<PAGE> 1
=====================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)
JUNE 27, 1996
AAMES CAPITAL CORPORATION
---------------------------------------------------------
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
CALIFORNIA 33-99458 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)
</TABLE>
(213) 351-6100
--------------------------------------------------
Registrant's telephone number, including area code
NO CHANGE
--------------------------------------------------------------
(Former name or former address, if changed since last report)
=====================================
<PAGE> 2
Item 5. Other Events (1)
Aames Capital Corporation (the "SPONSOR") registered
up to $1,104,923,164 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.
33-99458) (as amended, the "REGISTRATION STATEMENT"). Pursuant to the
Registration Statement, the Sponsor filed a Prospectus Supplement,
dated June 20, 1996, and a Prospectus, dated June 20, 1996
(collectively, the "PROSPECTUS"), relating to $300,035,000 aggregate
principal amount of Mortgage Pass-Through Certificates, Series 1996-B
(the "CERTIFICATES"), issued by Aames Mortgage Trust 1996-B (the
"TRUST") on June 27, 1996 (the "CLOSING DATE"). The Certificates
consist of the Class A-1A, Class A-1B, Class A-1C, Class A-1D 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 June 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 $43,334,416.35
(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 on June 27, 1996 (the "SUBSEQUENT TRANSFER
DATE") 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"). Approximately $20,540,702.27 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 $22,793,714.08 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 the Subsequent Transfer Date, the Trustee, on
behalf of the Trust, and the Sponsor entered into the Subsequent
Transfer Agreement, dated as of June 27, 1996 (the "SUBSEQUENT
TRANSFER AGREEMENT"). Pursuant to the Subsequent Transfer Agreement,
the Trust purchased $20,539,034.26 aggregate principal balance of
Subsequent Mortgage Loans to be included in the Fixed Rate Group for a
purchase price of $19,512,082.55 and $22,791,423.03 aggregate
principal balance of Subsequent Mortgage Loans to be included in the
Adjustable Rate Group for a purchase price of $21,651,851.88.
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 33-99458.
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 4,159 Mortgage Loans and has an aggregate principal
balance of $303,704,806.84. 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 $120,033,601.72. Approximately 91.97%,
6.23% and 1.80% 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 0.60% 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 85.70% and the
original weighted average Combined Loan-to-Value Ratio of all Mortgage
Loans in the Fixed Rate Group was approximately 63.45%. The maximum
and average loan sizes of the Mortgage Loans in the Fixed Rate Group
were $337,936.30 and approximately $54,069.19, 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 $124,558.38.
The interest rates borne by the Mortgage Loans (each,
a "MORTGAGE INTEREST RATE") in the Fixed Rate Group ranged from 8.625%
per annum to 17.50% per annum. The weighted average Mortgage Interest
Rate of the Mortgage Loans in the Fixed Rate Group was approximately
11.81% per annum.
The weighted average remaining term to stated
maturity of the Mortgage Loans in the Fixed Rate Group was
approximately 283 months. The weighted average original term to
maturity of the Mortgage Loans in the Fixed Rate Group was
approximately 285 months. The weighted average seasoning of the
Mortgage Loans in the Fixed Rate Group was less than two months.
Based on the Aggregate Principal Balance of the
Mortgage Loans in the Fixed Rate Group, 86.68% 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 13.32% of the Mortgage Loans in the Fixed Rate Group are
Balloon Loans which will provide for regular monthly payments of
principal and interest computed on the basis of an amortization term
of 360 months (or 180 months in the case of two of the Balloon Loans
and 216 months in the case of one Balloon Loan) 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 $183,671,205.12. Approximately 91.77%, 6.17% and
2.05% 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 0.53% 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 85.00% and the original weighted average
Combined Loan-to-Value Ratio of all Mortgage Loans in the Adjustable Rate Group
was approximately 66.40% . The maximum and average loan size of the Mortgage
Loans in the Adjustable Rate Group were $973,343.47 and $94,724.71
respectively. The average appraised value of the Mortgaged Properties was
$146,738.38.
The Mortgage Loans in the Adjustable Rate Group bear interest rates
that, after a period of approximately six months, two years, three years or
five years following 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 applicable next 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 was approximately 11.14% per
annum. The Mortgage Loans in the Adjustable Rate Group had a weighted average
gross margin of approximately 7.01%. The gross margin for the Mortgage Loans in
the Adjustable Rate Group ranged from 3.625% to 11.11%. 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 1.0% to 2.0%
above the interest rate in effect for such Mortgage Loan prior to such
adjustment. In addition, each Mortgage Loan in the Adjustable Rate Group that
has an initial adjustment date that is approximately two years, three years or
five years from its date of origination has an initial rate adjustment cap of
1.5% to 3.0% of the related initial Mortgage Interest Rate. 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 2.0% above the
rate in effect for such Mortage Loan prior to such adjustment. The maximum
rates at which interest may accrue on the Mortgage Loans in the Adjustable Rate
Group (the "MAXIMUM RATES") ranged from 12.95% per annum to 24.65% per annum.
The Mortgage Loans in the Adjustable Rate Group have a weighted average Maximum
Rate of approximately 17.48% per annum. The minimum rates at which interest may
accrue on the Mortgage Loans in the Adjustable Rate Group (the "MINIMUM RATES")
ranged from 5.55% per annum to 18.375% per annum. The weighted average Minimum
Rate was approximately 11.13% per annum.
Mortgage Loans in the Adjustable Rate Group have original terms to
maturity of up to 30 years.
The weighted average remaining term to stated maturity of the Mortgage
Loans in the Adjustable Rate Group was less than 356 months. The weighted
average original term to maturity of the Mortgage Loans in the Adjustable
Rate Group was less than 359 months. The weighted average seasoning of the
Mortgage Loans in the Adjustable Rate Group was approximately three months.
None of the Mortgage Loans in the Adjustable Rate Group is a Balloon
Loan.
Page 4
<PAGE> 5
FIXED RATE GROUP
TYPE OF MORTGAGED PROPERTY
<TABLE>
<CAPTION>
% OF TOTAL BY
NUMBER OF AGGREGATE AGGREGATE
MORTGAGE PRINCIPAL PRINCIPAL
PROPERTY TYPE LOANS BALANCE BALANCE
- ------------- ----- ------- -------
<S> <C> <C> <C>
SINGLE FAMILY 2,031 $110,398,690.33 91.97%
TWO- TO FOUR-FAMILY 130 7,477,015.63 6.23
CONDOMINIUM 59 2,157,895.76 1.80
------ -------------- ------
Total 2,220 $120,033,601.72 100.00%
====== ============== ======
</TABLE>
FIXED RATE GROUP
OCCUPANCY STATUS
<TABLE>
<CAPTION>
% OF TOTAL BY
NUMBER OF AGGREGATE AGGREGATE
OCCUPANCY MORTGAGE PRINCIPAL PRINCIPAL
STATUS LOANS BALANCE BALANCE
------ ----- ------- -------
<S> <C> <C> <C>
OWNER OCCUPIED/PRIMARY RESIDENCE 2,034 $110,526,032.10 92.08%
NON-OWNER OCCUPIED/INVESTMENT PROPERTY 186 9,507,569.62 7.92
------ -------------- ------
Total 2,220 $120,033,601.72 100.00%
====== ============== ======
</TABLE>
FIXED RATE GROUP
PRIORITY OF LIEN
<TABLE>
<CAPTION>
% OF TOTAL BY
NUMBER OF AGGREGATE AGGREGATE
MORTGAGE PRINCIPAL PRINCIPAL
LIEN PRIORITY LOANS BALANCE BALANCE
----- ------- -------
<S> <C> <C> <C>
FIRST LIEN 1,596 $101,427,926.19 84.50%
SECOND LIEN 616 18,434,571.46 15.36
THIRD LIEN 8 71,104.07 0.14
------ -------------- ------
Total 2,220 $120,033,601.72 100.00%
====== ============== ======
</TABLE>
Page 5
<PAGE> 6
FIXED RATE GROUP
TYPE OF LOAN BY AMORTIZATION METHOD
<TABLE>
<CAPTION>
% OF TOTAL BY
NUMBER OF AGGREGATE AGGREGATE
MORTGAGE PRINCIPAL PRINCIPAL
LOAN TYPE LOANS BALANCE BALANCE
- --------- ----- ------- -------
<S> <C> <C> <C>
FULLY AMORTIZING 1,940 $104,047,326.22 86.68%
PARTIALLY AMORTIZING 280 15,986,275.50 13.32
----- -------------- ------
Total 2,220 $120,033,601.72 100.00%
===== ============== ======
</TABLE>
FIXED RATE GROUP
COMBINED LOAN-TO-VALUE RATIOS
<TABLE>
<CAPTION>
% OF TOTAL BY
RANGE OF COMBINED NUMBER OF AGGREGATE AGGREGATE
LOAN-TO-VALUE MORTGAGE PRINCIPAL PRINCIPAL
RATIOS (%) LOANS BALANCE BALANCE
---------- ----- ------- -------
<S> <C> <C> <C>
5.00%-09.999% 4 $ 50,239.25 0.04%
10.00%-14.999% 25 499,001.28 0.42
15.00%-19.999% 32 747,621.77 0.62
20.00%-24.999% 39 854,982.87 0.71
25.00%-29.999% 53 1,930,274.56 1.61
30.00%-34.999% 60 1,745,611.89 1.45
35.00%-39.999% 73 2,953,938.43 2.46
40.00%-44.999% 79 3,148,662.98 2.62
45.00%-49.999% 92 4,083,208.02 3.40
50.00%-54.999% 135 6,604,118.44 5.50
55.00%-59.999% 184 9,405,320.67 7.84
60.00%-64.999% 328 17,179,477.98 14.31
65.00%-69.999% 485 27,616,901.85 23.01
70.00%-74.999% 398 22,408,513.27 18.67
75.00%-79.999% 153 13,018,210.36 10.85
80.00%-84.999% 79 7,757,526.71 6.46
85.00%-89.999% 1 29,991.39 0.02
------ -------------- ------
Total 2,220 $120,033,601.72 100.00%
======== ============== =======
</TABLE>
Page 6
<PAGE> 7
FIXED RATE GROUP
ORIGINAL TERM TO MATURITY
<TABLE>
<CAPTION>
% OF TOTAL BY
RANGE OF NUMBER OF AGGREGATE AGGREGATE
ORIGINAL TERMS MORTGAGE PRINCIPAL PRINCIPAL
TO MATURITY (MONTHS) LOANS BALANCE BALANCE
------------------- ----- ------- -------
<S> <C> <C> <C>
0- 59 0 $ 0.00 0.00%
60- 71 31 670,308.86 0.56
72- 83 9 122,606.67 0.10
84- 95 25 572,282.24 0.48
96-107 6 78,047.82 0.07
108-119 2 52,300.00 0.04
120-131 149 3,365,531.18 2.80
132-143 0 0.00 0.00
144-155 3 47,500.00 0.04
156-179 0 0.00 0.00
180-191 991 41,989,680.82 34.98
192-203 1 42,752.99 0.04
204-239 0 0.00 0.00
240-251 29 1,714,538.51 1.43
252-299 0 0.00 0.00
300-311 5 367,628.83 0.31
312-359 0 0.00 0.00
360 969 71,010,423.80 59.16
----- -------------- ------
Total 2,220 $120,033,601.72 100.00%
===== ============== ======
</TABLE>
Page 7
<PAGE> 8
FIXED RATE GROUP
REMAINING TERM TO MATURITY
<TABLE>
<CAPTION>
% OF TOTAL BY
RANGE OF NUMBER OF AGGREGATE AGGREGATE
REMAINING TERMS MORTGAGE PRINCIPAL PRINCIPAL
TO MATURITY (MONTHS) LOANS BALANCE BALANCE
- -------------------- ----- ------- -------
<S> <C> <C> <C>
0- 11 5 $ 163,564.19 0.14%
12- 23 6 93,795.93 0.08
24- 35 5 70,805.03 0.06
36- 47 5 192,789.38 0.16
48- 59 10 207,185.29 0.17
60- 71 27 476,072.14 0.40
72- 83 18 336,240.11 0.28
84- 95 16 319,165.68 0.27
96-107 5 75,498.50 0.06
108-119 51 1,102,032.94 0.92
120-131 95 2,531,220.41 2.11
132-143 15 457,627.53 0.38
144-155 4 63,200.24 0.05
156-167 0 0.00 0.00
168-179 497 22,956,078.92 19.12
180-191 460 17,952,000.01 14.96
192-215 0 0.00 0.00
216-227 1 31,022.59 0.03
228-239 12 694,672.79 0.58
240-251 15 963,600.00 0.80
252-287 0 0.00 0.00
288-299 1 97,728.83 0.08
300-311 4 269,900.00 0.22
312-323 0 0.00 0.00
324-335 2 239,697.66 0.20
336-347 3 156,751.38 0.13
348-359 439 30,632,686.96 25.52
360 524 39,950,265.21 33.28
----- -------------- ------
Total 2,220 $120,033,601.72 100.00%
===== ============== ======
</TABLE>
Page 8
<PAGE> 9
FIXED RATE GROUP
RANGE OF MORTGAGE INTEREST RATES
<TABLE>
<CAPTION>
% OF TOTAL BY
NUMBER OF AGGREGATE AGGREGATE
RANGE OF MORTGAGE MORTGAGE PRINCIPAL PRINCIPAL
INTEREST RATES (%) LOANS BALANCE BALANCE
------------------ ----- ------- -------
<S> <C> <C> <C>
6.00%- 8.499% 0 $ 0.00 0.00%
8.50%- 8.999% 57 4,460,291.89 3.72
9.00%- 9.499% 48 3,731,457.94 3.11
9.50%- 9.999% 251 17,000,198.30 14.16
10.00%-10.499% 137 8,637,615.29 7.20
10.50%-10.999% 245 13,763,681.17 11.47
11.00%-11.499% 202 10,831,658.40 9.02
11.50%-11.999% 247 12,162,069.20 10.13
12.00%-12.499% 157 7,691,705.16 6.41
12.50%-12.999% 204 9,594,621.64 7.99
13.00%-13.499% 141 6,169,505.53 5.14
13.50%-13.999% 177 7,669,910.16 6.39
14.00%-14.499% 93 4,428,655.73 3.69
14.50%-14.999% 95 5,319,543.07 4.43
15.00%-15.499% 49 3,274,094.60 2.73
15.50%-15.999% 57 2,945,881.00 2.45
16.00%-16.499% 28 1,457,452.57 1.21
16.50%-16.999% 27 772,494.82 0.64
17.00%+ 5 122,765.25 0.10
- -------------- ------
Total 2,220 $120,033,601.72 100.00%
===== ============== ======
</TABLE>
Page 9
<PAGE> 10
FIXED RATE GROUP
CUT-OFF DATE PRINCIPAL BALANCE
<TABLE>
<CAPTION>
% OF TOTAL BY
RANGE OF NUMBER OF AGGREGATE AGGREGATE
CUT-OFF DATE MORTGAGE PRINCIPAL PRINCIPAL
PRINCIPAL BALANCES($) LOANS BALANCE BALANCE
--------------------- ------- -------
<S> <C> <C> <C>
Less than 10,000.00 22 $ 173,146.72 0.14%
10,000.00- 19,999.99 351 5,309,183.33 4.42
20,000.00- 29,999.99 350 8,629,007.76 7.19
30,000.00- 39,999.99 305 10,737,114.68 8.95
40,000.00- 49,999.99 243 10,910,448.99 9.09
50,000.00- 59,999.99 230 12,560,798.01 10.46
60,000.00- 69,999.99 140 9,028,648.64 7.52
70,000.00- 79,999.99 130 9,638,518.63 8.03
80,000.00- 89,999.99 110 9,346,878.18 7.79
90,000.00- 99,999.99 84 7,966,596.99 6.64
100,000.00-109,999.99 62 6,496,218.13 5.41
110,000.00-119,999.99 40 4,585,183.90 3.82
120,000.00-129,999.99 35 4,339,726.39 3.62
130,000.00-139,999.99 21 2,830,019.27 2.36
140,000.00-149,999.99 24 3,505,118.06 2.92
150,000.00-159,999.99 17 2,644,891.35 2.20
160,000.00-169,999.99 16 2,637,676.68 2.20
170,000.00-179,999.99 6 1,046,914.20 0.87
180,000.00-189,999.99 8 1,467,765.44 1.22
190,000.00-199,999.99 3 581,028.82 0.48
200,000.00 or more 23 5,598,717.55 4.66
-- ------------ ------
Total 2,220 $120,033,601.72 100.00%
===== ============== ======
</TABLE>
Page 10
<PAGE> 11
FIXED RATE GROUP
GEOGRAPHICAL DISTRIBUTION OF MORTGAGED PROPERTIES
<TABLE>
<CAPTION>
% OF TOTAL BY
NUMBER OF AGGREGATE AGGREGATE
MORTGAGE PRINCIPAL PRINCIPAL
STATE LOANS BALANCE BALANCE
- ----- ----- ------- -------
<S> <C> <C> <C>
ARIZONA 131 $ 7,072,579.44 5.89%
CALIFORNIA 702 41,796,585.53 34.82
COLORADO 112 5,162,738.34 4.30
CONNECTICUT 9 736,597.42 0.61
DISTRICT OF COLUMBIA 6 533,175.67 0.44
FLORIDA 174 9,557,113.77 7.96
GEORGIA 11 568,358.24 0.47
HAWAII 2 258,000.00 0.21
IDAHO 3 210,073.17 0.18
ILLINOIS 206 9,662,679.96 8.05
INDIANA 77 2,540,076.92 2.12
KANSAS 1 35,000.00 0.03
LOUISIANA 2 98,005.63 0.08
MAINE 2 113,718.60 0.09
MARYLAND 25 1,689,922.97 1.41
MASSACHUSETTS 9 969,137.15 0.81
MICHIGAN 67 2,795,514.43 2.33
MISSOURI 26 988,481.47 0.82
MONTANA 1 59,987.33 0.05
NEVADA 42 2,167,045.66 1.81
NEW JERSEY 22 1,954,502.37 1.63
NEW MEXICO 3 127,100.00 0.11
NEW YORK 62 5,112,748.25 4.26
NORTH CAROLINA 20 773,625.20 0.64
OHIO 27 1,335,808.63 1.11
OKLAHOMA 2 160,046.38 0.13
OREGON 116 5,857,744.86 4.88
PENNSYLVANIA 59 2,095,106.08 1.75
RHODE ISLAND 1 50,408.58 0.04
SOUTH CAROLINA 1 25,993.66 0.02
TEXAS 19 1,416,930.37 1.18
UTAH 104 3,885,263.80 3.24
VIRGINIA 4 237,423.02 0.20
WASHINGTON 168 9,874,954.24 8.23
WEST VIRGINA 1 29,939.71 0.02
WISCONSIN 2 47,893.23 0.04
WYOMING 1 33,321.64 0.03
----- ----------------- -----
Total 2,220 $ 120,033,601.72 100.00%
===== ================= ======
</TABLE>
.
