SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported)
MAY 3, 1996
Bear Stearns Mortgage Securities Inc. (as
Depositor under a Pooling Agreement dated as of
April 1, 1996 providing for the issuance of
Mortgage Pass-Through Certificates, Series 1996-2)
BEAR STEARNS MORTGAGE SECURITIES INC.
(Exact name of registrant as specified in charter)
DELAWARE 33-62710 13-3633241
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
incorporation) No.)
245 PARK AVENUE, NEW YORK, NEW YORK 10167
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 272-2000
NOT APPLICABLE
(Former name or former address, if changed since last report.)
<PAGE>
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS.
(c) Exhibits
EXHIBIT NO.
1.1 Terms Agreement dated as of May 2, 1996 between
the Registrant and Bear, Stearns & Co. Inc.
4.1 Pooling Agreement dated as of April 1, 1996 between
the Registrant and First Trust National
Association, as Trustee.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BEAR STEARNS MORTGAGE SECURITIES INC.
(Registrant)
Date: May 15, 1996 By:/S/JOSEPH T. JURKOWSKI, JR.
Name: Joseph T. Jurkowski, Jr.
Title: Vice President
<PAGE>
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
1.1 Terms Agreement dated as of
May 2, 1996 between the
Registrant and Bear, Stearns & Co.
Inc.
4.1 Pooling Agreement dated as of
April 1, 1996 between the Registrant
and First Trust National Association,
as Trustee.
EXHIBIT 1.1
<PAGE>
BEAR STEARNS MORTGAGE SECURITIES INC.
Pass-Through Certificates
TERMS AGREEMENT
Dated: May 2, 1996
To: BEAR STEARNS MORTGAGE SECURITIES INC.
Re: Underwriting Agreement dated May 21, 1992
Series Designation: Series 1996-2
Class Designation Schedule: Class A-1
TERMS OF THE CERTIFICATES:
Original Principal Pass-Through
CLASS AMOUNT INTEREST RATE
A-1 $30,088,323(1) (2)
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(1) The initial principal amount will be decreased by an amount equal to
the principal payments received on the Pooled Certificates during
April 1996.
(2) The effective per annum interest rate borne by the
Certificates during each Interest Accrual Period with
respect to a Distribution Date will equal a fraction,
expressed as a percentage truncated at the second decimal
place, the numerator of which is equal to the aggregate
amount in respect of interest received by the Trustee on
the Pooled Certificates and pursuant to the Policy, if any,
for the related Interest Accrual Period (net of the related
Trustee Fee) multiplied by 12, and the denominator of which
is the principal amount of the Certificates immediately
prior to such Distribution Date.
<PAGE>
DISTRIBUTION DATES: With respect to each month, the third Business Day after
the last distribution date in such month with respect to any class of Pooled
Certificates commencing in May, 1996. Each Pooled Certificate Distribution Date
is the 25th day of each month or, if such 25th day is not a business day (with
respect to the respective Pooled Certificate), the next such succeeding
business day.
CERTIFICATE RATING: "AAAr" by Standard & Poor's Investors Service, a
division of The McGraw-Hill Companies Inc. and "Aaa" by Moody's Investors
Service, Inc.
FORM OF CERTIFICATES: Book-entry (Depository Trust Company).
TRUST FUND ASSETS: Certain interests in trusts or assets held in trusts created
pursuant to certain trust or pooling agreements or indentures which consist
primarily of one or more pools of conventional, fixed rate, one-to-four family,
fully amortizing, level payment, first mortgage loans with original maturities
of up to approximately 30 years (collectively referred to as the "Pooled
Certificates"). The Pooled Certificates to be included in the Trust Fund are as
described in Schedule A hereto.
PURCHASE PRICE: The aggregate purchase price payable by the Underwriter for the
Certificates covered by this Agreement will be 92% of the principal balance of
the Certificates plus accrued interest from April 1, 1996 to, but not
including, the Closing Date.
CREDIT ENHANCEMENT: Certificate Guaranty Insurance Policy to be
obtained from MBIA Insurance Corporation.
CLOSING DATE: May 3, 1996, 9:00 a.m., New York time
MISCELLANEOUS MATTERS: (a) The Pooling and Servicing Agreement and the
Mortgage Loan Schedule referred to in the Underwriting Agreement shall be deemed
to be references to the Pooling Agreement and the Pooled Certificates Schedule,
respectively;
(b) the Certificates will not constitute mortgage related securities for
purposes of the Secondary Mortgage Market Enhancement Act of 1984;
(c) the receipt of the Certificate Guaranty Insurance Policy and an opinion of
counsel to the Certificate Insurer, reasonably acceptable to the Underwriter,
shall be additional conditions to the Underwriter's obligations under the
Underwriting Agreement; and
(d) notices to the Underwriter shall be to the attention of Jeffrey Mayer
and notices to the Company shall be to the attention of Joseph T. Jurkowski, Jr.
The undersigned, as sole Underwriter, agrees, subject to the terms and
provisions of the above-referenced Underwriting Agreement, which is
incorporated herein in its entirety and made a part hereof, to purchase the
principal amount of the Class of the above-referenced Series of Certificates
set forth herein.
BEAR, STEARNS & CO. INC.
By: /S/ JEFFREY MAYER
Name: Jeffrey Mayer
Title: Senior Managing Director
Accepted:
BEAR STEARNS MORTGAGE SECURITIES INC.
By: /S/ JOSEPH T. JURKOWSKI, JR.
Name: Joseph T. Jurkowski, Jr.
Title: Vice President
<PAGE>
SCHEDULE A
POOLED CERTIFICATES
CLASS %
FULL NAME OF SERIES (1) IN TRUST
POOLED PO CERTIFICATES
Residential Funding Mortgage Securities I, Inc., 100%
Mortgage Pass-Through Certificates, Series 1993-
S40, Class A-11 ("RFC 1993-S40")
Residential Funding Mortgage Securities I, Inc., 100%
Mortgage Pass-Through Certificates, Series 1994-S1,
Class A-20 ("RFC 1994-S1")
Residential Funding Mortgage Securities I, Inc., 100%
Mortgage Pass-Through Certificates, Series 1994-
S13, Class A-5 ("RFC 1994-S13")
Residential Funding Mortgage Securities I, Inc., 100%
Mortgage Pass-Through Certificates, Series 1994-S7,
Class A-14 ("RFC 1994-S7")
Residential Funding Mortgage Securities I, Inc., 100%
Mortgage Pass-Through Certificates, Series 1993-
S45, Class A-17 ("RFC 1993-S45")
Residential Funding Mortgage Securities I, Inc., 100%
Mortgage Pass-Through Certificates, Series 1993-
S39, Class A-15(2) ("RFC 1993-S39")
Residential Funding Mortgage Securities I, Inc., 100%
Mortgage Pass-Through Certificates, Series 1993-
S31, Class A-8 ("RFC 1993-S31")
Bear Stearns Mortgage Securities Inc., Mortgage 100%
Pass-Through Certificates, Series 1993-10,
Class P(3) ("BSMSI 1993-10")
- -------------------
(1) Unless otherwise specified in a footnote to this
Schedule A, the entire series was issued in physical certificate form.
(2) $677.85 original principal balance is in physical certificate form and
$5,017,000.00 original principal balance is in book entry form.
(3) $744.43 original principal balance is in physical certificate form and
$1,002,000.00 original principal balance is in book entry form.
<PAGE>
Chase Mortgage Finance Corporation, Multi-Class 53.46%
Mortgage Pass-Through Certificates, Series 1993P,
Class A-P ("Chase 1993P")
CMC Securities Corporation III, Collateralized 100%
Mortgage Obligations, Series 1994-E,
Class E-APO(4) ("CMC III 1994-E")
PaineWebber Mortgage Acceptance Corporation IV, 100%
Mortgage Pass-Through Certificates, Series 1994-7,
Class A-8 ("PMAC IV 1994-7")
Sears Mortgage Securities Corporation, Mortgage 100%
Pass-Through Certificates, Series 1993-9,
Class P ("SMSC 1993-9")
Chase Mortgage Finance Corporation, Multi-Class 100%
Mortgage Pass-Through Certificates, Series 1993N,
Class A-P ("Chase 1993N")
POOLED IO CERTIFICATES
The Prudential Home Mortgage Securities Company, 100%
Inc., Mortgage Pass-Through Certificates, Series
1993-50, Class A-14(5) ("PHMSC 1993-50")
The Prudential Home Mortgage Securities Company, 11.40%
Inc., Mortgage Pass-Through Certificates, Series
1993-51, Class A-21(6) ("PHMSC 1993-51")
- ----------------------
(4) $1,199,144.00 original principal amount is in book entry form, there is no
physical certificate for this series.
(5) The notional amount for this series was $353,481,228.32 and the annual
pass-through rate was 0.501035% for the period from March 1 to March 30,
1996.
(6) The notional amount for this series was $60,665,655.00 and the annual
pass-through rate was 0.548999% for the period from March 1 to March 30,
1996.
<PAGE>
<TABLE>
<CAPTION>
RATINGS(7)
SERIES CURRENT PRINCIPAL BALANCE S&P M F D&P
<S> <C> <C> <C> <C> <C>
RFC 1993-S40 $4,374,978.27 AAA - AAA -
RFC 1994-S1 $5,027,818.91 AAA - AAA -
RFC 1994-S13 $2,197,791.62 AAA - AAA -
RFC 1994-S7 $ 410,414.58 AAA - AAA -
RFC 1993-S45 $2,560,131.23 AAA - AAA -
RFC 1993-S39 $4,612,876.68 AAA - AAA -
RFC 1993-S31 $1,377,317.85 - Aaa AAA -
BSMSI 1993-10 $ 904,484.30 - Aaa AAA -
CHASE 1993P $1,291,002.05 - Aaa AAA -
CMC III 1994-E $1,109,561.90 AAA - - AAA
PMAC IV 1994-7 $1,031,734.66 AAA - - AAA
SMSC 1993-9 $3,220,696.41 - Aaa AAA -
CHASE 1993N $1,804,364.66 - Aaa AAA -
PHMSC 1993-50 $ 1,000.00 - Aaa AAA -
PHMSC 1993-51 $ 100.00 - Aaa AAA -
- --------
(7) Key: S&P = Standard & Poor's Investor Services, a
division of The McGraw Hill Companies, Inc.
M = Moody's Investor Service, Inc.
F = Fitch Investors Service, L.P.
D&P = Duff & Phelps Inc.
</TABLE>
EXHIBIT 4.1
<PAGE>
EXECUTION COPY
BEAR STEARNS MORTGAGE SECURITIES INC.,
Depositor
and
FIRST TRUST NATIONAL ASSOCIATION,
Trustee
--------------------------------
POOLING AGREEMENT
Dated as of April 1, 1996
--------------------------------
$29,923,173.00
Bear Stearns Mortgage Securities Inc.
Pass-Through Certificates
Series 1996-2
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Section 1.01. Defined Terms............................................... 2
ARTICLE II
CONVEYANCE OF THE POOLED CERTIFICATES;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Conveyance of the Pooled Certificates...................... 20
Section 2.02. Acceptance of Trust Fund by Trustee;
Initial Issuance of Certificates........................... 22
Section 2.03. Representations and Warranties of the
Depositor and the Trustee.................................. 22
Section 2.04. Substitution of Pooled Certificates........................ 28
ARTICLE III
ADMINISTRATION OF THE POOLED CERTIFICATES;
PAYMENTS AND REPORTS TO CERTIFICATEHOLDERS
Section 3.01. Administration of the Trust Fund and
the Pooled Certificates................................... 29
Section 3.02. Collection of Monies...................................... 29
Section 3.03. Establishment of Certificate and
Trustee Fee Accounts; Deposits Therein.................... 30
Section 3.04. Permitted Withdrawals From the
Certificate Account....................................... 32
Section 3.05. Distributions............................................. 33
Section 3.06. Statements to Certificateholders.......................... 35
Section 3.07. Access to Certain Documentation and
Information............................................... 38
Section 3.08. Calculation of Monthly Distribution
Amount.................................................... 38
ARTICLE IV
THE CERTIFICATES
Section 4.01. The Certificates.......................................... 39
Section 4.02. Registration of Transfer and Exchange
of Certificates........................................... 41
Section 4.03. Mutilated, Destroyed, Lost or Stolen
Certificates.............................................. 42
Section 4.04. Persons Deemed Owners..................................... 43
ARTICLE V
THE TRUSTEE
Section 5.01. Duties of Trustee......................................... 44
Section 5.02. Certain Matters Affecting the Trustee..................... 45
Section 5.03. Trustee Not Liable for Certificates or
Pooled Certificates....................................... 46
Section 5.04. Trustee May Own Certificates.............................. 47
Section 5.05. Trustee's Fees; Indemnification of the
Trustee................................................... 47
Section 5.06. Eligibility Requirements for Trustee...................... 48
Section 5.07. Resignation and Removal of the Trustee.................... 49
Section 5.08. Successor Trustee......................................... 50
Section 5.09. Merger or Consolidation of Trustee........................ 51
Section 5.10. Appointment of Co-Trustee or Separate
Trustee................................................... 51
ARTICLE VI
THE DEPOSITOR
Section 6.01. Liability of the Depositor................................ 53
Section 6.02. Merger, Consolidation or Conversion of
the Depositor............................................. 53
Section 6.03. Limitation on Liability of the
Depositor and Others...................................... 53
ARTICLE VII
TERMINATION
Section 7.01. Termination............................................... 55
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.01. Amendment................................................. 58
Section 8.02. Counterparts.............................................. 59
Section 8.03. Limitation on Rights of Certificate-
holders.................................................. 59
Section 8.04. Governing Law............................................. 60
Section 8.05. Notices................................................... 60
Section 8.06. Severability of Provisions................................ 61
Section 8.07. Successors and Assigns.................................... 61
Section 8.08. Article and Section Headings.............................. 61
Section 8.09. Notices to Rating Agencies................................ 61
ARTICLE IX
CERTAIN MATTERS REGARDING THE CERTIFICATE INSURER
Section 9.01. Trust Fund and Accounts Held for
Benefit of the Certificate Insurer........................ 63
Section 9.02. Claims Upon the Policy; Policy
Payments Account.......................................... 63
Section 9.03. Notices to the Certificate Insurer and
the Depositor............................................. 65
Section 9.04. Third-Party Beneficiary................................... 65
Exhibit A - Form of Class A-1 Certificate
Exhibit B - Copy of the Certificate Guaranty Insurance
Policy
Schedule A - Pooled Certificates
<PAGE>
POOLING AGREEMENT, dated as of April 1, 1996, by and between Bear
Stearns Mortgage Securities Inc., as depositor (the "Depositor"), and First
Trust National Association, as trustee (the "Trustee").
PRELIMINARY STATEMENT
The Depositor intends to cause the issuance of and to sell its
Pass-Through Certificates, Series 1996-2 (the "Certificates") representing in
the aggregate the entire beneficial ownership of a trust fund (the "Trust
Fund"), the primary assets of which are the Pooled Certificates (defined
herein).
All things necessary to make this Agreement a valid declaration of
trust by the Depositor in accordance with its terms have been done.
In consideration of the premises and the mutual agreements herein
contained, the Depositor and the Trustee agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS
Section 1.01. DEFINED TERMS.
Whenever used in this Agreement, including the Preliminary Statement, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings:
ACQUIRED MORTGAGE ASSET: Any Underlying Mortgage Loan or related Mortgaged
Property acquired and to be serviced and administered on behalf and for the
benefit of the Trustee, as Pooled Certificateholder, and the other holders of
the related Underlying Series, all in accordance with the related Underlying
Agreement.
AFFILIATE: With respect to any specified Person, any other Person that
directly, or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, such specified Person. For the
purposes of this definition, "control" when used with respect to any specified
Person means possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of such Person, whether through
the ownership of voting securities, by contract or otherwise, and the terms
"controlling", "controlled by" and "under common control with" have meanings
correlative to the foregoing.
AGREEMENT: This Pooling Agreement and all amendments hereof and
supplements hereto.
AVAILABLE FUNDS: As of any date of determination, the aggregate amount on
deposit in the Certificate Account as of such date, net of any portion thereof
which represents amounts to be paid to any Person pursuant to clause (ii) of
Section 3.04.
BASE AMOUNT: With respect to any Distribution Date, one-twelfth of the
product of 0.0275% and the Class Balance immediately prior to such Distribution
Date.
BUSINESS DAY: Any day other than a Saturday, a Sunday or a day on which
banking institutions in New York or in the city in which the Corporate Trust
Office of the Trustee or the Certificate Insurer is located are authorized or
obligated by law or executive order to close.
CERTIFICATE: Any Class A-1 Certificate as executed hereunder by the
Trustee and authenticated and delivered hereunder by the Certificate Registrar,
substantially in the form of Exhibit A hereto.
CERTIFICATE ACCOUNT: The trust account or accounts, which shall at all
times be Eligible Accounts, created and maintained by the Trustee for the
benefit of the Certificateholders and the Certificate Insurer pursuant to
Section 3.03. Funds deposited in the Certificate Account shall be held in trust
for the Certificateholders and for the Certificate Insurer for the uses and
purposes set forth in Article III hereof.
CERTIFICATE INSURER: MBIA Insurance Corporation, a New York stock
insurance corporation, or any successor thereof, as issuer of the Policy.
CERTIFICATE INSURER DEFAULT: The existence and continuance unremedied for
a period of 30 days of any of the following:
(a) the Certificate Insurer fails to make a
payment required under the Policy in accordance with its
terms; or
(b)(i) the entry by a court having jurisdiction in the
premises of (A) a decree or order for relief in respect of the
Certificate Insurer in an involuntary case or proceeding under
any applicable United States federal or state bankruptcy,
insolvency, rehabilitation, reorganization or other similar law
or (B) a decree or order adjudging the Certificate Insurer a
bankrupt or insolvent, or approving as properly filed a
petition seeking reorganization, rehabilitation, arrangement,
adjustment or composition of or in respect of the Certificate
Insurer under any applicable United States federal or state
law, or appointing a custodian, receiver, liquidator,
rehabilitator, assignee, trustee, sequestrator or other similar
official for the Certificate Insurer or of any substantial part
of its property, or ordering the winding-up or liquidation of
its affairs, and the continuance of any such decree or order
for relief or any such other decree or order unstayed and in
effect for a period of 60 consecutive days; or
(ii) the commencement by the Certificate Insurer of a
voluntary case or proceeding under any applicable United States
federal or state bankruptcy, insolvency, reorganization or
other similar law or of any other case or proceeding to be
adjudicated a bankrupt or insolvent, or the consent of the
Certificate Insurer to the entry of a decree or order for
relief in respect of the Certificate Insurer in an involuntary
case or proceeding under any applicable United States federal
or state bankruptcy, insolvency, reorganization or other
similar law or of any other case or proceeding against the
Certificate Insurer, or the filing by the Certificate Insurer
of a petition or answer or consent seeking reorganization or
relief under any applicable United States federal or state law,
or the consent by the Certificate Insurer to the filing of such
petition or to the appointment of or the taking possession by a
custodian, receiver, liquidator, assignee, trustee,
sequestrator or similar official of the Certificate Insurer or
of any substantial part of its property, or the failure by the
Certificate Insurer to pay debts generally as they become due,
or the admission by the Certificate Insurer in writing of its
inability to pay its debts generally as they become due, or the
taking of corporate action by the Certificate Insurer in
furtherance of any such action.
CERTIFICATE INSURER REIMBURSEMENT AMOUNT: An amount equal to the sum of
the following, to the extent any such amounts are not otherwise reimbursed to
the Certificate Insurer:
(a) a sum equal to the total of all Insured Payments
paid by the Certificate Insurer under the Policy;
(b) a sum, to be paid by the Trustee, the Depositor or
the Company, as the case may be, pursuant to Sections 3.02,
3.03, 3.04 and 4.07 of the Insurance Agreement; and
(c) interest accrued at the Late Payment Rate on any
and all amounts described in clauses (a) and (b) hereof from
the date due to the Certificate Insurer pursuant to the
provisions of this Agreement until payment thereof in full.
CERTIFICATE OWNER: Any Person who is the beneficial owner of a Certificate
registered in the name of the Depository or its nominee.
CERTIFICATE PRINCIPAL BALANCE: With respect to any Certificate, as of any
date of determination, the then outstanding principal amount of such
Certificate, which is equal to the product of (a) the Percentage Interest
evidenced by such Certificate and (b) the then Class A-1 Balance of the
Certificates, provided that, solely for purposes of determining the Certificate
Insurer's rights as subrogee, the Certificate Balance shall not be reduced by
any principal amounts paid to the Holders from Insured Payments.
CERTIFICATE REGISTRAR AND CERTIFICATE REGISTER: Shall each have the
meanings provided in Section 4.02.
CERTIFICATEHOLDER OR HOLDER: As to the Certificates, the person in whose
name a Certificate is registered in the Certificate Register and the
Certificate Insurer to the extent of Cumulative Insured Payments, except that,
solely for the purpose of giving any consent, approval or waiver pursuant to
this Agreement, any Certificate registered in the name of the Depositor or any
Affiliate thereof shall be deemed not to be outstanding and shall not be taken
into account for purposes of determining whether the Holders of Certificates
evidencing the requisite aggregate Percentage Interest necessary to effect any
such consent, approval or waiver has been obtained, unless such Persons
collectively own all the Certificates.
CLASS: Collectively, all of the Certificates bearing the same designation.
CLASS A-1 BALANCE: The aggregate principal amount of Class A-1
Certificates outstanding as of any date of determination, which is equal to the
Original Class A-1 Balance minus the aggregate of all distributions of
principal previously made on the Class A-1 Certificates pursuant to Sections
3.05 and 7.01(d), provided that, solely for purposes of determining the
Certificate Insurer's rights as subrogee, the Class A-1 Balance shall not be
reduced by any principal amounts paid to a Holder of a Class A-1 Certificate
from Insured Payments.
CLASS A-1 CERTIFICATE: Any one of the Class A-1 Certificates, as executed
hereunder by the Trustee and authenticated and delivered hereunder by the
Certificate Registrar, substantially in the form of Exhibit A hereto.
CLASS A-1 PERCENTAGE: The Original Class A-1 Balance divided by the
Original Principal Balance, or 100.00%.
CLASS BALANCE: The Class A-1 Balance.
CLOSING DATE: May 3, 1996.
CODE: The Internal Revenue Code of 1986, as amended.
COMPANY: Bear Stearns Mortgage Capital Corporation.
CORPORATE TRUST OFFICE: The corporate trust office of the Trustee at which
at any particular time its corporate trust business with respect to this
Agreement shall be administered, which office at the date of the execution of
this Agreement is located at 180 East Fifth Street, St. Paul, Minnesota 55101,
Attention: Structured Finance Department, telephone no. (612) 244-0727,
facsimile no. (617) 244-0089.
CUMULATIVE INSURED PAYMENTS: As of any time of determination, the aggregate
of all Insured Payments previously made in respect of the Certificates minus the
aggregate of all payments previously made to the Certificate Insurer pursuant to
clause (C)first of Section 3.05(a) hereof as reimbursement for Insured Payments.
CURTAILMENT INTEREST SHORTFALL: A shortfall in the amount of interest
received on a Pooled Certificate Distribution Date resulting from any partial
prepayments on Underlying Mortgage Loans. Curtailment Interest Shortfalls are
not covered by the Policy.
DEFICIENCY AMOUNT: As defined in the Policy.
DEFINITIVE CERTIFICATES: The meaning specified in Section 4.01(b) hereof.
DELETED POOLED CERTIFICATE: A Pooled Certificate replaced by a Substitute
Pooled Certificate.
DEPOSITOR: Bear Stearns Mortgage Securities Inc., a Delaware corporation,
or its successor in interest.
DEPOSITORY: DTC, the nominee of which is Cede & Co., or any successor
thereto.
DEPOSITORY AGREEMENT: The meaning specified in Subsection 4.01(a) hereof.
DEPOSITORY PARTICIPANT: A broker, dealer, bank or other financial
institution or other Person for whom from time to time the Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
DISTRIBUTION DATE: With respect to any month, the Distribution Date shall
be the third Business Day after the last Pooled Certificates Distribution Date
to occur in such month. The first Distribution Date shall occur on May 30,
1996.
DTC: The Depository Trust Company.
ELIGIBLE ACCOUNT: Any of (i) an account maintained with a federal or state
chartered depository institution or trust company, the short-term unsecured
debt obligations of which are rated at least P-1 by Moody's and A-1+ by S&P (or
comparable ratings if Moody's and S&P are not the Rating Agencies) at any time
funds are on deposit therein, (ii) a trust account or accounts maintained with
the trust department of a federally chartered depository institution or trust
company acting in its fiduciary capacity, or (iii) a trust account or accounts
maintained with the trust department of a state chartered depository
institution or trust company acting in its fiduciary capacity and subject to
regulations regarding fiduciary funds on deposit therein substantially similar
to 12 CFR ss. 9.10(b).
ERISA: The Employee Retirement Income Security Act of 1974, as amended,
and the rules and regulations promulgated thereunder.
FHLMC: The Federal Home Loan Mortgage Corporation.
FINAL DISTRIBUTION DATE: With respect to the Pooled Certificates or the
Certificates, as applicable, the Pooled Certificate Distribution Date or the
Distribution Date, as applicable, on which the final distribution thereon is to
be made in accordance with the related Underlying Agreement or this Agreement,
as the case may be.
FMV OPINION: An opinion of an investment banking firm of national
reputation acceptable to the Certificate Insurer (other than an affiliate of
the Depositor) which may be obtained in connection with the determination of
the Repurchase Price for a repurchase pursuant to Section 2.03(c).
FNMA: The Federal National Mortgage Association.
