<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)
APRIL 14, 1997
AAMES CAPITAL CORPORATION ON
BEHALF OF AAMES MORTGAGE TRUST
1997-A
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
CALIFORNIA 333-21219 95-4438859
- ---------------------------- ----------- -------------------
(State or other jurisdiction (Commission (I.R.S. employer
of incorporation) file number) identification no.)
3731 WILSHIRE BOULEVARD, 10TH FLOOR
LOS ANGELES, CALIFORNIA 90010
- ---------------------------------------- ----------
(Address of principal executive offices) (ZIP Code)
(213) 351-6100
--------------------------------------------------
Registrant's telephone number, including area code
NO CHANGE
------------------------------------------------------------
(Former name or former address, if changed since last report)
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<PAGE> 2
Item 5. Other Events
Aames Capital Corporation (the "Sponsor") and an affiliate, Aames
Capital Acceptance Corp., registered up to $2,800,000,000 principal amount of
asset-backed certificates and asset-backed bonds under Rule 415 of the
Securities Act of 1933, as amended (the "Act"), pursuant to a Registration
Statement on Form S-3, including a prospectus (Registration Statement File No.
333-21219) (as amended, the "Registration Statement"). Pursuant to the
Registration Statement, the Sponsor filed a Prospectus Supplement, and a
Prospectus, each dated March 18, 1997 (collectively, the "Prospectus"),
relating to $215,000,000 aggregate principal amount of Mortgage Pass-Through
Certificates, Series 1997-A (the "Certificates"), issued by Aames Mortgage
Trust 1997-A ("Trust") on March 26, 1997 (the "Closing Date"). The
Certificates consist of the Class A-1, Class A-2, Class A-3, Class A-4 and
Class A-5 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 March 1,
1997 (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 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 MBIA
Insurance Corporation (the "Certificate Insurer"). On the Closing Date, cash in
the amount of $51,382,194.17 (the "Purchase Account Deposit") was deposited in
the Purchase Account in the name of the Trustee. The Purchase Account Deposit
was intended to be used for the purchase of additional home equity mortgage
loans satisfying the criteria specified in the Pooling and Servicing Agreement
and subject to the approval of the Certificate Insurer (the "Subsequent
Mortgage Loans") on or before April 14, 1997.
On April 14, 1997, the Trustee, on behalf of the Trust, and the
Sponsor entered into a Subsequent Transfer Agreement, dated as of such date
(the "Subsequent Transfer Agreement"). Pursuant to the Subsequent Transfer
Agreement, the Trust purchased $51,382,194.17 aggregate principal balance
of Subsequent Mortgage Loans for a purchase price of $48,803,767.81.
The description of the Mortgage Pool in the Prospectus contained
information only with respect to the Initial Mortgage Loans as of the date of
the Prospectus. This Current Report on Form 8-K is being filed to update the
description of the Mortgage Pool contained in the Prospectus and to file copies
of certain final agreements executed in connection with the issuance of the
Certificates. Annex A which follows contains a description of the final
Mortgage Pool.
Capitalized terms used but not otherwise defined herein shall have the
same meaning ascribed to them in the Prospectus. The Prospectus has been filed
with the Securities and Exchange Commission pursuant to Rule 424(b)(2) under
file number 333-21219.
2
<PAGE> 3
Item 7. Financial Statements: Pro Forma Financial Information and Exhibits.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits:
1.1 Underwriting Agreement, dated March 18, 1997, between
Aames Capital Corporation, as Sponsor, and Donaldson,
Lufkin & Jenrette Securities Corporation, as
Representative of the several Underwriters named in
Schedule I to the Pricing Agreement.
1.2 Pricing Agreement, dated March 18, 1997, between
Aames Capital Corporation, as Sponsor, and Donaldson,
Lufkin & Jenrette Securities Corporation, as
Representative of the several Underwriters named in
Schedule I thereto.
4.1 Pooling and Servicing Agreement, dated as of March 1,
1997, between Aames Capital Corporation, as Seller
and Servicer, and Bankers Trust Company of
California, N.A., as Trustee.
4.2 Certificate Guarantee Insurance Policy issued by the
Certificate Insurer, MBIA Insurance Corporation.
10.1 Subsequent Transfer Agreement, dated as of April 4,
1997, between Aames Capital Corporation, as Seller,
and Bankers Trust Company of California, N.A., as
Trustee for Aames Mortgage Trust 1997-A.
10.2 Subsequent Transfer Agreement, dated as of April 11,
1997, between Aames Capital Corporation, as Seller,
and Bankers Trust Company of California, N.A., as
Trustee for Aames Mortgage Trust 1997-A.
3
<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has dully caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AAMES CAPITAL CORPORATION
By: /s/ Gregory J. Witherspoon
--------------------------------------
Gregory J. Witherspoon
Executive Vice President - Finance and
Chief Financial Officer
Dated: April 29, 1997
4
<PAGE> 5
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
3,720 Mortgage Loans and has an aggregate principal balance of
$214,986,746.51.
Approximately 90.74%, 6.59% and 2.67% 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 0.51% of the Mortgage Loans were secured by Mortgaged Properties
located in any single postal ZIP code.
The original Combined Loan-to-Value Ratio of any Mortgage Loan did not
exceed 103% and the original weighted average Combined Loan- to-Value Ratio of
all Mortgage Loans was approximately 67.8%. The maximum and average loan sizes
of the Mortgage Loans were $500,000.00 and approximately $57,857.04,
respectively. The average appraised value of the Mortgaged Properties securing
Mortgage Loans at origination of the related Mortgage Loans was approximately
$115,067.55.
The interest rates borne by the Mortgage Loans (each, a "Mortgage
Interest Rate") ranged from 7.49% per annum to 18.00% per annum. The
weighted average Mortgage Interest Rate of the Mortgage Loans was approximately
10.60% per annum.
The weighted average remaining term to stated maturity of the Mortgage
Loans was approximately 294 months. The weighted average original term to
maturity of the Mortgage Loans was approximately 295 months. The weighted
average seasoning of the Mortgage Loans was approximately one month.
Based on the Aggregate Principal Balance of the Mortgage Loans, 94.84%
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 5.16% of the Mortgage Loans are Balloon Loans which will
provide for regular monthly payments of principal and interest computed on the
basis of an amortization term of 180 months (one loan), 240 months (one loan),
300 months (one loan) or 360 months (all other balloon loans) 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 have original terms to maturity of up to 30 years.
A-1
<PAGE> 6
TYPE OF MORTGAGED PROPERTY
<TABLE>
<CAPTION>
PERCENTAGE OF CUT-
NUMBER OF AGGREGATE UNPAID OFF DATE AGGREGATE
PROPERTY TYPE MORTGAGE LOANS PRINCIPAL BALANCE PRINCIPAL BALANCE
<S> <C> <C> <C>
Single Family Residence . . . . . . . . . . . . . 3,372 $195,076,212.35 90.74%
Two- to Four-Family Residence . . . . . . . . . . 234 $ 14,169,585.46 6.59%
Condominium Unit . . . . . . . . . . . . . . . . 114 $ 5,740,948.70 2.67%
Total . . . . . . . . . . . . . 3,720 $214,986,746.51 100.00%
</TABLE>
OCCUPANCY STATUS
<TABLE>
<CAPTION>
PERCENTAGE OF CUT-
NUMBER OF AGGREGATE UNPAID OFF DATE AGGREGATE
OCCUPANCY STATUS MORTGAGE LOANS PRINCIPAL BALANCE PRINCIPAL BALANCE
<S> <C> <C> <C>
Owner Occupied/Primary Residence . . . . . . . . 3,441 $201,332,626.59 93.65%
Non-Owner Occupied/Investment Property . . . . . 279 $ 13,654,119.92 6.35%
Total . . . . . . . . . . . . . 3,720 $214,986,746.51 100.00%
</TABLE>
PRIORITY OF LIEN
<TABLE>
<CAPTION>
PERCENTAGE OF CUT-
NUMBER OF AGGREGATE UNPAID OFF DATE AGGREGATE
LIEN PRIORITY MORTGAGE LOANS PRINCIPAL BALANCE PRINCIPAL BALANCE
<S> <C> <C> <C> <C>
First Lien . . . . . . . . . . . . . . . . . . . 2,944 $191,514,994.51 89.08%
Second Lien . . . . . . . . . . . . . . . . . . . 764 $ 23,100,501.96 10.75%
Third Lien . . . . . . . . . . . . . . . . . . . 12 $ 371,250.04 0.17%
Total . . . . . . . . . . . . . 3,720 $214,986,746.51 100.00%
</TABLE>
A-2
<PAGE> 7
ORIGINATOR STATUS
<TABLE>
<CAPTION>
PERCENTAGE OF CUT-
NUMBER OF AGGREGATE UNPAID OFF DATE AGGREGATE
ORIGINATOR MORTGAGE LOANS PRINCIPAL BALANCE PRINCIPAL BALANCE
<S> <C> <C> <C> <C>
Affiliate . . . . . . . . . . . . . . . . . . . . 3,035 $169,503,649.97 78.84%
Unaffiliated . . . . . . . . . . . . . . . . . . 685 $ 45,483,096.54 21.16%
Total . . . . . . . . . . . . . 3,720 $214,986,746.51 100.00%
</TABLE>
TYPE OF LOAN BY AMORTIZATION METHOD
<TABLE>
<CAPTION>
PERCENTAGE OF CUT-
NUMBER OF AGGREGATE UNPAID OFF DATE AGGREGATE
AMORTIZATION METHOD MORTGAGE LOANS PRINCIPAL BALANCE PRINCIPAL BALANCE
<S> <C> <C> <C>
Fully Amortizing . . . . . . . . . . . . . . . . 3,542 $203,888,253.98 94.84%
Partially Amortizing/Balloon . . . . . . . . . . 178 $ 11,098,492.53 5.16%
Total . . . . . . . . . . . . . 3,720 $214,986,746.51 100.00%
</TABLE>
A-3
<PAGE> 8
<TABLE>
<CAPTION>
COMBINED LOAN-TO-VALUE RATIO
RANGE OF COMBINED NUMBER OF AGGREGATE UNPAID PERCENTAGE OF CUT-OFF DATE
LOAN-TO-VALUE RATIOS MORTGAGE LOANS PRINCIPAL BALANCE AGGREGATE PRINCIPAL BALANCE
<S> <C> <C> <C> <C>
0.0% to 50.0% . . . . . . . . . . . . . . . . . . 651 $ 25,619,259.11 11.92%
50.1% to 55.0% . . . . . . . . . . . . . . . . . 170 $ 8,215,736.53 3.82%
55.1% to 60.0% . . . . . . . . . . . . . . . . . 295 $ 15,639,815.59 7.27%
60.1% to 65.0% . . . . . . . . . . . . . . . . . 605 $ 31,002,884.82 14.42%
65.1% to 70.0% . . . . . . . . . . . . . . . . . 511 $ 29,005,294.91 13.49%
70.1% to 75.0% . . . . . . . . . . . . . . . . . 815 $ 46,719,204.95 21.73%
75.1% to 80.0% . . . . . . . . . . . . . . . . . 380 $ 32,824,951.96 15.27%
80.1% to 85.0% . . . . . . . . . . . . . . . . . 274 $ 24,018,218.66 11.17%
85.1% to 90.0% . . . . . . . . . . . . . . . . . 16 $ 1,715,013.41 0.80%
90.1% to 95.0% . . . . . . . . . . . . . . . . . 1 $ 80,674.36 0.04%
95.1% to 100.0% . . . . . . . . . . . . . . . . . 1 $ 87,941.91 0.04%
Over 100.0% . . . . . . . . . . . . . . . . . . . 1 $ 57,750.30 0.03%
Total . . . . . . . . . . . . . 3,720 $214,986,746.51 100.00%
</TABLE>
A-4
<PAGE> 9
<TABLE>
<CAPTION>
ORIGINAL TERM TO MATURITY
PERCENTAGE OF CUT-
RANGE OF ORIGINAL NUMBER OF AGGREGATE UNPAID OFF DATE AGGREGATE
TERMS TO MATURITY (MONTHS) MORTGAGE LOANS PRINCIPAL BALANCE PRINCIPAL BALANCE
<S> <C> <C> <C> <C>
0-60 . . . . . . . . . . . . . . . . . . . . . . 51 $ 859,520.03 0.40%
61-120 . . . . . . . . . . . . . . . . . . . . . 242 $ 6,081,852.15 2.83%
121-180 . . . . . . . . . . . . . . . . . . . . . 1,453 $ 62,486,288.51 29.07%
181-240 . . . . . . . . . . . . . . . . . . . . . 112 $ 6,588,447.38 3.06%
241-300 . . . . . . . . . . . . . . . . . . . . . 8 $ 669,930.34 0.31%
301-360 . . . . . . . . . . . . . . . . . . . . . 1,854 $138,300,708.10 64.33%
Total . . . . . . . . . . . . . 3,720 $214,986,746.51 100.00%
</TABLE>
A-5
<PAGE> 10
REMAINING TERM TO MATURITY
<TABLE>
<CAPTION>
PERCENTAGE OF CUT-
RANGE OF REMAINING NUMBER OF AGGREGATE UNPAID OFF DATE AGGREGATE
TERMS TO MATURITY (MONTHS) MORTGAGE LOANS PRINCIPAL BALANCE PRINCIPAL BALANCE
<S> <C> <C> <C> <C>
0-60 . . . . . . . . . . . . . . . . . . . . . . 51 $ 859,520.03 0.40%
61-120 . . . . . . . . . . . . . . . . . . . . . 242 $ 6,081,852.15 2.83%
121-180 . . . . . . . . . . . . . . . . . . . . . 1,459 $ 62,729,349.94 29.18%
181-240 . . . . . . . . . . . . . . . . . . . . . 106 $ 6,345,385.95 2.95%
241-300 . . . . . . . . . . . . . . . . . . . . . 8 $ 669,930.34 0.31%
301-360 . . . . . . . . . . . . . . . . . . . . . 1,854 $138,300,708.10 64.33%
Total . . . . . . . . . . . . . 3,720 $214,986,746.51 100.00%
</TABLE>
A-6
<PAGE> 11
RANGE OF MORTGAGE INTEREST RATES
<TABLE>
<CAPTION>
PERCENTAGE OF CUT-
RANGE OF MORTGAGE NUMBER OF AGGREGATE UNPAID OFF DATE AGGREGATE
INTEREST RATES MORTGAGE LOANS PRINCIPAL BALANCE PRINCIPAL BALANCE
<S> <C> <C> <C>
7.001% to 7.500% . . . . . . . . . . . . . . . . 3 $ 186,614.80 0.09%
7.501% to 8.000% . . . . . . . . . . . . . . . . 46 $ 3,115,214.79 1.45%
8.001% to 8.500% . . . . . . . . . . . . . . . . 144 $ 12,358,679.81 5.75%
8.501% to 9.000% . . . . . . . . . . . . . . . . 287 $ 22,465,820.80 10.45%
9.001% to 9.500% . . . . . . . . . . . . . . . . 326 $ 23,278,758.20 10.83%
9.501% to 10.000% . . . . . . . . . . . . . . . . 500 $ 36,493,465.90 16.97%
10.001% to 10.500% . . . . . . . . . . . . . . . 492 $ 28,004,021.64 13.03%
10.501% to 11.000 . . . . . . . . . . . . . . . . 450 $ 24,779,453.28 11.53%
11.001% to 11.500% . . . . . . . . . . . . . . . 359 $ 15,824,260.04 7.36%
11.501% to 12.000% . . . . . . . . . . . . . . . 270 $ 12,540,316.73 5.83%
12.001% to 12.500% . . . . . . . . . . . . . . . 202 $ 8,434,652.83 3.92%
12.501% to 13.000% . . . . . . . . . . . . . . . 171 $ 7,901,442.49 3.68%
13.001% to 13.500% . . . . . . . . . . . . . . . 103 $ 3,543,633.29 1.65%
13.501% to 14.000% . . . . . . . . . . . . . . . 125 $ 5,771,828.05 2.68%
14.001% to 14.500% . . . . . . . . . . . . . . . 95 $ 4,157,917.76 1.93%
14.501% to 15.000% . . . . . . . . . . . . . . . 63 $ 2,798,887.13 1.30%
15.001% to 15.500% . . . . . . . . . . . . . . . 41 $ 1,689,756.71 0.79%
15.501% to 16.000% . . . . . . . . . . . . . . . 20 $ 777,618.01 0.36%
16.001% to 16.500% . . . . . . . . . . . . . . . 5 $ 177,947.31 0.08%
16.501% to 17.000% . . . . . . . . . . . . . . . 12 $ 433,119.07 0.20%
17.001% to 17.500% . . . . . . . . . . . . . . . 3 $ 186,146.95 0.09%
17.501% to 18.000% . . . . . . . . . . . . . . . 3 $ 67,190.92 0.03%
Total . . . . . . . . . . . . . 3,720 $214,986,746.51 100.00%
</TABLE>
A-7
<PAGE> 12
CUT-OFF DATE PRINCIPAL BALANCE
<TABLE>
<CAPTION>
PERCENTAGE OF CUT-
RANGE OF CUT-OFF NUMBER OF AGGREGATE UNPAID OFF DATE AGGREGATE
DATE PRINCIPAL BALANCES MORTGAGE LOANS PRINCIPAL BALANCE PRINCIPAL BALANCE
<S> <C> <C> <C>
$0.00 to $50,000.00 . . . . . . . . . . . . . . . 2,084 $ 62,354,651.48 29.00%
$50,000.01 to $100,000.00 . . . . . . . . . . . . 1,161 $ 82,438,988.11 38.35%
$100,000.01 to $150,000.00 . . . . . . . . . . . 328 $ 39,233,739.73 18.25%
$150,000.01 to $200,000.00 . . . . . . . . . . . 88 $ 15,420,242.85 7.17%
$200,000.01 to $250,000.00 . . . . . . . . . . . 36 $ 8,110,137.90 3.77%
$250,000.01 to $300,000.00 . . . . . . . . . . . 10 $ 2,809,955.31 1.31%
$300,000.01 to $350,000.00 . . . . . . . . . . . 9 $ 2,989,998.14 1.39%
$350,000.01 to $400,000.00 . . . . . . . . . . . 2 $ 724,782.99 0.34%
$400,000.01 to $450,000.00 . . . . . . . . . . . 1 $ 404,250.00 0.19%
$450,000.01 to $500,000.00 . . . . . . . . . . . 1 $ 500,000.00 0.23%
Total . . . . . . . . . . . . . 3,720 $214,986,746.51 100.00%
</TABLE>
A-8
<PAGE> 13
ORIGINAL PRINCIPAL BALANCE
<TABLE>
<CAPTION>
PERCENTAGE OF CUT-
RANGE OF ORIGINAL NUMBER OF AGGREGATE UNPAID OFF DATE AGGREGATE
PRINCIPAL BALANCES MORTGAGE LOANS PRINCIPAL BALANCE PRINCIPAL BALANCE
<S> <C> <C> <C>
$0.00 to $50,000.00 . . . . . . . . . . . . . . . 2,083 $ 62,354,079.34 29.00%
$50,000.01 to $100,000.00 . . . . . . . . . . . . 1,161 $ 82,438,988.11 38.35%
$100,000.01 to $150,000.00 . . . . . . . . . . . 329 $ 39,234,311.87 18.25%
$150,000.01 to $200,000.00 . . . . . . . . . . . 88 $ 15,420,242.85 7.17%
$200,000.01 to $250,000.00 . . . . . . . . . . . 36 $ 8,110,137.90 3.77%
$250,000.01 to $300,000.00 . . . . . . . . . . . 10 $ 2,809,955.31 1.31%
$300,000.01 to $350,000.00 . . . . . . . . . . . 9 $ 2,989,998.14 1.39%
$350,000.01 to $400,000.00 . . . . . . . . . . . 2 $ 724,782.99 0.34%
$400,000.01 to $450,000.00 . . . . . . . . . . . 1 $ 404,250.00 0.19%
$450,000.01 to $500,000.00 . . . . . . . . . . . 1 $ 500,000.00 0.23%
Total . . . . . . . . . . . . . 3,720 $214,986,746.51 100.00%
</TABLE>
A-9
<PAGE> 14
GEOGRAPHICAL DISTRIBUTION OF MORTGAGED PROPERTIES
<TABLE>
<CAPTION>
PERCENTAGE OF CUT-
NUMBER OF AGGREGATE UNPAID OFF DATE AGGREGATE
STATES MORTGAGE LOANS PRINCIPAL BALANCE PRINCIPAL BALANCE
<S> <C> <C> <C>
California . . . . . . . . . . . . . . . . . . . 678 $49,198,118.91 22.88%
Florida . . . . . . . . . . . . . . . . . . . . . 460 $26,669,948.32 12.41%
Washington . . . . . . . . . . . . . . . . . . . 214 $12,583,647.11 5.85%
Oregon . . . . . . . . . . . . . . . . . . . . . 139 $10,098,252.85 4.70%
Colorado . . . . . . . . . . . . . . . . . . . . 165 $ 9,851,037.70 4.58%
Illinois . . . . . . . . . . . . . . . . . . . . 198 $ 9,809,076.72 4.56%
Pennsylvania . . . . . . . . . . . . . . . . . . 221 $ 9,676,080.63 4.50%
Hawaii . . . . . . . . . . . . . . . . . . . . . 42 $ 8,427,441.11 3.92%
Ohio . . . . . . . . . . . . . . . . . . . . . . 199 $ 7,854,055.50 3.65%
Arizona . . . . . . . . . . . . . . . . . . . . . 146 $ 7,181,661.07 3.34%
Michigan . . . . . . . . . . . . . . . . . . . . 163 $ 6,438,214.40 2.99%
Utah . . . . . . . . . . . . . . . . . . . . . . 113 $ 6,242,617.06 2.90%
Maryland . . . . . . . . . . . . . . . . . . . . 122 $ 6,174,494.95 2.87%
Indiana . . . . . . . . . . . . . . . . . . . . . 129 $ 5,459,859.38 2.54%
New Jersey . . . . . . . . . . . . . . . . . . . 60 $ 4,502,981.08 2.09%
Minnesota . . . . . . . . . . . . . . . . . . . . 68 $ 4,057,783.58 1.89%
Georgia . . . . . . . . . . . . . . . . . . . . . 78 $ 3,966,921.31 1.85%
New York . . . . . . . . . . . . . . . . . . . . 42 $ 3,279,468.77 1.53%
Virginia . . . . . . . . . . . . . . . . . . . . 63 $ 3,005,055.69 1.40%
Nevada . . . . . . . . . . . . . . . . . . . . . 53 $ 2,909,490.11 1.35%
Connecticut . . . . . . . . . . . . . . . . . . . 52 $ 2,880,375.82 1.34%
Tennessee . . . . . . . . . . . . . . . . . . . . 76 $ 2,617,661.35 1.22%
Texas . . . . . . . . . . . . . . . . . . . . . . 48 $ 2,274,469.09 1.06%
North Carolina . . . . . . . . . . . . . . . . . 37 $ 1,829,290.78 0.85%
</TABLE>
A-10
<PAGE> 15
<TABLE>
<S> <C> <C> <C>
Louisiana . . . . . . . . . . . . . . . . . . . . 30 $ 1,204,024.46 0.56%
Missouri . . . . . . . . . . . . . . . . . . . . 18 $ 1,087,277.94 0.51%
Idaho . . . . . . . . . . . . . . . . . . . . . . 13 $ 1,016,088.50 0.47%
Arkansas . . . . . . . . . . . . . . . . . . . . 15 $ 715,663.82 0.33%
District of Columbia . . . . . . . . . . . . . . 5 $ 621,990.67 0.29%
Oklahoma . . . . . . . . . . . . . . . . . . . . 16 $ 578,749.73 0.27%
Mississippi . . . . . . . . . . . . . . . . . . . 10 $ 451,506.74 0.21%
Rhode Island . . . . . . . . . . . . . . . . . . 6 $ 434,430.05 0.20%
Massachusetts . . . . . . . . . . . . . . . . . . 6 $ 393,202.69 0.18%
New Mexico . . . . . . . . . . . . . . . . . . . 4 $ 374,498.89 0.17%
South Carolina . . . . . . . . . . . . . . . . . 11 $ 341,966.01 0.16%
Kentucky . . . . . . . . . . . . . . . . . . . . 9 $ 298,421.03 0.14%
Vermont . . . . . . . . . . . . . . . . . . . . . 3 $ 198,873.64 0.09%
Montana . . . . . . . . . . . . . . . . . . . . . 4 $ 176,132.20 0.08%
Iowa . . . . . . . . . . . . . . . . . . . . . . 2 $ 42,650.36 0.02%
Wyoming . . . . . . . . . . . . . . . . . . . . . 1 $ 44,716.49 0.02%
Kansas . . . . . . . . . . . . . . . . . . . . . 1 $ 18,550.00 0.01%
Total . . . . . . . . . . . . . 3,720 $214,986,746.51 100.00%
</TABLE>
A-11
<PAGE> 16
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
- ----------- ----------------------
<S> <C>
1.1 Underwriting Agreement, dated March 18, 1997, between Aames Capital
Corporation, as Sponsor, and Donaldson, Lufkin & Jenrette Securities
Corporation, as Representative of the several Underwriters named in
Schedule I to the Pricing Agreement.
1.2 Pricing Agreement, dated March 18, 1997, between Aames Capital
Corporation, as Sponsor, and Donaldson, Lufkin & Jenrette Securities
Corporation, as Representative of the several Underwriters named in
Schedule I thereto.
4.1 Pooling and Servicing Agreement, dated as of April 1, 1997, between
Aames Capital Corporation, as Seller and Servicer, and Bankers Trust
Company of California, N.A., as Trustee.
4.2 Certificate Guarantee Insurance Policy issued by the Certificate
Insurer, MBIA Insurance Corporation.
10.1 Subsequent Transfer Agreement, dated as of April 4, 1997, between
Aames Capital Corporation, as Seller, and Bankers Trust Company of
California, N.A., as Trustee for Aames Mortgage Trust 1997-A.
10.2 Subsequent Transfer Agreement, dated as of April 11, 1997, between
Aames Capital Corporation, as Seller, and Bankers Trust Company of
California, N.A., as Trustee for Aames Mortgage Trust 1997-A.
</TABLE>
<PAGE> 1
EXHIBIT 1.1
AAMES CAPITAL CORPORATION
AND
THE UNDERWRITERS
UNDERWRITING AGREEMENT
FOR
AAMES MORTGAGE TRUSTS
MORTGAGE PASS-THROUGH CERTIFICATES,
ISSUABLE IN SERIES
MARCH 18, 1997
<PAGE> 2
March 18, 1997
Donaldson, Lufkin & Jenrette Securities Corporation
as Representative of the several Underwriters
named in Schedule I to the Pricing Agreement
c/o Donaldson, Lufkin & Jenrette Securities Corporation
277 Park Avenue
New York, New York 10172
Aames Capital Corporation (the "Company") proposes, from time to time,
to enter into one or more pricing agreements (each a "Pricing Agreement") in
the form of Annex A hereto, with such additions and deletions as the parties
thereto may determine, and, subject to the terms and conditions stated herein
and therein, to issue in series (each a "Series") and to sell to the
Underwriters (as hereinafter defined), mortgage pass-through certificates, each
Series of which is to be issued pursuant to an applicable pooling and servicing
agreement (a "Pooling and Servicing Agreement") to be dated as of the
applicable Cut-off Date (as defined in the Pricing Agreement), between the
Company, as seller and servicer, and Bankers Trust Company of California, N.A.,
as trustee (the "Trustee"). Donaldson, Lufkin & Jenrette Securities
Corporation, will act as underwriter and as Representative (in such capacity,
the "Representative") of the several underwriters named in Schedule I hereto
(the "Underwriters"). Each Series of Certificates (as defined below) will
evidence an undivided beneficial ownership interest in a separate Trust (as
defined in the related Pooling and Servicing Agreement) consisting primarily of
a pool (the "Pool") of mortgage loans (the "Mortgage Loans") listed in an
attachment to such Pooling and Servicing Agreement. The Certificates will be
issued in one or more classes (each a "Class"), which may be divided into one
or more subclasses (each a "Subclass"). Any rights of holders of Certificates
of a particular Class or Subclass to receive certain distributions with respect
to the Mortgage Loans that are senior to such rights of holders of Certificates
of any other Class or Subclass of the same Series shall be specified in the
Pricing Agreement. The Certificates of a Series to be purchased pursuant to a
Pricing Agreement will be described more fully in the base Prospectus and the
related Prospectus Supplement (each of which terms is defined below) which the
Company will furnish to the Underwriters.
On or prior to the date of issuance of the Certificates of any Series,
if specified in the Pricing Agreement, the Company will obtain one or more
certificate guaranty insurance policies (each a "Policy") issued by an
insurance provider specified in the 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.
2
<PAGE> 3
As used herein, the term "Execution Time" shall mean the date and time
that the Pricing Agreement is executed and delivered by the parties thereto;
the term "Agreement," "this Agreement" and terms of similar import shall mean
this Underwriting Agreement including the Pricing Agreement; and the term
"Closing Date" shall mean the Closing Date specified in the Pricing Agreement.
All capitalized terms used but not otherwise defined herein have the respective
meanings set forth in the form of Pooling and Servicing Agreement heretofore
delivered to the Representative.
1. Securities. Unless otherwise specified in the Pricing
Agreement, the Certificates of each Series will be issued in classes as
follows: (i) a senior class (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 Pricing Agreement are hereinafter referred to as the
"Certificates."
2. Representations and Warranties of the Company. The Company
represents and warrants to, and covenants with, each Underwriter that:
A. A registration statement on Form S-3 (Registration
No. 333-21219), including a prospectus and a form of prospectus
supplement that contemplates the offering of mortgage pass-through
certificates from time to time, has been filed by the Company and
Aames Capital Acceptance Corp. ("ACAC") with the Securities and
Exchange Commission (the "Commission"), pursuant to the Securities
Act of 1933, as amended and the rules and regulations of the
Commission thereunder (collectively, the "1933 Act"), and as amended
from time to time by one or more amendments, including post-effective
amendments, has been declared effective by the Commission prior to
the date of the Pricing Agreement. The Company will cause to be
filed with the Commission, after effectiveness of such registration
statement (and any such post-effective amendments), a final
prospectus in accordance with Rules 415 and 424(b)(2) under the 1933
Act, relating to the 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 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
3
<PAGE> 4
supplement dated the date specified in the Pricing Agreement (which
if not so specified shall be the date of such Pricing Agreement)
(the "Prospectus Supplement"), relating to the offering of the Class
A Certificates, including any document incorporated therein by
reference pursuant to the Exchange Act, are hereinafter referred to
collectively as the "Prospectus," except that if the Prospectus is
thereafter amended or supplemented pursuant to Rule 424(b), the term
"Prospectus" shall mean the prospectus, as so amended or supplemented
pursuant to Rule 424(b), from and after the date on which such
amended prospectus or supplement is filed with the Commission. Any
preliminary form of the Prospectus Supplement which has heretofore
been filed pursuant to Rule 402(a) or Rule 424 is hereinafter called
a "Preliminary Prospectus Supplement." Any reference herein to the
terms "amend," "amendment" or "supplement" with respect to the
Registration Statement, the Prospectus or the Prospectus Supplement
shall be deemed to refer to and include the filing of any document
under the Exchange Act after the effective date of the Registration
Statement or the issue date of the Prospectus or Prospectus or
Prospectus Supplement, as the case may be, incorporated therein by
reference.
B. As of the date hereof, and as of the dates when the
Registration Statement became effective, when the Prospectus
Supplement is first filed pursuant to Rule 424(b) under the 1933
Act, when, prior to the Closing Date, any other amendment to the
Registration Statement becomes effective, and when any supplement to
the Prospectus is filed with the Commission, and at the Closing Date,
(i) the Registration Statement, as amended, as of any such time, and
the Prospectus, as amended or supplemented as of any such time,
complied or will comply in all material respects with the applicable
requirements of the 1933 Act, and (ii) the Registration Statement, as
amended as of any such time, did not and will not contain any untrue
statement of a material fact and did not and will not omit to state
any material fact required to be stated therein or necessary to make
the statements therein not misleading and the Prospectus, as amended
or supplemented as of any such time, did not and will not contain an
untrue statement of a material fact and did not and will not omit to
state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that the Company makes no
representations or warranties as to the information contained in or
omitted from (i) the Registration Statement or the Prospectus in
reliance upon and in conformity with written information furnished to
the Company by or on behalf of the Underwriters as set forth in this
Agreement or the Pricing Agreement specifically for use in connection
with the preparation of the Registration Statement or the Prospectus
and (ii) the Form 8-K - Computational Materials (as defined in
Section 5K below) or Form 8-K - ABS Term Sheets (as defined in
Section 5L below), or in any amendment thereof or supplement thereto,
incorporated by reference in such Registration Statement or such
Prospectus (or any amendment thereof or supplement thereto).
C. The Company is duly organized, validly existing and
in good standing under the laws of the State of California, has full
power and authority (corporate and
4
<PAGE> 5
other) to own its properties and conduct its business as now
conducted by it, and as described in the Prospectus, and is duly
qualified to do business in each jurisdiction in which it owns or
leases real property (to the extent such qualification is required by
applicable law) or in which the conduct of its business requires such
qualification except where the failure to be so qualified does not
involve (i) a material risk to, or a material adverse effect on, the
business, properties, financial position, operation or results of
operations of the Company or (ii) any risk whatsoever as to the
enforceability of any Mortgage Loan.
D. There are no actions, proceedings or investigations
pending, or, to the knowledge of the Company, threatened, before any
court, governmental agency or body or other tribunal (i) asserting
the invalidity of this Agreement, the Certificates, 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.
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 Trust by the
Company are within the corporate power of the Company and have been,
or will be, prior to the Closing Date duly authorized by all necessary
corporate action on the part of the Company and the execution and
delivery of such instruments, the consummation of the transactions
therein contemplated and compliance with the provisions thereof will
not result in a breach or violation of any of the terms and provisions
of, or constitute a default under, any statute or any agreement or
instrument to which the Company or any of its affiliates is a party or
by which it or any of them is bound or to which any of the property of
the Company or any of its affiliates is subject, the Company's
articles of incorporation or bylaws, or any order, rule or regulation
of any court, 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
5
<PAGE> 6
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 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.
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
6
<PAGE> 7
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.
P. Neither the Company nor the Trust will be subject to
registration as an "investment company" under the Investment Company
Act of 1940, as amended (the "Investment Company Act"). The Pooling
and Servicing Agreement is not required to be qualified under the
Trust Indenture Act of 1939, as amended, and the Trust is not
required to be registered.
7
<PAGE> 8
Q. In connection with the offering of the Certificates
in the State of Florida, the Company hereby certifies that it has
complied with all provisions of Section 5.17.075 of the Florida
Securities and Investor Protection Act.
Any certificate signed by any officer of the Company and delivered to
the Underwriters in connection with the sale of the 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 Pricing Agreement and authorization by the
Underwriters of the release of the Class A Certificates of the
related Series, the Underwriters shall offer such Class A
Certificates for sale upon the terms and conditions set forth in the
prospectus as amended or supplemented.
B. Each Underwriter severally represents and agrees
that:
(i) it has not offered or sold and will not offer
or sell, prior to the date six months after
their date of issuance, any Class A
Certificates to persons in the United
Kingdom, except to persons whose activities
involve them in acquiring, holding, managing
or disposing of investments (as principal or
agent) for the purposes of their businesses
or otherwise in circumstances which have not
resulted in and will not result in an offer
to the public in the United Kingdom within
the meaning of the Public Offers of
Securities Regulations 1995;
(ii) it has complied and will comply with all
applicable provisions of the Financial
Services Act of 1986 with respect to anything
done by it in relation to the Class A
Certificates in, from or otherwise involving
the United Kingdom;
(iii) it has only issued or passed on and will only
issue or pass on to any person in the United
Kingdom any document received by it in
connection with the issuance of the Class A
Certificates only if that person is of a kind
described in Article 11(3) of the Financial
Services Act of 1986 (Investment
Advertisements) (Exceptions) Order 1995, as
amended, or such person is one to whom the
document can lawfully be issued or passed on;
(iv) no action has been or will be taken by such
Underwriter that would permit a public
offering of the Class A Certificates or
distribution
8
<PAGE> 9
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 Pricing Agreement to the Underwriters,
who, upon the basis of the representations and warranties herein contained, but
subject to the conditions hereinafter stated, hereby agree, severally and not
jointly, to purchase the entire aggregate principal amount of the Class A
Certificates in the amounts set forth in Schedule I to such Pricing Agreement.
At the time of issuance of the Certificates, the Mortgage Loans will be sold by
the Company to the Trust pursuant to the Pooling and Servicing Agreement. The
Company will be obligated, under the Pooling and Servicing Agreement, to
service the Mortgage Loans either directly or through subservicers.
The Class A Certificates to be purchased by the Underwriters will be
delivered by the Company to the Underwriters (which delivery shall be made
through the facilities of The Depository Trust Company ("DTC") or Cedel Bank,
societe anonyme or the Euroclear System) against payment of the purchase price
therefor, in an amount equal to the percentage of the aggregate original
principal amount thereof as specified in the 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
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
9
<PAGE> 10
be prepared in definitive form and in such authorized denominations as the
Underwriters may request, registered in the name of Cede & Co., as nominee of
DTC.
It is a condition to the purchase and sale of each Class of Class A
Certificates that the purchase and sale of each other Class of Class A
Certificates occurs simultaneously.
The Company agrees to have the Class A Certificates available for
inspection and review by the Underwriters in Los Angeles not later than 11:00
a.m. New York City time on the business day prior to the Closing Date.
5. Covenants of the Company. The Company covenants and agrees
with each Underwriter that:
A. The Company will promptly advise the Representative
and counsel to the Underwriters (i) when any amendment to the
Registration Statement relating to the offering of the 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) or 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, and will use its best efforts to prevent ACAC
from filing, any amendment to the Registration Statement or
supplement to the Prospectus after the date of the Pricing Agreement
and prior to the related Closing Date for the 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 fat or omit to state any
material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, or
if it shall be necessary to amend or supplement the Prospectus to
comply with the 1933 Act or the rules under the 1933 Act, the Company
will promptly prepare and file with the Commission and shall use its
best efforts to cause ACAC to promptly prepare and file, subject to
Paragraph A of this Section 5, an amendment or supplement that will
correct such statement or omission or an amendment that will effect
such compliance and, if such amendment or supplement is
10
<PAGE> 11
required to be contained in a post-effective amendment to the
Registration Statement, will use its best efforts to cause such post-
effective amendment of the Registration Statement to become effective
as soon as possible, provided, however, that the Company will not be
required to file any such amendment or supplement with respect to any
Computational Materials or ABS Term Sheets incorporated by reference
in the Prospectus other than any amendments or supplements of such
Computational Materials or ABS Term Sheets that are furnished to the
Company by the Underwriters pursuant to Section 9A hereof which the
Company is required to file in accordance with Section 5K or 5L.
C. The Company will furnish to the Underwriters, without
charge, copies of the Registration Statement (including exhibits
thereto), any documents incorporated therein by reference, and, so
long as delivery of a prospectus by the Underwriters or a dealer may
be required by the 1933 Act, as many copies of the Prospectus, as
amended or supplemented, and any amendments and supplements thereto
as the Underwriters may reasonably request. The Company will pay the
expenses of printing all offering documents relating to the offering
of the 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.
11
<PAGE> 12
G. The Company, whether or not the transactions
contemplated hereunder are consummated or this Agreement or the
Pricing Agreement is consummated, will pay all expenses in connection
with the transactions contemplated herein, including but not limited
to (i) the expenses of printing (or otherwise reproducing) all
documents relating to the offering and the fees and disbursements of
its counsel incurred in connection with the issuance and delivery of
the Class A Certificates, (ii) the preparation of all documents
specified in this Agreement, (iii) any fees and expenses of the
Trustee, the Insurer and any other credit support provider (including
legal fees) that are not payable by or from the Trust, (iv) any
accounting fees and disbursements relating to the offering of Class A
Certificates, (v) any fees charged by rating agencies for rating the
Class A Certificates, (vi) any reasonable fees and disbursements of
counsel to the Underwriters relating to Blue Sky undertakings (vii)
any reasonable fees and disbursements of counsel to the Underwriters
in an amount not to exceed $5,000 per Series relating to the
representation of the Underwriters with respect to the offering of
the Class A Certificates of such Series and (viii) the fees and
charges related to the filing with the Commission of such Current
Reports on Form 8-K and such other materials as are contemplated
hereby, whether pursuant to EDGAR or otherwise. Subject to the
provisions of Section 7 hereof, the Company will not pay the fees and
expenses of the Underwriters or their counsel except as specified
above.
H. The Company will enter into the Pooling and Servicing
Agreement and all related agreements on or prior to the Closing Date.
I. The Company will endeavor to qualify the Class A
Certificates for sale to the extent necessary under any state
securities or Blue Sky laws in any jurisdiction as may be reasonably
requested by the Underwriters, if any, and will pay all expenses
(including reasonable fees and disbursements of counsel to the
Underwriters) in connection with such qualification and in connection
with the determination of the eligibility of the Class A Certificates
for investment under the laws of such jurisdiction as the
Underwriters may reasonably designate, if any.
J. The Company will file or cause to be filed with the
Commission within fifteen days of the termination of the Commitment
Period (as such term is defined in the related Pooling and Servicing
Agreement), a Current Report on Form 8-K setting forth specific
information concerning the description of the Mortgage Pool (the
"Form 8-K - Mortgage Pool"). Without limiting the generality of any
other provision hereof, such Form 8-K - Mortgage Pool shall be deemed
to be a part of the Registration Statement and Prospectus from and
after the date it is first filed with the Commission.
K. The Company will cause any Computational Materials
(as defined in Section 9A hereof) with respect to the 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)
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<PAGE> 13
under the 1933 Act; provided, however, that the Company shall have no
obligation to file any such materials which, in the reasonable
determination of the Company after consultation with such Underwriter
(i) are not, based upon the advice of outside counsel to the Company,
required to be filed pursuant to the Kidder Letters (as defined in
Section 9A hereof or (ii) contain any erroneous information or untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading; it being understood, however, that the
Company shall have no obligation to review or pass upon the accuracy
or adequacy of, or to correct, any Computational Materials provided
by any Underwriter to the Company pursuant to Section 9A hereof. The
parties hereto agree that the Company shall have no liability for any
failure to file such Computational Materials on such date if the
related Underwriter has not delivered such materials to the Company
one business day prior to the date such filing is to be made.
L. The Company will cause any ABS Term Sheets (as
defined in Section 9A hereof with respect of the Class A Certificates
which are delivered by any Underwriter to the Company pursuant to
Section 9A hereof to be filed with the Commission on one or more
Current Reports on Form 8-K (collectively, the "Form 8-K - ABS Term
Sheets") (i) at or before the time of filing of the Prospectus
pursuant to Rule 424(b) under the 1933 Act, in the case of Structural
Term Sheets (as defined in Section 9A hereof) and (ii) within two
business days of first use in the case of Collateral Term Sheets (as
defined in Section 9A hereof); provided, however, that the Company
shall have no obligation to file any such materials which, in the
reasonable determination of the Company after consultation with such
Underwriter (i) are not, based upon advice of outside counsel to the
Company, required to be filed pursuant to the PSA Letter (as defined
in Section 9A hereof), (ii) do not contain the legends required by
the PSA Letter or (iii) contain erroneous information or contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading; it being understood, however, that the
Company shall have no obligation to review or pass upon the accuracy
or adequacy of, or to correct, any ABS Term Sheets provided by any
Underwriter to the Company pursuant to Section 9A hereof. The
parties hereto agree that the Company shall have no liability for any
failure to file such ABS Term Sheets on such dates if the related
Underwriter has not delivered such materials to the Company one
business day prior to the date such filing is to be made.
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<PAGE> 14
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 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 respective terms thereof.
