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EXHIBIT 10.36
EXECUTION COPY
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AAMES CAPITAL CORPORATION
Servicer
and
FAIRBANKS CAPITAL CORP.
Sub-Servicer
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SUB-SERVICING AGREEMENT
Dated as of April 21, 1999
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Aames Mortgage Trust 1996-D
Mortgage Pass-Through Certificates Series 1996-D
Financial Security Assurance Inc., Certificate Insurer
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS..........................................................................1
Section 1.01 Defined Terms..............................................1
ARTICLE II
SERVICER'S ENGAGEMENT OF SUB-SERVICER TO PERFORM SERVICING RESPONSIBILITIES..........2
Section 2.01 Contract for Sub-Servicing.................................2
Section 2.02 Possession of Mortgage Loan Documents......................3
ARTICLE III
SERVICING OF THE MORTGAGE LOANS......................................................3
Section 3.01 Sub-Servicer to Service...................................3
Section 3.02 Loan Information and Financial Statements.................7
Section 3.03 Merger or Consolidation of the Sub-Servicer...............7
Section 3.04 Limitation on Liability of the Sub-Servicer and Others....8
Section 3.05 Sub-Servicer Not to Resign................................9
Section 3.06 No Transfer or Assignment of Servicing....................9
Section 3.07 Servicer's Cooperation....................................9
Section 3.08 Receipt of Mortgage Loan Amounts.........................10
Section 3.09 Subsequent Transfers.....................................10
Section 3.10 [Intentionally Omitted]..................................10
Section 3.11 Compensation to the Sub-Servicer.........................10
Section 3.12 Appointment as Servicer..................................12
Section 3.13 Reserve Sub-Account......................................12
Section 3.14 Security Interest........................................13
Section 3.15 Tax Forms................................................13
Section 3.16 Additional Servicing Procedures..........................13
ARTICLE IV
REPRESENTATIONS AND WARRANTIES......................................................13
Section 4.01 Representations, Warranties and Covenants of the Sub-
Servicer.................................................................13
Section 4.02 Representations and Warranties of the Servicer...........15
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ARTICLE V
DEFAULT..............................................................................16
Section 5.01 Events of Default. .......................................16
Section 5.02 Waiver of Defaults. ......................................18
ARTICLE VI
TERMINATION..........................................................................19
Section 6.01 Termination...............................................19
Section 6.02 Termination With Cause ...................................19
Section 6.03 Termination Without Cause. ...............................20
Section 6.04 Effect of Termination.....................................20
ARTICLE VII
MISCELLANEOUS........................................................................21
Section 7.01 Payment of Costs..........................................21
Section 7.02 Reports. ................................................ 21
Section 7.03 Notices. .................................................21
Section 7.04 Severability Clause. .....................................23
Section 7.05 Counterparts. ............................................23
Section 7.06 Governing Law. ...........................................23
Section 7.07 Security for Expenses. ...................................23
Section 7.08 Indemnification. .........................................24
Section 7.09 Protection of Confidential Information. ..................26
Section 7.10 Intention of the Parties. ................................26
Section 7.11 Third Party Beneficiary. .................................26
Section 7.12 Successors and Assigns; Assignment of Agreement. .........26
Section 7.13 Waivers. .................................................27
Section 7.14 Exhibits. ................................................27
Section 7.15 General Interpretive Principles. .........................27
Section 7.16 Reproduction of Documents. ...............................27
Section 7.17 Further Agreement; Power-of-Attorney. ....................27
Section 7.18 Amendments. ..............................................27
Section 7.19 Entire Agreement. ........................................28
Section 7.20 Expenses .................................................28
Section 7.21 Non-Disclosure. ..........................................28
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EXHIBIT A
POOLING AND SERVICING AGREEMENT.....................................................A-1
SCHEDULE 2.01
MORTGAGE LOAN SCHEDULE..............................................................B-1
SCHEDULE 3.01(a)
ADDITIONAL SERVICING PROCEDURES.....................................................B-2
SCHEDULE 3.01(d)
LOANS FOR WHICH SUB-SERVICER HAS NO
PAYMENT OBLIGATIONS ON MAY 12, 1999.................................................B-3
SCHEDULE 4.01(i)
CERTAIN EXCLUDED MORTGAGE LOANS AND REO PROPERTIES..................................B-4
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SUB-SERVICING AGREEMENT
This is a Sub-Servicing Agreement (the "Agreement"), dated as of April
21, 1999, by and between FAIRBANKS CAPITAL CORP., a Utah corporation, having an
office at 0000 Xxxxx Xxxx Xxxxxx, Xxxx Xxxx Xxxx, Xxxx 00000-0000, and its
successors and assigns (the "Sub-Servicer"), and Aames Capital Corporation, a
California corporation, having an office at 000 Xxxxx Xxxxx Xxxxxx, Xxx Xxxxxxx,
Xxxxxxxxxx 00000, and its successors and assigns (the "Servicer").
W I T N E S S E T H:
WHEREAS, the Servicer and Bankers Trust Company (the "Trustee") have
entered into that certain Pooling and Servicing Agreement dated as of December
1, 1996 (as amended, the "Pooling and Servicing Agreement"), whereby the
Servicer will service certain mortgage loans on behalf of the Trustee;
WHEREAS, the Servicer desires to enter into a contract with the
Sub-Servicer whereby the Sub-Servicer shall service those mortgage loans listed
on Schedule 2.01 (the "Mortgage Loan Schedule") attached hereto (the "Mortgage
Loans") in the name of on behalf of the Servicer;
WHEREAS, as the parties contemplate that Sub-Servicer may purchase from
Servicer the right to be reimbursed for all delinquency advances made by
Servicer with respect to the Mortgage Loans pursuant a purchase agreement to be
entered into by the parties (the "Purchase Agreement"); and
WHEREAS, certain obligations hereunder will become effective upon the
closing, if any, of the Purchase Agreement (the "Closing Date")
NOW, THEREFORE, in consideration of the mutual agreements hereinafter
set forth, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Servicer and the Sub-Servicer
hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Defined Terms.
Unless otherwise specified in this Agreement, all capitalized terms not
otherwise defined herein shall have the meanings set forth in the Pooling and
Servicing Agreement. As used herein, the following terms have the meanings
assigned to them in this SECTION 1.01:
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"Advance" shall mean any Monthly Advance or Servicing Advance.
"Event of Default" shall have the meaning set forth in Article V.
"Lender" shall mean any lender or lenders providing financing to
Sub-Servicer for the Purchase Agreement.
"Lockbox Advances" shall mean advances on funds received at the lockbox
account for which the lockbox bank does not make funds available for withdrawal
on the same day received.
"Non-Recoverable Advance" shall mean a Servicing Advance made by
Sub-Servicer that would be uncollectible through Monthly Mortgage Payments,
Insurance Proceeds, Liquidation Proceeds, proceeds from a Principal Payment or
other proceeds of the related Mortgage Loan.
"Prior Monthly Advances" shall mean Monthly Advances on the Mortgage
Loans made by Servicer prior to the Sub-Servicing Commencement Date.
"Reserve Sub-account" shall have the meaning set forth in Section 3.13.
"Sub-Servicing Agreements" shall mean this Agreement and each of the
Sub-Servicing Agreements between Servicer and Sub-Servicer with respect to Aames
Capital Owner Trust 1997-1, Aames Mortgage Trust 1996-B, and Aames Mortgage
Trust 1996-C.
"Sub-Servicing Commencement Date" shall mean May 1, 1999.
"Sub-Servicing Fees" shall mean, with respect to any Collection Period,
the applicable servicing fees and compensation as established pursuant to
Section 3.11.
"Uncollectible Advance" shall mean a Monthly Advance made by
Sub-Servicer or a Prior Monthly Advance made by Servicer which is or would be
uncollectible through Monthly Mortgage Payments, Insurance Proceeds, Liquidation
Proceeds, proceeds from a Principal Payment or other proceeds of the related
Mortgage Loan.
ARTICLE II
SERVICER'S ENGAGEMENT OF SUBSERVICER TO PERFORM
SERVICING RESPONSIBILITIES
Section 2.01 Contract for Sub-Servicing.
The Servicer, by execution and delivery of this Agreement, does hereby
contract with the Sub-Servicer for, and Sub-Servicer hereby agrees to perform
commencing on the Sub-Servicing
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Commencement Date, in each case subject to the terms of this Agreement, the
servicing of the Mortgage Loans listed on Schedule 2.01.
Section 2.02 Possession of Mortgage Loan Documents.