FIXED RATE GROUP
ORIGINATORS OF THE MORTGAGE LOANS
<TABLE>
<CAPTION>
% OF TOTAL BY
NUMBER OF AGGREGATE AGGREGATE
MORTGAGE PRINCIPAL PRINCIPAL
ORIGINATOR LOANS BALANCE BALANCE
- ---------- ----- ------- -------
<S> <C> <C> <C>
AFFILIATED 1,333 $ 61,964,389.89 51.62 %
UNAFFILIATED 887 58,069,211.83 48.38
------ ------------- ------
Total 2,220 $120,033,601.72 100.00 %
===== ============== ======
</TABLE>
Page 11
<PAGE> 12
ADJUSTABLE RATE GROUP
TYPE OF MORTGAGED PROPERTY
<TABLE>
<CAPTION>
% OF TOTAL BY
NUMBER OF AGGREGATE AGGREGATE
MORTGAGE PRINCIPAL PRINCIPAL
PROPERTY TYPE LOANS BALANCE BALANCE
- ------------- ----- ------- -------
<S> <C> <C> <C>
SINGLE FAMILY 1,751 $168,558,438.04 91.77%
TWO- TO FOUR-FAMILY 132 11,340,367.18 6.17
CONDOMINIUM 56 3,772,399.90 2.05
----- -------------- ------
Total 1,939 $183,671,205.12 100.00%
===== ============== ======
</TABLE>
ADJUSTABLE RATE GROUP
OCCUPANCY STATUS
<TABLE>
<CAPTION>
% OF TOTAL BY
NUMBER OF AGGREGATE AGGREGATE
MORTGAGE PRINCIPAL PRINCIPAL
OCCUPANCY STATUS LOANS BALANCE BALANCE
- ---------------- ----- ------- -------
<S> <C> <C> <C>
OWNER OCCUPIED /PRIMARY RESIDENCE 1,771 $ 170,418,525.15 92.78%
NON-OWNER OCCUPIED/INVESTMENT PROPERTY 168 13,252,679.97 7.22
----- ---------------- ------
Total 1,939 $ 183,671,205.12 100.00%
===== ================ ======
</TABLE>
ADJUSTABLE RATE GROUP
PRIORITY OF LIEN
<TABLE>
<CAPTION>
% OF TOTAL BY
NUMBER OF AGGREGATE AGGREGATE
MORTGAGE PRINCIPAL PRINCIPAL
LIEN PRIORITY LOANS BALANCE BALANCE
- ------------- ----- ------- -------
<S> <C> <C> <C>
FIRST LIEN 1,939 $ 183,671,205.12 100.00%
SECOND LIEN 0 0.00 0.00
----- --------------- ------
Total 1,939 $ 183,671,205.12 100.00%
===== =============== ======
</TABLE>
ADJUSTABLE RATE GROUP
TYPE OF LOAN BY AMORTIZATION
<TABLE>
<CAPTION>
% OF TOTAL BY
NUMBER OF AGGREGATE AGGREGATE
MORTGAGE PRINCIPAL PRINCIPAL
LOAN TYPE LOANS BALANCE BALANCE
- --------- ----- ------- -------
<S> <C> <C> <C>
FULLY AMORTIZING 1,939 $183,671,205.12 100.00%
PARTIALLY AMORTIZING 0 0.00 0.00
----- -------------- ------
Total 1,939 $183,671,205.12 100.00%
===== ============== ======
</TABLE>
Page 12
<PAGE> 13
ADJUSTABLE RATE GROUP
COMBINED LOAN-TO-VALUE RATIOS
<TABLE>
<CAPTION>
% OF TOTAL BY
RANGE OF COMBINED NUMBER OF AGGREGATE AGGREGATE
LOAN-TO-VALUE MORTGAGE PRINCIPAL PRINCIPAL
RATIOS (%) LOANS BALANCE BALANCE
---------- ----- ------- -------
<S> <C> <C> <C>
5.00%-09.999% 1 39,390.64 0.02%
10.00%-14.999% 1 29,300.00 0.02
15.00%-19.999% 1 38,000.00 0.02
20.00%-24.999% 3 144,798.08 0.08
25.00%-29.999% 13 652,182.98 0.36
30.00%-34.999% 13 906,526.23 0.49
35.00%-39.999% 27 1,722,602.33 0.94
40.00%-44.999% 40 2,724,481.74 1.48
45.00%-49.999% 51 4,142,159.15 2.26
50.00%-54.999% 66 6,173,575.12 3.36
55.00%-59.999% 106 8,696,449.10 4.73
60.00%-64.999% 312 28,148,686.80 15.33
65.00%-69.999% 630 56,164,215.52 30.58
70.00%-74.999% 371 36,047,665.46 19.63
75.00%-79.999% 209 26,503,762.22 14.43
80.00%-84.999% 83 10,046,241.87 5.47
85.00%-89.999% 12 1,491,167.88 0.81
90.00%+ 0 0.00 0.00
----- -------------- ------
Total 1,939 $183,671,205.12 100.00%
===== ============== ======
</TABLE>
Page 13
<PAGE> 14
ADJUSTABLE RATE GROUP
ORIGINAL TERM TO MATURITY
<TABLE>
<CAPTION>
% OF TOTAL BY
RANGE OF NUMBER OF AGGREGATE AGGREGATE
ORIGINAL TERMS MORTGAGE PRINCIPAL PRINCIPAL
TO MATURITY (MONTHS) LOANS BALANCE BALANCE
-------------------- ----- ------- -------
<S> <C> <C> <C>
0-179 0 $ 0.00 0.00%
180-191 31 1,375,842.75 0.75
192-359 0 0.00 0.00
360 1,908 182,295,362.37 99.25
----- -------------- ------
Total 1,939 $183,671,205.12 100.00%
===== ============== ======
</TABLE>
ADJUSTABLE RATE GROUP
REMAINING TERM TO MATURITY
<TABLE>
<CAPTION>
% OF TOTAL BY
RANGE OF NUMBER OF AGGREGATE AGGREGATE
REMAINING TERMS MORTGAGE PRINCIPAL PRINCIPAL
TO MATURITY (MONTHS) LOANS BALANCE BALANCE
- -------------------- ----- ------- -------
<S> <C> <C> <C>
0-143 0 $ 0.00 0.00%
144-155 1 46,465.58 0.03
156-167 1 24,961.48 0.01
168-179 27 1,139,914.51 0.62
180-191 4 222,200.00 0.12
192-203 0 0.00 0.00
204-215 1 61,145.56 0.03
216-323 0 0.00 0.00
324-335 9 643,834.71 0.35
336-347 65 6,238,325.69 3.40
348-359 1,310 123,592,946.06 67.29
360 521 51,701,411.53 28.15
----- -------------- ------
Total 1,939 $183,671,205.12 100.00%
===== ============== ======
</TABLE>
Page 14
<PAGE> 15
ADJUSTABLE RATE GROUP
RANGE OF ADJUSTABLE MORTGAGE INTEREST RATES
AS OF CUT-OFF OR SUBSEQUENT CUT-OFF DATE
<TABLE>
<CAPTION>
% OF TOTAL BY
RANGE OF NUMBER OF AGGREGATE AGGREGATE
ADJUSTABLE MORTGAGE MORTGAGE PRINCIPAL PRINCIPAL
INTEREST RATES (%) LOANS BALANCE BALANCE
------------------ ----- ------- -------
<S> <C> <C> <C>
6.00%- 6.499% 0 $ 0.00 0.00%
6.50%- 6.999% 1 82,500.00 0.04
7.00%- 7.499% 2 137,774.65 0.08
7.50%- 7.999% 18 2,638,666.61 1.44
8.00%- 8.499% 36 4,873,914.67 2.65
8.50%- 8.999% 96 11,572,046.91 6.30
9.00%- 9.499% 113 13,469,655.67 7.33
9.50%- 9.999% 185 21,892,902.44 11.92
10.00%-10.499% 135 15,670,621.06 8.53
10.50% 10.999% 212 21,056,116.10 11.46
11.00%-11.499% 142 12,540,740.17 6.83
11.50%-11.999% 231 18,068,793.93 9.84
12.00%-12.499% 193 15,404,804.75 8.39
12.50%-12.999% 222 18,050,387.89 9.83
13.00%-13.499% 135 11,185,880.76 6.09
13.50%-13.999% 112 9,316,796.94 5.07
14.00%-14.499% 47 3,333,111.11 1.81
14.50%-14.999% 40 3,001,069.84 1.63
15.00%-15.499% 10 956,381.60 0.52
15.50%-15.999% 5 240,491.01 0.13
16.00%-16.499% 2 145,568.17 0.08
16.50%-16.999% 0 0.00 0.00
17.00%-17.499% 1 16,494.44 0.01
17.50%-17.999% 1 16,486.40 0.01
----- -------------- ------
Total 1,939 $183,671,205.12 100.00%
===== ============== ======
</TABLE>
Page 15
<PAGE> 16
ADJUSTABLE RATE GROUP
CUT-OFF DATE PRINCIPAL BALANCE AS OF
CUT-OFF OR SUBSEQUENT CUT-OFF DATE
<TABLE>
<CAPTION>
% OF TOTAL BY
RANGE OF NUMBER OF AGGREGATE AGGREGATE
CUT-OFF DATE MORTGAGE PRINCIPAL PRINCIPAL
PRINCIPAL BALANCES ($) LOANS BALANCE BALANCE
- ---------------------------- ------- ------- -------
<S> <C> <C> <C>
$ 0.00- 9,999.99 0 $ 0.00 0.00%
10,000.00- 19,999.99 20 364,071.13 0.20
20,000.00- 29,999.99 85 2,218,432.10 1.21
30,000.00- 39,999.99 164 5,883,503.69 3.20
40,000.00- 49,999.99 175 7,882,518.53 4.29
50,000.00- 59,999.99 197 10,876,546.14 5.92
60,000.00- 69,999.99 167 10,827,470.64 5.90
70,000.00- 79,999.99 182 13,701,038.49 7.46
80,000.00- 89,999.99 187 15,858,300.09 8.63
90,000.00- 99,999.99 149 14,115,628.49 7.69
100,000.00-109,999.99 101 10,578,524.26 5.76
110,000.00-119,999.99 62 7,127,358.02 3.88
120,000.00-129,999.99 83 10,376,559.38 5.65
130,000.00-139,999.99 56 7,568,284.69 4.12
140,000.00-149,999.99 49 7,117,791.56 3.88
150,000.00-159,999.99 31 4,809,961.45 2.62
160,000.00-169,999.99 29 4,792,610.63 2.61
170,000.00-179,999.99 23 4,008,370.94 2.18
180,000.00-189,999.99 26 4,803,701.79 2.62
190,000.00-199,999.99 23 4,488,847.38 2.44
$200,000.00 or more 130 36,271,685.72 19.75
----- ---------------- ------
Total 1,939 $ 183,671,205.12 100.00%
===== ================ ======
</TABLE>
ADJUSTABLE RATE GROUP
RANGE OF GROSS MARGINS
<TABLE>
<CAPTION>
PERCENTEGE OF
CUT-OFF DATE
NUMBER OF AGGREGATE UNPAID AGGREGATE
GROSS MARGIN MORTGAGE LOANS PRINCIPAL BALANCE PRINCIPAL BALANCE
------------ -------------- ----------------- -----------------
<S> <C> <C> <C>
0.00%- 3.499% 0 $ 0.00 0.00%
3.50%- 3.999% 3 215,127.15 0.12
4.00%- 4.499% 13 1,910,201.68 1.04
4.50%- 4.999% 63 8,548,807.95 4.65
5.00%- 5.499% 88 10,571,715.81 5.76
5.50%- 5.999% 259 28,415,604.52 15.47
6.00%- 6.499% 245 26,290,043.03 14.31
6.50%- 6.999% 199 17,934,052.21 9.76
7.00%- 7.499% 195 16,273,390.84 8.86
7.50%- 7.999% 280 20,940,997.31 11.40
8.00%- 8.499% 230 19,069,749.95 10.38
8.50%- 8.999% 179 15,782,848.83 8.59
9.00%- 9.499% 108 10,690,367.49 5.82
9.50%- 9.999% 67 6,298,802.98 3.43
10.00%-10.499% 6 516,818.50 0.28
10.50%-10.999% 2 142,182.43 0.08
11.00%-11.499% 2 70,494.44 0.04
----- -------------------- ------
Total 1,939 $ 183,671,205.12 100.00%
===== ==================== ======
</TABLE>
Page 16
<PAGE> 17
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>
0.00%-12.499% 0 $ 0.00 0.00%
12.50%-12.999% 1 82,500.00 0.04
13.00%-13.499% 2 137,774.65 0.08
13.50%-13.999% 16 2,205,163.55 1.20
14.00%-14.499% 29 3,765,570.44 2.05
14.50%-14.999% 69 8,149,962.69 4.44
15.00%-15.499% 83 9,199,491.86 5.01
15.50%-15.999% 151 18,832,619.06 10.25
16.00%-16.499% 162 18,307,025.21 9.97
16.50%-16.999% 189 20,505,544.60 11.16
17.00%-17.499% 134 12,895,918.87 7.02
17.50%-17.999% 179 16,646,509.80 9.06
18.00%-18.499% 155 13,966,404.26 7.60
18.50%-18.999% 233 18,266,768.82 9.95
19.00%-19.499% 164 12,748,831.80 6.94
19.50%-19.999% 146 12,055,403.54 6.56
20.00%-20.499% 71 5,526,183.54 3.01
20.50%-20.999% 85 6,064,372.91 3.30
21.00%-21.499% 38 2,709,858.47 1.48
21.50%-21.999% 23 1,296,574.94 0.71
22.00%-22.499% 3 99,981.60 0.05
22.50%-22.999% 3 99,779.96 0.05
23.00%-23.499% 1 75,983.71 0.04
23.50%-23.999% 0 0.00 0.00
24.00%-24.499% 1 16,494.44 0.01
24.50%-24.999% 1 16,486.40 0.01
----- -------------- ------
Total 1,939 $183,671,205.12 100.00%
===== ============== ======
</TABLE>
Page 17
<PAGE> 18
ADJUSTABLE RATE GROUP
RANGE OF MINIMUM MORTGAGE RATES
<TABLE>
<CAPTION>
Pertcentage of
Cut-Off Date
Range of Minimum Number of Aggregate Unpaid Aggregate
Mortgage Rates Mortgage Loans Principal Balance Principal Balance
------------------- -------------- ------------------- -----------------
<S> <C> <C> <C>
0.00%- 5.499% 0 $ 0.00 0.00%
5.50%- 5.999% 1 98,056.60 0.05
6.00%- 6.499% 0 0.00 0.00
6.50%- 6.999% 2 168,750.00 0.09
7.00%- 7.499% 3 254,257.43 0.14
7.50%- 7.999% 18 2,498,800.95 1.36
8.00%- 8.499% 41 5,191,751.98 2.83
8.50%- 8.999% 103 12,657,458.24 6.89
9.00%- 9.499% 114 13,747,031.84 7.48
9.50%- 9.999% 189 21,491,973.91 11.70
10.00%-10.499% 132 15,500,746.39 8.44
10.50%-10.999% 210 20,625,367.45 11.23
11.00%-11.499% 133 11,634,526.38 6.33
11.50%-11.999% 226 18,352,798.56 9.99
12.00%-12.499% 193 15,222,406.71 8.29
12.50%-12.999% 217 17,311,054.31 9.43
13.00%-13.499% 132 11,187,383.06 6.09
13.50%-13.999% 112 9,403,008.50 5.12
14.00%-14.499% 48 3,503,725.87 1.91
14.50%-14.999% 45 3,401,707.50 1.85
15.00%-15.499% 10 956,381.60 0.52
15.50%-15.999% 5 274,781.34 0.15
16.00%-16.499% 1 69,584.46 0.04
16.50%-16.999% 1 10,687.49 0.01
17.00%-17.499% 1 75,983.71 0.04
17.50%-17.999% 1 16,486.40 0.01
18.00%-18.499% 1 16,494.44 0.01
----- --------------- ------
Total 1,939 $ 183,671,205.12 100.00%
===== =============== ======
</TABLE>
Page 18
<PAGE> 19
ADJUSTABLE RATE GROUP
GEOGRAPHICAL DISTRIBUTION OF THE MORTGAGED PROPERTIES
<TABLE>
<CAPTION>
% OF TOTAL BY
NUMBER OF AGGREGATE AGGREGATE
MORTGAGE PRINCIPAL PRINCIPAL
STATE LOANS BALANCE BALANCE
- ----- ----- ------- -------
<S> <C> <C> <C>
ALASKA 2 $ 257,400.00 0.14%
ARIZONA 48 4,284,629.73 2.33
CALIFORNIA 371 48,659,443.20 26.49
COLORADO 58 5,512,002.26 3.00
CONNECTICUT 16 1,635,338.58 0.89
DELAWARE 3 443,160.35 0.24
DISTRICT OF COLUMBIA 15 1,428,623.50 0.78
FLORIDA 104 7,525,020.24 4.10
GEORGIA 38 3,048,446.21 1.66
HAWAII 1 374,752.29 0.20
IDAHO 18 1,235,815.00 0.67
ILLINOIS 284 19,482,476.39 10.61
INDIANA 38 1,964,658.68 1.07
IOWA 2 80,646.78 0.04
KANSAS 6 280,300.00 0.15
KENTUCKY 2 55,215.36 0.03
MAINE 1 226,800.00 0.12
MASSACHUSETTS 38 3,851,843.04 2.10
MARYLAND 42 4,388,585.53 2.39
MICHIGAN 20 1,572,808.68 0.86
MINNESOTA 9 746,287.56 0.41
MISSOURI 33 1,752,741.00 0.95
MONTANA 2 153,505.32 0.08
NEVADA 10 1,012,674.12 0.55
NEW HAMPSHIRE 4 208,141.43 0.11
NEW JERSEY 91 10,468,464.96 5.70
NEW MEXICO 5 518,107.60 0.28
NEW YORK 87 11,048,051.58 6.02
NORTH CAROLINA 47 2,302,597.51 1.25
OHIO 25 1,113,666.16 0.61
OKLAHOMA 1 80,910.44 0.04
OREGON 122 12,043,967.71 6.56
PENNSYLVANIA 58 4,431,961.18 2.41
RHODE ISLAND 6 609,561.82 0.33
SOUTH CAROLINA 2 70,119.30 0.04
SOUTH DAKOTA 1 81,123.12 0.04
TEXAS 30 2,818,250.74 1.53
UTAH 126 11,675,429.98 6.36
VIRGINIA 9 744,710.05 0.41
WASHINGTON 154 14,959,768.42 8.14
WISCONSIN 8 420,287.43 0.23
WYOMING 2 102,911.87 0.06
----- -------------- ------
Total 1,939 $183,671,205.12 100.00%
===== ============== ======
</TABLE>
Page 19
<PAGE> 20
ADJUSTABLE RATE GROUP
ORIGINATORS OF THE MORTGAGE LOANS
<TABLE>
<CAPTION>
% OF TOTAL BY
NUMBER OF AGGREGATE AGGREGATE
MORTGAGE PRINCIPAL PRINCIPAL
ORIGINATOR LOANS BALANCE BALANCE
- ---------- ----- ------- -------
<S> <C> <C> <C>
AFFILIATED 43 $ 3,361,173.37 1.83%
UNAFFILIATED 1,896 180,310,031.75 98.17
----- -------------- ------
Total 1,939 $183,671,205.12 100.00%
===== ============== ======
</TABLE>
Page 20
<PAGE> 21
Item 7. Financial Statements: Pro Forma Financial Information and Exhibits.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits:
1.1 Underwriting Agreement, dated June 20, 1996, between
Aames Capital Corporation, as Sponsor, and NatWest Capital Markets
Limited, Prudential Securities Incorporated, Bear, Stearns & Co. Inc.
and Nomura Securities International, Inc., as Underwriters.
1.2 Pricing Agreement, dated June 20, 1996, between Aames
Capital Corporation, as Sponsor, and NatWest Capital Markets Limited,
Prudential Securities Incorporated, Bear, Stearns & Co. Inc. and
Nomura Securities International, Inc., as Underwriters.
4.1 Pooling and Servicing Agreement, dated as of June 1, 1996,
between Aames Capital Corporation, as Seller and Servicer, and
Bankers Trust Company of California, N.A., as Trustee.
4.2 Financial Guaranty Insurance Policy issued by the
Certificate Insurer, Financial Security Assurance Inc.
10.1 Subsequent Transfer Agreement, dated as of June 27, 1996,
between Aames Capital Corporation, as Seller, and Bankers Trust
Company of California, N.A., as Trustee for Aames Mortgage Trust
1996-B.
Page 21
<PAGE> 22
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AAMES CAPITAL CORPORATION
By: /s/ Gregory J. Witherspoon
---------------------------------
Gregory J. Witherspoon
Executive Vice President - Finance and
Chief Financial Officer
Dated: July 26, 1996
Page 22
<PAGE> 23
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number
------
<S> <C>
1.1 Underwriting Agreement, dated June 20, 1996, between Aames Capital Corporation, as Sponsor, and NatWest Capital
Markets Limited, Prudential Securities Incorporated, Bear, Stearns, & Co. Inc. and Nomura Securities
International, Inc.
1.2 Pricing Agreement, dated June 20, 1996, between Aames Capital Corporation, as Sponsor, and NatWest Capital
Markets Limited, Prudential Securities Incorporated, Bear, Stearns & Co. Inc. and Nomura Securities
International, Inc.
4.1 Pooling and Servicing Agreement, dated as of June 1, 1996, between Aames Capital Corporation, as Seller and
Servicer, and Bankers Trust Company of California, N.A., as Trustee.
4.2 Financial Guaranty Insurance Policy issued by the Certificate Insurer, Financial Security Assurance Inc.
10.1 Subsequent Transfer Agreement, dated as of June 27, 1996, between Aames Capital Corporation, as Seller, and
Bankers Trust Company of California, N.A., as Trustee for Aames Mortgage Trust 1996-B.
</TABLE>
Page 23
<PAGE> 1
EXHIBIT 1.1
AAMES CAPITAL CORPORATION
