A-2
Certificates.
Class A-2 Overflow Distribution: With respect to any Distribution
Date an amount equal to the lesser of (i) the amount by which the Class A-2
Excess Cash for such Distribution Date exceeds the Class A-2 Excess Cash
Distribution for such Distribution Date and (ii) the sum of (a) the amount by
which Class A-1 Monthly Interest exceeds the amount available for distribution
pursuant to clause third of subsection (A) of Section 5.01, (b) the amount by
which the Class A-1 Required Coverage Amount for such Distribution Date exceeds
the Class A-1 Coverage Amount for such Distribution Date after taking into
account distribution of the Class A-1 Excess Cash Distribution on such
Distribution Date or, if after taking into account the Class A-1 Monthly
Principal applied in reduction of the Class A-1 Certificate Principal Balance
on such Distribution Date, the Class A-1 Certificate Principal Balance exceeds
the Group I Balance, the sum of the Class A-1 Required Coverage Amount for such
Distribution Date plus the amount by which the Class A-1 Certificate Principal
Balance, determined as provided above, exceeds the Group I Balance and (c) any
amounts payable to the Certificate Insurer on such Distribution Date pursuant
to clause first of subsection (A) of Section 5.01 after giving effect to any
other distributions to the Certificate Insurer on such Distribution Date in
respect thereof. With respect to any Distribution Date on which a Class A-1
Coverage Surplus exists, the Class A-2 Overflow Distribution shall be zero.
The Class A- 2 Overflow Distribution for any Distribution Date shall be
allocated for distribution to Class A-1A Certificateholders, Class A-1B
Certificateholders, Class A-1C Certificateholders, Class A-1D
Certificateholders and Class A-1E Certificateholders in accordance with Section
5.01.
Class A-2 Pass-Through Rate: With respect to the October 1996
Distribution Date, 5.77875% per annum. With respect to each Distribution Date
thereafter, a per annum rate equal to the lesser of (a) with respect to each
Distribution Date prior to the Clean-up Call Date, LIBOR plus 0.31% and with
respect to each Interest Period thereafter, LIBOR plus 0.62% and (b) the Group
II Rate Cap.
Class A-2 Principal Distribution Amount: As to any Distribution Date,
the Class A-2 Monthly Principal and the Class A-2 Excess Cash Distribution.
14
<PAGE> 20
Class A-2 Required Coverage Amount: With respect to the Class A-2
Certificates and any Distribution Date on which an Excess Spread Trigger has
not occurred, an amount equal to 5.75% of the aggregate Principal Balances of
the Mortgage Loans in Group II as of the Cut-off Date plus the amount of the
Group II Purchase Account Deposit (plus any Class A-2 Additional Required
Coverage Amount with respect to Subsequent Mortgage Loans in Group II), subject
to the following: (i) if the Step Up Trigger has occurred, the Class A-2
Required Coverage Amount for such Distribution Date will be an amount equal to
14.375% of the aggregate Principal Balances of the Mortgage Loans in Group II
as of such Distribution Date, plus the product of 50% and the aggregate
Principal Balances of all Mortgage Loans in Group II that are 90 or more days
delinquent as of such Distribution Date, such sum not to exceed an amount equal
25% of and the aggregate Principal Balances of all Mortgage Loans in Group II
as of such Distribution Date, or (ii) if the Step Up Trigger has not occurred
but the Step Down Trigger has occurred, the Class A-2 Required Coverage Amount
for such Distribution Date will be an amount equal to the greater of (a) 0.50%
of the aggregate of the Principal Balances of the Mortgage Loans in Group I as
of the Cut-off Date plus the amount of the Group II Purchase Account Deposit
and (b) lesser of (x) 5.75% of the aggregate Principal Balances of the Mortgage
Loans in Group II as of the Cut-off Date plus the amount of the Group II
Purchase Account Deposit (plus any Class A-2 Additional Required Coverage
Amount with respect to Subsequent Mortgage Loans in Group II) and (y) the Class
A-2 Stepped Down Required Coverage Percentage of the aggregate Principal
Balances of the Mortgage Loans in Group II as of such Distribution Date. With
respect to the Class A-2 Certificates and any Distribution Date on which an
Excess Spread Trigger has occurred, an amount equal to 8.25% of the aggregate
Principal Balances of the Mortgage Loans in Group II as of the Cut-off Date
plus the amount of the Group II Purchase Account Deposit, subject to the
following: (i) if the Step Up Trigger has occurred, the Class A-2 Required
Coverage Amount for such Distribution Date will be an amount equal to the
lesser of (x) 20.625% of the aggregate Principal Balances of the Mortgage Loans
in Group II as of such Distribution Date, plus the product of 50% of the
aggregate Principal Balances of all Mortgage Loans in Group II that are 90 or
more days delinquent as of such Distribution Date, and (y) 25% of the aggregate
Principal Balances of the Mortgage Loans in Group II as of such Distribution
Date, or (ii) if the Step Up Trigger has not occurred but the Step Down Trigger
has occurred, the Class A-2 Required Coverage Amount for such Distribution Date
will be an amount equal to the greater of (a) 0.50% of the aggregate of the
Principal Balances of the Mortgage Loans in Group II as of the Cut-off Date
plus the amount plus the amount of the Group II Purchase Account Deposit and
(b) the lesser of (x) 8.25% of the aggregate Principal Balances of the Mortgage
Loans in Group II as of the Cut-off Date plus the amount of the Group II
Purchase Account Deposit (plus any Class A-2 Additional Required Coverage
Amount with respect to Subsequent Mortgage Loans in Group II) and (y) the Class
A-2 Stepped Down Required Coverage Percentage (Excess Spread Trigger) of the
aggregate Principal Balances of the Mortgage Loans in Group II as of such
Distribution Date.
Class A-2 Stepped Down Required Coverage Percentage: With respect to
the Class A-2 Certificates and any Distribution Date for which the Step Down
Trigger for the Mortgage Loans in Group II has occurred, a percentage equal to
(i) the percentage equivalent of a fraction, the numerator of which is 5.75% of
the aggregate Principal Balances of the Mortgage Loans in Group II as of the
Cut-off Date plus the amount of the Group II Purchase Account Deposit, and the
denominator of which is the aggregate Principal Balances of the Mortgage Loans
in Group II as of such Distribution Date, minus (if the difference is a
positive figure) (ii) the percentage equivalent of a fraction, the numerator of
which is the product of (A) the percentage calculated under clause (i) above
minus 14.375%,
15
<PAGE> 21
multiplied by (B) the number of consecutive Distribution Dates through and
including the Distribution Date for which the Stepped Down Required Coverage
Percentage is being calculated, up to a maximum of 12, for which the Step Down
Trigger has occurred, and the denominator of which is 12.
Class A-2 Stepped Down Required Coverage Percentage (Excess Spread
Trigger): With respect to the Class A-2 Certificates and any Distribution Date
for which the Step Down Trigger for the Mortgage Loans in Group II has
occurred, a percentage equal to (A) the percentage equivalent of a fraction,
the numerator of which is 8.25% of the aggregate Principal Balances of the
Mortgage Loans in Group II as of the Cut-off Date plus the amount of the Group
II Purchase Account Deposit, and the denominator of which is the aggregate
Principal Balances of the Mortgage Loans in Group II as of such Distribution
Date, minus (if the result is a positive figure) (B) the product of the
percentage equivalent of a fraction, the numerator of which is the percentage
calculated under clause (A) above minus 20.625%, multiplied by (2) the number
of consecutive Distribution Dates through and including the Distribution Date
for which the Stepped Down Required Coverage Percentage is being calculated, up
to a maximum of 12, for which the Step Down Trigger has occurred, and the
denominator of which is 12.
Class R Certificate: Any one of the Certificates executed by the
Trustee on behalf of the Trust, not in its individual capacity, but solely as
Trustee, authenticated by the Trustee and in substantially the form set forth
in Exhibit B hereto.
Clean-up Call Date: The first Distribution Date on which the Pool
Balance is less than 10% of the sum of the Cut-off Date Pool Balance and the
Purchase Account Deposit.
Closing Date: September 17, 1996.
Closing Date Deposit: The aggregate amount deposited by the Seller in
the Collection Account on or prior to the Closing Date pursuant to Section
2.01, which amount is equal to the sum of (i) 30 days of interest on the
principal balance of each Mortgage Loan in Group I that is included in the
Trust as of the Cut-off Date and does not have a Monthly Mortgage Payment due
in the Collection Period relating to the October 1996 Distribution Date, at a
per annum rate equal to the Mortgage Loan Rate for each such Mortgage Loan, net
of the applicable Servicing Fee Rate and (ii) 30 days of interest on the
principal balance of each Mortgage Loan in Group II that is included in the
Trust as of the Cut-off Date and does not have a Monthly Mortgage Payment due
in the Collection Period relating to the October 1996 Distribution Date, at a
per annum rate equal to the Mortgage Loan Rate for each such Mortgage Loan, net
of the applicable Servicing Fee Rate.
Code: The Internal Revenue Code of 1986, as amended.
Collection Account: The segregated account, which shall at all times
be an Eligible Account, established and maintained pursuant to Section 3.02(a)
and entitled "[Servicer], in trust for the benefit of Holders of Aames Mortgage
Trust 1996-C Mortgage Pass-Through Certificates, Series 1996-C, Collection
Account". References herein to the Collection Account shall include any
Sub-Servicing Account as the context requires.
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<PAGE> 22
Collection Period: As to any Distribution Date, the period beginning
on the first day of the calendar month immediately preceding the month in which
such Distribution Date occurs and ending on the last day of such calendar
month.
Combined Loan-to-Value Ratio: With respect to a Mortgage Loan, the
ratio (expressed as a percentage) of (i) the sum of the Original Principal
Amount of such related Mortgage Loan plus the outstanding principal balance (at
the time of origination of such Mortgage Loan) of each mortgage loan secured by
the related Mortgaged Property that is senior to such Mortgage Loan to (ii) the
Appraised Value of the related Mortgaged Property determined by the Seller at
the time of origination of such Mortgage Loan.
Commitment Period: The period beginning on the Closing Date and
ending on the earlier of (a) the date on which the amount on deposit in the
Purchase Account is zero and (b) the close of business on October 14, 1996.
Company: Aames Capital Corporation, a California corporation.
Compensating Interest: As to any Distribution Date and Group I, an
amount equal to the lesser of (a) the Monthly Servicing Fee with respect to
Group I for the related Collection Period and (b) the difference between (i) 30
days' interest (at the related Mortgage Loan Rates, net of the Servicing Fee
Rate) on the Principal Balance of each Mortgage Loan in Group I as to which a
Principal Prepayment was received or was otherwise charged-off (before giving
effect to any reduction in the Principal Balance of such Mortgage Loan due to
such Principal Prepayment or charge-off) by the Servicer during the related
Collection Period and (ii) the amount of interest actually collected by the
Servicer for such Mortgage Loans in Group I during such Collection Period. As
to any Distribution Date and Group II, an amount equal to the lesser of (a) the
Monthly Servicing Fee with respect to Group II for the related Collection
Period and (b) the difference between (i) 30 days' interest (at the related
Mortgage Loan Rates, net of the Servicing Fee Rate) on the Principal Balance of
each Mortgage Loan in Group II as to which a Principal Prepayment was received
or was otherwise charged-off (before giving effect to any reduction in the
Principal Balance of such Mortgage Loan due to such Principal Prepayment or
charge-off) by the Servicer during the related Collection Period and (ii) the
amount of interest actually collected by the Servicer for such Mortgage Loans
in Group II during such Collection Period.
Corporate Trust Office: The principal office of the Trustee at which
at any particular time its corporate trust business with respect to this
Agreement shall be principally administered, which office at the date of the
execution of this Agreement is located at 3 Park Plaza, Irvine, California
92714 Attention: Aames Mortgage Loan Pass-Through Certificates, Series 1996-C.
Coverage Amount: With respect to the Class A-1 Certificates, the
Class A-1 Coverage Amount and with respect to the Class A-2 Certificates, the
Class A-2 Coverage Amount.
Coverage Deficit: With respect to the Class A-1 Certificates, the
Class A-1 Coverage Deficit and with respect to the Class A-2 Certificates, the
Class A-2 Coverage Deficit.
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<PAGE> 23
Coverage Surplus: With respect to the Class A-1 Certificates, the
Class A-1 Coverage Surplus and with respect to the Class A-2 Certificates, the
Class A-2 Coverage Surplus.
Cumulative Loss Rate Event: With respect to either Mortgage Loan
Group, any Distribution Date occurring during the periods indicated in the
following table on which the Loss Percentage for such Mortgage Loan Group
exceeds the indicated percentage:
<TABLE>
<CAPTION>
Distribution Dates
from and including to but excluding Loss Percentage
------------------ ---------------- ---------------
<S> <C> <C>
October 1996 October 1997 0.75%
October 1997 October 1998 1.25%
October 1998 October 1999 2.00%
October 1999 October 2000 2.75%
</TABLE>
and, with respect to any Distribution Date thereafter, any Distribution Date on
which the Loss Percentage for such Mortgage Loan Group exceeds 3.50%.
Cut-off Date: September 1, 1996.
Cut-off Date Pool Balance: The aggregate of the Cut-off Date
Principal Balances of the Mortgage Loans.
Cut-off Date Principal Balance: As to any Mortgage Loan, its
Principal Balance as of the close of business on the Cut-off Date.
Defective Mortgage Loan: Any Mortgage Loan that is required to be
repurchased or substituted by the Seller pursuant to Section 2.03 or 2.05.
Definitive Certificates: As defined in Section 6.02(e).
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced by
a Qualified Replacement Mortgage Loan.
Delinquency Percentage: As to any Distribution Date and either
Mortgage Loan Group, the percentage equivalent of the fraction obtained by
dividing (i) the aggregate of the Principal Balances of all Mortgage Loans in
such Mortgage Loan Group, as the case may be, that were then 90 days
contractually delinquent as of the end of the related Collection Period or were
either foreclosed upon or transferred pursuant to Section 3.06 during such
Collection Period, by (ii) the Pool Balance as of such Distribution Date.
Delinquency Rate Event: With respect to either Mortgage Loan Group,
any Distribution Date on which the Rolling Delinquency Percentage for such
Mortgage Loan Group equals or exceeds 17%.
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<PAGE> 24
Deposit Date: As to any Distribution Date, the third Business Day
prior to such Distribution Date.
Depository: The initial depository shall be The Depository Trust
Company, the nominee of which is Cede & Co. The Depository shall at all times
be a "clearing corporation" as defined in Section 8102(3) of the Uniform
Commercial Code of the State of California, as amended, or any successor
provisions thereto.
Depository Participant: A broker, dealer, bank or other financial
institution or other person for which, from time to time, the Depository
effects book-entry transfers and pledges of securities deposited with such
Depository.
Determination Date: As to any Distribution Date, the last day of the
calendar month immediately preceding the calendar month in which such
Distribution Date occurs.
Disqualified Organization: Any Person that is (i) the United States,
any state or any political subdivision thereof, any possession of the United
States, or any agency or instrumentality of any of the foregoing (other than an
instrumentality that is a corporation if all of its activities are subject to
tax and a majority of its board of directors is not selected by any such
governmental unit), (ii) a foreign government, international organization or
any agency or instrumentality of either of the foregoing (other than an
instrumentality that is a corporation if all of its activities are subject to
tax and a majority of its board of directors is not selected by any such
governmental unit), (iii) an organization (except certain farmers' cooperatives
described in Code Section 521) exempt from tax imposed by Chapter 1 of the Code
(including the tax imposed by Code Section 511 on unrelated business taxable
income) on any excess inclusions (as defined in Code Section 860E(c)(1)) with
respect to any Class R Certificate, (iv) rural electric and telephone
cooperatives described in Code Section 1381(a)(2)(C), and (v) any other Person
so designated by the Trustee based upon an Opinion of Counsel that the holding
of an ownership interest in a Class R Certificate by such Person may cause the
REMIC Pool or any Person having an ownership interest in any Class R
Certificate, other than such Person, to incur a liability for any tax imposed
under the Code that would not otherwise be imposed but for the transfer of an
ownership interest in a Class R Certificate to such Person. The terms "United
States", "state" and "international organization" shall have the meanings set
forth in Code Section 7701 or successor provisions.
Distribution Date: The 15th day of each month or, if such day is not
a Business Day, the Business Day immediately following such 15th day, beginning
October 15, 1996.
Eligible Account: Either (A) a segregated account or accounts
maintained with an institution the deposits of which are insured by the Bank
Insurance Fund or the Savings Association Insurance Fund of the FDIC, the
unsecured and uncollateralized debt obligations of which shall be rated "A" or
better by Standard & Poor's and "A2" or better by Moody's and in the highest
short term rating category by Standard & Poor's and Moody's, and that is either
(i) a federal savings and loan association duly organized, validly existing and
in good standing under the federal banking laws, (ii) an institution duly
organized, validly existing and in good standing under the applicable banking
laws of any state, (iii) a national banking association duly organized, validly
existing and in good standing under the
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<PAGE> 25
federal banking laws, (iv) a principal subsidiary of a bank holding company,
and (v) approved in writing by the Certificate Insurer or (B) a trust account
(which shall be a "special deposit account") maintained with the trust
department of a federal or state chartered depository institution or trust
company, having capital and surplus of not less than $50,000,000, acting in its
fiduciary capacity, the unsecured and uncollateralized debt obligations of
which shall be rated "Baa3" or better by Moody's. Any Eligible Accounts
maintained with the Trustee shall conform to the preceding clause (B).
ERISA: The Employee Retirement Income Security Act of 1974, as
amended.
ERISA Plan: Any Person that is an employee benefit plan within the
meaning of Section 3(3) of ERISA or any Person that is an individual retirement
account or employee benefit plan, trust or account subject to Section 4975 of
the Code.
ERISA Prohibited Holder: As defined in Section 6.02(c).
Event of Default: As defined in Section 8.01.
Excess Cash Distribution: With respect to the Class A-1 Certificates,
the Class A-1 Excess Cash Distribution and with respect to the Class A-2
Certificates, the Class A-2 Excess Cash Distribution.
Excess Spread Trigger: For any Distribution Date and with respect to
the Class A-2 Certificates, an Excess Spread Trigger will have occurred if the
Class A-2 Excess Cash for such Distribution Date is less than one-twelfth of
3.50% of the Class A-2 Certificate Principal Balance for such Distribution
Date.
FDIC: The Federal Deposit Insurance Corporation and its successors in
interest.
FEMA: The Federal Emergency Management Agency and its successors in
interest.
FHLMC: The Federal Home Loan Mortgage Corporation and its successors
in interest.
Final Maturity Date: The Final Maturity Date for each of the Classes
of Certificates are as set forth below:
<TABLE>
<CAPTION>
Final Maturity Date
-------------------
<S> <C>
Class A-1A September 15, 2011
Class A-1B February 15, 2022
Class A-1C December 15, 2023
Class A-1D September 15, 2025
Class A-1E January 15, 2029
Class A-2 January 15, 2029
Class R January 15, 2029
</TABLE>
FNMA: The Federal National Mortgage Association and its successors in
interest.
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<PAGE> 26
Foreign Person: A Person that is not a citizen or resident of the
United States, a corporation, partnership, or other entity created or organized
in or under the laws of the United States or any political subdivision thereof,
or an estate or trust the income of which is subject to United States federal
income taxation regardless of its source.
Gross Margin: With respect to an Adjustable Rate Mortgage Loan, the
fixed percentage amount set forth in the related Mortgage Note, which amount is
added to the Index in accordance with the terms of the related Mortgage Note to
determine the Mortgage Loan Rate.
Group Factor: As to any Distribution Date and each Mortgage Loan
Group, the percentage (carried to eight places, rounded down) obtained by
dividing the aggregate Principal Balances of the Mortgage Loans in the related
Mortgage Loan Group (after giving effect to any distribution of principal on
the related Certificates on such Distribution Date) by the sum of the aggregate
Principal Balances of the Mortgage Loans in the related Mortgage Loan Group as
of the Cut-off Date plus the Group I Purchase Account Deposit or the Group II
Purchase Account Deposit, as applicable.
Group I: The group of Mortgage Loans comprised of fixed rate mortgage
loans identified in the Mortgage Loan Schedule as having been assigned to Group
I and any Subsequent Mortgage Loans identified in a Subsequent Transfer
Agreement as having been assigned to Group I, including any Qualified
Replacement Mortgage Loans delivered in replacement thereof.
Group I Balance: As to the Distribution Date occurring in October
1996, the sum of the aggregate of the Principal Balances of the Mortgage Loans
in Group I as of the end of the related Collection Period plus the Group I
Purchase Account Deposit minus the sum of all Subsequent Purchase Price amounts
paid from the Group I Purchase Account Deposit as of the last day of such
Collection Period. As to any Distribution Date thereafter, the aggregate of
the Principal Balances of the Mortgage Loans in Group I as of the end of the
related Collection Period.
Group I Capitalized Interest Account Deposit: The amount deposited in
the Capitalized Interest Account for the benefit of the Class A- 1
Certificateholders, which amount is $169,138.56.
Group I Purchase Account Deposit: The amount deposited in the
Purchase Account that is allocated for the purchase of Subsequent Mortgage
Loans having fixed Mortgage Loan Rates to be included in Group I, which amount
is $30,138,045.19.
Group I Subsequent Purchase Price: With respect to any Subsequent
Mortgage Loan to be included in Group I, an amount (which in no event shall
exceed 100% of the Principal Balance of such Subsequent Mortgage Loan) equal to
the purchase price specified in Attachment A to the related Subsequent Transfer
Agreement for the related Subsequent Mortgage Loans.
Group II: The group of Mortgage Loans comprised of adjustable rate
mortgage loans identified in the Mortgage Loan Schedule as having been assigned
to Group II and any Subsequent Mortgage Loans identified in Subsequent Transfer
Agreement as having been assigned to Group II, including any Qualified
Replacement Mortgage Loans delivered in replacement thereof.
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<PAGE> 27
Group II Balance: As to the Distribution Date occurring in October
1996, the sum of the aggregate of the Principal Balances of the Mortgage Loans
in Group II as of the end of the related Collection Period plus the Group II
Purchase Account Deposit minus the sum of all Subsequent Purchase Price amounts
paid from the Group II Purchase Account Deposit as of the last day of the
related Collection Period. As to any Distribution Date thereafter, the
aggregate of the Principal Balances of the Mortgage Loans in Group II as of the
end of the related Collection Period.
Group II Capitalized Interest Account Deposit: The amount deposited
in the Capitalized Interest Account for the benefit of the Class A-2
Certificateholders, which amount is $283,656.79.
Group II Purchase Account Deposit: The amount deposited in the
Purchase Account that is allocated for the purchase of Subsequent Mortgage
Loans having adjustable Mortgage Loan Rates to be included in Group II, which
amount is $61,609,792.28.
Group II Rate Cap: With respect to any Distribution Date and the
Class A-2 Certificates, the per annum rate expressed as the percentage obtained
by (I) dividing (x) the amount of interest that accrued on the Mortgage Loans
in Group II in respect of the related Interest Period at the weighted average
of the related Mortgage Loan Rates applicable to Monthly Mortgage Payments due
on such Mortgage Loans during such Interest Period, reduced by the sum of (i)
the Monthly Servicing Fee with respect to the Mortgage Loans in Group II for
the related Collection Period, (ii) the Certificate Insurer Premium on the
Class A-2 Certificates for such Distribution Date, and (iii) in the case of
each Distribution Date occurring after the Distribution Date in March 1997, an
amount equal to 1/12 of 100 basis points multiplied by the aggregate Principal
Balance of the Mortgage Loans in Group II as of the first day of such Interest
Period, by (y) the product of (i) the Class A-2 Certificate Principal Balance
as of the first day of such Interest Period and (ii) the actual number of days
elapsed during such Interest Period divided by 360 and (II) multiplying the
result by 100.
Group II Subsequent Purchase Price: With respect to any Subsequent
Mortgage Loan to be included in Group II, an amount (which in no event shall
exceed 100% of the Principal Balance of such Subsequent Mortgage Loan) equal to
the purchase price specified in Attachment B to the related Subsequent Transfer
Agreement for the related Subsequent Mortgage Loan.
Index: With respect to any Adjustable Rate Mortgage Loan, the
applicable index for computing the Mortgage Loan Rate as specified in the
Mortgage Note.
Insurance and Indemnity Agreement: The Insurance and Indemnity
Agreement, dated as of September 1, 1996, between the Certificate Insurer and
the Company, a copy of which is attached hereto as Exhibit M.
Insurance Proceeds: With respect to any Distribution Date, proceeds
paid by any insurer (other than the Certificate Insurer) and received by the
Servicer during the related Collection Period pursuant to any insurance policy
covering a Mortgage Loan or the related Mortgaged Property, including any
deductible payable by the Servicer with respect to a blanket insurance policy
pursuant to Section 3.04 and the proceeds from any fidelity bond or errors and
omission policy pursuant to Section 3.12 (to the extent such payments
compensate for losses that would otherwise be payable to Certificateholders
22
<PAGE> 28
pursuant to this Agreement), net of any component thereof covering any expenses
incurred by or on behalf of the Servicer and specifically reimbursable under
this Agreement.
Insured Amount: With respect to the Class A-1 Certificates, the Class
A-1 Insured Amount and with respect to the Class A-2 Certificates, the Class
A-2 Insured Amount.
Insurer Premium Rate: With respect to Group I and each Collection
Period, 0.13%. With respect to Group II, for each Collection Period, 0.13%;
provided, however, that if on the Clean-up Call Date or any subsequent
Distribution Date the Class A-2 Coverage Amount is less than the Class A-2
Required Coverage Amount as of the immediately preceding Distribution Date, the
Insurer Premium Rate with respect to the Class A-2 Certificates shall be 0.63%.
Interest Period: With respect to any Class A-1B Certificate, Class
A-1C Certificate, Class A-1D Certificate or Class A-1E Certificate, the
calendar month preceding the month in which such Distribution Date occurs; with
respect to any Class A-1A Certificate or Class A-2 Certificate and the first
Interest Period, the period beginning on the Closing Date and ending on the day
preceding the Distribution Date in October 1996, and as to any subsequent
Distribution Date, the period beginning on the immediately preceding
Distribution Date and ending on the day prior to the related Distribution Date.
Interest Shortfall: As to any Distribution Date, the amount of any
Prepayment Interest Shortfall and Relief Act Shortfall for the related Mortgage
Loan Group.
Investment Company Act: The Investment Company Act of 1940, as
amended.
Junior Mortgage Loan: Any Mortgage Loan secured by a Mortgage with a
lien of other than first priority.
LIBOR: With respect to the October 1996 Distribution Date, 5.46875%
per annum. With respect to any subsequent Distribution Date, the per annum
rate determined by the Trustee on the related LIBOR Determination Date on the
basis of the offered rates of the Reference Banks for one-month U.S. dollar
deposits as such rates appear on the Reuters Screen LIBO Page as of 11:00 a.m.
(London time) on such LIBOR Determination Date. On each LIBOR Determination
Date, LIBOR will be established by the Trustee as follows:
(i) if on such LIBOR Determination Date two or more Reference
Banks provide such offered quotations, LIBOR shall be the
arithmetic mean (rounded upwards if necessary to the nearest
whole multiple of 0.0625%) of such offered quotations.
(ii) if on such LIBOR Determination Date, fewer than two Reference
Banks provide such offered quotations, LIBOR shall be the
greater of (x) LIBOR as determined on the previous LIBOR
Determination Date and (y) the Reserve Interest Rate.
LIBOR Determination Date: With respect to any Interest Period after
the first Interest Period, the second London Business Day immediately preceding
the first day of such Interest Period.
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Liquidated Mortgage Loan: As to any Distribution Date, any Mortgage
Loan as to which the Servicer has determined, in accordance with the servicing
procedures specified herein, during the related Collection Period that all
Liquidation Proceeds that it expects to recover from or on account of such
Mortgage Loan have been recovered.
Liquidation Expenses: Expenses that are incurred by the Servicer in
connection with the liquidation of any Mortgage Loan and not recovered under
any insurance policy or from any Mortgagor. Such expenses shall include,
without limitation, legal fees and expenses, real estate brokerage commissions,
any unreimbursed amount expended by the Servicer pursuant to Section 3.06
respecting the related Mortgage Loan (including, without limitation, amounts
voluntarily advanced to correct defaults on each mortgage loan that is senior
to such Mortgage Loan), any other related and previously unreimbursed Servicing
Advances and any related and previously unreimbursed Property Protection
Expenses.
Liquidation Proceeds: Cash (other than Insurance Proceeds) received
in connection with the liquidation of any Mortgaged Property, whether through
trustee's sale, foreclosure sale, condemnation, taking by eminent domain or
otherwise received in respect of any Mortgage Loan foreclosed upon as described
in Section 3.06 (including, without limitation, proceeds from the rental of the
related Mortgaged Property).
Liquidation Report: A liquidation report in the form of Exhibit J
attached hereto.
Loan-to-Value Ratio: The Original Principal Amount of a Mortgage Loan
as a percentage of the Appraised Value of the related Mortgaged Property
determined by the Seller at the time of origination of such Mortgage Loan.
London Business Day: A day on which banks are open for dealing in
foreign currency and exchange in London and New York City.
Loss Percentage: As to any Distribution Date and either Mortgage Loan
Group, the percentage equivalent of the fraction obtained by dividing (i) the
principal amount of cumulative Realized Losses on Mortgage Loans in such
Mortgage Loan Group from the Cut-off Date through the end of the related
Collection Period by (ii) the sum of the aggregate of the Principal Balances of
the Mortgage Loans in such Mortgage Loan Group as of the Cut-off Date and the
amount deposited in the Purchase Account with respect to such Mortgage Loan
Group on the Closing Date.
Maximum Rate: With respect to an Adjustable Rate Mortgage Loan, any
absolute maximum Mortgage Loan Rate set by provisions in the related Mortgage
Note.
Minimum Rate: With respect to an Adjustable Rate Mortgage Loan, any
absolute minimum Mortgage Loan Rate, set by provisions in the related Mortgage
Note, subject to the initial Mortgage Loan Rate first adjusting to a level in
excess of such minimum Mortgage Loan Rate in accordance with the terms of the
Mortgage Note.
Monthly Advance: As defined in Section 5.02(a).
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Monthly Mortgage Payment: With respect to any Mortgage Note, the
amount of each monthly payment (other than any final balloon payment) payable
under such Mortgage Note in accordance with its terms, including one month's
accrued interest on the related Principal Balance at the then applicable
Mortgage Loan Rate but net of any portion of such monthly payment that
represents late payment charges, prepayment or extension fees or collections
allocable to payments to be made by Mortgagors for payment of insurance
premiums or similar items.
Monthly Servicing Fee: With respect to any Collection Period and
Group I, 1/12 of the product of the Servicing Fee Rate and the aggregate
Principal Balances of the Mortgage Loans in Group I as of the close of business
on the Determination Date occurring in the preceding month (or, in the case of
the first Collection Period, the Original Group I Balance). With respect to
any Collection Period and Group II, 1/12 of the product of the Servicing Fee
Rate and the aggregate Principal Balance of the Mortgage Loans in Group II as
of the close of business on the Determination Date occurring in the preceding
month (or, in the case of the first Collection Period, the Original Group II
Balance). The Monthly Servicing Fee shall be payable on the following Deposit
Date to the Servicer as servicing compensation hereunder pursuant to Section
3.08.
Moody's: Moody's Investors Service, Inc. and its successors in
interest.
Mortgage: The mortgage, deed of trust or other instrument creating a
first, second or third lien on an estate in fee simple in real property
securing a Mortgage Loan.
Mortgage File: The mortgage documents listed in Section 2.01
pertaining to a particular Mortgage Loan and any additional documents required
to be added to such Mortgage File pursuant to this Agreement.
Mortgage Loan: Each of the Mortgage Loans transferred and assigned to
the Trustee pursuant to Section 2.01 or 2.02 that from time to time comprise
part of the Trust, the Mortgage Loans originally so held being identified in
the Mortgage Loan Schedule attached hereto as Exhibit F.
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.
Mortgage Loan Rate: With respect to any Adjustable Rate Mortgage
Loan, the per annum rate of interest computed in accordance with the provisions
of the related Mortgage Note as the sum of the Index and the Gross Margin,
subject to any Minimum Rate, the Maximum Rate or periodic limitation on
adjustments to such rate applicable from time to time to the calculation of
interest thereon. As to any other Mortgage Loan, the fixed per annum rate of
interest applicable to the calculation of interest thereon specified in the
related Mortgage Note.
Mortgage Loan Schedule: As of any date, the schedule of Mortgage
Loans separated by Mortgage Loan Group. The initial schedule of Mortgage Loans
as of the Cut-off Date is attached hereto as Exhibit F and sets forth as to
each such Mortgage Loan, among other things, (a) its
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identifying number and the name of the related Mortgagor; (b) the street
address of the related Mortgaged Property including the state, county and zip
code; (c) its date of origination; (d) the original number of months to stated
maturity; (e) its original stated maturity; (f) its Original Principal Amount;
(g) its Cut-off Date Principal Balance; (h) the related Mortgage Loan Rate as
of the Cut-off Date and, with respect to any Adjustable Rate Mortgage Loan, the
related Index, Gross Margin, Minimum Rate, Maximum Rate and any periodic
limitations on adjustment; (i) the scheduled monthly payment of principal and
interest; (j) the date in each month on which the related Monthly Mortgage
Payments are due; (k) its Combined Loan-to-Value Ratio or the ratio, expressed
as a percentage, of the Original Principal Amount of such Mortgage Loan to the
Appraised Value of the related Mortgaged Property, as applicable; (l) the lien
status of the related Mortgage and, with respect to any Junior Mortgage Loan,
the principal amount (as of the date of origination) of all related Senior
Liens; (m) whether the related Mortgaged Property is owner-occupied or
non-owner-occupied; (n) whether the related Mortgaged Property is a
single-family residence, a two- to four-family residence or a unit in a
condominium or planned unit development; (o) whether the Mortgage Loan has been
originated by an Affiliate of the Company; and (p) whether the Mortgage Loan is
being serviced by a Sub-Servicer and, if so, the identity of such Sub-Servicer.
The Mortgage Loan Schedule shall be amended on each Subsequent Transfer Date to
reflect the addition of the related Subsequent Mortgage Loans to the Trust.
Mortgage Note: The note or other instrument evidencing the
indebtedness of a Mortgagor under the related Mortgage Loan.
Mortgaged Property: The underlying property securing a Mortgage Loan.
Mortgagor: The obligor under a Mortgage Note.
Net Liquidation Proceeds: As to any Mortgage Loan, Liquidation
Proceeds net of Liquidation Expenses. For all purposes of this Agreement, Net
Liquidation Proceeds shall be allocated first to accrued and unpaid interest on
the related Mortgage Loan and then to the Principal Balance thereof.
Non-permitted Foreign Holder: As defined in Section 6.02(c).
Nonrecoverable Advance: Any Servicing Advance that, in the Servicer's
reasonable judgment, would not be ultimately recoverable by the Servicer from
late collections, Insurance Proceeds or Liquidation Proceeds on the related
Mortgage Loan or otherwise, as evidenced by an Officer's Certificate delivered
to the Certificate Insurer and the Trustee no later than the Business Day
following the Servicer's determination thereof.
Notice of Claim: The notice required to be furnished by the Trustee
to the Certificate Insurer in the event an Insured Amount is required to be
paid under the Certificate Insurance Policy with respect to any Distribution
Date, in the form set forth as Exhibit E hereto. The Notice of Claim shall
specify separately the Class A-1 Insured Amount and the Class A-2 Insured
Amount, as applicable.
Officer's Certificate: A certificate signed by the Chairman of the
Board, the Vice Chairman of the Board, the President or a Vice President of the
Seller or the Servicer, as the case may be, and delivered to the Trustee,
Certificate Insurer or each Rating Agency, as the case may be.
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Opinion of Counsel: A written opinion of counsel reasonably
acceptable to the Trustee and, in the case of opinions delivered to Certificate
Insurer, reasonably acceptable to it, who may be in-house counsel for the
Seller or the Servicer (except with respect to any opinion with respect to or
concerning the REMIC status of the Trust). Any expense related to obtaining an
Opinion of Counsel for an action requested by a party shall be borne by the
party required to obtain such opinion or seeking to effect the action that
requires the delivery of such Opinion of Counsel.
Original Class A Certificate Principal Balance: $525,000,000.00.
Original Class A-1 Certificate Principal Balance: $175,000,000.00.
Original Class A-1A Certificate Principal Balance: $69,200,000.00.
Original Class A-1B Certificate Principal Balance: $54,800,000.00.
Original Class A-1C Certificate Principal Balance: $17,450,000.00.
Original Class A-1D Certificate Principal Balance: $19,900,000.00.
Original Class A-1E Certificate Principal Balance: $13,650,000.00.
Original Class A-2 Certificate Principal Balance: $350,000,000.00.
Original Group I Balance: $144,861,954.81.
Original Group II Balance: $290,149,001.69.
Original Pool Balance: $435,010,956.50.
Original Principal Amount: With respect to any Mortgage Loan, the
original principal amount due under the related Mortgage Note as of its date of
origination.
Overflow Distribution: With respect to the Class A-1 Certificates,
the Class A-2 Overflow Distribution, and with respect to the Class A-2
Certificates, the Class A-1 Overflow Distribution.
Payment Ahead: Any payment of one or more Monthly Mortgage Payments
remitted by a Mortgagor with respect to a Mortgage Note in excess of the
Monthly Mortgage Payment due during such Collection Period with respect to such
Mortgage Note, which sums the related Mortgagor has instructed the Servicer to
apply to Monthly Mortgage Payments due in one or more subsequent Collection
Periods. A Monthly Mortgage Payment that was a Payment Ahead shall, for
purposes of computing certain amounts under this Agreement, be deemed to have
been received by the Servicer on the date in the related Collection Period on
which such Monthly Mortgage Payment would have been due if such Monthly
Mortgage Payment was not a Payment Ahead.
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Payoff Notice: The certification delivered by the Servicer in
connection with any payment in full of the outstanding principal balance of a
Mortgage Loan pursuant to Section 3.07, to be substantially in the form of
Exhibit I.
Percentage Interest: With respect to a Class A Certificate, the
undivided percentage interest (carried to eight places, rounded down) obtained
by dividing the original principal balance of such Certificate by the Original
Class A-1A Certificate Principal Balance, Original Class A-1B Certificate
Principal Balance, Original Class A-1C Certificate Principal Balance, Original
Class A-1D Certificate Principal Balance, Original Class A-1E Certificate
Principal Balance or Original Class A-2 Certificate Principal Balance, as
applicable, and multiplying the result by 100. When used with respect to the
Class A-1 Certificates, the undivided percentage interest (carried to eight
places, rounded down) obtained by dividing the original principal balance of
such Certificate by the Original Class A-1 Certificate Principal Balance and
multiplying the result by 100. With respect to a Class R Certificate, the
undivided percentage interest set forth on the face of such Class R
Certificate, which in the aggregate shall not exceed 100%.
Permitted Investments: One or more of the following obligations,
instruments and securities:
(a) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and
interest by, the United States or any agency or instrumentality
thereof, provided such obligations are backed by the full faith and
credit of the United States;
(b) Federal Housing Administration debentures, FHLMC senior
debt obligations and FNMA senior debt obligations, but excluding any
of such securities whose terms do not provide for payment of a fixed
dollar amount upon maturity or call for redemption or that are not
rated in one of the two highest rating categories by each Rating
Agency;
(c) federal funds, certificates of deposit, time and demand
deposits and banker's acceptances (in each case having original
maturities of not more than 365 days) of any bank or trust company
incorporated under the laws of the United States or any state thereof,
provided that the short-term debt obligations of such bank or trust
company at the date of acquisition thereof have been rated "A-1" or
better by Standard & Poor's and Prime-1 or better by Moody's;
(d) deposits of any bank or savings and loan association that
has combined capital, surplus and undivided profits of at least
$100,000,000 which deposits are held up to the applicable limits
insured by the Bank Insurance Fund or the Savings Association
Insurance Fund of the FDIC;
(e) commercial paper (having original maturities of not more
than 180 days) that has the highest short term rating of each of
Standard & Poor's and Moody's;
(f) investments in money market funds rated "AAAm" or
"AAAm-G" by Standard & Poor's and Aaa by Moody's; and
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(g) investments approved in writing by Standard & Poor's, the
Certificate Insurer and Moody's;
provided that no investment described hereunder shall evidence either the right
to receive (i) only interest with respect to obligations underlying such
instrument or (ii) both principal and interest payments derived from
obligations underlying such instrument and the principal and interest payments
with respect to such instrument provided a yield to maturity at par greater
than 120% of the yield to maturity of the underlying obligations; and provided,
further, that no instrument described hereunder may be purchased at a price
greater than par if such instrument may be prepaid or called at a price less
than its purchase price prior to stated maturity. Permitted Investments shall
mature not later than the Business Day prior to the date on which such monies
will be needed to make payments, or in the case of Permitted Investments held
in the Purchase Account, shall be available on the Business Day next succeeding
the date the Trustee receives the Addition Notice that such monies will be
needed. Notwithstanding the foregoing, with respect to investment of amounts
in any account, any of the foregoing obligations, instruments or securities
will not be Permitted Investments to the extent that an investment therein will
cause the then outstanding principal amount thereof in which such funds are
then invested to exceed $25,000,000 (such investments being valued at par).
Person: Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
Policy Payments Account: The segregated account, which shall be an
Eligible Account, established and maintained pursuant to Section 3.18(a) and
entitled "Bankers Trust Company of California, N.A., as Trustee for Aames
Mortgage Trust 1996-C Mortgage Pass-Through Certificates, Series 1996-C, Policy
Payments Account".
Pool Balance: As to any Distribution Date, the sum of the Group I
Balance and Group II Balance.
Preference Amount: With respect to any Distribution Date and the
Class A-1 Certificates, any amounts included in previous distributions (i) to
Class A-1A Certificateholders as Class A-1A Monthly Interest, Class A-1 Monthly
Principal, Class A-1 Excess Cash Distribution and Class A-2 Overflow
Distribution, (ii) to Class A-1B Certificateholders as Class A-1B Monthly
Interest, Class A-1 Monthly Principal, Class A-1 Excess Cash Distribution and
Class A-2 Overflow Distribution, (iii) to Class A-1C Certificateholders, as
Class A-1C Monthly Interest, Class A-1 Monthly Principal, Class A-1 Excess Cash
Distribution and Class A-2 Overflow Distribution, (iv) to Class A-1D
Certificateholders as Class A-1D Monthly Interest, Class A-1 Monthly Principal,
Class A-1 Excess Cash Distribution and Class A-2 Overflow Distribution and (v)
to Class A-1E Certificateholders, as Class A-1E Monthly Interest, Class A-1
Monthly Principal, Class A-1 Excess Cash Distribution and Class A-2 Overflow
Distribution, Class A-1 Monthly Principal, Class A-1 Excess Cash Distribution
and Class A-2 Overflow Distribution, or any amounts in respect of any Class A-1
Coverage Deficit that are recovered from any Class A-1 Certificateholders as a
voidable preference by a trustee in bankruptcy pursuant to the United States
Bankruptcy Code in accordance
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with a final, nonappealable order of a court having competent jurisdiction and
that have not theretofore been repaid to such Class A-1A Certificateholders,
Class A-1B Certificateholders, Class A-1C Certificateholders, Class A-1D
Certificateholders and Class A-1E Certificateholders, as applicable, provided
such Class A-1A Certificateholders, Class A-1B Certificateholders, Class A-1C
Certificateholders, Class A-1D Certificateholders and/or Class A-1E
Certificateholders have complied with the provisions of Section 3.18(b). With
respect to any Distribution Date and the Class A-2 Certificates, any amounts
included in previous distributions to Class A-2 Certificateholders as Class A-2
Monthly Interest, Class A-2 Monthly Principal, Class A-2 Excess Cash
Distribution and Class A-1 Overflow Distribution or in respect of a Class A-2
Coverage Deficit that are recovered from such Class A-2 Certificateholders as a
voidable preference by a trustee in bankruptcy pursuant to the United States
Bankruptcy Code in accordance with a final, nonappealable order of a court
having competent jurisdiction and that have not theretofore been repaid to such
Class A-2 Certificateholders provided such Class A-2 Certificateholders have
complied with the provisions of Section 3.18(b).
Prepayment Interest Shortfall: As to any Distribution Date and the
Group I Mortgage Loans, the amount, if any, by which the amount described in
clause (b) of the first sentence of the definition of Compensating Interest for
such Distribution Date exceeds the Monthly Servicing Fee for the Group I
Mortgage Loans in the related Collection Period. As to any Distribution Date
and the Group II Mortgage Loans, the amount, if any, by which the amount
described in clause (b) of the second sentence of the definition of
Compensating Interest for such Distribution Date exceeds the Monthly Servicing
Fee for the Group II Mortgage Loans in the related Collection Period.
Principal Balance: As to any Mortgage Loan and any Determination
Date, the actual outstanding principal amount thereof as of the close of
business on the Determination Date in the preceding month (or, in the case of
the first Determination Date, as of the Cut-off Date) less (i) any Principal
Payments received in respect of such Mortgage Loan during the related
Collection Period, (ii) Net Liquidation Proceeds and Trust Insurance Proceeds
allocable to principal recovered or collected in respect of such Mortgage Loan
during the related Collection Period, (iii) the portion of the Purchase Price
allocable to principal to be remitted by the Seller or the Servicer to the
Trustee on the next succeeding Deposit Date in connection with a purchase or
repurchase of such Mortgage Loan pursuant to Section 2.03, 2.05, 2.09, 3.01,
3.06 or 10.01, to the extent such amount is actually received by the Trustee on
such Deposit Date, (iv) the amount to be remitted by the Seller to the Trustee
on the next succeeding Deposit Date in connection with a substitution of a
Qualified Replacement Mortgage Loan for such Mortgage Loan pursuant to Section
2.03 or 2.05, to the extent such amount is actually received by the Trustee on
such Deposit Date and (v) the amount to be remitted by the Certificate Insurer
to the Trustee on the next succeeding Deposit Date in connection with a
purchase of such Mortgage Loan pursuant to Section 10.01; provided, however
that a Mortgage Loan that has become a Liquidated Mortgage Loan since the
preceding Determination Date (or, in the case of the first Determination Date,
since the Cut-off Date) will be deemed to have a Principal Balance of zero on
the current Determination Date.
Principal Payment: As to any Mortgage Loan and Collection Period, all
amounts received or, in the case of the principal portion of any Payment Ahead,
deemed to have been received by the Servicer from or on behalf of the related
Mortgagor during such Collection Period (including
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Principal Prepayments) that, at the time of receipt or, in the case of any
Payment Ahead, at the time such Payment Ahead is deemed to have been received,
were applied or were required to be applied by the Servicer in reduction of the
Principal Balance of such Mortgage Loan.
Principal Prepayment: As to any Mortgage Loan and Collection Period,
any payment by a Mortgagor or other recovery in respect of principal on a
Mortgage Loan (including Net Liquidation Proceeds) that, in the case of a
payment by a Mortgagor, is received in advance of its scheduled due date and is
not a Payment Ahead.
Property Protection Expenses: Expenses (exclusive of overhead
expenses) reasonably paid or incurred by or for the account of the Servicer in
connection with the preservation or protection of a Mortgaged Property or the
security of a Mortgaged Property, including (a) hazard insurance policy
premiums, (b) real estate taxes and property repair, replacement, protection
and preservation expenses, (c) amounts expended to cure or prevent any default
with respect to any mortgage loan senior to the related Mortgage Loan and (d)
similar expenses reasonably paid or incurred to preserve or protect the value
of such Mortgaged Property or security (including but not limited to reasonable
legal fees and expenses).
Purchase Account: The segregated account, which shall be an Eligible
Account, established and maintained pursuant to Section 3.16 and entitled
"Bankers Trust Company of California, N.A., as Trustee for Aames Mortgage Trust
1996-C Mortgage Pass-Through Certificates, Series 1996-C, Purchase Account".
Purchase Account Deposit: $91,747,837.
Purchase Price: With respect to (a) any Defective Mortgage Loan or
(b) any Mortgage Loan to be purchased by the Servicer pursuant to Section 3.01
or Section 3.06, an amount equal to (i) the sum of (A) the Principal Balance of
such Mortgage Loan or Defective Mortgage Loan, as the case may be, as of the
beginning of the Collection Period next preceding the Deposit Date on which
such repurchase or purchase is required to occur, (B) interest computed at the
applicable Mortgage Loan Rate on such Principal Balance from the date to which
interest was last paid by the Mortgagor to the end of the Collection Period
immediately preceding the Deposit Date on which such repurchase or purchase
occurs and (C) any previously unreimbursed Servicing Advances made on or in
respect of such Defective Mortgage Loan or Mortgage Loan, as the case may be,
less (ii) any payments of principal and interest in respect of such Defective
Mortgage Loan or Mortgage Loan, as the case may be, made by or on behalf of the
related Mortgagor during such Collection Period.
Qualified Replacement Mortgage Loan: A Mortgage Loan that is
substituted for a Deleted Mortgage Loan pursuant to Section 2.03 or Section
2.05 that must, at the end of the Collection Period preceding the date of such
substitution, (i) have an outstanding principal balance (when taken together
with any other Qualified Replacement Mortgage Loan being substituted for such
Deleted Mortgage Loan), not in excess of and not substantially less than the
unpaid principal balance of the Deleted Mortgage Loan at the end of the
Collection Period preceding the date of substitution, (ii) if the Deleted
Mortgage Loan is an Adjustable Rate Mortgage Loan, have the Mortgage Loan Rate
computed on substantially the same basis as the Mortgage Loan Rate on the
related Mortgage Loan,
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utilizing the same Index and having a Gross Margin or Minimum Rate not less
than (and not more than one percentage point in excess of) the Gross Margin and
Minimum Rate applicable to the Deleted Mortgage Loan and if the Deleted
Mortgage Loan is not an Adjustable Rate Mortgage Loan, have a Mortgage Loan
Rate not less than (and not more than one percentage point in excess of) the
Mortgage Loan Rate of the Deleted Mortgage Loan, (iii) have a remaining term to
maturity not greater than (and not more than one year less than) that of the
Deleted Mortgage Loan, (iv) have a Combined Loan-to-Value Ratio equal to or
lower than the Combined Loan-to-Value Ratio of the Deleted Mortgage Loan, (v)
satisfy the criteria set forth from time to time in the definition "qualified
replacement mortgage" at Section 860G(a)(4) of the Code, (vi) have the same or
a superior lien priority as the Deleted Mortgage Loan, (vii) comply as of the
date of substitution with each representation and warranty set forth in Section
2.05, (viii) have the same or better property type as the Deleted Mortgage Loan
and (ix) have the same or better occupancy status. In the event that one or
more mortgage loans are proposed to be substituted for one or more Deleted
Mortgage Loans, the foregoing tests may be met on a weighted average basis or
other aggregate basis acceptable to the Certificate Insurer, except that the
requirements of clauses (v), (vi), (vii), (viii) and (ix) hereof must be
satisfied as to each Qualified Replacement Mortgage Loan.
Rating Agencies: Standard & Poor's and Moody's (each, a "Rating
Agency"). If either such agency or a successor is no longer in existence,
"Rating Agency" shall be such nationally recognized statistical credit rating
agency, or other comparable Person, designated by the Servicer, notice of which
designation shall be given to the Trustee.
Realized Loss: With respect to any Liquidated Mortgage Loan, the
amount, if any, by which the Principal Balance of such Mortgage Loan and
accrued and unpaid interest thereon (determined as of the Determination Date
immediately prior to such Mortgage Loan becoming a Liquidated Mortgage Loan)
exceeds the Net Liquidation Proceeds, if any, in respect of such Mortgage Loan,
which amount shall in no event exceed the Principal Balance of such Mortgage
Loan (determined as of the Determination Date immediately prior to such
Mortgage Loan becoming a Liquidated Mortgage Loan).
Record Date: As to any Distribution Date, the close of business, if
applicable, on the last Business Day of the calendar month immediately
preceding such Distribution Date.
Reference Banks: Bankers Trust Company, Barclay's Bank PLC and
National Westminster Bank PLC; provided that, if any of the foregoing banks are
deemed by the Servicer (as indicated in writing to the Trustee) not suitable to
serve as a Reference Bank, then any leading banks selected by the Trustee and
engaged in transactions in Eurodollar deposits in the international
Eurocurrency market (i) with an established place of business in London, (ii)
whose quotations appear on the Reuters Screen LIBO Page on the LIBOR
Determination Date in question, (iii) that have been designated as such by the
Trustee and (iv) not controlling, controlled by, or under common control with
the Company or any originator.
Relief Act: The Soldiers' and Sailors' Civil Relief Act of 1940, as
amended.
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Relief Act Shortfall: As to any Distribution Date and Group I, the
amount of any reduction of interest collectible on any Mortgage Loan in Group I
for the related Collection Period due to the application of the Relief Act. As
to any Distribution Date and Group II, the amount of any reduction of interest
collectible on any Mortgage Loan in Group II for the related Collection Period
due to the application of the Relief Act.
REMIC: A "real estate mortgage investment conduit" as defined in Code
Section 860D.
REMIC Pool: The assets of the Trust other than the Purchase Account
and the Capitalized Interest Account.
REMIC Provisions: Provisions of the federal income tax law relating
to REMICs that appear at Sections 860A through 860G of Part IV of Subchapter M
of Chapter 1 of Subtitle A of the Code, and related provisions, and U.S.
Department of the Treasury proposed, temporary or final regulations and rulings
promulgated thereunder, as the foregoing may be in effect from time to time.
REO Property: As defined in Section 5.02(a).
Required Coverage Amount: With respect to the Class A-1 Certificates,
the Class A-1 Required Coverage Amount and with respect to the Class A-2
Certificates, the Class A-2 Required Coverage Amount.
Reserve Interest Rate: With respect to any LIBOR Determination Date,
the rate per annum that the Trustee determines to be either (i) the arithmetic
mean (rounded upwards if necessary to the nearest whole multiple of 0.0625%) of
the one-month U.S. dollar lending rates that New York City banks selected by
the Trustee are quoting on the relevant LIBOR Determination Date to the
principal London offices of leading banks in the London interbank market or
(ii) in the event that the Trustee can determine no such arithmetic mean, the
lowest one-month U.S. dollar lending rate that New York City banks selected by
the Trustee are quoting on such LIBOR Determination Dates to leading European
banks.
Responsible Officer: When used with respect to the Trustee, the
Chairman or Vice Chairman of the Board of Directors or Trustees, the Chairman
or Vice Chairman of the Executive or Standing Committee of the Board of
Directors or Trustees, the President, the Chairman of the Committee on Trust
Matters, any Vice President, the Secretary, any Assistant Secretary, the
Treasurer, any Assistant Treasurer, the Cashier, any Assistant Cashier, any
Trust Officer or Assistant Trust Officer, the Controller and any Assistant
Controller or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated officers and to whom,
with respect to a particular matter, such matter is referred because of such
officer's knowledge of and familiarity with the particular subject.
Rolling Delinquency Percentage: For any Distribution Date and either
Mortgage Loan Group, the average of the Delinquency Percentages for such
Mortgage Loan Group as of the last day of each of the six (or one, two, three,
four and five in the case of the first five Distribution Dates, as applicable)
most recently ended Collection Periods.
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Rolling Loss Percentage: For any Distribution Date and either
Mortgage Loan Group, the percentage equivalent of a fraction, the numerator of
which is the aggregate amount of Realized Losses incurred with respect to such
Mortgage Loan Group during the preceding 12 Collection Periods, and the
denominator of which is the aggregate Principal Balances of the Mortgage Loans
in such Mortgage Loan Group as of the first day of the 12th preceding
Collection Period.
Rolling Loss Rate Event: With respect to either Mortgage Loan Group,
any Distribution Date on or after November 15, 1997 on which the Rolling Loss
Percentage for such Mortgage Loan Group exceeds 1.25%.
Scheduled Delinquent Mortgage Loans: The Mortgage Loans identified on
Schedule III hereto.
Securities Act: The Securities Act of 1933, as amended.
Seller: The Company.
Senior Lien: With respect to any Junior Mortgage Loan, any liens on
the related Mortgaged Property of higher priority.
Servicer: The Company or any successor servicer appointed as provided
pursuant to this Agreement.
Servicer Remittance Report: The monthly report prepared by the
Servicer and delivered to the Trustee pursuant to Section 4.01.
Servicing Advances: All reasonable and customary "out-of-pocket"
costs and expenses incurred in the performance by the Servicer of its servicing
obligation, including, but not limited to, the cost of (i) the preservation,
restoration and protection of the Mortgaged Property, including without
limitation advances in respect of real estate taxes and assessments and
insurance premiums on fire, hazard and, if applicable, flood insurance
policies, (ii) any enforcement or judicial proceedings, including foreclosures,
(iii) the management and liquidation of any REO Property, (iv) compliance with
the obligations under Section 3.04 and (v) expenditures relating to the
correction of a default on any Senior Lien pursuant to Section 3.06 in
connection with the liquidation of a Mortgage Loan.
Servicing Fee Rate: With respect to each Mortgage Loan Group and each
Collection Period, 0.50%.
Servicing Officer: Any officer of the Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name and specimen signature appear on a list of servicing officers annexed to
an Officer's Certificate furnished to the Trustee by the Servicer, as such list
may from time to time be amended.
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Standard & Poor's: Standard & Poor's, a division of The McGraw-Hill
Companies, Inc., and its successors in interest.
Startup Day: As defined in Section 2.07.
Statement to Certificateholders: As defined in Section 5.03.
Step Down Cumulative Loss Test: With respect to any Distribution Date
and either Mortgage Loan Group, a determination as to whether: (i) for the
Distribution Dates occurring in November 1998 through and including September
1999, the Loss Percentage for such Mortgage Loan Group and Distribution Date is
0.75% or less, (ii) for the Distribution Dates occurring in October 1999
through and including September 2000, the Loss Percentage for such Mortgage
Loan Group and such Distribution Date is 1.25% or less, (iii) for the
Distribution Dates occurring in October 2000 through and including September
2001, the Loss Percentage for such Mortgage Loan Group and such Distribution
Date is 1.50% or less and (iv) for any Distribution Date occurring in or after
October 2001, the Loss Percentage for such Mortgage Loan Group and such
Distribution Date is 1.75% or less.