(a) Within one (1) Business Day prior to the Sub-Servicing Commencement
Date, the Servicer, at Servicer's sole cost and expense, shall deliver to
Sub-Servicer a copy of each Mortgage File and other servicing, underwriting and
origination documents relating to the Mortgage Loans in Servicer's possession,
and on or before the Sub-Servicing Commencement Date, Servicer shall transfer to
Sub-Servicer all electronic data in Servicer's possession necessary to service
the Mortgage Loans and to provide current data with respect to the Mortgage
Loans and REO Property. Such copies of Mortgage Files shall include, without
limit, all documents relating to servicing, foreclosure, bankruptcy, and REO
Property with respect to any Mortgage Loan.
(b) The Sub-Servicer shall hold each Mortgage File and each document
contained therein in the possession of the Sub-Servicer in trust on behalf of
the Servicer for the benefit of the Trustee and the Certificate Insurer. The
Sub-Servicer's possession of any portion of the Mortgage File shall be for the
sole purpose of facilitating the servicing of the related Mortgage Loan pursuant
to this Agreement and the Pooling and Servicing Agreement, and such retention
and possession by the Sub-Servicer shall be in a custodial capacity only. Any
portion of the Mortgage File retained by the Sub-Servicer shall be identified to
reflect clearly the ownership of the related Mortgage Loan by the Trustee. The
Sub-Servicer shall release from its custody any Mortgage File retained by it
only in accordance with this Agreement and the Pooling and Servicing Agreement.
The Sub-Servicer shall provide to the Servicer as soon as practicable after
request therefor by the Servicer a copy of any documents held by it with respect
to any Mortgage Loan.
ARTICLE III
SERVICING OF THE MORTGAGE LOANS
Section 3.01 Sub-Servicer to Service.
(a) The Sub-Servicer, as an independent contractor, shall service and
administer the Mortgage Loans in accordance with the Pooling and Servicing
Agreement and this Agreement, including the additional servicing procedures set
forth on Schedule 3.01(a) hereto as may be amended from time to time. This
Agreement shall govern in the event of any conflict between this Agreement and
the additional servicing procedures. The Sub-Servicer shall perform all
obligations of Servicer under the Pooling and Servicing Agreement except as
specifically provided herein and shall prepare and deliver to Servicer all
documents and reports required to be delivered by the Servicer to the Trustee or
the Certificate Insurer at least two (2) Business Days
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prior to the date the Servicer must deliver such reports, provided, however,
that Sub-Servicer shall provide to Servicer such information as to the Mortgage
Loans being serviced by Sub-Servicer as is required by Servicer to prepare the
Servicer Remittance Report not later than the second Business Day of each month.
Sub-Servicer shall comply in all material respects with applicable law in
collecting the Mortgage Loans. The Sub-Servicer is hereby authorized and
empowered, subject to the terms of this Agreement, to execute and deliver on
behalf of itself and the Servicer all instruments of satisfaction or
cancellation, or of partial or full release, discharge and all other comparable
instruments, with respect to the Mortgage Loans and with respect to the
Mortgaged Properties. The Servicer shall furnish the Sub-Servicer with any
powers of attorney and other documents necessary or appropriate to enable the
Sub-Servicer to carry out its servicing and administrative duties under this
Agreement.
(b) The Sub-Servicer shall cause the portions of its electronic ledger
relating to the Mortgage Loans to be clearly and unambiguously marked, and shall
make appropriate entries in Sub-Servicer's general accounting records to
indicate that such Mortgage Loans constitute part of the Trust in accordance
with the terms of the Trust created under the Pooling and Servicing Agreement.
(c) The Sub-Servicer shall, in cooperation with the Trustee, establish
on or prior to the Sub-Servicing Commencement Date and maintain thereafter one
or more trust accounts (the "Sub-Servicing Account") in a manner consistent with
Section 3.02(b) of the Pooling and Servicing Agreement. The Sub-Servicing
Account shall be an Eligible Account established in the name of the Trustee as
trustee of Aames Mortgage Trust 1996-D. The Sub-Servicer shall deposit into the
Sub-Servicing Account no later than the first Business Day after receipt all
proceeds of Mortgage Loans received by the Sub-Servicer (except for Additional
Servicing Compensation as set forth in Section 3.11 hereof) consistent with
Section 3.02 of the Pooling and Servicing Agreement. The Sub-Servicer shall make
Lockbox Advances necessary to deposit such proceeds into the Sub-Servicing
Account in accordance with this Agreement and Section 3.02 of the Pooling and
Servicing Agreement. The Sub-Servicer shall remit such proceeds to the
Certificate Account on or before the Deposit Date. The Sub-Servicer shall be
able to withdraw Sub-Servicer's servicing compensation from the Sub-Servicing
Account on such date in accordance with Section 3.08 of the Pooling and
Servicing Agreement. The Sub-Servicer shall be permitted to withdraw from time
to time from the Sub-Servicing Account amounts representing reimbursements for
Advances made hereunder or purchased by the Sub-Servicer from the Seller in
accordance with the priorities set forth in Section 3.01(h). The Sub-Servicer
shall send to the Servicer a statement of proceeds of Mortgage Loans collected
by or on behalf of the Sub-Servicer within two (2) Business Days after the end
of every month, and the Servicer shall compare the information provided in such
reports with the deposits made by the Sub-Servicer into the Certificate Account
for the same period. The Sub-Servicer shall direct the investment of the
Sub-Servicing Accounts in Permitted Investments in accordance with the
requirements of Section 3.02(b) of the Pooling and Servicing Agreement.
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(d) The Sub-Servicer shall deposit into the Certificate Account one (1)
Business Day prior to each Deposit Date, commencing with the first Deposit Date
after the Sub-Servicing Commencement Date, Monthly Advances due the Certificate
Account on such Deposit Date in accordance with the terms of the Pooling and
Servicing Agreement as if the Sub-Servicer were the Servicer thereunder,
provided, however, that Sub-Servicer shall not be responsible for funding
Servicing Advances or Monthly Advances or remitting any collections on the
Deposit Date of May 12, 1999 with respect to the Mortgage Loans listed on
Schedule 3.01(d) , or any other Mortgage Loan as to which Servicer has received
payments with respect to such Mortgage Loans during April 1999 and all such
advances, payments and collections shall be made directly by Servicer.
Notwithstanding any other provision of this Agreement, Sub-Servicer shall not be
responsible for funding Servicing Advances or Monthly Advances to the extent
that Sub-Servicer deems such Servicing Advances or Monthly Advances to be
Non-Recoverable Advances or Uncollectible Advances, respectively, and gives
Servicer notice that it has deemed such Servicing Advances or Monthly Advances
to be Non-Recoverable Advances or Uncollectible Advances, respectively, five (5)
Business Days prior to the Deposit Date on which such an Advance would have been
made were it not deemed a Non-Recoverable Advance or Uncollectible Advance.
Compensating Interest shall be an obligation of Servicer and Sub-Servicer shall
have no obligation to make any payment with respect to Compensating Interest. To
the extent not paid directly by the Servicer, Sub-Servicer shall have the right
to pay Compensating Interest and off-set it against monies collected by
Sub-Servicer which represent amounts due Servicer with respect to Lockbox
Advances and Servicing Advances previously made by Servicer or from amounts
payable to Servicer including prepayment fees under the Pooling and Servicing
Agreement (collectively, the "Servicer Reimbursement Funds").
(e) This Agreement is intended to be consistent with and not to violate
the provisions of the Pooling and Servicing Agreement, including without limit
Sections 3.01, 3.02, and 3.15 thereof. Accordingly, if it is discovered that any
provision of this Agreement is not consistent with or violates any provision of
the Pooling and Servicing Agreement, the Pooling and Servicing Agreement shall
prevail, and the Sub-Servicer and the Servicer shall execute such amendments,
subject to the provisions of Section 7.18 hereof, as are reasonably necessary to
make this Agreement consistent with the Pooling and Servicing Agreement while
maintaining as nearly as possible the same economic benefits intended to be
conferred on the parties by this Agreement without regard to such inconsistency
or violation.
(f) The Sub-Servicer agrees that it shall not knowingly or
intentionally take any action that would result in the termination of the REMIC
status for the Trust, and that it shall not knowingly or intentionally engage in
any "prohibited transaction", as such term is defined in Section 860F(a)(2) of
the Code. In the event that any tax is imposed on "prohibited transactions" as
defined in Section 860F(a)(2) of the Code on the "net income from foreclosure
property" as defined in Section 860G of the Code, on any contribution to the
Trust after the applicable Startup Date pursuant to 860G of the Code, or any
other tax is imposed, such tax shall be paid by the Sub-Servicer, if, but only
if such tax arises out of or results from the gross negligence, willful
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malfeasance or bad faith of the Sub-Servicer in the performance of its
obligations under this Agreement.