AND
THE UNDERWRITERS
UNDERWRITING AGREEMENT
FOR
AAMES MORTGAGE TRUSTS
MORTGAGE PASS-THROUGH CERTIFICATES,
ISSUABLE IN SERIES
June 20, 1996
<PAGE> 2
June 20, 1996
Prudential Securities Incorporated
as Representative of the Several Underwriters
named in Schedule I-A-1 to the applicable Pricing Agreement
c/o Prudential Securities Incorporated
One New York Plaza, 15th Floor
New York, New York 10038
NatWest Capital Markets Limited
as Representative of the several Underwriters
named in Schedule I-A-2 to the applicable Pricing Agreement
c/o NatWest Capital Markets Limited
175 Water Street, 20th Floor
New York, New York 10038
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 named in Schedule I to the applicable Pricing Agreement (the
"Underwriters") for whom you are acting as Representative (the
"Representative"), 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"). 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 named above, then the terms "Underwriters" and "Representative,"
as used herein, shall each be deemed to refer only to such Representative.
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.
<PAGE> 3
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 include 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 Representative.
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. 33-99458), 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"), 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"
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<PAGE> 4
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 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.
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<PAGE> 5
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.
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.
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<PAGE> 6
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 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.
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<PAGE> 7
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
the Underwriters that would permit a public offering
of the Class A Certificates or possession 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
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
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<PAGE> 8
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 Closing of the Class A-1 Certificates
that the Closing 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
Representative 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
Representative and counsel to the Underwriters copies of such
amendment or supplement for their review prior to filing and
will not file any such proposed amendment or supplement to
which the Representative reasonably and promptly objects,
unless such filing is required by law. The Company will use
its 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
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<PAGE> 9
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
Representative.
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
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<PAGE> 10
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 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 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
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
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<PAGE> 11
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.
(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
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<PAGE> 12
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.
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.
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<PAGE> 13
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.
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
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<PAGE> 14
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 (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 (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 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 was furnished by the
Company to such Underwriter 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
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<PAGE> 15
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, 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, 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
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<PAGE> 16
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. It is understood that the indemnifying party
shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees
and expenses of more than one separate firm (in addition to
any local counsel) for all such indemnified parties, and that
all such fees and expenses shall be reimbursed as they are
incurred. Such firm shall be designated in writing by the
Representative in the case of parties indemnified pursuant to
Paragraph A and by the Company in the case of parties
indemnified pursuant to Paragraph B. The indemnifying party
shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such
consent or if there is a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing
sentence, if at any time an indemnified party shall have
requested an indemnifying party to reimburse the indemnified
party for fees and expenses of counsel as contemplated above,
the indemnifying party agrees that it shall be liable for any
settlement of any proceeding effected without its written
consent if (i) such settlement is entered into more than 30
days after receipt by such indemnifying party of the aforesaid
request and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such
request prior to the date of such settlement. No indemnifying
party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified
party is or could have been a party and indemnity could have
been sought hereunder by such indemnified party, unless such
settlement includes an unconditional release of such
indemnified party from all liability on claims that are the
subject matter of such proceeding.
D. If the indemnification provided for in this
Section 8 is unavailable to an indemnified party in respect of
any losses, claims, damages or liabilities referred to herein,
then each indemnifying party, in lieu of indemnifying such
indemnified party, shall:
(i) in the case of any such losses, claims,
damages or liabilities which do not arise out of or
are not based upon any untrue statement or omission
of a material fact in any Computational Materials or
ABS Term Sheet (or any amendments or supplements
thereof) contribute to the amount paid or payable by
such indemnified party as a result of such losses,
claims, damages or liabilities in such proportion as
is appropriate to reflect the relative benefits
received by the Company and the Underwriters from the
sale of the 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
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<PAGE> 17
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 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:
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<PAGE> 18
(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 statements set forth in the last
paragraph on the inside front cover page of the
Prospectus Supplement prior to the caption "Reports
to Certificateholders" regarding sales of the
Certificates in the United Kingdom have been supplied
by or on behalf of and is the responsibility of
NatWest Capital Markets Limited only; and
(iii) 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 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 the
Prospectus to the extent that such information, as presented in an ABS Term
Sheet is not substantially identical in form, substance, scope, content or
context thereto. Each Underwriter shall deliver to the Company (or counsel to
the Company) such number of complete copies of all materials (which, if
reasonably requested by the Company, shall be on computer
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<PAGE> 19
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 any such Computational
Materials or ABS Term Sheets with respect to such
Class A Certificates were last furnished to each
prospective investor and on the date of delivery
thereof 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.
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.
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<PAGE> 20
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
Representative by telephone, telegram or facsimile transmission, in any case,
confirmed by letter.
13. Successors. This Agreement will inure to the benefit
of and be binding upon the parties hereto and their respective successors and
assigns (which successors and assigns do not include any person purchasing a
Certificate from the Underwriters), and the officers and directors and
controlling persons referred to in Section 8 hereof and their respective
successors and assigns, and no other persons will have any right or obligations
hereunder.
14. Applicable Law; Venue. This Agreement shall be
governed by and construed in accordance with the internal laws of the State of
New York. Any action or proceeding brought to enforce or arising out of any
provision of this Agreement shall be brought only in a state or federal court
located in the Borough of Manhattan, New York City, New York, and the parties
hereto expressly consent to the jurisdiction of such courts and agree to waive
any defense or claim of forum non conveniens they may have with respect to any
such action or proceeding brought.
15. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall together constitute but one and the
same instrument.
16. Amendments and Waivers. This Agreement may be
amended, modified, altered or terminated, and any of its provisions waived,
only in a writing signed on behalf of the parties hereto.
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<PAGE> 21
Very truly yours,
AAMES CAPITAL CORPORATION
By: /s/ GREGORY J. WITHERSPOON
--------------------------------
Name: Gregory J. Witherspoon
Title: Executive Vice President - Finance
Confirmed as of the date first above written:
PRUDENTIAL SECURITIES INCORPORATED
By: /s/ BRENDAN J. KEANE
---------------------------------
Name: Brendan J. Keane
Title: Vice President
For itself and as Representative
of the several Underwriters named
in Schedule I-A-1 to the applicable
Pricing Agreement
NATWEST CAPITAL MARKETS LIMITED
By: /s/ JOHAN HATTINGH
---------------------------------
Name: Johan Hattingh
Title: Managing Director
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
June 20, 1996
Prudential Securities Incorporated
as Representative of the Several Underwriters
named in Schedule I-A-1 to the applicable Pricing Agreement
c/o Prudential Securities Incorporated
One New York Plaza, 15th Floor
New York, New York 10038
NatWest Capital Markets Limited
as Representative of the several Underwriters
named in Schedule I-A-2 to the applicable Pricing Agreement
c/o NatWest Capital Markets Limited
175 Water Street, 20th Floor
New York, New York 10038
Re: Underwriting Agreement for Aames Mortgage Trust, dated June
20, 1996 the "Underwriting Agreement") between Aames Capital
Corporation ("Aames") and Prudential Securities Incorporated
as Representative of the Underwriters named in Schedule I-A-1
and NatWest Capital Markets Limited as Representative of the
several Underwriters named in Schedule I-A-2 to the Pricing
Agreement dated June 20, 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.
Now, therefore, the Underwriters and AFC do hereby agree that:
(i) AFC hereby agrees to be absolutely and
unconditionally jointly and severally liable with Aames to the
Underwriters for the payment of the Joint and Several
Obligations under the Designated Agreement.
Exhibit A-1
<PAGE> 23
(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:
PRUDENTIAL SECURITIES INCORPORATED
By:
-------------------------------
Name:
Title:
For itself and as Representative
of the several Underwriters named
in Schedule I-A-1 to the applicable
Pricing Agreement
NATWEST CAPITAL MARKETS LIMITED
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, 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;
Appendix A-1
<PAGE> 25
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 (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.
Appendix A-2
<PAGE> 26
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 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.
Appendix A-3
<PAGE> 27
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 and are therefore
unenforceable).
In addition, please be advised such counsel has reviewed the
description of the Insurer under the caption "Certificate Insurer" in the
Prospectus Supplement (the "Offering Document") of the 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
June 20, 1996
Prudential Securities Incorporated
as Representative of the several Underwriters
named in Schedule I-A-1 to the applicable Pricing Agreement
c/o Prudential Securities Incorporated
One New York Plaza, 15th Floor
New York, New York 10038
NatWest Capital Markets Limited
as Representative of the several Underwriters
named in Schedule I-A-2 to the applicable Pricing Agreement
c/o NatWest Capital Markets Limited
175 Water Street, 20th Floor
New York, New York 10038
Gentlemen:
Aames Capital Corporation (the "Company") proposes, subject to
the terms and conditions stated herein and the Underwriting Agreement, dated
June 20, 1996 (the "Underwriting Agreement"), between the Company and
Prudential Securities Incorporated, underwriter and as Representative (in such
capacity, the "Class A-1 Representative) of the several underwriters named in
Schedule I-A-1 hereto, and NatWest 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 the Representatives 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:
PRUDENTIAL SECURITIES INCORPORATED
By:
-------------------------------------
Name:
Title:
For itself and as Representative
of the several Underwriters named
in Schedule I-A-1 to the applicable
Pricing Agreement
NATWEST CAPITAL MARKETS LIMITED
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
<TABLE>
<CAPTION>
Principal
Principal Amount Principal Amount Principal Amount Principal Amount Amount
of Class A-1A of Class A-1B of Class A-1C of Class A-1D of Class A-2
Underwriter Certificates Certificates Certificates Certificates Certificates
----------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
NatWest Capital $15,632,100 $ 9,239,700 $ 6,423,000 $ 4,715,700 $ 54,000,000
Markets Limited
Prudential Securities $15,632,100 $ 9,239,700 $ 6,423,000 $ 4,715,700 $ 54,000,000
Incorporated
Bear, Stearns & Co. $15,632,100 $ 9,239,700 $ 6,423,000 $ 4,715,700 $ 54,000,000
Inc.