Step Down Rolling Delinquency Test: With respect to any Distribution
Date and either Mortgage Loan Group, a determination as to whether the Rolling
Delinquency Percentage for such Distribution Date and such Mortgage Loan Group
is less than 12.50%.
Step Down Rolling Loss Test: With respect to any Distribution Date
occurring after September 1997 and either Mortgage Loan Group, a determination
as to whether the Rolling Loss Percentage for such Distribution Date and such
Mortgage Loan Group is less than 0.50%. With respect to any Distribution Date
occurring in or prior to September 1997 and any Mortgage Loan Group, a
determination as to whether the Rolling Loss Percentage for such Mortgage Loan
Group and Distribution Date is less than 0.75%.
Step Down Trigger: With respect to any Distribution Date after the
Distribution Date in October 1998 and either Mortgage Loan Group, the Step Down
Trigger will have occurred if each of the Step Down Cumulative Loss Test, the
Step Down Rolling Delinquency Test and the Step Down Rolling Loss Test for such
Mortgage Loan Group is met. In no event with the Step Down Trigger be deemed
to have occurred on or prior to the October 1998 Distribution Date.
Step Up Cumulative Loss Test: With respect to any Distribution Date
and either Mortgage Loan Group, a determination as to whether: (i) for any
Distribution Date occurring in or prior to September 1999, the Loss Percentage
for such Distribution Date and such Mortgage Loan Group is more than 0.75%,
(ii) for any Distribution Date occurring in or prior to September 1998, the
Loss Percentage for such Distribution Date and such Mortgage Loan Group is more
than 1.00%, (iii) for any Distribution Date occurring in or prior to September
1999, the Loss Percentage for such Distribution Date and such Mortgage Loan
Group is more than 1.25%, (iv) for any Distribution Date occurring in or prior
to September 2000, the Loss Percentage for such Distribution Date and Mortgage
Loan Group is more than 1.50% and (v) for any Distribution Date occurring in or
after
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October 2000, the Loss Percentage for such Distribution Date and Mortgage Loan
Group is more than 2.00%.
Step Up Rolling Delinquency Test: With respect to any Distribution
Date and either Mortgage Loan Group, a determination as to whether the Rolling
Delinquency Percentage for such Distribution Date and such Mortgage Loan Group
is more than 14.75%.
Step Up Rolling Loss Test: With respect to any Distribution Date and
either Mortgage Loan Group, a determination as to whether the Rolling Loss
Percentage for such Distribution Date and such Mortgage Loan Group is 1.00% or
more.
Step Up Trigger: With respect to any Distribution Date and either
Mortgage Loan Group, the Step Up Trigger will have occurred if any one of the
Step Up Cumulative Loss Test, the Step Up Rolling Delinquency Test or the Step
Up Rolling Loss Test is met with respect to such Mortgage Loan Group.
Sub-Servicer: Any Person, including an Affiliate of the Servicer,
with whom the Servicer has entered into a Sub-Servicing Agreement and who
satisfies the requirements set forth in Section 3.15 hereof in respect of the
qualification of a Sub-Servicer. The Sub-Servicers with respect to any of the
Mortgage Loans as of the Cut-off Date are listed on Schedule I attached to this
Agreement.
Sub-Servicing Account: Any segregated account, which shall at all
times be an Eligible Account, established and maintained pursuant to Section
3.02(b) and entitled "[Sub-Servicer], in trust for the benefit of Holders of
Aames Mortgage Trust 1996-C Mortgage Pass-Through Certificates, Series 1996-C,
Collection Account". References herein to the Collection Account shall include
any Sub-Servicing Account as the context requires.
Sub-Servicing Agreement: A written contract between the Servicer and
any Sub-Servicer relating to the servicing and/or administration of certain
Mortgage Loans.
Subsequent Cut-off Date: With respect to any Subsequent Mortgage
Loan, the date specified as such in the related Subsequent Mortgage Loan
Schedule.
Subsequent Cut-off Date Principal Balance: As to any Subsequent
Mortgage Loan, the actual outstanding principal balance due thereunder from the
Mortgagor in the related Addition Notice.
Subsequent Mortgage Loan: A Mortgage Loan sold to the Trust pursuant
to Section 2.02 of this Agreement, which shall be listed on the Subsequent
Mortgage Loan Schedule attached to a Subsequent Transfer Agreement.
Subsequent Mortgage Loan Schedule: As of any Subsequent Transfer
Date, the schedule of Subsequent Mortgage Loans separated by Mortgage Loan
Group as of the related Subsequent Cut-off Date being transferred to the Trust
on such Subsequent Transfer Date pursuant to a Subsequent Transfer Agreement.
Each Subsequent Mortgage Loan Schedule shall contain information
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regarding the related Subsequent Mortgage Loans of the type included in, and
shall be substantially in the form of, the Mortgage Loan Schedule attached
hereto as Exhibit F.
Subsequent Purchase Price: As of any Subsequent Transfer Date, with
respect to the Subsequent Mortgage Loans to be included in Group I, an amount
equal to the sum of (i) the product of 95% and the aggregate of the Principal
Balances as of the Subsequent Cut-off Date of such Subsequent Mortgage Loans
listed in the related Subsequent Transfer Agreement and (ii) any Additional
Subsequent Purchase Price attributable to such Subsequent Mortgage Loans;
provided, however, that the Additional Subsequent Purchase Price, if any, shall
be paid only on the last day of the Commitment Period. As of any Subsequent
Transfer Date, with respect to the Subsequent Mortgage Loans to be included in
Group II, an amount equal to the sum of (i) the product of 95% and the
aggregate of the Principal Balances as of the Subsequent Cut-off Date of such
Subsequent Mortgage Loans listed in the related Subsequent Transfer Agreement
and (ii) any Additional Subsequent Purchase Price attributable to such Mortgage
Loans; provided, however, that the Additional Subsequent Purchase Price, if
any, shall be paid only on the last day of the Commitment Period.
Subsequent Transfer Agreement: With respect to any Subsequent
Mortgage Loan, the agreement pursuant to which such Subsequent Mortgage Loan is
transferred to the Trust, in substantially the form attached hereto as Exhibit
C.
Subsequent Transfer Date: The date specified in each Subsequent
Transfer Agreement, but no later than October 14, 1996.
Subsequent Transfer Deposit: The amount deposited by the Seller in
the Collection Account in connection with each conveyance of Subsequent
Mortgage Loans pursuant to Section 2.02, which amount is equal to one month's
interest on the principal balance of each Subsequent Mortgage Loan that does
not have a Monthly Mortgage Payment due in the Collection Period relating to
the November 1996 Distribution Date at a per annum rate equal to the Mortgage
Loan Rate for each such Mortgage Loan, net of the applicable Servicing Fee
Rate. Each Subsequent Transfer Deposit shall be allocated to Group I or Group
II, as appropriate.
Transfer Affidavit: The affidavit to be delivered by any transferee
of an interest in a Class R Certificate pursuant to Section 6.02(b), to be
substantially in the form attached hereto as Exhibit H.
Transferor Affidavit: The affidavit to be delivered by any transferor
of an interest in a Class R Certificate pursuant to Section 6.02(c), to be
substantially in the form attached hereto as Exhibit L.
Trust: The trust created by this Agreement and the corpus thereof,
which consists of, to the extent described herein, the Mortgage Loans, such
assets as shall from time to time be identified or shall be required by this
Agreement to be deposited in the Collection Account, the Certificate Account,
the Purchase Account or the Capitalized Interest Account or invested in
Permitted Investments in accordance with this Agreement, all rights under any
insurance policy covering a Mortgage Loan or the related Mortgaged Property and
property and any proceeds thereof that
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secured a Mortgage Loan and that has been acquired by foreclosure, deed in lieu
of foreclosure or by a comparable conversion, and the Certificate Insurance
Policy.
Trust Insurance Proceeds: Insurance Proceeds that (a) are applied by
the Servicer to reduce the Principal Balance of the related Mortgage Loan and
(b) not applied to the restoration or repair of the related Mortgaged Property
or released to the related Mortgagor in accordance with the Servicer's normal
servicing procedures or the terms of the related Mortgage Loan.
Trust Parties: As defined in Section 5.04.
Trustee: Bankers Trust Company of California, N.A., a national
banking association, and its successors in interest or any successor trustee
appointed as provided pursuant to this Agreement.
Trustee Fee: The annual fee of the Trustee, which shall be $5,000,
and any annual file access fees, such fees being payable by the Servicer
pursuant to Section 9.05.
Vice President: Any vice president, whether or not designated by a
number or a word or words added before or after the title "vice president".
Voting Interest: With respect to any provisions hereof providing for
the action, consent or approval of the Holders of all Certificates evidencing
specified Voting Interests in the Trust, the Holders of the Class A
Certificates will collectively be entitled to 100% of the aggregate Voting
Interests represented by all Certificates. Voting Interests allocated to the
Class A-1A Certificates, Class A-1B Certificates, Class A-1C Certificates,
Class A-1D Certificates, Class A-1E Certificates and Class A-2 Certificates
shall be allocated between such Classes in proportion to the Class A-1A
Certificate Principal Balance, Class A-1B Certificate Principal Balance, Class
A-1C Certificate Principal Balance, Class A-1D Certificate Principal Balance,
Class A-1E Certificate Principal Balance and Class A-2 Certificate Principal
Balance, respectively. Each Certificateholder of a Class will have a Voting
Interest equal to the product of the Voting Interest to which such Class is
collectively entitled and the Percentage Interest in such Class represented by
such Holder's Certificates. With respect to any provision hereof providing for
action, consent or approval of each Class of Certificates or specified Classes
of Certificates, each Certificateholder of a Class will have a Voting Interest
in such Class equal to such Holder's Percentage Interest in such Class.
Section 1.02. Interest Calculations. All calculations of interest at
the Mortgage Loan Rate that are made in respect of the Principal Balance of a
Mortgage Loan, shall be made on a daily basis using a 360-day year of twelve
30-day months.
All calculations of interest on the Class A-1B Certificates, Class
A-1C Certificates, Class A-1D Certificates or Class A-1E Certificates will be
computed on the basis of a 360-day year of twelve 30-day months.
All calculations of interest on the Class A-1A Certificates or Class
A-2 Certificates will be computed on the basis of the actual number of days
elapsed in the related Interest Period and a year of 360 days.
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Section 1.03. Determination of Material Adverse Effect. Whenever a
determination is to be made under this Agreement as to whether a given action,
course of conduct, event or set of facts or circumstances could or would have a
material adverse effect on the Trust or the Certificateholder (or any similar
or analogous determination), such determination shall be made without giving
effect to the insurance provided by the Certificate Insurance Policy.
ARTICLE TWO
CONVEYANCE OF THE TRUST;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Conveyance of the Trust. The Seller, concurrently with
the execution and delivery of this Agreement, does hereby irrevocably sell,
transfer, assign, set over and otherwise convey to the Trustee, in trust for
the benefit of the Certificateholders, without recourse (except as otherwise
explicitly provided for herein), all of its right, title and interest in and to
the Trust, including specifically, without limitation, the Mortgage Loans, the
Mortgages, the Mortgage Files and the Mortgage Notes, including all interest
and principal (whether in the form of payments by Mortgagors or other proceeds)
received or deemed to be received by the Seller on or with respect to the
Mortgage Loans on or after the Cut-off Date (whether in the nature of amounts
held by the Seller for application on behalf of the related Mortgagor as a
Monthly Mortgage Payment that is due on any date on or after the Cut-off Date
or otherwise), together with all of its right, title and interest in and to the
proceeds received on or after the Cut-off Date of any related insurance
policies. In addition, on or prior to the Closing Date the Seller shall (i)
cause the Certificate Insurance Policy to be delivered to the Trustee and (ii)
deposit the Closing Date Deposit in the Collection Account.
In the event that, notwithstanding the intent of the parties hereto to
effect a sale and assignment of the Trust by the Seller to the Trustee, such
sale and assignment is deemed to constitute a pledge of security for a loan, it
is the intent of this Agreement that the Seller shall be deemed to have granted
to the Trustee for the benefit of the Certificateholders a first priority
perfected security interest in all of the Seller's right, title and interest in
and to the Mortgage Loans, the Mortgages, the Mortgage Files and the Mortgage
Notes, all payments of principal or interest on the Mortgage Loans received on
or after the Cut-off Date, all other payments (exclusive of assumption fees,
late payment charges, charges for checks returned for insufficient funds,
prepayment fees, if any, and extension and other administrative charges) made
in respect of such Mortgage Loans on or after the Cut-off Date and all proceeds
of any thereof, including all amounts on deposit in the Certificate Account,
the Collection Account, the Purchase Account and the Capitalized Interest
Account and amounts invested in Permitted Investments, and that this Agreement
shall constitute a security agreement under applicable law.
The Company confirms to the Trustee that it has caused its computer
records relating to the Mortgage Loans to indicate by a code that the Mortgage
Loans have been sold to the Trustee on behalf of the Trust and constitute part
of the Trust in accordance with the terms of the Trust and that the Company
will treat the transaction contemplated by such sale and assignment as a sale
in accordance with generally accepted accounting principles and will reflect
such sale on its primary accounting records.
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In connection with such sale and assignment, the Company, in its
capacity as Seller hereunder, does hereby deliver to, and deposit with, the
Trustee the originals of the following documents or instruments with respect to
each Mortgage Loan so assigned:
(a) The original Mortgage Note, with all intervening
endorsements sufficient to show a complete chain of endorsement to the
Seller, endorsed (which endorsement may be by manual or facsimile
signature) by the Seller without recourse to the order of the Trustee
in the following form: "Pay to the order of Bankers Trust Company of
California, N.A., in trust for the benefit of holders of Aames
Mortgage Trust 1996-C Mortgage Pass-Through Certificates, Series
1996-C, without recourse";
(b) The original Mortgage with evidence of recording
indicated thereon;
(c) The original executed assignment of the Mortgage in
recordable form;
(d) Originals of all assumption, modification and
substitution agreements in those instances where the terms or
provisions of a Mortgage or Mortgage Note have been modified or such
Mortgage or Mortgage Note has been assumed;
(e) Originals of all intervening mortgage assignments with
evidence of recording indicated thereon sufficient to show a complete
chain of assignment from the originator of the Mortgage Loan to the
Seller; and
(f) Original lender's title insurance policy issued on the
date of the origination of such Mortgage Loan.
As promptly as practicable subsequent to the Closing Date, and in any
event, within 30 days thereafter, the Company, in its capacity as Servicer
shall (i) affix the Trustee's name to each assignment of Mortgage, as the
assignee thereof, (ii) cause such assignment to be in proper form for recording
in the appropriate public office for real property records, and (iii) cause to
be delivered for recording in the appropriate public office for real property
records the assignments of the Mortgages to the Trustee, except that, with
respect to any assignments of Mortgage as to which the Servicer has not
received the information required to prepare such assignment in recordable
form, the Servicer shall be obligated to prepare and to deliver such assignment
for such recording as soon as practicable after receipt of such information and
in any event within 30 days after receipt thereof (and in no event more than
one year after the Closing Date) and that the Servicer need not cause to be
recorded any assignment that relates to a Mortgage Loan in any jurisdiction
under the laws of which, as evidenced by an Opinion of Counsel delivered by the
Seller (at the Seller's expense) to the Trustee, the recordation of such
assignment is not necessary to protect the Trustee's and the
Certificateholders' interest in the related Mortgage Loan.
In addition, in connection with such sale and assignments, the
Company, in its capacity as Seller hereunder, does hereby deliver to, and
deposit with, the Trustee the Certificate Insurance Policy.
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If the Company cannot deliver the original Mortgage or any intervening
mortgage assignment with evidence of recording thereon concurrently with the
execution and delivery of this Agreement solely because of a delay caused by
the public recording office where such original Mortgage or mortgage assignment
has been delivered for recordation, the Company shall deliver to the Trustee an
Officer's Certificate, with a photocopy of such Mortgage or mortgage
assignment, as the case may be, attached thereto, stating that such original
Mortgage or mortgage assignment has been delivered to the appropriate public
recording official for recordation. The Company shall promptly deliver to the
Trustee such original Mortgage or intervening mortgage assignment with evidence
of recording indicated thereon upon receipt thereof from the public recording
official. If the Company within six months from the Closing Date shall not
have received such original Mortgage or intervening mortgage assignment from
the public recording official, it shall obtain, and deliver to the Trustee
within eight months from the Closing Date, a copy of such original Mortgage or
mortgage assignment certified by such public recording official to be a true
and complete copy of such original Mortgage or mortgage assignment as recorded
by such public recording office.
The costs relating to the delivery of the documents specified in this
Section shall be borne by the Seller.
Section 2.02. Conveyance of the Subsequent Mortgage Loans; Fixed
Price Contract. Subject to the conditions set forth in the paragraphs below,
in consideration of the Trustee's delivery on the related Subsequent Transfer
Dates to or upon the order of the Seller of the Subsequent Purchase Price of
the related Subsequent Mortgage Loans from amounts on deposit in the Purchase
Account with respect to the related Mortgage Loan Group, the Seller shall, from
time to time, on any Subsequent Transfer Date sell, transfer, assign, set over
and otherwise convey without recourse, to the Trustee, all right, title and
interest of the Seller in and to each Subsequent Mortgage Loan identified on
the Subsequent Mortgage Loan Schedule attached to the related Subsequent
Transfer Agreement delivered by the Seller on such Subsequent Transfer Date,
including all of its right, title and interest in and to principal and interest
(whether in the form of payments by Mortgagors or other proceeds) received or
deemed to be received by the Seller on each such Subsequent Mortgage Loan on
and after the related Subsequent Cut-off Date (whether in the nature of amounts
held by the Seller for application on behalf of the related Mortgagor as a
Monthly Mortgage Payment that is due on any date on or after the related
Subsequent Cut-off Date or otherwise) and all items with respect to such
Subsequent Mortgage Loan to be delivered pursuant to Section 2.01 and other
items in the related Mortgage File; provided, however, that the Seller reserves
and retains all of its right, title and interest in and to principal (including
prepayments) and interest collected on each such Subsequent Mortgage Loan prior
to the related Subsequent Cut-off Date (except for amounts held by the Seller
for application on or after the related Subsequent Cut-off Date). The transfer
by the Seller of the Subsequent Mortgage Loans set forth on the Subsequent
Mortgage Loan Schedule to the Trustee shall be absolute and shall be intended
by the parties hereto to be treated as a sale by the Seller. On or before the
last day of the Commitment Period, the Seller shall convey to the Trustee
pursuant to this Section 2.02 the lesser of: (i) all Mortgage Loans then in
its possession that satisfy the requirements of this Section 2.02 or (ii) the
maximum principal balance of Mortgage Loans as determined by Seller that
satisfy the requirements of this Section 2.02 whose aggregate Subsequent
Purchase Price does not exceed the Purchase Account Deposit. Subsequent
Mortgage Loans to be conveyed on a given Subsequent Transfer Date must have an
aggregate Subsequent Cut-off Date
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Principal Balance of not less than $500,000; provided, however, that the
Subsequent Mortgage Loans to be conveyed on the final Subsequent Transfer Date
may have an aggregate Subsequent Cut-off Date Principal Balance of less than
$500,000. In connection with each conveyance of Subsequent Mortgage Loans, the
Seller shall deposit any applicable Subsequent Transfer Deposit in the
Collection Account on the related Subsequent Transfer Date.
In the event that, notwithstanding the intent of the parties hereto to
effect a sale and assignment of the Subsequent Mortgage Loans on the related
Subsequent Transfer Date by the Seller to the Trustee, such sale and assignment
will be deemed to constitute a pledge of security for a loan, it is the intent
of this Agreement that the Seller shall be deemed to have granted to the
Trustee for the benefit of the Certificateholders a first priority perfected
security interest in all of the Seller's right, title and interest in and to
the Subsequent Mortgage Loans, the Mortgages, the Mortgage Files and the
Mortgage Notes, all payments of principal and interest on the Subsequent
Mortgage Loans received on or after their respective Subsequent Cut-off Dates,
all other payments (exclusive of assumption fees, late payment charges, charges
for checks returned for insufficient funds, prepayment fees, if any, and
extension and other administrative charges) made in respect of such Subsequent
Mortgage Loans on or after the related Subsequent Cut-off Date and all proceeds
of any thereof, and that this Agreement and the related Subsequent Transfer
Agreement shall each constitute a security agreement with respect to the
related Subsequent Mortgage Loans under applicable law.
The amount released to the Seller from the Purchase Account on any
Subsequent Transfer Date in connection with any conveyance of Subsequent
Mortgage Loans to be included in Group I shall be equal to the aggregate of the
Subsequent Purchase Prices for such Subsequent Mortgage Loans, which amount
shall not exceed the amount then on deposit in the Purchase Account in respect
of the Group I Purchase Account Deposit; provided, however, that any Additional
Subsequent Purchase Price in respect of such Subsequent Mortgage Loans shall be
paid only on the last day of the Commitment Period. The amount released to the
Seller from the Purchase Account on any Subsequent Transfer Date in connection
with any conveyance of Subsequent Mortgage Loans to be included in Group II
shall be equal to the aggregate of the Subsequent Purchase Prices for such
Subsequent Mortgage Loans, which amount shall not exceed the amount then on
deposit in the Purchase Account in respect of the Group II Purchase Account
Deposit; provided, however, that any Additional Subsequent Purchase Price in
respect of such Subsequent Mortgage Loans shall be paid only on the last day of
the Commitment Period. The amount released to the Seller from the Purchase
Account in connection with any conveyance of Subsequent Mortgage Loans shall,
for federal income tax purposes, be considered cash contributed to the REMIC
Pool by the Seller and used by the Trustee to acquire the related Subsequent
Mortgage Loans pursuant to a fixed price contract established pursuant to this
Section 2.02.
On the related Subsequent Transfer Date, the Seller shall transfer to
the Trustee the Subsequent Mortgage Loans and the other property and rights
related thereto described in the first paragraph in this section only upon the
satisfaction of each of the following conditions on or prior to the related
Subsequent Transfer Date:
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(a) the Seller shall provide the Trustee and the Certificate
Insurer with an Addition Notice and shall provide any information
reasonably requested by the Trustee or the Certificate Insurer with
respect to the Subsequent Mortgage Loans;
(b) the Seller shall deliver to the Trustee, the Certificate
Insurer and the Rating Agencies a duly executed Subsequent Transfer
Agreement and any other related documentation in the forms of the
exhibits listed thereon;
(c) the Seller shall deposit in the Collection Account all
collections in respect of the Subsequent Mortgage Loans received or
deemed received by the Seller on or after the related Subsequent
Cut-off Date (whether in the nature of amounts held by the Seller for
later application on behalf of the related Mortgagor in respect of a
Monthly Payment due after the related Subsequent Cut-off Date or
otherwise);
(d) the Seller shall certify that, as of the Subsequent
Transfer Date, the Seller was not insolvent, was not made insolvent by
such transfer and is not aware of any pending insolvency;
(e) the Seller shall certify that such addition of Subsequent
Mortgage Loans will not result in a material adverse tax consequence
to the Trust or the Holders of Class A Certificates;
(f) the Commitment Period shall not have expired;
(g) the Seller shall make the representations and warranties
set forth in Section (A) of Schedule II to this Agreement with respect
to such Subsequent Mortgage Loans; and
(h) on such Subsequent Transfer Date, the Seller shall
deposit any applicable Subsequent Transfer Deposit in the Collection
Account.
In addition, the Seller will provide the Certificate Insurer and the
Trustee with data regarding all Subsequent Mortgage Loans to be transferred to
the Trust on any Subsequent Transfer Date at least 10 Business Days prior to
the end of the Commitment Period. No later than the end of the Commitment
Period, the following conditions shall have been satisfied with respect to all
Subsequent Mortgage Loans to be transferred to the Trust on any Subsequent
Transfer Date:
(a) the Seller shall have delivered to the Trustee and the
Certificate Insurer an Officer's Certificate confirming the
satisfaction of each condition precedent specified in this Section
2.02 and in the related Subsequent Transfer Agreements;
(b) the Seller shall have delivered to the Certificate
Insurer and the Trustee Opinions of Counsel with respect to the
transfer of all of the Subsequent Mortgage Loans to the Trust on any
Subsequent Transfer Date substantially in the form of the Opinions of
Counsel delivered to the Trustee and the Certificate Insurer on the
Closing Date (regarding bankruptcy, corporate and tax matters);
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(c) the Trustee shall deliver to the Rating Agencies, the
Certificate Insurer and the Seller an Opinion of Counsel with respect
to each of the Subsequent Transfer Agreements substantially in the
form of the Opinion of Counsel delivered to the Seller and the
Certificate Insurer on the Closing Date;
(d) the Seller shall make the representations and warranties
set forth in Section B of Schedule II to this Agreement; and
(e) the Certificate Insurer shall deliver to the Seller, the
Trustee and the Rating Agencies a written notice confirming the
Certificate Insurer's consent and approval to the addition of all
Subsequent Mortgage Loans purchased by the Trust on any Subsequent
Transfer Date, which notice shall specify any Class A-1 Additional
Coverage Requirement, any Class A-2 Additional Coverage Requirement
and the related Additional Subsequent Purchase Price with respect to
the Subsequent Mortgage Loans.
Upon the satisfaction of the conditions set forth in clauses (a)
through (e) of the immediately preceding paragraph, on the last Subsequent
Transfer Date during the Commitment Period, the Trustee shall release to the
Seller from the Purchase Account the aggregate Additional Subsequent Purchase
Prices with respect to all Subsequent Mortgage Loans included in Group I, which
amount shall not exceed the amount then on deposit in the Purchase Account in
respect of the Group I Purchase Account Deposit and the aggregate Additional
Subsequent Purchase Prices with respect to all Subsequent Mortgage Loans
included in Group II, which amount shall not exceed the amount then on deposit
in the Purchase Account in respect of the Group II Purchase Account Deposit.
On or prior to the Closing Date, the Seller shall provide to the
Trustee and the Certificate Insurer a schedule of mortgage loans that are
expected to be Subsequent Mortgage Loans, and Subsequent Mortgage Loans
transferred to the Trust shall be taken only from such schedule; provided,
however, if any such identified mortgage loans do not satisfy the requirements
of Subsequent Mortgage Loans as set forth in this Section 2.02 or if any such
mortgage loans are rejected as Subsequent Mortgage Loans by the Certificate
Insurer, mortgage loans acceptable to the Certificate Insurer may be
substituted for such defective or rejected mortgage loans only from a secondary
schedule of mortgage loans that is identified as such and delivered to the
Trustee and the Certificate Insurer on the Closing Date. The Seller shall
certify that the Subsequent Mortgage Loans will be transferred to the Trust in
accordance with the foregoing and that all mortgage loans identified in both
the original schedule and secondary schedule of mortgage loans described above
satisfy the requirements of Subsequent Mortgage Loans as set forth in this
Section 2.02 as of the Closing Date.
Section 2.03. Acceptance by the Trustee; Repurchase or Substitution
of Mortgage Loans. The Trustee acknowledges the sale and assignment of the
Trust and receipt by it of the original Mortgage Notes, Assignments and
Mortgages pursuant to this Agreement and the delivery to it of the Certificate
Insurance Policy, and subject to (i) the provisions of the penultimate
paragraph of Section 2.01, (ii) the review provided for in this Section of the
documents referred to in clauses (a) through (f) of Section 2.01 and (iii)
delivery of the Officer's Certificates pursuant to Section 2.01, declares that
it will hold the Trust in trust upon the terms herein set forth for the use and
benefit of
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all present and future Certificateholders. The Trustee agrees, for the benefit
of Certificateholders, to review each Mortgage File within 45 days after the
Closing Date (or, 45 days after the Subsequent Transfer Date, with respect to
the Subsequent Mortgage Loans) to determine whether the documents described in
Section 2.01(a)-(c), (e) and (f) have been executed and received, and whether
such documents relate to the Mortgage Loans identified in the Mortgage Loan
Schedule, or the Subsequent Mortgage Loan Schedule, as applicable, and in so
doing the Trustee may rely on the purported due execution and genuineness of
any such document and on the purported genuineness of any signature thereon.
If within such 45-day period the Trustee finds any document constituting a part
of a Mortgage File not to have been executed or received or to be unrelated to
the Mortgage Loans identified in the Mortgage Loan Schedule, the Trustee shall
promptly notify the Seller of such findings and shall provide a copy of such
notice to the Certificate Insurer. The Seller shall have a period of 60 days
from the date of such notice to correct or cure any such defect.
Notwithstanding the second paragraph of Section 9.01, the Trustee shall be
under no duty or obligation to inspect, review or examine any such documents,
instruments, certificates or other papers to determine that they are genuine,
enforceable, or appropriate for the represented purpose or that they have
actually been recorded or that they are other than what they purport to be on
their face.
If the Trustee has notified the Seller of a defect in a Mortgage File
that materially and adversely affects the interests of the Certificateholders
in the related Mortgage Loan, and such defect remains uncured after such 60-day
period, the Seller shall, (i) in the case of a defect consisting solely of the
failure of the Company to deliver the original Mortgage or any intervening
mortgage assignment with evidence of recording thereon for reasons set forth in
Section 2.01, on the first Deposit Date occurring after the expiration of eight
months from the Closing Date, and (ii) in the case of all other defects, on the
Deposit Date occurring not later than 60 days after receipt of notice of such
defect from the Trustee, as the case may be, either (I) repurchase the related
Mortgage Loan (including any property acquired in respect thereof and any
insurance policy or current or future insurance proceeds with respect thereto)
from the Trust at a price equal to the Purchase Price, which shall be
accomplished by deposit of monies by the Seller in the Certificate Account on
such Deposit Date, or (II) substitute one or more Qualified Replacement
Mortgage Loan for the related Mortgage Loan.
Upon receipt by the Trustee of an Officer's Certificate of the
Servicer to the effect that the Purchase Price for a Defective Mortgage Loan
(other than a Defective Mortgage Loan that is a Deleted Mortgage Loan) has been
deposited in the Certificate Account, and upon confirmation by the Trustee that
such Purchase Price has been received by it, the Trustee shall execute and
deliver such instrument of transfer or assignment presented to it by the
Seller, in each case without recourse, as shall be necessary to vest in the
Seller legal and beneficial ownership of such repurchased Defective Mortgage
Loan (including any property acquired in respect thereof or insurance policy or
current or future insurance proceeds with respect thereto).
Payments received with respect to Qualified Replacement Mortgage Loans
in the Collection Period prior to the Deposit Date on which such substitution
occurs will not be part of the Trust and will be retained by the Seller. For
the Distribution Date following the Deposit Date on which such substitution
occurs, distributions to Certificateholders will reflect the payments received
on such
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Deleted Mortgage Loan in the related Collection Period, and the Seller shall
thereafter be entitled to retain all amounts subsequently received in respect
of such Deleted Mortgage Loan. In the case of a Qualified Replacement Mortgage
Loan, the Mortgage File relating thereto shall be delivered to the Trustee and
the amount, if any, by which the Principal Balance of the related Deleted
Mortgage Loan as of the related Deposit Date exceeds the Principal Balance of
the Qualified Replacement Mortgage Loan as of the first day of the related
Collection Period shall be remitted by the Seller to the Trustee for deposit in
the Certificate Account on the Deposit Date on which the substitution occurs.
For purposes of this Agreement, any such amount so deposited in the Certificate
Account shall be deemed a prepayment of the related Deleted Mortgage Loan
received by the Servicer as of the prior Determination Date. Upon receipt by
the Trustee of an Officer's Certificate certifying that the Qualified
Replacement Mortgage Loan conforms to the requirements of this Agreement and
(a) written notification of such deposit signed by a Servicing Officer and (b)
the new Mortgage File (containing all of the documents referred to in clauses
(a), (b), (c), (d), (e) and (f) of Section 2.01), the Trustee shall release or
cause to be released to the Seller the Mortgage File related to the Deleted
Mortgage Loan or property and shall execute and deliver or cause to be executed
and delivered such instrument of transfer or assignment presented to it by the
Seller, without recourse, as shall be necessary to vest in the Seller all of
the legal and beneficial ownership of such Deleted Mortgage Loan or property
and the Trustee shall have no further responsibility with respect to said
Mortgage File. It is understood and agreed that the obligation of the Seller
to substitute a Qualified Replacement Mortgage Loan for or repurchase any
Defective Mortgage Loan (or any property acquired in respect thereof or
insurance policy or current or future insurance proceeds with respect thereto)
shall constitute the sole remedy against it respecting such defect available to
the Certificateholders or the Trustee, and such obligation on the part of the
Seller shall survive any resignation or termination of the Company as Servicer
under this Agreement. Notwithstanding the foregoing, a substitution by the
Seller for a defect in a constituent document will not be made unless the
Trustee receives an Officer's Certificate certifying that the Qualified
Replacement Mortgage Loan conforms to the requirements of this Agreement and an
Opinion of Counsel that such substitution will not be a "prohibited
transaction" as defined in Section 860F(a)(2) of the Code. Any substitution
must be effected not later than two years after the Closing Date, or within
such longer period of time as may be permitted under the REMIC Provisions for
substitution of mortgage loans.
On or prior to January 31, 1997 (February 28, 1997 with respect to the
Subsequent Mortgage Loans), the Trustee shall certify to the Certificate
Insurer, the Seller and the Servicer that it has received all of the documents
referred to in clauses (a) (b), (c), (e) and (f) of Section 2.01 and that all
corrections or curative actions required to be taken by the Seller within the
60-day period referred to in the first paragraph of this Section have been
completed or effected, or the related Mortgage Loans have been repurchased or
substituted, in accordance with the provisions of this Section or, if any
deficiencies in the Mortgage Files or other omissions of the Seller with
respect to the Mortgage Files are known to the Trustee at the time of such
certification, the Trustee shall make such certification only with respect to
those Mortgage Loans as to which no such defects or omissions are known, and
shall qualify such certification with respect to the remaining Mortgage Loans,
identifying the related defects or omissions. Thereafter, the Trustee shall
provide the Certificate Insurer, the Seller and the Servicer with monthly
exception reports indicating the status of any exceptions until all such
exceptions have been eliminated. Such monthly exception reports
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shall be distributed by the Trustee on the related Distribution Date with the
Statement to Certificateholders.
Section 2.04. Representations and Warranties Regarding the Servicer
and the Seller. The Company, as Seller and Servicer hereby represents and
warrants to the Trustee, the Certificate Insurer and the Certificateholders
that, as of the Closing Date:
(i) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of
California. The Company is in compliance with the laws of each state
in which it is acting as Servicer with respect to a Mortgage Loan to
the extent necessary to perform all servicing obligations with respect
to the related Mortgaged Property hereunder. Each Sub- Servicer is in
compliance with the laws of each state where the Mortgaged Properties
under the applicable Sub-Servicing Agreement are located to the extent
necessary to perform the servicing obligations hereunder; the Company
has the power and authority to execute and deliver this Agreement and
to perform its obligations in accordance herewith; the execution,
delivery and performance of this Agreement (including all instruments
of transfer to be delivered pursuant to this Agreement) by the Company
and the consummation of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action; this
Agreement evidences the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, subject
to the effect of bankruptcy, insolvency, reorganization, moratorium
and other similar laws relating to or affecting creditors' rights
generally or the application of equitable principles in any
proceeding, whether at law or in equity; and the consummation of the
transactions contemplated hereby will not result in the breach of any
terms or provisions of the articles of incorporation or by-laws of the
Company or result in the breach of any term or provision of, or
conflict with or constitute a default under or result in the
acceleration for any obligation under, any material agreement,
indenture or loan or credit agreement or other material instrument to
which the Company or its property is subject, or result in the
violation of any law, rule, regulation, order, judgment or decree to
which the Company or its property is subject. Each Sub-Servicer has
all requisite corporate power and authority to conduct its business
and perform the obligations under the Sub-Servicing Agreement to which
such Sub-Servicer is a party;
(ii) All actions, approvals, consents, waivers,
exemptions, variances, franchises, orders, permits authorizations,
rights and licenses required to be taken, given or obtained, as the
case may be, by or from any federal, state or other governmental
authority or agency, that are necessary in connection with the
execution and delivery by the Company of this Agreement, have been
duly taken, given or obtained, as the case may be, are in full force
and effect, are not subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and either the time within
which any appeal therefrom may be taken or review thereof may be
obtained has expired or no review thereof may be obtained or appeal
therefrom taken, and are adequate to authorize the consummation of the
transactions contemplated by this Agreement on the part of the Company
and the performance by the Company of its obligations as Servicer
under this Agreement;
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(iii) There is no action, suit, proceeding or investigation
pending or, to the best of the Company's knowledge, threatened against
the Company that, either in any one instance or in the aggregate, may
result in any material adverse change in the business, operations,
financial condition, properties or assets of the Company or in any
material impairment of the right or ability of the Company to carry on
its business substantially as now conducted, or in any material
liability on the part of the Company or that would draw into question
the validity of this Agreement or the Mortgage Loans or of any action
taken or to be taken in connection with the obligations of the
Company, in its capacity as Servicer, contemplated herein, or that
would be likely to impair the ability of the Company to perform under
the terms of this Agreement;
(iv) The Company is not in default with respect to any
order or decree of any court or any order, regulation or demand of any
federal, state, municipal or governmental agency, which default might
have consequences that would materially and adversely affect the
condition (financial or other) or operations of the Company or its
properties or might have consequences that would adversely affect its
performance as Servicer hereunder;
(v) The transfer, assignment and conveyance of the
Mortgage Loans by the Company, as Seller, pursuant to this Agreement
are not subject to the bulk transfer laws or any similar statutory
provisions in effect in any applicable jurisdiction;
(vi) The collection practices used by the Company and any
Sub-Servicer are in all material respects legal, proper, prudent and
customary in the home equity mortgage loan servicing business; and
(vii) Each Sub-Servicer engaged by the Servicer has
obtained all licenses and approvals required under state or federal
law to service the Mortgage Loans specified in the Sub-Servicing
Agreement to which the Sub-Servicer is a party.
The representations and warranties set forth in this Section shall survive the
sale and assignment of the Mortgage Loans to the Trust and the issuance, sale
and delivery of the Certificates. Upon discovery of a breach of any of the
foregoing representations and warranties that materially and adversely affects
the interests of the Certificateholders, the party discovering such breach
shall give prompt written notice to the other parties and the Certificate
Insurer. Within 60 days of its discovery or its receipt of notice of breach,
the Company shall cure such breach in all material respects.
Section 2.05. Representations and Warranties of the Seller Regarding
the Mortgage Loans. The Seller represents and warrants to the Trustee, the
Certificate Insurer and the Certificateholders as of the Closing Date and, with
respect to any Subsequent Mortgage Loan, as of the Subsequent Transfer Date (in
either case except as otherwise expressly stated) that, as to each Mortgage
Loan conveyed to the Trust by it:
(i) The information with respect to each Mortgage Loan
set forth in the Mortgage Loan Schedule is true and correct as of the
Cut-off Date;
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(ii) All of the original or certified documentation set
forth in Section 2.01 or Section 2.02, as applicable (including all
material documents related thereto), with respect to each Mortgage
Loan has been or will be delivered to the Trustee on the Closing Date
or as otherwise provided in Section 2.01 or Section 2.02, as
applicable;
(iii) The related Mortgaged Property is improved by a one-
to four-family residential dwelling owned by the related Mortgagor in
fee simple, which may include condominiums, townhouses and modular
homes that are permanently affixed to the land and constitute real
property under the laws of the state in which the Mortgaged Property
is located but shall not include co-operatives, manufactured housing
units or mobile homes;
(iv) As of the Cut-off Date or Subsequent Cut-off Date, as
applicable, no Mortgage Loan included in Group I has a Combined
Loan-to-Value Ratio in excess of 85% and no Mortgage Loan included in
Group II has a Loan-to-Value Ratio in excess of 90%;
(v) Each Mortgage Loan was originated by an Affiliate of
the Company or an by an originator not affiliated with the Company
authorized to originate such Mortgage Loan and is being serviced by
the Company;
(vi) Each Mortgage Loan included in Group I as of the
Cut-off Date bears a fixed Mortgage Loan Rate of at least 8.20% per
annum and each Mortgage Loan included in Group II as of the Cut-off
Date is an Adjustable Rate Mortgage Loan that has a Minimum Rate of
not less than 4.99% per annum and a Mortgage Loan Rate as of the
Cut-off Date of not less than 4.99% per annum;
(vii) Each Mortgage Note provides for a schedule of
substantially level and equal Monthly Mortgage Payments (subject, in
the case of an Adjustable Rate Mortgage Loan, to periodic adjustments
relating to changes in the Mortgage Loan Rate) that are sufficient to
amortize fully the principal balance of such Mortgage Note on or
before its maturity date, except that, Mortgage Notes with respect to
Mortgage Loans in Group I representing not more than 5.95% of the
Original Group I Balance and Mortgage Notes with respect to Mortgage
Loans in Group II representing not more than 0.047% of the Original
Group II Balance, provide for level and equal Monthly Mortgage
Payments that are sufficient to amortize fully the principal balances
of such Notes over a period not exceeding 30 years, with "balloon"
payments at stated maturity that are substantially in excess of the
Monthly Mortgage Payments;
(viii) Each Mortgage is a valid and subsisting lien of
record on the Mortgaged Property having the priority indicated on the
Mortgage Loan Schedule, subject, in the case of any Junior Mortgage
Loan, only to any Senior Lien or Senior Liens on such Mortgaged
Property and subject in all cases to the exceptions to title set forth
in the title insurance policy with respect to the related Mortgage
Loan, which exceptions are generally acceptable to home equity
mortgage lending institutions, and such other exceptions to which
similar properties are commonly subject and that do not individually,
or in the aggregate, materially and adversely affect the benefits of
the security intended to be provided by such Mortgage;
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(ix) Immediately prior to the sale, transfer and
assignment herein contemplated, the Company held good and indefeasible
title to, and was the sole owner of, each Mortgage Loan conveyed by
the Company subject to no liens, charges, mortgages, encumbrances or
rights of others, except with respect to liens that will be released
simultaneously with such transfer and assignment; and immediately upon
the transfer and assignment herein contemplated, the Trustee will hold
good and indefeasible title to, and be the sole owner of, each
Mortgage Loan subject to no liens, charges, mortgages, encumbrances or
rights of others;
(x) The Mortgage Loan Rate for each Adjustable Rate
Mortgage Loan will be adjustable on each related Adjustment Date and
will equal the sum, rounded upward to the nearest three decimal
places, of the Index plus the related Gross Margin, subject to any
related Minimum Rates, Maximum Rates or any limitations or periodic
adjustments, in each case as specified in the related Mortgage Loan
Schedule. No Adjustable Rate Mortgage Loan is subject to negative
amortization. The Mortgage Notes relating to not more than 47% of the
Mortgage Loans in Group II, by Original Group II Balance or by Group
II Balance as of the Closing Date, provide for initial Adjustment
Dates that are more than one year and less than five years from the
Cut-off Date;
(xi) With respect to any Adjustable Rate Mortgage Loan, no
mortgage document in the Mortgage File contains any provision
permitting or requiring conversion of the Mortgage Loan to a fixed
interest rate nor is the Mortgage Loan Rate conditioned upon Mortgagor
maintaining accounts with Seller;
(xii) As of the Cut-off Date (a) no Mortgage Loan had three
or more Monthly Payments past due, not more than 2.64% of the Mortgage
Loans (by Cut-off Date Principal Balance) had two or more Monthly
Payments past due and not more than 22.74% of the Mortgage Loans (by
Cut-off Date Principal Balance) had one or more Monthly Payments past
due, (b) no Mortgage Loan has been 60 or more days contractually
delinquent more than once during the 12-month period immediately
preceding the Cut-off Date and (c) no Mortgage Loan has been 90 or
more days delinquent in the 12 months preceding the Cut-off Date; as
of the related Subsequent Cut-off Date, no Subsequent Mortgage Loan
will have been 30 or more days contractually delinquent, (b) no
Subsequent Mortgage Loan will have been 30 or more days contractually
delinquent more than once during the preceding 12-month period and (c)
no Subsequent Mortgage Loan will have been 90 or more days
contractually delinquent in the 12 months preceding such Subsequent
Cut-off Date;
(xiii) As of the Cut-off Date, there is no delinquent tax or
assessment lien on any Mortgaged Property, and, to the best knowledge
of the Company, each Mortgaged Property is free of substantial damage
and is in good repair and is not affected by hazardous or toxic wastes
or substances;
(xiv) There is no offset, right of rescission, counterclaim
or defense, including the defense of usury, with respect to any
Mortgage Note or Mortgage, nor will the operation of any of the terms
of the Mortgage Note or the Mortgage, or the exercise of any right
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thereunder, render either the Mortgage Note or the Mortgage
unenforceable in whole or in part, or subject to any right to
rescission, set-off, counterclaim or defense, including the defense of
usury, and no such right of rescission, set-off, counterclaim or
defense has been asserted with respect thereto;
(xv) As of the Cut-off Date or Subsequent Cut-off Date, as
applicable, there is no mechanic's lien or claim for work, labor or
material affecting any Mortgaged Property that is or may be a lien
prior to, or equal to or on a parity with, the lien of the related
Mortgage except those that are insured against by any title insurance
policy referred to in paragraph (xvii) below;
(xvi) Each Mortgage Loan at the time it was made complied
in all material respects with applicable local, state and federal laws
and regulations, including, without limitation, the federal
Truth-in-Lending Act and other consumer protection laws, real estate
settlement procedure, usury, equal credit opportunity, disclosure and
recording laws;
(xvii) With respect to each Mortgage Loan, a lender's title
insurance policy (issued in standard form by a title insurance company
authorized to transact business in the state where the related
Mortgaged Property is located), in an amount at least equal to the
Original Principal Amount of such Mortgage Loan insuring the
mortgagee's interest under the related Mortgage Loan as the holder of
a valid lien of record on the real property described in the related
Mortgage (subject only to exceptions of the character referred to in
paragraph (viii) above), was effective on the date of the origination
of such Mortgage Loan, and, as of the Closing Date or related
Subsequent Transfer Date, as applicable, such policy is in full force
and effect and thereafter such policy shall continue in full force and
effect and shall inure to the benefit of the Certificateholders upon
consummation of the transactions contemplated by this Agreement;
(xviii) As of the Cut-off Date or Subsequent Cut-off Date, as
applicable, either (a) the improvements upon each Mortgaged Property
are covered by a valid and existing hazard insurance policy (which may
be a blanket policy) with a generally acceptable carrier that provides
for fire and extended coverage representing coverage not less than the
least of (a) the outstanding principal balance of the related Mortgage
Loan (together, in the case of a Junior Mortgage Loan, with the
outstanding principal balance of the Senior Lien), (b) the minimum
amount required to compensate for damage or loss on a replacement cost
basis or (c) the full insurable value of the Mortgaged Property or (b)
in the case of a Junior Mortgage Loan, a policy has been issued by a
generally acceptable carrier that will cover the full Principal
Balance of such Junior Mortgage Loan in the event of a loss covered by
a hazard typically insured against by the type of policy referred to
in clause (xviii)(a);
(xix) If any Mortgaged Property is in an area identified in
the Federal Register by FEMA as having special flood hazards, a flood
insurance policy in a form meeting the requirements of the current
guidelines of the Federal Insurance Administration, if obtainable with
respect to such Mortgaged Property, is in effect with respect to such
Mortgaged Property with a generally acceptable carrier in an amount
representing coverage not less than
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the least of (A) the outstanding principal balance of the related
Mortgage Loan (together, in the case of a Junior Mortgage Loan, with
the outstanding principal balance of the Senior Lien), (B) the minimum
amount required to compensate for damage or loss on a replacement cost
basis or (C) the maximum amount of insurance that is available under
the Flood Disaster Protection Act of 1973;
(xx) Each Mortgage and Mortgage Note is the legal, valid
and binding obligation of the maker thereof and is enforceable in
accordance with its terms, except only as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights generally
and by general principles of equity (whether considered in a
proceeding or action in equity or at law), and all parties to each
Mortgage Loan had full legal capacity to execute all documents
relating to such Mortgage Loan and convey the estate therein purported
to be conveyed; with respect to each Mortgage Loan, only one original
Mortgage Note exists;
(xxi) The Seller has caused and will cause to be performed
any and all acts required to be performed to preserve the rights and
remedies of the Trustee in any insurance policies applicable to each
Mortgage Loan, including any necessary notifications of insurers,
assignments of policies or interests therein, and establishment of
co-insured, joint loss payee and mortgagee rights in favor of the
Trustee;
(xxii) As of the Cut-off Date no more than 0.75% of the
Original Group I Balance is secured by Mortgaged Properties located
within any single zip code area and no more than 0.56% of the Original
Group II Balance is secured by Mortgaged Properties located within any
single zip code area;
(xxiii) Each original Mortgage has been recorded or is in the
process of being recorded, and all subsequent assignments of the
original Mortgage (other than the assignment from the Seller to the
Trustee) have been recorded in the appropriate jurisdictions wherein
such recordation is required to perfect the lien thereof for the
benefit of the Trustee (or, subject to Section 2.01 or 2.02, as
applicable, are in the process of being recorded);
(xxiv) The terms of each Mortgage Note and each Mortgage
have not been impaired, altered or modified in any respect, except by
a written instrument that has been recorded, if necessary, to protect
the interest of the Certificateholders and that has been delivered to
the Trustee. The substance of any such alteration or modification is
reflected on the Mortgage Loan Schedule and has been approved by the
primary mortgage guaranty insurer, if any;
(xxv) The proceeds of each Mortgage Loan have been fully
disbursed, and there is no obligation on the part of the mortgagee to
make future advances thereunder. Any and all requirements as to
completion of any on-site or off-site improvements and as to
disbursements of any escrow funds therefor have been complied with.
All costs, fees and expenses incurred in making or closing or
recording such Mortgage Loans were paid;
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(xxvi) No Mortgage Note is or has been secured by any
collateral, pledged account or other security other than the lien of
the corresponding Mortgage;
(xxvii) No Mortgage Loan was originated under a buydown plan;
(xxviii) No Mortgage Loan has a shared appreciation feature
or other contingent interest feature;
(xxix) Each Mortgaged Property consists of one or more
contiguous parcels of real property with a residential dwelling
erected thereon;
(xxx) Each Mortgage Loan contains a provision for the
acceleration of the payment of the unpaid principal balance of such
Mortgage Loan in the event the related Mortgaged Property is sold
without the prior consent of the mortgagee thereunder;
(xxxi) Any advances made after the date of origination of a
Mortgage Loan but prior to the Cut-off Date or related Subsequent
Cut-off Date, as applicable, have been consolidated with the
outstanding principal amount secured by the related Mortgage, and the
secured principal amount, as consolidated, bears a single interest
rate and single repayment term reflected on the Mortgage Loan
Schedule. The consolidated principal amount as of the Cut-off Date or
related Subsequent Cut-off Date, as applicable, does not exceed the
original principal amount of the related Mortgage Loan and is
reflected as the current principal amount of such Mortgage Loan on the
Mortgage Loan Schedule;
(xxxii) To the best knowledge of the Seller, there is no
proceeding pending or threatened for the total or partial condemnation
of any Mortgaged Property, nor is such a proceeding currently
occurring;
(xxxiii) To the best knowledge of the Seller, all of the
improvements that were included for the purposes of determining the
Appraised Value of any Mortgaged Property lie wholly within the
boundaries and building restriction lines of such Mortgaged Property,
and no improvements on adjoining properties encroach upon such
Mortgaged Property except those that are identified in the related
title insurance policy and affirmatively insured;
(xxxiv) To the best knowledge of the Seller, no improvement
located on or being part of any Mortgaged Property is in violation of
any applicable zoning law or regulation, all inspections, licenses and
certificates required to be made or issued with respect to all
occupied portions of each Mortgaged Property and, with respect to the
use and occupancy of the same, including but not limited to
certificates of occupancy and fire underwriting certificates, have
been made or obtained from the appropriate authorities and such
Mortgaged Property is lawfully occupied under applicable law;
(xxxv) With respect to each Mortgage that is a deed of
trust, a trustee, duly qualified under applicable law to serve as
such, has been properly designated and currently so serves and is
named in such Mortgage, and no fees or expenses are or will become
payable by the
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Certificateholders or the Trust to any trustee under any deed of
trust, except in connection with a trustee's sale after default by the
related Mortgagor;
(xxxvi) With respect to each Junior Mortgage Loan, either (A)
no consent for such Mortgage Loan was required by the holder of the
related Senior Lien prior to the making of such Mortgage Loan or (B)
such consent has been obtained and is contained in the related
Mortgage File;
(xxxvii) Each Mortgage contains customary and enforceable
provisions that render the rights and remedies of the holder thereof
adequate for the realization against the related Mortgaged Property of
the benefits of the security, including by trustee's sale and by
judicial foreclosure and there is no homestead or other exemption
available to the related Mortgagor that would materially interfere
with the right to sell the related Mortgaged Property at a trustee's
sale or the right to foreclose upon the related Mortgaged Property;
(xxxviii) There is no default, breach, violation or event of
acceleration existing under any Mortgage or the related Note and no
event that, with the passage of time or with notice and the expiration
of any grace or cure period, would constitute a default, breach,
violation or event of acceleration; and the Seller has not waived any
default, breach violation or event of acceleration;
(xxxix) No instrument of release or waiver has been executed
in connection with any Mortgage Loan, and no Mortgagor has been
released, in whole or in part, except in connection with an assumption
agreement that has been approved by the primary mortgage guaranty
insurer, if any, and that has been delivered to the Trustee;
(xl) The maturity date of each Junior Mortgage Loan is at
least 12 months prior to the maturity date of the related Senior Lien
if such Senior Lien provides for a balloon payment;
(xli) At least 88.84% of the Mortgage Loans in Group I (by
Original Group I Balance) and at least 84.54% of the Mortgage Loans in
Group II (by Original Group II Balance) are secured by Mortgaged
Properties that are maintained by the related Mortgagors as primary
residences;
(xlii) There are no defaults in complying with the terms of
the Mortgage, and all taxes, governmental assessments, insurance
premiums, water, sewer and municipal charges, leasehold payments or
ground rents that previously became due and owing have been paid, or
an escrow of funds has been established in an amount sufficient to pay
for every such item that remains unpaid, except for payments in the
nature of escrow payments, including, without limitation, taxes and
insurance payments, the Company has not advanced funds, or induced,
solicited or knowingly received any advance of funds by a party other
than the Mortgagor, directly or indirectly, for the payment of any
amount required by the Mortgage, other than interest accruing from the
date of the Mortgage Note or date of disbursement of
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the Mortgage proceeds, whichever is greater, to the date that precedes
by one month the due date of the first installment of principal and
interest;
(xliii) All parties that have had any interest in the
Mortgage Loan, whether as mortgagee, assignee, pledgee or otherwise
during the period in which they held and disposed of such interest,
were and either are now or, in the case of subclause (1) of this
clause (xliii), will be within 30 days of the Closing Date, (1) in
compliance with any and all applicable licensing requirements of the
laws of the state wherein the Mortgaged Property is located, and (2)
(A) organized under the laws of such state, or (B) qualified to do
business in such state, or (C) federal savings and loan associations
or national banks having principal offices in such state, or (D) not
doing business in such state so as to require qualification or
licensing;
(xliv) No Mortgage Loan was selected by the Seller for
inclusion in the Trust on any basis intended to adversely affect the
Trust;
(xlv) A full appraisal of each Mortgaged Property was
performed in connection with the origination of the related Mortgage
Loan, and such appraisal is the appraisal referred to in determining
the Appraised Value of such Mortgaged Property;
(xlvi) With respect to each Junior Mortgage Loan, the
related Senior Lien requires equal monthly payments or, if such Senior
Lien bears an adjustable interest rate, the monthly payments for such
Senior Lien may be adjusted no more frequently than monthly;
(xlvii) With respect to any Junior Mortgage Loan with a
related Senior Lien that provides for negative amortization or an
open-end feature that permits additional borrowings, the balance of
such Senior Lien reflected on the Mortgage Loan Schedule and used to
calculate the Combined Loan-to-Value Ratio for such Junior Mortgage
Loan is based on the maximum amount of negative amortization, deferred
interest or maximum amount of borrowings permitted under such Senior
Lien;
(xlviii) The Seller has not required the Mortgagor to sign a
letter in connection with the origination of any Mortgage Loan in
which such Mortgagor indicates its inability to repay such Mortgage
Loan in accordance with the terms of the related Mortgage Note;
(xlix) Each Adjustable Rate Mortgage Loan was underwritten
or re-underwritten as though such Mortgage Loan would initially have
borne interest at a rate equal to the Index plus the related Gross
Margin (determined at the time such underwriting was conducted);
(l) As of the Cut-off Date and any Subsequent Cut-off
Date, no Mortgage Loan in Group I or Group II is secured by more than
one Mortgaged Property;
(li) With respect to each Adjustable Rate Mortgage Loan,
all of the terms of the Mortgage pertaining to interest rate
adjustments, payment adjustments and adjustments of the outstanding
principal balance are enforceable; such adjustments will not affect
the
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priority of the Mortgage lien and all of the adjustments have been
properly calculated, recorded, reported and applied in accordance with
the Mortgage and applicable law;
(lii) All insurance policies are the valid and binding
obligation of the insurer and contain a standard mortgagee clause
naming the originator, its successors and assigns, as mortgagee. Such
insurance policies require prior notice to the insured of termination
or cancellation and no such notice has been received, each Mortgage
obligates the Mortgagor thereunder to maintain all such insurance at
the Mortgagor's cost and expense, and upon the Mortgagor's failure to
do so, authorizes the holder of the Mortgage to obtain and maintain
such insurance at the Mortgagor's cost and expense and to seek
reimbursement therefor from the Mortgagor;
(liii) None of the Mortgage Loans is subject to a plan of
bankruptcy and no Mortgagor has sought protection or relief under any
state or federal bankruptcy or insolvency law during the term of the
related Mortgage;
(liv) Each Initial Mortgage Loan has a Monthly Mortgage
Payment due during the first Collection Period commencing after the
calendar month during which such Mortgage Loan is included in the
Trust and each Subsequent Mortgage Loan has a Monthly Payment due
during the first or second Collection Period commencing after the
calendar month during which such Mortgage Loan is included in the
Trust;
(lv) All Mortgage Loans were underwritten or
re-underwritten in accordance with the underwriting guidelines of the
Seller;
(lvi) As of the Cut-off Date or related Subsequent Cut-off
Date, as applicable, no more than 1% of the Mortgage Loans by Cut-off
Date Principal Balance or aggregate Principal Balance of the Mortgage
Loans as of such Subsequent Cut-off Date, as applicable, is secured by
a Mortgaged Property upon which is affixed a modular home; and
(lvii) As of the end of the Commitment Period, with respect
to all of the Subsequent Mortgage Loans purchased by the Trust on any
Subsequent Transfer Date, all of the conditions set forth in Section
2.02 with respect to the sale and transfer of the Subsequent Mortgage
Loans to the Trust have been satisfied.