(g) [intentionally omitted]
(h) Except as set forth in this Section 3.01(h), Sub-Servicer shall not
be obligated to reimburse Servicer for any Advance made or Compensating Interest
paid by Servicer. As amounts are collected by Sub-Servicer which represent
reimbursements to Servicer or Sub-Servicer with respect to a particular mortgage
loan (a "Specific Mortgage Loan"), these amounts shall be paid or credited in
the following priority from time to time but in no event less frequently than
once a month:
(i) first, to Sub-Servicer to reimburse it for Monthly
Advances (including any such Advances made by the Servicer,
the reimbursement rights for which have been sold to the
Sub-Servicer pursuant to the Purchase Agreement), Servicing
Advances, Lockbox Advances and Sub-Servicing Fees (in that
order) with respect to the Specific Mortgage Loan;
(ii) second, to Sub-Servicer to reimburse Sub-Servicer for
any Compensating Interest for any Mortgage Loan which
Sub-Servicer has elected to pay notwithstanding Servicer's
obligation to pay Compensating Interest;
(iii) third, to Sub-Servicer to pay any amount due and
payable to Sub-Servicer under this Agreement or the Purchase
Agreement, including, without limitation, to reimburse
Sub-Servicer for any Monthly Advances and Servicing Advances
made by Sub-Servicer that have not been reimbursed following
liquidation of the related Mortgage Loan, or where proceeds
of any Mortgage Loan that would have otherwise been
available to reimburse Sub-Servicer for Advances made by
Servicer or Sub-Servicer under this Agreement have been
applied by the Trustee or the Certificate Insurer to set-off
amounts owed by the Servicer in respect of any default by
Servicer under this Agreement or the Pooling and Servicing
Agreement;
(iv) fourth, to Sub-Servicer to fund the Reserve Sub-account
to the extent required by Section 3.13; and
(v) fifth, any remaining amounts, to the Servicer.
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(i) Sub-Servicer shall service the Mortgage Loans on a private label
basis under the name of Servicer as Servicer's servicing agent and, except as
may be required by law or is required or desirable in connection with the
performance of its obligations hereunder, Sub-Servicer shall not disclose that
it is a sub-servicer for the Mortgage Loans.
Section 3.02 Loan Information and Financial Statements.
(a) No later than three (3) Business Days following each Deposit Date,
and no later than two (2) Business Days following any request by the Certificate
Insurer, the Sub-Servicer shall deliver to the Certificate Insurer or its
designee, a computer tape or electronic transmission in such format as shall be
agreed by the Certificate Insurer and the Sub-Servicer containing the "loan
level" information with respect to the Mortgage Loans as of the related Servicer
Remittance Date, or such other date specified by the Certificate Insurer if such
information is being provided upon its request. The form of such "loan level"
information may be modified by mutual agreement of the Sub-Servicer and the
Certificate Insurer.
(b) Sub-Servicer shall maintain appropriate records of information
relating to the servicing of the Mortgage Loans and the REO Property and related
books and records. Sub-Servicer will promptly provide Servicer or Certificate
Insurer with (i) information from and access to such records, upon the
reasonable request of Servicer or Certificate Insurer, and (ii) audit rights to
discuss the affairs, finances and accounts with the appropriate officers or
employees of the Sub-Servicer and with the Sub-Servicer's independent
accountants.
Section 3.03 Merger or Consolidation of the Sub-Servicer.
(a) The Sub-Servicer shall keep in full effect its existence, rights,
and franchises as a corporation under the laws of the state of its incorporation
except as permitted herein, and shall obtain and preserve its qualification to
do business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement and the Pooling and Servicing Agreement or any
of the Mortgage Loans and to perform its duties under this Agreement and shall
continue to meet the requirements of Sections 3.01 and 3.15 of the Pooling and
Servicing Agreement as shall be necessary to perform its duties under this
Agreement and the Pooling and Servicing Agreement (including maintaining
licenses and qualifications necessary to perform its servicing obligations in
states where the Mortgaged Properties are located).
(b) Any Person into which the Sub-Servicer may be merged or
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Sub-Servicer shall be a party, or any Person
succeeding to the business of the Sub-Servicer, shall be the successor of the
Sub-Servicer hereunder, 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, if the successor or surviving Person (i) meets the
requirements and complies with the terms of Section 3.01 of the Pooling and
Servicing Agreement, (ii) has received the prior
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written consent of the Certificate Insurer, and (iii) has received the prior
written consent of the Servicer.
Section 3.04 Limitation on Liability of the SubServicer and Others.
(a) Other than provided in Section 7.08(b) hereof, neither the
Sub-Servicer nor any of the directors or officers or employees or agents of the
Sub-Servicer shall be under any liability to the Servicer or the Certificate
Insurer for any action taken or for refraining from the taking of any action in
good faith pursuant to this Agreement, or for errors in judgment; provided,
however, that this provision shall not protect the Sub-Servicer or any such
Person against any liability that would otherwise be imposed by reason of such
Person's willful misfeasance, bad faith or gross negligence in the performance
of duties by the Sub-Servicer or by reason of such Person's reckless disregard
of its obligations and duties hereunder; and provided, further, that this
provision shall not be construed to entitle the Sub-Servicer to indemnity in the
event that amounts advanced by the Sub-Servicer to retire any senior lien exceed
Net Liquidation Proceeds realized with respect to the related Mortgage Loan. The
Sub-Servicer and any director, officer, employee or agent of the Sub-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.
(b) Notwithstanding anything else contained in this Agreement, the
Sub-Servicer does not assume (i) any responsibility to indemnify nor make any of
the Seller's representations and warranties under the Pooling and Servicing
Agreement or the Seller's or the Servicer's representations and warranties under
(a) any document relating to the sale of the Mortgage Loans and (b) the
Insurance and Indemnity Agreement dated as of December 1, 1996, by and between
the Certificate Insurer and the Servicer; (ii) any obligation to pay a
termination fee to any sub-servicer pursuant to the Pooling and Servicing
Agreement; (iii) any obligation to purchase one or more of the Mortgage Loans
pursuant to any agreement; (iv) any obligation to record the Mortgage Loans;
provided, however, that if the Sub-Servicer cannot enforce any Mortgage Loan due
to a lack of such recording, the Sub-Servicer shall record such mortgage at the
Servicer's expense; or (v), except as specifically provided herein, any
obligations of, or requirement to pay from Sub-Servicer's own funds, the Trustee
under the Pooling and Servicing Agreement.
(c) The Sub-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 expenses or liability; provided, however, that the
Sub-Servicer may, with the prior written consent of the Servicer and the
Certificate Insurer, undertake any such action that it may deem necessary or
desirable in respect to this Agreement and the rights and duties of the parties
hereto. In such event, the reasonable legal expenses and costs of such action
and any liability resulting therefrom shall be expenses, costs and liabilities
for which the Servicer will be liable and the Sub-Servicer shall be entitled to
be reimbursed therefor from the Servicer upon written demand, subject to the
Certificate Insurer's consent, to the extent that the Servicer receives
reimbursement from the
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Trust in accordance with the Pooling and Servicing Agreement. To the extent that
the Sub-Servicer's actions pursuant to this Agreement and the results thereof
would entitle the Servicer to indemnity from the Trust if such actions had been
performed directly by the Servicer, the Servicer shall seek indemnification from
the Trust for such expenses and if the Trust actually indemnifies the Servicer,
the Servicer shall indemnify the Sub-Servicer therefore, subject to Certificate
Insurer's reasonable consent all in accordance with the Pooling and Servicing
Agreement.
Section 3.05 Sub-Servicer Not to Resign.
The Sub-Servicer shall not resign from the obligations and duties
hereby imposed on it except with the prior written consent of the Certificate
Insurer, or upon the determination, in Sub-Servicer's reasonable judgment that
the Sub-Servicer's material duties hereunder are no longer permissible under
applicable law, and provided such impermissibility is not caused by an act or
omission of the Sub-Servicer and cannot be cured in a commercially reasonable
manner by the Sub-Servicer. Any such determination permitting the resignation of
the Sub-Servicer shall be evidenced by an Opinion of Counsel to such effect
delivered to the Servicer and the Certificate Insurer, which Opinion of Counsel
shall be in form and substance acceptable to the Servicer and the Certificate
Insurer.
Section 3.06 No Transfer or Assignment of Servicing.
With respect to the responsibility of the Sub-Servicer to service the
Mortgage Loans hereunder, the Sub-Servicer, acknowledges that the Servicer (and
the Certificate Insurer, in granting its consent hereto) has acted in reliance
upon the Sub-Servicer's independent status, the adequacy of its servicing
facilities, plant, personnel, records and procedures, its integrity, reputation
and financial standing and the continuance thereof. Without in any way limiting
the generality of this Section 3.06, the Sub-Servicer shall not either assign or
transfer this Agreement or the servicing hereunder nor delegate its rights or
duties hereunder or any portion thereof, whether to any sub-servicer or
otherwise, or sell or otherwise dispose of all or substantially all of its
property or assets, without the prior written consent of the Servicer and the
Certificate Insurer. Notwithstanding any other provision of this Agreement,
Sub-Servicer shall have the right to assign, transfer and pledge any right to
receive payment under this Agreement without the consent of or notice to
Servicer, the Trust or the Certificate Insurer.