Nomura Securities $ 5,210,700 $ 3,079,900 $ 6,423,000 $ 4,715,700 $ 18,000,000
International, Inc.
Total $52,107,000 $30,799,000 $21,410,000 $15,719,000 $180,000,000
</TABLE>
Schedule I-1
<PAGE> 33
SCHEDULE II
Registration Statement No. 33-99458
Basic Prospectus dated June 20, 1996
Prospectus Supplement dated June 20, 1996
<TABLE>
<S> <C>
Title of Certificates: Class A-1A
----------
Amount of Certificates: $52,107,000 (approximate)
Pass-Through Rate: 5.57875% for the initial Interest Period; LIBOR plus 0.11% thereafter
Purchase Price Percentage: 100%
Cut-off Date: June 1, 1996
Closing: June 27, 1996
Denominations: $1,000.00 and integral multiples of $1.00 in excess thereof.
Title of Certificates: Class A-1B
----------
Amount of Certificates: $30,799,000 (approximate)
Pass-Through Rate: 7.275%
Purchase Price Percentage: 99.984375% (plus accrued interest from Cut-off Date at applicable
Pass-Through Rate)
Cut-off Date: June 1, 1996
Closing: June 27, 1996
Denominations: $1,000.00 and integral multiples of $1.00 in excess thereof.
Title of Certificates: Class A-1C
----------
Amount of Certificates: $21,410,000 (approximate)
Pass-Through Rate: 7.625%
Purchase Price Percentage: 99.984375% (plus accrued interest from Cutoff Date at applicable
Pass-Through Rate)
Cut-off Date: June 1, 1996
Closing: June 27, 1996
Denominations: $1,000.00 and integral multiples of $1.00 in excess thereof.
</TABLE>
Schedule II-1
<PAGE> 34
<TABLE>
<S> <C>
Title of Certificates: Class A-1D
----------
Amount of Certificates: $15,719,000 (approximate)
Pass-Through Rate: 8.175%
Purchase Price Percentage: 99.953125% (plus accrued interest from Cutoff Date at applicable
Pass-Through Rate)
Cut-off Date: June 1, 1996
Closing: June 27, 1996
Denominations: $1,000.00 and integral multiples of $1.00 in excess thereof.
Title of Certificates: Class A-2
---------
Amount of Certificates: $180,000,000 (approximate)
Initial Pass-Through Rate: LIBOR +.33% for each Interest Period on or prior to the Distribution
Date in March 2005; LIBOR + 0.66% thereafter
Purchase Price Percentage: 100%
Cut-off Date: June 1, 1996
Closing: June 27, 1996
Denominations: $1,000.00 and integral multiples of $1.00 in excess thereof.
</TABLE>
<TABLE>
<S> <C>
Representative with respect to the Class A-1 Certificates: Prudential Securities Incorporated
Representative with respect to the Class A-2 Certificates: Natwest Capital Markets Limited
</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 1.2
AAMES CAPITAL CORPORATION
Mortgage Pass-Through Certificates
PRICING AGREEMENT
June 20, 1996
Prudential Securities Incorporated
as Representative of the several Underwriters
named in Schedule I-A-1 to the applicable Pricing Agreement
c/o Prudential Securities Incorporated
One New York Plaza, 15th Floor
New York, New York 10038
NatWest Capital Markets Limited
as Representative of the several Underwriters
named in Schedule I-A-2 to the applicable Pricing Agreement
c/o NatWest Capital Markets Limited
175 Water Street, 20th Floor
New York, New York 10038
Gentlemen:
Aames Capital Corporation (the "Company") proposes, subject to the
terms and conditions stated herein and the Underwriting Agreement, dated June
20, 1996 (the "Underwriting Agreement"), between the Company and Prudential
Securities Incorporated, underwriter and as Representative (in such capacity,
the "Class A-1 Representative) of the several underwriters named in Schedule
I-A-1 hereto, and NatWest 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 the Representatives 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.
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.
<PAGE> 2
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/ GREGORY J. WITHERSPOON
----------------------------------
Name: Gregory J. Witherspoon
Title: Executive Vice President - Finance
CONFIRMED AND ACCEPTED,
as of the date first above written:
PRUDENTIAL SECURITIES INCORPORATED
By: /s/ BRENDAN J. KEANE
-----------------------------
Name: Brendan J. Keane
Title: Vice President
For itself and as Representative
of the several Underwriters named
in Schedule I-A-1 to the applicable
Pricing Agreement
NATWEST CAPITAL MARKETS LIMITED
By: /s/ JOHAN HATTINGH
-----------------------------
Name: Johan Hattingh
Title: Managing Director
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-1
<TABLE>
<CAPTION>
Principal Principal
Amount of Class Principal Amount Principal Amount Principal Amount Amount
A-1A of Class A-1B of Class A-1C of Class A-1D of Class A-2
Underwriter Certificates Certificates Certificates Certificates Certificates
- ----------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
NatWest Capital $15,632,100 $ 9,239,700 $ 6,423,000 $ 4,715,700 $ 54,000,000
Markets Limited
Prudential Securities $15,632,100 $ 9,239,700 $ 6,423,000 $ 4,715,700 $ 54,000,000
Incorporated
Bear, Stearns & Co. $15,632,100 $ 9,239,700 $ 6,423,000 $ 4,715,700 $ 54,000,000
Inc.
Nomura Securities $ 5,210,700 $ 3,079,900 $ 6,423,000 $ 4,715,700 $ 18,000,000
International, Inc.
Total $52,107,000 $30,799,000 $21,410,000 $15,719,000 $180,000,000
</TABLE>
Schedule I-1
<PAGE> 4
SCHEDULE II
Registration Statement No. 33-99458
Basic Prospectus dated June 20, 1996
Prospectus Supplement dated June 20, 1996
<TABLE>
<S> <C>
Title of Certificates: Class A-1A
----------
Amount of Certificates: $52,107,000 (approximate)
Pass-Through Rate: 5.57875% for the initial Interest Period; LIBOR plus
0.11% thereafter
Purchase Price Percentage: 100%
Cut-off Date: June 1, 1996
Closing: June 27, 1996
Denominations: $1,000.00 and integral multiples of $1.00 in excess
thereof.
Title of Certificates: Class A-1B
----------
Amount of Certificates: $30,799,000 (approximate)
Pass-Through Rate: 7.275%
Purchase Price Percentage: 99.984375% (plus accrued interest from Cut-off Date
at applicable Pass-Through Rate)
Cut-off Date: June 1, 1996
Closing: June 27, 1996
Denominations: $1,000.00 and integral multiples of $1.00 in excess
thereof.
Title of Certificates: Class A-1C
----------
Amount of Certificates: $21,410,000 (approximate)
Pass-Through Rate: 7.625%
Purchase Price Percentage: 99.984375% (plus accrued interest from Cutoff Date
at applicable Pass-Through Rate)
Cut-off Date: June 1, 1996
Closing: June 27, 1996
Denominations: $1,000.00 and integral multiples of $1.00 in excess
thereof.
</TABLE>
Schedule II-1
<PAGE> 5
<TABLE>
<S> <C>
Title of Certificates: Class A-1D
----------
Amount of Certificates: $15,719,000 (approximate)
Pass-Through Rate: 8.175%
Purchase Price Percentage: 99.953125% (plus accrued interest from Cutoff Date
at applicable Pass-Through Rate)
Cut-off Date: June 1, 1996
Closing: June 27, 1996
Denominations: $1,000.00 and integral multiples of $1.00 in excess
thereof.
Title of Certificates: Class A-2
---------
Amount of Certificates: $180,000,000 (approximate)
Initial Pass-Through Rate: LIBOR +.33% for each Interest Period on or prior to the
Distribution Date in March 2005; LIBOR + 0.66%
thereafter
Purchase Price Percentage: 100%
Cut-off Date: June 1, 1996
Closing: June 27, 1996
Denominations: $1,000.00 and integral multiples of $1.00 in excess
thereof.
</TABLE>
<TABLE>
<S> <C>
Representative with respect to the Class A-1 Certificates: Prudential Securities Incorporated
Representative with respect to the Class A-2 Certificates: Natwest Capital Markets Limited
</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 June 1, 1996
Aames Mortgage Trust 1996-B
Mortgage Pass-Through Certificates,
Series 1996-B
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE ONE
DEFINITIONS
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02. Interest Calculations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 1.03. Determination of Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE TWO
-----------
CONVEYANCE OF THE TRUST;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Conveyance of the Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 2.02. Conveyance of the Subsequent Mortgage Loans; Fixed Price Contract . . . . . . . . . . . . . . . 37
Section 2.03. Acceptance by the Trustee; Repurchase or Substitution of Mortgage Loans . . . . . . . . . . . . 40
Section 2.04. Representations and Warranties Regarding the Servicer and the Seller . . . . . . . . . . . . . . 42
Section 2.05. Representations and Warranties of the Seller Regarding the Mortgage Loans . . . . . . . . . . . 44
Section 2.06. Execution and Authentication of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 2.07. Designation of Certificates; Designation of Startup Day . . . . . . . . . . . . . . . . . . . . 54
Section 2.08. Indemnification of the Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 2.09. Repurchase of Certain Delinquent Mortgage Loans by the Seller . . . . . . . . . . . . . . . . . 54
ARTICLE THREE
-------------
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS;
CERTIFICATE ACCOUNT
Section 3.01. The Servicer and the Sub-Servicers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 3.02. Collection of Certain Mortgage Loan Payments;
Collection Account and Certificate Account . . . . . . . . . . . . . . . . . . . . . 57
Section 3.03. Additional Servicing Responsibilities for the
Adjustable Rate Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 3.04. Hazard Insurance Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 3.05. Enforcement of Due-on-Sale Clauses;
Assumption and Modification Agreements . . . . . . . . . . . . . . . . . . . . . . . 60
Section 3.06. Realization upon Liquidated Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 3.07. Trustee to Cooperate; Release of Mortgage Files . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 3.08. Servicing Compensation; Payment of Certain Expenses by the Servicer . . . . . . . . . . . . . . 63
Section 3.09. [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 3.10. Annual Statement as to Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 3.11. Annual Independent Public Accountants' Servicing Report . . . . . . . . . . . . . . . . . . . . 64
Section 3.12. Access to Certain Documentation and Information
Regarding the Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 3.13. Maintenance of Fidelity Bond and Errors and Omission Policy . . . . . . . . . . . . . . . . . . 65
</TABLE>
-ii-
<PAGE> 3
<TABLE>
<S> <C> <C>
Section 3.14. Notices to the Rating Agencies, the Trustee and the Certificate Insurer . . . . . . . . . . . . 65
Section 3.15. Reports of Foreclosures and Abandonment of Mortgaged Property . . . . . . . . . . . . . . . . . 65
Section 3.16. Sub-Servicers and Sub-Servicing Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 3.17. Purchase Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 3.18. Capitalized Interest Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 3.19. [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 3.20. [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 3.21. Payments on the Certificate Insurance Policy . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 3.22. Rights of the Certificate Insurer to Exercise
Rights of Class A Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 3.23. Trust and Accounts Held for Benefit of the Certificate Insurer . . . . . . . . . . . . . . . . . 72
ARTICLE FOUR
------------
REMITTANCE REPORT
Section 4.01. Servicer Remittance Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 4.02. Trustee Distribution Date Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
ARTICLE FIVE
------------
PAYMENTS AND STATEMENTS TO CERTIFICATEHOLDERS
Section 5.01. Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 5.02. Monthly Advances; Servicing Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 5.03. Statements to Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 5.04. The Certificate Insurer; Use of Information . . . . . . . . . . . . . . . . . . . . . . . . . . 81
ARTICLE SIX
-----------
THE CERTIFICATES
Section 6.01. The Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 6.02. Registration of Transfer and Exchange of Certificates . . . . . . . . . . . . . . . . . . . . . 82
Section 6.03. Mutilated, Destroyed, Lost or Stolen Certificates . . . . . . . . . . . . . . . . . . . . . . . 86
Section 6.04. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 6.05. [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 6.06. [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 6.07. Actions of Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
ARTICLE SEVEN
-------------
THE SERVICER AND THE SELLER
Section 7.01. Liability of the Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 7.02. Merger or Consolidation of, or Assumption of
the Obligations of, the Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 7.03. Limitation on Liability of the Servicer and Others . . . . . . . . . . . . . . . . . . . . . . . 88
Section 7.04. Servicer Not to Resign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
</TABLE>
-iii-
<PAGE> 4
<TABLE>
<S> <C> <C>
Section 7.05. Merger or Consolidation of the Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Section 7.06. Term of Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
ARTICLE EIGHT
-------------
DEFAULT
Section 8.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Section 8.02. Trustee to Act; Appointment of Successor . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Section 8.03. Notifications to Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Section 8.04. Assumption or Termination of Sub-Servicing Agreements
by the Trustee or any Successor Servicer . . . . . . . . . . . . . . . . . . . . . . 92
ARTICLE NINE
------------
THE TRUSTEE
Section 9.01. Duties of the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Section 9.02. Certain Matters Affecting the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Section 9.03. Trustee Not Liable for Certificates or Mortgage Loans . . . . . . . . . . . . . . . . . . . . . 95
Section 9.04. Trustee May Own Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Section 9.05. Payment of the Trustee's Fees and Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Section 9.06. Eligibility Requirements for the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Section 9.07. Resignation or Removal of the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Section 9.08. Successor Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Section 9.09. Merger or Consolidation of the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Section 9.10. Appointment of Co-Trustee or Separate Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 98
Section 9.11. [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Section 9.12. Compliance with REMIC Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Section 9.13. Trustee May Enforce Claims Without Possession of Certificates . . . . . . . . . . . . . . . . .100
Section 9.14. Exercise of Trustee Powers by Certificate Insurer and Certificateholders . . . . . . . . . . . .100
Section 9.15. Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .100
Section 9.16. Taxpayer Identification Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .101
ARTICLE TEN
-----------
TERMINATION
Section 10.01. Termination Upon Purchase or Liquidation of All Mortgage Loans . . . . . . . . . . . . . . . .101
Section 10.02. Additional Termination Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .103
ARTICLE ELEVEN
--------------
MISCELLANEOUS PROVISIONS
Section 11.01. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .104
Section 11.02. Recordation of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .105
Section 11.03. Limitation on Rights of Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . .105
Section 11.04. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .106
</TABLE>
-iv-
<PAGE> 5
<TABLE>
<S> <C> <C>
Section 11.05. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .106
Section 11.06. Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .107
Section 11.07. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .107
Section 11.08. Certificates Nonassessable and Fully Paid . . . . . . . . . . . . . . . . . . . . . . . . . . .107
Section 11.09. Third Party Beneficiary; Rating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .107
</TABLE>
SCHEDULES AND EXHIBITS
<TABLE>
<S> <C>
Schedule I List of Sub-Servicers
Schedule II Representations and Warranties of the Seller Regarding Subsequent 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-2 Form of Class A-2 Certificate
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
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
June 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 Subsequent Transfer Date.
Additional Subordinated Amount: The aggregate amount, if any, specified
as such by the Certificate Insurer in the Coverage Amount Identification
Notice delivered in connection with its approval of the Subsequent Mortgage
Loans pursuant to Section 2.02.
Additional Subsequent Purchase Price: With respect to Group I, the
amount, if any, specified by the Certificate Insurer in the Coverage Amount
Identification Notice delivered in connection with its approval of the
Subsequent Mortgage Loans to be included in Group I pursuant to Section 2.02
using criteria established before the Closing Date. With respect to Group II,
the amount, if any, specified by the Certificate Insurer in the Coverage
Amount Identification Notice delivered in connection with its approval of the
Subsequent Mortgage Loans to be included in Group II pursuant to Section 2.02
using criteria established 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.
<PAGE> 7
Affiliate: With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect
to any specified Person means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings corresponding to the foregoing.