(lviii) Mortgage Loans in Group I representing not less than
46% of the Original Group I Balance were assigned a credit grade of
"A-" by the Seller at the time such Mortgage Loans were originated or
acquired, as applicable, by the Seller; Mortgage Loans in Group I
representing not less than 21% of the Original Group I Balance were
assigned a credit grade of "B" by the Seller at the time such Mortgage
Loans were originated or acquired, as applicable, by the Seller;
Mortgage Loans in Group I representing not less than 13% of the
Original Group I Balance were assigned a credit grade of "C" by the
Seller at the time such Mortgage Loans were originated or acquired, as
applicable, by the Seller; Mortgage Loans in Group I representing not
more than 6% of the Original Group I Balance were assigned a credit
grade of "C-" by the Seller at the time such Mortgage Loans were
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originated or acquired, as applicable, by the Seller; and Mortgage
Loans in Group I representing not more than 13% of the Original Group
I Balance were assigned a credit grade of "D" by the Seller at the
time such Mortgage Loans were originated or acquired, as applicable,
by the Seller. Mortgage Loans in Group II representing not less than
35% of the Original Group II Balance were assigned a credit grade of
"A-" by the Seller at the time such Mortgage Loans were originated or
acquired, as applicable, by the Seller; Mortgage Loans in Group II
representing not less than 22% of the Original Group II Balance were
assigned a credit grade of "B" by the Seller at the time such Mortgage
Loans were originated or acquired, as applicable, by the Seller;
Mortgage Loans in Group II representing not less than 16% of the
Original Group II Balance were assigned a credit grade of "C" by the
Seller at the time such Mortgage Loans were originated or acquired, as
applicable, by the Seller; Mortgage Loans in Group II representing not
more than 9% of the Original Group II Balance were assigned a credit
grade of "C-" by the Seller at the time such Mortgage Loans were
originated or acquired, as applicable, by the Seller; and Mortgage
Loans in Group II representing not more than 17% of the Original Group
II Balance were assigned a credit grade of "D" by the Seller at the
time such Mortgage Loans were originated or acquired, as applicable,
by the Seller. Each credit grade so assigned to any Mortgage Loan has
been determined in accordance with the Seller's internal credit
grading system and not pursuant to any other scale or objective
standard.
It is understood and agreed that the representations and warranties
set forth in this Section shall survive the sale and assignment of the Mortgage
Loans to the Trust and the issuance, sale and delivery of the Certificates.
Upon discovery by the Seller, the Servicer or a Responsible Officer of the
Trustee of a breach of any of the foregoing representations and warranties,
without regard to any limitation set forth in such representation or warranty
concerning the knowledge of the Seller as to the facts stated therein, which
breach materially and adversely affects the interests of the Certificateholders
in the related Mortgage Loan or Mortgage Loans, the party discovering such
breach shall give prompt written notice to the other parties hereto, to each of
the Rating Agencies and to the Certificate Insurer.
Within 60 days of its discovery or its receipt of notice of breach,
the Seller shall use all reasonable efforts to cure such breach in all material
respects. Unless, prior to the expiration of such 60-day period, such breach
has been cured in all material respects or otherwise does not exist or continue
to exist, the Seller shall, not later than the Deposit Date in the month
following the related Collection Period in which any such cure period expired,
but in all events within 90 days of the earlier of its discovery or receipt of
notice of breach (or at the election of the Seller, an earlier Collection
Period), either (I) repurchase such Mortgage Loan (or, in the case of a
representation and warranty of the nature specified in clauses (xxii) and
(xii), repurchase Mortgage Loans such that, after giving effect to such
repurchase, the related
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representation and warranty would be complied with) (including any property
acquired in respect thereof and any insurance policy or insurance proceeds with
respect thereto) from the Trust in the same manner and subject to the same
conditions as set forth in Section 2.03 or (II) remove such Mortgage Loan and
substitute in its place a Qualified Replacement Mortgage Loan (or, in the case
of a representation and warranty of the nature specified in clauses (xxii) and
(xii), remove such Mortgage Loans and substitute in their place Qualified
Replacement Mortgage Loans such that, after giving effect to such substitution,
the related representation and warranty would be complied with) in the same
manner and subject to the same conditions as set forth in Section 2.03. Upon
making any such repurchase or substitution, the Seller shall be entitled to
receive an instrument of assignment or transfer from the Trustee, without
recourse to the Trustee, to the same extent as set forth in Section 2.03 with
respect to the repurchase of or substitution for Defective Mortgage Loans under
that Section. It is understood and agreed that the obligation of the Seller to
repurchase or substitute any such Defective Mortgage Loan (or property acquired
in respect thereof or insurance policy or current or future insurance proceeds
with respect thereto) shall constitute the sole remedy against it respecting
such breach of the foregoing representations or warranties available to the
Certificateholders or the Trustee, as the case may be, and such obligation
shall survive any resignation or termination of the Company as Servicer under
this Agreement.
Notwithstanding the foregoing, a substitution of a Mortgage Loan by
the Seller for a breach will not be made unless the Trustee receives an
Officer's Certificate certifying that the Qualified Replacement Mortgage Loan
conforms to the requirements of this Agreement and an Opinion of Counsel that
such substitution will not be a "prohibited transaction" as defined in Section
860F(a)(2) of the Code. Any substitution must be effected not later than two
years after the Closing Date, or within such longer period of time as may be
permitted under the REMIC Provisions for substitution of mortgage loans.
Section 2.06. Execution and Authentication of Certificates. The
Trustee shall deliver to or upon the order of the Seller, in exchange for the
Mortgage Loans and the other assets comprising the Trust, simultaneously with
the sale, assignment and transfer to the Trustee of the Mortgage Loans,
Certificates duly executed by the Trustee, on behalf of the Trust, not in its
individual capacity but solely as Trustee, and authenticated by the Trustee,
pursuant to Section 6.01, in authorized denominations, equaling, 100% of the
Percentage Interests in each Class, and collectively evidencing the entire
ownership of the Trust.
Section 2.07. Designation of Certificates; Designation of Startup
Day. The Seller hereby designates the Class A-1A Certificates, Class A-1B
Certificates, Class A-1C Certificates, Class A-1D Certificates, Class A-1E
Certificates and Class A-2 Certificates as "regular interests" and the Class R
Certificates as the single class of "residual interests" in the REMIC Pool
comprising the REMIC established pursuant to Section 3.01 for the purposes of
Code Sections 860G(a)(1) and 860G(a)(2), respectively. The Purchase Account
and the Capitalized Interest Account shall not be assets of the REMIC Pool
established pursuant to Section 3.01. The Closing Date is hereby designated as
the "Startup Day" within the meaning of Code Section 860G(a)(9) of the REMIC
established pursuant to Section 3.01. The latest possible maturity date of the
Class A Certificates is the Final Maturity Date.
Section 2.08. Indemnification of the Trust. The Seller shall
indemnify the Trust for any liability incurred thereby as a result of a breach
of the representation and warranty set forth in clause (xvi) of Section 2.05.
This indemnity obligation shall be in addition to any other obligation the
Seller may have in connection with any such breach.
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Section 2.09. Repurchase of Certain Delinquent Mortgage Loans by the
Seller. The Seller shall repurchase from the Trust on or prior to December 17,
1996 each Scheduled Delinquent Mortgage Loan identified in Part A of Schedule
III hereto that is not brought current, paid in full, recovered or otherwise
credited in full in accordance with the original terms of the related Mortgage
Note before December 17, 1996. The repurchase price for each such repurchase
shall be calculated on the same basis as the Purchase Price would be calculated
pursuant to Section 2.03. Such repurchase price shall be deposited in the
Certificate Account on the date of such repurchase in the manner described in
Section 2.03. For purposes of this Agreement, any repurchase effected in
accordance with this paragraph shall be deemed to be a prepayment of such
Scheduled Delinquent Mortgage Loan. Upon receipt of the related repurchase
price and written notification of such deposit signed by a Servicing Officer,
the Trustee shall release or cause to be released to the Seller the Mortgage
File related to such Scheduled Delinquent Mortgage Loan and related property
(including any property acquired in respect thereof, any insurance policy or
related present or future insurance proceeds with respect thereto) and shall
execute and deliver or cause to be executed and delivered such instrument of
transfer or assignment presented to it by the Seller, without recourse, as
shall be necessary to vest in the Seller all of the legal and beneficial
ownership of such Scheduled Delinquent Mortgage Loan or property and the
Trustee shall have no further responsibility with respect to said Mortgage
File. It is understood and agreed that the obligation of the Seller to
repurchase such Scheduled Delinquent Mortgage Loan shall constitute the sole
remedy against it respecting such defect available to the Certificateholders or
the Trustee, and such obligation on the part of the Seller shall survive any
resignation or termination of the Company as Servicer under this Agreement.
ARTICLE THREE
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS;
CERTIFICATE ACCOUNT
Section 3.01. The Servicer and the Sub-Servicers. Acting directly or
through one or more Sub-Servicers as provided in Section 3.15, the Servicer, as
servicer, shall administer the Mortgage Loans with reasonable care, using that
degree of skill and attention that the Servicer exercises with respect to all
comparable home equity mortgage loans that it services for itself or others.
The duties of the Servicer shall include collecting and posting of all
payments, responding to inquiries of Mortgagors or by federal, state or local
government authorities with respect to the Mortgage Loans, investigating
delinquencies, reporting tax information to Mortgagors in accordance with its
customary practices and accounting for collections and furnishing monthly and
annual statements to the Trustee with respect to distributions and making
Monthly Advances and Servicing Advances pursuant to Section 5.02. The Servicer
shall follow its customary standards, policies and procedures in performing its
duties as Servicer, to the extent not in conflict with the provisions of this
Agreement. Notwithstanding the appointment of any Sub-Servicer, the Servicer
shall remain liable for the performance of all of the servicing obligations and
responsibilities under this Agreement. The Servicer shall maintain all
licenses and qualifications necessary under the laws of Arizona, California,
Colorado, Nevada, Oregon, Utah and Washington to perform the servicing
obligations hereunder. If the Servicer commences directly to service a
material number or principal amount of Mortgage Loans with related Mortgaged
Properties located in any other state, the Servicer will use its reasonable
efforts promptly to obtain, and thereafter to maintain, all licenses and
qualifications
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necessary to perform its servicing obligations hereunder in such states. Any
Sub-Servicer shall maintain all licenses and qualifications necessary to
perform its servicing obligations in the states where the Mortgaged Properties
to which the applicable Sub-Servicing Agreement relates are located. The
Servicer shall cooperate with the Trustee and furnish to the Trustee such
information in its possession as may be necessary or appropriate to enable the
Trustee to perform its tax reporting duties hereunder. The Trustee shall
furnish the Servicer with any powers of attorney and other documents necessary
or appropriate to enable the Servicer to carry out its servicing and
administrative duties hereunder. Without limiting the generality of the
foregoing, the Servicer (i) shall continue, and is hereby authorized and
empowered by the Trustee, to execute and deliver, on behalf of itself, the
Certificateholders and the Trustee or any of them, any and all instruments of
satisfaction or cancellation, or of partial or full release or discharge and
all other comparable instruments, with respect to the Mortgage Loans and with
respect to the related Mortgaged Properties (ii) may consent to any
modification of the terms of any Mortgage Note not expressly prohibited hereby
if the effect of any such modification will not be to materially and adversely
affect the security afforded by the related Mortgaged Property or to decrease
or slow (other than as permitted by Section 3.02(a)(ii)) the timing of receipt
of any payments required thereunder and (iii) shall not consent to the placing
of a lien senior to or on parity with that of the Mortgage on the related
Mortgaged Property. In the event that notwithstanding the provisions of clause
(iii) above the Servicer shall consent to the placing of a lien senior to or on
a parity with that of the Mortgage on a Mortgaged Property, the Servicer shall
purchase on the next Deposit Date such Mortgage Loan (including any property
acquired in respect thereof and any insurance policy or insurance proceeds with
respect thereto) from the Trust at a price equal to the Purchase Price and
deposit such amount in the Certificate Account on such Deposit Date pursuant to
Section 3.02. For purposes of this Agreement, any such purchase shall be deemed
to be a prepayment of such Mortgage Loan. It is understood and agreed that the
obligation of the Servicer to purchase any Mortgage Loan (or property acquired
in respect thereof or insurance policy or insurance proceeds with respect
thereto) pursuant to the second immediately preceding sentence shall constitute
the sole remedy against it respecting such breach available to the
Certificateholders or the Trustee and such obligation shall survive any
resignation or termination of the consenting Servicer under this Agreement.
The Servicer may sue to enforce or collect on any of the Mortgage
Loans or any insurance policy covering a Mortgage Loan, in its own name if
possible, or on behalf of the Trust. If the Servicer commences a legal
proceeding to enforce a Mortgage Loan or any such insurance policy, the Trustee
shall thereupon be deemed to have automatically assigned the Mortgage Loan or
the rights under such insurance policy to the Servicer for purposes of
collection only. If, however, in any suit or legal proceeding for enforcement,
it is held that the Servicer may not enforce or collect on a Mortgage Loan or
any insurance policy covering a Mortgage Loan on the ground that it is not a
real party in interest or a holder entitled to enforce such Mortgage Loan or
such insurance policy, as the case may be, then the Trustee shall, upon the
written request of a Servicing Officer, furnish the Servicer with such powers
of attorney and other documents as are necessary or appropriate to enable the
Servicer to enforce such Mortgage Loan or insurance policy, as the case may be.
The relationship of the Servicer to the Trustee under this Agreement
is intended by the parties to be that of an independent contractor and not that
of a joint venturer, partner or agent.
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The parties intend that the REMIC Pool shall constitute a REMIC, and
that the affairs of the REMIC Pool shall be conducted so as to qualify it as a
REMIC. In furtherance of such intention, the Servicer covenants and agrees
that it shall act as agent (and the Servicer is hereby appointed to act as
agent) on behalf of the REMIC Pool, and that in such capacity it shall: (a)
use its best efforts to conduct the affairs of the REMIC Pool at all times that
any Certificates are outstanding so as to maintain the status thereof as a
REMIC under the REMIC Provisions; (b) not knowingly or intentionally take any
action or omit to take any action that would cause the termination of the REMIC
status of the REMIC Pool or that would subject the REMIC Pool to tax, including
the modification of a qualified mortgage that would subject the REMIC Pool to
tax; (c) exercise reasonable care not to allow the REMIC Pool to receive income
from the performance of services or from assets not permitted under the REMIC
Provisions to be held by a REMIC; (d) pay the amount of any federal income tax,
including, without limitation, prohibited transaction taxes, taxes on net
income from foreclosure property, and taxes on certain contributions to a REMIC
after the Startup Day, imposed on the REMIC Pool when and as the same shall be
due and payable (but such obligation shall not prevent the Servicer or any
other appropriate Person from contesting any such tax in appropriate
proceedings and shall not prevent the Servicer from withholding or depositing
payment of such tax, if permitted by law, pending the outcome of such
proceedings); and (e) pay the amount of any and all taxes imposed on the REMIC
Pool pursuant to Section 24874 of the California Revenue and Taxation Code.
The Servicer shall not be entitled to reimbursement for any taxes paid pursuant
to this Section.
Section 3.02. Collection of Certain Mortgage Loan Payments;
Collection Account and Certificate Account. (a) The Servicer shall, to the
extent such procedures shall be consistent with this Agreement, follow such
collection procedures as it follows from time to time with respect to home
equity mortgage loans in its servicing portfolio that are comparable to the
Mortgage Loans; provided that the Servicer shall always at least follow
collection procedures that are consistent with or better than standard industry
practices. Consistent with the foregoing, the Servicer may in its discretion
(i) waive any assumption fees, late payment charges, charges for checks
returned for insufficient funds, prepayment fees, if any, or other fees that
may be collected in the ordinary course of servicing the Mortgage Loans, (ii)
if a Mortgagor is in default or about to be in default because of a Mortgagor's
financial condition, arrange with the Mortgagor a schedule for the payment of
delinquent payments due on the related Mortgage Loan, or (iii) modify payments
of monthly principal and interest on any Mortgage Loan becoming subject to the
terms of the Relief Act in accordance with the Servicer's general policies for
comparable home equity mortgage loans subject to such Act; provided, however,
that with respect to any arrangement referred to in clause (ii) above, the
Servicer shall not agree to any extension or modification of the related
Mortgage Note unless the Servicer shall have first given the Certificate
Insurer telephonic and telecopied notice of its intention to make such
extension or modification and the Certificate Insurer, within two Business Days
after such notice is given, has not given telephonic and telecopied notice to
the Servicer that it does not approve of such extension or modification.
(b) The Servicer shall establish and maintain, or cause to be
established and maintained, one or more Eligible Accounts that in the aggregate
are the Collection Account. All amounts held in the Collection Account shall
be invested by the depository institution or trust company then maintaining the
account at the written direction of the Servicer in Permitted Investments that
mature
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not later than the Deposit Date next succeeding the date of investment. No
Permitted Investment shall be sold or disposed of at a gain prior to maturity
unless the Servicer has obtained an Opinion of Counsel that such sale or
disposition will not cause the REMIC Pool to be subject to the tax on income
from prohibited transactions imposed by Code Section 860F(a)(1), or otherwise
subject the REMIC Pool to tax or cause the REMIC Pool to fail to qualify as a
REMIC. The Servicer shall not retain any cash or investment in the Collection
Account for a period in excess of 12 months and cash therein shall be
considered transferred to Certificate Account on a first-in, first-out basis.
All net income and gain realized from any such investment shall be for the
benefit of the Servicer as additional servicing compensation and shall be
subject to its withdrawal or order from time to time. Any losses realized in
connection with any such investment shall be for the account of the Servicer
and the Servicer shall deposit or cause to be deposited the amount of such loss
(to the extent not offset by income from other investments) in the Collection
Account immediately upon the realization of such loss.
(c) Subject to Section 3.02(d), the Servicer shall deposit in the
Collection Account each of the following payments on and collections in respect
of the Mortgage Loans as soon as practicable, but in no event later than the
close of business on the second Business Day after its receipt thereof:
(i) all payments in respect of or allocable to interest
on the Mortgage Loans (including any net income from REO Properties);
(ii) all Principal Payments;
(iii) all Payments Ahead;
(iv) all Net Liquidation Proceeds; and
(v) all Trust Insurance Proceeds (including, for this
purpose, any amounts required to be credited by the Servicer pursuant
to the last sentence of Section 3.04).
The Servicer shall replace all amounts previously withdrawn from the
Collection Account and applied by the Servicer towards the payment of a Monthly
Advance pursuant to Section 5.02(a) or towards the payment of a Servicing
Advance pursuant to Section 5.02(b) by depositing into the Collection Account
on or prior to the Deposit Date immediately following such withdrawal an amount
equal to the total of all such amounts so applied since the immediately
preceding Deposit Date.
The foregoing requirements respecting deposits to the Collection
Account are exclusive, it being understood that, without limiting the
generality of the foregoing, the Servicer need not deposit in the Collection
Account amounts representing fees, late payment charges, charges for checks
returned for insufficient funds, prepayment fees, if any, or extension or other
administrative charges paid by Mortgagors or amounts received by the Servicer
for the account of Mortgagors for application towards the payment of taxes,
insurance premiums, assessments and similar items. The amounts deposited in
the Collection Account are subject to withdrawal, from time to time, to make
deposits into the Certificate Account pursuant to Section 3.02(e), to pay
itself the Monthly Servicing
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Fee pursuant to Section 3.08 and to make Servicing Advances or to reimburse
itself for Servicing Advances, as applicable, in either case in accordance with
Section 5.02(b), to make Monthly Advances in accordance with Section 5.02(a) or
to reimburse itself for payments of Monthly Advances to the extent of
recoveries of interest relating to the Mortgage Loans that were the subject of
such Monthly Advances. In addition, if the Servicer deposits in the Collection
Account any amount not required to be so deposited or any amount in respect of
payments by Mortgagors made by checks subsequently returned for insufficient
funds or other reason for non-payment, it may at any time withdraw such amount
from the Collection Account, any provision herein to the contrary
notwithstanding.
(d) Upon such terms as the Certificate Insurer, Standard & Poor's and
Moody's may approve the Servicer may make the deposits to the Collection
Account referred to in Section 3.02(c) on a later day than the second Business
Day after receipt of the amounts required to be so deposited, which terms and
later day shall be specified by the Certificate Insurer, Standard & Poor's and
Moody's and confirmed to the Trustee and the Servicer in writing.
(e) The Trustee shall establish and maintain the Certificate Account.
The Certificate Account shall constitute a trust account segregated on the
books of the Trustee and held by the Trustee in trust, and the Certificate
Account and the amounts deposited therein shall not be subject to any claim,
liens or encumbrances of any creditors or depositors of the Trustee or the
Company (whether made directly or indirectly through a liquidator, receiver or
trustee in bankruptcy of the Trustee or the Company). At or before 11:00 a.m.
Los Angeles time on each Deposit Date, the Servicer shall withdraw from the
Collection Account all amounts on deposit therein that constitute any portion
of Available Funds for a Mortgage Loan Group and the related Distribution Date
(including any amounts therein that are being held for distribution on a
subsequent Distribution Date and are applied toward the Monthly Advance for the
related Distribution Date pursuant to Section 5.02(a)) and remit such amounts
to the Trustee for deposit in the Certificate Account. In addition, any
Compensating Interest and Monthly Advances required to be made by the Servicer
for the related Mortgage Loan Group in respect of the related Distribution Date
and any amounts required to be deposited into the Certificate Account in
connection with a purchase or repurchase of any Mortgage Loans or any shortage
on Mortgage Loans in such Mortgage Loan Group by the Seller or the Servicer
pursuant to Section 2.03, 2.05, 2.09, 3.01, 3.03, 3.06 or 10.01 or a
substitution of a Qualified Replacement Mortgage Loan pursuant to Section 2.03
or 2.05, or in connection with a purchase of Mortgage Loans by the Certificate
Insurer pursuant to Section 10.01, shall be remitted to the Trustee for deposit
in the Certificate Account on the applicable Deposit Date. Any amounts held in
the Certificate Account may be invested at the written direction of the
Servicer in Permitted Investments upon the same terms and conditions as those
specified in clause (b) above with respect to the Collection Account except
that such investments shall mature not later than the Distribution Date next
succeeding the date of investment, and in the absence of such direction the
Trustee shall invest in Permitted Investments described in clause (e) of the
definition of Permitted Investments. All net income and gain realized from any
such investment shall be for the benefit of the Servicer as additional
servicing compensation and shall be subject to its withdrawal or order from
time to time. Any losses realized in connection with any such investment shall
be for the account of the Servicer and the Servicer shall deposit or cause to
be deposited the amount of such loss (to the extent not
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offset by income from other investments) in the Certificate Account immediately
upon the realization of such loss.
Section 3.03. Additional Servicing Responsibilities for the
Adjustable Rate Mortgage Loans. The Servicer shall enforce each Adjustable Rate
Mortgage Loan and shall timely calculate, record, report and apply all Mortgage
Loan Rate adjustments in accordance with the related Mortgage Note. The
Servicer's record shall, at all times, reflect the then-current Mortgage Loan
Rate and Monthly Mortgage Payment and the Servicer shall timely notify the
Mortgagor of any changes to the Mortgage Loan Rate and the Monthly Mortgage
Payment. If the Servicer fails to adjust the Mortgage Loan Rate or the Monthly
Mortgage Payment in accordance with the terms of the Mortgage Note for the
related Adjustable Rate Mortgage Loan, or if the Servicer fails to notify the
related Mortgagor of any such adjustment as required under the terms of such
Mortgage Note, or if any liability, claim or defense arises with respect to any
Adjustable Rate Mortgage Loan solely as a result of any such failure, the
Servicer shall pay, from its own funds and without right of reimbursement
therefor, any shortage in amounts collected or collectible on the related
Adjustable Rate Mortgage Loan that results. The Servicer shall deposit any
amounts in respect of such shortage in the Certificate Account on the Deposit
Date with respect to the related Collection Period.
Section 3.04. Hazard Insurance Policies. The Servicer shall cause to
be maintained for each Mortgage Loan (including Mortgage Loans as to which the
related Mortgaged Property has been acquired by the Trust upon foreclosure, by
deed in lieu of foreclosure or comparable conversion), hazard insurance
(including flood insurance coverage, if obtainable, to the extent such property
is located in a federally designated flood area in such amount as is required
under applicable FEMA guidelines) with extended coverage in an amount that is
not less than the least of (i) the maximum insurable value from time to time of
the improvements that are a part of such property, or (ii) the combined
principal balance of such Mortgage Loan and the principal balance of each
mortgage loan senior to such Mortgage Loan at the time of such foreclosure plus
accrued interest and the good-faith estimate of the Servicer of related
Liquidation Expenses to be incurred in connection therewith; provided, further
that such hazard insurance shall be in an amount not less than such amount as
is necessary to avoid the application of any coinsurance clause contained in
the related hazard insurance policy. Each such hazard insurance policy shall
contain a standard mortgage clause naming the originator, its successors and
assigns, as mortgagee and shall require prior notice to the insured of
termination or cancellation. The Servicer shall be under no obligation to
require that any Mortgagor maintain earthquake or other additional insurance
and shall be under no obligation itself to maintain any such additional
insurance on property acquired in respect of a Mortgage Loan, other than
pursuant to such applicable laws and regulations as shall at any time be in
force and as shall require such additional insurance. Amounts collected by the
Servicer under any such policies shall be deposited in the Collection Account
or Certificate Account, as the case may be, in accordance with Section 3.02 to
the extent that they constitute Net Liquidation Proceeds or Trust Insurance
Proceeds. If the Servicer shall obtain and maintain a blanket policy, issued
by an insurer acceptable to each Rating Agency and the Certificate Insurer,
insuring against such hazard losses, it shall conclusively be deemed to have
satisfied its obligations as set forth in the first sentence of this Section,
it being understood and agreed that such policy may contain a deductible clause
that is in form and substance consistent with standard industry practice, in
which case the
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Servicer shall, in the event that there shall not have been maintained on the
related Mortgaged Property a policy complying with the first sentence of this
Section, and there shall have been a loss that would have been covered by such
policy, deposit in the Collection Account in accordance with Section 3.02 the
amount not otherwise payable under the blanket policy because of such
deductible clause.
Section 3.05. Enforcement of Due-on-Sale Clauses; Assumption and
Modification Agreements. In any case in which property subject to a Mortgage
is conveyed by the Mortgagor, the Servicer shall enforce any due-on-sale clause
contained in the related Mortgage Note or Mortgage, to the extent permitted by
such Mortgage Note or Mortgage, applicable law and governmental regulations,
but only to the extent that such enforcement will not adversely affect or
jeopardize coverage under any related insurance policy or result in legal
action by the Mortgagor. Subject to the foregoing, the Servicer may, with the
prior written consent of the Certificate Insurer, take or enter into an
assumption and modification agreement from or with the Person to whom such
Mortgaged Property has been or is about to be conveyed, pursuant to which such
Person becomes liable under the related Mortgage Note and the Mortgagor remains
liable thereon or, if the Person to whom such Mortgaged Property has been or is
about to be conveyed satisfies the Servicer's then-current underwriting
standards for home equity mortgage loans similar to the Mortgage Loans, and the
Servicer in its reasonable judgment finds it appropriate, is released from
liability thereon. If the Trustee is holding the Mortgage Files, the Servicer
shall notify the Trustee that any assumption and modification agreement has
been completed by delivering to the Trustee an Officer's Certificate certifying
that such agreement is in compliance with this Section and the Servicer shall
forward to the Trustee the original of such assumption and modification
agreement. Such assumption and modification agreement shall, for all purposes,
be considered a part of the related Mortgage File to the same extent as all
other documents and instruments constituting a part thereof. In connection
with any such agreement, the Mortgage Loan Rate shall not be reduced (but may
be increased), the Principal Balance of such Mortgage Loan shall not be changed
and the term of such Mortgage Loan will not be extended beyond the existing
term of such Mortgage Loan. Any fee collected by the Servicer for entering
into any such agreement shall be retained by the Servicer as additional
servicing compensation.
Notwithstanding the foregoing paragraph of this Section 3.05 or any
other provision of this Agreement, the Servicer shall not be deemed to be in
default, breach or any other violation of its obligations hereunder by reasons
of any assumption of a Mortgage Loan, or transfer of any Mortgaged Property
without the assumption thereof, by operation of law or any assumption or
transfer that the Servicer reasonably believes it may be restricted by law from
preventing, for any reason whatsoever.
Section 3.06. Realization upon Liquidated Mortgage Loans. Except as
otherwise provided below with respect to the Scheduled Delinquent Mortgage
Loans listed on Part B of the Schedule of Certain Delinquent Mortgage Loans
attached as Schedule III hereto the Servicer, on behalf of the Trust, shall
foreclose upon or otherwise comparably convert to ownership Mortgaged
Properties securing such of the Mortgage Loans as come into and continue in
default and as to which no satisfactory arrangements can be made for collection
of delinquent payments pursuant to Section 3.02(a); provided that if the
Servicer has actual knowledge or reasonably believes that any
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Mortgaged Property is affected by hazardous or toxic wastes or substances, then
the Servicer shall not cause the Trust to acquire title to such Mortgaged
Property in a foreclosure or similar proceeding, unless otherwise directed in
writing by the Certificate Insurer. In connection with such foreclosure or
other conversion, the Servicer shall follow such practices (including, in the
case of any default on a related Senior Lien, the advancing of funds to correct
such default) and procedures as it shall deem necessary or advisable and as
shall be normal and usual in its general first, second and third lien one- to
four-family mortgage loan servicing activities (including the procurement of a
drive-by appraisal of the related Mortgaged Property prior to foreclosure or
other conversion). The foregoing is subject to the proviso that the Servicer
or the Trustee shall not be required to expend its own funds in connection with
any foreclosure or towards the correction of any default on a related Senior
Lien or restoration of any Mortgaged Property unless, in the reasonable
judgment of the Servicer, such foreclosure, correction or restoration will
increase Net Liquidation Proceeds (taking into account any unreimbursed Monthly
Advances made or expected to be made with respect to such Mortgage Loan).
To the extent the Net Liquidation Proceeds derived from such
foreclosure or conversion exceed the unpaid principal balance of the related
Mortgage Loan and accrued interest thereon at the applicable Mortgage Loan Rate
through the Collection Period in which such foreclosure or conversion occurs
(net of any related Monthly Advances or Servicing Advances that were
unreimbursed prior to the receipt of such Net Liquidation Proceeds), such
excess shall be paid to the Holder of the Class R Certificate.
Under no circumstances will the Trust or the Trustee on behalf of the
Trust complete foreclosure proceedings with respect to any Scheduled Delinquent
Mortgage Loan listed on Part B of the Schedule of Certain Delinquent Mortgage
Loans or take title to the related Mortgaged Property unless the Trustee
receives an Opinion of Counsel satisfactory to it to the effect that the
property to which the Trust or the Trustee on behalf of the Trust would take
title will be "foreclosure property" within the meaning of Code Section
8860G(a)(8), which opinion shall not be an expense of the Trust or the Trustee.
Rather, the Servicer shall purchase from the Trust, or arrange for the purchase
by a third party of, each such Scheduled Delinquent Mortgage Loan that is not
brought current, paid in full, recovered or otherwise credited in full prior to
the completion of foreclosure proceedings with respect thereto. Each such
purchase shall be completed on a Deposit Date prior to the date on which
foreclosure proceedings are completed with respect to such Scheduled Delinquent
Mortgage Loan. The purchase price for each such purchase shall be the fair
market value of the related Mortgaged Property calculated by the Servicer on
the same basis used by the Servicer in its customary foreclosure proceedings.
Such purchase price shall be deposited in the Certificate Account on the date
of such purchase in the manner described in Section 2.03. For purposes of this
Agreement, any purchase effected in accordance with this paragraph shall be
deemed to be a prepayment of such Scheduled Delinquent Mortgage Loan. Upon
receipt of the related purchase price and written notification of such deposit
signed by a Servicing Officer, the Trustee shall release or cause to be
released to the Servicer, or such third party purchaser, the related Mortgage
File and other property (including any insurance policy or related present or
future insurance proceeds with respect thereto) and shall execute and deliver
or cause to be executed and delivered such instruments of transfer or
assignment presented to it by the Servicer, without recourse, as shall be
necessary to vest in the Servicer, or such third party purchaser, all of the
legal
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and beneficial ownership of such Scheduled Delinquent Mortgage Loan or property
and the Trustee shall have no further responsibility with respect to said
Mortgage File.
Notwithstanding the foregoing, the Servicer, at its sole option, may
purchase from the Trust on any Deposit Date any Mortgage Loan as to which the
related Mortgagor has failed to make full Monthly Mortgage Payments as required
under the related Mortgage Note for three consecutive months at any time
following the Cut-off Date and prior to such Deposit Date at a price equal to
the Purchase Price by depositing such amount in the Certificate Account on such
Deposit Date pursuant to Section 3.02; provided, however, that the aggregate
Principal Balances of the Mortgage Loans purchased by the Servicer pursuant to
the exercise of the option granted in this sentence shall not exceed 5% of the
sum of the Original Pool Balance plus the amount of the Purchase Account
Deposit, unless otherwise approved by the Certificate Insurer. In addition,
the Servicer, at its sole option, may purchase from the Trust on any Deposit
Date occurring during the 90-day period following the Closing Date any Mortgage
Loan as to which a Monthly Mortgage Payment becomes 60 or more days
contractually delinquent at any time following the Cut-off Date and prior to
such Deposit Date at a price equal to the Purchase Price by depositing such
amount in the Certificate Account on such Deposit Date pursuant to Section
3.02; provided, however, that the aggregate Principal Balances of the Mortgage
Loans purchased by the Servicer pursuant to the exercise of the option granted
in this sentence shall not exceed 5% of the sum of the Original Pool Balance
plus the amount of the Purchase Account Deposit. For purposes of this
Agreement, any purchase effected in accordance with this paragraph shall be
deemed to be a prepayment of each Mortgage Loan so purchased.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be issued to the Trustee, or to its nominee, on behalf of the
Certificateholders, and the Servicer shall manage, conserve, protect and
operate each such Mortgaged Property for the Certificateholders solely for the
purpose of its prompt disposition and sale. The Servicer shall use its best
efforts to dispose of each such Mortgaged Property as expeditiously as possible
consistent with the goal of maximizing Net Liquidation Proceeds (taking into
account any unreimbursed Monthly Advances made or expected to be made with
respect to such Mortgage Loan). Neither the Trustee nor the Servicer, acting
on behalf of the Trust, shall provide financing from the Trust to any purchaser
of any such Mortgaged Property.
In the event that the Trust acquires any Mortgaged Property as
aforesaid or otherwise in connection with a default or imminent default on a
Mortgage Loan, such Mortgaged Property shall be disposed of by the Servicer on
behalf of the Trust within two years after its acquisition by the Trust unless
(i) the Servicer on behalf of the REMIC Pool has applied for and received an
extension of such two-year period pursuant to Code Sections 856(e)(3) and
860G(a)(8)(A), in which case the Servicer shall sell such Mortgaged Property
within the applicable extension period or (ii) the Trustee shall have received
an Opinion of Counsel to the effect that the holding by the Trust of such
Mortgaged Property subsequent to two years after its acquisition will not
result in a tax on prohibited transactions imposed by Code Section 860F(a)(1),
or otherwise subject the REMIC Pool to tax or cause the REMIC Pool to fail to
qualify as a REMIC at any time that any Certificates are outstanding. The
Servicer shall further ensure that the Mortgaged Property is administered so
that it constitutes "foreclosure property" within the meaning of Code Section
860G(a)(8) at all times, that
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the sale of such property does not result in the receipt by the REMIC Pool of
any income from non-permitted assets as described in Code Section
860F(a)(2)(B), and that the REMIC Pool does not derive any "net income from
foreclosure property" within the meaning of Code Section 860G(c)(2) with
respect to such property.
Section 3.07. Trustee to Cooperate; Release of Mortgage Files. Upon
the payment in full of the principal balance of any Mortgage Loan, if the
Trustee is holding the Mortgage Files, the Servicer shall notify the Trustee by
a certification in the form of Exhibit I hereto (which certification shall
include a statement to the effect that all amounts received in connection with
such payment which are required to be deposited to the Collection Account
pursuant to Section 3.02 have been so deposited) of a Servicing Officer. Such
notification shall be made each month at the time that the Servicer delivers
its Servicer Remittance Report to the Trustee pursuant to Section 4.01. Upon
any such payment in full, the Servicer is authorized to procure from such
trustee under the Mortgage that secured the related Mortgage Note a deed of
full reconveyance covering the related Mortgaged Property encumbered by such
Mortgage, which deed, except as otherwise provided in Section 2941(c) of the
California Civil Code or other applicable law, shall be recorded by such
trustee in the office of the County Recorder in which the Mortgage is recorded,
or, as the case may be, to procure from such trustee an instrument of
satisfaction or, if the related Mortgagor so requests, an assignment without
recourse, in each case prepared by the Servicer at its expense and executed by
the Trustee, which deed of reconveyance, instrument of satisfaction or
assignment shall be delivered by the Servicer to the Person entitled thereto,
it being understood and agreed that no expenses incurred in connection with
such deed of reconveyance, assignment or instrument of satisfaction shall be
reimbursed from amounts at the time on deposit in the Collection or Certificate
Account. From time to time and as appropriate for the servicing or foreclosure
of any Mortgage Loan, the Trustee shall, upon written request of the Servicer
and delivery to the Trustee of a trust receipt signed by a Servicing Officer,
release the related Mortgage File to the Servicer and shall execute such
documents prepared by the Servicer as shall be necessary to the prosecution of
any such proceedings. Such trust receipt shall obligate the Servicer to return
the Mortgage File to the Trustee when the need therefor by the Servicer no
longer exists unless the Mortgage Loan shall be liquidated, in which case, upon
receipt of a certificate of a Servicing Officer similar to that herein above
specified, the trust receipt shall be released by the Trustee to the Servicer.
Section 3.08. Servicing Compensation; Payment of Certain Expenses by
the Servicer. On each Deposit Date, the Servicer shall be entitled to receive,
by withdrawal by the Servicer from the Collection Account, out of collections
of interest on the Mortgage Loans in the related Mortgage Loan Group for the
related Collection Period, as servicing compensation for such Collection
Period, the Monthly Servicing Fee for such Mortgage Loan Group. Additional
servicing compensation shall be assumption fees, late payment charges, charges
for checks returned for insufficient funds, prepayment fees, if any, or
extension and other administrative charges received by the Servicer. The
Servicer is obligated to pay Compensating Interest for the related Mortgage
Loan Group out of the related Monthly Servicing Fee on each Deposit Date, to
the extent of the amount of the Monthly Servicing Fee, and shall not be
entitled to reimbursement therefor. The Servicer shall be required to pay all
expenses incurred by it in connection with its activities hereunder (including
payment of the fees and expenses relating to the Annual Independent Public
Accountant's Servicing Report described in Section 3.10, and all other fees and
expenses not otherwise expressly stated hereunder
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for the account of the Certificateholders) and shall not be entitled to
reimbursement therefor except as specifically provided herein.
Section 3.09. Annual Statement as to Compliance. (a) The Servicer
will deliver to the Trustee, the Certificate Insurer and each Rating Agency, on
or before September 30 of each year, beginning with September 30, 1997, an
Officer's Certificate of the Servicer substantially in the form set forth in
Exhibit G hereto stating that (a) a review of the activities of the Servicer
during the preceding calendar year (or since the Closing Date in the case of
the first such statement) and of its performance under this Agreement has been
made under such officer's supervision and (b) to the best of such officer's
knowledge, based on such review, the Servicer has fulfilled all its material
obligations under this Agreement throughout such year (or since the Closing
Date in the case of the first such statement), or, if there has been a default
in the fulfillment of any such obligation, specifying each such default known
to such officer and the nature and status thereof.
(b) The Servicer shall deliver to the Trustee, with a copy to the
Certificate Insurer and each Rating Agency, promptly after having obtained
knowledge thereof, but in no event later than five Business Days thereafter,
written notice by means of an Officer's Certificate of any event that with the
giving of notice or the lapse of time, or both, would become an Event of
Default.
Section 3.10. Annual Independent Public Accountants' Servicing
Report. On or before September 30 of each year, beginning with September 30,
1997, the Servicer at its expense shall cause a firm of nationally recognized
independent public accountants (who may also render other services to the
Servicer) to furnish a report to the Trustee, the Certificate Insurer and each
Rating Agency to the effect that such firm has examined certain documents and
records (including the Servicer Remittance Reports delivered by the Servicer
during the period covered by such reports) relating to the servicing activities
of the Servicer (which would include servicing of Mortgage Loans under this
Agreement) for the period covered by such report, and that such examination,
which has been conducted substantially in compliance with the Uniform Single
Attestation Program for Mortgage Bankers (to the extent that the procedures in
such audit guide are applicable to the servicing obligations set forth in this
Agreement), has disclosed no exceptions or errors in records relating to the
servicing activities of the Servicer (including servicing of Mortgage Loans
subject to this Agreement) that, in the opinion of such firm, are material,
except for such exceptions as shall be set forth in such report.
Section 3.11. Access to Certain Documentation and Information
Regarding the Mortgage Loans. (a) The Servicer shall provide to
Certificateholders that are federally insured savings associations and the FDIC
and its supervisory agents and examiners access to the documentation regarding
the Mortgage Loans required by applicable regulations of the Office of Thrift
Supervision, and to the Trustee and the Certificate Insurer all documentation
relating to the Mortgage Loans that is in the possession of the Servicer, such
access being afforded without charge but only upon reasonable request and
during normal business hours at the offices of the Servicer. Nothing in this
Section shall derogate from the obligation of the Servicer to observe any
applicable law prohibiting disclosure of information regarding the Mortgagors
and the failure of the Servicer to
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provide access as provided in this Section as a result of such obligation shall
not constitute a breach of this Section.
(b) The Servicer shall supply information to the Trustee in such form
as the Trustee shall reasonably request, by the start of the third Business Day
preceding each Distribution Date, as is required in the Trustee's reasonable
judgment to enable the Trustee to make required distributions and to furnish
the certificates, statements and reports to Certificateholders required
pursuant to this Agreement.
Section 3.12. Maintenance of Fidelity Bond and Errors and Omission
Policy. The Servicer shall during the term of its service as Servicer maintain
in force a (a) policy or policies of insurance covering errors and omissions in
the performance of its obligations as Servicer hereunder and (b) fidelity bond
in respect of its officers, employees and agents, in each case having coverage
amounts deemed by the Servicer to be adequate to its operations.
Section 3.13. Notices to the Rating Agencies, the Trustee and the
Certificate Insurer. In addition to the other notices required to be given to
the Rating Agencies, the Trustee and the Certificate Insurer by the provisions
of this Agreement, the Servicer shall give notice to each Rating Agency, the
Trustee and the Certificate Insurer of (a) any amendment to this Agreement, (b)
the final distribution on the Class A Certificates, (c) the occurrence of an
Event of Default and (d) the repurchase, purchase or substitution, as
applicable, of any Mortgage Loan pursuant to Section 2.03, 2.05, 2.09, 3.01 or
3.06 by the Seller or Servicer, as the case may be.
Section 3.14. Reports of Foreclosures and Abandonment of Mortgaged
Properties. Each year beginning in 1996 the Servicer shall make the reports of
foreclosures and abandonments of any Mortgaged Property required by Code
Section 6050J. In order to facilitate this reporting process, the Servicer, on
or before February 28th of each year, shall provide to the Internal Revenue
Service and the Trustee reports relating to each instance occurring during the
previous calendar year in which the Servicer (i) on behalf of the Trustee
acquired an interest in a Mortgaged Property through foreclosure or other
comparable conversion in full or partial satisfaction of a Mortgage Loan, or
(ii) knows or has reason to know that a Mortgaged Property has been abandoned.
The reports from the Servicer shall be in form and substance sufficient to meet
the reporting requirements imposed by such Section 6050J.
Section 3.15. Sub-Servicers and Sub-Servicing Agreements. (a) The
Servicer may enter into Sub-Servicing Agreements for any servicing and
administration of Mortgage Loans with any institution that is acceptable to the
Certificate Insurer and that is in compliance with the laws of each state
necessary to enable it to perform its obligations under such Sub-Servicing
Agreement. The Servicer shall give notice to the Certificate Insurer of the
appointment of any Sub-Servicer. The Servicer shall not enter into any
Sub-Servicing Agreement that does not provide for the servicing of the Mortgage
Loans specified therein on a basis consistent with the terms of this Agreement
or that otherwise violates the provisions of this Agreement. The Servicer may
enter into, and make amendments to, any Sub-Servicing Agreement or enter into
different forms of Sub-Servicing Agreements; provided, however, that any such
amendments or forms shall be consistent with and not violate the provisions of
this Agreement.
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(b) For purposes of this Agreement the Servicer shall be deemed to
have received payments on Mortgage Loans when any Sub-Servicer has received
such payments. With respect to the Servicer's obligations under Section 3.01
to make deposits in the Collection Account, the Servicer shall be deemed to
have made such deposits when any Sub-Servicer has made such deposits into a
Sub-Servicing Account if permitted by the related Sub-Servicing Agreement.
(c) Any Sub-Servicing Agreement and any other transactions or
services relating to the Mortgage Loans involving a Sub-Servicer shall be
deemed to be between the Sub-Servicer and the Servicer alone and the
Certificate Insurer and the Trustee shall not be deemed parties thereto and
shall have no claims, rights, obligations, duties or liabilities with respect
to any Sub-Servicer, except that the Trustee shall have such claims or rights
that arise as a result of any funds held by a Sub-Servicer in trust for or on
behalf of the Trust. Notwithstanding the execution of any Sub-Servicing
Agreement, the Servicer shall not be relieved of any liability hereunder and
shall remain obligated and liable for the servicing and administration of the
Mortgage Loans.
Section 3.16. Purchase Account. (a) The Trustee will establish and
maintain the Purchase Account. No later than the Closing Date, the Trustee
will deposit in the Purchase Account: (i) the Group I Purchase Account Deposit
from the proceeds of the sale of the Class A-1 Certificates and (ii) the Group
II Purchase Account Deposit from the proceeds of the sale of the Class A-2
Certificates. Upon the conveyance of Subsequent Mortgage Loans to the Trust on
any Subsequent Transfer Date, the Seller shall instruct the Trustee to withdraw
from the Purchase Account (i) an amount equal to the Group I Subsequent
Purchase Price for the Subsequent Mortgage Loans bearing fixed Mortgage Loan
Rates to be included in Group I and make a corresponding reduction in the
amount of the Group I Purchase Account Deposit and (ii) an amount equal to the
Group II Subsequent Purchase Price for the Subsequent Mortgage Loans bearing
adjustable Mortgage Loan Rates to be included in Group II and make a
corresponding reduction in the amount of the Group II Purchase Account Deposit,
in each case (other than on the last day in the Commitment Period) excluding
any related Additional Subsequent Purchase Price, and to pay such amount to or
upon the order of the Seller upon satisfaction of the conditions set forth in
Section 2.02 of this Agreement with respect to such transfer. The aggregate
Additional Subsequent Purchase Prices shall be released to the Seller as
provided in the last paragraph of Section 2.02.
(b) The Purchase Account will be part of the Trust but not part of
the REMIC Pool. Amounts held in the Purchase Account shall be invested in
Permitted Investments of the type specified in clause (f) of the definition of
Permitted Investments. The Trustee shall not be liable for any losses on
amounts invested in accordance with the provisions hereof. Any losses realized
in connection with any such investment shall be for the account of the Seller
and the Seller shall deposit the amount of such loss (to the extent not offset
by income from other investments) in the Purchase Account immediately upon the
realization of such loss. All interest and any other investment earnings on
amounts held in the Purchase Account shall be taxed to the Seller and for
federal and state income tax purposes the Seller shall be deemed to be the
owner of the Purchase Account. All interest and any other investment earnings
on amounts held in the Purchase Account shall be paid by the Trustee to the
Seller on the October 1996 Distribution Date.
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(c) On the Deposit Date in October 1996, any amounts remaining in the
Purchase Account (i) in respect of the Group I Purchase Account Deposit at such
time (net of reinvestment earnings payable to the Seller) shall be deposited at
such time into the Certificate Account for distribution as part of the Class
A-1 Monthly Principal on the October 1996 Distribution Date and (ii) in respect
of the Group II Purchase Account Deposit at such time (net of reinvestment
earnings payable to the Seller) shall be deposited at such time into the
Certificate Account for distribution as part of the Class A-2 Monthly Principal
on the October 1996 Distribution Date. Any amounts so deposited shall not be
invested in Permitted Investments or otherwise.
Section 3.17. Capitalized Interest Account. (a) The Trustee shall
establish and maintain the Capitalized Interest Account. On the Closing Date,
the Trustee will deposit in the Capitalized Interest Account the Capitalized
Interest Account Deposit. The Trustee shall hold the Group I Capitalized
Interest Account Deposit for the benefit of the Class A-1 Certificates and the
Group II Capitalized Interest Account Deposit for the benefit of the Class A-2
Certificates. The Class A-1A Certificateholders, Class A-1B
Certificateholders, Class A-1C Certificateholders, Class A-1D
Certificateholders, Class A-1E Certificateholders and Class A-2
Certificateholders will be entitled to the full Class A-1A Monthly Interest,
Class A-1B Monthly Interest, Class A-1C Monthly Interest, Class A-1D Monthly
Interest, Class A-1E Monthly Interest and Class A-2 Monthly Interest,
respectively, for the applicable initial Interest Period. On the October 1996
Deposit Date, (a) an amount equal to the sum of (i) 30 days interest computed
at a per annum rate equal to the average (weighted on the basis of the related
Certificate Principal Balances) of the Class A-1B Pass-Through Rate, Class A-1C
Pass-Through Rate, Class A-1D Pass-Through Rate and Class A-1E Pass-Through
Rate on an amount equal to the result obtained by multiplying the Group I
Purchase Account Deposit by a fraction, the numerator of which is the sum of
the Class A-1B Certificate Principal Balance, the Class A-1C Certificate
Principal Balance, the Class A-1D Certificate Principal Balance and the Class
A-1E Certificate Principal Balance and the denominator of which is the Class
A-1 Certificate Principal Balance, (ii) 28 days interest computed at the Class
A-1A Pass-Through Rate on an amount equal to the result obtained by multiplying
the Group I Purchase Account Deposit by a fraction, the numerator of which is
the Class A-1A Certificate Principal Balance and the denominator of which is
the Class A-1 Certificate Principal Balance and (iii) an amount equal to the
Insurer Premium payable with respect to the Class A-1 Certificates, in each
case for the related Distribution Date shall be withdrawn from the Capitalized
Interest Account and deposited into the Certificate Account in respect of
Available Funds for Group I for such Distribution Date and (b) an amount equal
to the sum of (i) 28 days interest computed at the Class A-2 Pass-Through Rate
on the Group II Purchase Account Deposit and (ii) an amount equal to the
Insurer Premium payable with respect to the Class A-2 Certificates, in each
case for the related Distribution Date, shall be withdrawn from the Capitalized
Interest Account and deposited into the Certificate Account in respect of
Available Funds for Group II for such Distribution Date. Any amounts so
deposited shall not be invested in Permitted Investments or otherwise.
(b) The Capitalized Interest Account will be part of the Trust but
not part of the REMIC Pool. Amounts held in the Capitalized Interest Account
shall be invested in Permitted Investments of the type specified in clause (e)
of the definition of Permitted Investments, which Permitted Investments shall
mature no later than the next succeeding Deposit Date. The Trustee shall not
be liable for any losses on amounts invested in accordance with the provisions
hereof. All interest and
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other investment earnings on amounts held in the Capitalized Interest Account
shall be paid by the Trustee to the Seller on the October 1996 Distribution
Date and for federal and state income tax purposes the Seller shall be deemed
to be the owner of the Capitalized Interest Account. Any losses realized in
connection with any such investment shall be for the account of the Seller and
the Seller shall deposit the amount of such loss (to the extent not offset by
income from other investments) in the Capitalized Interest Account immediately
upon the realization of such loss. All amounts earned on deposit in the
Capitalized Interest Account shall be taxed to the Seller.
(c) On the Deposit Date in October 1996, (i) any amounts remaining in
the Capitalized Interest Account in respect of the Group I Capitalized Interest
Account Deposit following withdrawal of the amounts specified in paragraph (a)
above (net of reinvestment earnings payable to the Seller) with respect to the
Group I Capitalized Interest Account Deposit shall be deposited at such time
into the Certificate Account for distribution as part of Available Funds in
respect of Group I on the October 1996 Distribution Date and (ii) any amounts
remaining in the Capitalized Interest Account in respect of the Group II
Capitalized Interest Account Deposit following withdrawal of the amounts
specified in paragraph (a) above (net of reinvestment earnings payable to the
Seller) with respect to the Group II Capitalized Interest Account Deposit shall
be deposited at such time into the Certificate Account for distribution as part
of Available Funds in respect of Group II on the October 1996 Distribution
Date. Any amounts so deposited shall not be invested in Permitted Investments
or otherwise.
Section 3.18. Payments on the Certificate Insurance Policy. (a) The
Trustee will establish and maintain the Policy Payments Account, a separate
special purpose trust account for the benefit of the Class A Certificateholders
and the Certificate Insurer. The Trustee shall deposit or cause to be
deposited any Insured Amounts paid under the Certificate Insurance Policy in
the Policy Payments Accounts and distribute such amounts only for purpose of
payment to the related Class A Certificateholders of the related Insured
Amounts and such amounts may not be used to satisfy any costs, expenses or
liabilities of the Servicer, the Trustee or the Trust. Insured Amounts
deposited in the Policy Payments Account shall not be invested in Permitted
Investments or otherwise, and shall be transferred to the Certificate Account
on the related Distribution Date and disbursed by the Trustee to the related
Class A Certificateholders in accordance with Section 5.01 (A) or (B), as
applicable.
As soon as possible, and in no event later than 9:00 a.m. (Los Angeles
time) on the third Business Day immediately preceding the related Distribution
Date, the Trustee shall determine whether an Insured Amount is required to be
paid under the Certificate Insurance Policy with respect to such Distribution
Date and, if so, shall immediately notify the Servicer by telephone, which
notice shall be confirmed in writing by facsimile transmission, of the
Trustee's intention so to file the applicable Notice of Claim. If by the close
of business in Los Angeles on such date an Insured Amount is still required to
be paid under the Certificate Insurance Policy with respect to such
Distribution Date, the Trustee shall furnish the Certificate Insurer with a
completed Notice of Claim in respect of such Insured Amount by 12:00 noon New
York City time on the next succeeding Business Day and shall provide a copy
thereof to the Servicer at or prior to the time such Notice of Claim is
received by the Certificate Insurer. The Notice of Claim shall constitute a
claim therefor pursuant to the Certificate Insurance Policy. In the event any
funds are received by the
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Trustee from the Servicer prior to the close of business in Los Angeles on the
Business Day following the transmission of a Notice of Claim to the Certificate
Insurer, and such funds reduce the amount of the Insured Amount to which such
Notice of Claim relates, the Insured Amount to which such Notice of Claim
relates shall be reduced by a corresponding amount, and the Notice of Claim
shall be deemed to have been rescinded to the extent of the reduction of the
Insured Amount. Notification of any such reduction in the Insured Amount shall
be given to the Certificate Insurer by the Trustee by no later than 8:00 A.M.,
Los Angeles time, on the related Distribution Date. The Certificate Insurer
shall, pursuant to the Certificate Insurance Policy, pay to the Trustee the
Insured Amount by 2:00 P.M., New York City time, on the later of (i) the
Business Day following receipt of such Notice of Claim and (ii) such
Distribution Date. The Trustee shall deposit or cause to be deposited such
Insured Amount in the Certificate Account.
