SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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)
JUNE 28, 1996
Bear Stearns Mortgage Securities Inc. (as Seller under a Pooling and Servicing
Agreement dated as of June 1, 1996 providing for the issuance of Mortgage
Pass-Through Certificates, Series 1996-3)
BEAR STEARNS MORTGAGE SECURITIES INC.
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(Exact name of registrant as specified in charter)
DELAWARE 33-44658 13-3633241
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(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
incorporation) No.)
245 PARK AVENUE, NEW YORK, NEW YORK 10167
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 272-2000
NOT APPLICABLE
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(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 Underwriting Agreement dated as of June 25, 1996 between
the Registrant and Bear, Stearns & Co. Inc.
1.2 Terms Agreement dated as of June 25, 1996 among the
Registrant, Bear, Stearns & Co. Inc. and Morgan Stanley &
Co. Incorporated
4.1 Pooling and Servicing Agreement dated as of June 1,
1996 among the Registrant, ICI Funding Corporation,
and Bankers Trust Company of California, N.A..
<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.
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(Registrant)
Date: July 11, 1996 By: /s/ Joseph T. Jurkowski, Jr.
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Name: Joseph T. Jurkowski, Jr.
Title: Vice President
<PAGE>
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
1.1 Underwriting Agreement dated as of June 25, 1996 between
the Registrant and Bear, Stearns & Co. Inc.
1.2 Terms Agreement dated as of June 25, 1996 between the
Registrant, Bear, Stearns & Co. Inc. and Morgan Stanley & Co.
Incorporated.
4.1 Pooling and Servicing Agreement dated as of June 1, 1996
among the Registrant, ICI Funding Corporation and Bankers
Trust Company of California, N.A.
Exhibit 1.1
BEAR STEARNS MORTGAGE SECURITIES INC.
MORTGAGE PASS-THROUGH CERTIFICATES
UNDERWRITING AGREEMENT
June 25, 1996
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Dear Sirs:
1. Introduction. Bear Stearns Mortgage Securities Inc., a Delaware
corporation (the "Company"), from time to time proposes to issue and sell
Mortgage Pass-Through Certificates ("Certificates") in various series (each a
"Series"), and, within each Series, in various classes, in one or more offerings
on terms determined at the time of sale. The Certificates of each series will be
issued pursuant to a pooling and servicing agreement (each, a "Pooling and
Servicing Agreement") among the Company, as depositor, one or more master
servicers which may include the Company and a third-party trustee (the
"Trustee"). Upon issuance, the Certificates of each series will evidence
undivided interests in the Trust Fund (as defined in the Pooling and Servicing
Agreement) established for such series containing mortgages or, in the event the
Trust Fund, or a portion thereof, constitutes the upper tier of a two-tier real
estate mortgage investment conduit ("REMIC"), the Trust Fund may contain
interests issued by a lower tier trust which will contain mortgages, all as
described in the Prospectus (as defined below). Terms not defined herein which
are defined in the Pooling and Servicing Agreement shall have the meanings
ascribed to them in the Pooling and Servicing Agreement.
Whenever the Company determines to make an offering of a Series of
Certificates (an "Offering") through you or an underwriting syndicate managed or
co-managed by you, it will offer to enter into an agreement ("Terms Agreement")
providing for the sale of such Certificates to, and the purchase and offering
thereof by, you and such other co-managers and underwriters, if any, which have
been selected by you and have authorized you to enter into such Terms Agreement
and other related documentation on their behalf (the "Underwriters," which term
shall include you whether acting alone in the sale of Certificates or as a
co-manager or as a member of an underwriting syndicate). The Terms Agreement
relating to each Offering shall specify the principal amount of Certificates to
be issued and their terms not otherwise specified in the Pooling and Servicing
Agreement, the price at which the Certificates are to be purchased by each of
the Underwriters from the Company and the initial public offering price or the
method by which the price at which the Certificates are to be sold will be
determined. The Terms Agreement, which shall be substantially in the form of
Exhibit A hereto, may take the form of an exchange of any standard form of
written telecommunication between you and the Company. Each Offering governed by
this Agreement, as supplemented by the applicable Terms Agreement, shall inure
to the benefit of and be binding upon the Company and each of the Underwriters
participating in the Offering of such Certificates.
The Company hereby agrees with the Underwriters as follows:
2. Representations and Warranties of the Company. The Company
represents and warrants to you as of the date hereof, and to the Underwriters
named in the applicable Terms Agreement as of the date of such Terms Agreement,
as follows:
(a) A registration statement, including a prospectus, and such
amendments thereto as may have been required to the date hereof, relating to the
Certificates and the offering thereof from time to time in accordance with Rule
415 under the Securities Act of 1933, as amended ("Act"), have been filed with
the Securities and Exchange Commission ("Commission") and such registration
statement as amended has become effective. Such registration statement as
amended and the prospectus relating to the sale of Certificates constituting a
part thereof as from time to time amended or supplemented (including any
prospectus filed with the Commission pursuant to Rule 424 of the rules and
regulations of the Commission ("Rules and Regulations") under the Act, including
any documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the Act which were filed under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") on or before the Effective Date of the Registration
Statement or the date of the Prospectus Supplement, are respectively referred to
herein as the "Registration Statement" and the "Prospectus"; provided, however,
that a supplement to the Prospectus (a "Prospectus Supplement") prepared
pursuant to Section 5(a) hereof shall be deemed to have supplemented the
Prospectus only with respect to the Offering of the Series of Certificates to
which it relates. The conditions of Rule 415 under the Act have been satisfied
with respect to the Company and the Registration Statement.
(b) On the effective date of the Registration Statement, the
Registration Statement and the Prospectus conformed in all material respects to
the requirements of the Act and the Rules and Regulations, and did not include
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading, and on the date of each Terms Agreement, the Registration Statement
and the Prospectus will conform in all material respects to the requirements of
the Act and the Rules and Regulations, and the Prospectus will not include any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading; provided,
however, that the foregoing does not apply to (i) statements or omissions in
such documents based upon written information furnished to the Company by any
Underwriter specifically for use therein or (ii) any Current Report (as defined
in Section 5(b) below) or in any amendment thereof or supplement thereto,
incorporated by reference in such Registration Statement or such Prospectus (or
any amendment thereof or supplement thereto).
(c) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus except as otherwise stated therein,
(A) there has been no material adverse change in the condition, financial or
otherwise, earnings, affairs, regulatory situation or business prospects of the
Company whether or not arising in the ordinary course of business and (B) there
have been no transactions entered into by the Company which are material, other
than those in the ordinary course of business.
(d) This Agreement has been, and the Pooling and Servicing Agreement,
when executed and delivered as contemplated hereby and thereby will have been,
duly executed and delivered by the Company and each constitutes, or will
constitute when so executed and delivered, a legal, valid and binding instrument
enforceable against the Company in accordance with its terms, subject, as to the
enforceability of remedies, to applicable bankruptcy, reorganization,
insolvency, moratorium and other laws affecting the rights of creditors
generally, and to general principles of equity and the discretion of the court
(regardless of whether enforceability of such remedies is considered in a
proceeding in equity or at law).
(e) At the applicable Closing Date, each applicable Terms Agreement
will have been duly authorized, executed and delivered by the Company and will
be a legal, valid and binding obligation of the Company enforceable in
accordance with its terms, subject to the effect of bankruptcy, insolvency,
moratorium, fraudulent conveyance and other laws affecting the rights of
creditors generally, and to general principles of equity and the discretion of
the court (regardless of whether enforceability of such remedies is considered
in a proceeding in equity or at law).
(f) The issuance of the Certificates has been duly authorized by the
Company and, when such Certificates are executed and authenticated in accordance
with the Pooling and Servicing Agreement and delivered against payment pursuant
to this Agreement, such Certificates will be validly issued and outstanding; and
the Certificates will be entitled to the benefits provided by the Pooling and
Servicing Agreement. The Certificates are in all material respects in the form
contemplated by the Pooling and Servicing Agreement.
(g) Neither the Company nor the Trust Fund is or, as a result of the
offer and sale of the Certificates as contemplated in this Agreement will
become, an "investment company" as defined in the Investment Company Act of
1940, as amended (the "Investment Company Act"), or an "affiliated person" of
any such "investment company" that is registered or is required to be registered
under the Investment Company Act (or an "affiliated person" of any such
"affiliated person"), as such terms are defined in the Investment Company Act.
(h) The representations and warranties made by the Company in the
Pooling and Servicing Agreement and made in any Officer's Certificate of the
Company delivered pursuant to the Pooling and Servicing Agreement will be true
and correct at the time made and on the Closing Date.
3. Purchase, Sale and Delivery of Certificates. Delivery of and
payment for the Certificates shall be made at your office or at such other
location as you shall make known at such time as shall be specified in the
applicable Terms Agreement, each such time being herein referred to as a
"Closing Date." Delivery of the Certificates shall be made by the Company to the
Underwriters against payment of the purchase price specified in the applicable
Terms Agreement in Federal Funds by wire or check. Unless delivery is made
through the facilities of the Depository Trust Company, the Certificates so to
be delivered will be in definitive, fully registered form, in such denominations
and registered in such names as you request, and will be made available for
inspection and packaging at your office at least twenty-four hours prior to the
applicable Closing Date.
4. Offering by Underwriters. It is understood that the Underwriters
propose to offer the Certificates for sale to the public as set forth in the
Prospectus.
5. Covenants of the Company. The Company covenants and agrees with you
and the several Underwriters participating in the Offering of any Series of
Certificates that:
(a) In connection with the execution of each Terms Agreement, the
Company will prepare a Prospectus Supplement to be filed under the Act setting
forth the principal amount of Certificates covered thereby and their terms not
otherwise specified in the Prospectus, the price at which the Certificates are
to be purchased by the Underwriters from the Company, either the initial public
offering price or the method by which the price at which the Certificates are to
be sold will be determined, the selling concession and reallowance, if any, any
delayed delivery arrangements, and such other information as you and the Company
deem appropriate in connection with the offering of the Certificates, but the
Company will not file any amendments to the Registration Statement or any
amendments or supplements to the Prospectus, unless it shall first have
delivered copies of such amendments or supplements to you, and you shall not
have objected thereto promptly after receipt thereof. The Company will advise
you or your counsel promptly (i) when notice is received from the Commission
that any post-effective amendment to the Registration Statement has become or
will become effective, and (ii) of any order or communication suspending or
preventing, or threatening to suspend or prevent, the offer and sale of the
Certificates, or of any proceedings or examinations that may lead to such an
order or communication, whether by or of the Commission or any authority
administering any state securities or Blue Sky law, as soon as the Company is
advised thereof, and will use its best efforts to prevent the issuance of any
such order or communication and to obtain as soon as possible its lifting, if
issued.
(b) The Company will cause any Computational Materials and any
Structural Term Sheets (each as defined in Section 8 below) with respect to each
Series of Certificates that are delivered by the Underwriters to the Company
pursuant to Section 8 to be filed with the Commission on a Current Report on
Form 8-K (a "Current Report") pursuant to Rule 13a-11 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") on the business day
immediately following the day on which such Computational Materials and
Structural Term Sheets are delivered to counsel for the Company by any of the
Underwriters prior to 10:30 a.m. (and will use its best efforts to cause such
Computational Materials and Structural Term Sheets to be so filed prior to 2:00
p.m., New York time, on such business day), and will promptly advise you when
such Current Report has been so filed. The Company will cause one Collateral
Term Sheet (as defined in Section 9 below) with respect to an Offering of a
Series that is delivered by any of the Underwriters to the Company in accordance
with the provisions of Section 9 to be filed with the Commission on a Current
Report pursuant to Rule 13a-11 under the Exchange Act on the business day
immediately following the day on which such Collateral Term Sheet is delivered
to counsel for the Company by any of the Underwriters prior to 10:30 a.m. In
addition, if at any time prior to the availability of the related Prospectus
Supplement, any of the Underwriters has delivered to any prospective investor a
subsequent Collateral Term Sheet that reflects, in the reasonable judgment of
such Underwriter and the Company, a material change in the characteristics of
the Mortgage Loans for the related Series from those on which a Collateral Term
Sheet with respect to the related Series previously filed with the Commission
was based, the Company will cause any such Collateral Term Sheet that is
delivered by such Underwriter to the Company in accordance with the provisions
of Section 9 to be filed with the Commission on a Current Report on the business
day immediately following the day on which such Collateral Term Sheet is
delivered to counsel for the Company by such Underwriter prior to 2:00 p.m. In
each case, the Company will promptly advise you when such Current Report has
been so filed. Notwithstanding the four preceding sentences, the Company shall
have no obligation to file any materials provided by any of the Underwriters
pursuant to Sections 8 and 9 which (i) in the reasonable determination of the
Company are not required to be filed pursuant to the Kidder Letters or the PSA
Letter (each as defined in Section 8 below), or (ii) contain erroneous
information or contain any untrue statement of a material fact or, when read in
conjunction with the Prospectus and Prospectus Supplement, omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; it being understood, however, that the Company shall
have no obligation to review or pass upon the accuracy or adequacy of, or to
correct, any Computational Materials or ABS Term Sheets (as defined in Section 9
below) provided by such Underwriter to the Company pursuant to Section 8 or
Section 9 hereof. The Company shall give notice to you and such Underwriter of
its determination not to file any materials pursuant to clause (i) of the
preceding sentence and agrees to file such materials if such Underwriter or you
reasonably object to such determination within one business day after receipt of
such notice.
(c) If at any time when a prospectus relating to the Certificates is
required to be delivered under the Act any event occurs as a result of which the
Prospectus as then amended or supplemented would include an untrue statement of
a material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if it is necessary at any time to amend the Prospectus
to comply with the Act, the Company promptly will prepare and file with the
Commission an amendment or supplement which will correct such statement or
omission or an amendment which will effect such compliance; provided, however,
that the Company will not be required to file any such amendment or supplement
with respect to any Computational Materials, Structural Term Sheets or
Collateral Term Sheets incorporated by reference in the Prospectus other than
any amendments or supplements of such Computational Materials or Structural Term
Sheets that are furnished to the Company by the Underwriter pursuant to Section
8(e) hereof or any amendments or supplements of such Collateral Term Sheets that
are furnished to the Company by the Underwriter pursuant to Section 9(d) hereof
which are required to be filed in accordance therewith.
(d) With respect to each Series of Certificates, the Company will make
generally available to the holders of the Certificates and will deliver to you,
in each case as soon as practicable, an earnings statement covering the
twelve-month period beginning after the date of the Terms Agreement in respect
of such series of Certificates, which will satisfy the provisions of Section
11(a) of the Act with respect to the Certificates.
(e) The Company will furnish to you copies of the Registration
Statement (two of which will be signed and will include all documents and
exhibits thereto or incorporated by reference therein), each related preliminary
prospectus, the Prospectus, and all amendments and supplements to such
documents, in each case as soon as available and in such quantities as you
request.
(f) The Company will arrange for the qualification of the Certificates
for sale and the determination of their eligibility for investment under the
laws of such jurisdictions as you reasonably designate and will continue such
qualifications in effect so long as reasonably required for the distribution;
provided, however, that the Company shall not be required to qualify to do
business in any jurisdiction where it is not qualified on the date of the
related Terms Agreement or to take any action which would subject it to general
or unlimited service of process in any jurisdiction in which it is not, on the
date of the related Terms Agreement, subject to such service of process.
(g) The Company will pay all expenses incidental to the performance of
its obligations under this Agreement and any Terms Agreement and will reimburse
the Underwriters for any expenses (including fees and disbursements of counsel
and accountants) incurred by them in connection with qualification of the
Certificates and determination of their eligibility for investment under the
laws of such jurisdictions as you designate and the printing of memoranda
relating thereto, for any fees charged by the nationally recognized statistical
rating agencies for the rating of the Certificates, for the filing fee of the
National Association of Securities Dealers, Inc. relating to the Certificates,
if applicable, and for expenses incurred in distributing preliminary
prospectuses to the Underwriters.
(h) During the period when a prospectus is required by law to be
delivered in connection with the sale of the Certificates pursuant to this
Agreement, the Company will file or cause to be filed, on a timely and complete
basis, all documents that are required to be filed by the Company with the
Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.
(i) So long as the Certificates of a Series shall be outstanding, the
Company will deliver to you the annual statement of compliance delivered to the
Trustee pursuant to the Pooling and Servicing Agreement and the annual statement
of a firm of independent public accountants furnished to the Trustee pursuant to
the Pooling and Servicing Agreement as soon as such statements are furnished to
the Trustee.
6. Conditions to the Obligations of the Underwriters. The obligations
of the Underwriters named in any Terms Agreement to purchase and pay for the
Certificates will be subject to the accuracy of the representations and
warranties on the part of the Company as of the date hereof, the date of the
applicable Terms Agreement and the applicable Closing Date, to the accuracy of
the statements made in any officers' certificates (each an "Officer's
Certificate") pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder and to the following additional conditions
precedent:
(a)(i) At the time the applicable Terms Agreement is executed,
Deloitte & Touche and/or any other firm of certified independent public
accountants acceptable to you shall have furnished to you a letter, addressed to
you, and in form and substance satisfactory to you in all respects, stating in
effect that using the assumptions and methodology used by the Company, all of
which shall be described in such letter or the Prospectus Supplement, they have
recalculated such numbers, percentages and weighted average lives set forth in
the Prospectus as you may reasonably request, compared the results of their
calculations to the corresponding items in the Prospectus, and found each such
number, percentage, and weighted average life set forth in the Prospectus to be
in agreement with the results of such calculations. To the extent historical
financial delinquency or related information is included with respect to one or
more master servicers, such letter or letters shall also relate to such
information.
(a)(ii) At the Closing Date, Deloitte & Touche and/or any other firm
of certified independent public accountants acceptable to you shall have
furnished to you a letter, addressed to you, and in form and substance
satisfactory to you in all respects, relating to the extent such information is
not covered in the letter or letters provided pursuant to clause (a)(i), to a
portion of the information set forth on the Mortgage Loan Schedule attached to
the Pooling and Servicing Agreement and the characteristics of the mortgage
loans, as presented in the Prospectus Supplement or the Form 8-K relating
thereto, or if a letter relating to the same information is provided to the
Trustee, indicating that you are entitled to rely upon its letter to the
Trustee.
(b) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, there shall not have
been any change, or any development involving a prospective change, in or
affecting the business or properties of the Company or any of its affiliates the
effect of which, in any case, is, in your judgment, so material and adverse as
to make it impracticable or inadvisable to proceed with the Offering or the
delivery of the Certificates as contemplated by the Registration Statement and
the Prospectus. All actions required to be taken and all filings required to be
made by the Company under the Act and the Exchange Act prior to the sale of the
Certificates shall have been duly taken or made; and prior to the applicable
Closing Date, no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall have
been instituted, or to the knowledge of the Company or you, shall be
contemplated by the Commission or by any authority administering any state
securities or Blue Sky law.
(c) Unless otherwise specified in any applicable Terms Agreement for a
Series, the Certificates shall be rated in one of the four highest grades by one
or more nationally recognized statistical rating agencies specified in said
Terms Agreement.
(d) You shall have received the opinion of counsel for the Company,
dated the applicable Closing Date, to the effect that:
(i) The Company has been duly organized and is validly existing
as a corporation in good standing under the laws of the State of Delaware, with
corporate power and authority to own its assets and conduct its business as
described in the Prospectus, and the Company is duly qualified as a foreign
corporation to transact business and is in good standing under the laws of the
State of New York. The Company has no subsidiaries.
(ii) Each of this Agreement and the applicable Terms Agreement
have been duly authorized, executed and delivered by the Company and assuming
due and valid authorization and execution by the other parties thereto,
constitutes the legal, valid and binding obligation of the Company enforceable
in accordance with its terms, subject to the effect of bankruptcy, insolvency,
moratorium, fraudulent conveyance and other similar laws relating to or
affecting creditors' rights generally and court decisions with respect thereto
and to the application of equitable principles in any proceeding, whether at law
or in equity. Such counsel's opinion may be qualified, in the case of the
indemnity provisions in this Agreement, to applicable law or judicial policy.
(iii) The Pooling and Servicing Agreement has been duly and
validly authorized, executed and delivered by the Company and assuming due and
valid authorization and execution by the other parties thereto, constitutes the
valid and binding agreement of the Company, enforceable in accordance with its
terms, subject to the effect of bankruptcy, insolvency, moratorium, fraudulent
conveyance and other similar laws relating to or affecting creditors' rights
generally and court decisions with respect thereto and to the application of
equitable principles in any proceeding, whether at law or in equity.
(iv) The Certificates are in a form authorized by the Pooling and
Servicing Agreement, have been duly and validly authorized by all necessary
corporate action and, when executed and authenticated as specified in the
Pooling and Servicing Agreement and delivered against payment pursuant to this
Agreement and the related Terms Agreement, will be validly issued and
outstanding; and the Certificates will be entitled to the benefits of the
Pooling and Servicing Agreement.
(v) The Registration Statement has become effective under the
Act, and, to the best of such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been instituted or are pending or contemplated under the
Act, and the Registration Statement and the Prospectus, and each amendment or
supplement thereto, as of their respective effective or issue dates, complied as
to form in all material respects with the requirements of the Act and the Rules
and Regulations thereunder; such counsel has no reason to believe that either
the Registration Statement as of its effective date contained any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary in order to make the statements therein not
misleading, or the Prospectus as of the date of any Terms Agreement contained
any untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading (it being understood that such counsel need express no opinion as to
the financial statements or other financial data or notes thereto or any
statistical or tabular data contained or incorporated by reference in the
Registration Statement or the Prospectus).
(vi) The statements in the Prospectus and Prospectus Supplement
under the heading "Certain Federal Income Tax Consequences," to the extent that
they constitute matters of law or legal conclusions, have been prepared or
reviewed by such counsel and provide a fair summary of such law or conclusions;
the statements in the Prospectus to the extent modified by the statements in the
Prospectus Supplement under the headings "Summary of Terms," "Description of the
Certificates" and "The Pooling and Servicing Agreement" and such other headings
as you may request, insofar as such statements constitute a summary of the
proposed transaction and of the provisions of the Certificates or the Pooling
and Servicing Agreement, constitute a fair and accurate summary of such
transaction and provisions.
(vii) Neither the Company nor the Trust Fund is, or as a result
of the offer and sale of the Certificates as contemplated in the Prospectus and
in this Agreement will become, an "investment company" as defined in the
Investment Company Act, or an "affiliated person" of any such "investment
company" that is registered or is required to be registered under the Investment
Company Act (or an "affiliated person" of any such "affiliated person"), as such
terms are defined in the Investment Company Act.
(viii) The Certificates offered pursuant to the Registration
Statement and indicated as such in the Prospectus Supplement will be mortgage
related securities, as defined in Section 3(a)(41) of the Exchange Act, so long
as such Certificates are rated in one of the two highest grades by at least one
nationally recognized statistical rating agency.
(ix) The Pooling and Servicing Agreement is not required to be
qualified under the Trust Indenture Act of 1939, as amended.
Each opinion also shall relate to such other matters as may be
specified in the related Terms Agreement or as to which you reasonably may
request. In rendering any such opinion, counsel for the Company may rely on
certificates of responsible officers of the Company, the Trustee, and public
officials or, as to matters of law other than New York or Federal law, on
opinions of other counsel (copies of which opinions shall be delivered to you),
provided that, in cases of opinions of other counsel, counsel for the Company
shall include in its opinion a statement of its belief that both it and you are
justified in relying on such opinions.
(e) You shall have received from counsel for the Company a letter,
dated as of the Closing Date, stating that you may rely on the opinions
delivered by such firm under the Pooling and Servicing Agreement and to the
rating agency or agencies rating the Certificates as if such opinions were
addressed directly to you (copies of which opinions shall be delivered to you).
(f) You shall have received from counsel for the Underwriters, if such
counsel is different from counsel to the Company, such opinion or opinions,
dated as of the Closing Date, with respect to the validity of the Certificates,
the Registration Statement, the Prospectus and other related matters as the
Underwriters may require, and the Company shall have furnished to such counsel
such documents as they may have requested from it for the purpose of enabling
them to pass upon such matters.
(g) You shall have received Officer's Certificates signed by such of
the principal executive, financial and accounting officers of the Company as you
may request, dated as of the Closing Date, in which such officers, to the best
of their knowledge after reasonable investigation, shall state that the
representations and warranties of the Company in this Agreement are true and
correct; that the Company has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied at or prior to the Closing
Date; that no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are contemplated; that, subsequent to the respective dates as of
which information is given in the Prospectus, and except as set forth or
contemplated in the Prospectus, there has not been any material adverse change
in the general affairs, business, key personnel, capitalization, financial
condition or results of operations of the Company; that except as otherwise
stated in the Prospectus, there are no material actions, suits or proceedings
pending before any court or governmental agency, authority or body or, to their
knowledge, threatened, affecting the Company or the transactions contemplated by
this Agreement; and that attached thereto are true and correct copies of a
letter or letters from the one or more nationally recognized statistical rating
agencies specified in the applicable Terms Agreement confirming that, unless
otherwise specified in said Terms Agreement, the Certificates have been rated in
one of the four highest grades by each of such agencies and that such rating has
not been lowered since the date of such letter.
The Company will furnish you with such conformed copies of such
opinions, certificates, letters and documents as you reasonably request.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects with respect to a particular Offering
when and as provided in this Agreement and the related Terms Agreement, or if
any of the opinions and certificates mentioned above or elsewhere in this
Agreement and the related Terms Agreement shall not be in all material respects
reasonably satisfactory in form and substance to you, this Agreement (with
respect to the related Offering) and the related Terms Agreement and all
obligations of the Underwriters hereunder (with respect to the related Offering)
and thereunder may be canceled at, or at any time prior to, the related Closing
Date by the Underwriter. Notice of such cancellation shall be given to the
Company in writing, or by telephone or telegraph confirmed in writing.
7. Indemnification.
(a) The Company agrees to indemnify and hold harmless each Underwriter
and each person, if any, who controls any Underwriter within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act against any and all
losses, claims, damages, liabilities and expenses whatsoever (including but not
limited to attorneys' fees and any and all expenses whatsoever incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever, and any and all amounts paid in settlement
of any claim or litigation), joint or several, to which they or any of them may
become subject under the Act, the Exchange Act, or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement relating to the applicable
Series of Certificates (the "Applicable Registration Statement") as it became
effective or in any amendment or supplement thereof, or in the Applicable
Registration Statement or the related Prospectus, or in any amendment thereof,
or arise out of or are based upon the omission or alleged omission (in the case
of any Computational Materials or ABS Term Sheets in respect of which the
Company agrees to indemnify the Underwriters, as set forth below, when such are
read in conjunction with the related Prospectus and Prospectus Supplement) to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading; provided, however, that (i) the Company
will not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon any such untrue statement or
alleged untrue statement or omission or alleged omission made therein (A) in
reliance upon and in conformity with written information furnished to the
Company as herein stated by or on behalf of the Underwriters specifically for
use in connection with the preparation thereof or (B) in any Current Report or
any amendment or supplement thereof, except to the extent that any untrue
statement or alleged untrue statement therein or omission therefrom results (or
is alleged to have resulted) directly from an error (a "Mortgage Pool Error") in
the information concerning the characteristics of the Mortgage Loans furnished
by the Company to the Underwriters in writing or by electronic transmission that
was used in the preparation of either (x) any Computational Materials or ABS
Term Sheets (or amendments or supplements thereof) included in such Current
Report (or amendment or supplement thereof) or (y) any written or electronic
materials furnished to prospective investors on which the Computational
Materials (or amendments or supplements) were based, (ii) such indemnity with
respect to any Corrected Statement (as defined below) in such Prospectus (or
Prospectus Supplement thereto) shall not inure to the benefit of the
Underwriters (or any person controlling any Underwriter) from whom the person
asserting any loss, claim, damage or liability purchased the Certificates of the
related Series that are the subject thereof if such person did not receive a
copy of a Prospectus Supplement to such Prospectus at or prior to the
confirmation of the sale of such Certificates and the untrue statement or
omission of a material fact contained in such Prospectus (or Prospectus
Supplement thereto) was corrected (a "Corrected Statement") in such other
supplement and such supplement was furnished by the Company to the Underwriters
prior to the delivery of such confirmation, and (iii) such indemnity with
respect to any Mortgage Pool Error shall not inure to the benefit of the
Underwriters (or any person controlling any Underwriter) from whom the person
asserting any loss, claim, damage or liability received any Computational
Materials (or any written or electronic materials on which the Computational
Materials are based) or ABS Term Sheets that were prepared on the basis of such
Mortgage Pool Error, if, prior to the time of confirmation of the sale of the
applicable Series of Certificates to such person, the Company notified the
Underwriters in writing of the Mortgage Pool Error or provided in written or
electronic form information superseding or correcting such Mortgage Pool Error
(in any such case, a "Corrected Mortgage Pool Error"), and the Underwriters
failed to notify such person thereof or to deliver to such person corrected
Computational Materials (or underlying written or electronic materials) or ABS
Term Sheets. This indemnity agreement will be in addition to any liability which
the Company may otherwise have.
(b) The Underwriters severally, and not jointly, agree to indemnify
and hold harmless the Company, each of the directors of the Company, each of the
officers of the Company who shall have signed the Applicable Registration
Statement, and each other person, if any, who controls the Company within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, against
any losses, claims, damages, liabilities and expenses whatsoever (including but
not limited to attorneys' fees and any and all expenses whatsoever incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever, and any and all amounts paid in settlement
of any claim or litigation), joint or several, to which they or any of them may
become subject under the Act, the Exchange Act or otherwise, insofar as such
losses, liabilities, claims, damages or expenses (or actions in respect thereof)
arise out of or are based upon (A) any untrue statement or alleged untrue
statement of a material fact contained in the Applicable Registration Statement,
as originally filed or any amendment thereof, or any related preliminary
prospectus or the Prospectus, or in any amendment thereof or supplement thereto,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that any such loss, claim, damage, liability or expense arises out of or
is based upon any such untrue statement or alleged untrue statement or omission
or alleged omission made therein in reliance upon and in conformity with written
information furnished to the Company, by or on behalf of such Underwriter
expressly for use therein; or (B) any Computational Materials or ABS Term Sheets
(or amendments or supplements thereof) furnished to the Company by such
Underwriter pursuant to Section 8 and incorporated by reference in such
Registration Statement or the related Prospectus, Prospectus Supplement or any
amendment or supplement thereof (except that no such indemnity shall be
available for any losses, claims, damages or liabilities, or actions in respect
thereof resulting from any Mortgage Pool Error, other than a Corrected Mortgage
Pool Error). This indemnity will be in addition to any liability which the
Underwriters may otherwise have. The Company acknowledges that, unless otherwise
set forth in the applicable Terms Agreement, the statements set forth in the
last paragraph of the cover page and under the caption "Method of Distribution"
and the stabilization legend required by Item 502(d)(1) under Regulation S-K of
the Act included in the Prospectus Supplement relating to a Series of
Certificates constitute the only information furnished in writing by or on
behalf of any Underwriter expressly for use in the Applicable Registration
Statement or the Prospectus or in any amendment thereof or supplement thereto,
as the case may be (other than any Computational Materials or ABS Term Sheets
(or amendments or supplements thereof) furnished to the Company by such
Underwriter), and each Underwriter confirms, on its behalf, that such statements
are correct.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify each party against whom indemnification is
to be sought in writing of the commencement thereof (but the failure so to
notify an indemnifying party shall not relieve it from any liability which it
may have under this Section 7 except to the extent that it has been prejudiced
in any material respect by such failure or from any liability which it may have
otherwise). In case any such action is brought against any indemnified party,
and it notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein, and to the extent
that it may elect by written notice delivered to the indemnified party promptly
after receiving the aforesaid notice from such indemnified party, to assume the
defense thereof, with counsel satisfactory to such indemnified party.
Notwithstanding the foregoing, the indemnified party or parties shall have the
right to employ its or their own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of such indemnified party or
parties unless (i) the employment of such counsel shall have been authorized in
writing by one of the indemnifying parties in connection with the defense of
such action, (ii) the indemnifying parties shall not have employed counsel to
have charge of the defense of such action within a reasonable time after notice
of commencement of the action, or (iii) such indemnified party or parties shall
have reasonably concluded that there may be defenses available to it or them
which are different from or additional to those available to one or all of the
indemnifying parties (in which case the indemnifying parties shall not have the
right to direct the defense of such action on behalf of the indemnified party or
parties), in any of which events such fees and expenses shall be borne by the
indemnifying parties. Anything in this subsection to the contrary
notwithstanding, an indemnifying party shall not be liable for any settlement of
any claim or action effected without its written consent; provided, however,
that such consent was not unreasonably withheld.
(d) In order to provide for contribution in circumstances in which the
indemnification provided for in Section 7 hereof is for any reason held to be
unavailable, on grounds of public policy or otherwise, from the Company or the
Underwriters or is insufficient to hold harmless a party indemnified thereunder,
the Company and the Underwriters shall contribute to the aggregate losses,
claims, damages, liabilities and expenses of the nature contemplated by such
indemnification provision (including any investigation, legal and other expenses
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claims asserted, but after deducting in the case of
losses, claims, damages, liabilities and expenses suffered by the Company any
contribution received by the Company from persons, other than the Underwriters,
who may also be liable for contribution, including persons who control the
Company within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, officers of the Company who signed the Applicable Registration
Statement and directors of the Company) to which the Company and the
Underwriters may be subject (i) in the case of any losses, claims, damages and
liabilities (or actions in respect thereof) which do not arise out of or are not
based upon any untrue statement or omission of a material fact in any
Computational Materials or ABS Term Sheets (or any amendments or supplements
thereof), in such proportions as is appropriate to reflect the relative benefits
received by the Company on one hand and the Underwriters on the other from the
Offering of the Certificates as to which such loss, liability, claim, damage or
expense is claimed to arise or, if such allocation is not permitted by
applicable law or indemnification is not available as a result of the
indemnifying party not having received notice as provided in Section 7(c)
hereof, in such proportion as is appropriate to reflect not only the relative
benefits referred to above but also the relative fault of the Company on one
hand and the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations or (ii) in the
case of any losses, claims, damages and liabilities (or actions in respect
thereof) which arise out of or are based upon any untrue statement or omission
of a material fact in any Computational Materials or ABS Term Sheets (or any
amendments or supplements thereof) or in any written or electronic materials
distributed to prospective investors on which the Computational Materials are
based, in such proportion as is appropriate to reflect the relative fault of the
Company on the one hand and the Underwriter that furnished such Computational
Materials or ABS Term Sheets on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities (or
actions in respect thereof) as well as any other relevant equitable
considerations; provided, however, that in no case shall such Underwriter be
responsible under this subparagraph (ii) for any amount in excess of the
aggregate Purchase Price for the Offered Certificates.
The relative benefits received by the Company on one hand and the
Underwriters on the other shall be deemed to be in the same proportion as (x)
the total proceeds from the Offering (net of underwriting discounts and
commissions but before deducting expenses) received by the Company and (y) the
underwriting discounts and commissions received by the Underwriters,
respectively, in each case as set forth in the Terms Agreement in respect of the
Offering of the Certificates as to which such loss, liability, claim, damage or
expense is claimed to arise. The relative fault of the Company on one hand and
the Underwriters on the other shall be determined by reference to, among other
things, (A) in the case of clause (i) of the preceding paragraph, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
on one hand or the Underwriters on the other, (B) in the case of clause (ii) of
the preceding paragraph, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to any untrue statement or omission of a material fact in any
Computational Materials or ABS Term Sheets (or any amendments or supplements
thereof) or in any written or electronic materials distributed by the applicable
Underwriter to prospective investors on which the Computational Materials are
based, and (C) in the case of either clause (i) or clause (ii) of the preceding
paragraph, the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
the Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 7(d) were determined by pro rata allocation or by any
other method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this Section
7(d), (x) except as otherwise provided in Section 7(d)(ii), in no case shall the
Underwriters be liable or responsible for any amount in excess of the
underwriting discount set forth in the Terms Agreement relating to the
Certificates as to which such losses, claims, damages, liabilities or expenses
are claimed to arise, and (y) no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 7(d), each person, if any, who
controls any Underwriter within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act shall have the same rights to contribution as such
Underwriter, and each person, if any, who controls the Company within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, each
officer of the Company who shall have signed the Applicable Registration
Statement and each director of the Company shall have the same rights to
contribution as the Company, subject in each case to clauses (i) and (ii) of
this Section 7(d). Any party entitled to contribution will, promptly after
receipt of notice of commencement of any action, suit or proceeding against such
party in respect of which a claim for contribution may be made against another
party or parties under this Section 7(d), notify such party or parties from whom
contribution may be sought, but the omission to so notify such party or parties
shall not relieve the party or parties from whom contribution may be sought from
any obligation it or they may have under this Section 7(d) or otherwise. No
party shall be liable for contribution with respect to any action or claim
settled without its consent; provided, however, that such consent was not
unreasonably withheld.
8. Computational Materials and Structural Term Sheets. (a) Not later
than 2:00 p.m., New York time, on the business day before the date on which the
Current Report relating to the Certificates of a Series is required to be filed
by the Company with the Commission pursuant to Section 5(b) hereof, you and any
other applicable Underwriter shall deliver to the Company, and unless otherwise
agreed to by the Company, in a form reasonably convertible to an EDGAR filing
format, a copy of all materials provided by the Underwriters to prospective
investors in such Certificates which constitute (i) "Computational Materials,
within the meaning of the no-action letter dated May 20, 1994 issued by the
Division of Corporation Finance of the Commission to Kidder, Peabody Acceptance
Corporation I, Kidder, Peabody & Co. Incorporated, and Kidder Structured Asset
Corporation and the no-action letter dated May 27, 1994 issued by the Division
of Corporation Finance of the Commission to the Public Securities Association
(together, the "Kidder Letters") and the filing of such material is a condition
of the relief granted in such letter (such materials being the "Computational
Materials"), and (ii) "Structural Term Sheets" within the meaning of the
no-action letter dated February 17, 1995 issued by the Division of Corporation
Finance of the Commission to the Public Securities Association (the "PSA
Letter") and the filing of such material is a condition of the relief granted in
such letter (such materials being the "Structural Term Sheets"). Each delivery
of Computational Materials and Structural Term Sheets to the Company by you and
any other applicable Underwriter pursuant to this paragraph (a) shall be
effected by delivering a copy of such materials to counsel for the Company on
behalf of the Company at the address specified by the Company and one copy of
such materials to the Company.
(b) You and each other Underwriter, by virtue of its having executed
and delivered the related Terms Agreement, which shall incorporate this Section
8(b) by reference, represents and warrants to and agrees with the Company, as of
the date of the related Terms Agreement and as of the Closing Date, that:
(i) the Computational Materials furnished to the Company pursuant
to Section 8(a) constitute (either in original, aggregated or
consolidated form) all of the materials furnished to prospective
investors by such Underwriter prior to the time of delivery thereof to
the Company that are required to be filed with the Commission with
respect to the Offering of the Certificates in accordance with the
Kidder Letters, and such Computational Materials comply with the
requirements of the Kidder Letters;
(ii) the Structural Term Sheets furnished to the Company pursuant
to Section 8(a) constitute all of the materials furnished to
prospective investors by such Underwriter prior to the time of
delivery thereof to the Company that are required to be filed with the
Commission as "Structural Term Sheets" with respect to the related
Offering of the Certificates in accordance with the PSA Letter, and
such Structural Term Sheets comply with the requirements of the PSA
Letter;
(iii) on the date any such Computational Materials or Structural
Term Sheets with respect to the Offering of the Certificates (or any
written or electronic materials furnished to prospective investors on
which the Computational Materials are based) were last furnished to
each prospective investor and on the date of delivery thereof to the
Company pursuant to Section 8(a) and on the related Closing Date, such
Computational Materials (or such other materials) or Structural Term
Sheets did not and will not include any untrue statement of a material
fact or, when read in conjunction with the related Prospectus and
Prospectus Supplement, omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading; and
(iv) all Computational Materials (or underlying materials
distributed to prospective investors on which the Computational
Materials were based) or Structural Term Sheets furnished to
prospective investors contained and will contain a legend, prominently
displayed on the first page thereof, to the effect that the Company
has not prepared, reviewed or participated in the preparation of such
materials and is not responsible for the accuracy thereof.
Notwithstanding the foregoing, you and each such Underwriter make no
representation or warranty as to whether any Computational Materials or
Structural Term Sheets (or any written or electronic materials on which the
Computational Materials are based) included or will include any untrue statement
resulting directly from any Mortgage Pool Error (except any Corrected Mortgage
Pool Error, with respect to materials prepared after the receipt by the
Underwriters from the Company of notice of such Corrected Mortgage Pool Error or
materials superseding or correcting such Corrected Mortgage Pool Error).
(c) Each Underwriter delivering Computational Materials shall cause a
firm of public accountants to furnish to the Company a letter, dated as of the
date on which such Underwriter delivers any Computational Materials (which term
shall be deemed to include, for purposes of this paragraph (c), calculated
statistical information delivered to prospective investors in the form of a
Structural Term Sheet) to the Company pursuant to Section 8(a), in form and
substance satisfactory to the Company, stating in effect that they have verified
the mathematical accuracy of any calculations performed by such Underwriter and
set forth in such Computational Materials.
(d) The Underwriters acknowledge and agree that the Company has not
authorized and will not authorize the distribution of any Computational
Materials (or any written or electronic materials on which the Computational
Materials are based) or Structural Term Sheets to any particular prospective
investor, and agrees that any Computational Materials or Structural Term Sheets
with respect to any Series of Certificates furnished to prospective investors
shall include a disclaimer in the form described in paragraph (b) (iv) above.
The Underwriters agree that they will not represent to prospective investors
that any Computational Materials or Structural Term Sheets were prepared or
disseminated on behalf of the Company.
(e) If, at any time when a prospectus relating to the Certificates of
a Series is required to be delivered under the Act, it shall be necessary to
amend or supplement the related Prospectus or Prospectus Supplement as a result
of an untrue statement of a material fact contained in any Computational
Materials or Structural Term Sheets provided by an Underwriter pursuant to this
Section 8 or the omission to state therein a material fact required, when
considered in conjunction with the related Prospectus and Prospectus Supplement,
to be stated therein or necessary to make the statements therein, when read in
conjunction with the related Prospectus and Prospectus Supplement, not
misleading, or if it shall be necessary to amend or supplement any Current
Report relating to any Computational Materials or Structural Term Sheets to
comply with the Act or the rules thereunder, such Underwriter promptly will
prepare and furnish to the Company for filing with the Commission an amendment
or supplement which will correct such statement or omission or an amendment
which will effect such compliance. Such Underwriter will deliver an Officer's
Certificate to the Company representing and warranting to the Company that, as
of the date of delivery of such amendment or supplement to the Company, such
amendment or supplement will not include any untrue statement of a material fact
or, when read in conjunction with the related Prospectus and Prospectus
Supplement, omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however, that
such Underwriter will make no representation or warranty as to whether any such
amendment or supplement will include any untrue statement resulting directly
from any Mortgage Pool Error (except any Corrected Mortgage Pool Error, with
respect to any such amendment or supplement prepared after the receipt by such
Underwriter from the Company of notice of such Corrected Mortgage Pool Error or
materials superseding or correcting such Corrected Mortgage Pool Error). The
Company shall have no obligation to file such amendment or supplement if (i) the
Company determines that such amendment or supplement contains any untrue
statement of a material fact or, when read in conjunction with the related
Prospectus and Prospectus Supplement, omits to state a material fact required to
be stated therein or necessary to make the statements therein not misleading; it
being understood, however, that the Company shall have no obligation to review
or pass upon the accuracy or adequacy of, or to correct, any such amendment or
supplement provided by such Underwriter to the Company pursuant to this
paragraph (e) or (ii) the Company reasonably determines that such filing is not
required under the Act and such Underwriter does not object as provided below.