Section 3.07 Servicer's Cooperation.
The Servicer shall cooperate with the Sub-Servicer, and shall provide
to the Sub-Servicer information in its systems, regarding the Mortgage Loans and
the servicing thereof as reasonably requested by the Sub-Servicer.
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Section 3.08 Receipt of Mortgage Loan Amounts.
All amounts collected in connection with the Mortgage Loans before the
Sub-Servicing Commencement Date shall be accounted for and dealt with by the
Servicer in the manner set forth in the Pooling and Servicing Agreement. Except
for Servicer's interest as Seller or Master Servicer under the Pooling and
Servicing Agreement not specifically transferred to Sub-Servicer as provided
herein, the Servicer specifically disclaims any interest, legal or equitable, in
payments received with respect to the Mortgage Loans after the Sub-Servicing
Commencement Date, and the Servicer shall endorse any such payments received
with respect to the Mortgage Loans after the Sub-Servicing Commencement Date to
the Sub-Servicer and shall forward such payments to the Sub-Servicer within one
Business Day following the receipt of such payments by the Servicer.
Section 3.09 Subsequent Transfers.
In the event that any mortgage loan, as defined in the Pooling and
Servicing Agreement, is currently being sub-serviced by another sub-servicer and
such other sub-servicer terminates its servicing of such mortgage loan, such
mortgage loan shall be added to Schedule 2.01, and such mortgage loan shall
thereafter be sub-serviced by the Sub-Servicer; provided, however, that the
Sub-Servicer's obligation to accept servicing with respect to any such mortgage
loans shall be subject to terms and conditions (including without limit,
compensation provisions) to be mutually agreed upon by the Servicer,
Sub-Servicer, and Certificate Insurer.
Section 3.10 [Intentionally Omitted].
Section 3.11 Compensation to the SubServicer.
(a) As compensation for Sub-Servicer's services under this Agreement,
Sub-Servicer shall be entitled to the following during its term as Sub-Servicer
(collectively, the "Sub-Servicing Fees"):
(i) payment on a monthly basis on the Deposit Date of an amount
with respect to each Mortgage Loan, that is the product of .000125 (1/12 of 15
basis points) times the aggregate outstanding balance of Mortgage Loans being
serviced by Sub-Servicer as of the first Business Day of each month whether or
not Servicer would be entitled to such Servicing Fee pursuant to the Pooling and
Servicing Agreement (the "Enhanced Servicing Fees") plus .000416667 (1/12 of 50
basis points) times the aggregate outstanding balance of Mortgage Loans being
serviced by Sub-Servicer for which Servicer would be entitled to such Servicing
Fee pursuant to the Pooling and Servicing Agreement (the "Regular Servicing
Fees"). Payment of the Enhanced Servicing Fee and Regular Servicing Fees may be
made first, by withdrawals from the Sub-Servicing Account on each Deposit Date
to the extent permitted by Sections 3.02 and 3.08 of the Pooling and Servicing
Agreement; second, from any prepayment fees received by the Sub-Servicer and due
the Servicer under this Agreement; third, from any reimbursement of
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Servicing Advances received by the Sub-Servicer and due the Servicer pursuant to
the Pooling and Servicing Agreement; fourth, by Sub-Servicer's invoicing the
Servicer for such Sub-Servicing Fees, which invoice shall be paid within ten
(10) days of receipt by the Servicer; and fifth, by payment to the Sub-Servicer
from the Reserve Sub-account. Notwithstanding any other provision of this
Agreement, the obligation to pay the Enhanced Servicing Fee shall commence on
the later of the Sub-Servicing Commencement Date or the Closing Date and shall
not be payable with respect to any period prior to the Sub-Servicing
Commencement Date or the Closing Date, as applicable.
(ii) With the exception of prepayment fees, Sub-Servicer shall be
entitled to all additional servicing compensation that Servicer would otherwise
be entitled to under Section 3.08 of the Pooling and Servicing Agreement with
respect to each Mortgage Loan, for any period in which such Mortgage Loan was
serviced by Sub-Servicer, including without limitation ancillary income,
assumption fees, late payment charges, charges for checks returned for
insufficient funds and extension and other administrative charges ("Additional
Servicing Compensation"). Additional Servicing Compensation will be paid to
Sub-Servicer by Sub-Servicer retaining such Additional Servicing Compensation
prior to depositing proceeds of Mortgage Loans into the Sub-Servicing Account
or, if deposited in the Sub-Servicing Account, by withdrawals from the
Sub-Servicing Account on each Deposit Date as permitted by Sections 3.02 and
3.08 of the Pooling and Servicing Agreement.
(iii) The Servicer shall pay to the Sub-Servicer a Set-Up Fee equal
to $5 for each Mortgage Loan for which servicing is transferred to the
Sub-Servicer. Payment of the Set-Up Fees shall be made at Sub-Servicer's
election by Sub-Servicer invoicing the Servicer for such Set-Up Fees, which
invoice shall be paid within ten (10) days of receipt by the Servicer or by
payment to Sub-Servicer from the Reserve Sub-account.
(iv) In the event the Sub-Servicer is terminated pursuant to
Section 6.03 of this Agreement, or any Mortgage Loan is transferred to another
servicer or special servicer, the Sub-Servicer shall be entitled (from the
Servicer and not from the Trust unless specifically provided by the Pooling and
Servicing Agreement) to a Termination Fee of $20 (the "Termination Fee") for
each Mortgage Loan for which the Sub-Servicer transfers servicing in accordance
with this Agreement. In connection with a termination pursuant to Section 6.03
hereof, the Sub-Servicer shall receive, prior to the transfer of servicing, the
Termination Fees, all outstanding Advances and all other amounts due
Sub-Servicer hereunder.
(v) Sub-Servicer shall be entitled to all net income and net gain
realized, and shall be obligated to reimburse any loss from the investment of
funds deposited in the Sub-Servicing Account, as provided in Section 3.02(b) of
the Pooling and Servicing Agreement. The amount described in this subsection (v)
shall be paid to Sub-Servicer in accordance with the Pooling and Servicing
Agreement, as if the Sub-Servicer was the Servicer in the Pooling and Servicing
Agreement.
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(vi) Sub-Servicer shall remit to Servicer on each Deposit Date all
prepayment fees and compensation payable to Servicer pursuant to 3.01(h)(v), if
any, less any amount due Sub-Servicer hereunder.
Section 3.12 Appointment as Servicer.
If the Servicer is terminated as the servicer under Section 8.01 of the
Pooling and Servicing Agreement, or Servicer's term is not renewed, the
Sub-Servicer, if appointed by the Trustee or the Certificate Insurer, agrees to
accept such appointment as the successor Servicer under the Pooling and
Servicing Agreement and shall perform all of the duties of the Servicer under
the Pooling and Servicing Agreement and be bound by all the obligations of the
Servicer thereunder, except that the Sub-Servicer does not assume any obligation
described in Sections 3.04(b)(i), (ii) (except as to sub-servicers engaged by
the Sub-Servicer) (iii) or (v) hereof. Upon such occurrence, all future
obligations of the Sub-Servicer under this Agreement shall be terminated, but
without payment of any penalty or Termination Fee, provided, however, that
Sub-Servicer shall be entitled to all unpaid compensation due under Section 3.11
of this Agreement, (provided that the amount of any unpaid Enhanced Servicing
Fees and any unpaid Set-Up Fees shall be recoverable solely from the Servicer)
and Servicer, Sub-Servicer and Certificate Insurer shall continue to be entitled
and obligated with respect to all of their respective indemnification
obligations pursuant to Section 7.08 of this Agreement, in each case arising
from activities prior to such termination date.
Section 3.13 Reserve Sub-Account.