(b) Each Class A Certificateholder shall promptly notify the Trustee
in writing upon the receipt of a court order as described in the definition of
Preference Amount and shall enclose a copy of such order with such notice to
the Trustee. The Trustee shall promptly notify the Certificate Insurer upon
its receipt of any such court order. If the payment of any portion of the
Class A-1A Monthly Interest, Class A-1B Monthly Interest, Class A-1C Monthly
Interest, Class A-1D Monthly Interest, Class A-1E Monthly Interest, Class A-2
Monthly Interest, Class A-1 Monthly Principal, Class A-2 Monthly Principal,
Class A-1 Excess Cash Distribution, Class A-2 Excess Cash Distribution, Class
A-1 Overflow Distribution or Class A-2 Overflow Distribution, or any payment in
respect of Class A-1 Coverage Deficit or Class A-2 Coverage Deficit for any
Distribution Date is avoided as a preference pursuant to a final, nonappealable
order under the Bankruptcy Code (the "Order"), the Certificate Insurer shall
cause such payment to be made on the later of (a) the date when due to be paid
pursuant to the Order or (b) the first to occur of (i) the fourth Business Day
following receipt by the Certificate Insurer from the Trustee of (A) a copy of
the final nonappealable order of the court pursuant to the United States
Bankruptcy Code to the effect that the Class A-1A Certificateholder, Class A-1B
Certificateholder, Class A- 1C Certificateholder, Class A-1D Certificateholder,
Class A-1E Certificateholder or Class A-2 Certificateholder, as applicable, is
required to return distributions paid on the Class A-1A Certificates, Class
A-1B Certificates, Class A-1C Certificates, Class A-1D Certificates, Class A-1E
Certificates or Class A-2 Certificates, respectively, during the term of the
Certificate Insurance Policy because such payments were avoidable as preference
payments pursuant to an Order, (B) a certificate of the Class A-1A
Certificateholder, Class A-1B Certificateholder, Class A-1C Certificateholder,
Class A-1D Certificateholder, Class A-1E Certificateholder or Class A-2
Certificateholder, as applicable, that the Order has been entered and is not
subject to any stay and (C) an assignment duly executed and delivered by the
Class A-1A Certificateholder, Class A-1B Certificateholder, Class A-1C
Certificateholder, Class A-1D Certificateholder, Class A-1E Certificateholder
or Class A-2 Certificateholder, as applicable, in such form as is reasonably
required by the Certificate Insurer and provided to the Class A
Certificateholder by the Certificate Insurer, irrevocably assigning to the
Certificate Insurer all rights and claims of (i) the Class A-1A
Certificateholders relating to or arising under the Class A-1A Certificates,
(ii) the Class A-1B Certificateholders relating to or arising under the Class
A-1B Certificates, (iii) the Class A-1C Certificateholders relating to or
arising under the Class A-1C Certificates, (iv) the Class A-1D
Certificateholders relating to or arising under the Class A-1D Certificates,
(v) the Class A-1E Certificateholders relating to or arising under the Class
A-1E Certificates or (vi) the Class A-2 Certificateholders relating to or
arising under the Class A-2
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Certificates, as applicable, against the debtor that made such preference
payment or otherwise with respect to such preference payment or (ii) the date
of receipt by the Certificate Insurer from the Trustee of the items referred to
in clauses (A), (B) and (C) above if, at least four Business Days prior to such
date of receipt, the Certificate Insurer shall have received written notice
from the Trustee that such items were to be delivered on such date and such
date was specified in the notice. Such payment shall be disbursed to the
receiver, conservator, debtor-in-possession or trustee in bankruptcy named in
the Order and not to the Trustee or any Class A Certificateholder directly
(unless a Class A Certificateholder has previously paid such amount to the
receiver, conservator, debtor-in-possession or trustee in bankruptcy named in
the Order, in which case such payment shall be disbursed to the Trustee for
distribution to such Class A Certificateholder upon proof of such payment
reasonably satisfactory to the Certificate Insurer).
(c) The Trustee shall receive, as attorney-in-fact for each Class
A-1A Certificateholder, Class A-1B Certificateholder, Class A-1C
Certificateholder, Class A-1D Certificateholder or Class A-1E Certificateholder
any Class A-1 Insured Amount allocable to such Class A-1A Certificates, Class
A-1B Certificates, Class A-1C Certificates, Class A-1D Certificates or Class
A-1E Certificates, as applicable, and, for each Class A-2 Certificateholder,
any Class A-2 Insured Amount, from the Certificate Insurer and disburse the
same in accordance with the provisions of Section 5.01. Any portion of the
distributions made by the Trustee in respect of Class A-1A Monthly Interest,
Class A-1B Monthly Interest, Class A-1C Monthly Interest, Class A-1D Monthly
Interest, Class A-1E Monthly Interest or any Class A-1 Coverage Deficit and the
Class A-2 Monthly Interest or any Class A-2 Coverage Deficit, as applicable,
from proceeds of the Certificate Insurance Policy shall not be considered
payment by the Trust, nor shall such payments discharge the obligation of the
Trust with respect to such Class A Certificateholders, and the Certificate
Insurer shall become the owner of such unpaid amounts in respect of the Class
A-1A Certificates, Class A-1B Certificates, Class A-1C Certificates, Class A-1D
Certificates, Class A-1E Certificates and Class A-2 Certificates, as
appropriate. The Trustee hereby agrees on behalf of each Class A
Certificateholder for the benefit of the Certificate Insurer that it recognizes
that: (i) to the extent the Certificate Insurer pays any Class A-1 Insured
Amounts in respect of the Class A-1A Certificates, either directly or
indirectly (as by paying through the Trustee), to the Class A-1A
Certificateholders, the Certificate Insurer will be subrogated to the rights of
the Class A-1A Certificateholders with respect to such Class A-1 Insured
Amounts paid in respect of such Certificateholders, shall be deemed to the
extent of the Class A-1 Insured Amounts so paid in respect of such
Certificateholders, to be a registered Class A-1A Certificateholder and shall
be entitled to receive all future distributions on the Class A-1A Certificates
until all such Insured Amounts (together with interest thereon at the Class
A-1A Pass-Through Rate from the date paid until the date of reimbursement
thereof) have been fully reimbursed; (ii) to the extent the Certificate Insurer
pays any Class A-1 Insured Amounts in respect of the Class A-1B Certificates,
either directly or indirectly (as by paying through the Trustee), to the Class
A-1B Certificateholders, the Certificate Insurer will be subrogated to the
rights of the Class A-1B Certificateholders with respect to such Class A-1
Insured Amounts paid in respect of such Certificateholders, shall be deemed to
the extent of the Class A-1 Insured Amounts so paid in respect of such
Certificateholders, to be a registered Class A-1B Certificateholder and shall
be entitled to receive all future distributions on the Class A-1B Certificates
until all such Insured Amounts (together with interest thereon at the Class
A-1B Pass-Through Rate from the date paid until the date of reimbursement
thereof) have been fully
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reimbursed; (iii) to the extent the Certificate Insurer pays any Class A-1
Insured Amounts in respect of the Class A-1C Certificates, either directly or
indirectly (as by paying through the Trustee), to the Class A-1C
Certificateholders, the Certificate Insurer will be subrogated to the rights of
the Class A-1C Certificateholders with respect to such Class A-1 Insured
Amounts paid in respect of such Certificateholders, shall be deemed to the
extent of the Class A-1 Insured Amounts so paid in respect of such
Certificateholders, to be a registered Class A-1C Certificateholder and shall
be entitled to receive all future distributions on the Class A-1C Certificates
until all such Insured Amounts (together with interest thereon at the Class
A-1C Pass-Through Rate from the date paid until the date of reimbursement
thereof) have been fully reimbursed; (iv) to the extent the Certificate Insurer
pays any Class A-1 Insured Amounts in respect of the Class A-1D Certificates,
either directly or indirectly (as by paying through the Trustee), to the Class
A-1D Certificateholders, the Certificate Insurer will be subrogated to the
rights of the Class A-1D Certificateholders with respect to such Class A-1
Insured Amounts paid in respect of such Certificateholders, shall be deemed to
the extent of the Class A-1 Insured Amounts so paid in respect of such
Certificateholders, to be a registered Class A-1D Certificateholder and shall
be entitled to receive all future distributions on the Class A-1D Certificates
until all such Insured Amounts (together with interest thereon at the Class
A-1D Pass-Through Rate from the date paid until the date of reimbursement
thereof) have been fully reimbursed; (v) to the extent the Certificate Insurer
pays any Class A-1 Insured Amounts in respect of the Class A-1E Certificates,
either directly or indirectly (as by paying through the Trustee), to the Class
A-1E Certificateholders, the Certificate Insurer will be subrogated to the
rights of the Class A-1E Certificateholders with respect to such Class A-1
Insured Amounts paid in respect of such Certificateholders, shall be deemed to
the extent of the Class A-1 Insured Amounts so paid in respect of such
Certificateholders, to be a registered Class A-1E Certificateholder and shall
be entitled to receive all future distributions on the Class A-1E Certificates
until all such Insured Amounts (together with interest thereon at the Class
A-1E Pass-Through Rate from the date paid until the date of reimbursement
thereof) have been fully reimbursed; and (vi) to the extent the Certificate
Insurer pays any Class A-2 Insured Amounts in respect of the related Class A-2
Certificates, either directly or indirectly (as by paying through the Trustee),
to the Class A-2 Certificateholders, the Certificate Insurer will be subrogated
to the rights of the Class A-2 Certificateholders with respect to such Class
A-2 Insured Amounts, shall be deemed to the extent of the Class A-2 Insured
Amounts so paid to be a registered Class A-2 Certificateholder and shall be
entitled to receive all future distributions on the Class A-2 Certificates
until all such Insured Amounts (together with interest thereon at the Class A-2
Pass-Through Rate from the date paid until the date of reimbursement thereof)
have been fully reimbursed, in each case subject to the following paragraph.
To evidence such subrogation, the Trustee shall note the Certificate Insurer's
rights as subrogee on the registration books maintained by the Trustee. Except
as otherwise described herein, the Certificate Insurer shall not acquire any
voting rights hereunder as a result of such subrogation. The effect of the
foregoing provisions is that, to the extent of any Class A-1 Insured Amount
made by it on each Distribution Date, the Certificate Insurer shall be paid
before any other distributions are made to the other Class A-1A
Certificateholders, Class A-1B Certificateholders, Class A-1C
Certificateholders, Class A-1D Certificateholders and Class A-1E
Certificateholders and to the extent of any Class A-2 Insured Amount made by it
on each Distribution Date, the Certificate Insurer shall be paid before any
other distributions are made to the other Class A-2 Certificateholders, in each
case subject to the following paragraph.
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Notwithstanding the provisions of the preceding paragraph, it is
understood and agreed that the intention of the parties is that the Certificate
Insurer shall not be entitled to reimbursement on any Distribution Date for
amounts previously paid by it (i) in respect of the Class A-1A Certificates
unless on such Distribution Date the Class A-1A Certificateholders shall also
have received the full amount of the Class A-1A Monthly Interest and the amount
of any Class A-1 Coverage Deficit allocated for distribution to such Class A-1A
Certificateholders for such Distribution Date, (ii) in respect of the Class
A-1B Certificates unless on such Distribution Date the Class A-1B
Certificateholders shall also have received the full amount of the Class A-1B
Monthly Interest and the amount of any Class A-1 Coverage Deficit allocated for
distribution to such Class A-1B Certificateholders for such Distribution Date,
(iii) in respect of the Class A-1C Certificates unless on such Distribution
Date the Class A-1C Certificateholders shall also have received the full amount
of the Class A-1C Monthly Interest and the amount of any Class A-1 Coverage
Deficit allocated for distribution to such Class A-1C Certificateholders for
such Distribution Date, (iv) in respect of the Class A-1D Certificates unless
on such Distribution Date the Class A-1D Certificateholders shall also have
received the full amount of the Class A-1D Monthly Interest and the amount of
any Class A-1 Coverage Deficit allocated for distribution to such Class A-1D
Certificateholders for such Distribution Date, (v) in respect of the Class A-1E
Certificates unless on such Distribution Date the Class A-1E Certificateholders
shall also have received the full amount of the Class A-1E Monthly Interest and
the amount of any Class A-1 Coverage Deficit allocated for distribution to such
Class A-1E Certificateholders for such Distribution Date, and (vi) in respect
of the Class A-2 Certificates unless on such Distribution Date the Class A-2
Certificateholders shall also have received the full amount of the Class A-2
Monthly Interest and the amount of any Class A-2 Coverage Deficit for such
Distribution Date, as applicable.
(d) The Trustee shall be entitled to enforce on behalf of the Class A
Certificateholders the obligations of the Certificate Insurer under the
Certificate Insurance Policy. The Class A Certificateholders are not entitled
to institute proceedings directly against the Certificate Insurer. Each Class
A Certificateholder, by its purchase of the Class A Certificates, the Servicer
and the Trustee hereby agree that the Certificate Insurer may at any time
during the continuation of any proceeding relating to a preference claim direct
all matters relating to such preference claim, including, without limitation,
the direction of any appeal of any order relating to such preference claim and
the posting of any surety, supersedeas or performance bond pending any such
appeal. In addition and without limitation of the foregoing, the Certificate
Insurer shall be subrogated to the rights of the Servicer, the Trustee and each
Class A Certificateholder in the conduct of any such preference claim,
including, without limitation, all rights of any party to an adversary
proceeding action with respect to any court order issued in connection with any
such preference claim.
(e) The Trustee shall keep a complete and accurate record of the
amount of interest and principal paid in respect of any Class A Certificate
from monies received under the Certificate Insurance Policy. The Certificate
Insurer shall have the right to inspect such records at reasonable times during
normal business hours upon one Business Day's notice to the Trustee.
Section 3.19. Rights of the Certificate Insurer to Exercise Rights of
Class A Certificateholders. By accepting its Certificate, each Class A
Certificateholder agrees that unless a Certificate Insurer Default exists, the
Certificate Insurer shall have the right to exercise all rights of
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the Class A Certificateholders under this Agreement without any further consent
of the Class A Certificateholders, including, without limitation:
(i) the right to direct foreclosures upon Mortgage Loans
upon failure of the Servicer to do so;
(ii) the right to require the Seller to repurchase or
substitute for, or to require the Servicer to purchase, Mortgage Loans
pursuant to Sections 2.05 and 2.09; and
(iii) the right to direct the actions of the Trustee during
the continuance of an Event of Default.
In addition, each Class A Certificateholder agrees that, unless a
Certificate Insurer Default exists, the rights specifically set forth above may
be exercised by the Class A Certificateholders only with the prior written
consent of the Certificate Insurer.
Section 3.20. Trust and Accounts Held for Benefit of the
Certificate Insurer. Provided there does not exist a Certificate Insurer
Default, the Trustee shall hold the Trust and the Mortgage Files for the
benefit of the Certificateholders and the Certificate Insurer and all
references in this Agreement (including, without limitation, in Sections 2.01,
2.02 and 2.03) and in the Certificates to the benefit of Holders of the
Certificates shall be deemed to include the Certificate Insurer.
Provided there does not exist a Certificate Insurer Default, the
Servicer hereby acknowledges and agrees that it shall service and administer
the Mortgage Loans and any REO Properties, and shall maintain the Collection
Account for the benefit of the Certificateholders and for the benefit of the
Certificate Insurer, and all references in this Agreement to the benefit of or
actions on behalf of the Certificateholders shall be deemed to include the
Certificate Insurer.
All notices, statements, reports, certificates or opinions required by
this Agreement to be sent to any other party hereto or to the
Certificateholders shall also be sent to the Certificate Insurer.
ARTICLE FOUR
REMITTANCE REPORT
Section 4.01. Servicer Remittance Report. With respect to each
Distribution Date, not later than the fifth Business Day prior to the related
Deposit Date the Servicer shall deliver to the Trustee and the Certificate
Insurer a computer-readable magnetic tape containing the Servicer Remittance
Report relating to Group I and the Servicer Remittance Report relating to Group
II detailing the payments and collections received in respect of the Mortgage
Loans in the related Mortgage Loan Group during the immediately preceding
Collection Period. The computer- readable magnetic tape shall include
loan-by-loan information that specifies account number, borrower name,
outstanding principal balance and activity since the last Distribution Date.
Such tape shall be in the form and have the specifications as may be agreed to
between the Servicer, the Trustee and the Certificate Insurer from time to
time.
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In addition to the foregoing, the Servicer shall provide the Trustee
and the Certificate Insurer at the time the tape is delivered to the Trustee a
Liquidation Report for Group I, with respect to each Mortgage Loan in Group I
that became a Liquidated Mortgage Loan during the related Collection Period and
a Liquidation Report for Group II, with respect to each Mortgage Loan in Group
II that became a Liquidated Mortgage Loan during the related Collection Period,
in either case substantially in the form of Exhibit J hereto.
Section 4.02. Trustee Distribution Date Statement. The Trustee
shall, not later than the Business Day prior to each Deposit Date, furnish by
telecopy to the Servicer and the Certificate Insurer a statement derived from
information on the Servicer Remittance Report for the Group I Mortgage Loans
that sets forth the following information for the Class A-1 Certificates and
Group I and a statement derived from the information for the Group II Mortgage
Loans that sets forth following information for the Class A-2 Certificates and
Group II, relating to the next succeeding Distribution Date:
(a) the total amount of payments in respect of or allocable
to interest on the Mortgage Loans received or deemed to have been
received from the related Mortgagors by the Servicer during such
Collection Period (including any net income from REO Properties
received during the related Collection Period);
(b) the aggregate amount of all Principal Prepayments
received from the related Mortgagors by the Servicer during such
Collection Period;
(c) the aggregate amount of all Principal Payments received
or deemed to have been received from the related Mortgagors by the
Servicer during such Collection Period;
(d) the total amount of Payments Ahead received during the
related Collection Period;
(e) the aggregate of any Trust Insurance Proceeds received by
the Servicer during such Collection Period;
(f) the aggregate of any Net Liquidation Proceeds received by
the Servicer during such Collection Period;
(g) the total amount of Compensating Interest payments to be
paid by the Servicer pursuant to Section 3.08;
(h) the aggregate Purchase Prices for (i) any Defective
Mortgage Loans that the Seller is required to repurchase on the
related Deposit Date pursuant to Section 2.03 or 2.05, (ii) any
Mortgage Loan that the Servicer is required to purchase on the related
Deposit Date pursuant to Section 3.01 or within 90 days of the Closing
Date pursuant to Section 2.09 and (iii) any Mortgage Loans that the
Servicer is to purchase on the related Deposit Date pursuant to
Section 3.06;
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(i) any amounts required to be deposited by the Seller on the
related Deposit Date in connection with the substitution of a
Qualified Replacement Mortgage Loan pursuant to Section 2.03 or 2.05;
(j) the amount of Monthly Advances to be made by the Servicer
pursuant to Section 5.02(a);
(k) the related Monthly Servicing Fee attributable to the
Mortgage Loans in the related Mortgage Loan Group;
(l) the amount of Monthly Advances reimbursable to the
Servicer in such Collection Period pursuant to Section 5.02(a) and not
previously reimbursed;
(m) the amount of any Servicing Advance made by the Servicer
pursuant to Section 5.02(b) and not previously reimbursed; and
(n) the amount of any Interest Shortfall for the related
Distribution Date.
ARTICLE FIVE
PAYMENTS AND STATEMENTS TO CERTIFICATEHOLDERS
Section 5.01. Distributions. On each Distribution Date, provided
there does not exist a Certificate Insurer Default, the Trustee shall
distribute to each Certificateholder of record on the related Record Date
(other than as provided in Section 10.01 respecting the final distribution to
Certificateholders if the termination of the Trust is in connection with a
purchase of the assets of the Trust by the Servicer or the Certificate Insurer
pursuant to Section 10.01) by check or money order mailed to such
Certificateholder at the address appearing in the Certificate Register, or upon
written request by a Holder of a Certificate, by wire transfer (in the event
such Certificateholder owns of record one or more Certificates that have
principal denominations aggregating at least $5,000,000 and has given the
Trustee, at least five Business Days prior to the related Record Date, written
instruction for making such wire transfer to a bank account maintained in the
United States), or by such other means of payment as such Certificateholder and
the Trustee shall agree, such Certificateholder's Percentage Interest of the
following amounts (to the extent applicable to the Class of such Holder's
Certificate) and in the following orders of priority with respect to each
Mortgage Loan Group:
(A) from amounts on deposit in the Certificate Account in respect of
Group I and to the extent of the aggregate of Available Funds for the
Class A-1 Certificates for such Distribution Date:
first, to the Certificate Insurer as subrogee to the rights
of the Holders of the Class A-1A Certificates, Class
A-1B Certificates, Class A-1C Certificates, Class
A-1D Certificates and Class A-1E Certificates, the
aggregate amount necessary to reimburse the
Certificate Insurer for any unreimbursed Class A-1
Insured Amounts paid by the Certificate Insurer in
respect of the Class A-1A
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Certificates, Class A-1B Certificates, Class A-1C
Certificates, Class A-1D Certificates and Class A-1
Certificates on prior Distribution Dates, together
with interest thereon at the Class A-1A Pass-Through
Rate, Class A-1B Pass-Through Rate , Class A-1C
Pass-Through Rate, Class A-1D Pass-Through Rate and
Class A-1E Pass-Through Rate, as applicable, from the
date such Class A-1 Insured Amounts were paid by the
Certificate Insurer to such Distribution Date and to
the Certificate Insurer, the amount of any unpaid
Certificate Insurer Premium from any prior
Distribution Date together with interest thereon at
the Class A-1A Pass-Through Rate, Class A-1B
Pass-Through Rate, Class A-1C Pass-Through Rate,
Class A-1D Pass-Through Rate and Class A-1E
Pass-Through Rate, as applicable, from the date such
amounts were due; provided, however, that the
Certificate Insurer's right to such reimbursement and
payment is subject to the right of the Class A-1A
Certificateholders, Class A-1B Certificateholders,
Class A-1C Certificateholders, Class A-1D
Certificateholders and Class A-1E Certificateholders,
to receive the Class A-1A Monthly Interest, Class
A-1B Monthly Interest, Class A-1C Monthly Interest,
Class A-1D Monthly Interest and Class A-1E Monthly
Interest, respectively, and the right of the Class
A-1A Certificateholders, Class A-1B
Certificateholders, Class A-1C Certificateholders,
Class A-1D Certificateholders and Class A-1E
Certificateholders to receive their allocation of the
amount of any Class A-1 Coverage Deficit, if any,
with respect to such Distribution Date;
second, to the Certificate Insurer, an amount equal to the
applicable Certificate Insurer Premium attributable
to Group I;
third, concurrently to the Class A-1A Certificateholders,
Class A-1B Certificateholders, Class A-1C
Certificateholders, Class A-1D Certificateholders and
Class A-1E Certificateholders, the Class A-1A Monthly
Interest, Class A-1B Monthly Interest, Class A-1C
Monthly Interest, Class A-1D Monthly Interest and
Class A-1E Monthly Interest, respectively;
fourth, to the Class A-1A Certificateholders, the Class A-1
Principal Distribution Amount in reduction of the
Class A-1A Certificate Principal Balance until the
Class A-1A Certificate Principal Balance is reduced
to zero;
fifth, to the Class A-1B Certificateholders, the Class A-1
Principal Distribution Amount remaining after the
Class A-1A Certificate Principal Balance has been
reduced to zero, in reduction of the Class A-1B
Certificate Principal Balance until the Class A-1B
Certificate Principal Balance is reduced to zero;
sixth, to the Class A-1C Certificateholders, the Class A-1
Principal Distribution Amount remaining after the
Class A-1B Certificate Principal Balance has been
reduced to zero, in reduction of the Class A-1C
Certificate Principal Balance until the Class A-1C
Certificate Principal Balance is reduced to zero;
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seventh, to the Class A-1D Certificateholders, the Class A-1
Principal Distribution Amount remaining after the
Class A-1C Certificate Principal Balance has been
reduced to zero, in reduction of the Class A-1D
Certificate Principal Balance until the Class A-1D
Certificate Principal Balance is reduced to zero;
eighth, to the Class A-1E Certificateholders, the Class A-1
Principal Distribution Amount remaining after the
Class A-1D Certificate Principal Balance has been
reduced to zero, in reduction of the Class A-1E
Certificate Principal Balance until the Class A-1E
Certificate Principal Balance is reduced to zero;
ninth, to the Class A-2 Certificateholders, the Class A-1
Overflow Distribution to be applied to cover any
shortfalls in the Class A-2 Monthly Interest;
tenth, to the Certificate Insurer, the Class A-1 Overflow
Distribution remaining after the distribution in
accordance with clause ninth above up to the amount
described in clause (ii)(c) of the definition of
Class A-1 Overflow Distribution;
eleventh, to the Class A-2 Certificateholders, the Class A-1
Overflow Distribution remaining after the
distribution in accordance with clauses ninth and
tenth above to be applied to reduce the Class A-2
Certificate Principal Balance until the Class A-2
Principal Balance is reduced to zero; and
twelfth, to the Class R Certificateholder, an amount equal to
any Available Funds for the Class A-1 Certificates
remaining after making the distributions referred to
in clauses first through eleventh above, subject to
the right of the Servicer to be reimbursed for any
prior unreimbursed Monthly Advances or Servicing
Advances in respect of Group I; and
(B) from amounts on deposit in the Certificate Account in respect of
Group II and to the extent of the aggregate of Available Funds for the
Class A-2 Certificates for such Distribution Date:
first, to the Certificate Insurer as subrogee to the rights
of the Holders of the Class A-2 Certificates, the
aggregate amount necessary to reimburse the
Certificate Insurer for any unreimbursed Class A-2
Insured Amounts paid by the Certificate Insurer on
prior Distribution Dates, together with interest
thereon at the Class A-2 Pass-Through Rate from the
date such Class A-2 Insured Amounts were paid by the
Certificate Insurer to such Distribution Date and to
the Certificate Insurer, the amount of any unpaid
Certificate Insurer Premium from any prior
Distribution Date together with interest thereon at
the Class A-2 Pass-Through Rate from the date such
amounts were due; provided, however, that the
Certificate Insurer's right to such reimbursement and
payment is subject to the right of the Class A-2
Certificateholders to
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receive the Class A-2 Monthly Interest and an amount
equal to the Class A-2 Coverage Deficit, if any, with
respect to such Distribution Date;
second, to the Certificate Insurer, an amount equal to the
applicable Certificate Insurer Premium attributable
to Group II;
third, to the Class A-2 Certificateholders, the Class A-2
Monthly Interest;
fourth, to the Class A-2 Certificateholders, the Class A-2
Principal Distribution Amount in reduction of the
Class A-2 Certificate Principal Balance;
fifth, concurrently, to the Class A-1A Certificateholders,
Class A-1B Certificateholders, Class A-1C
Certificateholders, Class A-1D Certificateholders and
Class A-1E Certificateholders, the Class A-2 Overflow
Distribution in proportion to any shortfalls in the
Class A-1A Monthly Interest, Class A-1B Monthly
Interest, Class A-1C Monthly Interest, Class A- 1D
Monthly Interest and Class A-1E Monthly Interest,
respectively;
sixth, to the Certificate Insurer, the Class A-2 Overflow
Distribution remaining after distribution to the
Class A-1 Certificateholders pursuant to clause fifth
above up to the amount described in clause (ii)(c) of
the definition of Class A-2 Overflow Distribution;
seventh, sequentially, to the Class A-1A Certificateholders,
Class A-1B Certificateholders, Class A-1C
Certificateholders, Class A-1D Certificateholders and
Class A-1E Certificateholders, the Class A-2 Overflow
Distribution remaining after the distributions in
accordance with clauses fifth and sixth above, first,
to reduce the Class A-1A Certificate Principal
Balance to zero; second, to reduce the Class A-1B
Certificate Principal Balance to zero; third to
reduce the Class A-1C Certificate Principal Balance
to zero; fourth to reduce the Class A-1D Certificate
Principal Balance to zero; and thereafter, to reduce
the Class A-1E Certificate Principal Balance to zero;
and
eighth, to the Class R Certificateholder, an amount equal to
any Available Funds for the Class A-2 Certificates
remaining after making the distributions referred to
in clauses first through seventh above, subject to
the right of the Servicer to be reimbursed for any
prior unreimbursed Monthly Advances or Servicing
Advances in respect of Group II.
In addition to the foregoing, on each Distribution Date the Trustee
shall include in the distribution (i) to each Class A-1A Certificateholder,
Class A-1B Certificateholder, Class A-1C Certificateholder, Class A-1D
Certificateholder and Class A-1E Certificateholder specified in Section 5.01(A)
for such Distribution Date, such Certificateholder's Percentage Interest of any
Class A-1 Insured Amount received from the Certificate Insurer in respect of
such Distribution Date, first, to cover any shortfalls in Class A-1A Monthly
Interest, Class A-1B Monthly Interest, Class A-1C
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Monthly Interest, Class A-1D Monthly Interest and Class A-1E Monthly Interest
for such Distribution Date and then to reduce the Class A-1A Certificate
Principal Balance until such Class A-1A Certificate Principal Balance is
reduced to zero, second, to reduce the Class A-1B Certificate Principal Balance
until such Class A-1B Certificate Principal Balance is reduced to zero, third,
to reduce the Class A-1C Certificate Principal Balance until such Class A-1C
Certificate Principal Balance is reduced to zero, fourth, to reduce the Class
A-1D Certificate Principal Balance until such Class A-1D Certificate Principal
Balance is reduced to zero and, thereafter, to reduce the Class A-1E
Certificate Principal Balance until such Class A-1E Certificate Principal
Balance is reduced to zero, and (ii) to each Class A-2 Certificateholder
specified in Section 5.01(B) for such Distribution Date such
Certificateholder's Percentage Interest of any Class A-2 Insured Amount
received from the Certificate Insurer in respect of such Distribution Date, to
be applied first to cover any shortfalls in the Class A-2 Monthly Interest for
such Distribution Date and then to reduce the Class A-2 Certificate Principal
Balance by an amount equal to the Class A-2 Coverage Deficit for such
Distribution Date.
Notwithstanding the foregoing, on any Distribution Date on or after
which a Certificate Insurer Default has occurred, any amounts that would
otherwise be distributed sequentially to the Class A-1 Certificateholders
pursuant to Section 5.01 shall instead be distributed concurrently to the Class
A-1 Certificateholders, pro rata, based on the outstanding Class A-1
Certificate Principal Balances as of such Distribution Date, until the related
Class A-1 Certificate Principal Balances have each been reduced to zero.
Notwithstanding any of the foregoing, the aggregate of amounts
distributed on all Distribution Dates in reduction of the Certificate Principal
Balance of any Class shall not exceed the Certificate Principal Balance of such
Class as of the Closing Date.
Amounts to be paid to the Certificate Insurer by the Trustee under
this Agreement will be paid by wire transfer of same day funds.
Section 5.02. Monthly Advances; Servicing Advances. (a) On or before
each Deposit Date, the Servicer will deposit in the Certificate Account in
respect of Group I and Group II, in same day funds, an amount, if any, (a
"Monthly Advance") equal to the sum of the interest portions of the aggregate
amount of Monthly Mortgage Payments in respect of the related Mortgage Loan
Group (net of the Monthly Servicing Fee attributable to such Mortgage Loan
Group) due during the related Collection Period, but delinquent as of the close
of business on the last day of the related Collection Period, plus, with
respect to each Mortgaged Property that was acquired in foreclosure or similar
action (each, an "REO Property") during or prior to the related Collection
Period and as to which a final sale did not occur during the related Collection
Period, an amount equal to the excess, if any, of interest on the Principal
Balance of such REO Property at the related Mortgage Interest Rate (net of the
Monthly Servicing Fee attributable to such REO Property) over the net income
from such REO Property transferred to the Collection Account or the Certificate
Account, as the case may be, for such Distribution Date. All or a portion of
any Monthly Advance required to be made on a Deposit Date may be paid out of
amounts on deposit in the Collection Account in respect of the related Mortgage
Loan Group that are not required to be deposited on such Deposit Date in the
Certificate Account as any portion of Available Funds for such Mortgage Loan
Group and the
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related Distribution Date; provided, however, that the Servicer shall be
required to replace any such amounts by deposit to the Collection Account on or
before the next Deposit Date and the amount of such deposit shall thereafter be
considered a Monthly Advance for purposes of reimbursement under this
Agreement. The Servicer may recover Monthly Advances, if not theretofore
recovered from the Mortgagor on whose behalf such Monthly Advance was made,
from late collections on the related Mortgage Loan, including Liquidation
Proceeds, Insurance Proceeds and such other amounts as may be collected by the
Servicer from the Mortgagor or otherwise relating to the Mortgage Loan or, as
provided in clause twelfth of subsection (A) and in clause eighth of subsection
(B) of Section 5.01, as applicable, from amounts in respect of the related
Mortgage Loan Group that would otherwise be distributed to the Class R
Certificateholder on such Distribution Date.
(b) The Servicer shall from time to time during the term of this
Agreement make such Servicing Advances as the Servicer shall deem appropriate
or advisable under the circumstances and are required pursuant to the terms of
this Agreement. Servicing Advances may be paid by the Servicer out of amounts
on deposit in the Collection Account in respect of the related Mortgage Loan
Group from time to time; provided, however, that the Servicer shall be required
to replace any such amounts by deposit to the Collection Account in respect of
the related Mortgage Loan Group on or before the first Deposit Date occurring
after the payment of a Servicing Advance with such amounts, and the amount of
such deposit shall thereafter be considered a Servicing Advance for purposes of
reimbursement under this Agreement. All Servicing Advances made by the
Servicer shall be reimbursable from collections or recoveries relating to the
Mortgage Loans in respect of which such Servicing Advances have been made or,
as provided in clause twelfth of Section 5.01 (A) with respect to the Group I
Mortgage Loans and clause eighth of Section 5.01 (B) with respect to the Group
II Mortgage Loans, from amounts that would otherwise be distributed to the
Class R Certificateholder on a Distribution Date. Notwithstanding anything
herein to the contrary, no Servicing Advances need by made hereunder if such
Servicing Advance would, if made, constitute a Nonrecoverable Advance.
Section 5.03. Statements to Certificateholders. Concurrently with
each distribution charged to the Certificate Account on a Distribution Date the
Trustee shall forward to the Certificate Insurer and each Rating Agency and
shall mail to each Holder of a Certificate, a written statement setting forth
the following information with respect to the applicable Class of Class A
Certificates to which such statement (a "Statement to Certificateholders")
relates:
(a) the amount of such distribution to Holders of Class A
Certificates allocable to (i) Class A Monthly Principal, (ii) any
Excess Cash Distribution and (iii) Overflow Distribution;
(b) the amount of such distribution to Holders of Class A
Certificates allocable to Class A Monthly Interest;
(c) the Certificate Principal Balance of the related Class of
Class A Certificates, after giving effect to the distribution of Class
A Monthly Principal, any Excess Cash Distribution and any Overflow
Distribution on such Distribution Date;
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(d) the aggregate Principal Balances and Group Factor of the
Mortgage Loans in the related Mortgage Loan Group for the following
Distribution Date;
(e) the amount of unreimbursed Monthly Advances and/or
Servicing Advances, if any, with respect to the related Mortgage Loan
Group separately identifying the amount, if any, funds withdrawn from
the Collection Account on such Distribution Date with respect to
Monthly Advances and/or Servicing Advances;
(f) the number and aggregate Principal Balances of Mortgage
Loans in respect of the related Mortgage Loan Group (including the
Principal Balances of all Mortgage Loans in foreclosure) contractually
delinquent (i) one month and (ii) two months and (iii) three months or
more, as of the end of the related Collection Period (including
Mortgage Loans in foreclosure or relating to REO properties);
(g) the number and aggregate Principal Balances of the
Mortgage Loans in the related Mortgage Loan Group in foreclosure or
other similar proceedings, and the number and aggregate Principal
Balance of Mortgage Loans in the related Mortgage Loan Group, the
Mortgagor of which is known by the Servicer to be in bankruptcy as of
the end of the related Collection Period;
(h) the book value of any real estate acquired through
foreclosure, grant of a deed in lieu of foreclosure or otherwise and
the number and Principal Balances of the Mortgage Loans relating
thereto;
(i) the Coverage Amount, the Required Coverage Amount, the
Coverage Surplus, if any, and the Coverage Deficit, if any;
(j) any Insured Amount in respect of the related Class of
Class A Certificates relating to such Distribution Date;
(k) Available Funds in respect of the related Mortgage Loan
Group for such Distribution Date;
(l) the number and aggregate Principal Balances of all
Mortgage Loans in the related Mortgage Loan Group that were the
subject of a Principal Prepayment during the related Collection
Period, the aggregate amount of Principal Prepayments collected or
deemed collected during the related Collection Period and the amount
of any partial Principal Prepayment collected or deemed collected
during the related Collection Period;
(m) the weighted average maturity of the Mortgage Loans in
the related Mortgage Loan Group and weighted average Mortgage Loan
Rate of the Mortgage Loans in the related Mortgage Loan Group, as of
the end of the related Collection Period;
(n) the number of Mortgage Loans in the related Mortgage Loan
Group as of the beginning and the end of the related Collection
Period;
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(o) such other information as the Certificate Insurer may
reasonably request to the extent such information is available to the
Trustee from the Servicer and is produced by the Servicer in the
ordinary course of the Servicer's business;
(p) Realized Losses incurred during the Collection Period and
cumulative Realized Losses incurred since the Closing Date, including
the number of Mortgage Loans and Principal Balance of the Mortgage
Loans pertaining to the Realized Losses that occurred during the
related Collection Period; and
(q) the Certificate Insurer Premium attributable to the
related Mortgage Loan Group for the related Collection Period.
In the case of information furnished pursuant to subclauses (a) and
(b) above, the amounts shall be expressed as a dollar amount per Certificate
with a $1,000 principal denomination.
Within 90 days after the end of each calendar year, the Trustee shall
mail such report to Greenwich Capital Markets, Inc., 600 Steamboat Road,
Greenwich, Connecticut 06830, Attention: Mortgage & Asset Backed Securities
Group, and Lehman Brothers Inc., 3 World Financial Center, New York, New York
10385, Attention: Asset Backed Securities Finance, (which report shall include,
in addition to the information contained in reports to others hereunder, the
total amount of interest on the Mortgage Loans for the period covered by such
report), and to each Person who at any time during the calendar year was a
Class A Certificateholder, a statement for each Certificateholder containing
the information set forth in subclauses (a) through (c) above, aggregated for
such calendar year or, in the case of each Person who was a Class A
Certificateholder for a portion of such calendar year, setting forth such
information for each month thereof for the portion of the year during which
such Person was a Certificateholder. The Servicer shall provide any other
information necessary in order to report income in respect of the
Certificateholders for federal income tax purposes.
Section 5.04. The Certificate Insurer; Use of Information. The
Company and the Trustee on behalf of Certificateholders and the Trust (the
"Trust Parties") hereby authorize the Certificate Insurer to include the
information contained in reports provided to the Certificate Insurer hereunder
(the "Information") on Bloomberg, or in other electronic or print information
services. The Trust Parties agree not to commence any actions or proceedings,
or otherwise assert any claims, against the Certificate Insurer or its
Affiliates or any of the Certificate Insurer or the Certificate Insurer
Parties, arising out of, or related to or in connection with the dissemination
and/or use of any information by the Certificate Insurer as contemplated in
this Section 5.04, including, but not limited to, claims based on allegations
or inaccurate, incomplete or erroneous transfer of information by the
Certificate Insurer to Bloomberg or otherwise (other than in connection with
the Certificate Insurer's gross negligence or willful misconduct). The Trust
Parties waive their rights to assert any such claims against the Certificate
Insurer Parties and fully and finally release the Certificate Insurer Parties
from any and all such claims, demands, obligations, actions and liabilities
(other than in connection with the Certificate Insurer's gross negligence or
willful misconduct). The Certificate Insurer makes no representations or
warranties, expressed or implied, of any kind whatsoever with respect to the
accuracy, adequacy, timeliness, completeness, merchantability or
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fitness for any particular purpose of any Information in any form or manner.
The Certificate Insurer reserves the right at any time to withdraw or suspend
the dissemination of the Information by the Certificate Insurer. The
authorizations, covenants and obligations of the Trust Parties under this
section shall be irrevocable and shall survive the termination of this
Agreement.
ARTICLE SIX
THE CERTIFICATES
Section 6.01. The Certificates. (a) The Class A-1A Certificates,
Class A-1B Certificates, Class A-1C Certificates, Class A-1D Certificates,
Class A-1E Certificates, Class A-2 Certificates and the Class R Certificate
shall be substantially in the forms set forth in Exhibits A-1A, A-1B, A-1C,
A-1D, A-1E, A-2 and B hereto, respectively, and shall, on original issue, be
executed and delivered by the Trustee on behalf of the Trust, not individually
but solely as Trustee to or upon the order of the Seller concurrently with the
sale and assignment to the Trustee of the Trust.
(b) The Book-Entry Certificates will be evidenced by one or more
certificates, beneficial ownership of which will be held in minimum dollar
denominations of $1,000 and integral multiples of $1 in excess thereof. The
Class R Certificate shall be issuable solely as a single Class R Certificate
evidencing the entire Percentage Interest of the Class R Certificates.
(c) The Certificates shall be executed by manual or facsimile
signature by the Trustee on behalf of the Trust (not in its individual capacity
but solely as Trustee) by an authorized officer of the Trustee. Certificates
bearing the manual or facsimile signatures of individuals who were, at the time
when such signatures were affixed, authorized to sign on behalf of the Trustee
shall bind the Trust, notwithstanding that such individuals or any of them have
ceased to be so authorized prior to the countersigning and delivery of such
Certificates or did not hold such offices at the date of such Certificate. No
Certificate shall be entitled to any benefit under this Agreement, or be valid
for any purpose, unless such Certificate shall have been manually authenticated
by the Trustee substantially in the form provided for herein, and such
signature upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder. All Certificates shall be dated the date of their authentication.
Section 6.02. Registration of Transfer and Exchange of Certificates.
(a) The Trustee shall cause to be kept at the Corporate Trust Office a
Certificate Register in which, subject to such reasonable regulations as it may
prescribe, the Trustee shall provide for the registration of Certificates and
of transfers and exchanges of Certificates as herein provided.
Upon surrender for registration of transfer of any Certificate at any
office or agency of the Trustee maintained for such purpose pursuant to the
foregoing paragraph and upon satisfaction of the conditions set forth in
Section 6.02(b) and (c), the Trustee shall execute, authenticate and deliver,
in the name of the designated transferee or transferees, one or more new
Certificates of the same Class and of a like aggregate Percentage Interest.
At the option of the Certificateholders, Certificates may be exchanged
for other Certificates of authorized denominations of the same Class and of a
like aggregate Percentage Interest, upon
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surrender of the Certificates to be exchanged at any such office or agency.
Whenever any Certificates are so surrendered for exchange the Trustee shall
execute, authenticate and deliver the Certificates that the Certificateholder
making the exchange is entitled to receive.
Every Certificate presented or surrendered for transfer or exchange
shall (if so required by the Company or the Trustee) be duly endorsed by, or be
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by the Holder thereof or his attorney duly authorized in
writing.
No service charge shall be made to a Certificateholder for any
transfer or exchange of Certificates, but the Trustee may require payment of a
sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of certificates.
All Certificates surrendered for transfer or exchange shall be
canceled by the Trustee in accordance with its standard procedures.
(b) No transfer of a Class R Certificate shall be made unless, as
evidenced by an Opinion of Counsel and Transfer Affidavit delivered to the
Trustee, each in form and substance satisfactory to the Trustee, such transfer
is not subject to registration under the Securities Act or any applicable state
securities laws. Any such Opinion of Counsel and Transfer Affidavit shall not
be obtained at the expense of the Trustee, the Trust, the Seller or the
Servicer. The Holder of a Class R Certificate desiring to effect such transfer
shall, and does hereby agree to, indemnify the Trustee, the Seller and the
Servicer against any liability that may result if the transfer is not so exempt
or is not made in accordance with the Securities Act and such state laws.
Neither the Seller, the Servicer nor the Trustee or the Trust is under an
obligation to register the Class R Certificates under the Securities Act or any
state securities law.
The Class R Certificates, this Agreement and related documents may be
amended or supplemented from time to time to modify restrictions on and
procedures for resale and other transfer of such Class R Certificate to reflect
any change in applicable law or regulation (or the interpretation thereof) or
practices relating to the resale or transfers of restricted securities
generally.
(c) No legal or beneficial interest in all or any of the Class R
Certificates may be transferred directly or indirectly to: (i) a Disqualified
Organization or an agent of a Disqualified Organization (including a broker,
nominee or middleman), (ii) to an entity that holds REMIC residual securities
as nominee to facilitate the clearance and settlement of such securities
through electronic book-entry changes in accounts of participating
organizations (a "Book-Entry Nominee"), (iii) an individual, corporation,
partnership or other Person unless such transferee (A) is not a Foreign Person
or (B) is a Foreign Person that will hold such Class R Certificate in
connection with the conduct of a trade or business within the United States and
has furnished the transferor and the Trustee with an effective Internal Revenue
Service Form 4224 or (C) is a Foreign Person that has delivered (at the expense
of the Transferee) to both the transferor and the Trustee an opinion of a
nationally recognized tax counsel to the effect that the transfer of the Class
R Certificate to it is in accordance with the requirements of the Code and the
regulations promulgated thereunder and that such transfer of the
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Class R Certificate will not be disregarded for federal income tax purposes
(any such Person who is not covered by clause (A), (B) or (C) above being
referred to herein as a "Non-permitted Foreign Holder") or (iv) to an ERISA
Plan or an entity, including an insurance company separate account or general
account, whose underlying assets include ERISA Plan assets by reason of an
ERISA Plan's investment in the entity or a Person investing the assets of an
ERISA Plan or such an entity, whether as nominee, trustee, agent or otherwise
(such plan, entity or Person, an "ERISA Prohibited Holder"), and any such
purported transfer shall be void and have no effect.
The Trustee shall not execute, and shall not authenticate and deliver,
a new Class R Certificate in connection with any registration of transfer to a
Person known to a Responsible Officer of the Trustee to be a Disqualified
Organization or agent thereof (including a broker, nominee or middleman), to a
Book-Entry Nominee, a Non-permitted Foreign Holder or an ERISA Prohibited
Holder, and the Trustee shall not accept a surrender for the registration of
transfer or register the transfer of, any Class R Certificate, unless the
transferor shall have provided to the Trustee a Transfer Affidavit
substantially in the form attached as Exhibit H hereto, signed by the
transferee, to the effect that the transferee is not a Disqualified
Organization and is not a nominee for a beneficial owner of the Class R
Certificate from which the transferee has not received a substantially similar
affidavit, a Book-Entry Nominee, a Non-permitted Foreign Holder or an ERISA
Prohibited Holder. Such Transfer Affidavit shall contain (i) the consent of
the transferee to any such amendments of this Agreement as may be required to
further effectuate the foregoing restrictions on transfer of the Class R
Certificates to Disqualified Organizations, Book-Entry Nominees, Non-permitted
Foreign Holders or ERISA Prohibited Holders and (ii) a representation from the
transferee that such transferee does not have the intent or purpose to impede
the assessment or collection of any federal, state or local income taxes
legally required to be paid with respect to the Class R Certificates. Such
Transfer Affidavit, if not executed in connection with the initial issuance of
the Class R Certificates, also shall be accompanied by a Transferor Affidavit,
substantially in the form attached hereto as Exhibit L, signed by the
transferor to the effect that as of the time of the transfer, the transferor
has no actual knowledge that such affidavit is false and that the transferor
does not have the intent or purpose to impede the assessment or collection of
any federal, state or local income taxes legally required to be paid with
respect to the Class R Certificate.
The Class R Certificates shall bear a legend referring to the
foregoing restrictions. Any Person acquiring the Class R Certificate, or
beneficial ownership thereof, agrees to give the Servicer written notice that
it is a "pass-through interest holder" within the meaning of Treasury
Regulation Section 1.67-3T(a)(2)(i)(A) immediately upon acquiring the Class R
Certificate, or beneficial ownership thereof, if it is, or is acquiring the
Class R Certificate on behalf of, a "pass-through interest holder."
Upon notice to the Servicer that any legal or beneficial interest in
any Class R Certificate has been transferred, directly or indirectly, to a
Disqualified Organization in contravention of the foregoing restrictions or to
a pass-through entity as defined in the REMIC Provisions an interest of which
is held by a Disqualified Organization, the Servicer agrees to furnish to any
transferor of the Class R Certificate or such agent or such pass-through entity
such as may be required to be delivered thereto by the Code as necessary to the
application of Code Section 860E(e) including, but
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not limited to, the present value of the total anticipated excess inclusions
with respect to the Class R Certificate (or portion thereof) for periods after
such transfer. At the election of the Servicer, the cost to the Servicer of
computing and furnishing such information may be charged to the transferor or
such agent referred to above; provided, however, that the Servicer shall in no
event be excused from furnishing such information.
The Class R Certificates, this Agreement and related documents may be
amended or supplemented from time to time to modify restrictions on and
procedures for resale and other transfer of the Class R Certificates to reflect
any change in applicable law or regulation (or the interpretation thereof) or
practices relating to the resale or transfer of restricted securities
generally.
(d) The Book-Entry Certificates shall, subject to Section 6.02(e), at
all times remain registered in the name of the Depository or its nominee and at
all times: (i) registration thereof may not be transferred by the Trustee
except to another Depository; (ii) the Depository shall maintain book-entry
records with respect to the Certificate Owners and with respect to ownership
and transfers of such Certificates; (iii) ownership and transfers of
registration of the Certificates issued in book-entry form on the books of the
Depository shall be governed by applicable rules established by the Depository
and the rights of Certificate Owners with respect to Book-Entry Certificates
shall be governed by applicable law and agreements between such Certificate
Owners and the Depository, Depository Participants, and indirect participating
firms; (iv) the Depository may collect its usual and customary fees, charges
and expenses from its Depository Participants; (v) the Trustee shall deal with
the Depository as the authorized representative of the Certificate Owners of
the Book-Entry Certificates for all purposes including the making of payments
due on the Book-Entry Certificates and exercising the rights of Holders of
Book-Entry Certificates under this Agreement; (vi) the Trustee may rely and
shall be fully protected in relying upon information furnished by the
Depository; (vii) Certificate Owners shall not be entitled to certificates for
the Book-Entry Certificates and (viii) the Trustee may establish a reasonable
record date in connection with solicitations of consents from or voting by
holders of Book-Entry Certificates and give notice to the Depository of such
record date.
All transfers by Certificate Owners of Book-Entry Certificates shall
be made in accordance with the procedures established by the Depository
Participant or brokerage firm representing such Certificate Owner. Each
Depository Participant shall only transfer Book-Entry Certificates of
Certificate Owners it represents or of brokerage firms for which it acts as
agent in accordance with the Depository's normal procedures.
(e) If (x)(i) the Company or the Depository advises the Trustee in
writing that the Depository is no longer willing, qualified or able to properly
discharge its responsibilities as Depository, and (ii) the Trustee or the
Company is unable to locate a qualified successor, (y) the Company at its
option advises the Trustee in writing that it elects to terminate the
book-entry system through the Depository or (z) after the occurrence of an
Event of Default, Certificate Owners representing not less than 51% of the
aggregate Class A Certificate Principal Balance of the Book-Entry Certificates
together advise the Trustee and the Depository in writing that the continuation
of a book-entry system through the Depository is no longer in the best
interests of the Certificate Owners, the Trustee shall notify all Certificate
Owners, through the Depository, of the occurrence of
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any such event and of the availability of definitive, fully registered
Certificates ("Definitive Certificates") to Certificate Owners requesting the
same. Upon surrender to the Trustee of such Certificates by the Depository,
accompanied by registration instructions from the Depository for registration,
the Trustee shall issue the Definitive Certificates and the expense of any such
issuance shall be reimbursed by the Trust pursuant to Section 9.05. Neither
the Company nor the Trustee shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying
on, such instructions. Upon the issuance of Definitive Certificates all
references herein to obligations imposed upon or to be performed by the
Depository shall be deemed applicable with respect to such Definitive
Certificates and the Certificates as Certificateholders hereunder.
(f) On or prior to the Closing Date, there shall be delivered to the
Depository one certificate for each Class of Book-Entry Certificates registered
in the name of the Depository's nominee, Cede & Co. The face amount of each
such Certificate shall be equal to the Principal Balance thereof. Each
Certificate issued in book-entry form shall bear the following legend:
"Unless this Certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to Issuer or
its agent for registration of transfer, exchange, or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other
name as requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein."
Section 6.03. Mutilated, Destroyed, Lost or Stolen Certificates. If
(a) any mutilated Certificate is surrendered to the Trustee or the Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any
Certificate, and (b) there is delivered to the Trustee, the Servicer, the
Seller and the Certificate Insurer such security or indemnity as may be
required by them to save each of them harmless, then, in the absence of notice
to the Trustee that such Certificate has been acquired by a bona fide
purchaser, the Trustee shall execute, authenticate and deliver, in exchange for
or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of like Class and Percentage Interest. Upon the issuance of any
new Certificate under this Section, the Trustee may require the payment of a
sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses (including the fees and
expenses of the Trustee) connected therewith. Any duplicate Certificate issued
pursuant to this Section shall constitute complete and indefeasible evidence of
ownership of the Trust, as if originally issued, whether or not the lost,
stolen or destroyed Certificate shall be found at any time.
Section 6.04. Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, the Servicer, the Seller, the
Trustee, the Certificate Insurer and any of their respective agents may treat
the Person in whose name any Certificate is registered as the owner of such
Certificate for the purpose of receiving distributions pursuant to Section 5.01
and for all other purposes whatsoever, and neither the Servicer, the Seller,
the Trustee, the Certificate Insurer nor any of their respective agents shall
be affected by notice to the contrary.
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Section 6.05. Actions of Certificateholders. (a) Any request,
demand, authorization, direction, notice, consent, waiver or other action
provided by this Agreement to be given or taken by Certificateholders may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Certificateholders in person or by agent duly appointed in
writing; and except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are delivered to the
Trustee and the Certificate Insurer and, when required, to the Seller or the
Servicer. Proof of execution of any such instrument or of a writing appointing
any such agent shall be sufficient for any purpose of this Agreement and
conclusive in favor of the Trustee, the Seller, the Servicer and the
Certificate Insurer, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Certificateholder of
any such instrument or writing may be proved in any reasonable manner that the
Trustee deems sufficient.
(c) Any request, demand, authorization, direction, notice, consent,
waiver or other act by a Certificateholder shall bind every Holder of every
Certificate issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof, in respect of anything done, or omitted to be
done, by the Trustee, the Seller or the Servicer in reliance thereon, whether
or not notation of such action is made upon such Certificate.
ARTICLE SEVEN
THE SERVICER AND THE SELLER
Section 7.01. Liability of the Servicer. The Servicer shall be
liable in accordance herewith only to the extent of the obligations
specifically imposed upon and undertaken by the Servicer herein.
Section 7.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer. Any corporation or other entity (i) into which
the Servicer may be merged or consolidated, (ii) that may result from any
merger, conversion or consolidation to which the Servicer shall be a party, or
(iii) that may succeed to all or substantially all of the business of the
Servicer, which corporation or other entity shall, in any case where an
assumption shall not be effected by operation of law, execute an agreement of
assumption to perform every obligation of the Servicer under this Agreement,
shall be the successor to the Servicer under this Agreement without the
execution or filing of any document or any further act by any of the parties to
this Agreement; except that if the Servicer is not the surviving entity, then
the surviving entity shall execute and deliver to the Trustee an agreement of
assumption to perform every obligation of the Servicer hereunder.
Section 7.03. Limitation on Liability of the Servicer and Others.
Neither the Servicer nor any of its directors, officers, employees or agents
shall be under any liability to the Trustee, the Trust or the
Certificateholders for any action taken or for refraining from the taking of
any action by the Servicer pursuant to this Agreement, or for errors in
judgment; provided, however, that this provision shall not protect the Servicer
or any such person against any liability that would otherwise be imposed by
reason of willful misfeasance, bad faith or negligence in the performance of
the
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duties of the Servicer or by reason of reckless disregard of the obligations
and duties of the Servicer hereunder. The Servicer and any director, officer,
employee or agent of the Servicer may rely in good faith on any document of any
kind prima facie properly executed and submitted by any Person respecting any
matters arising hereunder. The Servicer shall not be under any obligation to
appear in, prosecute or defend any legal action that is not incidental to its
duties to service the Mortgage Loans in accordance with this Agreement, and
that in its opinion may involve it in any expense or liability.
Section 7.04. Servicer Not to Resign. Subject to the provisions of
Section 7.02 regarding the merger or consolidation of the Servicer into or with
another entity, the Servicer shall not resign from the obligations and duties
hereby imposed on it except upon determination that the performance of its
duties or obligations hereunder is no longer permissible under applicable law
or regulation or are in material conflict by reason of applicable law or
regulation with any other activities carried on by it at the date of this
Agreement. Any such determination permitting the resignation of the Servicer
pursuant to this Section shall be evidenced by an Opinion of Counsel to such
effect delivered to the Trustee and the Certificate Insurer. No resignation
pursuant to this Section 7.04 (a) shall become effective until the Trustee or a
successor servicer shall have assumed the responsibilities and obligations of
the Servicer in accordance with Section 8.02 or (b) shall relieve the Servicer
of responsibility for any obligations pursuant to this Agreement that
specifically survive the resignation or termination of the Servicer. Each of
the Rating Agencies shall be given written notice of a resignation of the
Servicer pursuant to this Section.
Section 7.05. Merger or Consolidation of the Seller. Any corporation
or other entity (i) into which the Seller may be merged or consolidated, (ii)
that may result from any merger, conversion or consolidation to which the
Seller shall be a party, or (iii) that may succeed to all or substantially all
of the business of the Seller, which corporation or other entity shall, in any
case where an assumption shall not be effected by operation of law, execute an
agreement of assumption to perform every obligation of the Seller under this
Agreement, shall be the successor to the Seller hereunder without the execution
or filing of any document or any further act by any of the parties to this
Agreement, except that if the Seller in any of the foregoing cases is not the
surviving entity, then the surviving entity shall execute and deliver to the
Trustee an agreement of assumption to perform every obligation of the Seller
hereunder.
Section 7.06. Term of Servicer. Subject to Section 7.04, the
Servicer shall act as servicer under this Agreement for an initial quarterly
period commencing on the Closing Date and ending on December 31, 1996, which
quarterly period shall be extended for a succeeding quarterly period ending
March 31, June 30, September 30 and December 31 of each year as provided below
(each such quarterly period for which the Servicer shall be designated to act
as servicer hereunder, a "Term of Service"). So long as there is no Event of
Default pursuant to Section 8.01 of this Agreement, the Certificate Insurer
shall be obligated to deliver to the Trustee and the Servicer at least 15 days
prior to the expiration of the related Term of Service, a written notice (a
"Servicer Extension Notice") extending the term of Servicer for the next
succeeding quarter. Subject to Section 7.04, the Servicer agrees that, upon
receipt of the Servicer Extension Notice, the Servicer shall continue to act as
servicer hereunder for the duration of the designated Term of Service.
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If the Trustee has not received the Servicer Extension Notice by the
15th day prior to the end of any Term of Service, the Trustee shall notify the
Servicer and the Certificate Insurer of the non-receipt thereof no later than
five Business Days thereafter.