C. (1) The Underwriters hall 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 Stroock & Stroock & Lavan LLP, special counsel to the
Underwriters, dated the Closing Date, with respect to the Pooling and
Servicing Agreement, the Certificates of such Series, the due
authorization, execution and delivery of this Agreement and the
Pricing Agreement, and such other matters as the Underwriters may
reasonably request.
In rendering their opinions, the counsel described in this
Paragraph C may rely, as to matters of fact, on certificates of
responsible officers of the Company, 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.
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<PAGE> 15
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 Corporation, a division
of the McGraw-Hill Companies, Inc. ("S&P") Moody's Investors Service,
Inc. ("Moody's") and Fitch Investors Service, L.P. ("Fitch"), and
such ratings shall not have been rescinded. The Underwriters and
counsel for the Underwriters shall have received copies, addressed to
the Underwriters and upon which they may rely, of any opinions of
counsel supplied to the rating organizations relating to any matters
with respect to the Certificates. Any such opinions shall be dated
the Closing Date.
F. The Underwriters shall have received from the Company
a certificate, signed by the president, an executive vice president
or a vice president of the Company, dated the Closing Date, to the
effect that the signer of such certificate has carefully examined the
Registration Statement (excluding Form 8-K - Computational Materials
and Form 8-K ABS Term Sheets), the Pooling and Servicing Agreement
and this Agreement and that, to the best of his or her knowledge
based upon reasonable investigation, the representations and
warranties of the Company in this Agreement, as of the Closing Date,
in the Pooling and Servicing Agreement and in all related agreements,
as of the date specified in such agreements, are true and correct,
and the Company has complied with all the agreements and satisfied
all the conditions on its part to be performed or satisfied at or
prior to the Closing Date and that no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or, to the best of
his or her knowledge, are contemplated by the Commission.
The Company shall attach to such certificate an incumbency
certificate and shall certify in an officer's certificate a true and
correct copy of its 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
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<PAGE> 16
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.
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
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<PAGE> 17
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 or any of S&P, Moody's
or Fitch relating to matters with respect to the Certificates or the
Policy, and such opinions shall be dated the Closing Date and
addressed to the Underwriters and upon which they may rely.
O. The Underwriters shall have received such further
information, certificates and documents as the Underwriters may
reasonably have requested not less than one (1) full business day
prior to the Closing Date.
P. There shall have been executed and delivered by Aames
Financial Corporation, the corporate parent of the Company ("AFC"), a
letter agreement with the Underwriters, pursuant to which AFC agrees
to become jointly and severally liable with the Company for the
payment of the Joint and Several Obligations (as defined in such
letter agreement). Such letter agreement with the Underwriters is
substantially in the form of Exhibit A hereto.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects, as determined by the Representative
and counsel to the Underwriters, when and as provided in this Agreement, this
Agreement and/or Pricing Agreement and all obligations of the Underwriters
hereunder and thereunder, may be canceled on, or at any time prior to, the
Closing Date by the Representative. Notice of such cancellation shall be given
to the Company in writing, or by telephone or telegraph confirmed in writing.
The Underwriters 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.
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<PAGE> 18
7. Expenses. If the sale of the Certificates of any Series
provided for herein is not consummated by reason of a default by the Company in
its obligations hereunder (including the failure to satisfy any of the
conditions specified in Section 6), except in the case of a termination of this
Agreement in accordance with Section 12 hereof, then the Company will reimburse
the Underwriters, upon demand, for all reasonable out-of-pocket expenses
(including, but not limited to, the reasonable fees and expenses of their
counsel) that shall have been incurred by them in connection with their
investigation with regard to the Company and the Class A Certificates and the
proposed purchase and sale of the Class A Certificates.
8. Indemnification and Contribution.
A. Regardless of whether any Class A Certificates are
sold, the Company will indemnify and hold harmless each Underwriter,
each of their respective officers and directors and each person who
controls any Underwriter within the meaning of the 1933 Act or the
Exchange Act, against any and all losses, claims, damages, or
liabilities (including the cost of any investigation, legal and other
expenses incurred in connection with and amounts paid in settlement
of any action, suit, proceeding or claim asserted), joint or several,
to which they or any of them may become subject, under the 1933 Act,
the Exchange Act or other federal or state law or regulation, at
common law or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material
fact contained (i) in the Registration Statement or arise out of or
are based upon the omission or alleged omission (and in the case of
any Computational Materials, as to which a Mortgage Pool Error (as
defined below) occurred) to state therein a material fact necessary
to make the statements therein not misleading or (ii) in the
Prospectus or arise out of or are based upon the omission or alleged
omission (and in the case of any Computational Materials, as to which
a Mortgage Pool Error occurred) to state therein a material fact
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and will
reimburse each such indemnified party for any legal or other expenses
reasonably incurred by it in connection with investigating or
defending against such loss, claim, damage, liability or action;
provided, however, that (a) the Company shall not be liable in any
such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made therein
(x) in reliance upon and in conformity with written information
furnished to the Company by or on behalf of an Underwriter, as
described (and to the extent described) in Section 9A of this
Agreement, or (y) in the Form 8-K - Computational Materials or in any
Form 8-K - ABS Term Sheet, or any amendment or supplement thereof,
except to the extent that any untrue statement or alleged untrue
statement therein results (or is alleged to have resulted) directly
from, in the case of the Form 8-K - Computational Materials, any
Mortgage Pool Error, or, in the case of any Form 8-K - ABS Term
Sheets, any error in Company Provided Information that was used in
the preparation of (X) any Computational Materials or ABS Term Sheets
(or amendments or supplements thereof) included in the Form 8-K -
Computational Materials or Form 8-K - ABS Term
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<PAGE> 19
Sheets (or amendment or supplement thereof), or (Y) any written or
electronic materials furnished to prospective investors on which the
Computational Materials or Collateral Term Sheets (or amendments or
supplements) were based, (b) such indemnity with respect to any
Corrected Statement (as defined below) in such Prospectus (or
supplement thereto) shall not inure to the benefit of such
Underwriter (or any person controlling such Underwriter) from whom
the person asserting any loss, claim, damage or liability purchased
the Class A Certificates that are the subject thereof if such person
did not receive a copy of a supplement to such Prospectus at or prior
to the confirmation of the sale of such Class A Certificates and the
untrue statement or omission of a material fact contained in such
Prospectus (or supplement thereto) was corrected (a "Corrected
Statement") in such other supplement and such supplement timely was
furnished by the Company to such Underwriter within a reasonable time
prior to the delivery of such confirmation, and (c) such indemnity
with respect to any error in Company Provided Information or any
Mortgage Pool Error shall not inure to the benefit of such
Underwriter (or any person controlling such Underwriter) from whom
the person asserting any loss, claim, damage or liability received
any Computational Materials or ABS Term Sheets (or any written or
electronic materials on which the Computational Materials or any ABS
Term Sheets are based) that were prepared on the basis of such
erroneous Company Provided Information or Mortgage Pool Error, if,
within a reasonable time prior to the time of confirmation of the
sale of the applicable Class A Certificates to such person, the
Company notified such Underwriter in writing of such error or
provided in written or electronic form information superseding or
correcting such error (in any such case, a "Corrected Error"), and
such Underwriter failed to notify such person thereof or to actually
or constructively deliver to such person corrected Computational
Materials or ABS Term Sheets (or underlying written or electronic
materials). This indemnity agreement will be in addition to any
liability which the Company may otherwise have. "Mortgage Pool
Error" shall mean any error or omission in the information concerning
the characteristics of the Mortgage Loans furnished by or on behalf
of the Company to any of 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
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<PAGE> 20
made, not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made therein (a) in reliance upon
and in conformity with written information relating to such
Underwriter furnished to the Company by or on behalf of such
Underwriter, as described in Section 9A of this Agreement,
specifically for use in the preparation thereof and so acknowledged
in writing, or (b) any Computational Materials or ABS Term Sheet (or
amendments or supplements thereof) furnished to the Company by such
Underwriter pursuant to Section 9A hereof and incorporated by
reference in such Registration Statement or the related Prospectus or
any amendment or supplement thereof (except that no such indemnity
shall be available for any losses, claims, damages or liabilities, or
actions in respect thereof resulting from any error in Company
Provided Information or any Mortgage Pool Error, other than a
Corrected Error), and such Underwriter or the Underwriters, as the
case may be, will reimburse the Company for any legal or other
expenses reasonably incurred by the Company in connection with
investigating or defending against such loss, claim, damage,
liability or action.
C. In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of
which indemnity may be sought pursuant to Paragraphs A and B above,
such person (hereinafter called the indemnified party) shall promptly
notify the person against whom such indemnity may be sought
(hereinafter called the indemnifying party) in writing thereof; but
the omission to notify the indemnifying party shall not relieve such
indemnifying party from any liability which it may have to any
indemnified party otherwise than under such Paragraph. The
indemnifying party, upon request of the indemnified party, shall
retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party
may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any
such proceeding any indemnified party shall have the right to retain
its own counsel, but the fees and expenses of such counsel shall be
at the expense of such indemnified party unless (i) the indemnifying
party and the indemnified party shall have mutually agreed to the
retention of such counsel, or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party and representation of
both parties by the same counsel would be inappropriate due to actual
or potential differing interests between them or because different
defenses are available to such parties. It is understood that the
indemnifying party shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the fees
and expenses of more than one separate firm (in addition to any local
counsel) for all such indemnified parties, and that all such fees and
expenses shall be reimbursed as they are incurred. Such firm shall
be designated in writing by the Representative in the case of parties
indemnified pursuant to Paragraph A and by the Company in the case of
parties indemnified pursuant to Paragraph B. The indemnifying party
shall not be liable for any settlement of any proceeding effected
without its written consent, but if settled with such consent or if
there is a final judgment for the plaintiff, the indemnifying party
agrees to indemnify the indemnified party from
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<PAGE> 21
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 both the relative benefits received by
the Company and the Underwriters from the sale of the Class A
Certificates and 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 or
liabilities, including legal and other expenses, by a fraction, the
numerator of which is (x) the excess of the Aggregate Resale Price of
the Class A Certificates of the related
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<PAGE> 22
Series over the aggregate purchase price of the Class A Certificates
specified in the 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 of the omission or
alleged omission to state a material fact relates to information
supplied by the Company or by the applicable Underwriter or
Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The Underwriters' obligations in this Paragraph D to
contribute are several in proportion to their respective underwriting
obligations and are not joint.
E. The Company and the Underwriters agree that it would
not be just and equitable if contribution pursuant to this Section 8
were determined by pro rata allocation or by any other method of
allocation that does not take account of the equitable considerations
referred to in Paragraph D. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or
liabilities referred to in Paragraph D shall be deemed to include,
subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection
with investigating or defending any such action or claim.
Notwithstanding the provisions of Section 8D(i), no Underwriter shall
be required to contribute any amount by which the difference between
the Aggregate Resale Price and the aggregate purchase price of the
Class A Certificates specified in the Pricing Agreement exceeds the
amount of any damages that such Underwriter has otherwise been
required to pay by reason of any untrue or alleged untrue statement
or omission or alleged omission.
F. The Company and the Underwriters each expressly
waive, and agree not to assert, any defense to their respective
indemnification and contribution obligations under 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
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<PAGE> 23
under this Section 8 shall be in addition to any liability that the
Underwriters may otherwise have and shall extend, upon the same terms
and conditions, to each director of the Company and to each person,
if any, who controls the Company within the meaning of the 1933 Act
or the Exchange Act; provided, however, that in no event shall the
Company or the Underwriters be liable for double indemnification.
9. Information Supplied by Underwriters; Representations and
Warranties of the Underwriters.
A. The Underwriters and the Company agree that the
following constitute the only information furnished by or on behalf
of the Underwriters to the Company for the purposes of Sections 2B
and 8A hereof:
(i) the statements set forth in the last
paragraph on the front cover page of the Prospectus Supplement
regarding market making, and information under the heading
"Underwriting" in the Prospectus Supplement, to the extent
such information relates to all of the Underwriters and not to
any particular Underwriter or affiliate of any particular
Underwriter, have been supplied by or on behalf of all of the
Underwriters jointly;
(ii) the information under the heading
"Underwriting" in the Prospectus Supplement, to the extent
such information relates to a particular Underwriter or
affiliate of such Underwriter, and the information contained
in any Form 8-K - Computational Materials and in any Form 8-K
- ABS Term Sheets to the extent supplied to the Company by or
on behalf of such Underwriter to be filed in the related
Current Report on Form 8-K, in each case excluding any Company
Provided Information and only to the extent not substantially
identical in form, substance, scope, content and context to
any information set forth in the Prospectus, has been supplied
by such Underwriter and shall relate to and be the several
responsibility of such Underwriter and no other Underwriter.
"Computational Materials" shall mean those materials delivered by an
Underwriter to the Company within the meaning of the no-action letter dated May
20, 1994 issued by the Division of Corporation Finance of the Commission to
Kidder, Peabody Acceptance Corporation I, Kidder, Peabody & Co. Incorporated,
and Kidder Structured Asset Corporation and the no-action letter dated May 27,
1994 issued by the Division of Corporation Finance of the Commission to the
Public Securities Association (together, the "Kidder Letters") for which the
filing of such material is a condition of the relief granted in such letters.
"ABS Term Sheet" shall mean those materials delivered by an Underwriter to the
Company in the form of "Structural Term Sheets" or "Collateral Term Sheets", in
each case within the meaning of the no-action letter dated February 13, 1995
issued by the Division of Corporation Finance of the Commission to the Public
Securities Association (the "PSA Letter") for which the filing of such material
is a condition of the relief granted in such letter. "Company Provided
Information" shall mean any information presented in any ABS Term Sheet (or
underlying materials) provided to the Underwriters by or
23
<PAGE> 24
on behalf of the Company specifically for use in ABS Term sheets in writing or
through electronic or magnetic data storage or transmission methods, in
tabular, graphic or textual form, regardless of whether or not such information
is presented in any ABS Term Sheets in the same format in which such
information was provided to the Underwriters, but shall not include (i) any
such information to the extent that, as presented in any ABS Term Sheet, such
information contains, or is alleged to contain, any untrue statement of a
material fact or omits, or is alleged to omit, to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading due to any (a) typographical or similar error or (b) stylistic,
contextual or other presentational considerations with respect to such ABS Term
Sheets, including the format of tables, the phraseology of text or the
placement or juxtaposition of such information in relation to any other
information presented therein (whether or not Company Provided Information), in
each case, not present in such information (in the aggregate), or in the manner
of presentation or communication thereof to the Underwriters, when provided to
the Underwriters by the Company or (ii) any information set forth in an ABS
Term Sheet to the extent that such information, as presented in the Prospectus
is not substantially identical in form, substance, scope, content or context
thereto. Each Underwriter shall deliver to the Company (or counsel to the
Company) a complete copy of all materials (which, if reasonably requested by
the Company, shall be on computer compatible disk or such other acceptable
electronic form) provided by such Underwriter to prospective investors in such
Class A Certificates which constitute or are deemed to constitute Computational
Materials or ABS Term Sheets, at least one business day before the date or
dates on which the related Form 8-K - Computational Materials or Form 8-K - ABS
Term Sheets relating to the Class A Certificates are required to be filed by
the Company with the Commission pursuant to Section 5K or 5L hereof.
B. Each Underwriter severally represents and warrants to
and agrees with the Company, that, as of the date of the related
Closing Date:
(i) any Computational Materials and ABS Term
Sheets furnished by it to the Company pursuant to Section 9A
hereof constitute (either in original, aggregated or
consolidated form) all of the materials furnished by it to
prospective investors prior to the time of delivery thereof to
the Company and that it reasonably believes that such
materials constitute the type of materials contemplated by the
Kidder Letters and the PSA Letter; and
(ii) on the date of delivery of any such
Computational Materials or ABS Term Sheets to the Company
pursuant to this Section 9 and on the related Closing Date
such Computational Materials and ABS Term Sheets (or
materials) 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
24
<PAGE> 25
materials on which such Computational Materials or ABS Term Sheets are based)
included or will include any untrue statement resulting directly from any
Mortgage Pool Error or, in the case of an ABS Term Sheet, any error in Company
Provided Information.
Each Underwriter agrees that it will not represent to investors that
any Computational Materials or ABS Term Sheets delivered thereto were prepared
by, or disseminated on behalf of, the Company.
10. Notices. All communications hereunder shall be in writing
and, if sent to the Underwriters, shall be mailed or delivered or telecopied
and confirmed in writing to the Representative at 277 Park Avenue, 9th Floor,
New York, New York 10172, Attention: Paul J. Najarian, with a copy to the
Representative's General Counsel's office at 277 Park Avenue, 23rd Floor, New
York, New York 10172 and, if sent to the Company, shall be mailed, delivered or
telegraphed and confirmed in writing to the Company at 3731 Wilshire Boulevard,
Los Angeles, California 90010, Attention: Gregory J. Witherspoon; with a copy
addressed to Andrews & Kurth L.L.P., 1701 Pennsylvania Avenue, N.W., Second
Floor, Washington, D.C. 20006, Attention: James A. Blalock III.
11. Survival. All representations, warranties, covenants and
agreements of the Company contained herein or in agreements or certificates
delivered pursuant hereto, the agreements of the Underwriters and the Company
contained in Section 8 hereof, and the representations, warranties and
agreements of the Underwriters contained in Section 3 hereof, shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of the Underwriters or any controlling persons, or any subsequent
purchaser or the Company or any of its officers, directors or any controlling
persons, and shall survive delivery of and payment for the Certificates. The
provisions of Sections 5, 7 and 8 hereof shall survive the termination or
cancellation of this Agreement or any Pricing Agreement.
12. Termination. The Underwriters shall have the right to
terminate this Agreement and/or the 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 Section 5G(vii)) and Section 8 hereof shall
at all times be effective. If the Underwriters elect to
25
<PAGE> 26
terminate this Agreement and/or the Pricing Agreement as provided in this
Section 12, the Company shall be notified promptly by the Representative by
telephone, telegram or facsimile transmission, in any case, confirmed by
letter.
13. Successors. This Agreement will inure to the benefit of and
be binding upon the parties hereto and their respective successors and assigns
(which successors and assigns do not include any person on purchasing a
Certificate from the Underwriters), and the officers and directors and
controlling persons referred to in Section 8 hereof and their respective
successors and assigns, and no other persons will have any right or obligations
hereunder.
14. Applicable Law; Venue. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of New York.
Any action or proceeding brought to enforce or arising out of any provision of
this Agreement shall be brought only in a state or federal court located in the
Borough of Manhattan, New York City, New York, and the parties hereto expressly
consent to the jurisdiction of such courts and agree to waive any defense or
claim of forum non conveniens they may have with respect to any such action or
proceeding brought.
15. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall together constitute but one and the same
instrument.
26
<PAGE> 27
16. Amendments and Waivers. This Agreement may be amended,
modified, altered or terminated, and any of its provisions waived, only in a
writing signed on behalf of the parties hereto.
Very truly yours,
AAMES CAPITAL CORPORATION
By: /s/ Mark Elbaum
---------------------------
Name: Mark E. Elbaum
Title: Senior Vice President - Finance
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
By: /s/ Paul J. Najarian
---------------------------
Name: Paul J. Najarian
Title: Vice President
For itself and as
Representative of the several
Underwriters named in Schedule I
to the Pricing Agreement
<PAGE> 28
EXHIBIT A
March 18, 1997
Donaldson, Lufkin & Jenrette Securities Corporation
as Representative of the several Underwriters
named in Schedule I to the Pricing Agreement
c/o Donaldson, Lufkin & Jenrette Securities Corporation
277 Park Avenue
New York, New York 10172
Re: Underwriting Agreement for Aames Mortgage Trust, dated March 18, 1997 the
"Underwriting Agreement") between Aames Capital Corporation ("Aames") and
Donaldson, Lufkin & Jenrette Securities Corporation as Representative of
the several Underwriters named in Schedule I to the Pricing Agreement
dated March 18, 1997 (the "Pricing Agreement")
Ladies and Gentlemen:
Pursuant to the Underwriting Agreement and Pricing Agreement
(collectively, the "Designated Agreement"), Aames has undertaken certain
financial obligations with respect to the indemnification of the Underwriters
with respect to the Registration Statement, and the Prospectus described in the
Designated Agreement. Any financial obligations of Aames under the Designated
Agreement, whether or not specifically enumerated in this paragraph, are
hereinafter referred to as the "Joint and Several Obligations;" provided,
however, that "Joint and Several Obligations" shall mean only the financial
obligations of Aames under the Designated Agreement (including the payment of
money damages for a breach of any of Aames' obligations under the Designated
Agreement, whether financial or otherwise) but shall not include any
obligations not relating to the payment of money.
As a condition of its execution of the Designated Agreement, the
Underwriters have required the undersigned, Aames Financial Corportion ("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:
Exhibit A-1
<PAGE> 29
(i) AFC hereby agrees to be absolutely and
unconditionally jointly and severally liable with Aames to the
Underwriters for the payment of the Joint and Several Obligations
under the Designated Agreement.
(ii) AFC may honor its obligations hereunder either by
direct payment of any Joint and Several Obligations or by causing any
Joint and Several Obligations to be paid to the Underwriters by Aames
or another affiliate of AFC.
Exhibit A-2
<PAGE> 30
Capitalized terms used herein and not defined herein shall have their
respective meanings as set forth in the Designated Agreement.
Very truly yours,
AAMES FINANCIAL CORPORATION
By:
------------------------------
Name:
Title:
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
By: _______________________________________________________
Name:
Title:
For itself and as
Representative of the several
Underwriters named in Schedule I
to the Pricing Agreement
Exhibit A-3
<PAGE> 31
APPENDIX A
FORM OF OPINION OF
COUNSEL TO THE COMPANY
1. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of 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 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.
Appendix A-1
<PAGE> 32
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.
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.
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 there of, 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.
Appendix A-2
<PAGE> 33
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.
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 base Prospectus and the
Prospectus Supplement, as the case may be, under the headings "Risk Factors,"
"Certain Legal Aspects of the Mortgage Loans," "Certain Federal Income Tax
Considerations," and "ERISA Considerations," to the extent that they constitute
matters of California, New York or federal law or legal conclusions with
respect 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)(1) 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 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
Appendix A-3
<PAGE> 34
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.
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
Appendix A-4
<PAGE> 35
information included or incorporated by reference therein, and the information
with respect to the Certificate Insurer, as to which such counsel need not make
any statement), at its issue date or at the date of the Closing, contained an
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
Appendix A-5
<PAGE> 36
APPENDIX B
FORM OF OPINION OF COUNSEL TO TRUSTEE
1. The Trustee is a national banking association with trust
powers, duly organized and validly existing in good standing under the laws of
the United States of America, and has all requisite power and authority to
enter into the Pooling and Servicing Agreement and perform the obligations of
trustee thereunder.
2. The Pooling and Servicing Agreement has been duly authorized,
executed, and delivered by the Trustee and constitutes the legal, valid, and
binding obligation of the Trustee enforceable against the Trustee in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy and insolvency laws and other similar laws affecting the enforcement
of creditors' rights generally and by general equity principles.
3. The execution and delivery of the Pooling and Servicing
Agreement by the Trustee and the performance by the Trustee of its terms do not
conflict with or result in a violation (A) of any law or regulation of the
United States of America or the State of California governing the banking or
trust powers of the Trustee, or (B) the Articles of Association or By-laws of
the Trustee.
4. No approval, authorization, or other action by, or filing
with, any governmental authority of the United States of America or the State
of California having jurisdiction over the banking or trust powers of the
Trustee is required in connection with its execution and delivery of the
Pooling and Servicing Agreement or the performance by the Trustee of the terms
of the Pooling and Servicing Agreement.
5. The Trustee has the power and authority to perform its duties
pursuant to Sections 8.01 and 8.02 of the Pooling and Servicing Agreement to
act as a successor servicer, including the making of advances as described in
Sections 8.01 and 8.02 of the Pooling and Servicing Agreement.
6. The Certificates have been duly executed, authenticated and
delivered by the Trustee.
Appendix B-1
<PAGE> 37
APPENDIX C
FORM OF OPINION OF COUNSEL TO INSURER
1. The Insurer is a stock insurance company duly organized,
validly existing and authorized to conduct financial guaranty insurance
business under the laws of the State of New York.
2. The Policy, the Insurance and Indemnity Agreement and the
Indemnification Agreement (the "Agreements") have been duly authorized,
executed and delivered by the Insurer.
3. The Policy and the Agreements constitute valid and binding
obligations of the Insurer, enforceable against the Insurer in accordance with
their terms subject, as to the enforcement of remedies, bankruptcy, insolvency,
reorganization, rehabilitation, moratorium and other similar laws affecting the
enforceability of creditors' rights generally applicable in the event of the
bankruptcy or insolvency of the Insurer and to the application of general
principles of equity and subject, in the case of the Indemnification Agreement,
to principles of public policy limiting the right to enforce the
indemnification provision contained therein insofar as they relate to
indemnification for liabilities arising under applicable securities laws.
4. The Policy is exempt from registration under the 1933 Act.
5. Neither the execution or delivery by the Insurer of the Policy
or the Agreements, nor the performance by the Insurer of its obligations
thereunder, will conflict with any provision of the certificate of
incorporation or the by-laws of the Insurer or, to the best of such counsel's
knowledge, result in a breach of, or constitute a default under any agreement
or other instrument to which the Insurer is a party to which it or any of its
property is bound, or to the best of such counsel's knowledge, violate any
consent, order to decree applicable to the Insurer of any governmental or
regulatory body, administrative agency, court or arbitrator having jurisdiction
over the Insurer (except that in the published opinion of the Commission the
indemnification provisions of the Indemnification Agreement, insofar as they
relate to indemnification or liabilities arising under the 1933 Act, are
against public policy as expressed in the 1933 Act and are therefore
unenforceable).
In addition, please be advised such counsel has reviewed the
description of the Insurer under the caption "Certificate Insurer" in the
Prospectus Supplement (the "Offering Document") of the 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
Appendix C-1
<PAGE> 38
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-2
<PAGE> 39
ANNEX A
AAMES CAPITAL CORPORATION
Mortgage Pass-Through Certificates
PRICING AGREEMENT
March 18, 1997
Donaldson, Lufkin & Jenrette Securities Corporation,
as Representative of the several Underwriters
named in Schedule I hereto
c/o Donaldson, Lufkin & Jenrette Securities Corporation
277 Park Avenue
New York, New York 10172
Ladies and Gentlemen:
Aames Capital Corporation (the "Company") proposes, subject to the
terms and condition stated herein and the Underwriting Agreement, dated March
18, 1997 (the "Underwriting Agreement"), between the Company and Donaldson,
Lufkin & Jenrette Securities Corporation, as underwriter and as Representative
(in such capacity, the "Representative" of the several underwriters named in
Schedule I hereto (together with the Representative, the "Underwriters"), to
issue and sell to the Underwriters the series of mortgage pass-through
certificates specified in Schedule II hereto (the "Certificates"). Each of the
provisions of the Underwriting Agreement is incorporated herein by reference in
its entirety, and shall be deemed to be a part of this Agreement to the same
extent as if such provisions had been set forth in full herein; and each of the
representations and warranties set forth therein shall be deemed to have been
made at and as of the date of this Pricing Agreement, except that each
representation and warranty with respect to the Prospectus in Section 1 of the
Underwriting Agreement shall be deemed to be a representation or warranty as of
the date of the Underwriting Agreement in relation to the Prospectus (as
therein defined), and also a representation and warranty as of the date of this
Pricing Agreement in relation to the Prospectus as amended or supplemented with
respect to the Certificates. Each reference to Representative contained in the
Underwriting Agreement shall be deemed to refer to the Representative named
herein. Unless otherwise defined herein, terms in the Underwriting Agreement
are used herein as therein defined.
Appendix A-1
<PAGE> 40
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.
Appendix A-2
<PAGE> 41
If the foregoing is in accordance with your understanding, please sign
and return to us five counterparts hereof, and upon acceptance hereof by you,
this letter and such acceptance hereof, including the provisions of the
Underwriting Agreement incorporated herein by reference, shall constitute a
binding agreement between the Underwriters and the Company.
Very truly yours,
AAMES CAPITAL CORPORATION
By:
---------------------------------
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
By:
----------------------------------
Name:
Title:
For itself and as
Representative of the several
Underwriters named in
Schedule I hereto
Appendix A-3
<PAGE> 42
SCHEDULE I
<TABLE>
<CAPTION>
Principal Principal Principal Principal Principal
Amount of Amount of Amount of Amount of Amount of
Class A-1 Class A-2 Class A-3 Class A-4 Class A-5
Underwriter Certificates Certificates Certificates Certificates Certificates
----------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Donaldson, Lufkin &
Jenrette Securities
Corporation $32,400,000 $28,600,000 $5,800,000 $9,200,000 $10,000,000
Credit Suisse First
Boston Corporation $24,300,000 $21,450,000 $4,350,000 $6,900,000 $7,500,000
Prudential
Securities
Incorporated $12,150,000 $10,725,000 $2,175,000 $3,450,000 $3,750,000
Morgan Stanley &
Co. Incorporated $12,150,000 $10,725,000 $2,175,000 $3,450,000 $3,750,000
Total $81,000,000 $71,500,000 $14,500,000 $23,000,000 $25,000,000
</TABLE>
<PAGE> 43
SCHEDULE II
Registration Statement No. 333-21219
Base Prospectus March 18, 1997
Prospectus Supplement dated March 18, 1997
<TABLE>
<S> <C>
Title of Certificates: Class A-1
---------
Amount of Certificates: $81,000,000 (approximate)
Pass-Through Rate: 6.47%
Purchase Price Percentage: 99.824375%
Cut-off Date: March 1, 1997
Closing: March 26, 1997
Denominations: $1,000.00 and integral multiples of $1.00 in excess
thereof.
Title of Certificates: Class A-2
---------
Amount of Certificates: $71,500,000 (approximate)
Pass-Through Rate: 6.88%
Purchase Price Percentage: 99.734375%
Cut-off Date: March 1, 1997
Closing: March 26, 1997
Denominations: $1,000.00 and integral multiples of $1.00 in excess
thereof.
Title of Certificates: Class A-3
---------
Amount of Certificates: $14,500,000 (approximate)
Pass-Through Rate: 7.22%
Purchase Price Percentage: 99.653125%
Cut-off Date: March 1, 1997
Closing: March 26, 1997
Denominations: $1,000.00 and integral multiples of $1.00 in excess
thereof.
Title of Certificates: Class A-4
---------
Amount of Certificates: $23,000,000 (approximate)
Pass-Through Rate: 7.61%
Purchase Price Percentage: 99.568750%
Cut-off Date: March 1, 1997
Closing: March 26, 1997
</TABLE>
<PAGE> 44
<TABLE>
<S> <C>
Denominations: $1,000.00 and integral multiples of $1.00 in excess
thereof.
Title of Certificates: Class A-5
---------
Amount of Certificates: $25,000,000 (approximate)
Pass-Through Rate: 7.18%
Purchase Price Percentage: 99.609375%
Cut-off Date: March 1, 1997
Closing: March 26, 1997
Denominations: $1,000.00 and integral multiples of $1.00 in excess
thereof.
</TABLE>
<TABLE>
<S> <C>
Representative with respect to the Class A Certificates: Donaldson, Lufkin & Jenrette
Securities Corporation
</TABLE>
Insurer: MBIA Insurance Corporation.
Location of Settlement: The offices of Andrews & Kurth L.L.P.,
601 South Figueroa Street, Los Angeles, California
<PAGE> 1
EXHIBIT 1.2
AAMES CAPITAL CORPORATION
Mortgage Pass-Through Certificates
PRICING AGREEMENT
March 18, 1997
Donaldson, Lufkin & Jenrette Securities Corporation,
as Representative of the several Underwriters
named in Schedule I hereto
c/o Donaldson, Lufkin & Jenrette Securities Corporation
277 Park Avenue
New York, New York 10172
Ladies and Gentlemen:
Aames Capital Corporation (the "Company") proposes, subject to the
terms and condition stated herein and the Underwriting Agreement, dated March
18, 1997 (the "Underwriting Agreement"), between the Company and Donaldson,
Lufkin & Jenrette Securities Corporation, as underwriter and as Representative
(in such capacity, the "Representative" of the several underwriters named in
Schedule I hereto (together with the Representative, the "Underwriters"), to
issue and sell to the Underwriters the series of mortgage pass-through
certificates specified in Schedule II hereto (the "Certificates"). Each of the
provisions of the Underwriting Agreement is incorporated herein by reference in
its entirety, and shall be deemed to be a part of this Agreement to the same
extent as if such provisions had been set forth in full herein; and each of the
representations and warranties set forth therein shall be deemed to have been
made at and as of the date of this Pricing Agreement, except that each
representation and warranty with respect to the Prospectus in Section 1 of the
Underwriting Agreement shall be deemed to be a representation or warranty as of
the date of the Underwriting Agreement in relation to the Prospectus (as
therein defined), and also a representation and warranty as of the date of this
Pricing Agreement in relation to the Prospectus as amended or supplemented with
respect to the Certificates. Each reference to Representative contained in the
Underwriting Agreement shall be deemed to refer to the Representative named
herein. Unless otherwise defined herein, terms in the Underwriting Agreement
are used herein as therein defined.
An amendment to the Registration Statement, or a supplement to the
Prospectus, as the case may be, relating to the Certificates in the form
heretofore delivered to you is now proposed to be filed or, in the case of a
supplement, mailed for filing with the Commission.
<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/ Mark E. Elbaum
---------------------------
Name: Mark E. Elbaum
Title: Senior Vice President - Finance
CONFIRMED AND ACCEPTED,
as of the date first above written:
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
By: /s/ Paul J. Najarian
-----------------------------
Name: Paul J. Najarian
Title: Vice President
For itself and as
Representative of the several
Underwriters named in
Schedule I hereto
2
<PAGE> 3
SCHEDULE I
<TABLE>
<CAPTION>
Principal Principal Principal Principal Principal
Amount of Amount of Amount of Amount of Amount of
Class A-1 Class A-2 Class A-3 Class A-4 Class A-5
Underwriter Certificates Certificates Certificates Certificates Certificates
----------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Donaldson, Lufkin &
Jenrette Securities
Corporation $32,400,000 $28,600,000 $5,800,000 $9,200,000 $10,000,000
Credit Suisse First
Boston Corporation $24,300,000 $21,450,000 $4,350,000 $6,900,000 $7,500,000
Prudential
Securities
Incorporated $12,150,000 $10,725,000 $2,175,000 $3,450,000 $3,750,000
Morgan Stanley &
Co. Incorporated $12,150,000 $10,725,000 $2,175,000 $3,450,000 $3,750,000
Total $81,000,000 $71,500,000 $14,500,000 $23,000,000 $25,000,000
</TABLE>
<PAGE> 4
SCHEDULE II
Registration Statement No. 333-21219
Base Prospectus March 18, 1997
Prospectus Supplement dated March 18, 1997
<TABLE>
<S> <C>
Title of Certificates: Class A-1
---------
Amount of Certificates: $81,000,000 (approximate)
Pass-Through Rate: 6.47%
Purchase Price Percentage: 99.824375%
Cut-off Date: March 1, 1997
Closing: March 26, 1997
Denominations: $1,000.00 and integral multiples of $1.00 in excess
thereof.
Title of Certificates: Class A-2
---------
Amount of Certificates: $71,500,000 (approximate)
Pass-Through Rate: 6.88%
Purchase Price Percentage: 99.734375%
Cut-off Date: March 1, 1997
Closing: March 26, 1997
Denominations: $1,000.00 and integral multiples of $1.00 in excess
thereof.
Title of Certificates: Class A-3
---------
Amount of Certificates: $14,500,000 (approximate)
Pass-Through Rate: 7.22%
Purchase Price Percentage: 99.653125%
Cut-off Date: March 1, 1997
Closing: March 26, 1997
</TABLE>
<PAGE> 5
<TABLE>
<S> <C>
Denominations: $1,000.00 and integral multiples of $1.00 in excess
thereof.
Title of Certificates: Class A-4
---------
Amount of Certificates: $23,000,000 (approximate)
Pass-Through Rate: 7.61%
Purchase Price Percentage: 99.568750%
Cut-off Date: March 1, 1997
Closing: March 26, 1997
Denominations: $1,000.00 and integral multiples of $1.00 in excess
thereof.
Title of Certificates: Class A-5
---------
Amount of Certificates: $25,000,000 (approximate)
Pass-Through Rate: 7.18%
Purchase Price Percentage: 99.609375%
Cut-off Date: March 1, 1997
Closing: March 26, 1997
Denominations: $1,000.00 and integral multiples of $1.00 in excess
thereof.
</TABLE>
<TABLE>
<S> <C>
Representative with respect to the Class A Certificates: Donaldson, Lufkin & Jenrette
Securities Corporation
</TABLE>
Insurer: MBIA Insurance Corporation.
Location of Settlement: The offices of Andrews & Kurth L.L.P.,
601 South Figueroa Street, Los Angeles, California
<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 March 1, 1997
Aames Mortgage Trust 1997-A
Mortgage Pass-Through Certificates,
Series 1997-A
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE I
---------
DEFINITIONS
Section 1.01 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02 Interest Calculations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 1.03 Determination of Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE II
----------
CONVEYANCE OF THE TRUST; ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01 Conveyance of the Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 2.02 Conveyance of the Subsequent Mortgage Loans; Fixed Price Contract . . . . . . . . . . . . . . . . . 32
Section 2.03 Acceptance by the Trustee; Repurchase or Substitution of Mortgage Loans . . . . . . . . . . . . . . 36
Section 2.04 Representations and Warranties Regarding the Servicer and the Seller . . . . . . . . . . . . . . . . 38
Section 2.05 Representations and Warranties of the Seller
Regarding the Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 2.06 Execution and Authentication of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 2.07 Designation of Certificates; Designation of Startup Day . . . . . . . . . . . . . . . . . . . . . . 50
Section 2.08 Indemnification of the Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE III
-----------
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS;CERTIFICATE ACCOUNT
Section 3.01 The Servicer and the Sub-Servicers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 3.02 Collection of Certain Mortgage Loan Payments;
Collection Account and Certificate Account . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 3.03 [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 3.04 Hazard Insurance Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 3.05 Enforcement of Due-on-Sale Clauses;
Assumption and Modification Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 3.06 Realization upon Liquidated Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 3.07 Trustee to Cooperate; Release of Mortgage Files . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 3.08 Servicing Compensation; Payment of Certain Expenses by the Servicer . . . . . . . . . . . . . . . . 59
Section 3.09 Annual Statement as to Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 3.10 Annual Independent Public Accountants' Servicing Report . . . . . . . . . . . . . . . . . . . . . . 60
Section 3.11 Access to Certain Documentation
and Information Regarding the Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . 61
Section 3.12 Maintenance of Fidelity Bond and Errors and Omissions Policy . . . . . . . . . . . . . . . . . . . . 61
Section 3.13 Notices to the Rating Agencies, the Trustee and the Certificate Insurer . . . . . . . . . . . . . . 61
Section 3.14 Reports of Foreclosures and Abandonment of Mortgaged Properties . . . . . . . . . . . . . . . . . . 61
Section 3.15 Sub-Servicers and Sub-Servicing Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
</TABLE>
ii
<PAGE> 3
<TABLE>
<S> <C> <C>
Section 3.16 Prefunding Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 3.17 Capitalized Interest Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 3.18 Payments on the Certificate Insurance Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 3.19 Rights of the Certificate Insurer to
Exercise Rights of Class A Certificateholders . . . . . . . . . . . . . . . . . . . . . . . 66
Section 3.20 Trust and Accounts Held for Benefit of the Certificate Insurer . . . . . . . . . . . . . . . . . . . 66
ARTICLE IV
----------
REMITTANCE REPORT
Section 4.01 Servicer Remittance Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 4.02 Trustee Distribution Date Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
ARTICLE V
---------
PAYMENTS AND STATEMENTS TO CERTIFICATEHOLDERS
Section 5.01 Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 5.02 Monthly Advances; Servicing Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 5.03 Statements to Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 5.04 The Certificate Insurer; Use of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
ARTICLE VI
----------
THE CERTIFICATES
Section 6.01 The Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 6.02 Registration of Transfer and Exchange of Certificates . . . . . . . . . . . . . . . . . . . . . . . 76
Section 6.03 Mutilated, Destroyed, Lost or Stolen Certificates . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 6.04 Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 6.05 Actions of Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
ARTICLE VII
-----------
THE SERVICER AND THE SELLER
Section 7.01 Liability of the Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 7.02 Merger or Consolidation of, or Assumption
of the Obligations of, the Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 7.03 Limitation on Liability of the Servicer and Others . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 7.04 Servicer Not to Resign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 7.05 Merger or Consolidation of the Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
ARTICLE VIII
------------
DEFAULT
Section 8.01 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Section 8.02 Trustee to Act; Appointment of Successor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
</TABLE>
LOS01:37560.8 iii
<PAGE> 4
<TABLE>
<S> <C>
Section 8.03 Notifications to Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 8.04 Assumption or Termination of Sub-Servicing
Agreements by the Trustee or any Successor Servicer . . . . . . . . . . . . . . . . . . . . 86
ARTICLE IX
----------
THE TRUSTEE
Section 9.01 Duties of the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 9.02 Certain Matters Affecting the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 9.03 Trustee Not Liable for Certificates or Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . 89
Section 9.04 Trustee May Own Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Section 9.05 Payment of the Trustee's Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Section 9.06 Eligibility Requirements for the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Section 9.07 Resignation or Removal of the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Section 9.08 Successor Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Section 9.09 Merger or Consolidation of the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Section 9.10 Appointment of Co-Trustee or Separate Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Section 9.11 Compliance with REMIC Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Section 9.12 Trustee May Enforce Claims Without Possession of Certificates . . . . . . . . . . . . . . . . . . . 93
Section 9.13 Exercise of Trustee Powers by Certificate Insurer and Certificateholders . . . . . . . . . . . . . . 94
Section 9.14 Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Section 9.15 Taxpayer Identification Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
ARTICLE X
---------
TERMINATION
Section 10.01 Termination Upon Purchase or Liquidation of All Mortgage Loans . . . . . . . . . . . . . . . . . . . 95
Section 10.02 Additional Termination Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
ARTICLE XI
----------
MISCELLANEOUS PROVISIONS
Section 11.01 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Section 11.02 Recordation of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Section 11.03 Limitation on Rights of Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Section 11.04 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Section 11.05 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Section 11.06 Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Section 11.07 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Section 11.08 Certificates Nonassessable and Fully Paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Section 11.09 Third Party Beneficiary; Rating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Section 11.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
</TABLE>
iv
<PAGE> 5
SCHEDULES AND EXHIBITS
Schedule I List of Sub-Servicers
Schedule II Representations and Warranties of the Seller Regarding
Subsequent Mortgage Loans
Schedule III Schedule of Restricted Mortgage Loans
Exhibit A-1 Form of Class A-1 Certificate
Exhibit A-2 Form of Class A-2 Certificate
Exhibit A-3 Form of Class A-3 Certificate
Exhibit A-4 Form of Class A-4 Certificate
Exhibit A-5 Form of Class A-5 Certificate
Exhibit B Form of Class R Certificate
Exhibit C Form of Subsequent Transfer Agreement
Exhibit D Form of Certificate Insurance Policy
Exhibit E Mortgage Loan Schedule
Exhibit F Form of Annual Statement as to Compliance
Exhibit G Form of Transfer Affidavit
Exhibit H Form of Payoff Notice
Exhibit I Form of Liquidation Report
Exhibit J Form of Officer's Certificate as to Charge-offs
Exhibit K Form of Transferor Affidavit
Exhibit L Insurance Agreement
v
<PAGE> 6
THIS POOLING AND SERVICING AGREEMENT (this "Agreement"), dated as of
March 1, 1997, 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
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the meanings specified in this Article.
Addition Notice: With respect to the transfer of Subsequent Mortgage
Loans to the Trust pursuant to Section 2.02 of this Agreement, notice of the
Seller's designation of Subsequent Mortgage Loans to be sold to the Trust and
the aggregate Subsequent Cut-off Date Principal Balance thereof, which notice
shall be given to the Trustee and to the Certificate Insurer not later than one
Business Day prior to the related Subsequent Transfer Date.