Agreement: This Pooling and Servicing Agreement and all amendments
hereof and supplements hereto.
Annual Statement of Compliance: The annual statement prepared and
delivered by the Servicer in accordance with Section 3.10.
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 July 1996, (a) the
amount deposited in the Certificate Account by the Trustee from the
Capitalized Interest Account pursuant to Section 3.18 and the amount, if
any, deposited in the Certificate Account by the Trustee from the
Purchase Account pursuant to Section 3.17 and (b) the Closing Date
Deposit and (x) in the case of the Distribution Date occurring in August
1996, the aggregate amount of Subsequent Transfer Deposits; reduced by
-2-
<PAGE> 8
(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 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 3.18 and
entitled "Bankers Trust Company of California, N.A., as Trustee for Aames
Mortgage Trust 1996-B Mortgage Pass-Through Certificates, Series 1996-B,
Capitalized Interest Account".
Capitalized Interest Account Deposit: $188,984.90.
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-B Mortgage Pass-Through Certificates, Series 1996-B, Certificate
Account".
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<PAGE> 9
Certificate Insurance Policy: The Financial Guaranty Insurance Policy
(No. 50480-N), dated June 27, 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:
(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.
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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.
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; 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, 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 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.
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Class A-1 Additional Coverage Requirement: The amount, if any, specified
as such by the Certificate Insurer in the Coverage Amount Identification
Notice delivered in connection with its approval of the Subsequent Mortgage
Loans to be included in Group I pursuant to Section 2.02 using criteria
established before the Closing Date.
Class A-1 Additional Step-Down Percentage: The amount (which may be
either a positive or negative amount), if any, specified as such by the
Certificate Insurer in the Coverage Amount Identification Notice delivered in
connection with its approval of the Subsequent Mortgage Loans to be included
in Group I pursuant to Section 2.02 using criteria established before the
Closing Date.
Class A-1 Certificates: Any or all of the Class A-1A Certificates, Class
A-1B Certificates, Class A-1C Certificates or Class A-1D Certificates, as the
case may be.
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
and the Class A-1D 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.
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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 and Class A-1D Certificateholders in accordance with
Section 5.01.
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 3.21) 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 and Class A-1D 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 and Class A-1D 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 and Class A-1D
Certificateholders pro rata in proportion to Class A-1A Monthly Interest,
Class A-1B Monthly Interest, Class A-1C Monthly Interest and Class A-1D
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
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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 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 3.17, 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 Certificateholders and Class A-1D 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: As to any Distribution Date
occurring before July 1999, $4,201,234. As to any Distribution Date occurring
during or after July 2000, the greatest of (a) the lesser of (x) the sum of
$4,201,234 and any Class A-1 Additional Coverage Requirement and (y) the
greater of (I) $600,176 and (II) the product of (i) 8.75% (increased or
decreased, as applicable, by the Class A-1 Additional Step-Down Percentage)
and (ii) the aggregate Principal Balances of the Mortgage Loans in Group I for
such Distribution Date, (b) the aggregate Principal Balances of the three
Mortgage Loans in Group I with the largest Principal Balances as of the
immediately preceding Determination Date and (c) two times the difference
between (x) 42.50% of the aggregate Principal Balances of all Mortgage Loans
in Group I (including Mortgage Loans as
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to which the underlying Mortgaged Property has become an REO Property) that,
as of the immediately preceding Determination Date, were 90 or more days
contractually delinquent and (y) three times (I) the amount, if any, of the
Class A-1 Excess Cash on the immediately preceding Distribution Date, less
(II) the Class A-1 Coverage Surplus if any, on such immediately preceding
Distribution Date. As to any Distribution Date occurring during or after July
1999 and during or before June 2000, the Class A-1 Required Coverage Amount
will be the lesser of (i) the amount set forth in the first sentence of this
definition and (ii) the excess, if any, of (x) the amount set forth in the
first sentence of this definition over (y) the amount determined by
multiplying the excess, if any, of the amount determined as set forth in the
first sentence of this definition over the amount determined as set forth in
the second sentence of this definition by a fraction, the numerator of which
is the integral number Distribution Dates that have occurred after June 1999
(including the Distribution Date on which such determination is being made)
and the denominator of which is 12; provided, however, that in no event shall
the amount determined pursuant to clause (ii) of this sentence be less than
the amount determined as set forth in the second sentence of this definition.
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 July
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
July 1996, 5.57875% per annum. With respect to each Distribution Date
thereafter, the per annum rate equal to the lesser of (i) LIBOR plus 0.11% per
annum and (ii) 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 (a) the applicable Servicing Fee Rate
with respect to Group I for the
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related Collection Period and (b) the applicable Insurer Premium Rate with
respect to Group I for the related Collection Period.
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 July
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: 7.275% 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 July
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
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Principal Balance as of the preceding Distribution Date (after giving effect
to any distributions made in reduction of the 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: 7.625% 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 July
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: 8.175% per annum.
Class A-2 Additional Coverage Requirement: As to any Distribution Date,
the amount, if any, specified as such by the Certificate Insurer in the
Coverage Amount Identification Notice delivered 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.
Class A-2 Additional Step-Down Percentage: As to any Distribution Date,
the amount (which may be either a positive or negative amount), if any,
specified as such by the Certificate Insurer in the Coverage Amount
Identification Notice delivered 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.
Class A-2 Base Coverage Amount: As to any Distribution Date occurring
prior to a Class A-2 Trigger Event Date or on or after the related Class A-2
Reinstatement Date, $11,020,408. As to any Distribution Date occurring on or
after a Class A-2 Trigger Event Date and prior to the related Class A-2
Reinstatement Date, $16,530,612.
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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.
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
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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 3.21) 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 July
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 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 3.17, 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
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<PAGE> 19
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 and Class A-1D
Certificateholders in accordance with Section 5.01.
Class A-2 Pass-Through Rate: With respect to the July 1996 Distribution
Date, 5.83% 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 March 2005 Distribution Date, LIBOR plus 0.33% and with
respect to each Interest Period thereafter, LIBOR plus 0.66% 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.
Class A-2 Reinstatement Date: With respect to any Class A-2 Trigger
Event Date, the Distribution Date that is the sixth consecutive Distribution
Date occurring after such Class A-2 Trigger Event Date on which the Class A-2
Excess Cash for such Distribution Date is an amount equal to or greater than
1/12th of 3.50% of the Group II Balance for such Distribution Date.
Class A-2 Required Coverage Amount: As to any Distribution Date
occurring before July 2000, the sum of the Class A-2 Base Coverage Amount and
any Class A-2 Additional Coverage Requirement. Subject to the following
proviso, as to any Distribution Date occurring during or after July 2000, the
greatest of (a) the lesser of (x) the sum of the Class A-2 Base Coverage
Amount and any Class A-2 Additional Coverage Requirement and (y) the greater
of (I) $918,367 and (II) the product of (i) 15.00% (increased or decreased, as
applicable by the Class A-2 Additional Step-Down Percentage) and (ii) the
aggregate Principal Balances of the Mortgage Loans in Group II for such
Distribution Date, (b) the aggregate Principal Balances of the three Mortgage
Loans in Group II with
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<PAGE> 20
the largest Principal Balances as of the immediately preceding Determination
Date and (c) two times the difference between (x) 42.50% of the aggregate
Principal Balances of all Mortgage Loans in Group II (including Mortgage Loans
as to which the underlying Mortgaged Property has become an REO Property)
that, as of the immediately preceding Determination Date, were 90 or more days
contractually delinquent and (y) three times (I) the amount, if any, of the
Class A-2 Excess Cash on the immediately preceding Distribution Date, less
(II) the Class A-2 Coverage Surplus, if any, on such immediately preceding
Distribution Date. As to any Distribution Date occurring during or after July
1999 and during or before June 2000, the Class A-2 Required Coverage Amount
will be the lesser of (i) the amount set forth in the first sentence of this
definition and (ii) the excess, if any, of (x) the amount set forth in the
first sentence of this definition over (y) the amount determined by
multiplying the excess, if any, of the amount determined as set forth in the
first sentence of this definition over the amount determined as set forth in
the second sentence of this definition by a fraction, the numerator of which
is the integral number Distribution Dates that have occurred after June 1999
(including the Distribution Date on which such determination is being made)
and the denominator of which is 12; provided, however, that in no event shall
the amount determined pursuant to clause (ii) of this sentence be less than
the amount determined as set forth in the second sentence of this definition.
Class A-2 Trigger Event Date: Any Distribution Date on which the Class
A-2 Excess Cash for such Distribution Date is less than 1/12th of 3.50% of the
Group II Balance for such Distribution Date.
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.
Closing Date: June 27, 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 July 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 July 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-B Mortgage Pass-Through Certificates, Series
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<PAGE> 21
1996-B, Collection Account". References herein to the Collection Account
shall include any Sub-Servicing Account as the context requires.
Collection Period: As to any Distribution Date, the period beginning on
the first day of the calendar month immediately preceding the month in which
such Distribution Date occurs and ending on the last day of such calendar
month.
Combined Loan-to-Value Ratio: With respect to a Mortgage Loan, the ratio
(expressed as a percentage) of (i) the sum of the Original Principal Amount of
such related Mortgage Loan plus the outstanding principal balance (at the time
of origination of such Mortgage Loan) of each mortgage loan secured by the
related Mortgaged Property that is senior to such Mortgage Loan to (ii) the
Appraised Value of the related Mortgaged Property determined by the Seller at
the time of origination of such Mortgage Loan.
Commitment Period: The period beginning on the Cut-Off Date and ending
on the close of business on June 27, 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, 16th Floor, Irvine,
California 92714, Attention: Aames Mortgage Loan Pass-Through Certificates,
Series 1996-B.
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.
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<PAGE> 22
Coverage Amount Identification Notice: The written notice to be
delivered by the Certificate Insurer pursuant to Section 2.02 identifying,
with respect to the Subsequent Mortgage Loans, as applicable, the Additional
Subordinated Amount, the Additional Subsequent Purchase Price, the Class A-1
Additional Coverage Requirement, the Class A-1 Additional Step-Down
Percentage, the Class A-2 Additional Coverage Requirement and the Class A-2
Additional Step-Down Percentage.
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.
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.
Cut-off Date: June 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 which 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.
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
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<PAGE> 23
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 fifteenth day of each month or, if such day is
not a Business Day, the Business Day immediately following such fifteenth day,
beginning July 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 which is either (i) a
federal savings and loan association duly organized, validly existing and in
good standing under the federal banking laws, (ii) an institution duly
organized, validly existing and in good standing under the applicable banking
laws of any state, (iii) a national banking association duly organized,
validly existing and in good standing under the federal banking laws, (iv) a
principal subsidiary of a bank holding company, and (v) approved in writing by
the Certificate Insurer or (B) a 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 which is an employee benefit plan within the
meaning of Section 3(3) of ERISA or any Person which 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.
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<PAGE> 24
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.
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:
Final Maturity Date
-------------------
Class A-1A October 15, 2010
Class A-1B May 15, 2020
Class A-1C April 15, 2024
Class A-1D August 15, 2028
Class A-2 August 15, 2028
Class R August 15, 2028
FNMA: The Federal National Mortgage Association and its successors in
interest.
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 the Subsequent Mortgage Loans identified in the Subsequent
Transfer Agreement as having been assigned to Group I, including any Qualified
Replacement Mortgage Loans delivered in replacement thereof.
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<PAGE> 25
Group I Balance: As to the Distribution Date occurring in July 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. 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 $117,406.31.
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
$20,539,034.26.
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 Subsequent Transfer
Agreement.
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 the Subsequent Mortgage Loans identified in the
Subsequent Transfer Agreement as having been assigned to Group II, including
any Qualified Replacement Mortgage Loans delivered in replacement thereof.
Group II Balance: As to the Distribution Date occurring in July 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. 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 $71,578.59.
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
$22,791,423.03.
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 December 1996, an
amount equal to 1/12 of 100 basis points multiplied by the aggregate Principal
Balance of the Mortgage Loans in
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<PAGE> 26
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 the 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 Subsequent Transfer
Agreement.
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 June 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 3.13 (to the extent such payments
compensate for losses which would otherwise be payable to Certificateholders
pursuant to this Agreement), net of any component thereof covering any
expenses incurred by or on behalf of the Servicer and specifically
reimbursable under this Agreement.
Insured Amount: With respect to the 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, 0.12%. With respect to Group II, for each Collection Period, 0.12%;
provided, however, that if on any Distribution Date subsequent to the
Distribution Date in March 2005 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 0.62%.
Interest Period: With respect to any Class A-1B Certificate, Class A-1C
Certificate or Class A-1D 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 July 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.
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Investment Company Act: The Investment Company Act of 1940, as amended.
Junior Mortgage Loan: Any Mortgage Loan secured by a Mortgage with a
lien of other than first priority.
LIBOR: With respect to the July 1996 Distribution Date, 5.50% 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.
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 which 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.
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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.
Maximum Rate: With respect to an Adjustable Rate Mortgage Loan, any
absolute maximum Mortgage Loan Rate set by provisions in the related Mortgage
Note.
Minimum Rate: With respect to an Adjustable Rate Mortgage Loan, any
absolute minimum Mortgage Loan Rate, set by provisions in the related Mortgage
Note, subject to the initial Mortgage Loan Rate first adjusting to a level in
excess of such minimum Mortgage Loan Rate in accordance with the terms of the
Mortgage Note.
Monthly Advance: As defined in Section 5.02(a).
Monthly 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
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<PAGE> 29
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 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; (l) the ratio, expressed as a
percentage, of the Original Principal Amount of such Mortgage Loan to the
Appraised Value of the related Mortgaged Property; (m) 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; (n)
whether the related Mortgaged Property is owner-occupied or
non-owner-occupied; (o) whether the related Mortgaged Property is a
single-family residence, a two- to four-family residence or a condominium; (p)
whether the Mortgage Loan has been originated by an affiliate of the Company;
and (q) 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 the Closing Date to reflect the addition of the 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
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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.
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: $300,035,000.00.
Original Class A-1 Certificate Principal Balance: $120,035,000.00.
Original Class A-1A Certificate Principal Balance: $52,107,000.00.
Original Class A-1B Certificate Principal Balance: $30,799,000.00.
Original Class A-1C Certificate Principal Balance: $21,410,000.00.
Original Class A-1D Certificate Principal Balance: $15,719,000.00.
Original Class A-2 Certificate Principal Balance: $180,000,000.00.
Original Group I Balance: $99,494,446.97.
Original Group II Balance: $160,881,761.93.
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Original Pool Balance: $260,376,208.90.
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.
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 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:
(i) 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;
(ii) 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;
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(iii) 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;
(iv) deposits of any bank or savings and loan association which 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;
(v) 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;
(vi) investments in money market funds rated "AAAm" or "AAAm-G" by
Standard & Poor's and Aaa by Moody's; and
(vii) 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 (a) only interest with respect to obligations underlying such
instrument or (b) both principal and interest payments derived from
obligations underlying such instrument and the 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.
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 3.21(a) and
entitled "Bankers Trust Company of California, N.A., as Trustee for Aames
Mortgage Trust 1996-B Mortgage Pass-Through Certificates, Series 1996-B,
Policy Payments Account".
Pool Balance: As to any Distribution Date, the sum of the Group I
Balance and Group II Balance.
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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 and (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, 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 which 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 with a final, nonappealable order of a
court having competent jurisdiction and which have not theretofore been repaid
to such Class A-1A Certificateholders, Class A-1B Certificateholders, Class
A-1C Certificateholders and Class A-1D Certificateholders, as applicable,
provided such Class A-1A Certificateholders, Class A-1B Certificateholders,
A-1C Certificateholders and/or Class A-1D Certificateholders have complied
with the provisions of Section 3.21(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 which 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
which have not theretofore been repaid to such Class A-2 Certificateholders
provided such Class A-2 Certificateholders have complied with the provisions
of Section 3.21(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
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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 Principal
Prepayments) which, 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) which, 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 3.17 and entitled
"Bankers Trust Company of California, N.A., as Trustee for Aames Mortgage
Trust 1996-B Mortgage Pass-Through Certificates, Series 1996-B, Purchase
Account".
Purchase Account Deposit: $43,330,457.29.
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
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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 which 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 Substitute 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, 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 (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 that are allocable to principal, 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.
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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) which 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.
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 which 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 which 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 which 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
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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.
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.
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.
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Subordinated Amount: An amount equal to $15,221,642, plus any applicable
Additional Subordinated Amount.
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 3.16 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-B Mortgage Pass-Through Certificates, Series 1996-B,
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 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 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 the Subsequent Transfer Agreement.