Sub-Servicer shall establish a single segregated trust account
("Reserve Sub-account") to be funded with distributions from, and subject to
withdrawals in accordance with, each of the Sub-Servicing Agreements. The
Reserve Sub- account shall be established for the benefit of Sub-Servicer in the
name of, and under the exclusive dominion and control of Sub-Servicer or its
designee. Sub-Servicer shall deposit into the Reserve Sub-account all amounts
designated for distribution to the Reserve Sub-account at any time pursuant to
each of the Sub-Servicing Agreements until the Reserve Sub-account balance at
such time is $300,000 (the "Reserve Amount"). All net income from the Reserve
Sub-account shall be reinvested in the Reserve Sub-account. Sub-Servicer shall
have the right to withdraw funds from the Reserve Sub-account (i) to reimburse
Sub-Servicer for any Advance made by the Sub-Servicer that was not reimbursed
from proceeds of the related Mortgage Loan following the liquidation or
attempted liquidation of such Mortgage Loan; (ii) to pay any Sub-Servicing Fee
owed Sub-Servicer pursuant to Section 3.11 or any other amount due Sub-Servicer
under this Agreement; and (iii) in accordance with terms of each Sub-Servicing
Agreement other than this Agreement. Sub-Servicer shall determine in its sole
reasonable discretion at least annually whether the Reserve Amount exceeds the
amount required to provide an adequate reserve for amounts payable to
Sub-Servicer from the Reserve Sub-account and shall reduce the Reserve Amount by
the amount of any such excess, provided however, that the Reserve Amount shall
in no event be reduced below $150,000. Promptly after the date on which the last
Sub-Servicing Agreement that is in effect is terminated,
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Sub-Servicer shall distribute the balance in the Reserve Sub-account, if any, to
Servicer, less any amounts due Sub-Servicer under the Sub-Servicing Agreements.
Section 3.14 Security Interest.
Servicer hereby grants Sub-Servicer a security interest in the Reserve
Sub-account and in all amounts payable to Servicer under the Pooling and
Servicing Agreement to secure payment of all amounts due Sub-Servicer under or
pursuant to this Agreement, the Purchase Agreement, any sub-servicing agreement
or any similar or other agreement between Servicer and Sub-Servicer.
Section 3.15 Tax Forms.
The Sub-Servicer shall mail, on or before the date required by law, all
required Internal Revenue Service forms, including without limitation form
numbers 1099, 1099A or 1098, to all persons or entities entitled to receive such
forms for all applicable periods beginning January 1, 2000. Servicer shall
cooperate with Sub-Servicer in the preparation of all such forms and timely
provide to Sub-Servicer all information necessary for Sub-Servicer to prepare
such forms.
Section 3.16 Additional Servicing Procedures.
The parties agree to comply with the additional servicing procedures
set forth on Schedule 3.01(a) hereto as the same may be amended from time to
time by the mutual agreement of the parties, provided that this Agreement shall
govern in the event of a conflict between this Agreement and the additional
servicing procedures.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01 Representations, Warranties and Covenants of the
Sub-Servicer.
The Sub-Servicer hereby represents and warrants to and covenants with
the Servicer and with the Certificate Insurer that as of the date of this
Agreement or as of such date as is specifically provided herein:
(a) The Sub-Servicer is a corporation duly organized, validly existing
and in good standing under the laws of the State of Utah and is in compliance
with the laws of each state in which any Mortgaged Property is located to the
extent necessary to perform the sub-servicing obligations hereunder;
(b) The execution and delivery of this Agreement by the Sub-Servicer
and its performance of and compliance with the terms of this Agreement will not
violate the Sub-Servicer's articles of incorporation or by-laws or constitute a
default (or an event which,
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with notice or lapse of time, or both, would constitute a default) under, or
result in the breach or acceleration of, any material contract, agreement or
other instrument to which the Sub-Servicer is a party or which may be applicable
to the Sub-Servicer or any of its assets;
(c) The Sub-Servicer has the full power and authority to enter into and
consummate all transactions contemplated by this Agreement, has duly authorized
the execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby, and has duly executed and delivered
this Agreement. This Agreement, assuming due authorization, execution and
delivery by the Servicer, constitutes a valid, legal and binding obligation of
the Sub-Servicer, enforceable against it in accordance with the terms hereof,
except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium or other similar laws relating to or
affecting the rights of creditors generally, and by general equity principles
(regardless of whether such enforcement is considered in a proceeding in equity
or at law);
(d) The Sub-Servicer is not in violation of, and the execution and
delivery of this Agreement by the Sub-Servicer and its performance and
compliance with the terms of this Agreement will not constitute a violation with
respect to, any order or decree of any court or any order or regulation of any
federal, state, municipal or governmental agency having jurisdiction, which
violation would materially and adversely affect the condition (financial or
otherwise) or operations of the Sub-Servicer or materially and adversely affect
the performance of Sub-Servicer's duties hereunder;
(e) There are no actions or proceedings against, or investigations of,
the Sub-Servicer pending, or, to the best knowledge of the Sub-Servicer,
threatened, before any court, administrative agency or other tribunal (A) that,
if determined adversely, would prohibit its entering into this Agreement, (B)
seeking to prevent the consummation of any of the transactions contemplated by
this Agreement, or (C) that, if determined adversely, would result in a material
adverse change with respect to Sub-Servicer or would be reasonably likely to
impair the ability of Sub-Servicer to perform, or to materially and adversely
affect the performance by the Sub-Servicer of its obligations under, or the
validity or enforceability of, this Agreement;
(f) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Sub-Servicer of, or compliance by the Sub-Servicer with, this
Agreement, or for the consummation of the transactions contemplated by this
Agreement, except for such consents, approvals, authorizations and orders, if
any, that have been obtained prior to the date of this Agreement;
(g) The Sub-Servicer is duly licensed where required as a "Licensee" or
is otherwise qualified in each state in which it transacts business and is not
in default of such state's applicable laws, rules and regulations, except where
the failure to so qualify or such default would not have a material adverse
effect on the ability of the Sub-Servicer to conduct its business or perform its
obligations hereunder, and the Sub-Servicer is an FHLMC-approved servicer; and
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(h) The Sub-Servicer is not required to be registered as an "investment
company" under the Investment Company Act of 1940, as amended.
Section 4.02 Representations and Warranties of the Servicer.
The Servicer hereby represents and warrants to the Sub-Servicer and to
the Certificate Insurer that as of the date of this Agreement or as of such date
as is specifically provided herein:
(a) The Servicer is a corporation duly organized, validly existing and
in good standing under the laws of the State of California and has, and had at
all relevant times, full power to own its property, to carry on its business as
presently conducted, to enter into and perform its obligations under this
Agreement;
(b) The execution and delivery of this Agreement by the Servicer and
its performance of and compliance with the terms of this Agreement will not
violate the Servicer's articles of incorporation or by-laws or constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or result in the breach or acceleration of, any
material contract, agreement or other instrument to which the Servicer is a
party or which may be applicable to the Servicer or any of its assets;
(c) The Servicer has the full power and authority to enter into and
consummate the transactions contemplated by this Agreement, has duly authorized
the execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby, and has duly executed and delivered
this Agreement. This Agreement, assuming due authorization, execution and
delivery by the Sub-Servicer, constitutes a valid, legal and binding obligation
of the Servicer, enforceable against it in accordance with the terms hereof,
except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium or other similar laws relating to or
affecting the rights of creditors generally, and by general equity principles
(regardless of whether such enforcement is considered in a proceeding in equity
or at law);
(d) The Servicer is not in violation of, and the execution and delivery
of this Agreement by the Servicer and its performance and compliance with the
terms of this Agreement and the Pooling and Servicing Agreement will not
constitute a violation with respect to, any order or decree of any court or any
order or regulation of any federal, state, municipal or governmental agency
having jurisdiction, which violation would materially and adversely affect the
condition (financial or otherwise) or operations of the Servicer or materially
and adversely affect the performance of Servicer's duties hereunder and
thereunder;
(e) There are no actions or proceedings against, or investigations of,
the Servicer pending, or, to the best knowledge of the Servicer, threatened,
before any court, administrative agency or other tribunal (A) that, if
determined adversely, would prohibit its entering into this Agreement, (B)
seeking to prevent the consummation of any of the transactions contemplated by
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this Agreement, or (C) that, if determined adversely, would result in a material
adverse change with respect to Servicer or would be reasonably likely to impair
the ability of Servicer to perform, or to materially and adversely affect the
performance by the Servicer of its obligations under, or the validity or
enforceability of, this Agreement;
(f) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Servicer of, or compliance by the Servicer with, this
Agreement, or for the consummation of the transactions contemplated by this
Agreement, except for such consents, approvals, authorizations and orders, if
any, that have been obtained prior to the date of this Agreement;
(g) The Servicer is duly licensed where required as a "Licensee" or is
otherwise qualified in each state in which it transacts business and is not in
default of such state's applicable laws, rules and regulations, except where the
failure to so qualify or such default would not have a material adverse effect
on the ability of the Servicer to conduct its business or perform its
obligations hereunder or under the Pooling and Servicing Agreement;
(h) The Servicer has serviced the Mortgage Loans in accordance with
applicable laws and the Pooling and Servicing Agreement. As of the Sub-Servicing
Commencement Date, there will be no Advances, Compensating Interest or any other
payment required to have been paid or advanced by the Servicer under the Pooling
and Servicing Agreement that have not been paid or advanced; and
(i) Schedule 2.01 contains all mortgage loans in the Trust except for
the Mortgage Loans and REO Properties set forth on Schedule 4.01(i).