INDEPENDENT: When used with respect to any specified Person, such a Person
who (i) is in fact independent of the Depositor and any Affiliate of the
Depositor, (ii) does not have any direct financial interest in the Depositor or
in any Affiliate of the Depositor, and (iii) is not connected with the
Depositor or any Affiliate of the Depositor as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing similar functions.
INSURANCE AGREEMENT: The Insurance Agreement, dated as of April 1, 1996,
among the Depositor, the Company, the Trustee and the Certificate Insurer, as
amended or supplemented in accordance with its terms.
INSURED PAYMENT: As defined in the Policy.
INTEREST DISTRIBUTION AMOUNT: As to any Distribution Date, the sum of the
following amounts for such Distribution Date:
(i) with respect to the Prudential Home Mortgage Securities
Company, Inc., Mortgage Pass-Through Certificates, Series 1993-50,
Class A-14 (the "Class A-14 Certificates"), the Pooled Certificate
Class Percentage of an amount equal to (A) the product of (1) 1/12th of
a rate equal to the weighted average of the Net Rates of the Underlying
Mortgage Loans as of the first day of the related interest accrual
period minus 6.50% and (2) the notional amount of the Class A-14
Certificates as of such Pooled Certificate Distribution Date, minus (B)
any Prepayment Interest Shortfalls, Curtailment Interest Shortfalls and
interest shortfalls as a result of the Relief Act not otherwise covered
by subordination or compensating interest allocated to the Class A-14
Certificates with respect to such Pooled Certificate Distribution Date;
and
(ii) with respect to the Prudential Home Mortgage Securities
Company, Inc., Mortgage Pass-Through Certificates, Series 1993-51,
Class A-21 (the "Class A-21 Certificates"), the Pooled Certificate
Class Percentage of an amount equal to (A) the product of (1) 1/12th of
a rate equal to the weighted average of the Net Rates of the Underlying
Mortgage Loans as of the first day of the related interest accrual
period minus 6.50% and (2) the notional amount of the Class A-21
Certificates as of such Pooled Certificate Distribution Date, minus (B)
any Prepayment Interest Shortfalls, Curtailment Interest Shortfalls and
interest shortfalls as a result of the Relief Act not otherwise covered
by subordination or compensating interest allocated to the Class A-21
Certificates with respect to such Pooled Certificate Distribution Date.
Notwithstanding the foregoing, if the Depositor repurchases, or elects to
substitute one or more Substitute Pooled Certificates for, a Pooled IO
Certificate pursuant to Sections 2.03(c) or 2.04 hereof, respectively, the
foregoing definition will be modified with respect to the related Distribution
Date to delete the portion thereof relating to the Deleted Pooled Certificate
being repurchased or substituted for and to reflect in the case of a
repurchase, the Repurchase Price received with respect thereto or in the case
of a substitution, the addition of a comparable provision acceptable to the
Certificate Insurer with respect to the related Substitute Pooled Certificate.
Capitalized terms used within this definition not otherwise defined in this
Agreement shall have the meanings assigned thereto in the related Underlying
Agreements as in effect on the Closing Date.
INVESTMENT COMPANY ACT: The Investment Company Act of 1940, as amended
from time to time, and the rules and regulations promulgated thereunder.
LATE PAYMENT RATE: As defined in the Insurance Agreement.
MAJORITY CERTIFICATEHOLDERS: The Holders of Certificates evidencing in the
aggregate greater than 50% of the aggregate Class Balance of all the
Certificates.
MONTHLY DISTRIBUTION AMOUNT: With respect to any Distribution Date, the
aggregate of (i) the Interest Distribution Amount for such Distribution Date,
and (ii) the Principal Distribution Amount for such Distribution Date.
MOODY'S: Moody's Investors Service, Inc. or its successor in interest.
MORTGAGE: With respect to any Underlying Mortgage Loan, any mortgage, deed
of trust or other similar instrument securing the related Mortgage Note and
creating a lien on the related Mortgaged Property.
MORTGAGE NOTE: The original executed note evidencing the indebtedness of
the Mortgagor under an Underlying Mortgage Loan, together with any rider,
addendum or amendment thereto.
MORTGAGED PROPERTY: The real property subject to the lien of a Mortgage.
MORTGAGOR: The obligor or obligors on a Mortgage Note, including without
limitation, any Person that has acquired a Mortgaged Property and assumed the
obligations of the original obligor under the Mortgage Note.
NOTICE OF FINAL DISTRIBUTION: With respect to the Pooled Certificates, any
notice provided pursuant to the related Underlying Agreement to the effect that
final distribution on a Pooled Certificate shall be made only upon presentment
and surrender thereof. With respect to the Certificates, the notice to be
provided pursuant to Section 7.01(b) to the effect that final distribution on
the Certificates shall be made only upon presentment and surrender thereof.
OFFICERS' CERTIFICATE: A certificate signed by the Chairman of the Board,
the President, a Senior Vice President, a Vice President or an Assistant Vice
President and by the Treasurer, the Secretary, an Assistant Treasurer or an
Assistant Secretary of the Depositor or the Trustee, as required by this
Agreement.
OPINION OF COUNSEL: A written opinion of counsel, who may be counsel for
the Depositor, which opinion is addressed to the Certificate Insurer and the
Trustee and is reasonably acceptable to the Trustee and the Certificate
Insurer.
ORIGINAL CLASS A-1 BALANCE: $29,923,173.00.
PERCENTAGE INTEREST: With respect to any Certificate, the portion of the
Class represented by such Certificate, expressed as a percentage, the numerator
of which is the initial outstanding principal amount of such Certificate as of
the Closing Date, as specified on the face thereof, and the denominator of
which is the Original Class A-1 Balance.
PERMITTED INVESTMENTS: Any one or more of the following obligations or
securities:
(i) direct obligations of, or obligations fully guaranteed as
to timely payment of principal and interest by, the United States or
any agency or instrumentality thereof, provided such obligations are
backed by the full faith and credit of the United States;
(ii) demand and time deposits in, certificates of deposit of, or
bankers' acceptances (which shall each have an original maturity of not
more than 90 days and, in the case of bankers' acceptances, shall in no
event have an original maturity of more than 365 days or a remaining
maturity of more than 30 days) denominated in United States dollars
issued by, any depository institution or trust company (including the
Trustee or any agent of the Trustee, acting in its respective
commercial capacities) incorporated under the laws of the United States
of America or any state thereof and subject to supervision and
examination by federal and/or state banking authorities, so long as at
the time of such investment or contractual commitment providing for
such investment the commercial paper or other short-term debt
obligations of such depository institution or trust company (or, in the
case of a depository institution which is the principal subsidiary of a
holding company, the commercial paper or other short-term debt
obligations of such holding company) have a credit rating of "A-1+" and
P-1 from S&P and Moody's, respectively;
(iii) repurchase obligations with respect to any security
described in clause (i) above where such security has a remaining
maturity of one year or less and where such repurchase obligation has
been entered into with a depository institution or trust company
(acting as principal) described in clause (ii) above;
(iv) securities bearing interest or sold at a discount issued by
any corporation incorporated under the laws of the United States of
America or any state thereof which securities are rated "AAA" and "Aaa"
by S&P and Moody's, respectively, at the time of such investment or
contractual commitment providing for such investment; provided,
however, that securities issued by any particular corporation will not
be Permitted Investments to the extent that investment therein will
cause the then outstanding principal amount of securities issued by
such corporation and held as part of the Trust Fund to exceed 10% of
the sum of the aggregate outstanding principal balance of all Pooled
Certificates and the aggregate principal amount of all Permitted
Investments in the Certificate Account;
(v) commercial paper (having original maturities of not more than
365 days) of any corporation incorporated under the laws of the United
States or any state thereof which on the date of acquisition has been
rated by each Rating Agency in its highest short-term rating available,
provided that such commercial paper shall have a remaining maturity of
not more than 30 days;
(vi) certificates or receipts representing ownership interests in
future principal payments on obligations of the United States of
America or its agencies or instrumentalities (which obligations are
backed by the full faith and credit of the United States of America)
held by a custodian on behalf of the holders of such receipts; and
(vii) any other demand, money market or time deposit obligation, or
interest bearing security or investment as may be acceptable to the
Certificate Insurer (written confirmation of which shall be furnished
to the Trustee) that is rated "A-1 + " and "P-1" by S&P and Moody's,
respectively, at the time of such investment.
provided, however, that no instrument shall be a Permitted Investment if it
represents, either (1) the right to receive only interest payments with respect
to the underlying debt instrument or (2) the right to receive both principal
and interest payments derived from obligations underlying such instrument and
the principal payments with respect to such instrument provide a yield to
maturity greater than 120% of the yield to maturity at par of such underlying
obligations.
PERSON: Any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
POLICY: The certificate guaranty insurance policy dated the Closing Date
and issued by the Certificate Insurer for the benefit of the
Certificateholders, a copy of which is attached hereto as Exhibit B.
POLICY PAYMENTS ACCOUNT: The account established pursuant to Section 9.02
hereof and maintained by the Trustee for the benefit of the Certificateholders
and the Certificate Insurer, which shall at all times be an Eligible Account.
POOLED CERTIFICATEHOLDER: With respect to Pooled Certificates in physical
form, the registered holder of the Pooled Certificates, which following the
execution and delivery of this Agreement by the parties hereto and registration
on the books of the applicable trustee with respect to the Underlying Series,
shall be the Trustee for the benefit of the Certificateholders and the
Certificate Insurer and with respect to Pooled Certificates in book-entry form,
the Trustee or its Depository Participant for the benefit of the
Certificateholders and the Certificate Insurer.
POOLED CERTIFICATES: The certificates or collateralized mortgage
obligations sold by the Depositor to, and registered in the name of, or held
for the benefit of, the Trustee pursuant to Section 2.01 or 2.04 and as more
particularly described in Schedule A hereto, as amended from time to time
(excluding from and after the respective date of substitution or repurchase any
Deleted Pooled Certificates and including from and after the date of
substitution any Substitute Pooled Certificates).
POOLED CERTIFICATE CLASS PERCENTAGE: Means, for each class of Pooled
Certificates, the percentage which the Pooled Certificate constitutes of its
entire class as set forth in Schedule A attached hereto under the caption
"Class % in Trust."
POOLED CERTIFICATE DISTRIBUTION DATE: With respect to each of the Pooled
Certificates the 25th day of each month or, if such day is not a business day
as defined in the relevant Underlying Agreement, the next succeeding business
day as so defined.
POOLED CERTIFICATE DISTRIBUTION DATE STATEMENT: Each report provided
monthly to holders of Pooled Certificates in connection with each Pooled
Certificate Distribution Date pursuant to the related Underlying Agreement.
POOLED IO CERTIFICATE: An "interest only" Pooled Certificate (provided
that such Pooled Certificate may have been issued as part of a class with an
original principal amount of up to $10,000.)
POOLED PO CERTIFICATE: A "principal only" Pooled Certificate.
PREFERENCE AMOUNT: Any amount previously distributed to a
Certificateholder that is recoverable and sought to be recovered as a voidable
preference by a trustee in 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.
PREPAYMENT INTEREST SHORTFALL: A shortfall in the amount of interest
received on a Pooled Certificate Distribution Date resulting from any
prepayments in full of Underlying Mortgage Loans not accompanied by payment of
a full month of interest. Prepayment Interest Shortfalls are not covered by the
Policy.
PRINCIPAL DISTRIBUTION AMOUNT: As to any Distribution Date, an amount
equal to the sum of:
(i) the aggregate of the principal payments received by the Trustee
in respect of the Pooled Certificates on the immediately preceding Pooled
Certificate Distribution Date;
(ii) with respect to Residential Funding Mortgage Securities I, Inc.,
Mortgage Pass-Through Certificates, Series 1994-S1, Class A-20, the Pooled
Certificate Class Percentage of the sum of Realized Losses and, without
duplication, Excess Special Hazard Losses, Excess Fraud Losses, Excess
Bankruptcy Losses, Extraordinary Losses and other losses not otherwise covered
by subordination allocated to Class A-20 on such Pooled Certificate
Distribution Date pursuant to the relevant Underlying Agreement;
(iii) with respect to Residential Funding Mortgage Securities I, Inc.,
Mortgage Pass-Through Certificates, Series 1993-S40, Class A-11, the Pooled
Certificate Class Percentage of the sum of Realized Losses and, without
duplication, Excess Special Hazard Losses, Excess Fraud Losses, Excess
Bankruptcy Losses, Extraordinary Losses and other losses not otherwise covered
by subordination allocated to Class A-11 on such Pooled Certificate
Distribution Date pursuant to the relevant Underlying Agreement;
(iv) with respect to Residential Funding Mortgage Securities I, Inc.,
Mortgage Pass-Through Certificates, Series 1994-S13, Class A-5, the Pooled
Certificate Class Percentage of the sum of Realized Losses and, without
duplication, Excess Special Hazard Losses, Excess Fraud Losses, Excess
Bankruptcy Losses, Extraordinary Losses and other losses not otherwise covered
by subordination allocated to Class A-5 on such Pooled Certificate Distribution
Date pursuant to the relevant Underlying Agreement;
(v) with respect to Residential Funding Mortgage Securities I, Inc.,
Mortgage Pass-Through Certificates, Series 1994-S7, Class A-14, the Pooled
Certificate Class Percentage of the sum of Realized Losses and, without
duplication, Excess Special Hazard Losses, Excess Fraud Losses, Excess
Bankruptcy Losses, Extraordinary Losses and other losses not otherwise covered
by subordination allocated to Class A-14 on such Pooled Certificate
Distribution Date pursuant to the relevant Underlying Agreement;
(vi) with respect to Residential Funding Mortgage Securities I, Inc.,
Mortgage Pass-Through Certificates, Series 1993-S45, Class A-17, the Pooled
Certificate Class Percentage of the sum of Realized Losses and, without
duplication, Excess Special Hazard Losses, Excess Fraud Losses, Excess
Bankruptcy Losses, Extraordinary Losses and other losses not otherwise covered
by subordination allocated to Class A-17 on such Pooled Certificate
Distribution Date pursuant to the relevant Underlying Agreement;
(vii) with respect to Residential Funding Mortgage Securities I, Inc.,
Mortgage Pass-Through Certificates, Series 1993-S39, Class A-15, the Pooled
Certificate Class Percentage of the sum of Realized Losses and, without
duplication, Excess Special Hazard Losses, Excess Fraud Losses, Excess
Bankruptcy Losses, Extraordinary Losses and other losses not otherwise covered
by subordination allocated to Class A-15 on such Pooled Certificate
Distribution Date pursuant to the relevant Underlying Agreement;
(viii) with respect to Residential Funding Mortgage Securities I, Inc.,
Mortgage Pass-Through Certificates, Series 1993-S31, Class A-8, the Pooled
Certificate Class Percentage of the sum of Realized Losses and, without
duplication, Excess Special Hazard Losses, Excess Fraud Losses, Excess
Bankruptcy Losses, Extraordinary Losses and other losses not otherwise covered
by subordination allocated to Class A-8 on such Pooled Certificate Distribution
Date pursuant to the relevant Underlying Agreement;
(ix) with respect to Bear Stearns Mortgage Securities Inc., Mortgage
Pass-Through Certificates, Series 1993-10, Class P, the Pooled Certificate
Class Percentage of the sum of Realized Losses and other losses not otherwise
covered by subordination allocated to Class P on such Pooled Certificate
Distribution Date pursuant to the relevant Underlying Agreement;
(x) with respect to Chase Mortgage Finance Corporation, Multi-Class
Mortgage Pass-Through Certificates, Series 1993 P, Class A-P, the Pooled
Certificate Class Percentage of the sum of Realized Losses and other losses not
otherwise covered by subordination allocated to Class A-P on such Pooled
Certificate Distribution Date pursuant to the relevant Underlying Agreement;
(xi) with respect to CMC Securities Corporation III, Collateralized
Mortgage Obligations, Series 1994-E, Class E-APO, the Pooled Certificate Class
Percentage of the sum of Realized Losses and, without duplication, Excess
Special Hazard Losses, Excess Fraud Losses, Excess Bankruptcy Losses and other
losses not otherwise covered by subordination allocated to Class E-APO on such
Pooled Certificate Distribution Date pursuant to the relevant Underlying
Agreement;
(xii) with respect to PaineWebber Mortgage Acceptance Corporation IV,
Mortgage Pass-Through Certificates, Series 1994- 07, Class A-8, the Pooled
Certificate Class Percentage of the sum of Realized Losses and, without
duplication, Excess Special Hazard Losses, Excess Fraud Losses, Excess
Bankruptcy Losses, Extraordinary Losses and other losses not otherwise covered
by subordination allocated to Class A-8 on such Pooled Certificate Distribution
Date pursuant to the relevant Underlying Agreement;
(xiii) with respect to Sears Mortgage Securities Corporation, Mortgage
Pass-Through Certificates, Series 1993-9, Class P, the Pooled Certificate Class
Percentage of the sum of Realized Losses and, without duplication, Excess
Special Hazard Losses, Excess Fraud Losses, Excess Bankruptcy Losses and other
losses not otherwise covered by subordination allocated to Class P on such
Pooled Certificate Distribution Date pursuant to the relevant Underlying
Agreement;
(xiv) with respect to Chase Mortgage Finance Corporation, Multi-Class
Mortgage Pass-Through Certificates, Series 1993N, Class A-P, the Pooled
Certificate Class Percentage of the sum of Realized Losses and other losses not
otherwise covered by subordination allocated to Class A-P on such Pooled
Certificate Distribution Date pursuant to the relevant Underlying Agreement;
Notwithstanding the foregoing, if the Depositor repurchases, or elects to
substitute one or more Substitute Pooled Certificates for, a Pooled PO
Certificate pursuant to Sections 2.03(c) or 2.04 hereof, respectively, the
foregoing definition will be modified with respect to the related Distribution
Date to delete the portion thereof relating to the Deleted Pooled Certificate
being repurchased or substituted for and to reflect in the case of a
repurchase, the Repurchase Price received with respect thereto or in the case
of a substitution, the addition of a comparable provision acceptable to the
Certificate Insurer with respect to the related Substitute Pooled Certificate.
In the event that the related Underlying Distribution Date is the Final
Distribution Date with respect to any of the Pooled Certificates, the Principal
Distribution Amount will include any principal which has not been distributed
with respect to such Pooled Certificates.
Capitalized terms used within this definition not otherwise defined in this
Agreement shall have the meanings assigned thereto in the related Underlying
Agreements as in effect on the Closing Date.
PURCHASE AGREEMENT: The Purchase Agreement dated as of May 2, 1996 between
Bear, Stearns & Co., Inc. and the Depositor relating to the Pooled
Certificates.
RATING AGENCY OR RATING AGENCIES: Moody's and S&P or their successors. If
such agencies or their successors are no longer in existence, "Rating Agencies"
shall be deemed to refer to such nationally recognized statistical rating
agencies, or other comparable Persons, designated by the Certificate Insurer,
notice of which designation shall be given to the Trustee and the Depositor,
and specific ratings of Moody's and S&P shall be deemed to refer to the
equivalent ratings of the parties so designated.
RECORD DATE: With respect to any Distribution Date, the last Business Day
of the month preceding the month in which such Distribution Date occurs;
provided, however, that for this purpose the Distribution Date is deemed to
occur on the 28th of each month, without regard to whether such day is a
Business Day.
RELIEF ACT: The Soldiers' and Sailors' Civil Relief Act of 1940, as
amended.
REPURCHASE PRICE: In connection with the repurchase of (i) any of the
Pooled PO Certificates pursuant to Section 2.03(c) or Section 7.01(a)(i), a
price equal to the outstanding Pooled Certificate Principal Balance thereof as
of the date of repurchase, (ii) any Pooled IO Certificate pursuant to Section
2.03(c), a price equal to the highest bid obtained by the Trustee from three
dealers acceptable to the Certificate Insurer (other than affiliates of the
Depositor) then active in the market for such Pooled IO Certificate (or such
lesser number as may then be active); provided, however, if the Trustee is able
to obtain a bid from only one active dealer, then the Trustee may, with the
consent of the Certificate Insurer or shall, at the direction of the
Certificate Insurer, obtain a FMV Opinion to determine whether such bid is at
least equal to the fair market value of such Pooled IO Certificate and the
Repurchase Price shall be the higher of the bid or the fair market value of
such Pooled IO Certificate as stated in any such FMV Opinion; provided further,
however, if the Trustee is unable to obtain a bid from any active dealer, then
the Trustee shall obtain a FMV Opinion and the Repurchase Price shall be equal
to the fair market value of such Pooled IO Certificate as stated in such FMV
Opinion and (iii) any Pooled IO Certificate pursuant to Section 7.01(a)(i), a
price equal to the portion of the Interest Distribution Amount allocable to
such Pooled IO Certificate for such date of repurchase.
RESPONSIBLE OFFICER: When used with respect to the Trustee, any officer of
the Trustee assigned to and working in its Corporate Trust Office or similar
group administering the Trusts hereunder and also, with respect to a particular
matter, any other officer of the Trustee to whom a particular matter is
referred by the Trustee because of such officer's knowledge of and familiarity
with the particular subject.
S&P: Standard & Poor's Ratings Service, a division of The McGraw-Hill
Companies, Inc., or its successor in interest.
SECURITIES ACT: The Securities Act of 1933, as amended.
SENIOR CERTIFICATE: A class of mortgage related securities which has
rights that are senior to those of another class or classes (typically called
mezzanine and subordinate securities) which include so called super senior and
senior securities.
SINGLE CERTIFICATE: A Certificate with an original Certificate Balance of
$1,000.
SUBSTITUTE POOLED CERTIFICATE: One or more mortgage related securities
tendered to the Trustee pursuant to Section 2.04, which meet the following
criteria, (i) if the related Deleted Pooled Certificate is a Pooled IO
Certificate, the Substitute Pooled Certificate is an "interest only" mortgage
related security (provided, that such Substitute Pooled Certificate may have
been issued as part of a class with an original principal amount of up to
$10,000) bearing interest based upon a weighted average coupon of the
Underlying Mortgage Loans, which interest together with the interest payable on
all other Pooled IO Certificates (other than the Deleted Pooled Certificate)
would have at least equaled the Interest Distribution Amount for the
immediately preceding Distribution Date, (ii) if the related Deleted Pooled
Certificate is a Pooled PO Certificate, the Substitute Pooled Certificate is a
"principal only" mortgage related security having an outstanding principal
amount as of the date of substitution no less than the outstanding principal
amount of the related Deleted Pooled Certificate as of the date of substitution
and (iii) for any Deleted Pooled Certificate, the Substitute Pooled Certificate
(a) is a Senior Certificate, (b) as of the date of substitution, has a weighted
average maturity no less than the weighted average maturity of the related
Deleted Pooled Certificate, (c) as of the date of substitution, has Underlying
Mortgage Loans with a weighted average gross coupon no more than 25 basis
points below or no more than 25 basis points above the weighted average gross
coupon of the Underlying Mortgage Loans relating to the Deleted Pooled
Certificate, (d) has Underlying Mortgage Loans consisting of conventional,
fixed rate, one- to four-family, fully amortizing, level payment, first
mortgage loans with original maturities of up to 30 years, (e) is rated as of
the date of substitution in the highest long-term rating category by each
Rating Agency, (f) the inclusion of which in the Trust Fund will not result in
a withdrawal or downgrading in the ratings assigned to the Certificates by
either Rating Agency, written confirmation of which shall be provided by each
Rating Agency to the Trustee and the Certificate Insurer, (g) is acceptable to
the Certificate Insurer and (h) will not cause the Trust to lose its status as
a grantor trust for federal income tax purposes as indicated in an Opinion of
Counsel to be provided to the Trustee and the Certificate Insurer.
TRUSTEE: First Trust National Association, in its capacity as trustee, or
its successor in interest.
TRUSTEE FEE: With respect to any Distribution Date, the monthly fee equal
to one-twelfth of the product of 0.03% and the Class Balance immediately prior
to such Distribution Date.
TRUSTEE FEE ACCOUNT: The trust account or accounts, which shall at all
times be Eligible Accounts, created and maintained by the Trustee for the
benefit of the Trustee and the Certificate Insurer pursuant to Section 3.03.
TRUSTEE FEE DEPOSIT: With respect to any Distribution Date upon which
sufficient amounts with respect to interest have been received on the Pooled
Certificates and pursuant to the Policy to pay to the Trustee the Base Amount,
an amount equal to the excess, if any, of the Trustee Fee over the Base Amount.
TRUST FUND: The segregated pool of assets subject hereto, constituting the
corpus of the trust created hereby and to be administered hereunder, consisting
of:
(i) the Pooled Certificates;
(ii) all amounts payable on the Pooled Certificates
following the Closing Date pursuant to the
Underlying Agreements;
(iii) the Certificate Account and the Policy Payments Account
and such funds or assets as are from time to time
deposited in the Certificate Account and the Policy
Payments Account;
(iv) the Depositor's rights under the Purchase
Agreement; and
(v) the income, payments and proceeds of each of the
foregoing.
UNDERLYING AGREEMENTS: The agreements pursuant to which the related Pooled
Certificates were issued, as in effect on the Closing Date.
UNDERLYING MORTGAGE LOANS: The mortgage loans in which a Pooled
Certificate evidences a beneficial ownership interest.
UNDERLYING SERIES: Each series of securities which includes one or more
classes of Pooled Certificates.
UNDERLYING EVENT OF DEFAULT: An event of default under an Underlying
Agreement.
ARTICLE II
CONVEYANCE OF THE POOLED CERTIFICATES;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. CONVEYANCE OF THE POOLED CERTIFICATES.
(a) The Depositor, concurrently with the execution and delivery hereof,
does hereby sell, transfer, assign, set-over and otherwise convey to the
Trustee, in trust, for the use and benefit of the Certificateholders and the
Certificate Insurer, without recourse, all the right, title and interest of the
Depositor (i) in and to the Pooled Certificates, (ii) in and to the Purchase
Agreement and (iii) in and to all other assets constituting the Trust Fund.