The Company shall give notice to such Underwriter of its determination not to
file an amendment or supplement pursuant to clause (ii) of the preceding
sentence and agrees to file such amendment or supplement if such Underwriter
reasonably objects to such determination within one business day after receipt
of such notice.
9. Collateral Term Sheets. (a) Prior to the delivery of any
"Collateral Term Sheet" within the meaning of the PSA Letter, the filing of
which material is a condition of the relief granted in such letter (such
material being the "Collateral Term Sheets"), to a prospective investor in the
Certificates, the applicable Underwriter shall notify the Company and its
counsel by telephone of its intention to deliver such materials and the
approximate date on which the first such delivery of such materials is expected
to occur. Not later than 10:30 a.m., New York time, on the business day
immediately following the date on which any Collateral Term Sheet was first
delivered to a prospective investor in the Certificates of an offered series,
such applicable Underwriter shall deliver to the Company, and unless otherwise
agreed to by the Company, in a form reasonably convertible to an EDGAR format, a
complete copy of all materials provided by such Underwriter to prospective
investors in such Certificates which constitute "Collateral Term Sheets." Each
delivery of a Collateral Term Sheet to the Company pursuant to this paragraph
(a) shall be effected by delivering a copy of such materials to counsel for the
Company on behalf of the Company at the address specified by the Company and one
copy of such materials to the Company. (Collateral Term Sheets and Structural
Term Sheets are, together, referred to herein as "ABS Term Sheets.") At the time
of each such delivery, such Underwriter shall indicate in writing that the
materials being delivered constitute Collateral Term Sheets, and, if there has
been any prior such delivery with respect to the related Series, shall indicate
whether such materials differ in any material respect from any Collateral Term
Sheets previously delivered to the Company with respect to such Series pursuant
to this Section 9(a) as a result of the occurrence of a material change in the
characteristics of the related Mortgage Loans.
(b) You and each other Underwriter, by virtue of its having executed
and delivered the related Terms Agreement, which shall incorporate this Section
9(b) by reference, represents and warrants to and agrees with the Company as of
the date of the related Terms Agreement and as of the Closing Date, that:
(i) The Collateral Term Sheets furnished to the Company pursuant
to Section 9(a) constitute all of the materials furnished to
prospective investors by such Underwriter prior to time of delivery
thereof to the Company that are required to be filed with the
Commission as "Collateral Term Sheets" with respect to the related
Offering of the Certificates in accordance with the PSA Letter, and
such Collateral Term Sheets comply with the requirements of the PSA
Letter;
(ii) On the date any such Collateral Term Sheets with respect to
the Offering of the Certificates were last furnished to each
prospective investor and on the date of delivery thereof to the
Company pursuant to Section 9(a) and on the related Closing Date, such
Collateral Term Sheets did not and will not include any untrue
statement of a material fact or, when read in conjunction with the
Prospectus and Prospectus Supplement, omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading; and
(iii) such Underwriter has not represented to any prospective
investor that any Collateral Term Sheets with respect to any Series
were prepared or disseminated on behalf of the Company, and, except as
otherwise disclosed by such Underwriter to the Company in writing
prior to the date hereof, all Collateral Term Sheets previously
furnished to prospective investors included a disclaimer to the effect
set forth in Section 8(b)(iv).
Notwithstanding the foregoing, you and each such Underwriter make no
representation or warranty as to whether any Collateral Term Sheet included or
will include any untrue statement or material omission resulting directly from
any Mortgage Pool Error (except any Corrected Mortgage Pool Error, with respect
to materials prepared after the receipt by such Underwriter from the Company of
notice of such Corrected Mortgage Pool Error or materials superseding or
correcting such Corrected Mortgage Pool Error).
(c) Each Underwriter delivering Collateral Term Sheets acknowledges
and agrees that any Collateral Term Sheets with respect to any Series of
Certificates furnished to prospective investors from and after the date hereof
shall include a disclaimer to the effect set forth in Section 8(d) hereof, and
to the effect that the information contained in such materials supersedes the
information contained in any prior Collateral Term Sheet with respect to such
Series of Certificates being offered and will be superseded by the description
of the related Mortgage Loans in the related Prospectus Supplement. The
Underwriters agree that they will not represent to any prospective investors
that any Collateral Term Sheets were prepared or disseminated on behalf of the
Company.
(d) If, at any time when a prospectus relating to the Certificates of
a Series is required to be delivered under the Act, it shall be necessary to
amend or supplement the related Prospectus as a result of an untrue statement of
a material fact contained in any Collateral Term Sheets provided by an
Underwriter pursuant to this Section 9 or the omission to state therein a
material fact required, when considered in conjunction with the related
Prospectus and Prospectus Supplement, to be stated therein or necessary to make
the statements therein, when read in conjunction with the related Prospectus and
Prospectus Supplement, not misleading, or if it shall be necessary to amend or
supplement any Current Report relating to any Collateral Term Sheets to comply
with the Act or the rules thereunder, such Underwriter promptly will prepare and
furnish to the Company for filing with the Commission an amendment or supplement
which will correct such statement or omission or an amendment which will effect
such compliance. Such Underwriter will deliver an Officer's Certificate to the
Company representing and warranting to the Company that, as of the date of
delivery of such amendment or supplement to the Company, such amendment or
supplement will not include any untrue statement of a material fact or, when
read in conjunction with the related Prospectus and Prospectus Supplement, omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, such Underwriter will make
no representation or warranty as to whether any such amendment or supplement
will include any untrue statement resulting directly from any Mortgage Pool
Error (except any Corrected Mortgage Pool Error, with respect to any such
amendment or supplement prepared after the receipt by such Underwriter from the
Company of notice of such Corrected Mortgage Pool Error or materials superseding
or correcting such Corrected Mortgage Pool Error). The Company shall have no
obligation to file such amendment or supplement if the Company determines that
(i) such amendment or supplement contains any untrue statement of a material
fact or, when read in conjunction with the related Prospectus and Prospectus
Supplement, omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; it being understood,
however, that the Company shall have no obligation to review or pass upon the
accuracy or adequacy of, or to correct, any such amendment or supplement
provided by such Underwriter to the Company pursuant to this paragraph (d) or
(ii) such filing is not required under the Act. The Company shall give notice to
such Underwriter of its determination not to file an amendment or supplement
pursuant to clause (ii) of the preceding sentence.
10. Default of Underwriters. If any Underwriter or Underwriters
participating in an Offering of Certificates default in their obligations to
purchase Certificates hereunder and under the Terms Agreement and the aggregate
purchase price of Certificates which such defaulting Underwriter or Underwriters
agreed but failed to purchase does not exceed 10% of the aggregate purchase
price of the Certificates then being purchased, you may make arrangements
satisfactory to the Company for the purchase of such Certificates by other
persons, including any of the Underwriters, but if no such arrangements are made
by the Closing Date the non-defaulting Underwriters shall be obligated
severally, in proportion to their respective total commitments as set forth in
the applicable Terms Agreement (for all classes of Certificates), to purchase
the Certificates which such defaulting Underwriter or Underwriters agreed but
failed to purchase. If any Underwriter or Underwriters so default and the
aggregate purchase price of Certificates with respect to which such default or
defaults occur is more than 10% of the aggregate purchase price of Certificates
then being purchased, and arrangements satisfactory to you and the Company for
the purchase of such Certificates by other persons are not made within 36 hours
after such default, the Terms Agreement as to which such offering relates will
terminate without liability on the part of any non-defaulting Underwriter or the
Company, except as provided in Section 11. As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section. Nothing herein will relieve a defaulting Underwriter from liability for
its default.
11. Survival of Certain Representations and Obligations. The
respective indemnities, agreements, representations, warranties, and other
statements of the Company or its officers and of the several Underwriters set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation, or statement as to the result thereof,
made by or on behalf of any Underwriter or the Company or any of its officers or
directors or any controlling person, and will survive delivery of and payment
for the Certificates and any termination of this Agreement or any Terms
Agreement, including any termination pursuant to Section 10.
12. Termination. You shall have the right to terminate any Terms
Agreement at any time prior to the applicable Closing Date if any domestic or
international event or act or occurrence has materially disrupted, or in your
opinion will in the immediate future materially disrupt, securities markets; or
if trading on the New York or American Stock Exchanges shall have been
suspended, or minimum or maximum prices for trading shall have been fixed, or
maximum ranges for prices for securities shall have been required on the New
York or American Stock Exchanges by the New York or American Stock Exchanges or
by order of the Commission or any other governmental authority having
jurisdiction; or if the United States shall have become involved in a war or
major hostilities; or if a banking moratorium has been declared by a state or
Federal authority, or if a banking moratorium in foreign exchange trading by
major international banks or persons has been declared; or if any new
restriction materially and adversely affecting the distribution of the series of
Certificates as to which such Terms Agreement relates shall have become
effective; or if there shall have been such change in the market for securities
in general or in political, financial or economic conditions as in your judgment
would be so materially adverse as to make it inadvisable to proceed with the
Offering, sale and delivery of the Series of Certificates as to which such Terms
Agreement relates on the terms contemplated in such Terms Agreement. Any notice
of termination pursuant to this Section 12 shall be by telephone, telex, or
telegraph, confirmed in writing by letter.
13. Notices. All communications hereunder will be in writing, and, if
sent to the Underwriters, will be mailed, delivered or telegraphed and confirmed
to you at 245 Park Avenue, New York, New York 10167, Attention: General Counsel
or if sent to the Company, will be mailed, delivered or telegraphed and
confirmed to it at 245 Park Avenue, New York, New York 10167, Attention: Michael
Hellenbrand; provided, however, that any notice to an Underwriter pursuant to
Section 7 will be mailed, delivered or telegraphed to such Underwriter at the
address furnished by it.
14. Successors. This Agreement and the Terms Agreement will inure to
the benefit of and be binding upon the parties hereto and thereto, and their
respective successors and the officers and directors and controlling persons
referred to in Section 7, and no other person will have any right or obligation
hereunder or thereunder.
15. Representation of Underwriters. You will act for the several
Underwriters in connection with each Offering of Certificates governed by this
Agreement, and any action under this Agreement and any Terms Agreement taken by
you will be binding upon all the Underwriters identified in such Terms
Agreement.
16. Construction. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York, without giving
effect to principles of conflict of laws.
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed duplicate hereof, whereupon
it will become a binding agreement among the Company and the several
Underwriters in accordance with its terms.
Very truly yours,
BEAR STEARNS MORTGAGE SECURITIES INC.
By: Name:/s/ Joseph T. Jurkowski, Jr.
----------------------------
Vice President
The foregoing Underwriting Agreement
hereby is confirmed and accepted as of
the date first above written.
BEAR, STEARNS & CO. INC.
By: /s/ Richard Landau
Senior Managing Director
<PAGE>
BEAR STEARNS MORTGAGE SECURITIES INC.
Mortgage Pass-Through Certificates
FORM OF TERMS AGREEMENT
Dated:___________, 199_
To: BEAR STEARNS [AND _______________]
Re: Underwriting Agreement dated June , l996
Series Designation: Series 19___ - ___
Class Designation Schedule:
Terms of the Certificates:
Original
Principal Interest Price to
Class Amount Rate Public(1)(2)
- ----- --------- -------- ------------
- ----------------------------
(1) Do not include if the Certificates will be offered from time to time by the
Underwriter in negotiated transactions at varying prices to be determined at the
time of sale.
(2) Plus accrued interest, if any, at the applicable rate from
__________________.
Distribution Dates: The __th day of each month or, if such __th day is not a
business day, the next succeeding business day commencing ____________.
Certificate Rating:
Mortgage Assets: The initial amounts to be included in any Reserve Account and
other accounts are as set forth, and the Mortgage Loans to be included in the
Trust Fund are as described, in Annex A hereto.
Purchase Price: The aggregate purchase price payable by the Underwriter for the
Certificates covered by this Agreement will be $________________. [Purchase
price may also be separately stated by class.]
Credit Enhancement:
[Include pool policies, letters of credit, bonds, subordination and similar
arrangements.]
Closing Date: ___________, 19__, _____ a.m., N.Y. Time
The undersigned, 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 respective principal amounts of
the Classes of the above-referenced Series of Certificates set forth [herein]
[on Schedule I attached hereto].
BEAR, STEARNS & CO. INC.
By: _________________________
Senior Managing Director
[ADDITIONAL UNDERWRITERS]
By: __________________________
__________________________
Title:
Accepted:
BEAR STEARNS MORTGAGE SECURITIES INC.
By: __________________________
<PAGE>
<TABLE>
<CAPTION>
Schedule I (for multiple underwriters)
Underwriters
Name Class Class Class Class Class
<S> <C> <C> <C> <C> <C>
Bear, Stearns $ $ $ $ $
& Co. Inc.
[Other
Underwriters]
----- ----- ----- ----- -----
Total ===== ===== ===== ===== =====
</TABLE>
<PAGE>
Exhibit 1.2
BEAR STEARNS MORTGAGE SECURITIES INC.
Mortgage Pass-Through Certificates
TERMS AGREEMENT
Dated: as of June 25, 1996
To: BEAR STEARNS MORTGAGE SECURITIES INC.
Re: Underwriting Agreement dated June 25, 1996
Underwriters: Bear, Stearns & Co. Inc. and Morgan Stanley & Co.
Incorporated
Series Designation: Series 1996-3
Class Designation Schedule of the Certificates: Class A-1, A-2, A-3, A-4, A-5,
A-6, A-7, A-8, A-9, A-10, A-11, X, PO, B-1, B-2, B-3, B-4, B-5, B-6, R-1 and R-2
Terms of the Certificates to be Purchased by the Underwriters:
<TABLE>
<CAPTION>
Original Amount pur- Amount pur-
Principal Interest chases by chased by
Class Amount Rate Bear Stearns Morgan Stanley
<S> <C> <C> <C> <C>
A-1 $45,532,000 6.82% $22,766,000 $22,766,000
A-2 $28,467,000 7.24% $14,233,500 $14,233,500
A-3 $24,371,000 7.39% $12,185,500 $12,185,500
A-4 $18,604,000 7.55% $ 9,302,000 $9,302,000
A-5 $17,089,000 7.75% $ 8,544,500 $8,544,500
A-6 $ 6,502,000 7.75% $ 3,251,000 $3,251,000
A-7 $12,175,000 7.75% $ 6,087,500 $6,087,500
A-8 $17,149,000 7.75% $ 8,574,500 $8,574,500
A-9 $ 9,256,000 7.75% $ 4,628,000 $4,628,000
A-10 $16,000,346 7.75% $ 8,000,173 $8,000,173
A-11 $ 2,500,000 7.75% $ 1,250,000 $1,250,000
PO $ 165,495 (1) $ 82,973 $ 82,973
B-1 $ 7,608,134 7.75% $ 7,608,134 $ -
B-2 $ 4,890,943 7.75% $ 4,890,943 $ -
B-3 $ 2,717,190 7.75% $ 2,717,190 $ -
R-1 $ 100 7.75% $ 100 $ -
R-2 $ 100 7.75% $ 100 $ -
<FN>
(1) The Class PO Certificates will be principal only Certificates.
</FN>
</TABLE>
The Certificates purchased by each Underwriter will be offered from time to time
by such Underwriter is negotiated transactions at varying prices to be
determined at the time of sale.
Form of Certificates Being Purchased by the Underwriters: Book Entry except for
the Class R-1 and Class R-2 Certificates which will be in certificated, fully
registered form.
Distribution Dates: The 25th day of each month or, if such 25th day is not a
business day, the next succeeding business day commencing in July, 1996.
Certificate Rating for the Certificates Being Purchased by the Underwriters:
Class Rating
S&P Fitch
A-1................................... AAA AAA
A-2................................... AAA AAA
A-3................................... AAA AAA
A-4................................... AAA AAA
A-5................................... AAA AAA
A-6................................... AAA AAA
A-7................................... AAA AAA
A-8................................... AAA AAA
A-9................................... AAA AAA
A-10.................................. AAA AAA
A-11.................................. AAA AAA
PO.................................... AAAr AAA
B-1................................... N/A AA
B-2................................... N/A A
B-3................................... N/A BBB
R-1................................... AAA AAA
R-2................................... AAA AAA
Mortgage Assets: The Mortgage Loans to be included in the Trust Fund are as
described in Annex A hereto.
Purchase Price: The aggregate purchase price payable by the Underwriters for the
Certificates covered by this Agreement will be $209,893,344.86 (plus
$1,185,241.32 in accrued interest).
Credit Enhancement: None other than the subordination described in the related
Prospectus Supplement.
Closing Date: June 28, 1996, 9:00 a.m., New York time.
[Remainder of Page Intentionally Left Blank]
<PAGE>
The undersigned, each as an 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 respective
principal amounts of the Classes of the above-referenced Series of Certificates
under the column containing such Underwriter's name as set forth herein.
BEAR, STEARNS & CO. INC.
By: /s/ Fred Khedouri
---------------------------
Name: Fred Khedouri
Title: Senior Managing Director
MORGAN STANLEY & CO. INCORPORATED
By: /s/ Sanjeev Khanna
---------------------------
Name: Sanjeev Khanna
Title: Vice President
Accepted:
BEAR STEARNS MORTGAGE SECURITIES INC.
By: /s/ Joseph T. Jurkowski, Jr.
-----------------------------
Name: Joseph T. Jurkowski, Jr.
Title: Vice President
<PAGE>
Annex A
[See Trustee's Certificate]
<PAGE>
Exhibit 4.1
BEAR STEARNS MORTGAGE SECURITIES INC.
SELLER,
ICI FUNDING CORPORATION
MASTER SERVICER
and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
TRUSTEE
---------------------------------
POOLING AND SERVICING AGREEMENT
Dated as of June 1, 1996
--------------------------------
Bear Stearns Mortgage Securities Inc.
Mortgage Pass-Through Certificates
Series 1996-3
<PAGE>
TABLE OF CONTENTS
ARTICLE I
Definitions
PAGE
Definitions....................................................I-1
ARTICLE II
Conveyance of Mortgage Loans;
Original Issuance of Certificates
2.01. Conveyance of Mortgage Loans to Trustee........................II-1
2.02. Acceptance of Mortgage Loans by Trustee........................II-3
2.03. Representations, Warranties and Covenants of the
Master Servicer................................................II-5
2.04. Substitution of Mortgage Loans.................................II-7
2.05. Representations and Warranties of the Trustee..................II-8
2.06. Issuance of Certificates.......................................II-9
2.07. Representations and Warranties Concerning the
Seller.........................................................II-9
ARTICLE III
Administration and Servicing of Mortgage Loans
3.01. Master Servicer to Assure Servicing..........................III-1
3.02. Sub-Servicing Agreements Between Master Servicer
and Sub-Servicers............................................III-2
3.03. Successor Sub-Servicers......................................III-3
3.04. Liability of the Master Servicer.............................III-3
3.05. Assumption or Termination of Sub-Servicing
Agreements by Trustee........................................III-4
3.06. Collection of Mortgage Loan Payments.........................III-4
3.07. Collection of Taxes, Assessments and Similar
Items; Servicing Accounts....................................III-5
3.08. Access to Certain Documentation and Information
Regarding the Mortgage Loans.................................III-6
3.09. Maintenance of Primary Insurance Policies;
Collection Thereunder........................................III-6
3.10. Maintenance of Hazard Insurance and Fidelity
Coverage.....................................................III-7
3.11. Due-on-Sale Clauses; Assumption Agreements...................III-9
3.12. Realization Upon Defaulted Mortgage Loans....................III-10
3.13. Trustee to Cooperate; Release of Mortgage Files..............III-11
3.14. Servicing and Master Servicing Compensation..................III-13
3.15. Annual Statement of Compliance...............................III-13
3.16. Annual Independent Public Accountants' Servicing
Report.......................................................III-14
3.17. REMIC-Related Covenants......................................III-14
3.18. Additional Information.......................................III-14
3.19. Optional Purchase of Defaulted Mortgage Loans................III-15
ARTICLE IV
Accounts
4.01. Protected Accounts.............................................IV-1
4.02. Certificate Account............................................IV-2
4.03. Permitted Withdrawals and Transfers from the
Certificate Account............................................IV-4
4.04. Custody Account................................................IV-7
ARTICLE V
Certificates
5.01. Certificates...................................................V-1
5.02. Registration of Transfer and Exchange of
Certificates...................................................V-6
5.03. Mutilated, Destroyed, Lost or Stolen Certificates..............V-10
5.04. Persons Deemed Owners..........................................V-10
5.05. Transfer Restrictions on Residual Certificates.................V-11
5.06. Restrictions on Transferability of Private
Certificates...................................................V-12
5.07. ERISA Restrictions.............................................V-13
5.08. Rule 144A Information..........................................V-13
ARTICLE VI
Payments to Certificateholders
6.01. Distributions on the Certificates.............................VI-1
6.02. [Reserved]....................................................VI-3
6.03. Allocation of Losses..........................................VI-3
6.04. [Reserved]....................................................VI-5
6.05. Payments......................................................VI-5
6.06. Statements to Certificateholders..............................VI-5
6.07. Reports to the Trustee and the Master Servicer................VI-8
6.08. Monthly Advances..............................................VI-10
6.09. Compensating Interest Payments................................VI-10
6.10. Reports of Foreclosures and Abandonment of
Mortgaged Property............................................VI-10
ARTICLE VII
The Master Servicer
7.01. Liabilities of the Master Servicer............................VII-1
7.02. Merger or Consolidation of the Master Servicer................VII-1
7.03. Indemnification of the Trustee................................VII-1
7.04. Limitation on Liability of the Master Servicer
and Others....................................................VII-2
7.05. Master Servicer Not to Resign.................................VII-3
7.06. [Reserved]....................................................VII-3
7.07. Sale and Assignment of Master Servicing.......................VII-3
ARTICLE VIII
Default
8.01. Events of Default........................................... VIII-1
8.02. Trustee to Act; Appointment of Successor.................... VIII-3
8.03. Notification to Certificateholders.......................... VIII-4
8.04. Waiver of Defaults.......................................... VIII-4
8.05. List of Certificateholders.................................. VIII-4
ARTICLE IX
Concerning the Trustee
9.01. Duties of Trustee.............................................IX-1
9.02. Certain Matters Affecting the Trustee.........................IX-2
9.03. Trustee Not Liable for Certificates or Mortgage
Loans.........................................................IX-4
9.04. Trustee May Own Certificates..................................IX-5
9.05. Trustee's Fees and Expenses...................................IX-5
9.06. Eligibility Requirements for Trustee..........................IX-6
9.07. Insurance.....................................................IX-6
9.08. Resignation and Removal of the Trustee........................IX-6
9.09. Successor Trustee.............................................IX-7
9.10. Merger or Consolidation of Trustee............................IX-8
9.11. Appointment of Co-Trustee or Separate Trustee.................IX-8
9.12. Master Servicer Shall Provide Information as
Reasonably Required...........................................IX-9
9.13. Federal Information Returns and Reports to
Certificateholders............................................IX-9
ARTICLE X
Termination
10.01. Termination Upon Repurchase by ICI Funding or its
Designee or Liquidation of All Mortgage Loans................. X-1
10.02. Additional Termination Requirements........................... X-3
ARTICLE XI
Miscellaneous Provisions
11.01. Intent of Parties..............................................XI-1
11.02. Amendment......................................................XI-1
11.03. Recordation of Agreement.......................................XI-2
11.04. Limitation on Rights of Certificateholders.....................XI-2
11.05. Acts of Certificateholders.....................................XI-3
11.06. [Reserved].....................................................XI-4
11.07. Governing Law..................................................XI-4
11.08. Notices........................................................XI-4
11.09. Severability of Provisions.....................................XI-5
11.10. Successors and Assigns.........................................XI-5
11.11. Article and Section Headings...................................XI-5
11.12. Counterparts...................................................XI-5
11.13. Notice to Rating Agencies .....................................XI-5
<PAGE>
EXHIBITS
Exhibit A-1 - Form of Face of Certificates
Exhibit A-2 - Form of Reverse of Certificates
Exhibit B - Mortgage Loan Schedule
Exhibit C - Representations and Warranties of ICI
Funding Concerning the Mortgage Loans
Exhibit D - Form of Request for Release
Exhibit E - Form of Affidavit pursuant to Section 860E(e)(4)
Exhibit F-1 - Form of Investment Letter
Exhibit F-2 - Form of Rule 144A and Related Matters Certificate
Exhibit G - Form of Special Servicing and Collateral Fund
Agreement
Exhibit H - Form of Trustee's Initial Certification
Exhibit I - Form of Trustee's Final Certification
<PAGE>
POOLING AND SERVICING AGREEMENT
Pooling and Servicing Agreement dated as of June 1, 1996, among Bear
Stearns Mortgage Securities Inc., a Delaware corporation, as the seller (the
"Seller"), ICI Funding Corporation, a California corporation ("ICI Funding"), as
master servicer (the "Master Servicer"), and Bankers Trust Company of
California, N.A., a national banking association, as trustee (the "Trustee").
PRELIMINARY STATEMENT
On or prior to the Closing Date, the Seller has acquired the Mortgage
Loans from ICI Funding. On the Closing Date, the Seller will sell the Mortgage
Loans and certain other property to the Trust Fund and receive in consideration
therefor Certificates evidencing the entire beneficial ownership interest in the
Trust Fund. ICI Funding will be the Master Servicer for the Mortgage Loans.
The Trustee shall make an election for the assets constituting REMIC
II to be treated for federal income tax purposes as a REMIC. On June 28, 1996
(the "Startup Day"), all the Classes of REMIC II Regular Certificates will be
designated "regular interests" in such REMIC and the Class R-2 Certificates will
be designated the "residual interest" in such REMIC.
The Trustee shall make an election for the assets constituting REMIC I
to be treated for federal income tax purposes as a REMIC. On the Startup Day,
all the Classes of Certificates except for the Class R-1, Class R-2 and Class X
Certificates will be designated "regular interests" in such REMIC and the Class
R-1 Certificates will be designated the "residual interest" in such REMIC. Each
component of the Class X Certificates as described in Section 5.01 (each, a
"Separate Component") will be designated as a "regular interest" in REMIC I.
The Mortgage Loans will have an Outstanding Principal Balance as of
the Cut-Off Date, after deducting all Scheduled Principal due on or before the
Cut-Off Date, of $217,375,264.75. The initial principal amount of the
Certificates will not exceed such Outstanding Principal Balance.
In consideration of the mutual agreements herein contained, the
Seller, the Master Servicer and the Trustee agree as follows:
<PAGE>
ARTICLE I
Definitions
Whenever used in this Agreement, the following words and phrases,
unless otherwise expressly provided or unless the context otherwise requires,
shall have the meanings specified in this Article.
ACCOUNT: The Custody Account, the Certificate Account, the Protected
Accounts or the Servicing Accounts as the context may require.
ACCRUED CERTIFICATE INTEREST: For any Certificate (other than a Class
PO Certificate) for any Distribution Date, the interest accrued during the
related Interest Accrual Period at the applicable Pass-Through Rate on the
Current Principal Amount (or, in the case of a Class X Certificate, the Notional
Amount) of such Certificate immediately prior to such Distribution Date,
calculated on the basis of a 360-day year consisting of twelve 30-day months,
less (i) in the case of a Senior Certificate, such Certificate's share of any
Net Interest Shortfall and the interest portion of Excess Losses and, after the
Cross-Over Date, the interest portion of any Realized Losses and (ii) in the
case of a Subordinate Certificate, such Certificate's share of any Net Interest
Shortfall and the interest portion of any Realized Losses.
ADVANCING DATE: The fourth Business Day preceding the related
Distribution Date.
AFFILIATE: As to any Person, any other Person controlling, controlled
by or under common control with such Person. "Control" means the power to direct
the management and policies of a Person, directly or indirectly, whether through
ownership of voting securities, by contract or otherwise. "Controlled" and
"Controlling" have meanings correlative to the foregoing. The Trustee may
conclusively presume that a Person is not an Affiliate of another Person unless
a Responsible Officer of the Trustee has actual knowledge to the contrary.
AGREEMENT: This Pooling and Servicing Agreement and all amendments
hereof and supplements hereto.
ALLOCABLE SHARE: With respect to each Class of Subordinate
Certificates:
(a) as to any Distribution Date and amounts distributable
pursuant to clauses (i) and (iii) of the Subordinate Optimal Principal
Amount, the fraction, expressed as a percentage, the numerator of
which is the Current Principal Amount of such Class and the
denominator of which is the aggregate Current Principal Amount of all
Classes of the Subordinate Certificates; and
(b) as to any Distribution Date and amounts distributable
pursuant to clause (ii), (iv) and (v) of the Subordinate Optimal
Principal Amount, and as to each Class of Subordinate Certificates for
which (x) the related Prepayment Distribution Trigger has been
satisfied on such Distribution Date, the fraction, expressed as a
percentage, the numerator of which is the Current Principal Amount of
such Class and the denominator of which is the aggregate Current
Principal Amount of all such Classes and (y) the related Prepayment
Distribution Trigger has not been satisfied on such Distribution Date,
0%; provided that if on a Distribution Date, the Current Principal
Amount of any Class of Subordinate Certificates for which the related
Prepayment Distribution Trigger was satisfied on such Distribution
Date is reduced to zero, any amounts distributed pursuant to this
clause (b), to the extent of such Class's remaining Allocable Share,
shall be distributed to the remaining Classes of Subordinate
Certificates in reduction of their respective Current Principal
Amounts in the order of their numerical Class designations.
ANNIVERSARY DETERMINATION DATE: The Determination Date occurring in
July of each year that the Certificates are outstanding, commencing in July
1997.
APPLICABLE CREDIT RATING: A rating of AAA, in the case of S&P or Fitch
for any long-term deposit or security or a rating of A-1+, in the case of S&P,
or F-1+ in the case of Fitch, for any short-term deposit or security (or AAAm,
in the case of S&P, for any Permitted Investment listed in clause (viii) of the
definition thereof).
APPRAISED VALUE: For any Mortgaged Property, the amount set forth as
the appraised value of such Mortgaged Property in an appraisal made for the
mortgage originator in connection with its origination of the related Mortgage
Loan.
ASSUMED FINAL DISTRIBUTION DATE: With respect to each Class of
Certificates, June 25, 2027.
AVAILABLE FUNDS: With respect to any Distribution Date, an amount
equal to the aggregate of the following amounts with respect to the Mortgage
Loans: (a) all previously undistributed payments on account of principal
(including the principal portion of Scheduled Payments, Principal Prepayments
and the principal portion of Net Liquidation Proceeds) and all previously
undistributed payments on account of interest received after the Cut-Off Date
and on or prior to the related Determination Date, (b) any Monthly Advances
(including Certificate Account Advances) and Compensating Interest Payments by
the Master Servicer with respect to such Distribution Date and (c) any amount
reimbursed by the Master Servicer pursuant to Subsections 4.02(d) and 4.04(d) in
connection with losses on Permitted Investments, except:
(i) all payments that were due on or before the Cut-Off Date;
(ii) all Principal Prepayments and Liquidation Proceeds received
during the month in which such Distribution Date occurs and all
related payments of interest;
(iii) all payments, other than Principal Prepayments, that
represent early receipt of Scheduled Payments due on a date or dates
subsequent to the Due Date in the month in which such Distribution
Date occurs;
(iv) amounts received on particular Mortgage Loans as late
payments of principal or interest and respecting which, and to the
extent that, there are any unreimbursed Monthly Advances (including
Certificate Account Advances);
(v) amounts of Monthly Advances (including Certificate Account
Advances) determined to be Non- recoverable Advances;
(vi) amounts permitted to be withdrawn from the Certificate
Account pursuant to Subsection 4.03(a); and
(vii) amounts withdrawn by the Trustee pursuant to Subsection
4.03(b) to pay the Trustee's Fee.
BANKRUPTCY CODE: The United States Bankruptcy Code, as amended, as
codified in 11 U.S.C. Section Section 101-1330.
BANKRUPTCY COVERAGE TERMINATION DATE: The Distribution Date upon which
the Bankruptcy Loss Amount has been reduced to zero or a negative number (or the
Cross-Over Date, if earlier).
BANKRUPTCY LOSS: With respect to any Mortgage Loan, a Deficient
Valuation or Debt Service Reduction.
BANKRUPTCY LOSS AMOUNT: As of any Determination Date prior to the
first Anniversary Determination Date, the Bankruptcy Loss Amount shall equal
$100,000, as reduced by the aggregate amount of Bankruptcy Losses since the
Cut-off Date. As of any Determination Date after the first Anniversary
Determination Date, other than an Anniversary Determination Date, the Bankruptcy
Loss Amount shall equal the Bankruptcy Loss Amount on the immediately preceding
Anniversary Determination Date as reduced by the aggregate amount of Bankruptcy
Losses since such preceding Anniversary Determination Date. As of any
Anniversary Determination Date, the Bankruptcy Loss Amount shall equal the
lesser of (x) the Bankruptcy Loss Amount as of the preceding Determination Date
as reduced by any Bankruptcy Losses for the preceding Distribution Date, and (y)
the S&P Formula Amount for such Anniversary Determination Date.
The Bankruptcy Loss Amount may be further reduced by ICI Funding
(including accelerating the manner in which such coverage is reduced) provided
that prior to any such reduction, ICI Funding shall obtain written confirmation
from each Rating Agency that such reduction shall not adversely affect the
then-current rating assigned to the related Classes of Certificates by such
Rating Agency and shall provide a copy of such written confirmation to the
Trustee.
BENEFIT PLAN OPINION: The meaning specified in Section 5.07(a) hereof.
BOOK-ENTRY CERTIFICATES: All Classes of Certificates other than the
Class X, Class R-1 and Class R-2 Certificates and, to the extent provided in
Section 5.02, the Class B-4, Class B-5 and Class B-6 Certificates.
BUSINESS DAY: Any day other than (i) a Saturday or a Sunday, or (ii) a
day on which the New York Stock Exchange is closed or on which banking
institutions in New York City or in California are authorized or obligated by
law or executive order to be closed.
CERTIFICATE: Any mortgage pass-through certificate evidencing a
beneficial ownership interest in the Trust Fund signed and countersigned by the
Trustee in substantially the forms annexed hereto as Exhibit A-1 and A-2, with
the blanks therein appropri- ately completed.
CERTIFICATE ACCOUNT: The trust account or accounts created and
maintained pursuant to Section 4.02, which shall be denominated "Bankers Trust
Company of California, N.A., as Trustee f/b/o holders of Bear Stearns Mortgage
Securities Inc. Mortgage Pass-Through Certificates, Series 1996-3 - Certificate
Account."
CERTIFICATE ACCOUNT ADVANCE: As of any Determination Date, the amount
on deposit in a Protected Account or Custody Account which is not required to be
transferred to the Certificate Account for distribution during the calendar
month in which such Determination Date occurs but which is deposited in the
Certificate Account and used to make a distribution to Certificateholders during
such calendar month on account of Scheduled Payments on the Mortgage Loans due
on the Due Date for such month not being paid on or before such Determination
Date except insofar as such unpaid amounts are the result of application of the
Relief Act.
CERTIFICATE OWNER: Any Person who is the beneficial owner of a
Certificate registered in the name of the Depository or its nominee.
CERTIFICATE REGISTER: The register maintained pursuant to Section
5.02.
CERTIFICATEHOLDER: A Holder of a Certificate.
CLASS: With respect to the Certificates, A-1, A-2, A-3, A-4, A-5, A-6,
A-7, A-8, A-9, A-10, A-11, PO, X, B-1, B-2, B-3, B- 4, B-5, B-6, R-1 and R-2.
With respect to the REMIC II Regular Certificates, each such REMIC II Regular
Certificate.
CLASS A-10/A-11 OPTIMAL PRINCIPAL AMOUNT: With respect to any
Distribution Date occurring within the first five years after the Closing Date
(I.E., prior to the Distribution Date in June 2001) zero. The Class A-10/A-11
Optimal Principal Amount for any Distribution Date occurring thereafter will be
as follows: for any Distribution Date during the sixth and seventh years after
the Cut-Off Date, 50% of the Class A-10/A-11 Pro Rata Optimal Principal Amount
for such Distribution Date and, for any Distribution Date thereafter, 100% of
the Class A-10/A-11 Pro Rata Optimal Distribution Amount for such Distribution
Date. Notwithstanding the foregoing, if on any Distribution Date the Current
Principal Amount of each Class of Senior Certificates (other than the Class
A-10, Class A-11 and Class PO Certificates) has been reduced to zero, the Class
A-10/A-11 Optimal Principal Amount shall equal the Senior Optimal Principal
Amount to the extent not distributed on such Distribution Date to the other
Classes of Senior Certificates.
CLASS A-10/A-11 PRO RATA OPTIMAL PRINCIPAL AMOUNT: With respect to any
Distribution Date, an amount equal to the product of (x) the Senior Optimal
Principal Amount for such Distribution Date multiplied by (y) a fraction, the
numerator of which is the sum of the Current Principal Amounts of the Class A-10
and Class A-11 Certificates immediately prior to such Distribution Date and the
denominator of which is the aggregate Current Principal Amounts of all Classes
of Senior Certificates (other than the Class PO Certificates) immediately prior
to such Distribution Date.
CLASS PO CASH SHORTFALL: The difference between the Class PO Principal
Distribution Amount for a Distribution Date and the actual amount distributed to
holders of the Class PO Certificates on such Distribution Date in the instance
where Available Funds are insufficient to make the full amount of distributions
required to be made to holders of the Class PO Certificates.
CLASS PO DEFERRED AMOUNT: With respect to each Distribution Date
through the Cross-Over Date, the aggregate of all amounts allocable on such
Distribution Date to the Class PO Certificates in respect of the principal
portion of Realized Losses (other than Excess Losses) and Class PO Cash
Shortfall and all amounts previously allocated in respect of such losses and
Class PO Cash Shortfall to the Class PO Certificates and not distributed on
prior Distributions Dates.
CLASS PO DEFERRED PAYMENT WRITEDOWN AMOUNT: With respect to any
Distribution Date, the amount if any, distributed on such date in respect of the
Class PO Deferred Amount.
CLASS PO PRINCIPAL DISTRIBUTION AMOUNT: With respect to each
Distribution Date, an amount, without duplication, equal to the sum of:
(i) the applicable PO Percentage of all Scheduled Principal due
on each Discount Mortgage Loan on the first day of the month in which
the Distribution Date occurs, as specified in the amortization
schedule at the time applicable thereto (after adjustment for previous
principal prepayments and the principal portion of Debt Service
Reductions after the Bankruptcy Coverage Termination Date, but before
any adjustment to such amortization schedule by reason of any other
bankruptcy or similar proceeding or any moratorium or similar waiver
or grace period);
(ii) the applicable PO Percentage of the Scheduled Principal
Balance of each Discount Mortgage Loan which was the subject of a
Voluntary Principal Prepayment in full received by the Master Servicer
during the applicable Prepayment Period;
(iii) the applicable PO Percentage of all Voluntary Principal
Prepayments in part received during the applicable Prepayment Period;
(iv) the lesser of (a) the applicable PO Percentage of the sum of
(w) the net liquidation proceeds allocable to principal on each
Discount Mortgage Loan which became a Liquidated Mortgage Loan during
the related Prepayment Period (other than Discount Mortgage Loans
described in clause (x)) and (x) the Scheduled Principal Balance of
each Discount Mortgage Loan that was purchased by a primary mortgage
insurer during the related Prepayment Period as an alternative to
paying a claim under the related insurance policy, and (b) the
applicable PO Percentage of the sum of (w) the Scheduled Principal
Balance of each Discount Mortgage Loan which became a Liquidated
Mortgage Loan during the related Prepayment Period (other than
Discount Mortgage Loans described in clause (x)) and (x) the Scheduled
Principal Balance of each Discount Mortgage Loan that was purchased by
a primary mortgage insurer during the related Prepayment Period as an
alternative to paying a claim under the related Insurance policy less
(y) in the case of clause (b), the applicable PO Percentage of the
principal portion of Excess Losses (other than Debt Service
Reductions) incurred during the related Prepayment Period; and
(v) the applicable PO Percentage of the sum of (a) the Scheduled
Principal Balance of each Discount Mortgage Loan which was repurchased
by the Master Servicer in connection with such Distribution Date and
(b) the difference, if any, between the Scheduled Principal Balance of
a Discount Mortgage Loan that has been replaced by the Master Servicer
with a substitute Discount Mortgage Loan pursuant to the Agreement in
connection with such Distribution Date and the Scheduled Principal
Balance of such substitute Discount Mortgage Loan.
CLOSING DATE: June 28, 1996.
CODE: The Internal Revenue Code of 1986, as amended.
COMPENSATING INTEREST PAYMENTS: As defined in Section 6.09.
CORPORATE TRUST OFFICE: The office of the Trustee at which at any
particular time its corporate trust business is administered, which office, at
the date of the execution of this Agreement, is located at 3 Park Plaza, 16th
Floor, Irvine, California 92714, Attention: Bear Stearns/ICI 1996-3.
CORRESPONDING CLASS: As indicated in Section 5.01(c).
CROSS-OVER DATE: The first Distribution Date on which the aggregate
Current Principal Amount of the Subordinate Certificates has been reduced to
zero (giving effect to all distributions on such Distribution Date).
CURRENT PRINCIPAL AMOUNT: With respect to any Certificate (other than
a Class X Certificate) as of any Distribution Date, the initial principal amount
of such Certificate reduced by (A) the sum of (i) all amounts distributed on
previous Distribution Dates on such Certificate with respect to principal, (ii)
the principal portion of all Realized Losses allocated prior to such
Distribution Date to such Certificate, and (iii) in the case of a Subordinate
Certificate, such Certificate's pro rata share, if any, of the Subordinate
Certificate Writedown Amount and the Class PO Deferred Payment Writedown Amount
for previous Distribution Dates. With respect to any Class of Certificates
(other than the Class X Certificates), the Current Principal Amount thereof will
equal the sum of the Current Principal Amounts of all Certificates in such
Class. Notwithstanding the foregoing, solely for purposes of giving consents,
directions, waivers, approvals, requests and notices, the Class R-1 and Class
R-2 Certificates after the Distribution Date on which they receive the
distribution of the last dollar of their original principal amount shall be
deemed to have a Current Principal Amount equal to their Current Principal
Amount on the day immediately preceding such Distribution Date.
CUSTODY ACCOUNT: A trust account created and maintained pursuant to
Section 4.04.
CUT-OFF DATE: June 1, 1996.
CUT-OFF DATE BALANCE: $217,375,264.75.