ARTICLE V
DEFAULT
Section 5.01 Events of Default.
(a) In case one or more of the following events (each, an "Event of
Default") by the Sub-Servicer shall occur and be continuing:
(1) except as set forth in clause (a)(3) below, any failure by the
Sub-Servicer to deposit into the designated account any amount required to be so
deposited or remitted under this Agreement or the Pooling or Servicing Agreement
on the date required under such agreement, subject to any applicable grace
period;
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(2) the Sub-Servicer shall fail timely to provide to the Servicer,
the Trustee, or the Certificate Insurer any report required by this Agreement to
be provided to the Servicer, the Trustee, or the Certificate Insurer, subject to
any applicable grace period;
(3) any failure by the Sub-Servicer to make any Servicing Advance
as required under this Agreement, which failure continues unremedied for a
period of 30 days, or any failure on the part of the Sub-Servicer duly to
observe or perform in any material respect any other of the covenants or
agreements on the part of the Sub-Servicer contained in this Agreement which
continues unremedied for a period of 30 days after the earlier of (a) knowledge
of the Sub-Servicer of such failure and (b) the date on which written notice of
such failure, requiring the same to be remedied, shall have been given to the
Sub-Servicer by the Servicer, Certificate Insurer or Trustee;
(4) the entry against the Sub-Servicer of a decree or order of a
court or agency or supervisory authority having jurisdiction in the premises for
the appointment of a conservator, receiver, liquidator, trustee or similar
official in any bankruptcy, insolvency, conservatorship, receivership,
readjustment of debt, marshaling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs, shall have
been entered against the Sub-Servicer and such decree or order shall have
remained in force undischarged or unstayed for a period of 60 consecutive days;
(5) the Sub-Servicer shall consent to the appointment of a
conservator, receiver, liquidator, trustee or similar official in any
bankruptcy, insolvency, conservatorship, receivership, readjustment of debt,
marshaling of assets and liabilities or similar proceedings of or relating to
the Sub-Servicer or of or relating to all or substantially all of its property;
(6) the Sub-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, voluntarily suspend payment of its
obligations, or take any corporate action in furtherance of the foregoing;
(7) the Sub-Servicer shall cease to be an approved servicer of
residential mortgage loans for FHLMC;
(8) the Sub-Servicer shall assign or transfer or attempt to assign
or transfer all or part of its rights and obligations hereunder except as
permitted by this Agreement;
(9) the Sub-Servicer shall cease to be a wholly-owned subsidiary of
Fairbanks Capital Holding Corp.;
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(10) any breach by the Sub-Servicer of a representation or warranty
made in Section 4.01 hereof, which breach continues unremedied for a period of
30 days after the earlier of (a) knowledge of the Sub-Servicer of such breach
and (b) the date on which written notice of such breach requiring the same to be
remedied shall have been given to the Sub-Servicer; or
(11) the Sub-Servicer shall fail to qualify as Sub-Servicer under
Section 3.01 of the Pooling and Servicing Agreement.
Servicer shall deliver written notice thereof to the Certificate Insurer, and in
each and every such case, so long as such Event of Default shall not have been
remedied within the applicable time period, if any, set forth above, the
Servicer shall, following ten day's prior written notice to the Certificate
Insurer which notice shall specify in detail the nature of such Event of Default
terminate, by notice in writing to the Sub-Servicer, all of the rights and
obligations of the Sub-Servicer as Sub-Servicer under this Agreement unless the
Certificate Insurer directs the Servicer by written notice to take either no
remedial action or a specified remedial measure, in which case the Servicer
shall follow such written notice of the Certificate Insurer. From and after the
receipt by the Sub-Servicer of such written notice, all authority and power of
the Sub-Servicer under this Agreement, whether with respect to the Mortgage
Loans or otherwise, shall pass to and be vested in the Servicer pursuant to and
under this section, and, without limitations, the Servicer is hereby authorized
and empowered, as attorney-in-fact or otherwise, to execute and deliver on
behalf of Sub-Servicer 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
enforcement or assignment of the Mortgage Loans and related documents, or
otherwise.
(b) The Sub-Servicer agrees that if it is terminated pursuant to this
Agreement, it shall promptly (and in any event no later than five Business Days
subsequent to its receipt of the notice of termination), at Servicer's cost and
expense, provide the Servicer with all documents and records (including, without
limitation, those in electronic form) requested by it to enable it to assume the
Sub-Servicer's functions hereunder, and shall cooperate with the Servicer in
effecting the termination of the Sub-Servicer's responsibilities and rights
hereunder and the assumption by a successor of the Sub-Servicer's obligations
hereunder, including, without limitation, the transfer within one Business Day
to the Servicer for administration by it of all cash amounts which shall at the
time be or should have been credited by the Sub-Servicer to the designated
account, or thereafter be received with respect to the Mortgage Loans or any REO
Property subject to Sub-Servicer's rights under Section 6.04.
Section 5.02 Waiver of Defaults.
The Servicer, with the prior written consent of the Certificate
Insurer, may waive any default by the Sub-Servicer in the performance of its
obligations hereunder and its consequences. Upon any such waiver of a past
default, such default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been remedied for every purpose of this
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Agreement. No such waiver shall extend to any subsequent or other default or
impair any right consequent thereon except to the extent expressly so waived.
ARTICLE VI
TERMINATION
Section 6.01 Termination.
Except as otherwise specifically set forth herein, the obligations and
responsibilities of the Sub-Servicer shall terminate: (i) upon the later of the
final payment or other liquidation (or any advance with respect thereto) of the
last Mortgage Loan and the disposition of all REO Property and the remittance of
all funds due hereunder; (ii) by mutual consent of the Sub-Servicer, the
Servicer, and the Certificate Insurer in writing, such consent of Certificate
Insurer not to be unreasonably withheld; (iii) pursuant to Section 6.02 of this
Agreement; (iv) at the option of any successor to the Servicer in its sole
discretion, subject, however, to the prior written consent of the Certificate
Insurer; (v) at the option of any purchaser of one or more Mortgage Loans
pursuant to the Pooling and Servicing Agreement, upon such purchase and only
with respect to such purchased Mortgage Loan or Mortgage Loans (including,
without limitation, the purchase of any delinquent loan in accordance with the
Pooling and Servicing Agreement); (vi) after sixty (60) days notice by the
Sub-Servicer to the Servicer and the Certificate Insurer, that Servicer has not,
within ninety (90) days following the commencement of any bankruptcy proceeding
in which the Servicer is a "debtor", obtained from the bankruptcy court approval
of the assumption of this Agreement; provided, however, that the Sub-Servicer
shall not terminate this Agreement if within ten (10) days of providing such
notice, the Certificate Insurer or the Trustee provides reasonable assurance
that the Sub-Servicer will be paid all amounts due under this Agreement; and
(vii) upon termination of the Pooling and Servicing Agreement pursuant to
Section 10.01 thereof.
Section 6.02 Termination With Cause.
(a) The Servicer may, at its sole option, with the prior written
consent of the Certificate Insurer but without payment of any penalty or
Termination Fee, terminate any rights the Sub-Servicer may have hereunder with
respect to any or all of the Mortgage Loans as provided in SECTION 5.01 of this
Agreement upon the occurrence of an Event of Default.
(b) The Certificate Insurer, upon the occurrence of an Event of Default
under this Agreement, but without payment of any penalty or Termination Fee,
shall have the right to terminate this Agreement immediately upon delivery of
written notice to the Servicer and the Sub-Servicer.
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Section 6.03 Termination Without Cause.
The Servicer, with the prior written consent of the Certificate
Insurer, may terminate this Agreement as of the last day of any Collection
Period as to any or all of the Mortgage Loans for reasons other than those set
forth in Sections 6.01(i), (ii), and (iii) by giving the Sub-Servicer at least
45 days notice of termination, provided that the Servicer in its sole
responsibility shall pay the Termination Fee for the Mortgage Loan or Loans
being terminated. Any notice of termination shall be in writing and delivered to
the Sub-Servicer as provided in Section 7.03 of this Agreement.
Section 6.04 Effect of Termination.
(a) With respect to termination of the Sub-Servicer pursuant to Section
6.02 or Section 6.03 of this Agreement, immediately upon the transfer of the
servicing of the Mortgage Loans, Sub-Servicer's obligations to make any Advance
or any other payment required hereunder shall cease. Upon termination of this
Agreement for any reason, with or without cause, the Sub-Servicer shall be
entitled to the Sub-Servicing Fees for each Mortgage Loan subject to termination
for the entire month in which the servicing transfer date occurs as well as all
other unpaid or unreimbursed Sub-Servicing Fees, reimbursement in full for all
Advances made by Sub-Servicer, and all Prior Monthly Advances remaining
unreimbursed and all other compensation, payments and reimbursable expenses due
the Sub-Servicer through the servicing transfer date (the "Sub-Servicer
Compensation").