Such assignment includes, without limitation, all amounts payable on the Pooled
Certificates pursuant to the Underlying Agreements following the Closing Date
or, with respect to Substitute Pooled Certificates, following the date of
substitution.
(b) In connection with such transfer and assignment, and concurrently with
its execution and delivery of this Agreement, or, with respect to Substitute
Pooled Certificates, on the date of substitution, the Depositor shall deliver
to, and deposit with, the Trustee the Pooled Certificates together with bond
powers executed in blank or in the name of the Trustee, as trustee, except
that, with respect to any Pooled Certificates held by the Depository, the
Depositor shall have caused the Pooled Certificates to be registered in the
book-entry records of DTC in the name of the Trustee. The Depositor also shall
deposit with the Trustee no later than the Closing Date or, with respect to
Substitute Pooled Certificates, on the date of substitution, the Underlying
Agreements with respect to each Pooled Certificate and the most recent Pooled
Certificate Distribution Date Statements received by the Depositor.
(c) In addition to the foregoing, the Depositor shall cause the
Certificate Insurer to deliver the Policy to the Trustee for the benefit of the
Certificateholders.
(d) The transfer of the Pooled Certificates and all other assets
constituting the Trust Fund is absolute and is intended by the parties hereto
as a sale.
(e) It is intended that the conveyances by the Depositor to the Trustee of
the Pooled Certificates as provided for in this Section 2.01 be construed as a
sale by the Depositor to the Trustee of the Pooled Certificates for the benefit
of the Certificateholders and the Certificate Insurer. Further, it is not
intended that any such conveyance be deemed to be a pledge of the Pooled
Certificates by the Depositor to the Trustee to secure a debt or other
obligation of the Depositor. However, in the event that the Pooled Certificates
are held to be property of the Depositor, or if for any reason this Agreement
is held or deemed to create a security interest in the Pooled Certificates,
then it is intended that (a) this Agreement shall also be deemed to be a
security agreement within the meaning of Articles 8 and 9 of the New York
Uniform Commercial Code and the Uniform Commercial Code of any other applicable
jurisdiction; (b) the conveyance provided for in Section 2.01 shall be deemed
to be a grant by the Depositor to the Trustee of a security interest in all of
the Depositor's right (including the power to convey title thereto), title and
interest, whether now owned or hereafter acquired, in and to (1) the Pooled
Certificates, (2) all amounts payable pursuant to the Pooled Certificates in
accordance with the terms thereof and (3) any and all general intangibles
consisting of, arising from or relating to any of the foregoing, and all
proceeds of the conversion, voluntary or involuntary, of the foregoing into
cash, instruments, securities or other property, including without limitation
all amounts from time to time held in the Certificate Account or the Policy
Payments Account, whether in the form of cash, instruments, securities or other
property; (c) the possession by the Trustee or any agent of the Trustee of such
items of property as constitute instruments, money, negotiable documents or
chattel paper shall be deemed to be "possession by the secured party", or
possession by a purchaser or a person designated by such secured party, for
purposes of perfecting the security interest pursuant to the New York Uniform
Commercial Code and the Uniform Commercial Code of any other applicable
jurisdiction (including, without limitation, Section 9-305, 8-313 or 8-321
thereof); and (d) notifications to persons holding such property, and
acknowledgments, receipts or confirmations from persons holding such property,
shall be deemed notifications to, or acknowledgments, receipts or confirmations
from, financial intermediaries, bailees or agents (as applicable) of the
Trustee for the purpose of perfecting such security interest under applicable
law.
The Depositor and the Trustee, at the Depositor's, the Certificate
Insurer's or the Majority Certificateholders' direction, shall, to the extent
consistent with this Agreement, take such reasonable actions as following
consultation with the Certificate Insurer may be determined to be necessary to
ensure that, if this Agreement were deemed to create a security interest in the
Pooled Certificates, and the other property described above, such security
interest would be deemed to be a perfected security interest of first priority
under applicable law and will be maintained as such throughout the term of this
Agreement.
Section 2.02. ACCEPTANCE OF TRUST FUND BY TRUSTEE;
INITIAL ISSUANCE OF CERTIFICATES.
The Trustee acknowledges receipt of the Policy, the Underlying Agreements,
the most recent Pooled Certificate Distribution Date Statements and the receipt
by it and the transfer, delivery and assignment to it of the Pooled
Certificates, in good faith and without notice of any adverse claim, and the
assignment to it of all other assets included in the Trust Fund and declares
that it holds and will hold the Pooled Certificates and all other assets
included in the Trust Fund and the Policy in trust for the exclusive use and
benefit of all present and future Certificateholders and for the benefit of the
Certificate Insurer in accordance with the terms of this Agreement.
Concurrently with such transfer, delivery and assignment and in exchange
therefor, pursuant to the written request of the Depositor executed by an
officer of the Depositor, the Trustee has executed and caused to be
authenticated and delivered to or upon the order of the Depositor, the
Certificates in authorized denominations evidencing the entire beneficial
ownership of the Trust Fund.
The Trustee shall, within three Business Days of the Closing Date or, with
respect to Substitute Pooled Certificates, within three Business Days of the
date of substitution, deliver to the applicable trustee for reregistration in
the name of the Trustee, as trustee hereunder each Pooled Certificate delivered
to it in physical form along with the related bond power received from the
Depositor.
Until the Trust Fund is terminated in accordance with Section 7.01, except
as provided herein, the Trustee shall not assign, sell, dispose of or transfer
any interest in the Pooled Certificates or any other asset constituting the
Trust Fund or permit the Pooled Certificates or any other asset constituting
the Trust Fund to be subjected to any lien, claim or encumbrance arising by,
through or under the Trustee or any person claiming by, through or under the
Trustee.
Section 2.03. REPRESENTATIONS AND WARRANTIES OF THE
DEPOSITOR AND THE TRUSTEE.
(a) The Depositor hereby represents and warrants to the Trustee and for
the benefit of the Certificateholders and of the Certificate Insurer, as of the
Closing Date and with respect to any Substitute Pooled Certificate, and subject
to such exceptions as are acceptable to the Certificate Insurer, as of the
related date of substitution, that:
(i) The Depositor is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware,
and the Depositor is possessed of all licenses necessary to carry on
its business.
(ii) The execution and delivery of this Agreement by the
Depositor, and the performance and compliance with the terms of this
Agreement by the Depositor, will not violate the Depositor's
certificate of incorporation or bylaws or constitute a default (or an
event which, with notice or lapse of time, or both, would constitute a
default) under, or result in the breach of, any material agreement or
other instrument to which it is a party or which is applicable to it
or any of its assets.
(iii) The Depositor has the full right, power and authority
to enter into and consummate all transactions contemplated by this
Agreement, including but not limited to selling the Pooled
Certificates to the Trustee, has duly authorized the execution,
delivery and performance of this Agreement, and has duly executed and
delivered this Agreement.
(iv) This Agreement, assuming due authorization, execution
and delivery by the Trustee, constitutes a valid, legal and binding
obligation of the Depositor, enforceable against the Depositor in
accordance with the terms hereof, subject to (A) applicable
bankruptcy, insolvency, reorganization, moratorium and other laws
affecting the enforcement of creditors' rights generally, and (B)
general principles of equity, regardless of whether such enforcement
is considered in a proceeding in equity or at law.
(v) The Depositor is not in violation of, and its execution
and delivery of this Agreement and its performance and compliance with
the terms of this Agreement will not constitute a violation of, any
law, any order or decree of any court or arbiter, or any order,
regulation or demand of any federal, state or local governmental or
regulatory authority, which violation is likely to affect materially
and adversely either the ability of the Depositor to perform its
obligations under this Agreement or the financial condition of the
Depositor.
(vi) No litigation is pending or, to the best of the
Depositor's knowledge, threatened against the Depositor which, if
determined adversely to the Depositor, would prohibit the Depositor
from entering into this Agreement or is likely to materially and
adversely affect either the ability of the Depositor to perform its
obligations under this Agreement or the financial condition of the
Depositor.
(vii) The Depositor was, immediately prior to the transfer of
the Pooled Certificates to the Trustee, the sole owner thereof free
and clear of any lien, pledge, charge or encumbrance of any kind
(except any lien created by this Agreement).
(viii) The Depositor acquired the Pooled Certificates in good
faith without notice of any adverse claim, lien, charge, encumbrance
or security interest (including without limitation, federal tax liens
or liens arising under ERISA).
(ix) The Depositor has not assigned any interest in the Pooled
Certificates or any distributions thereon, except as contemplated
herein.
(x) The Trustee, in its capacity as a Pooled Certificateholder,
will be entitled to distributions under the Underlying Agreements
equal to all distributions of interest and principal made on the
Pooled Certificates.
(xi) As of the Closing Date, the Pooled Certificates have an
aggregate principal balance greater than or equal to the Original
Principal Balance.
(xii) The information relating to the Pooled Certificates set
forth in Schedule A is true and correct in all material respects.
(xiii) Each Pooled Certificate is either a Certificated Security
(as such term is defined in Article 8 of the Uniform Commercial Code),
in the possession of the Trustee together with bond powers executed in
blank or to the Trustee signed by an appropriate person or an
Uncertificated Security (as such term is defined in Article 8 of the
Uniform Commercial Code registered on the books of DTC in the name of
the Trustee or its financial intermediary on behalf of the Trustee.
(xiv) The Pooled Certificates were structured to
be REMIC regular interests under the REMIC Provisions;
(xv) The Depositor has no actual knowledge after reasonable
inquiry that (a) each trust issuing each Pooled Certificate was not
duly created and is not validly existing and (b) each Pooled
Certificate (1) was not validly issued by such trust and (2) is not
outstanding, (3) is not the legal, valid, binding and enforceable
obligation of such trust and (4) is not entitled to the benefits of
the pooling and servicing agreement, indenture, trust agreement or
other document pursuant to which such Pooled Certificate was issued
(except as limited by bankruptcy, insolvency or other similar laws
affecting the enforcement of creditors' rights generally or to the
extent that such enforceability may be subject to the exercise of
judicial discretion in accordance with general equitable principles).
(xvi) The Depositor has no actual knowledge after reasonable
inquiry that each trust or other issuer issuing Pooled Certificates
does not own all right, title and interest in and to the Underlying
Mortgage Loans and other property constituting the trust estate of
such trust, free and clear of any claim, lien, charge, security
interest or other encumbrance (except the lien of the applicable
pooling and servicing agreement, indenture, trust agreement or other
document pursuant to which each Pooled Certificate was issued), or
that (except with respect to the Underlying Mortgage Loans and other
property relating to CMC Securities Corporation III, Collateralized
Mortgage Obligations, Series 1994-E, CLASS E-APO) such Underlying
Mortgage Loans and other property would constitute property of any
entity transferring the same to the trust in the event any such
transferring entity became subject to proceedings under Section 541 of
the United States Bankruptcy Code, 11 U.S.C.ss. 101 et seq., as
amended (the "Bankruptcy Code"), and accordingly, payments on the
Underlying Mortgage Loans would be subject to the automatic stay of
Section 362 of the Bankruptcy Code.
(xvii) The Depositor has no actual knowledge after reasonable
inquiry that any pooling and servicing agreement, indenture, trust
agreement or other document pursuant to which each Pooled Security was
issued was required to be registered or qualified under the Trust
Indenture Act of 1939, as amended, except that the Indenture under
which CMC Securities Corporation III Collateralized Mortgage
Obligations Series 1994-E Class E-APO were issued was required to be
so qualified and no trust or other issuer issuing Pooled Certificates
was required to be registered as an investment company under the
Investment Company Act of 1940, as amended.
(b) The Trustee hereby represents and warrants to the Depositor and for
the benefit of the Certificateholders and of the Certificate Insurer, as of the
Closing Date, that:
(i) The Trustee is a national banking association, duly organized
and validly existing under the laws of the United States of America.
(ii) The execution and delivery of this Agreement by the Trustee,
and the performance and compliance with the terms of this Agreement by
the Trustee, will not violate the Trustee's charter or bylaws or
constitute a default (or an event which, with notice or lapse of time,
or both, would constitute a default) under, or result in the breach
of, any material agreement or other instrument to which it is a party
or which is applicable to it or any of its assets.
(iii) The Trustee 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 has duly executed and delivered this Agreement.
(iv) This Agreement, assuming due authorization, execution and
delivery by the Depositor, constitutes a valid, legal and binding
obligation of the Trustee, enforceable against the Trustee in
accordance with the terms hereof, subject to (A) applicable
bankruptcy, insolvency, reorganization, moratorium and other laws
affecting the enforcement of creditors' rights generally, and (B)
general principles of equity, regardless of whether such enforcement
is considered in a proceeding in equity or at law.
(v) The Trustee is not in violation of, and its execution and
delivery of this Agreement and its performance and compliance with the
terms of this Agreement will not constitute a violation of, any law,
any order or decree of any court or arbiter, or any order, regulation
or demand of any federal, state or local governmental or regulatory
authority, which violation is likely to affect materially and
adversely either the ability of the Trustee to perform its obligations
under this Agreement or the financial condition of the Trustee.
(vi) No litigation is pending or, to the best of the Trustee's
knowledge, threatened against the Trustee which would prohibit the
Trustee from entering into this Agreement or is likely to materially
and adversely affect either the ability of the Trustee to perform its
obligations under this Agreement or the financial condition of the
Trustee.
(vii) The Pooled Certificates will be registered in the name of
the Trustee; the information relating to the Pooled Certificates set
forth on Schedule A hereto conforms to information set forth on the
face of the Pooled Certificates and the most recent Pooled Certificate
Distribution Date Statements, as applicable; it has acquired the
Pooled Certificates on behalf of the Certificateholders and the
Certificate Insurer from the Depositor in good faith, for value, and,
to the best of the Trustee's knowledge, without notice or actual
knowledge of any adverse claim, lien, charge, encumbrance or security
interest (including, without limitation, federal tax liens or liens
arising under ERISA); it has not and will not, in any capacity, assert
any claim or interest in the Pooled Certificates and will hold such
Pooled Certificates and the proceeds thereof in trust pursuant to the
terms of this Agreement; and it has not encumbered or transferred its
right, title or interest in the Pooled Certificates.
(c) It is understood and agreed that the foregoing representations and
warranties shall survive the execution and delivery of this Agreement. Upon
discovery by either party hereto of a breach of any of the foregoing
representations and warranties which materially and adversely affects the
interests of the Certificateholders, the Certificate Insurer or either party
hereto, the party discovering such breach will give prompt written notice
thereof to the other party hereto, to the Certificateholders and to the
Certificate Insurer. Within thirty (30) days of the earlier of either discovery
by or notice to the Depositor of any breach of a representation or warranty of
the Depositor that materially and adversely affects the interests of the
Certificateholders or the Certificate Insurer, the Depositor shall use its best
efforts promptly to cure such breach in all material respects and, if such
breach cannot be cured, the Depositor shall, at the election of the Certificate
Insurer or, if there is a Certificate Insurer Default, at the election of the
Majority Certificateholders, repurchase each Pooled Certificate affected by the
breach at the Repurchase Price or if either the Certificate Insurer or the
Majority Certificateholders exercise the foregoing election, the Depositor
shall alternatively at its option substitute a Substitute Pooled Certificate
for the Pooled Certificate affected by the breach pursuant to Section 2.04. If
the Depositor is to repurchase Pooled Certificates, the Trustee shall promptly
determine the Repurchase Price in accordance with the definition thereof.
Repurchase of any of the Pooled Certificates pursuant to the foregoing
provisions of this Section 2.03(c) shall be accomplished by (i) deposit in the
Certificate Account on the Business Day prior to the next succeeding
Distribution Date of the amount of the Repurchase Price, (ii) amending the
definitions of "Interest Distribution Amount" and/or "Principal Distribution
Amount," as applicable and (iii) amending Schedule A hereto to remove the
related Deleted Pooled Certificates.
Section 2.04. SUBSTITUTION OF POOLED CERTIFICATES. Notwithstanding
anything to the contrary in this Agreement, in lieu of repurchasing a Pooled
Certificate pursuant to Section 2.03(c), the Depositor may, no later than the
date by which such repurchase by the Depositor would otherwise be required,
tender to the Trustee a Substitute Pooled Certificate accompanied by an
Officer's Certificate of the Depositor that such Substitute Pooled Certificate
conforms to the requirements set forth in the definition of "Substitute Pooled
Certificate;" PROVIDED, however, that substitution pursuant to this Section
2.04 in lieu of repurchase shall not be permitted after the termination of the
two-year period beginning on the Closing Date. The Trustee shall accept any
such Substitute Pooled Certificate, which shall thereafter be deemed to be a
Pooled Certificate hereunder. In the event of such a substitution, payments
received on the Substitute Pooled Certificate for the month in which the
substitution occurs shall be the property of the Depositor and payments
received on the Deleted Pooled Certificate during such month shall be the
property of the Trust Fund. Upon acceptance of the Substitute Pooled
Certificate, the Trustee shall release to the Depositor and shall execute and
deliver all instruments of transfer or assignment, without recourse, in form as
provided to it as are necessary to vest in the Depositor title to and rights
under the related Deleted Pooled Certificate released pursuant to this Section
2.04. The Depositor shall deliver the documents related to the Substitute
Pooled Certificate in accordance with the provisions of Section 2.01. The
representations and warranties set forth in 2.03(a) concerning the Pooled
Certificates shall be deemed to have been made by the Depositor with respect to
each Substitute Pooled Certificate as of the date of acceptance of such
Substitute Pooled Certificate by the Trustee. On or prior to the date of
substitution, the Trustee shall (i) amend Schedule A hereto, to reflect such
substitution and shall provide a copy of such amended Schedule to the
Depositor, the Certificate Insurer and the Rating Agencies (ii) amend the
definition of "Interest Distribution Amount" and/or "Principal Distribution
Amount" in a manner acceptable to the Certificate Insurer and (iii) provide
written acknowledgement to the Certificate Insurer of the receipt by it and the
transfer, delivery and assignment to it of the related Substitute Pooled
Certificate, in good faith and without notice of any adverse claim, and the
assignment to it of all other related assets to be included in the Trust Fund.
<PAGE>
ARTICLE III
ADMINISTRATION OF THE POOLED CERTIFICATES;
PAYMENTS AND REPORTS TO CERTIFICATEHOLDERS
Section 3.01. ADMINISTRATION OF THE TRUST FUND AND THE
POOLED CERTIFICATES.
If at any time the Trustee, as a holder of a Pooled Certificate, is
requested in such capacity, whether by a Certificateholder, a holder of a
certificate of an Underlying Series or a party to the related Underlying
Agreement or any other Person, to take any action or to give any consent,
approval or waiver, including without limitation in connection with the
servicing and administration of Acquired Mortgage Assets, an amendment of any
Underlying Agreement or the occurrence of an Underlying Event of Default, the
Trustee shall promptly notify the Certificate Insurer, all of the
Certificateholders and the Depositor of such request and of its planned course
of action with respect thereto and shall, in its capacity as a holder of Pooled
Certificates, take such action in connection with the exercise and/or
enforcement of any rights and/or remedies available to it in such capacity with
respect to such request as the Certificate Insurer, so long as no Certificate
Insurer Default exists, directs in writing, or if a Certificate Insurer Default
exists, as the Majority Certificateholders shall direct in writing. The Trustee
shall promptly furnish to the Certificate Insurer, the Depositor and, upon the
written request of a Certificateholder, such Certificateholder, all notices,
statements, reports or other information that it receives as holder of the
Pooled Certificates, including without limitation information regarding the
Underlying Mortgage Loans and any Acquired Mortgage Assets. To the extent the
Trustee has actual knowledge thereof, it will provide to the Certificate
Insurer notice of any downgrade or withdrawal of the rating assigned by either
Rating Agency to any Pooled Certificate.
Section 3.02. COLLECTION OF MONIES.
(a) In connection with its receipt of any distribution on the Pooled
Certificates on any Pooled Certificate Distribution Date (or such later date on
which the Trustee shall receive the related Pooled Certificate Distribution
Date Statement), the Trustee shall review each related Pooled Certificate
Distribution Date Statement delivered to it and shall confirm that the
aggregate amount of such distribution received is consistent with the
information contained therein (it being understood that the Trustee shall be
entitled to rely on the accuracy and correctness of the information set forth
on such statements).
If the Trustee shall not have received a distribution on any Pooled
Certificate by 12:00 noon (local time in the City where the Corporate Trust
Office is located) on the Business Day following the Pooled Certificate
Distribution Date, the Trustee shall promptly notify the Certificate Insurer.
If the Trustee shall gain actual knowledge of any Underlying Event of Default,
the Trustee shall promptly notify the Certificateholders, the Depositor and the
Certificate Insurer of such occurrence and such parties shall proceed in
accordance with the terms and conditions of Section 3.01.
(b) If the Trustee receives a Notice of Final Distribution in respect of
any of the Pooled Certificates, the Trustee shall promptly notify the
Certificate Insurer of such occurrence and the Trustee shall present and
surrender any related Pooled Certificates which are in certificated form for
final payment thereon in accordance with the terms and conditions of the
related Underlying Agreement and such notice. The Trustee shall promptly
deposit in the Certificate Account the final distribution received upon
presentation and surrender of such Pooled Certificates for distribution in
accordance with Section 3.05 hereof on the next succeeding Distribution Date.
Section 3.03. ESTABLISHMENT OF CERTIFICATE AND TRUSTEE
FEE ACCOUNTS; DEPOSITS THEREIN.
(a) The Trustee, for the benefit of the Certificateholders and the
Certificate Insurer, shall establish and maintain one or more interest bearing
trust accounts (collectively, the "Certificate Account"), each of which shall
be an Eligible Account, entitled "First Trust National Association, as trustee
for the registered holders of Bear Stearns Mortgage Securities Inc. Trust
Certificates, Series 1996-2", held in trust by the Trustee for the benefit of
the Certificateholders and the Certificate Insurer. The Trustee shall cause all
distributions received on the Pooled Certificates by the Trustee in its
capacity as holder of the Pooled Certificates, from whatever source, and all
amounts received by it representing payment of a Repurchase Price pursuant to
Section 2.03(c) and 7.01(a)(i), subsequent to the Closing Date to be deposited
directly into the Certificate Account. On each Distribution Date the Trustee
also shall deposit from the Policy Payments Account into the Certificate
Account all Insured Payments received pursuant to Section 9.02(b). The
Certificate Account is initially located at the Trustee. The Trustee shall give
notice to the Depositor, to the Certificate Insurer and to Certificateholders
of any new location of the Certificate Account prior to any change thereof.
(b) In the event that payments in respect of the Pooled Certificates are
received by the Trustee prior to the related Distribution Date, the Trustee may
invest such funds deposited in the Certificate Account in one or more Permitted
Investments held in the name of the Trustee and shall receive as compensation,
in addition to the Trustee Fee, any interest or investment income earned on
such Permitted Investments, which may be withdrawn by the Trustee on each
Distribution Date and shall not constitute Available Funds, provided that on a
Distribution Date with respect to which a claim is being made on the Policy,
such investment earnings shall remain in the Certificate Account and shall be
deemed Available Funds for such Distribution Date. Notwithstanding the
foregoing, no such Permitted Investment may mature later than the day before
such related Distribution Date and no such investment shall be sold prior to
its maturity date. The amount of any losses incurred in respect of any such
investments shall be deposited in the Certificate Account by the Trustee out of
its own funds immediately as realized.
(c) The Trustee, for the benefit of the Certificateholders and the
Certificate Insurer, shall establish and maintain one or more interest bearing
trust accounts (collectively, the "Trustee Fee Account"), each of which shall
be an Eligible Account, entitled "First Trust National Association, as trustee
for the registered holders of Bear Stearns Mortgage Securities Inc. Trust
Certificates, Series 1996-2," held in trust (but outside of the Trust Fund
established hereby) by the Trustee for the benefit of the Certificateholders
and the Certificate Insurer. The Trustee Fee Account is initially located at
the Trustee. The Trustee shall give notice to the Depositor, the Certificate
Insurer and the Certificateholders of any new location of the Trustee Fee
Account prior to any change thereof. The Trustee Fee Account shall have two
subaccounts ("Subaccount One" and "Subaccount Two" and each, a "Subaccount").
On the Closing Date the Depositor shall provide to the Trustee for deposit in
Subaccount One $2,500. On each Distribution Date the Trustee shall transfer
from the Certificate Account to Subaccount Two the Trustee Fee Deposit for such
Distribution Date. The Trustee shall invest any amounts deposited in each
Subaccount of the Trustee Fee Account in one or more Permitted Investments held
in the name of the Trustee in trust for the benefit of the Certificateholders
and the Certificate Insurer. No such Permitted Investment may mature later than
the day before any Distribution Date which in the Depositor's sole discretion
is believed to be a Distribution Date upon which the Trustee Fee may exceed
interest received on the Pooled Certificates. No investment shall be sold prior
to its maturity date unless the investment must be sold to pay the Trustee Fee.
The amount of any losses incurred in respect of any investment shall be
deposited in the Trustee Fee Account by the Trustee out of its own funds
immediately as realized. The Trustee shall be entitled to withdraw on each
Distribution Date any interest or investment income on amounts in Subaccount
Two as additional compensation. All interest and investment income on amounts
in Subaccount One shall be retained in Subaccount One. On any Distribution Date
on which the Base Amount exceeds the interest received from the Pooled
Certificates and pursuant to the Policy, the Trustee may withdraw the amount of
the excess from the Trustee Fee Account, first from Subaccount Two and then
from Subaccount One if there are no funds in Subaccount Two, and pay such
excess to the Trustee in its individual capacity. If the Trustee resigns or is
removed and a successor trustee is appointed, any amounts on deposit in the
Trustee Fee Account shall thereafter be held in the same manner by and for the
benefit of the successor trustee. Upon the termination of the Trust Fund, any
amount (including earnings) remaining in (i) Subaccount One shall be paid to
the Depositor and (ii) Subaccount Two shall be paid to the acting Trustee in
its individual capacity.