DEBT SERVICE REDUCTION: Any reduction of the Scheduled Payments which
a Mortgagor is obligated to pay with respect to a Mortgage Loan as a result of
any proceeding under the Bankruptcy Code or any other similar state law or other
proceeding.
DEBTOR RELIEF LAWS: Any applicable liquidation, conservatorship,
receivership, bankruptcy, insolvency, rearrangement, moratorium, reorganization,
or similar debtor relief laws affecting the rights of creditors generally from
time to time in effect.
DEFAULTED MORTGAGE LOAN: Any Mortgage Loan as to which the Mortgagor
has failed to make unexcused payment in full of three or more consecutive
Scheduled Payments.
DEFICIENT VALUATION: With respect to any Mortgage Loan, a valuation of
the Mortgaged Property by a court of competent jurisdiction in an amount less
than the then outstanding indebtedness under the Mortgage Loan, which valuation
results from a proceeding initiated under the Bankruptcy Code or any other
similar state law or other proceeding.
DEFINITIVE CERTIFICATES: The meaning specified in Subsection 5.01(b)
hereof.
DEPOSITORY: The Depository Trust Company, the nominee of which is Cede
& Co., or any successor thereto.
DEPOSITORY AGREEMENT: The meaning specified in Subsection 5.01(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.
DESIGNATED DEPOSITORY INSTITUTION: A depository institution
(commercial bank, mutual savings bank or savings and loan association) or trust
company (which may include the Trustee), the deposits of which are fully insured
by the FDIC to the extent provided by law.
DETERMINATION DATE: The 18th day of the month of the Distribution
Date, or if such day is not a Business Day, the following Business Day.
DISCOUNT MORTGAGE LOAN: Any Mortgage Loan with a Net Rate less than
7.75% per annum.
DISTRIBUTION DATE: The 25th day of any month, beginning in the month
immediately following the month of the initial issuance of the Certificates, or,
if such 25th day is not a Business Day, the Business Day immediately following.
DTC CUSTODIAN: Bankers Trust Company of California, N.A., or its
successors in interest.
DUE DATE: With respect to each Mortgage Loan, the first day of each
month, on which its Scheduled Payment is due.
DUE PERIOD: With respect to any Distribution Date, the period
commencing on the second day of the month preceding the month in which the
Distribution Date occurs and ending at the close of business on the first day of
the month in which the Distribution Date occurs.
ERISA: Employee Retirement Income Security Act of 1974, as amended.
EVENT OF DEFAULT: An event described in Section 8.01.
EXCESS BANKRUPTCY LOSS: Any Bankruptcy Loss, or portion thereof, (i)
occurring after the Bankruptcy Coverage Termination Date or (ii) if on such
date, in excess of the then-applicable Bankruptcy Loss Amount.
EXCESS FRAUD LOSS: Any Fraud Loss, or portion thereof, (i) occurring
after the Fraud Coverage Termination Date or (ii) if on such date, in excess of
the then-applicable Fraud Loss Amount.
EXCESS LIQUIDATION PROCEEDS: To the extent that such amount is not
required by law to be paid to the related Mortgagor, the amount, if any, by
which Liquidation Proceeds with respect to a Liquidated Mortgage Loan exceed the
sum of (i) the Outstanding Principal Balance of such Mortgage Loan and accrued
but unpaid interest at the related Mortgage Interest Rate through the last day
of the month in which the related Liquidation Date occurs, plus (ii) related
Liquidation Expenses.
EXCESS LOSSES: The sum of any Excess Bankruptcy Losses, Excess Fraud
Losses and Excess Special Fraud Losses.
EXCESS SPECIAL HAZARD LOSS: Any Special Hazard Loss, or portion
thereof, (i) occurring after the Special Hazard Termination Date or (ii) if on
such date, in excess of the then-applicable Special Hazard Loss Amount.
FDIC: Federal Deposit Insurance Corporation or any successor thereto.
FHLMC: Federal Home Loan Mortgage Corporation or any successor
thereto.
FITCH: Fitch Investors Service, L.P. and its successors in interest.
FNMA: Federal National Mortgage Association or any successor thereto.
FRACTIONAL UNDIVIDED INTEREST: With respect to any Class of
Certificates other than the Class X Certificates, the fractional undivided
interest evidenced by any Certificate of such Class, the numerator of which is
the Current Principal Amount of such Certificate and the denominator of which is
the Current Principal Amount of such Class. With respect to the Class X
Certificates, the fractional undivided interest evidenced by any Certificate of
such Class, the numerator of which is the Notional Amount of such Certificate
and the denominator of which is the Notional Amount of such Class. With respect
to the Certificates in the aggregate, the fractional undivided interest
evidenced by (i) a Class X Certificate will be deemed to equal 1% multiplied by
a fraction, the numerator of which is the Notional Amount of such Certificate
and the denominator of which is the Notional Amount of such Class (ii) a Class
R-1 or Class R-2 Certificate will be deemed to equal 1% multiplied by a fraction
the numerator of which is the Current Principal Amount of such Certificate and
the denominator of which is the aggregate Current Principal Amount of such
Classes and (iii) a Certificate of any other Class will be deemed to equal 97%
(plus an additional 1% if and when the Class X Certificates have been paid in
full prior to the date of determination) multiplied by a fraction, the numerator
of which is the Current Principal Amount of such Certificate and the denominator
of which is the Current Principal Amount of all the Certificates.
FRAUD COVERAGE TERMINATION DATE: The Distribution Date upon which the
related Fraud Loss Amount has been reduced to zero or a negative number (or the
Cross-Over Date, if earlier).
FRAUD LOSS: Any Realized Loss attributable to fraud in the origination
of the related Mortgage Loan.
FRAUD LOSS AMOUNT: As of any Distribution Date after the Cut-Off Date,
(x) prior to the first anniversary of the Cut-Off Date, an amount equal to
$4,347,505 minus the aggregate amount of Fraud Losses that would have been
allocated to the Subordinate Certificates in accordance with Section 6.03 in the
absence of the Loss Allocation Limitation since the Cut-Off Date, and (y) from
the first through the fifth anniversary of the Cut-Off Date, an amount equal to
(1) the lesser of (a) the Fraud Loss Amount as of the most recent anniversary of
the Cut-Off Date and (b) 1.00% of the aggregate Outstanding Principal Balance of
all of the Mortgage Loans as of the most recent anniversary of the Cut-Off Date
minus (2) the Fraud Losses that would have been allocated to the Subordinate
Certificates in accordance with Section 6.03 in the absence of the Loss
Allocation Limitation since the most recent anniversary of the Cut-Off Date.
After the fifth anniversary of the Cut-Off Date the Fraud Loss Amount shall be
zero.
FUNDS TRANSFER DATE: The 21st day of the month of the Distribution
Date, or if such day is not a Business Day, the preceding Business Day (but in
no event less than two Business Days prior to the related Distribution Date).
GLOBAL CERTIFICATE: Any Private Certificate registered in the name of
the Depository or its nominee, beneficial interests in which are reflected on
the books on the Depository or on the books of a Person maintaining an account
with such Depository (directly or as an indirect participant in accordance with
the rules of such Depository).
HOLDER: The Person in whose name a Certificate is registered in the
Certificate Register, except that, subject to Subsection 11.05(e), solely for
the purpose of giving any consent pursuant to this Agreement, any Certificate
registered in the name of the Seller, the Master Servicer, a Sub-Servicer or the
Trustee or any Affiliate thereof shall be deemed not to be outstanding and the
Fractional Undivided Interest evidenced thereby shall not be taken into account
in determining whether the requisite percentage of Fractional Undivided
Interests necessary to effect any such consent has been obtained.
ICI FUNDING: ICI Funding Corporation, a California corporation, or its
successors in interest.
INDEMNIFIED PERSONS: The Trustee, its employees and any separate
co-trustee.
INDEPENDENT: When used with respect to any specified Person, this term
means that such Person (a) is in fact independent of the Seller or the Master
Servicer and of any Affiliate of the Seller or the Master Servicer, (b) does not
have any direct financial interest or any material indirect financial interest
in the Seller or the Master Servicer, or any Affiliate of the Seller or the
Master Servicer, and (c) is not connected with the Seller or the Master
Servicer, or any Affiliate as an officer, employee, promoter, underwriter,
trustee, partner, director or person performing similar functions.
INDIVIDUAL CERTIFICATE: Any Private Certificate registered in the name
of the Holder other than the Depository or its nominee.
INSTITUTIONAL ACCREDITED INVESTOR: Any Person meeting the requirements
of Rule 501 (a)(1), (2), (3) or (7) of Regulation D under the Securities Act.
INSURANCE POLICY: With respect to any Mortgage Loan, any Primary
Insurance Policy, standard hazard insurance policy, flood insurance policy or
title insurance policy.
INSURANCE PROCEEDS: Amounts paid by the insurer under any Insurance
Policy covering any Mortgage Loan or Mortgaged Property other than amounts
required to be paid over to the Mortgagor pursuant to law or the related
Mortgage Note or Security Instrument and other than amounts used to repair or
restore the Mortgaged Property or to reimburse Insured Expenses.
INSURED EXPENSES: Expenses covered by any Insurance Policy.
INSURER: Any issuer of an Insurance Policy.
INTEREST ACCRUAL PERIOD: With respect to each Distribution Date, for
each Class of REMIC II Certificates and each Class of Certificates, the calendar
month preceding the month in which the Distribution Date occurs, commencing in
June 1996.
INTEREST SHORTFALL: With respect to any Distribution Date and each
Mortgage Loan that during the related Prepayment Period was the subject of a
Voluntary Principal Prepayment, or constitutes a Relief Act Mortgage Loan, an
amount determined as follows:
(a) partial principal prepayments: one month's interest at the
applicable Net Rate on the amount of such prepayment;
(b) principal prepayments in full: the difference between (i) one
month's interest at the applicable Net Rate on the Scheduled Principal
Balance of such Mortgage Loan immediately prior to such prepayment and
(ii) the amount of interest for the calendar month of such prepayment
(adjusted to the applicable Net Rate) received at the time of such
prepayment;
(c) Relief Act Mortgage Loans: As to any Relief Act Mortgage
Loan, the excess of (i) 30 days' interest (or, in the case of a
principal prepayment in full, interest to the date of prepayment) on
the Scheduled Principal Balance thereof (or, in the case of a
principal prepayment in part, on the amount so prepaid) at the related
Net Rate over (ii) 30 days' interest (or, in the case of a principal
prepayment in full, interest to the date of prepayment) on such
Scheduled Principal Balance (or, in the case of a Principal Prepayment
in part, on the amount so prepaid) at the Net Rate required to be paid
by the Mortgagor as limited by application of the Relief Act.
INVESTMENT LETTER: The letter to be furnished by each Institutional
Accredited Investor which purchases Class B-4, Class B-5 and Class B-6
Certificates in connection with such purchase, substantially in the form set
forth as Exhibit F-1 hereto.
LIQUIDATED MORTGAGE LOAN: Any defaulted Mortgage Loan as to which the
Master Servicer has determined that all amounts it expects to recover from or on
account of such Mortgage Loan have been recovered.
LIQUIDATION DATE: With respect to any Liquidated Mortgage Loan, the
date on which the Master Servicer has certified that such Mortgage Loan has
become a Liquidated Mortgage Loan.
LIQUIDATION EXPENSES: With respect to a Mortgage Loan in liquidation,
unreimbursed expenses paid or incurred by or for the account of the Master
Servicer and not recovered by the Master Servicer under any Primary Insurance
Policy for reasons other than the Master Servicer's failure to ensure the
maintenance of or compliance with a Primary Insurance Policy, such expenses
including (a) property protection expenses, (b) property sales expenses, (c)
foreclosure and sale costs, including court costs and reasonable attorneys'
fees, and (d) similar expenses reasonably paid or incurred in connection with
liquidation.
LIQUIDATION PROCEEDS: Cash received in connection with the liquidation
of a defaulted Mortgage Loan, whether through trustee's sale, foreclosure sale,
Insurance Proceeds, condemnation proceeds or otherwise.
LOAN SUMMARY AND REMITTANCE REPORT: The report to be submitted by the
Master Servicer to the Trustee pursuant to Sub- section 6.07(b).
LOAN-TO-VALUE RATIO: The fraction, expressed as a percentage, the
numerator of which is the original principal balance of the related Mortgage
Loan and the denominator of which is the Original Value of the related Mortgaged
Property.
LOSS ALLOCATION LIMITATION: The meaning specified in Section 6.03(d)
hereof.
MASTER SERVICER: With respect to the Mortgage Loans, ICI Funding, or
its successor in interest, or any successor master servicer with respect to the
Mortgage Loans appointed as herein provided.
MASTER SERVICING FEE: As to any Mortgage Loan and Distribution Date,
an amount equal to the product of (i) the Scheduled Principal Balance of such
Mortgage Loan as of the Due Date in the preceding calendar month and (ii) the
Master Servicing Fee Rate.
MASTER SERVICING FEE RATE: With respect to each Mortgage Loan, the per
annum rate of 0.25%.
MONTHLY ADVANCE: The advance (including a Certificate Account Advance)
required to be made by the Master Servicer on the related Advancing Date
pursuant to Section 6.08.
MORTGAGE FILE: The mortgage documents listed in Section 2.01(b)
pertaining to a particular Mortgage Loan and any additional documents required
to be added to the Mortgage File pursuant to this Agreement.
MORTGAGE INTEREST RATE: The annual rate at which interest accrues from
time to time on any Mortgage Loan pursuant to the related Mortgage Note, which
rate is equal to the "Mortgage Interest Rate" set forth with respect thereto on
the Mortgage Loan Schedule.
MORTGAGE LOAN: A mortgage loan transferred and assigned to the Trustee
pursuant to Section 2.01 or Section 2.04 and held as a part of the Trust Fund,
as identified in the Mortgage Loan Schedule, including a mortgage loan the
property securing which has become an REO Property.
MORTGAGE LOAN SCHEDULE: The schedule, attached hereto as Exhibit B
with respect to the Mortgage Loans and as amended from time to time to reflect
the repurchase or substitution of Mortgage Loans pursuant to this Agreement.
MORTGAGE NOTE: The originally executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under the related
Mortgage Loan.
MORTGAGED PROPERTY: Land and improvements securing the indebtedness of
a Mortgagor under the related Mortgage Loan or, in the case of REO Property,
such REO Property.
MORTGAGOR: The obligor on a Mortgage Note.
NET INTEREST SHORTFALL: With respect to any Distribution Date, the
Interest Shortfall, if any, for such Distribution Date net of Compensating
Interest Payments made with respect to such Distribution Date.
NET LIQUIDATION PROCEEDS: As to any Liquidated Mortgage Loan,
Liquidation Proceeds net of (i) Liquidation Expenses which are payable therefrom
to the Master Servicer in accordance with this Agreement and (ii) unreimbursed
advances by the related Sub-Servicer and Monthly Advances including Certificate
Account Advances.
NET RATE: With respect to each Mortgage Loan, the Mortgage Interest
Rate in effect from time to time less the sum of the Master Servicing Fee Rate
and the Trustee's Fee (expressed as a per annum rate), each such fee being
expressed as a per annum rate.
NON-DISCOUNT MORTGAGE LOAN: Any Mortgage Loan with a Net Rate equal to
or greater than 7.75%.
NON-PO PERCENTAGE: (i) with respect to any Discount Mortgage Loan, the
Net Rate thereof divided by 7.75%, and (ii) with respect to any Non-Discount
Mortgage Loan, 100%.
NONRECOVERABLE ADVANCE: Any advance (i) which was previously made or
is proposed to be made by the Master Servicer and (ii) which, in the good faith
judgment of the Master Servicer, will not or, in the case of a proposed advance,
would not, be ultimately recoverable by the Master Servicer from Liquidation
Proceeds, Insurance Proceeds or future payments on any Mortgage Loan.
NOTIONAL AMOUNT: On any Distribution Date, with respect to the Class X
Certificates, an amount equal to the Scheduled Principal Balances of the
Mortgage Loans as of the Due Date in the month prior to the month of the
Distribution Date.
OFFICER'S CERTIFICATE: A certificate signed by the Chairman of the
Board, the Vice Chairman of the Board, the President or a Vice President or
Assistant Vice President of the Master Servicer and delivered to the Trustee, as
required by this Agreement.
OPINION OF COUNSEL: A written opinion of counsel who is or are
acceptable to the Trustee and who, unless required to be Independent (an
"Opinion of Independent Counsel"), may be internal counsel for the Master
Servicer.
ORIGINAL SUBORDINATE PRINCIPAL BALANCE: The sum of the aggregate
Current Principal Amounts of each Class of Subordinate Certificates as of the
Cut-Off Date.
ORIGINAL VALUE: Except in the case of a refinance Mortgage
Loan, the lesser of the Appraised Value or sales price of a Mortgaged Property
at the time a Mortgage Loan is closed, and for a refinance Mortgage Loan, the
Original Value is the value of such property set forth in an appraisal
acceptable to the Master Servicer.
OUTSTANDING MORTGAGE LOAN: With respect to any Due Date, a Mortgage
Loan which, prior to such Due Date, was not the subject of a Principal
Prepayment in full, did not become a Liquidated Mortgage Loan and was not
purchased pursuant to Sections 2.02, 2.03 or 3.19 or replaced pursuant to
Section 2.04.
OUTSTANDING PRINCIPAL BALANCE: As of the time of any determination,
the principal balance of a Mortgage Loan remaining to be paid by the Mortgagor,
or, in the case of an REO Property, the principal balance of the related
Mortgage Loan remaining to be paid by the Mortgagor at the time such property
was acquired by the Trust Fund.
PASS-THROUGH RATE: As to each Class of Certificates, the rate of
interest set forth, or determined as provided with respect thereto, in Section
5.01. Any monthly calculation of interest at a stated rate shall be based upon
annual interest at such rate divided by twelve.
PERMITTED INVESTMENTS: Any one or more of the following obligations or
securities:
(i) direct obligations of, and obligations fully guaranteed by
the United States of America or any agency or instrumentality of the
United States of America the obligations of which are backed by the
full faith and credit of the United States of America;
(ii) (a) demand or time deposits, federal funds or bankers'
acceptances issued by any depository institution or trust company
incorporated under the laws of the United States of America or any
state thereof (including the Trustee acting in its commercial banking
capacity) and subject to supervision and examination by federal and/or
state banking authorities, provided that the commercial paper and/or
the short-term deposit rating and/or the long-term unsecured debt
obligations or deposits of such depository institution or trust
company at the time of such investment or contractual commitment
providing for such investment have the Applicable Credit Rating or
better from each Rating Agency and (b) any other demand or time
deposit or certificate of deposit that is fully insured by the Federal
Deposit Insurance Corporation;
(iii) repurchase obligations with respect to (a) any security
described in clause (i) above or (b) any other security issued or
guaranteed by an agency or instrumentality of the United States of
America, the obligations of which are backed by the full faith and
credit of the United States of America, in either case entered into
with a depository institution or trust company (acting as principal)
described in clause (ii)(a) above where the Trustee holds the security
therefor;
(iv) securities bearing interest or sold at a discount issued by
any corporation (including the Trustee) incorporated under the laws of
the United States of America or any state thereof that have the
Applicable Credit Rating or better from each Rating Agency 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 investments therein will cause the then outstanding principal
amount of securities issued by such corporation and held as part of
the Trust to exceed 10% of the aggregate Outstanding Principal
Balances and amounts of all the Mortgage Loans and Permitted
Investments held as part of the Trust;
(v) commercial paper (including both noninterest-bearing discount
obligations and interest-bearing obligations payable on demand or on a
specified date not more than one year after the date of issuance
thereof) having the Applicable Credit Rating or better from each
Rating Agency at the time of such investment;
(vi) a Reinvestment Agreement issued by any bank, insurance
company or other corporation or entity;
(vii) any other demand, money market or time deposit, obligation,
security or investment as may be acceptable to each Rating Agency; and
(viii) any money market funds the collateral of which consists of
obligations fully guaranteed by the United States of America or any
agency or instrumentality of the United States of America the
obligations of which are backed by the full faith and credit of the
United States of America (which may include repurchase obligations
secured by collateral described in clause (i)) and having the
Applicable Credit Rating or better from each Rating Agency;
PROVIDED, HOWEVER, that no instrument or security shall be a Permitted
Investment if such instrument or security evidences a right to receive only
interest payments with respect to the obligations underlying such instrument or
if such security provides for payment of both principal and interest with a
yield to maturity in excess of 120% of the yield to maturity at par.
PERSON: Any individual, corporation, partnership, joint venture,
association, limited liability company, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
PHYSICAL CERTIFICATES: The Class X, Class R-1 and Class R-2
Certificates and, to the extent provided in Section 5.02, the Class B-4, Class
B-5 and Class B-6 Certificates.
PO PERCENTAGE: (i) With respect to any Discount Mortgage Loan, the
fraction, expressed as a percentage, equal to 7.75% minus the Net Rate thereof
divided by 7.75%, and (ii) with respect to any Non-Discount Mortgage Loan, 0%.
PREPAYMENT DISTRIBUTION TRIGGER: For a Class of Subordinate
Certificates for any Distribution Date, the Class Prepayment Distribution
Trigger is satisfied if the fraction (expressed as a percentage), the numerator
of which is the aggregate Current Principal Amount of such Class and each Class
of Subordinate Certificates subordinate thereto, if any, and the denominator of
which is the Scheduled Principal Balances of all of the Mortgage Loans as of the
Due Date in the month next preceding such Distribution Date, equals or exceeds
such percentage calculated as of the Closing Date.
PREPAYMENT PERIOD: With respect to any Distribution Date, the calendar
month preceding the month of the Distribution Date.
PRIMARY INSURANCE POLICY: Any primary mortgage guaranty insurance
policy issued in connection with a Mortgage Loan which provides compensation to
a Mortgage Note holder in the event of default by the obligor under such
Mortgage Note or the related Security Instrument, or any replacement policy
therefor.
PRINCIPAL PREPAYMENT: Any payment (whether partial or full) or other
recovery of principal on a Mortgage Loan which is received in advance of its
scheduled Due Date to the extent that it is not accompanied by an amount as to
interest representing scheduled interest due on any date or dates in any month
or months subsequent to the month of prepayment, including Insurance Proceeds
and the purchase price in connection with any purchase of a Mortgage Loan, any
cash deposit in connection with the substitution of a Mortgage Loan, and the
principal portion of Net Liquidation Proceeds.
PRIVATE CERTIFICATE: Any Class B-4, Class B-5 or Class B-6
Certificate.
PROTECTED ACCOUNT: A trust account established and maintained by the
Master Servicer or any Sub-Servicer with respect to the Mortgage Loans and with
respect to REO Property in a Designated Depository Institution for receipt of
principal and interest and other amounts as described in Section 4.01.
QUALIFIED INSURER: Any insurance company duly qualified as such under
the laws of the state or states in which the related Mortgaged Property or
Mortgaged Properties is or are located, duly authorized and licensed in such
state or states to transact the type of insurance business in which it is
engaged and approved as an insurer by the Master Servicer, so long as the claims
paying ability of which is acceptable to the Rating Agencies for pass-through
certificates having the same rating as the Certificates rated by the Rating
Agencies as of the Closing Date.
RATING AGENCIES: S&P and Fitch.
RATING AGENCY ELIGIBLE ACCOUNT: An account, including one maintained
with the Trustee, which either (i) is a trust account maintained with the trust
department of a depository institution or trust company organized under the laws
of the United States of America or any one of the states thereof or the District
of Columbia or (ii) is maintained with an entity which is an institution whose
deposits are insured by the FDIC, the unsecured and uncollateralized long-term
debt obligations of which shall be rated "A" or better by S&P and Fitch, or one
of the two highest short-term ratings by S&P and Fitch, and which is either (a)
a federal savings association duly organized, validly existing and in good
standing under the federal banking laws, (b) an institution duly organized,
validly existing and in good standing under the applicable banking laws of any
state, (c) a national banking association under the federal banking laws, or (d)
a principal subsidiary of a bank holding company.
REALIZED LOSS: Any (i) Deficient Valuation or (ii) as to any
Liquidated Mortgage Loan, (x) the Outstanding Principal Balance of such
Liquidated Mortgage Loan plus accrued and unpaid interest thereon at the
Mortgage Interest Rate through the last day of the month of such liquidation
LESS (y) the related Net Liquidation Proceeds.
RECORD DATE: With respect to any Distribution Date, the close of
business on the last Business Day of the month immediately preceding the month
of such Distribution Date.
REINVESTMENT AGREEMENTS: One or more reinvestment agreements,
acceptable to the Rating Agencies, from a bank, insurance company or other
corporation or entity (including the Trustee).
RELIEF ACT: The Soldiers' and Sailors' Civil Relief Act of 1940, as
amended.
RELIEF ACT MORTGAGE LOAN: Any Mortgage Loan as to which the Scheduled
Payment thereof has been reduced due to the application of the Relief Act.
REMIC: A real estate mortgage investment conduit, as defined in the
Code.
REMIC I: That group of assets contained in the Trust Fund designated
as a REMIC consisting of the REMIC II Regular Certificates.
REMIC II: That group of assets contained in the Trust Fund designated
as a REMIC consisting of (i) the Mortgage Loans, (ii) the Certificate Account,
(iii) any REO Property and (iv) any proceeds of the foregoing. Expenses and fees
of the Trust shall be paid by REMIC II.
REMIC II CERTIFICATES: The REMIC II Regular Certificates and the Class
R-2 Certificates.
REMIC II REGULAR CERTIFICATES: As defined in Section 5.01.
REMIC OPINION: An Opinion of Independent Counsel, to the effect that
the proposed action described therein would not, under the REMIC Provisions, (i)
cause either REMIC I or REMIC II to fail to qualify as a REMIC while any regular
interest in either REMIC I or REMIC II is outstanding, (ii) result in a tax on
prohibited transactions or (iii) constitute a taxable contribution after the
Startup Day.
REMIC PROVISIONS: The provisions of the federal income tax law
relating to REMICs, which appear at Sections 860A through 860G of the Code, and
related provisions and regulations promulgated thereunder, as the foregoing may
be in effect from time to time.
REO PROPERTY: A Mortgaged Property acquired in the name of the
Trustee, for the benefit of Certificateholders, by foreclosure or deed-in-lieu
of foreclosure in connection with a defaulted Mortgage Loan.
REPURCHASE PRICE: With respect to any Mortgage Loan (or any property
acquired with respect thereto) required to be repurchased pursuant to Section
2.02 or 2.03 an amount equal to the sum of (i) 100% of the Outstanding Principal
Balance of such Mortgage Loan as of the date of repurchase (or if the related
Mortgaged Property was acquired with respect thereto, 100% of the Outstanding
Principal Balance at the date of the acquisition) plus (ii) accrued but unpaid
interest on the Outstanding Principal Balance at the related Mortgage Interest
Rate, through and including the last day of the month of repurchase reduced by
(ii) any portion of the Master Servicing Fee or advances payable to the
purchaser of the Mortgage Loan.
REQUEST FOR RELEASE: A request for release in the form attached hereto
as Exhibit D.
REQUIRED INSURANCE POLICY: With respect to any Mortgage Loan, any
insurance policy which is required to be maintained from time to time under this
Agreement with respect to such Mortgage Loan.
RESIDUAL CERTIFICATES: The Class R-1 and Class R-2 Certificates.
RESPONSIBLE OFFICER: Any officer assigned to the corporate trust
department or similar department of the Trustee (or any successor division or
department thereto), and also, with respect to a particular matter, any other
officer to whom such matter is referred because of such officer's knowledge of
and familiarity with the particular subject.
RULE 144A CERTIFICATE: The certificate to be furnished by each
purchaser of a Private Certificate which is a Qualified Institutional Buyer as
defined under Rule 144A promulgated under the Securities Act, substantially in
the form set forth as Exhibit F-2 hereto.
SCHEDULED PAYMENT: With respect to any Mortgage Loan and any month,
the scheduled payment or payments of principal and interest due during such
month on such Mortgage Loan which either is payable by a Mortgagor in such month
under the related Mortgage Note or, in the case of REO Property, would otherwise
have been payable under the related Mortgage Note.
SCHEDULED PRINCIPAL: The principal portion of any Scheduled Payment.
SCHEDULED PRINCIPAL BALANCE: With respect to any Mortgage Loan on any
Distribution Date, (A) the unpaid principal balance of such Mortgage Loan as of
the close of business on the Due Date in the month preceding the month of such
Distribution Date (i.e., taking account of the principal payment to be made on
such Due Date and irrespective of any delinquency in its payment), as specified
in the amortization schedule at the time relating thereto (before any adjustment
to such amortization schedule by reason of any bankruptcy or similar proceeding
occurring after the Cut-Off Date (other than a Deficient Valuation) or any
moratorium or similar waiver or grace period) less (B) any Principal Prepayments
(including the principal portion of Net Liquidation Proceeds) received during or
prior to the month preceding the month in which such Distribution Date occurs.
SECURITIES ACT: The Securities Act of 1933, as amended.
SECURITIES LEGEND: "THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR UNDER ANY STATE SECURITIES OR BLUE SKY LAW OF ANY STATE. THE HOLDER HEREOF,
BY PURCHASING THIS CERTIFICATE, AGREES THAT THIS CERTIFICATE MAY BE REOFFERED,
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES
ACT AND OTHER APPLICABLE LAWS AND ONLY (1) PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A") TO A PERSON THAT THE HOLDER REASONABLY BELIEVES IS
A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A "QIB"),
PURCHASING FOR ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF A QIB,
WHOM THE HOLDER HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE, PLEDGE OR
OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (2) PURSUANT TO AN
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE) OR (3) IN CERTIFICATED FORM TO AN "INSTITUTIONAL ACCREDITED INVESTOR"
WITHIN THE MEANING THEREOF IN RULE 501(a)(1), (2), (3) or (7) OF REGULATION D
UNDER THE SECURITIES ACT PURCHASING NOT FOR DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, SUBJECT TO (A) THE RECEIPT BY THE TRUSTEE OF A LETTER
SUBSTANTIALLY IN THE FORM PROVIDED IN THE AGREEMENT AND (B) AN OPINION OF
COUNSEL AS TO COMPLIANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE UNITED
STATES. THIS CERTIFICATE MAY NOT BE TRANSFERRED TO "BENEFIT PLAN INVESTORS," AS
SUCH TERM IS DEFINED IN 29 C.F.R. ss. 2510.3-101., UNLESS THE PROPOSED
TRANSFEREE PROVIDES A BENEFIT PLAN OPINION TO THE TRUSTEE."
SECURITY INSTRUMENT: A written instrument creating a valid first lien
on a Mortgaged Property securing a Mortgage Note, which may be any applicable
form of mortgage, deed of trust, deed to secure debt or security deed, including
any riders or addenda thereto.
SELLER: Bear Stearns Mortgage Securities Inc., a Delaware corporation,
or its successors in interest.
SELLER CONTRACT: The Mortgage Loan Purchase Agreement dated as of June
25, 1996, among ICI Funding, as seller, Imperial Credit Mortgage Holdings, Inc.,
as guarantor, and Bear Stearns Mortgage Securities Inc., as purchaser, and all
amendments thereof and supplements thereto.
SENIOR CERTIFICATES: The Class A-1, Class A-2, Class A- 3, Class A-4,
Class A-5, Class A-6, Class A-7, Class A-8, Class A- 9, Class A-10, Class A-11,
Class PO, Class X, Class R-1 and Class R-2 Certificates.
SENIOR OPTIMAL PRINCIPAL AMOUNT: As to any Distribution Date, an
amount equal to the sum, without duplication, of:
(i) the Senior Percentage of the applicable Non-PO Percentage of
Scheduled Principal due on the related Due Date on each Outstanding
Mortgage Loan as of such Due Date as specified in the amortization
schedule at the time applicable thereto (after adjustments for
previous Principal Prepayments and the principal portion of Debt
Service Reductions subsequent to the Bankruptcy Coverage Termination
Date but before any adjustment to such amortization schedule by reason
of any bankruptcy (except as aforesaid) or similar proceeding or any
moratorium or similar waiver or grace period);
(ii) the Senior Prepayment Percentage of the applicable Non-PO
Percentage of all Voluntary Principal Prepayments in part received
during the related Prepayment Period, together with the Senior
Prepayment Percentage of the applicable Non-PO Percentage of the
Scheduled Principal Balance of each Mortgage Loan which was the
subject of a Voluntary Principal Prepayment in full during the related
Prepayment Period;
(iii) the lesser of (x) the Senior Prepayment Percentage of the
applicable Non-PO Percentage of the sum of (A) all Net Liquidation
Proceeds allocable to principal received in respect of each Mortgage
Loan that became a Liquidated Mortgage Loan during the related
Prepayment Period (other than Mortgage Loans described in clause (B))
and (B) the Scheduled Principal Balance of each such Mortgage Loan
purchased by an Insurer from the Trustee during the related Prepayment
Period pursuant to the related Primary Insurance Policy; and (y) the
Senior Percentage of the applicable Non-PO Percentage of the sum of
(A) the Scheduled Principal Balance of each Mortgage Loan that became
a Liquidated Mortgage Loan during the related Prepayment Period (other
than Mortgage Loans described in clause (B)) and (B) the Scheduled
Principal Balance of each Mortgage Loan that was purchased by an
Insurer from the Trustee during the related Prepayment Period pursuant
to the related Primary Insurance Policy, as reduced in each case by
the Senior Percentage of the applicable Non-PO Percentage of the
principal portion of any Excess Bankruptcy Losses (other than those
attributable to Debt Service Reductions), Excess Fraud Losses and
Excess Special Hazard Losses;
(iv) the Senior Prepayment Percentage of the applicable Non-PO
Percentage of the Scheduled Principal Balance of each Mortgage Loan
which was purchased on such Distribution Date pursuant to Section
2.02, 2.03(d) or 3.19; and
(v) the Senior Prepayment Percentage of the applicable Non-PO
Percentage of the difference, if any, between the Scheduled Principal
Balance of a Mortgage Loan that has been replaced by the Master
Servicer with a Substitute Mortgage Loan pursuant to Section 2.04
during the month of such Distribution Date and the Scheduled Principal
Balance of such Substitute Mortgage Loan.
SENIOR PERCENTAGE: On any Distribution Date, the lesser of (i) 100%
and (ii) the percentage (carried to six places rounded up) obtained by dividing
the aggregate Current Principal Amounts of all the Senior Certificates (other
than the Class PO Certificates) immediately preceding such Distribution Date by
the aggregate Current Principal Amounts of all the Classes of Certificates
(other than the Class PO Certificates) immediately preceding such Distribution
Date.
SENIOR PREPAYMENT PERCENTAGE: On any Distribution Date occurring
during the periods set forth below, as follows:
Period (dates Senior Prepayment
inclusive) Percentage
- ------------------------------- ------------------------------------
July 25, 1996 - June 25, 2001 100%
July 25, 2001 - June 25, 2002 Applicable Senior ercentage plus 70% of
the applicable Subordinate Percentage
July 25, 2002 - June 25, 2003 Applicable Senior Percentage plus 60% of
the applicable Subordinate Percentage
July 25, 2003 - June 25, 2004 Applicable Senior Percentage plus 40% of
the applicable Subordinate Percentage
July 25, 2004 - June 25, 2005 Applicable Senior Percentage plus 20% of
the applicable Subordinate Percentage
July 25, 2--5 and thereafter Applicable Senior Percentage thereafter
Notwithstanding the foregoing, if on any Distribution Date the Senior Percentage
exceeds the Senior Percentage as of the Cut-Off Date, the Senior Prepayment
Percentage for such Distribution Date will equal 100%. On the Distribution Date
after which the Current Principal Amounts of the Senior Certificates (other than
the Class PO Certificates) is zero, the Senior Prepayment Percentage shall be
the minimum percentage sufficient to effect such reduction.
In addition, notwithstanding the foregoing, no reduction of the Senior
Prepayment Percentage shall occur on any Distribution Date unless, as of the
last day of the month preceding such Distribution Date:
(i) the aggregate Scheduled Principal Balance of Mortgage Loans
delinquent 60 days or more (including for this purpose any Mortgage
Loans in foreclosure and Mortgage Loans with respect to which the
related Mortgaged Property has been acquired by the Trust Fund),
averaged over the last six months, as a percentage of the aggregate
Current Principal Amount of the Subordinate Certificates averaged over
the last six months, does not exceed 50% and (ii) cumulative Realized
Losses do not exceed (a) 30% of the Original Subordinate Principal
Balance if such Distribution Date occurs between and including July
2001 and June 2002, (b) 35% of the related Original Subordinate
Principal Balance if such Distribution Date occurs between and
including July 2002 and June 2003, (c) 40% of the related Original
Subordinate Principal Balance if such Distribution Date occurs between
and including July 2003 and June 2004, (d) 45% of the related Original
Subordinate Principal Balance if such Distribution Date occurs between
and including July 2004 and June 2005, and (e) 50% of the related
Original Subordinate Principal Balance if such Distribution Date
occurs during or after July 2005.
SERVICING ACCOUNT: The separate trust account created and maintained
by the Master Servicer or each Sub-Servicer with respect to the Mortgage Loans
or with respect to REO Property in a Designated Depository Institution for
collection of taxes, assessments, insurance premiums and comparable items as
described in Section 3.07.
SERVICING OFFICER: Any officer of the Master Servicer or of an
agent or independent contractor through which all or part of the Master
Servicer's master servicing responsibilities are carried out, involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name and specimen signature appear on a list of servicing officers furnished to
the Trustee by the Master Servicer as such list may from time to time be amended
in accordance with the foregoing.
S&P: Standard and Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., and its successors in interest.
S&P FORMULA AMOUNT: As to each Anniversary Determination Date, the
greater of (i) $100,000 and (ii) the product of (x) 0.06% and (y) the Scheduled
Principal Balance of each Mortgage Loan remaining in the Trust whose original
principal balance was 75% or greater of the Original Value thereof.
SPECIAL HAZARD LOSS: (i) A Realized Loss suffered by a Mortgaged
Property on account of direct physical loss, exclusive of (a) any loss covered
by a hazard policy or a flood insurance policy required to be maintained in
respect of such Mortgaged Property under Section 3.10 and (b) any loss caused by
or resulting from:
(1) normal wear and tear;
(2) conversion or other dishonest act on the part of the Trustee, the
Master Servicer or any of their agents or employees; or
(3) errors in design, faulty workmanship or faulty materials, unless
the collapse of the property or a part thereof ensues;
or (ii) any Realized Loss suffered by the Trust Fund arising from or related to
the presence or suspected presence of hazardous wastes or hazardous substances
on a Mortgaged Property unless such loss to a Mortgaged Property is covered by a
hazard policy or a flood insurance policy required to be maintained in respect
of such Mortgaged Property under Section 3.10.
SPECIAL HAZARD LOSS AMOUNT: As of any Distribution Date, an amount
equal to $2,173,752.60 minus the sum of (i) the aggregate amount of Special
Hazard Losses that would have been allocated to the Subordinate Certificates in
accordance with Section 6.03 in the absence of the Loss Allocation Limitation
and (ii) the Adjustment Amount (as defined below) as most recently calculated.
On each anniversary of the Cut-Off Date, the "Adjustment Amount" shall be equal
to the amount, if any, by which the amount calculated in accordance with the
preceding sentence (without giving effect to the deduction of the Adjustment
Amount for such anniversary) exceeds the lesser of (x) the greater of (A) the
product of the Special Hazard Percentage for such anniversary multiplied by the
Outstanding Principal Balance of all the Mortgage Loans on the Distribution Date
immediately preceding such anniversary and (B) twice the Outstanding Principal
Balance of the Mortgage Loan which has the largest Outstanding Principal Balance
on the Distribution Date immediately preceding such anniversary, and (y) an
amount calculated by the Master Servicer and approved by each Rating Agency,
which amount shall not be less than $500,000.
SPECIAL HAZARD PERCENTAGE: As of each anniversary of the Cut-Off Date,
the greater of (i) 1.00% and (ii) the largest percentage obtained by dividing
(x) the aggregate Outstanding Principal Balance (as of the immediately preceding
Distribution Date) of the Mortgage Loans secured by Mortgaged Properties located
in a single, five-digit zip code area in the State of California by (y) the
Outstanding Principal Balance of all the Mortgage Loans as of the immediately
preceding Distribution Date.
SPECIAL HAZARD TERMINATION DATE: The Distribution Date upon which the
Special Hazard Loss Amount has been reduced to zero or a negative number (or the
Cross-Over Date, if earlier).
STARTUP DAY: June 28, 1996.
SUBORDINATE CERTIFICATE WRITEDOWN AMOUNT: As to any Distribution Date,
the amount by which (a) the sum of the Current Principal Amounts of all the
Certificates (after giving effect to the distribution of principal and the
allocation of Realized Losses and the Class PO Deferred Payment Writedown Amount
in reduction of the Current Principal Amounts of the Certificates on such
Distribution Date) exceeds (b) the aggregate Scheduled Principal Balances of the
Mortgage Loans on the first day of the month of such Distribution Date, less any
Deficient Valuation occurring on or prior to the Bankruptcy Coverage Termination
Date.
SUBORDINATE CERTIFICATES: Class B-1, Class B-2, Class B-3, Class B-4,
Class B-5 and Class B-6 Certificates.
SUBORDINATE OPTIMAL PRINCIPAL AMOUNT: As to any Distribution Date, an
amount equal to the sum, without duplication, of the following (but in no event
greater than the aggregate Current Principal Amounts of the Subordinate
Certificates immediately prior to such Distribution Date):
(i) the Subordinate Percentage of the applicable Non-PO
Percentage of Scheduled Principal due on the related Due Date on each
Outstanding Mortgage Loan as of such Due Date as specified in the
amortization schedule at the time applicable thereto (after adjustment
for previous Principal Prepayments and the principal portion of Debt
Service Reductions subsequent to the Bankruptcy Coverage Termination
Date but before any adjustment to such amortization schedule by reason
of any bankruptcy (other than as aforesaid) or similar proceeding or
any moratorium or similar waiver or grace period);
(ii) the Subordinate Prepayment Percentage of the applicable
Non-PO Percentage of all Voluntary Principal Prepayments in part
received during the related Prepayment Period, and 100% of any Senior
Optimal Principal Amount not distributed to the Senior Certificates on
such Distribution Date, together with the Subordinate Prepayment
Percentage of the Scheduled Principal Balance of each Mortgage Loan
which was the subject of a Voluntary Principal Prepayment in full
during the related Prepayment Period;
(iii) the excess, if any, of the applicable Non-PO Percentage of
(x) the sum of (A) all Net Liquidation Proceeds allocable to principal
received during the related Prepayment Period (other than in respect
of Mortgage Loans described in clause (B)) and (B) the Scheduled
Principal Balance of each Mortgage Loan that was purchased by an
Insurer from the Trustee during the related Prepayment Period pursuant
to the related Primary Insurance Policy, over (y) the sum of the
amounts distributable pursuant to clause (iii) of the definition of
Senior Optimal Principal Amount on such Distribution Date;
(iv) the Subordinate Prepayment Percentage of the applicable
Non-PO Percentage of the Scheduled Principal Balance of each Mortgage
Loan which was purchased on such Distribution Date pursuant to Section
2.02, 2.03(d) or 3.19; and
(v) the Subordinate Prepayment Percentage of the applicable
Non-PO Percentage of the difference, if any, between the Scheduled
Principal Balance of a Mortgage Loan that has been replaced by the
Master Servicer with a Substitute Mortgage Loan pursuant to Section
2.04 during the month of such Distribution Date and the Scheduled
Principal Balance of such Substitute Mortgage Loan.