Additional Subsequent Purchase Price: As to the last Subsequent
Transfer Date occurring during the Commitment Period, the amount, if any,
specified by the Certificate Insurer in connection with its approval of the
Subsequent Mortgage Loans pursuant to Section 2.02 using criteria established
on or before the Closing Date.
Adjusted 90 Day Delinquent Dollar Balance: As to any Distribution
Date, the sum of: (a) 15% of the principal balance of all Mortgage Loans that
are 90 or more days contractually delinquent (including REO Properties) that
have an original combined loan-to-value ratio of less than or equal to 50% and
are also in a first lien position; (b) 30% of the principal balance of all
Mortgage Loans that are 90 or more days contractually delinquent (including REO
Properties) that have an original combined loan-to-value ratio of greater than
50.01% and less than or equal to 60% and are also in a first lien position; (c)
35% of the principal balance of all Mortgage Loans that are 90 or more days
contractually delinquent (including REO Properties) that have an original
combined loan-to-value ratio of greater than 60.01% and less than or equal to
65% and are also in a first lien position; (d) 40% of the principal balance of
all Mortgage Loans that are 90 or more days contractually delinquent (including
REO Properties) that have an original combined loan-to-value ratio of greater
than 65.01% and less than or equal to 70% and are also in a first lien
position; (e) 50% of the principal balance of all Mortgage Loans that are 90 or
more days contractually delinquent (including REO Properties) that have an
original combined loan-to-value ratio of greater than 70.01% and less than or
equal to 80% and are also in a first lien position; (f) 65% of the principal
balance of all Mortgage Loans that are 90 or more days contractually delinquent
(including REO Properties) that have an original combined loan-to-value ratio
of greater than 80.01% and less than or equal to 90% and are also in a first
lien position; and (g) 100% of the principal balance of all Mortgage Loans that
are (i) 90 or more days
<PAGE> 7
contractually delinquent (including REO Properties) that have an original
combined loan-to-value ratio of greater than 90.01% or (ii) 90 or more days
contractually delinquent (including REO Properties) and are in a second lien
position.
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.
Amortized Overcollateralization Amount Requirement: As of any date of
determination, means the product of (x) two times the Target Percentage and (y)
the aggregate of the Pool Balance as of the close of business on the last day
of the related Collection Period immediately preceding such date.
Annual Statement of Compliance: The annual statement to be prepared
and delivered by the Servicer in accordance with Section 3.09.
Appraised Value: The appraised value of any Mortgaged Property based
upon the appraisal made at the time of origination of the related Mortgage Loan
or, in the case of a Mortgage Loan that is a purchase money mortgage loan, the
sales price of the related Mortgaged Property if such sales price is less than
such appraised value.
Available Funds: With respect to any Distribution Date, the aggregate
of the following amounts 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, net of
amounts representing interest accrued in respect of any period prior to the
Cut-off Date or Subsequent Cut- off Date, as applicable, (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, shortfall or substitution pursuant to Section 2.03, 2.05, 3.01 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 and any net income from related REO Properties for such
Collection Period, (ix) in the case of the Distribution Date occurring in April
1997, (a) the amount deposited in the Certificate Account by the Trustee from
the Capitalized Interest Account
2
<PAGE> 8
pursuant to Section 3.17 and the amount, if any, deposited in the Certificate
Account by the Trustee from the Prefunding Account pursuant to Section 3.16 and
(b) the Closing Date Deposit and (x) in the case of the Distribution Date
occurring in May 1997, the aggregate amount of Subsequent Transfer Deposits;
reduced by (II) the sum of (X) the Monthly Servicing Fee and any other
compensation payable to the Servicer pursuant to Section 3.08 for the related
Collection Period (without regard to any Compensating Interest payable
therefrom) to the extent not previously paid to the Servicer, (Y) the aggregate
amount of Monthly Advances and Servicing Advances (other than those included in
the Liquidation Expenses for any Liquidated Mortgage Loan and reimbursed from
the related Liquidation Proceeds) reimbursable to the Servicer on such
Distribution Date pursuant to the provisions of this Agreement and (Z) amounts
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.
Base Specified Overcollateralization Amount: Means $7,525,000 (the
Target Percentage of the sum of the Pool Balance as of the Closing Date plus
the amount of the Prefunding Account Deposit).
Bloomberg: The on-line computer based information network maintained
by Bloomberg L.P., or any successor thereto.
Book-Entry Certificate: Any Certificate registered in the name of the
Depository or its nominee, ownership of which is reflected on the books of the
Depository or on the books of a person maintaining an account with such
Depository (directly or as an indirect participant in accordance with the rules
of such Depository). As of the Closing Date, only the Class A Certificates
constitute Book-Entry Certificates.
Book-Entry Nominee: As defined in Section 6.02(c).
Business Day: Any day other than (a) a Saturday or a Sunday or (b) a
day on which banking institutions in the State of California or the State of
New York are required or authorized by law, executive order or governmental
decree to be closed.
Capitalized Interest Account: The segregated account, which shall be
an Eligible Account, established and maintained pursuant to Section 3.17 and
entitled "Bankers Trust Company of California, N.A., as Trustee for Aames
Mortgage Trust 1997-A Mortgage Pass-Through Certificates, Series 1997-A,
Capitalized Interest Account".
Capitalized Interest Account Deposit: The amount deposited in the
Capitalized Interest Account for the benefit of the Class A Certificateholders,
which amount is $299,363.02.
Certificate: Any Class A Certificate or Class R Certificate.
3
<PAGE> 9
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 1997-A Mortgage Pass-Through Certificates, Series 1997-A,
Certificate Account".
Certificate Insurance Policy: The Financial Guaranty Insurance Policy
(No. 23493), dated March 26, 1997, 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 Payments. A copy of the Certificate Insurance Policy is attached
hereto as Exhibit D.
Certificate Insurer: MBIA Insurance Corporation, a stock insurance
company organized and created under the laws of the State of New York, and any
successors thereto.
Certificate Insurer Default: The existence and continuance of any of
the following:
(a) the Certificate Insurer fails to make a payment
required under the Certificate Insurance Policy in accordance with its
terms;
(b) The Certificate Insurer (i) files any petition or
commences any case or proceeding under any state or federal law
relating to insolvency or bankruptcy, (ii) consents to the entry of
any decree or order for relief in an involuntary case or proceeding
under any state or federal bankruptcy or insolvency law, (iii) makes a
general assignment for the benefit of its creditors or (iv) admits in
writing its inability to pay its debts as they come due; or
(c) A court of competent jurisdiction, the New York
Department of Insurance or other competent regulatory agency enters an
order, judgment or decree under any state or federal bankruptcy or
insolvency law which has continued in effect and unstayed for a period
of 60 or more consecutive days (i) appointing a custodian, trustee,
agent or receiver for MBIA or for all or any material portion of its
property or (ii) authorizing the taking of possession by a custodian,
trustee, agent or receiver of the Certificate Insurer or the taking of
possession of all or any material portion of its property.
Certificate Insurer Parties: The Certificate Insurer or its
respective agents, representatives, directors, officers or employees.
Certificate Insurer Premium: 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 Certificate
Principal Balance immediately prior to such Distribution Date.
Certificate Insurer Repurchase Proceeds: In connection with any
purchase by the Servicer of the outstanding Mortgage Loans pursuant to Section
10.01, an amount equal to the lesser of (i)
4
<PAGE> 10
the Estimated Remaining Excess Servicing and (ii) Clean-up Call Date
Unreimbursed Insured Payments.
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-1
Certificates, the Class A-1 Certificate Principal Balance; with respect to the
Class A-2 Certificates, the Class A-2 Certificate Principal Balance; with
respect to the Class A-3 Certificates, the Class A-3 Certificate Principal
Balance; with respect to the Class A-4 Certificates, the Class A-4 Certificate
Principal Balance; with respect to the Class A-5 Certificates, the Class A-5
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.
Class: All of the Class A Certificates, or the Class R Certificate,
as the case may be, taken as a whole.
Class A Certificates: Any or all of the Class A-1 Certificates, Class
A-2 Certificates, Class A-3 Certificates, Class A-4 Certificates or Class A-5
Certificates, as the case may be.
Class A Certificate Principal Balance: As to any Distribution Date,
the sum of the Class A-1 Certificate Principal Balance, the Class A-2
Certificate Principal Balance, the Class A-3 Certificate Principal Balance, the
Class A-4 Certificate Principal Balance and the Class A-5 Certificate Principal
Balance.
Class A Monthly Interest: As to any Distribution Date, the sum of
Class A-1 Monthly Interest, Class A-2 Monthly Interest, Class A-3 Monthly
Interest, Class A-4 Monthly Interest and Class A-5 Monthly Interest. Class A
Monthly Interest shall be allocated for distribution to Class A-1
Certificateholders, Class A-2 Certificateholders, Class A-3 Certificateholders,
Class A-4 Certificateholders and Class A-5 Certificateholders, pro rata in
proportion to Class A-1 Monthly Interest, Class A-2 Monthly Interest, Class A-3
Monthly Interest, Class A-4 Monthly Interest and Class A-5 Monthly Interest.
Class A 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
5
<PAGE> 11
Period in respect of the Mortgage Loans, (ii) all Trust Insurance Proceeds
received during the related Collection Period and allocable to principal of the
Mortgage Loans, (iii) all Net Liquidation Proceeds received during the related
Collection Period and allocable to principal of the Mortgage Loans, (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 pursuant to
Section 2.03, 2.05, 3.01 or 3.06, net of any amounts allocable to interest in
respect thereof, (v) the aggregate of the amounts deposited in the Certificate
Account by the Servicer or the Certificate Insurer in connection with a
purchase pursuant to Section 10.01 during the related Collection Period of any
Mortgage Loan, net of any amounts allocable to interest in respect thereof or
amounts payable to the Certificate Insurer or Servicer, and (vi) the amount, if
any, deposited during the related Collection Period in the Certificate Account
by the Trustee in respect of the Prefunding Account Deposit pursuant to Section
3.16, reduced by (II) the amount of any Coverage Surplus with respect to such
Distribution Date. Class A Monthly Principal for any Distribution Date shall
be allocated for distribution to Class A Certificates in accordance with
Section 5.01 and, except as set forth in Section 3.18(c) with respect to the
Certificate Insurer's subrogation rights, payments in reduction of the
Certificate Principal Balance of any subclass from Insured Payments will be
deemed to have been distributions of Class A Monthly Principal.
Class A-1 Certificate: Any one of the Certificates executed by the
Trustee on behalf of the Trust, not in its individual capacity, but solely as
Trustee, authenticated by the Trustee and in substantially the form set forth
in Exhibit A-1 hereto. The Class A-1 Certificates are a subclass of the Class
A Certificates.
Class A-1 Certificate Principal Balance: As to any Distribution Date,
the Original Class A-1 Certificate Principal Balance less all amounts
distributed to Holders of Class A-1 Certificates on previous Distribution Dates
on account of Class A Monthly Principal, any Excess Cash Distribution and any
payments made by the Certificate Insurer in respect of principal on the Class A
Certificates under the Certificate Insurance Policy in each case to the extent
allocable to Class A-1 Certificateholders and applied in reduction of the Class
A-1 Certificate Principal Balance.
Class A-1 Monthly Interest: As to any Distribution Date, the amount
of interest distributable to Holders of the Class A-1 Certificates on such
Distribution Date, which amount shall be equal to (i) in the case of the April
1997 Distribution Date, 30 days' interest on the Original Class A-1 Certificate
Principal Balance computed at the Class A-1 Pass-Through Rate, and (ii) in the
case of each subsequent Distribution Date, 30 days' interest on the Class A-1
Certificate Principal Balance as of the preceding Distribution Date (after
giving effect to any distributions made in reduction of the Class A-1
Certificate Principal Balance on such preceding Distribution Date) computed at
the Class A-1 Pass-Through Rate, in either case net of any Interest Shortfall.
Class A-1 Pass-Through Rate: 6.47% per annum.
6
<PAGE> 12
Class A-2 Certificate: Any one of the Certificates executed by the
Trustee on behalf of the Trust, not in its individual capacity, but solely as
Trustee, authenticated by the Trustee and in substantially the form set forth
in Exhibit A-2 hereto. The Class A-2 Certificates are a subclass of the Class
A Certificates.
Class A-2 Certificate Principal Balance: As to any Distribution Date,
the Original Class A-2 Certificate Principal Balance less all amounts
distributed to Holders of Class A-2 Certificates on previous Distribution Dates
on account of Class A Monthly Principal, any Excess Cash Distribution and any
payments made by the Certificate Insurer in respect of principal on the Class A
Certificates under the Certificate Insurance Policy in each case to the extent
allocable to Class A-2 Certificateholders and applied in reduction of the Class
A-2 Certificate Principal Balance.
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 April
1997 Distribution Date, 30 days' interest on the Original Class A-2 Certificate
Principal Balance computed at the Class A-2 Pass-Through Rate and (ii) in the
case of each subsequent Distribution Date, 30 days' interest 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, in either case net of any Interest Shortfall.
Class A-2 Pass-Through Rate: 6.88% per annum.
Class A-3 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-3 hereto. The Class A-3 Certificates are a subclass of the Class
A Certificates.
Class A-3 Certificate Principal Balance: As to any Distribution Date,
the Original Class A-3 Certificate Principal Balance less all amounts
distributed to Holders of Class A-3 Certificates on previous Distribution Dates
on account of Class A Monthly Principal, any Excess Cash Distribution and any
payments made by the Certificate Insurer in respect of principal on the Class A
Certificates under the Certificate Insurance Policy in each case to the extent
allocable to Class A-3 Certificateholders and applied in reduction of the Class
A-3 Certificate Principal Balance.
Class A-3 Monthly Interest: As to any Distribution Date, the amount
of interest distributable to Holders of the Class A-3 Certificates on such
Distribution Date, which amount shall be equal to (i) in the case of the April
1997 Distribution Date, 30 days' interest on the Original Class A-3 Certificate
Principal Balance computed at the Class A-3 Pass-Through Rate and (ii) in the
case of each subsequent Distribution Date, 30 days' interest on the Class A-3
Certificate Principal Balance as of the preceding Distribution Date (after
giving effect to any distributions made in reduction of the Class A-3
Certificate Principal Balance on such preceding
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<PAGE> 13
Distribution Date) computed at the Class A-3 Pass-Through Rate, in either case
net of any Interest Shortfall.
Class A-3 Pass-Through Rate: 7.22% per annum.
Class A-4 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-4 hereto. The Class A-4 Certificates are a subclass of the Class
A Certificates.
Class A-4 Certificate Principal Balance: As to any Distribution Date,
the Original Class A-4 Certificate Principal Balance less all amounts
distributed to Holders of Class A-4 Certificates on previous Distribution Dates
on account of Class A Monthly Principal, any Excess Cash Distribution and any
payments made by the Certificate Insurer in respect of principal on the Class A
Certificates under the Certificate Insurance Policy in each case to the extent
allocable to Class A-4 Certificateholders and applied in reduction of the Class
A-4 Certificate Principal Balance.
Class A-4 Monthly Interest: As to any Distribution Date, the amount
of interest distributable to Holders of the Class A-4 Certificates on such
Distribution Date, which amount shall be equal to (i) in the case of the April
1997 Distribution Date, 30 days' interest on the Original Class A-4 Certificate
Principal Balance computed at the Class A-4 Pass-Through Rate and (ii) in the
case of each subsequent Distribution Date, 30 days' interest on the Class A-4
Certificate Principal Balance as of the preceding Distribution Date (after
giving effect to any distributions made in reduction of the Class A-4
Certificate Principal Balance on such preceding Distribution Date) computed at
the Class A-4 Pass-Through Rate, in either case net of any Interest Shortfall.
Class A-4 Pass-Through Rate: 7.61% per annum.
Class A-5 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-5 hereto. The Class A-5 Certificates are a subclass of the Class
A Certificates.
Class A-5 Certificate Principal Balance: As to any Distribution Date,
the Original Class A-5 Certificate Principal Balance less all amounts
distributed to Holders of Class A-5 Certificates on previous Distribution Dates
on account of Class A Monthly Principal, any Excess Cash Distribution and any
payments made by the Certificate Insurer in respect of principal on the Class A
Certificates under the Certificate Insurance Policy in each case to the extent
allocable to Class A-5 Certificateholders and applied in reduction of the Class
A-5 Certificate Principal Balance.
Class A-5 Excess Cash Lockout Distribution: As to any Distribution
Date, the lesser of (a) the product of (i) the applicable Class A-5 Lockout
Percentage, (ii) the Class A-5 Pro Rata
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<PAGE> 14
Distribution for such Distribution Date and (iii) the lesser of (A) the amount
by which the Required Coverage Amount exceeds the Coverage Amount and (B)
Excess Cash for such Distribution Date and (b) Excess Cash for such
Distribution Date.
Class A-5 Lockout Percentage: As to any Distribution Date, as
follows:
Distribution Dates Occurring In Class A-5 Lockout Percentage
------------------------------- ----------------------------
April 1997 - March 2000 0%
April 2000 - March 2002 45%
April 2002 - March 2003 80%
April 2003 - March 2004 100%
April 2004 and thereafter 300%
Class A-5 Monthly Interest: As to any Distribution Date, the amount
of interest distributable to Holders of the Class A-5 Certificates on such
Distribution Date, which amount shall be equal to (i) in the case of the April
1997 Distribution Date, 30 days' interest on the Original Class A-5 Certificate
Principal Balance computed at the Class A-5 Pass-Through Rate and (ii) in the
case of each subsequent Distribution Date, 30 days' interest on the Class A-5
Certificate Principal Balance as of the preceding Distribution Date (after
giving effect to any distributions made in reduction of the Class A-5
Certificate Principal Balance on such preceding Distribution Date) computed at
the Class A-5 Pass-Through Rate, in either case net of any Interest Shortfall.
Class A-5 Monthly Principal Lockout Distribution: As to any
Distribution Date, will be the lesser of (a) the product of (i) the applicable
Class A-5 Lockout Percentage, (ii) the Class A-5 Pro Rata Distribution for such
Distribution Date and (ii) Class A Monthly Principal for such Distribution Date
and (b) Class A Monthly Principal for such Distribution Date.
Class A-5 Pass-Through Rate: 7.18% per annum.
Class A-5 Pro Rata Distribution: As to any Distribution Date, the
percentage equivalent of a fraction, the numerator of which is the Class A-5
Certificate Principal Balance and the denominator of which is the Class A
Certificate Principal Balance, in each case immediately prior to 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.
Clean-up Call Date: The first Distribution Date on which the Pool
Balance is less than 10% of the sum of the Original Pool Balance and the
Prefunding Account Deposit.
Clean-up Call Date Unreimbursed Insured Payments: As to the
Distribution Date, if any, on which the Servicer exercises its right to
purchase all outstanding Mortgage Loans pursuant to
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<PAGE> 15
Section 10.01, the aggregate amount of unreimbursed Insured Payments together
with any interest accrued thereon at the Late Payment Rate through such
Distribution Date.
Closing Date: March 26, 1997.
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 30 days' interest on the principal
balance of each Initial Mortgage Loan that does not have a Monthly Mortgage
Payment due in the Collection Period relating to the April 1997 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 1997-A Mortgage Pass-Through Certificates, Series 1997-A, Collection
Account". References herein to the Collection Account shall include any
Sub-Servicing Account as the context requires.
Collection Period: As to any Distribution Date, the period beginning
on the first day of the calendar month immediately preceding the month in which
such Distribution Date occurs and ending on the last day of such calendar
month.
Combined Loan-to-Value Ratio: With respect to a Mortgage Loan, the
ratio (expressed as a percentage) of (i) the sum of the Original Principal
Amount of such related Mortgage Loan plus the outstanding principal balance (at
the time of origination of such Mortgage Loan) of each mortgage loan secured by
the related Mortgaged Property that is senior to such Mortgage Loan to (ii) the
Appraised Value of the related Mortgaged Property determined by the Seller at
the time of origination of such Mortgage Loan.
Company: Aames Capital Corporation, a California corporation.
Compensating Interest: As to any Distribution Date, an amount equal
to the lesser of (a) the Monthly Servicing Fee with respect to 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 as to which a Principal Prepayment was received ,
that became a Liquidated Mortgage Loan or that was otherwise charged-off
(before giving effect to any related reduction in the Principal Balance of such
Mortgage Loan) by the Servicer during the related Collection Period and (ii)
the amount of interest actually collected by the Servicer for such Mortgage
Loans 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,
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<PAGE> 16
which office at the date of the execution of this Agreement is located at 3
Park Plaza, Irvine, California 92714 Attention: Aames Mortgage Loan
Pass-Through Certificates, Series 1997-A.
Coverage Amount: As to any Distribution Date, the amount, if any, by
which the Pool Balance as of the last day of the related Collection Period
(plus, in the case of the April 1997 Distribution Date, the aggregate of the
Principal Balances of Subsequent Mortgage Loans added to the Mortgage Pool
after March 31, 1997 and prior to the end of the Funding Period) exceeds the
Class A Certificate Principal Balance for such Distribution Date, after taking
into account the Class A Monthly Principal (prior to any reduction thereof in
respect of any Coverage Surplus pursuant to the definition of Class A Monthly
Principal) to be applied in reduction of the Class A Certificate Principal
Balance on such Distribution Date. If the Pool Balance as of the last day of
the related Collection Period (plus, in the case of the April 1997 Distribution
Date, the aggregate of the Principal Balances of Subsequent Mortgage Loans
added to the Mortgage Pool after March 31, 1997 and prior to the end of the
Funding Period) is less than the Class A Certificate Principal Balance for such
Distribution Date determined as provided above, the Coverage Amount for such
Distribution Date shall be zero.
Coverage Deficit: As to any Distribution Date, the amount, if any, by
which the Class A Certificate Principal Balance for such Distribution Date
(after taking into account any Class A Monthly Principal and Excess Cash
Distribution to be applied in reduction of the Class A Certificate Principal
Balance on such Distribution Date) exceeds the Pool Balance as of the last day
of the related Collection Period (plus, in the case of the April 1997
Distribution Date, the aggregate of the Principal Balances of Subsequent
Mortgage Loans added to the Mortgage Pool after March 31, 1997 and prior to the
end of the Funding Period). If the Pool Balance as of the last day of the
related Collection Period (plus, in the case of the April 1997 Distribution
Date, the aggregate of the Principal Balances of Subsequent Mortgage Loans
added to the Mortgage Pool after March 31, 1997 and prior to the end of the
Funding Period) is greater than the Class A Certificate Principal Balance for
such Distribution Date, determined as provided above, the Coverage Deficit for
such Distribution Date shall be zero.
Coverage Surplus: As to any Distribution Date, the amount, if any, by
which the Coverage Amount for such Distribution Date exceeds the Required
Coverage Amount for such Distribution Date.
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<PAGE> 17
Cumulative Loss Rate Event: With respect to any Distribution Date
occurring during the periods indicated in the following table, any Distribution
Date on which the Loss Percentage for such the Mortgage Loans exceeds the
indicated percentage:
Distribution Dates
from and including to but excluding Loss Percentage
------------------ ---------------- ---------------
April 1997 April 1998 0.75%
April 1998 April 1999 1.25%
April 1999 April 2000 2.00%
April 2000 April 200 12.75%
and, with respect to any Distribution Date thereafter, any Distribution Date on
which the Loss Percentage exceeds 3.50%.
Cut-off Date: March 1, 1997.
Cut-off Date Principal Balance: As to any Mortgage Loan, its
Principal Balance as of the close of business on the Cut-off Date.
Defective Mortgage Loan: Any Mortgage Loan that is required to be
repurchased or substituted by the Seller pursuant to Section 2.03 or 2.05.
Deficiency Amount: With respect to any Distribution Date, the sum of
(i) the amount, if any, by which the Class A Monthly Interest exceeds the
amount of Available Funds remaining after distributions pursuant to clauses
first and second of Section 5.01 and (ii) the Coverage Deficit, if any.
Definitive Certificates: As defined in Section 6.02(e).
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced by a
Qualified Replacement Mortgage Loan.
Delinquency Percentage: As to any Distribution Date, the percentage
equivalent of the fraction obtained by dividing (i) the aggregate of the
Principal Balances of all Mortgage Loans that were then 90 or more days
contractually delinquent as of the end of the related Collection Period or were
either foreclosed upon or transferred pursuant to Section 3.06 during such
Collection Period, by (ii) the Pool Balance as of such Distribution Date.
Delinquency Rate Event: With respect to any Distribution Date, the
Rolling Delinquency Percentage equals or exceeds 17%.
Deposit Date: As to any Distribution Date, the third Business Day
prior to such Distribution Date.
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<PAGE> 18
Depository: The initial depository shall be The Depository Trust
Company, the nominee of which is Cede & Co. The Depository shall at all times
be a "clearing corporation" as defined in Section 8102(3) of the Uniform
Commercial Code of the State of California, as amended, or any successor
provisions thereto.
Depository Participant: A broker, dealer, bank or other financial
institution or other person for which, from time to time, the Depository
effects book-entry transfers and pledges of securities deposited with such
Depository.
Determination Date: As to any Distribution Date, the last day of the
calendar month immediately preceding the calendar month in which such
Distribution Date occurs.
Disqualified Organization: Any Person that is (i) the United States,
any state or any political subdivision thereof, any possession of the United
States, or any agency or instrumentality of any of the foregoing (other than an
instrumentality that is a corporation if all of its activities are subject to
tax and a majority of its board of directors is not selected by any such
governmental unit), (ii) a foreign government, international organization or
any agency or instrumentality of either of the foregoing (other than an
instrumentality that is a corporation if all of its activities are subject to
tax and a majority of its board of directors is not selected by any such
governmental unit), (iii) an organization (except certain farmers' cooperatives
described in Code Section 521) exempt from tax imposed by Chapter 1 of the Code
(including the tax imposed by Code Section 511 on unrelated business taxable
income) on any excess inclusions (as defined in Code Section 860E(c)(1)) with
respect to any Class R Certificate, (iv) rural electric and telephone
cooperatives described in Code Section 1381(a)(2)(C), and (v) any other Person
so designated by the Trustee based upon an Opinion of Counsel that the holding
of an ownership interest in a Class R Certificate by such Person may cause the
REMIC Pool or any Person having an ownership interest in any Class R
Certificate, other than such Person, to incur a liability for any tax imposed
under the Code that would not otherwise be imposed but for the transfer of an
ownership interest in a Class R Certificate to such Person. The terms "United
States", "state" and "international organization" shall have the meanings set
forth in Code Section 7701 or successor provisions.
Distribution Date: The 15th day of each month or, if such day is not
a Business Day, the Business Day immediately following such 15th day, beginning
April 15, 1997.
Eligible Account: Either (A) a segregated account or accounts
maintained with an institution the deposits of which are insured by the Bank
Insurance Fund or the Savings Association Insurance Fund of the FDIC, the
unsecured and uncollateralized debt obligations of which shall be rated "A" or
better by Standard & Poor's and "A2" or better by Moody's and in the highest
short term rating category by Standard & Poor's and Moody's, and that is either
(i) a federal savings and loan association duly organized, validly existing and
in good standing under the federal banking laws, (ii) an institution duly
organized, validly existing and in good standing under the applicable banking
laws of any state, (iii) a national banking association duly organized, validly
existing and in good standing under the federal banking laws, (iv) a principal
subsidiary of a bank holding company, and (v) approved in writing by the
Certificate Insurer or
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(B) a trust account maintained with the trust department of a federal or state
chartered depository institution or trust company, having capital and surplus
of not less than $50,000,000, acting in its fiduciary capacity, the unsecured
and uncollateralized debt obligations of which shall be rated "Baa3" or better
by Moody's. Any Eligible Accounts maintained with the Trustee shall conform to
the preceding clause (B).
ERISA: The Employee Retirement Income Security Act of 1974, as
amended.
ERISA Plan: Any Person that is an employee benefit plan within the
meaning of Section 3(3) of ERISA or any Person that is an individual retirement
account or employee benefit plan, trust or account subject to Section 4975 of
the Code.
ERISA Prohibited Holder: As defined in Section 6.02(c).
Estimated Remaining Excess Servicing: As to the Distribution Date, if
any, on which the Servicer exercises its right to purchase all outstanding
Mortgage Loans pursuant to Section 10.01, an amount equal to the present value
(based on an assumed per annum interest rate equal to the weighted average of
the Mortgage Loan Rates) of the amount of Excess Spread that would be
distributable to the Certificate Insurer pursuant to clause first of Section
5.01 on such Distribution Date and all subsequent Distributions Dates assuming
the following facts: (i) the Certificate Insurer does not exercise its right to
purchase the outstanding Mortgage Loans on any Distribution Date; (ii)
distributions of interest and principal continue to be made to the Class A
Certificateholders in accordance with Section 5.01 on each Distribution Date;
(iii) prepayments are experienced on the Mortgage Loans in each subsequent
Collection Period continue at the average of the prepayment rates experienced
with respect thereto during the five preceding Collection Periods; (iv) all
future Monthly Mortgage Payments are paid when due (subject to the assumptions
in the following clauses (v) and (vi)); (v) Realized Losses, Net Liquidation
Proceeds, Prepayment Interest Shortfalls, and Insurance Proceeds are realized
in each subsequent Collection Period in amounts equal to the average of the
amounts received in each of the five preceding Collection Periods; (vi) the
Required Coverage Amount for such Distribution Date is also the Required
Coverage Amount for each subsequent Distribution Date; and (vii) no Monthly
Advances are made but Compensating Interest continues to be paid by the
Servicer pursuant to this Agreement during each subsequent Collection Period.
Event of Default: As defined in Section 8.01.
Excess Cash: With respect to any Distribution Date, the amount, if
any, by which Available Funds for such Distribution Date exceed the sum of (i)
the Certificate Insurer Premium for such Distribution Date, (ii) the Class A
Monthly Interest for such Distribution Date, (iii) the Class A 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
Section 5.01.
Excess Cash Distribution: With respect to any Distribution Date on
which a Coverage Surplus does not exist, an amount equal to the lesser of (i)
the amount, if any, by which the Required Coverage Amount for such
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Distribution Date exceeds the Coverage Amount for such Distribution Date, or,
if after taking into account the Class A Monthly Principal applied in reduction
of the Class A Certificate Principal Balance on such Distribution Date, the
Class A Certificate Principal Balance exceeds the Pool Balance, the sum of the
Required Coverage Amount for such Distribution Date plus the amount by which
the Class A Certificate Principal Balance, determined as provided above,
exceeds the Pool Balance and (ii) Excess Cash for such Distribution Date. With
respect to any Distribution Date on which a Coverage Surplus exists, the Excess
Cash Distribution shall be zero. The Excess Cash Distribution for any
Distribution Date shall be allocated for distribution to Class A
Certificateholders in accordance with Section 5.01.
Excess Spread: As to any Distribution Date, the product of the Excess
Spread Rate multiplied by the Pool Balance as of such Distribution Date.
Excess Spread Rate: As to any Distribution Date, the weighted average
of the Mortgage Loan Rates less the sum of (i) the weighted average of the
Class A-1 Pass-Through Rate, Class A-2 Pass-Through Rate, Class A-3
Pass-Through Rate, Class A-4 Pass-Through Rate and Class A-5 Pass-Through Rate
(based on the outstanding Certificate Principal Balances of each subclass),
(ii) the Insurer Premium Rate, and (iii) the Servicing Fee Rate.
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-1 September 15, 2013
Class A-2 May 15, 2024
Class A-3 August 15, 2025
Class A-4 June 15, 2029
Class A-5 June 15, 2029
Class R June 15, 2029
Fitch: Fitch Investors Service, LP and its successors in interest.
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,
an estate the income of which is subject to United States federal income
taxation regardless of its source, or a trust if (i) a court within the United
States is able to exercise primary supervision over the administration of the
trust, and (ii) one or more United States fiduciaries have the authority to
control all substantial decisions of the trust.
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Funding Period: The period beginning on the Closing Date and ending
on the earlier of (a) the date on which the amount on deposit in the Prefunding
Account is zero and (b) the close of business on April 14, 1997.
Initial Mortgage Loans: The Mortgage Loans included in the Trust as
of the Closing Date.
Insurance Agreement: The Insurance Agreement, dated as of March 1,
1997, among the Certificate Insurer, the Company and the Trustee, a copy of
which is attached hereto as Exhibit L.
Insurance Proceeds: With respect to any Distribution Date, proceeds
paid by any insurer (other than the Certificate Insurer) and received by the
Servicer during the related Collection Period pursuant to any insurance policy
covering a Mortgage Loan or the related Mortgaged Property, including any
deductible payable by the Servicer with respect to a blanket insurance policy
pursuant to Section 3.04 and the proceeds from any fidelity bond or errors and
omission policy pursuant to Section 3.12 (to the extent such payments
compensate for losses that would otherwise be payable to Certificateholders
pursuant to this Agreement), net of any component thereof covering any expenses
incurred by or on behalf of the Servicer and specifically reimbursable under
this Agreement.
Insured Payment: (i) As to any Distribution Date, any Deficiency
Amount and (ii) any Preference Amount.
Insurer Premium Rate: With respect to any Distribution Date, 0.13%.
Interest Period: With respect to any Class A-1 Certificate, Class A-2
Certificate, Class A-3 Certificate, Class A-4 Certificate or Class A-5
Certificate, the calendar month preceding the month in which such Distribution
Date occurs.
Interest Shortfall: As to any Distribution Date, the amount of any
Prepayment Interest Shortfall and Relief Act Shortfall for all Mortgage Loans.
Investment Company Act: The Investment Company Act of 1940, as
amended.
Junior Mortgage Loan: Any Mortgage Loan secured by a Mortgage with a
lien of other than first priority.
Late Payment Rate: With respect to any date of determination, the
rate of interest as it is publicly announced by Citibank, N.A. at its principal
office in New York, New York on its prime rate (any change in such prime rate
of interest to be effective on the date such change is announced by Citibank,
N.A.) plus 3%.
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
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the related Collection Period that all Liquidation Proceeds that it expects to
recover from or on account of such Mortgage Loan have been recovered.
Liquidation Expenses: Expenses that are incurred by the Servicer in
connection with the liquidation of any Mortgage Loan and not recovered under
any insurance policy or from any Mortgagor. Such expenses shall include,
without limitation, legal fees and expenses, real estate brokerage commissions,
any unreimbursed amount expended by the Servicer pursuant to Section 3.06
respecting the related Mortgage Loan (including, without limitation, amounts
voluntarily advanced to correct defaults on each mortgage loan that is senior
to such Mortgage Loan), any other related and previously unreimbursed Servicing
Advances and any related and previously unreimbursed Property Protection
Expenses.
Liquidation Proceeds: Cash (other than Insurance Proceeds) received
in connection with the liquidation of any Mortgaged Property, whether through
trustee's sale, foreclosure sale, condemnation, taking by eminent domain or
otherwise received in respect of any Mortgage Loan foreclosed upon as described
in Section 3.06 (including, without limitation, proceeds from the rental of the
related Mortgaged Property).
Liquidation Report: A liquidation report in the form of Exhibit I
attached hereto.
Loan-to-Value Ratio: The Original Principal Amount of a Mortgage Loan
as a percentage of the Appraised Value of the related Mortgaged Property
determined by the Seller at the time of origination of such Mortgage Loan.
London Business Day: A day on which banks are open for dealing in
foreign currency and exchange in London and New York City.
Loss Percentage: As to any Distribution Date, the percentage
equivalent of the fraction obtained by dividing (i) the principal amount of
cumulative Realized Losses on all Mortgage Loans from the Cut-off Date through
the end of the related Collection Period by (ii) the sum of the Original Pool
Balance and the Prefunding Account Deposit.
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, 1/12 of
the product of the Servicing Fee Rate and the Pool Balance 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 Pool
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Balance). The Monthly Servicing Fee shall be payable on the following Deposit
Date to the Servicer as servicing compensation hereunder pursuant to Section
3.08.
Moody's: Moody's Investors Service, Inc. and its successors in
interest.
Mortgage: The mortgage, deed of trust or other instrument creating a
first, second or third lien on an estate in fee simple in real property
securing a Mortgage Loan.
Mortgage File: The mortgage documents listed in Section 2.01 pertaining to a
particular Mortgage Loan and any additional documents required to be added to
such Mortgage File pursuant to this Agreement.
Mortgage Loan: Each of the Mortgage Loans transferred and assigned to
the Trustee pursuant to Section 2.01 or 2.02 that from time to time comprise
part of the Trust, the Mortgage Loans originally so held being identified in
the Mortgage Loan Schedule attached hereto as Exhibit F.
Mortgage Loan Rate: 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. The
initial schedule of Mortgage Loans as of the Cut-off Date is attached hereto as
Exhibit E and sets forth as to each such Mortgage Loan, among other things, (a)
its identifying number and the name of the related Mortgagor; (b) the street
address of the related Mortgaged Property including the state, county and zip
code; (c) its date of origination; (d) the original number of months to stated
maturity; (e) its original stated maturity; (f) its Original Principal Amount;
(g) its Cut-off Date Principal Balance; (h) the related Mortgage Loan Rate; (i)
the scheduled monthly payment of principal and interest; (j) the date in each
month on which the related Monthly Mortgage Payments are due; (k) its Combined
Loan-to-Value Ratio or the ratio, expressed as a percentage, of the Original
Principal Amount of such Mortgage Loan to the Appraised Value of the related
Mortgaged Property, as applicable; (l) the lien status of the related Mortgage
and, with respect to any Junior Mortgage Loan, the principal amount (as of the
date of origination) of all related Senior Liens; (m) whether the related
Mortgaged Property is owner-occupied or non-owner-occupied; (n) whether the
related Mortgaged Property is a single-family residence, a two- to four-family
residence or a unit in a condominium or planned unit development; (o) whether
the Mortgage Loan has been originated by an Affiliate of the Company; and (p)
whether the Mortgage Loan is being serviced by a Sub-Servicer and, if so, the
identity of such Sub-Servicer. The Mortgage Loan Schedule shall be amended on
each Subsequent Transfer Date to reflect the addition of the related Subsequent
Mortgage Loans to the Trust.
Mortgage Note: The note or other instrument evidencing the
indebtedness of a Mortgagor under the related Mortgage Loan.
Mortgaged Property: The underlying property securing a Mortgage Loan.
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<PAGE> 24
Mortgagor: The obligor under a Mortgage Note.
Net Liquidation Proceeds: As to any Mortgage Loan, Liquidation
Proceeds net of Liquidation Expenses. If Liquidation Expenses exceed
Liquidation Proceeds as to any Mortgage Loan, Net Liquidation Proceeds shall be
zero. For all purposes of this Agreement, Net Liquidation Proceeds shall be
allocated first to accrued and unpaid interest on the related Mortgage Loan and
then to the Principal Balance thereof.
Non-permitted Foreign Holder: As defined in Section 6.02(c).
Nonrecoverable Advance: Any Servicing Advance that, in the Servicer's
reasonable judgment, would not be ultimately recoverable by the Servicer from
late collections, Insurance Proceeds or Liquidation Proceeds on the related
Mortgage Loan or otherwise, as evidenced by an Officer's Certificate delivered
to the Certificate Insurer and the Trustee no later than the Business Day
following the Servicer's determination thereof.
Notice of Claim: The notice required to be furnished by the Trustee
to the Certificate Insurer in the event an Insured Payment is required to be
paid under the Certificate Insurance Policy with respect to any Distribution
Date, in the form set forth as an exhibit to the Certificate Insurance Policy.
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: $215,000,000.
Original Class A-1 Certificate Principal Balance: $81,000,000.
Original Class A-2 Certificate Principal Balance: $71,500,000.
Original Class A-3 Certificate Principal Balance: $14,500,000.
Original Class A-4 Certificate Principal Balance: $23,000,000.
Original Class A-5 Certificate Principal Balance: $25,000,000.
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Original Pool Balance: $163,617,805.83, the aggregate of the Cut-off
Date Principal Balances of the Mortgage Loans.
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.
Payment Ahead: Any payment of one or more Monthly Mortgage Payments
remitted by a Mortgagor with respect to a Mortgage Note in excess of the
Monthly Mortgage Payment due during such Collection Period with respect to such
Mortgage Note, which sums the related Mortgagor has instructed the Servicer to
apply to Monthly Mortgage Payments due in one or more subsequent Collection
Periods. A Monthly Mortgage Payment that was a Payment Ahead shall, for
purposes of computing certain amounts under this Agreement, be deemed to have
been received by the Servicer on the date in the related Collection Period on
which such Monthly Mortgage Payment would have been due if such Monthly
Mortgage Payment was not a Payment Ahead.
Payoff Notice: The certification delivered by the Servicer in
connection with any payment in full of the outstanding principal balance of a
Mortgage Loan pursuant to Section 3.07, to be substantially in the form of
Exhibit H.
Percentage Interest: With respect to a Class A Certificate of any
subclass, the undivided percentage interest (carried to eight places, rounded
down) obtained by dividing the original principal balance of such Certificate
by the Original Certificate Principal Balance of such Class of Certificates.
With respect to a Class R Certificate, the undivided percentage interest set
forth on the face of such Class R Certificate, which in the aggregate shall not
exceed 100%.
Permitted Investments: One or more of the following obligations,
instruments and securities:
(a) direct general obligations of, or obligations fully
and unconditionally guaranteed as to the timely payment of principal
and interest by, the United States or any agency or instrumentality
thereof, provided such obligations are backed by the full faith and
credit of the United States;
(b) Federal Housing Administration debentures, FHLMC
senior debt obligations and FNMA senior debt obligations, but
excluding any of such securities whose terms do not provide for
payment of a fixed dollar amount upon maturity or call for redemption
or that are not rated in the highest rating category by each Rating
Agency;
(c) federal funds, certificates of deposit, time and
demand deposits and banker's acceptances (in each case having original
maturities of not more than 365 days) of any bank or trust company
incorporated under the laws of the United States or any state thereof,
provided that the short-term debt obligations of such bank or trust
company at the date of acquisition thereof have been rated "A-1" or
better by Standard & Poor's and Prime-1 or better by Moody's;
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(d) deposits of any bank or savings and loan association
that has combined capital, surplus and undivided profits of at least
$100,000,000 which deposits are held up to the applicable limits
insured by the Bank Insurance Fund or the Savings Association
Insurance Fund of the FDIC;
(e) commercial paper (having original maturities of not
more than 180 days) that has the highest short term rating of each of
Standard & Poor's and Moody's;
(f) investments in money market funds rated "AAAm" or
"AAAm-G" by Standard & Poor's and Aaa by Moody's (any such money
market funds which provide for demand withdrawals without penalty
being conclusively deemed to satisfy any maturity requirement for
Permitted Investments set forth herein); and
(g) investments approved in writing all Rating Agencies
and the Certificate Insurer;
provided that no investment described hereunder shall evidence either the right
to receive (i) only interest with respect to obligations underlying such
instrument or (ii) both principal and interest payments derived from
obligations underlying such instrument and the principal and interest payments
with respect to such instrument provided a yield to maturity at par greater
than 120% of the yield to maturity of the underlying obligations; and provided,
further, that no instrument described hereunder may be purchased at a price
greater than par if such instrument may be prepaid or called at a price less
than its purchase price prior to stated maturity. Permitted Investments shall
mature not later than the Business Day prior to the date on which such monies
will be needed to make payments, or in the case of Permitted Investments held
in the Prefunding Account, shall be available on the Business Day next
succeeding the date the Trustee receives the Addition Notice that such monies
will be needed. Notwithstanding the foregoing, with respect to investment of
amounts in any account, any of the foregoing obligations, instruments or
securities will not be Permitted Investments to the extent that an investment
therein will cause the then outstanding principal amount thereof in which such
funds are then invested to exceed $25,000,000 (such investments being valued at
par).
Person: Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
Policy Payments Account: The segregated account, which shall be an
Eligible Account, established and maintained pursuant to Section 3.18(a) and
entitled "Bankers Trust Company of California, N.A., as Trustee for Aames
Mortgage Trust 1997-A Mortgage Pass-Through Certificates, Series 1997-A, Policy
Payments Account".
Pool Balance: As to any Distribution Date, the aggregate of the
Principal Balances of all of the Mortgage Loans. As of the Cut-off Date, the
Original Pool Balance.