(d) The Depositor shall cause all distributions received on the Pooled
Certificates by the Depositor or any of its Affiliates after the Closing Date
to be deposited directly into the Certificate Account.
Section 3.04. PERMITTED WITHDRAWALS FROM THE CERTIFICATE ACCOUNT.
The Trustee may from time to time withdraw funds from the Certificate
Account for the following purposes:
(i) to make distributions in the amounts and in the
manner provided for in Section 3.05;
(ii) to pay to the Person entitled thereto any amount
deposited in the Certificate Account in error;
(iii) to clear and terminate the Certificate Account
upon the termination of this Agreement; and
(iv) to pay itself, as additional compensation, the
net reinvestment income permitted to be paid to it
as provided in Section 3.03(b).
On each Distribution Date, the Trustee shall withdraw all funds from the
Certificate Account and shall use such funds withdrawn from the Certificate
Account only for the purposes described in this Section 3.04 and in Section
3.05.
Section 3.05. DISTRIBUTIONS.
(a) On each Distribution Date, the Trustee shall apply amounts in the
Certificate Account representing Available Funds and Insured Payments received
pursuant to Section 9.02(b) in the following manner and order of priority, in
each case to the extent of the remaining Available Funds and the Insured
Payments: (A) from amounts with respect to interest received on the Pooled
Certificates and pursuant to the Policy, if any:
FIRST, to the Trustee, to pay the portion of
the Trustee Fee not being covered by a
withdrawal (other than of earnings from
Subaccount Two (as defined in Section
3.03(c))) from the Trustee Fee Account; and
SECOND, to the Certificateholders as
distributions of interest, the Interest
Distribution Amount (less the Trustee Fee)
for such Distribution Date and portion, if
any, of the Interest Distribution Amount
(less the Trustee Fee) for any prior
Distribution Date which remains unpaid;
(B) from amounts with respect to principal
received on the Pooled Certificates and
pursuant to the Policy, if any, to the
Certificateholders as distributions of
principal, the lesser of (i) the Principal
Distribution Amount for such Distribution
Date and for any prior Distribution Date
which remains unpaid and (ii) the Class A-1
Balance immediately prior to such
Distribution Date; and
(C) from any remaining amounts:
FIRST, to pay the Certificate Insurer the
Certificate Insurer Reimbursement Amount; and
SECOND, to the extent of the balance, if
any, of such Available Funds still
remaining, to the Certificateholders as
additional distributions of interest.
If any Pooled Certificate Distribution Date Statement has not been
received by the Trustee by the close of business on the Business Day prior to
the Distribution Date, the Trustee shall pay the portion of the Available Funds
on deposit in the Certificate Account attributable to such Pooled Certificates
to the Certificateholders. After receipt of such Pooled Certificate
Distribution Date Statement, the Trustee shall make on the following
Distribution Date any necessary adjustments in the application of amounts in
the Certificate Account. In addition, if the Trustee has not received a
distribution on a Pooled Certificate by 3:00 P.M. (or 10:00 A.M. if a claim is
to be made under the Policy) (in each case local time in the city where the
Corporate Trust Office is located) on the second Business Day following the
Pooled Certificate Distribution Date, the distribution allocable to such Pooled
Certificate (including any amount to be drawn on the Policy with respect
thereto) will not be made on the immediately following Distribution Date, but
will be made on the next succeeding Distribution Date.
(b) All distributions made to Certificateholders pursuant to Section
3.05(a) on each Distribution Date shall be allocated PRO RATA among the
outstanding Certificates based upon their respective Percentage Interests and,
except in the case of the final distribution to the Certificateholders, shall
be made to the Holders of record on the related Record Date. Distributions to
any Certificateholder on any Distribution Date shall be made by wire transfer
of immediately available funds to the account of such Certificateholder at a
bank or other entity having appropriate facilities therefor, if such
Certificateholder shall have so notified the Trustee in writing (which wiring
instructions may be in the form of a standing order applicable to all future
Distribution Dates) no less than five Business Days prior to the related Record
Date (or, in the case of the initial Distribution Date, no later than the
related Record Date) and is the registered owner of Certificates with an
aggregate initial Certificate Balance of not less than $1,000,000, or otherwise
by check mailed by first class mail to the address of such Certificateholder
appearing in the Certificate Register. Final distribution to each
Certificateholder will be made in like manner, but only upon presentment and
surrender of such Certificate at the Corporate Trust Office or such other
location specified in the notice to Certificateholders of such final
distribution.
(c) Each Holder of a Certificate, by its acceptance of such Certificate,
hereby agrees that, in the event any distribution is made to any Holder of a
Certificate from amounts paid under the Policy, the Certificate Insurer shall
be subrogated to the rights of the Holders of such Certificate in the manner
provided in Section 9.02 hereof to receive from amounts on deposit in the
Certificate Account the distributions allocable to principal and interest that
would have been distributable to such Holder if no such distribution to such
Holder had been made from amounts paid under the Policy.
(d) Notwithstanding any other provision of this Agreement, the Trustee
shall comply with all federal withholding requirements respecting payments to
Certificateholders of interest or the accrual of original issue discount that
the Trustee reasonably believes are applicable under the Code. The consent of
Certificateholders shall not be required for such withholding. In the event the
Trustee does withhold any amount from payments to any Certificateholder
pursuant to federal withholding requirements, the Trustee shall indicate the
amount withheld to such Certificateholders.
(e) The Trustee may conclusively rely on the information set forth in the
Pooled Certificate Distribution Date Statements in making the calculations
called for in this Section 3.05, including, without limitation, the
determinations of the Interest Distribution Amount and the Principal
Distribution Amount. If the information available to the Trustee in any Pooled
Certificate Distribution Date Statement is insufficient to make the
calculations provided for in this Section 3.05, the Trustee shall promptly
request the underlying trustee with respect to the Pooled Certificates to
provide sufficient information in writing, and after receipt of such
information the Trustee shall make on the following Distribution Date any
necessary adjustments in the application of amounts in the Certificate Account.
If such information is not received from such underlying trustee, the Trustee
shall not be responsible for making any such adjustment.
Section 3.06. STATEMENTS TO CERTIFICATEHOLDERS.
On each Distribution Date, the Trustee shall prepare, and shall forward by
mail, a statement to each Certificateholder, the Depositor, the Rating Agencies
and to the Certificate Insurer stating:
(i) the Available Funds for such Distribution Date;
(ii) the Interest Distribution Amount and the
Principal Distribution Amount for such Distribution
Date and, with respect to each, the components
thereof as described in the definitions of such
terms as set forth in Section 1.01 hereof and as
reported in the related Pooled Certificate
Distribution Date Statements or other information
received from the underlying trustees with respect
to the Pooled Certificates;
(iii) the Class Balances before and after applying
payments on such Distribution Date;
(iv) the effective interest rate on the Certificates
for such Distribution Date;
(v) the outstanding principal and/or notional amount,
as the case may be, immediately prior to and
after taking into account distributions made on such
Distribution Date, and the current interest rate,
interest shortfalls (separately stating in the
aggregate those relating to Prepayment Interest
Shortfalls, Curtailment Interest Shortfalls and
those resulting from the application of the Relief
Act not covered by subordination orcompensating
interest) and current realized losses allocated
to each of the Pooled Certificates for such
Distribution Date;
(vi) any amount in the Trustee Fee Account applied to
pay the Trustee Fee and the balance of the
Trustee Fee Account as of such Distribution Date;
and
(vii) the amount of any Insured Payment made to
Certificateholders on such Distribution Date (and
the Distribution Dates to which such payment
relates), the amount of any Certificate Insurer
Reimbursement Amount paid to the Certificate
Insurer on such Distribution Date pursuant to
clause (C) FIRST of Section 3.05(a) and the
amount of Cumulative Insured Payments after giving
effect to any such Insured Payment made to
Certificateholders and/or any such Certificate
Insurer Reimbursement Amount payment to the
Certificate Insurer.
In the case of the information furnished pursuant to clauses (ii) and
(iii) above, the amounts shall also be expressed as a dollar amount per Single
Certificate. The Trustee's responsibility for reporting the above information
is limited to the availability, timeliness, and accuracy of the information set
forth in the Pooled Certificate Distribution Date Statements and any additional
written information requested by the Trustee with respect to the Pooled
Certificates. If the Trustee receives any such additional information after
preparing a statement required by this Section, the Trustee shall report the
related adjustments in the statement prepared after receipt of such
information.
In addition, the Trustee promptly will furnish to the Depositor and to the
Certificate Insurer, and upon the written request of a Certificateholder, to
such Certificateholder, copies of any notices, statements, reports or other
communications including, without limitation, the Pooled Certificate
Distribution Date Statements, received by the Trustee in its capacity as a
holder of Pooled Certificates. The Trustee shall furnish copies of all Pooled
Certificate Distribution Date Statements to the Rating Agencies promptly after
its receipt of same. The Trustee may fulfill its obligations hereunder with
respect to the distribution of the Pooled Certificate Distribution Date
Statements by mailing the same together with the statements to
Certificateholders required pursuant to the first paragraph of this Section
3.06.
On or before March 31st of each calendar year, commencing in 1997, the
Trustee shall prepare and deliver by first class mail to the Certificate
Insurer, the Depositor and to each Person who at any time during the prior
calendar year was a Certificateholder of record a statement containing the
information required to be contained in the regular monthly report to
Certificateholders, as set forth in clauses (ii) and (iv) above aggregated for
such prior calendar year or in the case of a Certificateholder, the applicable
portion thereof during which such Person was a Certificateholder. Such
obligation of the Trustee shall be deemed to have been satisfied to the extent
that substantially comparable information shall be provided by the Trustee
pursuant to any requirements of the Code and regulations thereunder as from
time to time are in force.
The Trustee shall be responsible for preparing, at its own expense,
signing and filing, on behalf of the Trust Fund, federal income tax and
information returns with the Internal Revenue Service ("IRS") and Minnesota
income tax returns and the returns of any other state taxing authority the
necessity of filing of which shall have been confirmed to the Trustee in
writing either by the delivery of an Opinion of Counsel to such effect or by
the delivery to the Trustee of a written notification to such effect by the
taxing authority of any such state. The Depositor shall provide the Trustee
within 10 days of the Closing Date all information deemed necessary by the
Trustee to fulfill its obligations under this paragraph. The Trustee shall
furnish to each Certificateholder at the time required by law such information
reports or returns as are required by applicable federal, state or local law
with respect to the Trust Fund to enable Certificateholders to prepare their
tax returns and will furnish comparable information to the IRS and other taxing
authorities as and when required by law to do so.
Section 3.07. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION.
The Trustee shall provide to the Depositor and to the Certificate Insurer
access to all reports, documents and records maintained by the Trustee in
respect of its duties hereunder, such access being afforded without charge but
only upon three Business Days' written request and during normal business hours
at offices designated by the Trustee.
Section 3.08. CALCULATION OF MONTHLY DISTRIBUTION AMOUNT.
All calculations of the Monthly Distribution Amount for any Distribution
Date and of the amount of any shortfall with respect thereto as to which a
claim on the Policy will be made shall be performed by the Trustee in reliance
on the information provided to it in the applicable Pooled Certificate
Distribution Date Statements and any additional written information requested
by the Trustee with respect to the Pooled Certificates. The Trustee shall
promptly communicate the results of its calculations to the Certificate Insurer
pursuant to Section 9.02, and to the Depositor and the Certificateholders
(which obligation may be satisfied through the distribution of the statements
required under Section 3.06).
<PAGE>
ARTICLE IV
THE CERTIFICATES
Section 4.01. THE CERTIFICATES.
(a) The Depository, the Depositor and the Trustee have entered into a
Depository Agreement dated as of May 3, 1996 (the "Depository Agreement").
Except as provided in Subsection 4.01(b), the Certificates shall at all times
remain registered in the name of the Depository or its nominee and at all
times: (i) registration of such Certificates may not be transferred by the
Trustee except to a successor to the Depository; (ii) ownership and transfers
of registration of such Certificates on the books of the Depository shall be
governed by applicable rules established by the Depository; (iii) the
Depository may collect its usual and customary fees, charges and expenses from
its Depository Participants; (iv) the Trustee shall deal with the Depository as
representative of the Certificate Owners for purposes of exercising the rights
of Certificateholders under this Agreement, and requests and directions for and
votes of such representative shall not be deemed to be inconsistent if they are
made with respect to different Certificate Owners; and (v) the Trustee may rely
and shall be fully protected in relying upon information furnished by the
Depository with respect to its Depository Participants.
All transfers by Certificate Owners of Certificates shall be made in
accordance with the procedures established by the Depository Participant or
brokerage firm representing such Certificate Owners. Each Depository
Participant shall only transfer Certificates of Certificate Owners it
represents or of brokerage firms for which it acts as agent in accordance with
the Depository's normal procedures.
(b) If (i)(A) the Depositor advises the Trustee and the Certificate
Insurer in writing that the Depository is no longer willing or able to properly
discharge its responsibilities as Depository and (B) the Trustee or the
Depositor is unable to locate a qualified successor within 30 days or (ii) the
Depositor at its option advises the Trustee and the Certificate Insurer in
writing that it elects to terminate the book-entry system through the
Depository, the Trustee shall request that the Depository notify all
Certificate Owners of the occurrence of any such event and of the availability
of definitive, fully registered Certificates (the "Definitive Certificates") to
Certificate Owners requesting the same. Upon surrender to the Trustee of the
Certificates by the Depository, accompanied by registration instructions from
the Depository for registration, the Trustee shall issue the Definitive
Certificates. Neither the Depositor 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.
(c) The Certificates shall be substantially in the form set forth in
Exhibit A hereto. The Certificates shall be executed by manual signature on
behalf of the Trustee in its capacity as trustee hereunder by an authorized
officer. Certificates bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Trustee shall be entitled to
all benefits under this Agreement, subject to the following sentence,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Certificates or did
not hold such offices at the date of such Certificates. No Certificate shall be
entitled to any benefit under this Agreement, or be valid for any purpose,
unless there appears on such Certificate a certificate of authentication
substantially in the form provided for herein executed by the Certificate
Registrar by manual signature, and such certificate 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.
Pending the preparation of Definitive Certificates, the Trustee may sign
and the Certificate Registrar may authenticate temporary Certificates that are
printed, lithographed or typewritten, in authorized denominations for
Certificates, substantially of the tenor of the Definitive Certificates in lieu
of which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers or authorized signatories
executing such Certificates may determine, as evidenced by their execution of
such Certificates. If temporary Certificates are issued, the Depositor will
cause Definitive Certificates to be prepared without unreasonable delay. After
the preparation of Definitive Certificates, the temporary Certificates shall be
exchangeable for Definitive Certificates upon surrender of the temporary
Certificates at the office of the Trustee, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Certificates, the
Trustee shall sign and the Certificate Registrar shall authenticate and deliver
in exchange therefor a like aggregate principal amount, in authorized
denominations, of Definitive Certificates. Until so exchanged, such temporary
Certificates shall in all respects be entitled to the same benefits as
Definitive Certificates.
(d) The Certificates will be registered as a single Certificate held by a
nominee of the Depository, and beneficial interests will be held by investors
through the book-entry facilities of the Depository in minimum denominations of
$50,000 and increments of $1 in excess thereof, except that one Certificate may
be issued in a different amount so that the sum of the denominations of all
outstanding Certificates shall equal the Original Class A-1 Balance.
Section 4.02. REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES.
(a) At all times during the term of this Agreement, there shall be
maintained at the office of a registrar (the "Certificate Registrar") a
register (the "Certificate Register") in which, subject to such reasonable
regulations as the Certificate Registrar may prescribe, the Certificate
Registrar shall provide for the registration of Certificates and of transfers
and exchanges of Certificates as herein provided. The Trustee is initially
appointed (and hereby agrees to act in accordance with the terms hereof) as
Certificate Registrar for the purpose of registering Certificates and transfers
and exchanges of Certificates as herein provided. For so long as the Trustee
acts as Certificate Registrar, its Corporate Trust Office shall constitute the
offices of the Certificate Registrar maintained for such purposes. The
Certificate Registrar may appoint, by a written instrument delivered to the
Depositor, any other bank or trust company in New York to act as Certificate
Registrar under such conditions as the predecessor Certificate Registrar may
prescribe, provided that the predecessor Certificate Registrar shall not be
relieved of any of its duties or responsibilities hereunder by reason of such
appointment. If the Trustee resigns or is removed in accordance with the terms
hereof, the successor trustee shall immediately succeed to its predecessor's
duties as Certificate Registrar. The Depositor, the Certificate Insurer and, if
it is no longer the Certificate Registrar, the Trustee shall have the right to
inspect the Certificate Register or to obtain a copy thereof at all reasonable
times, and to rely conclusively upon a certificate of the Certificate Registrar
as to the information set forth in the Certificate Register.
Every Certificateholder agrees with the Certificate Registrar, the
Certificate Insurer and the Trustee that neither the Certificate Registrar, the
Certificate Insurer nor the Trustee shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the
Certificateholders hereunder, regardless of the source from which such
information was derived.
(b) Subject to the preceding subsections, upon surrender for registration
of transfer of any Certificate at the offices of the Certificate Registrar
maintained for such purpose, the Trustee shall execute and the Certificate
Registrar shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Certificates of a like aggregate
Percentage Interest.
(c) At the option of any Holder, its Certificates may be exchanged for
other Certificates of authorized denominations of a like aggregate Percentage
Interest, upon surrender of the Certificates to be exchanged at the offices of
the Certificate Registrar maintained for such purpose. Whenever any
Certificates are so surrendered for exchange, the Trustee shall execute and the
Certificate Registrar shall authenticate and deliver the Certificates which the
Certificateholder making the exchange is entitled to receive.
(d) Every Certificate presented or surrendered for transfer or exchange
shall (if so required by the Trustee) be duly endorsed by, or be accompanied by
a written instrument of transfer in the form satisfactory to the Trustee duly
executed by, the Holder thereof or his attorney duly authorized in writing.
(e) No service charge shall be made 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.
(f) All Certificates surrendered for transfer and exchange shall be
destroyed by the Certificate Registrar without liability on its part.
Section 4.03. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
If (i) any mutilated Certificate is surrendered to the Certificate
Registrar, or the Trustee and the Certificate Registrar receive evidence to
their satisfaction of the destruction, loss or theft of any Certificate, and
(ii) (except in the case of a mutilated Certificate) there is delivered to the
Trustee, the Certificate Insurer and the Certificate Registrar such agreement,
security or indemnity as may be required by them to save each of them harmless,
then, in the absence of notice to the Trustee or the Certificate Registrar that
such Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute and the Certificate Registrar shall authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like tenor and Percentage Interest but
bearing a number not contemporaneously outstanding. Upon the issuance of any
new Certificate under this Section, the Trustee may require the payment by the
Certificateholder of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto. Any duplicate Certificate
issued pursuant to this Section shall constitute complete and indefeasible
evidence of ownership in the Trust Fund, as if originally issued, whether or
not the lost, stolen or destroyed Certificate shall be found at any time.
Section 4.04. PERSONS DEEMED OWNERS.
Prior to due presentment of a Certificate for registration of transfer,
the Depositor, the Trustee, the Certificate Registrar, the Certificate Insurer
and any agent of the Depositor, the Trustee, the Certificate Registrar or the
Certificate Insurer 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 3.05 and for all other purposes whatsoever,
and neither the Depositor, the Trustee, the Certificate Registrar, the
Certificate Insurer nor any agent of the Depositor, the Trustee, the
Certificate Registrar or the Certificate Insurer shall be affected by notice to
the contrary.
<PAGE>
ARTICLE V
THE TRUSTEE
Section 5.01. DUTIES OF TRUSTEE.
(a) The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they are
in the form required by this Agreement and the Underlying Agreements; PROVIDED,
HOWEVER, that the Trustee shall not be responsible to determine, confirm or
recalculate the accuracy or content of any such resolution, certificate or
other instrument furnished to it pursuant to this Agreement including, without
limitation, the Pooled Certificate Distribution Date Statements. The Trustee
shall notify the Certificateholders, the Rating Agencies and the Certificate
Insurer of any such documents which do not materially conform to the
requirements of this Agreement in the event that the Trustee, after so
requesting of the party required to deliver the same, does not receive
satisfactorily corrected documents or a satisfactory explanation regarding any
such nonconformities.
The Trustee shall forward or cause to be forwarded in a timely fashion the
notices, reports and statements required to be forwarded by the Trustee
pursuant to Sections 3.01, 3.02, 3.06 and 7.01.
(b) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct; PROVIDED, HOWEVER, that:
(i) The duties and obligations of the Trustee shall be
determined solely by the express provisions of this Agreement, the
Trustee shall not be liable except for the performance of such duties
and obligations as are specifically set forth in this Agreement, no
implied covenants or obligations shall be read into this Agreement
against the Trustee and, in the absence of bad faith on the part of
the Trustee, the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
any certificates or opinions furnished by the Depositor to the Trustee
and which on their face, do not contradict the requirements of this
Agreement;
(ii) The Trustee shall not be personally liable for an
error of judgment made in good faith by a Responsible Officer or
Responsible Officers of the Trustee, unless it shall be proved that
the Trustee was negligent in ascertaining the pertinent facts;
(iii) 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 Certificate Insurer
or the Majority Certificateholders in accordance with the terms of
this Agreement, as 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;
(iv) No provision in this Agreement shall require the
Trustee to expend or risk its own funds or otherwise incur any
personal financial liability in the performance of any of its duties
as Trustee hereunder, or in the exercise of any of its rights or
powers, if the Trustee shall have reasonable grounds for believing
that repayment of funds or adequate indemnity against such risk or
liability is not reasonably assured to it; provided that this
provision shall not be deemed to abrogate the responsibilities
undertaken by the Trustee hereunder to perform routine administrative
duties in accordance with the terms hereof; and
(v) The Trustee shall not be deemed to have notice of any
Underlying Event of Default or other fact or circumstance upon the
occurrence of which it may be required to take action hereunder unless
a Responsible Officer of the Trustee has actual knowledge of such
event, fact or circumstance or unless written notice of any such event
is received by the Trustee at its Corporate Trust Office.
Section 5.02. CERTAIN MATTERS AFFECTING THE TRUSTEE.
Except as otherwise provided in Section 5.01:
(i) The Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officers' 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;
(ii) The Trustee may consult with counsel and any Opinion of
Counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it hereunder in
good faith and in accordance with such Opinion of Counsel;
(iii) The Trustee shall be under no obligation to exercise
any of the trusts 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 any of the
Certificateholders or the Certificate Insurer, pursuant to the
provisions of this Agreement, unless such Certificateholders or the
Certificate Insurer, as the case may be, shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses
and liabilities which may be incurred therein or thereby;
(iv) The Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order or other paper or document, but the Trustee,
in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit, and, if the Trustee shall
determine to make such further inquiry or investigation, it shall be
entitled to the extent reasonable under the circumstances to examine
the books, records and premises of such Person, personally or by agent
or attorney;
(v) The Trustee shall not be personally liable for any
action taken, suffered or omitted by it in good faith and believed by
it to be authorized or within the discretion or rights or powers
conferred upon it by this Agreement; and
(vi) The Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and shall not be liable for the default or
misconduct of any such agents or attorneys if selected with reasonable
care.
Section 5.03. TRUSTEE NOT LIABLE FOR CERTIFICATES OR POOLED CERTIFICATES.
The recitals contained herein and in the Certificates (other than the
statements attributed to, and the representations and warranties of, the
Trustee in Article II and the signature of the Trustee on each Certificate)
shall be taken as the statements of the Depositor, and the Trustee assumes no
responsibility for their correctness. The Trustee makes no representations as
to the validity or sufficiency of this Agreement (other than as specifically
set forth in Section 2.03(b)) or of the Certificates (other than that the
Certificates shall be duly and validly executed by it as Trustee and
authenticated by it as Certificate Registrar) or of the Pooled Certificates or
any related document. Except as otherwise provided herein, the Trustee shall
not be accountable for the use or application by the Depositor of any of the
Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Depositor in respect of the assignment and
delivery of the Pooled Certificates.
Section 5.04. 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 it would have if it were not
Trustee.
Section 5.05. TRUSTEE'S FEES; INDEMNIFICATION OF THE TRUSTEE.
(a) The Trustee shall withdraw the Trustee Fee, as compensation, from the
Certificate Account and, to the extent necessary, the Trustee Fee Account, as
provided in Sections 3.03(c) and 3.05 hereof.
(b) Subject to the provisions of this paragraph, the Trustee and any
director, officer, employee or agent of the Trustee shall be entitled to be
indemnified and held harmless by the Depositor against any loss, liability or
expense (including, without limitation, costs and expenses of litigation, and
of investigation, counsel fees and expenses, damages, judgments, amounts paid
in settlement and out-of-pocket expenses) arising out of, or incurred in
connection with, the exercise and performance of any of the powers and duties
of the Trustee hereunder; provided that neither the Trustee nor any of the
other above specified Persons shall be entitled to indemnification pursuant to
this Section 5.05(b) for (i) allocable overhead, (ii) expenses or disbursements
incurred or made by or on behalf of the Trustee in the normal course of the
Trustee's performing routine administrative duties in accordance with any of
the provisions hereof, (iii) any expense or liability specifically required to
be borne thereby pursuant to the terms hereof, or (iv) any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or negligence in
the performance of the Trustee's obligations and duties hereunder, or by reason
of reckless disregard of such obligations or duties, or as may arise from a
breach of any representation, warranty or covenant of the Trustee made herein.