After the aggregate current Principal Amounts of the Subordinate Certificates
have been reduced to zero, the Subordinate Optimal Principal Amount shall be
zero.
SUBORDINATE PERCENTAGE: On any Distribution Date, 100% minus the
applicable Senior Percentage.
SUBORDINATE PREPAYMENT PERCENTAGE: On any Distribution Date, 100%
minus the applicable Senior Prepayment Percentage, except that on any
Distribution Date after the Current Principal Amounts of the Senior Certificates
(other than the Class PO Certificates) have each been reduced to zero, the
Subordinate Prepayment Percentage will equal 100%.
SUB-SERVICER: Any Person with which the Master Servicer has entered
into a Sub-Servicing Agreement and which meets the qualifications of a
Sub-Servicer pursuant to Section 3.02.
SUB-SERVICING AGREEMENT: The written contract between the Master
Servicer and a Sub-Servicer and any successor Sub-Servicer relating to servicing
and administration of certain Mortgage Loans as provided in Section 3.02.
SUBSTITUTE MORTGAGE LOAN: A mortgage loan tendered to the Trustee
pursuant to Section 2.04, in each case, in the opinion of the Master Servicer,
(i) which has an Outstanding Principal Balance not materially greater nor
materially less than the Mortgage Loan for which it is to be substituted; (ii)
which has a Mortgage Interest Rate and Net Rate not less than, and not
materially greater than, such Mortgage Loan; (iii) which has a maturity date not
materially earlier or later than such Mortgage Loan and not later than the
latest maturity date of any Mortgage Loan; (iv) which is of the same property
type and occupancy type as such Mortgage Loan; (v) which has a Loan-to-Value
Ratio not greater than the Loan-to-Value Ratio of such Mortgage Loan; (vi) which
is current in payment of principal and interest as of the date of substitution;
and (vii) as to which the payment terms do not vary in any material respect from
the payment terms of the Mortgage Loan for which it is to be substituted. The
opinion of the Master Servicer shall be evidenced by an Officer's Certificate
delivered to the Trustee.
TAX MATTERS PERSON: Bankers Trust Company of California, N.A., or any
successor thereto or assignee thereof.
TRUST FUND or TRUST: The corpus of the trust created by this
Agreement, consisting of the Mortgage Loans and the other assets described in
Section 2.01(a).
TRUSTEE: Bankers Trust Company of California, N.A., or its successor
in interest, or any successor trustee appointed as herein provided.
TRUSTEE'S FEES: With respect to each Distribution Date, the amount to
be paid to the Trustee calculated monthly on a Mortgage Loan by Mortgage Loan
basis, equal to the sum of (i) with respect to each Mortgage Loan which has been
prepaid in full during the related Prepayment Period, the product of (a) the
amount of the Principal Prepayment, (b) 0.015% per annum and (c) a fraction, the
numerator of which is the number of days elapsed from the Due Date in the month
prior to the month of such Distribution Date to the date of Principal Prepayment
and the denominator of which is 365, and (ii) with respect to all other Mortgage
Loans, the product of (x) the Scheduled Principal Balance of such Mortgage Loan
on the Due Date in the month prior to the month of such Distribution Date and
(y) one-twelfth of 0.015%.
UNINSURED CAUSE: Any cause of damage to a Mortgaged Property or REO
Property such that the complete restoration of such Mortgaged Property or REO
Property is not fully reimbursable by the hazard insurance policies required to
be maintained pursuant to Section 3.10, without regard to whether or not such
policy is maintained.
VOLUNTARY PRINCIPAL PREPAYMENT: With respect to any Distribution Date,
any Principal Prepayment received from the related Mortgagor on a Mortgage Loan.
<PAGE>
ARTICLE II
Conveyance of Mortgage Loans;
Original Issuance of Certificates
Section 2.01. CONVEYANCE OF MORTGAGE LOANS TO TRUSTEE. (a) The Seller
concurrently with the execution and delivery of this Agreement, sells, transfers
and assigns to the Trustee without recourse all its right, title and interest in
and to (i) the Mortgage Loans identified in the Mortgage Loan Schedule,
including all interest and principal due with respect to the Mortgage Loans
after the Cut-Off Date, but excluding any payments of principal and interest due
on or prior to the Cut-Off Date; (ii) such assets as shall from time to time be
credited or are required by the terms of this Agreement to be credited to the
Certificate Account (excluding any income to the Master Servicer from Permitted
Investments under Subsection 4.02(d)), (iii) such assets relating to the
Mortgage Loans as from time to time may be held by the Master Servicer or a
Sub-Servicer in Protected Accounts (excluding any income to the Master Servicer
or any Sub-Servicer from Permitted Investments under Subsection 4.01(a)), (iv)
such assets relating to the Mortgage Loans as from time to time may be held by
the Trustee in the Custody Account (excluding any income to the Master Servicer
from Permitted Investments under Section 4.04(d)), (v) any Servicing Accounts
(to the extent the mortgagee has a claim thereto and excluding any income to the
Master Servicer or Sub-Servicer or interest payable to Mortgagors pursuant to
applicable law), (vi) any REO Property, (vii) the Required Insurance Policies
and any amounts paid or payable by the insurer under any Insurance Policy (to
the extent the mortgagee has a claim thereto), (viii) the Seller Contract to the
extent provided in Subsection 2.03(b), and (ix) any proceeds of the foregoing.
Although it is the intent of the parties to this Agreement that the conveyance
of the Seller's right, title and interest in and to the Mortgage Loans and other
assets in the Trust Fund pursuant to this Agreement shall constitute a purchase
and sale and not a loan, in the event that such conveyance is deemed to be a
loan, it is the intent of the parties to this Agreement that the Seller shall be
deemed to have granted to the Trustee a first priority perfected security
interest in all of the Seller's right, title and interest in, to and under the
Mortgage Loans and other assets in the Trust Fund, and that this Agreement shall
constitute a security agreement under applicable law.
(b) In connection with the above transfer and assignment, the Seller
hereby deposits with the Trustee, with respect to each Mortgage Loan, (i) the
original Mortgage Note, endorsed without recourse to the order of the Trustee
and showing an unbroken chain of endorsements from the original payee thereof to
the Person endorsing it to the Trustee, (ii) the original Security Instrument,
which shall have been recorded, with evidence of such recording indicated
thereon, (iii) the assignment (which may be in the form of a blanket assignment
if permitted in the jurisdiction in which the Mortgaged Property is located) to
the Trustee of the Security Instrument, with evidence of recording with respect
to each Mortgage Loan in the name of the Trustee thereon, (iv) all intervening
assignments of the Security Instrument, if any, to the extent available to the
Seller with evidence of recording thereon, (v) the original or a copy of the
policy or certificate of primary mortgage guaranty insurance, to the extent
available, if any, (vi) the original policy of title insurance or mortgagee's
certificate of title insurance or commitment or binder for title insurance and
(vii) originals of all assumption and modification agreements, if any; PROVIDED,
HOWEVER, that in lieu of the foregoing, the Seller may deliver the following
documents, under the circumstances set forth below: (w) in lieu of the original
policy of title insurance, the Seller may deliver a binder or commitment
therefor, or, in California, a preliminary title report, or, in Iowa, an
attorney's certificate; (x) in lieu of the original Security Instrument or
intervening assignments thereof which have been delivered or are being delivered
to recording offices for recording and have not been returned to the Seller in
time to permit their delivery as specified above, the Seller may deliver a true
copy thereof with a certification by ICI Funding or the title company issuing
the commitment for title insurance, on the face of such copy, substantially as
follows: "Certified to be a true and correct copy of the original, which has
been transmitted for recording"; (y) in lieu of the Security Instrument,
assignment to the Trustee or intervening assignments thereof, if the applicable
jurisdiction retains the originals of such documents (as evidenced by a
certification from ICI Funding to such effect) the Seller may deliver
photocopies of such documents containing an original certification by the
judicial or other governmental authority of the jurisdiction where such
documents were recorded; and (z) in lieu of the Mortgage Notes relating to the
nine Mortgage Loans identified in the list delivered by the Master Servicer to
the Trustee on the Closing Date, the Seller may deliver a lost note affidavit;
and PROVIDED, FURTHER, HOWEVER, that in the case of Mortgage Loans which have
been prepaid in full after the Cut-Off Date and prior to the Closing Date, the
Seller, in lieu of delivering the above documents, may deliver to the Trustee a
certification of a Servicing Officer to such effect and shall deposit all
amounts paid in respect of such Mortgage Loans in the Certificate Account on the
Closing Date. The Seller shall deliver such original documents (including any
original documents as to which certified copies had previously been delivered)
or such certified copies together with the original title insurance policy (or,
if a master title policy has been issued by the title insurer, a mortgagee's
certificate of title insurance) if a title insurance binder or commitment or
other assurance of title was originally deposited, to the Trustee promptly after
they are received. The Master Servicer shall cause, at its expense, the Security
Instrument and intervening assignments, if any, and the assignment of the
Security Instrument to the Trustee to be recorded not later than 180 days after
the Closing Date.
Section 2.02. ACCEPTANCE OF MORTGAGE LOANS BY TRUSTEE. (a) The Trustee
acknowledges receipt of, subject to the exceptions it notes pursuant to the
procedures described below, the documents (or certified copies thereof)
delivered to it pursuant to Section 2.01 and declares that it holds and will
continue to hold those documents and any amendments, replacements or supplements
thereto and all other assets of the Trust Fund delivered to it as Trustee in
trust for the use and benefit of all present and future Holders of the
Certificates. No later than 45 days after the Closing Date (or, with respect to
any Substitute Mortgage Loan, within 5 days after the receipt by the Trustee
thereof), the Trustee agrees, for the benefit of the Certificateholders, to
review each Mortgage File delivered to it and to execute and deliver, or cause
to be executed and delivered, to the Seller and the Master Servicer an Initial
Certification in the form annexed hereto as Exhibit H. In conducting such
review, the Trustee will ascertain whether all required documents have been
executed and received and whether those documents relate, determined on the
basis of the Mortgagor name, original principal balance and loan number, to the
Mortgage Loans it has received, as identified in Exhibit B to this Agreement, as
supplemented (PROVIDED, HOWEVER, that with respect to those documents described
in subclauses (b)(iv), (b)(v) and (b)(vii) of Section 2.01, the Trustee's
obligations shall extend only to documents actually delivered pursuant to such
subsections). In performing any such review, the Trustee may conclusively rely
on the purported due execution and genuineness of any such document and on the
purported genuineness of any signature thereon. If the Trustee finds any
document constituting part of the Mortgage File not to have been executed or
received, or to be unrelated to the Mortgage Loans identified in Exhibit B or to
appear to be defective on its face, the Trustee shall promptly notify ICI
Funding. ICI Funding shall correct or cure any such defect within 60 days from
the date of notice from the Trustee of the defect and if ICI Funding fails to
correct or cure the defect within such period, and such defect materially and
adversely affects the interests of the Certificateholders in the related
Mortgage Loan, ICI Funding, will, subject to Section 2.04, within 90 days from
the Trustee's notification purchase such Mortgage Loan at the Repurchase Price;
PROVIDED, HOWEVER, that if such defect relates solely to the inability of ICI
Funding to deliver the original Security Instrument or intervening assignments
thereof, or a certified copy because the originals of such documents, or a
certified copy have not been returned by the applicable jurisdiction, ICI
Funding shall not be required to purchase such Mortgage Loan if ICI Funding
delivers such original documents or certified copy promptly upon receipt, but in
no event later than 360 days after the Closing Date.
(b) No later than 180 days after the Closing Date, the Trustee will
review, for the benefit of the Certificateholders, the Mortgage Files and will
execute and deliver or cause to be executed and delivered to the Seller and the
Master Servicer, a Final Certification in the form annexed hereto as Exhibit I.
In conducting such review, the Trustee will ascertain whether (i) an original of
each document required to be recorded has been returned from the recording
office with evidence of recording thereon or a certified copy has been obtained
from the recording office; and (ii) an original title insurance policy (or if a
master title policy has been issued by the title insurer, a mortgagee's
certificate of title insurance) has been delivered whenever a title insurance
binder or commitment or other assurance of title was originally deposited. If
the Trustee finds any document constituting part of the Mortgage File has not
been received, or to be unrelated, determined on the basis of the Mortgagor
name, original principal balance and loan number, to the Mortgage Loans
identified in Exhibit B or to appear defective on its face, the Trustee shall
promptly notify ICI Funding. ICI Funding shall correct or cure any such defect
within 60 days from the date of notice from the Trustee of the defect and if ICI
Funding is unable to cure such defect within such period, and if such defect
materially and adversely affects the interests of the Certificateholders in the
related Mortgage Loan, ICI Funding shall, subject to Section 2.04, within 90
days from the Trustee's notification purchase such Mortgage Loan at the
Repurchase Price; PROVIDED, HOWEVER, that if such defect relates solely to the
inability of ICI Funding to deliver the original Security Instrument or
intervening assignments thereof, or a certified copy, because the originals of
such documents, or a certified copy, have not been returned by the applicable
jurisdiction, ICI Funding shall not be required to purchase such Mortgage Loan,
if ICI Funding delivers such original documents or certified copy promptly upon
receipt, but in no event later than 360 days after the Closing Date.
(c) In the event that a Mortgage Loan is purchased by ICI Funding in
accordance with Subsections 2.02(a) or (b) above or Section 3.19, ICI Funding
shall cause the Repurchase Price to be deposited in the Certificate Account and
shall provide written notification of such deposit (which notification shall
detail the components of the Repurchase Price), signed by a Servicing Officer,
to the Trustee. Upon deposit of the Repurchase Price in the Certificate Account,
the Trustee shall release to ICI Funding the related Mortgage File and shall
execute and deliver all instruments of transfer or assignment, without recourse,
furnished to it by ICI Funding as are necessary to vest in ICI Funding title to
and rights under the Mortgage Loan. Such purchase shall be deemed to have
occurred on the date on which certification of the deposit of the Repurchase
Price in the Certificate Account was received by the Trustee. The Trustee shall
amend the Mortgage Loan Schedule to reflect such repurchase and shall promptly
notify the Master Servicer and the Rating Agencies of such amendment. The
obligation of ICI Funding to repurchase any Mortgage Loan as to which such a
defect in a constituent document exists shall be the sole remedy respecting such
defect available to the Certificateholders or to the Trustee on their behalf.
Section 2.03. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE MASTER
SERVICER. (a) ICI Funding hereby represents and warrants to the Trustee as of
the Closing Date that:
(i) It is a corporation duly organized, validly existing and in
good standing under the laws of the state of its incorporation and is
in good standing as a foreign corporation in each jurisdiction where
such qualification is necessary and throughout the term of this
Agreement will remain a corporation duly organized, validly existing
and in good standing under the laws of the state of its incorporation
or any state of reincorporation and in good standing as a foreign
corporation in each jurisdiction where such qualification is necessary
(except, in the case of foreign corporation qualification both on the
date hereof and in the future, where the failure so to qualify would
not reasonably be expected to have a material adverse effect on the
Master Servicer's ability to enter into this Agreement or to perform
its obligations hereunder), and has the corporate power and authority
to perform its obligations under this Agreement;
(ii) The execution and delivery of this Agreement have been duly
authorized by all requisite corporate action;
(iii) This Agreement, assuming due authorization, execution, and
delivery by the other parties hereto, will constitute its legal, valid
and binding obligation, enforceable in accordance with its terms,
except only as such enforcement may be limited by applicable Debtor
Relief Laws and that certain equitable remedies may not be available
regardless of whether enforcement is sought in equity or at law;
(iv) Its execution and delivery of this Agreement and its
performance and compliance with the terms of this Agreement will not
(A) violate its certificate of incorporation or bylaws (B) to its
knowledge, violate any law or regulation, or any administrative or
judicial decree or order to which it is subject or (C) 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 contract, agreement or other instrument to which it is a
party or which may be applicable to it or any of its assets;
(v) To its best knowledge, after reasonable investigation, it is
not in default with respect to any order or decree of any court or any
order, regulation or demand of any federal, state, municipal or
governmental agency, which default would reasonably be expected to
have consequences that would materially and adversely affect its
financial condition or operations or its performance hereunder;
(vi) It does not believe, nor does it have any reason or cause to
believe, that it cannot perform each and every covenant contained in
this Agreement to be performed by it;
(vii) The consummation of the transactions con- templated by this
Agreement are in the ordinary course of its business;
(viii) No litigation is pending or, to its best knowledge,
threatened against it, which could be reasonably expected to
materially and adversely affect its entering into this Agreement or
performing its obligations under this Agreement or which would have a
material adverse effect on its financial condition; and
(ix) As to each Mortgage Loan, the Seller Contract is in full
force and effect.
(b) The Seller hereby assigns to the Trustee, on behalf of the
Certificateholders, all of its right, title and interest in the Seller Contract
(but none of its obligations) insofar as such contract relates to the
representations and warranties set forth in Exhibit C hereto regarding the
Mortgage Loans (including the substitution and repurchase obligations of ICI
Funding and the guaranty thereof of Imperial Credit Mortgage Holdings, Inc.);
provided that the obligations of ICI Funding and Imperial Credit Mortgage
Holdings, Inc. to substitute or repurchase a Mortgage Loan shall be the
Trustee's and the Certificateholder's sole remedy for any breach thereof. At the
request of the Trustee, the Seller shall take such actions as may be necessary
to enforce the above right, title and interest on behalf of the Trustee and the
Certificateholders or shall execute such further documents as the Trustee may
reasonably require in order to enable the Trustee to carry out such enforcement.
(c) [Intentionally omitted.]
(d) If the Seller, ICI Funding, the Master Servicer or the Trustee
discovers a breach of any of the representations and warranties set forth in
Exhibit C or Section 7 of the Seller Contract, and such breach existed on the
date the representation and warranty was made, which breach materially and
adversely affects the value of the interests of Certificateholders or the
Trustee in the related Mortgage Loan, the party discovering the breach shall
give prompt written notice of the breach to the other parties. ICI Funding
within 60 days of its discovery or receipt of notice that such breach has
occurred (whichever occurs earlier), shall cure the breach in all material
respects or, subject to Section 2.04, shall purchase the Mortgage Loan or any
property acquired with respect thereto from the Trustee; PROVIDED, HOWEVER, that
if there is a breach of any representation set forth in Exhibit C and the
Mortgage Loan or the related property acquired with respect thereto has been
sold, then ICI Funding shall pay, in lieu of the Repurchase Price, any excess of
the Repurchase Price over the Net Liquidation Proceeds received upon such sale.
(If the Net Liquidation Proceeds exceed the Repurchase Price, any excess shall
be paid to ICI Funding to the extent not required by law to be paid to the
borrower.) Any such purchase by ICI Funding shall be made by depositing an
amount equal to the Repurchase Price in the Certificate Account and the Trustee,
upon receipt of the Repurchase Price and of written notification of such deposit
by a Servicing Officer (which notification shall detail the components of such
Repurchase Price), shall release to ICI Funding the related Mortgage File and
shall execute and deliver all instruments of transfer or assignment furnished to
it by ICI Funding, without recourse, as are necessary to vest in ICI Funding
title to and rights under the Mortgage Loan or any property acquired with
respect thereto. Such purchase shall be deemed to have occurred on the date on
which certification of the deposit of the Repurchase Price in the Certificate
Account was received by the Trustee. The Trustee shall amend the Mortgage Loan
Schedule to reflect such repurchase and shall promptly notify the Master
Servicer and the Rating Agencies of such amendment. Enforcement of the
obligation of ICI Funding to purchase (or substitute a Substitute Mortgage Loan
for) any Mortgage Loan or any property acquired with respect thereto (or pay the
Repurchase Price as set forth in the above proviso) as to which a breach has
occurred and is continuing shall constitute the sole remedy respecting such
breach available to the Certificateholders or the Trustee on their behalf.
Section 2.04. SUBSTITUTION OF MORTGAGE LOANS. Notwithstanding anything
to the contrary in this Agreement, in lieu of purchasing a Mortgage Loan
pursuant to Sections 2.02 or 2.03, ICI Funding may, no later than the date by
which such purchase by ICI Funding would otherwise be required, tender to the
Trustee a Substitute Mortgage Loan accompanied by an Officer's Certificate of
ICI Funding that such Substitute Mortgage Loan conforms to the requirements set
forth in the definition of "Substitute Mortgage Loan"; PROVIDED, HOWEVER, that
substitution pursuant to this Section 2.04 in lieu of purchase shall not be
permitted after the termination of the two-year period beginning on the Startup
Day. The Trustee shall examine the Mortgage File for any Substitute Mortgage
Loan in the manner set forth in Section 2.02(a) and shall notify the Master
Servicer in writing, within five Business Days after receipt, whether or not the
documents relating to the Substitute Mortgage Loan satisfy the requirements of
the third sentence of Subsection 2.02(a). Within two Business Days after such
notification, ICI Funding shall deposit in the Certificate Account the amount,
if any, by which the Outstanding Principal Balance as of the next preceding Due
Date of the Mortgage Loan for which substitution is being made, after giving
effect to Scheduled Principal due on such date, exceeds the Outstanding
Principal Balance as of such date of the Substitute Mortgage Loan, after giving
effect to Scheduled Principal due on such date, which amount shall be treated
for the purposes of this Agreement as if it were the payment by ICI Funding of
the Repurchase Price for the purchase of a Mortgage Loan by ICI Funding. After
such notification to ICI Funding, and, if any such excess exists, upon receipt
of such deposit and of written notification thereof signed by a Servicing
Officer, the Trustee shall accept such Substitute Mortgage Loan, which shall
thereafter be deemed to be a Mortgage Loan hereunder. In the event of such a
substitution, accrued interest on the Substitute Mortgage Loan for the month in
which the substitution occurs and any Principal Prepayments made thereon during
such month shall be the property of the Trust Fund and accrued interest for such
month on the Mortgage Loan for which the substitution is made and any Principal
Prepayments made thereon during such month shall be the property of ICI Funding.
The Scheduled Principal on a Substitute Mortgage Loan due on the Due Date in the
month of substitution shall be the property of ICI Funding and the Scheduled
Principal on the Mortgage Loan for which the substitution is made due on such
Due Date shall be the property of the Trust Fund. Upon acceptance of the
Substitute Mortgage Loan, the Trustee shall release to ICI Funding the related
Mortgage File related to any Mortgage Loan released pursuant to this Section
2.04 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 ICI
Funding title to and rights under any Mortgage Loan released pursuant to this
Section 2.04. ICI Funding shall deliver the documents related to the Substitute
Mortgage Loan in accordance with the provisions of Subsections 2.01(b) and
2.02(b), with the date of acceptance of the Substitute Mortgage Loan deemed to
be the Closing Date for purposes of the time periods set forth in those
Subsections. The representations and warranties set forth in Exhibit C shall be
deemed to have been made by ICI Funding with respect to each Substitute Mortgage
Loan as of the date of acceptance of such Mortgage Loan by the Trustee. The
Trustee shall amend the Mortgage Loan Schedule to reflect such substitution and
shall provide a copy of such amended Mortgage Loan Schedule to the Master
Servicer and the Rating Agencies.
Section 2.05. REPRESENTATIONS AND WARRANTIES OF THE TRUSTEE. The
Trustee hereby represents and warrants to the Seller and the Master Servicer, as
of the Closing Date (and in the case of paragraphs (v) and (vi) below throughout
the term of the Agreement), that:
(i) The Trustee is a banking association duly organized, validly
existing and in good standing under the laws of the United States of
America with a principal place of business in Irvine, California;
(ii) Subject to the right of the Trustee to appoint a co-trustee
or separate trustee under Section 9.11 hereof in order to meet the
legal requirements of a particular jurisdiction, the Trustee has full
power, authority and legal right to execute and deliver this Agreement
and to perform its obligations under this Agreement and has taken all
necessary action to authorize the execution, delivery and performance
by it of this Agreement and the Certificates;
(iii) To the best of the Trustee's knowledge, after reasonable
investigation, the execution and delivery by the Trustee of this
Agreement and the Certificates and the performance by the Trustee of
its obligations under this Agreement and the Certificates will not
violate any provision of the Trustee's Articles of Association or
ByLaws or any law or regulation governing the Trustee or any order,
writ, judgment or decree of any court, arbitrator or governmental
authority or agency applicable to the Trustee or any of its assets. To
the best of the Trustee's knowledge, after reasonable investigation,
such execution, delivery and performance will not require the
authorization, consent or approval of, the giving of notice to, the
filing or registration with, or the taking of any other action with
respect to, any governmental authority or agency regulating the
activities of national banking associations. To the best of the
Trustee's knowledge, after reasonable investigation, such execution,
delivery and performance will not conflict with, or result in a breach
or violation of, any material indenture, mortgage, deed of trust,
lease or other agreement or instrument to which the Trustee is a party
or by which it or its properties is bound;
(iv) This Agreement has been duly executed and delivered by the
Trustee. This Agreement and the Certificates, when executed and
delivered, will constitute the valid, legal and binding obligations of
the Trustee, enforceable against the Trustee in accordance with their
terms, except as the enforcement thereof may be limited by applicable
Debtor Relief Laws and that certain equitable remedies may not be
available regardless of whether enforcement is sought in equity or at
law; and
(v) All funds received by the Trustee and required to be
deposited in the Certificate Account and the Custody Account pursuant
to this Agreement will be promptly so deposited.
Section 2.06. ISSUANCE OF CERTIFICATES. The Trustee acknowledges the
assignment to it of the Mortgage Loans and the other assets comprising the Trust
Fund and, concurrently therewith, has signed, and countersigned and delivered to
the Seller, in exchange therefor, Certificates in such authorized denominations
representing such Fractional Undivided Interests as the Seller has requested.
The Trustee agrees that it will hold the Mortgage Loans and such other assets
segregated on the books of the Trustee in trust for the benefit of the
Certificateholders.
Section 2.07. REPRESENTATIONS AND WARRANTIES CONCERNING THE SELLER.
The Seller hereby represents and warrants to the Trustee and the Master Servicer
as follows:
(i) the Seller (a) is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and (b) is
qualified and in good standing as a foreign corporation to do business in each
jurisdiction where such qualification is necessary, except where the failure so
to qualify would not reasonably be expected to have a material adverse effect on
the Seller's business as presently conducted or on the Purchaser's ability to
enter into this Agreement and to consummate the transactions contemplated
hereby;
(ii) the Seller has full corporate power to own its property, to
carry on its business as presently conducted and to enter into and perform its
obligations under this Agreement;
(iii) the execution and delivery by the Seller of this Agreement
have been duly authorized by all necessary corporate action on the part of the
Seller; and neither the execution and delivery of this Agreement, nor the
consummation of the transactions herein contemplated, nor compliance with the
provisions hereof, will conflict with or result in a breach of, or constitute a
default under, any of the provisions of any law, governmental rule, regulation,
judgment, decree or order binding on the Seller or its properties or the
articles of incorporation or by-laws of the Seller, except those conflicts,
breaches or defaults which would not reasonably be expected to have a material
adverse effect on the Seller's ability to enter into this Agreement and to
consummate the transactions contemplated hereby;
(iv) the execution, delivery and performance by the Seller of
this Agreement and the consummation of the transactions contemplated hereby do
not require the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action in respect of, any state,
federal or other governmental authority or agency, except those consents,
approvals, notices, registrations or other actions as have already been
obtained, given or made;
(v) this Agreement has been duly executed and delivered by the
Seller and, assuming due authorization, execution and delivery by the other
parties hereto, constitutes a valid and binding obligation of the Seller
enforceable against it in accordance with its terms (subject to applicable
bankruptcy and insolvency laws and other similar laws affecting the enforcement
of the rights of creditors generally); and
(vi) there are no actions, suits or proceedings pending or, to
the knowledge of the Seller, threatened against the Seller, before or by any
court, administrative agency, arbitrator or governmental body (i) with respect
to any of the transactions contemplated by this Agreement or (ii) with respect
to any other matter which in the judgment of the Seller will be determined
adversely to the Seller and will if determined adversely to the Seller
materially and adversely affect the Seller's ability to enter into this
Agreement or perform its obligations under this Agreement; and the Seller is not
in default with respect to any order of any court, administrative agency,
arbitrator or governmental body so as to materially and adversely affect the
transactions contemplated by this Agreement.
<PAGE>
ARTICLE III
Administration and Servicing of Mortgage Loans
Section 3.01. MASTER SERVICER TO ASSURE SERVICING. (a) The Master
Servicer shall supervise, or take such actions as are necessary to ensure, the
servicing and administration of the Mortgage Loans and any REO Property in
accordance with this Agreement and its normal servicing practices, which
generally conform to the standards of an institution prudently servicing
mortgage loans for its own account and shall have full authority to do anything
it reasonably deems appropriate or desirable in connection with such servicing
and administration. The Master Servicer may perform its responsibilities
relating to servicing through other agents or independent contractors, but shall
not thereby be released from any of its responsibilities as hereinafter set
forth. The authority of the Master Servicer, in its capacity as master servicer,
shall include, without limitation, the power to (i) consult with and advise any
Sub-Servicer regarding administration of a related Mortgage Loan, (ii) approve
any recommendation by a Sub-Servicer to foreclose on a related Mortgage Loan,
(iii) supervise the filing and collection of insurance claims and take or cause
to be taken such actions on behalf of the insured person thereunder as shall be
reasonably necessary to prevent the denial of coverage thereunder, and (iv)
effectuate foreclosure or other conversion of the ownership of the Mortgaged
Property securing a related Mortgage Loan, including the employment of
attorneys, the institution of legal proceedings, the collection of deficiency
judgments, the acceptance of compromise proposals, the filing of claims under
any Primary Insurance Policy and any other matter pertaining to a delinquent
Mortgage Loan. The authority of the Master Servicer shall include, in addition,
the power on behalf of the Certificateholders, the Trustee or any of them to (i)
execute and deliver customary consents or waivers and other instruments and
documents, (ii) consent to transfers of any related Mortgaged Property and
assumptions of the related Mortgage Notes and Security Instruments (in the
manner provided in this Agreement) and (iii) collect any Insurance Proceeds and
Liquidation Proceeds. Without limiting the generality of the foregoing, the
Master Servicer may, and is hereby authorized, and empowered by the Trustee to,
execute and deliver, on behalf of itself, the Certificateholders, the Trustee,
or any of them, any instruments of satisfaction, cancellation, partial or full
release, discharge and all other comparable instruments, with respect to the
related Mortgage Loans, the Insurance Policies and the accounts related thereto,
and the Mortgaged Properties. The Master Servicer may exercise this power in its
own name or in the name of a Sub- Servicer.
(b) Notwithstanding the provisions of Subsection 3.01(a), the Master
Servicer shall not take any action inconsistent with the interest of the Trustee
or the Certificateholders in the Mortgage Loans or with the rights and interests
of the Trustee or the Certificateholders under this Agreement.
(c) The Trustee shall furnish the Master Servicer with any powers of
attorney and other documents in form as provided to it necessary or appropriate
to enable the Master Servicer to service and administer the related Mortgage
Loans and REO Property.
Section 3.02. SUB-SERVICING AGREEMENTS BETWEEN MASTER SERVICER AND
SUB-SERVICERS. (a) The Master Servicer may enter into Sub-Servicing Agreements
with Sub-Servicers for the servicing and administration of the Mortgage Loans
and for the performance of any and all other activities of the Master Service
hereunder. Each Sub-Servicer shall be either (i) an institution the accounts of
which are insured by the FDIC or (ii) another entity that engages in the
business of originating or servicing mortgage loans, and in either case shall be
authorized to transact business in the state or states in which the related
Mortgaged Properties it is to service are situated, if and to the extent
required by applicable law to enable the Sub-Servicer to perform its obligations
hereunder and under the Sub-Servicing Agreement, and in either case shall be a
FHLMC or FNMA approved mortgage servicer. Any Sub-Servicing Agreement entered
into by the Master Servicer shall include the provision that such Agreement may
be immediately terminated (x) with cause and without any termination fee by any
Master Servicer hereunder other than ICI Funding or (y) without cause in which
case the Master Servicer shall be responsible for any termination fee or penalty
resulting therefrom. In addition, each Sub-Servicing Agreement shall provide for
servicing of the Mortgage Loans consistent with the terms of this Agreement.
With the consent of the Trustee, which consent shall not be unreasonably
withheld, the Master Servicer and the Sub-Servicers may enter into Sub-Servicing
Agreements and make amendments to the Sub-Servicing Agreements or enter into
different forms of Sub-Servicing Agreements; provided, however, that any such
amendments or different forms shall be consistent with and not violate the
provisions of this Agreement, and that no such amendment or different form shall
be made or entered into which could be reasonably expected to be materially
adverse to the interests of the Certificateholders, without the consent of the
Holders of Certificates entitled to at least 51% of the Fractional Undivided
Interests. The parties hereto acknowledge that the initial Sub-Servicer shall be
Imperial Credit Industries, Inc. and that as of July 1, 1996, the Sub-Servicer
shall be Wendover Funding Inc.
(b) As part of its servicing activities hereunder, the Master
Servicer, for the benefit of the Trustee and the Certificate- holders, shall
enforce the obligations of each Sub- Servicer under the related Sub-Servicing
Agreement. Such enforcement, including, without limitation, the legal
prosecution of claims, termination of Sub-Servicing Agreements and the pursuit
of other appropriate remedies, shall be in such form and carried out to such an
extent and at such time as the Master Servicer, in its good faith business
judgment, would require were it the owner of the related Mortgage Loans. The
Master Servicer shall pay the costs of such enforcement at its own expense, but
shall be reimbursed therefor only (i) from a general recovery resulting from
such enforcement only to the extent, if any, that such recovery exceeds all
amounts due in respect of the related Mortgage Loans or (ii) from a specific
recovery of costs, expenses or attorneys' fees against the party against whom
such enforcement is directed.
Section 3.03. SUCCESSOR SUB-SERVICERS. The Master Servicer shall be
entitled to terminate any Sub-Servicing Agreement that may exist in accordance
with the terms and conditions of such Sub-Servicing Agreement and without any
limitation by virtue of this Agreement; PROVIDED, HOWEVER, that upon
termination, the Master Servicer shall either act as servicer of the related
Mortgage Loan or enter into an appropriate contract with a successor
Sub-Servicer pursuant to which such successor Sub-Servicer will be bound by all
relevant terms of the related Sub-Servicing Agreement pertaining to the
servicing of such Mortgage Loan.
Section 3.04. LIABILITY OF THE MASTER SERVICER. (a) Notwithstanding
any Sub-Servicing Agreement, any of the provisions of this Agreement relating to
agreements or arrangements between the Master Servicer and a Sub-Servicer or
reference to actions taken through a Sub-Servicer or otherwise, the Master
Servicer shall under all circumstances remain obligated and primarily liable to
the Trustee and the Certificateholders for the servicing and administering of
the Mortgage Loans and any REO Property in accordance with this Agreement. The
obligations and liability of the Master Servicer shall not be diminished by
virtue of Sub-Servicing Agreements or by virtue of indemnification of the Master
Servicer by any Sub-Servicer, or any other Person. The obligations and liability
of the Master Servicer shall remain of the same nature and under the same terms
and conditions as if the Master Servicer alone were servicing and administering
the related Mortgage Loans. The Master Servicer shall, however, be entitled to
enter into indemnification agreements with any Sub-Servicer or other Person and
nothing in this Agreement shall be deemed to limit or modify such
indemnification. For the purposes of this Agreement, the Master Servicer shall
be deemed to have received any payment on a Mortgage Loan on the date the
Sub-Servicer received such payment; PROVIDED, HOWEVER, that this sentence shall
not apply to the Trustee acting as the Master Servicer; PROVIDED, FURTHER,
HOWEVER, that the foregoing provision shall not affect the obligation of the
Master Servicer if it is also the Trustee to advance amounts which are not
Nonrecoverable Advances.
(b) Any Sub-Servicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Sub-Servicer
in its capacity as such and not as an originator shall be deemed to be between
the Sub-Servicer and the Master Servicer alone, and the Trustee and
Certificateholders shall not be deemed parties thereto and shall have no claims,
rights, obligations, duties or liabilities with respect to the Sub-Servicer
except as set forth in Section 3.05.
Section 3.05. ASSUMPTION OR TERMINATION OF SUB-SERVICING AGREEMENTS BY
TRUSTEE. (a) If the Trustee or its designee shall assume the master servicing
obligations of the Master Servicer in accordance with Section 8.02, the Trustee,
to the extent necessary to permit the Trustee to carry out the provisions of
Section 8.02 with respect to the Mortgage Loans, shall succeed to all of the
rights and obligations of the Master Servicer under each of the Sub-Servicing
Agreements. In such event, the Trustee or its designee as the successor master
servicer shall be deemed to have assumed all of the Master Servicer's rights and
obligations therein and to have replaced the Master Servicer as a party to such
Sub- Servicing Agreements to the same extent as if such Sub-Servicing Agreements
had been assigned to the Trustee or its designee as a successor master servicer,
except that the Trustee or its designee as a successor master servicer shall not
be deemed to have assumed any obligations or liabilities of the Master Servicer
arising prior to such assumption and the Master Servicer shall not thereby be
relieved of any liability or obligations under such Sub-Servicing Agreements.
(b) In the event that the Trustee or its designee as successor master
servicer for the Trustee assumes the servicing obligations of the Master
Servicer under Section 8.02, upon the reasonable request of the Trustee or such
designee as successor master servicer, the Master Servicer shall at its own
expense deliver to the Trustee, or at its written request to such designee,
photocopies of all documents and records, electronic or otherwise, relating to
the Sub-Servicing Agreements and the related Mortgage Loans or REO Property then
being serviced and an accounting of amounts collected and held by it, if any,
and will otherwise cooperate and use its reasonable best efforts to effect the
orderly and efficient transfer of the Sub-Servicing Agreements, or
responsibilities hereunder to the Trustee, or at its written request to such
designee as successor master servicer.
Section 3.06. COLLECTION OF MORTGAGE LOAN PAYMENTS. (a) The Master
Servicer will coordinate and monitor remittances by Sub- Servicers to the
Trustee with respect to the Mortgage Loans in accordance with this Agreement.
(b) The Master Servicer shall make its reasonable best efforts to
collect or cause to be collected all payments required under the terms and
provisions of the Mortgage Loans and shall follow, and use its best efforts to
cause Sub-Servicers to follow, collection procedures comparable to the
collection procedures of prudent mortgage lenders servicing mortgage loans for
their own account to the extent such procedures shall be consistent with this
Agreement. Consistent with the foregoing, the Master Servicer may in its
discretion (i) waive or permit to be waived any late payment charge, prepayment
charge, assumption fee, or any penalty interest in connection with the
prepayment of a Mortgage Loan and (ii) suspend or reduce or permit to be
suspended or reduced regular monthly payments for a period of up to six months,
or arrange or permit an arrangement with a Mortgagor for a scheduled liquidation
of delinquencies. In the event the Master Servicer shall consent to the
deferment of the due dates for payments due on a Mortgage Note, the Master
Servicer shall nonetheless make a Monthly Advance or shall cause the related
Sub-Servicer to make an advance to the same extent as if such installment were
due, owing and delinquent and had not been deferred through liquidation of the
Mortgaged Property; PROVIDED, HOWEVER, that the obligation of the Master
Servicer to make a Monthly Advance shall apply only to the extent that the
Master Servicer believes, in good faith, that such advances are not
Nonrecoverable Advances.
(c) Within five Business Days after the Master Servicer has determined
that all amounts which it expects to recover from or on account of a Mortgage
Loan have been recovered and that no further Liquidation Proceeds will be
received in connection therewith, the Master Servicer shall provide to the
Trustee a certificate of a Servicing Officer that such Mortgage Loan became a
Liquidated Mortgage Loan as of the date of such determination.
Section 3.07. COLLECTION OF TAXES, ASSESSMENTS AND SIMILAR ITEMS;
SERVICING ACCOUNTS. (a) The Master Servicer shall establish and maintain or
cause the Sub-Servicers to establish and maintain, in addition to the Protected
Accounts, one or more Servicing Accounts. The Master Servicer or a Sub-Servicer
will deposit and retain therein all collections from the Mortgagors for the
payment of taxes, assessments, insurance premiums, or comparable items as agent
of the Mortgagors.
(b) The deposits in the Servicing Accounts shall be held in a
Designated Depository Institution in an account designated as a "Mortgage Loan
Servicing Account," held in trust by the Master Servicer or a Sub-Servicer as
Trustee of Taxes and Insurance Custodial Account for borrowers and for ICI
Funding (and its successors and assigns) acting on its own behalf and for ICI
Funding as agent for holders of various pass-through securities and other
interests in mortgage loans sold by it; and agent for various mortgagors, as
their interests may appear or under such other designation as may be permitted
by a Sub-Servicing Agreement. The amount at any time credited to a Servicing
Account must be fully insured by the FDIC, or, to the extent that such deposits
exceed the limits of such insurance, such excess must be (i) transferred to
another fully insured account in another Designated Depository Institution or
(ii) if permitted by applicable law, invested in Permitted Investments held in
trust by the Master Servicer or a Sub-Servicer as described above and maturing,
or be subject to redemption or withdrawal, no later than the date on which such
funds are required to be withdrawn, and in no event later than 45 days after the
date of investment. The Master Servicer may, or may permit a Sub-Servicer to,
establish Servicing Accounts not conforming to the foregoing requirements to the
extent that such Servicing Accounts are Rating Agency Eligible Accounts.
Withdrawals of amounts from the Servicing Accounts may be made only to effect
timely payment of taxes, assessments, insurance premiums, or comparable items,
to reimburse the Master Servicer or a Sub- Servicer for any advances made with
respect to such items, to refund to any Mortgagors any sums as may be determined
to be overages, to pay interest, if required, to Mortgagors on balances in the
Servicing Accounts or to clear and terminate the Servicing Accounts at or any
time after the termination of this Agreement in accordance with Section 10.01.
Section 3.08. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION
REGARDING THE MORTGAGE LOANS. The Master Servicer shall provide, and shall cause
any Sub-Servicer to provide, to the Trustee and the Seller access to the
documentation regarding the related Mortgage Loans and REO Property and to the
Certificateholders, the FDIC, and the supervisory agents and examiners of the
FDIC (to which the Trustee shall also provide) access to the documentation
regarding the related Mortgage Loans required by applicable regulations, such
access being afforded without charge but only upon reasonable request and during
normal business hours at the offices of the Master Servicer, the Sub-Servicers
or the Trustee that are designated by these entities; PROVIDED, HOWEVER, that,
unless otherwise required by law, the Trustee, the Master Servicer or the
Sub-Servicer shall not be required to provide access to such documentation if
the provision thereof would violate the legal right to privacy of any Mortgagor
PROVIDED, FURTHER, HOWEVER, that the Trustee and the Seller shall coordinate
their requests for such access so as not to impose an unreasonable burden on, or
cause an interruption of, the business of the Master Servicer or any
Sub-Servicer. The Master Servicer, the Sub-Servicers and the Trustee shall allow
representatives of the above entities to photocopy any of the documentation and
shall provide equipment for that purpose at a charge that covers their own
actual out-of-pocket costs.