(b) In the event of termination pursuant to Section 6.03, Sub-Servicer
shall be paid Sub-Servicer Compensation by the Servicer, any successor servicer,
or otherwise on or prior to such servicing transfer date and if the Sub-Servicer
does not receive the Sub-Servicer Compensation by the servicing transfer date,
the Sub-Servicer will be entitled to net such amounts against funds held in the
Sub-Servicing Account and Sub-Servicer shall not be obligated to transfer
servicing of the Mortgage Loans until such time as Sub-Servicer is paid all the
Sub-Servicer Compensation.
(c) In the event of termination pursuant to Section 6.02, Sub-Servicer
shall not be obligated to transfer servicing until either (i) Sub-Servicer is
paid the Sub-Servicer Compensation by the Servicer, any successor servicer, or
otherwise on or prior to such servicing transfer date, or (ii) the successor
servicer is obligated to deposit into the Receivables Reimbursement Account (as
defined in the Purchase Agreement), all collections relating to unreimbursed
Advances within one (1) Business Day of receipt thereof and the successor
servicer provides an endorsement to Lender on its fidelity bond naming Lender as
a loss payee.
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(d) This Section 6.04 shall survive any termination of this Agreement
and any termination of this Agreement shall not prejudice the rights of the
Sub-Servicer to recover any Sub-Servicer Compensation. The Sub-Servicer and its
directors, officers, employees and agents shall continue to be entitled to the
benefits of Section 3.04 of this Agreement notwithstanding any termination of
this Agreement.
ARTICLE VII
MISCELLANEOUS
Section 7.01 Payment of Costs.
Except as specifically set forth herein, all costs of Servicer or
Sub-Servicer associated with this Agreement shall be paid by the party incurring
such costs.
Section 7.02 Reports.
As long as this Agreement is in effect, the Sub-Servicer shall deliver
to the Certificate Insurer and Servicer: (A) the audited consolidated financial
statements, balance sheet and statement of income of the Sub-Servicer and each
subsidiary thereof within 90 days of the close of each fiscal year and (B) the
unaudited consolidated quarterly financial statements, balance sheet and
statement of income of the Sub-Servicer thereof within 45 days of the end of
each fiscal quarter.
Section 7.03 Notices.
All demands, notices, consents and communications hereunder shall be in
writing and shall be deemed to have been duly given when delivered to the
following addresses:
(1) if to the Servicer:
Aames Capital Corporation
000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx,
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: National Loan Servicing Director
Fax No. (000) 000-0000
Phone No. (000) 000-0000
with a copy to:
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Aames Capital Corporation
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 00xx Xxxxx,
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx
Fax No. (000) 000-0000
Phone No. (000) 000-0000
(2) if to the Sub-Servicer:
If by U.S. Mail:
Fairbanks Capital Corp.
X.X. Xxx 00000
Xxxx Xxxx Xxxx, Xxxx 00000-0000
Attention: Xxxxxxx X. Xxxxx
Fax No. (000) 000-0000
Phone No. (000) 000-0000
If by overnight delivery:
Fairbanks Capital Corp.
0000 Xxxxx Xxxx Xxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000-0000
Attention: Xxxxxxx X. Xxxxx
with a copy to:
Xxxxxx, Xxxxxx & Xxxxxxxxx
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: X. X. Xxxxxxxx
Fax No. (000) 000-0000
Phone No. (000) 000-0000
(3) if to the Certificate Insurer:
Financial Security Assurance Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Senior Vice President - Surveillance
Fax No. (000) 000-0000
Phone No. (000) 000-0000
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or such other address as may hereafter be furnished to the other party by like
notice. Any notice given pursuant hereto shall be effective upon receipt by the
party to whom sent.
Section 7.04 Severability Clause.
Any part, provision, representation or warranty of this Agreement that
is prohibited or that is held to be void or unenforceable shall be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law that prohibits
or renders void or unenforceable any provision hereof. If the invalidity of any
part, provision, representation or warranty of this Agreement shall deprive any
party of the economic benefit intended to be conferred by this Agreement, the
parties shall negotiate, in good faith, to develop a structure the economic
effect of which is nearly as possible the same as the economic effect of this
Agreement without regard to such invalidity.
Section 7.05 Counterparts.
This Agreement may be executed simultaneously in any number of
counterparts. Each counterpart shall be deemed to be an original, and all such
counterparts shall constitute one and the same instrument.
Section 7.06 Governing Law.
The Agreement shall be construed in accordance with the laws of the
State of California without regard to conflicts rules and the obligations,
rights and remedies of the parties hereunder shall be determined in accordance
with the laws of the State of California except to the extent preempted by
Federal Law. With respect to any claim arising out of this Agreement, each party
irrevocably submits to the jurisdiction of the courts of the state of
California, and each party irrevocably waives any objection which it may have at
any time to the laying of venue of any suit, action or proceeding arising out of
or relating hereto brought in any such courts, irrevocably waives any claim that
any such suit, action or proceeding brought in any such court has been brought
in any inconvenient forum and further waives the right to object, with respect
to such claim, suit, action or proceeding brought in any such court, that such
court does not have jurisdiction over such party, provided that service of
process has been made by any lawful means.
Section 7.07 Security for Expenses.
Except as provided in Section 3.01(e), neither the Servicer nor the
Sub-Servicer shall have any obligation to consent to any amendment or
modification of this Agreement.
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Section 7.08 Indemnification.
(a) Servicer Indemnification.
(1) The Servicer shall indemnify the Sub-Servicer and the
Certificate Insurer and hold harmless each of them against any and all claims,
losses, damages, penalties, fines, forfeitures, reasonable legal fees and
related costs, judgments, and other costs and expenses resulting from any claim,
demand, defense or assertion based on or grounded upon, or resulting from, a
breach of any of the Servicer's representations and warranties and covenants
contained in this Agreement, in any way relating to the failure of the Servicer
to perform its duties in compliance with the terms of this Agreement; provided,
however, that the Servicer shall not be required to indemnify the Sub-Servicer
or the Certificate Insurer against any liability due to the willful malfeasance,
bad faith, or negligence of the Sub-Servicer or the Certificate Insurer
hereunder. This indemnity shall survive the termination of this Agreement and
the payment of the Mortgage Loans. The Sub-Servicer or Certificate Insurer, as
the case may be, shall promptly notify the Servicer if a claim is made by a
third party with respect to a breach of any of the Servicer's representations
and warranties and covenants contained in this Agreement or in any way relating
to the failure of the Servicer to perform its duties in compliance with the
terms of this Agreement. The Servicer shall promptly notify the Sub-Servicer and
the Certificate Insurer of any claim of which it has been notified pursuant to
this Section 7.08 by a Person other than the party claiming indemnification, as
the case may be, and, in any event, shall promptly notify the Sub-Servicer and
the Certificate Insurer of its intended course of action with respect to any
claim.
(2) The Servicer shall be entitled to participate in and, upon
notice to the Sub-Servicer and the Certificate Insurer, assume the defense of
any such action or claim in reasonable cooperation with, and with the reasonable
cooperation of the Sub-Servicer and the Certificate Insurer. The Sub-Servicer
and the Certificate Insurer shall have the right to employ their own counsel in
any such action in addition to the counsel of the Servicer, but the fees and
expenses of such counsel shall be at the expense of the Sub-Servicer and the
Certificate Insurer, unless (a) the employment of counsel by the Sub-Servicer
and the Certificate Insurer at its expense has been authorized in writing by the
Servicer, (b) the Servicer has not in fact employed counsel to assume the
defense of such action within a reasonable time after receiving notice of the
commencement of the action, or (c) the named parties to any such action or
proceeding (including any impleaded parties) include the Servicer and either the
Sub-Servicer or the Certificate Insurer, or both, and the Sub-Servicer and the
Certificate Insurer have been advised by counsel that there may be one or more
legal defenses available to them which are different from or additional to those
available to the Servicer. The Servicer shall not be liable for any settlement
of any such claim or action unless the Servicer shall have consented thereto or
be in default on its obligations hereunder. Any failure by the Sub-Servicer or
the Certificate Insurer to comply with the provisions of this section shall
relieve the Servicer of liability only if such failure is materially prejudicial
to the position of the Servicer and then only to the extent of such prejudice.
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(b) Sub-Servicer Indemnification.