If any such loss, liability or expense is incurred in connection with any
action or proceeding threatened, pending or instituted, whether civil,
criminal, administrative, arbitrative or investigative, against an indemnified
person, the amount shall be paid by the Depositor unless the Depositor (i)
assumes the defense of the indemnified person with counsel reasonably
satisfactory to the Trustee and pays any such loss, liability or expense in
connection therewith, or (ii) makes other arrangements satisfactory to the
Trustee. Upon notice of such action or proceeding, the Trustee promptly shall
notify the Depositor of the action or proceeding (with a copy of such notice
being provided to the Certificate Insurer), and the Depositor promptly shall
notify the Trustee whether or not it elects the alternative in clause (i) or
(ii) of the preceding sentence. If any such loss, liability or expense is not
incurred in connection with any such action or proceeding, the amount shall be
paid by the Depositor.
The provisions of this Section 5.05(b) shall survive any resignation or
removal of the Trustee and appointment of a successor trustee.
Section 5.06. ELIGIBILITY REQUIREMENTS FOR TRUSTEE.
The Trustee hereunder shall at all times be a trust company or banking
institution acceptable to the Certificate Insurer organized and doing business
under the laws of the United States of America or any State thereof, authorized
under such laws to exercise corporate trust powers, having a combined capital,
surplus and undivided profits of at least $50,000,000 (or shall be a member of
a bank holding system, the combined capital and surplus of which is at least
$50,000,000) and subject to supervision or examination by federal or state
authority. If such trust company or banking institution 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, surplus and undivided profits of such trust
company or banking institution shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. The
Trustee shall at all times meet the requirements of Section 26(a)(1) of the
Investment Company Act and shall in no event be an Affiliate of the Depositor
or of any Person involved in the organization or operation of the Depositor. 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 5.07.
Section 5.07. RESIGNATION AND REMOVAL OF THE TRUSTEE.
(a) The Trustee may upon 30 days' notice resign and be discharged from the
trusts hereby created by giving written notice thereof to the Depositor, the
Certificateholders and the Certificate Insurer. Upon receiving such notice of
resignation, the Certificate Insurer may (provided there is not a Certificate
Insurer Default) appoint a successor trustee and, if there is a Certificate
Insurer Default or the Certificate Insurer fails to appoint promptly a
successor trustee, the Depositor shall (in the latter case, with the consent of
the Certificate Insurer) promptly appoint a successor trustee (in the latter
case, acceptable to the Certificate Insurer) by written instrument, in
duplicate, one copy of which instrument shall be delivered to the resigning
Trustee and one copy to the successor trustee. A copy of such instrument shall
be delivered to the Certificate Insurer by the Depositor. If no successor
trustee shall have been so appointed and have 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.
(b) If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 5.06 and shall fail to resign after written
request therefor by the Depositor (with the prior written consent of the
Certificate Insurer so long as no Certificate Insurer Default exists), the
Certificate Insurer or the Majority Certificateholders (with the prior written
consent of the Certificate Insurer so long as no Certificate Insurer Default
exists), or if at any time the Trustee shall become incapable of acting, or
shall be adjudged bankrupt or insolvent, or a receiver of the Trustee or of its
property shall be appointed, or any public officer shall take charge or control
of the Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then the Certificate Insurer or the Depositor may,
so long as no Certificate Insurer Default exists, with the prior written
consent of the Certificate Insurer, or shall at the direction of the
Certificate Insurer so long as no Certificate Insurer Default exists, remove
the Trustee and, with the prior written consent of the Certificate Insurer so
long as no Certificate Insurer Default exists, appoint a successor trustee
acceptable to the Certificate Insurer by written instrument, in duplicate, one
copy of which instrument shall be delivered to the Trustee so removed and one
copy to the successor trustee. A copy of such instrument shall be delivered to
the Certificate Insurer by the Depositor.
(c) The Certificate Insurer or the Majority Certificateholders, so long as
no Certificate Insurer Default exists with the prior written consent of the
Certificate Insurer, may at any time remove the Trustee and appoint a successor
trustee acceptable to the Certificate Insurer by written instrument or
instruments, in triplicate, signed by the Certificate Insurer or such Holders
or their attorneys-in-fact duly authorized, one complete set of which
instruments shall be delivered to the Depositor, one complete set to the
Trustee so removed and one complete set to the successor so appointed. A copy
of such instrument shall be delivered to the Certificateholders and the
Certificate Insurer by the Depositor. All reasonable out-of-pocket costs and
expenses incurred in connection with such removal and replacement of the
Trustee, including without limitation, reasonable attorneys fees and expenses,
shall be borne by the party requesting such action.
(d) Notwithstanding anything to the contrary contained herein, (i) any
resignation or removal of the Trustee and appointment of a successor trustee
pursuant to any of the provisions of this Section shall become effective only
upon acceptance of appointment by the successor trustee as provided in Section
5.08 and (ii) no entity may be appointed as a successor trustee if such
appointment would result in a withdrawal or downgrading of any then current
rating assigned to the Certificates by a Rating Agency.
Section 5.08. SUCCESSOR TRUSTEE.
(a) Any successor trustee appointed as provided in Section 5.07 shall
execute, acknowledge and deliver to the Depositor, the Certificateholders, the
Certificate Insurer 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 the appointment of such
successor 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 the
like effect as if originally named as trustee herein. The predecessor trustee
shall deliver to the successor trustee the Pooled Certificates and related
documents and statements held by it hereunder, and the Depositor, the Trustee
and the predecessor trustee shall execute and deliver such instruments and do
such other things as may be required for more fully and certainly vesting and
confirming in the successor trustee all such rights, powers, duties and
obligations.
(b) No successor trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor trustee shall be
eligible under the provisions of Section 5.06.
(c) Upon acceptance of appointment by a successor trustee as provided in
this Section, the Depositor shall mail notice of the succession of such trustee
hereunder to the Certificate Insurer and to all Certificateholders at their
addresses as shown in the Certificate Register. If the Depositor 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 Depositor.
Section 5.09. MERGER OR CONSOLIDATION OF TRUSTEE.
Any trust company or banking institution into which the Trustee may be
merged or converted or with which it may be consolidated or any trust company
or banking institution resulting from any merger, conversion or consolidation
to which the Trustee shall be a party, or any trust company or banking
institution succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such trust company or banking institution shall be eligible under the
provisions of Section 5.06, 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. The Trustee shall mail notice of any such merger or
consolidation to the Certificate Insurer, the Depositor and to the
Certificateholders at their address as shown in the Certificate Register.
Section 5.10. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
(a) Notwithstanding any other provisions hereof, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust Fund or property securing the same may at the time be located, the
Trustee 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 Fund, and to vest in such Person or
Persons, in such capacity, such title to the Trust Fund, or any part thereof,
and, subject to the other provisions of this Section 5.10, such powers, duties,
obligations, rights and trusts as the Trustee may consider necessary or
desirable. No co-trustee or separate trustee hereunder shall be required to
meet the terms of eligibility as a successor trustee under Section 5.06
hereunder; provided, that if the co-trustee or separate trustee does not meet
such eligibility standards, the Trustee shall remain liable for its actions
hereunder, and no notice to Certificateholders of the appointment of
co-trustee(s) or separate trustee(s) shall be required under Section 5.08
hereof.
(b) In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 5.10 all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed jointly by the Trustee and such separate trustee or
co-trustee, except to the extent that under any law of any jurisdiction in
which any particular act or acts are to be performed, 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 Fund or any portion thereof in any such jurisdiction) shall be exercised
and performed by such separate trustee or co-trustee at the direction of the
Trustee.
(c) 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 V. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Trustee. Every such instrument shall be filed with the
Trustee.
(d) 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.
<PAGE>
ARTICLE VI
THE DEPOSITOR
Section 6.01. LIABILITY OF THE DEPOSITOR.
The Depositor shall be liable in accordance herewith only to the extent of
the respective obligations specifically imposed upon and undertaken by the
Depositor herein.
Section 6.02. MERGER, CONSOLIDATION OR CONVERSION OF THE DEPOSITOR.
Subject to the following paragraph, the Depositor will keep in full effect
its existence, rights and franchises as a corporation under the laws of the
jurisdiction of its incorporation, and will 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 Certificates and to perform its duties
under this Agreement.
The Depositor may be merged or consolidated with or into any Person, or
transfer all or substantially all of its assets to any Person, in which case
any Person resulting from any merger or consolidation to which the Depositor
shall be a party, or any Person succeeding to the business of the Depositor,
shall be the successor of the Depositor 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; provided, however,
that the Certificate Insurer shall have given its prior written consent if such
merger, consolidation, or transfer of all or substantially all of the
Depositor's assets will adversely affect the shadow rating granted by either
Rating Agency to the Certificate Insurer in connection with the transaction
contemplated hereby.
Section 6.03. LIMITATION ON LIABILITY OF THE DEPOSITOR AND OTHERS.
Neither the Depositor nor any of the directors, officers, employees or
agents of the Depositor shall be under any liability to the Trust Fund or the
Certificateholders 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 Depositor or any
such other Person against any breach of a representation or warranty made
herein, or against any expense or liability specifically required to be borne
thereby pursuant to the terms hereof, or against any liability which would
otherwise be imposed by reason of willful misfeasance, bad faith or negligence
in the performance of obligations or duties hereunder, or by reason of reckless
disregard of such obligations and duties. The Depositor and any director,
officer, employee or agent of the Depositor may rely in good faith on any
document of any kind which, PRIMA FACIE, is properly executed and submitted by
any Person respecting any matters arising hereunder. Provided that such action
is not related to its representations made in or its duties under this
Agreement, the Depositor shall not be under any obligation to appear in,
prosecute or defend any action or proceeding unless such action in its opinion
does not involve it in any expense or liability.
<PAGE>
ARTICLE VII
TERMINATION
Section 7.01. TERMINATION.
(a) The respective obligations and responsibilities of the Depositor and
the Trustee created hereby with respect to the Certificates (other than the
obligation to make certain payments and to send certain notices to
Certificateholders as hereinafter set forth) shall terminate upon the earlier
of (i) the repurchase by or at the direction of the Depositor, or if the
Depositor does not exercise such option, the repurchase by the Certificate
Insurer, of all Pooled Certificates at the Repurchase Price therefor as of the
date of such repurchase plus payment to the Certificate Insurer of the
Certificate Insurer Reimbursement Amount; provided that any such purchase of
the Pooled Certificates and termination of the Trust requires the consent of
the Certificate Insurer if it would result in a draw on the Policy; or (ii) the
payment (or provision for payment) to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them hereunder
on the Final Distribution Date following receipt of the final distribution to
be made on the Pooled Certificates plus payment to the Certificate Insurer of
the Certificate Insurer Reimbursement Amount; PROVIDED, HOWEVER, that in no
event shall the trust created hereby continue beyond the expiration of
twenty-one 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's, living on the date hereof. The right of the Depositor or its designee,
or if the Depositor does not exercise such option, the right of the Certificate
Insurer, to repurchase all Pooled Certificates pursuant to Section 7.01(a)(i)
shall be exercisable only if the aggregate outstanding principal balance of
such Pooled Certificates of the time of any such repurchase is 10% or less than
their outstanding principal balance on the Closing Date.
(b) The Trustee shall, in accordance with Section 8.05, give a Notice of
Final Distribution to the Certificateholders, the Certificate Insurer, the
Depositor and the Rating Agencies as soon as practicable of the Distribution
Date on which the Trustee anticipates that the final distribution will be made
on the Certificates, which notice shall:
(i) specify the Distribution Date on which the final distribution
is anticipated to be made to Certificateholders;
(ii) specify the amount of any such final
distribution, if known; and
(iii) state that the final distribution to Certificateholders will
be made only upon presentment and surrender of Certificates
at the office of the Trustee therein specified.
If the Trust Fund is not terminated on the anticipated Distribution Date for
any reason, the Trustee shall promptly mail notice thereof to each
Certificateholder, the Certificate Insurer, the Depositor and to the Rating
Agencies.
(c) Upon presentment and surrender of the Certificates by the
Certificateholders on the Final Distribution Date, the Trustee shall distribute
to the Certificateholders the amounts otherwise distributable on such
Distribution Date pursuant to Section 3.05(a). Any funds not distributed on the
Final Distribution Date because of the failure of any Certificateholders to
tender their Certificates shall be set aside and held in trust for the account
of the appropriate non- tendering Certificateholders, whereupon the Trust Fund
shall terminate. If any Certificates as to which Notice of Final Distribution
has been given pursuant to this Section 7.01 shall not have been surrendered
for cancellation within six months after the time specified in such notice, the
Trustee shall mail a second notice to the remaining Certificateholders, at
their last addresses shown in the Certificate Register, to surrender their
Certificates for cancellation in order to receive, from such funds held, the
final distribution with respect thereto. If within one year after the second
notice any Certificate shall not have been surrendered for cancellation, the
Trustee shall directly or through an agent, take reasonable steps to contact
the remaining Certificateholders concerning surrender of their Certificates.
The costs and expenses of maintaining such funds and of contacting
Certificateholders shall be paid out of the assets which remain held. If within
two years after the second notice any Certificates shall not have been
surrendered for cancellation, the Trustee shall segregate all amounts
distributable to the Holders thereof and shall thereafter hold such amounts for
the benefit of such Holders. No interest shall accrue or be payable to any
Certificateholder on any amount held as a result of such Certificateholder's
failure to surrender its Certificate(s) for final payment thereof in accordance
with this Section 7.01.
(d) If the option by the Depositor or the Certificate Insurer, as the case
may be, to repurchase or cause the repurchase of all Pooled Certificates under
Section 7.01(a)(i) above is exercised, the Depositor and/or its designee, or
the Certificate Insurer, as the case may be, shall deposit in the Certificate
Account, by 10:00 a.m., New York City time, on the applicable Distribution
Date, an amount equal to the Repurchase Price for the Pooled Certificates being
purchased by the Depositor or the Certificate Insurer, as the case may be, and
shall pay to the Certificate Insurer the Certificate Insurer Reimbursement
Amount. Upon the presentation and surrender of the Certificates, the Trustee,
as paying agent, shall distribute the Repurchase Price as follows to the extent
of such amount:
FIRST, to pay the Trustee Fee to the Trustee;
SECOND, the amount otherwise distributable to the
Certificateholders on such Distribution Date but for
such repurchase;
THIRD, to the Certificateholders as distributions of
interest, the interest portion included in the
Repurchase Price;
FOURTH, to the Certificateholders as distributions of
principal, the principal portion included in the Repurchase
Price, up to the outstanding Class A-1 Balance;
FIFTH, to pay the Certificate Insurer the Certificate
Insurer Reimbursement Amount; and
SIXTH, to the extent of the balance, if any, of such
Repurchase Price still remaining, to the Certificateholders
as additional distributions of interest.
Upon deposit of the required Repurchase Price, payment of the Certificate
Insurer Reimbursement Amount and delivery to the Trustee of an Officer's
Certificate from the Depositor or the Certificate Insurer, as the case may be,
certifying that such deposit of the Repurchase Price in the Certificate Account
and payment to the Certificate Insurer has been made, following such final
Distribution Date, the Trustee shall promptly release to the Depositor and/or
its designee, or the Certificate Insurer, as the case may be, the Pooled
Certificates, subject to the Trustee's obligation to hold any amounts payable
to Certificate- holders in trust without interest pending final distributions
pursuant to Section 7.01(c).
<PAGE>
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.01. AMENDMENT.
(a) This Agreement may be amended from time to time by the Depositor and
the Trustee, without the prior consent of any Certificateholder and, provided
no Certificate Insurer Default exists, with the prior written consent of the
Certificate Insurer:
(i) to cure any ambiguity;
(ii) to correct or supplement any provisions herein, which may
be inconsistent with any other provisions herein;
(iii) to make any other provisions with respect to matters or
questions arising under this Agreement which shall not be materially
inconsistent with the existing provisions of this Agreement; and
(iv) to make such modifications as may be permitted or required
hereunder in connection with a repurchase or substitution of a Pooled
Certificate pursuant to Section 2.03(c) or 2.04 hereof.
provided that such amendment shall not, as evidenced by an Opinion of Counsel
delivered to the Trustee and the Certificate Insurer (the expense of which
shall be paid for by the Depositor), adversely affect in any material respect
the interests of any Certificateholder or the Certificate Insurer.
(b) This Agreement may also be amended from time to time by the Depositor
and the Trustee with the prior written consent of the Certificate Insurer
(provided no Certificate Insurer Default exists) and the Majority
Certificateholders 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 Certificateholders; PROVIDED,
HOWEVER, that no such amendment shall:
(i) reduce in any manner the amount of, or delay the timing of,
payments which are required to be distributed on any Certificate without
the consent of the Holder of such Certificate;
(ii) modify the provisions of this Section 8.01 without the consen
of the Holders of all Certificates;
(iii) be made unless and until the Trustee and the Certificate
Insurer shall have received an Opinion of Counsel (at the expense of the
party seeking such amendment but in no event at the expense of the Trust
Fund) to the effect that such amendment shall not adversely affect the
status of the Trust as a grantor trust for federal income tax purposes; or
(iv) increase the obligations of the Certificate Insurer under the
Policy unless the Certificate Insurer has consented thereto
notwithstanding that a Certificate Insurer Default exists and any such
amendment entered into without such consent shall not be effective as
against the Certificate Insurer.
(c) Promptly after the execution of any such amendment the Trustee shall
furnish written notification of the substance of such amendment to each
Certificateholder and the Certificate Insurer. It shall not be necessary for
the consent of Certificateholders under this Section 8.01 to approve the
particular form of any proposed amendment, 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 regulations as the
Trustee may prescribe.
Section 8.02. COUNTERPARTS.
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 8.03. LIMITATION ON RIGHTS OF CERTIFICATE- HOLDERS.
(a) The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or the Trust Fund, nor entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of the
Trust Fund, nor otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them.
(b) No Certificateholder shall have any right to vote (except as expressly
provided for herein) or in any manner otherwise control the operation and
management of the Trust Fund, 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 party by reason of any action taken by the parties
to this Agreement pursuant to any provision hereof.
(c) No Certificateholder shall have any right by virtue of any provision
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, so long as no
Certificate Insurer Default exists, the Certificate Insurer has given its prior
written consent, unless such Holder previously shall have given to the Trustee,
the Depositor and to the Certificate Insurer a written notice of default
hereunder, and of the continuance thereof, as hereinbefore provided, and unless
also the Majority Certificateholders shall have 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 and the Certificate Insurer
such reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee, for 30 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. For the
prosecution and enforcement of the rights granted under this Section, each and
every Certificateholder and the Trustee shall be entitled to such relief as can
be given either at law or in equity.
Section 8.04. GOVERNING LAW.
This Agreement and the Certificates shall be construed in accordance with
the laws of the State of New York applicable to agreements made and to be
performed in said state (without reference to the conflicts of law provisions
of such state), and the obligations, rights and remedies of the parties
hereunder and the Certificateholders shall be determined in accordance with
such laws.
Section 8.05. NOTICES.
All communications provided for or permitted hereunder shall be in writing
and shall be deemed to have been duly given when delivered to: (a) in the case
of the Depositor, Bear Stearns Structured Securities Inc., 245 Park Avenue, New
York, New York 10167, or such other address as may hereafter be furnished to
the Trustee and the Certificate Insurer in writing by the Depositor; (b) in the
case of the Trustee, First Trust National Association 180 East Fifth Street,
St. Paul, Minnesota 55101, Attention: Structured Finance, or such other address
as may hereafter be furnished to the Depositor and the Certificate Insurer in
writing by the Trustee; (c) in the case of the Certificate Insurer, MBIA
Insurance Corporation, 113 King Street, Armonk, New York 10007, Attention:
Insured Portfolio Management - SF-Bear Stearns Mortgage Securities, Inc.,
Mortgage Pass-Through Certificates, Series 1996-2, or such other address as may
hereafter be furnished to the Depositor and the Trustee in writing by the
Certificate Insurer; (d) in the case of Moody's, Moody's Investors Service,
Inc., 99 Church Street, New York, New York 10007, Attention: Mortgage
Pass-Through Monitoring Group; and (e) in the case of S & P, Standard & Poor's
Ratings Service, a division of The McGraw-Hill Companies, Inc., 25 Broadway,
New York, New York 10004, Attention: Residential Mortgage Surveillance Group.
Section 8.06. 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 8.07. SUCCESSORS AND ASSIGNS.
The provisions of this Agreement shall be binding upon and inure to the
benefit of the respective successors and assigns of the parties hereto, and all
such provisions shall inure to the benefit of the Certificateholders and the
Certificate Insurer.
Section 8.08. ARTICLE AND SECTION HEADINGS.
The article and section headings herein are for convenience of reference
only, and shall not limit or otherwise affect the meaning hereof.
Section 8.09. NOTICES TO RATING AGENCIES.
The Trustee shall notify each Rating Agency and the Certificate Insurer at
such time as it is otherwise required pursuant to this Agreement to give notice
of the occurrence of any of the events described in clauses (a), (b), (d), (f),
(g) or (h) below or provide a copy to each Rating Agency and the Certificate
Insurer at such time as otherwise required to be delivered pursuant to this
Agreement of each of the statements described in clauses (c) and (e) below:
(a) a material change or amendment to this Agreement,
(b) the termination or appointment of a successor
Trustee or a change in the majority ownership of
the Trustee,
(c) the monthly distribution statement required to be
delivered to the Certificateholders pursuant to
Section 3.06,
(d) the non-conformance of any documents pursuant to
Section 5.01(a),
(e) the Notice of Final Distribution required to be
delivered pursuant to Section 7.01(b),
(f) a Certificate Insurer Default shall occur,
(g) a claim is made by the Trustee on the Policy, and
(h) a change in the location of the Certificate
Account or the Trustee Fee Account.
The Depositor shall notify each Rating Agency and the Certificate Insurer of
any change in its identity.
<PAGE>
ARTICLE IX
CERTAIN MATTERS REGARDING THE CERTIFICATE INSURER
Section 9.01. TRUST FUND AND ACCOUNTS HELD FOR BENEFIT
OF THE CERTIFICATE INSURER.
The Trustee shall hold the Trust Fund and the Policy for the benefit of
the Certificateholders and the Certificate Insurer and all references in this
Agreement (including, without limitation, in Sections 2.01 and 2.02) and in the
Certificates to the benefit of Holders of the Certificates shall be deemed to
include the Certificate Insurer. The Trustee shall cooperate in all reasonable
respects with any reasonable request by the Certificate Insurer for action to
preserve or enforce the Certificate Insurer's rights or interests under this
Agreement and the Certificates.
The Trustee hereby acknowledges and agrees that it shall hold, service and
administer the Pooled Certificates, and shall maintain the Certificate Account
and the Policy Payments 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.
Section 9.02. CLAIMS UPON THE POLICY; POLICY PAYMENTS ACCOUNT.
(a) The Trustee shall determine each month whether a Deficiency Amount
exists with respect to the related Distribution Date. If any Pooled Certificate
Distribution Date Statement has not been received or does not contain
sufficient information to determine the Monthly Distribution Amount, the
Trustee shall promptly request such Pooled Certificate Distribution Date
Statement or information from the trustee with respect to the Pooled
Certificates. To the extent the Trustee, based upon the Pooled Certificate
Distribution Date Statements and any additional information, if applicable,
determines that a Deficiency Amount exists, the Trustee shall complete a notice
in the form of Exhibit A to the Policy (the "Notice") and submit the Notice to
the Certificate Insurer or its agent no later than 12:00 noon New York City
time on the first Business Day prior to the Distribution Date, as a claim for
an Insured Payment in an amount equal to such Deficiency Amount. If the Trustee
does not receive any Pooled Certificate Distribution Date Statement or
information in sufficient time to submit the Notice to the Certificate Insurer
as aforesaid or to include the amount of any deficiency with respect to the
related Pooled Certificates in such notice to the Certificate Insurer, the
Trustee shall give such notice at or before 12:00 noon New York City time on
the first Business Day prior to the next succeeding Distribution Date.
(b) The Trustee shall establish a separate special purpose trust account
for the benefit of Holders of the Certificates and the Certificate Insurer
referred to herein as the "Policy Payments Account" over which the Trustee
shall have exclusive control and sole right of withdrawal. The Policy Payments
Account shall be an Eligible Account which shall be a non-interest bearing
account. Amounts deposited in the Policy Payments Account shall remain
uninvested. The Trustee shall deposit any Insured Payment with respect to a
Deficiency Amount in the Policy Payments Account. Amounts paid under the Policy
with respect to a Deficiency Amount shall be transferred to the Certificate
Account in accordance with the next succeeding paragraph and disbursed by the
Trustee in accordance with Section 3.05(a) and this Section 9.02(b).
On any Distribution Date with respect to which a claim has been made under
the Policy with respect to a Deficiency Amount, the amount of any funds
received by the Trustee from the Certificate Insurer as a result of any such
claim under the Policy shall be withdrawn from the Policy Payments Account and
deposited in the Certificate Account and applied by the Trustee, together with
the other funds to be withdrawn from the Certificate Account pursuant to
Section 3.05(a), directly to the payment in full of the Monthly Distribution
Amount due on the Certificates on such Distribution Date. Any funds remaining
in the Policy Payments Account on the first Business Day following a
Distribution Date shall be remitted to the Certificate Insurer, pursuant to the
instructions of the Certificate Insurer, by the end of such Business Day.
(c) The Trustee shall keep a complete and accurate record of the amount of
interest and principal paid in respect of any Certificate from moneys received
under the Policy. The Certificate Insurer shall have the right to inspect such
records at reasonable times during normal business hours upon one Business
Day's prior written notice to the Trustee.