Section 3.09. MAINTENANCE OF PRIMARY INSURANCE POLICIES; COLLECTION
THEREUNDER. The Master Servicer shall, or shall cause the related Sub-Servicer
to, exercise its best reasonable efforts to maintain and keep in full force and
effect each Primary Insurance Policy by a Qualified Insurer, or other insurer
satisfactory to the Rating Agencies, with respect to each conventional Mortgage
Loan as to which as of the Cut-Off Date such a Primary Insurance Policy was in
effect (or, in the case of a Substitute Mortgage Loan, the date of substitution)
and the original principal amount of the related Mortgage Note exceeded 80% of
the Original Value in an amount at least equal to the excess of such original
principal amount over 75% of such Original Value until the principal amount of
any such Mortgage Loan is reduced below 80% of the Original Value or, based upon
a new appraisal, the principal amount of such Mortgage Loan represents less than
80% of the new appraised value. The Master Servicer shall, or shall cause the
related Sub-Servicer to, effect the timely payment of the premium on each
Primary Insurance Policy. The Master Servicer and the related Sub-Servicer shall
have the power to substitute for any Primary Insurance Policy another
substantially equivalent policy issued by another Qualified Insurer; PROVIDED
THAT such substitution is subject to the condition, to be evidenced by a writing
from each Rating Agency, that it would not cause the ratings on the Certificates
to be downgraded or withdrawn.
Section 3.10. MAINTENANCE OF HAZARD INSURANCE AND FIDELITY COVERAGE.
(a) The Master Servicer shall maintain and keep, or cause each Sub-Servicer to
maintain and keep, with respect to each Mortgage Loan and each REO Property, in
full force and effect hazard insurance (fire insurance with extended coverage)
equal to at least the lesser of the Outstanding Principal Balance of the
Mortgage Loan or the current replacement cost of the Mortgaged Property, and
containing a standard mortgagee clause; PROVIDED, HOWEVER, that the amount of
hazard insurance may not be less than the amount necessary to prevent loss due
to the application of any co-insurance provision of the related policy. Unless
applicable state law requires a higher deductible, the deductible on such hazard
insurance policy may be no more than $1000 or 1% of the applicable amount of
coverage, whichever is less. In the case of a condominium unit or a unit in a
planned unit development, the required hazard insurance shall take the form of a
multiperil policy covering the entire condominium project or planned unit
development, in an amount equal to at least 100% of the insurable value based on
replacement cost.
(b) Any amounts collected by the Master Servicer or a Sub-Servicer
under any such hazard insurance policy (other than amounts to be applied to the
restoration or repair of the Mortgaged Property or amounts released to the
Mortgagor in accordance with the Master Servicer's or a Sub-Servicer's normal
servicing procedures, the terms of the Mortgage Note, the Security Instrument or
applicable law) shall be deposited initially in a Protected Account, for
transmittal to the Certificate Account or Custody Account, subject to withdrawal
pursuant to Section 4.03.
(c) Any cost incurred by a Master Servicer or a Sub-Servicer in
maintaining any such hazard insurance policy shall not be added to the amount
owing under the Mortgage Loan for the purpose of calculating monthly
distributions to Certificateholders, notwithstanding that the terms of the
Mortgage Loan so permit. Such costs shall be recoverable by the Master Servicer
or a Sub-Servicer out of related late payments by the Mortgagor or out of
Insurance Proceeds or Liquidation Proceeds or by the Master Servicer from the
Repurchase Price, to the extent permitted by Section 4.03.
(d) No earthquake or other additional insurance is to be required of
any Mortgagor or maintained on property acquired with respect to a Security
Instrument other than pursuant to such applicable laws and regulations as shall
at any time be in force and shall require such additional insurance. When, at
the time of origination of the Mortgage Loan, the Mortgaged Property is located
in a federally designated special flood hazard area, the Master Servicer shall
use its best reasonable efforts to cause with respect to the Mortgage Loans and
each REO Property, flood insurance (to the extent available and in accordance
with mortgage servicing industry practice) to be maintained. Such flood
insurance shall cover the Mortgaged Property, including all items taken into
account in arriving at the Appraised Value on which the Mortgage Loan was based,
and shall be in an amount equal to the lesser of (i) the Outstanding Principal
Balance of the related Mortgage Loan and (ii) the minimum amount required under
the terms of coverage to compensate for any damage or loss on a replacement cost
basis, but not more than the maximum amount of such insurance available for the
related Mortgaged Property under either the regular or emergency programs of the
National Flood Insurance Program (assuming that the area in which such Mortgaged
Property is located is participating in such program). Unless applicable state
law requires a higher deductible, the deductible on such flood insurance may not
exceed $1,000 or 1% of the applicable amount of coverage, whichever is less.
(e) If insurance has not been maintained complying with Subsections
3.10(a) and (d) and there shall have been a loss which would have been covered
by such insurance had it been maintained, the Master Servicer shall pay, or
cause the related Sub-Servicer to pay, for any necessary repairs.
(f) The Master Servicer shall present, or cause the related
Sub-Servicer to present, claims under the related hazard insurance or flood
insurance policy.
(g) The Master Servicer shall obtain and maintain at its own expense
and for the duration of this Agreement a blanket fidelity bond and shall cause
each Sub-Servicer to obtain and maintain an errors and omissions insurance
policy covering such Sub-Servicer's officers, employees and other persons acting
on its behalf in connection with its activities under this Agreement. The amount
of coverage shall be at least equal to the coverage maintained by the Master
Servicer acceptable to FNMA or FHLMC to service loans for it or otherwise in an
amount as is commercially available at a cost that is generally not regarded as
excessive by industry standards. The Master Servicer shall promptly notify the
Trustee of any material change in the terms of such bond or policy. The Master
Servicer shall provide annually to the Trustee a certificate of insurance that
such bond and policy are in effect. If any such bond or policy ceases to be in
effect, the Master Servicer shall, to the extent possible, give the Trustee ten
days' notice prior to any such cessation and shall use its best efforts to
obtain a comparable replacement bond or policy, as the case may be. Any amounts
relating to the Mortgage Loans collected under such bond or policy shall be
remitted to the Certificate Account to the extent that such amounts have not
previously been paid to such account.
Section 3.11. DUE-ON-SALE CLAUSES; ASSUMPTION Agreements. (a) In any
case in which the Master Servicer is notified by any Mortgagor or Sub-Servicer
that a Mortgaged Property relating to a Mortgage Loan has been or is about to be
conveyed by the Mortgagor, the Master Servicer shall enforce, or shall instruct
such Sub-Servicer to enforce, any due-on-sale clause contained in the related
Security Instrument to the extent permitted under the terms of the related
Mortgage Note and by applicable law unless the Master Servicer reasonably
believes such enforcement is likely to result in legal action by the Mortgagor.
The Master Servicer or the related Sub-Servicer may repurchase a Mortgage Loan
at the Repurchase Price when the Master Servicer requires acceleration of the
Mortgage Loan, but only if the Master Servicer is satisfied, as evidenced by an
Officer's Certificate delivered to the Trustee, that either (i) such Mortgage
Loan is in default or default is reasonably foreseeable or (ii) if such Mortgage
Loan is not in default or default is not reasonably foreseeable, such repurchase
will have no adverse tax consequences for the Trust Fund or any
Certificateholder. If the Master Servicer reasonably believes that such
due-on-sale clause cannot be enforced under applicable law or if the Mortgage
Loan does not contain a due-on-sale clause, the Master Servicer is authorized,
and may authorize any Sub-Servicer, to consent to a conveyance subject to the
lien of the Mortgage, and to take or enter into an assumption agreement from or
with the Person to whom such property has been or is about to be conveyed,
pursuant to which such Person becomes liable under the related Mortgage Note and
unless prohibited by applicable state law, such Mortgagor remains liable
thereon, on condition, however, that the related Mortgage Loan shall continue to
be covered (if so covered before the Master Servicer or the related Sub-Servicer
enters into such agreement) by any Primary Insurance Policy. The Master Servicer
shall notify the Trustee, whenever possible, before the completion of such
assumption agreement, and shall forward to the Trustee the original copy of such
assumption agreement, which copy shall be added by the Trustee to the related
Mortgage File and which shall, for all purposes, be considered a part of such
Mortgage File to the same extent as all other documents and instruments
constituting a part thereof. In connection with any such assumption agreement,
the interest rate on the related Mortgage Loan shall not be changed and no other
material alterations in the Mortgage Loan shall be made unless such material
alteration would not cause each of REMIC I and REMIC II to fail to qualify as a
REMIC for federal income tax purposes, as evidenced by a REMIC Opinion. Any fee
or additional interest collected by the Master Servicer or Sub-Servicer for
consenting to any such conveyance or entering into any such assumption agreement
may be retained by the Master Servicer or the related Sub-Servicer as additional
servicing compensation.
(b) Notwithstanding the foregoing paragraph or any other provision of
this Agreement, the Master Servicer shall not be deemed to be in default, breach
or any other violation of its obligations hereunder by reason of any assumption
of a Mortgage Loan by operation of law or any conveyance by the Mortgagor of the
related Mortgaged Property or assumption of a Mortgage Loan which the Master
Servicer reasonably believes it may be restricted by law from preventing, for
any reason whatsoever or if the exercise of such right would impair or threaten
to impair any recovery under any applicable Insurance Policy, or, in the Master
Servicer's judgment, be reasonably, likely to result in legal action by the
Mortgagor.
Section 3.12. REALIZATION UPON DEFAULTED MORTGAGE Loans. (a) The
Master Servicer shall, or shall direct the related Sub-Servicer to, foreclose
upon or otherwise comparably convert the ownership of properties securing any
Mortgage Loans that come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments
pursuant to Section 3.06 except that the Master Servicer shall not, and shall
not direct the related Sub-Servicer to, foreclose upon or otherwise comparably
convert a Mortgaged Property if there is evidence of toxic waste thereon and the
Master Servicer determines it would be imprudent to do so or not in accordance
with appropriate servicing standards. The Master Servicer can conclusively rely
on results of third party inspections from parties it reasonably believes are
qualified to conduct such inspections. In connection with such foreclosure or
other conversion, the Master Servicer in conjunction with the related
Sub-Servicer, if any, shall use its best reasonable efforts to preserve REO
Property and to realize upon defaulted Mortgage Loans in such manner as to
maximize the receipt of principal and interest by the Certificateholders, taking
into account, among other things, the timing of foreclosure and the
considerations set forth in Subsection 3.12(b). The foregoing is subject to the
proviso that the Master Servicer shall not be required to expend its own funds
in connection with any foreclosure or towards the restoration of any property
unless it determines in good faith (i) that such restoration or foreclosure will
increase the proceeds of liquidation of the Mortgage Loan to Certificateholders
after reimbursement to itself for such expenses and (ii) that such expenses will
be recoverable to it either through Liquidation Proceeds (respecting which it
shall have priority for purposes of reimbursements from the Certificate Account
pursuant to Section 4.03) or through Insurance Proceeds (respecting which it
shall have similar priority). The Master Servicer shall be responsible for all
other costs and expenses incurred by it in any such proceedings; PROVIDED,
HOWEVER, that it shall be entitled to reimbursement thereof (as well as its
normal servicing compensation), and in respect of the Master Servicer only, to
receive Excess Liquidation Proceeds as additional servicing compensation to the
extent that transfers or withdrawals from the Certificate Account with respect
thereto are permitted under Section 4.03. Any income from or other funds (net of
any income taxes) generated by REO Property shall be deemed for purposes of this
Agreement to be Insurance Proceeds.
(b) The Trust Fund shall not acquire any real property (or any
personal property incident to such real property) except in connection with a
default or imminent default of a Mortgage Loan. In the event that the Trust Fund
acquires any real property (or personal property incident to such real property)
in connection with a default or imminent default of a Mortgage Loan, such
property shall be disposed of by the Trust Fund within two years after its
acquisition by the Trust Fund unless the Trustee shall have received a REMIC
Opinion with respect to such longer retention or the Master Servicer applies for
and receives an extension of the two-year period under Section 856(e)(3) of the
Code, in which case such two year period will be extended by the period set
forth in such REMIC Opinion or approved application, as the case may be. The
Trustee shall have no obligation to pay for such REMIC Opinion.
(c) Notwithstanding anything to the contrary contained herein, the
Master Servicer shall have the right, at its sole option, to enter into an
agreement substantially in the form of Exhibit G hereto with a Holder of the
Class B-6 Certificates (provided that such form may be revised to incorporate an
option on the part of such Person to purchase a defaulted Mortgage Loan at the
end of the six-month period referred to in Subsection 2.02(f) thereof). It is
understood that the right of the Master Servicer to be reimbursed for Monthly
Advances and Nonrecoverable Advances under this Agreement shall not be affected
in any way by the provisions of any such agreement. The Trustee hereby agrees to
perform such obligations as may be required of it pursuant to the provisions of
such agreement. The Master Servicer agrees to provide the Trustee with such
information as may be necessary, or as the Trustee may reasonably request, for
the Trustee to perform such obligations.
Section 3.13. TRUSTEE TO COOPERATE; RELEASE OF MORTGAGE FILES. (a)
Upon payment in full of any Mortgage Loan or the receipt by the Master Servicer
of a notification that payment in full will be escrowed in a manner customary
for such purposes, the Master Servicer will immediately notify the Trustee by a
certification signed by a Servicing Officer in the Form of Exhibit D (which
certification shall include a statement to the effect that all amounts received
or to be received in connection with such payment which are required to be
deposited in the Certificate Account have been or will be so deposited in the
appropriate subaccount thereof) and shall request delivery to the Master
Servicer or Sub-Servicer, as the case may be, of the Mortgage File. Upon receipt
of such certification and request, the Trustee shall promptly release the
related Mortgage File to the Master Servicer or Sub-Servicer and execute and
deliver to the Master Servicer, without recourse, the request for reconveyance,
deed of reconveyance or release or satisfaction of mortgage or such instrument
releasing the lien of the Security Instrument (furnished by the Master
Servicer), together with the Mortgage Note with written evidence of cancellation
thereon. No expenses incurred in connection with any instrument of satisfaction
or deed of reconveyance shall be chargeable to the Certificate Account.
(b) From time to time as is appropriate for the servicing or
foreclosure of any Mortgage Loan or collection under a Required Insurance
Policy, the Master Servicer shall deliver to the Trustee a Request for Release
signed by a Servicing Officer on behalf of the Master Servicer in substantially
the form attached as Exhibit D hereto. Upon receipt of the Request for Release,
the Trustee shall deliver the Mortgage File or any document therein to the
Master Servicer or Sub-Servicer, as the case may be.
(c) The Master Servicer shall cause each Mortgage File or any document
therein released pursuant to Subsection 3.13(b) to be returned to the Trustee
when the need therefor no longer exists, and in any event within 21 days of the
Master Servicer's receipt thereof, unless the Mortgage Loan has become a
Liquidated Mortgage Loan and the Liquidation Proceeds relating to the Mortgage
Loan have been deposited in the Certificate Account or such Mortgage File is
being used to pursue foreclosure or other legal proceedings. Prior to return of
a Mortgage File or any document to the Trustee, the Master Servicer, the related
Insurer or Sub-Servicer to whom such file or document was delivered shall retain
such file or document in its respective control unless the Mortgage File or such
document has been delivered to an attorney, or to a public trustee or other
public official as required by law, to initiate or pursue legal action or other
proceedings for the foreclosure of the Mortgaged Property either judicially or
non-judicially, and the Master Servicer has delivered to the Trustee a
certificate of a Servicing Officer certifying as to the name and address of the
Person to which such Mortgage File or such document was delivered and the
purpose or purposes of such delivery. If a Mortgage Loan becomes a Liquidated
Mortgage Loan, the Trustee shall deliver the Request for Release with respect
thereto to the Master Servicer upon deposit of the related Liquidation Proceeds
in the Certificate Account.
(d) The Trustee shall execute and deliver to the Master Servicer any
court pleadings, requests for trustee's sale or other documents necessary to (i)
the foreclosure or trustee's sale with respect to a Mortgaged Property; (ii) any
legal action brought to obtain judgment against any Mortgagor on the Mortgage
Note or Security Instrument; (iii) obtain a deficiency judgment against the
Mortgagor; or (iv) enforce any other rights or remedies provided by the Mortgage
Note or Security Instrument or otherwise available at law or equity. Together
with such documents or pleadings the Master Servicer shall deliver to the
Trustee a certificate of a Servicing Officer in which it requests the Trustee to
execute the pleadings or documents. The certificate shall certify and explain
the reasons for which the pleadings or documents are required. It shall further
certify that the Trustee's execution and delivery of the pleadings or documents
will not invalidate any insurance coverage under the Required Insurance Policies
or invalidate or otherwise affect the lien of the Security Instrument, except
for the termination of such a lien upon completion of the foreclosure or
trustee's sale.
Section 3.14. SERVICING AND MASTER SERVICING COMPENSATION. (a) As
compensation for its activities hereunder, the Master Servicer shall be entitled
to receive the Master Servicing Fee from full payments of accrued interest on
each Mortgage Loan.
(b) The Master Servicer may retain additional servicing compensation
in the form of prepayment charges, if any, assumption fees, tax service fees,
fees for statement of account or payoff, late payment charges, interest on
amounts deposited in any Accounts or Permitted Investments of such amounts, or
otherwise. The Master Servicer is also entitled to receive Excess Liquidation
Proceeds as additional servicing compensation to the extent that transfers or
withdrawals from the Certificate Account with respect thereto are permitted
under Subsection 4.03(a)(xii). The Master Servicer shall be required to pay all
expenses it incurs in connection with servicing activities under this Agreement,
including fees and expenses to Sub-Servicers, and shall not be entitled to
reimbursement except as provided in this Agreement. Expenses to be paid by the
Master Servicer under this Subsection 3.14(b) shall include payment of the
expenses of the accountants retained pursuant to Section 3.16.
Section 3.15. ANNUAL STATEMENT OF COMPLIANCE. Within 120 days after
December 31 of each year, commencing December 1996, the Master Servicer at its
own expense, shall deliver to the Trustee, with a copy to the Rating Agencies,
an Officer's Certificate stating, as to the signer thereof, that (i) a review of
the activities of the Master Servicer during the preceding fiscal year and of
performance under this Agreement has been made under such officer's supervision,
(ii) to the best of such officer's knowledge, based on such review, the Master
Servicer has fulfilled all its obligations under this Agreement for such year,
or, if there has been a default in the fulfillment of any such obligation,
specifying each such default known to such officer and the nature and status
thereof including the steps being taken by the Master Servicer to remedy such
default; (iii) a review of the activities of each Sub-Servicer during the
Sub-Servicer's most recently ended fiscal year on or prior to such December 31
and its performance under its Sub-Servicing Agreement has been made under such
Officer's supervision; and (iv) to the best of the Servicing Officer's
knowledge, based on his review and the certification of an officer of the
Sub-Servicer (unless the Servicing Officer has reason to believe that reliance
on such certification is not justified), either each Sub-Servicer has performed
and fulfilled its duties, responsibilities and obligations under this Agreement
and its Sub-Servicing Agreement in all material respects throughout the year,
or, if there has been a default in performance or fulfillment of any such
duties, responsibilities or obligations, specifying the nature and status of
each such default known to the Servicing Officer. Copies of such statements
shall be provided by the Master Servicer to the Certificateholders upon request
or by the Trustee at the expense of the Master Servicer should the Master
Servicer fail to provide such copies.
Section 3.16. ANNUAL INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING REPORT.
(a) Within 120 days after December 31 of each year, commencing December, 1996,
the Master Servicer, at its expense, shall cause a firm of Independent public
accountants who are members of the American Institute of Certified Public
Accountants to furnish a statement to the Master Servicer, which will be
provided to the Trustee and the Rating Agencies to the effect that, in
connection with the firm's examination of the Master Servicer's financial
statements as of the end of such fiscal year, nothing came to their attention
that indicated that the Master Servicer was not in compliance with Sections
3.07, 3.15, 4.01, 4.02, 4.03 and 4.04 except for (i) such exceptions as such
firm believes to be immaterial and (ii) such other exceptions as are set forth
in such statement.
(b) Within 120 days after December 31 of each year, commencing
December 1996, the Master Servicer, at its expense, shall furnish to the Trustee
the most recently available letter or letters from one or more firms of
Independent certified public accountants who are members of the American
Institute of Certified Public Accountants reporting the results of such firm's
examination of the servicing procedures of any Sub-Servicer and any Master
Servicer (other than ICI Funding or the Trustee) in accordance with the
requirements of the Uniform Single Attestation Program for Mortgage Bankers.
Section 3.17. REMIC-RELATED COVENANTS. For as long as REMIC I and
REMIC II shall exist, the Master Servicer and the Trustee shall act in
accordance herewith to assure continuing treatment of REMIC I and REMIC II as
REMICs, and the Trustee shall comply with any directions of the Master Servicer
to assure such continuing treatment. In particular, the Trustee shall not (a)
sell or permit the sale of all or any portion of the Mortgage Loans or of any
Permitted Investment unless such sale is as a result of a repurchase of the
Mortgage Loans pursuant to this Agreement or the Trustee has received a REMIC
Opinion prepared at the expense of the Trust Fund; and (b) other than with
respect to a substitution pursuant to Section 2.04, accept any contribution to
REMIC I or REMIC II after the Startup Day without receipt of a REMIC Opinion.
Section 3.18. ADDITIONAL INFORMATION. The Master Servicer agrees to
furnish the Seller from time to time upon reasonable request, such further
information, reports and financial statements as the Seller deems appropriate to
prepare and file all necessary reports with the Securities and Exchange
Commission.
Section 3.19. OPTIONAL PURCHASE OF DEFAULTED MORTGAGE LOANS. The
Master Servicer shall have the right, but not the obligation, to purchase any
Defaulted Mortgage Loan for a price equal to the Repurchase Price therefor. Any
such purchase shall be accomplished as provided in Subsection 2.02(c) hereof.
<PAGE>
ARTICLE IV
Accounts
Section 4.01. PROTECTED ACCOUNTS. (a) The Master Servicer shall
require each Sub-Servicer to establish and maintain a Protected Account
complying with the requirements set forth in this Section 4.01, with records to
be kept with respect thereto on a Mortgage Loan by Mortgage Loan basis, into
which accounts shall be deposited within 24 hours of receipt all collections of
principal and interest on any Mortgage Loan and with respect to any REO Property
received by the Master Servicer, or a Sub-Servicer, including Principal
Prepayments, Insurance Proceeds, Liquidation Proceeds, and advances made from
the Sub-Servicer's own funds (less servicing compensation as permitted by
Subsection 3.14(a)) and all other amounts to be deposited in the Protected
Accounts. The Master Servicer is hereby authorized to make withdrawals from and
deposits to the related Protected Accounts for purposes required or permitted by
this Agreement. All Protected Accounts shall be held in a Designated Depository
Institution and segregated on the books of such institution. The amount at any
time credited to a Protected Account shall be fully insured by the FDIC or, to
the extent that such balance exceeds the lesser of $100,000 or the limits of
such insurance, such excess must be transferred to the appropriate subaccount of
the Certificate Account or the related Custody Account or invested in Permitted
Investments.
Amounts on deposit in a Protected Account may be invested in Permitted
Investments, such Permitted Investments to mature, or to be subject to
redemption or withdrawal, no later than the date on which such funds are
required to be withdrawn for deposit in the Custody Account or Certificate
Account, and shall be held until required for such deposit. The income earned
from Permitted Investments made pursuant to this Section 4.01 shall be paid to
the Master Servicer or the related Sub-Servicer as additional compensation for
its obligations under this Agreement, and the risk of loss of moneys required to
be distributed to the Certificateholders resulting from such investments shall
be borne by and be the risk of the Master Servicer or the related Sub-Servicer.
The Master Servicer shall cause the related Sub-Servicer to deposit the amount
of any such loss in the related Protected Account within two Business Days of
receipt of notification of such loss but not later than the second Business Day
prior to the Distribution Date on which the moneys so invested are required to
be distributed to the Certificateholders. The Master Servicer may, and the
Master Servicer may permit the related Sub-Servicer to, transfer funds to other
accounts (which shall for purposes hereof be deemed to be Protected Accounts) or
to establish Protected Accounts not conforming to the foregoing requirements, to
the extent that such other accounts or Protected Accounts are Rating Agency
Eligible Accounts.
(b) On or before each Funds Transfer Date, the Master Servicer shall
withdraw or shall cause (by written direction to the Trustee if such withdrawal
is from a Custody Account) to be withdrawn from the Protected Accounts or the
Custody Account and shall immediately deposit or cause to be deposited in the
Certificate Account amounts representing the following collections and payments
(other than with respect to principal of or interest on the Mortgage Loans due
on or before the Cut-Off Date):
(i) Scheduled Payments on the Mortgage Loans received or advanced
by the Master Servicer or Sub-Servicers which were due on or before
the related Due Date, net of the amount thereof comprising the Master
Servicing Fee due the Master Servicer;
(ii) Full Principal Prepayments and any Liquidation Proceeds
received by the Master Servicer or Sub-Servicers with respect to such
Mortgage Loans in the related Prepayment Period, with interest to the
date of prepayment or liquidation, net of the amount thereof
comprising the Master Servicing Fee due the Master Servicer;
(iii) Partial prepayments of principal received by the Master
Servicer or Sub-Servicers for such Mortgage Loans in the related
Prepayment Period; and
(iv) Any amount to be used as a Certificate Account Advance.
(c) Withdrawals may be made from a Protected Account only to make
remittances as provided in Subsections 4.01(b) or 4.03(c), or Section 4.04; to
reimburse the Master Servicer or a Sub-Servicer for advances of principal and
interest which have been recovered by subsequent collection from the related
Mortgagor; to remove amounts deposited in error; to remove fees, charges or
other such amounts deposited on a temporary basis; or to clear and terminate the
account at the termination of this Agreement in accordance with Section 10.01.
(d) The Master Servicer shall deliver to the Trustee on or prior to
the Determination Date in each month a statement from the institution at which
each Protected Account is maintained showing deposits and withdrawals during the
prior month.
Section 4.02. CERTIFICATE ACCOUNT. (a) The Trustee shall establish and
maintain in the name of the Trustee, for the benefit of the Certificateholders,
the Certificate Account as a segregated non-interest bearing trust account or
accounts. The Trustee will deposit in the Certificate Account as received the
following amounts:
(i) Any amounts withdrawn from a Protected Account pursuant to
Subsection 4.01(b) or the Custody Account pursuant to Section 4.04;
(ii) Any Monthly Advance and any Compensating Interest Payments;
(iii) Any Insurance Proceeds or Liquidation Proceeds received by
the Master Servicer which were not deposited in a Protected Account or
the Custody Account;
(iv) The Repurchase Price with respect to any Mortgage Loans
purchased by ICI Funding pursuant to Sections 2.02 or 2.03 or by the
Master Servicer pursuant to Section 3.19, any amounts which are to be
treated pursuant to Section 2.04 as the payment of such a Repurchase
Price, and all proceeds of any Mortgage Loans or property acquired
with respect thereto repurchased by the Master Servicer or its
designee pursuant to Section 10.01;
(v) Any amounts required to be deposited with respect to losses
on Permitted Investments pursuant to Subsection 4.02(d) or Section
4.04(d) below; and
(vi) Any other amounts received by the Master Servicer or the
Trustee and required to be deposited in the Certificate Account
pursuant to this Agreement.
(b) All amounts deposited to the Certificate Account shall be held by
the Trustee in the name of the Trustee in trust for the benefit of the
Certificateholders in accordance with the terms and provisions of this
Agreement, subject to the right of the Master Servicer to require the Trustee to
make withdrawals therefrom as provided herein. The foregoing requirements for
crediting the Certificate Account shall be exclusive, it being understood and
agreed that, without limiting the generality of the foregoing, payments in the
nature of prepayment or late payment charges or assumption, tax service,
statement account or payoff, substitution, satisfaction, release and other like
fees and charges need not be credited by the Master Servicer or the related
Sub-Servicer to the Certificate Account and may be retained by the Master
Servicer or the related Sub-Servicer as servicing compensation. In the event
that the Master Servicer shall deposit or cause to be deposited to the
Certificate Account any amount not required to be credited thereto, the Trustee,
upon receipt of a written request therefor signed by a Servicing Officer of the
Master Servicer, shall promptly transfer such amount to the Master Servicer, any
provision herein to the contrary notwithstanding.
(c) The Certificate Account shall constitute a trust account of the
Trust Fund segregated on the books of the Trustee and held by the Trustee in
trust, and the Certificate Account and the funds deposited therein shall not be
subject to, and shall be protected from, all claims, liens, and encumbrances of
any creditors or depositors of the Trustee or the Master Servicer (whether made
directly, or indirectly through a liquidator or receiver of the Trustee or the
Master Servicer). The amount at any time credited to the Certificate Account
shall be (i) fully insured by the FDIC to the maximum coverage provided thereby,
(ii) at the written direction of the Master Servicer invested, in the name of
the Trustee, or its nominee, for the benefit of the Certificateholders, in such
Permitted Investments to be held by the Trustee as the Master Servicer may
direct (such direction to be confirmed in writing) and in the absence of such
direction, the Trustee shall invest funds in the Certificate Account in
Permitted Investments described in clause (viii) of the definition thereof, or
(iii) from the maturity of any Permitted Investment on the Business Day prior to
a Distribution Date through the distribution of such funds on such Distribution
Date or at such other time and in such amount as, in the judgment of the Master
Servicer, cannot reasonably be invested in accordance with items (i) or (ii) of
this sentence, held by the Trustee in such Certificate Account. All Permitted
Investments shall mature or be subject to redemption or withdrawal on or before,
and shall be held until, the next succeeding Distribution Date if the obligor
for such Permitted Investment is the Trustee or, if such obligor is any other
Person, the Business Day preceding such Distribution Date. With respect to the
Certificate Account and the funds deposited therein, the Trustee shall take such
action as may be necessary to ensure that the Certificateholders shall be
entitled to the priorities afforded to such a trust account (in addition to a
claim against the estate of the Trustee) as provided by 12 U.S.C. ss. 92a(e), if
applicable, or any applicable comparable state statute applicable to state
chartered banking corporations.
(d) The income earned from Permitted Investments made pursuant to this
Section 4.02 shall be paid to the Master Servicer, as additional compensation
for its obligations under this Agreement, and the risk of loss of moneys
required to be distributed to the Certificateholders resulting from such
investments shall be borne by and be the risk of the Master Servicer. The amount
of any such loss shall be remitted by the Master Servicer to the Trustee for
deposit in the Certificate Account within two Business Days of receipt of
notification of such loss but not later than the second Business Day prior to
the Distribution Date on which the moneys so invested are required to be
distributed to the Certificateholders.
Section 4.03. PERMITTED WITHDRAWALS AND TRANSFERS FROM THE CERTIFICATE
ACCOUNT. (a) The Trustee will, from time to time on demand of the Master
Servicer, make or cause to be made such withdrawals or transfers from the
Certificate Account as the Master Servicer has designated for such transfer or
withdrawal as specified in a certificate signed by a Servicing Officer (upon
which the Trustee may conclusively rely) for the following purposes:
(i) [intentionally omitted];
(ii) to reimburse the Master Servicer or any Sub-Servicer for any
Monthly Advance of its own funds or any advance of such Sub-Servicer's
own funds, the right of the Master Servicer or a Sub-Servicer to
reimbursement pursuant to this subclause (ii) being limited to amounts
received on a particular Mortgage Loan (including, for this purpose,
the Repurchase Price therefor, Insurance Proceeds and Liquidation
Proceeds) which represent late payments or recoveries of the principal
of or interest on such Mortgage Loan respecting which such Monthly
Advance or advance was made;
(iii) to reimburse the Master Servicer or any Sub-Servicer from
Insurance Proceeds or Liquidation Proceeds relating to a particular
Mortgage Loan for amounts expended by the Master Servicer or such
Sub-Servicer pursuant to Section 3.12 in good faith in connection with
the restoration of the related Mortgaged Property which was damaged by
an Uninsured Cause or in connection with the liquidation of such
Mortgage Loan;
(iv) to reimburse the Master Servicer or any Sub-Servicer from
Insurance Proceeds relating to a particular Mortgage Loan for Insured
Expenses incurred with respect to such Mortgage Loan and to reimburse
the Master Servicer or such Sub-Servicer from Liquidation Proceeds
from a particular Mortgage Loan for Liquidation Expenses incurred with
respect to such Mortgage Loan; PROVIDED THAT the Master Servicer shall
not be entitled to reimbursement for Liquidation Expenses with respect
to a Mortgage Loan to the extent that (i) any amounts with respect to
such Mortgage Loan were paid as Excess Liquidation Proceeds pursuant
to clause (xii) of this Subsection 4.03(a) to the Master Servicer; and
(ii) such Liquidation Expenses were not included in the computation of
such Excess Liquidation Proceeds;
(v) to pay the Master Servicer or any Sub-Servicer (payment to
any Sub-Servicer to be subject to prior payment to the Master Servicer
of an amount equal to the Master Servicing Fee), as appropriate, from
Liquidation Proceeds or Insurance Proceeds received in connection with
the liquidation of any Mortgage Loan, the amount which it or such
Sub-Servicer would have been entitled to receive under subclause (x)
of this Subsection 4.03(a) as servicing compensation on account of
each defaulted scheduled payment on such Mortgage Loan if paid in a
timely manner by the related Mortgagor, but only to the extent that
the aggregate of Liquidation Proceeds and Insurance Proceeds with
respect to such Mortgage Loan, after any reimbursement to the Master
Servicer or any Sub-Servicer, pursuant to subclauses (ii), (iii), (iv)
and (vii) of this Subsection 4.03(a), exceeds the Outstanding
Principal Balance of such Mortgage Loan plus accrued and unpaid
interest thereon at the related Mortgage Interest Rate less the Master
Servicing Fee Rate to but not including the date of payment;
(vi) to pay the Master Servicer or any Sub-Servicer (payment to
any Sub-Servicer to be subject to prior payment to the Master Servicer
of the portion of the Master Servicing Fee which the Master Servicer
is entitled to retain as evidenced in writing to the Trustee by the
Master Servicer, as appropriate, from the Repurchase Price for any
Mortgage Loan, the amount which it or such Sub-Servicer would have
been entitled to receive under subclause (x) of this Subsection
4.03(a) as servicing compensation, but only to the extent that the
Repurchase Price with respect to such Mortgage Loan after any
reimbursement to the related Master Servicer and Sub- Servicer
pursuant to subclauses (ii) and (vii) of this Subsection 4.03(a)
exceeds the Outstanding Principal Balance of such Mortgage Loan plus
accrued and unpaid interest thereon at the related Mortgage Interest
Rate less the Master Servicing Fee Rate through the last day of the
month of repurchase;
(vii) to reimburse the Master Servicer or any Sub- Servicer for
advances of funds pursuant to Sections 3.07, 3.09 and 3.10, the right
to reimbursement pursuant to this subclause being limited to amounts
received on the related Mortgage Loan (including, for this purpose,
the Repurchase Price therefor, Insurance Proceeds and Liquidation
Proceeds) which represent late recoveries of the payments for which
such advances were made;
(viii) to pay the Master Servicer or any Sub-Servicer, as the
case may be, with respect to each Mortgage Loan that has been
purchased pursuant to Section 2.02, 2.03, 2.04, 3.19 or 10.01, all
amounts received thereon, representing recoveries of principal that
reduce the Outstanding Principal Balance of the related Mortgage Loan
below the Outstanding Principal Balance used in calculating the
Repurchase Price or representing interest included in the calculation
of the Repurchase Price or accrued after the end of the month during
which such repurchase occurs;
(ix) to reimburse the Master Servicer or any Sub-Servicer for any
Monthly Advance or advance, after a Realized Loss has been allocated
with respect to the related Mortgage Loan if the Monthly Advance or
advance has not been reimbursed pursuant to clauses (ii) and (vii);
(x) to pay the Master Servicer and any Sub-Servicer servicing
compensation as set forth in Section 3.14;
(xi) to reimburse the Master Servicer for expenses, costs and
liabilities incurred by and reimbursable to it pursuant to Subsection
7.04(d);
(xii) to pay to the Master Servicer, as additional servicing
compensation, any Excess Liquidation Proceeds;
(xiii) to clear and terminate the Certificate Account pursuant to
Section 10.01; and
(xiv) to remove amounts deposited in error.
The Master Servicer shall keep and maintain separate accounting, on a
Mortgage Loan by Mortgage Loan basis, for the purpose of accounting for any
reimbursement from the Certificate Account pursuant to subclauses (i) through
(vii), inclusive, and (ix).
(b) On each Distribution Date, the Trustee shall make the following
payments in the priority set forth from the funds in the Certificate Account:
(i) First, the Trustee's Fees shall be paid to the Trustee; and
(ii) Second, the amount distributable to the Holders of the
Certificates shall be payable in accordance with Section 6.01.
(c) Notwithstanding the provisions of this Section 4.03, the Master
Servicer may, but is not required to, allow the Sub-Servicers to deduct from
amounts received by them or from the related Protected Account, prior to deposit
in the Certificate Account or the Custody Account, any portion to which such
Sub-Servicers are entitled as servicing compensation (including income on
Permitted Investments) or reimbursement of any reimbursable advances made by
such Sub-Servicers.
Section 4.04 CUSTODY ACCOUNT. (a) The Trustee shall establish and
maintain for the benefit of the Certificateholders the Custody Account as a
segregated non-interest bearing trust account in the corporate trust department
of a Designated Depository Institution. The Custody Account shall constitute a
trust account of the Trust Fund segregated on the books of the Designated
Depository Institution and held by the Designated Depository Institution in
trust, and such Account and the funds deposited therein shall not be subject to,
and shall be protected from, all claims, liens, and encumbrances of any
creditors or depositors of the Designated Depository Institution, the Trustee,
the Master Servicer, any Sub-Servicer (whether made directly, or indirectly
through a liquidator or receiver of the Designated Depository Institution, the
Trustee, any Master Servicer, or any Sub-Servicer). With respect to the Custody
Account maintained with the Trustee and the funds deposited therein, the Trustee
shall take such action as may be necessary to ensure that the Certificate-
holders shall be entitled to the priorities afforded to such a trust account (in
addition to a claim against the estate of the Trustee) as provided by 12 U.S.C.
ss. 92a(e), if applicable, or any applicable comparable state statute applicable
to state chartered banking corporations. The Custody Account shall be an outside
reserve fund of REMIC II and shall not constitute a part of REMIC II (or REMIC
I). The Trustee shall be the legal owner of the portion of the Funds held in the
Custody Account for the benefit of the Certificateholders and for all Federal
income tax purposes, ICI Funding shall be the owner of the Custody Account. For
all Federal tax purposes, amounts, if any, transferred by REMIC II to the
Custody Account shall be treated as amounts distributed by REMIC II to ICI
Funding.
(b) Within one Business Day after receipt, the Master Servicer shall
withdraw or shall cause to be withdrawn from each Protected Account and shall
immediately deposit or cause to be deposited in the Custody Account all amounts
in the Protected Account not otherwise invested in Permitted Investments
pursuant to Section 4.01 and exceeding the lesser of $100,000 or the FDIC
insurance limit (other than with respect to principal of or interest on the
Mortgage Loans due on or before the Cut-Off Date).
(c) Withdrawals may be made from the Custody Account only to make
remittances as provided in Sections 4.01(b) or 4.04(d); to reimburse the Master
Servicer or any Sub-Servicer for advances of principal and interest which have
been recovered by subsequent collection from the related Mortgagor; to remove
amounts deposited in error; to remove fees, charges or other such amounts
deposited on a temporary basis; or to clear and terminate the account at the
termination of this Agreement in accordance with Section 10.01.
(d) Funds in the Custody Account may be invested at the direction of
the Master Servicer (such direction to be confirmed promptly in writing) in
Permitted Investments held in trust for the benefit of the Certificateholders
and in the absence of such directions, funds in the Custody Account shall be
invested in Permitted Investments described in clause (viii) of the definition
thereof. Such Permitted Investments must mature, or be subject to redemption or
withdrawal, no later than the date on which such funds are required to be
withdrawn for deposit in the Certificate Account pursuant to Section 4.01(b) and
shall be held in such Account until required for such deposit. The income earned
from Permitted Investments made pursuant to this Section 4.04 shall be paid to
the Master Servicer as additional compensation for its obligations under this
Agreement, and the risk of loss of moneys required to be distributed to the
Certificateholders resulting from such investments shall be borne by and be the
risk of the Master Servicer. The amount of any such loss shall be deposited by
the Master Servicer in the Custody Account within two Business Days of receipt
of notification of such loss but not later than the second Business Day prior to
the Distribution Date on which the moneys so invested are required to be
distributed to the Certificateholders.
<PAGE>
ARTICLE V
Certificates
Section 5.01. CERTIFICATES. (a) The Depository, the Seller and the
Trustee have entered into a Depository Agreement dated as of June 28, 1996 (the
"Depository Agreement"). Except for the Physical Certificates, the Individual
Certificates and as provided in Subsection 5.01(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 such Certificate Owners of the respective Class of
Certificates 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 such respective Classes of
Book-Entry Certificates and Global 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 Book-Entry Certificates of Certificate Owners it represents or of
brokerage firms for which it acts as agent in accordance with the Depository's
normal procedures.
(b) If (i)(A) the Seller advises the Trustee in writing that the
Depository is no longer willing or able to properly discharge its
responsibilities as Depository and (B) the Trustee or the Seller is unable to
locate a qualified successor within 30 days or (ii) the Seller at its option
advises the Trustee 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 Seller, the Master Servicer 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) REMIC II will be evidenced by (x) the REMIC II Regular
Certificates, which will be uncertificated and non-transferable and are hereby
designated as the "regular interests" in REMIC II and (y) the Class R-2
Certificates, which are hereby designated as the single "residual interest" in
REMIC II. Except as discussed below, principal and interest shall be paid on the
REMIC II Regular Certificates in the same order and priority as payments are to
be made on the Corresponding Classes of Certificates (disregarding the Class X
Certificates). The REMIC II Regular Certificates and the Class R-2 Certificates
will have the following designations and pass-through rates, and distributions
of principal and interest thereon shall be allocated to the Corresponding Class
of Certificates in the following manner:
<TABLE>
<CAPTION>
Corresponding Class of
CERTIFICATES (1)
Allocation Allocation
REMIC II Initial Pass-Through of of
CERTIFICATES BALANCE RATE PRINCIPAL INTEREST
<S> <C> <C> <C> <C>
II-A-1 $45,532,000 (2) A-1 A-1 (5)
II-A-2 $28,467,000 (2) A-2 A-2 (5)
II-A-3 $24,371,000 (2) A-3 A-3 (5)
II-A-4 $18,604,000 (2) A-4 A-4 (5)
II-A-5 $17,089,000 (2) A-5 A-5 (5)
II-A-6 $ 6,502,000 (2) A-6 A-6 (5)
II-A-7 $12,175,000 (2) A-7 A-7 (5)
II-A-8 $17,149,000 (2) A-8 A-8 (5)
II-A-9 $ 9,256,000 (2) A-9 A-9 (5)
II-A-10 $16,000,346 (2) A-10 A-10(5)
II-A-11 $ 2,500,000 (2) A-11 A-11(5)
II-PO $ 165,945 (3) PO N/A
II-B-1 $ 7,068,134 (2) B-1 B-1 (5)
II-B-2 $ 4,890,943 (2) B-2 B-2 (5)
II-B-3 $ 2,717,190 (2) B-3 B-3 (5)
II-B-4 $ 1,412,939 (2) B-4 B-4 (5)
II-B-5 $ 978,188 (2) B-5 B-5 (5)
II-B-6 $ 1,956,379.87 (2) B-6 B-6 (5)
II-R-1 $ 100 (2) R-1 R-1 (5)
R-2 $ 100 (4) N/A N/A (6)
</TABLE>
- -----------------
(1) Except as otherwise indicated, the amount of principal and interest
allocable from a REMIC II Certificate to its Corresponding Class of
Certificates on any Distribution Date shall be 100%. Principal payments
will be made on the Class R-2 Certificate pro-rata with principal
payments on the Class II-R-1
Certificate.