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Preference Amount: As defined in the Certificate Insurance Policy.
Prefunding Account: The segregated account, which shall be an
Eligible Account, established and maintained pursuant to Section 3.16 and
entitled "Bankers Trust Company of California, N.A., as Trustee for Aames
Mortgage Trust 1997-A Mortgage Pass-Through Certificates, Series 1997-A,
Prefunding Account".
Prefunding Account Deposit: The amount deposited in the Prefunding
Account on the Closing Date and allocated for the purchase of Subsequent
Mortgage Loans, which amount is $51,382,194.17.
Prepayment Interest Shortfall: As to any Distribution Date, 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 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, 3.01, 3.06 or
10.01, to the extent such amount is actually received by the Trustee on such
Deposit Date, (iv) the amount to be remitted by the Seller to the Trustee on
the next succeeding Deposit Date in connection with a substitution of a
Qualified Replacement Mortgage Loan for such Mortgage Loan pursuant to Section
2.03 or 2.05, to the extent such amount is actually received by the Trustee on
such Deposit Date and (v) the amount to be remitted by the Certificate Insurer
to the Trustee on the next succeeding Deposit Date in connection with a
purchase of such Mortgage Loan pursuant to Section 10.01; provided, however
that a Mortgage Loan that has become a Liquidated Mortgage Loan since the
preceding Determination Date (or, in the case of the first Determination Date,
since the Cut-off Date) will be deemed to have a Principal Balance of zero on
the current and all subsequent Determination Dates.
Principal Payment: As to any Mortgage Loan and Collection Period, all
amounts received or, in the case of the principal portion of any Payment Ahead,
deemed to have been received by the Servicer from or on behalf of the related
Mortgagor during such Collection Period (including Principal Prepayments) that,
at the time of receipt or, in the case of any Payment Ahead, at the time such
Payment Ahead is deemed to have been received, were applied or were required to
be applied by the Servicer in reduction of the Principal Balance of such
Mortgage Loan.
Principal Prepayment: As to any Mortgage Loan and Collection Period,
any payment by a Mortgagor or other recovery in respect of principal on a
Mortgage Loan (including Net
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Liquidation Proceeds) that, in the case of a payment by a Mortgagor, is
received in advance of its scheduled due date and is not a Payment Ahead.
Projected Net Monthly Excess Cashflow: As to any Distribution Date,
an amount equal to five times the Excess Spread for such Distribution Date.
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 Price: With respect to (a) any Defective Mortgage Loan or
(b) any Mortgage Loan to be purchased by the Servicer pursuant to Section 3.01
or Section 3.06, an amount equal to (i) the sum of (A) the Principal Balance of
such Mortgage Loan or Defective Mortgage Loan, as the case may be, as of the
beginning of the Collection Period next preceding the Deposit Date on which
such repurchase or purchase is required to occur, (B) interest computed at the
applicable Mortgage Loan Rate on such Principal Balance from the date to which
interest was last paid by the Mortgagor to the last day of the Collection
Period immediately preceding the Deposit Date on which such repurchase or
purchase occurs and (C) any previously unreimbursed Servicing Advances made on
or in respect of such Defective Mortgage Loan or Mortgage Loan, as the case may
be, less (ii) any payments of principal and interest in respect of such
Defective Mortgage Loan or Mortgage Loan, as the case may be, made by or on
behalf of the related Mortgagor during such Collection Period.
Qualified Replacement Mortgage Loan: A Mortgage Loan that is
substituted for a Deleted Mortgage Loan pursuant to Section 2.03 or Section
2.05 that must, at the end of the Collection Period preceding the date of such
substitution, (i) have an outstanding principal balance (when taken together
with any other Qualified Replacement Mortgage Loan being substituted for such
Deleted Mortgage Loan), not in excess of and not substantially less than the
unpaid principal balance of the Deleted Mortgage Loan at the end of the
Collection Period preceding the date of substitution, (ii) have a remaining
term to maturity not greater than (and not more than one year less than) that
of the Deleted Mortgage Loan, (iii) have a Combined Loan-to-Value Ratio equal
to or lower than the Combined Loan-to-Value Ratio of the Deleted Mortgage Loan,
(iv) satisfy the criteria set forth from time to time in the definition
"qualified replacement mortgage" at Section 860G(a)(4) of the Code, (v) have
the same or a superior lien priority as the Deleted Mortgage Loan, (vi) comply
as of the date of substitution with each representation and warranty set forth
in Section 2.05, (vii) have the same or better property type as the Deleted
Mortgage Loan and (viii) 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
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Certificate Insurer, except that the requirements of clauses (iv), (v), (vi),
(vii) and (viii) hereof must be satisfied as to each Qualified Replacement
Mortgage Loan.
Rating Agencies: Standard & Poor's, Moody's and Fitch (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 and which shall be
acceptable to the Certificate Insurer.
Realized Loss: With respect to any Liquidated Mortgage Loan, the
amount, if any, by which the Principal Balance of such Mortgage Loan and
accrued and unpaid interest thereon (determined as of the Determination Date
immediately prior to such Mortgage Loan becoming a Liquidated Mortgage Loan)
exceeds the Net Liquidation Proceeds, if any, in respect of such Mortgage Loan,
which amount shall in no event exceed the Principal Balance of such Mortgage
Loan (determined as of the Determination Date immediately prior to such
Mortgage Loan becoming a Liquidated Mortgage Loan).
Record Date: As to any Distribution Date, the close of business, if
applicable, on the last Business Day of the calendar month immediately
preceding such Distribution Date.
Relief Act: The Soldiers' and Sailors' Civil Relief Act of 1940, as
amended.
Relief Act Shortfall: As to any Distribution Date, the amount of any
reductions of interest collectible on Mortgage Loans 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 Prefunding Account
and the Capitalized Interest Account.
REMIC Provisions: Provisions of the federal income tax law relating
to REMICs that appear at Sections 860A through 860G of Part IV of Subchapter M
of Chapter 1 of Subtitle A of the Code, and related provisions, and U.S.
Department of the Treasury proposed, temporary or final regulations and rulings
promulgated thereunder, as the foregoing may be in effect from time to time.
REO Property: As defined in Section 5.02(a).
Responsible Officer: When used with respect to the Trustee, the
Chairman or Vice Chairman of the Board of Directors or Trustees, the Chairman
or Vice Chairman of the Executive or Standing Committee of the Board of
Directors or Trustees, the President, the Chairman of the Committee on Trust
Matters, any Vice President, the Secretary, any Assistant Secretary, the
Treasurer, any Assistant Treasurer, the Cashier, any Assistant Cashier, any
Trust Officer or Assistant Trust Officer, the Controller and any Assistant
Controller or any other
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officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and to whom, with respect to
a particular matter, such matter is referred because of such officer's
knowledge of and familiarity with the particular subject.
Restricted Mortgage Loan: As defined in Section 3.06.
Restricted Mortgaged Property: With respect to any Restricted Mortgage
Loan, means the Mortgaged Property securing such Restricted Mortgage Loan.
Required Coverage Amount:
(a) for any Distribution Date occurring during the period
commencing on the Closing Date and ending on the later of the
thirtieth Distribution Date following the Closing Date and the date
upon which principal equal to one-half of the Original Pool Balance
plus the amount of the Prefunding Account Deposit has been received,
the greater of the Base Specified Overcollateralization Amount and two
times the excess of (i) the Adjusted 90 Day Delinquent Dollar Balance
over (ii) the Projected Net Monthly Excess Cashflow as of such
Distribution Date; and
(b) for any Distribution Date occurring after the end of
the period specified in clause (a) above, the greatest of (i) the
lesser of (A) the Base Specified Overcollateralization Amount and if
the Step Down Trigger is satisfied (B) the Amortized
Overcollateralization Amount Requirement, (ii) two times the excess of
(A) the Adjusted 90 Day Delinquent Dollar Balance over (B) the
Projected Net Monthly Excess Cashflow as of such date, (iii) an amount
equal to the product of 0.50% and the Original Pool Balance plus the
amount of the Prefunding Account Deposit and (iv) three (3) times the
then outstanding principal balance of the Mortgage Loan with the
largest outstanding principal balance.
(c) Notwithstanding the above, the Required Coverage
Amount shall not step down pursuant to clause (b) above in the event a
claim on the Certificate Insurance Policy has occurred prior to the
date the Required Coverage Amount would otherwise have stepped down.
Following the end of the Funding Period, the Certificate Insurer may,
by written notice to the Servicer, the Trustee and the Rating Agencies,
increase the level of the Required Coverage Amount in light of the
characteristics of the Subsequent Mortgage Loans actually delivered. In making
such determination, the Certificate Insurer shall apply the same standards and
methodology as were applied with respect to the Initial Mortgage Loans. In
addition, the Certificate Insurer may reduce the requirements relating to the
Required Coverage Amount and related matters without the consent of any
Certificateholders by written notice of such change delivered to the Trustee,
the Servicer and each Rating Agency. No Opinion of Counsel shall be required
in connection with any such increase or reduction.
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Rolling Delinquency Percentage: For any Distribution, the average of
the Delinquency Percentages as of the last day of each of the six (or one, two,
three, four and five in the case of the first five Distribution Dates, as
applicable) most recently ended Collection Periods.
Rolling Loss Percentage: For any Distribution Date, the percentage
equivalent of a fraction, the numerator of which is the aggregate amount of
Realized Losses incurred during the preceding 12 Collection Periods, and the
denominator of which is the Pool Balance as of the first day of the 12th
preceding Collection Period.
Rolling Loss Rate Event: Any Distribution Date on or after May 15,
1999 on which the Rolling Loss Percentage exceeds 1.25%.
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 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.
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Startup Day: As defined in Section 2.07.
Statement to Certificateholders: As defined in Section 5.03.
Step Down Trigger: Will be satisfied on or after the 24th
Distribution Date if the following conditions are met: (1a) for the 24th- 36th
Distribution Dates, the Loss Percentage is 0.75% or less (1b) for the 37th-48th
Distribution Dates, the Loss Percentage is 1.25% or less, (1c) for the
49th-60th Distribution Dates, the Loss Percentage is 1.50% or less, (1d) for
the 61st Distribution Date and thereafter, the Loss Percentage is 1.75% or
less, (2) the Rolling Delinquency Percentage for such Distribution Date is less
than 12.50%, and (3) the Rolling Loss Percentage is less than 0.50%
Sub-Servicer: Any Person, including an Affiliate of the Servicer,
with whom the Servicer has entered into a Sub-Servicing Agreement and who
satisfies the requirements set forth in Section 3.15 hereof in respect of the
qualification of a Sub-Servicer. The Sub-Servicers with respect to any of the
Mortgage Loans as of the Cut-off Date are listed on Schedule I attached to this
Agreement.
Sub-Servicing Account: Any segregated account, which shall at all
times be an Eligible Account, established and maintained pursuant to Section
3.02(b) and entitled "[Sub-Servicer], in trust for the benefit of Holders of
Aames Mortgage Trust 1997-A Mortgage Pass-Through Certificates, Series 1997-A,
Collection Account". References herein to the Collection Account shall include
any Sub-Servicing Account as the context requires.
Sub-Servicing Agreement: A written contract between the Servicer and
any Sub-Servicer relating to the servicing and/or administration of certain
Mortgage Loans.
Subsequent Cut-off Date: With respect to any Subsequent Mortgage
Loan, the date specified as such in the related Subsequent Mortgage Loan
Schedule.
Subsequent Cut-off Date Principal Balance: As to any Subsequent
Mortgage Loan, the actual outstanding principal balance due thereunder from the
Mortgagor as of the related Subsequent Cut-off Date specified in the related
Addition Notice.
Subsequent Mortgage Loan: A Mortgage Loan sold to the Trust pursuant
to Section 2.02 of this Agreement, which shall be listed on the Subsequent
Mortgage Loan Schedule attached to a Subsequent Transfer Agreement.
Subsequent Mortgage Loan Schedule: As of any Subsequent Transfer
Date, the schedule of Subsequent Mortgage Loans as of the related Subsequent
Cut-off Date being transferred to the Trust on such Subsequent Transfer Date
pursuant to a Subsequent Transfer Agreement. Each Subsequent Mortgage Loan
Schedule shall contain information regarding the related Subsequent Mortgage
Loans of the type included in, and shall be substantially in the form of, the
Mortgage Loan Schedule attached hereto as Exhibit E.
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Subsequent Purchase Price: As of any Subsequent Transfer Date, an
amount equal to the sum of (i) the product of 95% and the aggregate of the
Principal Balances as of the Subsequent Cut-off Date of such Subsequent
Mortgage Loans listed in the related Subsequent Transfer Agreement and (ii) any
Additional Subsequent Purchase Price attributable to such Subsequent Mortgage
Loans; provided, however, that the Additional Subsequent Purchase Price, if
any, shall be paid only on the last day of the Funding Period.
Subsequent Transfer Agreement: With respect to any Subsequent
Mortgage Loan, the agreement pursuant to which such Subsequent Mortgage Loan is
transferred to the Trust, in substantially the form attached hereto as Exhibit
C.
Subsequent Transfer Date: The date specified in each Subsequent
Transfer Agreement, but no later than April 14, 1997.
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 May 1997 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.
Target Percentage: 3.50%.
Transfer Affidavit: The affidavit to be delivered by any transferee
of an interest in a Class R Certificate pursuant to Section 6.02(b), to be
substantially in the form attached hereto as Exhibit G.
Transferor Affidavit: The affidavit to be delivered by any transferor
of an interest in a Class R Certificate pursuant to Section 6.02(c), to be
substantially in the form attached hereto as Exhibit K.
Trust: The trust created by this Agreement and the corpus thereof,
which consists of, to the extent described herein, the Mortgage Loans, such
assets as shall from time to time be identified or shall be required by this
Agreement to be deposited in the Collection Account, the Certificate Account,
the Policy Payments Account, the Prefunding Account or the Capitalized Interest
Account or invested in Permitted Investments in accordance with this Agreement,
all rights under any insurance policy covering a Mortgage Loan or the related
Mortgaged Property and property and any proceeds thereof that secured a
Mortgage Loan and that has been acquired by foreclosure, deed in lieu of
foreclosure or by a comparable conversion, and the Certificate Insurance
Policy.
Trust Insurance Proceeds: Insurance Proceeds that (a) are applied by
the Servicer to reduce the Principal Balance of the related Mortgage Loan 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.
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Trust Parties: As defined in Section 5.04.
Trustee: Bankers Trust Company of California, N.A., a national
banking association, and its successors in interest or any successor trustee
appointed as provided pursuant to this Agreement.
Trustee Fee: The annual fee of the Trustee, which shall be $5,000,
and any annual file access fees, such fees being payable by the Servicer
pursuant to Section 9.05.
Vice President: Any vice president, whether or not designated by a
number or a word or words added before or after the title "vice president".
Voting Interest: With respect to any provisions hereof providing for
the action, consent or approval of the Holders of all Certificates evidencing
specified Voting Interests in the Trust, the Holders of the Class A
Certificates will collectively be entitled to 100% of the aggregate Voting
Interests represented by all Certificates. Voting Interests allocated to the
Class A-1 Certificates, Class A-2 Certificates, Class A-3 Certificates, Class
A-4 Certificates and Class A-5 Certificates shall be allocated between such
Classes in proportion to the related Certificate Principal Balances of such
subclasses. With respect to any provision hereof providing for action, consent
or approval of each the Certificateholders, each Certificateholder will have a
Voting Interest equal to such Holder's Percentage Interest.
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-1 Certificates, Class A-2
Certificates, Class A-3 Certificates, Class A-4 Certificates or Class A-5
Certificates will be computed on the basis of a 360-day year of twelve 30-day
months.
Section 2.01 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
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
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Files and the Mortgage Notes, including all interest and principal (whether in
the form of payments by Mortgagors or other proceeds) received or deemed to be
received by the Seller on or with respect to the Mortgage Loans on or after the
Cut-off Date, (whether in the nature of amounts held by the Seller for
application on behalf of the related Mortgagor as a Monthly Mortgage Payment
that is due on any date on or after the Cut-off Date or otherwise), net of
amounts in respect of interest accrued on the Mortgage Loans in periods prior
to the Cut-off Date, 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 net of amounts in respect of interest accrued on the
Mortgage Loans in periods prior to 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 Policy
Payments Account, the Prefunding 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 Seller shall file
financing statements and continuation statements as necessary to maintain the
perfection of such security interest.
The Company confirms to the Trustee that it has caused its computer
records relating to the 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 1997-A Mortgage Pass-Through Certificates, Series
1997-A, without recourse";
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(b) The original Mortgage with evidence of recording
indicated thereon;
(c) The original executed assignment of the Mortgage in
recordable form;
(d) Originals of all assumption, modification and
substitution agreements in those instances where the terms or
provisions of a Mortgage or Mortgage Note have been modified or such
Mortgage or Mortgage Note has been assumed;
(e) Originals of all intervening mortgage assignments
with evidence of recording indicated thereon sufficient to show a
complete chain of assignment from the originator of the Mortgage Loan
to the Seller; and
(f) Original lender's title insurance policy issued on
the date of the origination of such Mortgage Loan.
As promptly as practicable subsequent to the Closing Date, and in any
event, within 30 days thereafter, the Company, in its capacity as Servicer
shall (i) affix the Trustee's name to each assignment of Mortgage, as the
assignee thereof in the following form: "Bankers Trust Company of California,
N.A., in trust for the benefit of holders of Aames Mortgage Trust 1997-A
Mortgage Pass-Through Certificates, Series 1997-A, without recourse", (ii)
cause such assignment to be in proper form for recording in the appropriate
public office for real property records, and (iii) cause to be delivered for
recording in the appropriate public office for real property records the
assignments of the Mortgages to the Trustee, except that, with respect to any
assignments of Mortgage as to which the Servicer has not received the
information required to prepare such assignment in recordable form, the
Servicer shall be obligated to prepare and to deliver such assignment for such
recording as soon as practicable after receipt of such information and in any
event within 30 days after receipt thereof (and in no event more than one year
after the Closing Date) and that the Servicer need not cause to be recorded any
assignment that relates to a Mortgage Loan in any jurisdiction under the laws
of which, as evidenced by an Opinion of Counsel delivered by the Seller (at the
Seller's expense) to the Trustee and the Certificate Insurer, the recordation
of such assignment is not necessary to protect the Trustee's and the
Certificateholders' interest in the related Mortgage Loan; provided, however,
notwithstanding the delivery of any legal opinions, each assignment of mortgage
shall be recorded if the Certificate Insurer reasonably determines based upon a
change of any law (including case law) or fact, including any fact referenced
or assumed in any such Opinion of Counsel, that it no longer is satisfied with
the conclusion drawn in such Opinion of Counsel, and delivers notice to such
effect to the Seller and the Seller does not promptly deliver to the
Certificate Insurer a new Opinion of Counsel reasonably satisfactory to the
Certificate Insurer reaffirming each of the opinions contained in the original
Opinion of Counsel delivered at the Closing Date in lieu of such recordation.
All recording of assignments of mortgages shall be at the expense of the Seller
without any right of reimbursement from the Trust.
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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.
Section 2.02 Conveyance of the Subsequent Mortgage Loans; Fixed
Price Contract. Subject to the conditions set forth in the paragraphs below,
in consideration of the Trustee's delivery on the related Subsequent Transfer
Dates to or upon the order of the Seller of the Subsequent Purchase Price of
the related Subsequent Mortgage Loans from amounts on deposit in the Prefunding
Account, the Seller shall, from time to time, on any Subsequent Transfer Date
sell, transfer, assign, set over and otherwise convey without recourse, to the
Trustee, all right, title and interest of the Seller in and to each Subsequent
Mortgage Loan identified on the Subsequent Mortgage Loan Schedule attached to
the related Subsequent Transfer Agreement delivered by the Seller on such
Subsequent Transfer Date, including all of its right, title and interest in and
to principal and interest (whether in the form of payments by Mortgagors or
other proceeds) received or deemed to be received by the Seller on each such
Subsequent Mortgage Loan on and after the related Subsequent Cut-off
Date(whether in the nature of amounts held by the Seller for application on
behalf of the related Mortgagor as a Monthly Mortgage Payment that is due on
any date on or after the related Subsequent Cut-off Date or otherwise), net of
amounts in respect of interest accrued on such Subsequent Mortgage Loans in
periods prior to the related Subsequent Cut-off Date, plus any Subsequent
Transfer Deposit relating to such Subsequent Mortgage Loan 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
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Mortgage Loans set forth on the Subsequent Mortgage Loan Schedule to the
Trustee shall be absolute and shall be intended by the parties hereto to be
treated as a sale by the Seller. On or before the last day of the Funding
Period, the Seller shall convey to the Trustee pursuant to this Section 2.02
the lesser of: (i) all Mortgage Loans then in its possession that satisfy the
requirements of this Section 2.02 or (ii) the maximum principal balance of
Mortgage Loans as determined by Seller that satisfy the requirements of this
Section 2.02 whose aggregate Subsequent Purchase Price does not exceed the
Prefunding Account Deposit. Subsequent Mortgage Loans to be conveyed on a
given Subsequent Transfer Date must have an aggregate Subsequent Cut-off Date
Principal Balance of not less than $500,000; provided, however, that the
Subsequent Mortgage Loans to be conveyed on the final Subsequent Transfer Date
may have an aggregate Subsequent Cut-off Date Principal Balance of less than
$500,000. In connection with each conveyance of Subsequent Mortgage Loans, the
Seller shall deposit any applicable Subsequent Transfer Deposit in the
Collection Account on the related Subsequent Transfer Date.
In the event that, notwithstanding the intent of the parties hereto to
effect a sale and assignment of the Subsequent Mortgage Loans on the related
Subsequent Transfer Date by the Seller to the Trustee, such sale and assignment
will be deemed to constitute a pledge of security for a loan, it is the intent
of this Agreement that the Seller shall be deemed to have granted to the
Trustee for the benefit of the Certificateholders a first priority perfected
security interest in all of the Seller's right, title and interest in and to
the Subsequent Mortgage Loans, the Mortgages, the Mortgage Files and the
Mortgage Notes, all payments of principal and interest on the Subsequent
Mortgage Loans received on or after their respective Subsequent Cut-off Dates,
net of amounts in respect of interest accrued on such Subsequent Mortgage Loans
in periods prior to the related Subsequent Cut-off Date, all other payments
(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, plus any Subsequent Transfer
Deposit relating to such Subsequent Mortgage Loan and all proceeds of any
thereof, and that this Agreement and the related Subsequent Transfer Agreement
shall each constitute a security agreement with respect to the related
Subsequent Mortgage Loans under applicable law. The Seller shall file
financing statements and continuation statements as necessary to maintain the
perfection of such security interest.
The amount released to the Seller from the Prefunding Account on any
Subsequent Transfer Date in connection with any conveyance of Subsequent
Mortgage Loans 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 Prefunding Account; provided, however, that any
Additional Subsequent Purchase Price in respect of such Subsequent Mortgage
Loans shall be paid only on the last day of the Funding Period. The amount
released to the Seller from the Prefunding Account in connection with any
conveyance of Subsequent Mortgage Loans shall, for federal income tax purposes,
be considered cash contributed to the REMIC Pool by the Seller and used by the
Trustee to acquire the related Subsequent Mortgage Loans pursuant to a fixed
price contract established pursuant to this Section 2.02.
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On the related Subsequent Transfer Date, the Seller shall transfer to
the Trustee the Subsequent Mortgage Loans and the other property and rights
related thereto described in the first paragraph in this section only upon the
satisfaction of each of the following conditions on or prior to the related
Subsequent Transfer Date:
(a) the Seller shall provide the Trustee and the
Certificate Insurer with an Addition Notice and shall provide any
information reasonably requested by the Trustee or the Certificate
Insurer with respect to the Subsequent Mortgage Loans;
(b) the Seller shall deliver to the Trustee, the
Certificate Insurer and the Rating Agencies a duly executed Subsequent
Transfer Agreement and any other related documentation in the forms of
the exhibits listed thereon;
(c) the Seller shall deposit in the Collection Account
all collections in respect of the Subsequent Mortgage Loans received
or deemed received by the Seller on or after the related Subsequent
Cut-off Date (whether in the nature of amounts held by the Seller for
later application on behalf of the related Mortgagor in respect of a
Monthly Payment due on or after the related Subsequent Cut-off Date or
otherwise) except for amounts accrued in respect of interest accrued
in periods prior to the related Subsequent Mortgage Loans;
(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 Funding Period shall not have expired;
(g) the Seller shall make the representations and
warranties set forth in Section (A) of Schedule II to this Agreement
with respect to such Subsequent Mortgage Loans; and
(h) on such Subsequent Transfer Date, the Seller shall
deposit any applicable Subsequent Transfer Deposit in the Collection
Account.
In addition, the Seller will provide the Certificate Insurer and the
Trustee with data regarding all Subsequent Mortgage Loans to be transferred to
the Trust on any Subsequent Transfer Date at least 10 Business Days prior to
the end of the Funding Period. No later than the end of the Funding Period,
the following conditions shall have been satisfied with respect to all
Subsequent Mortgage Loans to be transferred to the Trust on any Subsequent
Transfer Date:
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(a) the Seller shall have delivered to the Certificate
Insurer and the Trustee an Officer's Certificate confirming the
satisfaction of each condition precedent specified in this Section
2.02 and in the related Subsequent Transfer Agreements;
(b) the Seller shall have delivered to the Certificate
Insurer and the Trustee Opinions of Counsel with respect to the
transfer of all of the Subsequent Mortgage Loans to the Trust on any
Subsequent Transfer Date substantially in the form of the Opinions of
Counsel delivered to the Trustee and the Certificate Insurer on the
Closing Date regarding bankruptcy, corporate and tax matters;
(c) the Trustee shall deliver to the Rating Agencies, the
Certificate Insurer and the Seller an Opinion of Counsel with respect
to the enforceability of each of the Subsequent Transfer Agreements
substantially in the form of the Opinion of Counsel delivered to the
Seller and the Certificate Insurer on the Closing Date;
(d) the Seller shall make the representations and
warranties set forth in Section B of Schedule II to this Agreement
with respect to all Subsequent Mortgage Loans; and
(e) the Certificate Insurer shall deliver to the Seller,
the Trustee and the Rating Agencies a written notice confirming the
Certificate Insurer's consent and approval to the addition of all
Subsequent Mortgage Loans purchased by the Trust on any Subsequent
Transfer Date, which notice shall specify any required variation in
the Required Coverage Amount and the related Additional Subsequent
Purchase Price with respect to the Subsequent Mortgage Loans.
Upon the satisfaction of the conditions set forth in clauses (a)
through (e) of the immediately preceding paragraph, on the last Subsequent
Transfer Date during the Funding Period, the Trustee shall release to the
Seller from the Prefunding Account the aggregate Additional Subsequent Purchase
Prices with respect to all Subsequent Mortgage Loans, which amount shall not
exceed the amount then on deposit in the Prefunding Account.
On or prior to the Closing Date, the Seller shall provide to the
Trustee and the Certificate Insurer a schedule of mortgage loans that are
expected to be Subsequent Mortgage Loans, and Subsequent Mortgage Loans
transferred to the Trust shall be taken only from such schedule; provided,
however, if any such identified mortgage loans do not satisfy the requirements
of Subsequent Mortgage Loans as set forth in this Section 2.02 or if any such
mortgage loans are rejected as Subsequent Mortgage Loans by the Certificate
Insurer, mortgage loans acceptable to the Certificate Insurer may be
substituted for such defective or rejected mortgage loans only from a secondary
schedule of mortgage loans that is identified as such and delivered to the
Trustee and the Certificate Insurer on the Closing Date. The Seller shall
certify that the Subsequent Mortgage Loans will be transferred to the Trust in
accordance with the foregoing and that all mortgage loans identified in both
the original schedule and secondary schedule of mortgage loans described above
satisfy the requirements of Subsequent Mortgage Loans as set forth in this
Section 2.02 as of the Closing Date.
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Section 2.03 Acceptance by the Trustee; Repurchase or Substitution
of Mortgage Loans. The Trustee acknowledges the sale and assignment to the
Trust and receipt by it of the original Mortgage Notes, Assignments and
Mortgages pursuant to this Agreement and the delivery to it of the Certificate
Insurance Policy, and subject to (i) the provisions of the second to the last
paragraph of Section 2.01, (ii) the review provided for in this Section of the
documents referred to in clauses (a) through (f) of Section 2.01 and (iii)
delivery of the Officer's Certificates pursuant to Section 2.01, declares that
it will hold the Trust in trust upon the terms herein set forth for the use and
benefit of all present and future Certificateholders. The Trustee agrees, for
the benefit of Certificateholders, to review each Mortgage File within 45 days
after the Closing Date (or, 45 days after the Subsequent Transfer Date, with
respect to the Subsequent Mortgage Loans) to determine whether the documents
described in Section 2.01(a)-(c), (e) and (f) have been executed and received,
and whether such documents relate to the Mortgage Loans identified in the
Mortgage Loan Schedule, or the Subsequent Mortgage Loan Schedule, as
applicable, and in so doing the Trustee may rely on the purported due execution
and genuineness of any such document and on the purported genuineness of any
signature thereon. If within such 45-day period the Trustee finds any document
constituting a part of a Mortgage File not to have been executed or received or
to be unrelated to the Mortgage Loans identified in the Mortgage Loan Schedule,
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 value of the related Mortgage Loan or
the interests of the Certificateholders or the Certificate Insurer in the
related Mortgage Loan, and such defect remains uncured after such 60-day
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
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without recourse, as shall be necessary to vest in the Seller legal and
beneficial ownership of such repurchased Defective Mortgage Loan (including any
property acquired in respect thereof or insurance policy or current or future
insurance proceeds with respect thereto).
Payments received with respect to Qualified Replacement Mortgage Loans
in the Collection Period prior to the Deposit Date on which such substitution
occurs will not be part of the Trust and will be retained by the Seller. For
the Distribution Date following the Deposit Date on which such substitution
occurs, distributions to Certificateholders will reflect the payments received
on such Deleted Mortgage Loan in the related Collection Period representing
amounts due or accrued thereon prior to such Deposit Date, and the Seller shall
thereafter be entitled to retain all amounts subsequently received in respect
of such Deleted Mortgage Loan. In the case of a Qualified Replacement Mortgage
Loan, the Mortgage File relating thereto shall be delivered to the Trustee and
the amount, if any, by which the Principal Balance of the related Deleted
Mortgage Loan as of the related Deposit Date exceeds the Principal Balance of
the Qualified Replacement Mortgage Loan as of the first day of the related
Collection Period shall be remitted by the Seller to the Trustee for deposit in
the Certificate Account on the Deposit Date on which the substitution occurs.
For purposes of this Agreement, any such amount so deposited in the Certificate
Account shall be deemed a prepayment of the related Deleted Mortgage Loan
received by the Servicer as of the prior Determination Date. Upon receipt by
the Trustee of an Officer's Certificate certifying that the Qualified
Replacement Mortgage Loan conforms to the requirements of this Agreement and
(a) written notification of such deposit signed by a Servicing Officer and (b)
the new Mortgage File (containing all of the documents referred to in clauses
(a), (b), (c), (d), (e) and (f) of Section 2.01), the Trustee shall release or
cause to be released to the Seller the Mortgage File related to the Deleted
Mortgage Loan or property and shall execute and deliver or cause to be executed
and delivered such instrument of transfer or assignment presented to it by the
Seller, without recourse, as shall be necessary to vest in the Seller all of
the legal and beneficial ownership of such Deleted Mortgage Loan or property
and the Trustee shall have no further responsibility with respect to said
Mortgage File. It is understood and agreed that the obligation of the Seller
to substitute a Qualified Replacement Mortgage Loan for or repurchase any
Defective Mortgage Loan (or any property acquired in respect thereof or
insurance policy or current or future insurance proceeds with respect thereto)
shall constitute the sole remedy against it respecting such defect available to
the Certificateholders or the Trustee, and such obligation on the part of the
Seller shall survive any resignation or termination of the Company as Servicer
under this Agreement. Notwithstanding the foregoing, a substitution by the
Seller for a defect in a constituent document will not be made unless the
Trustee and the Certificate Insurer receive an Officer's Certificate certifying
that the Qualified Replacement Mortgage Loan conforms to the requirements of
this Agreement and an Opinion of Counsel that such substitution will not be a
"prohibited transaction" as defined in Section 860F(a)(2) of the Code. Any
substitution must be effected not later than two years after the Closing Date,
or within such longer period of time as may be permitted under the REMIC
Provisions for substitution of mortgage loans.
On or prior to June 30, 1997 (July 31, 1997 with respect to the
Subsequent Mortgage Loans), the Trustee shall certify to the Certificate
Insurer, the Seller and the Servicer that it has received all of the documents
referred to in clauses (a) (b), (c), (e) and (f) of Section 2.01 and that all
corrections or curative actions required to be taken by the Seller within the
60-day period
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referred to in the first paragraph of this Section have been completed or
effected, or the related Mortgage Loans have been repurchased or substituted,
in accordance with the provisions of this Section or, if any deficiencies in
the Mortgage Files or other omissions of the Seller with respect to the
Mortgage Files are known to the Trustee at the time of such certification, the
Trustee shall make such certification only with respect to those Mortgage Loans
as to which no such defects or omissions are known, and shall qualify such
certification with respect to the remaining Mortgage Loans, identifying the
related defects or omissions. Thereafter, the Trustee shall provide the
Certificate Insurer, the Seller and the Servicer with monthly exception reports
indicating the status of any exceptions until all such exceptions have been
eliminated. Such monthly exception reports shall be distributed by the Trustee
on the related Distribution Date with the Statement to Certificateholders.
Section 2.04 Representations and Warranties Regarding the Servicer
and the Seller. The Company, as Seller and Servicer hereby represents and
warrants to the Trustee, the Certificate Insurer and the Certificateholders
that, as of the Closing Date:
(i) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of
California. The Company is in compliance with the laws of each state
in which it is acting as Servicer with respect to a Mortgage Loan to
the extent necessary to perform all servicing obligations with respect
to the related Mortgaged Property hereunder. Each Sub- Servicer is in
compliance with the laws of each state where the Mortgaged Properties
under the applicable Sub-Servicing Agreement are located to the extent
necessary to perform the servicing obligations hereunder; the Company
has the power and authority to execute and deliver this Agreement and
to perform its obligations in accordance herewith; the execution,
delivery and performance of this Agreement (including all instruments
of transfer to be delivered pursuant to this Agreement) by the Company
and the consummation of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action; this
Agreement evidences the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, subject
to the effect of bankruptcy, insolvency, reorganization, moratorium
and other similar laws relating to or affecting creditors' rights
generally or the application of equitable principles in any
proceeding, whether at law or in equity; and the consummation of the
transactions contemplated hereby will not result in the breach of any
terms or provisions of the articles of incorporation or by-laws of the
Company or result in the breach of any term or provision of, or
conflict with or constitute a default under or result in the
acceleration of any obligation under, any material agreement,
indenture or loan or credit agreement or other material instrument to
which the Company or its property is subject, or result in the
violation of any law, rule, regulation, order, judgment or decree to
which the Company or its property is subject. Each Sub-Servicer has
all requisite corporate power and authority to conduct its business
and perform the obligations under the Sub-Servicing Agreement to which
such Sub-Servicer is a party;
(ii) All actions, approvals, consents, waivers,
exemptions, variances, franchises, orders, permits authorizations,
rights and licenses required to be taken, given or obtained,
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as the case may be, by or from any federal, state or other
governmental authority or agency, that are necessary in connection
with the execution and delivery by the Company of this Agreement, have
been duly taken, given or obtained, as the case may be, are in full
force and effect, are not subject to any pending proceedings or
appeals (administrative, judicial or otherwise) and either the time
within which any appeal therefrom may be taken or review thereof may
be obtained has expired or no review thereof may be obtained or appeal
therefrom taken, and are adequate to authorize the consummation of the
transactions contemplated by this Agreement on the part of the Company
and the performance by the Company of its obligations as Servicer
under this Agreement;
(iii) There is no action, suit, proceeding or investigation
pending or, to the best of the Company's knowledge, threatened against
the Company that, either in any one instance or in the aggregate, may
result in any material adverse change in the business, operations,
financial condition, properties or assets of the Company or in any
material impairment of the right or ability of the Company to carry on
its business substantially as now conducted, or in any material
liability on the part of the Company or that would draw into question
the validity of this Agreement or the Mortgage Loans or of any action
taken or to be taken in connection with the obligations of the
Company, in its capacity as Servicer, contemplated herein, or that
would be likely to impair the ability of the Company to perform under
the terms of this Agreement;
(iv) The Company is not in default with respect to any
order or decree of any court or any order, regulation or demand of any
federal, state, municipal or governmental agency, which default might
have consequences that would materially and adversely affect the
condition (financial or other) or operations of the Company or its
properties or might have consequences that would adversely affect its
performance as Servicer hereunder;
(v) The transfer, assignment and conveyance of the
Mortgage Loans by the Company, as Seller, pursuant to this Agreement
are not subject to the bulk transfer laws or any similar statutory
provisions in effect in any applicable jurisdiction and are not being
transferred with the intent to hinder, delay or defraud any creditors;
(vi) The collection practices used by the Company and any
Sub-Servicer are in all material respects legal, proper, prudent and
customary in the home equity mortgage loan servicing business; and
(vii) Each Sub-Servicer engaged by the Servicer has
obtained all licenses and approvals required under state or federal
law to service the Mortgage Loans specified in the Sub-Servicing
Agreement to which the Sub-Servicer is a party.
The representations and warranties set forth in this Section shall survive the
sale and assignment of the Mortgage Loans to the Trust and the issuance, sale
and delivery of the Certificates. Upon discovery of a breach of any of the
foregoing representations and warranties that materially and adversely affects
the value of such Mortgage Loans or the interests of the Certificateholders or
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the Certificate Insurer in such Mortgage Loans, the party discovering such
breach shall give prompt written notice to the other parties and the
Certificate Insurer. Within 60 days of its discovery or its receipt of notice
of breach, the Company shall cure such breach in all material respects.