Subsequent Mortgage Loan Schedule: As of the Subsequent Transfer Date,
the schedule of Subsequent Mortgage Loans separated by Mortgage Loan Group
being transferred to the Trust on the Subsequent Transfer Date pursuant to the
Subsequent Transfer Agreement. The Subsequent Mortgage Loan Schedule shall
contain information regarding the 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 the Subsequent Transfer Date, (a) 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 Subsequent Transfer Agreement and (ii) any Additional Subsequent
Purchase Price attributable to such Subsequent Mortgage Loans and (b) 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 Subsequent Transfer Agreement and (ii) any Additional Subsequent
Purchase Price attributable to such Mortgage Loans.
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Subsequent Transfer Agreement: The agreement pursuant to which the
Subsequent Mortgage Loans are to be transferred to the Trust, in substantially
the form attached hereto as Exhibit C.
Subsequent Transfer Date: The Closing Date.
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 August
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 which secured a Mortgage Loan and which
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 which (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".
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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 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 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 or Class A-1D 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.
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
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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.
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-B Mortgage
Pass-Through Certificates, Series 1996-B, 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;
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(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 thirty (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 thirty (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 which 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.
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.
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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 Subsequent Transfer Date 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, on the
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 Subsequent Transfer Agreement delivered by the
Seller on the 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 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. The Seller shall deposit any
applicable Subsequent Transfer Deposit in the Collection Account on the
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
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 Subsequent
Transfer Agreement shall each constitute a security agreement with respect to
the Subsequent Mortgage Loans under applicable law.
The amount released to the Seller from the Purchase Account on the
Subsequent Transfer Date in connection with the 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
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Loans, which amount shall not exceed the amount then on deposit in the
Purchase Account in respect of the Group I Purchase Account Deposit. The
amount released to the Seller from the Purchase Account on the 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. 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
Subsequent Mortgage Loans pursuant to a fixed price contract established
pursuant to this Section 2.02.
On the 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 Subsequent
Transfer Date:
(a) the Seller shall provide the Trustee and the Certificate
Insurer with an Addition Notice and shall provide any information
reasonably requested by the Trustee or the Certificate Insurer with
respect to the Subsequent Mortgage Loans;
(b) the Seller shall deliver to the Trustee, the Certificate
Insurer and the Rating Agencies a duly executed Subsequent Transfer
Agreement and any other related documentation in the forms of the
exhibits listed thereon;
(c) the Seller shall deposit in the Collection Account all
collections in respect of the Subsequent Mortgage Loans received or
deemed received by the Seller on or after the 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 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;
(g) on the Subsequent Transfer Date, the Seller shall deposit any
applicable Subsequent Transfer Deposit in the Collection Account;
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(h) 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
Subsequent Transfer Agreements;
(i) 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 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);
(j) the Trustee shall deliver to the Rating Agencies, the
Certificate Insurer and the Seller an Opinion of Counsel with respect to
the Subsequent Transfer Agreement substantially in the form of the
Opinion of Counsel delivered to the Seller and the Certificate Insurer on
the Closing Date;
(k) the Seller shall make the representations and warranties set
forth in Section B of Schedule II to this Agreement; and
(l) 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.
Upon the delivery to the Trustee, the Seller and each Rating Agency of
the Coverage Amount Identification Notice, 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.
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 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
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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 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
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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 November 30, 1996 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
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
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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;
(iii) There is no action, suit, proceeding or investigation pending
or, to the best of the Company's knowledge, threatened against the Company
which, 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
which 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 which would be likely to impair the ability of the Company to
perform under the terms of this Agreement;
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(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 which 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;
(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;
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(iv) As of the Cut-off Date or Subsequent Cut-off Date, as
applicable, other than with respect to not more than 6.75% of the
Mortgage Loans included in Group I (by Original Group I Balance), no
Mortgage Loan included in Group I has a Combined Loan-to-Value Ratio in
excess of 80.0% and, other than with respect to not more than 6.50% of
the Mortgage Loans included in Group II (by Original Group II Balance),
no Mortgage Loan included in Group II has a Loan-to-Value Ratio in excess
of 80.0%;
(v) Each Mortgage Loan was originated by an Affiliate 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 8.63% 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
5.50% per annum and a Mortgage Loan Rate as of the Cut-off Date of not
less than 6.50% 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 12.90% of the Original Group I 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 which do
not individually, or in the aggregate, materially and adversely affect the
benefits of the security intended to be provided by such Mortgage;
(ix) Immediately prior to the sale, transfer and assignment herein
contemplated, the 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 which 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;
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(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 35.00% 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 two years, three years or
five years from the date of origination thereof;
(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 opening of business on the Cut-off Date (a) no
Mortgage Loan had three or more Monthly Payments past due, not more than
1.00% of the Mortgage Loans (by Cut-Off Date Principal Balance) had two or
more Monthly Payments past due and not more than 3.50% 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 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 which is or may be a lien prior
to, or equal to or on a parity with, the lien of the related Mortgage
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except those which 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 state and federal laws and regulations,
including, without limitation, the federal Truth-in-Lending Act and other
consumer protection laws, real estate settlement procedure, usury, equal
credit opportunity, disclosure and recording laws;
(xvii) With respect to each Mortgage Loan, a lender's title
insurance policy (issued in standard form by a title insurance company
authorized to transact business in the state where the related Mortgaged
Property is located), in an amount at least equal to the Original Principal
Amount of such Mortgage Loan insuring the mortgagee's interest under the
related Mortgage Loan as the holder of a valid lien of record on the real
property described in the related Mortgage (subject only to exceptions of
the character referred to in paragraph (viii) above), was effective on the
date of the origination of such Mortgage Loan, and, as of the Closing Date,
such policy is in full force and effect and thereafter such policy shall
continue in full force and effect and shall inure to the benefit of the
Certificateholders upon consummation of the transactions contemplated by
this Agreement;
(xviii) As of the 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 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
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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 establishments of co-insured, joint loss payee
and mortgagee rights in favor of the Trustee;
(xxii) As of the Cut-off Date no more than 1.00% of the Original
Group I Balance is secured by Mortgaged Properties located within any
single zip code area and no more than 0.75% 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 which has been recorded, if necessary, to protect the interest
of the Certificateholders and which 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;
(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;
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(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 the related 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
which 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
which 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) Each Mortgage is a deed of trust, and a trustee, duly
qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in such Mortgage, and no
fees or expenses are or will become payable by the Certificateholders or
the Trust to any trustee under any deed of trust, except in connection with
a trustee's sale after default by the related Mortgagor;
(xxxvi) With respect to each Junior Mortgage Loan, either (A) no
consent for such Mortgage Loan was required by the holder of the related
Senior Lien prior to the making of such Mortgage Loan or (B) such consent
has been obtained and is contained in the related Mortgage File;
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(xxxvii) Each Mortgage contains customary and enforceable provisions
which 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 which
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
which, 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 which
has been approved by the primary mortgage guaranty insurer, if any, and
which has been delivered to the Trustee;
(xl) The maturity date of each Junior Mortgage Loan is at least
twelve months prior to the maturity date of the related Senior Lien if
such Senior Lien provides for a balloon payment;
(xli) At least 91.72% of the Mortgage Loans in Group I (by Original
Group I Balance) and at least 93.15% 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
which 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
which 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 the Mortgage proceeds, whichever is greater, to the date
which precedes by one month the Due Date of the first installment of
principal and interest;
(xliii) All parties which 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
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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
which 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 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 mortgage 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
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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 the
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
33.00% 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 19.00% 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 15.00% 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 10.00% 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; and Mortgage Loans in Group I representing not
more than 23.00% 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 19.00% 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 14.00% 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
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than 19.00% 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 11.00% 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 37.00% 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 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,
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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 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.
Section 2.09. Repurchase of Certain Delinquent Mortgage Loans by the
Seller. The Seller shall repurchase from the Trust on any Deposit Date
occurring on or prior to the September 1996 Deposit Date each Mortgage Loan
that had three or more Monthly Payments delinquent as of the Closing Date
(each such Mortgage Loan being identified on the Mortgage Loan Schedule) if
each such delinquent Monthly Mortgage Payment has not been paid, recovered or
otherwise credited by the September 1996 Deposit Date. 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 Mortgage Loan. Upon receipt of the related repurchase
price and written notification of such deposit signed by a Servicing
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Officer, the Trustee shall release or cause to be released to the Seller the
Mortgage File related to such 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 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 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 3.16, 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 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
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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.
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
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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 which
may be collected in the ordinary course of servicing the Mortgage Loans, (ii)
if a Mortgagor is in default or about to be in default because of a
Mortgagor's financial condition, arrange with the Mortgagor a schedule for the
payment of delinquent payments due on the related Mortgage Loan, 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 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
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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 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 which 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.
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(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 (v) of the definition of Permitted Investments. All net
income and gain realized from any such investment shall be for the benefit of
the Servicer as additional servicing compensation and shall be subject to its
withdrawal or order from time to time. Any losses realized in connection with
any such investment shall be for the account of the Servicer and the Servicer
shall deposit or cause to be deposited the amount of such loss (to the extent
not offset by income from other investments) in the Certificate Account
immediately upon the realization of such loss.
Section 3.03. Additional Servicing Responsibilities for the Adjustable
Rate Mortgage Loans. The Servicer shall enforce each Adjustable Rate Mortgage
Loan and shall timely calculate, record, report and apply all Mortgage Loan
Rate adjustments in accordance with the related Mortgage Note. The Servicer's
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
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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
which is not less than the least of (i) the maximum insurable value from time
to time of the improvements which 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 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 which 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
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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 which the Servicer reasonably believes it may be restricted by law
from preventing, for any reason whatsoever.
Section 3.06. Realization upon Liquidated Mortgage Loans. On behalf of
the Trust, the Servicer shall foreclose upon or otherwise comparably convert
to ownership Mortgaged Properties securing such of the Mortgage Loans as come
into and continue in default and as to which no satisfactory arrangements can
be made for collection of delinquent payments pursuant to Section 3.02(a);
provided that if the Servicer has actual knowledge or reasonably believes that
any Mortgaged Property is affected by hazardous or toxic wastes or substances,
then the Servicer shall not cause the Trust to acquire title to such Mortgaged
Property in a foreclosure or similar proceeding, unless otherwise directed in
writing by the Certificate Insurer. In connection with such foreclosure or
other conversion, the Servicer shall follow such practices (including, in the
case of any default on a related Senior Lien, the advancing of funds to
correct such default) and procedures as it shall deem necessary or advisable
and as shall be normal and usual in its general first, second and third lien
one- to four-family mortgage loan servicing activities (including the
procurement of a drive-by appraisal of the related Mortgaged Property prior to
foreclosure or other conversion). The foregoing is subject to the proviso
that 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).
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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 which were unreimbursed prior
to the receipt of such Net Liquidation Proceeds), such excess shall be paid to
the Holder of the Class R Certificate.
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
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transactions imposed by Code Section 860F(a)(1), or otherwise subject the
REMIC Pool to tax or cause the REMIC Pool to fail to qualify as a REMIC at any
time that any Certificates are outstanding. The Servicer shall further ensure
that the Mortgaged Property is administered so that it constitutes
"foreclosure property" within the meaning of Code Section 860G(a)(8) at all
times, that the sale of such property does not result in the receipt by the
REMIC Pool of any income from non-permitted assets as described in Code
Section 860F(a)(2)(B), and that the REMIC Pool does not derive any "net income
from foreclosure property" within the meaning of Code Section 860G(c)(2) with
respect to such property.
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 which 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
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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 3.11, and all other fees and expenses not otherwise
expressly stated hereunder for the account of the Certificateholders) and
shall not be entitled to reimbursement therefor except as specifically
provided herein.
Section 3.09. [Reserved]
Section 3.10. 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, 1996, 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 which with
the giving of notice or the lapse of time, or both, would become an Event of
Default.
Section 3.11. Annual Independent Public Accountants' Servicing Report.
On or before September 30 of each year, beginning with September 30, 1996, 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, which, in the opinion of such firm,
are material, except for such exceptions as shall be set forth in such report.
Section 3.12. Access to Certain Documentation and Information Regarding
the Mortgage Loans. (a) The Servicer shall provide to Certificateholders
which 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
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is in the possession of the Servicer, such access being afforded without
charge but only upon reasonable request and during normal business hours at
the offices of the Servicer. Nothing in this Section shall derogate from the
obligation of the Servicer to observe any applicable law prohibiting
disclosure of information regarding the Mortgagors and the failure of the
Servicer to provide access as provided in this Section as a result of such
obligation shall not constitute a breach of this Section.
(b) The Servicer shall supply information to the Trustee in such form as
the Trustee shall reasonably request, by the start of the third Business Day
preceding each Distribution Date, as is required in the Trustee's reasonable
judgment to enable the Trustee to make required distributions and to furnish
the certificates, statements and reports to Certificateholders required
pursuant to this Agreement.
Section 3.13. 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 3.14. 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 3.15. Reports of Foreclosures and Abandonment of Mortgaged
Property. 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 3.16. 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
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with the terms of this Agreement or that otherwise violates the provisions of
this Agreement. The Servicer may enter into, and make amendments to, any
Sub-Servicing Agreement or enter into different forms of Sub-Servicing
Agreements; provided, however, that any such amendments or forms shall be
consistent with and not violate the provisions of this Agreement.
(b) For purposes of this Agreement the Servicer shall be deemed to have
received payments on Mortgage Loans when any Sub-Servicer has received such
payments. With respect to the Servicer's obligations under Section 3.01 to
make deposits in the Collection Account, the 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 which 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 3.17. Purchase Account. (a) The Trustee will establish and
maintain the Purchase Account. On 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 the Subsequent Mortgage Loans to the
Trust on the 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 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 after the Subsequent
Transfer Date shall be invested in Permitted Investments of the type specified
in clause (v) of the definition of Permitted Investments, which Permitted
Investments shall mature on the Business Day next succeeding the Deposit Date
prior to the July 1996 Distribution Date. 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
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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 July
1996 Distribution Date.
(c) On the Deposit Date in July 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 July 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 July 1996 Distribution Date. Any amounts so deposited shall
not be invested in Permitted Investments or otherwise.
Section 3.18. 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 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, and Class A-2 Monthly Interest,
respectively, for the applicable initial Interest Period. On the July 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 and Class A-1D 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 and the Class
A-1D Certificate Principal Balance and the denominator of which is the Class
A-1 Certificate Principal Balance, (ii) 18 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) 18 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
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of the type specified in clause (iv) 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
other investment earnings on amounts held in the Capitalized Interest Account
shall be paid by the Trustee to the Seller on the July 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.
Section 3.19. [Reserved].
Section 3.20. [Reserved].
Section 3.21. 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 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
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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 (a) the Business Day following
receipt of such Notice of Claim and (b) 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-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 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 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
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 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 or (v) the Class A-2
Certificateholders relating to or arising under the Class A-2 Certificates, as
applicable, against the debtor which 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
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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
or Class A-1D Certificateholder any Class A-1 Insured Amount allocable to such
Class A-1A Certificates, Class A-1B Certificates, Class A-1C Certificates or
Class A-1D 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 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 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 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
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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;
and (v) 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 and Class A-1D 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.
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, and (v) 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.
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(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 3.22. 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 the Class A
Certificateholders under this Agreement without any further consent of the
Class A Certificateholders, including, without limitation:
(a) the right to direct foreclosures upon Mortgage Loans upon
failure of the Servicer to do so;
(b) 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
(c) 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 3.23. 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
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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.
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
which 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 which 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;
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(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 which the Seller is required to repurchase on the related Deposit
Date pursuant to Section 2.03 or 2.05, (ii) any Mortgage Loan which 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 which the Servicer is to purchase on
the related Deposit Date pursuant to Section 3.06;
(i) any amounts required to be deposited by the Seller on the
related Deposit Date in connection with the substitution of a Qualified
Replacement Mortgage Loan pursuant to Section 2.03 or 2.05;
(j) the amount of Monthly Advances to be made by the Servicer
pursuant to Section 5.02(a);
(k) the related Monthly Servicing Fee attributable to the Mortgage
Loans in the related Mortgage Loan Group;
(l) the amount of Monthly Advances reimbursable to the Servicer in
such Collection Period pursuant to Section 5.02(a) and not previously
reimbursed;
(m) the amount of any Servicing Advance made by the Servicer
pursuant to Section 5.02(b) and not previously reimbursed; and
(n) the amount of any Interest Shortfall for the related
Distribution Date.