(2) The pass-through rate on these REMIC II Certificates for any
Distribution Date shall equal the rate computed by dividing (i)
the sum of the amounts computed for each Mortgage Loan determined
by multiplying the principal balance of each Mortgage Loan by the
Net Rate of the Mortgage Loan, by (ii) the sum of the amounts
computed for each Mortgage Loan determined by multiplying the Non-
PO Percentage with respect to each Mortgage Loan by the principal
balance of the Mortgage Loan.
(3) The Class II-PO Certificate will be a principal only Certificate
and will not bear interest.
(4) The Pass-Through Rate on the Class R-2 Certificates shall equal the
weighted average of the Net Rates of the Mortgage Loans.
(5) Interest in excess of the Pass-Through Rate for this Class shall be
allocated to the Class X Certificates as a Separate Component.
(6) On each Distribution Date, Available Funds, if any, remaining in REMIC
II after payment of interest and principal, as designated above, will
be distributed to the Class R-2 Certificate.
(d) The Classes of the Certificates shall have the following
designations, initial principal amounts and Pass-Through Rates:
<TABLE>
<CAPTION>
Initial Principal Pass-Through
DESIGNATION AMOUNT RATE
<S> <C> <C>
A-1 $ 45,532,000 6.82%
A-2 $ 28,467,000 7.24%
A-3 $ 24,371,000 7.39%
A-4 $ 18,604,000 7.55%
A-5 $ 17,089,000 7.75%
A-6 $ 6,502,000 7.75%
A-7 $ 12,175,000 7.75%
A-8 $ 17,149,000 7.75%
A-9 $ 9,256,000 7.75%
A-10 $ 16,000,346 7.75%
A-11 $ 2,500,000 7.75%
PO $ 165,945 (1)
X $ 217,375,265* (2)
B-1 $ 7,068,134 7.75%
B-2 $ 4,890,943 7.75%
B-3 $ 2,717,190 7.75%
B-4 $ 1,412,939 7.75%
B-5 $ 978,188 7.75%
B-6 $ 1,956,379.87 7.75%
R-1 $ 100 7.75%
</TABLE>
* Original Notional Amount
(1) The Class PO Certificates are principal only Certificates and
will not bear interest.
(2) The Class X Certificates will bear interest on their Notional
Amount at a variable Pass-Through Rate equal to the excess of
(a) the weighted average of the Net Rates of the Mortgage
Loans (weighted on the basis of the Scheduled Principal
Balances thereof) over (b) the weighted average of the Pass-
Through Rates of all the Certificates (other than the Class X
Certificates).
(e) With respect to each Distribution Date, each Class of Certificates
(other than the Class PO Certificates) shall accrue interest during the related
Interest Accrual Period. With respect to each Distribution Date and each such
Class of Certificates, interest shall be calculated based upon the respective
Pass-Through Rate set forth, or determined as provided, above and the Current
Principal Amount or Notional Amount, as the case may be, of such Class
applicable to such Distribution Date.
(f) The Certificates shall be substantially in the forms set forth in
Exhibit A-1 and A-2. On original issuance, the Trustee shall sign, countersign
and shall deliver them at the direction of the Seller. Pending the preparation
of definitive Certificates of any Class, the Trustee may sign and countersign
temporary Certificates that are printed, lithographed or typewritten, in
authorized denominations for Certificates of such Class, 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 Seller 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 countersign and
deliver in exchange therefor a like aggregate principal amount, in authorized
denominations for such Class, of definitive Certificates of the same Class.
Until so exchanged, such temporary Certificates shall in all respects be
entitled to the same benefits as Defini- tive Certificates.
(g) Each Class of Book-Entry Certificates will be registered as a
single Certificate of such Class held by a nominee of the Depository or the DTC
Custodian, and beneficial interests will be held by investors through the
book-entry facilities of the Depository in minimum denominations of $25,000 and
increments of $1 in excess thereof, except that one Certificate of each such
Class may be issued in a different amount so that the sum of the denominations
of all outstanding Certificates of such Class shall equal the Current Principal
Amount of such Class on the Closing Date. Each Class of Global Certificates
shall be issued in fully registered form in minimum dollar denominations of
$25,000 and integral multiples of $1 in excess thereof, except that one
Certificate of each Class may be in a different denomination so that the sum of
the denominations of all outstanding Certificates of such Class shall equal the
Current Principal Amount of such Class on the Closing Date. On the Closing Date,
the Trustee shall execute and countersign (i) one or more Global Certificates of
each Class and/or (ii) Individual Certificates all in an aggregate principal
amount that shall equal the Current Principal Amount of such Class on the
Closing Date. The Global Certificates shall be delivered by the Seller to the
Depository or pursuant to the Depository's instructions, shall be delivered by
the Seller on behalf of the Depository to and deposited with the DTC Custodian.
The Class X, Class B-4, Class B-5 and Class B-6 Certificates will be issued in
certificated fully-registered form in minimum denominations of $25,000 and
increments of $1 in excess thereof, except that one Certificate of each such
Class may be issued in a different amount so that the sum of the denominations
of all outstanding Certificates of such Class shall equal the Current Principal
Amount (or Notional Amount in the case of the Class X Certificates) of such
Class on the Closing Date. The Class R-1 and Class R-2 Certificates shall be
issued in certificated fully-registered form in the denomination of $100 each.
The Trustee shall sign them by facsimile or manual signature and countersign
them by manual signature on behalf of the Trustee by authorized signatories, who
shall be Responsible Officers of the Trustee or its agent. A Certificate bearing
the manual and facsimile signatures of individuals who were the authorized
signatories of the Trustee or its agent at the time of issuance shall bind the
Trustee, notwithstanding that such individuals or any of them have ceased to
hold such positions prior to the delivery of such Certificate.
(h) No Certificate shall be entitled to any benefit under this
Agreement, or be valid for any purpose, unless there appears on such Certificate
the countersignature of the Trustee or its agent, and such countersignature upon
any Certificate shall be conclusive evidence, and the only evidence, that such
Certificate has been duly executed and delivered hereunder. All Certificates
issued on the Closing Date shall be dated the Closing Date. All Certificates
issued thereafter shall be dated the date of their countersignature.
(i) The Closing Date is hereby designated as the "startup" day of each
REMIC within the meaning of Section 860G(a)(9) of the Code.
(j) For federal income tax purposes, each REMIC shall have a tax year
that is a calendar year and shall report income on an accrual basis.
(k) The Trustee shall cause each REMIC to elect to be treated as a
REMIC under Section 860D of the Code. Any inconsistencies or ambiguities in this
Agreement or in the administration of any Trust established hereby shall be
resolved in a manner that preserves the validity of such elections.
(l) The Assumed Final Distribution Date for each Class of Certificates
and REMIC II Certificates is June 25, 2027.
Section 5.02. REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES.
(a) The Trustee shall maintain at an office or agency a Certificate Register in
which, subject to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and of transfers and
exchanges of Certificates as herein provided.
(b) Subject to Subsection 5.01(a) and, in the case of each Class of
Global Certificates or Physical Certificates upon the satisfaction of the
conditions set forth below, upon surrender for registration of transfer of any
Certificate at any office or agency of the Trustee maintained for such purpose,
the Trustee shall sign, countersign and shall deliver, in the name of the
designated transferee or transferees, a new Certificate of a like Class and
aggregate Fractional Undivided Interest, but bearing a different number.
(c) By acceptance of an Individual Certificate, whether upon original
issuance or subsequent transfer, each holder of such a Certificate acknowledges
the restrictions on the transfer of such Certificate set forth in the Securities
Legend and agrees that it will transfer such a Certificate only as provided
herein. In addition to the provisions of Subsection 5.02(h), the following
restrictions shall apply with respect to the transfer and registration of
transfer of an Individual Certificate to a transferee that takes delivery in the
form of an Individual Certificate:
(i) The Trustee shall register the transfer of an Individual
Certificate if the requested transfer is being made to a transferee
who has provided the Trustee with a Rule 144A Certificate.
(ii) The Trustee shall register the transfer of any Individual
Certificate if (x) the transferor has advised the Trustee in writing
that the Certificate is being transferred to an Institutional
Accredited Investor; and (y) prior to the transfer the transferee
furnishes to the Trustee an Investment Letter, provided that, if based
upon an Opinion of Counsel to the effect that the delivery of (x) and
(y) above are not sufficient to confirm that the proposed transfer is
being made pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act and
other applicable laws, the Trustee shall as a condition of the
registration of any such transfer require the transferor to furnish
such other certifications, legal opinions or other information prior
to registering the transfer of an Individual Certificate as shall be
set forth in such Opinion of Counsel.
(d) Subject to Subsection 5.02(h), so long as the Global Certificate
of such Class remains outstanding and is held by or on behalf of the Depository,
transfers of beneficial interests in such Class of Global Certificates, or
transfers by holders of Individual Certificates of such Class to transferees
that take delivery in the form of beneficial interests in the Global
Certificate, may be made only in accordance with this Subsection 5.02(d) and in
accordance with the rules of the Depository:
(i) In the case of a beneficial interest in the Global
Certificate being transferred to an Institutional Accredited Investor,
such transferee shall be required to take delivery in the form of an
Individual Certificate or Certificates and the Trustee shall register
such transfer only upon compliance with the provisions of Subsection
5.02(c)(ii).
(ii) In the case of a beneficial interest in a Class of Global
Certificates being transferred to a transferee that takes delivery in
the form of an Individual Certificate of such Class or Certificates,
except as set forth in clause (i) above, the Trustee shall register
such transfer only upon compliance with the provisions of Subsection
5.02(c)(i).
(iii) In the case of an Individual Certificate of a Class being
transferred to a transferee that takes delivery in the form of a
beneficial interest in a Global Certificate of such Class, the Trustee
shall register such transfer if the transferee has provided the
Trustee with a Rule 144A Certificate.
(iv) No restrictions shall apply with respect to the transfer or
registration of transfer of a beneficial interest in the Global
Certificate of a Class to a transferee that takes delivery in the form
of a beneficial interest in the Global Certificate of such Class.
(e) Subject to Subsection 5.02(h), an exchange of a beneficial
interest in a Global Certificate of a Class for an Individual Certificate or
Certificates of such Class, an exchange of an Individual Certificate of a Class
or Certificates of a Class for a beneficial interest in the Global Certificate
of such Class and an exchange of an Individual Certificate or Certificates of a
Class for another Individual Certificate or Certificates of such Class (in each
case, whether or not such exchange is made in anticipation of subsequent
transfer, and, in the case of the Global Certificate of such Class, so long as
such Certificate remains outstanding and is held by or on behalf of the
Depository) may be made only in accordance with this Subsection 5.02(e) and in
accordance with the rules of the Depository:
(i) A holder of a beneficial interest in a Global Certificate of
a Class may at any time exchange such beneficial interest for an
Individual Certificate or Certificates of such Class.
(ii) A holder of an Individual Certificate of a Class may
exchange such Certificate for a beneficial interest in the Global
Certificate of such Class if such holder furnishes to the Registrar a
Rule 144A Certificate.
(iii) A holder of an Individual Certificate of a Class may
exchange such Certificate for an equal aggregate principal amount of
Individual Certificates of such Class in different authorized
denominations without any certification.
(f) (i) Upon acceptance for exchange or transfer of an Individual
Certificate of a Class for a beneficial interest in a Global Certificate of such
Class as provided herein, the Trustee shall cancel such Individual Certificate
and shall (or shall request the Depository to) endorse on the schedule affixed
to the applicable Global Certificate (or on a continuation of such schedule
affixed to the Global Certificate and made a part thereof) an appropriate
notation evidencing the date of such exchange or transfer and an increase in the
certificate balance of the Global Certificate equal to the certificate balance
of such Individual Certificate exchanged or transferred therefor.
(ii) Upon acceptance for exchange or transfer of a beneficial
interest in a Global Certificate of a Class for an Individual
Certificate of such Class as provided herein, the Trustee shall (or
shall request the Depository to) endorse on the schedule affixed to
such Global Certificate (or on a continuation of such schedule affixed
to such Global Certificate and made a part thereof) an appropriate
notation evidencing the date of such exchange or transfer and a
decrease in the certificate balance of such Global Certificate equal
to the certificate balance of such Individual Certificate issued in
exchange therefor or upon transfer thereof.
(g) The Securities Legend shall be placed on any Individual
Certificate issued in exchange for or upon transfer of another Individual
Certificate or of a beneficial interest in a Global Certificate.
(h) Subject to the restrictions on transfer and exchange set forth in
this Section 5.02, the holder of any Individual Certificate may transfer or
exchange the same in whole or in part (in an initial certificate balance equal
to the minimum authorized denomination or any integral multiple of $1 in excess
thereof) by surrendering such Certificate at the Corporate Trust Office, or at
the office of any transfer agent, together with an executed instrument of
assignment and transfer satisfactory in form and substance to the Trustee in the
case of transfer and a written request for exchange in the case of exchange. The
holder of a beneficial interest in a Global Certificate may, subject to the
rules and procedures of the Depository, cause the Depository (or its nominee) to
notify the Trustee in writing of a request for transfer or exchange of such
beneficial interest for an Individual Certificate or Certificates. Following a
proper request for transfer or exchange, the Trustee shall, within five Business
Days of such request made at such Corporate Trust Office, sign, countersign and
deliver at such Corporate Trust Office, to the transferee (in the case of
transfer) or holder (in the case of exchange) or send by first class mail at the
risk of the transferee (in the case of transfer) or holder (in the case of
exchange) to such address as the transferee or holder, as applicable, may
request, an Individual Certificate or Certificates, as the case may require, for
a like aggregate Fractional Undivided Interest and in such authorized
denomination or denominations as may be requested. The presentation for transfer
or exchange of any Individual Certificate shall not be valid unless made at the
Corporate Trust Office by the registered holder in person, or by a duly
authorized attorney-in-fact.
(i) At the option of the Certificateholders, Certificates may be
exchanged for other Certificates of authorized denominations of a like Class and
aggregate Fractional Undivided Interest, upon surrender of the Certificates to
be exchanged at any such office or agency; PROVIDED, HOWEVER, that no
Certificate may be exchanged for new Certificates unless the original Fractional
Undivided Interest represented by each such new Certificate (i) is at least
$25,000 with respect to the Certificates other than the Residual Certificates,
which shall be at least $100 or (ii) is acceptable to the Seller as indicated to
the Trustee in writing. Whenever any Certificates are so surrendered for
exchange, the Trustee shall sign and countersign and the Trustee shall deliver
the Certificates which the Certificateholder making the exchange is entitled to
receive.
(j) If the Trustee so requires, every Certificate presented or
surrendered for transfer or exchange shall be duly endorsed by, or be
accompanied by a written instrument of transfer, with a signature guarantee, in
form satisfactory to the Trustee, duly executed by the holder thereof or his or
her attorney duly authorized in writing.
(k) 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.
(l) The Trustee shall cancel all Certificates surrendered for transfer
or exchange but shall retain such Certificates in accordance with its standard
retention policy or for such further time as is required by the record retention
requirements of the Securities Exchange Act of 1934, as amended, and thereafter
may destroy such Certificates.
(m) The following legend shall be placed on each Class X Certificate,
whether upon original issuance or upon issuance of any other Class X
Certificate, in exchange therefor or upon transfer thereof:
This Certificate may not be transferred to "Benefit Plan
Investors" as such term is defined in 29 C.F.R. ss. 2510.3-101 unless
the transferee provides a Benefit Plan Opinion to the Trustee;
provided that this Certificate may be transferred to a Benefit Plan
Investor without delivery of a Benefit Plan Opinion if this
Certificate is made available for purchase in the secondary market
through an underwriting or sale or placement by an entity which has
been granted an underwriter's prohibited transaction exemption similar
to PTE 90-30 or PTE 90-24.
(n) The following legend shall be placed on each Class A-11, Class
B-1, Class B-2 and Class B-3 Certificates, whether upon original issuance or
upon issuance of any other Certificate of any such Class in exchange therefor or
upon transfer thereof:
This Certificate may not be transferred to "Benefit Plan
Investors" as such term is defined in 29 C.F.R. ss. 2510.3-101 unless
the transferee provides a Benefit Plan Opinion to the Trustee.
(o) Subject to the matters set forth in Section 5.02, (j), (k) and
(m), the Class X Certificates may be transferred without provision of any
additional documents to the Trustee.
Section 5.03. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES. (a)
If (i) any mutilated Certificate is surrendered to the Trustee, or the Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any
Certificate, and (ii) there is delivered to the Trustee such security or
indemnity as it may require to save it harmless, and (iii) the Trustee has not
received notice that such Certificate has been acquired by a third Person, the
Trustee shall sign, countersign and deliver, in exchange for or in lieu of any
such mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
tenor and Fractional Undivided Interest but in each case bearing a different
number. The mutilated, destroyed, lost or stolen Certificate shall thereupon be
canceled of record by the Trustee and shall be of no further effect and evidence
no rights.
(b) Upon the issuance of any new Certificate under this Section 5.03,
the Trustee may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Any duplicate Certificate issued pursuant to this Section 5.03 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 5.04. PERSONS DEEMED OWNERS. Prior to due presentation of a
Certificate for registration of transfer, the Seller, the Master Servicer, the
Trustee and any agent of the Seller, the Master Servicer or the Trustee 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
6.01 and for all other purposes whatsoever. Neither the Seller, the Master
Servicer, the Trustee nor any agent of the Seller, the Master Servicer or the
Trustee shall be affected by notice to the contrary. No Certificate shall be
deemed duly presented for a transfer effective on any Record Date unless the
Certificate to be transferred is presented no later than the close of business
on the third Business Day preceding such Record Date.
Section 5.05. TRANSFER RESTRICTIONS ON RESIDUAL CERTIFICATES. (a)
Residual Certificates, or interests therein, may not be transferred without the
prior express written consent of the Tax Matters Person. As a prerequisite to
such consent, the proposed transferee must provide the Tax Matters Person and
the Trustee with an affidavit that the proposed transferee is not a Disqualified
Organization (as defined in Subsection 5.05(b)) (and, unless the Tax Matters
Person consents to the transfer to a person who is not a U.S. Person, an
affidavit that it is a U.S. Person) as provided in Subsection 5.05(b).
(b) No transfer, sale or other disposition of a Residual Certificate
(including a beneficial interest therein) may be made unless, prior to the
transfer, sale or other disposition of the Residual Certificate, the proposed
transferee (including the initial purchasers thereof) delivers to the Tax
Matters Person and the Trustee an affidavit in the form attached hereto as
Exhibit E stating, among other things, that as of the date of such transfer (i)
such transferee is not any of (A) the United States, any state or political
subdivision thereof, any foreign government, any international organization, or
any agency or instrumentality of any of the foregoing (other than an
instrumentality that is a corporation all of whose activities are subject to tax
under Chapter 1 of Subtitle A of the Code and (except in the case of FHLMC) a
majority of whose board of directors is not selected by the United States, or
any state or political subdivision thereof), (B) any organization that is exempt
from any tax imposed by Chapter 1 of Subtitle A of the Code, other than (x) a
tax-exempt farmers' cooperative within the meaning of Section 521 of the Code or
(y) an organization that is subject to the tax imposed by section 511 of the
Code on "unrelated business taxable income" or (C) a corporation operating on a
cooperative basis that is engaged in furnishing electric energy or providing
telephone service to persons in rural areas (within the meaning of Section
1381(a)(2)(C) of the Code) (any Person described in (A), (B), or (C) being
referred to herein as a "Disqualified Organization") and that (ii) such
transferee is not acquiring such Residual Certificate for the account of a
Disqualified Organization. The Tax Matters Person shall not consent to a
transfer of a Residual Certificate if it has actual knowledge that any statement
made in the affidavit issued pursuant to the preceding sentence is not true.
Notwithstanding any transfer, sale or other disposition of a Residual
Certificate to a Disqualified Organization, such transfer, sale or other
disposition shall be deemed to be of no legal force or effect whatsoever and
such Disqualified Organization shall not be deemed to be a Holder of a Residual
Certificate for any purpose hereunder, including, but not limited to, the
receipt of distributions thereon. If any purported transfer shall be in
violation of the provisions of this Subsection 5.05(b), then the prior Holder
thereof shall, upon discovery that the transfer of such Residual Certificate was
not in fact permitted by this Subsection 5.05(b), be restored to all rights as a
Holder thereof retroactive to the date of the purported transfer. The Trustee
and the Tax Matters Person shall be under no liability to any Person for any
registration or transfer of a Residual Certificate that is not permitted by this
Subsection 5.05(b) or for making payments due on such Residual Certificate to
the purported Holder thereof or taking any other action with respect to such
purported Holder under the provisions of this Agreement so long as the written
affidavit referred to above was received with respect to such transfer, and the
Tax Matters Person and the Trustee had no knowledge that it was untrue. The
prior Holder shall be entitled to recover from any purported Holder of a
Residual Certificate that was in fact not a permitted transferee under this
Subsection 5.05(b) at the time it became a Holder all payments made on such
Residual Certificate. Each Holder of a Residual Certificate, by acceptance
thereof, shall be deemed for all purposes to have consented to the provisions of
this Subsection 5.05(b) and to any amendment of this Agreement deemed necessary
(whether as a result of new legislation or otherwise) by counsel of the Tax
Matters Person or the Seller to ensure that the Residual Certificates are not
transferred to a Disqualified Organization and that any transfer of such
Residual Certificates will not cause the imposition of a tax upon the Trust or
cause the REMIC Assets to fail to qualify as a REMIC.
(c) Unless the Tax Matters Person shall have consented in writing
(which consent may be withheld in the Tax Matters Person's sole discretion), the
Residual Certificates (including a beneficial interest therein) may not be
purchased by or transferred to any person who is not (i) a citizen or resident
of the United States, (ii) a corporation, partnership or other entity created or
organized in or under the laws of the United States or any political subdivision
thereof or (iii) an estate or trust that is subject to U.S. federal income tax
regardless of the source of its income.
Section 5.06. RESTRICTIONS ON TRANSFERABILITY OF PRIVATE CERTIFICATES.
(a) No offer, sale, transfer or other disposition (including pledge) of a
Private Certificate shall be made by any Holder thereof unless registered under
the Securities Act, or an exemption from the registration requirements of the
Securities Act and any applicable state securities or "Blue Sky" laws is
available and the prospective transferee (other than the Seller) of such
Certificate signs and delivers to the Trustee an Investment Letter, if the
transferee is an Institutional Accredited Investor, in the form set forth as
Exhibit F-1 hereto, or a Rule 144A Certificate, if the transferee is a Qualified
Institutional Buyer, in the form set forth as Exhibit F-2 hereto. In the case of
a proposed transfer of a Private Certificate to a transferee other than a
Qualified Institutional Buyer, the Trustee shall require an Opinion of Counsel
that such transaction is exempt from the registration requirements of the
Securities Act. The cost of such opinion shall not be an expense of the Trustee
or the Trust Fund.
(b) Each Class B-4, Class B-5 and Class B-6 Certificate shall bear a
Securities Legend.
Section 5.07. ERISA RESTRICTIONS. (a) Subject to the provisions of
subsection (b), No Class X, Class A-11 or Class B Certificates may be acquired
by, or transferred to, an entity which is acquiring such Certificates directly
or indirectly for or on behalf of, a "benefit plan investor" described in or
subject to 29 C.F.R. ss. 2510.3-101 (the "Plan Asset Regulations") ("Benefit
Plan Investor") unless the proposed transferee provides a Benefit Plan Opinion
to the Trustee. A "Benefit Plan Opinion" is an Opinion of Counsel (upon which
the Trustee is authorized to rely) to the effect that neither the proposed
transfer and/or holding of a Certificate nor the servicing, management and
operation of the Trust (X) will result in a prohibited transaction under Section
406 of ERISA or Section 4975 of the Code or will be covered under an individual
or class prohibited transaction exemption including but not limited to
Department of Labor Prohibited Transaction Exemption ("PTE") 84-14 (Class
Exemption for Plan Asset Transactions Determined by Independent Qualified
Professional Asset Managers); PTE 91-38 (Class Exemption for Certain
Transactions Involving Bank Collective Investment Funds); PTE 90-1 (Class
Exemption for Certain Transactions Involving Insurance Company Pooled Separate
Accounts), PTE 95-60 (Class Exemption for Certain Transactions Involving
Insurance Company General Accounts), and PTCE 96-23 (Class Exemption for Plan
Asset Transactions Determined by In-House Asset Managers and (Y) either: (i)
will cause the assets of the Trust Fund to be regarded as plan assets for
purposes of the Plan Asset Regulations or (ii) will give rise to any additional
fiduciary duties under ERISA on the part of the Master Servicer or the Trustee.
A Benefit Plan Opinion shall not be an expense of the Trustee or the Master
Servicer.
(b) In the event that the Class X Certificates are made available for
purchase in the secondary market through an underwriting or sale or placement by
an entity which has been granted an underwriter's prohibited transaction
exemption similar to PTE 90-30 and PTE 90-24, no Benefit Plan Opinion shall be
required for the Class X Certificates to be acquired by, or transferred to, an
entity which is acquiring such Certificates directly or indirectly for or on
behalf of, a Benefit Plan Investor.
(c) Any Person acquiring a Book-Entry Certificate or a Global
Certificate which represents one of the Classes referred to in Section 5.07(a),
by acquisition of such Certificate, shall be deemed to have represented to the
Trustee that such Person is not a Benefit Plan Investor nor a trustee, fiduciary
or other party acting on behalf of any Benefit Plan Investor.
Section 5.08. RULE 144A INFORMATION. For so long as any Subordinate
Certificates are outstanding and are "restricted securities" within the meaning
of Rule 144(a)(3) of the Securities Act, (1) the Master Servicer will provide or
cause to be provided to any holder of such Certificates and any prospective
purchaser thereof designated by such a holder, upon the request of such holder
or prospective purchaser, the information required to be provided to such holder
or prospective purchaser by Rule 144A(d)(4) under the Securities Act; and (2)
the Master Servicer shall update such information from time to time in order to
prevent such information from becoming false and misleading and will take such
other actions as are necessary to ensure that the safe harbor exemption from the
registration requirements of the Securities Act under Rule 144A is and will be
available for resales of such Certificates conducted in accordance with Rule
144A.
<PAGE>
ARTICLE VI
Payments to Certificateholders
Section 6.01. DISTRIBUTIONS ON THE CERTIFICATES.
(a) On each Distribution Date, the Trustee shall withdraw the
Available Funds from the Certificate Account and distribute them in the
following order of priority:
(i) to each Class of interest-bearing Senior Certificates, the
Accrued Certificate Interest on each such Class for such Distribution
Date, any Net Interest Shortfall and the interest portion of Realized
Losses allocable to the interest-bearing Senior Certificates being
allocated among such Classes in proportion to the amount of Accrued
Certificate Interest otherwise distributable thereon, except that
after the Cross-Over Date the Class A-11 Certificates will bear the
Interest Portion of any Realized Losses (other than Excess Losses)
otherwise allocable to the Class A-7, Class A-8 and Class A-9
Certificates;
(ii) to each Class of interest-bearing Senior Certificates, any
Accrued Certificate Interest thereon remaining undistributed from
previous Distribution Dates, any shortfall in available amounts being
allocated among such Classes in proportion to the amount of such
Accrued Certificate Interest remaining undistributed for each such
Class on such Distribution Date (no interest shall be paid on such
undistributed amounts);
(iii) to the Senior Certificates (other than the Class X
Certificates) in reduction of the Current Principal Amounts thereof;
(a) the Senior Optimal Principal Amount, in the following
order of priority;
(x) concurrently to the Class A-10 and Class A-11
Certificates, pro rata, based upon their Current Principal
Amounts up to the Class A-10/Class A-11 Optimal Principal Amount
for such Distribution Date, until the Current Principal Amounts
thereof have been reduced to zero; and
(y) concurrently, to the Class R-1 and R-2
Certificates, pro rata, based upon their current Principal
Amounts, and then sequentially to the Class A-1, Class A-2, Class
A-3, Class A-4, Class A-5, Class A-6, Class A- 7, Class A-8 and
Class A-9 Certificates, in that order, until the respective
Current Principal Amounts thereof have been reduced to zero;
(b) the Class PO Principal Distribution Amount for such Distribution
Date, to the Class PO Certificates, until the Current Principal Amount thereof
has been reduced to zero;
(iv) the Class PO Deferred Amount for such Distribution Date to
the Class PO Certificates; provided, that (a) on any Distribution
Date, distributions pursuant to this clause (iv), shall not exceed the
excess, if any, of (x) the Available Funds remaining after giving
effect to distributions pursuant to clauses (i) through (iii) above
over (y) the amount of Accrued Certificate Interest for such
Distribution Date and Accrued Certificate Interest remaining
undistributed from previous Distribution Dates on all Classes of
Subordinate Certificates then outstanding, (b) such distributions
shall not reduce the Current Principal Amount of the Class PO
Certificates and (c) no distribution will be made in respect of the
Class PO Deferred Amount after the Cross-Over Date;
(v) to the Class B-1 Certificates, to the extent of remaining
Available Funds, in the following order: (a) the Accrued Certificate
Interest thereon for such Distribution Date, (b) any Accrued
Certificate Interest thereon remaining undistributed from previous
Distribution Dates and (c) such Class's Allocable Share for such
Distribution Date;
(vi) to the Class B-2 Certificates, to the extent of remaining
Available Funds, in the following order: (a) the Accrued Certificate
Interest thereon for such Distribution Date, (b) any Accrued
Certificate Interest thereon remaining undistributed from previous
Distribution Dates and (c) such Class's Allocable Share for such
Distribution Date;
(vii) to the Class B-3 Certificates, to the extent of remaining
Available Funds, in the following order: (a) the Accrued Certificate
Interest thereon for such Distribution Date, (b) any Accrued
Certificate Interest thereon remaining undistributed from previous
Distribution Dates and (c) such Class's Allocable Share for such
Distribution Date;
(viii) to the Class B-4 Certificates, to the extent of remaining
Available Funds, in the following order: (a) the Accrued Certificate
Interest thereon for such Distribution Date, (b) any Accrued
Certificate Interest thereon remaining undistributed from previous
Distribution Dates and (c) such Class's Allocable Share for such
Distribution Date;
(ix) to the Class B-5 Certificates, to the extent of remaining
Available Funds, in the following order: (a) the Accrued Certificate
Interest thereon for such Distribution Date, (b) any Accrued
Certificate Interest thereon remaining undistributed from previous
Distribution Dates and (c) such Class's Allocable Share for such
Distribution Date; and
(x) to the Class B-6 Certificates, to the extent of remaining
Available Funds, in the following order: (a) the Accrued Certificate
Interest thereon for such Distribution Date, (b) any Accrued
Certificate Interest thereon remaining undistributed from previous
Distribution Dates and (c) such Class's Allocable Share for such
Distribution Date;
If, on any Distribution Date, after distributions have been made
pursuant to clauses (i) and (ii) above on any Distribution Date, remaining
Available Funds are less than the sum of the Senior Optimal Principal Amount and
the Class PO Principal Distribution Amount for such Distribution Date, such
amounts shall be proportionately reduced, and such remaining Available Funds
will be distributed on the Senior Certificates (other than the Class X
Certificates) in accordance with clauses (iii)(a) and (iii)(b) above on the
basis of such reduced amounts. Notwithstanding any reduction in principal
distributable to the Class PO Certificates pursuant to this paragraph, the
principal balance of the Class PO Certificates shall be reduced not only by
principal so distributed but also by the Class PO Shortfall for such
Distribution Date.
(b) On each Distribution Date, Available Funds, if any, remaining in
REMIC-I after payment of interest and principal, as described above, will be
distributed to the Class R-1 Certificates.
(c) If on any Distribution Date the Current Principal Amounts of the
Subordinate Certificates have each been reduced to zero, the amount
distributable as principal to the Senior Certificates (other than the Class PO
and Class X) for such Distribution Date and each succeeding Distribution Date
shall be allocated among the Classes of Senior Certificates, pro rata, on the
basis of their respective Current Principal Amounts immediately prior to such
Distribution Date, regardless of the priorities and amounts set forth in
Subsection 6.01(a); except that the Class A-11 Certificates will bear any
Realized Losses (other than Excess Losses) otherwise allocable to the Class A-7,
Class A-8 and Class A-9 Certificates.
(d) On each Distribution Date, the funds available for distribution
shall be applied to distributions on the REMIC II Regular Interests in an amount
sufficient to make the distributions on the respective Corresponding Classes of
Certificates on such Payment Date in accordance with the provisions of
subsection (a) of this Section 6.01.
(e) No Accrued Certificate Interest will be payable with respect to
any class of Certificates after the Distribution Date on which the outstanding
principal balance (or Notional Amount) of such Certificate has been reduced to
zero.
Section 6.02. [Reserved]
Section 6.03. ALLOCATION OF LOSSES. (a) On or prior to each Reporting
Date, the Master Servicer shall determine the amount of any Realized Loss in
respect of each Mortgage Loan that occurred during the immediately preceding
calendar month.
(b) With respect to any Distribution Date, the principal portion of
each Realized Loss (other than any Excess Special Hazard Loss, Excess Fraud Loss
and Excess Bankruptcy Loss) shall be allocated as follows:
(i) the applicable PO Percentage of any such Realized Loss shall
be allocated to the Class PO Certificates; and
(ii) the applicable Non-PO Percentage of any such Realized Loss
shall be allocated as follows:
first, to the Class B-6 Certificates until the Current Principal
Amount thereof has been reduced to zero;
second, to the Class B-5 Certificates until the Current Principal
Amount thereof has been reduced to zero;
third, to the Class B-4 Certificates until the Current Principal
Amount thereof has been reduced to zero;
fourth, to the Class B-3 Certificates until the Current Principal
Amount thereof has been reduced to zero;
fifth, to the Class B-2 Certificates until the Current Principal
Amount thereof has been reduced to zero;
sixth, to the Class B-1 Certificates until the Current Principal
Amount thereof has been reduced to zero; and
seventh, to the Classes of Senior Certificates, pro rata, in
accordance with their Current Principal Amounts; except that the Class
A-11 Certificates will bear any Realized Losses otherwise allocable to
the Class A-7, Class A-8 and Class A-9 Certificates.
(c) With respect to any Distribution Date, the principal portion of
any Excess Loss (other than those attributable to Debt Service Reductions) shall
be allocated as follows:
(i) the applicable PO Percentage of any such Excess Loss shall be
allocated to the Class PO Certificates; and
(ii) the applicable Non-PO Percentage of any such Excess Loss
shall be allocated among all Classes of Certificates (other than the
Class PO and Class X Certificates), pro rata, based on the respective
Current Principal Amounts thereof.
(d) Notwithstanding the foregoing, no such allocation of any Realized
Loss shall be made on a Distribution Date to a Class of Certificates to the
extent that such allocation would result in the reduction of the aggregate
Current Principal Amounts of all the Certificates as of such Distribution Date,
after giving effect to all distributions and prior allocations of Realized
Losses on such date, to an amount less than the aggregate Scheduled Principal
Balance of the Mortgage Loans as of the first day of the month of such
Distribution Date, less any Deficient Valuations occurring on or prior to the
Bankruptcy Coverage Termination Date (such limitation, the "Loss Allocation
Limitation").
(e) Any Realized Losses allocated to a Class of Certificates pursuant
to Subsections 6.03(b) or (c) shall be allocated among the Certificates of such
Class in proportion to their respective Current Principal Amounts. Any
allocation of Realized Losses pursuant to this Subsection 6.03(e) shall be
accomplished by reducing the Current Principal Amount of the related
Certificates on the related Distribution Date in accordance with Subsection
6.03(f).
(f) Realized Losses allocated in accordance with this Section 6.03
shall be allocated on the Distribution Date in the month following the month in
which such loss was incurred and, in the case of the principal portion thereof,
after giving effect to distributions made on such Distribution Date, except that
the aggregate amount of Realized Losses to be allocated to the Class PO
Certificates on such Distribution Date will be taken into account in determining
distributions in respect of the Class PO Deferred Amount.
(g) On each Distribution Date, the Master Servicer shall determine the
Subordinate Certificate Writedown Amount, if any. Any such Certificate Writedown
Amount shall effect a corresponding reduction in the Current Principal Amount of
(i) if prior to the Cross-Over Date, the Subordinate Certificates in the reverse
order of their numerical Class designations and (ii) after the Cross-Over Date,
the Senior Certificates pro rata based in their respective Current Principal
Amounts, which reduction shall occur on such Distribution Date after giving
effect to distributions made on such Distribution Date.
(h) On each Distribution Date, on or prior to the CrossOver Date, the
Master Servicer shall determine the Class PO Deferred Payment Amount Writedown
Amount, if any. Any such Class PO Deferred Payment Writedown Amount shall effect
a corresponding reduction in the Current Principal Amount of the Subordinate
Certificates in the reverse order of their numerical Class designations.
The interest portion of any Realized Losses occurring prior to the
Cross-Over Date will not be allocated among any Certificates, but will reduce
the amount of Available Funds on the related Distribution Date. As a result of
the subordination of the Subordinate Certificates in right of distribution, such
Realized Losses on the Mortgage Loans will be borne first by the Subordinate
Certificates in inverse order of their numerical Class designations.
Section 6.04. [Reserved]
Section 6.05. PAYMENTS. (a) No later than the Determination Date, the
Master Servicer shall provide to the Trustee any information with respect to the
Mortgage Loans required to enable the Trustee to make, or cause its agent to
make, distributions on the Certificates and prepare reports to
Certificateholders.
(b) On each Distribution Date, other than the final Distribution Date,
the Trustee shall distribute to each Certificateholder of record on the directly
preceding Record Date the Certificateholder's pro rata share of its Class (based
on the aggregate Fractional Undivided Interest represented by such Holder's
Certificates) of all amounts required to be distributed on such Distribution
Date to such Class. The Trustee shall calculate such amounts based upon the
information provided by the Master Servicer pursuant to Subsection 6.05(a).
(c) Payment of the above amounts to each Certificateholder shall be
made (i) by check mailed to each Certificateholder entitled thereto at the
address appearing in the Certificate Register or (ii) upon receipt by the
Trustee on or before the fifth Business Day preceding the Record Date of written
instructions from a Certificateholder holding Certificates representing an
initial aggregate Current Principal Amount and/or Notional Amount of not less
than $1,000,000 by wire transfer to a United States dollar account maintained by
the payee at any United States depository institution with appropriate
facilities for receiving such a wire transfer; PROVIDED, HOWEVER, that the final
payment in respect of each Class of Certificates will be made only upon
presentation and surrender of such respective Certificates at the office or
agency of the Trustee specified in the notice to Certificateholders of such
final payment.
Section 6.06. STATEMENTS TO CERTIFICATEHOLDERS. (a) Concurrently with
each distribution to Certificateholders, the Trustee shall forward by
first-class mail to each Certificateholder, with a copy to the Seller, the
Master Servicer and the Rating Agencies, a statement setting forth the following
information, expressed with respect to clauses (i) through (vi) in the aggregate
and as a Fractional Undivided Interest representing an initial Current Principal
Amount of $1,000, or, in the case of the Class X Certificates, a Notional Amount
of $1,000, or, in the case of the Class R Certificates, an initial Current
Principal Amount of $100:
(i) the Current Principal Amount (or Notional Amount in the case
of the Class X Certificates) of each Class of Certificates immediately
prior to such Distribution Date;
(ii) the amount of the distribution allocable to principal on
each applicable Class of Certificates;
(iii) the aggregate amount of interest accrued at the related
Pass-Through Rate with respect to each Class of Certificates (other
than the Class PO Certificates) during the related Interest Accrual
Period;
(iv) the Interest Shortfall and any other adjustments to interest
at the related Pass-Through Rate necessary to account for any
difference between interest accrued and aggregate interest distributed
with respect to each Class of Certificates (other than the Class PO
Certificates);
(v) the amount of the distribution allocable to interest on each
Class of Certificates (other than the Class PO Certificates);
(vi) the Class X Pass-Through Rate with respect to such
Distribution Date;
(vii) the Current Principal Amount and/or Notional Amount of each
applicable Class of Certificates after such Distribution Date and the
Class PO Deferred Amount;
(viii) the amount of any Monthly Advances and Compensating
Interest Payments by the Master Servicer included in such
distribution;
(ix) the amount of any Realized Losses (listed separately for
each category of Realized Loss) during the related Prepayment Period
and the amount and source (separately identified) of any distribution
in respect thereof included in such distribution;
(x) the amount of Scheduled Principal and Principal Prepayments,
(including but separately identifying the principal amount of Net
Liquidation Proceeds);
(xi) the number of Mortgage Loans (excluding REO Property),
remaining in the Trust Fund as of the end of the related Due Period;
(xii) information regarding any Mortgage Loan delinquencies as of
the end of the related Due Period, including the aggregate number,
aggregate Outstanding Principal Balance and aggregate Scheduled
Principal Balance of Mortgage Loans delinquent one month, two months
and three months or more;
(xiii) the number of Mortgage Loans in the foreclosure process as
of the end of the related Due Period and the aggregate Outstanding
Principal Balance of such Mortgage Loans;
(xiv) the number and aggregate Outstanding Principal Balance of
all Mortgage Loans which were REO Property as of the end of the
related Due Period;
(xv) the book value (the sum of (A) the Outstanding Principal
Balance of the Mortgage Loan, (B) accrued interest through the date of
foreclosure and (C) foreclosure expenses) of any REO Property;
PROVIDED THAT, in the event that such information is not available to
the Master Servicer and the Trustee on the Distribution Date, such
information shall be furnished promptly after it becomes available;
(xvi) the amount of Realized Losses allocated to each Class of
Certificates since the prior Distribution Date and in the aggregate
for all prior Distribution Dates; and
(xvii) the then applicable Senior Percentage, Senior Prepayment
Percentage, Subordinate Percentage and Subordinate Prepayment
Percentage.
The information set forth above shall be calculated, or reported, as
the case may be, by the Trustee based on data provided by the Master Servicer
pursuant to Subsection 6.05(a) and, with respect to prior periods, Section 6.06,
upon which the Trustee may conclusively rely. The information furnished by the
Master Servicer shall be sufficient for the Trustee to calculate any statements
it is required to make.