Section 2.05 Representations and Warranties of the Seller
Regarding the Mortgage Loans. The Seller represents and warrants to the
Trustee, the Certificate Insurer and the Certificateholders as of the Closing
Date and, with respect to any Subsequent Mortgage Loan, as of the Subsequent
Transfer Date (in either case except as otherwise expressly stated) that, as to
each Mortgage Loan conveyed to the Trust by it:
(i) The information with respect to each Mortgage Loan
set forth in the Mortgage Loan Schedule 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
manufactured housing or modular homes that are permanently affixed to
the land and constitute real property under the laws of the state in
which the Mortgaged Property is located but shall not include
co-operatives or mobile homes;
(iv) Each Mortgage Loan is a "qualified mortgage" ad no
such Mortgage Loan has a combined-loan-to-value ratio (calculated in
accordance with the REMIC Provisions) in excess of 125%; none of the
Mortgage Loans are either "consumer credit contracts" or "purchase
money loans" as such terms are defined in 16 C.F.R. Section 433; with
respect to each Mortgage Loan that is a "mortgage" as such term is
defined in 15 U.S.C. 1602(aa), no obligor has or will have a claim or
defense under such Mortgage Loan;
(v) Each Mortgage Loan was originated by an Affiliate of
the Company or an by an originator not affiliated with the Company
authorized to originate such Mortgage Loan and is being serviced by
the Company;
(vi) Each Mortgage Loan bears a fixed Mortgage Loan Rate
of at least 7.00% per annum; Each Subsequent Mortgage Loan will bear a
fixed Mortgage Loan Rate of not less than 8.35%;
(vii) Each Mortgage Note provides for a schedule of
substantially level and equal Monthly Mortgage Payments that are
sufficient to amortize fully the principal balance of such Mortgage
Note on or before its maturity date, except that, Mortgage Notes with
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respect to Mortgage Loans representing not more than 5.27% of the
Original Pool Balance, provide for level and equal Monthly Mortgage
Payments that are sufficient to amortize fully the principal balances
of such Notes over a period not exceeding 30 years, with "balloon"
payments at stated maturity that are substantially in excess of the
Monthly Mortgage Payments;
(viii) Each Mortgage is a valid and subsisting lien of
record on the Mortgaged Property having the priority indicated on the
Mortgage Loan Schedule, subject, in the case of any Junior Mortgage
Loan, only to any Senior Lien or Senior Liens on such Mortgaged
Property and subject in all cases to the exceptions to title set forth
in the title insurance policy with respect to the related Mortgage
Loan, which exceptions are generally acceptable to home equity
mortgage lending institutions, and such other exceptions to which
similar properties are commonly subject and that do not individually,
or in the aggregate, materially and adversely affect the benefits of
the security intended to be provided by such Mortgage;
(ix) Immediately prior to the sale, transfer and
assignment herein contemplated, the Company held good and indefeasible
title to, and was the sole owner of, each Mortgage Loan conveyed by
the Company subject to no liens, charges, mortgages, encumbrances or
rights of others, except with respect to liens that will be released
simultaneously with such transfer and assignment; and immediately upon
the transfer and assignment herein contemplated, the Trustee will hold
good and indefeasible title to, and be the sole owner of, each
Mortgage Loan subject to no liens, charges, mortgages, encumbrances or
rights of others, and the Seller has done nothing to impair the rights
of the Trustee, the Certificate Insurer or the Certificateholders in
or to payments with respect thereto (it being expressly understood
that no action consistent with the provisions of this Agreement or any
of other agreements referenced herein so impairs any such rights); the
rights of the Seller with respect to each Mortgage Loan are assignable
by the Seller without the consent of any Person other than such
consents as have or will have been obtained prior to the Closing Date
or related Subsequent Transfer Date, as appropriate;
(x) As of the Cut-off Date (a) no Mortgage Loan was 90 or
more days contractually delinquent (except that with respect to one
Mortgage Loan a payment received prior to the Cut-off Date was not
credited until after the Cut-off Date causing such Mortgage Loan to be
recorded as being 90 or more days past due on the Cut-off Date), not
more than 0.48% of the Initial Mortgage Loans (by Initial Pool Balance)
were 60 or more days contractually delinquent and not more than 4.19%
of the Initial Mortgage Loans (by Initial Pool Balance) were 30 or more
days contractually delinquent, (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, (a) no Subsequent
Mortgage Loan will be more than 59 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
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period and (c) no Subsequent Mortgage Loan will have been 90 or more
days contractually delinquent during the preceding 12 month period;
(xi) 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;
(x) 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;
(xi) As of the Cut-off Date or Subsequent Cut-off Date, as
applicable, there is no mechanic's lien or claim for work, labor or
material affecting any Mortgaged Property that is or may be a lien
prior to, or equal to or on a parity with, the lien of the related
Mortgage except those that are insured against by any title insurance
policy referred to in paragraph (xv) below;
(xii) To the best of the Seller's knowledge, each Mortgage
Loan at the time it was made complied in all material respects with
applicable local, state and federal laws and regulations, including,
without limitation, the federal Truth-in-Lending Act and other
consumer protection laws, real estate settlement procedure, usury,
equal credit opportunity, disclosure and recording laws;
(xiii) With respect to each Mortgage Loan, a lender's title
insurance policy (issued in standard form by a title insurance company
authorized to transact business in the state where the related
Mortgaged Property is located), in an amount at least equal to the
Original Principal Amount of such Mortgage Loan insuring the
mortgagee's interest under the related Mortgage Loan as the holder of
a valid lien of record on the real property described in the related
Mortgage (subject only to exceptions of the character referred to in
paragraph (viii) above), was effective on the date of the origination
of such Mortgage Loan, and, as of the Closing Date or related
Subsequent Transfer Date, as applicable, such policy is in full force
and effect and thereafter such policy shall continue in full force and
effect and shall inure to the benefit of the Certificateholders and
the Certificate Insurer upon consummation of the transactions
contemplated by this Agreement;
(xvi) 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
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the least of (i) the outstanding principal balance of the related
Mortgage Loan (together, in the case of a Junior Mortgage Loan, with
the outstanding principal balance of the Senior Lien), (ii) the
minimum amount required to compensate for damage or loss on a
replacement cost basis or (iii) the 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 (a) above;
(xvii) 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;
(xviii) Each Mortgage and Mortgage Note is the legal, valid
and binding obligation of the maker thereof and is enforceable in
accordance with its terms, except only as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights generally
and by general principles of equity (whether considered in a
proceeding or action in equity or at law), and all parties to each
Mortgage Loan had full legal capacity to execute all documents
relating to such Mortgage Loan and convey the estate therein purported
to be conveyed; with respect to each Mortgage Loan, only one original
Mortgage Note exists;
(xix) The Seller has caused and will cause to be performed
any and all acts required to be performed to preserve the rights and
remedies of the Trustee in any insurance policies applicable to each
Mortgage Loan, including any necessary notifications of insurers,
assignments of policies or interests therein, and establishment of
co-insured, joint loss payee and mortgagee rights in favor of the
Trustee;
(xx) As of the Cut-off Date no more than 1.00% of the
Original Pool Balance is secured by Mortgaged Properties located
within any single zip code area;
(xxi) 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);
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(xxii) The terms of each Mortgage Note and each Mortgage have
not been impaired, altered or modified in any respect, except by a
written instrument that has been recorded, if necessary, to protect the
interests of the Certificateholders and the Certificate Insurer and
that has been delivered to the Trustee. The substance of any such
alteration or modification is reflected on the Mortgage Loan Schedule
and has been approved by the primary mortgage guaranty insurer, if any;
(xxiii) 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;
(xxiv) No Mortgage Note is or has been secured by any
collateral, pledged account or other security other than the lien of
the corresponding Mortgage;
(xxv) No Mortgage Loan was originated under a buydown plan;
(xxvi) No Mortgage Loan has a shared appreciation feature or
other contingent interest feature;
(xxvii) Each Mortgaged Property consists of one or more
contiguous parcels of real property with a residential dwelling
erected thereon;
(xxviii) Each Mortgage Loan contains a provision for
the acceleration of the payment of the unpaid principal balance of
such Mortgage Loan in the event the related Mortgaged Property is sold
without the prior consent of the mortgagee thereunder;
(xxix) Any advances made to the Mortgagor 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;
(xxx) To the best knowledge of the Seller, there is no
proceeding pending or threatened for the total or partial condemnation
of any Mortgaged Property, nor is such a proceeding currently
occurring and no proceedings are pending, or to the best of the
Seller's knowledge, threatened, wherein the related Mortgagor or any
governmental agency has alleged that any Mortgage Loan is illegal or
unenforceable;
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(xxxi) To the best knowledge of the Seller, all of the
improvements that were included for the purposes of determining the
Appraised Value of any Mortgaged Property lie wholly within the
boundaries and building restriction lines of such Mortgaged Property,
and no improvements on adjoining properties encroach upon such
Mortgaged Property except those that are identified in the related
title insurance policy and affirmatively insured;
(xxxii) 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;
(xxxiii) With respect to each Mortgage that is a deed
of trust, a trustee, duly qualified under applicable law to serve as
such, has been properly designated and currently so serves and is
named in such Mortgage, and no fees or expenses are or will become
payable by the Certificateholders or the Trust to any trustee under
any deed of trust, except in connection with a trustee's sale after
default by the related Mortgagor;
(xxxiv) 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;
(xxxv) Each Mortgage contains customary and enforceable
provisions that render the rights and remedies of the holder thereof
adequate for the realization against the related Mortgaged Property of
the benefits of the security, including by trustee's sale and by
judicial foreclosure and there is no homestead or other exemption
available to the related Mortgagor that would materially interfere
with the right to sell the related Mortgaged Property at a trustee's
sale or the right to foreclose upon the related Mortgaged Property;
(xxxvi) There is no default, breach, violation or event of
acceleration existing under any Mortgage or the related Note and no
event that, with the passage of time or with notice and the expiration
of any grace or cure period, would constitute a default, breach,
violation or event of acceleration; and the Seller has not waived any
default, breach, violation or event of acceleration;
(xxxvii) No instrument of release or waiver has been
executed in connection with any Mortgage Loan, no Mortgaged Property
and no Mortgagor have been released, in whole or in part, except in
connection with an assumption agreement that has been approved by the
primary mortgage guaranty insurer, if any, and that has been delivered
to the Trustee and no Mortgage has been satisfied, canceled,
subordinated or rescinded, in whole or part;
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(xxxviii) The maturity date of each Junior Mortgage Loan is at least 12
months prior to the maturity date of the related Senior Lien if such
Senior Lien provides for a balloon payment;
(xxxix) At least 93.45% of the Mortgage Loans (by Original Pool
Balance) are secured by Mortgaged Properties that are maintained by the
related Mortgagors as primary residences;
(xl) There are no defaults (other than delinquencies) in complying
with the terms of the Mortgage, and all taxes, governmental assessments,
insurance premiums, water, sewer and municipal charges, leasehold
payments or ground rents that previously became due and owing have been
paid, or an escrow of funds has been established in an amount sufficient
to pay for every such item that remains unpaid; the 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
that precedes by one month the due date of the first installment of
principal and interest;
(xli) To the best of the Seller's knowledge, all parties that have
had any interest in the Mortgage Loan, whether as mortgagee, assignee,
pledgee or otherwise are or, during the period in which they held and
disposed of such interest, were (1) in compliance with any and all
applicable licensing requirements of the laws of the state wherein the
Mortgaged Property is located, and (2) (A) organized under the laws of
such state, or (B) qualified to do business in such state, or (C)
federal savings and loan associations or national banks having principal
offices in such state, or (D) not doing business in such state so as to
require qualification or licensing;
(xlii) No Mortgage Loan was selected by the Seller for inclusion in
the Trust on any basis intended to adversely affect the Trust;
(xliii) 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;
(xliv) 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;
(xlv) With respect to any Junior Mortgage Loan with a related
Senior Lien that provides for negative amortization or an open-end
feature that permits additional borrowings, the balance of such Senior
Lien reflected on the Mortgage Loan Schedule and used to calculate the
Combined Loan-to-Value Ratio for such Junior Mortgage Loan
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is based on the maximum amount of negative amortization, deferred
interest or maximum amount of borrowings permitted under such Senior
Lien;
(xlvi) 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;
(xlvii) As of the Cut-off Date and any Subsequent Cut-off Date, no
Mortgage Loan is secured by more than one Mortgaged Property;
(xlviii) All insurance policies are the valid and binding obligation
of the insurer and contain a standard mortgagee clause naming the
originator, its successors and assigns, as mortgagee. Such insurance
policies require prior notice to the insured of termination or
cancellation and no such notice has been received, each Mortgage
obligates the Mortgagor thereunder to maintain all such insurance at the
Mortgagor's cost and expense, and upon the Mortgagor's failure to do so,
authorizes the holder of the Mortgage to obtain and maintain such
insurance at the Mortgagor's cost and expense and to seek reimbursement
therefor from the Mortgagor;
(xlix) 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;
(l) 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;
(li) All Mortgage Loans were underwritten or re-underwritten in
accordance with the underwriting guidelines of the Seller and such
guidelines conform in all material respects to the descriptions thereof
set forth in the Prospectus dated March 18, 1997 and the Prospectus
Supplement dated March 18, 1997 relating to the Class A Certificates;
(lii) As of the Cut-off Date or related Subsequent Cut-off Date, as
applicable, no more than 0.05% 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 manufactured housing or a
modular home; as of the Cut-off Date or related Subsequent Cut-off Date,
as applicable, each manufactured home that constitutes a portion of any
Mortgaged Property includes a minimum of 400 square feet of living
space, a minimum width in excess of 102 inches and is of a kind
customarily used at a fixed location;
(liii) As of the end of the Funding Period, with respect to all of
the Subsequent Mortgage Loans purchased by the Trust on any Subsequent
Transfer Date, all of the
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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;
(liv) Mortgage Loans representing not less than 35.0% of the
Original Pool 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 representing not less than
22.0% of the Original Pool 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 representing not
less than 9.5% of the Original Pool 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 representing not
more than 3.0% of the Original Pool 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 representing
not more than 8.5% of the Original Pool 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;
(lv) The sale, transfer, assignment and conveyance of Mortgage
Loans by the Seller pursuant to the Agreement is not subject to and will
not result in any tax, fee or governmental charge payable by the Seller
or the Trustee to any federal, state or local government ("Transfer
Taxes") other than Transfer Taxes which have or will be paid by the
Seller as due. In the event that the Trustee or the Certificate Insurer
receives actual notice of any Transfer Taxes arising out of the
transfer, assignment and conveyance of the Mortgage Loans, on written
demand by the Certificateholders, the Trustee or the Certificate Insurer
or upon the Seller's otherwise being given notice thereof by the Trustee
or the Certificate Insurer, the Seller shall pay, and otherwise
indemnify and hold the Trust, the Trustee, and the Certificate Insurer
harmless, on an after-tax basis, from and against any and all such
Transfer Taxes (it being understood that the Certificateholders, the
Trustee, the Trust, and the Certificate Insurer shall have no obligation
to pay such Transfer Taxes);
(lvi) The Seller did not originate any Mortgage Loan by way of
curing any default on the part of a Mortgagor on another mortgage loan
originated by the Seller; and
(lvii) Each Mortgage Loan conforms, and all Mortgage Loans in the
aggregate conform, in all material respects to the descriptions thereof
set forth in the Prospectus Supplement dated March 18, 1997 relating to
the Class A Certificates.
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
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regard to any limitation set forth in such representation or warranty concerning
the knowledge of the Seller as to the facts stated therein, which breach
materially and adversely affects the value of the related Mortgage Loan or the
interests of the Certificateholders or the Certificate Insurer in the related
Mortgage Loan, the party discovering such breach shall give prompt written
notice to the other parties hereto, to each of the Rating Agencies and to the
Certificate Insurer.
Within 60 days of its discovery or its receipt of notice of such breach,
the Seller shall use all reasonable efforts to cure such breach in all material
respects. Unless, prior to the expiration of such 60-day period, such breach has
been cured in all material respects or otherwise does not exist or continue to
exist, the Seller shall, not later than the Deposit Date in the month following
the related Collection Period in which any such cure period expired, but in all
events within 90 days of the earlier of its discovery or receipt of notice of
breach (or at the election of the Seller, an earlier Collection Period), either
(I) repurchase such Mortgage Loan (or, in the case of any representation and
warranty stated above in terms of minimum or maximum aggregate percentage
amounts, repurchase Mortgage Loans such that, after giving effect to such
repurchase, the related representation and warranty would be complied with)
(including any property acquired in respect thereof and any insurance policy or
insurance proceeds with respect thereto) from the 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 the representation contained in clause (lvii) above and any
representation and warranty stated above in terms of minimum or maximum
aggregate percentage amounts, remove such Mortgage Loans and substitute in their
place Qualified Replacement Mortgage Loans such that, after giving effect to
such substitution, the related representation and warranty would be complied
with) in the same manner and subject to the same conditions as set forth in
Section 2.03. Upon making any such repurchase or substitution, the Seller shall
be entitled to receive an instrument of assignment or transfer from the Trustee,
without recourse to the Trustee, to the same extent as set forth in Section 2.03
with respect to the repurchase of or substitution for Defective Mortgage Loans
under that Section. It is understood and agreed that the obligation of the
Seller to repurchase or substitute any such Defective Mortgage Loan (or property
acquired in respect thereof or insurance policy or current or future insurance
proceeds with respect thereto) shall constitute the sole remedy against it
respecting such breach of the foregoing representations or warranties available
to the Certificateholders or the Trustee, as the case may be, and such
obligation shall survive any resignation or termination of the Company as
Servicer under this Agreement.
Notwithstanding the foregoing, a substitution of a Mortgage Loan by the
Seller for a breach will not be made unless the Trustee and the Certificate
Insurer receive an Officer's Certificate certifying that the Qualified
Replacement Mortgage Loan conforms to the requirements of this Agreement and an
Opinion of Counsel that such substitution will not be a "prohibited transaction"
as defined in Section 860F(a)(2) of the Code. Any substitution must be effected
not later than two years after the Closing Date, or within such longer period of
time as may be permitted under the REMIC Provisions for substitution of mortgage
loans.
Section 2.06 Execution and Authentication of Certificates. The Trustee
shall deliver to or upon the order of the Seller, in exchange for the Mortgage
Loans and the other assets
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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-1 Certificates, Class A-2 Certificates,
Class A-3 Certificates, Class A-4 Certificates and Class A-5 Certificates as
"regular interests" and the Class R Certificate 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 Prefunding 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 (xiv) and the last two
subclauses of clause (iv) of Section 2.05 (without regard to any limitation
therein relating to the knowledge of the Seller). This indemnity obligation
shall be in addition to any other obligation the Seller may have in connection
with any such breach.
ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS;
CERTIFICATE ACCOUNT
Section 3.01 The Servicer and the Sub-Servicers. Acting directly or
through one or more Sub-Servicers as provided in Section 3.15, the Servicer, as
servicer, shall administer the Mortgage Loans with reasonable care, using that
degree of skill and attention that the Servicer exercises with respect to all
comparable home equity mortgage loans that it services for itself or others. The
duties of the Servicer shall include collecting and posting of all payments,
responding to inquiries of Mortgagors or by federal, state or local government
authorities with respect to the Mortgage Loans, investigating delinquencies,
reporting tax information to Mortgagors in accordance with its customary
practices and accounting for collections and furnishing monthly and annual
statements to the Trustee with respect to distributions and making Monthly
Advances and Servicing Advances pursuant to Section 5.02. The Servicer shall
follow its customary standards, policies and procedures in performing its duties
as Servicer, to the extent not in conflict with the provisions of this
Agreement. Notwithstanding the appointment of any Sub-Servicer, the Servicer
shall remain liable for the performance of all of the servicing obligations and
responsibilities under this Agreement. The Servicer shall maintain all licenses
and qualifications necessary to perform its servicing obligations hereunder
under the laws of the jurisdictions in which it services Mortgage Loans. If the
Servicer commences directly to service a material number or principal amount of
Mortgage Loans with related Mortgaged Properties located in any other state, the
Servicer will use its reasonable efforts promptly to obtain, and
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thereafter to maintain, all licenses and qualifications necessary to perform its
servicing obligations hereunder in each such state. Each Sub-Servicer shall
maintain all licenses and qualifications necessary to perform its servicing
obligations in the states where the Mortgaged Properties to which the applicable
Sub-Servicing Agreement relates are located. The Servicer shall cooperate with
the Trustee and furnish to the Trustee such information in its possession as may
be necessary or appropriate to enable the Trustee to perform its tax reporting
duties hereunder. The Trustee shall furnish the Servicer with any powers of
attorney and other documents necessary or appropriate to enable the Servicer to
carry out its servicing and administrative duties hereunder.
Without limiting the generality of the foregoing, the Servicer (i) shall
continue, and is hereby authorized and empowered by the Trustee, to execute and
deliver, on behalf of itself, the Certificateholders and the Trustee or any of
them, any and all instruments of satisfaction or cancellation, or of partial or
full release or discharge and all other comparable instruments, with respect to
the Mortgage Loans and with respect to the related Mortgaged Properties (ii) may
consent to any modification of the terms of any Mortgage Note not expressly
prohibited hereby if the effect of any such modification will not be to
materially and adversely affect the security afforded by the related Mortgaged
Property or to decrease or slow (other than as permitted by Section 3.02(a)(ii))
the timing of receipt of any payments required thereunder and (iii) shall not
consent to the placing of a lien senior to or on parity with that of the
Mortgage on the related Mortgaged Property. In the event that notwithstanding
the provisions of clause (iii) above the Servicer shall consent to the placing
of a lien senior to or on a parity with that of the Mortgage on a Mortgaged
Property, the Servicer shall purchase on the next Deposit Date such Mortgage
Loan (including any property acquired in respect thereof and any insurance
policy or insurance proceeds with respect thereto) from the Trust at a price
equal to the Purchase Price and deposit such amount in the Certificate Account
on such Deposit Date pursuant to Section 3.02. For purposes of this Agreement,
any such purchase shall be deemed to be a prepayment of such Mortgage Loan. It
is understood and agreed that the obligation of the Servicer to purchase any
Mortgage Loan (or property acquired in respect thereof or insurance policy or
insurance proceeds with respect thereto) pursuant to the second immediately
preceding sentence shall constitute the sole remedy against it respecting such
breach available to the Certificateholders or the Trustee and such obligation
shall survive any resignation or termination of the consenting Servicer under
this Agreement.
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
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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 amount of any federal income tax,
including, without limitation, prohibited transaction taxes, taxes on net income
from foreclosure property, and taxes on certain contributions to a REMIC after
the Startup Day, imposed on the REMIC Pool when and as the same shall be due and
payable (but such obligation shall not prevent the Servicer or any other
appropriate Person from contesting any such tax in appropriate proceedings and
shall not prevent the Servicer from withholding or depositing payment of such
tax, if permitted by law, pending the outcome of such proceedings); and (e) pay
the amount of any and all taxes imposed on the REMIC Pool pursuant to Section
24874 of the California Revenue and Taxation Code. The Servicer shall not be
entitled to reimbursement for any taxes paid pursuant to this Section.
Section 3.02 Collection of Certain Mortgage Loan Payments; Collection
Account and Certificate Account.
(a) The Servicer shall, to the extent such procedures shall be
consistent with this Agreement, follow such collection procedures as it follows
from time to time with respect to home equity mortgage loans in its servicing
portfolio that are comparable to the Mortgage Loans; provided that the Servicer
shall always at least follow collection procedures that are consistent with or
better than standard industry practices. Consistent with the foregoing, the
Servicer may in its discretion (i) waive any assumption fees, late payment
charges, charges for checks returned for insufficient funds, prepayment fees, if
any, or other fees that may be collected in the ordinary course of servicing the
Mortgage Loans, (ii) if a Mortgagor is in default or about to be in default
because of a Mortgagor's financial condition, arrange with the Mortgagor a
schedule for the payment of delinquent payments due on the related Mortgage
Loan, or (iii) modify payments of monthly principal and interest on any Mortgage
Loan becoming subject to the terms of the Relief Act in accordance with the
Servicer's general policies for comparable home equity mortgage loans subject to
such Act; provided, however, that with respect to any arrangement referred to in
clause (ii) above, the Servicer shall not agree to any extension or modification
of the related Mortgage Note unless the Servicer shall have first given the
Certificate Insurer telephonic and
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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 and delivered copies thereof to the Trustee and the Certificate Insurer.
The Servicer shall not retain any cash or investment in the Collection Account
for a period in excess of 12 months and cash therein shall be considered
transferred to Certificate Account on a first-in, first-out basis. All net
income and gain realized from any such investment shall be for the benefit of
the Servicer as additional servicing compensation and shall be subject to its
withdrawal or order from time to time. Any losses realized in connection with
any such investment shall be for the account of the Servicer and the Servicer
shall deposit or cause to be deposited the amount of such loss (to the extent
not offset by income from other investments) in the Collection Account
immediately upon the realization of such loss.
(c) Subject to Section 3.02(d), the Servicer shall deposit in the
Collection Account each of the following payments on and collections in respect
of the Mortgage Loans as soon as practicable, but in no event later than the
close of business on the second Business Day after its receipt thereof:
(i) all payments in respect of or allocable to interest on the
Mortgage Loans (including any net income from REO Properties);
(ii) all Principal Payments;
(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
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withdrawal an amount equal to the total of all such amounts so applied since the
immediately preceding Deposit Date.
The foregoing requirements respecting deposits to the Collection Account
are exclusive, it being understood that, without limiting the generality of the
foregoing, the Servicer need not deposit in the Collection Account amounts
representing fees, late payment charges, charges for checks returned for
insufficient funds, prepayment fees, if any, or extension or other
administrative charges paid by Mortgagors or amounts received by the Servicer
for the account of Mortgagors for application towards the payment of taxes,
insurance premiums, assessments and similar items. The amounts deposited in the
Collection Account are subject to withdrawal, from time to time, to make
deposits into the Certificate Account pursuant to Section 3.02(e), to pay itself
the Monthly Servicing Fee pursuant to Section 3.08 and to make Servicing
Advances or to reimburse itself for Servicing Advances, as applicable, in either
case in accordance with Section 5.02(b), to make Monthly Advances in accordance
with Section 5.02(a) or to reimburse itself for payments of Monthly Advances to
the extent of recoveries of interest relating to the Mortgage Loans that were
the subject of such Monthly Advances. In addition, if the Servicer deposits in
the Collection Account any amount not required to be so deposited or any amount
in respect of payments by Mortgagors made by checks subsequently returned for
insufficient funds or other reason for non-payment, it may at any time withdraw
such amount from the Collection Account, any provision herein to the contrary
notwithstanding.
(d) Upon such terms as the Certificate Insurer and the Rating Agencies
may approve, the Servicer may make the deposits to the Collection Account
referred to in Section 3.02(c) on a later day than the second Business Day after
receipt of the amounts required to be so deposited, which terms and later day
shall be specified by the Certificate Insurer and the Rating Agencies and
confirmed to the Trustee and the Servicer in writing.
(e) The Trustee shall establish and maintain the Certificate Account.
The Certificate Account shall 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 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 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
by the Seller or the Servicer pursuant to Section 2.03, 2.05, 3.01, 3.06 or
10.01 or a substitution of a Qualified Replacement Mortgage Loan pursuant to
Section 2.03 or 2.05, or in connection with a purchase of Mortgage Loans by the
Certificate Insurer pursuant to Section 10.01, shall be remitted to the Trustee
for deposit in the Certificate Account on the applicable
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Deposit Date. Any amounts held in the Certificate Account may be invested at the
written direction of the Servicer in Permitted Investments upon the same terms
and conditions as those specified in clause (b) above with respect to the
Collection Account except that such investments shall mature not later than the
Distribution Date next succeeding the date of investment, and in the absence of
such direction the Trustee shall invest in Permitted Investments described in
clause (e) of the definition of Permitted Investments. All net income and gain
realized from any such investment shall be for the benefit of the Servicer as
additional servicing compensation and shall be subject to its withdrawal or
order from time to time. Any losses realized in connection with any such
investment shall be for the account of the Servicer and the Servicer shall
deposit or cause to be deposited the amount of such loss (to the extent not
offset by income from other investments) in the Certificate Account immediately
upon the realization of such loss.
Section 3.03 [Reserved]
Section 3.04 Hazard Insurance Policies. The Servicer shall cause to be
maintained for each Mortgage Loan (including Mortgage Loans as to which the
related Mortgaged Property has been acquired by the Trust upon foreclosure, by
deed in lieu of foreclosure or comparable conversion), hazard insurance
(including flood insurance coverage, if obtainable, to the extent such property
is located in a federally designated flood area in such amount as is required
under applicable FEMA guidelines) with extended coverage in an amount that is
not less than the least of (i) the maximum insurable value from time to time of
the improvements that are a part of such property, or (ii) the combined
principal balance of such Mortgage Loan and the principal balance of each
mortgage loan senior to such Mortgage Loan at the time of such foreclosure plus
accrued interest and the good-faith estimate of the Servicer of related
Liquidation Expenses to be incurred in connection therewith; provided, further
that such hazard insurance shall be in an amount not less than such amount as is
necessary to avoid the application of any coinsurance clause contained in the
related hazard insurance policy. Each such hazard insurance policy shall contain
a standard mortgage clause naming the originator, its successors and assigns, as
mortgagee and shall require prior notice to the insured of termination or
cancellation. The Servicer shall be under no obligation to require that any
Mortgagor maintain earthquake or other additional insurance and shall be under
no obligation itself to maintain any such additional insurance on property
acquired in respect of a Mortgage Loan, other than pursuant to such applicable
laws and regulations as shall at any time be in force and as shall require such
additional insurance. Amounts collected by the Servicer under any such policies
shall be deposited in the Collection Account or Certificate Account, as the case
may be, in accordance with Section 3.02 to the extent that they constitute Net
Liquidation Proceeds or Trust Insurance Proceeds. If the Servicer shall obtain
and maintain a blanket policy, issued by an insurer acceptable to each Rating
Agency and the Certificate Insurer, insuring against such hazard losses, it
shall conclusively be deemed to have satisfied its obligations as set forth in
the first sentence of this Section, it being understood and agreed that such
policy may contain a deductible clause that is in form and substance consistent
with standard industry practice, in which case the Servicer shall, in the event
that there shall not have been maintained on the related Mortgaged Property a
policy complying with the first sentence of this Section, and there shall have
been a loss that would have been covered by such policy, deposit in the
Collection Account in accordance with Section 3.02 the amount not otherwise
payable under the blanket policy because of such deductible clause.
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Section 3.05 Enforcement of Due-on-Sale Clauses; Assumption and
Modification Agreements. In any case in which property subject to a Mortgage is
voluntarily conveyed by the Mortgagor, the Servicer shall enforce any
due-on-sale clause contained in the related Mortgage Note or Mortgage, to the
extent permitted by such Mortgage Note or Mortgage, applicable law and
governmental regulations, but only to the extent that such enforcement will not
adversely affect or jeopardize coverage under any related insurance policy or
result in legal action by the Mortgagor. Subject to the foregoing, the Servicer
may, with the prior written consent of the Certificate Insurer, take or enter
into an assumption and modification agreement from or with the Person to whom
such Mortgaged Property has been or is about to be conveyed, pursuant to which
such Person becomes liable under the related Mortgage Note and the Mortgagor
remains liable thereon or, if the Person to whom such Mortgaged Property has
been or is about to be conveyed satisfies the Servicer's then-current
underwriting standards for home equity mortgage loans similar to the Mortgage
Loans, and the Servicer in its reasonable judgment finds it appropriate, is
released from liability thereon. If the Trustee is holding the Mortgage Files,
the Servicer shall notify the Trustee that any assumption and modification
agreement has been completed by delivering to the Trustee an Officer's
Certificate certifying that such agreement is in compliance with this Section
and the Servicer shall forward to the Trustee the original of such assumption
and modification agreement. Such assumption and modification agreement shall,
for all purposes, be considered a part of the related Mortgage File to the same
extent as all other documents and instruments constituting a part thereof. In
connection with any such agreement, the Mortgage Loan Rate shall not be reduced
(but may be increased), the Principal Balance of such Mortgage Loan shall not be
changed and the term of such Mortgage Loan will not be extended beyond the
existing term of such Mortgage Loan. Any fee collected by the Servicer for
entering into any such agreement shall be retained by the Servicer as additional
servicing compensation.
Notwithstanding the foregoing paragraph of this Section 3.05 or any
other provision of this Agreement, the Servicer shall not be deemed to be in
default, breach or any other violation of its obligations hereunder by reasons
of any assumption of a Mortgage Loan, or transfer of any Mortgaged Property
without the assumption thereof, by operation of law or any assumption or
transfer that the Servicer reasonably believes it may be restricted by law from
preventing, for any reason whatsoever.
Section 3.06 Realization upon Liquidated Mortgage Loans. Subject to the
limitations set forth in this Section 3.06 with respect to Restricted Mortgage
Properties, the Servicer, on behalf of the Trust, shall foreclose upon or
otherwise comparably convert to ownership Mortgaged Properties securing such of
the Mortgage Loans as come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments
pursuant to Section 3.02(a); provided that if the Servicer has actual knowledge
or reasonably believes that any Mortgaged Property is affected by hazardous or
toxic wastes or substances, then the Servicer shall not cause the Trust to
acquire title to such Mortgaged Property in a foreclosure or similar proceeding,
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
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usual in its general first, second and third lien one- to four-family mortgage
loan servicing activities (including the procurement of a drive-by appraisal of
the related Mortgaged Property prior to foreclosure or other conversion). The
foregoing is subject to the proviso that neither the Servicer nor the Trustee
shall be required to expend its own funds in connection with any foreclosure or
towards the correction of any default on a related Senior Lien or restoration of
any Mortgaged Property unless, in the reasonable judgment of the Servicer, such
foreclosure, correction or restoration will increase Net Liquidation Proceeds
(taking into account any unreimbursed Monthly Advances made or expected to be
made with respect to such Mortgage Loan).
To the extent the Net Liquidation Proceeds derived from any such
foreclosure or conversion exceed the unpaid Principal Balance of the related
Mortgage Loan and accrued interest thereon at the applicable Mortgage Loan Rate
to the related due date during the Collection Period in which such foreclosure
or conversion occurs (net of any related Monthly Advances or Servicing Advances
that were unreimbursed prior to the receipt of such Net Liquidation Proceeds),
such excess shall be paid to the Holder of the Class R Certificate.
Neither the Trust nor the Trustee on behalf of the Trust shall complete
foreclosure proceedings with respect to any Mortgage Loan listed on Schedule III
that has not, at any time after the Cut-off Date, been brought current (each, a
"Restricted Mortgage Loan"), or take title to any Mortgaged Property securing a
Restricted Mortgage Loan (each, a "Restricted Mortgaged Property"), if, as a
result of such foreclosure or taking of title, the aggregate value of the
Restricted Mortgaged Properties (computed on the basis of the outstanding
Principal Balance of such Restricted Mortgage Loan immediately prior to such
foreclosure or taking of title) then owned by the Trust or the Trustee on behalf
of the Trust would exceed 0.80% of the aggregate of the Principal Balances of
the Mortgage Loans as of the preceding Determination Date.
If at any time the Trust or the Trustee on behalf of the Trust holds
title to Restricted Mortgaged Properties that have an aggregate value (computed
on the basis of the outstanding Principal Balance of each related Restricted
Mortgage Loan immediately prior to the time the Trust or the Trustee on behalf
of the Trust acquired title to the related Restricted Mortgaged Property) that
exceeds 0.95% of the aggregate of the Principal Balance of the Mortgage Loans as
of the preceding Determination Date, then the Seller shall, on or prior to the
next succeeding Deposit Date, purchase one or more of such Restricted Mortgaged
Properties at a price equal to the fair market value of the related Restricted
Mortgaged Property (calculated by the Servicer in a manner consistent with the
Servicer's customary practice of making valuation determinations in foreclosure
proceedings relating to residential mortgage loans in its servicing portfolio at
the time of such purchase) so that the aggregate value of such Restricted
Mortgaged Properties (calculated as specified above) then owned by the Trust or
the Trustee on behalf of the Trust after such purchase or purchases does not
exceed 0.90% of the then aggregate of the Principal Balance of the Mortgage
Loans.
Such purchase price shall be deposited in the Certificate Account on the
date of such purchase in the manner described in Section 2.03. For purposes of
this Agreement, any purchase effected in accordance with this paragraph shall be
deemed to be a prepayment of the related
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Restricted Mortgage Loan. Upon receipt of the related purchase price and written
notification of such deposit signed by a Servicing Officer, the Trustee shall
release or cause to be released to the Seller the related Mortgage File and
other property (including any insurance policy or related present or future
insurance proceeds with respect thereto) and shall execute and deliver or cause
to be executed and delivered such instruments of transfer or assignment
presented to it by the Seller, without recourse, as shall be necessary to vest
in the Seller, all of the legal and beneficial ownership of each such Restricted
Mortgaged Property and the Trustee shall have no further responsibility with
respect to said Mortgage File.
Notwithstanding the foregoing, the Servicer, 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 Prefunding 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 Prefunding Account Deposit. For purposes of this Agreement, any purchase
effected in accordance with this paragraph shall be deemed to be a prepayment of
each Mortgage Loan so purchased.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be issued to the Trustee, or to its nominee, on behalf of the
Certificateholders, and the Servicer shall manage, conserve, protect and operate
each such Mortgaged Property for the Certificateholders solely for the purpose
of its prompt disposition and sale. The Servicer shall use its best efforts to
dispose of each such Mortgaged Property as expeditiously as possible consistent
with the goal of maximizing Net Liquidation Proceeds (taking into account any
unreimbursed Monthly Advances made or expected to be made with respect to such
Mortgage Loan). Neither the Trustee nor the Servicer, acting on behalf of the
Trust, shall provide financing from the Trust to any purchaser of any such
Mortgaged Property.
In the event that the Trust acquires any Mortgaged Property as aforesaid
or otherwise in connection with a default or imminent default on a Mortgage
Loan, such Mortgaged Property shall be disposed of by the Servicer on behalf of
the Trust 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
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which case the Servicer shall sell such Mortgaged Property within the applicable
extension period or (ii) the Trustee and the Certificate Insurer shall have
received an Opinion of Counsel to the effect that the holding by the Trust of
such Mortgaged Property subsequent to two years after its acquisition will not
result in a tax on prohibited transactions imposed by Code Section 860F(a)(1),
or otherwise subject the REMIC Pool to tax or cause the REMIC Pool to fail to
qualify as a REMIC at any time that any Certificates are outstanding. The
Servicer shall further ensure that the Mortgaged Property is administered so
that it constitutes "foreclosure property" within the meaning of Code Section
860G(a)(8) at all times, that the sale of such property does not result in the
receipt by the REMIC Pool of any income from non-permitted assets as described
in Code Section 860F(a)(2)(B), and that the REMIC Pool does not derive any "net
income from foreclosure property" within the meaning of Code Section 860G(c)(2)
with respect to such property.
Section 3.07 Trustee to Cooperate; Release of Mortgage Files. Upon the
payment in full of the principal balance of any Mortgage Loan, if the Trustee is
holding the Mortgage Files, the Servicer shall notify the Trustee by a
certification in the form of Exhibit I hereto (which certification shall include
a statement to the effect that all amounts received in connection with such
payment which are required to be deposited to the Collection Account pursuant to
Section 3.02 have been so deposited) of a Servicing Officer. Such notification
shall be made each month at the time that the Servicer delivers its Servicer
Remittance Report to the Trustee pursuant to Section 4.01. Upon any such payment
in full, the Servicer is authorized to procure from such trustee under the
Mortgage that secured the related Mortgage Note a deed of full reconveyance
covering the related Mortgaged Property encumbered by such Mortgage, which deed,
except as otherwise provided in Section 2941(c) of the California Civil Code or
other applicable law, shall be recorded by such trustee in the office of the
County Recorder in which the Mortgage is recorded, or, as the case may be, to
procure from such trustee an instrument of satisfaction or, if the related
Mortgagor so requests, an assignment without recourse, in each case prepared by
the Servicer at its expense and executed by the Trustee, which deed of
reconveyance, instrument of satisfaction or assignment shall be delivered by the
Servicer to the Person entitled thereto, it being understood and agreed that no
expenses incurred in connection with such deed of reconveyance, assignment or
instrument of satisfaction shall be reimbursed from amounts at the time on
deposit in the Collection or Certificate Account. From time to time and as
appropriate for the servicing or foreclosure of any Mortgage Loan, the Trustee
shall, upon written request of the Servicer and delivery to the Trustee of a
trust receipt signed by a Servicing Officer, release the related Mortgage File
to the Servicer and shall execute such documents prepared by the Servicer as
shall be necessary to the prosecution of any such proceedings. Such trust
receipt shall state that the Servicer is holding the Mortgage File in trust for
the Trustee and shall obligate the Servicer to return the Mortgage File to the
Trustee when the need therefor by the Servicer no longer exists unless the
Mortgage Loan shall be liquidated, in which case, upon receipt of a certificate
of a Servicing Officer similar to that herein above specified, the trust receipt
shall be released by the Trustee to the Servicer.
Section 3.08 Servicing Compensation; Payment of Certain Expenses by the
Servicer. On each Deposit Date, the Servicer shall be entitled to receive, by
withdrawal by the Servicer from the Collection Account, out of collections of
interest on the Mortgage Loans for the related
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Collection Period, as servicing compensation for such Collection Period, the
Monthly Servicing Fee. Additional servicing compensation shall be assumption
fees, late payment charges, charges for checks returned for insufficient funds,
prepayment fees, if any, or extension and other administrative charges received
by the Servicer. The Servicer is obligated to pay Compensating Interest out of
the related Monthly Servicing Fee on each Deposit Date, to the extent of the
amount of the Monthly Servicing Fee, and shall not be entitled to reimbursement
therefor. The Servicer shall be required to pay all expenses incurred by it in
connection with its activities hereunder (including payment of the fees and
expenses relating to the Annual Independent Public Accountant's Servicing Report
described in Section 3.10, and all other fees and expenses not otherwise
expressly stated hereunder for the account of the Certificateholders) and shall
not be entitled to reimbursement therefor except as specifically provided
herein.
Section 3.09 Annual Statement as to Compliance.
(a) The Servicer will deliver to the Trustee, the Certificate Insurer
and each Rating Agency, on or before September 30 of each year, beginning with
September 30, 1998, an Officer's Certificate of the Servicer substantially in
the form set forth in Exhibit G hereto stating that (a) a review of the
activities of the Servicer during the preceding calendar year (or since the
Closing Date in the case of the first such statement) and of its performance
under this Agreement has been made under such officer's supervision and (b) to
the best of such officer's knowledge, based on such review, the Servicer has
fulfilled all its material obligations under this Agreement throughout such year
(or since the Closing Date in the case of the first such statement), or, if
there has been a default in the fulfillment of any such obligation, specifying
each such default known to such officer and the nature and status thereof.
(b) The Servicer shall deliver to the Trustee, with a copy to the
Certificate Insurer and each Rating Agency, promptly after having obtained
knowledge thereof, but in no event later than five Business Days thereafter,
written notice by means of an Officer's Certificate of any event that with the
giving of notice or the lapse of time, or both, would become an Event of
Default.
Section 3.10 Annual Independent Public Accountants' Servicing Report. On
or before September 30 of each year, beginning with September 30, 1998, the
Servicer at its expense shall cause a firm of nationally recognized independent
public accountants (who may also render other services to the Servicer) to
furnish a report to the Trustee, the Certificate Insurer and each Rating Agency
to the effect that such firm has examined certain documents and records
(including the Servicer Remittance Reports delivered by the Servicer during the
period covered by such reports) relating to the servicing activities of the
Servicer (which would include servicing of Mortgage Loans under this Agreement)
for the period covered by such report, and that such examination, which has been
conducted substantially in compliance with the Uniform Single Attestation
Program for Mortgage Bankers (to the extent that the procedures in such audit
guide are applicable to the servicing obligations set forth in this Agreement),
has disclosed no exceptions or errors in records relating to the servicing
activities of the Servicer (including servicing of Mortgage Loans subject to
this Agreement) that, in the opinion of such firm, are material, except for such
exceptions as shall be set forth in such report.
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Section 3.11 Access to Certain Documentation and Information Regarding
the Mortgage Loans.
(a) The Servicer shall provide to Certificateholders that are federally
insured savings associations and the FDIC and its supervisory agents and
examiners access to the documentation regarding the Mortgage Loans required by
applicable regulations of the Office of Thrift Supervision, and to the Trustee
and the Certificate Insurer all documentation relating to the Mortgage Loans
that is in the possession of the Servicer, such access being afforded without
charge but only upon reasonable request and during normal business hours at the
offices of the Servicer. Nothing in this Section shall derogate from the
obligation of the Servicer to observe any applicable law prohibiting disclosure
of information regarding the Mortgagors and the failure of the Servicer to
provide access as provided in this Section as a result of such obligation shall
not constitute a breach of this Section.
(b) The Servicer shall supply information to the Trustee in such form as
the Trustee shall reasonably request, by the start of the fourth Business Day
preceding each Distribution Date, as is required in the Trustee's reasonable
judgment to enable the Trustee to make required distributions and to furnish the
certificates, statements and reports to Certificateholders required pursuant to
this Agreement.
Section 3.12 Maintenance of Fidelity Bond and Errors and Omissions
Policy. The Servicer shall during the term of its service as Servicer maintain
in force a (a) policy or policies of insurance covering errors and omissions in
the performance of its obligations as Servicer hereunder and (b) fidelity bond
in respect of its officers, employees and agents, in each case having coverage
amounts reasonably deemed by the Servicer to be adequate to its operations.
Section 3.13 Notices to the Rating Agencies, the Trustee and the
Certificate Insurer. In addition to the other notices required to be given to
the Rating Agencies, the Trustee and the Certificate Insurer by the provisions
of this Agreement, the Servicer shall give notice to each Rating Agency, the
Trustee and the Certificate Insurer of (a) any amendment to this Agreement, (b)
the final distribution on the Class A Certificates, (c) the occurrence of an
Event of Default and (d) the repurchase, purchase or substitution, as
applicable, of any Mortgage Loan pursuant to Section 2.03, 2.05, 3.01 or 3.06 by
the Seller or Servicer, as the case may be.
Section 3.14 Reports of Foreclosures and Abandonment of Mortgaged
Properties. Each year beginning in 1998 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.
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Section 3.15 Sub-Servicers and Sub-Servicing Agreements.
(a) The Servicer may enter into Sub-Servicing Agreements for any
servicing and administration of Mortgage Loans with any institution that is
acceptable to the Certificate Insurer and that is in compliance with the laws of
each state necessary to enable it to perform its obligations under such
Sub-Servicing Agreement. The Servicer shall give notice to the Certificate
Insurer of the appointment of any Sub-Servicer. The Servicer shall not enter
into any Sub-Servicing Agreement that does not provide for the servicing of the
Mortgage Loans specified therein on a basis consistent with the terms of this
Agreement or that otherwise violates the provisions of this Agreement. The
Servicer may enter into, and make amendments to, any Sub-Servicing Agreement or
enter into different forms of Sub-Servicing Agreements; provided, however, that
any such amendments or forms shall be consistent with and not violate the
provisions of this Agreement.
(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 and the Certificate Insurer shall have such claims or
rights that arise as a result of any funds held by a Sub-Servicer in trust for
or on behalf of the Trust. Notwithstanding the execution of any Sub-Servicing
Agreement, the Servicer shall not be relieved of any liability hereunder and
shall remain obligated and liable for the servicing and administration of the
Mortgage Loans.
Section 3.16 Prefunding Account.
(a) The Trustee will establish and maintain the Prefunding Account. No
later than the Closing Date, the Trustee will deposit in the Prefunding Account
the Prefunding Account Deposit from the proceeds of the sale of the Class A
Certificates. Upon the conveyance of Subsequent Mortgage Loans to the Trust on
any Subsequent Transfer Date, the Seller shall instruct the Trustee to withdraw
from the Prefunding Account (i) an amount equal to the Subsequent Purchase Price
and make a corresponding reduction in the amount of the Prefunding Account
Deposit, in each case (other than on the last day in the Funding Period)
excluding any related Additional Subsequent Purchase Price, and to pay such
amount to or upon the order of the Seller upon satisfaction of the conditions
set forth in Section 2.02 of this Agreement with respect to such transfer. The
aggregate Additional Subsequent Purchase Prices shall be released to the Seller
as provided in the penultimate paragraph of Section 2.02.
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(b) The Prefunding Account will be part of the Trust but not part of the
REMIC Pool. Amounts held in the Prefunding Account shall be invested in
Permitted Investments of the type specified in clause (f) of the definition of
Permitted Investments. The Trustee shall not be liable for any losses on amounts
invested in accordance with the provisions hereof. Any losses realized in
connection with any such investment shall be for the account of the Seller and
the Seller shall deposit the amount of such loss (to the extent not offset by
income from other investments) in the Prefunding Account immediately upon the
realization of such loss. All interest and any other investment earnings on
amounts held in the Prefunding Account shall be taxed to the Seller and for
federal and state income tax purposes the Seller shall be deemed to be the owner
of the Prefunding Account. All interest and any other investment earnings on
amounts held in the Prefunding Account shall be paid by the Trustee to the
Seller on the April 1997 Distribution Date.
(c) On the Distribution Date in April 1997, any amounts remaining in the
Prefunding Account in respect of the Prefunding 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
Monthly Principal on the April 1997 Distribution Date.
Section 3.17 Capitalized Interest Account.