ARTICLE EIGHT
DEFAULT
Section 8.01. Events of Default. If any one of the following events
(each an "Event of Default") shall occur and be continuing:
(a) Any failure by the Servicer to (i) make a Monthly Advance
on any Deposit Date or (ii) deposit in the Collection Account or the
Certificate Account any other amount required to be deposited therein
under this Agreement or failure to pay the Trustee Fee, which failure,
in the case of only clause (ii) hereof, continues unremedied for a
period of one Business Day after the date upon which written notice of
such failure shall have been given to the Servicer by the Trustee or
the Certificate Insurer or to the Servicer, the Certificate Insurer
and the Trustee by Holders of Certificates evidencing Voting Interests
represented by all Certificates aggregating not less than 51%;
(b) Failure on the part of the Servicer duly to observe or
perform in any material respect any other covenants or agreements of
the Servicer set forth in the Certificates or in this Agreement, which
failure (i) materially and adversely affects the Certificateholders or
the Certificate Insurer and (ii) continues unremedied for a period of
30 days after the date on which written notice of such failure (which
notice shall refer specifically to this Section), requiring the same
to be remedied, shall have been given to the Servicer by the Trustee
or the Certificate Insurer, or to the Servicer, the Certificate
Insurer and the Trustee by the Holders of Certificates evidencing
Voting Interests represented by all Certificates aggregating not less
than 51%;
(c) The entry against the Servicer of a decree or order by a
court or agency or supervisory authority having jurisdiction in the
premises for the appointment of a trustee, conservator, receiver or
liquidator in any insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings, or for the winding up
or liquidation of its affairs, and the continuance of any such decree
or order unstayed and in effect for a period of 60 consecutive days;
(d) The consent by the Servicer to the appointment of a
trustee, conservator or receiver or liquidator in any bankruptcy,
insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating to the Servicer or
of or relating to substantially all of its property; or the Servicer
shall admit in writing its inability to pay its debts generally as
they become due, file a petition to take advantage of any applicable
bankruptcy, insolvency or reorganization statute, make an assignment
for the benefit of its creditors, or voluntarily suspend payment of
its obligations;
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(e) The payment by the Certificate Insurer of any Insured
Amounts; or
(f) For so long as the Company is the Servicer, failure on
the part of the Seller duly to observe or perform in any material
respect any covenants or agreements of the Seller set forth in the
Certificates or in this Agreement, which failure (i) materially and
adversely affects the Certificateholders or the Certificate Insurer
and (ii) continues unremedied for a period of 30 days after the date
on which written notice of such failure (which notice shall refer
specifically to this Section), requiring the same to be remedied,
shall have been given to the Servicer by the Trustee or the
Certificate Insurer, or to the Servicer, the Certificate Insurer and
the Trustee by the Holders of Certificates evidencing Voting Interests
represented by all Certificates aggregating not less than 51%;
(g) The Servicer shall have failed to establish a disaster
recovery plan that complies in all material respects with industry
standards (including by establishing off-site computer and personnel
access to all material customer and operations data and related
software) by December 31, 1996; or
(h) The occurrence of a material default of the Servicer
under this Agreement or the Insurance and Indemnity Agreement or the
occurrence of a Delinquency Rate Event, a Cumulative Loss Rate Event
or a Rolling Loss Rate Event;
then, and in each and every such case, so long as such Event of Default shall
not have been remedied by the Servicer, either (1) the Certificate Insurer or
(2) with the prior written consent of the Certificate Insurer, either the
Trustee or the Holders of Certificates evidencing Voting Interests represented
by all Certificates aggregating not less than 51%, by notice then given in
writing to the Servicer with a copy to the Certificate Insurer and to the
Trustee, may terminate all of the rights, responsibilities and obligations of
the Servicer as servicer under this Agreement. On or after the receipt by the
Servicer of such written notice, all authority and power of the Servicer under
this Agreement, whether with respect to the Certificates or the Mortgage Loans
or otherwise, shall pass to and be vested in the Trustee pursuant to and under
this Section and, without limitation, the Trustee is hereby authorized and
empowered to execute and deliver, on behalf of the Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments, and
to do or accomplish all other acts or things necessary or appropriate to effect
the purposes of such notice of termination, whether to complete the transfer
and endorsement of the Mortgage Loans and related documents, or otherwise. The
Servicer agrees to cooperate with the Trustee in effecting the termination of
its responsibilities and rights as Servicer hereunder, including, without
limitation, the transfer to the Trustee for the administration by it of all
cash amounts that shall at the time be held by the Servicer that have been
deposited by the Servicer in the Collection Account or the Certificate Account
or thereafter received by the Servicer with respect to the Mortgage Loans.
All reasonable costs and expenses (including attorneys' fees) incurred
in connection with transferring the Mortgage Files to a successor Servicer,
amending this Agreement to reflect the appointment of a successor as Servicer
pursuant to this Section 8.01 or otherwise in connection with the assumption by
a successor Servicer of the duties of the predecessor Servicer hereunder shall
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be paid by the predecessor Servicer upon presentation of reasonable
documentation of such costs and expenses.
Section 8.02. Trustee to Act; Appointment of Successor. On and after
the time the Servicer receives a notice of termination pursuant to Section
8.01, the Trustee shall be the successor in all respects to the Servicer in its
capacity as servicer under this Agreement and the transactions set forth or
provided for herein and shall be subject to all the responsibilities, duties
and liabilities relating thereto placed on the Servicer by the terms and
provisions hereof, including without limitation, the obligation to make Monthly
Advances and to pay Compensating Interest. As compensation therefor, the
Trustee shall be entitled to such compensation as the Servicer would have been
entitled to hereunder if no such notice of termination had been given.
Notwithstanding the foregoing, the Trustee may, if it shall be unwilling so to
act, or shall, if it is legally unable so to act, promptly appoint, or petition
a court of competent jurisdiction to appoint, any established housing and home
finance institution or any institution that regularly services home equity
loans that is then servicing a home equity loan portfolio and having all
licenses, permits and approvals required by applicable law, and having a net
worth of not less than $10,000,000 as the successor to the Servicer hereunder
in the assumption of all or any part of the responsibilities, duties or
liabilities of the Servicer hereunder; provided that any such successor
Servicer shall be acceptable to the Certificate Insurer, which acceptance shall
not be unreasonably withheld and provided further that the appointment of any
such successor Servicer will not result in the qualification, reduction or
withdrawal of the rating assigned to any Class of Class A Certificates by any
Rating Agency. Pending appointment of a successor to the Servicer hereunder,
unless the Trustee is prohibited by law from so acting, the Trustee shall act
in such capacity as hereinabove provided. In connection with such appointment
and assumption, the Trustee may make such arrangements for the compensation of
such successor out of payments on Mortgage Loans as it and such successor shall
agree; provided, however, that no such compensation shall be in excess of that
permitted the Servicer hereunder. The Trustee and such successor shall take
such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession. The appointment of a successor Servicer shall
not affect any liability of the predecessor Servicer that may have arisen under
this Agreement prior to its termination as Servicer (including without
limitation, any amount for a deductible amount pursuant to the last sentence of
Section 3.04), nor shall any successor Servicer be liable for any acts or
omissions of the predecessor Servicer or for any breach by such Servicer or the
Seller of any of its representations or warranties contained herein or in any
related document or agreement. Each of the Rating Agencies shall be given
written notice of the appointment of a successor Servicer pursuant to this
Section.
Section 8.03. Notifications to Certificateholders. Upon any
termination or appointment of a successor to the Servicer pursuant to this
Article Eight, the Trustee shall give prompt written notice thereof to
Certificateholders at their respective addresses appearing in the Certificate
Register, the Certificate Insurer and to each Rating Agency.
Within 60 days of obtaining actual knowledge of the occurrence of any
Event of Default that remains uncured, the Trustee shall transmit by mail to
all Certificateholders notice of such Event of Default.
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Section 8.04. Assumption or Termination of Sub-Servicing Agreements
by the Trustee or any Successor Servicer. Upon the termination of the Servicer
as servicer under this Agreement, the Trustee as successor to the Servicer
hereunder or any other successor to the Servicer hereunder may, subject to the
terms of any Sub-Servicing Agreement, in its sole and absolute discretion elect
to assume or terminate any Sub- Servicing Agreement then in force and effect
between the Servicer and the Sub-Servicer. Notwithstanding the foregoing, any
termination fee due to a Sub-Servicer because of its termination by the Trustee
hereunder shall be the responsibility of the terminated Servicer and not the
Trustee. Upon the assumption of any Sub-Servicing Agreement, the Servicer
agrees to deliver to the assuming party any and all documents and records
relating to the applicable Sub-Servicing Agreement and an accounting of amounts
collected and held by it and otherwise use its best reasonable efforts to
effectuate the orderly transfer of the Sub-Servicing Agreement.
ARTICLE NINE
THE TRUSTEE
Section 9.01. Duties of the Trustee. The Trustee, prior to the
occurrence of an Event of Default and after the curing of all Events of Default
that may have occurred, undertakes to perform such duties and only such duties
as are specifically set forth in this Agreement. If an Event of Default of
which a Responsible Officer of the Trustee shall have actual knowledge shall
have occurred (which has not been cured) and subject to the provisions of
Section 9.13, the Trustee shall exercise such of the rights and powers vested
in it by this Agreement, and use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee that are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
substantially conform to the requirements of this Agreement. If any such
document or instrument is found not to conform to the requirements of this
Agreement in a material manner, the Trustee shall, subject to the provisions of
Section 9.13, take such action as it deems appropriate to have the document or
instrument corrected, and if it is not corrected to the Trustee's reasonable
satisfaction, the Trustee will provide notice thereof to the Certificateholders
and the Certificate Insurer.
No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own misconduct; provided, however, that:
(a) prior to the occurrence of an Event of Default, and after
the curing of all such Events of Default that may have occurred, the
duties and obligations of the Trustee shall be determined solely by
the express provisions of this Agreement, the Trustee shall not be
liable except for the performance of such duties and obligations as
are specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee and,
in the absence of bad faith on the part of the Trustee, the Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions
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expressed therein, upon any certificates, filings or opinions
furnished to the Trustee and conforming to the requirements of this
Agreement;
(b) the Trustee shall not be personally liable for an error
of judgment made in good faith by a Responsible Officer of the
Trustee, unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts;
(c) the Trustee shall not be personally liable with respect
to any action taken, suffered or omitted to be taken by it in good
faith in accordance with the direction of the Holders of Certificates
evidencing Voting Interests represented by all Certificates
aggregating not less than 51% relating to the time, method and place
of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred upon the Trustee, under
this Agreement provided that such action has been approved by the
Certificate Insurer; and
(d) the Trustee shall not be charged with knowledge of any
failure by the Servicer to comply with the obligations of the Servicer
referred to in clauses (a) and (b) of Section 8.01 unless a
Responsible Officer obtains actual knowledge of such failure or the
Trustee receives written notice of such failure from the Servicer, the
Holders of Certificates evidencing Voting Interests represented by all
Certificates aggregating not less than 51% or the Certificate Insurer,
as the case may be.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of, any
of the obligations of the Servicer under this Agreement, except during such
time, if any, as the Trustee shall be the successor to, and be vested with the
rights, duties, powers and privileges of, the Servicer in accordance with the
terms of this Agreement.
Section 9.02. Certain Matters Affecting the Trustee. Except as
otherwise provided in Section 9.01:
(a) The Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officer's Certificate,
certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties;
(b) The Trustee may consult with counsel and any advice
obtained from counsel or Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken or
suffered or omitted by it hereunder in good faith and in accordance
with such advice or Opinion of Counsel;
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(c) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Agreement, or to
institute, conduct or defend any litigation hereunder or in relation
hereto, at the request, order or direction of the Certificate Insurer
or any of the Certificateholders, pursuant to the provisions of this
Agreement, unless the Person so requesting, ordering or directing same
shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities that may be incurred
therein or thereby; the right of the Trustee to perform any
discretionary act enumerated in this Agreement shall not be construed
as a duty, and the Trustee shall not be answerable for other than its
negligence or willful misconduct in the performance of any such act;
nothing contained herein shall, however, relieve the Trustee of the
obligations, upon the occurrence of an Event of Default known to a
Responsible Officer of the Trustee (which has not been cured), to
exercise such of the rights and powers vested in it by this Agreement,
subject to the provisions of Section 9.13, and to use the same degree
of care and skill in their exercise as a prudent man would exercise or
use under the circumstances in the conduct of his own affairs;
(d) The Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith in accordance with the
direction of the Certificate Insurer or of Holders of Certificates
evidencing Voting Interests representing all Certificates aggregating
not less than 51%, with the consent of the Certificate Insurer;
(e) Prior to the occurrence of an Event of Default and after
the curing of all Events of Default that may have occurred, the
Trustee shall not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or
other paper or documents, unless requested in writing to do so by the
Certificate Insurer or by Holders of Certificates evidencing Voting
Interests represented by all Certificates aggregating not less than
51%, with the consent of the Certificate Insurer; provided, however,
that if the payment within a reasonable time to the Trustee of the
costs, expenses or liabilities likely to be incurred by it in the
making of such investigation is, in the opinion of the Trustee, not
reasonably assured to the Trustee by the security afforded to it by
the terms of this Agreement, the Trustee may require reasonable
indemnity against such cost, expense or liability as a condition to
such proceeding; the reasonable expense of every such examination
shall be paid by the Servicer or, if paid by the Trustee, shall be
reimbursed by the Servicer upon demand; and nothing in this clause (e)
shall derogate from the obligation of the Servicer to observe any
applicable law prohibiting disclosure of information regarding the
Mortgagors; and
(f) The Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys or a custodian. The Trustee shall not be
liable or responsible for the misconduct of the custodian of the
Mortgage Files appointed with due care by the Trustee hereunder.
Section 9.03. Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates (other than the signature
and authentication of the Trustee on the Certificates) shall be taken as the
statements of the Servicer, and the Trustee assumes no
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responsibility for the correctness of the same. The Trustee makes no
representations as to the validity or sufficiency of this Agreement or of the
Certificates (other than the signature and authentication of the Trustee on the
Certificates and the signature of the Trustee on this Agreement) or of any
Mortgage, Mortgage Loan or related document. The Trustee shall not be
accountable for the use or application by the Servicer of any of the
Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Servicer in respect of the Mortgage Loans
or deposited in or withdrawn from the Collection Account by the Servicer.
Section 9.04. Trustee May Own Certificates. The Trustee in its
individual or any other capacity may become the owner or pledgee of
Certificates with the same rights as it would have if it were not Trustee.
Section 9.05. Payment of the Trustee's Fees and Expenses. (a) On or
before each Distribution Date occurring in October, beginning with the October
1996 Distribution Date, the Servicer shall pay to the Trustee without any right
of reimbursement from the Trust or otherwise, an amount equal to the Trustee
Fee, any reasonable expenses as agreed to by the Servicer and Trustee
(including any fees and expenses of a co-trustee or separate trustee appointed
under Section 9.10) and, with respect to the October 1996 Distribution Date,
all loan file review fees, as compensation for all services rendered by the
Trustee (and any such co-trustee or separate trustee) in the execution of the
trusts hereby created and in the exercise and performance of any of the powers
and duties hereunder of the Trustee (and any such co-trustee or separate
trustee). The Trustee Fee and such expenses and loan file review fees
(including any fees and expenses of a co-trustee or separate trustee appointed
under Section 9.10) are an obligation solely of the Servicer and neither the
Trustee nor any co-trustee or separate trustee appointed hereunder has or will
have any lien on the Trust for payment of any such fees or expenses. It is
anticipated that the Servicer will utilize a portion of the Monthly Servicing
Fee for payment of such fees and expenses.
(b) The Trust shall pay or reimburse the Trustee upon its request for
all reasonable expenses, disbursements and advances incurred or made by the
Trustee in accordance with any of the provisions of this Agreement (including
the reasonable compensation and the expenses and disbursements of its counsel
and of all persons not regularly in its employ) except any such expense,
disbursement or advance as may arise from its negligence or bad faith or that
is otherwise reimbursable to the Trustee by the Servicer pursuant to Section
9.05(a) above; provided, however, that the Trustee shall not refuse to perform
any of its duties hereunder solely as a result of the failure of the Trust to
pay or reimburse such expenses, disbursements or advances. The right of the
Trustee to recover such amounts from the Trust shall be subordinate to the
rights of the Holders of the Class A Certificates and the Certificate Insurer
under this Agreement including, without limitation, to the prior payment in
full of all amounts payable as of any Distribution Date under clauses first
through eleventh of Section 5.01(A) hereof and clauses first through seventh of
Section 5.01(B) hereof.
(c) The Servicer agrees to indemnify the Trustee from, and hold it
harmless against, any and all losses and liabilities, damages, claims or
expenses (including reasonable attorneys' fees) arising in respect of its acts
or omissions in connection with this Agreement or the Certificates except to
the extent the negligence, bad faith or intentional misconduct of the Trustee
contributes to the loss, liability, damage, claim or expense.
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(d) This Section 9.05 shall survive the termination of this Agreement
or the resignation or removal of the Trustee as regards rights accrued prior to
such resignation or removal.
Section 9.06. Eligibility Requirements for the Trustee. The Trustee
hereunder shall at all times be a bank or other depository institution doing
business under the laws of the United States or any state thereof, authorized
under such laws to exercise corporate trust powers, having a combined capital
and surplus of at least $100,000,000 and subject to supervision or examination
by federal or state authority and rated at least BBB by Standard & Poor's and
Baa2 by Moody's. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising
or examining authority, then for the purposes of this Section, the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, the Trustee shall resign
immediately in the manner and with the effect specified in Section 9.07. Any
successor to the Trustee must be reasonably acceptable to the Certificate
Insurer.
Section 9.07. Resignation or Removal of the Trustee. The Trustee may
at any time resign and be discharged from the trusts hereby created by giving
written notice thereof to the Servicer, the Certificate Insurer and each Rating
Agency. Upon receiving such notice of resignation, the Servicer shall promptly
appoint a successor trustee satisfying the criteria set forth in Section 9.06
(approved by the Certificate Insurer, which approval shall not be unreasonably
withheld) by written instrument, in triplicate, one copy of which instrument
shall be delivered to the resigning Trustee, one copy to the successor trustee
and one copy to the Servicer or the Certificate Insurer, as applicable. If no
successor trustee shall have been so appointed and having accepted appointment
within 30 days after the giving of such notice of resignation, the resigning
Trustee may petition any court of competent jurisdiction for the appointment of
a successor trustee.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 9.06 and shall fail to resign after written
request therefor by the Servicer or the Certificate Insurer, or if at any time
the Trustee shall be legally unable to act, or shall be adjudged a bankrupt or
insolvent, or a receiver of the Trustee or of its property shall be appointed,
or any public officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, or the Trustee shall fail to perform its obligations under this
Agreement, then the Servicer shall remove the Trustee and appoint a successor
trustee satisfying the criteria set forth in Section 9.06 (approved by the
Certificate Insurer, which approval shall not be unreasonably withheld) by
written instrument, in triplicate, one copy of which instrument shall be
delivered to the Trustee so removed, one copy to the successor trustee and one
copy to the Certificate Insurer.
Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor trustee as
provided in Section 9.08. The provisions of Section 9.05 shall survive any
such resignation or removal.
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Section 9.08. Successor Trustee. Any successor trustee appointed as
provided in Section 9.07 shall execute, acknowledge and deliver to the Servicer
and to its predecessor Trustee an instrument accepting such appointment
hereunder, and thereupon the resignation or removal of the predecessor Trustee
shall become effective and such successor trustee, without any further act,
deed or conveyance, shall become fully vested with all the rights, powers,
duties and obligations of its predecessor hereunder, with like effect as if
originally named as Trustee. The Seller, the Servicer and the predecessor
Trustee shall execute and deliver such instruments and do such other things as
may reasonably be required for fully and certainly vesting and confirming in
the successor Trustee all such rights, powers, duties and obligations.
No successor Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance it shall be eligible under the
provisions of Section 9.06.
Upon acceptance of appointment by a successor trustee as provided in
this Section, the Servicer shall mail notice of the succession of such trustee
hereunder to all Holders of Certificates at their addresses as shown in the
Certificate Register, to each Rating Agency and to the Certificate Insurer. If
the Servicer fails to mail such notice within 10 days after acceptance of
appointment by the successor trustee, the successor trustee shall cause such
notice to be mailed at the expense of the Servicer.
Section 9.09. Merger or Consolidation of the Trustee. Any
corporation into which the Trustee may be merged or converted or with which it
may be consolidated, or any corporation resulting from any merger, conversion
or consolidation to which the Trustee shall be a party, or any corporation
succeeding to the business of the Trustee or substantially all of the Trustee's
trust business, shall be the successor of the Trustee hereunder, provided such
corporation shall be eligible under the provisions of Section 9.06, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding.
Section 9.10. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust or any Mortgaged Property may at the time be located, the Servicer
and the Trustee acting jointly, with the prior written consent of the
Certificate Insurer, shall have the power and shall execute and deliver all
instruments to appoint one or more Persons approved by the Trustee to act as
co-trustee or co-trustees, jointly with the Trustee, or separate trustee or
separate trustees, of all or any part of the Trust, and to vest in such Person
or Persons, in such capacity and for the benefit of the Certificateholders,
such title to the Trust, or any part thereof, and, subject to the other
provisions of this Section, such powers, duties, obligations, rights,
indemnities and trusts as the Servicer and the Trustee may consider necessary
or desirable. If the Servicer shall not have joined in such appointment within
15 days after the receipt by it of a request so to do, or in the case an Event
of Default shall have occurred and be continuing, the Trustee alone and with
the prior consent of the Certificate Insurer shall have the power to make such
appointment. No co-trustee or separate trustee hereunder shall be required to
meet the terms of eligibility as a successor trustee under Section 9.06 and no
notice to Certificateholders of the appointment of any co-trustee or separate
trustee shall be required under Section 9.08. Each of the Rating Agencies
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shall be given written notice of the appointment of a co-trustee or a separate
trustee pursuant to this Section.
Every separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following provisions and
conditions:
(a) All rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
(whether as Trustee hereunder or as successor to the Servicer
hereunder), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust or any
portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate trustee or co-trustee, but solely at
the direction of the Trustee;
(b) No trustee hereunder shall be held personally liable by
reason of any act or omission of any other trustee hereunder; and
(c) The Servicer and the Trustee acting jointly may at any
time accept the resignation of or remove any separate trustee or
co-trustee, except that following the occurrence of an Event of
Default that has not been cured, the Trustee, acting alone may accept
the resignation of or remove any separate or co-trustor.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Trustee. Every such instrument shall be filed with the
Trustee and copies thereof given to each of the Servicer and the Certificate
Insurer.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its
estates, properties, rights, remedies and trusts shall vest in and be exercised
by the Trustee, to the extent permitted by law, without the appointment of a
new or successor trustee.
No appointment of any separate trustee or co-trustee shall absolve the
Trustee of its duties and obligations under this Agreement.
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Section 9.11. Compliance with REMIC Provisions. The Trustee shall at
all times act in such a manner in the performance of its duties hereunder as
shall be necessary to prevent the REMIC Pool from failing to qualify as a REMIC
and to prevent the imposition of a tax on the REMIC Pool. The Trustee shall:
(a) prepare and file, or cause to be prepared and filed, such federal, state
and local income tax and information returns or reports using the calendar year
as the taxable year for the REMIC Pool when and as required by the REMIC
Provisions and other applicable federal, state and local income tax laws, which
returns or reports shall be signed by the Trustee or such other person as may
be required thereby; (b) make an election, on behalf of the REMIC Pool, to be
treated as a REMIC and make the appropriate designations, if applicable, in
accordance with Section 2.07 on the federal income tax return of the REMIC Pool
for its first taxable year, in accordance with the REMIC Provisions; (c)
prepare and forward, or cause to be prepared and forwarded, to the
Certificateholders all information reports, or furnish or cause to be furnished
by telephone, mail, publication or other appropriate method such information,
as and when required to be provided to them in accordance with the Code; (d)
exercise reasonable care not to allow the creation of any "interests" in the
REMIC Pool within the meaning of Code Section 860D(a)(2) other than the
interests represented by the Certificates; and (e) within 30 days of the
Startup Day, furnish or cause to be furnished to the Internal Revenue Service,
on Form 8811 or as may otherwise be required by the Code, the name, title,
address, and telephone number of the person that Certificateholders may contact
for tax information relating to their Certificates (and the Trustee shall act
as the representative of the REMIC Pool for this purpose), together with such
additional information as may be required by such Form, and shall update such
information at the time and in the manner required by the Code. The Class R
Certificateholder shall designate the Servicer, if permitted by the Code and
applicable law, to act as "tax matters person" for the REMIC Pool within the
meaning of Treasury regulations Section 1.860F-4(d), and the Servicer is hereby
designated as agent of the Class R Certificateholder for such purpose (or if
the Servicer is not so permitted, the Holder of the Class R Certificate shall
be the tax matters person in accordance with the REMIC Provisions).
Section 9.12. Trustee May Enforce Claims Without Possession of
Certificates. All rights of action and claims under this Agreement or the
Certificates (including in respect of the Certificate Insurer's rights of
subrogation) may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceedings relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name or in its capacity as Trustee. Any recovery
of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, be for the ratable benefit of the Certificateholders (or the
Certificate Insurer in respect of any right or interest as to which the
Certificate Insurer is subrogated) in respect of which such judgment has been
recovered in accordance with the terms of this Agreement.
Section 9.13. Exercise of Trustee Powers by Certificate Insurer and
Certificateholders. The Certificate Insurer, or the Holders of Certificates
evidencing Voting Interests represented by all Certificates aggregating not
less than 51% with the consent of the Certificate Insurer, which consent may
not be unreasonably withheld, may direct the time, method and place of
conducting any proceeding relating to the Trust or the Certificates or for any
remedy available to the Trustee with
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respect to the Certificates or exercising any trust or power conferred on the
Trustee with respect to the Certificates of the Trust provided that:
(i) such direction shall not be in conflict with any rule
of law or with this Agreement;
(ii) the Trustee shall have been provided with indemnity
satisfactory to it; and
(iii) the Trustee may take any other action deemed proper
by the Trustee that is not inconsistent with such direction; provided,
however, that the Trustee need not take any action that it determines
might involve it in liability or may be unjustly prejudicial to the
Holders not so directing.
Section 9.14. Tax Returns. The Trustee shall maintain all
information in its possession as may be required in connection with the
preparation of all federal and, if applicable, state and local income tax and
information returns of the REMIC Pool (including, but not limited to, tax
reporting under the REMIC Provisions for the REMIC Pool, exclusive of the
Purchase Account and the Capitalized Interest Account), and pursuant to Section
24874 of the California Revenue and Taxation Code and its successors, and shall
prepare, execute and file as required all such returns. The Trustee shall
include in the first federal income tax return the information required to be
included therein under the REMIC Provisions, including, but not limited to,
Treas. Reg. Section 1.860D-1(d)2) and Treas. Reg. Section 1.860F-4(b)(2). The
Servicer shall report all required tax information to Mortgagors in accordance
with applicable law.
The Prepayment Assumption (as such term is defined in the Prospectus,
dated as of September 11, 1996) for the Class A Certificates shall be 120% of
the "Standard Prepayment Assumption" assumption, with respect to the Class A-1
Certificates and 25% of the "Constant Prepayment Rate" assumption, with respect
to the Class A-2 Certificates, as described in the Prospectus Supplement dated
September 11, 1996 relating to the Class A Certificates.
Section 9.15. Taxpayer Identification Number. The Trustee shall
prepare and file with the Internal Revenue Service, on behalf of the REMIC Pool
within the time period prescribed therefor, an application on IRS Form SS-4 for
the REMIC Pool. The Trustee, upon receipt from the Internal Revenue Service of
the Notice of Taxpayer Identification Number assigned to the REMIC Pool, shall
promptly forward a copy of such notice to the Servicer.
ARTICLE TEN
TERMINATION
Section 10.01. Termination Upon Purchase or Liquidation of All
Mortgage Loans. Subject to Section 10.02, the respective obligations and
responsibilities hereunder of the Servicer, the Seller and the Trustee (other
than the obligation of the Trustee to make certain payments to
Certificateholders after the final Distribution Date and the obligation of the
Seller to send certain notices as hereinafter set forth) and the Trust created
hereby shall terminate upon the last action required to be taken by the Trustee
on the final Distribution Date pursuant to this Article following
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the earlier of (a) the purchase by the Servicer of all Mortgage Loans and all
property acquired in respect of any Mortgage Loan remaining in the Trust at a
price equal to the sum of (x) 100% of the Principal Balance of each Mortgage
Loan (other than any Mortgage Loan as to which title to the underlying
Mortgaged Property has been acquired and whose fair market value is included
pursuant to clause (y) below) as of the final Distribution Date, and (y) the
fair market value of such acquired Mortgaged Property (determined as described
below), plus accrued and unpaid interest at the applicable Mortgage Loan Rate
on the Principal Balance of each Mortgage Loan (including any Mortgage Loan as
to which title to the underlying Mortgaged Property has been acquired) through
the end of the Collection Period preceding the date of repurchase and the
aggregate amount of unreimbursed Servicing Advances made in respect of any such
Mortgage Loan, less any payments of principal and interest received during such
Collection Period in respect of each such Mortgage Loan, or (b) the final
payment or other liquidation of the Principal Balance of the last Mortgage Loan
remaining in the Trust or the disposition of all property remaining in the
Trust acquired upon foreclosure or deed in lieu of foreclosure of any Mortgage
Loan; provided, however, that in no event shall the trust created hereby
continue beyond the expiration of 21 years from the death of the last survivor
of the descendants of Joseph P. Kennedy, the late ambassador of the United
States to the Court of St. James, who are living on the Closing Date. The fair
market value of Mortgaged Properties pursuant to the foregoing clause (y) shall
be determined by the Servicer as of the close of business on the third Business
Day next preceding the date upon which notice of any such termination is
furnished to Certificateholders pursuant to the third paragraph of this Section
10.01. Such determination shall not be effective unless consented to in
writing by the Certificate Insurer, which consent shall not be unreasonably
withheld. In the event that the Certificate Insurer does not consent to the
fair market value determined by the Servicer within three business days of
receiving notice of such determination, the Certificate Insurer and the
Servicer shall appoint a mutually agreed appraiser to make a determination as
to such fair market value whose determination shall be final and binding on the
Certificate Insurer and the Servicer, the expense of such appraisal being borne
equally by the Servicer and the Certificate Insurer and not being an expense of
the Trust.
The right of the Servicer to purchase all outstanding Mortgage Loans
pursuant to clause (a) above is exercisable only on or after the Clean-up Call
Date. If such right is exercised, the Servicer shall remit the purchase price
specified in this Section to the Trustee for deposit in the Certificate Account
pursuant to Section 3.02 (e) on or before the related Deposit Date and the
Trustee, if it has received the Mortgage Files pursuant to Section 2.01, shall,
promptly following remittance of such purchase price, release to the Servicer
the Mortgage Files pertaining to the Mortgage Loans being purchased and all
other documents furnished by the Servicer as are necessary to transfer the
Trustee's interest in the Mortgage Loans to the Servicer.
In addition, on any Distribution Date on which Mortgage Loans with
aggregate Principal Balances that equal or exceed 25% of the sum of the
Original Pool Balance and the Purchase Account Deposit have become Liquidated
Mortgage Loans, the Certificate Insurer may purchase from the Trust all of the
Mortgage Loans then remaining in the Trust at the price set forth in the
immediately preceding paragraph plus the amount of any outstanding and unpaid
fees and expenses of the Servicer and the Trustee by remitting such amount to
the Trustee for deposit in the Certificate Account pursuant to Section 3.02(e)
on or before the related Deposit Date and the Trustee shall, promptly following
remittance of such amount, release to the Certificate Insurer the Mortgage
Files
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pertaining to the Mortgage Loans being purchased and all other documents
necessary to transfer the Trustee's interest in such Mortgage Loans to the
Certificate Insurer.
Notice of any termination, specifying the Distribution Date (which
shall be a date that would otherwise be a Distribution Date) upon which the
Certificateholders may surrender their Certificates to the Trustee for payment
of the final distribution and cancellation shall be given promptly by the
Trustee (upon receipt of written directions from the Servicer, if the Servicer
is exercising its right to purchase the assets of the Trust as provided above,
or from the Certificate Insurer, if the Certificate Insurer is exercising its
right to purchase the assets of the Trust as provided above, in either case
given not later than the 15th day of the month preceding the month of such
final distribution) by letter to Certificateholders mailed not earlier than the
first day and not later than the 10th day of the month of such final
distribution specifying (a) the Distribution Date upon which final distribution
of the Certificates will be made upon presentation and surrender of
Certificates at the office or agency of the Trustee therein designated, (b) the
amount of any such final distribution and (c) that the Record Date otherwise
applicable to such Distribution Date is not applicable, distributions being
made only upon presentation and surrender of the Certificates at the office or
agency of the Trustee therein specified. In the event written directions are
delivered by the Servicer or the Certificate Insurer, as applicable, to the
Trustee as described in the preceding sentence, the Servicer or the Certificate
Insurer, as applicable, shall deposit in the Certificate Account on or before
the related Deposit Date for such final distribution in immediately available
funds an amount equal to the purchase price for the assets of the Trust
computed as above provided. In the case of a purchase by the Servicer, such
deposit shall be in lieu of the deposit otherwise required to be made in
respect of such Distribution Date pursuant to Section 3.02 and the related
distribution thereof to Certificateholders.
If the termination of the Trust is in connection with a purchase of
the assets of the Trust by the Servicer pursuant to clause (a) of the first
paragraph in this Section, or by the Certificate Insurer pursuant to the third
paragraph of this Section, the Trustee shall cause to be distributed to
Certificateholders on the final Distribution Date an amount equal to (i) as to
the Class A-1 Certificates, and upon presentation and surrender of the
Certificates, in proportion to their respective Percentage Interests the Class
A-1 Certificate Principal Balance, and the Class A-1 Monthly Interest, (ii) as
to the Class A-2 Certificates, and upon presentation and surrender of the Class
A-2 Certificates, in proportion to their respective Percentage Interests, the
Class A-2 Certificate Principal Balance and the Class A-2 Monthly Interest,
(iii) as to the Certificate Insurer, any amounts necessary to reimburse the
Certificate Insurer for any unreimbursed Insured Amounts, together with
interest thereon, and any accrued and unpaid Certificate Insurer Premium after
application pursuant to clauses (i) and (ii) above, (iv) as to the Servicer,
any additional servicing compensation with respect to such Distribution Date
(other than amounts retained to meet claims) after application pursuant to the
clauses (i), (ii) and (iii) above and payment to the Servicer of any amounts to
which it is entitled as reimbursement hereunder and (v) as to the Class R
Certificateholders and upon presentation and surrender of the Class R
Certificates, in proportion to their Percentage Interests, any amounts
remaining after application pursuant to the preceding clauses (i) through (iv);
provided, however, that if the fair market value of any acquired property
referred to in, or covered by, clause (a)(y) of the first paragraph of this
Section is less than the Principal Balance of the related Mortgage Loan, then
the excess of such Principal Balance over such fair market value shall be
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allocated in reduction of the amounts otherwise distributable on the final
Distribution Date in the following order of priority: first, to the Holders of
the Class R Certificates and second to the Holders of the Class A-1A
Certificates, Class A-1B Certificates, Class A-1C Certificates, Class A-1D
Certificates and Class A-1E Certificates, pro rata based on the Class A-1
Certificate Principal Balances thereof on such Distribution Date, or to the
Class A-2 Certificates, as applicable. The distribution on the final
Distribution Date in connection with the purchase by the Servicer of the assets
in the Trust shall be in lieu of the distribution otherwise required to be made
on such Distribution Date in respect of each Class of Certificates. The
Servicer shall provide in writing to the Trustee and the Certificate Insurer
the information with respect to the amounts so to be paid.
In the event that all of the Certificateholders shall not surrender
their Certificates for final payment and cancellation on or before the fifth
day following such final Distribution Date, the Trustee shall on such date
cause all funds in the Certificate Account not distributed in the final
distribution to Certificateholders to be withdrawn therefrom and credited to
the remaining Certificateholders by holding such funds uninvested in a separate
escrow account for the benefit of such Certificateholders and the Servicer (if
the Servicer exercised its right to purchase the assets of the Trust as
provided above) or the Trustee (in any other case) shall give a second written
notice to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If
within one year after the second notice all the Certificates shall not have
been surrendered for cancellation, any funds deposited in such escrow account
and remaining unclaimed shall be paid by the Trustee to the Servicer and
thereafter Certificateholders shall look only to the Servicer with respect to
any claims in respect of such funds.
Section 10.02. Additional Termination Requirements. In the event the
Servicer or the Certificate Insurer exercises its purchase option as provided
in Section 10.01, the REMIC Pool shall be terminated in accordance with the
following additional requirements, and the Trustee shall receive an Opinion of
Counsel to the effect that the termination of the REMIC Pool (i) will
constitute a "qualified liquidation" of the REMIC Pool within the meaning of
Code Section 860F(a)(4)(A), and (ii) will not subject the REMIC Pool to tax or
cause the REMIC Pool to fail to qualify as a REMIC at any time that any
Certificates are outstanding.
(i) Within 90 days prior to the final Distribution Date
set forth in the notice of intention to purchase the Mortgage Loans
given by the Servicer or the Certificate Insurer under Section 10.01,
the Trustee, at the direction of the Servicer, shall adopt a plan of
complete liquidation of the REMIC Pool on behalf of the REMIC within
the meaning of Code Section 860F(a)(4)(A)(8), which shall be evidenced
by such notice; and
(ii) At or after the time of adoption of such a plan of
complete liquidation and at or prior to the final Distribution Date,
the Trustee shall sell all of the assets of the REMIC Pool to the
Servicer or the Certificate Insurer, as the case may be, for cash at
the purchase price specified in Section 10.01 and shall distribute
such cash in the manner specified in Section 10.01.
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ARTICLE ELEVEN
MISCELLANEOUS PROVISIONS
Section 11.01. Amendment. This Agreement may be amended from time to
time by the Servicer, the Seller and the Trustee, without the consent of any of
the Certificateholders but with the prior written consent of the Certificate
Insurer (which consent shall not be unreasonably withheld), (a) to cure any
error or any ambiguity or to correct or supplement any provisions herein which
may be inconsistent with any other provisions herein; (b) to add to the duties
or obligations of the Servicer hereunder; (c) to maintain or improve any rating
then assigned by any Rating Agency to any of the Class A Certificates; or (d)
to add any other provisions with respect to matters or questions arising under
this Agreement or the Certificate Insurance Policy, as the case may be
(including specifically amendments or supplements pursuant to the second
paragraph of Section 6.02(b)); (e) to modify, eliminate or add to any of its
provisions to such extent as shall be necessary to maintain the qualification
of the REMIC Pool as a REMIC at all times that any Certificates are outstanding
or to avoid or minimize the risk of the imposition of any tax on the REMIC Pool
pursuant to the Code that would be a claim against the REMIC Pool, provided
that in the case of this clause (e) the Trustee has received an Opinion of
Counsel to the effect that such action is necessary or desirable to maintain
such qualification or to avoid or minimize the risk of the imposition of any
such tax; or (f) to modify, eliminate or add to the provisions of Section
6.02(c) or any other provisions hereof restricting transfer of the Class R
Certificates; provided that in all such cases the Trustee has obtained written
confirmation from each Rating Agency that any such modifications to this
Agreement will not result in a qualification, reduction or withdrawal of the
rating assigned to any Class of Class A Certificates by such Rating Agency and
has received an Opinion of Counsel to the effect that any such modifications to
this Agreement do not give rise to a risk that the REMIC Pool or any of the
Certificateholders will be subject to a tax caused by a transfer to a
Disqualified Organization; provided, further, that in all such cases such
action shall not, as evidenced by an Opinion of Counsel, adversely affect in
any material respect the interests of any Certificateholder or the Certificate
Insurer.
This Agreement may also be amended from time to time by the Servicer,
the Seller and the Trustee, with the consent of the Certificate Insurer (which
consent shall not be unreasonably withheld) and the Holders of Certificates
evidencing Voting Interests of each Class affected thereby aggregating not less
than 51%, for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of this Agreement, or of modifying in any
manner the rights of the Holders of Certificates of such Class; provided,
however, that no such amendment shall (a) reduce in any manner the amount of,
or delay the timing of, collections of payments on Mortgage Loans or
distributions which are required to be made on any Certificate without the
consent of the Holder of such Certificate or (b) reduce the aforesaid
percentage of each Class the Holders of which are required to consent to any
such amendment, without the consent of the Holders of all Certificates of such
Class then outstanding.
Promptly after the execution of any such amendment or consent pursuant
to the next preceding paragraph, the Trustee shall furnish written notification
of the substance of such amendment to each Certificateholder and each Rating
Agency.
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It shall not be necessary for the consent of Certificateholders under
this Section to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject
to such reasonable requirements as the Trustee may prescribe.
Prior to the execution of any amendment to this Agreement, the Trustee
and the Certificate Insurer shall be entitled to receive and rely upon an
Opinion of Counsel stating that the execution of such amendment is authorized
or permitted by this Agreement. The Trustee may, but shall not be obligated
to, enter into any such amendment that affects the Trustee's own rights, duties
or immunities under this Agreement.
Section 11.02. Recordation of Agreement. This Agreement is subject
to recordation in all appropriate public offices for real property records in
all the counties or other comparable jurisdictions in which any or all of the
Mortgaged Properties are situated, and in any other appropriate public
recording office or elsewhere, such recordation to be effected by the Servicer,
at its expense but only upon, determination of the Servicer accompanied by an
Opinion of Counsel to the effect that such recordation is legally required to
protect the Trustee's interest in the Mortgage Loans.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
Section 11.03. Limitation on Rights of Certificateholders. The death
or incapacity of any Certificateholder shall not operate to terminate this
Agreement, the Trust or the REMIC established pursuant to Section 3.01, nor
entitle such Certificateholder's legal representatives or heirs to claim an
accounting or to take any action or commence any proceeding in any court for a
partition or winding up of the Trust or the REMIC established pursuant to
Section 3.01, nor otherwise affect the rights, obligations and liabilities of
the parties hereto or any of them.
Except as otherwise expressly provided herein, no Certificateholder,
solely by virtue of its status as a Certificateholder, shall have any right to
vote or in any manner otherwise control the operation and management of the
Trust or the REMIC established pursuant to Section 3.01, or the obligations of
the parties hereto, nor shall anything herein set forth, or contained in the
terms of the Certificates, be construed so as to constitute the
Certificateholders from time to time as partners or members of an association;
nor shall any Certificateholder be under any liability to any third person by
reason of any action taken by the parties to this Agreement pursuant to any
provision hereof.
No Certificateholder, solely by virtue of its status as a
Certificateholder, shall have any right by virtue or by availing itself of any
provisions of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee a written notice of default
and of the continuance thereof, as hereinbefore provided, and unless also the
Holders of Certificates evidencing Voting Interests
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represented by all Certificates aggregating not less than 51% shall have
obtained the prior written consent of the Certificate Insurer and made written
request upon the Trustee to institute such action, suit or proceeding in its
own name as Trustee hereunder and shall have offered to the Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee, for 60 days
after its receipt of such notice, request and offer of indemnity, shall have
neglected or refused to institute any such action, suit or proceeding; it being
understood and intended, and being expressly covenanted by each
Certificateholder with every other Certificateholder and the Trustee, that no
one or more Holders of Certificates shall have any right in any manner whatever
by virtue or by availing itself or themselves of any provision of this
Agreement to affect, disturb or prejudice the rights of the Holders of any
other Certificates, or to obtain or seek to obtain priority over or preference
to any other such Holder, or to enforce any right under this Agreement, except
in the manner herein provided and for the equal, ratable and common benefit of
all Certificateholders. For the protection and enforcement of the provisions
of this Section, each and every Certificateholder and the Trustee shall be
entitled to such relief as can be given either at law or in equity.
Section 11.04. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of California (without regard to conflict
of laws principles and the application of the laws of any other jurisdiction),
and the obligations, rights and remedies of the parties hereunder shall be
determined in accordance with such laws.
Section 11.05. Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given when
delivered to (a) in the case of the Seller and the Servicer, at 3731 Wilshire
Boulevard, 10th Floor, Los Angeles, California 90010, Attention: Gregory J.
Witherspoon; (b) in the case of the Trustee, at the Corporate Trust Office at 3
Park Plaza, 16th Floor, Irvine, California 92714, Attention: Aames Capital
Corporation, Series 1996-C; (c) in the case of the Certificate Insurer,
Financial Security Assurance Inc., 350 Park Avenue, New York, New York 10022,
Attention: Senior Vice President, Surveillance Department; (d) in the case of
S&P, to Standard & Poor's, 26 Broadway, 15th Floor, New York, New York 10004,
Attention: Mortgage Surveillance Group; and (e) in the case of Moody's, to
Moody's Investors Service Inc., 99 Church Street, New York, New York 10007,
Attention: Residential Mortgage Pass-Through Monitoring, or, as to each party,
at such other address as shall be designated by such party in a written notice
to each other party. Any notice required or permitted to be mailed to a
Certificateholder shall be given by first class mail, postage prepaid, at its
address shown in the Certificate Register. Any notice so mailed within the
time prescribed in this Agreement shall be conclusively presumed to have been
duly given, whether or not the Certificateholder receives such notice. Any
notice or other document required to be delivered or mailed by the Trustee to
any Rating Agency shall be given on a best efforts basis and only as a matter
of courtesy and accommodation and the Trustee shall have no liability for
failure to deliver such notice or document to any such Rating Agency.
Section 11.06. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity
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or enforceability of the other provisions of this Agreement or of the
Certificates or the rights of the Holders thereof.
Section 11.07. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 7.02, 7.04 and 7.05, this
Agreement may not be assigned by the Seller or the Servicer without the prior
written consent of the Certificate Insurer and the Holders of Certificates
evidencing not less than 66% of the Voting Interests of all Certificates.
Section 11.08. Certificates Nonassessable and Fully Paid. The
parties agree that the Certificateholders shall not be personally liable for
obligations of the Trust, that the beneficial ownership interests represented
by the Certificates shall be nonassessable for any losses or expenses of the
Trust or for any reason whatsoever, and that Certificates upon execution,
authentication and delivery thereof by the Trustee pursuant to Section 2.06 are
and shall be deemed fully paid.
Section 11.09. Third Party Beneficiary; Rating. (a) The Certificate
Insurer is an intended third-party beneficiary of this Agreement. This
Agreement shall be binding upon and inure to the benefit of the Certificate
Insurer; provided that, notwithstanding the foregoing, for so long as a
Certificate Insurer Default is continuing under its obligations under the
Certificate Insurance Policy, the Class A Certificateholders shall succeed to
the Certificate Insurer's rights hereunder. Without limiting the generality of
the foregoing, all covenants and agreements in this Agreement that expressly
confer rights upon the Certificate Insurer shall be for the benefit of and run
directly to the Certificate Insurer, and the Certificate Insurer shall be
entitled to rely on and enforce such covenants to the same extent as if it were
a party to this Agreement.
(b) In the event the rating of the Certificate Insurer by any of the
Rating Agencies is reduced to a rating that is below "investment grade" (as
that term is then commonly used), the Servicer shall, at its own expense, seek
to obtain ratings of each Class of Class A Certificates (apart from the rating
related to the Certificate Insurance Policy) from such Rating Agency.
113
<PAGE> 119
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective officers, all as of the day and year first
above written.
AAMES CAPITAL CORPORATION,
as Seller and Servicer
By: /s/ Gregory J. Witherspoon
------------------------------------
Name: Gregory J. Witherspoon
Title: Executive Vice President
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.,
as Trustee and not in its
individual capacity
By: /s/ Nana Palmer
------------------------------------
Name: Nana Palmer
Title: Vice President
114
<PAGE> 120
State of California )
) ss.:
County of Los Angeles )
On the 17th day of September 1996, before me, a notary public in and
for of the State of California, personally appeared Gregory Witherspoon,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in the capacity or capacities
indicated in the within instrument, and that by his signature on the instrument
the person, or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
/s/ Katherine L. Murray
- -------------------------------------
Notary Public
[Notary Seal]
115
<PAGE> 121
State of California )
) ss.:
County of Los Angeles )
On the 17th day of September 1996, before me, a notary public in and
for of the State of California, personally appeared Nana Palmer, personally
known to me (or proved to me on the basis of satisfactory evidence) to be the
person whose name is subscribed to the within instrument and acknowledged to me
that she executed the same in the capacity or capacities indicated in the
within instrument, and that by her signature on the instrument the person, or
the entity upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
/s/ Suzanne C. Patten
- --------------------------------
Notary Public
[Notary Seal]
116
<PAGE> 122
Schedule I
List of Sub-Servicers
Advanta Mortgage Corp. USA
Wendover Funding, Inc.
<PAGE> 123
Schedule II
Representations and Warranties of the Seller
Regarding Subsequent Mortgage Loans
A. The Seller represents and warrants to the Trustee, the Certificate
Insurer and the Certificateholders as of any Subsequent Transfer Date
(except as otherwise expressly stated) that as to each Subsequent
Mortgage Loan conveyed to the Trust by it:
(i) no Subsequent Mortgage Loan provides for negative
amortization;
(ii) with respect to Group II each Subsequent Mortgage
Loan that has an Index based on 6-month LIBOR (a) if
such Mortgage Loan has an initial Adjustment Date not
more than six months from the date of origination,
then the related Mortgage Note provides for a 1.0%
rate cap every six months, (b) if such Mortgage Loan
has an initial Adjustment Date of six months, one
year, two years, three years or five years from the
date of origination, then the related Mortgage Note
provides for a rate cap as to its first Adjustment
Date of from 1.5% to 3.0% and a rate cap as to each
subsequent Adjustment Date of from 1.0% to 2.0%; any
Subsequent Mortgage Loan that has an Index based on
the one-year CMT index provides for a 2.0% annual
rate cap;
(iii) no Subsequent Mortgage Loan has a Gross Margin less
than 3.5%;
(iv) each Subsequent Mortgage Loan will have been serviced
since origination or purchase by the Servicer;
(v) no Subsequent Mortgage Loan has been originated for
the purpose of facilitating the purchase of real
estate owned by the originator; and
(vi) no Subsequent Mortgage Loan will have a Cut-off Date
of later than October 1, 1996.
B. The Seller represents and warrants to the Trustee, the Certificate
Insurer and the Certificateholders, that following the purchase of all
Subsequent Mortgage Loans by the Trust and the assignment of such
Subsequent Mortgage Loans to the appropriate Mortgage Loan Group, as
of the end of the Commitment Period:
(i) the Mortgage Loans in Group I (including the
Subsequent Mortgage Loans):
(a) will have a weighted average Mortgage Loan
Rate of at least 11.33%;
(b) will have a weighted average original term to
stated maturity of not more than 307 months;
Schedule II-1
<PAGE> 124
(c) will have a weighted average Combined
Loan-to-Value Ratio of not more than 64.84%
and a weighted average second loan-to-value
ratio of not more than 64.90%;
(d) will have no Mortgage Loan with a Principal
Balance less than $20,000 or greater than
$306,000;
(e) will not have in excess of 10% by Aggregate
Principal Balance of Mortgage Loans secured
by non-owner occupied Mortgaged Properties;
(f) will not have a concentration in a single ZIP
code in excess of 0.75% by Aggregate
Principal Balance;
(g) will not have an aggregate concentration in
excess of 0.60% by Aggregate Principal
Balance in ZIP codes beginning with the
following three digits: 900-919, 922-925,
930-931 and 935;
(h) will not have a concentration in a single
State, other than California, Florida,
Illinois or Washington in excess of 5% by
Aggregate Principal Balance;
(i) will not have a concentration in California
in excess of 36.17%, in Florida in excess of
10.48%, in Illinois in excess of 6.66%, in
Washington in excess of 6.33% by Aggregate
Principal Balance;
(j) will not have in excess of 8.53% or 4.50% by
Aggregate Principal Balance of Mortgage Loans
secured by Mortgaged Properties that are two
family properties or condominiums (less than
four stories), three and four family
properties or condominiums (greater than four
stories), respectively, and will have none
secured by mobile homes or manufactured
housing treated as real estate under
applicable state law;
(k) will have at least 92% by Aggregate Principal
Balance of Mortgage Loans secured by fee
simple interests in detached single family
dwelling units (including units in de minimis
planned unit developments);
(l) will have no Mortgage Loans that are based on
a 360-month amortization schedule with a
balloon payment prior to month 60;
(m) will have no Mortgage Loans that are based on
a 360-month amortization schedule and have a
balloon payment between month 121-150;
Schedule II-2
<PAGE> 125
(n) will have no more than 4.71% by Aggregate
Principal Balance of Mortgage Loans that are
based on a 360-month amortization schedule
and have a balloon payment between month
151-180; and
(o) will have no more than 1.18% by Aggregate
Principal Balance of Mortgage Loans that are
based on a 360-month amortization schedule
and have a balloon payment between month
181-240;
(p) will have no less than 94.05% by Aggregate
Principal Balance of Mortgage Loans that
provide for the payment of principal and
interest on a level basis to fully amortize
such Mortgage Loan over its stated maturity;
and
(q) will have a weighted average term since
origination not in excess of three months.
(ii) the Mortgage Loans in Group II (including the
Subsequent Mortgage Loans):
(a) will have a weighted average Mortgage Loan
Rate of at least 10.27%;
(b) will have a weighted average original term to
stated maturity of not more than 350 months;
(c) will have a weighted average Loan-to-Value
Ratio of not more than 68.88%;
(d) will have no Mortgage Loan with a Principal
Balance less than $20,000 or more than
$550,000;
(e) will have not in excess of 10% by Aggregate
Principal Balance of Mortgage Loans secured
by non-owner occupied Mortgage Properties;
(f) will not have a concentration in a single ZIP
code in excess of 0.75% by Aggregate
Principal Balance;
(g) will not have an aggregate concentration in
excess of 0.50% in ZIP codes beginning with
the following three digits: 900-919,
922-925, 930, 931, 935;
(h) will not have a concentration in a single
State, other than California, Colorado,
Florida, Illinois, Oregon or Washington in
excess of 5% by Aggregate Principal Balance;
Schedule II-3
<PAGE> 126
(i) will not have a concentration in California
in excess of 22.80%, in Colorado in excess of
6.44%, in Florida in excess of 9.60%, in
Illinois in excess of 8.25%, in Oregon in
excess of 6.36% or in Washington in excess of
7.32% by Aggregate Principal Balance;
(j) will not have in excess of 7.13% or 5.04% by
Aggregate Principal Balance Mortgage Loans
secured by Mortgaged Properties that are two
family properties or condominiums (less than
four stories) and three and four family
properties or condominiums (greater than four
stories), respectively, and none will be
secured by mobile homes or manufactured
housing treated as real estate under
applicable state law;
(k) will have at least 92% by Aggregate Principal
Balance Mortgage Loans secured by fee simple
interests in detached single family dwelling
units (including units in de minimis planned
unit development);
(l) will have a weighted average margin of at
least 6.86%;
(m) will have no Mortgage Loan that is not based
on a 360-month amortization schedule of level
payments;
(n) will have a weighted average term since
origination not in excess of three months.
For purposes of this Schedule II, "Aggregate Principal Balance" means
the aggregate of the Principal Balances of the Mortgage Loans (determined as of
the Cut-off Date for the Initial Mortgage Loans and as of the Subsequent
Cut-off Date for the Subsequent Mortgage Loans) in the related Mortgage Loan
Group.
Schedule II-4
<PAGE> 127
Schedule III
Schedule of Certain Delinquent Mortgage Loans
[Omitted from this Current Report on Form 8-K]
Schedule III
<PAGE> 128
EXHIBIT A-1A
FORM OF CLASS A-1A CERTIFICATE
Date of Pooling and Servicing Original Class A-1A Certificate
Agreement and Cut-off Date: Balance: $69,200,000.00
September 1, 1996
First Distribution Date: CUSIP No. 00253C BS 5
October 15, 1996
Denomination: $69,200,000.00 Certificate No.: 1
Class A-1A Adjustable Rate Certificate
AAMES MORTGAGE TRUST 1996-C
PASS-THROUGH CERTIFICATE,
SERIES 1996-C, CLASS A-1A
evidencing a percentage interest in the distributions allocable to the
Class A-1A Certificates with respect to a Trust consisting primarily
of a pool of conventional, closed-end, fixed and adjustable rate,
residential mortgage loans, sold and serviced by Aames Capital
Corporation.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL CORPORATION OR THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR
RESPECTIVE AFFILIATES. THIS CERTIFICATE IS NOT A DEPOSIT, AND NEITHER THIS
CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
Unless this Certificate is presented by an authorized representative
of The Depository Trust Company, a New York Corporation ("DTC"), to Issuer or
its agent for registration of transfer, exchange, or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other
name as requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL in as much as the requested owner
hereof, Cede & Co. has an interest herein.
This certifies that CEDE & CO. is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
denomination of this Certificate shown
A1A-1
<PAGE> 129
above by the Original Class A-1A Certificate Principal Balance) in a trust, the
assets of which consist primarily of a pool of conventional, closed-end, fixed
and adjustable rate, residential mortgage loans (the "Mortgage Loans"), sold
and serviced by Aames Capital Corporation (in its capacity as seller, the
"Seller" and in its capacity as servicer, the "Servicer", which term includes
any successor Servicer under the Agreement referred to below). The Percentage
Interest evidenced by this Certificate represents an interest in the group of
fixed rate Mortgage Loans. The Trust was created pursuant to a Pooling and
Servicing Agreement dated as specified above (the "Agreement") between the
Seller and Servicer and Bankers Trust Company of California, N.A., as trustee
(the "Trustee"), a summary of certain of the pertinent provisions of which is
set forth hereafter. To the extent not defined herein, the capitalized terms
used herein have the meanings assigned in the Agreement. This Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on
the 15th day of each month (or if any such day is not a Business Day, on the
Business Day immediately following such 15th day) (the "Distribution Date"),
commencing on the first Distribution Date specified above, to the Person in
whose name this Certificate is registered at the close of business on the
applicable Record Date, in an amount equal to the product of (a) the Percentage
Interest evidenced by this Certificate and (b) the sum of the Class A-1A
Monthly Interest and any amounts distributed to Class A-1A Certificateholders
in respect of Class A-1 Monthly Principal, Class A-1 Excess Cash Distribution,
Class A-2 Overflow Distribution and the Class A-1 Insured Amount, all as more
specifically set forth in the Agreement.