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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 which
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 and Class A-1D
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 Certificates, Class A-1B Certificates,
Class A-1C Certificates and Class A-1D 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 and Class A-1D 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 and Class A-1D 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 and Class
A-1D Certificateholders, to receive the Class A-1A Monthly
Interest, Class A-1B Monthly Interest, Class A-1C Monthly
Interest and Class A-1D Monthly Interest, respectively, and
the right of the Class A-1A Certificateholders, Class A-1B
Certificateholders, Class A-1C Certificateholders and Class
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A-1D 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 and
Class A-1D Certificateholders, the Class A-1A Monthly
Interest, Class A-1B Monthly Interest, Class A-1C Monthly
Interest and Class A-1D 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;
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-2 Certificateholders, the Class A-1
Overflow Distribution to be applied to cover any shortfalls
in the Class A-2 Monthly Interest;
ninth, to the Certificate Insurer, the Class A-1 Overflow
Distribution remaining after the distribution in
accordance with clause eighth above up to the amount
described in clause (ii)(c) of the definition of Class A-1
Overflow Distribution;
tenth, to the Class A-2 Certificateholders, the Class A-1
Overflow Distribution remaining after the distribution in
accordance with clauses eighth and ninth 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
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eleventh, 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 tenth 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 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 and
Class A-1D 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 and Class A-1D 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; and
seventh, sequentially, to the Class A-1A Certificateholders, Class
A-1B Certificateholders, Class A-1C Certificateholders and
Class A-1D
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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; and thereafter, to reduce the Class A-1D
Certificate Principal Balance to zero;
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 and Class A-1D
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 Monthly Interest and Class A-1D 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 and, thereafter,
to reduce the Class A-1D Certificate Principal Balance until such Class A-1D
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.
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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 which 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 which are not required
to be deposited on such Deposit Date in the Certificate Account as any portion
of Available Funds for such Mortgage Loan Group and the related Distribution
Date; provided, however, that the Servicer shall be required to replace any
such amounts by deposit to the Collection Account on or before the next
Deposit Date and the amount of such deposit shall thereafter be considered a
Monthly Advance for purposes of reimbursement under this Agreement. The
Servicer may recover Monthly Advances, 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
eleventh 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 eleventh 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.
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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;
(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;
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(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;
(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 NatWest Capital Markets Limited, as representative of the
several underwriters, NatWest Capital Markets Limited, 175 Water Street, New
York, New York 10038, Attention: Mortgage & Asset Backed Securities Group,
(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.
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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 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-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-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
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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 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 which 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.
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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
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
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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 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.
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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 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
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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.
Section 6.05. [Reserved]
Section 6.06. [Reserved]
Section 6.07. 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 which 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.
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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) which may result from any
merger, conversion or consolidation to which the Servicer shall be a party, or
(iii) which 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 which would otherwise be
imposed by reason of willful misfeasance, bad faith or negligence in the
performance of the duties of the Servicer or by reason of reckless disregard
of the obligations and duties of the Servicer hereunder. The Servicer and any
director, officer, employee or agent of the Servicer may rely in good faith on
any document of any kind prima facie properly executed and submitted by any
Person respecting any matters arising hereunder. The Servicer shall not be
under any obligation to appear in, prosecute or defend any legal action which
is not incidental to its duties to service the Mortgage Loans in accordance
with this Agreement, and which 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.
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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)
which may result from any merger, conversion or consolidation to which the
Seller shall be a party, or (iii) which 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 September 30, 1996, which
quarterly period shall be extended for a succeeding quarterly period ending
December 31, March 31, June 30 and September 30 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 fifteen
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.
If the Trustee has not received the Servicer Extension Notice by the
fifteenth (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
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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;
(e) The payment by the Certificate Insurer of any Insured Amounts;
(f) The aggregate of the Principal Balances of Mortgage Loans which
are contractually delinquent three months or more as of any Determination
Date exceeds 13% of the Pool Balance as of the related Distribution Date;
(g) The aggregate Realized Losses in respect of the Mortgage Loans
(i) for any twelve-month period commencing on January 1 of a given year
and ending on December 31 of the following year exceeds 10% of the
Subordinated Amount as of the Closing Date or (ii) occurring since the
Cut-off Date exceeds 35% of the Subordinated Amount as of the Closing
Date; or
(h) 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%;
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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 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
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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
which 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.
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 which 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 9.14, 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.
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The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which 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 9.14, 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 which may have occurred, the duties
and obligations of the Trustee shall be determined solely by the express
provisions of this Agreement, the Trustee shall not be liable except for
the performance of such duties and obligations as are specifically set
forth in this Agreement, no implied covenants or obligations shall be
read into this Agreement against the Trustee and, in the absence of bad
faith on the part of the Trustee, the Trustee may conclusively rely, as
to the truth of the statements and the correctness of the opinions
expressed therein, upon any certificates, filings or opinions furnished
to the Trustee and conforming to the requirements of this Agreement;
(b) the Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer of the Trustee,
unless it shall be proved that the Trustee was negligent in ascertaining
the pertinent facts;
(c) the Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of the Holders of Certificates evidencing
Voting Interests represented by all Certificates 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
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indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of,
any of the obligations of the Servicer under this Agreement, except during
such time, if any, as the Trustee shall be the successor to, and be vested
with the rights, duties, powers and privileges of, the Servicer in accordance
with the terms of this Agreement.
Section 9.02. Certain Matters Affecting the Trustee. Except as
otherwise provided in Section 9.01:
(a) The Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officer's Certificate,
certificate of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal, bond or
other paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(b) The Trustee may consult with counsel and any advice obtained
from counsel or Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken or suffered
or omitted by it hereunder in good faith and in accordance with such
advice or Opinion of Counsel;
(c) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement, or to institute, conduct
or defend any litigation hereunder or in relation hereto, at the request,
order or direction of 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 which 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 9.14, 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 which 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
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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
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 July,
beginning with the July 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 July
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
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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 which 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 tenth 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.
(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
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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.
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 ten days after acceptance of
appointment by the successor trustee, the successor trustee shall cause such
notice to be mailed at the expense of the 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
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corporation succeeding to the business of the Trustee or substantially all of
the Trustee's trust business, shall be the successor of the Trustee hereunder,
provided such corporation shall be eligible under the provisions of Section
9.06, without the execution or filing of any paper or any further act on the
part of any of the parties hereto, anything herein to the contrary
notwithstanding.
Section 9.10. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust or any Mortgaged Property may at the time be located, the
Servicer and the Trustee acting jointly, with the prior written consent of the
Certificate Insurer, shall have the power and shall execute and deliver all
instruments to appoint one or more Persons approved by the Trustee to act as
co-trustee or co-trustees, jointly with the Trustee, or separate trustee or
separate trustees, of all or any part of the Trust, and to vest in such Person
or Persons, in such capacity and for the benefit of the Certificateholders,
such title to the Trust, or any part thereof, and, subject to the other
provisions of this Section, such powers, duties, obligations, rights,
indemnities and trusts as the Servicer and the Trustee may consider necessary
or desirable. If the Servicer shall not have joined in such appointment
within 15 days after the receipt by it of a request so to do, or in the case
an Event of Default shall have occurred and be continuing, the Trustee alone
and with the prior consent of the Certificate Insurer shall have the power to
make such appointment. No co-trustee or separate trustee hereunder shall be
required to meet the terms of eligibility as a successor trustee under Section
9.06 and no notice to Certificateholders of the appointment of any co-trustee
or separate trustee shall be required under Section 9.08. Each of the Rating
Agencies shall be given written notice of the appointment of a co-trustee or a
separate trustee pursuant to this Section.
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 which has not
been cured, the Trustee, acting alone may accept the resignation of or
remove any separate or co-trustor.
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Any notice, request or other writing given to the Trustee shall be deemed
to have been given to each of the then separate trustees and co-trustees, as
effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the
conditions of this Article. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Trustee. Every such instrument shall be filed with the
Trustee and copies thereof given to each of the Servicer and the Certificate
Insurer.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all of
its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
No appointment of any separate trustee or co-trustee shall absolve the
Trustee of its duties and obligations under this Agreement.
Section 9.11. [Reserved]
Section 9.12. 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
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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 9.13. 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 9.14. 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 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 which is not inconsistent with such direction; provided, however,
that the Trustee need not take any action which it determines might
involve it in liability or may be unjustly prejudicial to the Holders not
so directing.
Section 9.15. 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
Supplement, dated as of June 20, 1996, with respect to the Class A
Certificates) for the Class A Certificates shall be
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23% of the "Home Equity Prepayment" assumption described in the Prospectus
Supplement dated June 20, 1996 relating to the Class A Certificates.
Section 9.16. 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 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.
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The right of the Servicer to purchase all outstanding Mortgage Loans
pursuant to clause (a) above is conditioned upon the Pool Balance as of the
final Distribution Date being less than 10% of the sum of the Cut-off Date
Pool Balance and the Purchase Account Deposit. 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 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 fifteenth 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 tenth 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
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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 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 and Class A-1D 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
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"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.
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.
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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.
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 which 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
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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 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-B; (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:
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<PAGE> 112
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
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
which 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
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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.
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<PAGE> 114
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
<PAGE> 115
State of California }
} ss.:
County of Los Angeles }
On the 27th day of June 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/ Catherine Emmett
- ---------------------------------------
Notary Public
[Notary Seal]
<PAGE> 116
State of California }
} ss.:
County of Los Angeles }
On the 27th day of June 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/ Catherine Emmett
- ------------------------------------
Notary Public
[Notary Seal]
<PAGE> 117
Schedule I
List of Sub-Servicers
Advanta Mortgage Corp. USA
Wendover Funding, Inc.
<PAGE> 118
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 the 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% rate cap every 6 months, (b) if such Mortgage Loan has
an initial Adjustment Date 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% and a rate cap as to each subsequent Adjustment Date
of from 1% to 2%; any Subsequent Mortgage Loan that has an
Index based on the one-year CMT index provides for a 2% annual
rate cap;
(iii) no Subsequent Mortgage Loan has a Gross Margin less than 3.50%;
(iv) each Subsequent Mortgage Loan will have been serviced since
origination or purchase by the Servicer; and
(v) no Subsequent Mortgage Loan has been originated for the
purpose of facilitating the purchase of real estate owned by
the originator.
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 11.75%;
(b) will have a weighted average original term to stated
Pmaturity of not more than 284 months;
Schedule II-1
<PAGE> 119
(c) will have a weighted average Combined Loan-to-Value Ratio
of not more than 63.05% and a weighted average second
loan-to-value ratio of not more than 63.37%;
(d) will have no Mortgage Loan with a Principal Balance less
than $10,000 or greater than $338,000;
(e) will not have in excess of 8.50% 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 1.00% by Aggregate Principal Balance;
(g) will not have an aggregate concentration in excess of
0.71% by Aggregate Principal Balance in ZIP codes
beginning with the following 3 digits: 900-919, 922-925,
930-931 and 935;
(h) will not have a concentration in a single State, other
than Arizona, California, Colorado, Florida, Illinois,
New York, New Jersey, Oregon or Washington in excess of
5.00% by Aggregate Principal Balance;
(i) will not have a concentration in Arizona in excess of
5.23%, in California in excess of 35.77%, in Colorado in
excess of 5.00%, in Illinois in excess of 8.18%, In New
York in excess of 5.00%, in New Jersey in excess of
5.00%, in Oregon in excess of 5.00%, in Utah in excess of
5.00% or in Washington in excess of 8.61% by Aggregate
Principal Balance;
(j) will not have in excess of 1.74% or 6.84% 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 91.42% 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;
Schedule II-2
<PAGE> 120
(m) will have no Mortgage Loans that are based on a 360 month
amortization schedule and have a balloon payment between
month 121-150;
(n) will have no more than 10.92% 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 1.37% 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 87.12% 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 11.00%;
(b) will have a weighted average original term to stated
maturity of not more than 358 months;
(c) will have a weighted average Loan-to-Value Ratio of not
more than 65.626%;
(d) will have no Mortgage Loan with a Principal Balance less
than $10,000 or more than $974,000;
(e) will have not in excess of 6.95% 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 1.00% by Aggregate Principal Balance;
(g) will not have an aggregate concentration in excess of
0.61% in ZIP codes beginning with the following 3 digits:
900-919, 922-925, 930, 931, 935;
Schedule II-3
<PAGE> 121
(h) will not have a concentration in a single State, other
than Arizona, California, Florida, Illinois, New Jersey,
New York, Oregon, Utah or Washington in excess of 5.00%
by Aggregate Principal Balance;
(i) will not have a concentration in Arizona in excess of
5.00%, in California in excess of 27.11%, in Florida in
excess of 5.00%, in Illinois in excess of 10.90%, in New
Jersey in excess of 5.63%, in New York in excess of
5.31%, in Oregon in excess of 6.82%, in Utah in excess of
6.44%, or in Washington in excess of 8.28% by Aggregate
Principal Balance;
(j) will not have in excess of 6.13% or 1.96% 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 91.91% 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 6.965%;
(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 four 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> 122
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: $52,107,000.00
June 1, 1996
First Distribution Date: CUSIP No. 00253C BL0
July 15, 1996
Denomination: $52,107,000.00 Certificate No.: 1
Class A-1A Adjustable Rate Certificate
AAMES MORTGAGE TRUST 1996-B
PASS-THROUGH CERTIFICATE,
SERIES 1996-B, CLASS A-1A
evidencing a percentage interest in the distributions allocable to the
Class A-1A Certificates with respect to a Trust consisting primarily of a
pool of conventional, closed-end, fixed and adjustable rate, residential
mortgage loans, sold 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-1A Certificate
Principal Balance) in a trust, the assets of which consist primarily
A1A-1
<PAGE> 123
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 fifteenth day of each month (or if any such day is not a Business Day, on
the Business Day immediately following such fifteenth 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-B, Class A-1A" (herein called the "Class A-1A Certificates") and
representing a beneficial ownership interest, in each case subject to the
limitations set forth in the Agreement in, among other things, the Mortgage
Loans, such assets as shall from time to time be identified or shall be
required by the Agreement to be identified as deposited in the Collection
and/or Certificate Account or invested in Permitted Investments in accordance
with the Agreement, all rights under any insurance policy covering a Mortgage
Loan or the related Mortgaged Property and property and any proceeds thereof
which secured a Mortgage Loan and which has been acquired by foreclosure, deed
in lieu of foreclosure or by a comparable conversion.
A1A-2
<PAGE> 124
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> 125
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> 126
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: June 27, 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> 127
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: $30,799,000.00
June 1, 1996
First Distribution Date: CUSIP No. 00253C BM8
July 15, 1996
Denomination: $30,799,000.00 Certificate No.: 1
Class A-1B Pass-Through Rate: 7.275%
AAMES MORTGAGE TRUST 1996-B
PASS-THROUGH CERTIFICATE,
SERIES 1996-B, 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 above by the Original Class A-1B Certificate
Principal Balance) in a trust, the assets of which consist primarily
A1B-1
<PAGE> 128
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 fifteenth day of each month (or if any such day is not a Business Day, on
the Business Day immediately following such fifteenth 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-B, 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> 129
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> 130
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> 131
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: June 27, 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> 132
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: $21,410,000.00
June 1, 1996
First Distribution Date: CUSIP No. 00253C BN6
July 15, 1996
Denomination: $21,417,000.00 Certificate No.: 1
Class A-1C Pass-Through Rate: 7.625%
AAMES MORTGAGE TRUST 1996-B
PASS-THROUGH CERTIFICATE,
SERIES 1996-B, 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 above by the Original Class A-1C Certificate
Principal Balance) in a trust, the assets of which consist primarily
A1C-1
<PAGE> 133
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 fifteenth day of each month (or if any such day is not a Business Day, on
the Business Day immediately following such fifteenth 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-B, 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> 134
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> 135
The Seller and the Trustee and any of their respective agents may treat
the Person in whose name this Certificate is registered as the owner hereof
for all purposes, and neither the Seller, the Trustee nor any of their
respective agents shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon payment to the Certificateholders,
or provision therefor, in accordance with the Agreement upon (a) the purchase
by the 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> 136
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: June 27, 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> 137
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: $15,719,000.00
June 1, 1996
First Distribution Date: CUSIP No. 00253C BP1
July 15, 1996
Denomination: $15,719,000.00 Certificate No.: 1
Class A-1D Pass-Through Rate: 8.175%
AAMES MORTGAGE TRUST 1996-B
PASS-THROUGH CERTIFICATE,
SERIES 1996-B, 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 above by the Original Class A-1D Certificate
Principal Balance) in a trust, the assets of which consist primarily
A1D-1
<PAGE> 138
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 fifteenth day of each month (or if any such day is not a Business Day, on
the Business Day immediately following such fifteenth 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-B, 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> 139
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> 140
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> 141
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: June 27, 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> 142
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: $180,000,000.00
June 1, 1996
First Distribution Date: CUSIP No. 00253C BQ9
July 15, 1996
Denomination: $180,000,000.00 Certificate No.: 1
Class A-2 Adjustable Rate Certificate
AAMES MORTGAGE TRUST 1996-B
MORTGAGE LOAN PASS-THROUGH CERTIFICATE,
SERIES 1996-B, 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
A2-1
<PAGE> 143
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
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 fifteenth day of each month (or if any such day is not a Business Day, on
the Business Day immediately following such fifteenth 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-B, 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> 144
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> 145
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> 146
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: June 27, 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> 147
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 REFERRED TO HEREIN AS A "NON-PERMITTED FOREIGN HOLDER")
OR (iv) ANY PERSON WHICH IS AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF
B-1
<PAGE> 148
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.