(a) The Trustee shall establish and maintain the Capitalized Interest
Account. On the Closing Date, the Trustee will deposit in the Capitalized
Interest Account the Capitalized Interest Account Deposit. The Trustee shall
hold the Capitalized Interest Account Deposit for the benefit of the Class A
Certificates. The Class A Certificateholders will be entitled to the full Class
A-1 Monthly Interest, Class A-2 Monthly Interest, Class A-3 Monthly Interest,
Class A-4 Monthly Interest and Class A-5 Monthly Interest, respectively, for the
applicable initial Interest Period. On the April 1997 Deposit Date, 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-1 Pass-Through Rate, Class A-2 Pass-Through Rate, Class
A-3 Pass- Through Rate, Class A-4 Pass-Through Rate and Class A-5 Pass-Through
Rate on an amount equal to the Prefunding Account Deposit and (ii) an amount
equal to the result obtained by multiplying the Certificate Insurer Premium
payable with respect to the Class A Certificates for the related Distribution
Date by a fraction, the numerator of which is the amount of the Prefunding
Account Deposit and the denominator of which is the Class A Certificate
Principal Balance 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 such Distribution Date. Any amounts so deposited
shall not be invested in Permitted Investments or otherwise.
(b) The Capitalized Interest Account will be part of the Trust but not
part of the REMIC Pool. Amounts held in the Capitalized Interest Account shall
be invested in Permitted Investments of the type specified in clause (e) of the
definition of Permitted Investments, which Permitted Investments shall mature no
later than the Deposit Date in April 1997. 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
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shall be paid by the Trustee to the Seller on the April 1997 Distribution Date
and for federal and state income tax purposes the Seller shall be deemed to be
the owner of the Capitalized Interest Account. Any losses realized in connection
with any such investment shall be for the account of the Seller and the Seller
shall deposit the amount of such loss (to the extent not offset by income from
other investments) in the Capitalized Interest Account immediately upon the
realization of such loss. All amounts earned on deposit in the Capitalized
Interest Account shall be taxed to the Seller.
(c) On the Deposit Date in April 1997, any amounts remaining in the
Capitalized Interest Account following withdrawal of the amounts specified in
paragraph (a) above (net of reinvestment earnings payable to the Seller) shall
be deposited at such time into the Certificate Account for distribution as part
of Available Funds on the April 1997 Distribution Date. Any amounts so deposited
shall not be invested in Permitted Investments or otherwise.
Section 3.18 Payments on the Certificate Insurance Policy.
(a) The Trustee will establish and maintain the Policy Payments Account,
a separate special purpose trust account for the benefit of the Class A
Certificateholders and the Certificate Insurer. The Trustee shall deposit or
cause to be deposited any Insured Payments paid under the Certificate Insurance
Policy and received by the Trustee in the Policy Payments Account and distribute
such amounts only for the purpose of payment to the related Class A
Certificateholders of the related Insured Payments and such amounts may not be
used to satisfy any costs, expenses or liabilities of the Servicer, the Trustee
or the Trust. Insured Payments deposited in the Policy Payments Account shall
not be invested in Permitted Investments or otherwise, and shall be transferred
to the Certificate Account on the related Distribution Date and disbursed by the
Trustee to the related Class A Certificateholders in accordance with Section
5.01.
As soon as possible, and in no event later than 9:00 a.m. (Los Angeles
time) on the fourth Business Day immediately preceding the related Distribution
Date, the Trustee shall determine whether a Deficiency Amount is required to be
paid under the Certificate Insurance Policy with respect to such Distribution
Date and, if so, shall immediately notify the Servicer by telephone, which
notice shall be confirmed in writing by facsimile transmission, of the Trustee's
intention so to file the applicable Notice of Claim. If by the close of business
in Los Angeles on such date a Deficiency Amount is still required to be paid
under the Certificate Insurance Policy with respect to such Distribution Date,
the Trustee shall furnish the Certificate Insurer (or an agent of the
Certificate Insurer designated to the Trustee in writing) with a completed
Notice of Claim in respect of such Deficiency Amount by 12:00 noon New York City
time on the next succeeding Business Day and shall provide a copy thereof to the
Servicer at or prior to the time such Notice of Claim is received by the
Certificate Insurer. The Notice of Claim shall constitute a claim therefor
pursuant to the Certificate Insurance Policy. In the event any funds are
received by the Trustee from the Servicer prior to the close of business in Los
Angeles on the Business Day following the transmission of a Notice of Claim to
the Certificate Insurer (or an agent of the Certificate Insurer designated to
the Trustee in writing), and such funds reduce the amount of the Deficiency
Amount to which such Notice of Claim relates, the Deficiency Amount to which
such Notice of Claim relates shall be reduced by a corresponding amount, and the
Notice of Claim
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shall be deemed to have been rescinded to the extent of the reduction of the
Deficiency Amount. Notification of any such reduction in the Insured Amount
shall be given to the Certificate Insurer (or an agent of the Certificate
Insurer designated to the Trustee in writing) by the Trustee by no later than
9:00 A.M., New York time, on the related Distribution Date. The Certificate
Insurer shall pay amounts due pursuant to the Certificate Insurance Policy in
accordance with the terms of the Certificate Insurance Policy.
(b) The Trustee shall, as necessary, make a claim on the Policy in
respect of Preference Amounts in accordance with the terms of the Policy.
(c) The Trustee shall receive, as attorney-in-fact for each Class A
Certificateholder, any Insured Payment allocable to such Class A Certificates,
from the Certificate Insurer and disburse the same in accordance with the
provisions of Section 5.01. Any portion of the distributions made by the Trustee
in respect of any Insured Payment, from proceeds of the Certificate Insurance
Policy shall not be considered payment by the Trust, nor shall such payments
discharge the obligation of the Trust with respect to such Class A
Certificateholders, and the Certificate Insurer shall become the owner of such
unpaid amounts in respect of such Class A Certificates. The Trustee hereby
agrees on behalf of each Class A Certificateholder for the benefit of the
Certificate Insurer that it recognizes that: to the extent the Certificate
Insurer pays any Insured Payments in respect of the Class A Certificates, either
directly or indirectly (as by paying through the Trustee), to the Class A
Certificateholders, the Certificate Insurer will be subrogated to the rights of
such Class A Certificateholders with respect to such Insured Payments paid in
respect of such Class A Certificateholders, shall be deemed to the extent of the
Insured Payments so paid in respect of such Certificateholders, to be a
registered Holder of such Class A Certificates and shall be entitled to receive
all future distributions on such Class A Certificates until all such Insured
Payments (together with interest thereon at the related Late Payment Rate from
the date paid until the date of reimbursement thereof) have been fully
reimbursed, in each case subject to the following paragraph. To evidence such
subrogation, the Trustee shall note the Certificate Insurer's rights as subrogee
on the registration books maintained by the Trustee. Except as otherwise
described herein, the Certificate Insurer shall not acquire any voting rights
hereunder as a result of such subrogation. The effect of the foregoing
provisions is that, to the extent of any Insured Payments made by it on each
Distribution Date, the Certificate Insurer shall be paid before any other
distributions are made to the other Class A Certificateholders, 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 Certificates of any
subclass unless on such Distribution Date the other Certificateholders with
respect to such subclass of Class A Certificates shall also have received the
full amount of the related Monthly Interest and the amount of any Coverage
Deficit allocated for distribution to such subclass for such Distribution Date.
(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
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Certificateholders are not entitled to institute proceedings directly against
the Certificate Insurer. Each Class A Certificateholder, by its purchase of
Class A Certificates, the Servicer and the Trustee hereby agree that the
Certificate Insurer may at any time during the continuation of any proceeding
relating to a preference claim direct all matters relating to such preference
claim, including, without limitation, the direction of any appeal of any order
relating to such preference claim and the posting of any surety, supersedeas or
performance bond pending any such appeal. In addition and without limitation of
the foregoing, the Certificate Insurer shall be subrogated to the rights of the
Servicer, the Trustee and each Class A Certificateholder in the conduct of any
such preference claim, including, without limitation, all rights of any party to
an adversary proceeding action with respect to any court order issued in
connection with any such preference claim.
(e) The Trustee shall keep a complete and accurate record of the amount
of interest and principal paid in respect of any Class A Certificate from monies
received under the Certificate Insurance Policy. The Certificate Insurer shall
have the right to inspect such records at reasonable times during normal
business hours upon one Business Day's notice to the Trustee.
Section 3.19 Rights of the Certificate Insurer to Exercise Rights of
Class A Certificateholders. By accepting its Certificate, each Class A
Certificateholder agrees that unless a Certificate Insurer Default exists, the
Certificate Insurer shall have the right to exercise all rights of the Class A
Certificateholders under this Agreement without any further consent of the Class
A Certificateholders, including, without limitation:
(i) the right to direct foreclosures upon Mortgage Loans upon
failure of the Servicer to do so;
(ii) the right to require the Seller to repurchase or
substitute for, or to require the Servicer to purchase, Mortgage Loans
pursuant to Sections 2.05 and 2.09; and
(iii) the right to direct the actions of the Trustee during the
continuance of an Event of Default.
In addition, each Class A Certificateholder agrees that, unless a
Certificate Insurer Default exists, the rights specifically set forth above may
be exercised by the Class A Certificateholders only with the prior written
consent of the Certificate Insurer.
Section 3.20 Trust and Accounts Held for Benefit of the Certificate
Insurer. Provided there does not exist a Certificate Insurer Default, the
Trustee shall hold the Trust and the Mortgage Files for the benefit of the
Certificateholders and the Certificate Insurer and all references in this
Agreement (including, without limitation, in Sections 2.01, 2.02 and 2.03) and
in the Certificates to the benefit of Holders of the Certificates shall be
deemed to include the Certificate Insurer.
Provided there does not exist a Certificate Insurer Default, the
Servicer hereby acknowledges and agrees that it shall service and administer the
Mortgage Loans and any REO
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Properties, and shall maintain the Collection Account for the benefit of the
Certificateholders and for the benefit of the Certificate Insurer, and all
references in this Agreement to the benefit of or actions on behalf of the
Certificateholders shall be deemed to include the Certificate Insurer.
All notices, statements, reports, certificates or opinions required by
this Agreement to be sent to any other party hereto or to the Certificateholders
shall also be sent to the Certificate Insurer.
ARTICLE IV
REMITTANCE REPORT
Section 4.01 Servicer Remittance Report. With respect to each
Distribution Date, not later than the fifth Business Day prior to the related
Deposit Date the Servicer shall deliver to the Trustee and the Certificate
Insurer a computer-readable magnetic tape or disk containing the Servicer
Remittance Report detailing the payments and collections received in respect of
the Mortgage Loans during the immediately preceding Collection Period. The
computer-readable magnetic tape or disk shall include loan-by-loan information
that specifies account number, borrower name, outstanding principal balance and
activity since the last Distribution Date. Such tape shall be in the form and
have the specifications as may be agreed to between the Servicer, the Trustee
and the Certificate Insurer from time to time and shall include information
concerning original loan-to-value ratios, the lien positions of and number of
days contractually delinquent of the Mortgage Loans and information necessary to
calculate Delinquency Rate Events, Cumulative Loss Rate Events, Rolling Loss
Rate Events and Required Coverage Amounts.
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 with respect to each Mortgage Loan that became a Liquidated
Mortgage Loan during the related Collection Period substantially in the form of
Exhibit I hereto.
Section 4.02 Trustee Distribution Date Statement. The Trustee shall, not
later than the Business Day prior to each Deposit Date, furnish by telecopy to
the Servicer and the Certificate Insurer a statement derived from information on
the Servicer Remittance Report that sets forth the following information for the
Class A Certificates relating to the next succeeding Distribution Date:
(a) the total amount of payments in respect of or allocable to
interest on the Mortgage Loans received or deemed to have been received
from the related Mortgagors by the Servicer during such Collection
Period (including any net income from REO Properties received during the
related Collection Period);
(b) the aggregate amount of all Principal Prepayments received
from the related Mortgagors by the Servicer during such Collection
Period;
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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 that the Seller is required to repurchase on the related
Deposit Date pursuant to Section 2.03 or 2.05, (ii) any Mortgage Loan
that the Servicer is required to purchase on the related Deposit Date
pursuant to Section 3.01 and (iii) any Mortgage Loans that 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;
(l) the amount of Monthly Advances reimbursable to the
Servicer in such Collection Period pursuant to Section 5.02(a) and not
previously reimbursed;
(m) the amount of any Servicing Advance made by the Servicer
pursuant to Section 5.02(b) and not previously reimbursed; and
(n) the amount of any Interest Shortfall for the related
Distribution Date.
ARTICLE V
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
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Certificateholders if the termination of the Trust is in connection with a
purchase of the assets of the Trust by the Servicer or the Certificate Insurer
pursuant to Section 10.01) by check or money order mailed to such
Certificateholder at the address appearing in the Certificate Register, or upon
written request by a Holder of a Certificate, by wire transfer (in the event
such Certificateholder owns of record one or more Certificates that have
principal denominations aggregating at least $5,000,000 and has given the
Trustee, at least five Business Days prior to the related Record Date, written
instruction for making such wire transfer to a bank account maintained in the
United States), or by such other means of payment as such Certificateholder and
the Trustee shall agree, such Certificateholder's Percentage Interest of the
following amounts (to the extent applicable to the Class of such Holder's
Certificate) and in the following orders of priority from amounts on deposit in
the Certificate Account and to the extent of the aggregate of Available Funds
for such Distribution Date:
<TABLE>
<S> <C>
first, to the Certificate Insurer, the aggregate amount necessary to reimburse the
----- Certificate Insurer for any unreimbursed Insured Payments prior to such
Distribution Date, together with interest thereon at the Late Payment Rate
from the date such Insured Payments were paid by the Certificate Insurer
to such Distribution Date the amount of any unpaid Certificate Insurer
Premium from any prior Distribution Date together with interest thereon at
the Late Payment Rate from the date such Certificate Insurer Premium was
due to such Distribution Date; provided, however, that the Certificate
-------- -------
Insurer's right to any such reimbursement and payment is subject to the
right of the Class A-1 Certificateholders, Class A-2 Certificateholders,
Class A-3 Certificateholders, Class A-4 Certificateholders and Class A-5
Certificateholders, to receive the Class A-1 Monthly Interest, Class A-2
Monthly Interest, Class A-3 Monthly Interest, Class A-4 Monthly Interest
and Class A-5 Monthly Interest, respectively, and the right of the Class A
Certificateholders to receive their allocation of the amount of any
Coverage Deficit, if any, with respect to such Distribution Date;
second, to the Certificate Insurer, an amount equal to the applicable Certificate
Insurer Premium for such Distribution Date;
third, concurrently to the Class A-1 Certificateholders, Class
A-2 Certificateholders, Class A-3 Certificateholders,
Class A-4 Certificateholders and Class A-5
Certificateholders, the Class A-1 Monthly Interest, Class
A-2 Monthly Interest, Class A-3 Monthly Interest, Class
A-4 Monthly Interest and Class A-5 Monthly Interest,
respectively;
fourth, commencing on the April 2000 Distribution Date, to the
Class A-5 Certificateholders, Class A Monthly Principal up
to the Class A-5 Monthly Principal Lockout Distribution in
reduction of the Class A-5 Certificate Principal Balance;
</TABLE>
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<TABLE>
<S> <C>
fifth, to the Class A-1 Certificateholders, Class A Monthly
Principal remaining after the Class A-5 Monthly Principal
Lockout Distribution has been paid in full in reduction of
the Class A-1 Certificate Principal Balance until the
Class A-1 Certificate Principal Balance is reduced to
zero;
sixth, to the Class A-2 Certificateholders, Class A Monthly
Principal remaining after the Class A-1 Certificate
Principal Balance has been reduced to zero, in reduction
of the Class A-2 Certificate Principal Balance until the
Class A-2 Certificate Principal Balance is reduced to
zero;
seventh, to the Class A-3 Certificateholders, Class A Monthly
Principal remaining after the Class A-2 Certificate
Principal Balance has been reduced to zero, in reduction
of the Class A-3 Certificate Principal Balance until the
Class A-3 Certificate Principal Balance is reduced to
zero;
eighth, to the Class A-4 Certificateholders, Class A
Monthly Principal remaining after the Class A-3
Certificate Principal Balance has been reduced to
zero, in reduction of the Class A-4 Certificate
Principal Balance until the Class A-4 Certificate
Principal Balance is reduced to zero;
ninth, to the Class A-5 Certificateholders, Class A Monthly
Principal remaining after the Class A-4 Certificate
Principal Balance has been reduced to zero, in reduction
of the Class A-5 Certificate Principal Balance until the
Class A-5 Certificate Principal Balance is reduced to
zero;
tenth, commencing on the April 2000 Distribution Date, to the
Class A-5 Certificateholders, the amount, if any, of
Excess Cash, up to the Class A-5 Excess Cash Lockout
Distribution, in reduction of the Class A-5 Certificate
Principal Balance;
eleventh, to the Class A-1 Certificateholders, the amount, if any,
of Excess Cash remaining after the Class A-5 Excess Cash
Lockout Distribution has been paid in full in reduction of
the Class A-1 Certificate Principal Balance, up to an
amount equal to the lesser of (1) the amount necessary for
the Coverage Amount to equal the Required Coverage Amount
on such Distribution Date and (2) the amount necessary to
reduce the Class A-1 Certificate Principal Balance to
zero;
twelfth, to the Class A-2 Certificateholders, the amount, if any,
of Excess Cash remaining after the Class A-1 Certificate
Principal Balance has been paid in full in reduction of
the Class A-2 Certificate Principal Balance, up to an
amount equal to the lesser of (1) the amount necessary for
the Coverage Amount to equal the Required Coverage Amount
on such Distribution Date and (2) the amount necessary to
reduce the Class A-2 Certificate Principal Balance to
zero;
</TABLE>
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<TABLE>
<S> <C>
thirteenth, to the Class A-3 Certificateholders, the amount, if any,
of Excess Cash remaining after the Class A-2 Certificate
Principal Balance has been paid in full in reduction of
the Class A-3 Certificate Principal Balance, up to an
amount equal to the lesser of (1) the amount necessary for
the Coverage Amount to equal the Required Coverage Amount
on such Distribution Date and (2) the amount necessary to
reduce the Class A-3 Certificate Principal Balance to
zero;
fourteenth, to the Class A-4 Certificateholders, the amount, if any,
of Excess Cash remaining after the Class A-3 Certificate
Principal Balance has been paid in full in reduction of
the Class A-4 Certificate Principal Balance, up to an
amount equal to the lesser of (1) the amount necessary for
the Coverage Amount to equal the Required Coverage Amount
on such Distribution Date and (2) the amount necessary to
reduce the Class A-4 Certificate Principal Balance to
zero;
fifteenth, to the Class A-5 Certificateholders, the amount, if any,
of Excess Cash remaining after the Class A-4 Certificate
Principal Balance has been paid in full in reduction of
the Class A-5 Certificate Principal Balance, up to an
amount equal to the lesser of (1) the amount necessary for
the Coverage Amount to equal the Required Coverage Amount
on such Distribution Date and (2) the amount necessary to
reduce the Class A-5 Certificate Principal Balance to
zero;
sixteenth, to the Class R Certificateholder, an amount equal to any
Available Funds remaining after making the distributions
referred to in clauses first through fifteenth above,
subject to the right of the Servicer to be reimbursed for
any prior unreimbursed Monthly Advances or Servicing
Advances.
</TABLE>
In addition to the foregoing, on each Distribution Date the Trustee
shall include in the distribution to each Class A Certificateholder for such
Distribution Date, such Certificateholder's Percentage Interest of any
Deficiency Amount received from the Certificate Insurer in respect of such
Distribution Date, first, to cover any shortfalls in Class A-1 Monthly Interest,
Class A-2 Monthly Interest, Class A-3 Monthly Interest, Class A-4 Monthly
Interest and Class A-5 Monthly Interest for such Distribution Date and then to
reduce the Class A-1 Certificate Principal Balance until such Class A-1
Certificate Principal Balance is reduced to zero, second, to reduce the Class
A-2 Certificate Principal Balance until such Class A-2 Certificate Principal
Balance is reduced to zero, third, to reduce the Class A-3 Certificate Principal
Balance until such Class A-3 Certificate Principal Balance is reduced to zero,
fourth, to reduce the Class A-4 Certificate Principal Balance until such Class
A-4 Certificate Principal Balance is reduced to zero and thereafter, to reduce
the Class A-5 Certificate Principal Balance until such Class A-5 Certificate
Principal Balance is reduced to zero.
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
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Class A Certificateholders pursuant to Section 5.01 shall instead be distributed
concurrently to the Class A Certificateholders, pro rata, based on the
outstanding Certificate Principal Balances of each subclass as of such
Distribution Date, until such 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 subclass shall not exceed the Certificate Principal Balance of
such subclass as of the Closing Date.
Amounts to be paid to the Certificate Insurer by the Trustee under this
Agreement will be paid by wire transfer of same day funds.
Section 5.02 Monthly Advances; Servicing Advances.
(a) On or before each Deposit Date, the Servicer will deposit in the
Certificate Account, in same day funds, an amount, if any (a "Monthly Advance"),
equal to the sum of (i) with respect to all Mortgage Loans that are delinquent
as of the close of business on the last day of the related Collection Period,
the aggregate of the interest portions of each Monthly Mortgage Payment due
during the related Collection Period (net of the aggregate of the Monthly
Servicing Fees attributable to such Mortgage Loans), inclusive of those amounts
representing the interest portions of Monthly Mortgage Payments due during the
first Collection Period, plus (ii) with respect to all Mortgage Loans that are
not delinquent Mortgage Loans as of the close of business on the last day of
such Collection Period, an amount equal to the amount of interest that would
accrue on each such Mortgage Loan at the related Mortgage Rate (net of the
aggregate of the Monthly Servicing Fees attributable to such Mortgage Loans) in
a period of 30 days minus the number of days from the first day of such
Collection Period to the related due date for such Mortgage Loan during such
Collection Period, plus (iii) with respect to each Mortgaged Property that was
acquired in foreclosure or similar action (each, an "REO Property") during or
prior to the related Collection Period and as to which a final sale did not
occur during the related Collection Period, an amount equal to the excess, if
any, of interest on the Principal Balance of such REO Property at the related
Mortgage Interest Rate (net of the Monthly Servicing Fee attributable to such
REO Property) over the net income from such REO Property transferred to the
Collection Account or the Certificate Account, as the case may be, for such
Distribution Date; provided, however, that in no case will the Servicer be
required to make advances with respect to any period or portion of any
Collection Period following the final due date with respect to any Mortgage
Loan. All or a portion of any Monthly Advance required to be made on a Deposit
Date may be paid out of amounts on deposit in the Collection Account that are
not required to be deposited on such Deposit Date in the Certificate Account as
any portion of Available Funds for 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 collections on the related Mortgage Loan,
including Liquidation Proceeds, Insurance Proceeds and such other amounts as may
be collected by the Servicer from
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the Mortgagor or otherwise relating to the Mortgage Loan or, as provided in
clause sixteenth of Section 5.01, as applicable, from amounts 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 from time to time; provided, however, that the
Servicer shall be required to replace any such amounts by deposit to the
Collection Account 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 Ser vicing 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 sixteenth of Section 5.01 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, con stitute a
Nonrecoverable Advance.
Section 5.03 Statements to Certificateholders. Concurrently with each
distribution charged to the Certificate Account on a Distribution Date the
Trustee shall forward to the Certifi cate Insurer and each Rating Agency and
shall mail to each Holder of a Certificate, a written statement setting forth
the following information with respect to the applicable subclass of 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 and (ii) any
Excess Cash Distribution;
(b) the amount of such distribution to Class A
Certificateholders allocable to Class A Monthly Interest;
(c) the Certificate Principal Balance of the related subclass
of Class A Certificates, after giving effect to the distribution of
Class A Monthly Principal and any Excess Cash Distribution on such
Distribution Date;
(d) the aggregate Principal Balances of the Mortgage Loans for
the following Distribution Date;
(e) the amount of unreimbursed Monthly Advances and/or
Servicing Advances, if any, separately identifying the amount, if any,
of 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 (including the Principal Balances of all Mortgage Loans in
foreclosure) contractually
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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 foreclosure or other similar proceedings, and the
number and aggregate Principal Balance of Mortgage Loans, 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, the Coverage Deficit, if any, the Rolling
Delinquency Percentage, the Loss Percentage and the Rolling Loss
Percentage and amounts reimbursable to the Certificate Insurer pursuant
to clause first of Section 5.01;
(j) any Insured Payment in respect of the related subclass of
Class A Certificates relating to such Distribution Date;
(k) Available Funds for such Distribution Date;
(l) the number and aggregate Principal Balances of all
Mortgage Loans 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 and
weighted aver age Mortgage Loan Rate of the Mortgage Loans as of the end
of the related Collection Period;
(n) the number of Mortgage Loans as of the beginning and the
end of the re lated Collection Period;
(o) 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;
(p) the Certificate Insurer Premium for the related Collection
Period; and
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(q) such other information as the Certificate Insurer may
reasonably request to the extent such information is available to the
Trustee from the Servicer and is produced by the Servicer in the
ordinary course of the Servicer's business.
In the case of information furnished pursuant to subclauses (a) 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 Donaldson, Lufkin & Jenrette, 277 Park Avenue, 9th Floor,
New York, New York 10172, Attention: Mortgage & Asset Backed Finance, (which
report shall include, in addition to the in formation contained in reports to
others hereunder, the total amount of interest on the Mortgage Loans for the
period covered by such report), and to each Person who at any time during the
calendar year was a Class A Certificateholder, a statement for each
Certificateholder containing the information set forth in subclauses (a) through
(c) above, aggregated for such calendar year or, in the case of each Person who
was a Class A Certificateholder for a portion of such calendar year, setting
forth such information for each month thereof for the portion of the year during
which such Person was a Certificateholder. The Servicer shall provide any other
information necessary in order to report income in respect of the
Certificateholders for federal income tax purposes.
Section 5.04 The Certificate Insurer; Use of Information. The Company
and the Trustee on behalf of Certificateholders and the Trust (the "Trust
Parties") hereby authorize the Certificate Insurer to include the information
contained in reports provided to the Certificate Insurer hereunder (the
"Information") on Bloomberg, or in other electronic or print information
services. The Trust Parties agree not to commence any actions or proceedings, or
otherwise assert any claims, against the Certificate Insurer or its Affiliates
or any of the Certificate Insurer or the Certificate Insurer Parties, arising
out of, or related to or in connection with the dissemination and/or use of any
information by the Certificate Insurer as contemplated in this Section 5.04,
including, but not limited to, claims based on allegations of 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.
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ARTICLE VI
THE CERTIFICATES
Section 6.01 The Certificates.
(a) The Class A-1 Certificates, Class A-2 Certificates, Class A-3
Certificates, Class A-4 Certificates and Class A-5 Certificates and the Class R
Certificate shall be substantially in the forms set forth in Exhibits A-1, A-2,
A-3, A-4 and A-5 and B hereto, respectively, and shall, on original issue, be
executed and delivered by the Trustee on behalf of the Trust, not individually
but solely as Trustee to or upon the order of the Seller concurrently with the
sale and assignment to the Trustee of the Trust.
(b) The Book-Entry Certificates will be evidenced by one or more
certificates, beneficial ownership of which will be held in minimum dollar
denominations of $1,000 and integral multiples of $1 in excess thereof. The
Class R Certificate shall be issuable solely as a single Class R Certificate
evidencing the entire Percentage Interest of the Class R Certificates.
(c) The Certificates shall be executed by manual or facsimile signature
by the Trustee on behalf of the Trust (not in its individual capacity but solely
as Trustee) by an authorized officer of the Trustee. Certificates bearing the
manual or facsimile signatures of individuals who were, at the time when such
signatures were affixed, authorized to sign on behalf of the Trustee shall bind
the Trust, notwithstanding that such individuals or any of them have ceased to
be so authorized prior to the countersigning and delivery of such Certificates
or did not hold such offices at the date of such Certificate. No Certificate
shall be entitled to any benefit under this Agreement, or be valid for any
purpose, unless such Certificate shall have been manually authenticated by the
Trustee substantially in the form provided for herein, and such signature upon
any Certificate shall be conclusive evidence, and the only evidence, that such
Certificate has been duly authenticated and delivered hereunder. All
Certificates shall be dated the date of their authentication. The textual
supplement entitled "Statement of Insurance" supplied to the Sponsor by the
Certificate Insurer shall be attached to each Class A Certificate.
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.
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At the option of the Certificateholders, Certificates may be exchanged
for other Certificates of authorized denominations of the same Class and of a
like aggregate Percentage Interest, upon surrender of the Certificates to be
exchanged at any such office or agency. Whenever any Certificates are so
surrendered for exchange the Trustee shall execute, authenticate and deliver the
Certificates that the Certificateholder making the exchange is entitled to
receive.
Every Certificate presented or surrendered for transfer or exchange
shall (if so required by the Company or the Trustee) be duly endorsed by, or be
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by the Holder thereof or his attorney duly authorized in
writing.
No service charge shall be made to a Certificateholder for any transfer
or exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of certificates.
All Certificates surrendered for transfer or exchange shall be canceled
by the Trustee in accordance with its standard procedures.
(b) No transfer of a Class R Certificate shall be made unless, as
evidenced by an Opinion of Counsel and Transfer Affidavit delivered to the
Trustee, each in form and substance satisfactory to the Trustee, such transfer
is not subject to registration under the Securities Act or any applicable state
securities laws. Any such Opinion of Counsel and Transfer Affidavit shall not be
obtained at the expense of the Trustee, the Trust, the Seller or the Servicer.
The Holder of a Class R Certificate desiring to effect such transfer shall, and
does hereby agree to, indemnify the Trustee, the Certificate Insurer, the Seller
and the Servicer against any liability that may result if the transfer is not so
exempt or is not made in accordance with the Securities Act and such state laws.
Neither the Seller, the Servicer nor the Trustee or the Trust is under an
obligation to register the Class R Certificates under the Securities Act or any
state securities law.
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
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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 Transferor Affidavit
substantially in the form attached as Exhibit K hereto, signed by the
transferee, to the effect that the transferee is not a Disqualified Organization
and is not a nominee for a beneficial owner of the Class R Certificate from
which the transferee has not received a substantially similar affidavit, a
Book-Entry Nominee, a Non-permitted Foreign Holder or an ERISA Prohibited
Holder. Such Transferor Affidavit shall contain (i) the consent of the
transferee to any such amendments of this Agreement as may be required to
further effectuate the foregoing restrictions on transfer of the Class R
Certificates to Disqualified Organizations, Book-Entry Nominees, Non-permitted
Foreign Holders or ERISA Prohibited Holders and (ii) a representation from the
transferee that such transferee does not have the intent or purpose to impede
the assessment or collection of any federal, state or local income taxes legally
required to be paid with respect to the Class R Certificates. Such Transferor
Affidavit, if not executed in connection with the initial issuance of the Class
R Certificates, also shall be accompanied by a Transferor Affidavit,
substantially in the form attached hereto as Exhibit K, signed by the transferor
to the effect that as of the time of the transfer, the transferor has no actual
knowledge that such affidavit is false and that the transferor does not have the
intent or purpose to impede the assessment or collection of any federal, state
or local income taxes legally required to be paid with respect to the Class R
Certificate.
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."
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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.
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
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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 and shall notify the Certificate Insurer
of such event. Neither the Company nor the Trustee shall be liable for any delay
in delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Certificates all references herein to obligations imposed upon or to be
performed by the Depository shall be deemed applicable with respect to such
Definitive Certificates and the Certificates as Certificateholders hereunder.
(f) On or prior to the Closing Date, there shall be delivered to the
Depository one certificate for each Class of Book-Entry Certificates registered
in the name of the Depository's nominee, Cede & Co. The face amount of each such
Certificate shall be equal to the Principal Balance thereof. Each Certificate
issued in book-entry form shall bear the following legend:
"Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to Issuer or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein."
Section 6.03 Mutilated, Destroyed, Lost or Stolen Certificates. If (a)
any mutilated Certificate is surrendered to the Trustee or the Trustee receives
evidence to its satisfaction of the destruction, loss or theft of any
Certificate, and (b) there is delivered to the Trustee, the Servicer, the Seller
and the Certificate Insurer such security or indemnity as may be required by
them to save each of them harmless, then, in the absence of notice to the
Trustee that such Certificate has been acquired by a bona fide purchaser, the
Trustee shall execute, authenticate and deliver, in exchange for or in lieu of
any such mutilated, destroyed, lost or stolen Certificate, a new Certificate of
like Class and Percentage Interest. Upon the issuance of any new Certificate
under this Section, the Trustee may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Trustee)
connected therewith. Any duplicate Certificate issued pursuant to this Section
shall constitute complete and indefeasible evidence of ownership of the Trust,
as if originally issued, whether or not the lost, stolen or destroyed
Certificate shall be found at any time.
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Section 6.04 Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, the Servicer, the Seller, the Trustee,
the Certificate Insurer and any of their respective agents may treat the Person
in whose name any Certificate is registered as the owner of such Certificate for
the purpose of receiving distributions pursuant to Section 5.01 and for all
other purposes whatsoever, and neither the Servicer, the Seller, the Trustee,
the Certificate Insurer nor any of their respective agents shall be affected by
notice to the contrary.
Section 6.05 Actions of Certificateholders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by
Certificateholders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Certificateholders in person or by
agent duly appointed in writing; and except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered to the Trustee and the Certificate Insurer and, when required, to
the Seller or the Servicer. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any purpose of this
Agreement and conclusive in favor of the Trustee, the Seller, the Servicer and
the Certificate Insurer, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Certificateholder of any
such instrument or writing may be proved in any reasonable manner that the
Trustee deems sufficient.
(c) Any request, demand, authorization, direction, notice, consent,
waiver or other act by a Certificateholder shall bind every Holder of every
Certificate issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof, in respect of anything done, or omitted to be done,
by the Trustee, the Seller or the Servicer in reliance thereon, whether or not
notation of such action is made upon such Certificate.
ARTICLE VII
THE SERVICER AND THE SELLER
Section 7.01 Liability of the Servicer. The Servicer shall be liable in
accordance herewith only to the extent of the obligations specifically imposed
upon and undertaken by the Servicer herein.
Section 7.02 Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer. Any corporation or other entity (i) into which the
Servicer may be merged or consolidated, (ii) that may result from any merger,
conversion or consolidation to which the Servicer shall be a party, or (iii)
that may succeed to all or substantially all of the business of the Servicer,
which corporation or other entity shall, in any case where an assumption shall
not be effected by operation of law, execute an agreement of assumption to
perform every obligation of the Servicer under this Agreement, shall be the
successor to the Servicer under this Agreement without the execution or filing
of any document or any further act by any of the parties to this Agreement;
except that if the Servicer is not the surviving entity, then the surviving
entity shall
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execute and deliver to the Trustee an agreement of assumption to perform every
obligation of the Servicer hereunder.
Section 7.03 Limitation on Liability of the Servicer and Others. Neither
the Servicer nor any of its directors, officers, employees or agents shall be
under any liability to the Trustee, the Trust or the Certificateholders for any
action taken or for refraining from the taking of any action by the Servicer
pursuant to this Agreement, or for errors in judgment; provided, however, that
this provision shall not protect the Servicer or any such person against any
liability that would otherwise be imposed by reason of willful misfeasance, bad
faith or negligence in the performance of the duties of the Servicer or by
reason of reckless disregard of the obligations and duties of the Servicer
hereunder. The Servicer and any director, officer, employee or agent of the
Servicer may rely in good faith on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising hereunder.
The Servicer shall not be under any obligation to appear in, prosecute or defend
any legal action that is not incidental to its duties to service the Mortgage
Loans in accordance with this Agreement, and that in its opinion may involve it
in any expense or liability.
Section 7.04 Servicer Not to Resign. Subject to the provisions of
Section 7.02 regarding the merger or consolidation of the Servicer into or with
another entity, the Servicer shall not resign from the obligations and duties
hereby imposed on it except upon determination that the performance of its
duties or obligations hereunder is no longer permissible under applicable law or
regulation or are in material conflict by reason of applicable law or regulation
with any other activities carried on by it at the date of this Agreement. Any
such determination permitting the resignation of the Servicer pursuant to this
Section shall be evidenced by an Opinion of Counsel to such effect delivered to
the Trustee and the Certificate Insurer. No resignation pursuant to this Section
7.04 (a) shall become effective until the Trustee or a successor servicer shall
have assumed the responsibilities and obligations of the Servicer in accordance
with Section 8.02 or (b) shall relieve the Servicer of responsibility for any
obligations pursuant to this Agreement that specifically survive the resignation
or termination of the Servicer. Each of the Rating Agencies shall be given
written notice of a resignation of the Servicer pursuant to this Section.
Section 7.05 Merger or Consolidation of the Seller. Any corporation or
other entity (i) into which the Seller may be merged or consolidated, (ii) that
may result from any merger, conversion or consolidation to which the Seller
shall be a party, or (iii) that may succeed to all or substantially all of the
business of the Seller, which corporation or other entity shall, in any case
where an assumption shall not be effected by operation of law, execute an
agreement of assumption to perform every obligation of the Seller under this
Agreement, shall be the successor to the Seller hereunder without the execution
or filing of any document or any further act by any of the parties to this
Agreement, except that if the Seller in any of the foregoing cases is not the
surviving entity, then the surviving entity shall execute and deliver to the
Trustee an agreement of assumption to perform every obligation of the Seller
hereunder.
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ARTICLE VIII
DEFAULT
Section 8.01 Events of Default. If any one of the following events
(each an "Event of Default") shall occur and be continuing:
(a) Any failure by the Servicer to (i) make a Monthly Advance
on any Deposit Date or (ii) deposit in the Collection Account or the
Certificate Account any other amount required to be deposited therein
under this Agreement or failure to pay the Trustee Fee, which failure,
in the case of only clause (ii) hereof, continues unremedied for a
period of one Business Day after the date upon which written notice of
such failure shall have been given to the Servicer by the Trustee or the
Certificate Insurer or to the Servicer, the Certificate Insurer and the
Trustee by Holders of Certificates evidencing Voting Interests
represented by all Certificates aggregating not less than 51%;
(b) Failure on the part of the Servicer duly to observe or
perform in any material respect any other covenants or agreements of the
Servicer set forth in the Certificates or in this Agreement, which
failure (i) materially and adversely affects the Certificateholders or
the Certificate Insurer and (ii) continues unremedied for a period of 30
days after the date on which written notice of such failure (which
notice shall refer specifically to this Section), requiring the same to
be remedied, shall have been given to the Servicer by the Trustee or the
Certificate Insurer, or to the Servicer, the Certificate Insurer and the
Trustee by the Holders of Certificates evidencing Voting Interests
represented by all Certificates aggregating not less than 51%;
(c) The entry against the Servicer of a decree or order by a
court or agency or supervisory authority having jurisdiction in the
premises for the appointment of a trustee, conservator, receiver or
liquidator in any insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings, or for the winding up or
liquidation of its affairs, and the continuance of any such decree or
order unstayed and in effect for a period of 60 consecutive days;
(d) The consent by the Servicer to the appointment of a
trustee, conservator or receiver or liquidator in any bankruptcy,
insolvency, readjustment of debt, marshalling of assets and liabilities
or similar proceedings of or relating to the Servicer or of or relating
to substantially all of its property; or the Servicer shall admit in
writing its inability to pay its debts generally as they become due,
file a petition to take advantage of any applicable bankruptcy,
insolvency or reorganization statute, make an assignment for the benefit
of its creditors, or voluntarily suspend payment of its obligations;
(e) The payment by the Certificate Insurer of any Insured
Payment;
(f) For so long as the Company is the Servicer, failure on the
part of the Seller duly to observe or perform in any material respect
any covenants or agreements of the Seller set forth in the Certificates
or in this Agreement, which failure (i) materially and
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adversely affects the Certificateholders or the Certificate Insurer and
(ii) continues unremedied for a period of 30 days after the date on
which written notice of such failure (which notice shall refer
specifically to this Section), requiring the same to be remedied, shall
have been given to the Servicer by the Trustee or the Certificate
Insurer, or to the Servicer, the Certificate Insurer and the Trustee by
the Holders of Certificates evidencing Voting Interests represented by
all Certificates aggregating not less than 51%;
(g) The occurrence of a material default of the Servicer under
this Agreement or of an "Event of Default" specified in the Insurance
Agreement or the occurrence of a Delinquency Rate Event, a Cumulative
Loss Rate Event or a Rolling Loss Rate Event;
(h) The occurrence of any merger or consolidation of the
Servicer described in Section 7.02 following which the Servicer does not
(or if the Servicer continues to be a subsidiary or affiliate of Aames
Financial Corporation, Aames Financial Corporation and its subsidiaries
and affiliates on a consolidated reporting basis do not) have a net
worth of at least $10,000,000 determined in accordance with generally
accepted accounting principles, unless the Certificate Insurer consents
in writing thereto.
then, and in each and every such case, so long as such Event of Default shall
not have been remedied by the Servicer, either (1) the Certificate Insurer or
(2) with the prior written consent of the Certificate Insurer, either the
Trustee or the Holders of Certificates evidencing Voting Interests represented
by all Certificates aggregating not less than 51%, by notice then given in
writing to the Servicer with a copy to the Certificate Insurer 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.
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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, unless
the Certificate Insurer previously shall have appointed a successor servicer,
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 (or the Certificate Insurer may, without regard to the
willingness or inability of the Trustee to so act, appoint as an alternative
successor servicer in place of the Trustee) 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 subclass of Class A Certificates by any Rating
Agency. Pending appointment of a successor to the Servicer hereunder, unless the
Trustee is prohibited by law from so acting, the Trustee shall act in such
capacity as hereinabove provided. In connection with such appointment and
assumption, the Trustee may make such arrangements for the compensation of such
successor out of payments on Mortgage Loans as it and such successor shall
agree; provided, however, that no such compensation shall be in excess of that
permitted the Servicer hereunder. The Trustee and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession. The appointment of a successor Servicer shall not affect any
liability of the predecessor Servicer that may have arisen under this Agreement
prior to its termination as Servicer (including without limitation, any amount
for a deductible amount pursuant to the last sentence of Section 3.04), nor
shall any successor Servicer be liable for any acts or omissions of the
predecessor Servicer or for any breach by such Servicer or the Seller of any of
its representations or warranties contained herein or in any related document or
agreement. Each of the Rating Agencies shall be given written notice of the
appointment of a successor Servicer pursuant to this Section.
Section 8.03 Notifications to Certificateholders. Upon any termination
or appointment of a successor to the Servicer pursuant to this Article Eight,
the Trustee shall give prompt written notice thereof to Certificateholders at
their respective addresses appearing in the Certificate Register, the
Certificate Insurer and to each Rating Agency.
Within 60 days of obtaining actual knowledge of the occurrence of any
Event of Default that remains uncured, the Trustee shall transmit by mail to all
Certificateholders notice of such Event of Default.
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Section 8.04 Assumption or Termination of Sub-Servicing Agreements by
the Trustee or any Successor Servicer. Upon the termination of the Servicer as
servicer under this Agreement, the Trustee as successor to the Servicer
hereunder or any other successor to the Servicer hereunder may, subject to the
terms of any Sub-Servicing Agreement, in its sole and absolute discretion elect
to assume or terminate any Sub-Servicing Agreement then in force and effect
between the Servicer and the Sub-Servicer. Notwithstanding the foregoing, any
termination fee due to a Sub-Servicer because of its termination by the Trustee
hereunder shall be the responsibility of the terminated Servicer and not the
Trustee. Upon the assumption of any Sub-Servicing Agreement, the Servicer agrees
to deliver to the assuming party any and all documents and records relating to
the applicable Sub-Servicing Agreement and an accounting of amounts collected
and held by it and otherwise use its best reasonable efforts to effectuate the
orderly transfer of the Sub-Servicing Agreement.
ARTICLE IX
THE TRUSTEE
Section 9.01 Duties of the Trustee. The Trustee, prior to the occurrence
of an Event of Default and after the curing of all Events of Default that may
have occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement. If an Event of Default of which a
Responsible Officer of the Trustee shall have actual knowledge shall have
occurred (which has not been cured) and subject to the provisions of Section
9.13, the Trustee shall exercise such of the rights and powers vested in it by
this Agreement, and use the same degree of care and skill in their exercise, as
a prudent man would exercise or use under the circumstances in the conduct of
his own affairs.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee that are specifically required to be furnished pursuant to any provision
of this Agreement, shall examine them to determine whether they substantially
conform to the requirements of this Agreement. If any such document or
instrument is found not to conform to the requirements of this Agreement in a
material manner, the Trustee shall, subject to the provisions of Section 9.13,
take such action as it deems appropriate to have the document or instrument
corrected, and if it is not corrected to the Trustee's reasonable satisfaction,
the Trustee will provide notice thereof to the Certificateholders and the
Certificate Insurer.