(b) By April 30 of each year beginning in 1997, the Trustee will
furnish a report to each Holder of the Certificates of record at any time during
such calendar year as to the aggregate of amounts reported pursuant to
subclauses (a)(ii) and (a)(v) above with respect to the Certificates, plus
information with respect to the amount of servicing compensation and such other
customary information as the Master Servicer determines and advises the Trustee
to be necessary and/or to be required by the Internal Revenue Service or by a
federal or state law or rules or regulations to enable such Holders to prepare
their tax returns for such calendar year. Copies of such report shall also be
furnished to the Master Servicer. Such obligations shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Trustee pursuant to the requirements of the Code.
The Master Servicer shall supply to the Trustee in a timely manner the
information required for the statements described above which, where
appropriate, shall be the information from which the Trustee can calculate the
statements it is required to make.
Section 6.07. REPORTS TO THE TRUSTEE AND THE MASTER SERVICER. (a) Not
later than 15 days after each Distribution Date, the Trustee shall forward to
the Master Servicer a statement setting forth the status of the Certificate
Account and the Custody Account as of the close of business on the last day of
the month of the Distribution Date and showing, for the month covered by such
statement, deposits in or withdrawals from the Certificate Account and the
Custody Account.
(b) On or before the Reporting Date, the Master Servicer shall provide
to the Trustee, with respect to the Mortgage Loans and the REO Property,
respectively, a Loan Summary and Remittance Report which shall be based upon
reports from Sub-Servicers, if any, received by the Master Servicer on or before
the 7th Business Day of such month with respect to the Mortgage Loans and REO
Property and containing the following information (in respect of the REO
Property, only such information which is applicable):
(i) Aggregate deposits to and withdrawals from the Certificate
Account since the date of the prior statement, stated separately for
each category of deposit specified in Section 4.02 and each category
of withdrawal specified in Section 4.03, indicating separately the
aggregate of amounts withdrawn which are not applicable to a
particular Mortgage Loan;
(ii) Amount of Available Funds expected for the related
Distribution Date and attributable to each of the following
categories:
(A) regularly scheduled principal;
(B) Principal Prepayments (stated separately for partial and
full prepayments and Net Liquidation Proceeds, stating
Liquidation Proceeds and Liquidation Expenses separately);
(C) Insurance Proceeds;
(D) interest on the Mortgage Loans;
(E) Monthly Advances made by the Master Servicer;
(F) Certificate Account Advances;
(G) Compensating Interest Payments; and
(H) reimbursements in connection with losses on Permitted
Investments.
(iii) Aggregate Outstanding Principal Balances of the Mortgage
Loans as of the related Due Date, without giving effect to payments
due on such date;
(iv) Realized Losses for the prior month and, in the aggregate,
from the Closing Date;
(v) [intentionally omitted];
(vi) [intentionally omitted];
(vii) Aggregate Scheduled Principal Balance of the Mortgage Loans
as of the related Due Date;
(viii) Book value of any collateral acquired by means of
foreclosure, grant of deed in lieu of foreclosure or otherwise in
respect of any Mortgage Loan;
(ix) Number and aggregate principal balance of Mortgage Loans
which are 30, 60, 90 and 120 days delinquent, those which are in
foreclosure and those which are REO Property;
(x) Interest Shortfall with respect to the related Distribution
Date and portion thereof resulting from the provisions of the Relief
Act;
(xi) [intentionally omitted]
(xii) Amount, if any, by which the aggregate of payments of
scheduled principal and interest on the Mortgage Loans that were due
on the related Due Date and delinquent, other than as a result of the
Relief Act, as of the 18th day of such month exceeds the sum of the
Monthly Advances to be made by the Master Servicer and Certificate
Account Advances for such Distribution Date;
(xiii) Aggregate Master Servicing Fee for the related Due Period;
and
(xiv) Such other information regarding each Mortgage Loan,
including an updated Mortgage Loan Schedule in magnetic tape format,
as may be reasonably requested by the Trustee.
(c) [Intentionally omitted.]
(d) Not less than three Business Days prior to any Distribution Date
for which the Current Principal Amount of a Class of Certificates will be
reduced to zero, the Master Servicer shall provide the Trustee with notice
thereof.
Section 6.08. MONTHLY ADVANCES. If the Scheduled Payment (together
with any advances from the Sub-Servicers) on a Mortgage Loan that was due on the
Due Date in the month of a Distribution Date and is delinquent other than as a
result of application of the Relief Act exceeds the amount deposited in the
Custody Account or the Certificate Account which will be used for a Certificate
Account Advance with respect to such Mortgage Loan, the Master Servicer will
deposit in the Certificate Account not later than the Advancing Date immediately
preceding the related Distribution Date an amount equal to such deficiency net
of the related Master Servicing Fee for such Mortgage Loan except to the extent
the Master Servicer determines any such advance to be nonrecoverable from
Liquidation Proceeds, Insurance Proceeds or future payments on the Mortgage Loan
for which such Monthly Advance was made. Subject to the foregoing, the Master
Servicer shall continue to make such advances through the date that the related
Mortgaged Property has, in the judgment of the Master Servicer, been completely
liquidated. Any amount used as a Certificate Account Advance shall be replaced
by the Master Servicer by deposit in the Certificate Account on or before any
future date to the extent that funds in the Certificate Account on such date are
less than the amount required to be transferred by the Master Servicer to the
Certificate Account. If applicable, on the fifth Business Day preceding each
Distribution Date, the Master Servicer shall present an Officer's Certificate to
the Trustee (i) stating that the Master Servicer elects not to make a Monthly
Advance in a stated amount and (ii) detailing the reason it deems the advance to
be nonrecoverable.
Section 6.09. COMPENSATING INTEREST PAYMENTS. The Master Servicer
shall deposit in the Certificate Account not later than the Advancing Date
immediately preceding the related Distribution Date an amount equal to the
lesser of (i) the aggregate amounts determined pursuant to subclauses (a) and
(b) of the definition of Interest Shortfall for the related Distribution Date
and (ii) the Master Servicing Fee for such Distribution Date (such amount, the
"Compensating Interest Payment"). The Master Servicer shall not be entitled to
any reimbursement of any Compensating Interest Payment.
Section 6.10. REPORTS OF FORECLOSURES AND ABANDONMENT OF MORTGAGED
PROPERTY. Each year the Master Servicer shall report or cause to be reported to
the Internal Revenue Service foreclosures and abandonments of any Mortgaged
Property as required by Section 6050J of the Code.
<PAGE>
ARTICLE VII
The Master Servicer
Section 7.01. LIABILITIES OF THE MASTER SERVICER. The Master Servicer
shall be liable in accordance herewith only to the extent of the obligations
specifically imposed upon and undertaken by it herein. Only the Master Servicer,
any successor Master Servicer or the Trustee acting as Master Servicer shall be
liable with respect to the servicing of the Mortgage Loans and the REO Property
for actions taken by any such person in contravention of the Master Servicer's
duties hereunder.
Section 7.02. MERGER OR CONSOLIDATION OF THE MASTER SERVICER. (a) The
Master Servicer will keep in full effect its existence, rights and franchises as
a corporation under the laws of the state 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, the Certificates or any of the
Mortgage Loans and to perform its duties under this Agreement.
(b) Any Person into which the Master Servicer may be merged or
consolidated, or any corporation resulting from any merger or consolidation to
which the Master Servicer shall be a party, or any Person succeeding to the
business of the Master Servicer, shall be the successor of the Master Servicer
hereunder, without the execution or filing of any paper or further act on the
part of any of the parties hereto, anything herein to the contrary
notwithstanding.
Section 7.03. INDEMNIFICATION OF THE TRUSTEE. The Master Servicer
agrees to indemnify the Indemnified Persons for, and to hold them harmless
against, any loss, liability or expense incurred on their part, arising out of,
or in connection with, this Agreement, including the costs and expenses
(including reasonable legal fees and expenses) of defending themselves against
any such claim other than (i) any loss, liability or expense related to its
failure to perform its duties in compliance with this Agreement (except as any
such loss, liability or expense shall be otherwise reimbursable pursuant to this
Agreement and (ii) any loss, liability or expense incurred by reason of such
Person's willful misfeasance, bad faith or gross negligence in the performance
of duties hereunder or by reason of reckless disregard of obligations and duties
hereunder, provided that with respect to any such claim, the Trustee shall have
given the Master Servicer written notice thereof promptly after the Trustee
shall have with respect to such claim knowledge thereof. The Master Servicer
shall assume the defense of any claim for which an Indemnified Person is
entitled to indemnification pursuant to this Section 7.03, and the Master
Servicer shall pay all expenses in connection therewith, including reasonable
legal fees, and shall promptly pay, discharge and satisfy any judgment or decree
which may be rendered against an Indemnified Person in respect of such claim.
Section 7.04. LIMITATION ON LIABILITY OF THE MASTER SERVICER AND
OTHERS. Subject to the obligation of the Master Servicer to indemnify the
Indemnified Persons pursuant to Section 7.03:
(a) Neither the Master Servicer nor any of the directors, officers,
employees or agents of the Master Servicer shall be under any liability to the
Indemnified Persons, the Seller, the Trust Fund or the Certificateholders for
taking any action or for refraining from taking any action in good faith
pursuant to this Agreement, or for errors in judgment; PROVIDED, HOWEVER, that
this provision shall not protect the Master Servicer or any such Person against
any breach of warranties or representations made herein or any liability which
would otherwise be imposed by reason of such Person's willful misfeasance, bad
faith or gross negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder.
(b) The Master Servicer and any director, officer, employee or agent
of the Master Servicer may rely in good faith on any document of any kind PRIMA
FACIE properly executed and submitted by any Person respecting any matters
arising hereunder.
(c) The Master Servicer and any director, officer, employee or agent
of the Master Servicer shall be indemnified by the Trust and held harmless
thereby against any loss, liability or expense incurred in connection with any
legal proceedings relating to this Agreement or the Certificates (including
reasonable legal fees and disbursements of counsel), other than (i) any loss,
liability or expense related to its failure to perform its duties in compliance
with this Agreement (except as any such loss, liability or expense shall be
otherwise reimbursable pursuant to this Agreement) and (ii) any loss, liability
or expense incurred by reason of such Person's willful misfeasance, bad faith or
gross negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties hereunder.
(d) The Master Servicer shall not be under any obligation to appear
in, prosecute or defend any legal action that is not incidental to its duties
under this Agreement and that in its opinion may involve it in any expense or
liability; PROVIDED, HOWEVER, the Master Servicer may in its discretion
undertake any such action which it may deem necessary or desirable with respect
to this Agreement and the rights and duties of the parties hereto and the
interests of the Certificateholders hereunder. In such event, the legal expenses
and costs of such action and any liability resulting therefrom shall be
expenses, costs and liabilities of the Trust Fund, and the Master Servicer shall
be entitled to be reimbursed therefor out of the Certificate Account as provided
by Subsection 4.03(a). Nothing in this Subsection 7.04(d) shall affect the
Master Servicer's obligation to supervise, or to take such actions as are
necessary to ensure, the servicing and administration of the Mortgage Loans
pursuant to Subsection 3.01(a).
(e) In taking or recommending any course of action pursuant to this
Agreement, unless specifically required to do so pursuant to this Agreement, the
Master Servicer shall not be required to investigate or make recommendations
concerning potential liabilities which the Trust might incur as a result of such
course of action by reason of the condition of the Mortgaged Properties but
shall give notice to the Trustee if it has notice of such potential liabilities.
Section 7.05. MASTER SERVICER NOT TO RESIGN. Except as provided in
Section 7.07, the Master Servicer shall not resign from the obligations and
duties hereby imposed on it except upon a determination that any such duties
hereunder are no longer permissible under applicable law. Any such determination
permitting the resignation of the Master Servicer shall be evidenced by an
Opinion of Independent Counsel to such effect delivered to the Trustee. No such
resignation by the Master Servicer shall become effective until the Trustee or a
successor to the Master Servicer shall have assumed the responsibilities and
obligations of the Master Servicer in accordance with Section 8.02 hereof. The
Trustee shall notify the Rating Agencies of the resignation of the Master
Servicer.
Section 7.06. [Reserved]
Section 7.07. SALE AND ASSIGNMENT OF MASTER SERVICING. The Master
Servicer may sell and assign its rights and delegate its duties and obligations
in their entirety as Master Servicer under this Agreement; PROVIDED, HOWEVER,
that: (i) the purchaser or transferee accepting such assignment and delegation
(a) shall be a Person which shall be qualified to service mortgage loans for
FNMA or FHLMC; (b) shall, in the case of successor master servicers only, have a
net worth of not less than $10,000,000 (unless otherwise approved by each Rating
Agency pursuant to clause (ii) below); (c) shall be reasonably satisfactory to
the Trustee (as evidenced in a writing signed by the Trustee) as having a
comparable servicing ability to that of the Master Servicer on the Closing Date;
(d) shall execute and deliver to the Trustee an agreement, in form and substance
reasonably satisfactory to the Trustee, which contains an assumption by such
Person of the due and punctual performance and observance of each covenant and
condition to be performed or observed by it as master servicer under this
Agreement, any custodial agreement and any agreement substantially in the form
of Exhibit G hereto from and after the effective date of such agreement; (ii)
each Rating Agency shall be given prior written notice of the identity of the
proposed successor to the Master Servicer and each Rating Agency's rating of the
Certificates in effect immediately prior to such assignment, sale and delegation
will not be downgraded or withdrawn as a result of such assignment, sale and
delegation, as evidenced by a letter to such effect delivered to the Master
Servicer and the Trustee; and (iii) the Master Servicer assigning and selling
the master servicing shall deliver to the Trustee an Officer's Certificate and
an Opinion of Independent Counsel, each stating that all conditions precedent to
such action under this Agreement have been completed and such action is
permitted by and complies with the terms of this Agreement. No such assignment
or delegation shall affect any liability of the Master Servicer arising prior to
the effective date thereof.
<PAGE>
ARTICLE VIII
Default
Section 8.01. EVENTS OF DEFAULT. "Event of Default," wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i) The Master Servicer fails to cause to be deposited in the
Certificate Account any amount so required to be deposited pursuant to
this Agreement, and such failure continues unremedied for a period of
two Business Days after the date such deposit was required to be made;
or
(ii) The Master Servicer fails to observe or perform in any
material respect any other covenants and agreements set forth in the
Certificates or this Agreement to be performed by it, which covenants
and agreements materially affect the rights of Certificateholders, and
such failure continues unremedied for a period of 60 days after the
date on which written notice of such failure, properly requiring the
same to be remedied, shall have been given to the Master Servicer by
the Trustee or to the Master Servicer and the Trustee by the Holders
of Certificates evidencing Fractional Undivided Interests aggregating
not less than 25% of the Trust Fund; or
(iii) There is entered against the Master Servicer a decree or
order by a court or agency or supervisory authority having
jurisdiction in the premises for the appointment of a conservator,
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for
the winding up or liquidation of its affairs, and the continuance of
any such decree or order is unstayed and in effect for a period of 60
consecutive days, or an involuntary case is commenced against the
Master Servicer under any applicable insolvency or reorganization
statute and the petition is not dismissed within 60 days after the
commencement of the case; or
(iv) The Master Servicer consents to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment
of debt, marshalling of assets and liabilities or similar proceedings
of or relating to the Master Servicer or substantially all of its
property; or the Master Servicer admits in writing its inability to
pay its debts generally as they become due, files a petition to take
advantage of any applicable insolvency or reorganization statute,
makes an assignment for the benefit of its creditors, or voluntarily
suspends payment of its obligations; or
(v) The Master Servicer assigns or delegates its duties or rights
under this Agreement in contravention of the provisions permitting
such assignment or delegation under Sections 7.05 or 7.07.
In each and every such case, so long as such Event of Default with respect to
the Master Servicer shall not have been remedied, either the Trustee or the
Holders of Certificates evidencing Fractional Undivided Interests aggregating
not less than 51% of the principal of the Trust Fund, by notice in writing to
the Master Servicer (and to the Trustee if given by such Certificateholders),
with a copy to the Rating Agencies, may terminate all of the rights and
obligations (but not the liabilities) of the Master Servicer under this
Agreement and in and to the Mortgage Loans and/or the REO Property serviced by
the Master Servicer and the proceeds thereof. Upon the receipt by the Master
Servicer of the written notice, all authority and power of the Master Servicer
under this Agreement, whether with respect to the Certificates, the Mortgage
Loans, REO Property or under any other related agreements, including the
Sub-Servicing Agreements (but only to the extent that such other agreements
relate to the Mortgage Loans or REO Property) shall, subject to Section 8.02,
automatically and without further action pass to and be vested in the Trustee
pursuant to this Section 8.01; and, without limitation, the Trustee is hereby
authorized and empowered to execute and deliver, on behalf of the Master
Servicer as attorney-in-fact or otherwise, any and all documents and other
instruments and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Mortgage Loans and
related documents, or otherwise. The Master Servicer agrees to cooperate with
the Trustee in effecting the termination of the Master Servicer's rights and
obligations hereunder, including, without limitation, the transfer to the
Trustee of (i) the property and amounts which are then or should be part of the
Trust or which thereafter become part of the Trust; (ii) originals or copies of
all documents of the Master Servicer reasonably requested by the Trustee to
enable it to assume the Master Servicer's duties thereunder; and (iii) the
rights and obligations of the Master Servicer under the Sub-Servicing Agreements
with respect to the Mortgage Loans. In addition to any other amounts which are
then, or, notwithstanding the termination of its activities under this
Agreement, may become payable to the Master Servicer under this Agreement, the
Master Servicer shall be entitled to receive, out of any amount received on
account of a Mortgage Loan or REO Property, that portion of such payments which
it would have received as reimbursement pursuant to Section 3.14 if notice of
termination had not been given. The termination of the rights and obligations of
the Master Servicer shall not affect any obligations incurred by the Master
Servicer prior to such termination.
Section 8.02. TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR. (a) Upon the
receipt by the Master Servicer of a notice of termination pursuant to Section
8.01 or an Opinion of Independent Counsel pursuant to Section 7.05 to the effect
that the Master Servicer is legally unable to act or to delegate its duties to a
Person which is legally able to act, the Trustee shall automatically become the
successor in all respects to the Master Servicer in its capacity under this
Agreement and the transactions set forth or provided for herein and shall
thereafter be subject to all the responsibilities, duties, liabilities and
limitations on liabilities relating thereto placed on the Master Servicer by the
terms and provisions hereof; PROVIDED, HOWEVER, that the Trustee (i) shall be
under no obligation to purchase any Mortgage Loan pursuant to Section 10.01; and
(ii) shall have no obligation whatsoever with respect to any liability incurred
by the Master Servicer at or prior to the time of receipt by the Master Servicer
of such notice or by the Trustee of such Opinion of Independent Counsel. As
compensation therefor, the Trustee shall be entitled to all funds relating to
the Mortgage Loans which the Master Servicer would have been entitled to retain
if the Master Servicer had continued to act hereunder, except for those amounts
due the Master Servicer as reimbursement for advances previously made or
expenses previously incurred. Notwithstanding the above, the Trustee may, if it
shall be unwilling so to act, or shall, if it is legally unable so to act,
appoint or petition a court of competent jurisdiction to appoint, any
established housing and home finance institution which is a FNMA- or
FHLMC-approved servicer, and with respect to a successor to the Master Servicer
only, having a net worth of not less than $10,000,000, as the successor to the
Master Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Master Servicer hereunder.
Pending appointment of a successor to the Master Servicer hereunder, the Trustee
shall act in such capacity as hereinabove provided. In connection with such
appointment and assumption, the Trustee may make such arrangements for the
compensation of such successor out of payments on the Mortgage Loans as it and
such successor shall agree; PROVIDED, HOWEVER, that no such compensation shall
be in excess of that permitted the Trustee under this Subsection 8.02(a), and
that such successor shall undertake and assume the obligations of the Trustee to
pay compensation to any third Person acting as an agent or independent
contractor in the performance of master servicing responsibilities hereunder.
The Trustee and such successor shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession.
(b) If the Trustee shall succeed to any duties of either the Master
Servicer respecting the Mortgage Loans as provided herein, it shall do so in a
separate capacity and not in its capacity as Trustee and, accordingly, the
provisions of Article IX shall be inapplicable to the Trustee in its duties as
the successor to the Master Servicer in the servicing of the Mortgage Loans
(although such provisions shall continue to apply to the Trustee in its capacity
as Trustee); the provisions of Article VII, however, shall apply to it in its
capacity as successor master servicer.
Section 8.03. NOTIFICATION TO CERTIFICATEHOLDERS. Upon any termination
or appointment of a successor to the Master Servicer, the Trustee shall give
prompt written notice thereof to Certificateholders at their respective
addresses appearing in the Certificate Register and to the Rating Agencies.
Section 8.04. WAIVER OF DEFAULTS. The Trustee shall transmit by mail
to all Certificateholders, within 60 days after the occurrence of any Event of
Default known to the Trustee, unless such Event of Default shall have been
cured, notice of each such Event of Default hereunder known to the Trustee. The
Holders of Certificates evidencing Fractional Undivided Interests aggregating
not less than 51% of the Trust Fund may, on behalf of all Certificateholders,
waive any default by the Master Servicer in the performance of its obligations
hereunder and the consequences thereof, except a default in the making of or the
causing to be made any required distribution on the Certificates. Upon any such
waiver of a past default, such default shall be deemed to cease to exist, and
any Event of Default arising therefrom shall be deemed to have been timely
remedied for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereon except to the
extent expressly so waived. The Master Servicer shall give notice of any such
waiver to the Rating Agencies.
Section 8.05. LIST OF CERTIFICATEHOLDERS. Upon written request of
three or more Certificateholders of record, for purposes of communicating with
other Certificateholders with respect to their rights under this Agreement, the
Trustee will afford such Certificateholders access during business hours to the
most recent list of Certificateholders held by the Trustee.
<PAGE>
ARTICLE IX
Concerning the Trustee
Section 9.01. DUTIES OF TRUSTEE. (a) The Trustee, prior to the
occurrence of an Event of Default and after the curing or waiver of all Events
of Default which may have occurred, undertakes to perform such duties and only
such duties as are specifically set forth in this Agreement as duties of the
Trustee. If an Event of Default has occurred and has not been cured or waived,
the Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in their exercise, as a
prudent person would exercise under the circumstances in the conduct of his own
affairs.
(b) Upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments which are specifically
required to be furnished to the Trustee pursuant to any provision of this
Agreement, the Trustee shall examine them to determine whether they are in the
form required by this Agreement; PROVIDED, HOWEVER, that the Trustee shall not
be responsible for the accuracy or content of any resolution, certificate,
statement, opinion, report, document, order or other instrument furnished by the
Master Servicer hereunder.
(c) The Trustee shall make monthly distributions and the final
distribution to the Certificateholders as provided in Sections 6.01 and 10.01
herein.
(d) 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) Prior to the occurrence of an Event of Default, and after the
curing or waiver of all such Events of Default which may have
occurred, the duties and obligations of the Trustee shall be
determined solely by the express provisions of this Agreement, the
Trustee shall not be liable except for the performance of such duties
and obligations as are specifically set forth in this Agreement, no
implied covenants or obligations shall be read into this Agreement
against the Trustee and, in the absence of bad faith on the part of
the Trustee, the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
any certificates or opinions furnished to the Trustee and conforming
to the requirements of this Agreement;
(ii) The Trustee shall not be 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 liable with respect to any action
taken, suffered or omitted to be taken by it in good faith in
accordance with the directions of the Holders of Certificates
evidencing Fractional Undivided Interests aggregating not less than
25% of the Trust Fund, if such action or non-action relates to the
time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or other power
conferred upon the Trustee, under this Agreement; and
(iv) The Trustee shall not be required to take notice or be
deemed to have notice or knowledge of any default or Event of Default
unless a Responsible Officer of the Trustee's corporate trust
department shall have actual knowledge thereof. In the absence of such
notice, the Trustee may conclusively assume there is no such default
or Event of Default.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of, any
of the obligations of the Master Servicer under this Agreement, except during
such time, if any, as the Trustee shall be the successor to, and be vested with
the rights, duties, powers and privileges of, the Master Servicer in accordance
with the terms of this Agreement.
(e) All funds received by the Trustee and required to be deposited in
the Certificate Account and the Custody Account pursuant to this Agreement will
be promptly so deposited by the Trustee.
Section 9.02. CERTAIN MATTERS AFFECTING THE TRUSTEE. Except as
otherwise provided in Section 9.01:
(i) The Trustee may rely and shall be protected in acting or
refraining from acting in reliance on any resolution, Officer's
Certificate, certificate of a Servicing Officer, certificate of
auditors or any other certificate, statement, instrument, opinion,
report, notice, request, consent, order, appraisal, bond or other
paper or document believed by it to be genuine and to have been signed
or presented by the proper party or parties;
(ii) The Trustee may consult with counsel and any Opinion of
Counsel shall be full and complete authorization and protection with
respect to 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, other than its
obligation to give notices pursuant to 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 pursuant to the provisions of this Agreement,
unless such Certificateholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby. Nothing
contained herein shall, however, relieve the Trustee of the
obligation, upon the occurrence of an Event of Default of which a
Responsible Officer of the Trustee's corporate trust department has
actual knowledge (which has not been cured), to exercise such of the
rights and powers vested in it by this Agreement, and to use the same
degree of care and skill in their exercise, as a prudent person would
exercise under the circumstances in the conduct of his own affairs;
(iv) The Trustee shall not be 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;
(v) Prior to the occurrence of an Event of Default hereunder and
after the curing or waiver of all Events of Default which may have
occurred, the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instru- ment, opinion, report, notice, request, consent,
order, approval, bond or other paper or document, unless requested in
writing to do so by Holders of Certificates evidencing Fractional
Undivided Interests aggregating not less than 25% of the Trust Fund
and provided that the payment within a reasonable time to the Trustee
of the costs, expenses or liabilities likely to be incurred by it in
the making of such investigation is, in the opinion of the Trustee,
reasonably assured to the Trustee by the security afforded to it by
the terms of this Agreement. The Trustee may require reasonable
indemnity against such expense or liability as a condition to taking
any such action. The reasonable expense of every such examination
shall be paid by the Certificateholders requesting the investigation;
(vi) The Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or through
agents or attorneys; PROVIDED, HOWEVER, that the Trustee may not
appoint any agent to perform its custodial or paying agent functions
under this Agreement without the express written consent of the Master
Servicer, which consent will not be unreasonably withheld. The Trustee
shall not be liable or responsible for the misconduct or negligence of
any of the Trustee's agents or attorneys or a custodian or paying
agent appointed hereunder by the Trustee with due care and, when
required, with the consent of the Master Servicer;
(vii) Should the Trustee deem the nature of any action required
on its part, other than a payment or transfer under Subsection 4.02(b)
or Section 4.03, to be unclear, the Trustee may require prior to such
action that it be provided by the Master Servicer with reasonable
further instructions;
(viii) The right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the
Trustee shall not be accountable for other than its negligence or
willful misconduct in the performance of any such act;
(ix) The Trustee shall not be required to give any bond or surety
with respect to the execution of the trust created hereby or the
powers granted hereunder; and
(x) The Trustee shall have no duty to conduct any affirmative
investigation as to the occurrence of any condition requiring the
repurchase of any Mortgage Loan by ICI Funding pursuant to this
Agreement or the eligibility of any Mortgage Loan for purposes of this
Agreement.
Section 9.03. TRUSTEE NOT LIABLE FOR CERTIFICATES OR MORTGAGE LOANS.
The recitals contained herein and in the Certificates (other than the signature
and countersignature of the Trustee on the Certificates) shall be taken as the
statements of the Seller, and the Trustee shall have no responsibility for their
correctness. The Trustee makes no representation as to the validity or
sufficiency of the Certificates (other than the signature and countersignature
of the Trustee on the Certificates) or of any Mortgage Loan except as expressly
provided in Sections 2.02 and 2.05 hereof. The Trustee's signature and
countersignature (or countersignature of its agent) on the Certificates shall be
solely in its capacity as Trustee and shall not constitute the Certificates an
obligation of the Trustee in any other capacity. The Trustee shall not be
accountable for the use or application by the Seller of any of the Certificates
or of the proceeds of such Certificates, or for the use or application of any
funds paid to the Seller with respect to the Mortgage Loans. Subject to the
provisions of Section 2.05, the Trustee shall not be responsible for the
legality or validity of this Agreement or any document or instrument relating to
this Agreement, the validity of the execution of this Agreement or of any
supplement hereto or instrument of further assurance, or the validity, priority,
perfection or sufficiency of the security for the Certificates issued hereunder
or intended to be issued hereunder. The Trustee shall at no time have any
responsibility or liability for or with respect to the legality, validity and
enforceability of any Mortgage or any Mortgage Loan, or the perfection and
priority of any Mortgage or the maintenance of any such perfection and priority,
or for or with respect to the sufficiency of the Trust Fund or its ability to
generate the payments to be distributed to Certificateholders, under this
Agreement. The Trustee shall have no responsibility for filing any financing or
continuation statement in any public office at any time or to otherwise perfect
or maintain the perfection of any security interest or lien granted to it
hereunder or to record this Agreement.
Section 9.04. TRUSTEE MAY OWN CERTIFICATES. The Trustee in its
individual capacity or in any capacity other than as Trustee hereunder may
become the owner or pledgee of any Certificates with the same rights it would
have if it were not Trustee, and may otherwise deal with the parties hereto.
Section 9.05. TRUSTEE'S FEES AND EXPENSES. The Master Servicer
covenants and agrees to pay to the Trustee the Trustee's Fee with respect to the
calendar month in which the Closing Date occurs. With respect to the calendar
month following the month in which the Closing Date occurs and all subsequent
calendar months, the Trustee's Fee shall be paid from the Certificate Account,
pursuant to Subsection 4.03(b). If the funds in the Certificate Account are not
sufficient to pay the Trustee's Fees, the Master Servicer will be liable for
payment of the Trustee's Fees. The Master Servicer further covenants and agrees
to pay or reimburse the Trustee from time to time upon request for all
reasonable out-of-pocket expenses, disbursements and advances incurred or made
by the Trustee in the administration of the trusts hereunder as set forth in a
fee letter sent by the Trustee to the Master Servicer (including the reasonable
compensation, expenses and disbursements of its counsel) except any such
expense, disbursement or advance as may arise from its negligence or intentional
misconduct or which is the responsibility of the Certificateholders or the Trust
Fund hereunder. Such compensation and reimbursement obligation shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust.
Section 9.06. ELIGIBILITY REQUIREMENTS FOR TRUSTEE. The Trustee and
any successor Trustee shall during the entire duration of this Agreement be a
state bank or trust company or a national banking association with its principal
office in Orange County, California or such other state and city reasonably
acceptable to the Master Servicer and organized and doing business under the
laws of such state or the United States of America, authorized under such laws
to exercise corporate trust powers, having a combined capital and surplus and
undivided profits of at least $40,000,000 or, in the case of a successor
Trustee, $50,000,000, subject to supervision or examination by federal or state
authority and, in the case of a successor Trustee other than pursuant to Section
9.10, rated in one of the two highest long-term debt categories of, or otherwise
acceptable to, each of the Rating Agencies. The Trustee shall not be an
Affiliate of the Master Servicer, unless the Trustee acts as successor Master
Servicer hereunder. If the Trustee 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 9.06 the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 9.06, the Trustee shall resign
immediately in the manner and with the effect specified in Section 9.08.
Section 9.07. INSURANCE. The Trustee, at its own expense, shall at all
times maintain and keep in full force and effect: (i) fidelity insurance, (ii)
theft of documents insurance and (iii) forgery insurance. All such insurance
shall be in amounts, with standard coverage and subject to deductibles, as are
customary for insurance typically maintained by banks which act as custodians
for investor-owned mortgage pools. A certificate of an officer of the Trustee as
to the Trustee's compliance with this Section 9.07 shall be furnished to the
Master Servicer or any Certificateholder upon request.
Section 9.08. RESIGNATION AND REMOVAL OF THE TRUSTEE. (a) The Trustee
may at any time resign and be discharged from the Trust hereby created by giving
written notice thereof to the Master Servicer, with a copy to the Rating
Agencies. Upon receiving such notice of resignation, the Master Servicer shall
promptly appoint a successor Trustee by written instrument, in triplicate, one
copy of which instrument shall be delivered to each of the resigning Trustee and
the successor Trustee. 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 9.06 and shall fail to resign after
written request therefor by the Master Servicer or if at any time the Trustee
shall become incapable of acting, or shall be adjudged a bankrupt or insolvent,
or a receiver of the Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Master Servicer shall be entitled to remove the Trustee and appoint a successor
Trustee by written instrument, in triplicate, one copy of which instrument shall
be delivered to each of the Trustee so removed and the successor Trustee.
(c) The Holders of Certificates evidencing Fractional Undivided
Interests aggregating not less than 51% of the Trust Fund may at any time remove
the Trustee and appoint a successor Trustee by written instrument or
instruments, in triplicate, signed by such Holders or their attorneys-in-fact
duly authorized, one complete set of which instruments shall be delivered to
each of the Master Servicer, the Trustee so removed and the successor so
appointed.
(d) No resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 9.08 shall
become effective except upon appointment of and acceptance of such appointment
by the successor Trustee as provided in Section 9.09.
Section 9.09. SUCCESSOR TRUSTEE. (a) Any successor Trustee appointed
as provided in Section 9.08 shall execute, acknowledge and deliver to the Master
Servicer and to its prede- cessor Trustee an instrument accepting such
appointment hereunder. The resignation or removal of the predecessor Trustee
shall then become effective and such successor Trustee, without any further act,
deed or conveyance, shall become fully vested with all the rights, powers,
duties and obligations of its predecessor hereunder, with like effect as if
originally named as Trustee herein. The predecessor Trustee shall after payment
of its outstanding fees and expenses promptly deliver to the successor Trustee
all assets and records of the Trust held by it hereunder, and the Master
Servicer and the predecessor Trustee shall execute and deliver such instruments
and do such other things as may reasonably 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 9.09 unless at the time of such acceptance such successor Trustee shall
be eligible under the provisions of Section 9.06.
(c) Upon acceptance of appointment by a successor Trustee as provided
in this Section 9.09, the successor Trustee shall mail notice of the succession
of such Trustee hereunder to all Certificateholders at their addresses as shown
in the Certificate Register and to the Rating Agencies. The Master Servicer
shall pay the cost of any mailing by the successor Trustee.
Section 9.10. MERGER OR CONSOLIDATION OF TRUSTEE. Any state bank or
trust company or national banking association into which the Trustee may be
merged or converted or with which it may be consolidated or any state bank or
trust company or national banking association resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any state
bank or trust company or national banking association succeeding to all or
substantially all of the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, provided such state bank or trust company or
national banking association shall be eligible under the provisions of Section
9.06. Such succession shall be valid without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
Section 9.11. 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 or property constituting the same may at the time be located, the Master
Servicer and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee and the Master Servicer to act as co-trustee or co-trustees, jointly
with the Trustee, or separate trustee or separate trustees, of all or any part
of the Trust, and to vest in such Person or Persons, in such capacity, such
title to the Trust, or any part thereof, and, subject to the other provisions of
this Section 9.11, such powers, duties, obligations, rights and trusts as the
Master Servicer and the Trustee may consider necessary or desirable.
(b) If the Master Servicer shall not have joined in such appointment
within 15 days after the receipt by it of a written request so to do, or in case
an Event of Default with respect to the Master Servicer shall have occurred and
be continuing, the Trustee shall have the power to make such appointment without
the Master Servicer.
(c) No co-trustee or separate trustee hereunder shall be required to
meet the terms of eligibility as a successor Trustee under Section 9.06
hereunder and no notice to Certificateholders of the appointment of
co-trustee(s) or separate trustee(s) shall be required under Section 9.08
hereof.
(d) In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 9.11, all rights, powers, duties and obligations
conferred or imposed upon the Trustee and required to be conferred on such
co-trustee shall be conferred or imposed upon and exercised or performed by the
Trustee and such separate trustee or co-trustee jointly, except to the extent
that under any law of any jurisdiction in which any particular act or acts are
to be performed (whether as Trustee hereunder or as successor to the Master
Servicer hereunder), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust or any portion thereof in any such
jurisdiction) shall be exercised and performed by such separate trustee or
co-trustee at the direction of the Trustee.
(e) 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 IX. 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.
(f) To the extent not prohibited by law, any separate trustee or
co-trustee may, at any time, request the Trustee, its agent or attorney-in-fact,
with full power and authority, to do any lawful act under or with respect to
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.
(g) No trustee under this Agreement shall be personally liable by
reason of any act or omission of another trustee under this Agreement. The
Master Servicer and the Trustee acting jointly may at any time accept the
resignation of or remove any separate trustee or co-trustee, except that
following the occurrence of any Event of Default which has not been cured, the
Trustee acting alone may accept the resignation of or remove any separate
trustee or co- trustee.
Section 9.12. MASTER SERVICER SHALL PROVIDE INFORMATION AS REASONABLY
REQUIRED. The Master Servicer shall furnish to the Trustee, during the term of
this Agreement, such periodic, special, or other reports or information as may
reasonably be requested by the Trustee in order to fulfill its duties and
obligations under this Agreement.
Section 9.13. FEDERAL INFORMATION RETURNS AND REPORTS TO
CERTIFICATEHOLDERS. (a) For Federal income tax purposes, the taxable year of
each of REMIC I and REMIC II shall be a calendar year and the Trustee shall
maintain or cause the maintenance of the books of each of REMIC I and REMIC II
Assets on the accrual method of accounting.
(b) The Trustee shall prepare and file or cause to be filed with the
Internal Revenue Service Federal tax information returns with respect to each of
REMIC I and REMIC II, the Trust Fund, if applicable, and the Certificates
containing such information and at the times and in the manner as may be
required by the Code or applicable Treasury regulations, and shall furnish to
each Holder of Certificates at any time during the calendar year for which such
returns or reports are made such statements or information at the times and in
the manner as may be required thereby. In connection with the foregoing, the
Trustee shall provide the name and address of the person who can be contacted to
obtain information required to be reported to the holders of regular interests
in each of REMIC I and REMIC II (the "REMIC Reporting Agent") as required by IRS
Form 8811. The Trustee shall make the elections to treat each of REMIC I and
REMIC II as a REMIC (which election shall apply to the taxable period ending
December 31, 1996 and each calendar year thereafter) in such manner as the Code
or applicable Treasury regulations may prescribe. The Trustee shall sign all tax
information returns filed pursuant to this Section and any other returns as may
be required by the Code, and in doing so shall rely entirely upon, and shall
have no liability for information provided by, or calculations provided by, the
Seller or the Master Servicer. The Trustee is hereby designated as the "Tax
Matters Person" (within the meaning of Treas. Reg. ss. 1.860F-4(d)) for each of
REMIC I and REMIC II Any Holder of a Residual Certificate will by acceptance
thereof appoint the Trustee as agent and attorney-in-fact for the purpose of
acting as Tax Matters Person for each of REMIC I and REMIC II during such time
as the Trustee does not own any such Residual Certificate. In the event that the
Code or applicable Treasury regulations prohibit the Trustee from signing tax or
information returns or other statements, or the Trustee from acting as Tax
Matters Person (as an agent or otherwise), the Trustee shall take whatever
action that in its sole good faith judgment is necessary for the proper filing
of such information returns or for the provision of a tax matters person,
including designation of the Holder of a Residual Certificate to sign such
returns or act as tax matters person. Each Holder of a Residual Certificate
shall be bound by this Section.
(c) The Trustee shall provide upon request such information (which
shall be provided by the Master Servicer) as required in Section 860D(a)(6)(B)
of the Code to the Internal Revenue Service, to any Person purporting to
transfer a Residual Certificate to a Person other than a transferee permitted by
Section 5.05(b), and to any regulated investment company, real estate investment
trust, common trust fund, partnership, trust, estate, organization described in
Section 1381 of the Code, or nominee holding an interest in a pass-through
entity described in Section 860E(e)(6) of the Code, any record holder of which
is not a transferee permitted by Section 5.05(b) (or which is deemed by statute
to be an entity with a disqualified member).
(d) The Trustee shall prepare and file or cause to be filed any state
income tax returns required with respect to each of REMIC I and REMIC II or the
Trust Fund.
<PAGE>
ARTICLE X
Termination
Section 10.01. TERMINATION UPON REPURCHASE BY ICI FUNDING OR ITS
DESIGNEE OR LIQUIDATION OF ALL MORTGAGE LOANS. (a) Subject to Section 10.02, the
respective obligations and responsibilities of the Seller, the Master Servicer
and the Trustee created hereby, other than the obligation of the Trustee or the
Master Servicer to make payments to Certificateholders as hereinafter set forth
and to the Trustee, shall terminate upon:
(i) the repurchase by or at the direction of the Master Servicer
or its designee of all Mortgage Loans and all property remaining in
the Trust at a price equal to (a) 100% of the Outstanding Principal
Balance of each Mortgage Loan (other than a Mortgage Loan related to
REO Property) as of the date of repurchase, net of the principal
portion of any unreimbursed Monthly Advances made by the purchaser,
together with interest at the applicable Mortgage Interest Rate
accrued but unpaid through and including the last day of the month of
repurchase, plus (b) the appraised value of any REO Property (but not
more than the Outstanding Principal Balance of the related Mortgage
Loan, together with interest at the applicable Mortgage Interest Rate
accrued on that balance but unpaid through and including the last day
of the month of repurchase), less the good faith estimate of the
Master Servicer of liquidation expenses to be incurred in connection
with its disposal thereof, such appraisal to be calculated by an
appraiser mutually agreed upon by the Master Servicer and the Trustee
at the expense of the Master Servicer; or
(ii) the later of the making of the final payment or other
liquidation, or any advance with respect thereto, of the last Mortgage
Loan remaining in the Trust Fund or the disposition of all property
acquired with respect to any Mortgage Loan; PROVIDED, HOWEVER, that in
the event that an advance has been made, but not yet recovered, at the
time of such termination, the Person having made such advance shall be
entitled to receive, notwithstanding such termination, any payments
received subsequent thereto with respect to which such advance was
made.
(b) In no event, however, shall the Trust created hereby continue
beyond the expiration of 21 years from the death of the last survivor of the
descendants of Joseph P. Kennedy, the late Ambassador of the United States to
the Court of St. James, living on the date of this Agreement.
(c) [Intentionally omitted.]
(d) The right of the Master Servicer or its designee to repurchase all
Mortgage Loans pursuant to Subsection 10.01(a)(i) above shall be exercisable
only if (i) the aggregate Scheduled Principal Balance of such Mortgage Loans at
the time of any such repurchase is less than 10% of the Cut-Off Date Balance or
(ii) the Master Servicer based upon an Opinion of Counsel, has determined that
the REMIC status of either REMIC I or REMIC II has been lost or that a
substantial risk exists that such REMIC status will be lost for the then-current
taxable year. At any time thereafter, the Master Servicer may elect to terminate
the Trust at any time, and upon such election, the Master Servicer or its
designee shall repurchase all the Mortgage Loans.
(e) [Intentionally omitted].