B-2
<PAGE> 149
Date of Pooling and Servicing Percentage Interest: 100%
Agreement and Cut-off Date:
June 1, 1996 CUSIP No. 00253 BR7
First Distribution Date: Certificate No.: R
July 15, 1996
AAMES MORTGAGE TRUST 1996-B
MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1996-B, 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 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
B-3
<PAGE> 150
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
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
B-4
<PAGE> 151
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.
B-5
<PAGE> 152
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: June 27, 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
B-6
<PAGE> 153
EXHIBIT C
FORM OF SUBSEQUENT TRANSFER AGREEMENT
Pursuant to this Subsequent Transfer Agreement, dated June 27, between
Aames Capital Corporation (the "Seller"), and Aames Mortgage Trust 1996-B, as
trustee (the "Trustee"), and pursuant to the Pooling and Servicing Agreement
dated as of June 1, 1996 between Aames Capital Corporation, as Seller and
Servicer, and Bankers Trust Company of California, N.A., as Trustee (the
"Pooling and Servicing Agreement"), the Seller and the Trustee agree to the
sale by the Seller and the purchase by the Trustee of subsequent mortgage
loans (the "Subsequent Mortgage Loans") to be included in Group I or Group II
as listed on the Addition Notice provided to the Trustee on June 27, 1996 (the
"Addition Notice"). A complete list of all Mortgage Loans to be included in
Group I and Group II shall be set forth on the Mortgage Loan Schedule
("Schedule") attached hereto.
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 Purchaser:
(i) all right, title and interest of such Seller in and to the
Subsequent Mortgage Loans owned by it and listed in the Addition Notice,
including without limitation, the Mortgages, the Mortgage Files and the
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 Mortgage Loans, including any 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 Mortgage Loans, the Mortgaged Properties
or the Mortgagor and any amounts recovered from third parties in respect
of any 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 Addition Notice 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-1
<PAGE> 154
(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 and will
be specified in the Coverage Amount Identification Notice.
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 which 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.
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.
C-2
<PAGE> 155
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:
---------------------------------------
Gregory J. Witherspoon
Executive Vice President
By: BANKERS TRUST COMPANY OF CALIFORNIA,
N.A., as Trustee for Aames Mortgage
Trust 1996-B,
By:
---------------------------------------
Name:
Title:
C-3
<PAGE> 156
EXHIBIT D
FORM OF CERTIFICATE INSURANCE POLICY
[Filed as Exhibit 4.2 to this Current Report on Form 8-K]
<PAGE> 157
EXHIBIT E
FORM OF NOTICE OF CLAIM
Re: Certificate Guaranty Insurance Policy No. _______.
Distribution Date:
We refer to that certain Pooling and Servicing Agreement relating to Aames
Mortgage Trust 1996-B Mortgage Pass-Through Certificates, Series 1996-B (the
"Agreement") and dated as of June 1, 1996; all capitalized terms not otherwise
defined herein shall have the same respective meanings as set forth in such
Agreement.
As of the Business Day prior to the Deposit Date, the Trustee has determined
under the Agreement that in respect of the above-referenced Distribution Date
the Coverage Deficit is $______________.
Please be advised that the Available Funds are not sufficient to pay all of
the Required Distributions in respect of the Distribution Date set forth
above.
Accordingly, pursuant to Section _______ of the Agreement, this statement
constitutes a Notice of Claim for an Insured Amount in the amount of $_________
under the Certificate Insurance Policy.
,
- ---------------------------------------------
as Trustee
By:
-------------------------------------------
Name:
Title:
Telephone:
-----------------------------------
E-1
<PAGE> 158
EXHIBIT F
MORTGAGE LOAN SCHEDULE
[Omitted from this Current Report on Form 8-K]
<PAGE> 159
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 June 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 3.10 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, 19__ 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
________, 19__.
----------------------------------------
Name:
Title:
G-1
<PAGE> 160
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-B Mortgage Loan Pass-Through
Certificates, (the "Class R Certificate") for the account of, or as an agent
(including a broker, nominee or middleman) of any entity as to which the
Investor has not received an affidavit substantially in the form of this
affidavit. For these purposes, a "Disqualified Organization" means the United
States, any state or political subdivision thereof, any foreign government,
any international organization, any agency or instrumentality of any of the
foregoing (other than an instrumentality if all of its activities are subject
to tax and a majority of its board of directors is not selected by such
governmental entity), any cooperative organization furnishing electrical
energy or providing telephone service to persons in rural areas as described
in Code Section 1381(a)(2)(c), or any organization (other than a farmers'
cooperative described in Code Section 521) that is exempt from federal income
tax unless such organization is subject to the tax on unrelated business
income imposed by Code Section 511.
4. That the Investor is not (i) an entity that holds Class R
Certificates as nominee to facilitate the clearance and settlement of such
Class R Certificates through electronic book-entry changes in accounts of
participating organizations (a "Book-Entry Nominee"), (ii) an individual,
corporation, partnership or other person unless such transferee (A) is not a
Foreign Person or (B) is a Foreign Person that will hold such Class R
Certificate in connection with the conduct of a trade or business within the
United States and has furnished the transferor and the Trustee with an
effective Internal Revenue Service Form 4224 or (C) is a Foreign Person that
has delivered to both the transferor and the Trustee an opinion of a
nationally recognized tax counsel to the effect that the transfer of a Class
H-1
<PAGE> 161
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 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 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 with any transfer
by a Person for whom the Investor is acting as nominee, trustee or agent, and
the
H-2
<PAGE> 162
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___.
H-3
<PAGE> 163
EXHIBIT I
FORM OF NOTICE RE 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-B
Ladies and Gentlemen:
Reference is made to Section 3.07 of the Pooling and Servicing Agreement
dated as of June 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) which 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:
I-1
<PAGE> 164
EXHIBIT J
FORM OF LIQUIDATION REPORT
1. Type of Liquidation (REO disposition/charge-off/short pay-off)
- Date Last Paid
- Date of Foreclosure
- Date of REO
- Date of REO Disposition
- Property Sale Price; Estimated Market Value at Disposition
2. Liquidation Proceeds
- Principal Prepayment $_________________
- Property Sale Proceeds _________________
- Insurance Proceeds _________________
- Other (itemize) _________________
3. Liquidation Expenses
- Servicing Advances $_________________
- Monthly Advances _________________
- Contingency Fees _________________
- Servicing Fees _________________
- Annual Expense Escrow Amount _________________
- Supplemental Fee (if any) _________________
- Additional Interest (if any) _________________
- Monthly Sponsor Fee (if any) _________________
4. Net Liquidation Proceeds $_________________
(Item 2 minus Item 3)
5. Principal Balance of Mortgage Loan $_________________
6. Realized Loss on Mortgage Loan $_________________
J-1
<PAGE> 165
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 June 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> 166
EXHIBIT L
FORM OF TRANSFEROR AFFIDAVIT
[LETTERHEAD OF TRANSFEROR]
________________, 19___
[Trustee]
Re: Aames Mortgage Trust 1996-B
Mortgage Pass-Through Certificates, Series 1996-B
Ladies and Gentlemen:
We have reviewed the attached affidavit of [NAME OF TRANSFEREE] and have
no actual knowledge that such affidavit is not true and 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> 167
EXHIBIT M
INSURANCE AND INDEMNITY AGREEMENT
[begins on next page]
<PAGE> 168
- --------------------------------------------------------------------------------
INSURANCE AND INDEMNITY AGREEMENT
by and between
FINANCIAL SECURITY ASSURANCE INC.,
and
AAMES CAPITAL CORPORATION
Dated as of June 1, 1996
$120,035,000 CLASS A-1 CERTIFICATES
$180,000,000 CLASS A-2 CERTIFICATES
- --------------------------------------------------------------------------------
<PAGE> 169
TABLE OF CONTENTS
<TABLE>
<CAPTION>
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.04. Negative Covenants of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III
THE POLICY; REIMBURSEMENT; INDEMNIFICATION
Section 3.01. Issuance of the Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.02. Payment of Fees and Premium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.03. Reimbursement and Additional Payment Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.04. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.05. Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE IV
FURTHER AGREEMENTS
Section 4.01. Effective Date; Term of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.02. Obligations Absolute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.03. Assignments; Reinsurance; Third-Party Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.04. Liability of Financial Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE V
EVENTS OF DEFAULT; REMEDIES
Section 5.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 5.02. Remedies; Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
i
<PAGE> 170
<TABLE>
<S> <C> <C>
ARTICLE VI
MISCELLANEOUS
Section 6.01. Amendments, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 6.02. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 6.03. Payment Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 6.04. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 6.05. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 6.06. Consent to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 6.07. Consent of Financial Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 6.08. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 6.09. Trial by Jury Waived . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 6.10. Limited Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 6.11. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
</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> 171
INSURANCE AND INDEMNITY AGREEMENT
INSURANCE AND INDEMNITY AGREEMENT dated as of June 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-B, Mortgage Pass-Through Certificates, Series 1996-B, 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 June 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:
1
<PAGE> 172
(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 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
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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.
(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.
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(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 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.
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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 accordance 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.
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(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 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
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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:
(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
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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 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.
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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 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
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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
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"
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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 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
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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 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.
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(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 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
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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, 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;
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<PAGE> 185
(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
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 Finan-cial 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,
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<PAGE> 186
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:
<TABLE>
<S> <C> <C>
(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-B
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 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.")
</TABLE>
16
<PAGE> 187
<TABLE>
<S> <C>
(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: Trey Blalock, Esq.
(c) To the Trustee: Bankers Trust Company of California, N.A.
3 Park Plaza
Irvine, California 92714
Attention: Corporate Trust Department
</TABLE>
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 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
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<PAGE> 188
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 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.
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<PAGE> 189
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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<PAGE> 190
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
----------------------------
<PAGE> 191
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-B, 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.
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<PAGE> 192
"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 cash flows for the fiscal quarter
then ended and the consolidated balance sheets as of [June 30, 1995] 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 June 27, 1996 from Aames
Financial.
"Indemnification Agreement" means the Indemnification Agreement dated
as of June 20, 1996 among Financial Security, the Company and Prudential
Securities Incorporated, for itself and as representative of the other
Underwriters with respect to the Class A-1 Certificates and NatWest Capital
Markets Limited, 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 June 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.
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"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 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 June 20, 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.
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"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 June 1, 1996 between the Company and the Trustee on
behalf of Financial Security 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 June 27, 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 $120,035,000 of Aames Mortgage Trust 1996-B,
Mortgage Pass-Through Certificates, Series 1996-B, Class A-1 and the
$180,000,000 of Aames Mortgage Trust 1996-B, Mortgage Pass-Through
Certificates, Series 1996-B, Class A-2, issued pursuant to the Pooling and
Servicing Agreement.
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<PAGE> 195
"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 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.
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<PAGE> 196
"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 NatWest Capital Markets Limited,
Prudential Securities Incorporated, Bear, Stearns & Co. Inc. and Nomura
Securities International, Inc.
"Underwriting Agreement" means the Underwriting Agreement among
Prudential Securities Incorporated, NatWest Capital Markets Limited, 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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<PAGE> 197
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
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subject to income, franchise or tangible or intangible personal property taxes
in the State of California; and
(vi) an opinion to the effect that the Guaranty has been duly
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> 199
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> 200
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
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each such opinion shall have been instructed by its client to deliver such
opinion to the addressees thereof.
(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.
A-2
<PAGE> 1
EXHIBIT 4.2
FINANCIAL FINANCIAL GUARANTY
SECURITY INSURANCE POLICY
ASSURANCE
Trust: As described in Endorsement No. 1 Policy No.: 50480-N
Certificates: $300,035,000 Original Date of Issuance: 6/27/96
Principal Amount, Aames Mortgage Trust 1996-B, Mortgage
Pass-Through Certificates, Series 1996-B, 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 June 1, 1996 between Aames Capital Corporation, as
Seller and Servicer, and Bankers Trust Company of California, N.A., as
Trustee
POLICY NO.: 50480-N
SECURITIES: $300,035,000 Aames Mortgage Trust 1996-B, Mortgage
Pass-Through Certificates, Series 1996-B, Class A-1 and Class
A-2
DATE OF ISSUANCE: June 27, 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
Policy No. 50480-N Date of Issuance: June 27, 1996
"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 June 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. 50480-N Date of Issuance: June 27, 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 3.21(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. 50480-N Date of Issuance: June 27, 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. 50480-N Date of Issuance: June 27, 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. 50480-N Date of Issuance: June 27, 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. 50480-N dated June 27, 1996, including Endorsement No. 1
thereto, (the "Policy") issued by Financial Security in respect of Aames
Mortgage Trust 1996-B, Mortgage Pass-Through Certificates, Series 1996-B, 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. 50480-N Date of Issuance: June 27, 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 June 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. 50480-N
Date of Issuance: June 27, 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
June 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-B (the "TRUSTEE"), and pursuant to that certain Pooling and
Servicing Agreement dated as of June 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.
<PAGE> 3
AAMES CAPITAL CORPORATION,
as Seller
By: /s/ Mark E. Elbaum
------------------------------------------------
Name: Mark E. Elbaum
Title: Senior Vice President - Finance
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., as
Trustee for Aames Mortgage Trust 1996-B
By: /s/ Nana Palmer
------------------------------------------------
Name: Nana Palmer
Title: Vice President
<PAGE> 4
State of California )
) ss:
County of Los Angeles )
On the 26th day of June, 1996, before me, a notary public in
and for said County and State, personally appeared MARK E. ELBAUM, personally
known to me (or proved to me on the basis of satisfactory evidence) to be the
person whose name is subscribed to the within instrument and acknowledged to me
that he executed 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.
[Notorial Seal] /s/ Katherine L. Murray
----------------------------------
Notary Public
<PAGE> 5
State of California )
) ss:
County of Los Angeles )
On the 27th day of June, 1996, before me, a notary public in
and for said County and State, 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 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.
[Notorial Seal] /s/ Whitney Knox
------------------------------------
Notary Public
<PAGE> 6
ATTACHMENT A
<TABLE>
<S> <C>
Subsequent Transfer Date: June 27, 1996
Subsequent Cut-off Date: June 27, 1996
Aggregate of the Principal Balances of
Group I Subsequent Mortgage Loans: $20,538,945.47
Aggregate of the Purchase Prices of Group I
Subsequent Mortgage Loans: $19,511,998.19
Number of Subsequent Mortgage Loans
in Group 1: 352
</TABLE>
<PAGE> 7
ATTACHMENT B
<TABLE>
<S> <C>
Subsequent Transfer Date: June 27, 1996
Subsequent Cut-off Date: June 27, 1996
Aggregate of the Principal Balances of
Group II Subsequent Mortgage Loans: $22,791,013.59
Aggregate of the Purchase Prices of Group II
Subsequent Mortgage Loans: $21,651,462.91
Number of Subsequent Mortgage Loans
in Group II: 261
</TABLE>
<PAGE> 8
CERTIFICATE PURSUANT TO
SECTION 2.02 OF THE POOLING AND SERVICING AGREEMENT
The undersigned, Mark E. Elbaum, Senior Vice President -
Finance of Aames Capital Corporation, a California corporation (the "COMPANY"),
does certify that:
(i) this certificate is signed pursuant to Section 2.02
of the Pooling and Servicing Agreement, dated as of June 1, 1996 (the "POOLING
AND SERVICING AGREEMENT"), by and between the Company and Bankers Trust Company
of California, N.A., as Trustee;
(ii) each condition precedent specified in Section 2.02
of the Pooling and Servicing Agreement and the Subsequent Transfer Agreement
dated as of June 27, 1996 has been satisfied as of the date hereof;
(iii) each of the representations and warranties set forth
in Section A of Schedule II to the Pooling and Servicing Agreement is made at
the date hereof;
(iv) the Company was not insolvent nor was made insolvent
by the transfer of the related Subsequent Mortgage Loans nor is aware of any
pending insolvency at the date hereof; and
(v) the addition of the Subsequent Mortgage Loans will
not result in a material adverse tax consequence to the Trust or the Holders of
Class A Certificates.
Capitalized terms used herein and not defined herein shall
have their respective meanings as set forth in the Pooling and Servicing
Agreement.
IN WITNESS WHEREOF, the undersigned has hereunto signed his
name as of the 27th day of June, 1996.
/s/ Mark E. Elbaum
-----------------------------------
Mark E. Elbaum
Senior Vice President - Finance