No provision of this Agreement shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own misconduct; provided, however, that:
(a) prior to the occurrence of an Event of Default, and after the
curing of all such Events of Default that may have occurred, the duties
and obligations of the Trustee shall be determined solely by the express
provisions of this Agreement, the Trustee shall not be liable except for
the performance of such duties and obligations as are specifically set
forth in this Agreement, no implied covenants or obligations shall be
read into this Agreement against the Trustee and, in the absence of bad
faith on the part of the Trustee,
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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
indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of, any
of the obligations of the Servicer under this Agreement, except during such
time, if any, as the Trustee shall be the successor to, and be vested with the
rights, duties, powers and privileges of, the Servicer in accordance with the
terms of this Agreement.
Section 9.02 Certain Matters Affecting the Trustee. Except as
otherwise provided in Section 9.01:
(a) The Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officer's Certificate,
certificate of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal, bond or
other paper or document reasonably believed by it to be genuine and to
have been signed or presented by the proper party or parties;
(b) The Trustee may consult with counsel selected by it with due
care and any advice obtained from such counsel or Opinion of Counsel
shall be full and complete
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authorization and protection in respect of any action taken or suffered
or omitted by it hereunder in good faith and in accordance with such
advice or Opinion of Counsel;
(c) The Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement, or to institute,
conduct or defend any litigation hereunder or in relation hereto, at the
request, order or direction of the Certificate Insurer or any of the
Certificateholders, pursuant to the provisions of this Agreement, unless
the Person so requesting, ordering or directing same shall have offered
to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities that may be incurred therein or thereby; the
right of the Trustee to perform any discretionary act enumerated in this
Agreement shall not be construed as a duty, and the Trustee shall not be
answerable for other than its negligence or willful misconduct in the
performance of any such act; nothing contained herein shall, however,
relieve the Trustee of the obligations, upon the occurrence of an Event
of Default known to a Responsible Officer of the Trustee (which has not
been cured), to exercise such of the rights and powers vested in it by
this Agreement, subject to the provisions of Section 9.13, and to use
the same degree of care and skill in their exercise as a prudent man
would exercise or use under the circumstances in the conduct of his own
affairs;
(d) The Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith in accordance with the
direction of the Certificate Insurer or of Holders of Certificates
evidencing Voting Interests representing all Certificates aggregating
not less than 51%, with the consent of the Certificate Insurer;
(e) Prior to the occurrence of an Event of Default and after the
curing of all Events of Default that may have occurred, the Trustee
shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, approval, bond or other paper
or documents, unless requested in writing to do so by the Certificate
Insurer or by Holders of Certificates evidencing Voting Interests
represented by all Certificates aggregating not less than 51%, with the
consent of the Certificate Insurer; provided, however, that if the
payment within a reasonable time to the Trustee of the costs, expenses
or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably assured
to the Trustee by the security afforded to it by the terms of this
Agreement, the Trustee may require reasonable indemnity against such
cost, expense or liability as a condition to such proceeding; the
reasonable expense of every such examination shall be paid by the
Servicer or, if paid by the Trustee, shall be reimbursed by the Servicer
upon demand; and nothing in this clause (e) shall derogate from the
obligation of the Servicer to observe any applicable law prohibiting
disclosure of information regarding the Mortgagors; and
(f) The Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents
or attorneys or a custodian. Any appointment of a Custodian hereunder
shall require the prior written consent of the Certificate Insurer. The
Trustee shall not be liable or responsible for the misconduct of
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the custodian of the Mortgage Files appointed with due care by the
Trustee hereunder with the prior written consent of the Certificate
Insurer.
Section 9.03 Trustee Not Liable for Certificates or Mortgage Loans. The
recitals contained herein and in the Certificates (other than the signature and
authentication of the Trustee on the Certificates) shall be taken as the
statements of the Servicer, and the Trustee assumes no responsibility for the
correctness of the same. The Trustee makes no representations as to the validity
or sufficiency of this Agreement or of the Certificates (other than the
signature and authentication of the Trustee on the Certificates and the
signature of the Trustee on this Agreement) or of any Mortgage, Mortgage Loan or
related document. The Trustee shall not be accountable for the use or
application by the Servicer of any of the Certificates or of the proceeds of
such Certificates, or for the use or application of any funds paid to the
Servicer in respect of the Mortgage Loans or deposited in or withdrawn from the
Collection Account by the Servicer.
Section 9.04 Trustee May Own Certificates. The Trustee in its individual
or any other capacity may become the owner or pledgee of Certificates with the
same rights as it would have if it were not Trustee.
Section 9.05 Payment of the Trustee's Fees and Expenses.
(a) On or before each Distribution Date occurring in April, beginning
with the April 1997 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 April 1997 Distribution
Date, all loan file review fees, as compensation for all services rendered by
the Trustee (and any such co-trustee or separate trustee) in the execution of
the trusts hereby created and in the exercise and performance of any of the
powers and duties hereunder of the Trustee (and any such co-trustee or separate
trustee). The Trustee Fee and such expenses and loan file review fees (including
any fees and expenses of a co-trustee or separate trustee appointed under
Section 9.10) are an obligation solely of the Servicer and neither the Trustee
nor any co-trustee or separate trustee appointed hereunder has or will have any
lien on the Trust for payment of any such fees or expenses. It is anticipated
that the Servicer will, and the Servicer hereby (and any successor to the
Servicer, by accepting its appointment as such, thereby) agrees to utilize a
portion of the Monthly Servicing Fee for payment of such fees and expenses. The
Trustee hereby agrees to perform its obligations hereunder on the basis that
such fees are payable only by the Servicer.
(b) The Trust shall pay or reimburse the Trustee upon its request for
all reasonable expenses, disbursements and advances incurred or made by the
Trustee in accordance with any of the provisions of this Agreement (including
the reasonable compensation and the expenses and disbursements of its counsel
and of all persons not regularly in its employ) except any such expense,
disbursement or advance as may arise from its negligence or bad faith or that is
otherwise reimbursable to the Trustee by the Servicer pursuant to Section
9.05(a) above; provided, however, that the Trustee shall not refuse to perform
any of its duties hereunder solely as a result of the failure of the Trust to
pay or reimburse such expenses, disbursements or
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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 sixteenth of Section 5.01 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, copies of which shall be delivered to the
resigning Trustee, the successor trustee, the Servicer and the Certificate
Insurer. If no successor trustee shall have been so appointed and having
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
If at any time the Trustee shall cease to be eligible in accordance with
the provisions of Section 9.06 and shall fail to resign after written request
therefor by the Servicer or the Certificate Insurer, or if at any time the
Trustee shall be legally unable to act, or shall be adjudged a bankrupt or
insolvent, or a receiver of the Trustee or of its property shall be appointed,
or any public officer shall take charge or control of the Trustee or of its
property or
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affairs for the purpose of rehabilitation, conservation or liquidation, or the
Trustee shall fail to perform its obligations under this Agreement, then the
Servicer or the Certificate Insurer shall remove the Trustee and appoint a
successor trustee satisfying the criteria set forth in Section 9.06 (approved by
the Certificate Insurer, which approval shall not be unreasonably withheld) by
written instrument, in triplicate, one copy of which instrument shall be
delivered to the Trustee so removed, one copy to the successor trustee and one
copy to the Certificate Insurer.
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 10 days after acceptance of
appointment by the successor trustee, the successor trustee shall cause such
notice to be mailed at the expense of the Servicer.
Section 9.09 Merger or Consolidation of the Trustee. Any corporation
into which the Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation
succeeding to the business of the Trustee or substantially all of the Trustee's
trust business, shall be the successor of the Trustee hereunder, provided such
corporation shall be eligible under the provisions of Section 9.06, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding.
Section 9.10 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust or any Mortgaged Property may at the time be located, the Servicer
and the Trustee acting jointly, with the prior written consent of
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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 that has not
been cured, the Trustee, acting alone may accept the resignation of or
remove any separate or co-trustor.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee or separately, as
may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the
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Trustee. Every such instrument shall be filed with the Trustee and copies
thereof given to each of the Servicer and the Certificate Insurer.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
No appointment of any separate trustee or co-trustee shall absolve the
Trustee of its duties and obligations under this Agreement.
Section 9.11 Compliance with REMIC Provisions. The Trustee shall at all
times act in such a manner in the performance of its duties hereunder as shall
be necessary to prevent the REMIC Pool from failing to qualify as a REMIC and to
prevent the imposition of a tax on the REMIC Pool. The Trustee shall: (a)
prepare and file, or cause to be prepared and filed, such federal, state and
local income tax and information returns or reports using the calendar year as
the taxable year for the REMIC Pool when and as required by the REMIC Provisions
and other applicable federal, state and local income tax laws, which returns or
reports shall be signed by the Trustee or such other person as may be required
thereby; (b) make an election, on behalf of the REMIC Pool, to be treated as a
REMIC and make the appropriate designations, if applicable, in accordance with
Section 2.07 on the federal income tax return of the REMIC Pool for its first
taxable year, in accordance with the REMIC Provisions; (c) prepare and forward,
or cause to be prepared and forwarded, to the Certificateholders all information
reports, or furnish or cause to be furnished by telephone, mail, publication or
other appropriate method such information, as and when required to be provided
to them in accordance with the Code; (d) exercise reasonable care not to allow
the creation of any "interests" in the REMIC Pool within the meaning of Code
Section 860D(a)(2) other than the interests represented by the Certificates; and
(e) within 30 days of the Startup Day, furnish or cause to be furnished to the
Internal Revenue Service, on Form 8811 or as may otherwise be required by the
Code, the name, title, address, and telephone number of the person that
Certificateholders may contact for tax information relating to their
Certificates (and the Trustee shall act as the representative of the REMIC Pool
for this purpose), together with such additional information as may be required
by such Form, and shall update such information at the time and in the manner
required by the Code. The Class R Certificateholder shall designate the
Servicer, if permitted by the Code and applicable law, to act as "tax matters
person" for the REMIC Pool within the meaning of Treasury regulations Section
1.860F-4(d), and the Servicer is hereby designated as agent of the Class R
Certificateholder for such purpose (or if the Servicer is not so permitted, the
Holder of the Class R Certificate shall be the tax matters person in accordance
with the REMIC Provisions).
Section 9.12 Trustee May Enforce Claims Without Possession of
Certificates. All rights of action and claims under this Agreement or the
Certificates (including in respect of the Certificate Insurer's rights of
subrogation) may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceedings
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relating thereto, and any such proceeding instituted by the Trustee shall be
brought in its own name or in its capacity as Trustee. Any recovery of judgment
shall, after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Certificateholders (or the Certificate Insurer in respect
of any right or interest as to which the Certificate Insurer is subrogated) in
respect of which such judgment has been recovered in accordance with the terms
of this Agreement.
Section 9.13 Exercise of Trustee Powers by Certificate Insurer and
Certificateholders. The Certificate Insurer, or the Holders of Certificates
evidencing Voting Interests represented by all Certificates aggregating not less
than 51% with the consent of the Certificate Insurer, which consent may not be
unreasonably withheld, may direct the time, method and place of conducting any
proceeding relating to the Trust or the Certificates or for any remedy available
to the Trustee with respect to the Certificates or exercising any trust or power
conferred on the Trustee with respect to the Certificates of the Trust provided
that:
(i) such direction shall not be in conflict with any rule of law
or with this Agreement;
(ii) the Trustee shall have been provided with indemnity
satisfactory to it; and
(iii) the Trustee may take any other action deemed proper by the
Trustee that is not inconsistent with such direction; provided, however,
that the Trustee need not take any action that it reasonably determines
might involve it in liability unless it has been satisfactorily
indemnified and, with respect to actions directed by Certificateholders
and not the Certificate Insurer, may be unjustly prejudicial to the
Holders not so directing.
Section 9.14 Tax Returns. The Trustee shall maintain all information
in its possession as may be required in connection with the preparation of all
federal and, if applicable, state and local income tax and information returns
of the REMIC Pool (including, but not limited to, tax reporting under the REMIC
Provisions for the REMIC Pool, exclusive of the Prefunding Account and the
Capitalized Interest Account), and pursuant to Section 24874 of the California
Revenue and Taxation Code and its successors, and shall prepare, execute and
file as required all such returns. The Trustee shall include in the first
federal income tax return the information required to be included therein under
the REMIC Provisions, including, but not limited to, Treas. Reg. Section
.1.860D-1(d)(2) and Treas. Reg. Section.1.860F-4(b)(2). The Servicer shall
report all required tax information to Mortgagors in accordance with applicable
law.
The Prepayment Assumption (as such term is defined in the Prospectus,
dated as of March 18, 1997) for the Class A Certificates shall be 100% of the
"Standard Prepayment Assumption", as described in the Prospectus Supplement
dated March 18, 1997 relating to the Class A Certificates.
Section 9.15 Taxpayer Identification Number. The Trustee shall prepare
and file with the Internal Revenue Service, on behalf of the REMIC Pool within
the time period prescribed
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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 X
TERMINATION
Section 10.01 Termination Upon Purchase or Liquidation of All Mortgage
Loans. Subject to Section 10.02, the respective obligations and responsibilities
hereunder of the Servicer, the Seller and the Trustee (other than the obligation
of the Trustee to make certain payments to Certificateholders after the final
Distribution Date and the obligation of the Seller to send certain notices as
hereinafter set forth) and the Trust created hereby shall terminate 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, and the payment to the Certificate Insurer of the
Certificate Insurer Repurchase Proceeds, 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 exercisable only on or after the Clean-up Call
Date. If such right is exercised, (i) 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, (ii)
the Servicer will pay to the Certificate Insurer the Certificate Insurer
Repurchase Proceeds and (iii) 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 Prefunding 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 first paragraph
of this Section 10.01 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 15th day of the month preceding the month of such final
distribution) by letter to Certificateholders mailed not earlier than the first
day and not later than the 10th day of the month of such final distribution
specifying (a) the Distribution Date upon which final distribution of the
Certificates will be made upon presentation and surrender of Certificates at the
office or agency of the Trustee therein designated, (b) the amount of any such
final distribution and (c) that the Record Date otherwise applicable to such
Distribution Date is not applicable, distributions being made only upon
presentation and surrender of the Certificates at the office or agency of the
Trustee therein specified. In the event written directions are delivered by the
Servicer or the Certificate Insurer, as applicable, to the Trustee as described
in the preceding sentence, the Servicer or the Certificate Insurer, as
applicable, shall deposit in the Certificate Account on or before the related
Deposit Date for such final distribution in immediately available funds an
amount equal to the purchase price for the assets of the Trust computed as above
provided. In the case of a purchase by the Servicer, such deposit shall be in
lieu of the deposit otherwise required to be made in respect of such
Distribution Date pursuant to Section 3.02 and the related distribution thereof
to Certificateholders.
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If the termination of the Trust is in connection with a purchase of the
assets of the Trust by the Servicer pursuant to clause (a) of the first
paragraph in this Section, or by the Certificate Insurer pursuant to the third
paragraph of this Section, the Trustee shall cause to be distributed to
Certificateholders on the final Distribution Date, an amount equal to (i) as to
the Class A Certificates, and upon presentation and surrender thereof, to the
Holders thereof in proportion to their respective Percentage Interests the Class
A Certificate Principal Balance, and the Class A Monthly Interest and (ii) as to
the Servicer, any additional servicing compensation with respect to such
Distribution Date (other than amounts retained to meet claims) after application
pursuant to the clauses (i) and (ii) above and payment to the Servicer of any
amounts to which it is entitled as reimbursement hereunder and (iii) 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 clauses (i) and (ii); 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-1 Certificates, Class A-2 Certificates, Class A-3
Certificates, Class A-4 Certificates and Class A-5 Certificates, pro rata based
on the Certificate Principal Balances thereof on such Distribution Date. The
distribution on the final Distribution Date in connection with the purchase by
the Servicer of the assets in the Trust shall be in lieu of the distribution
otherwise required to be made on such Distribution Date in respect of each Class
of Certificates. The Servicer shall provide in writing to the Trustee and the
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 and the Certificate Insurer
shall receive an Opinion of Counsel to the effect that the termination of the
REMIC Pool (i) will constitute a "qualified liquidation" of the REMIC Pool
within the
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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 XI
MISCELLANEOUS PROVISIONS
Section 11.01 Amendment. This Agreement may be amended from time to time
by the Servicer, the Seller and the Trustee, without the consent of any of the
Certificateholders but with the prior written consent of the Certificate Insurer
(which consent shall not be unreasonably withheld), (a) to cure any error or any
ambiguity or to correct or supplement any provisions herein which may be
inconsistent with any other provisions herein; (b) to add to the duties or
obligations of the Servicer hereunder; (c) to maintain or improve any rating
then assigned by any Rating Agency to any subclass of the 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
delivered to the Trustee and the Certificate Insurer to the effect that such
action is necessary or desirable to maintain such qualification or to avoid or
minimize the risk of the imposition of any such tax; 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 (a
copy of which has been delivered to the Certificate Insurer) to the effect that
any such modifications to this Agreement do not give rise to a risk that 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 (a copy of
which has been delivered to the Certificate Insurer), adversely affect in any
material respect the interests of any Certificateholder or the Certificate
Insurer.
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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 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 that affects the Trustee's own rights, duties or
immunities under this Agreement.
Section 11.02 Recordation of Agreement. This Agreement is subject to
recordation in all appropriate public offices for real property records in all
the counties or other comparable jurisdictions in which any or all of the
Mortgaged Properties are situated, and in any other appropriate public recording
office or elsewhere, such recordation to be effected by the Servicer, at its
expense but only upon, determination of the Servicer accompanied by an Opinion
of Counsel (a copy of which has been delivered to the Certificate Insurer) to
the effect that such recordation is legally required to protect the Trustee's
interest in the Mortgage Loans.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
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
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heirs to claim an accounting or to take any action or commence any proceeding in
any court for a partition or winding up of the Trust or the REMIC established
pursuant to Section 3.01, nor otherwise affect the rights, obligations and
liabilities of the parties hereto or any of them.
Except as otherwise expressly provided herein, no Certificateholder,
solely by virtue of its status as a Certificateholder, shall have any right to
vote or in any manner otherwise control the operation and management of the
Trust or the REMIC established pursuant to Section 3.01, or the obligations of
the parties hereto, nor shall anything herein set forth, or contained in the
terms of the Certificates, be construed so as to constitute the
Certificateholders from time to time as partners or members of an association;
nor shall any Certificateholder be under any liability to any third person by
reason of any action taken by the parties to this Agreement pursuant to any
provision hereof.
No Certificateholder, solely by virtue of its status as a
Certificateholder, shall have any right by virtue or by availing itself of any
provisions of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee a written notice of default
and of the continuance thereof, as hereinbefore provided, and unless also the
Holders of Certificates evidencing Voting Interests 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, the Trustee, and the Certificate Insurer that no one or more
Holders of Certificates shall have any right in any manner whatever by virtue or
by availing itself or themselves of any provision of this Agreement to affect,
disturb or prejudice the rights of the Holders of any other Certificates, or to
obtain or seek to obtain priority over or preference to any other such Holder,
or to enforce any right under this Agreement, except in the manner herein
provided and for the equal, ratable and common benefit of all
Certificateholders. For the protection and enforcement of the provisions of this
Section, each and every Certificateholder, the Certificate Insurer and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
Section 11.04 Governing Law. This Agreement shall be construed in
accordance with the laws of the State of California (without regard to conflict
of laws principles and the application of the laws of any other jurisdiction),
and the obligations, rights and remedies of the parties hereunder shall be
determined in accordance with such laws.
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,
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Series 1997-A; (c) in the case of the Certificate Insurer, MBIA Insurance Corp.,
113 King Street, Armonk, New York 10504, Attention: Insured Portfolio Management
- - Structured Finance - IPM-SF; (d) in the case of S&P, to Standard & Poor's, 26
Broadway, 15th Floor, New York, New York 10004, Attention: Mortgage Surveillance
Group; and (e) in the case of Moody's, to Moody's Investors Service Inc., 99
Church Street, New York, New York 10007, Attention: Residential Mortgage
Pass-Through Monitoring and (f) in the case of Fitch, to Fitch Investors Service
LP, One State Street Plaza, New York, New York 10004, Attention: MBS 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; provided, further, that even if a
Certificate Insurer Default is continuing this Agreement may not be amended
except upon delivery to the Certificate Insurer of an Opinion of Counsel
acceptable to the Certificate Insurer to the effect that such amendment shall
not adversely affect in any material
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respect the interests of the Certificate Insurer. Without limiting the
generality of the foregoing, all covenants and agreements in this Agreement that
expressly confer rights upon the Certificate Insurer shall be for the benefit of
and run directly to the Certificate Insurer, and the Certificate Insurer shall
be entitled to rely on and enforce such covenants to the same extent as if it
were a party to this Agreement.
(b) In the event the rating of the claims paying ability of the
Certificate Insurer by any of the Rating Agencies is reduced to a rating that is
below "investment grade" (as that term is then commonly used), the Servicer
shall, at its own expense, seek to obtain ratings of each Class of Class A
Certificates (apart from the rating related to the Certificate Insurance Policy)
from such Rating Agency.
Section 11.10 Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
[Signatures follow.]
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<PAGE> 108
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
(Notarized)
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.,
as Trustee and not in its
individual capacity
By: /s/ Mary Bellissimo
-------------------------------------
Name: Mary Bellissimo
Title: Assistant Secretary
(Notarized)
<PAGE> 109
Schedule I
----------
List of Sub-Servicers
Advanta Mortgage Corp. USA
Schedule I
<PAGE> 110
Schedule II
-----------
Representations and Warranties of the Seller
Regarding Subsequent Mortgage Loans
A. The Seller represents and warrants to the Trustee, the Certificate
Insurer and the Certificateholders as of any Subsequent Transfer Date
(except as otherwise expressly stated) that as to each Subsequent
Mortgage Loan conveyed to the Trust by it:
(i) no Subsequent Mortgage Loan provides for negative amortization;
(ii) each Subsequent Mortgage Loan will have been serviced by the
Servicer or a Sub-Servicer since origination or purchase by the
Servicer;
(iii) no Subsequent Mortgage Loan has been originated for the purpose
of facilitating the purchase of real estate owned by the
originator; and
(iv) no Subsequent Mortgage Loan will have a Cut-off Date of later
than April 1, 1997.
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 Trust, as of the end of the Funding
Period the Mortgage Loans (including the Subsequent Mortgage Loans):
(iv) will have a weighted average Mortgage Loan Rate of at least
10.57%;
(ii) will have a weighted average original term to stated maturity of
not more than 298 months;
(iii) will have a weighted average Combined Loan-to-Value Ratio of not
more than 68.50%;
(iv) will have no Mortgage Loan with a Principal Balance less than
$5,000 or greater than $500,000;
(v) will not have in excess of 10% by Aggregate Principal Balance of
Mortgage Loans secured by non-owner occupied Mortgaged
Properties;
(vi) will not have a concentration in a single ZIP code in excess of
1.00% by Aggregate Principal Balance;
(vii) will not have an aggregate concentration in excess of 0.60% by
Aggregate Principal Balance in ZIP codes beginning with the
following three digits: 900-919, 922-925, 930-931 and 935;
Schedule II-1
<PAGE> 111
(viii) will not have a concentration in a single State, other than
California, Florida or Washington in excess of 5% by Aggregate
Principal Balance;
(ix) will not have a concentration in California in excess of 23.40%,
in Florida in excess of 12.75% or in Washington in excess of
5.25% by Aggregate Principal Balance;
(x) will not have in excess of 7.00% or 3.00% by Aggregate Principal
Balance of Mortgage Loans secured by Mortgaged Properties that
are two- to four-family properties or condominiums (less than
four stories), three and four family properties or condominiums
(greater than four stories), respectively, and will have none
secured by mobile homes treated as real estate under applicable
state law;
(xi) will have at least 90.00% by Aggregate Principal Balance of
Mortgage Loans secured by fee simple interests in detached single
family dwelling units (including units in de minimis planned unit
developments);
(xii) have no less than 94.00% by Aggregate Principal Balance of
Mortgage Loans that provide for the payment of principal and
interest on a level basis to fully amortize such Mortgage Loan
over its stated maturity; and
(xiii) will have a weighted average term since origination not in excess
of two 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.
Schedule II-2
<PAGE> 112
Schedule III
Schedule of Restricted Mortgage Loans
[On file with Sponsor and Trustee.]
Schedule III
<PAGE> 113
EXHIBIT A-1
FORM OF CLASS A-1 CERTIFICATE
Date of Pooling and Servicing Original Class A-1 Certificate
Agreement and Cut-off Date: Balance: $81,000,000
March 1, 1997
First Distribution Date: CUSIP No. 00253C CH8
April 15, 1997
Denomination: $81,000,000 Certificate No.: 1
Class A-1 Pass-Through Rate: 6.47%
AAMES MORTGAGE TRUST 1997-A
PASS-THROUGH CERTIFICATE,
SERIES 1997-A, CLASS A-1
evidencing a percentage interest in the distributions allocable to the
Class A-1 Certificates with respect to a Trust consisting primarily of a
pool of conventional, closed-end, fixed rate, residential mortgage
loans, sold and serviced by Aames Capital Corporation.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL CORPORATION OR THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR
RESPECTIVE AFFILIATES. THIS CERTIFICATE IS NOT A DEPOSIT, AND NEITHER THIS
CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York Corporation ("DTC"), to Issuer or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL in as much as the requested owner
hereof, Cede & Co. has an interest herein.
This certifies that CEDE & CO. is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
denomination of this Certificate shown
A-1-1
<PAGE> 114
above by the Original Class A-1 Certificate Principal Balance) in a trust, the
assets of which consist primarily of a pool of conventional, closed-end, fixed
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 in the Agreement. This Certificate
is issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on
the 15th day of each month (or if any such day is not a Business Day, on the
Business Day immediately following such 15th day) (the "Distribution Date"),
commencing on the first Distribution Date specified above, to the Person in
whose name this Certificate is registered at the close of business on the
applicable Record Date, in an amount equal to the product of (a) the Percentage
Interest evidenced by this Certificate and (b) the sum of the Class A-1 Monthly
Interest and any amounts distributed to Class A-1 Certificateholders in respect
of Class A Monthly Principal, Excess Cash Distribution and any Insured Payment,
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
1997-A, Class A-1" (herein called the "Class A-1 Certificates") and representing
a beneficial ownership interest, in each case subject to the limitations set
forth in the Agreement in, among other things, the Mortgage Loans, such assets
as shall from time to time be identified or shall be required by the Agreement
to be identified as deposited in the Collection and/or Certificate Account or
invested in Permitted Investments in accordance with the Agreement, all rights
under any insurance policy covering a Mortgage Loan or the related Mortgaged
Property and property and any proceeds thereof which secured a Mortgage Loan and
which has been acquired by foreclosure, deed in lieu of foreclosure or by a
comparable conversion.
A-1-2
<PAGE> 115
The Class A-1 Certificates are limited in right of payment to certain
payments on and collections in respect of the Mortgage Loans, as more
specifically set forth in the Agreement. The Holder of this Certificate, by its
acceptance of this Certificate, agrees that it will look solely to the funds on
deposit in the Certificate Account and, in certain limited circumstances,
payments made under the Certificate Insurance Policy in respect of any Insured
Payment allocable to Class A-1 Certificateholders and that the Trustee in its
individual capacity is not personally liable to the Certificateholders for any
amount payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Seller, the Servicer, and the rights of the Certificateholders under the
Agreement at any time by the Servicer and the Trustee with the consent of the
Certificate Insurer and the Holders of Certificates evidencing Voting Interests
represented by all Certificates aggregating not less than 51%. Any such consent
by the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates but with the prior written
consent of the Certificate Insurer.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registerable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in New York, New
York, accompanied by a written instrument of transfer in form satisfactory to
the Trustee duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class of authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class of authorized denominations
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
A-1-3
<PAGE> 116
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 Original Pool Balance and the Prefunding 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 Original Pool Balance
and the Prefunding 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.
A-1-4
<PAGE> 117
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: March 26, 1997
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.,
as Trustee
By:
---------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION:
This is one of the Class A-1
Certificates referred to in
the within named Agreement
By:
---------------------------------
Authorized Officer of Bankers Trust Company
of California, N.A., as Trustee
A-1-5
<PAGE> 118
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: $71,500,000
March 1, 1997
First Distribution Date: CUSIP No. 00253C CJ4
April 15, 1997
Denomination: $71,500,000 Certificate No.: 1
Class A-2 Pass-Through Rate: 6.88%
AAMES MORTGAGE TRUST 1997-A
PASS-THROUGH CERTIFICATE,
SERIES 1997-A, 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 rate, residential mortgage
loans, sold and serviced by Aames Capital Corporation.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL CORPORATION OR THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR
RESPECTIVE AFFILIATES. THIS CERTIFICATE IS NOT A DEPOSIT, AND NEITHER THIS
CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York Corporation ("DTC"), to Issuer or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL in as much as the requested owner
hereof, Cede & Co. has an interest herein.
This certifies that CEDE & CO. is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
denomination of this Certificate shown
A-2-1
<PAGE> 119
above by the Original Class A-2 Certificate Principal Balance) in a trust, the
assets of which consist primarily of a pool of conventional, closed-end, fixed
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 in the Agreement. This Certificate
is issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on
the 15th day of each month (or if any such day is not a Business Day, on the
Business Day immediately following such 15th day) (the "Distribution Date"),
commencing on the first Distribution Date specified above, to the Person in
whose name this Certificate is registered at the close of business on the
applicable Record Date, in an amount equal to the product of (a) the Percentage
Interest evidenced by this Certificate and (b) the sum of the Class A-2 Monthly
Interest and any amounts distributed to Class A-2 Certificateholders in respect
of Class A Monthly Principal, Excess Cash Distribution and any Insured Payment,
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
1997-A, 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.
A-2-2
<PAGE> 120
The Class A-2 Certificates are limited in right of payment to certain
payments on and collections in respect of the Mortgage Loans, as more
specifically set forth in the Agreement. The Holder of this Certificate, by its
acceptance of this Certificate, agrees that it will look solely to the funds on
deposit in the Certificate Account and, in certain limited circumstances,
payments made under the Certificate Insurance Policy in respect of the any
Insured Payment allocable to Class A-2 Certificateholders and that the Trustee
in its individual capacity is not personally liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Seller, the Servicer, and the rights of the Certificateholders under the
Agreement at any time by the Servicer and the Trustee with the consent of the
Certificate Insurer and the Holders of Certificates evidencing Voting Interests
represented by all Certificates aggregating not less than 51%. Any such consent
by the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates but with the prior written
consent of the Certificate Insurer.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registerable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in New York, New
York, accompanied by a written instrument of transfer in form satisfactory to
the Trustee duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class of authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class of authorized denominations
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
A-2-3
<PAGE> 121
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 Original Pool Balance and the Prefunding 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 Original Pool Balance
and the Prefunding 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.
A-2-4
<PAGE> 122
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: March 26, 1997
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
A-2-5
<PAGE> 123
EXHIBIT A-3
FORM OF CLASS A-3 CERTIFICATE
Date of Pooling and Servicing Original Class A-3 Certificate
Agreement and Cut-off Date: Balance: $14,500,000
March 1, 1997
First Distribution Date: CUSIP No. 00253C CK1
April 15, 1997
Denomination: $14,500,000 Certificate No.: 1
Class A-3 Pass-Through Rate: 7.22%
AAMES MORTGAGE TRUST 1997-A
PASS-THROUGH CERTIFICATE,
SERIES 1997-A, CLASS A-3
evidencing a percentage interest in the distributions allocable to the
Class A-3 Certificates with respect to a Trust consisting primarily of a
pool of conventional, closed-end, fixed rate, residential mortgage
loans, sold and serviced by Aames Capital Corporation.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL CORPORATION OR THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR
RESPECTIVE AFFILIATES. THIS CERTIFICATE IS NOT A DEPOSIT, AND NEITHER THIS
CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York Corporation ("DTC"), to Issuer or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL in as much as the requested owner
hereof, Cede & Co. has an interest herein.
This certifies that CEDE & CO. is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
denomination of this Certificate shown
A-3-1
<PAGE> 124
above by the Original Class A-3 Certificate Principal Balance) in a trust, the
assets of which consist primarily of a pool of conventional, closed-end, fixed
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 in the Agreement. This Certificate
is issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on
the 15th day of each month (or if any such day is not a Business Day, on the
Business Day immediately following such 15th day) (the "Distribution Date"),
commencing on the first Distribution Date specified above, to the Person in
whose name this Certificate is registered at the close of business on the
applicable Record Date, in an amount equal to the product of (a) the Percentage
Interest evidenced by this Certificate and (b) the sum of the Class A-3 Monthly
Interest and any amounts distributed to Class A-3 Certificateholders in respect
of Class A Monthly Principal, Excess Cash Distribution and any Insured Payment,
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
1997-A, Class A-3" (herein called the "Class A-3 Certificates") and representing
a beneficial ownership interest, in each case subject to the limitations set
forth in the Agreement in, among other things, the Mortgage Loans, such assets
as shall from time to time be identified or shall be required by the Agreement
to be identified as deposited in the Collection and/or Certificate Account or
invested in Permitted Investments in accordance with the Agreement, all rights
under any insurance policy covering a Mortgage Loan or the related Mortgaged
Property and property and any proceeds thereof which secured a Mortgage Loan and
which has been acquired by foreclosure, deed in lieu of foreclosure or by a
comparable conversion.
A-3-2
<PAGE> 125
The Class A-3 Certificates are limited in right of payment to certain
payments on and collections in respect of the Mortgage Loans, as more
specifically set forth in the Agreement. The Holder of this Certificate, by its
acceptance of this Certificate, agrees that it will look solely to the funds on
deposit in the Certificate Account and, in certain limited circumstances,
payments made under the Certificate Insurance Policy in respect of any Insured
Payment allocable to Class A-3 Certificateholders and that the Trustee in its
individual capacity is not personally liable to the Certificateholders for any
amount payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Seller, the Servicer, and the rights of the Certificateholders under the
Agreement at any time by the Servicer and the Trustee with the consent of the
Certificate Insurer and the Holders of Certificates evidencing Voting Interests
represented by all Certificates aggregating not less than 51%. Any such consent
by the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates but with the prior written
consent of the Certificate Insurer.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registerable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in New York, New
York, accompanied by a written instrument of transfer in form satisfactory to
the Trustee duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class of authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class of authorized denominations
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
A-3-3
<PAGE> 126
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 Original Pool Balance and the Prefunding 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 Original Pool Balance
and the Prefunding 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.
A-3-4
<PAGE> 127
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: March 26, 1997
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.,
as Trustee
By:
---------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION:
This is one of the Class A-3
Certificates referred to in
the within named Agreement
By:
--------------------------------------------------
Authorized Officer of Bankers Trust Company
of California, N.A., as Trustee
A-3-5
<PAGE> 128
EXHIBIT A-4
FORM OF CLASS A-4 CERTIFICATE
Date of Pooling and Servicing Original Class A-4 Certificate
Agreement and Cut-off Date: Balance: $23,000,000
March 1, 1997
First Distribution Date: CUSIP No. 00253C CL9
April 15, 1997
Denomination: $23,000,000 Certificate No.: 1
Class A-4 Pass-Through Rate: 7.61%
AAMES MORTGAGE TRUST 1997-A
PASS-THROUGH CERTIFICATE,
SERIES 1997-A, CLASS A-4
evidencing a percentage interest in the distributions allocable to the
Class A-4 Certificates with respect to a Trust consisting primarily of a
pool of conventional, closed-end, fixed rate, residential mortgage
loans, sold and serviced by Aames Capital Corporation.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL CORPORATION OR THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR
RESPECTIVE AFFILIATES. THIS CERTIFICATE IS NOT A DEPOSIT, AND NEITHER THIS
CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York Corporation ("DTC"), to Issuer or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL in as much as the requested owner
hereof, Cede & Co. has an interest herein.
This certifies that CEDE & CO. is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
denomination of this Certificate shown
A-4-1
<PAGE> 129
above by the Original Class A-4 Certificate Principal Balance) in a trust, the
assets of which consist primarily of a pool of conventional, closed-end, fixed
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 in the Agreement. This Certificate
is issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on
the 15th day of each month (or if any such day is not a Business Day, on the
Business Day immediately following such 15th day) (the "Distribution Date"),
commencing on the first Distribution Date specified above, to the Person in
whose name this Certificate is registered at the close of business on the
applicable Record Date, in an amount equal to the product of (a) the Percentage
Interest evidenced by this Certificate and (b) the sum of the Class A-4 Monthly
Interest and any amounts distributed to Class A-4 Certificateholders in respect
of Class A Monthly Principal, Excess Cash Distribution and any Insured Payment,
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
1997-A, Class A-4" (herein called the "Class A-4 Certificates") and representing
a beneficial ownership interest, in each case subject to the limitations set
forth in the Agreement in, among other things, the Mortgage Loans, such assets
as shall from time to time be identified or shall be required by the Agreement
to be identified as deposited in the Collection and/or Certificate Account or
invested in Permitted Investments in accordance with the Agreement, all rights
under any insurance policy covering a Mortgage Loan or the related Mortgaged
Property and property and any proceeds thereof which secured a Mortgage Loan and
which has been acquired by foreclosure, deed in lieu of foreclosure or by a
comparable conversion.
A-4-2
<PAGE> 130
The Class A-4 Certificates are limited in right of payment to certain
payments on and collections in respect of the Mortgage Loans, as more
specifically set forth in the Agreement. The Holder of this Certificate, by its
acceptance of this Certificate, agrees that it will look solely to the funds on
deposit in the Certificate Account and, in certain limited circumstances,
payments made under the Certificate Insurance Policy in respect of any Insured
Payment allocable to Class A-4 Certificateholders and that the Trustee in its
individual capacity is not personally liable to the Certificateholders for any
amount payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Seller, the Servicer, and the rights of the Certificateholders under the
Agreement at any time by the Servicer and the Trustee with the consent of the
Certificate Insurer and the Holders of Certificates evidencing Voting Interests
represented by all Certificates aggregating not less than 51%. Any such consent
by the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates but with the prior written
consent of the Certificate Insurer.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registerable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in New York, New
York, accompanied by a written instrument of transfer in form satisfactory to
the Trustee duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class of authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class of authorized denominations
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
A-4-3
<PAGE> 131
The Seller and the Trustee and any of their respective agents may treat
the Person in whose name this Certificate is registered as the owner hereof for
all purposes, and neither the Seller, the Trustee nor any of their respective
agents shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon payment to the Certificateholders, or
provision therefor, in accordance with the Agreement upon (a) the purchase by
the Servicer or the Certificate Insurer of all Mortgage Loans and all property
acquired in respect of any Mortgage Loan remaining in the Trust at a price
determined as provided in the Agreement, or (b) the later of the final payment
or other liquidation of the last Mortgage Loan remaining in the Trust or the
disposition of all property acquired upon foreclosure or by deed in lieu of
foreclosure of any Mortgage Loan. The exercise of the right of the Servicer to
purchase all the Mortgage Loans and property in respect of Mortgage Loans will
result in early retirement of the Certificates, the right of the Servicer to
purchase being subject to the Pool Balance at the time of purchase being less
than 10% of the sum of the Original Pool Balance and the Prefunding 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 Original Pool Balance
and the Prefunding 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.
A-4-4
<PAGE> 132
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: March 26, 1997
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.,
as Trustee
By:
---------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION:
This is one of the Class A-4
Certificates referred to in
the within named Agreement
By:
--------------------------------------------------
Authorized Officer of Bankers Trust Company
of California, N.A., as Trustee
A-4-5
<PAGE> 133
EXHIBIT A-5
FORM OF CLASS A-5 CERTIFICATE
Date of Pooling and Servicing Original Class A-5 Certificate
Agreement and Cut-off Date: Balance: $25,000,000
March 1, 1997
First Distribution Date: CUSIP No. 00253C CM7
April 15, 1997
Denomination: $25,000,000 Certificate No.: 1
Class A-5 Pass-Through Rate: 7.18%
AAMES MORTGAGE TRUST 1997-A
PASS-THROUGH CERTIFICATE,
SERIES 1997-A, CLASS A-5
evidencing a percentage interest in the distributions allocable to the
Class A-5 Certificates with respect to a Trust consisting primarily of a
pool of conventional, closed-end, fixed rate, residential mortgage
loans, sold and serviced by Aames Capital Corporation.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL CORPORATION OR THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR
RESPECTIVE AFFILIATES. THIS CERTIFICATE IS NOT A DEPOSIT, AND NEITHER THIS
CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York Corporation ("DTC"), to Issuer or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL in as much as the requested owner
hereof, Cede & Co. has an interest herein.
This certifies that CEDE & CO. is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
denomination of this Certificate shown
A-5-1
<PAGE> 134
above by the Original Class A-5 Certificate Principal Balance) in a trust, the
assets of which consist primarily of a pool of conventional, closed-end, fixed
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 in the Agreement. This Certificate
is issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on
the 15th day of each month (or if any such day is not a Business Day, on the
Business Day immediately following such 15th day) (the "Distribution Date"),
commencing on the first Distribution Date specified above, to the Person in
whose name this Certificate is registered at the close of business on the
applicable Record Date, in an amount equal to the product of (a) the Percentage
Interest evidenced by this Certificate and (b) the sum of the Class A-5 Monthly
Interest and any amounts distributed to Class A-5 Certificateholders in respect
of Class A Monthly Principal, Excess Cash Distribution and any Insured Payment,
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
1997-A, Class A-5" (herein called the "Class A-5 Certificates") and representing
a beneficial ownership interest, in each case subject to the limitations set
forth in the Agreement in, among other things, the Mortgage Loans, such assets
as shall from time to time be identified or shall be required by the Agreement
to be identified as deposited in the Collection and/or Certificate Account or
invested in Permitted Investments in accordance with the Agreement, all rights
under any insurance policy covering a Mortgage Loan or the related Mortgaged
Property and property and any proceeds thereof which secured a Mortgage Loan and
which has been acquired by foreclosure, deed in lieu of foreclosure or by a
comparable conversion.
A-5-2
<PAGE> 135
The Class A-5 Certificates are limited in right of payment to certain
payments on and collections in respect of the Mortgage Loans, as more
specifically set forth in the Agreement. The Holder of this Certificate, by its
acceptance of this Certificate, agrees that it will look solely to the funds on
deposit in the Certificate Account and, in certain limited circumstances,
payments made under the Certificate Insurance Policy in respect of any Insured
Payment allocable to Class A-5 Certificateholders and that the Trustee in its
individual capacity is not personally liable to the Certificateholders for any
amount payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Seller, the Servicer, and the rights of the Certificateholders under the
Agreement at any time by the Servicer and the Trustee with the consent of the
Certificate Insurer and the Holders of Certificates evidencing Voting Interests
represented by all Certificates aggregating not less than 51%. Any such consent
by the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates but with the prior written
consent of the Certificate Insurer.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registerable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in New York, New
York, accompanied by a written instrument of transfer in form satisfactory to
the Trustee duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class of authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class of authorized denominations
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
A-5-3
<PAGE> 136
The Seller and the Trustee and any of their respective agents may treat
the Person in whose name this Certificate is registered as the owner hereof for
all purposes, and neither the Seller, the Trustee nor any of their respective
agents shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon payment to the Certificateholders, or
provision therefor, in accordance with the Agreement upon (a) the purchase by
the Servicer or the Certificate Insurer of all Mortgage Loans and all property
acquired in respect of any Mortgage Loan remaining in the Trust at a price
determined as provided in the Agreement, or (b) the later of the final payment
or other liquidation of the last Mortgage Loan remaining in the Trust or the
disposition of all property acquired upon foreclosure or by deed in lieu of
foreclosure of any Mortgage Loan. The exercise of the right of the Servicer to
purchase all the Mortgage Loans and property in respect of Mortgage Loans will
result in early retirement of the Certificates, the right of the Servicer to
purchase being subject to the Pool Balance at the time of purchase being less
than 10% of the sum of the Original Pool Balance and the Prefunding 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 Original Pool Balance
and the Prefunding 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.