(1) The Sub-Servicer shall indemnify the Servicer and the
Certificate Insurer and hold harmless each of them against any and all claims,
losses, damages, penalties, fines, forfeitures, reasonable legal fees and
related costs, judgments, and other costs and expenses resulting from any claim,
demand, defense or assertion based on or grounded upon, or resulting from, a
breach of any of the Sub-Servicer's representations and warranties and covenants
contained in this Agreement or in any way relating to the failure of the
Sub-Servicer to perform its duties in compliance with the terms of this
Agreement; provided, however, that the Sub-Servicer shall not be required to
indemnify the Servicer or the Certificate Insurer against any liability due to
the willful malfeasance, bad faith, or negligence of the Servicer or the
Certificate Insurer hereunder. This indemnity shall survive the termination of
this Agreement and the payment of the Mortgage Loans. The Servicer and the
Certificate Insurer, as the case may be, shall promptly notify the Sub-Servicer
if a claim is made by a third party with respect to a breach of any of the
Sub-Servicer's representations and warranties and covenants contained in this
Agreement or in any way relating to the failure of the Sub-Servicer to perform
its duties in compliance with the terms of this Agreement. The Sub-Servicer
shall promptly notify the Servicer and the Certificate Insurer of any claim of
which it has been notified pursuant to this Section 7.08 by a Person other than
the Servicer or the Certificate Insurer, as the case may be, and, in any event,
shall promptly notify the Servicer and the Certificate Insurer of its intended
course of action with respect to any claim.
(2) The Sub-Servicer shall be entitled to participate in and, upon
notice to the Servicer and the Certificate Insurer, assume the defense of any
such action or claim in reasonable cooperation with, and with the reasonable
cooperation of the Servicer and the Certificate Insurer. The Servicer and the
Certificate Insurer shall have the right to employ their own counsel in any such
action in addition to the counsel of the Sub-Servicer, but the fees and expenses
of such counsel shall be at the expense of the Servicer and the Certificate
Insurer, unless (a) the employment of counsel by the Servicer and the
Certificate Insurer at its expense has been authorized in writing by the
Sub-Servicer, (b) the Sub-Servicer has not in fact employed counsel to assume
the defense of such action within a reasonable time after receiving notice of
the commencement of the action, or (c) the named parties to any such action or
proceeding (including any impleaded parties) include the Sub-Servicer and either
the Servicer or the Certificate Insurer, or both, and the Servicer and the
Certificate Insurer have been advised by counsel that there may be one or more
legal defenses available to them which are different from or additional to those
available to the Sub-Servicer. The Sub-Servicer shall not be liable for any
settlement of any such claim or action unless the Sub-Servicer shall have
consented thereto or be in default on its obligations hereunder. Any failure by
the Servicer or the Certificate Insurer to comply with the provisions of this
section shall relieve the Sub-Servicer of liability only if such failure is
materially prejudicial to the position of the Sub-Servicer and then only to the
extent of such prejudice.
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Section 7.09 Protection of Confidential Information.
The Sub-Servicer shall keep confidential and shall not divulge to any
party other than the Servicer, the Trustee, or the Certificate Insurer, without
the Servicer's prior written consent, any information pertaining to the Mortgage
Loans or any borrower thereunder, except to the extent that it is appropriate
for the Sub-Servicer to do so in working with legal counsel, auditors, taxing
authorities or other governmental agencies or in accordance with this Agreement.
Section 7.10 Intention of the Parties.
It is the intention of the parties that the Servicer is conveying, and
the Sub-Servicer is receiving, only a contract for sub-servicing the Mortgage
Loans. Accordingly, the parties hereby acknowledge that the Trustee remains the
sole and absolute beneficial owner of the Mortgage Loans and all rights related
thereto.
Section 7.11 Third Party Beneficiary.
The Trustee, for the benefit of the Certificateholders, and the
Certificate Insurer shall be third party beneficiaries under this Agreement,
provided that, except to the extent the Trustee or its designee assumes the
obligations of the Servicer hereunder as contemplated by Section 8.04 of the
Pooling and Servicing Agreement, none of the Trustee, the Trust, the Certificate
Insurer, any successor Servicer, or any Certificateholder shall have any duties
under this Agreement or any liabilities arising herefrom.
Section 7.12 Successors and Assigns; Assignment of Agreement.
This Agreement shall bind and inure to the benefit of and be
enforceable by the Sub-Servicer and the Servicer and the respective successors
and assigns of the Sub-Servicer and the Servicer. This Agreement shall not be
assigned, pledged or hypothecated by the Sub-Servicer to a third party except as
otherwise specifically provided for herein and shall be subject to the prior
written consent of the Certificate Insurer in each instance. If the Servicer
shall for any reason no longer act in such capacity under the Pooling and
Servicing Agreement, the Trustee or its designee may thereupon assume all of the
rights and, except to the extent they arose prior to the date of assumption,
obligations of the Servicer under this Agreement or, alternatively, may
terminate this Agreement as provided in Section 6.01(iv) of this Agreement.
Notwithstanding any other provision of this Agreement, Sub-Servicer shall have
the right to assign, transfer and pledge any right to receive payment under this
Agreement without the consent of or notice to Servicer, the Trust, the Trustee
or the Certificate Insurer.
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Section 7.13 Waivers.
No term or provision of this Agreement may be waived or modified unless
such waiver or modification is in writing and signed by the party against whom
such waiver or modification is sought to be enforced and the Certificate Insurer
shall have consented to such waiver.
Section 7.14 Exhibits.
The exhibits to this Agreement are hereby incorporated and made a part
hereof and are an integral part of this Agreement.
Section 7.15 General Interpretive Principles.
The general interpretive principles set forth in the Pooling and
Servicing Agreement are hereby incorporated herein by reference, provided that
references therein to the Pooling and Servicing Agreement shall, for the
purposes of this Agreement, be deemed to be references to this Agreement.
Section 7.16 Reproduction of Documents.
The provisions with respect to reproduction of documents set forth in
the Pooling and Servicing Agreement are hereby incorporated herein by reference,
provided that references therein to the Pooling and Servicing Agreement shall,
for purposes of this Agreement, be deemed to be references to this Agreement.
Section 7.17 Further Agreement; Power of Attorney.
The Sub-Servicer and the Servicer each agree to execute and deliver to
the other (with copies to the Certificate Insurer) such reasonable and
appropriate additional documents, instruments or agreements as may be necessary
or appropriate to effectuate the purposes of this Agreement. Servicer hereby
irrevocably grants to Sub-Servicer a limited power-of-attorney to execute
documents as may be necessary or appropriate so as to enable Sub-Servicer to
collect payments against, to liquidate and to otherwise manage and service the
Mortgage Loans and properties in accordance with this Agreement.
Section 7.18 Amendments.
This Agreement may only be modified, supplemented or amended by written
agreement by and between the Sub-Servicer and the Servicer, with the Certificate
Insurer's prior written consent in each instance. No amendment to the Pooling
and Servicing Agreement that purports to change the rights or obligations of the
Sub-Servicer hereunder shall be effective against the Sub-Servicer without the
express prior written consent of the Sub-Servicer.
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Section 7.19 Entire Agreement.
This Agreement contains the entire agreement and understanding between
the parties with respect to the subject matter hereof and supersedes all prior
and contemporaneous agreements and understandings, express or implied, oral or
written, of any nature whatsoever with respect to the subject matter hereof.
Section 7.20 Expenses.
Servicer shall pay Sub-Servicer's costs and expenses reasonably
incurred in connection with its due diligence and the preparation, negotiation,
execution, delivery and enforcement of this Agreement, including but not limited
to the fees and out-of-pocket expenses of its attorneys.
Section 7.21 Non-Disclosure.
The Servicer and Sub-Servicer agree not to disclose information
concerning this transaction without their mutual agreement and the consent of
the Certificate Insurer, except as may be required by law or regulation.
[Signature page follows]
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IN WITNESS WHEREOF, the Sub-Servicer and the Servicer have caused their
names to be signed hereto by their respective officers thereunto duly authorized
as of the date first above written.
AAMES CAPITAL CORPORATION
By: /s/ Xxxx X. Xxxxxxxx
--------------------------------------------
Xxxx X. Xxxxxxxx
Its: Chief Executive Officer
-------------------------------------------
FAIRBANKS CAPITAL CORP.
By: /s/ Xxx X. Xxxxxxxxx
--------------------------------------------
Its: Executive Vice President-Administration
-------------------------------------------
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EXHIBIT A
POOLING AND SERVICING AGREEMENT
A-1
35
SCHEDULE 2.01
MORTGAGE LOAN SCHEDULE
B-1
36
SCHEDULE 3.01(a)
ADDITIONAL SERVICING PROCEDURES
B-2
37
SCHEDULE 3.01(d)
LOANS FOR WHICH SUB-SERVICER HAS NO PAYMENT OBLIGATIONS ON MAY 12, 1999
All of the Mortgage Loans listed on Schedule 2.01.
B-3
38
SCHEDULE 4.01(i)
CERTAIN EXCLUDED MORTGAGE LOANS AND REO PROPERTIES
B-4