Except as otherwise provided in the Agreement, distributions on this
Certificate will be made by the Trustee by check or money order mailed to the
Person entitled thereto at the address appearing in the Certificate Register,
or upon written request by the Certificateholder, by wire transfer to a bank
account maintained in the United States (in the case of any Holder of
Certificates entitled to such form of payment as provided in the Agreement) or
by such other means of payment as such Person and the Trustee shall agree.
Except as otherwise provided in the Agreement, the final distribution on this
Certificate will be made in the applicable manner described above, after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
maintained for that purpose and as specified in such notice.
This Certificate is one of a duly authorized issue of Certificates
designated as "Aames Mortgage Trust Mortgage Pass-Through Certificates, Series
1996-C, Class A-1A" (herein called the "Class A-1A Certificates") and
representing a beneficial ownership interest, in each case subject to the
limitations set forth in the Agreement in, among other things, the Mortgage
Loans, such assets as shall from time to time be identified or shall be
required by the Agreement to be identified as deposited in the Collection
and/or Certificate Account or invested in Permitted Investments in accordance
with the Agreement, all rights under any insurance policy covering a Mortgage
Loan or the related Mortgaged Property and property and any proceeds thereof
which secured a Mortgage Loan and which has been acquired by foreclosure, deed
in lieu of foreclosure or by a comparable conversion.
A1A-2
<PAGE> 130
The Class A-1A Certificates are limited in right of payment to certain
payments on and collections in respect of Group I and in certain limited
circumstances, Group II, all as more specifically set forth in the Agreement.
The Holder of this Certificate, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Certificate Account in
respect of Group I and, in certain limited circumstances, Group II and payments
made under the Certificate Insurance Policy in respect of the Class A-1 Insured
Amount allocable to Class A-1A Certificateholders and that the Trustee in its
individual capacity is not personally liable to the Certificateholders for any
amount payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Seller, the Servicer, and the rights of the Certificateholders under the
Agreement at any time by the Servicer and the Trustee with the consent of the
Certificate Insurer and the Holders of Certificates evidencing Voting Interests
of each Class affected thereby aggregating not less than 51%. Any such consent
by the Holder of this Certificate shall be conclusive and binding on such
Holder and upon all future Holders of this Certificate and of any Certificate
issued upon the transfer hereof or in exchange herefor or in lieu hereof
whether or not notation of such consent is made upon this Certificate. The
Agreement also permits the amendment thereof, in certain limited circumstances,
without the consent of the Holders of any of the Certificates but with the
prior written consent of the Certificate Insurer.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registerable in the
Certificate Register of the Trustee upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Trustee in
New York, New York, accompanied by a written instrument of transfer in form
satisfactory to the Trustee duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class of authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for new Certificates of the same Class of authorized
denominations evidencing the same aggregate Percentage Interest, as requested
by the Holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Trustee may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
A1A-3
<PAGE> 131
The Seller and the Trustee and any of their respective agents may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Seller, the Trustee nor any of their
respective agents shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon payment to the Certificateholders,
or provision therefor, in accordance with the Agreement upon (a) the purchase
by the Servicer or the Certificate Insurer of all Mortgage Loans and all
property acquired in respect of any Mortgage Loan remaining in the Trust at a
price determined as provided in the Agreement, or (b) the later of the final
payment or other liquidation of the last Mortgage Loan remaining in the Trust
or the disposition of all property acquired upon foreclosure or by deed in lieu
of foreclosure of any Mortgage Loan. The exercise of the right of the Servicer
to purchase all the Mortgage Loans and property in respect of Mortgage Loans
will result in early retirement of the Certificates, the right of the Servicer
to purchase being subject to the Pool Balance at the time of purchase being
less than 10% of the sum of the Cut-off Date Pool Balance and the Purchase
Account Deposit. The exercise of the right of the Certificate Insurer to
purchase all the Mortgage Loans and property in respect of Mortgage Loans will
result in early retirement of the Certificates, the right of the Certificate
Insurer to purchase being subject to Mortgage Loans with aggregate Cut-off Date
Principal Balances equal to or greater than 25% of the sum of the Cut-off Date
Pool Balance and the Purchase Account Deposit having become Liquidated Mortgage
Loans prior to the time of purchase.
This Certificate constitutes a "regular interest" in a "real estate
mortgage investment conduit" as those terms are defined in Section 860G(a)(1)
and Section 860D, respectively, of the Internal Revenue Code of 1986, as
amended.
This Certificate will not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned for
authenticating purposes only by any authorized officer of the Trustee.
A1A-4
<PAGE> 132
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: September 17, 1996
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.,
as Trustee
By:
--------------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION:
This is one of the Class A-1A
Certificates referred to in
the within named Agreement
By:
----------------------------------------------
Authorized Officer of Bankers Trust Company
of California, N.A., as Trustee
A1A-5
<PAGE> 133
EXHIBIT A-1B
FORM OF CLASS A-1B CERTIFICATE
Date of Pooling and Servicing Original Class A-1B Certificate
Agreement and Cut-off Date: Balance: $54,800,000.00
September 1, 1996
First Distribution Date: CUSIP No. 00253C BT 3
October 15, 1996
Denomination: $54,800,000.00 Certificate No.: 1
Class A-1B Pass-Through Rate: 7.22%
AAMES MORTGAGE TRUST 1996-C
PASS-THROUGH CERTIFICATE,
SERIES 1996-C, CLASS A-1B
evidencing a percentage interest in the distributions allocable to the
Class A-1B Certificates with respect to a Trust consisting primarily
of a pool of conventional, closed-end, fixed and adjustable rate,
residential mortgage loans, sold and serviced by Aames Capital
Corporation.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL CORPORATION OR THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR
RESPECTIVE AFFILIATES. THIS CERTIFICATE IS NOT A DEPOSIT, AND NEITHER THIS
CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
Unless this Certificate is presented by an authorized representative
of The Depository Trust Company, a New York Corporation ("DTC"), to Issuer or
its agent for registration of transfer, exchange, or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other
name as requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL in as much as the requested owner
hereof, Cede & Co. has an interest herein.
This certifies that CEDE & CO. is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
denomination of this Certificate shown
A1B-1
<PAGE> 134
above by the Original Class A-1B Certificate Principal Balance) in a trust, the
assets of which consist primarily of a pool of conventional, closed-end, fixed
and adjustable rate, residential mortgage loans (the "Mortgage Loans"), sold
and serviced by Aames Capital Corporation (in its capacity as seller, the
"Seller" and in its capacity as servicer, the "Servicer", which term includes
any successor Servicer under the Agreement referred to below). The Percentage
Interest evidenced by this Certificate represents an interest in the group of
fixed rate Mortgage Loans. The Trust was created pursuant to a Pooling and
Servicing Agreement dated as specified above (the "Agreement") between the
Seller and Servicer and Bankers Trust Company of California, N.A., as trustee
(the "Trustee"), a summary of certain of the pertinent provisions of which is
set forth hereafter. To the extent not defined herein, the capitalized terms
used herein have the meanings assigned in the Agreement. This Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on
the 15th day of each month (or if any such day is not a Business Day, on the
Business Day immediately following such 15th day) (the "Distribution Date"),
commencing on the first Distribution Date specified above, to the Person in
whose name this Certificate is registered at the close of business on the
applicable Record Date, in an amount equal to the product of (a) the Percentage
Interest evidenced by this Certificate and (b) the sum of the Class A-1B
Monthly Interest and any amounts distributed to Class A-1B Certificateholders
in respect of Class A-1 Monthly Principal, Class A-1 Excess Cash Distribution,
Class A-2 Overflow Distribution and the Class A-1 Insured Amount, all as more
specifically set forth in the Agreement.
Except as otherwise provided in the Agreement, distributions on this
Certificate will be made by the Trustee by check or money order mailed to the
Person entitled thereto at the address appearing in the Certificate Register,
or upon written request by the Certificateholder, by wire transfer to a bank
account maintained in the United States (in the case of any Holder of
Certificates entitled to such form of payment as provided in the Agreement) or
by such other means of payment as such Person and the Trustee shall agree.
Except as otherwise provided in the Agreement, the final distribution on this
Certificate will be made in the applicable manner described above, after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
maintained for that purpose and as specified in such notice.
This Certificate is one of a duly authorized issue of Certificates
designated as "Aames Mortgage Trust Mortgage Pass-Through Certificates, Series
1996-C, Class A-1B" (herein called the "Class A-1B Certificates") and
representing a beneficial ownership interest, in each case subject to the
limitations set forth in the Agreement in, among other things, the Mortgage
Loans, such assets as shall from time to time be identified or shall be
required by the Agreement to be identified as deposited in the Collection
and/or Certificate Account or invested in Permitted Investments in accordance
with the Agreement, all rights under any insurance policy covering a Mortgage
Loan or the related Mortgaged Property and property and any proceeds thereof
which secured a Mortgage Loan and which has been acquired by foreclosure, deed
in lieu of foreclosure or by a comparable conversion.
A1B-2
<PAGE> 135
The Class A-1B Certificates are limited in right of payment to certain
payments on and collections in respect of Group I and in certain limited
circumstances, Group II, all as more specifically set forth in the Agreement.
The Holder of this Certificate, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Certificate Account in
respect of Group I and, in certain limited circumstances, Group II and payments
made under the Certificate Insurance Policy in respect of the Class A-1 Insured
Amount allocable to Class A-1B Certificateholders and that the Trustee in its
individual capacity is not personally liable to the Certificateholders for any
amount payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Seller, the Servicer, and the rights of the Certificateholders under the
Agreement at any time by the Servicer and the Trustee with the consent of the
Certificate Insurer and the Holders of Certificates evidencing Voting Interests
of each Class affected thereby aggregating not less than 51%. Any such consent
by the Holder of this Certificate shall be conclusive and binding on such
Holder and upon all future Holders of this Certificate and of any Certificate
issued upon the transfer hereof or in exchange herefor or in lieu hereof
whether or not notation of such consent is made upon this Certificate. The
Agreement also permits the amendment thereof, in certain limited circumstances,
without the consent of the Holders of any of the Certificates but with the
prior written consent of the Certificate Insurer.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registerable in the
Certificate Register of the Trustee upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Trustee in
New York, New York, accompanied by a written instrument of transfer in form
satisfactory to the Trustee duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class of authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for new Certificates of the same Class of authorized
denominations evidencing the same aggregate Percentage Interest, as requested
by the Holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Trustee may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
A1B-3
<PAGE> 136
The Seller and the Trustee and any of their respective agents may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Seller, the Trustee nor any of their
respective agents shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon payment to the Certificateholders,
or provision therefor, in accordance with the Agreement upon (a) the purchase
by the Servicer or the Certificate Insurer of all Mortgage Loans and all
property acquired in respect of any Mortgage Loan remaining in the Trust at a
price determined as provided in the Agreement, or (b) the later of the final
payment or other liquidation of the last Mortgage Loan remaining in the Trust
or the disposition of all property acquired upon foreclosure or by deed in lieu
of foreclosure of any Mortgage Loan. The exercise of the right of the Servicer
to purchase all the Mortgage Loans and property in respect of Mortgage Loans
will result in early retirement of the Certificates, the right of the Servicer
to purchase being subject to the Pool Balance at the time of purchase being
less than 10% of the sum of the Cut-off Date Pool Balance and the Purchase
Account Deposit. The exercise of the right of the Certificate Insurer to
purchase all the Mortgage Loans and property in respect of Mortgage Loans will
result in early retirement of the Certificates, the right of the Certificate
Insurer to purchase being subject to Mortgage Loans with aggregate Cut-off Date
Principal Balances equal to or greater than 25% of the sum of the Cut-off Date
Pool Balance and the Purchase Account Deposit having become Liquidated Mortgage
Loans prior to the time of purchase.
This Certificate constitutes a "regular interest" in a "real estate
mortgage investment conduit" as those terms are defined in Section 860G(a)(1)
and Section 860D, respectively, of the Internal Revenue Code of 1986, as
amended.
This Certificate will not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned for
authenticating purposes only by any authorized officer of the Trustee.
A1B-4
<PAGE> 137
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: September 17, 1996
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.,
as Trustee
By:
---------------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION:
This is one of the Class A-1B
Certificates referred to in
the within named Agreement
By:
----------------------------------------------
Authorized Officer of Bankers Trust Company
of California, N.A., as Trustee
A1B-5
<PAGE> 138
EXHIBIT A-1C
FORM OF CLASS A-1C CERTIFICATE
Date of Pooling and Servicing Original Class A-1C Certificate
Agreement and Cut-off Date: Balance: $17,450,000.00
September 1, 1996
First Distribution Date: CUSIP No. 00253C BU 0
October 15, 1996
Denomination: $17,450,000.00 Certificate No.: 1
Class A-1C Pass-Through Rate: 7.57%
AAMES MORTGAGE TRUST 1996-C
PASS-THROUGH CERTIFICATE,
SERIES 1996-C, CLASS A-1C
evidencing a percentage interest in the distributions allocable to the
Class A-1C Certificates with respect to a Trust consisting primarily
of a pool of conventional, closed-end, fixed and adjustable rate,
residential mortgage loans, sold and serviced by Aames Capital
Corporation.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL CORPORATION OR THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR
RESPECTIVE AFFILIATES. THIS CERTIFICATE IS NOT A DEPOSIT, AND NEITHER THIS
CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
Unless this Certificate is presented by an authorized representative
of The Depository Trust Company, a New York Corporation ("DTC"), to Issuer or
its agent for registration of transfer, exchange, or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other
name as requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL in as much as the requested owner
hereof, Cede & Co. has an interest herein.
This certifies that CEDE & CO. is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
denomination of this Certificate shown
A1C-1
<PAGE> 139
above by the Original Class A-1C Certificate Principal Balance) in a trust, the
assets of which consist primarily of a pool of conventional, closed-end, fixed
and adjustable rate, residential mortgage loans (the "Mortgage Loans"), sold
and serviced by Aames Capital Corporation (in its capacity as seller, the
"Seller" and in its capacity as servicer, the "Servicer", which term includes
any successor Servicer under the Agreement referred to below). The Percentage
Interest evidenced by this Certificate represents an interest in the group of
fixed rate Mortgage Loans. The Trust was created pursuant to a Pooling and
Servicing Agreement dated as specified above (the "Agreement") between the
Seller and Servicer and Bankers Trust Company of California, N.A., as trustee
(the "Trustee"), a summary of certain of the pertinent provisions of which is
set forth hereafter. To the extent not defined herein, the capitalized terms
used herein have the meanings assigned in the Agreement. This Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on
the 15th day of each month (or if any such day is not a Business Day, on the
Business Day immediately following such 15th day) (the "Distribution Date"),
commencing on the first Distribution Date specified above, to the Person in
whose name this Certificate is registered at the close of business on the
applicable Record Date, in an amount equal to the product of (a) the Percentage
Interest evidenced by this Certificate and (b) the sum of the Class A-1C
Monthly Interest and any amounts distributed to Class A-1C Certificateholders
in respect of Class A-1 Monthly Principal, Class A-1 Excess Cash Distribution,
Class A-2 Overflow Distribution and the Class A-1 Insured Amount, all as more
specifically set forth in the Agreement.
Except as otherwise provided in the Agreement, distributions on this
Certificate will be made by the Trustee by check or money order mailed to the
Person entitled thereto at the address appearing in the Certificate Register,
or upon written request by the Certificateholder, by wire transfer to a bank
account maintained in the United States (in the case of any Holder of
Certificates entitled to such form of payment as provided in the Agreement) or
by such other means of payment as such Person and the Trustee shall agree.
Except as otherwise provided in the Agreement, the final distribution on this
Certificate will be made in the applicable manner described above, after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
maintained for that purpose and as specified in such notice.
This Certificate is one of a duly authorized issue of Certificates
designated as "Aames Mortgage Trust Mortgage Pass-Through Certificates, Series
1996-C, Class A-1C" (herein called the "Class A-1C Certificates") and
representing a beneficial ownership interest, in each case subject to the
limitations set forth in the Agreement in, among other things, the Mortgage
Loans, such assets as shall from time to time be identified or shall be
required by the Agreement to be identified as deposited in the Collection
and/or Certificate Account or invested in Permitted Investments in accordance
with the Agreement, all rights under any insurance policy covering a Mortgage
Loan or the related Mortgaged Property and property and any proceeds thereof
which secured a Mortgage Loan and which has been acquired by foreclosure, deed
in lieu of foreclosure or by a comparable conversion.
A1C-2
<PAGE> 140
The Class A-1C Certificates are limited in right of payment to certain
payments on and collections in respect of Group I and in certain limited
circumstances, the Group II, all as more specifically set forth in the
Agreement. The Holder of this Certificate, by its acceptance of this
Certificate, agrees that it will look solely to the funds on deposit in the
Certificate Account in respect of Group I and, in certain limited
circumstances, Group II and payments made under the Certificate Insurance
Policy in respect of the Class A-1 Insured Amount allocable to Class A-1C
Certificateholders and that the Trustee in its individual capacity is not
personally liable to the Certificateholders for any amount payable under this
Certificate or the Agreement or, except as expressly provided in the Agreement,
subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Seller, the Servicer, and the rights of the Certificateholders under the
Agreement at any time by the Servicer and the Trustee with the consent of the
Certificate Insurer and the Holders of Certificates evidencing Voting Interests
of each Class affected thereby aggregating not less than 51%. Any such consent
by the Holder of this Certificate shall be conclusive and binding on such
Holder and upon all future Holders of this Certificate and of any Certificate
issued upon the transfer hereof or in exchange herefor or in lieu hereof
whether or not notation of such consent is made upon this Certificate. The
Agreement also permits the amendment thereof, in certain limited circumstances,
without the consent of the Holders of any of the Certificates but with the
prior written consent of the Certificate Insurer.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registerable in the
Certificate Register of the Trustee upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Trustee in
New York, New York, accompanied by a written instrument of transfer in form
satisfactory to the Trustee duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class of authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for new Certificates of the same Class of authorized
denominations evidencing the same aggregate Percentage Interest, as requested
by the Holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Trustee may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
A1C-3
<PAGE> 141
The Seller and the Trustee and any of their respective agents may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Seller, the Trustee nor any of their
respective agents shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon payment to the Certificateholders,
or provision therefor, in accordance with the Agreement upon (a) the purchase
by the Servicer or the Certificate Insurer of all Mortgage Loans and all
property acquired in respect of any Mortgage Loan remaining in the Trust at a
price determined as provided in the Agreement, or (b) the later of the final
payment or other liquidation of the last Mortgage Loan remaining in the Trust
or the disposition of all property acquired upon foreclosure or by deed in lieu
of foreclosure of any Mortgage Loan. The exercise of the right of the Servicer
to purchase all the Mortgage Loans and property in respect of Mortgage Loans
will result in early retirement of the Certificates, the right of the Servicer
to purchase being subject to the Pool Balance at the time of purchase being
less than 10% of the sum of the Cut-off Date Pool Balance and the Purchase
Account Deposit. The exercise of the right of the Certificate Insurer to
purchase all the Mortgage Loans and property in respect of Mortgage Loans will
result in early retirement of the Certificates, the right of the Certificate
Insurer to purchase being subject to Mortgage Loans with aggregate Cut-off Date
Principal Balances equal to or greater than 25% of the sum of the Cut-off Date
Pool Balance and the Purchase Account Deposit having become Liquidated Mortgage
Loans prior to the time of purchase.
This Certificate constitutes a "regular interest" in a "real estate
mortgage investment conduit" as those terms are defined in Section 860G(a)(1)
and Section 860D, respectively, of the Internal Revenue Code of 1986, as
amended.
This Certificate will not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned for
authenticating purposes only by any authorized officer of the Trustee.
A1C-4
<PAGE> 142
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: September 17, 1996
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.,
as Trustee
By:
------------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION:
This is one of the Class A-1C
Certificates referred to in
the within named Agreement
By:
----------------------------------------------
Authorized Officer of Bankers Trust Company
of California, N.A., as Trustee
A1C-5
<PAGE> 143
EXHIBIT A-1D
FORM OF CLASS A-1D CERTIFICATE
Date of Pooling and Servicing Original Class A-1D Certificate
Agreement and Cut-off Date: Balance: $19,900,000.00
September 1, 1996
First Distribution Date: CUSIP No. 00253C BV 8
October 15, 1996
Denomination: $19,900,000.00 Certificate No.: 1
Class A-1D Pass-Through Rate: 7.87%
AAMES MORTGAGE TRUST 1996-C
PASS-THROUGH CERTIFICATE,
SERIES 1996-C, CLASS A-1D
evidencing a percentage interest in the distributions allocable to the
Class A-1D Certificates with respect to a Trust consisting primarily
of a pool of conventional, closed-end, fixed and adjustable rate,
residential mortgage loans, sold and serviced by Aames Capital
Corporation.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL CORPORATION OR THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR
RESPECTIVE AFFILIATES. THIS CERTIFICATE IS NOT A DEPOSIT, AND NEITHER THIS
CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
Unless this Certificate is presented by an authorized representative
of The Depository Trust Company, a New York Corporation ("DTC"), to Issuer or
its agent for registration of transfer, exchange, or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other
name as requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL in as much as the requested owner
hereof, Cede & Co. has an interest herein.
This certifies that CEDE & CO. is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
denomination of this Certificate shown
A1D-1
<PAGE> 144
above by the Original Class A-1D Certificate Principal Balance) in a trust, the
assets of which consist primarily of a pool of conventional, closed-end, fixed
and adjustable rate, residential mortgage loans (the "Mortgage Loans"), sold
and serviced by Aames Capital Corporation (in its capacity as seller, the
"Seller" and in its capacity as servicer, the "Servicer", which term includes
any successor Servicer under the Agreement referred to below). The Percentage
Interest evidenced by this Certificate represents an interest in the group of
fixed rate Mortgage Loans. The Trust was created pursuant to a Pooling and
Servicing Agreement dated as specified above (the "Agreement") between the
Seller and Servicer and Bankers Trust Company of California, N.A., as trustee
(the "Trustee"), a summary of certain of the pertinent provisions of which is
set forth hereafter. To the extent not defined herein, the capitalized terms
used herein have the meanings assigned in the Agreement. This Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on
the 15th day of each month (or if any such day is not a Business Day, on the
Business Day immediately following such 15th day) (the "Distribution Date"),
commencing on the first Distribution Date specified above, to the Person in
whose name this Certificate is registered at the close of business on the
applicable Record Date, in an amount equal to the product of (a) the Percentage
Interest evidenced by this Certificate and (b) the sum of the Class A-1D
Monthly Interest and any amounts distributed to Class A-1D Certificateholders
in respect of Class A-1 Monthly Principal, Class A-1 Excess Cash Distribution,
Class A-2 Overflow Distribution and the Class A-1 Insured Amount, all as more
specifically set forth in the Agreement.
Except as otherwise provided in the Agreement, distributions on this
Certificate will be made by the Trustee by check or money order mailed to the
Person entitled thereto at the address appearing in the Certificate Register,
or upon written request by the Certificateholder, by wire transfer to a bank
account maintained in the United States (in the case of any Holder of
Certificates entitled to such form of payment as provided in the Agreement) or
by such other means of payment as such Person and the Trustee shall agree.
Except as otherwise provided in the Agreement, the final distribution on this
Certificate will be made in the applicable manner described above, after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
maintained for that purpose and as specified in such notice.
This Certificate is one of a duly authorized issue of Certificates
designated as "Aames Mortgage Trust Mortgage Pass-Through Certificates, Series
1996-C, Class A-1D" (herein called the "Class A-1D Certificates") and
representing a beneficial ownership interest, in each case subject to the
limitations set forth in the Agreement in, among other things, the Mortgage
Loans, such assets as shall from time to time be identified or shall be
required by the Agreement to be identified as deposited in the Collection
and/or Certificate Account or invested in Permitted Investments in accordance
with the Agreement, all rights under any insurance policy covering a Mortgage
Loan or the related Mortgaged Property and property and any proceeds thereof
which secured a Mortgage Loan and which has been acquired by foreclosure, deed
in lieu of foreclosure or by a comparable conversion.
A1D-2
<PAGE> 145
The Class A-1D Certificates are limited in right of payment to certain
payments on and collections in respect of Group I and in certain limited
circumstances, the Group II, all as more specifically set forth in the
Agreement. The Holder of this Certificate, by its acceptance of this
Certificate, agrees that it will look solely to the funds on deposit in the
Certificate Account in respect of Group I and, in certain limited
circumstances, Group II and payments made under the Certificate Insurance
Policy in respect of the Class A-1 Insured Amount allocable to Class A-1D
Certificateholders and that the Trustee in its individual capacity is not
personally liable to the Certificateholders for any amount payable under this
Certificate or the Agreement or, except as expressly provided in the Agreement,
subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Seller, the Servicer, and the rights of the Certificateholders under the
Agreement at any time by the Servicer and the Trustee with the consent of the
Certificate Insurer and the Holders of Certificates evidencing Voting Interests
of each Class affected thereby aggregating not less than 51%. Any such consent
by the Holder of this Certificate shall be conclusive and binding on such
Holder and upon all future Holders of this Certificate and of any Certificate
issued upon the transfer hereof or in exchange herefor or in lieu hereof
whether or not notation of such consent is made upon this Certificate. The
Agreement also permits the amendment thereof, in certain limited circumstances,
without the consent of the Holders of any of the Certificates but with the
prior written consent of the Certificate Insurer.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registerable in the
Certificate Register of the Trustee upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Trustee in
New York, New York, accompanied by a written instrument of transfer in form
satisfactory to the Trustee duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class of authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for new Certificates of the same Class of authorized
denominations evidencing the same aggregate Percentage Interest, as requested
by the Holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Trustee may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
A1D-3
<PAGE> 146
The Seller and the Trustee and any of their respective agents may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Seller, the Trustee nor any of their
respective agents shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon payment to the Certificateholders,
or provision therefor, in accordance with the Agreement upon (a) the purchase
by the Servicer or the Certificate Insurer of all Mortgage Loans and all
property acquired in respect of any Mortgage Loan remaining in the Trust at a
price determined as provided in the Agreement, or (b) the later of the final
payment or other liquidation of the last Mortgage Loan remaining in the Trust
or the disposition of all property acquired upon foreclosure or by deed in lieu
of foreclosure of any Mortgage Loan. The exercise of the right of the Servicer
to purchase all the Mortgage Loans and property in respect of Mortgage Loans
will result in early retirement of the Certificates, the right of the Servicer
to purchase being subject to the Pool Balance at the time of purchase being
less than 10% of the sum of the Cut-off Date Pool Balance and the Purchase
Account Deposit. The exercise of the right of the Certificate Insurer to
purchase all the Mortgage Loans and property in respect of Mortgage Loans will
result in early retirement of the Certificates, the right of the Certificate
Insurer to purchase being subject to Mortgage Loans with aggregate Cut-off Date
Principal Balances equal to or greater than 25% of the sum of the Cut-off Date
Pool Balance and the Purchase Account Deposit having become Liquidated Mortgage
Loans prior to the time of purchase.
This Certificate constitutes a "regular interest" in a "real estate
mortgage investment conduit" as those terms are defined in Section 860G(a)(1)
and Section 860D, respectively, of the Internal Revenue Code of 1986, as
amended.
This Certificate will not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned for
authenticating purposes only by any authorized officer of the Trustee.
A1D-4
<PAGE> 147
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: September 17, 1996
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.,
as Trustee
By:
--------------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION:
This is one of the Class A-1D
Certificates referred to in
the within named Agreement
By:
------------------------------------------------
Authorized Officer of Bankers Trust Company
of California, N.A., as Trustee
A1D-5
<PAGE> 148
EXHIBIT A-1E
FORM OF CLASS A-1E CERTIFICATE
Date of Pooling and Servicing Original Class A-1E Certificate
Agreement and Cut-off Date: Balance: $13,650,000.00
September 1, 1996
First Distribution Date: CUSIP No. 00253C BW 6
October 15, 1996
Denomination: $13,650,000.00 Certificate No.: 1
Class A-1E Pass-Through Rate: 8.04%
AAMES MORTGAGE TRUST 1996-C
PASS-THROUGH CERTIFICATE,
SERIES 1996-C, CLASS A-1E
evidencing a percentage interest in the distributions allocable to the
Class A-1E Certificates with respect to a Trust consisting primarily
of a pool of conventional, closed-end, fixed and adjustable rate,
residential mortgage loans, sold and serviced by Aames Capital
Corporation.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL CORPORATION OR THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR
RESPECTIVE AFFILIATES. THIS CERTIFICATE IS NOT A DEPOSIT, AND NEITHER THIS
CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
Unless this Certificate is presented by an authorized representative
of The Depository Trust Company, a New York Corporation ("DTC"), to Issuer or
its agent for registration of transfer, exchange, or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other
name as requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL in as much as the requested owner
hereof, Cede & Co. has an interest herein.
This certifies that CEDE & CO. is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
denomination of this Certificate shown
A1E-1
<PAGE> 149
above by the Original Class A-1E Certificate Principal Balance) in a trust, the
assets of which consist primarily of a pool of conventional, closed-end, fixed
and adjustable rate, residential mortgage loans (the "Mortgage Loans"), sold
and serviced by Aames Capital Corporation (in its capacity as seller, the
"Seller" and in its capacity as servicer, the "Servicer", which term includes
any successor Servicer under the Agreement referred to below). The Percentage
Interest evidenced by this Certificate represents an interest in the group of
fixed rate Mortgage Loans. The Trust was created pursuant to a Pooling and
Servicing Agreement dated as specified above (the "Agreement") between the
Seller and Servicer and Bankers Trust Company of California, N.A., as trustee
(the "Trustee"), a summary of certain of the pertinent provisions of which is
set forth hereafter. To the extent not defined herein, the capitalized terms
used herein have the meanings assigned in the Agreement. This Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on
the 15th day of each month (or if any such day is not a Business Day, on the
Business Day immediately following such 15th day) (the "Distribution Date"),
commencing on the first Distribution Date specified above, to the Person in
whose name this Certificate is registered at the close of business on the
applicable Record Date, in an amount equal to the product of (a) the Percentage
Interest evidenced by this Certificate and (b) the sum of the Class A-1E
Monthly Interest and any amounts distributed to Class A-1E Certificateholders
in respect of Class A-1 Monthly Principal, Class A-1 Excess Cash Distribution,
Class A-2 Overflow Distribution and the Class A-1 Insured Amount, all as more
specifically set forth in the Agreement.
Except as otherwise provided in the Agreement, distributions on this
Certificate will be made by the Trustee by check or money order mailed to the
Person entitled thereto at the address appearing in the Certificate Register,
or upon written request by the Certificateholder, by wire transfer to a bank
account maintained in the United States (in the case of any Holder of
Certificates entitled to such form of payment as provided in the Agreement) or
by such other means of payment as such Person and the Trustee shall agree.
Except as otherwise provided in the Agreement, the final distribution on this
Certificate will be made in the applicable manner described above, after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
maintained for that purpose and as specified in such notice.
This Certificate is one of a duly authorized issue of Certificates
designated as "Aames Mortgage Trust Mortgage Pass-Through Certificates, Series
1996-C, Class A-1E" (herein called the "Class A-1E Certificates") and
representing a beneficial ownership interest, in each case subject to the
limitations set forth in the Agreement in, among other things, the Mortgage
Loans, such assets as shall from time to time be identified or shall be
required by the Agreement to be identified as deposited in the Collection
and/or Certificate Account or invested in Permitted Investments in accordance
with the Agreement, all rights under any insurance policy covering a Mortgage
Loan or the related Mortgaged Property and property and any proceeds thereof
which secured a Mortgage Loan and which has been acquired by foreclosure, deed
in lieu of foreclosure or by a comparable conversion.
A1E-2
<PAGE> 150
The Class A-1E Certificates are limited in right of payment to certain
payments on and collections in respect of Group I and in certain limited
circumstances, the Group II, all as more specifically set forth in the
Agreement. The Holder of this Certificate, by its acceptance of this
Certificate, agrees that it will look solely to the funds on deposit in the
Certificate Account in respect of Group I and, in certain limited
circumstances, Group II and payments made under the Certificate Insurance
Policy in respect of the Class A-1 Insured Amount allocable to Class A-1E
Certificateholders and that the Trustee in its individual capacity is not
personally liable to the Certificateholders for any amount payable under this
Certificate or the Agreement or, except as expressly provided in the Agreement,
subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Seller, the Servicer, and the rights of the Certificateholders under the
Agreement at any time by the Servicer and the Trustee with the consent of the
Certificate Insurer and the Holders of Certificates evidencing Voting Interests
of each Class affected thereby aggregating not less than 51%. Any such consent
by the Holder of this Certificate shall be conclusive and binding on such
Holder and upon all future Holders of this Certificate and of any Certificate
issued upon the transfer hereof or in exchange herefor or in lieu hereof
whether or not notation of such consent is made upon this Certificate. The
Agreement also permits the amendment thereof, in certain limited circumstances,
without the consent of the Holders of any of the Certificates but with the
prior written consent of the Certificate Insurer.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registerable in the
Certificate Register of the Trustee upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Trustee in
New York, New York, accompanied by a written instrument of transfer in form
satisfactory to the Trustee duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class of authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for new Certificates of the same Class of authorized
denominations evidencing the same aggregate Percentage Interest, as requested
by the Holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Trustee may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
A1E-3
<PAGE> 151
The Seller and the Trustee and any of their respective agents may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Seller, the Trustee nor any of their
respective agents shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon payment to the Certificateholders,
or provision therefor, in accordance with the Agreement upon (a) the purchase
by the Servicer or the Certificate Insurer of all Mortgage Loans and all
property acquired in respect of any Mortgage Loan remaining in the Trust at a
price determined as provided in the Agreement, or (b) the later of the final
payment or other liquidation of the last Mortgage Loan remaining in the Trust
or the disposition of all property acquired upon foreclosure or by deed in lieu
of foreclosure of any Mortgage Loan. The exercise of the right of the Servicer
to purchase all the Mortgage Loans and property in respect of Mortgage Loans
will result in early retirement of the Certificates, the right of the Servicer
to purchase being subject to the Pool Balance at the time of purchase being
less than 10% of the sum of the Cut-off Date Pool Balance and the Purchase
Account Deposit. The exercise of the right of the Certificate Insurer to
purchase all the Mortgage Loans and property in respect of Mortgage Loans will
result in early retirement of the Certificates, the right of the Certificate
Insurer to purchase being subject to Mortgage Loans with aggregate Cut-off Date
Principal Balances equal to or greater than 25% of the sum of the Cut-off Date
Pool Balance and the Purchase Account Deposit having become Liquidated Mortgage
Loans prior to the time of purchase.
This Certificate constitutes a "regular interest" in a "real estate
mortgage investment conduit" as those terms are defined in Section 860G(a)(1)
and Section 860D, respectively, of the Internal Revenue Code of 1986, as
amended.
This Certificate will not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned for
authenticating purposes only by any authorized officer of the Trustee.
A1E-4
<PAGE> 152
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: September 17, 1996
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.,
as Trustee
By:
---------------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION:
This is one of the Class A-1E
Certificates referred to in
the within named Agreement
By:
------------------------------------------------
Authorized Officer of Bankers Trust Company
of California, N.A., as Trustee
A1E-5
<PAGE> 153
EXHIBIT A-2
FORM OF CLASS A-2 CERTIFICATE
Date of Pooling and Servicing Original Class A-2 Certificate
Agreement and Cut-off Date: Balance: $350,000,000.00
September 1, 1996
First Distribution Date: CUSIP No. 00253C BX 4
October 15, 1996
Denomination: $200,000,000.00 Certificate No.: 1
Class A-2 Adjustable Rate Certificate
AAMES MORTGAGE TRUST 1996-C
MORTGAGE LOAN PASS-THROUGH CERTIFICATE,
SERIES 1996-C, CLASS A-2
evidencing a percentage interest in the distributions allocable to the
Class A-2 Certificates with respect to a Trust consisting primarily of
a pool of conventional, closed-end, fixed and adjustable rate,
residential mortgage loans, sold and serviced by Aames Capital
Corporation.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL CORPORATION OR THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR
RESPECTIVE AFFILIATES. THIS CERTIFICATE IS NOT A DEPOSIT, AND NEITHER THIS
CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
Unless this Certificate is presented by an authorized representative
of The Depository Trust Company, a New York Corporation ("DTC"), to Issuer or
its agent for registration of transfer, exchange, or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other
name as requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL in as much as the requested owner
hereof, Cede & Co. has an interest herein.
This certifies that CEDE & CO. is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
denomination of this Certificate shown
A2-1
<PAGE> 154
above by the Original Class A-2 Certificate Principal Balance) in a trust, the
assets of which consist primarily of a pool of conventional, closed-end, fixed
and adjustable rate, residential mortgage loans (the "Mortgage Loans"), sold
and serviced by Aames Capital Corporation (in its capacity as seller, the
"Seller" and in its capacity as servicer, the "Servicer", which term includes
any successor Servicer under the Agreement referred to below). The Percentage
Interest evidenced by this Certificate represents an interest in the group of
adjustable rate Mortgage Loans. The Trust was created pursuant to a Pooling
and Servicing Agreement dated as specified above (the "Agreement") between the
Seller and Servicer and Banker's Trust Company of California, N.A., as trustee
(the "Trustee"), a summary of certain of the pertinent provisions of which is
set forth hereafter. To the extent not defined herein, the capitalized terms
used herein have the meanings assigned in the Agreement. This Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on
the 15th day of each month (or if any such day is not a Business Day, on the
Business Day immediately following such 15th day) (the "Distribution Date"),
commencing on the first Distribution Date specified above, to the Person in
whose name this Certificate is registered at the close of business on the
applicable Record Date, in an amount equal to the product of (a) the Percentage
Interest evidenced by this Certificate and (b) the sum of the Class A-2 Monthly
Interest, Class A-2 Monthly Principal, any amounts distributed to Class A-2
Certificateholders in respect of Class A-2 Excess Cash Distribution, Class A-1
Overflow Distribution and the Class A-2 Insured Amount, all as more
specifically set forth in the Agreement.
Except as otherwise provided in the Agreement, distributions on this
Certificate will be made by the Trustee by check or money order mailed to the
Person entitled thereto at the address appearing in the Certificate Register,
or upon written request by the Certificateholder, by wire transfer to a bank
account maintained in the United States (in the case of any Holder of
Certificates entitled to such form of payment as provided in the Agreement) or
by such other means of payment as such Person and the Trustee shall agree.
Except as otherwise provided in the Agreement, the final distribution on this
Certificate will be made in the applicable manner described above, after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
maintained for that purpose and as specified in such notice.
This Certificate is one of a duly authorized issue of Certificates
designated as "Aames Mortgage Trust Mortgage Pass-Through Certificates, Series
1996-C, Class A-2" (herein called the "Class A-2 Certificates") and
representing a beneficial ownership interest, in each case subject to the
limitations set forth in the Agreement in, among other things, the Mortgage
Loans, such assets as shall from time to time be identified or shall be
required by the Agreement to be identified as deposited in the Collection
and/or Certificate Account or invested in Permitted Investments in accordance
with the Agreement, all rights under any insurance policy covering a Mortgage
Loan or the related Mortgaged Property and property and any proceeds thereof
which secured a Mortgage Loan and which has been acquired by foreclosure, deed
in lieu of foreclosure or by a comparable conversion.
A2-2
<PAGE> 155
The Class A-2 Certificates are limited in right of payment to certain
payments on and collections in respect of Group II and in certain limited
circumstances, Group I, all as more specifically set forth in the Agreement.
The Holder of this Certificate, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Certificate Account in
respect of Group II and, in certain limited circumstances, Group I and payments
made under the Certificate Insurance Policy in respect of the Class A-2 Insured
Amount and that the Trustee in its individual capacity is not personally liable
to the Certificateholders for any amount payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Seller, the Servicer, and the rights of the Certificateholders under the
Agreement at any time by the Servicer and the Trustee with the consent of the
Certificate Insurer and the Holders of Certificates evidencing Voting Interests
of each Class affected thereby aggregating not less than 51%. Any such consent
by the Holder of this Certificate shall be conclusive and binding on such
Holder and upon all future Holders of this Certificate and of any Certificate
issued upon the transfer hereof or in exchange herefor or in lieu hereof
whether or not notation of such consent is made upon this Certificate. The
Agreement also permits the amendment thereof, in certain limited circumstances,
without the consent of the Holders of any of the Certificates but with the
prior written consent of the Certificate Insurer.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registerable in the
Certificate Register of the Trustee upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Trustee in
New York, New York, accompanied by a written instrument of transfer in form
satisfactory to the Trustee duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class of authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for new Certificates of the same Class of authorized
denominations evidencing the same aggregate Percentage Interest, as requested
by the Holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Trustee may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
A2-3
<PAGE> 156
The Seller and the Trustee and any of their respective agents may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Seller, the Trustee nor any of their
respective agents shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon payment to the Certificateholders,
or provision therefor, in accordance with the Agreement upon (a) the purchase
by the Servicer or the Certificate Insurer of all Mortgage Loans and all
property acquired in respect of any Mortgage Loan remaining in the Trust at a
price determined as provided in the Agreement, or (b) the later of the final
payment or other liquidation of the last Mortgage Loan remaining in the Trust
or the disposition of all property acquired upon foreclosure or by deed in lieu
of foreclosure of any Mortgage Loan. The exercise of the right of the Servicer
to purchase all the Mortgage Loans and property in respect of Mortgage Loans
will result in early retirement of the Certificates, the right of the Servicer
to purchase being subject to the Pool Balance at the time of purchase being
less than 10% of the sum of the Cut-off Date Pool Balance and the Purchase
Account Deposit. The exercise of the right of the Certificate Insurer to
purchase all the Mortgage Loans and property in respect of Mortgage Loans will
result in early retirement of the Certificates, the right of the Certificate
Insurer to purchase being subject to Mortgage Loans with aggregate Cut-off Date
Principal Balances equal to or greater than 25% of the sum of the Cut-off Date
Pool Balance and the Purchase Account Deposit having become Liquidated Mortgage
Loans prior to the time of purchase.
This Certificate constitutes a "regular interest" in a "real estate
mortgage investment conduit" as those terms are defined in Section 860G(a)(1)
and Section 860D, respectively, of the Internal Revenue Code of 1986, as
amended.
This Certificate will not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned for
authenticating purposes only by any authorized officer of the Trustee.
A2-4
<PAGE> 157
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: September 17, 1996
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.,
as Trustee
By:
-------------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION:
This is one of the Class A-2
Certificates referred to in
the within named Agreement
By:
---------------------------------------------
Authorized Officer of Bankers Trust Company
of California, N.A., as Trustee
A2-5
<PAGE> 158
FORM OF CLASS A-2 CERTIFICATE
Date of Pooling and Servicing Original Class A-2 Certificate
Agreement and Cut-off Date: Balance: $350,000,000.00
September 1, 1996
First Distribution Date: CUSIP No. 00253C BX 4
October 15, 1996
Denomination: $150,000,000.00 Certificate No.: 2
Class A-2 Adjustable Rate Certificate
AAMES MORTGAGE TRUST 1996-C
MORTGAGE LOAN PASS-THROUGH CERTIFICATE,
SERIES 1996-C, CLASS A-2
evidencing a percentage interest in the distributions allocable to the
Class A-2 Certificates with respect to a Trust consisting primarily of
a pool of conventional, closed-end, fixed and adjustable rate,
residential mortgage loans, sold and serviced by Aames Capital
Corporation.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL CORPORATION OR THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR
RESPECTIVE AFFILIATES. THIS CERTIFICATE IS NOT A DEPOSIT, AND NEITHER THIS
CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
Unless this Certificate is presented by an authorized representative
of The Depository Trust Company, a New York Corporation ("DTC"), to Issuer or
its agent for registration of transfer, exchange, or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other
name as requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL in as much as the requested owner
hereof, Cede & Co. has an interest herein.
This certifies that CEDE & CO. is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
denomination of this Certificate shown above by the Original Class A-2
Certificate Principal Balance) in a trust, the assets of which consist
primarily of a pool of conventional, closed-end, fixed and adjustable rate,
residential mortgage loans (the "Mortgage Loans"), sold and serviced by Aames
Capital Corporation (in its
A2-6
<PAGE> 159
capacity as seller, the "Seller" and in its capacity as servicer, the
"Servicer", which term includes any successor Servicer under the Agreement
referred to below). The Percentage Interest evidenced by this Certificate
represents an interest in the group of adjustable rate Mortgage Loans. The
Trust was created pursuant to a Pooling and Servicing Agreement dated as
specified above (the "Agreement") between the Seller and Servicer and Banker's
Trust Company of California, N.A., as trustee (the "Trustee"), a summary of
certain of the pertinent provisions of which is set forth hereafter. To the
extent not defined herein, the capitalized terms used herein have the meanings
assigned in the Agreement. This Certificate is issued under and is subject to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on
the 15th day of each month (or if any such day is not a Business Day, on the
Business Day immediately following such 15th day) (the "Distribution Date"),
commencing on the first Distribution Date specified above, to the Person in
whose name this Certificate is registered at the close of business on the
applicable Record Date, in an amount equal to the product of (a) the Percentage
Interest evidenced by this Certificate and (b) the sum of the Class A-2 Monthly
Interest, Class A-2 Monthly Principal, any amounts distributed to Class A-2
Certificateholders in respect of Class A-2 Excess Cash Distribution, Class A-1
Overflow Distribution and the Class A-2 Insured Amount, all as more
specifically set forth in the Agreement.
Except as otherwise provided in the Agreement, distributions on this
Certificate will be made by the Trustee by check or money order mailed to the
Person entitled thereto at the address appearing in the Certificate Register,
or upon written request by the Certificateholder, by wire transfer to a bank
account maintained in the United States (in the case of any Holder of
Certificates entitled to such form of payment as provided in the Agreement) or
by such other means of payment as such Person and the Trustee shall agree.
Except as otherwise provided in the Agreement, the final distribution on this
Certificate will be made in the applicable manner described above, after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
maintained for that purpose and as specified in such notice.
This Certificate is one of a duly authorized issue of Certificates
designated as "Aames Mortgage Trust Mortgage Pass-Through Certificates, Series
1996-C, Class A-2" (herein called the "Class A-2 Certificates") and
representing a beneficial ownership interest, in each case subject to the
limitations set forth in the Agreement in, among other things, the Mortgage
Loans, such assets as shall from time to time be identified or shall be
required by the Agreement to be identified as deposited in the Collection
and/or Certificate Account or invested in Permitted Investments in accordance
with the Agreement, all rights under any insurance policy covering a Mortgage
Loan or the related Mortgaged Property and property and any proceeds thereof
which secured a Mortgage Loan and which has been acquired by foreclosure, deed
in lieu of foreclosure or by a comparable conversion.
The Class A-2 Certificates are limited in right of payment to certain
payments on and collections in respect of Group II and in certain limited
circumstances, Group I, all as more
A2-7
<PAGE> 160
specifically set forth in the Agreement. The Holder of this Certificate, by
its acceptance of this Certificate, agrees that it will look solely to the
funds on deposit in the Certificate Account in respect of Group II and, in
certain limited circumstances, Group I and payments made under the Certificate
Insurance Policy in respect of the Class A-2 Insured Amount and that the
Trustee in its individual capacity is not personally liable to the
Certificateholders for any amount payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Seller, the Servicer, and the rights of the Certificateholders under the
Agreement at any time by the Servicer and the Trustee with the consent of the
Certificate Insurer and the Holders of Certificates evidencing Voting Interests
of each Class affected thereby aggregating not less than 51%. Any such consent
by the Holder of this Certificate shall be conclusive and binding on such
Holder and upon all future Holders of this Certificate and of any Certificate
issued upon the transfer hereof or in exchange herefor or in lieu hereof
whether or not notation of such consent is made upon this Certificate. The
Agreement also permits the amendment thereof, in certain limited circumstances,
without the consent of the Holders of any of the Certificates but with the
prior written consent of the Certificate Insurer.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registerable in the
Certificate Register of the Trustee upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Trustee in
New York, New York, accompanied by a written instrument of transfer in form
satisfactory to the Trustee duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class of authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for new Certificates of the same Class of authorized
denominations evidencing the same aggregate Percentage Interest, as requested
by the Holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Trustee may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
The Seller and the Trustee and any of their respective agents may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the
A2-8
<PAGE> 161
Seller, the Trustee nor any of their respective agents shall be affected by any
notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon payment to the Certificateholders,
or provision therefor, in accordance with the Agreement upon (a) the purchase
by the Servicer or the Certificate Insurer of all Mortgage Loans and all
property acquired in respect of any Mortgage Loan remaining in the Trust at a
price determined as provided in the Agreement, or (b) the later of the final
payment or other liquidation of the last Mortgage Loan remaining in the Trust
or the disposition of all property acquired upon foreclosure or by deed in lieu
of foreclosure of any Mortgage Loan. The exercise of the right of the Servicer
to purchase all the Mortgage Loans and property in respect of Mortgage Loans
will result in early retirement of the Certificates, the right of the Servicer
to purchase being subject to the Pool Balance at the time of purchase being
less than 10% of the sum of the Cut-off Date Pool Balance and the Purchase
Account Deposit. The exercise of the right of the Certificate Insurer to
purchase all the Mortgage Loans and property in respect of Mortgage Loans will
result in early retirement of the Certificates, the right of the Certificate
Insurer to purchase being subject to Mortgage Loans with aggregate Cut-off Date
Principal Balances equal to or greater than 25% of the sum of the Cut-off Date
Pool Balance and the Purchase Account Deposit having become Liquidated Mortgage
Loans prior to the time of purchase.
This Certificate constitutes a "regular interest" in a "real estate
mortgage investment conduit" as those terms are defined in Section 860G(a)(1)
and Section 860D, respectively, of the Internal Revenue Code of 1986, as
amended.
This Certificate will not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned for
authenticating purposes only by any authorized officer of the Trustee.
A2-9
<PAGE> 162
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: September 17, 1996
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.,
as Trustee
By:
--------------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION:
This is one of the Class A-2
Certificates referred to in
the within named Agreement
By:
---------------------------------------------
Authorized Officer of Bankers Trust Company
of California, N.A., as Trustee
A2-10
<PAGE> 163
EXHIBIT B
FORM OF CLASS R CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE EXTENT SET
FORTH IN THE AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND
LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM
REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED
IN ACCORDANCE WITH THE PROVISIONS OF SECTION 6.02(b) OF THE AGREEMENT REFERRED
TO HEREIN.
FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G(A)(2) AND 860D OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED (THE "CODE"). A TRANSFEREE OF THIS CERTIFICATE, BY
ACCEPTANCE HEREOF, IS DEEMED TO HAVE ACCEPTED THIS CERTIFICATE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFERABILITY AS SET FORTH IN SECTION 6.02(c) OF THE
POOLING AND SERVICING AGREEMENT, AND SHALL BE REQUIRED TO FURNISH AN AFFIDAVIT
TO THE TRANSFEROR AND THE TRUSTEE TO THE EFFECT THAT (I) IT IS NOT (i) A
DISQUALIFIED ORGANIZATION, AS SUCH TERM IS DEFINED IN CODE SECTION 860E(e)(5),
OR AN AGENT (INCLUDING A BROKER, NOMINEE OR OTHER MIDDLEMAN) FOR SUCH
DISQUALIFIED ORGANIZATION, (ii) AN ENTITY THAT HOLDS REMIC RESIDUAL SECURITIES
AS NOMINEE TO FACILITATE THE CLEARANCE AND SETTLEMENT OF SUCH SECURITIES
THROUGH BOOK-ENTRY CHANGES IN ACCOUNTS OF PARTICIPATING ORGANIZATIONS (A
"BOOK-ENTRY NOMINEE"), (iii) AN INDIVIDUAL, CORPORATION, PARTNERSHIP OR OTHER
PERSON UNLESS SUCH TRANSFEREE (A) IS NOT A FOREIGN PERSON OR (B) IS A FOREIGN
PERSON THAT WILL HOLD SUCH CLASS R CERTIFICATE IN CONNECTION WITH THE CONDUCT
OF A TRADE OR BUSINESS WITHIN THE UNITED STATES AND HAS FURNISHED THE
TRANSFEROR AND THE TRUSTEE WITH AN EFFECTIVE INTERNAL REVENUE SERVICE FORM 4224
OR (C) IS A FOREIGN PERSON THAT HAS DELIVERED TO BOTH THE TRANSFEROR AND THE
TRUSTEE AN OPINION OF A NATIONALLY RECOGNIZED TAX COUNSEL TO THE EFFECT THAT
THE TRANSFER OF THE CLASS R CERTIFICATE TO IT IS IN ACCORDANCE WITH THE
REQUIREMENTS OF THE CODE AND THE REGULATIONS PROMULGATED THEREUNDER AND THAT
SUCH TRANSFER OF THE CLASS R CERTIFICATE WILL NOT BE DISREGARDED FOR FEDERAL
INCOME TAX PURPOSES (ANY SUCH PERSON WHO IS NOT COVERED BY CLAUSE (A), (B) OR
(C) ABOVE BEING
B-1
<PAGE> 164
REFERRED TO HEREIN AS A "NON-PERMITTED FOREIGN HOLDER") OR (iv) ANY PERSON
WHICH IS AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR ANY PERSON
WHICH IS AN INDIVIDUAL RETIREMENT ACCOUNT OR EMPLOYEE BENEFIT PLAN, TRUST OR
ACCOUNT SUBJECT TO SECTION 4975 OF THE CODE (AN "ERISA PLAN") OR AN ENTITY,
INCLUDING AN INSURANCE COMPANY SEPARATE ACCOUNT OR GENERAL ACCOUNT, WHOSE
UNDERLYING ASSETS INCLUDE ERISA PLAN ASSETS BY REASON OF AN ERISA PLAN'S
INVESTMENT IN THE ENTITY, OR ANY PERSON INVESTING THE ASSETS OF AN ERISA PLAN
OR SUCH AN ENTITY, WHETHER AS NOMINEE, TRUSTEE, AGENT OR OTHERWISE, (II) IT HAS
NO INTENT OR PURPOSE TO IMPEDE THE ASSESSMENT OR COLLECTION OF ANY FEDERAL,
STATE OR LOCAL INCOME TAXES LEGALLY REQUIRED TO BE PAID WITH RESPECT TO THE
CLASS R CERTIFICATE, AND (III) IT HAS AGREED TO SUCH AMENDMENTS TO FURTHER
EFFECTUATE THE RESTRICTIONS ON TRANSFERS TO DISQUALIFIED ORGANIZATIONS, AGENTS
THEREOF, BOOK-ENTRY NOMINEES, NON-PERMITTED FOREIGN HOLDERS OR ERISA PLANS.
THE TERM "FOREIGN PERSON" MEANS A PERSON WHO IS NOT ONE OF THE FOLLOWING: A
CITIZEN OR RESIDENT OF THE UNITED STATES, A CORPORATION, PARTNERSHIP OR OTHER
ENTITY CREATED OR ORGANIZED IN OR UNDER THE LAWS OF THE UNITED STATES OR ANY
POLITICAL SUBDIVISION THEREOF, OR AN ESTATE OR TRUST THAT IS SUBJECT TO U.S.
FEDERAL INCOME TAX REGARDLESS OF THE SOURCE OF ITS INCOME.
THE HOLDER OF THIS CLASS R CERTIFICATE, BY ACCEPTANCE HEREOF, IS
DEEMED TO HAVE AGREED TO THE DESIGNATION OF THE SERVICER AS ITS AGENT TO ACT AS
"TAX MATTERS PERSON" TO PERFORM THE FUNCTIONS OF A "TAX MATTERS PARTNER" FOR
PURPOSES OF SUBCHAPTER C OF CHAPTER 63 OF SUBTITLE F OF THE CODE, OR, IF SO
REQUESTED BY THE SERVICER, TO ACT AS TAX MATTERS PERSON.
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Date of Pooling and Servicing Percentage Interest: 100%
Agreement and Cut-off Date:
September 1, 1996 CUSIP No. 00253C BY 2
First Distribution Date: Certificate No.: R
October 15, 1996
AAMES MORTGAGE TRUST 1996-C
MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1996-C, CLASS R
evidencing a percentage interest in the distributions allocable to the
Class R Certificate with respect to a Trust consisting primarily of a
pool of conventional, closed-end, fixed and adjustable rate
residential mortgage loans sold and serviced by Aames Capital
Corporation.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL CORPORATION OR THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR
RESPECTIVE AFFILIATES. THIS CERTIFICATE IS NOT A DEPOSIT, AND NEITHER THIS
CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
This certifies that Aames Capital Corporation is the registered owner
of the Percentage Interest specified on the face of this Class R Certificate.
This Class R Certificate is one series of Certificates issued by a trust, the
assets of which consist primarily of a pool of conventional, closed-end, fixed
and adjustable rate, residential mortgage loans (the "Mortgage Loans"), sold
and serviced by Aames Capital Corporation (in its capacity as seller, the
"Seller" and in its capacity as servicer, the "Servicer", which term includes
any successor Servicer under the Agreement referred to below). The Trust was
created pursuant to a Pooling and Servicing Agreement dated as specified above
(the "Agreement") between the Seller and Servicer and Bankers Trust Company of
California, N.A., as trustee (the "Trustee"), a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not
defined herein, the capitalized terms used herein have the meanings assigned to
such terms in the Agreement. This Certificate is issued under and is subject
to the terms, provisions and conditions of the Agreement, to which Agreement
the Holder of this Certificate by virtue of the acceptance hereof assents and
by which such Holder is bound.
No transfer of a Class R Certificate will be made unless such transfer
is exempt from the registration requirements of the Securities Act of 1933, as
amended (the "Act"), and any applicable state securities laws or is made in
accordance with such Act and laws. In the event that such a transfer is
desired to be made by the holder hereof, (i) the transferee will be required to
execute an investment letter in the form described by the Agreement and (ii) if
such transfer is to be made, the Trustee shall require the Holder to deliver an
Opinion of Counsel acceptable to
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and in form and substance satisfactory to the Trustee and the Seller that such
transfer is exempt (describing the applicable exemption and the basis therefor)
from or is being made pursuant to the registration requirements of the Act and
of any applicable state securities laws. The Holder hereof desiring to effect
such transfer shall, and does hereby agree to, indemnify the Trustee, the
Seller and the Servicer against any liability that may result if the transfer
is not so exempt or is not made in accordance with such federal and state laws.