(d) The Trustee shall (i) receive as attorney-in-fact of each
Certificateholder any Insured Payment with respect to a Deficiency Amount from
the Certificate Insurer and (ii) distribute such Insured Payment as set forth
in subsection (b) above. Insured Payments received by the Trustee from proceeds
of the Policy shall not be considered payment by the Trust Fund with respect to
the Certificates, nor shall such receipt of such Insured Payments discharge the
obligations of the Trust Fund with respect to the amounts thereof, and the
Certificate Insurer shall become the owner of such amounts as the deemed
assignee of the Certificateholder and each Certificateholder, by its acceptance
of its Certificates, hereby agrees for the benefit of the Certificate Insurer
that the Trustee shall recognize that to the extent the Certificate Insurer
deposits Insured Payments with the Trustee, the Certificate Insurer will be
entitled to receive the Certificate Insurer Reimbursement Amounts in accordance
with the priority set forth in Section 3.05 hereof.
(e) The Trustee shall make claims for Preference Amounts in accordance
with the terms of the Policy. In the event that any Insured Payment constitutes
a Preference Amount, payment of such amount shall be disbursed to the trustee
in bankruptcy named in the final order of the court exercising jurisdiction and
not directly to any Certificateholder unless such Certificateholder has
returned principal or interest paid on the Certificates to such trustee in
bankruptcy, in which case payment shall be disbursed to such Certificateholder,
in each case, in accordance with the terms of the Policy.
Section 9.03. NOTICES TO THE CERTIFICATE INSURER AND
THE DEPOSITOR.
All notices, statements, reports, certificates or opinions required by
this Agreement to be sent to any other party hereto or to any of the
Certificateholders shall also be sent to the Certificate Insurer. All notices,
statements, reports, certificates or opinions required by this Agreement to be
sent to any other party hereto or to any of the Certificateholders or the
Certificate Insurer shall also be sent to the Depositor.
Section 9.04. THIRD-PARTY BENEFICIARY.
The Certificate Insurer shall be a third-party beneficiary of this
Agreement, entitled to enforce the provisions hereof as if it were a party
hereto.
<PAGE>
IN WITNESS WHEREOF, the Depositor and the Trustee have caused their names
to be signed hereto by their respective duly authorized officers, all as of the
day and year first above written.
BEAR STEARNS MORTGAGE SECURITIES
INC., as Depositor
By: /S/ RICHARD LANDAU
Name: Richard Landau
Title: President
FIRST TRUST NATIONAL ASSOCIATION,
as Trustee
By: /S/ EVE D. KAPLAN
Name: Eve D. Kaplan
Title: Vice President
<PAGE>
STATE OF NEW YORK )
ss:
COUNTY OF NEW YORK)
On the 3rd day of May, 1996 before me, a notary public in and for said
State, personally appeared Richard S. Landau, known to me to be the President
of Bear Stearns Mortgage Securities Inc., the corporation that executed the
within instrument, and also known to me to be the person who executed it on
behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/S/ STEVE LEVITAN
Notary Public
[Notarial Seal] Commission Expires: February 16, 1998
<PAGE>
STATE OF MINNESOTA)
ss:
COUNTY OF RAMSEY )
On the 3rd day of May, 1996 before me, a notary public in and for said
State, personally appeared Eve D. Kaplan, known to me to be a Vice President of
First Trust National Association, the national banking association that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said national banking association, and acknowledged to
me that such national banking association executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/S/ TIMOTHY A. BOURDREAUX
Notary Public
[Notarial Seal] Commission Expires: January 31, 2000
EXHBIT A
<PAGE>
FORM OF CLASS A CERTIFICATE
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
BEAR STEARNS MORTGAGE SECURITIES INC. OR THE TRUSTEE REFERRED TO BELOW OR ANY
OF THEIR RESPECTIVE AFFILIATES AND IS NOT GUARANTEED OR INSURED BY ANY
GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THE CERTIFICATE WAS ISSUED ON MAY 3, 1996.
THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DECREASED BY THE
PRINCIPAL PAYMENTS HEREON. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE
CERTIFICATES, THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE
DIFFERENT FROM THE DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE
MAY ASCERTAIN ITS CURRENT PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE NAMED
HEREIN.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE
& CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
PASS-THROUGH CERTIFICATE,
NO. A-1-1 SERIES 1996-2
evidencing a beneficial interest in a Trust
consisting primarily of the Pooled Certificates (as defined in the Agreement)
sold by
BEAR STEARNS MORTGAGE SECURITIES INC.
CUSIP No. 073914 PE 7
Class : A-1 Initial Principal Amount
First Distribution Date : May 30, 1996 of this Certificate
Assumed Final Distribution Date : January 28, 2025 ("Denomination"):$29,923,173
Approximate Original Class
Principal Amount : $ 29,923,173
Pass-Through Rate : The effective per annum interest rate borne
by the Certificates during each Interest
Accrual Period with respect to a Distribution
Date will equal a fraction, expressed as a
percentage truncated at the second decimal
place, the numerator of which is equal to
the aggregate amount in respect of interest
received by the Trustee on the Pooled
Certificates and pursuant to the Policy, if
any, for the related Interest Accrual Period
(net of the related Trustee Fee) multiplied
by 12, and the denominator of which is the
principal amount of the Certificates
immediately prior to such Distribution
Date.
THIS CERTIFIES THAT
CEDE & CO.
is the registered owner of the Percentage Interest evidenced hereby in the
beneficial ownership interest of Certificates of the same Class as this
Certificate in a trust (the "Trust") consisting primarily of all or a portion
of 13 separate senior classes of principal-only mortgaged-backed securities and
two separate senior classes of interest-only mortgaged-backed securities (the
"Pooled Certificates") sold by Bear Stearns Mortgage Securities Inc. ("BSMSI").
The Trust was created pursuant to the Pooling Agreement dated as of April 1,
1996 (the "Agreement"), between BSMSI, as depositor, and First Trust National
Association, as trustee (the "Trustee"), a summary of certain of the pertinent
provisions of which is set forth hereinafter. To the extent not defined herein,
capitalized terms used herein shall have the meaning ascribed to them 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 its acceptance hereof assents and by which such
Holder is bound.
Interest on this Certificate will accrue during each calendar month preceding
the month in which a Distribution Date (as hereinafter defined) occurs at a per
annum rate equal to the Pass-Through Rate as set forth above. Distributions of
principal and interest on the Certificates with respect to a month will be made
on the day (each, a "Distribution Date") which is the third Business Day after
the last distribution date in such month with respect to any class of Pooled
Certificates (each, a "Pooled Certificate Distribution Date"). Each Pooled
Certificate Distribution Date is the 25th day of each month or if any such day
is not a business day as defined in the applicable Underlying Agreement, then
the next succeeding business day as so defined, commencing on the First
Distribution Date specified above. Distributions will be made on each
Distribution Date to holders of record as of the close of business on the last
Business Day of the calendar month preceding the month in which such
Distribution Date occurs; provided that for this purpose the Distribution Date
is deemed to occur on the 28th of each month, without regard to whether such
day is a Business Day. The Assumed Final Distribution Date is the Distribution
Date in January 2025.
Distributions on this Certificate will be made by the Trustee by check mailed
to the address of the Person entitled thereto as such name and address shall
appear on the Certificate Register or, if such Person so requests by notifying
the Trustee in writing as specified in the Agreement and if such Person holds
Certificates with an initial aggregate initial Certificate Balance of not less
than $1,000,000, by wire transfer in immediately available funds to the account
specified in writing by such Person to the Trustee. Notwithstanding the above,
the final distribution on this Certificate will be made 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 appointed by the Trustee
for that purpose and designated in such notice.
<PAGE>
BEAR STEARNS MORTGAGE SECURITIES INC.
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1996-2
This Certificate is one of a duly authorized issue of Certificates
designated as set forth on the face hereof (the "Certificates"). The
Certificates, in the aggregate, evidence the entire beneficial ownership
interest in the Trust formed pursuant to the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the Trust and to payments made under the
Certificate Guaranty Insurance Policy (the "Policy"), if any, for payment
hereunder and that the Trustee is not 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 of the Certificateholders
under the Agreement from time to time by the Depositor and the Trustee with the
consent of the Holders of Certificates evidencing more than 50% of the
aggregate Class Balance of the Certificates. 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 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.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable with the
Trustee upon surrender of this Certificate for registration of transfer at the
offices or agencies maintained by the Trustee in the City of St. Paul, State of
Minnesota, duly endorsed by, or 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 in authorized denominations representing a like aggregate
principal amount will be issued to the designated transferee.
The Certificates are issuable only as registered Certificates without
coupons in the Class and denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth, this
Certificate is exchangeable for one or more new Certificates evidencing the
same Class and in the same aggregate principal amount, as requested by the
Holder surrendering the same.
No service charge will be made to the Certificateholders for any such
registration of transfer, but the Certificate Registrar or the Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith. The Certificate Registrar and the
Trustee and any agent of any of them may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and neither the
Certificate Registrar, the Trustee nor any such agent shall be affected by
notice to the contrary.
The obligations created by the Agreement and the Trust created thereby
(other than the obligations to make certain payments and send certain notices
to Certificateholders with respect to the termination of the Agreement) shall
terminate upon the earlier of (i) the repurchase by or at the direction of the
Depositor, or if the Depositor does not exercise such option, the repurchase by
the Certificate Insurer of all Pooled Certificates; (ii) the sale of the Pooled
Certificates on the Distribution Date following a Distribution Date on which
the Trustee Fee exceeds the interest received on the Pooled Certificates and
under the Policy, if any, and the amount in the Trustee Fee Account and the
Class Balance is 1% or less of the Original Principal Balance of the
Certificates; or (iii) the payment (or provision for payment) to the
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them under the Agreement on the Final Distribution Date
following receipt of the final distribution to be made on the Pooled
Certificates. In no event, however, will the Trust created by the Agreement
continue beyond the expiration of 21 years after the death of certain persons
identified in the Agreement.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
(Please print or typewrite name and address including postal zip code
assignee) the within Certificate and hereby authorizes the transfer of
registration of such interest to the assignee on the Certificate Register of
the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new Certificate
of a like denomination and Class, to the above named assignee and deliver such
Certificate to the following address:
Dated:
Signature by or on behalf of assignor
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to
for the account of
account number , or, if mailed by check to
Applicable statements should be mailed to,
This information is provided by
the assignee named above, or
as its agent.
<PAGE>
STATEMENT OF INSURANCE
The MBIA Insurance Corporation (the "Insurer") has issued a policy
containing the following provisions, such policy being on file at First Trust
National Association, as trustee (the "Trustee"), St. Paul, Minnesota.
The Insurer in consideration of the payment of the premium and subject to
the terms of the Certificate Guaranty Insurance Policy (the "Policy") thereby
unconditionally and irrevocably guarantees to any Owner (as described below)
that an amount equal to each full and complete Insured Payment (as described
below) will be received from the Insurer by the Trustee or its successor, on
behalf of the Owners, for distribution by the Trustee to each Owner of each
Owner's proportionate share of the Insured Payment. The Insurer's obligations
under the Policy 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 the
Policy and no accelerated Insured Payments shall be made regardless of any
acceleration of the Obligations (as that term is described below) unless such
acceleration is at the sole option of the Insurer.
Notwithstanding the foregoing paragraph, the Policy does not cover
shortfalls, if any, attributable to the liability of the Trust or the Trustee
for withholding taxes, if any (including interest and penalties in respect of
any such liability).
"Obligations" shall mean:
$29,923,173 BSMSI Pass-Through Certificates, Series 1996-2,
Class A-1.
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 under the Policy no later
than 12:00 noon New York City time on the later of the Distribution Date on
which the related distribution is due or the 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 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 a 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 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 the Policy.
As used herein, the following terms shall have the following meanings:
"Agreement" means the Pooling Agreement dated as of April 1, 1996
among BSMSI, as depositor, and the Trustee, as trustee, without regard to any
amendment or supplement thereto.
"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 or the Insurer is
located are authorized or obligated by law or executive order to close.
"Deficiency Amount" means the excess, if any, of the sum of the Interest
Distribution Amount and the Principal Distribution Amount over Available Funds
(each as defined in the Agreement).
"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 to the
Policy, 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) who, on the
applicable Distribution Date, is entitled under the terms of the applicable
Certificate to payment thereunder.
"Preference Amount" means any amount previously distributed to an Owner of
the Senior Certificates that is recoverable and sought to be recovered as a
voidable preference by a trustee in 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 in the Policy and not otherwise defined therein
shall have the respective meanings set forth in the Agreement as of the date of
execution of the Policy, without giving effect to any subsequent amendment or
modification to the Agreement unless such amendment or modification has been
approved in writing by the Insurer.
Any notice under the Policy or service of process on the Fiscal Agent of
the Insurer may be made at the address listed below for the Fiscal Agent of the
Insurer 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.
The 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 the Policy is not covered by the
Property/Casualty Insurance Security Fund specified in Article 76 of the New
York Insurance Law.
The Policy is not cancelable for any reason. The premium on the 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 Trustee in its capacity as trustee under the
Agreement has caused this Certificate to be duly executed.
FIRST TRUST NATIONALASSOCIATION,
Not in its individual capacity but solely
as Trustee
By:________________________________________
Name:
Title:
THIS IS ONE OF THE CLASS A-1 CERTIFICATES REFERRRED TO IN THE WITHIN-MENTIONED
AGREEMENT.
FIRST TRUST NATIONAL ASSOCIATION,
as Certificate Registrar
By:_______________________________________
Name:
Title:
Dated:
<PAGE>
EXHIBIT B
<PAGE>
EXECUTION COPY
MBIA INSURANCE CORPORATION,
as Insurer
BEAR STEARNS MORTGAGE SECURITIES INC.,
as Depositor
BEAR STEARNS MORTGAGE CAPITAL CORPORATION,
as Company
and
FIRST TRUST NATIONAL ASSOCIATION,
as Trustee
INSURANCE AGREEMENT
$29,923,173
Bear Stearns Mortgage Securities Inc.
Pass-Through Certificates
Series 1996-2
Class A-I Certificates
Dated as of April 1, 1996
<PAGE>
TABLE OF CONTENTS
(This Table of Contents is for convenience of reference only and shall not
be deemed to be a part of this Agreement. All capitalized terms used in this
Agreement and not otherwise defined shall have the meanings set forth in
Article I of this Agreement.)
PAGE
ARTICLE I
DEFINITIONS................................................................1
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.01. Representation and Warranties of the Depositor
and the Company.................................4
Section 2.02. Affirmative Covenants of the Depositor and the
Company.........................................7
Section 2.03. Negative Covenants of the Depositor............11
Section 2.04. Negative Covenant of the Trustee...............12
ARTICLE III
THE POLICY; REIMBURSEMENT
Section 3.01. Issuance of the Policy.........................12
Section 3.02. Payment of Fees and Premium....................14
Section 3.03. Reimbursement and Additional Payment
Obligation.................................... 14
Section 3.04. Indemnification; Limitation of Liability.......16
Section 3.05. Payment Procedure to the Insurer...............17
ARTICLE IV
FURTHER AGREEMENTS
Section 4.01. Effective Date; Term of the Insurance
Agreement.......................................18
Section 4.02. Further Assurances and Corrective Instruments...18
Section 4.03. Obligations Absolute............................18
Section 4.04. Assignments; Reinsurance; Third-Party Rights....19
Section 4.05. Liability of the Insurer........................19
Section 4.06. Trustee and Depositor To Join in Enforcement
Action..........................................20
Section 4.07. Obligation of the Company.......................20
ARTICLE V
DEFAULTS; REMEDIES
Section 5.01. Defaults...................................................20
Section 5.02. Remedies; No Remedy Exclusive..............................21
Section 5.03. Waivers....................................................22
ARTICLE VI
MISCELLANEOUS
Section 6.01. Amendments, Etc............................................22
Section 6.02. Notices....................................................22
Section 6.03. Severability...............................................24
Section 6.04. Governing Law..............................................24
Section 6.05. Consent to Jurisdiction....................................24
Section 6.06. Consent of the Insurer.....................................24
Section 6.07. Counterparts...............................................25
Section 6.08. Headings...................................................25
Section 6.09. Trial by Jury Waived.......................................25
Section 6.10. Limited Liability..........................................25
Section 6.11. Entire Agreement...........................................25
TESTIMONIUM
SIGNATURES
<PAGE>
INSURANCE AGREEMENT
INSURANCE AGREEMENT (this "Insurance Agreement"), dated as of
April 1, 1996 by and among Bear Stearns Mortgage Securities Inc., as depositor
(together with its permitted successors and assigns, the "Depositor"), Bear
Stearns Mortgage Capital Corporation, as Company (the "Company"), MBIA
Insurance Corporation (the "Insurer") and First Trust National Association, as
Trustee (the "Trustee).
WHEREAS, the Pooling Agreement dated as of April 1, 1996
relating to the $29,923,173 Bear Stearns Mortgage Securities Inc., Pass-Through
Certificates, Series 1996-2, Class A-1 Certificates, by and among the Depositor
and the Trustee (the "Pooling Agreement") provides for, among other things, the
issuance of pass-through certificates, representing fractional ownership
interests in the trust estate established thereby and the Insurer has issued
its certificate guaranty insurance policy (the "Policy") that guarantees
certain payments due from the Trust (as defined herein) on the Securities;
WHEREAS, the Insurer shall be paid an insurance premium
pursuant to this Insurance Agreement, and the details of such premium are set
forth herein; and
WHEREAS, the Depositor and the Company have undertaken
certain obligations in consideration for the Insurer's issuance
of the Policy;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
The terms defined in this Article I shall have the meanings
provided herein for all purposes of this Insurance Agreement, unless the
context clearly requires otherwise, in both singular and plural form, as
appropriate. Unless the context clearly requires otherwise, all capitalized
terms used herein and not otherwise defined in this Article I shall have the
meanings assigned to them in the Pooling Agreement. All words used herein shall
be construed to be of such gender or number as the circumstances require. This
"Insurance Agreement" shall mean this Insurance Agreement as a whole and as the
same may, from time to time hereafter, be amended, supplemented or modified.
The words "herein," "hereby," "hereof " "hereto," "hereinabove" and
"hereinbelow," and words of similar import, refer to this Insurance Agreement
as a whole and not to any particular paragraph, clause or other subdivision
hereof, unless otherwise specifically noted.
"Business D" 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 Pooling Agreement or the
Insurer is located are authorized or obligated by law or executive order to
close.
"Code" means the Internal Revenue Code of 1986, including,
unless the context otherwise requires, the rules and regulations thereunder, as
amended from time to time.
"Commission" means the Securities and Exchange Commission.
"Commitment" means the letter of commitment from the Insurer to the
Depositor dated May 3, 1996.
"Date of Issuance" means the date on which the Policy is issued as
specified therein.
"Default" means any event which results, or which with the giving of
notice or the lapse of time or both would result, in an Event of Default.
"Event of Default" means any event of default specified in Section 5.01 of
this Insurance Agreement.
"Financial Statements" means, with respect to the Company, the balance
sheets and the statements of income, retained earnings and cash flows and the
notes thereto provided to the Insurer.
"Fiscal Agent" means the Fiscal Agent, if any, designated pursuant to the
terms of the Policy.
"Indemnification Agreement" means the Indemnification Agreement dated as
of May 2, 1996 between the Insurer, the Depositor, the Company and the
Underwriter.
"Investment Company Act" means the Investment Company Act of 1940,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended.
"Late Payment Rate" means, for any Distribution Date, the rate of interest
as it is publicly announced by Citibank, N.A. at its principal office in New
York, New York as its prime rate (any change in such prime rate of interest to
be effective on the date such change is announced by Citibank, N.A.) plus 3%.
The Late Payment Rate shall be computed on the basis of a year of 365 days
calculating the actual number of days elapsed. In no event shall the Late
Payment Rate exceed the maximum rate permissible under any applicable law
limiting interest rates.
"Material Adverse Change" means, in respect of any Person, a material
adverse change in (i) the business, financial condition, results of operations
or properties of such Person or (ii) the ability of such Person to perform its
obligations under any of the Transaction Documents.
"Moody's" means Moody's Investors Service, Inc., a Delaware corporation,
and any successor thereto, and, if such corporation shall for any reason no
longer perform the functions of a securities rating agency, "Moody's" shall be
deemed to refer to any other nationally recognized rating agency designated by
the Insurer.
"Notice of Claim" means a Notice of Claim and Certificate in the form
attached as Exhibit A to the Policy.
"Offering Document" means the Prospectus dated February 23, 1996 and the
Prospectus Supplement thereto dated May 2, 1996, of the Depositor in respect of
the Securities, (and any amendment or supplement thereto) and any other
offering document in respect of the Securities prepared by the Depositor that
makes reference to the Policy.
"Owners" means registered holders of the Securities.
"Person" means an individual, joint stock company, trust, unincorporated
association, joint venture, corporation, business or owner trust, partnership
or other organization or entity (whether governmental or private).
"Premium" means the premium payable in accordance with Section 3.02 of
this Insurance Agreement.
"Purchase Agreement" means the Purchase Agreement dated as of May 2, 1996
between Bear, Stearns & Co. Inc. and Bear Stearns Mortgage Securities Inc.
relating to the sale of the Pooled Certificates.
"Registration Statement" means the registration statement on Form S-3,
including a form of prospectus, relating to the Securities, as amended or
supplemented to the date hereof.
"Securities" means the Class A-1 Certificates issued by the Trust pursuant
to the Pooling Agreement.
"Securities Act" means the Securities Act of 1933, including, unless the
context otherwise requires, the rules and regulations thereunder, as amended
from time to time.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., and any successor thereto, and, if such
corporation shall for any reason no longer perform the functions of a
securities rating agency, "S&P" shall be deemed to refer to any other
nationally recognized rating agency designated by the Insurer.
"Term of the Insurance Agreement" shall be determined as provided in
Section 4.01 of this Insurance Agreement.
"Transaction" means the transactions contemplated by the Transaction
Documents, including the transactions described in the Offering Document.
"Transaction Documents" means this Insurance Agreement, the
Indemnification Agreement, the Commitment, the Pooling Agreement, the
Underwriting Agreement, the Securities, the Offering Document and the Purchase
Agreement.
"Trust" means the trust created pursuant to the Pooling Agreement.
"Trustee" means First Trust National Association, as trustee under the
Pooling Agreement, and any successor to the Trustee under the Pooling
Agreement.
"Trust Indenture Act" means the Trust Indenture Act of 1939, including,
unless the context otherwise requires, the rules and regulations thereunder, as
amended from time to time.
"Underwriter" means Bear, Stearns & Co. Inc.
"Underwriting Agreement" means the Underwriting Agreement (including the
Terms Agreement thereto) between the Underwriter and the Depositor with respect
to the offer and sale of the Securities, as the same may be amended from time
to time.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.01. REPRESENTATION AND WARRANTIES OF THE COMPANY. Each of the
Depositor and the Company represents, warrants and covenants, each as to those
matters relating to itself, as of the date hereof and as of the Date of
Issuance, as follows:
(a) Due Organization and Qualification. The Depositor is a Corporation,
duly organized, validly existing and in good standing under the laws
of the State of Delaware. The Depositor is duly qualified to do
business, is in good standing and has obtained all necessary licenses,
permits, charters, registrations and approvals (together, "approvals")
necessary for the conduct of its business as currently conducted and
as described in the Offering Document and the performance of its
obligations under the Transaction Documents, in each jurisdiction in
which the failure to be so qualified or to obtain such approvals would
render any Transaction Document unenforceable in any respect or would
have a material adverse effect upon the Transaction.
(b) Power and Authority. The Depositor and the Company each
have all necessary corporate power and authority to conduct their
respective business as currently conducted and, as described in the
Offering Document, to execute, deliver and perform their respective
obligations under the Transaction Documents and to consummate the
Transaction.
(c) Due Authorization. The execution, delivery and
performance of the Transaction Documents by the Depositor and the
Company have been duly authorized by all necessary corporate action
and do not require any additional approvals or consents, or other
action by or any notice to or filing with any Person, including,
without limitation, any governmental entity or the Depositor's or the
Company's stockholder, which have not previously been obtained or
given.
(d) Noncontravention. Neither the execution and delivery of
the Transaction Documents by the Depositor or the Company, the
consummation of the transactions contemplated thereby nor the
satisfaction of the terms and conditions of the Transaction Documents:
(i) conflicts with or results in any breach or
violation of any provision of its certificate of
incorporation or bylaws or any law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award
currently in effect having applicability to it or any of its
material properties, including regulations issued by an
administrative agency or other governmental authority having
supervisory powers over it;
(ii) constitutes a default by it under or a breach
of any provision of any loan agreement, mortgage, indenture
or other agreement or instrument to which it is a party or by
which any of its respective properties, which are
individually or in the aggregate material to it, is or may be
bound or affected; or
(iii) results in or requires the creation of any
lien upon or in respect of any of its assets.
(e) Legal Proceedings. There is no action, proceeding or
investigation by or before any court, governmental or administrative
agency or arbitrator against or affecting the Depositor or the Company
or any of its subsidiaries or affiliates, or any properties or rights
of the Depositor or the Company or any of its subsidiaries or
affiliates, pending or, to the Depositor's or the Company's knowledge
after reasonable inquiry, threatened, which, in any case, could
reasonably be expected to result in a Material Adverse Change with
respect to the Company or the Depositor.
(f) Valid and Binding Obligations. The Securities, when
executed, authenticated and issued in accordance with the Pooling
Agreement, and the Transaction Documents (other than the Securities),
when executed and delivered by the Depositor and the Company, will
constitute the legal, valid and binding obligations of the Depositor
and the Company and the Trust, as applicable, enforceable in
accordance with their respective terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting creditors' rights generally and
general equitable principles and public policy considerations as to
rights of indemnification for violations of federal securities laws.