A-5-4
<PAGE> 137
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: March 26, 1997
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.,
as Trustee
By:
---------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION:
This is one of the Class A-5
Certificates referred to in
the within named Agreement
By:
--------------------------------------------------
Authorized Officer of Bankers Trust Company
of California, N.A., as Trustee
A-5-5
<PAGE> 138
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
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REFERRED TO HEREIN AS A "NON-PERMITTED FOREIGN HOLDER") OR (iv) ANY PERSON WHICH
IS AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR ANY PERSON WHICH IS AN
INDIVIDUAL RETIREMENT ACCOUNT OR EMPLOYEE BENEFIT PLAN, TRUST OR ACCOUNT SUBJECT
TO SECTION 4975 OF THE CODE (AN "ERISA PLAN") OR AN ENTITY, INCLUDING AN
INSURANCE COMPANY SEPARATE ACCOUNT OR GENERAL ACCOUNT, WHOSE UNDERLYING ASSETS
INCLUDE ERISA PLAN ASSETS BY REASON OF AN ERISA PLAN'S INVESTMENT IN THE ENTITY,
OR ANY PERSON INVESTING THE ASSETS OF AN ERISA PLAN OR SUCH AN ENTITY, WHETHER
AS NOMINEE, TRUSTEE, AGENT OR OTHERWISE, (II) IT HAS NO INTENT OR PURPOSE TO
IMPEDE THE ASSESSMENT OR COLLECTION OF ANY FEDERAL, STATE OR LOCAL INCOME TAXES
LEGALLY REQUIRED TO BE PAID WITH RESPECT TO THE CLASS R CERTIFICATE, AND (III)
IT HAS AGREED TO SUCH AMENDMENTS TO FURTHER EFFECTUATE THE RESTRICTIONS ON
TRANSFERS TO DISQUALIFIED ORGANIZATIONS, AGENTS THEREOF, BOOK-ENTRY NOMINEES,
NON-PERMITTED FOREIGN HOLDERS OR ERISA PLANS. THE TERM "FOREIGN PERSON" MEANS A
PERSON WHO IS NOT ONE OF THE FOLLOWING: A CITIZEN OR RESIDENT OF THE UNITED
STATES, A CORPORATION, PARTNERSHIP OR OTHER ENTITY CREATED OR ORGANIZED IN OR
UNDER THE LAWS OF THE UNITED STATES OR ANY POLITICAL SUBDIVISION THEREOF, AN
ESTATE THAT IS SUBJECT TO U.S. FEDERAL INCOME TAX REGARDLESS OF THE SOURCE OF
ITS INCOME, OR TRUST IF (i) A COURT WITHIN THE UNITED STATES IS ABLE TO EXERCISE
PRIMARY SUPERVISION OVER THE ADMINISTRATION OF THE TRUST, AND (ii) ONE OR MORE
UNITED STATES FIDUCIARIES HAVE THE AUTHORITY TO CONTROL ALL SUBSTANTIAL
DECISIONS OF THE TRUST.
THE HOLDER OF THIS CLASS R CERTIFICATE, BY ACCEPTANCE HEREOF, IS DEEMED
TO HAVE AGREED TO THE DESIGNATION OF THE SERVICER AS ITS AGENT TO ACT AS "TAX
MATTERS PERSON" TO PERFORM THE FUNCTIONS OF A "TAX MATTERS PARTNER" FOR PURPOSES
OF SUBCHAPTER C OF CHAPTER 63 OF SUBTITLE F OF THE CODE, OR, IF SO REQUESTED BY
THE SERVICER, TO ACT AS TAX MATTERS PERSON.
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<PAGE> 140
Date of Pooling and Servicing Percentage Interest: 100%
Agreement and Cut-off Date:
March 1, 1997 Certificate No.: R-1
First Distribution Date:
April 15, 1997
AAMES MORTGAGE TRUST 1997-A
MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1997-A, CLASS R
evidencing a percentage interest in the distributions allocable to the
Class R Certificate with respect to a Trust consisting primarily of a
pool of conventional, closed-end, fixed rate residential mortgage loans
sold and serviced by Aames Capital Corporation.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL CORPORATION OR THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR
RESPECTIVE AFFILIATES. THIS CERTIFICATE IS NOT A DEPOSIT, AND NEITHER THIS
CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
This certifies that Aames Capital Corporation is the registered owner of
the Percentage Interest specified on the face of this Class R Certificate. This
Class R Certificate is one series of Certificates issued by a trust, the assets
of which consist primarily of a pool of conventional, closed-end, fixed rate,
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
B-3
<PAGE> 141
and in form and substance satisfactory to the Trustee and the Seller that such
transfer is exempt (describing the applicable exemption and the basis therefor)
from or is being made pursuant to the registration requirements of the Act and
of any applicable state securities laws. The Holder hereof desiring to effect
such transfer shall, and does hereby agree to, indemnify the Trustee, the Seller
and the Servicer against any liability that may result if the transfer is not so
exempt or is not made in accordance with such federal and state laws. In
connection with any such transfer, the Trustee will also require an affidavit,
in the form as described in the Agreement, stating the matters set forth on the
legend of this Class R Certificate.
The Holder of the Class R Certificate, by acceptance hereof, is deemed
to have designated the Servicer, if permitted by the Code and applicable law, to
act as the "tax matters person", to perform the functions of a "tax matters
partner" for purposes of Subchapter C of Chapter 63 of Subtitle F of the Code
and if not so permitted, the Holder of the Class R Certificate, is deemed to
have agreed to act as such "tax matters person".
The Class R Certificate is not entitled to any payments on and
collections in respect of the Mortgage Loans on any Distribution Date until all
other distributions for such Distribution Date have been made in accordance with
the Agreement. The Holder of this Certificate, by its acceptance of this
Certificate, agrees that the Trustee in its individual capacity is not
personally liable to the Certificateholders for any amount payable under this
Certificate or the Agreement or, except as expressly provided in the Agreement,
subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Seller, the Servicer, and the rights of the Certificateholders under the
Agreement at any time by the Seller , the Servicer, and the Trustee with the
consent of the Certificate Insurer and the Holders of Certificates evidencing
Voting Interests represented by all Certificates aggregating not less than 51%.
The Class R Certificate will have no Voting Interests. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of the Certificates but with the prior written consent of
the Certificate Insurer.
This Certificate is issuable only as a registered Certificate without
coupons in the Percentage Interest specified in the Agreement. As provided in
the Agreement and subject to certain limitations therein set forth, the
Certificate is exchangeable for a new Certificate evidencing the same aggregate
Percentage Interest, as requested by the Holder surrendering the same.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender 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
B-4
<PAGE> 142
the Servicer, the Trustee, and the Certificate Registrar duly executed by the
Holder hereof or such Holder's attorney duly authorized in writing together with
an affidavit in the form as described in the Agreement, and thereupon a new
Certificate evidencing the same aggregate Percentage Interest will be issued to
the designated transferee or transferees.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Seller and the Trustee and any of their respective agents may treat
the Person in whose name this Certificate is registered as the owner hereof for
all purposes, and neither the Seller, the Trustee nor any of their respective
agents shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon payment to the Certificateholders, or
provision therefor, in accordance with the Agreement upon (a) the purchase by
the Servicer or the Certificate Insurer of all Mortgage Loans and all property
acquired in respect of any Mortgage Loan remaining in the Trust at a price
determined as provided in the Agreement, or (b) the later of the final payment
or other liquidation of the last Mortgage Loan remaining in the Trust or the
disposition of all property acquired upon foreclosure or by deed in lieu of
foreclosure of any Mortgage Loan. The exercise of the right of the Servicer to
purchase all the Mortgage Loans and property in respect of Mortgage Loans will
result in early retirement of the Certificates, the right of the Servicer to
purchase being subject to the Pool Balance at the time of purchase being less
than 10% of the sum of the Original Pool Balance and the Prefunding 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 Original Pool Balance
and the Prefunding Account Deposit having become Liquidated Mortgage Loans prior
to the time of purchase.
This Certificate will not be entitled to any benefit under the Agreement
or be valid for any purpose unless manually countersigned for authenticating
purposes only by any authorized officer of the Trustee.
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<PAGE> 143
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: March 26, 1997
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.,
as Trustee
By:
---------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION:
This is the Class R Certificate
referred to in the within named
Agreement
By:
------------------------------------------------
Authorized Officer of Bankers Trust Company
of California, N.A., as Trustee
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<PAGE> 144
EXHIBIT C
FORM OF SUBSEQUENT TRANSFER AGREEMENT
Pursuant to this Subsequent Transfer Agreement, dated as of [__________,
1997] 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
1997-A (the "Trustee"), and pursuant to that certain Pooling and Servicing
Agreement, dated as of March 1, 1997 (the "Pooling and Servicing Agreement"), by
and between the Seller, as seller and servicer, and the Trustee, as trustee, the
Seller and the Trustee agree to the sale by the Seller and the purchase by the
Trustee of additional mortgage loans (the "Subsequent Mortgage Loans") as listed
on the Mortgage Loan Schedule attached hereto as Schedule A.
Capitalized terms used and not defined herein shall have their
respective meanings as set forth in the Pooling and Servicing Agreement.
Section 1. Purchase and Conveyance of Subsequent Mortgage Loans.
(a) The Seller does hereby sell, transfer, assign, set over and convey
to the Trustee:
(i) all right, title and interest of such Seller in and to the
Subsequent Mortgage Loans owned by it and listed on
Schedule A hereto, including without limitation, the
related Mortgages, Mortgage Files and Mortgage Notes, and
all payments on, and proceeds with respect to, such
Subsequent Mortgage Loans received on and after the
Subsequent Cut-off Date except such payments and proceeds
as the Servicer is entitled to retain pursuant to the
express provisions of the Pooling and Servicing Agreement;
(ii) all right, title and interest of such Seller in the
Mortgages on the properties securing the Subsequent
Mortgage Loans, including any related Mortgaged Property
acquired by or on behalf of the Trust by foreclosure or
deed in lieu of foreclosure or otherwise;
(iii) all right, title and interest of such Seller in and to any
rights in or proceeds from any insurance policies
(including title insurance policies) covering the
Subsequent Mortgage Loans, the related Mortgaged
Properties or Mortgagors and any amounts recovered from
third parties in respect of any Subsequent Mortgage Loans
that became Liquidated Mortgage Loans; and
(iv) the proceeds of all of the foregoing.
(b) With respect to each Subsequent Mortgage Loan, the Seller,
contemporaneously with the delivery of this Agreement, has delivered or caused
to be delivered to the Trustee, each item set forth in Section 2.01 of the
Pooling and Servicing Agreement. The transfer to the Trustee by the Seller of
the Subsequent Mortgage Loans identified on the Schedule A hereto
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<PAGE> 145
shall be absolute and is intended by the Seller, the Servicer, the Trustee and
the Certificateholders to constitute and to be treated as a sale by the Seller.
(c) The expenses and costs relating to the delivery of the Subsequent
Mortgage Loans, this Agreement and the Pooling and Servicing Agreement shall be
borne by the Seller.
(d) Additional terms of the sale, including the purchase price, are set
forth on Attachment A hereto.
Section 2. Representations and Warranties; Conditions Precedent.
(a) The Seller hereby affirms the representations and warranties set
forth in Section 2.05 of the Pooling and Servicing Agreement that relate to the
Subsequent Mortgage Loans as of the date hereof. The Seller hereby confirms that
each of the conditions set forth in Section 2.02 of the Pooling and Servicing
Agreement (except such conditions that are required to be satisfied as of the
end of the Funding Period) are satisfied as of the date hereof.
(b) All terms and conditions of the Pooling and Servicing Agreement are
hereby ratified and confirmed; provided however, that in the event of any
conflict the provisions of this Agreement shall control over the conflicting
provisions of the Pooling and Servicing Agreement.
Section 3. Recordation of Agreement.
This Agreement is subject to recordation in all appropriate public
offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the Mortgaged Properties are situated, and
in any other appropriate public recording office or elsewhere, such recordation
to be effected by the Servicer and at its expense in the event such recordation
materially and beneficially affects the interests of Certificateholders.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
Section 4. Governing Law.
This Agreement shall be construed in accordance with the laws of the
State of California (without regard to conflict of laws principles and the
application of the laws of any other jurisdiction), and the obligations, rights
and remedies of the parties hereunder shall be determined in accordance with
such laws.
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<PAGE> 146
Section 5. Successors and Assigns.
This Agreement shall inure to the benefit of and be binding upon the
Seller and the Purchaser and their respective successors and assigns. The
Certificate Insurer is a third party beneficiary hereto and shall be entitled to
enforce the provisions hereof as if a party hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers, all as of the day and year first
above written.
AAMES CAPITAL CORPORATION,
as Seller
By:
-----------------------------------
Name:
Title:
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A., as Trustee
for Aames Mortgage Trust 1997-A
By:
-----------------------------------
Name:
Title:
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<PAGE> 147
SCHEDULE A
SUBSEQUENT MORTGAGE LOAN SCHEDULE
C-4
<PAGE> 148
ATTACHMENT A
Subsequent Transfer Date:
Subsequent Cut-off Date:
Aggregate of the Principal Balances of
Subsequent Mortgage Loans:
Aggregate of the Purchase Prices of
Subsequent Mortgage Loans:
Number of Subsequent Mortgage Loans:
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<PAGE> 149
EXHIBIT D
FORM OF CERTIFICATE INSURANCE POLICY
Filed as Exhibit 4.2 to this Form 8-K.
<PAGE> 150
EXHIBIT E
MORTGAGE LOAN SCHEDULE
[On file with Sponsor and Trustee.]
<PAGE> 151
EXHIBIT F
FORM OF ANNUAL STATEMENT AS TO COMPLIANCE
The undersigned, __________________________, of Aames Capital
Corporation (the "Servicer"), in its capacity as Servicer under that certain
Pooling and Servicing Agreement dated as of March 1, 1997 (the "Pooling and
Servicing Agreement") between Aames Capital Corporation, as Seller and Servicer,
and Bankers Trust Company of California, N.A., as Trustee, does hereby certify
pursuant to Section 3.09 of the Pooling and Servicing Agreement that as of the
___ day of ____________, 199_:
(a) a review of the activities of the Servicer for the year ended December
31, 199_ and of its performance under the Pooling and Servicing
Agreement has been made under my supervision, and
(b) to the best of my knowledge, based on such review, the Servicer has
fulfilled all of its material obligations under the Pooling and
Servicing Agreement throughout such year.
IN WITNESS WHEREOF, I have hereunto signed my name as of this ____day of
___________, 199_.
_____________________________
Name:
Title:
<PAGE> 152
EXHIBIT G
FORM OF AFFIDAVIT PURSUANT TO SECTION 860E(e)(4)
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
STATE OF _______________________________)
) ss.:
COUNTY OF ______________________________)
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That he is [Title of Officer] of [Name of Investor] (the "Investor"),
a [savings institution] [corporation] duly organized and existing under the laws
of [the State of ____________] [the United States], on behalf of which he makes
this affidavit. Capitalized terms used but not defined herein shall have the
meanings ascribed to such terms in the Agreement as defined in the Class R
Certificate.
2. That the Investor's Taxpayer Identification Number is [___________].
3. That the Investor is not a "Disqualified Organization" within the
meaning of Section 860E(e)(5) of the Internal Revenue Code of 1986, as amended
(the "Code"), or an agent of a Disqualified Organization (including a broker,
nominee or middleman) and will not be a "Disqualified Organization" as of [date
of transfer], and that the Investor is not acquiring a Class R Certificate of
the Aames Mortgage Trust 1997-A Mortgage Loan Pass-Through Certificates, (the
"Class R Certificate") for the account of, or as an agent (including a broker,
nominee or middleman) of any entity as to which the Investor has not received an
affidavit substantially in the form of this affidavit. For these purposes, a
"Disqualified Organization" means the United States, any state or political
subdivision thereof, any foreign government, any international organization, any
agency or instrumentality of any of the foregoing (other than an instrumentality
if all of its activities are subject to tax and a majority of its board of
directors is not selected by such governmental entity), any cooperative
organization furnishing electrical energy or providing telephone service to
persons in rural areas as described in Code Section 1381(a)(2)(c), or any
organization (other than a farmers' cooperative described in Code Section 521)
that is exempt from federal income tax unless such organization is subject to
the tax on unrelated business income imposed by Code Section 511.
4. That the Investor is not (i) an entity that holds Class R
Certificates as nominee to facilitate the clearance and settlement of such Class
R Certificates through electronic book-entry changes in accounts of
participating organizations (a "Book-Entry Nominee"), (ii) an individual,
corporation, partnership or other person unless such transferee (A) is not a
Foreign Person or (B) is a Foreign Person that will hold such Class R
Certificate in connection with the conduct of a trade or business within the
United States and has furnished the transferor and the Trustee with an effective
Internal Revenue Service Form 4224 or (C) is a Foreign Person that has delivered
to
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<PAGE> 153
both the transferor and the Trustee an opinion of a nationally recognized tax
counsel to the effect that the transfer of a Class R Certificate to it is in
accordance with the requirements of the Code and the regulations promulgated
thereunder and that such transfer of a Class R Certificate will not be
disregarded for federal income tax purposes (any such person who is not covered
by clause (A), (B) or (C) above being referred to herein as a "Non-permitted
Foreign Holder") or (iii) a Person that is an employee benefit plan within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended, or any Person that is an individual retirement account or employee
benefit plan, trust or account subject to Section 4975 of the Code (an "ERISA
Plan") or an entity, including an insurance company separate account or general
account, whose underlying assets include ERISA Plan assets by reason of an ERISA
Plan's investment in the entity or a Person investing the assets of an ERISA
Plan or such an entity, whether as nominee, trustee, agent or otherwise (an
"ERISA Prohibited Holder").
5. That the Investor agrees to any such amendments of the Pooling and
Servicing Agreement as may be required to further effectuate the restrictions on
transfer of the Class R Certificate to such a Disqualified Organization or a
Book-Entry Nominee or a Non-permitted Foreign Holder or an ERISA Prohibited
Holder.
6. That the Investor has no intent or purpose to impede the assessment
or collection of any federal, state or local income taxes legally required to be
paid with respect to the Class R Certificate and will not transfer the Class R
Certificate to any Person that it has reason to believe has the intention to
impede the assessment or collection of such taxes.
7. The Investor has been advised of, understands and acknowledges that
under the Code, a substantial tax would be imposed on a "pass-through entity"
holding a Class R Certificate if at any time during the taxable year of the
pass-through entity a Person that is a Disqualified Orga nization is the record
holder of an interest in such entity. (For this purpose, a "pass-through entity"
includes a regulated investment company, a real estate investment trust or
common trust fund, a partnership, trust or estate, and certain cooperatives and,
except as may be provided in Treasury Regulations, persons holding interests in
pass through entities as a nominee for another Person). A pass-through entity
shall be relieved of liability for the tax if it had received from such Person
an affidavit (in substantially the same form as this affidavit) that such Person
is not a Disqualified Organization and the entity had no actual knowledge that
the affidavit was false. The Investor will advise the Trustee and the Servicer
if it becomes a pass-through entity or if it is a pass-through entity, if any of
the interest holders are or become Disqualified Persons.
8. The Investor has reviewed the provisions of Section 6.02 of the
Agreement and understands the legal consequences of the acquisition of a Class R
Certificate including, without limitation, the restrictions on subsequent
transfers. The Investor expressly agrees to be bound by and to abide by the
provisions of Section 6.02 of the Agreement, as such Section may be amended from
time to time.
9. The Investor agrees to require an affidavit substantially similar to
this affidavit from any Person to whom the Investor attempts to transfer its
Class R Certificate including any Person with respect to which the Investor is
then acting as nominee, trustee or agent, and in connection
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<PAGE> 154
with any transfer by a Person for whom the Investor is acting as nominee,
trustee or agent, and the Investor will not transfer its Class R Certificate to
be transferred to any Person that the Investor knows is a Disqualified
Organization.
10. The Investor is acquiring the Class R Certificate either (i) for its
own account or (ii) as nominee, trustee or agent for another Person and has
attached hereto an affidavit from such Person in substantially the same form as
this affidavit. If clause (ii) of the preceding sentence is applicable, such
Person is not a Disqualified Organization and the Investor has no knowledge that
any such affidavit from such Person is false.
IN WITNESS WHEREOF, the Investor has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
[Title of Officer] and its corporate seal to be hereunto attached, attested by
its [Assistant] Secretary, this ____ day of _________, 199_.
[NAME OF INVESTOR]
By:
-------------------------------------
Name:
Title:
Personally appeared before me the above-named [Name of Officer], known
or proved to me to be the same person who executed the foregoing instrument and
to be the [Title of Officer] of the Investor, and acknowledged to me that he
executed the same as his free act and deed and the free act and deed of the
Investor.
Subscribed and sworn before me this _____day of ___________, 199_.
- ------------------------------
NOTARY PUBLIC
COUNTY OF
--------------------
STATE OF
---------------------
My Commission expires the day of , 19 .
-------- ---------- ---
G-3
<PAGE> 155
EXHIBIT H
FORM OF NOTICE REGARDING PAYMENT IN FULL
OF PRINCIPAL BALANCE OF MORTGAGE LOAN
Bankers Trust Company of California, N.A.,
as Trustee
3 Park Plaza, 16th Floor
Irvine, California 92714
Attention: Corporate Trust Administration
Re: Mortgage Loan Pass-Through Certificates, Series 1997-A
Ladies and Gentlemen:
Reference is made to Section 3.07 of the Pooling and Servicing Agreement
dated as of March 1, 1997 (the "Pooling and Servicing Agreement") between Aames
Capital Corporation, as Seller and Servicer, and Bankers Trust Company of
California, N.A., as Trustee. All capitalized terms used but not defined herein
shall have the meanings given to such terms in the Pooling and Servicing
Agreement.
The undersigned hereby certifies that the Principal Balance of the
Mortgage Loan(s) listed on Schedule A annexed hereto has been paid in full and
that all amounts received in connection with the payment of such Mortgage
Loan(s) that were required to be deposited or credited in the Certificate
Account pursuant to Section 3.02 of the Pooling and Servicing Agreement have
been so deposited or credited.
The undersigned further certifies that he is a Servicing Officer of the
Servicer holding the office set forth beneath his signature and that he is duly
authorized to execute this certificate on behalf of the Servicer.
AAMES CAPITAL CORPORATION
Date: By:
------------------- --------------------------
Name:
Title:
<PAGE> 156
EXHIBIT I
FORM OF LIQUIDATION REPORT
1. Type of Liquidation (REO disposition/charge-off/short pay-off)
- Date Last Paid
- Date of Foreclosure
- Date of REO
- Date of REO Disposition
- Property Sale Price; Estimated Market Value at Disposition
2. Liquidation Proceeds
- Principal Prepayment $____________
- Property Sale Proceeds $____________
- Insurance Proceeds $____________
- Other (itemize) $____________
TOTAL $
============
3. Liquidation Expenses
- Servicing Advances $____________
- Monthly Advances $____________
- Contingency Fees $____________
- Servicing Fees $____________
- Annual Expense Escrow Amount $____________
- Supplemental Fee (if any) $____________
- Additional Interest (if any) $____________
- Monthly Sponsor Fee (if any) $____________
TOTAL $
============
4. Net Liquidation Proceeds* $____________
(Total of Item 2 minus total of Item 3)
5. Accrued and Unpaid Interest on Mortgage Loan $____________
6. Principal Balance of Mortgage Loan $____________
7. Realized Loss on Mortgage Loan $____________
(Item 5 plus Item 6 minus Item 4, with
a Realized Loss resulting only if the total
of this calculation is a positive number)
*Applied first to Item 5 and then to Item 6.
<PAGE> 157
EXHIBIT J
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 March 1, 1997
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:
<PAGE> 158
EXHIBIT K
FORM OF TRANSFEROR AFFIDAVIT
[LETTERHEAD OF TRANSFEROR]
________________, 199_
Bankers Trust Company of California, N.A.,
as Trustee
3 Park Plaza, 16th Floor
Irvine, California 92714
Attention: Corporate Trust Administration
Re: Aames Mortgage Trust 1997-A
Mortgage Pass-Through Certificates, Series 1997-A
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:
<PAGE> 159
EXHIBIT L
INSURANCE AGREEMENT
On file with the Sponsor and the Trustee.
<PAGE> 1
EXHIBIT 4.2
[MBIA LOGO]
CERTIFICATE GUARANTY INSURANCE POLICY
OBLIGATIONS: $215,000,000 POLICY NUMBER: 23493
Aames Mortgage Trust 1997-A
Mortgage Pass-Through Certificates, Series 1997-A
Class A-1, Class A-2, Class A-3,
Class A-4 and Class A-5 Certificates
MBIA Insurance Corporation (the "Insurer"), in consideration of the
payment of the premium and subject to the terms of this Certificate Guaranty
Insurance Policy (this "Policy"), hereby unconditionally and irrevocably
guarantees to any Owner that an amount equal to each full and complete Insured
Payment will be received by Bankers Trust Company of California, N.A., or its
successors, as trustee for the Owners (the "Trustee"), on behalf of the Owners
from the Insurer, for distribution by the Trustee to each Owner of each Owner's
share of the Insured Payment. The Insurer's obligations hereunder with respect
to a particular Insured Payment shall be discharged to the extent funds equal to
the applicable Insured Payment are received by the Trustee, whether or not such
funds are properly applied by the Trustee. Insured Payments shall be made only
at the time set forth in this Policy and no accelerated Insured Payments shall
be made regardless of any acceleration of the Obligations, unless such
acceleration is at the sole option of the Insurer.
Notwithstanding the foregoing paragraph, this Policy does not cover
shortfalls, if any, attributable to the liability of the Trust, any REMIC or the
Trustee for withholding taxes, if any (including interest and penalties in
respect of any such liability).
The Insurer will pay any Insured Payment that is a Preference Amount on
the Business Day following receipt on a Business Day by the Fiscal Agent (as
described below) of (i) a certified copy of the order requiring the return of a
preference payment, (ii) an opinion of counsel satisfactory to the Insurer that
such order is final and not subject to appeal, (iii) an assignment in such form
as is reasonably required by the Insurer, irrevocably assigning to the Insurer
all rights and claims of the Owner relating to or arising under the Obligations
against the debtor which made such preference payment or otherwise with respect
to such preference payment and (iv) appropriate instruments to effect the
appointment of the Insurer as agent for such Owner in any legal proceeding
related to such preference payment, such instruments being in a form
satisfactory to the Insurer, provided that if such documents are received after
12:00 noon New York City time on such Business Day, they will be deemed to be
received on the following Business Day. Such payments shall be disbursed to the
receiver or trustee in bankruptcy named in the final order of the court
exercising jurisdiction on behalf of the Owner and not to any Owner directly
unless such Owner has returned principal or interest paid on the Obligations to
such receiver or trustee in bankruptcy, in which case such payment shall be
disbursed to such Owner.
The Insurer will pay any other amount payable hereunder no later than
12:00 noon New York City time on the later of the Distribution Date on which the
related Deficiency Amount is due or the third Business Day following receipt in
New York, New York on a Business Day by State Street Bank and Trust Company,
N.A., as Fiscal Agent for the Insurer or any successor fiscal agent appointed by
the Insurer (the "Fiscal Agent") of a Notice (as described below); provided that
<PAGE> 2
[MBIA LOGO]
if such Notice is received after 12:00 noon New York City time on such Business
Day, it will be deemed to be received on the following Business Day. If any such
Notice received by the Fiscal Agent is not in proper form or is otherwise
insufficient for the purpose of making claim hereunder it shall be deemed not to
have been received by the Fiscal Agent for purposes of this paragraph, and the
Insurer or the Fiscal Agent, as the case may be, shall promptly so advise the
Trustee and the Trustee may submit an amended Notice.
Insured Payments due hereunder unless otherwise stated herein will be
disbursed by the Fiscal Agent to the Trustee on behalf of the Owners by wire
transfer of immediately available funds in the amount of the Insured Payment
less, in respect of Insured Payments related to Preference Amounts, any amount
held by the Trustee for the payment of such Insured Payment and legally
available therefor.
The Fiscal Agent is the agent of the Insurer only and the Fiscal Agent
shall in no event be liable to Owners for any acts of the Fiscal Agent or any
failure of the Insurer to deposit or cause to be deposited, sufficient funds to
make payments due under this Policy.
As used herein, the following terms shall have the following meanings:
"Agreement" means the Pooling and Servicing Agreement dated as of March
1, 1997 among Aames Capital Corporation, as servicer and seller, and the
Trustee, as trustee, without regard to any amendment or supplement thereto
unless the Insurer shall have consented to such amendment or supplement in
writing.
"Business Day" means any day other than a Saturday, a Sunday or a day on
which banking institutions in New York City or in the city in which the
corporate trust office of the Trustee under the Agreement is located are
authorized or obligated by law or executive order to close.
"Deficiency Amount" means, with respect to any Distribution Date, the
sum of (i) the amount, if any, by which the Class A Monthly Interest exceeds the
amount of Available Funds remaining after distributions pursuant to clauses
first and second of Section 5.01 of the Agreement and (ii) the Coverage Deficit,
if any.
"Insured Payment" means (i) as of any Distribution Date, any Deficiency
Amount and (ii) any Preference Amount.
"Notice" means the telephonic or telegraphic notice, promptly confirmed
in writing by telecopy substantially in the form of Exhibit A attached hereto,
the original of which is subsequently delivered by registered or certified mail,
from the Trustee specifying the Insured Payment which shall be due and owing on
the applicable Distribution Date.
"Owner" means each Holder (as defined in the Agreement) of an Obligation
who, on the applicable Distribution Date, is entitled under the terms of the
applicable Obligations to payment thereunder.
"Preference Amount" means any amount previously distributed to an Owner
on the Obligations that is recoverable and sought to be recovered as a voidable
preference by a trustee in
2
<PAGE> 3
[MBIA LOGO]
bankruptcy pursuant to the United States Bankruptcy Code (11 U.S.C.), as amended
from time to time, in accordance with a final nonappealable order of a court
having competent jurisdiction.
Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings set forth in the Agreement as of the date of
execution of this Policy, without giving effect to any subsequent amendment to
or modification of the Agreement unless such amendment or modification has been
approved in writing by the Insurer.
Any notice hereunder or service of process on the Fiscal Agent may be
made at the address listed below for the Fiscal Agent or such other address as
the Insurer shall specify in writing to the Trustee.
The notice address of the Fiscal Agent is 15th Floor, 61 Broadway, New
York, New York 10006 Attention: Municipal Registrar and Paying Agency, or such
other address as the Fiscal Agent shall specify to the Trustee in writing.
This Policy is being issued under and pursuant to, and shall be
construed under, the laws of the State of New York, without giving effect to the
conflict of laws principles thereof.
The insurance provided by 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 cancelable for any reason. The premium on this Policy
is not refundable for any reason including payment, or provision being made for
payment, prior to maturity of the Obligations.
IN WITNESS WHEREOF, the Insurer has caused this Policy to be executed
and attested this 26th day of March 1997.
MBIA INSURANCE CORPORATION
/s/ Richard Weill
----------------------------------
President
/s/ Ann McKenna
----------------------------------
Assistant Secretary
3
<PAGE> 4
[MBIA LOGO]
EXHIBIT A
TO CERTIFICATE GUARANTY INSURANCE POLICY
NUMBER: 23493
NOTICE UNDER CERTIFICATE GUARANTY
INSURANCE POLICY NUMBER: 23493
State Street Bank and Trust Company, N.A., as Fiscal Agent
for MBIA Insurance Corporation
61 Broadway, 15th Floor
New York, NY 10006
Attention: Municipal Registrar and
Paying Agency
MBIA Insurance Corporation
113 King Street
Armonk, NY 10504
The undersigned, a duly authorized officer of [NAME OF TRUSTEE], as
trustee (the "Trustee"), hereby certifies to State Street Bank and Trust
Company, N.A. (the "Fiscal Agent") and MBIA Insurance Corporation (the
"Insurer"), with reference to Certificate Guaranty Insurance Policy Number:
23493 (the "Policy") issued by the Insurer in respect of the $215,000,000 Aames
Mortgage Trust 1997-A, Mortgage Pass-Through Certificates, Series 1997-A, Class
A-1, Class A-2, Class A-3, Class A-4 and Class A-5 Certificates (the
"Obligations"), that:
(i) the Trustee is the trustee under the Pooling and
Servicing Agreement dated as of March 1, 1997 between Aames Capital
Corporation, as servicer and seller, and the Trustee, as trustee for
the Owners;
(ii) the amount due under clause (i) of the definition of
Deficiency Amount for the Distribution Date occurring on (the
"Applicable Distribution Date") is $ ;
(iii) the amount due under clause (ii) of the definition of
Deficiency AMOUNT for the Applicable Distribution Date is $ ;
(iv) the sum of the amounts listed in paragraphs (ii)
and (iii) above is $ (the "Deficiency Amount");
(v) the amount of previously distributed payments on the
Obligations that is recoverable and sought to be recovered as a voidable
preference by a trustee in bankruptcy pursuant to the Bankruptcy Code in
accordance with a final nonappealable order of a court having competent
jurisdiction is $ (the "Preference Amount");
<PAGE> 5
[MBIA LOGO]
(vi) the total Insured Payment due is $ , which
amount equals the sum of the Deficiency Amount and the Preference
Amount;
(vii) the Trustee is making a claim under and pursuant to the
terms of the Policy for the dollar amount of the Insured Payment set
forth in (iv) above to be applied to the payment of the Deficiency
Amount for the Applicable Distribution Date in accordance with the
Agreement and for the dollar amount of the Insured Payment set forth in
(v) above to be applied to the payment of any Preference Amount; and
(viii) the Trustee directs that payment of the Insured
Payment be made to the following account by bank wire transfer of
federal or other immediately available funds in accordance with the
terms of the Policy: [TRUSTEE'S ACCOUNT NUMBER].
Any capitalized term used in this Notice and not otherwise defined
herein shall have the meaning assigned thereto in the Policy.
Any Person Who Knowingly And With Intent To Defraud Any Insurance
Company Or Other Person Files An Application For Insurance Or Statement Of Claim
Containing Any Materially False Information, Or Conceals For The Purpose Of
Misleading, Information Concerning Any Fact Material Thereto, Commits A
Fraudulent Insurance Act, Which Is A Crime, And Shall Also Be Subject To A Civil
Penalty Not To Exceed Five Thousand Dollars And The Stated Value Of The Claim
For Each Such Violation.
IN WITNESS WHEREOF, the Trustee has executed and delivered this Notice
under the Policy as of the day of , .
[NAME OF TRUSTEE], as Trustee
By
-----------------------------------
Title
-----------------------------------
2
<PAGE> 1
EXHIBIT 10.1
SUBSEQUENT TRANSFER AGREEMENT
Pursuant to this Subsequent Transfer Agreement, dated as of April 4,
1997, 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
1997-A (the "Trustee"), and pursuant to that certain Pooling and Servicing
Agreement dated as of March 1, 1997 (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") as listed on the Mortgage Loan
Schedule attached hereto as Schedule A.
Capitalized terms used and not defined herein shall have their
respective meanings as set forth in the Pooling and Servicing Agreement.
Section 1. Purchase and Conveyance of Subsequent Mortgage Loans.
(a) The Seller does hereby sell, transfer, assign, set over and
convey to Trustee:
(i) all right, title and interest of such Seller in and to
the Subsequent Mortgage Loans owned by it and listed on
Schedule A hereto, including, without limitation, the related
Mortgages, Mortgage Files and Mortgage Notes, and all payments
on, and proceeds with respect to, such Subsequent Mortgage
Loans received on and after the Subsequent Cut-off Date except
such payments and proceeds as the Servicer is entitled to
retain pursuant to the express provisions of the Pooling and
Servicing Agreement;
(ii) all right, title and interest of such Seller in the
Mortgages on the properties securing the Subsequent Mortgage
Loans, including any related Mortgaged Property acquired by or
on behalf of the Trust by foreclosure or deed in lieu of
foreclosure or otherwise;
(iii) all right, title and interest of such Seller in and to
any rights in or proceeds from any insurance policies
(including title insurance policies) covering the Subsequent
Mortgage Loans, the related Mortgaged Properties or Mortgagors
and any amounts recovered from third parties in respect of any
Subsequent Mortgage Loans that became Liquidated Mortgage
Loans; and
(iv) the proceeds of all of the foregoing.
(b) With respect to each Subsequent Mortgaged 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 Schedule A hereto 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.
<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 the Seller.
(d) Additional terms of the sale, including the purchase price, are
set forth on Attachment A hereto.
Section 2. Representations and Warranties; Conditions Precedent.
(a) The Seller hereby affirms the representations and 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. The 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 Funding 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 interests of Certificateholders.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and all such counterparts shall constitute but one
and the same instrument.
Section 4. Governing Law.
This Agreement shall be construed in accordance with the laws of the
State of California (without regard to conflict of laws principles and the
application of the laws of any other jurisdiction), and the obligations, rights
and remedies of the parties hereunder shall be determined in accordance with
such laws.
Section 5. Successors and Assigns.
This Agreement shall inure to the benefit of and be binding upon the
Seller and the Trustee and their respective successors and assigns. The
Certificate Insurer is a third party beneficiary hereto and shall be entitled to
enforce the provisions hereof as if a party hereto.
2
<PAGE> 3
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: /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 1997-A
By: /s/ Katherine M. Keller
-------------------------------------
Name: Katherine M. Keller
Title: Assistant Secretary
3
<PAGE> 4
State of California )
) ss:
County of Los Angeles )
On this 4th day of April, 1997, 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.
/s/ Yvette Heredia
----------------------------
Notary Public
[Notarial Seal]
4
<PAGE> 5
State of California )
) ss:
County of Orange )
On this 4th day of April, 1997, before me, a notary public in and for
said County and State, personally appeared Katherine Keller, personally known to
me (or proved to me on the basis of satisfactory evidence) to be the person
whose name is subscribed to the within instrument and acknowledged to me that
she executed same in her authorized capacity, and that by her signature on the
instrument the person, or the entity upon behalf of which the person acted,
executed the instrument.
WITNESS my hand and official seal.
/s/ Whitney Knox
-----------------------------
Notary Public
[Notarial Seal]
5
<PAGE> 6
ATTACHMENT A
Subsequent Transfer Date: April 4, 1997
Subsequent Cut-off Date: March 31, 1997
Aggregate of the Principal Balances of
Subsequent Mortgage Loans: $34,847,311.95
Aggregate of the Purchase Prices of
Subsequent Mortgage Loans: $33,104,946.35
Number of Subsequent Mortgage Loans: 651
A-1
<PAGE> 1
EXHIBIT 10.2
SUBSEQUENT TRANSFER AGREEMENT
Pursuant to this Subsequent Transfer Agreement, dated as of April 11,
1997, 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
1997-A (the "Trustee"), and pursuant to that certain Pooling and Servicing
Agreement dated as of March 1, 1997 (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") as listed on the Mortgage Loan
Schedules attached hereto as Schedule A and Schedule B.
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 Trustee, as of the respective Subsequent Transfer Dates set forth in
Attachment A and Attachment B hereto (the "Subsequent Transfer Dates)":
(i) all right, title and interest of such Seller in and to
the Subsequent Mortgage Loans owned by it and listed on
Schedule A and Schedule B hereto, including, without
limitation, the related Mortgages, Mortgage Files and Mortgage
Notes, and all payments on, and proceeds with respect to, such
Subsequent Mortgage Loans received on and after the Subsequent
Cut-off Date except such payments and proceeds as the Servicer
is entitled to retain pursuant to the express provisions of
the Pooling and Servicing Agreement;
(ii) all right, title and interest of such Seller in the
Mortgages on the properties securing the Subsequent Mortgage
Loans, including any related Mortgaged Property acquired by or
on behalf of the Trust by foreclosure or deed in lieu of
foreclosure or otherwise;
(iii) all right, title and interest of such Seller in and to
any rights in or proceeds from any insurance policies
(including title insurance policies) covering the Subsequent
Mortgage Loans, the related Mortgaged Properties or Mortgagors
and any amounts recovered from third parties in respect of any
Subsequent Mortgage Loans that became Liquidated Mortgage
Loans; and
(iv) the proceeds of all of the foregoing.
(b) With respect to each Subsequent Mortgage Loan, the Seller,
contemporaneously with the delivery of this Agreement, has delivered or caused
to be delivered to the Trustee each item set forth in Section 2.01 of the
Pooling and Servicing Agreement. The transfer to the Trustee by the Seller of
the Subsequent Mortgage Loans identified on Schedule A and Schedule B hereto
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.
<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 the Seller.
(d) Additional terms of the sales, including the purchase prices,
are set forth on Attachment A and Attachment B hereto.
Section 2. Representations and Warranties; Conditions Precedent.
(a) The Seller hereby affirms the representations and warranties
set forth in Section 2.05 of the Pooling and Servicing Agreement that relate to
the Subsequent Mortgage Loans as of the respective Subsequent Transfer Dates.
The 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 Funding Period) is satisfied as of
the respective Subsequent Transfer Dates.
(b) All terms and conditions of the Pooling and Servicing
Agreement are hereby ratified and confirmed; provided, however, that in the
event of any conflict, the provisions of this Agreement shall control over the
conflicting provisions of the Pooling and Servicing Agreement.
Section 3. Recordation of Agreement.
This Agreement is subject to recordation in all appropriate public
offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the Mortgaged Properties are situated, and
in any other appropriate public recording office or elsewhere, such recordation
to be effected by the Servicer and at its expense, in the event such recordation
materially and beneficially affects the interests of Certificateholders.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and all such counterparts shall constitute but one
and the same instrument.
Section 4. Governing Law.
This Agreement shall be construed in accordance with the laws of the
State of California (without regard to conflict of laws principles and the
application of the laws of any other jurisdiction), and the obligations, rights
and remedies of the parties hereunder shall be determined in accordance with
such laws.
Section 5. Successors and Assigns.
This Agreement shall inure to the benefit of and be binding upon the
Seller and the Trustee and their respective successors and assigns. The
Certificate Insurer is a third party beneficiary hereto and shall be entitled to
enforce the provisions hereof as if a party hereto.
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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: /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 1997-A
By: /s/ ERIN DEEGAN
--------------------------------------
Name: Erin Deegan
Title: Assistant Vice President
3
<PAGE> 4
State of California )
) ss:
County of Los Angeles )
On this 11th day of April, 1997, 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.
/s/ Yvette Heredia
----------------------------
Notary Public
[Notarial Seal]
4
<PAGE> 5
State of California )
) ss:
County of Orange )
On this 11th day of April, 1997, before me, a notary public in and for
said County and State, personally appeared Erin Deegan, personally known to me
(or proved to me on the basis of satisfactory evidence) to be the person whose
name is subscribed to the within instrument and acknowledged to me that she
executed same in her authorized capacity, and that by her signature on the
instrument the person, or the entity upon behalf of which the person acted,
executed the instrument.
WITNESS my hand and official seal.
/s/ Whitney Knox
-----------------------------
Notary Public
[Notarial Seal]
5
<PAGE> 6
ATTACHMENT A
Subsequent Transfer Date: April 9, 1997
Subsequent Cut-off Date: March 31, 1997
Aggregate of the Principal Balances of
Subsequent Mortgage Loans: $13,610,567.19
Aggregate of the Purchase Prices of
Subsequent Mortgage Loans: $12,930,038.83
Number of Subsequent Mortgage Loans: 226
A-1
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ATTACHMENT B
Subsequent Transfer Date: April 11, 1997
Subsequent Cut-off Date: March 31, 1997
Aggregate of the Principal Balances of
Subsequent Mortgage Loans: $2,914,508.03
Aggregate of the Purchase Prices of
Subsequent Mortgage Loans: $2,768,782.63
Number of Subsequent Mortgage Loans: 61
A-2