In connection with any such transfer, the Trustee will also require an
affidavit, in the form as described in the Agreement, stating the matters set
forth on the legend of this Class R Certificate.
The Holder of the Class R Certificate, by acceptance hereof, is
deemed to have designated the Servicer, if permitted by the Code and applicable
law, to act as the "tax matters person", to perform the functions of a "tax
matters partner" for purposes of Subchapter C of Chapter 63 of Subtitle F of
the Code and if not so permitted, the Holder of the Class R Certificate, is
deemed to have agreed to act as such "tax matters person".
The Class R Certificate is not entitled to any payments on and
collections in respect of the Mortgage Loans on any Distribution Date until all
other distributions for such Distribution Date have been made in accordance
with the Agreement. The Holder of this Certificate, by its acceptance of this
Certificate, agrees that the Trustee in its individual capacity is not
personally liable to the Certificateholders for any amount payable under this
Certificate or the Agreement or, except as expressly provided in the Agreement,
subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Seller, the Servicer, and the rights of the Certificateholders under the
Agreement at any time by the Seller , the Servicer, and the Trustee with the
consent of the Certificate Insurer and the Holders of Certificates evidencing
Voting Interests of each Class affected thereby aggregating not less than 51%.
The Class R Certificate will have no Voting Interests. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of the Certificates but with the prior written consent
of the Certificate Insurer.
This Certificate is issuable only as a registered Certificate without
coupons in the Percentage Interest specified in the Agreement. As provided in
the Agreement and subject to certain limitations therein set forth, the
Certificate is exchangeable for a new Certificate evidencing the same aggregate
Percentage Interest, as requested by the Holder surrendering the same.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register of the Trustee upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Trustee in
New York, New York, accompanied by a written instrument of transfer in form
satisfactory to
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the Servicer, the Trustee, and the Certificate Registrar duly executed by the
Holder hereof or such Holder's attorney duly authorized in writing together
with an affidavit in the form as described in the Agreement, and thereupon a
new Certificate evidencing the same aggregate Percentage Interest will be
issued to the designated transferee or transferees.
No service charge will be made for any such registration of transfer
or exchange, but the Trustee may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
The Seller and the Trustee and any of their respective agents may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Seller, the Trustee nor any of their
respective agents shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon payment to the Certificateholders,
or provision therefor, in accordance with the Agreement upon (a) the purchase
by the Servicer or the Certificate Insurer of all Mortgage Loans and all
property acquired in respect of any Mortgage Loan remaining in the Trust at a
price determined as provided in the Agreement, or (b) the later of the final
payment or other liquidation of the last Mortgage Loan remaining in the Trust
or the disposition of all property acquired upon foreclosure or by deed in lieu
of foreclosure of any Mortgage Loan. The exercise of the right of the Servicer
to purchase all the Mortgage Loans and property in respect of Mortgage Loans
will result in early retirement of the Certificates, the right of the Servicer
to purchase being subject to the Pool Balance at the time of purchase being
less than 10% of the sum of the Cut-off Date Pool Balance and the Purchase
Account Deposit. The exercise of the right of the Certificate Insurer to
purchase all the Mortgage Loans and property in respect of Mortgage Loans will
result in early retirement of the Certificates, the right of the Certificate
Insurer to purchase being subject to Mortgage Loans with aggregate Cut-off Date
Principal Balances equal to or greater than 25% of the sum of the Cut-off Date
Pool Balance and the Purchase Account Deposit having become Liquidated Mortgage
Loans prior to the time of purchase.
This Certificate will not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned for
authenticating purposes only by any authorized officer of the Trustee.
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IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: September 17, 1996
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.,
as Trustee
By:
---------------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION:
This is the Class R Certificate
referred to in the within named
Agreement
By:
---------------------------------------------
Authorized Officer of Bankers Trust Company
of California, N.A., as Trustee
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EXHIBIT C
FORM OF SUBSEQUENT TRANSFER AGREEMENT
Pursuant to this Subsequent Transfer Agreement, dated as of [
, 1996] by and between Aames Capital Corporation (the "Seller") and Bankers
Trust Company of California, N.A., in its capacity as trustee for Aames
Mortgage Trust 1996-C (the "Trustee"), and pursuant to that certain Pooling and
Servicing Agreement, dated as of September 1, 1996 (the "Pooling and Servicing
Agreement"), by and between the Seller, as seller and servicer, and the
Trustee, as trustee, the Seller and the Trustee agree to the sale by the Seller
and the purchase by the Trustee of additional mortgage loans (the "Subsequent
Mortgage Loans") to be included in Group I or Group II as listed on the
Mortgage Loan Schedule attached hereto as Schedule A.
Capitalized terms used and not defined herein shall have their
respective meanings as set forth in the Pooling and Servicing Agreement.
Section 1. Purchase and Conveyance of Subsequent Mortgage Loans.
(a) The Seller does hereby sell, transfer, assign, set over and
convey to the Trustee:
(i) all right, title and interest of such Seller in and
to the Subsequent Mortgage Loans owned by it and
listed on Schedule A hereto, including without
limitation, the related Mortgages, Mortgage Files and
Mortgage Notes, and all payments on, and proceeds
with respect to, such Subsequent Mortgage Loans
received on and after the Subsequent Cut-off Date
except such payments and proceeds as the Servicer is
entitled to retain pursuant to the express provisions
of the Pooling and Servicing Agreement;
(ii) all right, title and interest of such Seller in the
Mortgages on the properties securing the Subsequent
Mortgage Loans, including any related Mortgaged
Property acquired by or on behalf of the Trust by
foreclosure or deed in lieu of foreclosure or
otherwise;
(iii) all right, title and interest of such Seller in and
to any rights in or proceeds from any insurance
policies (including title insurance policies)
covering the Subsequent Mortgage Loans, the related
Mortgaged Properties or Mortgagors and any amounts
recovered from third parties in respect of any
Subsequent Mortgage Loans that became Liquidated
Mortgage Loans; and
(iv) the proceeds of all of the foregoing.
(b) With respect to each Subsequent Mortgage Loan, the Seller,
contemporaneously with the delivery of this Agreement, has delivered or caused
to be delivered to the Trustee, each item set forth in Section 2.01 of the
Pooling and Servicing Agreement. The transfer to the Trustee by the Seller of
the Subsequent Mortgage Loans identified on the Schedule A hereto
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shall be absolute and is intended by the Seller, the Servicer, the Trustee and
the Certificateholders to constitute and to be treated as a sale by the Seller.
(c) The expenses and costs relating to the delivery of the
Subsequent Mortgage Loans, this Agreement and the Pooling and Servicing
Agreement shall be borne by the Seller.
(d) Additional terms of the sale, including the purchase price,
are set forth on Attachments A and B hereto separated by Mortgage Loan Group.
Section 2. Representations and Warranties; Conditions Precedent.
(a) The Seller hereby affirms the representations and warranties
set forth in Section 2.05 of the Pooling and Servicing Agreement that relate to
the Subsequent Mortgage Loans as of the date hereof. The Seller hereby
confirms that each of the conditions set forth in Section 2.02 of the Pooling
and Servicing Agreement (except such conditions that are required to be
satisfied as of the end of the Commitment Period) are satisfied as of the date
hereof.
(b) All terms and conditions of the Pooling and Servicing
Agreement are hereby ratified and confirmed; provided however, that in the
event of any conflict the provisions of this Agreement shall control over the
conflicting provisions of the Pooling and Servicing Agreement.
Section 3. Recordation of Agreement.
This Agreement is subject to recordation in all appropriate public
offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the Mortgaged Properties are situated, and
in any other appropriate public recording office or elsewhere, such recordation
to be effected by the Servicer and at its expense in the event such recordation
materially and beneficially affects the interests of Certificateholders.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
Section 4. Governing Law.
This Agreement shall be construed in accordance with the laws of the
State of California (without regard to conflict of laws principles and the
application of the laws of any other jurisdiction), and the obligations, rights
and remedies of the parties hereunder shall be determined in accordance with
such laws.
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<PAGE> 171
Section 5. Successors and Assigns.
This Agreement shall inure to the benefit of and be binding upon the
Seller and the Purchaser and their respective successors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective officers, all as of the day and year first
above written.
AAMES CAPITAL CORPORATION,
as Seller
By:
------------------------------------
Name:
Title:
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A., as Trustee
for Aames Mortgage Trust 1996-C
By:
------------------------------------
Name:
Title:
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<PAGE> 172
SCHEDULE A
SUBSEQUENT MORTGAGE LOAN SCHEDULE
C-4
<PAGE> 173
ATTACHMENT A
Subsequent Transfer Date:
Subsequent Cut-off Date:
Aggregate of the Principal Balances of
Group I Subsequent Mortgage Loans:
Aggregate of the Purchase Prices of Group I
Subsequent Mortgage Loans:
Number of Subsequent Mortgage Loans
in Group I:
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<PAGE> 174
ATTACHMENT B
Subsequent Transfer Date:
Subsequent Cut-off Date:
Aggregate of the Principal Balances of
Group II Subsequent Mortgage Loans:
Aggregate of the Purchase Prices of Group II
Subsequent Mortgage Loans:
Number of Subsequent Mortgage Loans
in Group II:
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<PAGE> 175
EXHIBIT D
FORM OF CERTIFICATE INSURANCE POLICY
[Filed as Exhibit 4.2 to this Current Report on Form 8-K]
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<PAGE> 176
EXHIBIT E
FORM OF NOTICE OF CLAIM AND CERTIFICATE
Financial Security Assurance Inc.
350 Park Avenue
New York, New York 10022
The undersigned, a duly authorized officer of Bankers Trust Company of
California, N.A. (the "Trustee"), hereby certifies to Financial Security
Assurance Inc. ("Financial Security") with reference to Financial Guaranty
Insurance Policy No. 50506-N dated September 17, 1996, including Endorsement
No. 1 thereto (the "Policy"), issued by Financial Security in respect of Aames
Mortgage Trust 1996-C, Mortgage Pass- Through Certificates, Series 1996-C,
Class A-1 and Class A-2 that:
(i) The Trustee is the Trustee under the Pooling and
Servicing Agreement for the Holders.
(ii) With respect to the [Class A-1 Certificates][Class
A-2 Certificates] for the Distribution Date in ____________, the
related Insured Amount due under the Policy is $__________.
(iii) The Trustee is making a claim under the Policy for
the Insured Amount to be applied to distributions of principal or
interest or both with respect to the Securities.
(iv) The Trustee agrees that, following receipt of funds
from Financial Security, it shall (a) hold such amounts in trust and
apply the same directly to the payment of Insured Amounts on the
Securities when due; (b) not apply such funds for any other purpose;
(c) not commingle such finds with other funds held by the Trustee; and
(d) maintain an accurate record of such payments with respect to each
Security and the corresponding claim on the Policy and proceeds
thereof and, if the Security is required to be surrendered for such
payment, shall stamp on each such Security the legend "$[insert
applicable amount] paid by Financial Security and the balance hereof
has been canceled and reissued" and then shall deliver such Security
to Financial Security.
(v) The Trustee, on behalf of the Certificateholders,
hereby assigns to Financial Security the rights of the
Certificateholders with respect to the Trust Fund to the extent of any
payments under the Policy, including, without limitation, any amounts
due to the Certificateholders in respect of securities law violations
arising from the offer and sale of the Trust Fund. The foregoing
assignment is in addition to, and not in limitation of, rights of
subrogation otherwise available to Financial Security in respect of
such payments. The Trustee shall take such action and deliver such
instruments as may be reasonably requested or required by Financial
Security to effectuate the purpose or provisions of this clause (v).
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<PAGE> 177
(vi) The Trustee, on its behalf and on behalf of the
Certificateholders, hereby appoints Financial Security as agent and
attorney-in-fact for the Trustee and each such Certificateholder in
any legal proceeding with respect to the Trust Fund. The Trustee
hereby agrees that Financial Security may at any time during the
continuation of the proceeding by or against the Seller under the
United States Bankruptcy Code or any other applicable bankruptcy,
insolvency, receivership, rehabilitation or similar law (an
"Insolvency Proceeding") direct all matters relating to such
Insolvency Proceeding, including without limitation, (A) all matters
relating to any claim in connection with an Insolvency Proceeding
seeking the avoidance as a preferential transfer of any payment with
respect to the Trust Fund (a "Preference Claim"), (B) the direction of
any appeal of any order relating to any Preference Claim at the
expense of Financial Security but subject to reimbursement as provided
in the Insurance and Indemnity Agreement, dated as of September 1,
1996, between the Company and Financial Security and (C) the posting
of any, surety, supersedeas or performance bond pending any such
appeal. In addition, the Trustee hereby agrees that Financial
Security shall be subrogated to, and the Trustee on its behalf and on
behalf of each Certificateholder, hereby delegates and assigns, to the
fullest extent permitted by law, the rights of the Trustee and each
Certificateholder in the conduct of any Insolvency Proceeding,
including, without limitation, all rights of any party to an adversary
proceeding or action with respect to any court order issued in
connection with any such Insolvency Proceeding.
(vii) Payment should be made by wire transfer directed to
[the Policy Payments Account].
Unless the context otherwise requires, capitalized terms used in this
Notice of Claim and Certificate and not defined herein shall have the meanings
provided in the Policy.
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<PAGE> 178
IN WITNESS WHEREOF, the Trustee has executed and delivered this Notice
of Claim and Certificate as of the _________ day of _______________, 199_.
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., as Trustee
By:
--------------------------------------
Name:
Title:
For Financial Security or Fiscal Agent Use Only
Wire transfer sent ___________ by ____________________________
Confirmation Number __________________________________________
E-3
<PAGE> 179
EXHIBIT F
MORTGAGE LOAN SCHEDULE
[Omitted from this Current Report on Form 8-K]
F-1
<PAGE> 180
EXHIBIT G
FORM OF ANNUAL STATEMENT AS TO COMPLIANCE
The undersigned, __________________________________________,
_________________________________ of Aames Capital Corporation (the
"Servicer"), in its capacity as Servicer under that certain Pooling and
Servicing Agreement dated as of September 1, 1996 (the "Pooling and Servicing
Agreement") between Aames Capital Corporation, as Seller and Servicer, and
Bankers Trust Company of California, N.A., as Trustee, does hereby certify
pursuant to Section 3.09 of the Pooling and Servicing Agreement that as of the
___ day of ____________, 199_:
(a) a review of the activities of the Servicer for the
year ended December 31, 199_ and of its performance
under the Pooling and Servicing Agreement has been
made under my supervision, and
(b) to the best of my knowledge, based on such review,
the Servicer has fulfilled all of its material
obligations under the Pooling and Servicing Agreement
throughout such year.
IN WITNESS WHEREOF, I have hereunto signed my name as of this ____day
of ___________, 199_.
---------------------------------------
Name:
Title:
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<PAGE> 181
EXHIBIT H
FORM OF AFFIDAVIT PURSUANT TO SECTION 860E(e)(4)
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
STATE OF _____________________________ )
) ss.:
COUNTY OF ____________________________ )
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That he is [Title of Officer] of [Name of Investor] (the
"Investor"), a [savings institution] [corporation] duly organized and existing
under the laws of [the State of _____________] [the United States], on behalf
of which he makes this affidavit. Capitalized terms used but not defined
herein shall have the meanings ascribed to such terms in the Agreement as
defined in the Class R Certificate.
2. That the Investor's Taxpayer Identification Number is
[______________________].
3. That the Investor is not a "Disqualified Organization" within the
meaning of Section 860E(e)(5) of the Internal Revenue Code of 1986, as amended
(the "Code"), or an agent of a Disqualified Organization (including a broker,
nominee or middleman) and will not be a "Disqualified Organization" as of [date
of transfer], and that the Investor is not acquiring a Class R Certificate of
the Aames Mortgage Trust 1996-C Mortgage Loan Pass-Through Certificates, (the
"Class R Certificate") for the account of, or as an agent (including a broker,
nominee or middleman) of any entity as to which the Investor has not received
an affidavit substantially in the form of this affidavit. For these purposes,
a "Disqualified Organization" means the United States, any state or political
subdivision thereof, any foreign government, any international organization,
any agency or instrumentality of any of the foregoing (other than an
instrumentality if all of its activities are subject to tax and a majority of
its board of directors is not selected by such governmental entity), any
cooperative organization furnishing electrical energy or providing telephone
service to persons in rural areas as described in Code Section 1381(a)(2)(c),
or any organization (other than a farmers' cooperative described in Code
Section 521) that is exempt from federal income tax unless such organization is
subject to the tax on unrelated business income imposed by Code Section 511.
4. That the Investor is not (i) an entity that holds Class R
Certificates as nominee to facilitate the clearance and settlement of such
Class R Certificates through electronic book-entry changes in accounts of
participating organizations (a "Book-Entry Nominee"), (ii) an individual,
corporation, partnership or other person unless such transferee (A) is not a
Foreign Person or (B) is a Foreign Person that will hold such Class R
Certificate in connection with the conduct of a trade or business within the
United States and has furnished the transferor and the Trustee with an
effective Internal Revenue Service Form 4224 or (C) is a Foreign Person that
has delivered to
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<PAGE> 182
both the transferor and the Trustee an opinion of a nationally recognized tax
counsel to the effect that the transfer of a Class R Certificate to it is in
accordance with the requirements of the Code and the regulations promulgated
thereunder and that such transfer of a Class R Certificate will not be
disregarded for federal income tax purposes (any such person who is not covered
by clause (A), (B) or (C) above being referred to herein as a "Non-permitted
Foreign Holder") or (iii) a Person that is an employee benefit plan within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended, or any Person that is an individual retirement account or employee
benefit plan, trust or account subject to Section 4975 of the Code (an "ERISA
Plan") or an entity, including an insurance company separate account or general
account, whose underlying assets include ERISA Plan assets by reason of an
ERISA Plan's investment in the entity or a Person investing the assets of an
ERISA Plan or such an entity, whether as nominee, trustee, agent or otherwise
(an "ERISA Prohibited Holder").
5. That the Investor agrees to any such amendments of the Pooling and
Servicing Agreement as may be required to further effectuate the restrictions
on transfer of the Class R Certificate to such a Disqualified Organization or a
Book-Entry Nominee or a Non-permitted Foreign Holder or an ERISA Prohibited
Holder.
6. That the Investor has no intent or purpose to impede the
assessment or collection of any federal, state or local income taxes legally
required to be paid with respect to the Class R Certificate and will not
transfer the Class R Certificate to any Person that it has reason to believe
has the intention to impede the assessment or collection of such taxes.
7. The Investor has been advised of, understands and acknowledges
that under the Code, a substantial tax would be imposed on a "pass-through
entity" holding a Class R Certificate if at any time during the taxable year of
the pass-through entity a Person that is a Disqualified Organization is the
record holder of an interest in such entity. (For this purpose, a
"pass-through entity" includes a regulated investment company, a real estate
investment trust or common trust fund, a partnership, trust or estate, and
certain cooperatives and, except as may be provided in Treasury Regulations,
persons holding interests in pass through entities as a nominee for another
Person). A pass-through entity shall be relieved of liability for the tax if
it had received from such Person an affidavit (in substantially the same form
as this affidavit) that such Person is not a Disqualified Organization and the
entity had no actual knowledge that the affidavit was false. The Investor will
advise the Trustee and the Servicer if it becomes a pass-through entity or if
it is a pass-through entity, if any of the interest holders are or become
Disqualified Persons.
8. The Investor has reviewed the provisions of Section 6.02 of the
Agreement and understands the legal consequences of the acquisition of a Class
R Certificate including, without limitation, the restrictions on subsequent
transfers. The Investor expressly agrees to be bound by and to abide by the
provisions of Section 6.02 of the Agreement, as such Section may be amended
from time to time.
9. The Investor agrees to require an affidavit substantially similar
to this affidavit from any Person to whom the Investor attempts to transfer its
Class R Certificate including any Person with respect to which the Investor is
then acting as nominee, trustee or agent, and in connection
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<PAGE> 183
with any transfer by a Person for whom the Investor is acting as nominee,
trustee or agent, and the Investor will not transfer its Class R Certificate to
be transferred to any Person that the Investor knows is a Disqualified
Organization.
10. The Investor is acquiring the Class R Certificate either (i) for
its own account or (ii) as nominee, trustee or agent for another Person and has
attached hereto an affidavit from such Person in substantially the same form as
this affidavit. If clause (ii) of the preceding sentence is applicable, such
Person is not a Disqualified Organization and the Investor has no knowledge
that any such affidavit from such Person is false.
IN WITNESS WHEREOF, the Investor has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
[Title of Officer] and its corporate seal to be hereunto attached, attested by
its [Assistant] Secretary, this ____ day of _________, 199_.
[NAME OF INVESTOR]
By:
------------------------------------
Name:
Title:
Personally appears before me the above-named [Name of Officer], known
or proved to me to be the same person who executed the foregoing instrument and
to be the [Title of Officer] of the Investor, and acknowledged to me that he
executed the same as his free act and deed and the free act and deed of the
Investor.
Subscribed and sworn before me this _____day of ___________, 199_.
___________________________________________
NOTARY PUBLIC
COUNTY OF _________________________________
STATE OF __________________________________
My Commission expires the ________ day of __________, 19___.
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<PAGE> 184
EXHIBIT I
FORM OF NOTICE REGARDING PAYMENT IN FULL
OF PRINCIPAL BALANCE OF MORTGAGE LOAN
Bankers Trust Company of California, N.A.,
as Trustee
3 Park Plaza, 16th Floor
Irvine, California 92714
Attention: Corporate Trust Administration
Re: Mortgage Loan Pass-Through Certificates, Series 1996-C
------------------------------------------------------
Ladies and Gentlemen:
Reference is made to Section 3.07 of the Pooling and Servicing
Agreement dated as of September 1, 1996 (the "Pooling and Servicing Agreement")
between Aames Capital Corporation, as Sponsor and Servicer, and Bankers Trust
Company of California, N.A., as Trustee. All capitalized terms used but not
defined herein shall have the meanings given to such terms in the Pooling and
Servicing Agreement.
The undersigned hereby certifies that the Principal Balance of the
Mortgage Loan(s) listed on Schedule A annexed hereto has been paid in full and
that all amounts received in connection with the payment of such Mortgage
Loan(s) that were required to be deposited or credited in the Certificate
Account pursuant to Section 3.02 of the Pooling and Servicing Agreement have
been so deposited or credited.
The undersigned further certifies that he is a Servicing Officer of
the Servicer holding the office set forth beneath his signature and that he is
duly authorized to execute this certificate on behalf of the Servicer.
AAMES CAPITAL CORPORATION
Date: By:
----------------------------- ------------------------------
Name:
Title:
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<PAGE> 185
EXHIBIT J
FORM OF LIQUIDATION REPORT
1. Type of Liquidation (REO disposition/charge-off/short pay-off)
o Date Last Paid
o Date of Foreclosure
o Date of REO
o Date of REO Disposition
o Property Sale Price; Estimated Market Value at Disposition
2. Liquidation Proceeds
o Principal Prepayment $_____________
o Property Sale Proceeds ______________
o Insurance Proceeds ______________
o Other (itemize)
TOTAL $
==============
3. Liquidation Expenses
o Servicing Advances $_____________
o Monthly Advances ______________
o Contingency Fees ______________
o Servicing Fees ______________
o Annual Expense Escrow Amount ______________
o Supplemental Fee (if any) ______________
o Additional Interest (if any) ______________
o Monthly Sponsor Fee (if any) ______________
TOTAL $
==============
4. Net Liquidation Proceeds* $_____________
(Total of Item 2 minus total of Item 3)
5. Accrued and Unpaid Interest on Mortgage Loan $_____________
6. Principal Balance of Mortgage Loan $_____________
7. Realized Loss on Mortgage Loan $_____________
(Item 5 plus Item 6 minus Item 4, with
a Realized Loss resulting only if the total
of this calculation is a positive number)
* Applied first to Item 5 and then to Item 6.
J-1
<PAGE> 186
EXHIBIT K
OFFICER'S CERTIFICATE
I, _____________________, hereby certify that I am the duly elected
_____________________ of Aames Capital Corporation (the "Company") acting as
servicer pursuant to a Pooling and Servicing Agreement dated as of September 1,
1996 by and among the Company and Bankers Trust Company of California, N.A., as
Trustee, and further certify, to the best of my knowledge and after due inquiry
that the following is a summary of the facts and circumstances surrounding the
"charge-off" of any Mortgage Loans during the Collection Period from _____ 1
through _____ 30/31, 199_;
[Insert the following information for each "charged-off" Mortgage Loan]
Loan #
Borrower Name
Property Address
Date of "charge-off"
Original Principal Balance
Outstanding Principal Balance
Mortgage Loan Rate
Accrued Interest at time of "charge off"
Unreimbursed Servicing Advances at time of "charge off"
Unreimbursed Delinquency Advances at time of "charge off"
# of days in default at time of "charge off"
Original Appraised Value
Current appraised value based upon "drive by"
Amount of outstanding first lien
Estimate of Foreclosure Costs
Broker Fees
Legal Fees
Repair and Miscellaneous Expenses
Projected Marketing Period
Estimate of Loss on Foreclosure and Liquidation
Capitalized terms not otherwise defined herein have the meanings set forth in
the Pooling and Servicing Agreement.
IN WITNESS WHEREOF, I have hereunto signed by name and affixed the
seal of the Servicer.
Dated:
---------------------------- ----------------------------
Name:
Title:
K-1
<PAGE> 187
EXHIBIT L
FORM OF TRANSFEROR AFFIDAVIT
[LETTERHEAD OF TRANSFEROR]
________________, 199_
Bankers Trust Company of California, N.A.,
as Trustee
3 Park Plaza, 16th Floor
Irvine, California 92714
Attention: Corporate Trust Administration
Re: Aames Mortgage Trust 1996-C
Mortgage Pass-Through Certificates, Series 1996-C
-------------------------------------------------
Ladies and Gentlemen:
We have reviewed the attached affidavit of [NAME OF TRANSFEREE] and
have no actual knowledge that such affidavit is not true and has no reason to
believe that the requirements set forth in paragraph 3, paragraph 4(i) or
paragraph 4(ii) are not satisfied and have no reason to believe that the
transferee has the intention to impede the assessment or collection of any
federal, state or local taxes legally required to be paid with respect to a
Class R Certificate. In addition, we have conducted a reasonable investigation
at the time of the transfer and found that the transferee had historically paid
its debts as they came due and found no significant evidence to indicate that
the transferee will not continue to pay its debts as they become due.
Very truly yours,
-------------------------------------------
By:
----------------------------------------
Name:
Title:
L-1
<PAGE> 188
EXHIBIT M
===============================================================================
INSURANCE AND INDEMNITY AGREEMENT
by and between
FINANCIAL SECURITY ASSURANCE INC.,
and
AAMES CAPITAL CORPORATION
Dated as of September 1, 1996
$175,000,000 CLASS A-1 CERTIFICATES
$350,000,000 CLASS A-2 CERTIFICATES
===============================================================================
<PAGE> 189
TABLE OF CONTENTS
<TABLE>
Page
<S> <C> <C>
ARTICLE I
DEFINITIONS; LIMITED RECOURSE
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.01. Representations and Warranties of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2.02. Affirmative Covenants of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.03. Negative Covenants of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE III
THE POLICY; REIMBURSEMENT; INDEMNIFICATION
Section 3.01. Issuance of the Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.02. Payment of Fees and Premium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.03. Reimbursement and Additional Payment Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.04. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.05. Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE IV
FURTHER AGREEMENTS
Section 4.01. Effective Date; Term of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 4.02. Obligations Absolute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 4.03. Assignments; Reinsurance; Third-Party Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.04. Liability of Financial Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE V
EVENTS OF DEFAULT; REMEDIES
Section 5.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 5.02. Remedies; Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
i
<PAGE> 190
<TABLE>
<S> <C> <C>
ARTICLE VI
MISCELLANEOUS
Section 6.01. Amendments, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 6.02. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 6.03. Payment Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 6.04. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 6.05. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 6.06. Consent to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 6.07. Consent of Financial Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 6.08. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 6.09. Trial by Jury Waived . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 6.10. Limited Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 6.11. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>
Appendix I--Definitions
Appendix II--Opinions of Counsel
Annex I--Form of Policy
Appendix A--Conditions Precedent to Issuance of the Policy
ii
<PAGE> 191
INSURANCE AND INDEMNITY AGREEMENT
INSURANCE AND INDEMNITY AGREEMENT dated as of September 1,
1996, by and between FINANCIAL SECURITY ASSURANCE INC. ("Financial Security")
and AAMES CAPITAL CORPORATION (the "Company").
INTRODUCTORY STATEMENTS
The Company intends to sponsor the issuance of the Aames Mortgage
Trust 1996-C, Mortgage Pass-Through Certificates, Series 1996-C, in three
classes, designated as the Class A-1 Certificates (which consists of four
subclasses), the Class A-2 Certificates and the Class R Certificates, pursuant
to a Pooling and Servicing Agreement, dated as of September 1, 1996 between the
Company and the Trustee.
The Company has requested that Financial Security issue a financial
guaranty insurance policy guarantying certain distributions of the principal of
and interest on the Securities (including any such distributions subsequently
avoided as a preference under applicable bankruptcy law) upon the terms and
subject to the conditions provided herein.
The parties hereto desire to specify the conditions precedent to the
issuance of the Policy by Financial Security, the payment of premium in respect
of the Policy, the indemnity to be provided to Financial Security in respect of
amounts paid by Financial Security under the Policy or otherwise and certain
other matters.
In consideration of the premises and of the agreements herein
contained, Financial Security and the Company hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Capitalized terms used herein shall have
the meanings provided in Appendix I hereto unless the context otherwise
requires.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.01. Representations and Warranties of the Company. The
Company represents, warrants and covenants, as of the date hereof and as of the
Date of Issuance, as follows:
(a) Due Organization and Qualification. The Company is a
corporation, duly organized, validly existing and in good standing
under the laws of the State of
1
<PAGE> 192
California. The Company is duly qualified to do business, is in good
standing and has obtained all material licenses, permits, charters,
registrations and approvals (together, "approvals") necessary for the
conduct of its business as currently conducted and as described in the
Offering Document and the performance of its obligations under the
Transaction Documents, in each jurisdiction in which the failure to be
so qualified or to obtain such approvals would render any Mortgage
Loan unenforceable in any respect or would otherwise have a material
adverse effect upon the Transaction.
(b) Power and Authority. The Company has all necessary
corporate power and authority to conduct its business as currently
conducted and as described in the Offering Document, to execute,
deliver and perform its obligations under the Transaction Documents
and to consummate the Transaction.
(c) Due Authorization. The execution, delivery and
performance of the Transaction Documents by the Company have been duly
authorized by all necessary corporate action and do not require any
additional approvals or consents or other action by or any notice to
or filing with any Person, including, without limitation, any
governmental entity or the Company's stockholders.
(d) Noncontravention. Neither the execution and delivery
of the Transaction Documents by the Company, the consummation of the
transactions contemplated thereby nor the satisfaction of the terms
and conditions of the Transaction Documents,
(i) conflicts with or results in any material
breach or violation of any provision of the Articles of
Incorporation or Bylaws of the Company or any law, rule,
regulation, order, writ, judgment, injunction, decree,
determination or award currently in effect binding the Company
or any of its properties, including regulations issued by an
administrative agency or other governmental authority having
supervisory powers over the Company,
(ii) constitutes a default by the Company under or
a breach of any provision of any loan agreement, mortgage,
indenture or other agreement or instrument to which the
Company is a party or by which it or any of its properties is
or may be bound, or
(iii) results in or requires the creation of any
Lien upon or in respect of any of the Company's assets except
as otherwise expressly contemplated by the Transaction
Documents.
(e) Legal Proceedings. There is no action, proceeding or
investigation by or before any court, governmental or administrative
agency or arbitrator against or affecting all or any of the Mortgage
Loans, or the Company, or any properties or rights of the Company,
pending or, to the Company's knowledge after reasonable inquiry,
threatened, which, in any case, if decided adversely to the Company,
would result in a Material Adverse Change with respect to the Company
or any Mortgage Loan.
2
<PAGE> 193
(f) Valid and Binding Obligations. The Transaction
Documents, when executed and delivered by the Company, will constitute
the legal, valid and binding obligations of the Company, enforceable
in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors'
rights generally and general equitable principles. The Securities,
when executed, authenticated and delivered in accordance with the
Pooling and Servicing Agreement, will be validly issued and
outstanding and entitled to the benefits of the Pooling and Servicing
Agreement and, together with the Class R Certificates, will evidence
the entire beneficial ownership interest in the Trust Fund.
(g) Financial Statements. The consolidated Financial
Statements of the Parent (which includes the Company's assets and
operations), copies of which have been furnished to Financial Security
by the Company, (i) are, as of the dates and for the periods referred
to therein, complete and correct in all material respects, (ii)
present fairly the consolidated financial condition and results of
operations of the Parent as of the dates and for the periods indicated
and (iii) have been prepared in accordance with generally accepted
accounting principles consistently applied, except as noted therein
(subject as to interim statements to normal year-end adjustments).
Since the date of the most recent Financial Statements, there has been
no material adverse change in such financial condition or results of
operations of the Company. Except as disclosed in the Financial
Statements, the Parent is not subject to any contingent liabilities or
commitments that, individually or in the aggregate, might cause a
Material Adverse Change in respect of the Company.
(h) ERISA. The Company is in compliance with ERISA and
has not incurred and does not reasonably expect to incur any
liabilities to the PBGC under ERISA in connection with any Plan or
Multiemployer Plan or to contribute now or in the future in respect of
any Plan or Multiemployer Plan.
(i) Accuracy of Information. None of the Provided
Documents (other than the Transaction Documents) contain any statement
of a material fact with respect to the Company or the Transaction that
was untrue or misleading in any material respect when made. Since the
furnishing of the Provided Documents, there has been no change, nor
any development or event involving a prospective change known to the
Company, that would materially and adversely affect the ability of the
Company to perform its obligations under any of the Transaction
Documents. There is no fact known to the Company which might cause a
Material Adverse Change with respect to the Company or the Mortgage
Loans.
(j) Compliance With Securities Laws. The offer and sale
of the Securities by the Company comply in all material respects with
all requirements of law, including all registration requirements of
applicable securities laws. Without limitation of the foregoing, the
Offering Document does not contain any untrue statement of a material
fact and does not omit to state a material fact required to be stated
therein or necessary to make the statements made therein, in light of
the circumstances under which they
3
<PAGE> 194
were made, not misleading. Neither the Trust nor the Trust Fund is
required to be registered as an "investment company" under the
Investment Company Act. The Pooling and Servicing Agreement is not
required to be qualified under the Trust Indenture Act.
(k) Transaction Documents. Each of the representations
and warranties of the Company contained in the Transaction Documents
is true and correct in all material respects and the Company hereby
makes each such representation and warranty to, and for the benefit
of, Financial Security as if the same were set forth in full herein.
(l) Compliance With Law, Etc. No practice, procedure or
policy employed or proposed to be employed by the Company in the
conduct of its business violates any law, regulation, judgment,
agreement, order or decree applicable to the Company which, if
enforced, would result in a Material Adverse Change with respect to
the Company.
(m) Taxes. The Company has filed all federal and state
tax returns which are required to be filed and paid all taxes,
including any assessments received by it, to the extent that such
taxes have become due. Any taxes, fees and other governmental charges
payable by the Company in connection with the Transaction, the
execution and delivery of the Related Documents and the issuance of
the Securities have been paid or shall have been paid at or prior to
the Date of Issuance.
(n) Solvency; Fraudulent Conveyance. The Company is
solvent and will not be rendered insolvent by the transactions
contemplated by the Transaction Documents and, after giving effect to
such transactions, the Company will not be left with an unreasonably
small amount of capital with which to engage in its business. The
Company does not intend to incur, or believe that it has incurred,
debts beyond its ability to pay such debts as they mature. The
Company does not contemplate the commencement of insolvency,
bankruptcy, liquidation or consolidation proceedings or the
appointment of a receiver, liquidator, conservator, trustee or similar
official in respect of the Company or any of its assets. The amount
of consideration being received by the Company upon the sale of the
Securities to the Underwriters constitutes reasonably equivalent value
and fair consideration for the interest in the Mortgage Loans
evidenced by the Securities. The Company is not transferring the
Mortgage Loans to the Trust or selling the Securities to any
Underwriter, as provided in the Transaction Documents, with any intent
to hinder, delay or defraud any of the Company's creditors.
Section 2.02. Affirmative Covenants of the Company. The Company
hereby agrees that during the Term of the Agreement, unless Financial Security
shall otherwise expressly consent in writing:
(a) Compliance With Agreements and Applicable Laws. The
Company shall perform each of its obligations under the Transaction
Documents and shall comply with all material requirements of, and the
Securities shall be offered and sold in accor-
4
<PAGE> 195
dance with, any law, rule or regulation applicable to it or thereto,
or that are required in connection with its performance under any of
the Transaction Documents.
(b) Financial Statements; Accountants' Reports; Other
Information. The Company shall keep or cause to be kept in reasonable
detail books and records of account of the Company's assets and
business, and shall clearly reflect therein the transfer of the
Mortgage Loans to the Trust and the sale of the Securities to the
Underwriters as a sale of the Company's interest in the Mortgage Loans
evidenced by the Securities. The Company shall furnish or caused to
be furnished to Financial Security:
(i) Annual Financial Statements. As soon as
available, and in any event within 90 days after the close of
each fiscal year of the Parent, the audited consolidated
balance sheets of the Parent as of the end of such fiscal year
and the audited consolidated statements of income, changes in
shareholders' equity and cash flows of the Parent for such
fiscal year, all in reasonable detail and stating in
comparative form the respective figures for the corresponding
date and period in the preceding fiscal year, prepared in
accordance with generally accepted accounting principles,
consistently applied, and accompanied by the certificate of
the Parent's independent accountants (who shall be a
nationally recognized firm or otherwise acceptable to
Financial Security).
(ii) Quarterly Financial Statements. As soon as
available, and in any event within 45 days after the close of
each of the first three quarters of each fiscal year of the
Parent, the unaudited balance sheets of the Parent as of the
end of such quarter and the unaudited statements of income,
changes in shareholders' equity and cash flows of the Parent
for the portion of the fiscal year then ended, all in
reasonable detail and stating in comparative form the
respective figures for the corresponding date and period in
the preceding fiscal year, prepared in accordance with
generally accepted accounting principles, consistently applied
(subject to normal year-end adjustments).
(iii) Accountants' Reports. If a Trigger Event has
occurred, copies of any reports submitted to the Parent by its
independent accountants in connection with any examination of
the consolidated financial statements of the Parent, promptly
upon receipt thereof.
(iv) Other Information. Promptly upon receipt
thereof, copies of all reports, statements, certifications,
schedules, or other similar items delivered to or by the
Company pursuant to the terms of the Transaction Documents
and, promptly upon request, such other data as Financial
Security may reasonably request; provided, however, that the
Company shall not be required to deliver any such items if
provision by some other party to Financial Security is
required under the Related Documents unless such other party
wrongfully fails to deliver such item. The Company shall,
upon the request of Financial Security, permit Financial
Security or its authorized agents (A) to inspect the books and
records
5
<PAGE> 196
of the Company as they may relate to the Securities, the
Mortgage Loans, the obligations of the Company under the
Transaction Documents, the Transaction and, but only following
the occurrence of a Trigger Event, the Company's business; (B)
to discuss the affairs, finances and accounts of the Company
with the Chief Financial Officer of the Company, no more
frequently than annually unless a Trigger Event has occurred;
and (C) upon the occurrence of a Trigger Event, to discuss the
affairs, finances and accounts of the Company with the
Company's independent accountants, provided that an officer of
the Company shall have the right to be present during such
discussions. Such inspections and discussions shall be
conducted during normal business hours and shall not
unreasonably disrupt the business of the Company. The books
and records of the Company will be maintained at the address
of the Company designated herein for receipt of notices,
unless the Company shall otherwise advise the parties hereto
in writing.
(v) The Company shall provide or cause to be
provided to Financial Security a copy of each document
executed in connection with the transaction within 60 days
after the date of closing.
(c) Compliance Certificate. The Company shall deliver to
Financial Security concurrently with the delivery of the financial
statements required pursuant to Section 2.02(b)(i) hereof (and
concurrently with the delivery of the financial statements required
pursuant to Section 2.02(b)(ii) hereof, if a Trigger Event has
occurred), a certificate signed by the Chief Financial Officer of the
Company stating that:
(i) a review of the Company's performance under
the Transaction Documents during such period has been made
under such officer's supervision;
(ii) to the best of such individual's knowledge
following reasonable inquiry, no Trigger Event, Default or
Event of Default has occurred, or if a Trigger Event, Default
or Event of Default has occurred, specifying the nature
thereof and, if the Company has a right to cure any such
Default or Event of Default pursuant to Section 5.01, stating
in reasonable detail the steps, if any, being taken by the
Company to cure such Default or Event of Default or to
otherwise comply with the terms of the agreement to which such
Default or Event of Default relates; and
(iii) the attached financial reports submitted in
accordance with Section 2.02(b)(i) or (ii) hereof, as
applicable, are complete and correct in all material respects
and present fairly the consolidated financial condition and
results of operations of the Parent as of the dates and for
the periods indicated, in accordance with generally accepted
accounting principles consistently applied (subject as to
interim statements to normal year-end adjustments).
(d) Notice of Material Events. The Company shall
promptly inform Financial Security in writing of the occurrence of any
of the following:
6
<PAGE> 197
(i) the submission of any claim or the initiation
of any legal process, litigation or administrative or judicial
investigation (A) against the Company pertaining to the
Mortgage Loans in general or (B) with respect to a material
portion of the Mortgage Loans;
(ii) any change in the location of the Company's
principal office or any change in the location of the
Company's books and records;
(iii) the occurrence of any Trigger Event, Default
or Event of Default; or
(iv) any other event, circumstance or condition
that has resulted, or might result, in a Material Adverse
Change in respect of the Company.
(e) Further Assurances. The Company shall, upon the
request of Financial Security, from time to time, execute, acknowledge
and deliver, or cause to be executed, acknowledged and delivered,
within thirty (30) days of such request, such amendments hereto and
such further instruments and take such further action as may be
reasonably necessary to effectuate the intention, performance and
provisions of the Transaction Documents or to protect the interest of
the Trustee, for the benefit of the Certificateholders and Financial
Security, in the Mortgage Loans, free and clear of all Liens and
Restrictions on Transferability except the Lien in favor of the
Trustee, for the benefit of the Certificateholders and Financial
Security, and the Restrictions on Transferability imposed by the
Pooling and Servicing Agreement. In addition, the Company agrees to
cooperate with S&P and Moody's in connection with any review of the
Transaction which may be undertaken by S&P and Moody's after the date
hereof.
(f) Retirement of Securities. The Company shall cause
the Trustee, upon retirement of the Securities pursuant to the Pooling
and Servicing Agreement or otherwise, to furnish to Financial Security
a notice of such retirement, and, upon retirement of the Securities
and the expiration of the term of the Policy, to surrender the Policy
to Financial Security for cancellation.
(g) Third-Party Beneficiary. The Company agrees that
Financial Security shall have all rights of a third-party beneficiary
in respect of the Pooling and Servicing Agreement and hereby
incorporates and restates its representations, warranties and
covenants as set forth therein for the benefit of Financial Security.
Section 2.03. Negative Covenants of the Company. The Company hereby
agrees that during the Term of the Agreement, unless Financial Security shall
otherwise expressly consent in writing:
(a) Restrictions on Liens. The Company shall not (i)
create, incur or suffer to exist, or agree to create, incur or suffer
to exist, or consent to cause or permit in the future (upon the
happening of a contingency or otherwise) the creation, incurrence or
existence of any Lien or Restriction on Transferability on the
Mortgage Loans except
7
<PAGE> 198
for the Lien in favor of the Trustee, for the benefit of the
Certificateholders and Financial Security, and the Restrictions on
Transferability imposed by the Pooling and Servicing Agreement or (ii)
sign or file under the Uniform Commercial Code of any jurisdiction any
financing statement which names the Company as a debtor, or sign any
security agreement authorizing any secured party thereunder to file
such financing statement, with respect to the Mortgage Loans, except
in each case any such instrument solely securing the rights and
preserving the Lien of the Trustee, for the benefit of the
Certificateholders and Financial Security.
(b) Impairment of Rights. The Company shall not take any
action, or fail to take any action, if such action or failure to take
action will (i) interfere with the enforcement of any rights under the
Transaction Documents that are material to the rights, benefits or
obligations of the Trustee, the Certificateholders or Financial
Security, (ii) result in a Material Adverse Change in respect of all,
or a substantial portion, of the Mortgage Loans or (iii) impair the
ability of the Company to perform its obligations under the
Transaction Documents.
(c) Waiver, Amendments, Etc. The Company shall not
waive, modify or amend, or consent to any waiver, modification or
amendment of, any of the provisions of any of the Related Documents.
ARTICLE III
THE POLICY; REIMBURSEMENT; INDEMNIFICATION
Section 3.01. Issuance of the Policy. Financial Security agrees to
issue the Policy subject to satisfaction of the conditions precedent set forth
in Appendix A hereto.
Section 3.02. Payment of Fees and Premium.
(a) Fees and Expenses. On the Date of Issuance, the
Company shall pay or cause to be paid the amounts specified with
respect to fees, expenses and disbursements in the Premium Letter,
unless otherwise agreed between the Company and Financial Security.
All periodic and subsequent fees of S&P or Moody's with respect to,
and directly allocable to, the Securities shall be for the account of,
and shall be billed to, the Company. The fees for any other rating
agency shall be paid by the party requesting such other agency's
rating, unless such other agency is a substitute for S&P or Moody's in
the event that S&P or Moody's is no longer rating the Securities, in
which case the cost for such agency shall be paid by the Company.
(b) Premium. In consideration of the issuance by
Financial Security of the Policy, Financial Security shall be entitled
to receive the Premium as and when due in accordance with the terms of
the Premium Letter (i) in the case of Premium due on or before the
Date of Issuance, directly from the Company and (ii) in the case of
Premium due after the Date of Issuance, pursuant to Section 5.01 of
the Pooling and Servicing
8
<PAGE> 199
Agreement. The Premium paid hereunder or under the Pooling and
Servicing Agreement shall be nonrefundable without regard to whether
Financial Security makes any payment under the Policy or any other
circumstances relating to the Securities or provision being made for
payment of the Securities prior to maturity.
Section 3.03. Reimbursement and Additional Payment Obligation. The
following amounts will be payable as and when incurred solely from the Trust
pursuant to and in accordance with Section 5.01 of the Pooling and Servicing
Agreement:
(a) a sum equal to the total of all amounts paid by
Financial Security under the Policy;
(b) any and all out-of-pocket charges, fees, costs and
expenses which Financial Security may reasonably pay or incur,
including, but not limited to, attorneys' and accountants' fees and
expenses, in connection with (i) in the event of payments under the
Policy, any accounts established to facilitate payments under the
Policy, to the extent Financial Security has not been immediately
reimbursed on the date that any amount is paid by Financial Security
under the Policy, or other administrative expenses relating to such
payments under the Policy, (ii) the enforcement, defense or
preservation of any rights in respect of any of the Related Documents,
including defending, monitoring or participating in any litigation or
proceeding (including any insolvency or bankruptcy proceeding in
respect of any Transaction participant or any affiliate thereof)
relating to any of the Related Documents, any party to any of the
Related Documents or the Transaction, (iii) any amendment, waiver or
other action with respect to, or related to, any Related Document
whether or not executed or completed, (iv) any review or investigation
made by Financial Security in those circumstances where its approval
or consent is sought under any of the Related Documents;
(c) interest on any and all amounts described in Section
3.03(a) from the date due to Financial Security pursuant to the
provisions hereof until payment thereof in full, payable to Financial
Security at the Late Payment Rate per annum; and
(d) any payments made by Financial Security on behalf of,
or advanced to, the Company, including, without limitation, any
amounts payable by the Company pursuant to the Securities or any other
Related Documents; and any payments made by Financial Security as, or
in lieu of, any servicing, management, trustee, custodial or
administrative fees payable, in the sole discretion of Financial
Security to third parties in connection with the Transaction.
Section 3.04. Indemnification.
(a) Indemnification by the Company. In addition to any
and all rights of reimbursement, indemnification, subrogation and any
other rights pursuant hereto or under law or in equity, the Company
agrees to pay, and to protect, indemnify and save harmless, Financial
Security and its officers, directors, shareholders, employees, agents
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and each Person, if any, who controls Financial Security within the
meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act from and against any and all claims, losses,
liabilities (including penalties), actions, suits, judgments, demands,
damages, costs or expenses (including, without limitation, fees and
expenses of attorneys, consultants and auditors and reasonable costs
of investigations) of any nature arising out of or relating to the
transactions contemplated by the Related Documents by reason of:
(i) the negligence, bad faith, willful
misconduct, misfeasance, malfeasance or theft committed by any
director, officer, employee or agent of the Company; or
(ii) the breach by the Company of any
representation, warranty or covenant under any of the
Transaction Documents (other than a breach of any
representation or warranty set forth in Section 2.05 of the
Pooling and Servicing Agreement regarding the Mortgage Loans
to the extent the Seller has remedied such breach in
accordance with the terms thereof) or the occurrence, in
respect of the Company, under any of the Transaction Documents
of any "event of default" or any event which, with the giving
of notice or the lapse of time or both, would constitute any
"event of default".
(b) Conduct of Actions or Proceedings. If any action or
proceeding (including any governmental investigation) shall be brought
or asserted against Financial Security, any officer, director,
shareholder, employee or agent of Financial Security or any Person
controlling Financial Security (individually, an "Indemnified Party"
and, collectively, the "Indemnified Parties") in respect of which
indemnity may be sought from the Company (the "Indemnifying Party")
hereunder, Financial Security shall promptly notify the Indemnifying
Party in writing, and the Indemnifying Party shall assume the defense
thereof, including the employment of counsel satisfactory to Financial
Security and the payment of all expenses. An Indemnified Party shall
have the right to employ separate counsel in any such action and to
participate in the defense thereof at the expense of the Indemnified
Party; provided, however, that the fees and expenses of such separate
counsel shall be at the expense of the Indemnifying Party if (i) the
Indemnifying Party has agreed to pay such fees and expenses, (ii) the
Indemnifying Party shall have failed to assume the defense of such
action or proceeding and employ counsel satisfactory to Financial
Security in any such action or proceeding or (iii) the named parties
to any such action or proceeding (including any impleaded parties)
include both the Indemnified Party and the Indemnifying Party, and the
Indemnified Party shall have been advised by counsel that (A) there
may be one or more legal defenses available to it which are different
from or additional to those available to the Indemnifying Party and
(B) the representation of the Indemnifying Party and the Indemnified
Party by the same counsel would be inappropriate or contrary to
prudent practice (in which case, if the Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate
counsel at the expense of the Indemnifying Party, the Indemnifying
Party shall not have the right to assume the defense of such action or
proceeding on behalf of such Indemnified Party, it being
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understood, however, that the Indemnifying Party shall not, in
connection with any one such action or proceeding or separate but
substantially similar or related actions or proceedings in the same
jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more
than one separate firm of attorneys at any time for the Indemnified
Parties, which firm shall be designated in writing by Financial
Security). The Indemnifying Party shall not be liable for any
settlement of any such action or proceeding effected without its
written consent to the extent that any such settlement shall be
prejudicial to the Indemnifying Party, but, if settled with its
written consent, or if there be a final judgment for the plaintiff in
any such action or proceeding with respect to which the Indemnifying
Party shall have received notice in accordance with this subsection
(b), the Indemnifying Party agrees to indemnify and hold the
Indemnified Parties harmless from and against any loss or liability by
reason of such settlement or judgment.
(c) Contribution. To provide for just and equitable
contribution if the indemnification provided by the Indemnifying Party
is determined to be unavailable for any Indemnified Party (other than
due to application of this Section), the Indemnifying Party shall
contribute to the losses incurred by the Indemnified Party on the
basis of the relative fault of the Indemnifying Party, on the one
hand, and the Indemnified Party, on the other hand.
Section 3.05. Subrogation. Subject only to the priority of payment
provisions of the Pooling and Servicing Agreement, the Company acknowledges for
itself that, to the extent of any payment made by Financial Security pursuant
to the Policy, Financial Security is to be fully subrogated to the extent of
such payment and any additional interest due on any late payment, to the rights
of the Certificateholders to any moneys paid or payable in respect of the
Securities under the Related Documents or otherwise. The Company agrees for
itself to such subrogation and, further, agrees to execute such instruments and
to take such actions as, in the sole judgment of Financial Security, are
necessary to evidence such subrogation and to perfect the rights of Financial
Security to receive any moneys paid or payable in respect of the Securities
under the Related Documents or otherwise.
ARTICLE IV
FURTHER AGREEMENTS
Section 4.01. Effective Date; Term of Agreement. This Agreement
shall take effect on the Date of Issuance and shall remain in effect until the
later of (a) such time as Financial Security is no longer subject to a claim
under the Policy and the Policy shall have been surrendered to Financial
Security for cancellation and (b) all amounts payable to Financial Security and
the Certificateholders under the Related Documents and under the Securities
have been paid in full; provided, however, that the provisions of Section 3.04
hereof shall survive any termination of this Agreement.
Section 4.02. Obligations Absolute. (a) The payment obligations of
the Company hereunder shall be absolute and unconditional, and shall be paid
strictly in accordance with
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this Agreement under all circumstances irrespective of (i) any lack of validity
or enforceability of, or any amendment or other modifications of, or waiver
with respect to, any of the Related Documents, the Securities or the Policy;
(ii) any exchange or release of any other obligations hereunder; (iii) the
existence of any claim, setoff, defense, reduction, abatement or other right
which the Company may have at any time against Financial Security or any other
Person; (iv) any document presented in connection with the Policy proving to be
forged, fraudulent, invalid or insufficient in any respect, including any
failure to strictly comply with the terms of the Policy, or any statement
therein being untrue or inaccurate in any respect; (v) any failure of the
Company to receive the proceeds from the sale of the Securities; (vi) any
breach by the Company of any representation, warranty or covenant contained in
any of the Related Documents; or (vii) any other circumstances, other than
payment in full, which might otherwise constitute a defense available to, or
discharge of, the Company in respect of any Related Document.
(b) The Company and any and all others who are now or may become
liable for all or part of the obligations of the Company under this Agreement
agree to be bound by this Agreement and (i) to the extent permitted by law,
waive and renounce any and all redemption and exemption rights and the benefit
of all valuation and appraisement privileges against the indebtedness, if any,
and obligations evidenced by any Related Document or by any extension or
renewal thereof; (ii) waive presentment and demand for payment, notices of
nonpayment and of dishonor, protest of dishonor and notice of protest; (iii)
waive all notices in connection with the delivery and acceptance hereof and all
other notices in connection with the performance, default or enforcement of any
payment hereunder except as required by the Related Documents; (iv) waive all
rights of abatement, diminution, postponement or deduction, or to any defense
other than payment, or to any right of setoff or recoupment arising out of any
breach under any of the Related Documents, by any party thereto or any
beneficiary thereof, or out of any obligation at any time owing to the Company;
(v) agree that any consent, waiver or forbearance hereunder with respect to an
event shall operate only for such event and not for any subsequent event; (vi)
consent to any and all extensions of time that may be granted by Financial
Security with respect to any payment hereunder or other provisions hereof and
to the release of any security at any time given for any payment hereunder, or
any part thereof, with or without substitution, and to the release of any
Person or entity liable for any such payment; and (vii) consent to the addition
of any and all other makers, endorsers, guarantors and other obligors for any
payment hereunder, and to the acceptance of any and all other security for any
payment hereunder, and agree that the addition of any such obligors or security
shall not affect the liability of the parties hereto for any payment hereunder.
(c) Nothing herein shall be construed as prohibiting the Company
from pursuing any rights or remedies it may have against any Person other than
Financial Security in a separate legal proceeding.
Section 4.03. Assignments; Reinsurance; Third-Party Rights. (a)
This Agreement shall be a continuing obligation of the parties hereto and shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. The Company may not assign its
rights under this Agreement, or delegate any of its duties
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hereunder, without the prior written consent of Financial Security. Any
assignment made in violation of this Agreement shall be null and void.
(b) Financial Security shall have the right to give participations
in its rights under this Agreement and to enter into contracts of reinsurance
with respect to the Policy upon such terms and conditions as Financial Security
may in its discretion determine; provided, however, that no such participation
or reinsurance agreement or arrangement shall relieve Financial Security of any
of its obligations hereunder or under the Policy.
(c) In addition, Financial Security shall be entitled to assign or
pledge to any bank or other lender providing liquidity or credit with respect
to the Transaction or the obligations of Financial Security in connection
therewith any rights of Financial Security under the Related Documents or with
respect to any real or personal property or other interests pledged to
Financial Security, or in which Financial Security has a security interest, in
connection with the Transaction.
(d) Except as provided herein with respect to participants and
reinsurers, nothing in this Agreement shall confer any right, remedy or claim,
express or implied, upon any Person, including, particularly, any
Certificateholder, other than Financial Security, against the Company, and all
the terms, covenants, conditions, promises and agreements contained herein
shall be for the sole and exclusive benefit of the parties hereto and their
successors and permitted assigns. Neither the Trustee nor any
Certificateholder shall have any right to payment from any premiums paid
hereunder or from any other amounts paid by the Company pursuant to Section
3.02 or 3.04 hereof.
Section 4.04. Liability of Financial Security. Neither Financial
Security nor any of its officers, directors or employees shall be liable or
responsible for: (a) the use which may be made of the Policy by the Trustee or
for any acts or omissions of the Trustee in connection therewith or (b) the
validity, sufficiency, accuracy or genuineness of documents delivered to
Financial Security (or its Fiscal Agent) in connection with any claim under the
Policy, or of any signatures thereon, even if such documents or signatures
should in fact prove to be in any or all respects invalid, insufficient,
fraudulent or forged (unless Financial Security had actual knowledge thereof).
In furtherance and not in limitation of the foregoing, Financial Security (or
its Fiscal Agent) may accept documents that appear on their face to be in
order, without responsibility for further investigation.