Neither the Depositor nor the Company will at any time in the future
deny that the Transaction Documents constitute the legal, valid and
binding obligations of the Depositor, the Company and the Trust, as
applicable.
(g) Financial Statements. The Financial Statements of the
Company, copies of which have been furnished to the Insurer, (i) are,
as of the dates and for the periods referred to therein, complete and
correct in all material respects, (ii) present fairly the financial
condition and results of operations of the Company as of the dates and
for the periods indicated and (iii) have been prepared in accordance
with generally accepted accounting principles consistently applied,
except as noted therein (subject as to interim statements to normal
year-end adjustments). Since the date of the most recent Financial
Statements, there has been no Material Adverse Change in respect of
the Company. Except as disclosed in the Financial Statements, the
Company is not subject to any contingent liabilities or commitments
that, individually or in the aggregate, have a material possibility of
causing a Material Adverse Change in the Depositor or the Company.
(h) Compliance With Law, Etc. No practice, procedure or
policy employed, or proposed to be employed, by the Depositor or the
Company in the conduct of its business violates any law, regulation,
judgment, agreement, order or decree applicable to any of them that,
if enforced, could reasonably be expected to result in a Material
Adverse Change with respect to the Depositor or the Company.
(i) Taxes. The Depositor, the Company and the Depositor's and
the Company's parent company or companies have filed prior to the date
hereof all federal and state tax returns that are required to be filed
and paid all taxes, including any assessments received by them that
are not being contested in good faith, to the extent that such taxes
have become due, except for any failures to file or pay that,
individually or in the aggregate, would not result in a Material
Adverse Change with respect to the Depositor or the Company.
(j) Accuracy of Information. Neither the Transaction
Documents, nor other information relating to the Pooled Certificates,
the operations or the financial condition of the Depositor or the
Company (collectively, the "Documents"), as amended, supplemented or
superseded, furnished to the Insurer by the Depositor, the Company or
the Underwriter contain any statement of a material fact by the
Depositor or the Company which was untrue or misleading in any
material adverse respect when made. Neither the Depositor nor the
Company has knowledge of circumstances that could reasonably be
expected to cause a Material Adverse Change with respect to the
Depositor or the Company. Since the furnishing of the Documents, there
has been no change nor any development or event involving a
prospective change known to the Depositor or the Company that would
render any of the Documents untrue or misleading in a material
respect.
(k) Compliance With Securities Laws. The offer and sale of
the Securities comply in all material respects with all requirements
of law, including all registration requirements of applicable
securities laws. Without limitation of the foregoing, the Offering
Document does not contain any untrue statement of a material fact and
does not omit to state a material fact necessary to make the
statements made therein, in light of the circumstances under which
they were made, not misleading; provided, however, that no
representation is made with respect to the information in the Offering
Document set forth under the headings "DESCRIPTION OF THE
CERTIFICATES-The Certificate Guaranty Insurance Policy" and "MBIA
INSURANCE CORPORATION" or the consolidated financial statements of the
Insurer included in the Offering Document. Neither the offer nor the
sale of the Securities has been or will be in violation of the
Securities Act or any other federal or state securities laws. The
Trust is not required to be registered as an "investment company"
under the Investment Company Act.
(l) Transaction Documents. Each of the representations and
warranties of the Depositor and of the Company contained in the
Transaction Documents is true and correct in all material respects,
and the Depositor and the Company each hereby makes each such
representation and warranty to, and for the benefit of, the Insurer as
if the same were set forth in full herein.
(m) Solvency. The Depositor is solvent and will not be
rendered insolvent by the Transaction and, after giving effect to the
Transaction, the Depositor will not be left with an unreasonably small
amount of capital with which to engage in its business, nor does the
Depositor intend to incur, or believe that it has incurred, debts
beyond its ability to pay as they mature. The Depositor does not
contemplate the commencement of insolvency, bankruptcy, liquidation or
consolidation proceedings or the appointment of a receiver,
liquidator, conservator, trustee or similar official in respect of the
Depositor, the Trust or any of their assets.
(n) Principal Place of Business. The principal place
of business of the Depositor is located in New York, New
York.
(o) Documents. Each transaction document and disclosure
document related to each of the Pooled Certificates which was provided
to the Insurer by the Depositor, the Company or the Underwriter is an
accurate and most recent version of such document as in effect on the
Closing Date.
Section 2.02. AFFIRMATIVE COVENANTS OF THE DEPOSITOR AND THE COMPANY.
Each of the Depositor and the Company hereby agrees, each as to those matters
relating to itself, that during the Term of the Insurance Agreement, unless the
Insurer shall otherwise expressly consent in writing:
(a) Compliance With Agreements and Applicable Laws.
The Depositor shall not be in default under the Transaction
Documents and shall comply with all material requirements
of any law, rule or regulation applicable to it.
(b) Corporate Existence. Each of the Depositor, the Company,
their successors and assigns, shall maintain its corporate existence
and shall at all times continue to be duly organized under the laws of
its respective jurisdiction of incorporation and duly qualified and
duly authorized (as described in subsections 2.01(a), (b) and (c)
hereof) and shall conduct its business in accordance with the terms of
its certificate of incorporation and bylaws. Notwithstanding the
foregoing, each of the Depositor and the Company shall be entitled to
merge or consolidate with or into any Person, or transfer all or
substantially all of its assets to any Person without the consent of
the Insurer so long as such merger, consolidation or transfer of
assets will not adversely affect the shadow rating granted by each
Rating Agency to the Insurer in connection with the Transaction.
(c) Financial Statements; Accountants' Reports; Other
Information. The Depositor shall keep or cause to be kept in
reasonable detail books and records of account of its assets and
business, including, but not limited to, books and records relating to
the Transaction. The Depositor or the Company, as applicable, shall
furnish or cause to be furnished to the Insurer:
(i) Certain Information. Upon the reasonable request
of the Insurer, the Company shall promptly provide copies of
any requested proxy statements, financial statements, reports
and registration statements which the Company files with, or
delivers to, the Commission or any national securities
exchange.
(ii) Other Information. Promptly upon receipt
thereof, copies of all schedules, financial statements or
other similar reports delivered to or by the Depositor
pursuant to the terms of the Pooling Agreement or the
Underlying Agreements and, promptly upon request, such other
data as the Insurer may reasonably request.
The Insurer agrees that it and its agents, accountants and
attorneys shall keep confidential all financial statements, reports
and other information delivered by the Depositor pursuant to this
subsection 2.02(c) to the extent provided in subsection 2.02(d)
hereof.
(d) Access to Records; Discussions With Officers and
Accountants. On an annual basis, or upon the occurrence of a Material
Adverse Change, the Depositor shall, upon the reasonable request of
the Insurer, permit the Insurer or its authorized agents:
(i) to inspect the books and records of the
Depositor as they may relate to the Securities, the
obligations of the Depositor under the Transaction
Documents and the Transaction;
(ii) to discuss the affairs, finances and
accounts of the Depositor with the chief operating officer and
the chief financial officer of the Depositor; and
(iii) with the Depositor's consent, which consent
shall not be unreasonably withheld, to discuss the affairs,
finances and accounts of the Depositor with the Depositor's
independent accountants, provided that an officer of the
Depositor shall have the right to be present during such
discussions.
Such inspections and discussions shall be conducted during
normal business hours and shall not unreasonably disrupt the business
of the Depositor.
The Insurer agrees that it and its shareholders, directors,
agents, accountants and attorneys shall keep confidential any matter
of which it becomes aware through such inspections or discussions
(unless readily available from public sources), except as may be
otherwise required by regulation, law or court order or requested by
appropriate governmental authorities or as necessary to preserve its
rights or security under or to enforce the Transaction Documents,
provided that the foregoing shall not limit the right of the Insurer
to make such information available to its regulators, securities
rating agencies, reinsurers, credit and liquidity providers, counsel
and accountants. If the Insurer is requested or required (by oral
questions, interrogatories, requests for information or documents
subpoena, civil investigative demand or similar process) to disclose
any information of which it becomes aware through such inspections or
discussions, the Insurer will promptly notify the Depositor of such
request(s) so that the Depositor may seek an appropriate protective
order and/or waive the Insurer's compliance with the provisions of
this Insurance Agreement. If, in the absence of a protective order or
the receipt of a waiver hereunder, the Insurer is, nonetheless, in the
opinion of its counsel, compelled to disclose such information to any
tribunal or else stand liable for contempt or suffer other censure or
significant penalty, the Insurer may disclose such information to such
tribunal that the Insurer is compelled to disclose, provided that a
copy of all information disclosed is provided to the Depositor
promptly upon such disclosure.
(f) Notice Of Material Events. The Depositor shall be
obligated promptly to inform the Insurer in writing of the
occurrence of any of the following:
(i) the submission of any claim or the initiation or
threat of any legal process, litigation or administrative or
judicial investigation, or rule making or disciplinary
proceeding by or against the Depositor that (A) could be
required to be disclosed to the Commission or (B) could
result in a Material Adverse Change with respect to the
Depositor, or the promulgation of any proceeding or any
proposed or final rule which would result in a Material
Adverse Change with respect to the Depositor;
(ii) any change in the location of the
Depositor's principal offices or any change in the location of
the Depositor's books and records;
(iii) the occurrence of any Default or Event of
Default or of any Material Adverse Change with respect
to itself;
(iv) the commencement of any proceedings by or
against the Depositor under any applicable bankruptcy,
reorganization, liquidation, rehabilitation, insolvency or
other similar law now or hereafter in effect or of any
proceeding in which a receiver, liquidator, conservator,
trustee or similar official shall have been, or may be,
appointed or requested for the Depositor or any of its
assets;
(v) the receipt of notice that (A) the Depositor is
being placed under regulatory supervision, (B) any license,
permit, charter, registration or approval necessary for the
conduct of the Depositor's business is to be, or may be
suspended or revoked, or (C) the Depositor is to cease and
desist any practice, procedure or policy employed by the
Depositor in the conduct of its business, and such cessation
may result in a Material Adverse Change with respect to the
Depositor; or
(vi) the receipt of notice of the downgrade or
withdrawal of the rating assigned to any Pooled
Certificate.
(g) Further Assurances. The Depositor shall, upon the request
of the Insurer, from time to time, execute, acknowledge and deliver,
or cause to be executed, acknowledged and delivered, within ten days
of such request, such amendments hereto and such further instruments
and take such further action as may be reasonably necessary to
effectuate the intention, performance and provisions of the
Transaction Documents. In addition, the Depositor agrees to cooperate
with S&P and Moody's in connection with any review of the Transaction
that may be undertaken by S&P and Moody's after the date hereof.
(h) Maintenance of Licenses. The Depositor, or any
successors thereof, shall maintain all licenses, permits,
charters and registrations which are material to the
conduct of its business.
(i) Redemption of Securities. The Depositor shall instruct
the Trustee, upon redemption of the Securities pursuant to the
Offering Document or otherwise, to furnish to the Insurer a notice of
such redemption and, upon a redemption or other payment of all of the
Securities to surrender the Policy to the Insurer for cancellation.
(j) Disclosure Document. Each Offering Document delivered
with respect to the Securities shall clearly disclose that the Policy
is not covered by the property/casualty insurance security fund
specified in Article 76 of the New York Insurance Law.
(k) Third-Party Beneficiary. The Depositor agrees that the
Insurer shall have all rights of a third-party beneficiary in respect
of the Pooling Agreement and hereby incorporates and restates its
representations, warranties and covenants as set forth therein for the
benefit of the Insurer.
(l) Amendments. The Depositor will provide the Insurer with
written notice of any change or amendment to any Transaction Document
as currently in effect and agrees that it will not make any change or
amendment to any Transaction Document without the prior written
consent of the Insurer thereto.
(m) Closing Documents. The Depositor shall provide or cause
to be provided to the Insurer an executed original copy of each
document executed in connection with the Transaction within 30 days
after the date of closing.
(n) Preference Payments. With respect to any
Preference Amount (as defined in the Policy), the Depositor
shall provide to the Insurer upon the request of the
Insurer:
(i) a certified copy of the final nonappealable
order of a court having competent jurisdiction ordering the
recovery by a trustee in bankruptcy as voidable preference
amounts of amounts included in previous distributions under
Section 3.05 of the Pooling Agreement to any Owner pursuant
to the United States Bankruptcy Code;
(ii) an opinion of counsel satisfactory to the
Insurer, and upon which the Insurer shall be entitled to
rely, stating that such order is final and is not subject to
appeal;
(iii) an assignment in such form as reasonably
required by the Insurer, irrevocably assigning to the Insurer
all rights and claims of the Trustee and any
Certificateholder relating to or arising under the Underlying
Mortgage Loans or Pooled Certificates against the debtor
which made such preference payment or otherwise with respect
to such preference amount; and
(iv) appropriate instruments to effect (when
executed by the affected party) the appointment of the
Insurer as agent for the Trustee and any Certificateholders
in any legal proceeding relating to such preference payment
being in a form satisfactory to the Insurer.
Section 2.03. NEGATIVE COVENANTS OF THE DEPOSITOR. The
Depositor hereby agrees that during the Term of the Insurance Agreement, unless
the Insurer shall otherwise expressly consent in writing:
(a) Impairment of Rights. The Depositor shall not take any
action, or fail to take any action, if such action or failure to take
action may result in a material adverse change as described in clause
(ii) of the definition of Material Adverse Change with respect to the
Depositor, or may interfere with the enforcement of any rights of the
Insurer under or with respect to the Transaction Documents. The
Depositor shall give the Insurer written notice of any such action or
failure to act on the earlier of: (i) the date upon which any publicly
available filing or release is made with respect to such action or
failure to act or (ii) promptly prior to the date of consummation of
such action or failure to act. The Depositor shall furnish to the
Insurer all information requested by it that is reasonably necessary
to determine compliance with this paragraph.
(b) Waiver, Amendments, Etc. Except in accordance with the
Transaction Documents, the Depositor shall not waive, modify or amend,
or consent to any waiver, modification or amendment of, any of the
terms, provisions or conditions of the Transaction Documents without
the consent of the Insurer.
Section 2.04. NEGATIVE COVENANT OF THE TRUSTEE. The Trustee
shall not agree to or acquiesce in any amendment, modification or waiver of any
Transaction Document without the written consent of the Insurer.
ARTICLE III
THE POLICY; REIMBURSEMENT
Section 3.01. ISSUANCE OF THE POLICY. The Insurer agrees to
issue the Policy on the Closing Date subject to satisfaction of the conditions
precedent set forth below:
(a) Payment of Initial Premium and Expenses. The Insurer
shall have been paid, by the Depositor, that portion of a
nonrefundable Premium payable on the Closing Date and the Depositor
shall agree to reimburse or pay directly other fees and expenses
identified in Section 3.02 as payable, and the Insurer shall have
received a fully executed copy of the Commitment.
(b) Transaction Documents. The Insurer shall have
received a copy of each of the Transaction Documents, in
form and substance satisfactory to the Insurer, duly
authorized, executed and delivered by each party thereto.
(c) Certified Documents and Resolutions. The Insurer shall
have received a copy of (i) the certificate of incorporation and
bylaws of the Depositor and (ii) the resolutions of the Depositor's
Board of Directors authorizing the issuance of the Securities and the
execution, delivery and performance by the Depositor of the
Transaction Documents and the transactions contemplated thereby,
certified by the Secretary or an Assistant Secretary of the Depositor
(which certificate shall state that such certificate of incorporation,
bylaws and resolutions are in full force and effect without
modification on the Date of Issuance).
(d) Incumbency Certificate. The Insurer shall have received a
certificate of the Secretary or an Assistant Secretary of the
Depositor certifying the names and signatures of the officers of the
Depositor authorized to execute and deliver the Transaction Documents
and that shareholder consent to the execution and delivery of such
documents is not necessary.
(e) Representations and Warranties; Certificate. The
representations and warranties of the Depositor set forth or
incorporated by reference in this Insurance Agreement shall be true
and correct as of the Date of Issuance as if made on the Date of
Issuance and the Insurer shall have received a certificate of
appropriate officers of the Depositor to that effect.
(f) Opinions of Counsel.
(i) The law firm of Stroock & Stroock & Lavan shall
have issued its favorable opinion, in form and substance
acceptable to the Insurer and its counsel, regarding the
corporate existence and authority of the Depositor and the
validity and enforceability of the Transaction Documents
against the Depositor.
(ii) The law firm of Stroock & Stroock & Lavan shall
have furnished its opinions, in form and substance acceptable
to the Insurer and its counsel, regarding the sale of the
Pooled Certificates and the tax treatment of payments on the
Securities under federal and New York tax laws.
(iii) The Insurer shall have received such other
opinions of counsel, in form and substance acceptable to the
Insurer and its counsel, addressing such other matters as the
Insurer may reasonably request.
(g) Approvals, Etc. The Insurer shall have received true and
correct copies of all approvals, licenses and consents, if any,
including, without limitation, any required approval of the
shareholders of the Depositor, required in connection with the
Transaction.
(h) No Litigation, Etc. No suit, action or other proceeding,
investigation or injunction, or final judgment relating thereto, shall
be pending or threatened before any court or governmental agency in
which it is sought to restrain or prohibit or to obtain damages or
other relief in connection with the Transaction Documents or the
consummation of the Transaction.
(i) Legality. No statute, rule, regulation or order shall
have been enacted, entered or deemed applicable by any government or
governmental or administrative agency or court that would make the
transactions contemplated by any of the Transaction Documents illegal
or otherwise prevent the consummation thereof.
(j) Satisfaction of Conditions of the Underwriting Agreement.
All conditions in the Underwriting Agreement relating to the
Underwriters' obligation to purchase the Securities shall have been
satisfied.
(k) Issuance of Ratings. The Insurer shall have received
confirmation that the risk secured by the Policy constitutes a "AAA"
risk by S&P and a "Aaa" risk by Moody's; that the Securities, when
issued, will be rated "AAAr" by S&P and "Aaa" by Moody's; and that the
Pooled Certificates have a rating of "AAA" or "AAAr" by S&P and "Aaa"
by Moody's as indicated to the Certificate Insurer.
(l) No Default. No Default or Event of Default shall
have occurred.
(m) Additional Items. The Insurer shall have received such
other documents, instruments, approvals or opinions requested by the
Insurer as may be reasonably necessary to effect the Transaction,
including, but not limited to, evidence satisfactory to the Insurer
that the conditions precedent, if any, in the Transaction Documents
have been satisfied.
(n) Underwriting Agreement. The Insurer shall have
received copies of each of the documents, and specifically
be entitled to rely on each of the documents, required to
be delivered to the Underwriter pursuant to the Underwriting
Agreement.
(o) Conform to Documents. The Insurer and its counsel
shall have determined that all documents, certificates and
opinions to be delivered in connection with the Securities
conform to the terms of the Pooling Agreement, the
Commitment, the Registration Statement, the Offering
Document and this Insurance Agreement.
(p) Compliance with Commitment. All other terms,
conditions and requirements of the Commitment shall have
been satisfied.
(q) Distribution Date Statements. The Insurer shall
have received a copy of each Pooled Certificate
Distribution Date Statement that was delivered in April 1996 relating
to each Pooled Certificate.
Section 3.02. PAYMENT OF FEES AND PREMIUM.
(a) Legal and Accounting Fees The Depositor shall pay or
cause to be paid, on the Date of Issuance, legal fees and
disbursements incurred by the Insurer in connection with the issuance
of the Policy in accordance with the terms of the Commitment and any
fees of the Insurer's auditors payable in respect of the Offering
Document. Any fees of the Insurer's auditors payable in respect of any
amendment or supplement to the Offering Document or any other Offering
Document incurred after the Date of Issuance shall be paid by the
Depositor on demand.
(b) Premium. In consideration of the issuance by the Insurer
of the Policy, the Insurer shall be entitled to receive the Premium in
accordance with the terms of the Commitment directly from the
Depositor on or before the Date of Issuance. The Premium paid
hereunder shall be nonrefundable without regard to whether the Insurer
makes any payment under the Policy or any other circumstances relating
to the Securities or provision being made for payment of the
Securities prior to maturity. The Depositor shall make all payments of
Premium to be made by it by wire transfer to an account designated by
the Insurer by written notice to the Depositor.
Section 3.03. REIMBURSEMENT AND ADDITIONAL PAYMENT OBLIGATION. (a) In
accordance with the priorities established in Section 3.05 of the Pooling
Agreement, the Insurer shall be entitled to reimbursement from Available Funds
for any payment made by the Insurer under the Policy, which reimbursement shall
be due and payable on the date that any amount is to be paid pursuant to a
Notice (as defined in the Policy), in an amount equal to the amount to be so
paid and all amounts previously paid that remain unreimbursed, together with
interest on any and all amounts remaining unreimbursed (to the extent permitted
by law, if in respect of any unreimbursed amounts representing interest) from
the date such amounts became due until paid in full (after as well as before
judgment), at a rate of interest equal to the Late Payment Rate.
(b) The Trustee agrees to pay to the Insurer as follows: anything in
subsection 3.03(a) to the contrary notwithstanding, the Insurer shall be
entitled to reimbursement from the Trustee for payments made under the Policy,
arising as a result of the Trustee's failure to deposit into the Certificate
Account any amount received by it and required to be so deposited pursuant to
the Pooling Agreement together with interest on any and all amounts remaining
unreimbursed (to the extent permitted by law, if in respect to any unreimbursed
amounts representing interest) from the date such amounts became due until paid
in full (after as well as before judgment), at a rate of interest equal to the
Late Payment Rate.
(c) The Depositor agrees to pay to the Insurer as follows: anything in
subsection 3.03(a) to the contrary notwithstanding, the Insurer shall be
entitled to reimbursement from the Depositor for payments made under the
Policy, arising as a result of (A) the Depositor's failure to repurchase any
Pooled Certificates required to be repurchased by the Depositor pursuant to
Section 2.03 of the Pooling Agreement, or (B) the Depositor's or any of its
Affiliate's failure to deposit into the Certificate Account any amount it
receives on the Pooled Certificates with respect to payments due on the Pooled
Certificates after the related Pooled Certificate Distribution Dates occurring
in April 1996, and in the case of either (A) or (B), together with interest on
any and all amounts remaining unreimbursed (to the extent permitted by law, if
in respect to any unreimbursed amounts representing interest) from the date
such amounts became due until paid in full (after as well as before judgment),
at a rate of interest equal to the Late Payment Rate.
(d) The Depositor agrees to pay to the Insurer as follows: any and all
charges, fees, costs and expenses that the Insurer may reasonably pay or incur,
including, but not limited to, attorneys' and accountants' fees and expenses,
in connection with (i) any accounts established to facilitate payments under
the Policy to the extent the Insurer has not been immediately reimbursed on the
date that any amount is paid by the Insurer under the Policy, (ii) the
enforcement, defense or preservation of any rights in respect of any of the
Transaction Documents, including defending, monitoring or participating in any
litigation or proceeding (including any insolvency or bankruptcy proceeding in
respect of any Transaction participant or any affiliate thereof) relating to
any of the Transaction Documents, any party to any of the Transaction
Documents, in its capacity as such a party, or the Transaction or (iii) any
amendment, waiver or other action with respect to, or related to, any
Transaction Document, whether or not executed or completed, and the Insurer
reserves the right to charge a reasonable fee as a condition to executing any
waiver or consent proposed in respect of any of the Transaction Documents.
(e) The Trustee and the Depositor, as applicable, agree to pay to the
Insurer as follows: interest on any and all amounts described in subclauses
(b), (c), (d) and (f) of this Section 3.03 from the date payable or paid by
such party until payment thereof in full, and interest on any and all amounts
described in Section 3.02 from the date due until payment thereof in full, in
each case, payable to the Insurer at the Late Payment Rate per annum.
(f) The Depositor agrees to pay to the Insurer as follows: any
payments made by the Insurer on behalf of, or advanced to, the Depositor,
respectively, including, without limitation, any amounts payable by the
Depositor pursuant to the Securities or any other Transaction Documents.
(g) Following termination of the Pooling Agreement pursuant to Section
7.01 thereof, the Depositor agrees to reimburse the Insurer for any Insured
Payments required to be made pursuant to the Policy subsequent to the date of
such termination.
All such amounts are to be immediately due and payable without demand.
Section 3.04. INDEMNIFICATION; LIMITATION OF LIABILITY. (a) In
addition to any and all rights of indemnification or any other rights of the
Insurer pursuant hereto or under law or equity, the Depositor and any
successors thereto agree to pay, and to protect, indemnify, and save harmless,
the Insurer and its officers, directors, shareholders, employees, agents, and
each person, if any, who controls the Insurer within the meaning of either
Section 15 of the Securities Act of 1933, as amended, or Section 20 of the
Securities and Exchange Act of 1934, as amended, from and against any and all
claims, losses, liabilities (including penalties), actions, suits, judgments,
demands, damages, costs or reasonable expenses (including, without limitation,
reasonable fees and expenses of attorneys, consultants and auditors and
reasonable costs of investigations) or obligations whatsoever paid by the
Insurer (herein collectively referred to as "Liabilities") of any nature
arising out of or relating to the transactions contemplated by the Transaction
Documents by reason of:
(i) to the extent not covered by the Indemnification
Agreement, any act or omission of the Depositor, in connection with
the offering, issuance, sale or delivery of the Securities other than
by reason of false or misleading information provided by the Insurer
in writing for inclusion in the Offering Document as specified in the
Indemnification Agreement, or the allegation thereof;
(ii) the misfeasance or malfeasance of, or negligence
or theft committed by, any director, officer, employee or
agent of the Depositor;
(iii) the violation by the Depositor of any federal or state
securities, banking or antitrust laws, rules or regulations in
connection with the issuance, offer and sale of the Securities or the
transactions contemplated by the Transaction Documents;
(iv) the violation by the Depositor of any federal or state
laws, rules or regulations relating to the maximum amount of interest
permitted to be received on account of any loan of money or with
respect to the Mortgage Loans or Pooled Certificates;
(v) the breach by the Depositor of any of its
obligations under this Agreement or any of the Transaction
Documents; and
(vi) the breach by the Depositor of any representation or
warranty on the part of the Depositor contained in the Transaction
Documents or in any certificate or report furnished or delivered to
the Insurer thereunder.