ARTICLE V
EVENTS OF DEFAULT; REMEDIES
Section 5.01. Events of Default. The occurrence of any of the
following events shall constitute an Event of Default hereunder:
(a) any representation or warranty made by the Company
under any of the Related Documents, or in any certificate or report
furnished under any of the Related Documents, shall prove to be untrue
or incorrect in any material respect; provided,
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however, that if the Company effectively cures any such defect in any
representation or warranty under any Related Document, or certificate
or report furnished under any Related Document, within the time period
specified in the relevant Related Document as the cure period
therefor, such defect shall not in and of itself constitute an Event
of Default hereunder;
(b) (i) the Company shall fail to pay when due any amount
payable by the Company under any of the Related Documents unless such
amounts are paid in full within any applicable cure period explicitly
provided for under the relevant Related Document; (ii) the Company
shall have asserted that any of the Related Documents to which it is a
party is not valid and binding on the parties thereto; or (iii) any
court, governmental authority or agency having jurisdiction over any
of the parties to any of the Related Documents or any property thereof
shall find or rule that any material provision of any of the Related
Documents is not valid and binding on the parties thereto;
(c) the Company shall fail to perform or observe any
other material covenant or agreement contained in any of the Related
Documents (except for the obligations described under clause (b)
above) and such failure shall continue for a period of 30 days after
written notice given to it; provided, however, that, if such failure
shall be of a nature that it cannot be cured within 30 days, such
failure shall not constitute an Event of Default hereunder if within
such 30-day period the Company shall have given notice to Financial
Security of corrective action it proposes to take, which corrective
action is agreed in writing by Financial Security to be satisfactory
and the Company shall thereafter pursue such corrective action
diligently until such default is cured; and
(d) the occurrence of an "event of default" under any of
the Related Documents.
Section 5.02. Remedies; Waivers. (a) Upon the occurrence of an
Event of Default, Financial Security may exercise any one or more of the rights
and remedies set forth below:
(i) exercise any rights and remedies available under the
Related Documents in its own capacity or in its capacity as the Person
entitled to exercise the rights of the Certificateholders in respect
of the Securities; or
(ii) take whatever action at law or in equity may appear
necessary or desirable in its judgment to enforce performance of any
obligation of the Company under the Related Documents.
(b) Unless otherwise expressly provided, no remedy herein
conferred upon or reserved is intended to be exclusive of any other available
remedy, but each remedy shall be cumulative and shall be in addition to other
remedies given under the Related Documents or existing at law or in equity. No
delay or failure to exercise any right or power accruing under any Related
Document upon the occurrence of any Event of Default or otherwise shall impair
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any such right or power or shall be construed to be a waiver thereof, but any
such right and power may be exercised from time to time and as often as may be
deemed expedient. In order to entitle Financial Security to exercise any
remedy reserved to Financial Security in this Article, it shall not be
necessary to give any notice, other than such notice as may be expressly
required in this Article.
(c) If any proceeding has been commenced to enforce any right or
remedy under this Agreement and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to Financial
Security, then and in every such case the parties hereto shall, subject to any
determination in such proceeding, be restored to their respective former
positions hereunder, and, thereafter, all rights and remedies of Financial
Security shall continue as though no such proceeding had been instituted.
(d) Financial Security shall have the right, to be exercised in
its complete discretion, to waive any covenant, Default or Event of Default by
a writing setting forth the terms, conditions and extent of such waiver signed
by Financial Security and delivered to the Company. Any such waiver may only
be effected in writing duly executed by Financial Security, and no other course
of conduct shall constitute a waiver of any provision hereof. Unless such
writing expressly provides to the contrary, any waiver so granted shall extend
only to the specific event or occurrence so waived and not to any other similar
event or occurrence.
ARTICLE VI
MISCELLANEOUS
Section 6.01. Amendments, Etc. This Agreement may be amended,
modified or terminated only by written instrument or written instruments signed
by the parties hereto. No act or course of dealing shall be deemed to
constitute an amendment, modification or termination hereof.
Section 6.02. Notices. All demands, notices and other communications
to be given hereunder shall be in writing (except as otherwise specifically
provided herein) and shall be mailed by registered mail or personally delivered
or telecopied to the recipient as follows:
(a) To Financial Security:
Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022
Attention: Surveillance Department
Re: Aames Capital Corporation, Mortgage Pass-
Through Certificates, Series 1996-C
Confirmation: (212) 826-0100
Telecopy Nos.: (212) 339-3518, (212) 339-3529
(in each case in which notice or other
communication to Financial Security refers to an
Event of Default, a claim on the Policy or with
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respect to which failure on the part of Financial
Security to respond shall be deemed to constitute
consent or acceptance, then a copy of such notice
or other communication should also be sent to the
attention of each of the General Counsel and the
Head--Financial Guaranty Group and shall be
marked to indicate "URGENT MATERIAL
ENCLOSED.")
(b) To the Company:
3731 Wilshire Boulevard
10th Floor
Los Angeles, California 90010
Attention: Gregory J. Witherspoon
Barbara Polsky, Esq.
with a copy to:
Andrews & Kurth L.L.P.
1701 Pennsylvania Avenue, N.W.
Suite 200
Washington, D.C. 20006
Attention: James A. Blalock III, Esq.
(c) To the Trustee:
Bankers Trust Company of California, N.A.
3 Park Plaza
Irvine, California 92714
Attention: Corporate Trust Department
A party may specify an additional or different address or addresses by
writing mailed or delivered to the other party as aforesaid. All such notices
and other communications shall be effective upon receipt.
Section 6.03. Payment Procedure. In the event of any payment by
Financial Security for which it is entitled to be reimbursed or indemnified as
provided above, the Company agrees to accept the voucher or other evidence of
payment as prima facie evidence of the propriety thereof and the liability
therefor to Financial Security. All payments to be made to Financial Security
under this Agreement shall be made to Financial Security in lawful currency of
the United States of America in immediately available funds to the account
number provided in the Premium Letter before 1:00 p.m. (New York, New York
time) on the date when due or as Financial Security shall otherwise direct by
written notice to the Company. In the event that the date of any payment to
Financial Security or the expiration of any time period hereunder occurs on a
day which is not a Business Day, then such payment or expiration of time period
shall be made or occur on the next succeeding Business Day with the same force
and effect as if such payment was made or time period expired on the scheduled
date of
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payment or expiration date. Payments to be made to Financial Security under
this Agreement shall bear interest at the Late Payment Rate from the date due
to the date paid.
Section 6.04. Severability. In the event that any provision of this
Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, the parties hereto agree that such holding shall not invalidate
or render unenforceable any other provision hereof. The parties hereto further
agree that the holding by any court of competent jurisdiction that any remedy
pursued by any party hereto is unavailable or unenforceable shall not affect in
any way the ability of such party to pursue any other remedy available to it.
Section 6.05. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Section 6.06. Consent to Jurisdiction. (a) THE PARTIES HERETO HEREBY
IRREVOCABLY SUBMIT TO THE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF NEW YORK AND ANY COURT IN THE STATE OF NEW YORK
LOCATED IN THE CITY AND COUNTY OF NEW YORK, AND ANY APPELLATE COURT FROM ANY
THEREOF, IN ANY ACTION, SUIT OR PROCEEDING BROUGHT AGAINST IT AND TO OR IN
CONNECTION WITH ANY OF THE RELATED DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
THEREUNDER OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND THE PARTIES
HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREE THAT ALL CLAIMS IN RESPECT
OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD OR DETERMINED IN SUCH NEW YORK
STATE COURT OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. THE
PARTIES HERETO AGREE THAT A FINAL JUDGMENT IN ANY SUCH ACTION, SUIT OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. TO THE EXTENT
PERMITTED BY APPLICABLE LAW, THE PARTIES HERETO HEREBY WAIVE AND AGREE NOT TO
ASSERT BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE IN ANY SUCH SUIT, ACTION OR
PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF
SUCH COURTS, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT
FORUM, THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER OR THAT THE
RELATED DOCUMENTS OR THE SUBJECT MATTER THEREOF MAY NOT BE LITIGATED IN OR BY
SUCH COURTS.
(b) To the extent permitted by applicable law, the parties hereto
shall not seek and hereby waive the right to any review of the judgment of any
such court by any court of any other nation or jurisdiction which may be called
upon to grant an enforcement of such judgment.
(c) The Company hereby irrevocably appoints and designates Andrews
& Kurth whose address is 425 Lexington Avenue, New York, New York 10017, as its
true and lawful
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attorney and duly authorized agent for acceptance of service of legal process.
The Company agrees that service of such process upon such Person shall
constitute personal service of such process upon it.
(d) Nothing contained in the Agreement shall limit or affect
Financial Security's right to serve process in any other manner permitted by
law or to start legal proceedings relating to any of the Related Documents
against the Company or its property in the courts of any jurisdiction.
Section 6.07. Consent of Financial Security. In the event that
Financial Security's consent is required under any of the Related Documents,
the determination whether to grant or withhold such consent shall be made by
Financial Security in its sole discretion without any implied duty towards any
other Person, except as otherwise expressly provided therein.
Section 6.08. Counterparts. This Agreement may be executed in
counterparts by the parties hereto, and all such counterparts shall constitute
one and the same instrument.
Section 6.09. Trial by Jury Waived. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION ARISING DIRECTLY OR INDIRECTLY OUT OF, UNDER OR IN CONNECTION
WITH ANY OF THE RELATED DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED
THEREUNDER. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT IT
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THE RELATED DOCUMENTS
TO WHICH IT IS A PARTY BY, AMONG OTHER THINGS, THIS WAIVER.
Section 6.10. Limited Liability. No recourse under any Related
Document shall be had against, and no personal liability shall attach to, any
officer, employee, director, affiliate or shareholder of any party hereto, as
such, by the enforcement of any assessment or by any legal or equitable
proceeding, by virtue of any statute or otherwise in respect of any of the
Related Documents, the Securities or the Policy, it being expressly agreed and
understood that each Related Document is solely a corporate obligation of each
party hereto, and that any and all personal liability, either at common law or
in equity, or by statute or constitution, of every such officer, employee,
director, affiliate or shareholder for breaches by any party hereto of any
obligations under any Related Document is hereby expressly waived as a
condition of and in consideration for the execution and delivery of this
Agreement.
Section 6.11. Entire Agreement. This Agreement, the Premium Letter
and the Policy set forth the entire agreement between the parties with respect
to the subject matter thereof, and this Agreement supersedes and replaces any
agreement or understanding that may have existed between the parties prior to
the date hereof in respect of such subject matter.
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IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Insurance and Indemnity Agreement, all as of the day and year
first above written.
FINANCIAL SECURITY ASSURANCE INC.
By /s/ Robert P. Cochran
----------------------------------------
Authorized Officer
AAMES CAPITAL CORPORATION
By /s/ Gregory J. Witherspoon
----------------------------------------
Title Executive Vice President - Finance
-------------------------------------
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APPENDIX I
DEFINITIONS
"Aames Financial" means Aames Financial Corporation
"Business Day" means any day other than (a) a Saturday or Sunday or
(b) a day on which banking institutions in New York or California are
authorized or obligated by law or executive order to be closed.
"Certificateholders" means registered holders of the Securities.
"Class R Certificates" means the Series 1996-C, Class R Certificates
issued under the Pooling and Servicing Agreement together with the Securities.
"Code" means the Internal Revenue Code of 1986, including, unless the
context otherwise requires, the rules and regulations thereunder, as amended
from time to time.
"Commission" means the Securities and Exchange Commission.
"Commonly Controlled Entity" means the Company and each entity,
whether or not incorporated, which is affiliated with the Company pursuant to
Section 414(b), (c), (m) or (o) of the Code.
"Company" means Aames Capital Corporation.
"Date of Issuance" means the date on which the Policy is issued as
specified therein.
"Default" means any event which results, or which with the giving of
notice or the lapse of time or both would result, in an Event of Default.
"ERISA" means the Employee Retirement Income Security Act of 1974,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.
"Event of Default" means any event of default specified in Section
5.01 of the Insurance Agreement.
"Expiration Date" means the final date of the Term of the Policy, as
specified in the Policy.
"Financial Security" means Financial Security Assurance Inc., a New
York stock insurance company, its successors and assigns.
"Financial Statements" means with respect to the Parent, the
consolidated balance sheets as of March 31, 1996 and the consolidated
statements of income, retained earnings and
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cash flows for the fiscal quarter then ended and the consolidated balance
sheets as of June 30, 1996 and the consolidated statements of income, retained
earnings and cash flows for the 12-month period then ended and the notes
thereto.
"Fiscal Agent" means the Fiscal Agent, if any, designated pursuant to
the terms of the Policy.
"Guaranty" means the guaranty letter dated September 17, 1996 from
Aames Financial.
"Indemnification Agreement" means the Indemnification Agreement dated
as of September 11, 1996 among Financial Security, the Company and Lehman
Brothers Inc., for itself and as representative of the other Underwriters with
respect to the Class A-1 Certificates, and Greenwich Capital Markets, Inc., for
itself and as representative of the other Underwriters with respect to the
Class A-2 Certificates, as the same may be amended from time to time.
"Insurance Agreement" means the Insurance and Indemnity Agreement
dated as of September 1, 1996, by and between Financial Security and the
Company, as the same may be amended from time to time.
"Investment Company Act" means the Investment Company Act of 1940,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.
"IRS" means the Internal Revenue Service.
"Late Payment Rate" means the lesser of (a) the then applicable rate
of interest on the Securities and (b) the maximum rate permissible under
applicable usury or similar laws limiting interest rates. The Late Payment
Rate shall be computed on the basis of the actual number of days elapsed over a
year of 360 days.
"Lien" means, as applied to the property or assets (or the income or
profits therefrom) of any Person, in each case whether the same is consensual
or nonconsensual or arises by contract, operation of law, legal process or
otherwise: (a) any mortgage, lien, pledge, attachment, charge, lease,
conditional sale or other title retention agreement, or other security interest
or encumbrance of any kind or (b) any arrangement, express or implied, under
which such property or assets are transferred, sequestered or otherwise
identified for the purpose of subjecting or making available the same for the
payment of debt or performance of any other obligation in priority to the
payment of the general, unsecured creditors of such Person.
"Material Adverse Change" means, (a) in respect of any Person, a
material adverse change in (i) the business, financial condition, results of
operations or properties of such Person or any of its Subsidiaries or (ii) the
ability of such Person to perform its obligations under any of the Related
Documents to which it is a party and (b) in respect of all or a portion of the
Mortgage Loans, a material adverse change in (i) the value or marketability of
such
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Mortgage Loans or (ii) the probability that amounts now or hereafter due in
respect of such Mortgage Loans will be collected on a timely basis.
"Moody's" means Moody's Investors Service, Inc., a Delaware
corporation, and any successor thereto, and, if such corporation shall for any
reason no longer perform the functions of a securities rating agency, "Moody's"
shall be deemed to refer to any other nationally recognized rating agency
designated by Financial Security.
"Mortgage Documents" means the Mortgage Notes, Mortgages, assignments
of Mortgages and other related documents required to be delivered to the
Trustee pursuant to Sections 2.01 and 2.02 of the Pooling and Servicing
Agreement.
"Mortgage Loan" has the meaning provided in the Pooling and Servicing
Agreement.
"Multiemployer Plan" means a multiemployer plan (within the meaning of
Section 4001(a)(3) of ERISA) in respect of which a Commonly Controlled Entity
makes contributions or has liability.
"Notice of Claim" means a Notice of Claim and Certificate in the form
attached as Exhibit A to Endorsement No. 1 to the Policy.
"Offering Document" means the Prospectus dated September 11, 1996 of
the Company in respect of the Securities and any amendment or supplement
thereto and any other offering document in respect of the Securities that makes
reference to the Policy.
"Parent" means Aames Financial.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
agency, corporation or instrumentality of the United States to which the duties
and powers of the Pension Benefit Guaranty Corporation are transferred.
"Person" means an individual, joint stock company, trust,
unincorporated association, joint venture, corporation, business or owner
trust, partnership or other organization or entity (whether governmental or
private).
"Plan" means any pension plan (other than a Multiemployer Plan)
covered by Title IV of ERISA, which is maintained by a Commonly Controlled
Entity or in respect of which a Commonly Controlled Entity has liability.
"Policy" means the financial guaranty insurance policy, including any
endorsements thereto, issued by Financial Security with respect to the
Securities, substantially in the form attached as Annex I to this Agreement.
"Pooling and Servicing Agreement" means the Pooling and Servicing
Agreement dated as of September 1, 1996 between the Company and the Trustee on
behalf of Financial Security
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and the Certificateholders, pursuant to which the Securities are to be issued
and the Mortgage Loans are to be serviced and administered, as the same may be
amended from time to time.
"Premium" means the premium payable in accordance with Section 3.02 of
the Insurance Agreement.
"Premium Letter" means the side letter between Financial Security and
the Company dated September 17, 1996 in respect of the premium payable by the
Company in consideration of the issuance of the Policy.
"Prospectus" means the form of prospectus, as supplemented, relating
to the Securities, as first filed with the Commission pursuant to Rule 424
under the Securities Act.
"Provided Documents" means the Related Documents and any documents,
agreements, instruments, schedules, certificates, statements, cash flow
schedules, number runs or other writings or data furnished to Financial
Security by or on behalf of the Company with respect to itself, its Parent, or
the Transaction.
"Registration Statement" means the registration statement on Form S-3
(No. 33-99458, including a form of prospectus, relating to the Securities, as
amended to the date hereof.
"Related Documents" means the Transaction Documents and the Guaranty.
"Restrictions on Transferability" means, as applied to the property or
assets (or the income or profits therefrom) of any Person, in each case whether
the same is consensual or nonconsensual or arises by contract, operation of
law, legal process or otherwise, any material condition to, or restriction on,
the ability of such Person or any transferee therefrom to sell, assign,
transfer or otherwise liquidate such property or assets in a commercially
reasonable time and manner or which would otherwise materially deprive such
Person or any transferee therefrom of the benefits of ownership of such
property or assets.
"Securities" means the $175,000,000 of Aames Mortgage Trust 1996-C,
Mortgage Pass-Through Certificates, Series 1996-C, Class A-1 and the
$350,000,000 of Aames Mortgage Trust 1996-C, Mortgage Pass-Through
Certificates, Series 1996-C, Class A-2, issued pursuant to the Pooling and
Servicing Agreement.
"Securities Act" means the Securities Act of 1933, including, unless
the context otherwise requires, the rules and regulations thereunder, as
amended from time to time.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.
"S&P" means Standard & Poor's, a division of The McGraw-Hill
Companies, Inc., and any successor thereto, and, if such entity shall for any
reason no longer perform the
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functions of a securities rating agency, "S&P" shall be deemed to refer to any
other nationally recognized rating agency designated by Financial Security.
"Subsidiary" means, with respect to any Person, any corporation of
which a majority of the outstanding shares of capital stock having ordinary
voting power for the election of directors is at the time owned by such Person
directly or through one or more Subsidiaries.
"Term of the Agreement" shall be determined as provided in Section
4.01 of the Insurance Agreement.
"Term of the Policy" has the meaning provided in the Policy.
"Transaction" means the transactions contemplated by the Related
Documents, including the transactions described in the Offering Document.
"Transaction Documents" means the Insurance Agreement, the
Indemnification Agreement, the Pooling and Servicing Agreement, the
Underwriting Agreement and the Premium Letter.
"Trigger Event" means the occurrence of any one of the following: (a)
an Event of Default under the Insurance Agreement has occurred and is
continuing, (b) the occurrence of an event of default by the Company, as
Servicer, contained in Section 8.01 of the Pooling and Servicing Agreement, (c)
any legal proceeding or binding arbitration is instituted with respect to the
Transaction, (d) any governmental or administrative investigation, action or
proceeding is instituted that would, if adversely decided, result in a Material
Adverse Change in respect of the Company or of a material portion of the
Mortgage Loans or (e) Financial Security pays a claim under the Policy.
"Trust" means the trust created under the Pooling and Servicing
Agreement.
"Trustee" means Bankers Trust Company of California, N.A., a national
banking association, as trustee under the Pooling and Servicing Agreement, and
any successor thereto as trustee under the Pooling and Servicing Agreement.
"Trust Fund" has the meaning provided in the Pooling and Servicing
Agreement.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.
"Underwriter" means each of Lehman Brothers Inc., Prudential
Securities Incorporated, Bear, Stearns & Co. Inc. and Greenwich Capital
Markets, Inc.
"Underwriting Agreement" means the Underwriting Agreement among Lehman
Brothers Inc., Greenwich Capital Markets, Inc. and the Company with respect to
the offer and sale of the Securities, as the same may be amended from time to
time.
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APPENDIX II
OPINIONS OF COUNSEL
There shall be delivered to Financial Security, Moody's and S&P
opinions of counsel as follows:
(i) opinions to the effect that the Securities have been duly
issued, and the Related Documents have been duly executed and delivered, and
each constitutes legal, valid and binding obligations, enforceable in
accordance with their respective terms;
(ii) opinions as to compliance with applicable securities laws,
including, but not limited to, opinions to the effect that:
(A) to the best of counsel's knowledge, no filing or
registration with or notice to or consent, approval, authorization or
order of any court or governmental authority or agency is required for
the consummation of the Transaction, except such as may be required
and have been obtained under the Securities Act and state securities
or "blue sky" laws;
(B) the Registration Statement is effective under the
Securities Act and, to the best of counsel's knowledge and
information, no stop order suspending the effectiveness of the
Registration Statement has been issued under the Securities Act or
proceedings therefor initiated or threatened by the Commission;
(C) neither the Trust nor the Trust Fund is required to
be registered under the Investment Company Act; and
(D) the Pooling and Servicing Agreement is not required
to be qualified under the Trust Indenture Act;
(iii) an opinion to the effect that (A) the Trustee is the owner of
the Mortgage Loans, holding good and marketable title thereto; (B) the Mortgage
Loans would not be included as part of the estate of the Company in the event
of any receivership or insolvency proceedings in respect thereof; and (C) the
transfer of the Mortgage Loans would be characterized by a court of competent
jurisdiction as a sale of such Mortgage Loans and not as a borrowing by the
Company or a relationship of joint ownership, partnership, joint venture or
similar arrangement;
(iv) an opinion to the effect that the transfer of the Mortgage
Loans to the Trust does not constitute either a fraudulent conveyance or a
preferential transfer by the Company;
(v) an opinion to the effect that (A) the Trust Fund qualifies as
a REMIC for federal income tax purposes and for state and local tax purposes;
and (B) the Trust Fund will not be subject to income, franchise or tangible or
intangible personal property taxes in the State of California; and
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(vi) an opinion to the effect that the Guaranty has been
authorized, executed and delivered by Aames Financial and is the legal, valid
and binding obligation of Aames Financial enforceable against Aames Financial
in accordance with its terms.
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<PAGE> 217
ANNEX I
TO
INSURANCE AND INDEMNITY AGREEMENT
FORM OF FINANCIAL GUARANTY INSURANCE POLICY
[Filed as Exhibit 4.2 to this Current Report on Form 8-K]
<PAGE> 218
APPENDIX A
TO INSURANCE AND INDEMNITY AGREEMENT
CONDITIONS PRECEDENT TO ISSUANCE OF THE POLICY
(a) Payment of Initial Premium and Expenses; Premium Letter.
Financial Security shall have been paid, by or on behalf of Company, a
nonrefundable Premium and shall have been reimbursed, by or on behalf of the
Company, for other fees and expenses identified in Section 3.02 below as
payable at closing, and Financial Security shall have received a fully executed
copy of the Premium Letter.
(b) Related Documents. Financial Security shall have received a
copy of each of the Related Documents, in form and substance satisfactory to
Financial Security, duly authorized, executed and delivered by each party
thereto. Without limiting the foregoing, the provisions of the Pooling and
Servicing Agreement relating to the payment to Financial Security of Premium
due on the Policy and the reimbursement to Financial Security of amounts paid
under the Policy shall be in form and substance acceptable to Financial
Security in its sole discretion.
(c) Certified Documents and Resolutions. Financial Security shall
have received a copy of (i) the certificate of incorporation and bylaws of the
Company and (ii) the resolutions of each of the Company's Board of Directors
authorizing the issuance of the Securities and the execution, delivery and
performance by the Company, as the case may be, of the Transaction Documents
and the transactions contemplated thereby, certified by the Secretary or an
Assistant Secretary of the Company, as the case may be, (which certificate
shall state that such certificate of incorporation, bylaws and resolutions are
in full force and effect without modification on the Date of Issuance).
(d) Incumbency Certificate. Financial Security shall have
received a certificate of the Secretary or an Assistant Secretary of the
Company certifying the name and signatures of the officers of the Company, as
the case may be, authorized to execute and deliver the Transaction Documents
and that shareholder consent to the execution and delivery of such documents is
not necessary.
(e) Representations and Warranties; Certificate. The
representations and warranties of the Company in the Insurance Agreement shall
be true and correct as of the Date of Issuance as if made on the Date of
Issuance and Financial Security shall have received a certificate of
appropriate officers of the Company to that effect.
(f) Opinions of Counsel. Financial Security shall have received
opinions of counsel addressed to Financial Security, Moody's and S&P in respect
of the Company, Aames Financial, the other parties to the Related Documents and
the Transaction in form and substance satisfactory to Financial Security,
addressing such matters as Financial Security may reasonably request, including
without limitation, the items set forth in Appendix II hereto, and the counsel
providing each such opinion shall have been instructed by its client to deliver
such opinion to the addressees thereof.
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(g) Approvals, Etc. Financial Security shall have received true
and correct copies of all approvals, licenses and consents, if any, including,
without limitation, the approval of the shareholders of the Company, required
in connection with the Transaction.
(h) No Litigation, Etc. No suit, action or other proceeding,
investigation, or injunction or final judgment relating thereto, shall be
pending or threatened before any court or governmental agency in which it is
sought to restrain or prohibit or to obtain damages or other relief in
connection with any of the Related Documents or the consummation of the
Transaction.
(i) Legality. No statute, rule, regulation or order shall have
been enacted, entered or deemed applicable by any government or governmental or
administrative agency or court which would make the transactions contemplated
by any of the Related Documents illegal or otherwise prevent the consummation
thereof.
(j) Satisfaction of Conditions of Underwriting Agreement. All
conditions in the Underwriting Agreement to the Underwriters' obligation to
purchase the Securities shall have been satisfied.
(k) Issuance of Ratings. Financial Security shall have received
confirmation that the risk secured by the Policy constitutes an investment
grade risk by S&P and an insurable risk by Moody's and that the Securities,
when issued, will be rated "AAA" by S&P and "Aaa" by Moody's.
(l) Delivery of Mortgage Documents. Financial Security shall have
received evidence satisfactory to it that: (i) delivery has been made to the
Trustee or to a Custodian of the Mortgage Documents required to be so delivered
pursuant to Section 2.01 of the Pooling and Servicing Agreement; and (ii) each
Mortgage Note is endorsed as provided in Section 2.01 of the Pooling and
Servicing Agreement.
(m) No Default. No Default or Event of Default shall have
occurred.
(n) Additional Items. Financial Security shall have received such
other documents, instruments, approvals or opinions requested by Financial
Security as may be reasonably necessary to effect the Transaction, including
but not limited to evidence satisfactory to Financial Security that all
conditions precedent, if any, in the Related Documents have been satisfied.
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<PAGE> 1
EXHIBIT 4.2
FINANCIAL FINANCIAL GUARANTY
SECURITY INSURANCE POLICY
ASSURANCE
Trust: As described in Endorsement No. 1 Policy No.: 50506-N
Certificates: $525,000,000 Original Principal Amount,
Aames Mortgage of Issuance: 9/17/96
Trust 1996-C, Mortgage Pass-Through Certificates, Series
1996-C, Class A-1 and Class A-2
FINANCIAL SECURITY ASSURANCE INC. ("Financial Security"), for
consideration received, hereby UNCONDITIONALLY AND IRREVOCABLY GUARANTEES to
the Trustee for the benefit of each Holder, subject only to the terms of this
Policy (which includes each endorsement hereto), the full and complete payment
of Guaranteed Distributions with respect to the Certificates of the Trust
referred to above.
For the further protection of each Holder, Financial Security
irrevocably and unconditionally guarantees payment of the amount of any
distribution of principal or interest with respect to the Certificates made
during the Term of this Policy to such Holder that is subsequently avoided in
whole or in part as a preference payment under applicable law.
Payment of any amount required to be paid under this Policy will be
made following receipt by Financial Security of notice as described in
Endorsement No. 1 hereto.
Financial Security shall be subrogated to the rights of each Holder to
receive distributions with respect to each Certificate held by such Holder to
the extent of any payment by Financial Security hereunder.
Except to the extent expressly modified by Endorsement No. 1 hereto,
the following terms shall have the meanings specified for all purposes of this
Policy. "Holder" means the registered owner of any Certificate as indicated on
the registration books maintained by or on behalf of the Trustee for such
purpose or, if the Certificate is in bearer form, the holder of the
Certificate. "Trustee", "Guaranteed Distributions" and "Term of this Policy"
shall have the meanings set forth in Endorsement No. 1 hereto.
This Policy sets forth in full the undertaking of Financial Security,
and shall not be modified, altered, or affected by any other agreement or
instrument, including any modification or amendment thereto. Except to the
extent expressly modified by an endorsement hereto, the premiums paid in
respect of this Policy are nonrefundable for any reason whatsoever. This
Policy may not be canceled or revoked during the Term of this Policy. An
acceleration payment shall not be due under this Policy unless such
acceleration is at the sole option of Financial Security. THIS POLICY IS NOT
COVERED BY THE PROPERTY/CASUALTY INSURANCE SECURITY FUND SPECIFIED IN ARTICLE
76 OF THE NEW YORK INSURANCE LAW.
In witness whereof, FINANCIAL SECURITY ASSURANCE INC. has caused this
Policy to be executed on its behalf by its Authorized Officer.
FINANCIAL SECURITY ASSURANCE INC.
By: /s/ Robert P. Cochran
----------------------------------
AUTHORIZED OFFICER
A subsidiary of Financial Assurance Holdings Ltd.
350 Park Avenue, New York, N.Y. 10022-6022
(212) 826-0100
Form 101NY (5/89)
<PAGE> 2
ENDORSEMENT NO. 1 TO
FINANCIAL GUARANTY INSURANCE POLICY
FINANCIAL SECURITY ASSURANCE INC.
TRUST: Established pursuant to the Pooling and Servicing Agreement dated as
of September 1, 1996 between Aames Capital Corporation, as Seller and
Servicer, and Bankers Trust Company of California, N.A., as Trustee
POLICY NO.: 50506-N
SECURITIES: $525,000,000 Aames Mortgage Trust 1996-C, Mortgage
Pass-Through Certificates, Series 1996-C, Class A-1 and Class A-2
DATE OF ISSUANCE: September 17, 1996
1. Definitions. For all purposes of this Policy, the terms
specified below shall have the meanings or constructions provided below.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings provided in the Pooling and Servicing Agreement unless the context
shall otherwise require.
"Business Day" means any day other than (i) a Saturday or Sunday, or
(ii) a day on which banking institutions in New York or California are
authorized or obligated by law or executive order to be closed.
"Class A-1 Insured Amount" means, as to any Distribution Date, the sum
of (i) the amount by which the Class A-1 Monthly Interest exceeds the amount of
Available Funds for Group I remaining after distribution of amounts pursuant to
clauses first and second in subsection (A) of Section 5.01 of the Pooling and
Servicing Agreement reduced by any amount of Class A-2 Overflow Distribution to
be applied in respect of the Class A-1 Monthly Interest for such Distribution
Date, (ii) the Class A-1 Coverage Deficit, if any, on such Distribution Date
reduced by any amount of Class A-2 Overflow Distribution to be applied to
reduce the Class A-1 Certificate Principal Balance for such Distribution Date
and (iii) the Preference Amount for the Class A-1 Certificates for such
Distribution Date.
"Class A-2 Insured Amount" means, as to any Distribution Date, the sum
of (i) the amount by which the Class A-2 Monthly Interest exceeds the amount of
Available Funds for Group II remaining after distribution of amounts pursuant
to clauses first and second in subsection (B) of Section 5.01 of the Pooling
and Servicing Agreement reduced by any amount of Class A-1 Overflow
Distribution to be applied in respect of the Class A-2 Monthly Interest for
such Distribution Date, (ii) the Class A-2 Coverage Deficit, if any, on such
Distribution Date reduced by any amount of Class A-1 Overflow Distribution to
be applied to reduce the Class A-2 Certificate Principal Balance for such
Distribution Date and (iii) the Preference Amount for the Class A-2
Certificates for such Distribution Date.
<PAGE> 3
"Guaranteed Distributions" means the Insured Amounts.
"Insured Amounts" means in the case of the Class A-1 Certificates, the
Class A-1 Insured Amount and, in the case of the Class A-2 Certificates, the
Class A-2 Insured Amount.
"Policy" means this Financial Guaranty Insurance Policy and includes each
endorsement thereto.
"Pooling and Servicing Agreement" means the Pooling and Servicing
Agreement dated as of September 1, 1996 between Aames Capital Corporation, as
Seller and Servicer, and Bankers Trust Company of California, N.A., as Trustee
"Receipt" and "Received" mean actual delivery to Financial Security
and to the Fiscal Agent (as defined below), if any, at or prior to 12:00 noon,
New York City time, on a Business Day; delivery either on a day that is not a
Business Day, or after 12:00 noon, New York City time, shall be deemed to be
Received on the next succeeding Business Day. If any notice or certificate
given hereunder by the Trustee is not in proper form or is not properly
completed, executed or delivered, it shall be deemed not to have been Received,
and Financial Security or its Fiscal Agent shall promptly so advise the Trustee
and the Trustee may submit an amended notice.
"Term of This Policy" means the period from and including the Date of
Issuance to and including the date on which (i) the Certificate Principal
Balance of all the Securities is zero, (ii) any period during which any payment
on the Securities could have been avoided in whole or in part as a preference
payment under applicable bankruptcy, insolvency, receivership or similar law
has expired, and (iii) if any proceedings requisite to avoidance as a
preference payment have been commenced prior to the occurrence of (i) and (ii),
a final and non-appealable order in resolution of each such proceeding has been
entered.
"Trustee" means Bankers Trust Company of California, N.A., in its
capacity as Trustee under the Pooling and Servicing Agreement and any successor
in such capacity.
2. Notices and Conditions to Payment in Respect of Insured
Amounts. Following Receipt by Financial Security of a notice and certificate
from the Trustee in the form attached as Exhibit A to this Endorsement,
Financial Security will pay any amount payable hereunder in respect of Insured
Amounts out of the funds of Financial Security on the later to occur of (a)
12:00 noon, New York City time, on the second Business Day following such
Receipt; and (b) 12:00 noon, New York City time, on the Distribution Date to
which such claim relates. Payments due hereunder in respect of Insured Amounts
will be disbursed by wire transfer of immediately available funds to the Policy
Payments Account established pursuant to the Trust Agreement or, if no such
Policy Payments Account has been established, to the Trustee.
-2-
<PAGE> 4
Policy No. 50506-N Date of Issuance: September 17, 1996
Financial Security shall be entitled to pay any amount hereunder in
respect of Insured Amounts, whether or not any notice and certificate shall
have been Received by Financial Security as provided above. Financial
Security's obligations hereunder in respect of Insured Amounts shall be
discharged to the extent funds are disbursed by Financial Security as provided
herein whether or not such funds are properly applied by the Trustee.
3. Notices and Conditions to Payment in Respect of Insured
Amounts Avoided as Preference Payments. If any Insured Amount is avoided as a
preference payment under applicable bankruptcy, insolvency, receivership or
similar law, Financial Security will pay such amount out of the funds of
Financial Security on the later of (a) the date when due to be paid pursuant to
the Order referred to below or (b) the first to occur of (i) the fourth
Business Day following Receipt by Financial Security from the Trustee of (A) a
certified copy of the order of the court or other governmental body which
exercised jurisdiction to the effect that the relevant Certificateholder is
required to return principal or interest distributed with respect to the
Security during the Term of this Policy because such distributions were
avoidable as preference payments under applicable bankruptcy law (the "Order"),
(B) a certificate of the relevant Certificateholder that the Order has been
entered and is not subject to any stay and (C) an assignment duly executed and
delivered by the relevant Certificateholder, in such form as is reasonably
required by Financial Security and provided to the relevant Certificateholder
by Financial Security, irrevocably assigning to Financial Security all rights
and claims of the relevant Certificateholder relating to or arising under the
Security against the debtor which made such preference payment or otherwise
with respect to such preference payment or (ii) the date of Receipt by
Financial Security from the Trustee of the items referred to in clauses (A),
(B) and (C) above if, at least four Business Days prior to such date of
Receipt, Financial Security shall have Received written notice from the Trustee
that such items were to be delivered on such date and such date was specified
in such notice. Such payment shall be disbursed to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the Order and not to the
Trustee or any Certificateholder directly (unless a Certificateholder has
previously paid such amount to the receiver, conservator, debtor-in-possession
or trustee in bankruptcy named in the Order, in which case such payment shall
be disbursed to the Trustee for distribution to such Certificateholder upon
proof of such payment reasonably satisfactory to Financial Security). In
connection with the foregoing, Financial Security shall have the rights
provided pursuant to Section 3.18(d) of the Pooling and Servicing Agreement.
4. Governing Law. This Policy shall be governed by and construed
in accordance with the laws of the State of New York, without giving effect to
the conflict of laws principles thereof.
5. Fiscal Agent. At any time during the Term of this Policy,
Financial Security may appoint a fiscal agent (the "Fiscal Agent") for purposes
of this Policy by written notice to the Trustee at the notice address specified
in the Pooling and Servicing Agreement specifying the name and notice address
of the Fiscal Agent. From and after the date of receipt of such notice by the
Trustee, (i) copies of all notices and documents required to be delivered to
Financial Security pursuant to this
3
<PAGE> 5
Policy No. 50506-N Date of Issuance: September 17, 1996
Policy shall be simultaneously delivered to the Fiscal Agent and to Financial
Security and shall not be deemed Received until Received by both and (ii) all
payments required to be made by Financial Security under this Policy may be
made directly by Financial Security or by the Fiscal Agent on behalf of
Financial Security. The Fiscal Agent is the agent of Financial Security only
and the Fiscal Agent shall in no event be liable to any Holder for any acts of
the Fiscal Agent or any failure of Financial Security to deposit, or cause to
be deposited, sufficient funds to make payments due under this Policy.
6. Waiver of Defenses. To the fullest extent permitted by
applicable law, Financial Security agrees not to assert, and hereby waives, for
the benefit of each Holder, all rights (whether by counterclaim, setoff or
otherwise) and defenses (including, without limitation, the defense of fraud),
whether acquired by subrogation, assignment or otherwise, to the extent that
such rights and defenses may be available to Financial Security to avoid
payment of its obligations under this Policy in accordance with the express
provisions of this Policy.
7. Notices. All notices to be given hereunder shall be in
writing (except as otherwise specifically provided herein) and shall be mailed
by registered mail or personally delivered or telecopied to Financial Security
as follows:
Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022
Attention: Senior Vice President
- Surveillance Department
Telecopy No.: (212) 339-3518
Confirmation: (212) 826-0100
Financial Security may specify a different address or addresses by writing
mailed or delivered to the Trustee.
8. Priorities. In the event any term or provision of the face
of this Policy is inconsistent with the provisions of this Endorsement, the
provisions of this Endorsement shall take precedence and shall be binding.
9. Exclusions From Insurance Guaranty Funds. This Policy is not
covered by the Property/Casualty Insurance Security Fund specified in Article
76 of the New York Insurance Law. This Policy is not covered by the Florida
Insurance Guaranty Association created under Part II of Chapter 631 of the
Florida Insurance Code. In the event Financial Security were to become
insolvent, any claims arising under this Policy are excluded from coverage by
the California Insurance Guaranty Association, established pursuant to Article
14.2 of Chapter 1 of Part 2 of Division 1 of the California Insurance Code.
4
<PAGE> 6
Policy No. 50506-N Date of Issuance: September 17, 1996
10. Surrender of Policy. The Holder shall surrender this Policy
to Financial Security for cancellation upon expiration of the Term of this
Policy.
IN WITNESS WHEREOF, FINANCIAL SECURITY ASSURANCE INC. has caused this
Endorsement No. 1 to be executed by its Authorized Officer.
FINANCIAL SECURITY ASSURANCE INC.
By: /s/ Robert P. Cochran
-----------------------------------
Authorized Officer
5
<PAGE> 7
Policy No. 50506-N Date of Issuance: September 17, 1996
Exhibit A
To Endorsement 1
NOTICE OF CLAIM AND CERTIFICATE
Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022
The undersigned, a duly authorized officer of Bankers Trust Company of
California, N.A. (the "Trustee"), hereby certifies to Financial Security
Assurance Inc. ("Financial Security"), with reference to Financial Guaranty
Insurance Policy No. 50506-N dated September 17, 1996, including Endorsement
No. 1 thereto, (the "Policy") issued by Financial Security in respect of Aames
Mortgage Trust 1996-C, Mortgage Pass- Through Certificates, Series 1996-C,
Class A-1 and Class A-2 that:
(i) The Trustee is the Trustee under the Pooling and Servicing Agreement
for the Holders.
(ii) With respect to the [Class A-1 Certificates] [Class
A-2 Certificates] for the Distribution Date in _______, the related
Insured Amount due under the Policy is $________.
(iii) The Trustee is making a claim under the Policy for
the Insured Amount to be applied to distributions of principal or
interest or both with respect to the Securities.
(iv) The Trustee agrees that, following receipt of funds
from Financial Security, it shall (a) hold such amounts in trust and
apply the same directly to the payment of Insured Amounts on the
Securities when due; (b) not apply such funds for any other purpose;
(c) not commingle such funds with other funds held by the Trustee and
(d) maintain an accurate record of such payments with respect to each
Security and the corresponding claim on the Policy and proceeds
thereof and, if the Security is required to be surrendered for such
payment, shall stamp on each such Security the legend "$[insert
applicable amount] paid by Financial Security and the balance hereof
has been cancelled and reissued" and then shall deliver such Security
to Financial Security.
(v) The Trustee, on behalf of the Certificateholders,
hereby assigns to Financial Security the rights of the
Certificateholders with respect to the Trust Fund to the extent of any
payments under the Policy, including, without limitation, any amounts
due to the
A-1
<PAGE> 8
Policy No. 50506-N Date of Issuance: September 17, 1996
Certificateholders in respect of securities law violations arising
from the offer and sale of the Trust Fund. The foregoing assignment
is in addition to, and not in limitation of, rights of subrogation
otherwise available to Financial Security in respect of such payments.
The Trustee shall take such action and deliver such instruments as may
be reasonably requested or required by Financial Security to
effectuate the purpose or provisions of this clause (v).
(vi) The Trustee, on its behalf and on behalf of the
Certificateholders, hereby appoints Financial Security as agent and
attorney-in-fact for the Trustee and each such Certificateholder in
any legal proceeding with respect to the Trust Fund. The Trustee
hereby agrees that Financial Security may at any time during the
continuation of any proceeding by or against the Seller under the
United States Bankruptcy Code or any other applicable bankruptcy,
insolvency, receivership, rehabilitation or similar law (an
"Insolvency Proceeding") direct all matters relating to such
Insolvency Proceeding, including without limitation, (A) all matters
relating to any claim in connection with an Insolvency Proceeding
seeking the avoidance as a preferential transfer of any payment with
respect to the Trust Fund (a "Preference Claim"), (B) the direction of
any appeal of any order relating to any Preference Claim at the
expense of Financial Security but subject to reimbursement as provided
in the Insurance and Indemnity Agreement, dated as of September 1,
1996, between the Company and Financial Security and (C) the posting
of any surety, supersedeas or performance bond pending any such
appeal. In addition, the Trustee hereby agrees that Financial
Security shall be subrogated to, and the Trustee on its behalf and on
behalf of each Certificateholder, hereby delegates and assigns, to the
fullest extent permitted by law, the rights of the Trustee and each
Certificateholder in the conduct of any Insolvency Proceeding,
including, without limitation, all rights of any party to an adversary
proceeding or action with respect to any court order issued in
connection with any such Insolvency Proceeding.
(vii) Payment should be made by wire transfer directed to
[the Policy Payments Account].
Unless the context otherwise requires, capitalized terms used in this
Notice of Claim and Certificate and not defined herein shall have the meanings
provided in the Policy.
A-2
<PAGE> 9
Policy No. 50506-N Date of Issuance: September 17, 1996
IN WITNESS WHEREOF, the Trustee has executed and delivered this Notice of Claim
and Certificate as of the _______ day of _____________________, _____.
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., as Trustee
By: ___________________________________
Title: ________________________________
- -------------------------------------------------------------------------------
For Financial Security or Fiscal Agent Use Only
Wire transfer sent _____________ by _____________________________________
Confirmation Number _____________________________________________________
A-3
<PAGE> 1
Exhibit 10.1
SUBSEQUENT TRANSFER AGREEMENT
Pursuant to this Subsequent Transfer Agreement, dated as of September
27, 1996, by and between AAMES CAPITAL CORPORATION (the "SELLER") and BANKERS
TRUST COMPANY OF CALIFORNIA, N.A., in its capacity as trustee for Aames Mortgage
Trust 1996-C (the "TRUSTEE"), and pursuant to that certain Pooling and Servicing
Agreement dated as of September 1, 1996 (the "POOLING AND SERVICING AGREEMENT"),
by and between Seller, as seller and servicer, and Trustee, as trustee, Seller
and Trustee agree to the sale by Seller and the purchase by Trustee of
additional mortgage loans (the "SUBSEQUENT MORTGAGE LOANS") to be included in
Group I or Group II as listed on the Additional Loan Schedule attached hereto as
Schedule A.
Capitalized terms used and not defined herein shall have their
respective meanings as set forth in the Pooling and Servicing Agreement.
Section 1. Purchase and Conveyance of Subsequent Mortgage Loans.
(a) Seller does hereby sell, transfer, assign, set over and convey
to Trustee:
(i) all right, title and interest of Seller in and to the
Subsequent Mortgage Loans owned by it and listed on Schedule A
hereto, including, without limitation, the related Mortgages,
Mortgage Files and Mortgage Notes, and all payments on, and
proceeds with respect to, such Subsequent Mortgage Loans
received on and after the Subsequent Cut-off Date except such
payments and proceeds as the Servicer is entitled to retain
pursuant to the express provisions of the Pooling and
Servicing Agreement;
(ii) all right, title and interest of Seller in the Mortgages
on the properties securing the Subsequent Mortgage Loans,
including any related Mortgaged Property acquired by or on
behalf of the Trust by foreclosure or deed in lieu of
foreclosure or otherwise;
(iii) all right, title and interest of Seller in and to any
rights in or proceeds from any insurance policies (including
title insurance policies) covering the Subsequent Mortgage
Loans, the related Mortgaged Properties or Mortgagors and any
amounts recovered from third parties in respect of any
Subsequent Mortgage Loans that became Liquidated Mortgage
Loans; and
(iv) the proceeds of all of the foregoing.
(b) With respect to each Subsequent Mortgaged Loan, Seller,
contemporaneously with the delivery of this Agreement, has delivered or caused
to be delivered to Trustee each item set forth in Section 2.01 of the Pooling
and Servicing Agreement. The transfer to Trustee by Seller of the Subsequent
Mortgage Loans identified on Schedule A hereto shall be absolute and is intended
by Seller, the Servicer, Trustee and the Certificateholders to constitute and to
be treated as a sale by Seller.
<PAGE> 2
(c) The expenses and costs related to the delivery of the Subsequent
Mortgage Loans, this Agreement and the Pooling and Servicing Agreement shall be
borne by Seller.
(d) Additional terms of the sale, including the purchase price, are set
forth on Attachments A and B hereto separated by Mortgage Loan Group and will be
specified in the Coverage Amount Identification Notice.
Section 2. Representations and Warranties; Conditions Precedent.
(a) Seller hereby affirms the representations and warrantees set forth
in Section 2.05 of the Pooling and Servicing Agreement that relate to the
Subsequent Mortgage Loans as of the date hereof. Seller hereby affirms that each
of the conditions set forth in Section 2.02 of the Pooling and Servicing
Agreement (except such conditions which are required to be satisfied as of the
end of the Commitment Period) is satisfied as of the date hereof.
(b) All terms and conditions of the Pooling and Servicing Agreement are
hereby ratified and confirmed; provided, however, that in the event of any
conflict, the provisions of this Agreement shall control over the conflicting
provisions of the Pooling and Servicing Agreement.
Section 3. Recordation of Agreement.
This Agreement is subject to recordation in all appropriate public
offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the Mortgaged Properties are situated, and
in any other appropriate public recording office or elsewhere, such recordation
to be effected by the Servicer and at its expense, in the event such recordation
materially and beneficially affects the interest of Certificateholders.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and all such counterparts shall constitute but one
and the same instrument.
Section 4. Governing Law.
This Agreement shall be construed in accordance with the laws of the
State of California and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws.
Section 5. Successors and Assigns.
This Agreement shall inure to the benefit of and be binding upon Seller
and Trustee and their respective successors and assigns.
2
<PAGE> 3
AAMES CAPITAL CORPORATION,
as Seller
By: /s/ Gregory J. Witherspooon
------------------------------------
Name: Gregory J. Witherspoon
Title: Executive Vice President - Finance
and Chief Financial Officer
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., as
Trustee for Aames Mortgage Trust 1996-C
By: /s/ Erin Deegan
------------------------------------
Name: Erin Deegan
Title: Assistant Vice President
3
<PAGE> 4
State of California )
) ss:
County of Los Angeles )
On this 27th day of September, 1996, before me, a notary public in and
for said County and State, personally appeared GREGORY J. WITHERSPOON,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he executed same in his authorized capacity, and that by
his signature on the instrument the person, or the entity upon behalf of which
the person acted, executed the instrument.
WITNESS my hand and official seal.
/s/ Katherine L. Murray
-------------------------
Notary Public
[Notarial Seal]
4
<PAGE> 5
State of California )
) ss:
County of Los Angeles )
On this 27th day of September, 1996, before me, a notary public in and
for said County and State, personally appeared ERIN DEEGAN, personally known to
me (or proved to me on the basis of satisfactory evidence) to be the person
whose name is subscribed to the within instrument and acknowledged to me that
she executed same in her authorized capacity, and that by her signature on the
instrument the person, or the entity upon behalf of which the person acted,
executed the instrument.
WITNESS my hand and official seal.
/s/ Whitney Knox
--------------------
Notary Public
[Notarial Seal]
5
<PAGE> 6
ATTACHMENT A
<TABLE>
<S> <C>
Subsequent Transfer Date: N/A
Subsequent Cut-off Date: N/A
Aggregate of the Principal Balances of
Group I Subsequent Mortgage Loans: -0-
Aggregate of the Purchase Prices of Group I
Subsequent Mortgage Loans: -0-
Number of Subsequent Mortgage Loans
in Group I: -0-
</TABLE>
A-1
<PAGE> 7
ATTACHMENT B
<TABLE>
<S> <C>
Subsequent Transfer Date: September 27, 1996
Subsequent Cut-off Date: September 27, 1996
Aggregate of the Principal Balances of
Group II Subsequent Mortgage Loans: $21,710,408.34
Aggregate of the Purchase Prices of Group II
Subsequent Mortgage Loans: $20,624,887.92
Number of Subsequent Mortgage Loans
in Group II: 243
</TABLE>
B-1
<PAGE> 8
SCHEDULE A
MORTGAGE LOAN SCHEDULE
(Omitted from this Current Report on Form 8-K)
<PAGE> 1
Exhibit 10.2
SUBSEQUENT TRANSFER AGREEMENT
Pursuant to this Subsequent Transfer Agreement, dated as of October 4,
1996, by and between AAMES CAPITAL CORPORATION (the "SELLER") and BANKERS TRUST
COMPANY OF CALIFORNIA, N.A., in its capacity as trustee for Aames Mortgage Trust
1996-C (the "TRUSTEE"), and pursuant to that certain Pooling and Servicing
Agreement dated as of September 1, 1996 (the "POOLING AND SERVICING AGREEMENT"),
by and between Seller, as seller and servicer, and Trustee, as trustee, Seller
and Trustee agree to the sale by Seller and the purchase by Trustee of
additional mortgage loans (the "SUBSEQUENT MORTGAGE LOANS") to be included in
Group I or Group II as listed on the Additional Loan Schedule attached hereto as
Schedule A.
Capitalized terms used and not defined herein shall have their
respective meanings as set forth in the Pooling and Servicing Agreement.
Section 1. Purchase and Conveyance of Subsequent Mortgage Loans.
(a) Seller does hereby sell, transfer, assign, set over and convey to
Trustee:
(i) all right, title and interest of Seller in and to the
Subsequent Mortgage Loans owned by it and listed on Schedule A
hereto, including, without limitation, the related Mortgages,
Mortgage Files and Mortgage Notes, and all payments on, and
proceeds with respect to, such Subsequent Mortgage Loans
received on and after the Subsequent Cut-off Date except such
payments and proceeds as the Servicer is entitled to retain
pursuant to the express provisions of the Pooling and
Servicing Agreement;
(ii) all right, title and interest of Seller in the Mortgages
on the properties securing the Subsequent Mortgage Loans,
including any related Mortgaged Property acquired by or on
behalf of the Trust by foreclosure or deed in lieu of
foreclosure or otherwise;
(iii) all right, title and interest of Seller in and to any
rights in or proceeds from any insurance policies (including
title insurance policies) covering the Subsequent Mortgage
Loans, the related Mortgaged Properties or Mortgagors and any
amounts recovered from third parties in respect of any
Subsequent Mortgage Loans that became Liquidated Mortgage
Loans; and
(iv) the proceeds of all of the foregoing.
(b) With respect to each Subsequent Mortgaged Loan, Seller,
contemporaneously with the delivery of this Agreement, has delivered or caused
to be delivered to Trustee each item set forth in Section 2.01 of the Pooling
and Servicing Agreement. The transfer to Trustee by Seller of the Subsequent
Mortgage Loans identified on Schedule A hereto shall be absolute and is intended
by Seller, the Servicer, Trustee and the Certificateholders to constitute and to
be treated as a sale by Seller.
<PAGE> 2
(c) The expenses and costs related to the delivery of the Subsequent
Mortgage Loans, this Agreement and the Pooling and Servicing Agreement shall be
borne by Seller.
(d) Additional terms of the sale, including the purchase price, are set
forth on Attachments A and B hereto separated by Mortgage Loan Group and will be
specified in the Coverage Amount Identification Notice.
Section 2. Representations and Warranties; Conditions Precedent.
(a) Seller hereby affirms the representations and warrantees set forth
in Section 2.05 of the Pooling and Servicing Agreement that relate to the
Subsequent Mortgage Loans as of the date hereof. Seller hereby affirms that each
of the conditions set forth in Section 2.02 of the Pooling and Servicing
Agreement (except such conditions which are required to be satisfied as of the
end of the Commitment Period) is satisfied as of the date hereof.
(b) All terms and conditions of the Pooling and Servicing Agreement are
hereby ratified and confirmed; provided, however, that in the event of any
conflict, the provisions of this Agreement shall control over the conflicting
provisions of the Pooling and Servicing Agreement.
Section 3. Recordation of Agreement.
This Agreement is subject to recordation in all appropriate public
offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the Mortgaged Properties are situated, and
in any other appropriate public recording office or elsewhere, such recordation
to be effected by the Servicer and at its expense, in the event such recordation
materially and beneficially affects the interest of Certificateholders.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and all such counterparts shall constitute but one
and the same instrument.
Section 4. Governing Law.
This Agreement shall be construed in accordance with the laws of the
State of California and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws.
Section 5. Successors and Assigns.
This Agreement shall inure to the benefit of and be binding upon Seller
and Trustee and their respective successors and assigns.
2
<PAGE> 3
AAMES CAPITAL CORPORATION,
as Seller
By: /s/ Luis Markiz
-----------------------------
Name:Luis Markiz
Title:Assistant Vice President and Controller
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., as
Trustee for Aames Mortgage Trust 1996-C
By: /s/ Erin Deegan
-----------------------------
Name: Erin Deegan
Title: Assistant Vice President
3
<PAGE> 4
State of California )
) ss:
County of Los Angeles )
On this 8th day of October, 1996, before me, a notary public in and for
said County and State, personally appeared LUIS MARKIZ, personally known to me
(or proved to me on the basis of satisfactory evidence) to be the person whose
name is subscribed to the within instrument and acknowledged to me that he
executed same in his authorized capacity, and that by his signature on the
instrument the person, or the entity upon behalf of which the person acted,
executed the instrument.
WITNESS my hand and official seal.
/s/ Katherine L. Murray
-------------------------
Notary Public
[Notarial Seal]
4
<PAGE> 5
State of California )
) ss:
County of Los Angeles )
On this 4th day of October, 1996, before me, a notary public in and for
said County and State, personally appeared ERIN DEEGAN, personally known to me
(or proved to me on the basis of satisfactory evidence) to be the person whose
name is subscribed to the within instrument and acknowledged to me that she
executed same in her authorized capacity, and that by her signature on the
instrument the person, or the entity upon behalf of which the person acted,
executed the instrument.
WITNESS my hand and official seal.
/s/ Whitney Knox
-------------------------
Notary Public
[Notarial Seal]
5
<PAGE> 6
ATTACHMENT A
<TABLE>
<S> <C>
Subsequent Transfer Date: October 4, 1996
Subsequent Cut-off Date: October 4, 1996
Aggregate of the Principal Balances of
Group I Subsequent Mortgage Loans: $30,137,919.11
Aggregate of the Purchase Prices of Group I
Subsequent Mortgage Loans: $28,631,023.15
Number of Subsequent Mortgage Loans
in Group I: 662
</TABLE>
A-1
<PAGE> 7
ATTACHMENT B
<TABLE>
<S> <C>
Subsequent Transfer Date: October 4, 1996
Subsequent Cut-off Date: October 4, 1996
Aggregate of the Principal Balances of
Group II Subsequent Mortgage Loans: $39,542,588.37
Aggregate of the Purchase Prices of Group II
Subsequent Mortgage Loans: $37,565,458.95
Number of Subsequent Mortgage Loans
in Group II: 413
</TABLE>
B-1
<PAGE> 8
SCHEDULE A
MORTGAGE LOAN SCHEDULE
(Omitted from this Current Report of Form 8-K)