This indemnity provision shall survive the termination of this Agreement and
shall survive until the statute of limitations has run on any causes of action
which arise from one of these reasons and until all suits filed as a result
thereof have been finally concluded.
(b) Any party which proposes to assert the right to be indemnified
under this Section 3.04 will, promptly after receipt of notice of commencement
of any action, suit or proceeding against such party in respect of which a
claim is to be made against the Depositor under this Section 3.04, notify the
Depositor of the commencement of such action, suit or proceeding, enclosing a
copy of all papers served. In case any action, suit or proceeding shall be
brought against any indemnified party and it shall notify the Depositor of the
commencement thereof, the Depositor shall be entitled to participate in, and,
to the extent that it shall wish, to assume the defense thereof, with counsel
satisfactory to such indemnified party, and after notice from the Depositor to
such indemnified party of its election so to assume the defense thereof, the
Depositor shall not be liable to such indemnified party for any legal or other
expenses other than reasonable costs of investigation subsequently incurred by
such indemnified party in connection with the defense thereof. The indemnified
party shall have the right to employ its counsel in any such action the defense
of which is assumed by the Depositor in accordance with the terms of this
subsection (b), but the fees and expenses of such counsel shall be at the
expense of such indemnified party unless the employment of counsel by such
indemnified party has been authorized by the Depositor. The Depositor shall not
be liable for any settlement of any action or claim effected without its
consent.
Section 3.05. PAYMENT PROCEDURE TO THE INSURER. In the event of any
payment by the Insurer, the Trustee and the Depositor agree to accept the
voucher or other evidence of payment as prima facie evidence of the propriety
thereof and the liability therefor to the Insurer. All payments to be made to
the Insurer under this Insurance Agreement shall be made to the Insurer in
lawful currency of the United States of America in immediately available funds
at the notice address for the Insurer as specified in the Pooling Agreement on
the date when due or as the Insurer shall otherwise direct by written notice to
the other parties hereto. In the event that the date of any payment to the
Insurer or the expiration of any time period hereunder occurs on a day which is
not a Business Day, then such payment or expiration of time period shall be
made or occur on the next succeeding Business Day with the same force and
effect as if such payment was made or time period expired on the scheduled date
of payment or expiration date. Payments to be made to the Insurer under this
Insurance Agreement shall bear interest at the Late Payment Rate from the date
when due to the date paid.
ARTICLE IV
FURTHER AGREEMENTS
Section 4.01. EFFECTIVE DATE; TERM OF THE INSURANCE AGREEMENT. This
Insurance Agreement shall take effect on the Date of Issuance and shall remain
in effect until the later of (a) such time as the Insurer is no longer subject
to a claim under the Policy and the Policy shall have been surrendered to the
Insurer for cancellation and (b) all amounts payable to the Insurer by the
Depositor or from any other source under the Transaction Documents and all
amounts payable under the Securities have been paid in full; provided, however,
that the provisions of Sections 3.03 and 3.04 hereof shall survive any
termination of this Insurance Agreement.
Section 4.02. FURTHER ASSURANCES AND CORRECTIVE INSTRUMENTS. (a)
Excepting at such times as a default in payment under the Policy shall exist or
shall have occurred, neither the Depositor nor the Trustee shall grant any
waiver of rights under any of the Transaction Documents to which any of them is
a party without the prior written consent of the Insurer, and any such waiver
without the written consent of the Insurer shall be null and void and of no
force or effect.
(b) To the extent permitted by law, the Depositor agrees that it will,
from time to time, execute, acknowledge and deliver, or cause to be executed,
acknowledged and delivered, such supplements hereto and such further
instruments as the Insurer may request and as may be required in the Insurer's
judgment to effectuate the intention of or facilitate the performance of this
Insurance Agreement.
Section 4.03. OBLIGATIONS ABSOLUTE. (a) The obligations
of the Depositor and the Company hereunder shall be absolute and
unconditional.
(b) The Depositor and any and all others who are now or may become
liable for all or part of the obligations of the Depositor under this Insurance
Agreement agree to be bound by this Insurance Agreement and (i) to the extent
permitted by law, waive and renounce any and all redemption and exemption
rights and the benefit of all valuation and appraisement privileges against the
indebtedness and obligations evidenced by any Transaction Document or by any
extension or renewal thereof; (ii) waive presentment and demand for payment,
notices of nonpayment and of dishonor, protest of dishonor and notice of
protest; (iii) waive all notices in connection with the delivery and acceptance
hereof and all other notices in connection with the performance, default or
enforcement of any payment hereunder, except as required by the Transaction
Documents; (iv) waive all rights of abatement, diminution, postponement or
deduction, or any defense other than payment, or to any right of setoff or
recoupment arising out of any breach under any of the Transaction Documents, by
any party thereto or any beneficiary thereof, or out of any obligation at any
time owing to the Depositor; (v) agree that its liabilities hereunder shall,
except as otherwise expressly provided in this Section 4.03, be unconditional
and without regard to any setoff, counterclaim or the liability of any other
Person for the payment hereof, (vi) agree that any consent, waiver or
forbearance hereunder with respect to an event shall operate only for such
event and not for any subsequent event; (vii) consent to any and all extensions
of time that may be granted by the Insurer with respect to any payment
hereunder or other provisions hereof and to the release of any security at any
time given for any payment hereunder, or any part thereof, with or without
substitution, and to the release of any Person or entity liable for any such
payment; and (viii) consent to the addition of any and all other makers,
endorsers, guarantors and other obligors for any payment hereunder, and to the
acceptance of any and all other security for any payment hereunder, and agree
that the addition of any such obligors or security shall not affect the
liability of the parties hereto for any payment hereunder.
(c) Nothing herein shall be construed as prohibiting the Depositor
from pursuing any rights or remedies it may have against any other Person in a
separate legal proceeding.
Section 4.04. ASSIGNMENTS; REINSURANCE; THIRD-PARTY RIGHTS. (a) This
Insurance Agreement shall be a continuing obligation of the parties hereto and
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Neither the Trustee, the Company
nor the Depositor may assign its rights under this Insurance Agreement, or
delegate any of its duties hereunder, without the prior written consent of the
Insurer.
(b) The Insurer shall have the right to give participations in its
rights under this Insurance Agreement and to enter into contracts of
reinsurance with respect to the Policy upon such terms and conditions as the
Insurer may in its discretion determine; provided, however, that no such
participation or reinsurance agreement or arrangement shall relieve the Insurer
of any of its obligations hereunder or under the Policy.
(c) In addition, the Insurer shall be entitled to assign or pledge to
any bank or other lender providing liquidity or credit with respect to the
Transaction or the obligations of the Insurer in connection therewith any
rights of the Insurer under the Transaction Documents or with respect to any
real or personal property or other interests pledged to the Insurer, or in
which the Insurer has a security interest, in connection with the Transaction.
(d) Except as provided herein with respect to participants and
reinsurers, nothing in this Insurance Agreement shall confer any right, remedy
or claim, express or implied, upon any Person, including, particularly, any
Owner, other than the Insurer against the Depositor, and all the terms,
covenants, conditions, promises and agreements contained herein shall be for
the sole and exclusive benefit of the parties hereto and their successors and
permitted assigns. Neither the Trustee nor any Owner shall have any right to
payment from any Premiums paid or payable hereunder or from any other amounts
paid by the Depositor, the Trustee or the Company pursuant to Section 3.02,
3.03, 3.04 or 4.07 hereof.
Section 4.05. LIABILITY OF THE INSURER. Neither the Insurer nor any of
its officers, directors or employees shall be liable or responsible for: (a)
the use that may be made of the Policy by the Trustee or for any acts or
omissions of the Trustee in connection therewith; or (b) the validity,
sufficiency, accuracy or genuineness of documents delivered to the Insurer (or
its Fiscal Agent) in connection with any claim under the Policy, or of any
signatures thereon, even if such documents or signatures should in fact prove
to be in any or all respects invalid, insufficient, fraudulent or forged
(unless the Insurer shall have actual knowledge thereof). In furtherance and
not in limitation of the foregoing, the Insurer (or its Fiscal Agent) may
accept documents that appear on their face to be in order, without
responsibility for further investigation.
Section 4.06. TRUSTEE AND DEPOSITOR TO JOIN IN ENFORCEMENT ACTION. To
the extent necessary to enforce any right of the Insurer in or remedy of the
Insurer under any Pooled Certificates, the Trustee and the Depositor agree to
join in any action initiated by the Trust or the Insurer for the protection of
such right or exercise of such remedy.
Section 4.07. OBLIGATION OF THE COMPANY. The Company agrees, for the
sole and exclusive benefit of the Insurer, in consideration of and as an
inducement to the Insurer's agreement to issue the Policy, to indemnify and
hold harmless the Insurer against any damages resulting from (a) the inaccuracy
of any of the representations and warranties of the Depositor contained in
Article II hereof, or (b) the breach by the Depositor of the Depositor's
obligations under Sections 3.03 and 3.04 hereof.
ARTICLE V
DEFAULTS; REMEDIES
Section 5.01. DEFAULTS. The occurrence of any of the
following events shall constitute an Event of Default hereunder:
(a) Any representation or warranty made by the Depositor or
the Trustee hereunder or under the Transaction Documents, or in any
certificate furnished hereunder or under the Transaction Documents,
shall prove to be untrue or incomplete in any material respect;
(b)(i) The Depositor or the Trustee shall fail to pay when
due any amount payable by the Depositor or the Trustee hereunder or
(ii) a legislative body has enacted any law that declares or a court
of competent jurisdiction shall find or rule that this Insurance
Agreement or the Pooling Agreement is not valid and binding on the
Depositor or the Company;
(c) Any failure on the part of the Depositor or the Trustee
duly to observe or perform in any material respect any other of the
covenants or agreements on the part of the Depositor or the Trustee
contained in this Insurance Agreement or in any other Transaction
Document which continues unremedied for a period of 30 days with
respect to this Insurance Agreement, or, with respect to any other
Transaction Document, beyond any cure period provided for therein,
after the date on which written notice of such failure, requiring the
same to be remedied, shall have been given to the Depositor or the
Trustee, as applicable, by the Insurer (with a copy to the Trustee) or
by the Trustee (with a copy to the Insurer);
(d) A decree or order of a court or agency or supervisory
authority having jurisdiction in the premises in an involuntary case
under any present or future federal or state bankruptcy, insolvency or
similar law or the appointment of a conservator or receiver or
liquidator or other similar official in any insolvency, readjustment
of debt, marshalling of assets and liabilities or similar proceedings,
or for the winding-up or liquidation of its affairs, shall have been
entered against the Depositor and such decree or order shall have
remained in force undischarged or unstayed for a period of 90
consecutive days;
(e) The Depositor shall consent to the appointment of a
conservator or receiver or liquidator or other similar official in any
insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating to the Depositor or
of or relating to all or substantially all of the property of it; or
(f) The Depositor shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take
advantage of or otherwise voluntarily commence a case or proceeding
under any applicable bankruptcy, insolvency, reorganization or other
similar statute, make an assignment for the benefit of its creditors
or voluntarily suspend payment of its obligations.
Section 5.02. REMEDIES; NO REMEDY EXCLUSIVE. (a) Upon the
occurrence of an Event of Default, the Insurer may exercise any
one or more of the rights and remedies set forth below:
(i) declare all indebtedness of every type or description
then owed by the Depositor, the Trustee or the Company to the Insurer
to be immediately due and payable, and the same shall thereupon be
immediately due and payable;
(ii) exercise any rights and remedies under the Pooling
Agreement in accordance with the terms of the Pooling Agreement or
direct the Trustee to exercise such remedies in accordance with the
terms of the Pooling Agreement; or
(iii) take whatever action at law or in equity as may appear
necessary or desirable in its judgment to collect the amounts then due
under this Insurance Agreement or the Pooling Agreement or to enforce
performance and observance of any obligation, agreement or covenant of
the Depositor the Trustee or the Company under this Insurance
Agreement or the Pooling Agreement.
(b) Unless otherwise expressly provided, no remedy herein conferred
upon or reserved is intended to be exclusive of any other available remedy, but
each remedy shall be cumulative and shall be in addition to other remedies
given under this Insurance Agreement, the Pooling Agreement or existing at law
or in equity. No delay or omission to exercise any right or power accruing
under this Insurance Agreement or the Pooling Agreement upon the happening of
any event set forth in Section 5.01 hereof shall impair any such right or power
or shall be construed to be a waiver thereof, but any such right and power may
be exercised from time to time and as often as may be deemed expedient. In
order to entitle the Insurer to exercise any remedy reserved to the Insurer in
this Article, it shall not be necessary to give any notice, other than such
notice as may be required in this Article.
Section 5.03. WAIVERS. (a) No failure by the Insurer to exercise, and
no delay by the Insurer in exercising, any right hereunder shall operate as a
waiver thereof. The exercise by the Insurer of any right hereunder shall not
preclude the exercise of any other right, and the remedies provided herein to
the Insurer are declared in every case to be cumulative and not exclusive of
any remedies provided by law or equity.
(b) The Insurer shall have the right, to be exercised in its complete
discretion, to waive any Event of Default hereunder, by a writing setting forth
the terms, conditions and extent of such waiver signed by the Insurer and
delivered to the Depositor and the Trustee. Unless such writing expressly
provides to the contrary, any waiver so granted shall extend only to the
specific event or occurrence which gave rise to the Event of Default so waived
and not to any other similar event or occurrence which occurs subsequent to the
date of such waiver.
ARTICLE VI
MISCELLANEOUS
Section 6.01. AMENDMENTS, ETC. This Insurance Agreement may be
amended, modified or terminated only by written instrument or written
instruments signed by the parties hereto. The Depositor agrees to promptly
provide a copy of any amendment to this Insurance Agreement to the Trustee and
the Rating Agencies. No act or course of dealing shall be deemed to constitute
an amendment, modification or termination hereof.
Section 6.02. NOTICES. All demands, notices and other communications
to be given hereunder shall be in writing (except as otherwise specifically
provided herein) and shall be mailed by registered mail or personally delivered
or telecopied to the recipient as follows:
(a) To the Insurer:
MBIA Insurance Corporation
113 King Street
Armonk, NY 10504
Attention: Insured Portfolio Management -
Structured Finance (IPM-SF)
(BSMSI Series 1996-2)
Telecopy No.: (914) 765-3164
Confirmation: (914) 273-4545
(in each case in which notice or other communication to the Insurer
refers to an Event of Default, a claim on the Policy or with respect
to which failure on the part of the Insurer to respond shall be deemed
to constitute consent or acceptance, then a copy of such notice or
other communication should also be sent to the attention of each of
the general counsel and the Insurer and shall be marked to indicate
"URGENT MATERIAL ENCLOSED.")
(b) To the Depositor:
Bear Stearns Mortgage Securities Inc.
245 Park Avenue
New York, NY 10167
Attention: Sara Bonesteel
Telecopy No.: (212) 272-2718
Confirmation: (212) 272-6413
(c) To the Trustee:
First Trust National Association
First Trust Center
180 East Fifth Street
St. Paul, MN 55101
Attention: Structured Finance Administration
Telecopy No.: (612) 244-0089
Confirmation: (612) 244-0727
(d) To the Company:
Bear Stearns Mortgage Capital Corporation
245 Park Avenue
New York, NY 10167
Attention: Jean Langen
Telecopy No.: (212) 272-2718
Confirmation: (212) 272-6413
A party may specify an additional or different address or addresses by
writing mailed or delivered to the other parties as aforesaid. All such notices
and other communications shall be effective upon receipt.
Section 6.03. SEVERABILITY. In the event that any provision of this
Insurance Agreement shall be held invalid or unenforceable by any court of
competent jurisdiction, the parties hereto agree that such holding shall not
invalidate or render unenforceable any other provision hereof. The parties
hereto further agree that the holding by any court of competent jurisdiction
that any remedy pursued by any party hereto is unavailable or unenforceable
shall not affect in any way the ability of such party to pursue any other
remedy available to it.
Section 6.04. GOVERNING LAW. This Insurance Agreement
shall be governed by and construed in accordance with the laws
of the State of New York.
Section 6.05. CONSENT TO JURISDICTION. (a) The parties hereto hereby
irrevocably submit to the jurisdiction of the United States District Court for
the Southern District of New York and any court in the State of New York
located in the City and County of New York, and any appellate court from any
thereof, in any action, suit or proceeding brought against it and to or in
connection with any of the Transaction Documents or the transactions
contemplated thereunder or for recognition or enforcement of any judgment, and
the parties hereto hereby irrevocably and unconditionally agree that all claims
in respect of any such action or proceeding may be heard or determined in such
New York state court or, to the extent permitted by law, in such federal court.
The parties hereto agree that a final judgment in any such action, suit or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. To the extent
permitted by applicable law, the parties hereto hereby waive and agree not to
assert by way of motion, as a defense or otherwise in any such suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
such courts, that the suit, action or proceeding is brought in an inconvenient
forum, that the venue of the suit, action or proceeding is improper or that the
related documents or the subject matter thereof may not be litigated in or by
such courts.
(b) To the extent permitted by applicable law, the parties hereto
shall not seek and hereby waive the right to any review of the judgment of any
such court by any court of any other nation or jurisdiction which may be called
upon to grant an enforcement of such judgment.
(c) Nothing contained in this Insurance Agreement shall limit or
affect the Insurer's right to serve process in any other manner permitted by
law or to start legal proceedings relating to any of the Transaction Documents
against the Depositor, the Trustee or the Company or its or their property in
the courts of any jurisdiction.
Section 6.06. CONSENT OF THE INSURER. In the event that the consent of
the Insurer is required under any of the Transaction Documents, the
determination whether to grant or withhold such consent shall be made by the
Insurer in its sole discretion without any implied duty towards any other
Person, except as otherwise expressly provided therein.
Section 6.07. COUNTERPARTS. This Insurance Agreement may
be executed in counterparts by the parties hereto, and all such
counterparts shall constitute one and the same instrument.
Section 6.08. HEADINGS. The headings of Articles and Sections and the
Table of Contents contained in this Insurance Agreement are provided for
convenience only. They form no part of this Insurance Agreement and shall not
affect its construction or interpretation. Unless otherwise indicated, all
references to Articles and Sections in this Insurance Agreement refer to the
corresponding Articles and Sections of this Insurance Agreement.
Section 6.09. TRIAL BY JURY WAIVED. Each party hereto hereby waives,
to the fullest extent permitted by law, any right to a trial by jury in respect
of any litigation arising directly or indirectly out of, under or in connection
with any of the Transaction Documents or any of the transactions contemplated
thereunder. Each party hereto (A) certifies that no representative, agent or
attorney of any party hereto has represented, expressly or otherwise, that it
would not, in the event of litigation, seek to enforce the foregoing waiver and
(B) acknowledges that it has been induced to enter into the Transaction
Documents to which it is a party by, among other things, this waiver.
Section 6.10. LIMITED LIABILITY. No recourse under any Transaction
Document shall be had against, and no personal liability shall attach to, any
officer, employee, director, affiliate or shareholder of any party hereto, as
such, by the enforcement of any assessment or by any legal or equitable
proceeding, by virtue of any statute or otherwise in respect of any of the
Transaction Documents, the Securities or the Policy, it being expressly agreed
and understood that each Transaction Document is solely a corporate obligation
of each party hereto, and that any and all personal liability, either at common
law or in equity, or by statute or constitution, of every such officer,
employee, director, affiliate or shareholder for breaches by any party hereto
of any obligations under any Transaction Document is hereby expressly waived as
a condition of and in consideration for the execution and delivery of this
Insurance Agreement.
Section 6.11. ENTIRE AGREEMENT. This Insurance Agreement and the
Policy set forth the entire agreement between the parties with respect to the
subject matter thereof, and this Insurance Agreement supersedes and replaces
any agreement or understanding that may have existed between the parties prior
to the date hereof in respect of such subject matter.
<PAGE>
[REMAINDER OF PAGE INTENTIONALLY BLANK;
SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have executed this
Insurance Agreement, all as of the day and year first above mentioned.
MBIA INSURANCE CORPORATION
By _______________________________
Title ____________________________
BEAR STEARNS MORTGAGE SECURITIES
INC., as Depositor
By _______________________________
Title ____________________________
FIRST TRUST NATIONAL ASSOCIATION,
as Trustee
By _______________________________
Title ____________________________
BEAR STEARNS MORTGAGE CAPITAL
CORPORATION, as Company
By ______________________________
Title ___________________________
<PAGE>
SCHEDULE A
POOLED CERTIFICATES
CLASS % IN
FULL NAME OF SERIES (1) TRUST
POOLED PO CERTIFICATES
Residential Funding Mortgage Securities I, Inc., 100%
Mortgage Pass-Through Certificates, Series 1993-
S40, Class A-11 ("RFC 1993-S40")
Residential Funding Mortgage Securities I, Inc., 100%
Mortgage Pass-Through Certificates, Series 1994-S1,
Class A-20 ("RFC 1994-S1")
Residential Funding Mortgage Securities I, Inc., 100%
Mortgage Pass-Through Certificates, Series 1994-
S13, Class A-5 ("RFC 1994-S13")
Residential Funding Mortgage Securities I, Inc., 100%
Mortgage Pass-Through Certificates, Series 1994-S7,
Class A-14 ("RFC 1994-S7")
Residential Funding Mortgage Securities I, Inc., 100%
Mortgage Pass-Through Certificates, Series 1993-
S45, Class A-17 ("RFC 1993-S45")
Residential Funding Mortgage Securities I, Inc., 100%
Mortgage Pass-Through Certificates, Series 1993-
S39, Class A-15(2) ("RFC 1993-S39")
Residential Funding Mortgage Securities I, Inc., 100%
Mortgage Pass-Through Certificates, Series 1993-
S31, Class A-8 ("RFC 1993-S31")
Bear Stearns Mortgage Securities Inc., Mortgage 100%
Pass-Through Certificates, Series 1993-10,
Class P(3) ("BSMSI 1993-10")
Chase Mortgage Finance Corporation, Multi-Class 53.46%
Mortgage Pass-Through Certificates, Series 1993P,
Class A-P ("Chase 1993P")
- -----------------
(1) Unless otherwise specified in a footnote to this Schedule A, the
entire series was issued in physical certificate form.
(2) $677.85 original principal balance is in physical certificate form
and $5,017,000.00 original principal balance is in book entry form.
(3) $744.43 original principal balance is in physical certificate form
and $1,002,000.00 original principal balance is in book entry form.
<PAGE>
CMC Securities Corporation III, Collateralized 100%
Mortgage Obligations, Series 1994-E,
Class E-APO(4)("CMC III 1994-E")
PaineWebber Mortgage Acceptance Corporation IV, 100%
Mortgage Pass-Through Certificates, Series 1994-7,
Class A-8 ("PMAC IV 1994-7")
Sears Mortgage Securities Corporation, Mortgage 100%
Pass-Through Certificates, Series 1993-9,
Class P ("SMSC 1993-9")
Chase Mortgage Finance Corporation, Multi-Class 100%
Mortgage Pass-Through Certificates, Series 1993N,
Class A-P ("Chase 1993N")
POOLED IO CERTIFICATES
The Prudential Home Mortgage Securities Company, 100%
Inc., Mortgage Pass-Through Certificates, Series
1993-50, Class A-14(5)("PHMSC 1993-50")
The Prudential Home Mortgage Securities Company, 11.40%
Inc., Mortgage Pass-Through Certificates, Series
1993-51, Class A-21(6) ("PHMSC 1993-51")
- ------------------
(4) $1,199,144.00 original principal amount is in book entry form, there is no
physical certificate for this series.
(5) The notional amount for this series was $353,481,228.32 and the annual
pass-through rate was 0.501035% for the period from March 1 to March 30,
1996.
(6) The notional amount for this series was $60,665,655.00 and the annual
pass-through rate was 0.548999% for the period from March 1 to March 30,
1996.
<PAGE>
<TABLE>
<CAPTION>
RATINGS(7)
SERIES CURRENT PRINCIPAL BALANCE S&P M F D&P
<S> <C> <C> <C> <C> <C>
RFC 1993-S40 $4,374,978.27 AAA - AAA -
RFC 1994-S1 $5,027,818.91 AAA - AAA -
RFC 1994-S13 $2,197,791.62 AAA - AAA -
RFC 1994-S7 $ 410,414.58 AAA - AAA -
RFC 1993-S45 $2,560,131.23 AAA - AAA -
RFC 1993-S39 $4,612,876.68 AAA - AAA -
RFC 1993-S31 $1,377,317.85 - Aaa AAA -
BSMSI 1993-10 $ 904,484.30 - Aaa AAA -
CHASE 1993P $1,291,002.05 - Aaa AAA -
CMC III 1994-E $1,109,561.90 AAA - - AAA
PMAC IV 1994-7 $1,031,734.66 AAA - - AAA
SMSC 1993-9 $3,220,696.41 - Aaa AAA -
CHASE 1993N $1,804,364.66 - Aaa AAA -
PHMSC 1993-50 $ 1,000.00 - Aaa AAA -
PHMSC 1993-51 $ 100.00 - Aaa AAA -
- ---------------
f7) Key: S&P = Standard & Poor's Investor Services, a
division of The McGraw Hill Companies, Inc.
M = Moody's Investor Service, Inc.
F = Fitch Investors Service, L.P.
D&P = Duff & Phelps Inc.
</TABLE>