(f) The Trustee shall give notice of any termination to the
Certificateholders, with a copy to the Rating Agencies, upon which the
Certificateholders shall surrender their Certificates to the Trustee for payment
of the final distribution and cancellation. Such notice shall be given by
letter, mailed not earlier than the 15th day and not later than the 25th day of
the month next preced- ing the month of such final distribution, and shall
specify (i) the Distribution Date upon which final payment of the Certificates
will be made upon presentation and surrender of the Certificates at the office
of the Trustee therein designated, (ii) the amount of any such final payment and
(iii) that the Record Date otherwise applicable to such Distribution Date is not
applicable, payments being made only upon presentation and surrender of the
Certificates at the office of the Trustee therein specified.
(g) If the option of the Master Servicer to repurchase or cause the
repurchase of all Mortgage Loans under Subsection 10.01(a)(i) above is
exercised, the Master Servicer and/or its designee, as the case may be, shall
deliver to the Trustee for deposit in the Certificate Account, by the Business
Day prior to the applicable Distribution Date, an amount equal to the repurchase
price for the Mortgage Loans being purchased by it and all property acquired
with respect to such Mortgage Loans remaining in the Trust. Upon the
presentation and surrender of the Certificates, the Trustee shall distribute an
amount equal to (i) the amount otherwise distributable to the Certificateholders
(other than the holders of the Class R-2 Certificates) on such Distribution Date
but for such repurchase, (ii) the Current Principal Amount and any accrued but
unpaid interest at the Pass-Through Rate to the Certi- ficateholders of each
Class, and (iii) the remainder to the Class R-2 Certificateholders. Upon deposit
of the required repurchase price and delivery to the Trustee of an Officer's
Certificate from the Master Servicer certifying that such deposit in the
Certificate Account has been made, and following such final Distribution Date,
the Trustee shall promptly release to the Master Servicer and/or its designee,
as the case may be, the Mortgage Files for the remaining Mortgage Loans, and the
Accounts shall terminate, subject to the Trustee's obligation to hold any
amounts payable to Certifi- cateholders in trust without interest pending final
distributions pursuant to Subsection 10.01(i).
(h) In the event that this Agreement is terminated by reason of the
payment or liquidation of all Mortgage Loans or the disposition of all property
acquired with respect to all Mortgage Loans under Subsection 10.01(a)(ii) above,
the Master Servicer shall deliver to the Trustee for deposit in the Certificate
Account all distributable amounts remaining in the Custody Account and shall
cause the Sub-Servicers to deliver to the Trustee for deposit in the Certificate
Account all distributable amounts remaining in their Protected Accounts. Upon
the presentation and surrender of the Certificates, the Trustee shall distribute
to the Certificateholders, in accordance with their respective interests, all
distributable amounts remaining in the Certificate Account. Upon deposit by the
Sub-Servicers of such distributable amounts and delivery to the Trustee of an
Officer's Certificate from the Master Servicer certifying that such deposit has
been made, and following such final Distribution Date, the Trustee shall
promptly release to the Master Servicer the Mortgage Files for the remaining
Mortgage Loans, and the Accounts shall terminate, subject to the Trustee's
obligation to hold any amounts payable to the Certificateholders in trust
without interest pending final distributions pursuant to Subsection 10.01(i).
(i) If not all of the Certificateholders shall surrender their
Certificates for cancellation within six months after the time specified in the
above-mentioned written notice, the Trustee shall give a second written notice
to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
six months after the second notice, not all the Certificates shall have been
surrendered for cancellation, the Trustee may take appropriate steps, or appoint
any agent to take appropriate steps, to contact the remaining Certificateholders
concerning surrender of their Certificates, and the cost thereof shall be paid
out of the funds and other assets which remain subject to this Agreement.
Section 10.02 ADDITIONAL TERMINATION REQUIREMENTS. (a) If the option
of the Master Servicer to repurchase all the Mortgage Loans under Subsection
10.01(a)(i) above is exercised, the Trust and each of REMIC I and REMIC II shall
be terminated in accordance with the following additional requirements, unless
the Trustee has been furnished with an Opinion of Counsel to the effect that the
failure of the Trust to comply with the requirements of this Section 10.02 will
not (i) result in the imposition of taxes on "prohibited transactions" as
defined in Section 860F of the Code on each of REMIC I and REMIC II or (ii)
cause each of REMIC I and REMIC II to fail to qualify as a REMIC at any time
that any Regular Certificates are outstanding:
(i) within 90 days prior to the final Distribution Date, at the
written direction of the Master Servicer, the Trustee shall adopt a
plan of complete liquidation of the Trust Fund and each of REMIC I and
REMIC II provided to it by the Master Servicer meeting the
requirements of a "Qualified Liquidation" under Section 860F of the
Code and any regulations thereunder as prepared by ICI Funding;
(ii) at or after the time of adoption of such a plan of complete
liquidation and at or prior to the final Distribution Date, the
Trustee shall sell for cash all of the assets of the Trust to or at
the direction of the Master Servicer; and
(iii) at the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit from the
Certificate Account (or cause to be distributed or credited) (i) to
the Certificateholders other than the Holders of the Class X
Certificates and the Class R-2 Certificates, the Current Principal
Amount of the Certificates plus (except with respect to the Class PO
Certificates) 30 days' interest thereon at the applicable Pass-Through
Rate, (ii) to the Holders of the Class X Certificates, 30 days'
interest on the Notional Amount thereof at the applicable Pass-Through
Rate, and (iii) to the Class R-2 Certificateholders, all cash on hand
from the Certificate Account (other than cash retained to meet
claims); and the Trust and each of REMIC I and REMIC II shall
terminate at such time.
(b) By their acceptance of the Residual Certificates, the Holders
thereof hereby (i) agree to adopt such a plan of complete liquidation upon the
written request of the Master Servicer and to take such action in connection
therewith as may be reasonably requested by the Master Servicer and (ii) appoint
the Master Servicer as their attorney-in-fact, with full power of substitution,
for purposes of adopting such a plan of complete liquidation. The Trustee shall
adopt such plan of liquidation by filing the appropriate statement on the final
tax return of REMIC I and REMIC II.
<PAGE>
ARTICLE XI
Miscellaneous Provisions
Section 11.01. INTENT OF PARTIES. The parties intend that each of
REMIC I and REMIC II shall be treated as a REMIC for federal income tax purposes
and that the provisions of this Agreement should be construed in furtherance of
this intent.
Section 11.02. AMENDMENT. (a) This Agreement may be amended from time
to time by the Seller, the Trustee and the Master Servicer, without notice to or
the consent of any of the Certificateholders, to cure any ambiguity, to correct
or supplement any provisions herein that may be defective or inconsistent with
any other provisions herein, to comply with any changes in the Code or to make
any other provisions with respect to matters or questions arising under this
Agreement which shall not be inconsistent with the provisions of this Agreement;
PROVIDED, HOWEVER, that such action shall not, as evidenced by an Opinion of
Independent Counsel, adversely affect in any material respect the interests of
any Certificateholder.
(b) This Agreement may also be amended from time to time by the
Seller, the Trustee and the Master Servicer, with the consent of the holders of
Certificates evidencing Fractional Undivided Interests aggregating not less than
51% of the Trust Fund 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 received on Mortgage Loans which are required to be
distributed on any Certificate without the consent of the Holder of such
Certificate, (ii) reduce the aforesaid percentage of Certificates the Holders of
which are required to consent to any such amendment, without the consent of the
Holders of all Certificates then outstanding, or (iii) cause either REMIC I or
REMIC II to fail to qualify as a REMIC for federal income tax purposes, as
evidenced by an Opinion of Independent Counsel which shall be provided to the
Trustee other than at the Trustee's expense.
(c) Promptly after the execution of any such amendment, the Trustee
shall furnish a copy of such amendment or written notification of the substance
of such amendment to each Certificateholder, with a copy to the Rating Agencies.
(d) In the case of an amendment under Subsection 11.02(b) above, it
shall not be necessary for the Certificateholders to approve the particular form
of such an amendment. Rather, it shall be sufficient if the Certificateholders
approve the substance of the amendment. 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 11.03. RECORDATION OF AGREEMENT. To the extent permitted by
applicable law, this Agreement is subject to recordation in all appropriate
public offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the Mortgaged Properties are situated, and
in any other appropriate public recording office or elsewhere. The Master
Servicer shall effect such recordation, at its expense upon the request in
writing of a Certificateholder, but only if such direction is accompanied by an
Opinion of Counsel (provided at the expense of the Certificateholder requesting
recordation) to the effect that such recordation would materially and
beneficially affect the interests of the Certificateholders or is required by
law.
Section 11.04. LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS. (a) The
death or incapacity of any Certificateholder shall not terminate this Agreement
or the Trust, 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, nor otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them.
(b) Except as expressly provided in this Agreement, no
Certificateholders shall have any right to vote or in any manner otherwise
control the operation and management of the Trust, 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 establish the Certificateholders from
time to time as partners or members of an association; nor shall any
Certificateholders be under any liability to any third Person by reason of any
action taken by the parties to this Agreement pursuant to any provision hereof.
(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, under or with respect to this Agreement against the
Seller, the Master Servicer or any successor to any such parties unless (i) such
Certificateholder previously shall have given to the Trustee a written notice of
a continuing default, as herein provided, (ii) the Holders of Certificates
evidencing Fractional Undivided Interests aggregating not less than 51% of the
Trust Fund 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 such reasonable indemnity as it may require against the
costs and expenses and liabilities to be incurred therein or thereby, and (iii)
the Trustee, for 60 days after its receipt of such notice, request and offer of
indemnity, shall have neglected or refused to institute any such action, suit or
proceeding.
(d) No one or more Certificateholders shall have any right by virtue
of any provision of this Agreement to affect the rights of any other
Certificateholders or to obtain or seek to obtain priority or preference over
any other such Certificateholder, or to enforce any right under this Agreement,
except in the manner herein provided and for the equal, ratable and common
benefit of all Certificateholders. For the protection and enforcement of the
provisions of this Section 11.04, each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
Section 11.05. ACTS OF CERTIFICATEHOLDERS. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Agreement to be given or taken by Certificateholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Certificateholders in person or by an agent duly appointed in writing.
Except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee and,
where it is expressly required, to the Seller. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Agreement and conclusive in favor of the Trustee and the Seller,
if made in the manner provided in this Section 11.05.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his or her individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his or her authority. The fact and date of the execution of any such
instrument or writing, or the authority of the individual executing the same,
may also be proved in any other manner which the Trustee deems sufficient.
(c) The ownership of Certificates (notwithstanding any notation of
ownership or other writing on such Certificates, except an endorsement in
accordance with Section 5.02 made on a Certificate presented in accordance with
Section 5.04) shall be proved by the Certificate Register, and neither the
Trustee, the Seller, the Master Servicer nor any successor to any such parties
shall be affected by any notice to the contrary.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action of the holder of any Certificate shall bind every future
holder of the same Certificate and the holder of every Certificate issued upon
the registration of transfer or exchange thereof, if applicable, or in lieu
thereof with respect to anything done, omitted or suffered to be done by the
Trustee, the Seller, the Master Servicer or any successor to any such party in
reliance thereon, whether or not notation of such action is made upon such
Certificates.
(e) In determining whether the Holders of the requisite percentage of
Certificates evidencing Fractional Undivided Interests have given any request,
demand, authorization, direction, notice, consent or waiver hereunder,
Certificates owned by the Trustee, the Seller, the Master Servicer or any
Sub-Servicer or any Affiliate thereof shall be disregarded, except that, in
determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Certificates which the Trustee knows to be so owned shall be so disregarded.
Certificates which have been pledged in good faith to the Trustee, the Seller,
the Master Servicer or any Sub-Servicer or any Affiliate thereof may be regarded
as outstanding if the pledgor establishes to the satisfaction of the Trustee the
pledgor's right to act with respect to such Certificates and that the pledgor is
not an Affiliate of the Trustee, the Seller, the Master Servicer or any
Sub-Servicer, as the case may be.
Section 11.06. [Reserved]
Section 11.07. GOVERNING LAW. THIS AGREEMENT AND THE CERTIFICATES
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REFERENCE TO ITS CONFLICT OF LAWS RULES AND THE OBLIGATIONS, RIGHTS AND REMEDIES
OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 11.08. NOTICES. All demands and notices hereunder shall be in
writing and shall be deemed given when delivered at or mailed by registered
mail, return receipt requested, postage prepaid, or by recognized overnight
courier, to (i) in the case of the Seller, 245 Park Avenue, New York, New York
10167, Attention: Vice President-Servicing, or such other address as may
hereafter be furnished to the other parties hereto in writing; (ii) in the case
of ICI Funding, 20371 Irvine Avenue, Santa Ana Heights, California 92707,
Attention: Richard Johnson or such other address as may hereafter be furnished
to the other parties hereto in writing; (iii) in the case of the Trustee, at its
Corporate Trust Office, or such other address as may hereafter be furnished to
the other parties hereto in writing; or (iv) in the case of the Rating Agencies,
S&P, 25 Broadway, New York, New York 10004 Attention: Residential Mortgage
Surveillance Group and Fitch, One State Street Plaza, New York, New York 10004,
Attention: Mortgage-Backed Surveillance. Any notice delivered to the Seller, the
Master Servicer or the Trustee under this Agreement shall be effective only upon
receipt. Any notice required or permitted to be mailed to a Certificateholder,
unless otherwise provided herein, shall be given by first-class mail, postage
prepaid, at the address of such Certificateholder as shown in the Certificate
Register. Any notice so mailed within the time prescribed in this Agreement
shall be conclusively presumed to have been duly given, whether or not the
Certificateholder receives such notice.
Section 11.09. 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 severed from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the holders thereof.
Section 11.10. 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.
Section 11.11. 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 11.12. COUNTERPARTS. This Agreement may be executed in two or
more counterparts each of which when so executed and delivered shall be an
original but all of which together shall constitute one and the same instrument.
Section 11.13 NOTICE TO RATING AGENCIES. The article and section
headings herein are for convenience of reference only, and shall not limited or
otherwise affect the meaning hereof. The Trustee shall use its best efforts to
promptly provide notice to each Rating Agency with respect to each of the
following of which it has actual knowledge:
1. Any material change or amendment to this Agreement;
2. The occurrence of any Event of Default that has not been cured;
3. The resignation or termination of the Master Servicer or the
Trustee;
4. The repurchase or substitution of Mortgage Loans;
5. The final payment to Certificateholders; and
6. Any change in the location of the Custody Account or the
Certificate Account.
In addition, in accordance with Section 6.06 and Section 3.16, the
Trustee and the Master Servicer, respectively, shall promptly furnish to each
Rating Agency copies of the following:
1. Each report to Certificateholders described in Section 6.06; and
2. Each annual independent public accountants' servicing report
received as described in Section 3.16.
IN WITNESS WHEREOF, the Seller, ICI Funding and the Trustee have
caused their names to be signed hereto by their respective officers thereunto
duly authorized as of the day and year first above written.
BEAR STEARNS MORTGAGE SECURITIES INC.,
as Seller
/s/ Joseph T. Jurkowski
By:
Name: Joseph T. Jurkowski
Title: Vice President
ICI FUNDING CORPORATION,
as Master Servicer
/s/ Mary Glass
By: ------------------------------
Name: Mary Glass
Title: Senior Vice President
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
as Trustee
/s/ Michelle Lambott
By:
Name: Michelle Lambott
Title: Assistant Vice President
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 28th day of June, 1996 before me, a notary public in and for
said State, personally appeared Joseph T. Jurkowski, Jr., known to me to be a
Vice 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/ Maria K. Montgomery
Notary Public Maria K. Montgomery
[Notarial Seal]
<PAGE>
STATE OF CALIFORNIA )
) ss.:
COUNTY OF ORANGE )
On the 28th day of June, 1996 before me, a notary public in and for
said State, personally appeared Mary Glass, known to me to be a Senior Vice
President of ICI Funding Corporation, 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/ Linda Sepulveda
Notary Public Linda Sepulveda
[Notarial Seal]
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 28th day of June, 1996 before me, a notary public in and for
said State, personally appeared Michelle Lambott, known to me to be an Assistant
Vice President of Bankers Trust Company of California, N.A., 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 bank and acknowledged to me that
such bank 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/ Maria K. Montgomery
Notary Public Maria K. Montgomery
[Notarial Seal]
<PAGE>
START HERE
EXHIBIT A-1
FORM OF FACE OF CERTIFICATES
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
BEAR STEARNS MORTGAGE SECURITIES INC., ICI FUNDING CORPORATION OR THE TRUSTEE
REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE AFFILIATES AND IS NOT GUARANTEED OR
INSURED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THIS CERTIFICATE IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" (A "REMIC"), AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE").
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.
MORTGAGE PASS-THROUGH CERTIFICATE,
No. A-1-1 SERIES 1996-3
evidencing a beneficial interest in a Trust
consisting primarily of conventional, first lien mortgage loans sold by
BEAR STEARNS MORTGAGE SECURITIES INC.
CUSIP No. 073914 PF 4
Cut-Off Date : June 1, 1996 Class : A-1
First Distribution Date : July 25, 1996 Initial Principal Amount
Assumed Final of this Certificate
Distribution Date : June 25, 2027 ("Denomination") :
Master Servicer : ICI Funding Corporation Approximate Original Class
Pass-Through Rate : 6.82% Principal Amount:$45,532,000
THIS CERTIFIES THAT
is the registered owner of the Fractional Undivided 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 conventional
one- to four-family, fully amortizing, first lien mortgage loans (collectively,
the "Mortgage Loans") sold by Bear Stearns Mortgage Securities Inc. ("BSMSI").
The Mortgage Loans were sold by ICI Funding Corporation to BSMSI. ICI will act
as master servicer of the Mortgage Loans (the "Master Servicer," which term
includes any successors thereto under the Agreement referred to below). The
Trust was created pursuant to the Pooling and Servicing Agreement dated as of
the Cutoff Date specified above (the "Agreement"), by and among BSMSI, as
seller, ICI, as Master Servicer, and Bankers Trust Company of California, N.A.,
as trustee (the "Trustee"), a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, 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 the month prior to the
month in which a Distribution Date (as hereinafter defined) occurs on the
Current Principal Amount hereof at a per annum rate equal to the Pass-Through
Rate. The Trustee will distribute on the 25th day of each month, or, if such
25th day is not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on the last Business Day of the calendar month preceding the month of
such Distribution Date, an amount equal to the product of the Fractional
Undivided interest evidenced by this Certificate and the amount required to be
distributed to Holders of Certificates of the same Class as this Certificate.
The Assumed Final Distribution Date is the first anniversary of the Distribution
Date immediately following the latest scheduled maturity date of any Mortgage
Loan and is not likely to be the date on which the Current Principal Amount of
this Class of Certificates will be reduced to zero.
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 Current Principal Amount
and/or initial aggregate notional amount of not less than $1,000,000, in
immediately available funds (by wire transfer or otherwise) 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. Unless this Certificate has been
countersigned by an authorized signatory of the Trustee by manual signature,
this Certificate shall not be entitled to any benefit under the Agreement, or be
valid for any purpose.
FORM OF CLASS A-1 CERTIFICATES
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
BEAR STEARNS MORTGAGE SECURITIES INC., ICI FUNDING CORPORATION OR THE TRUSTEE
REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE AFFILIATES AND IS NOT GUARANTEED OR
INSURED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THIS CERTIFICATE IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" (A "REMIC"), AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE").
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.
MORTGAGE PASS-THROUGH CERTIFICATE,
No. A-2-1 SERIES 1996-3
evidencing a beneficial interest in a Trust
consisting primarily of conventional, first lien mortgage loans sold by
BEAR STEARNS MORTGAGE SECURITIES INC.
CUSIP No. 073914 PG 2
Cut-Off Date : June 1, 1996 Class : A-2
First Distribution Date : July 25, 1996 Initial Principal Amount
Assumed Final of this Certificate
Distribution Date : June 25, 2027 ("Denomination") :
Master Servicer : ICI Funding Corporation Approximate Original Class
Pass-Through Rate : 7.24% Principal Amount:$28,467,000
THIS CERTIFIES THAT
is the registered owner of the Fractional Undivided 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 conventional one-
to four-family, fully amortizing, first lien mortgage loans (collectively, the
"Mortgage Loans") sold by Bear Stearns Mortgage Securities Inc. ("BSMSI"). The
Mortgage Loans were sold by ICI Funding Corporation to BSMSI. ICI will act as
master servicer of the Mortgage Loans (the "Master Servicer," which term
includes any successors thereto under the Agreement referred to below). The
Trust was created pursuant to the Pooling and Servicing Agreement dated as of
the Cutoff Date specified above (the "Agreement"), by and among BSMSI, as
seller, ICI, as Master Servicer, and Bankers Trust Company of California, N.A.,
as trustee (the "Trustee"), a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, 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 the month prior to the
month in which a Distribution Date (as hereinafter defined) occurs on the
Current Principal Amount hereof at a per annum rate equal to the Pass-Through
Rate. The Trustee will distribute on the 25th day of each month, or, if such
25th day is not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on the last Business Day of the calendar month preceding the month of
such Distribution Date, an amount equal to the product of the Fractional
Undivided interest evidenced by this Certificate and the amount required to be
distributed to Holders of Certificates of the same Class as this Certificate.
The Assumed Final Distribution Date is the first anniversary of the Distribution
Date immediately following the latest scheduled maturity date of any Mortgage
Loan and is not likely to be the date on which the Current Principal Amount of
this Class of Certificates will be reduced to zero.
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 Current Principal Amount
and/or initial aggregate notional amount of not less than $1,000,000, in
immediately available funds (by wire transfer or otherwise) 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.
FORM OF CLASS A-2 CERTIFICATES
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
BEAR STEARNS MORTGAGE SECURITIES INC., ICI FUNDING CORPORATION OR THE TRUSTEE
REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE AFFILIATES AND IS NOT GUARANTEED OR
INSURED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THIS CERTIFICATE IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" (A "REMIC"), AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE").
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.
MORTGAGE PASS-THROUGH CERTIFICATE,
No. A-3-1 SERIES 1996-3
evidencing a beneficial interest in a Trust
consisting primarily of conventional, first lien mortgage loans sold by
BEAR STEARNS MORTGAGE SECURITIES INC.
CUSIP No. 073914 PH 0
Cut-Off Date : June 1, 1996 Class : A-3
First Distribution Date : July 25, 1996 Initial Principal Amount
Assumed Final of this Certificate
Distribution Date : June 25, 2027 ("Denomination") :
Master Servicer : ICI Funding Corporation Approximate Original Class
Pass-Through Rate : 7.39% Principal Amount:$24,371,000
THIS CERTIFIES THAT
is the registered owner of the Fractional Undivided 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 conventional one-
to four- family, fully amortizing, first lien mortgage loans (collectively, the
"Mortgage Loans") sold by Bear Stearns Mortgage Securities Inc. ("BSMSI"). The
Mortgage Loans were sold by ICI Funding to BSMSI. ICI will act as master
servicer of the Mortgage Loans (the "Master Servicer," which term includes any
successors thereto under the Agreement referred to below). The Trust was created
pursuant to the Pooling and Servicing Agreement dated as of the Cut-off Date
specified above (the "Agreement"), by and among BSMSI, as seller, ICI, as Master
Servicer, and Bankers Trust Company of California, N.A., as trustee (the
"Trustee"), a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, 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 the month prior to the
month in which a Distribution Date (as hereinafter defined) occurs on the
Current Principal Amount hereof at a per annum rate equal to the Pass-Through
Rate. The Trustee will distribute on the 25th day of each month, or, if such
25th day is not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on the last Business Day of the calendar month preceding the month of
such Distribution Date, an amount equal to the product of the Fractional
Undivided interest evidenced by this Certificate and the amount required to be
distributed to Holders of Certificates of the same Class as this Certificate.
The Assumed Final Distribution Date is the first anniversary of the Distribution
Date immediately following the latest scheduled maturity date of any Mortgage
Loan and is not likely to be the date on which the Current Principal Amount of
this Class of Certificates will be reduced to zero.
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 Current Principal Amount
and/or initial aggregate notional amount of not less than $1,000,000, in
immediately available funds (by wire transfer or otherwise) 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.
FORM OF CLASS A-3 CERTIFICATES
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
BEAR STEARNS MORTGAGE SECURITIES INC., ICI FUNDING CORPORATION OR THE TRUSTEE
REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE AFFILIATES AND IS NOT GUARANTEED OR
INSURED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THIS CERTIFICATE IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" (A "REMIC"), AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE").
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.
MORTGAGE PASS-THROUGH CERTIFICATE,
No. A-4-1 SERIES 1996-3
evidencing a beneficial interest in a Trust
consisting primarily of conventional, first lien mortgage loans sold by
BEAR STEARNS MORTGAGE SECURITIES INC.
CUSIP No. 073914 PJ 6
Cut-Off Date : June 1, 1996 Class : A-4
First Distribution Date : July 25, 1996 Initial Principal Amount
Assumed Final of this Certificate
Distribution Date : June 25, 2027 ("Denomination") :
Master Servicer : ICI Funding Corporation Approximate Original Class
Pass-Through Rate : 7.55% Principal Amount:$18,604,000
THIS CERTIFIES THAT
is the registered owner of the Fractional Undivided 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 conventional one-
to four-family, fully amortizing, first lien mortgage loans (collectively, the
"Mortgage Loans") sold by Bear Stearns Mortgage Securities Inc. ("BSMSI"). The
Mortgage Loans were sold by ICI Funding Corporation to BSMSI. ICI will act as
master servicer of the Mortgage Loans (the "Master Servicer," which term
includes any successors thereto under the Agreement referred to below). The
Trust was created pursuant to the Pooling and Servicing Agreement dated as of
the Cutoff Date specified above (the "Agreement"), by and among BSMSI, as
seller, ICI, as Master Servicer, and Bankers Trust Company of California, N.A.,
as trustee (the "Trustee"), a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, 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 the month prior to the
month in which a Distribution Date (as hereinafter defined) occurs on the
Current Principal Amount hereof at a per annum rate equal to the Pass-Through
Rate. The Trustee will distribute on the 25th day of each month, or, if such
25th day is not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on the last Business Day of the calendar month preceding the month of
such Distribution Date, an amount equal to the product of the Fractional
Undivided interest evidenced by this Certificate and the amount required to be
distributed to Holders of Certificates of the same Class as this Certificate.
The Assumed Final Distribution Date is the first anniversary of the Distribution
Date immediately following the latest scheduled maturity date of any Mortgage
Loan and is not likely to be the date on which the Current Principal Amount of
this Class of Certificates will be reduced to zero.
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 Current Principal Amount
and/or initial aggregate notional amount of not less than $1,000,000, in
immediately available funds (by wire transfer or otherwise) 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.
FORM OF CLASS A-4 CERTIFICATES
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
BEAR STEARNS MORTGAGE SECURITIES INC., ICI FUNDING CORPORATION OR THE TRUSTEE
REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE AFFILIATES AND IS NOT GUARANTEED OR
INSURED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THIS CERTIFICATE IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" (A "REMIC"), AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE").
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.
MORTGAGE PASS-THROUGH CERTIFICATE,
No. A-5-1 SERIES 1996-3
evidencing a beneficial interest in a Trust
consisting primarily of conventional, first lien mortgage loans sold by
BEAR STEARNS MORTGAGE SECURITIES INC.
CUSIP No. 073914 PK 3
Cut-Off Date : June 1, 1996 Class : A-5
First Distribution Date: July 25, 1996 Initial Principal Amount
Assumed Final of this Certificate
Distribution Date : June 25, 2027 ("Denomination") :
Master Servicer : ICI Funding Corporation Approximate Original Class
Pass-Through Rate : 7.75% Principal Amount: $17,089,000
THIS CERTIFIES THAT
is the registered owner of the Fractional Undivided 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 conventional one-
to four-family, fully amortizing, first lien mortgage loans (collectively, the
"Mortgage Loans") sold by Bear Stearns Mortgage Securities Inc. ("BSMSI"). The
Mortgage Loans were sold by ICI Funding Corporation to BSMSI. ICI will act as
master servicer of the Mortgage Loans (the "Master Servicer," which term
includes any successors thereto under the Agreement referred to below). The
Trust was created pursuant to the Pooling and Servicing Agreement dated as of
the Cutoff Date specified above (the "Agreement"), by and among BSMSI, as
seller, ICI, as Master Servicer, and Bankers Trust Company of California, N.A.,
as trustee (the "Trustee"), a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, 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 the month prior to the
month in which a Distribution Date (as hereinafter defined) occurs on the
Current Principal Amount hereof at a per annum rate equal to the Pass-Through
Rate. The Trustee will distribute on the 25th day of each month, or, if such
25th day is not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on the last Business Day of the calendar month preceding the month of
such Distribution Date, an amount equal to the product of the Fractional
Undivided interest evidenced by this Certificate and the amount required to be
distributed to Holders of Certificates of the same Class as this Certificate.
The Assumed Final Distribution Date is the first anniversary of the Distribution
Date immediately following the latest scheduled maturity date of any Mortgage
Loan and is not likely to be the date on which the Current Principal Amount of
this Class of Certificates will be reduced to zero.
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 Current Principal Amount
and/or initial aggregate notional amount of not less than $1,000,000, in
immediately available funds (by wire transfer or otherwise) 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.
FORM OF CLASS A-5 CERTIFICATES
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
BEAR STEARNS MORTGAGE SECURITIES INC., ICI FUNDING CORPORATION OR THE TRUSTEE
REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE AFFILIATES AND IS NOT GUARANTEED OR
INSURED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THIS CERTIFICATE IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" (A "REMIC"), AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE").
UNDER TREASURY REGULATIONS RELATING TO ORIGINAL ISSUE DISCOUNT ("OID"),
TAXPAYERS MAY RELY ON THIS INFORMATION. THIS CERTIFICATE WAS ISSUED ON JUNE 28,
1996 AT A PRICE (EXCLUSIVE OF ACCRUED INTEREST) EQUAL TO 97.75% OF ITS ORIGINAL
PRINCIPAL AMOUNT. BASED ON THIS ISSUE PRICE, THIS CERTIFICATE WAS ISSUED WITH
OID FOR FEDERAL INCOME TAX PURPOSES IN AN AMOUNT EQUAL TO 1.73% OF ITS ORIGINAL
PRINCIPAL AMOUNT. THE MONTHLY YIELD TO MATURITY OF THIS CERTIFICATE EXPRESSED ON
AN ANNUAL BASIS IS APPROXIMATELY 8.12%, AND THE AMOUNT OF OID ALLOCABLE TO THE
SHORT FIRST ACCRUAL PERIOD (JUNE 28, 1996 THROUGH JULY 25, 1996) AS A PERCENTAGE
OF THE ORIGINAL PRINCIPAL AMOUNT OF THE CERTIFICATE IS APPROXIMATELY 0.02%. THE
COMPUTATION OF THE MONTHLY YIELD TO MATURITY AND THE OID AMOUNTS, INCLUDING THE
AMOUNT OF OID ALLOCABLE TO THE SHORT PERIOD, SPECIFIED ABOVE WAS BASED ON: (I)
THE EXACT METHOD AND (II) A PREPAYMENT ASSUMPTION OF 100% SPA (AS DEFINED IN THE
PROSPECTUS SUPPLEMENT). THE ACTUAL YIELD TO MATURITY, PREPAYMENT ASSUMPTION, AND
OID AMOUNTS MAY DIFFER FROM THOSE SET FORTH ABOVE.
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.
MORTGAGE PASS-THROUGH CERTIFICATE,
No. A-6-1 SERIES 1996-3
evidencing a beneficial interest in a Trust
consisting primarily of conventional, first lien mortgage loans sold by
BEAR STEARNS MORTGAGE SECURITIES INC.
CUSIP No. 073914 PL 1
Cut-Off Date : June 1, 1996 Class : A-6
First Distribution Date: July 25, 1996 Initial Principal Amount
Assumed Final of this Certificate
Distribution Date : June 25, 2027 ("Denomination") :
Master Servicer : ICI Funding Corporation Approximate Original Class
Pass-Through Rate : 7.75% Principal Amount: $6,502,000
THIS CERTIFIES THAT
is the registered owner of the Fractional Undivided 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 conventional one-
to four-family, fully amortizing, first lien mortgage loans (collectively, the
"Mortgage Loans") sold by Bear Stearns Mortgage Securities Inc. ("BSMSI"). The
Mortgage Loans were sold by ICI Funding Corporation to BSMSI. ICI will act as
master servicer of the Mortgage Loans (the "Master Servicer," which term
includes any successors thereto under the Agreement referred to below). The
Trust was created pursuant to the Pooling and Servicing Agreement dated as of
the Cutoff Date specified above (the "Agreement"), by and among BSMSI, as
seller, ICI, as Master Servicer, and Bankers Trust Company of California, N.A.,
as trustee (the "Trustee"), a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, 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 the month prior to the
month in which a Distribution Date (as hereinafter defined) occurs on the
Current Principal Amount hereof at a per annum rate equal to the Pass-Through
Rate. The Trustee will distribute on the 25th day of each month, or, if such
25th day is not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on the last Business Day of the calendar month preceding the month of
such Distribution Date, an amount equal to the product of the Fractional
Undivided interest evidenced by this Certificate and the amount required to be
distributed to Holders of Certificates of the same Class as this Certificate.
The Assumed Final Distribution Date is the first anniversary of the Distribution
Date immediately following the latest scheduled maturity date of any Mortgage
Loan and is not likely to be the date on which the Current Principal Amount of
this Class of Certificates will be reduced to zero.
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 Current Principal Amount
and/or initial aggregate notional amount of not less than $1,000,000, in
immediately available funds (by wire transfer or otherwise) 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.
FORM OF CLASS A-6 CERTIFICATES
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
BEAR STEARNS MORTGAGE SECURITIES INC., ICI FUNDING CORPORATION OR THE TRUSTEE
REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE AFFILIATES AND IS NOT GUARANTEED OR
INSURED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THIS CERTIFICATE IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" (A "REMIC"), AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE").
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.
MORTGAGE PASS-THROUGH CERTIFICATE,
No. A-7-1 SERIES 1996-3
evidencing a beneficial interest in a Trust
consisting primarily of conventional, first lien mortgage loans sold by
BEAR STEARNS MORTGAGE SECURITIES INC.
CUSIP No. 073914 PM 9
Cut-Off Date : June 1, 1996 Class : A-7
First Distribution Date: July 25, 1996 Initial Principal Amount
Assumed Final of this Certificate
Distribution Date : June 25, 2027 ("Denomination") :
Master Servicer : ICI Funding Corporation Approximate Original Class
Pass-Through Rate : 7.75% Principal Amount:$12,175,000
THIS CERTIFIES THAT
is the registered owner of the Fractional Undivided 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 conventional one-
to four-family, fully amortizing, first lien mortgage loans (collectively, the
"Mortgage Loans") sold by Bear Stearns Mortgage Securities Inc. ("BSMSI"). The
Mortgage Loans were sold by ICI Funding Corporation to BSMSI. ICI will act as
master servicer of the Mortgage Loans (the "Master Servicer," which term
includes any successors thereto under the Agreement referred to below). The
Trust was created pursuant to the Pooling and Servicing Agreement dated as of
the Cutoff Date specified above (the "Agreement"), by and among BSMSI, as
seller, ICI, as Master Servicer, and Bankers Trust Company of California, N.A.,
as trustee (the "Trustee"), a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, 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 the month prior to the
month in which a Distribution Date (as hereinafter defined) occurs on the
Current Principal Amount hereof at a per annum rate equal to the Pass-Through
Rate. The Trustee will distribute on the 25th day of each month, or, if such
25th day is not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on the last Business Day of the calendar month preceding the month of
such Distribution Date, an amount equal to the product of the Fractional
Undivided interest evidenced by this Certificate and the amount required to be
distributed to Holders of Certificates of the same Class as this Certificate.
The Assumed Final Distribution Date is the first anniversary of the Distribution
Date immediately following the latest scheduled maturity date of any Mortgage
Loan and is not likely to be the date on which the Current Principal Amount of
this Class of Certificates will be reduced to zero.
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 Current Principal Amount
and/or initial aggregate notional amount of not less than $1,000,000, in
immediately available funds (by wire transfer or otherwise) 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.
FORM OF CLASS A-7 CERTIFICATES
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
BEAR STEARNS MORTGAGE SECURITIES INC., ICI FUNDING CORPORATION OR THE TRUSTEE
REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE AFFILIATES AND IS NOT GUARANTEED OR
INSURED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THIS CERTIFICATE IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" (A "REMIC"), AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE").
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.
MORTGAGE PASS-THROUGH CERTIFICATE,
No. A-8-1 SERIES 1996-3
evidencing a beneficial interest in a Trust
consisting primarily of conventional, first lien mortgage loans sold by
BEAR STEARNS MORTGAGE SECURITIES INC.
CUSIP No. 073914 PN 7
Cut-Off Date : June 1, 1996 Class : A-8
First Distribution Date : July 25, 1996 Initial Principal Amount
Assumed Final of this Certificate
Distribution Date : June 25, 2027 ("Denomination") :
Master Servicer : ICI Funding Corporation Approximate Original Class
Pass-Through Rate : 7.75% Principal Amount: $17,149,000
THIS CERTIFIES THAT
is the registered owner of the Fractional Undivided 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 conventional one-
to four-family, fully amortizing, first lien mortgage loans (collectively, the
"Mortgage Loans") sold by Bear Stearns Mortgage Securities Inc. ("BSMSI"). The
Mortgage Loans were sold by ICI Funding Corporation to BSMSI. ICI will act as
master servicer of the Mortgage Loans (the "Master Servicer," which term
includes any successors thereto under the Agreement referred to below). The
Trust was created pursuant to the Pooling and Servicing Agreement dated as of
the Cutoff Date specified above (the "Agreement"), by and among BSMSI, as
seller, ICI, as Master Servicer, and Bankers Trust Company of California, N.A.,
as trustee (the "Trustee"), a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, 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 the month prior to the
month in which a Distribution Date (as hereinafter defined) occurs on the
Current Principal Amount hereof at a per annum rate equal to the Pass-Through
Rate. The Trustee will distribute on the 25th day of each month, or, if such
25th day is not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on the last Business Day of the calendar month preceding the month of
such Distribution Date, an amount equal to the product of the Fractional
Undivided interest evidenced by this Certificate and the amount required to be
distributed to Holders of Certificates of the same Class as this Certificate.
The Assumed Final Distribution Date is the first anniversary of the Distribution
Date immediately following the latest scheduled maturity date of any Mortgage
Loan and is not likely to be the date on which the Current Principal Amount of
this Class of Certificates will be reduced to zero.
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 Current Principal Amount
and/or initial aggregate notional amount of not less than $1,000,000, in
immediately available funds (by wire transfer or otherwise) 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.
FORM OF CLASS A-8 CERTIFICATES
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
BEAR STEARNS MORTGAGE SECURITIES INC., ICI FUNDING CORPORATION OR THE TRUSTEE
REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE AFFILIATES AND IS NOT GUARANTEED OR
INSURED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THIS CERTIFICATE IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" (A "REMIC"), AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE").
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.
MORTGAGE PASS-THROUGH CERTIFICATE,
No. A-9-1 SERIES 1996-3
evidencing a beneficial interest in a Trust
consisting primarily of conventional, first lien mortgage loans sold by
BEAR STEARNS MORTGAGE SECURITIES INC.
CUSIP No. 073914 PP 2
Cut-Off Date : June 1, 1996 Class : A-9
First Distribution Date : July 25, 1996 Initial Principal Amount
Assumed Final of this Certificate
Distribution Date : June 25, 2027 ("Denomination") :
Master Servicer : ICI Funding Corporation Approximate Original Class
Pass-Through Rate : 7.75% Principal Amount:$9,256,000
THIS CERTIFIES THAT
is the registered owner of the Fractional Undivided 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 conventional one-
to four-family, fully amortizing, first lien mortgage loans (collectively, the
"Mortgage Loans") sold by Bear Stearns Mortgage Securities Inc. ("BSMSI"). The
Mortgage Loans were sold by ICI Funding Corporation to BSMSI. ICI will act as
master servicer of the Mortgage Loans (the "Master Servicer," which term
includes any successors thereto under the Agreement referred to below). The
Trust was created pursuant to the Pooling and Servicing Agreement dated as of
the Cutoff Date specified above (the "Agreement"), by and among BSMSI, as
seller, ICI, as Master Servicer, and Bankers Trust Company of California, N.A.,
as trustee (the "Trustee"), a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, 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 the month prior to the
month in which a Distribution Date (as hereinafter defined) occurs on the
Current Principal Amount hereof at a per annum rate equal to the Pass-Through
Rate. The Trustee will distribute on the 25th day of each month, or, if such
25th day is not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on the last Business Day of the calendar month preceding the month of
such Distribution Date, an amount equal to the product of the Fractional
Undivided interest evidenced by this Certificate and the amount required to be
distributed to Holders of Certificates of the same Class as this Certificate.
The Assumed Final Distribution Date is the first anniversary of the Distribution
Date immediately following the latest scheduled maturity date of any Mortgage
Loan and is not likely to be the date on which the Current Principal Amount of
this Class of Certificates will be reduced to zero.
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 Current Principal Amount
and/or initial aggregate notional amount of not less than $1,000,000, in
immediately available funds (by wire transfer or otherwise) 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.
FORM OF CLASS A-9 CERTIFICATES
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
BEAR STEARNS MORTGAGE SECURITIES INC., ICI FUNDING CORPORATION OR THE TRUSTEE
REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE AFFILIATES AND IS NOT GUARANTEED OR
INSURED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THIS CERTIFICATE IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" (A "REMIC"), AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE").
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.
MORTGAGE PASS-THROUGH CERTIFICATE,
No. A-10-1 SERIES 1996-3
evidencing a beneficial interest in a Trust
consisting primarily of conventional, first lien mortgage loans sold by
BEAR STEARNS MORTGAGE SECURITIES INC.
CUSIP No. 073914 PQ 0
Cut-Off Date : June 1, 1996 Class : A-10
First Distribution Date: July 25, 1996 Initial Principal Amount
Assumed Final of this Certificate
Distribution Date : June 25, 2027 ("Denomination") :
Master Servicer : ICI Funding Corporation Approximate Original Class
Pass-Through Rate : 7.75% Principal Amount: $16,000,346
THIS CERTIFIES THAT
is the registered owner of the Fractional Undivided 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 conventional one-
to four-family, fully amortizing, first lien mortgage loans (collectively, the
"Mortgage Loans") sold by Bear Stearns Mortgage Securities Inc. ("BSMSI"). The
Mortgage Loans were sold by ICI Funding Corporation to BSMSI. ICI will act as
master servicer of the Mortgage Loans (the "Master Servicer," which term
includes any successors thereto under the Agreement referred to below). The
Trust was created pursuant to the Pooling and Servicing Agreement dated as of
the Cutoff Date specified above (the "Agreement"), by and among BSMSI, as
seller, ICI, as Master Servicer, and Bankers Trust Company of California, N.A.,
as trustee (the "Trustee"), a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, 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 the month prior to the
month in which a Distribution Date (as hereinafter defined) occurs on the
Current Principal Amount hereof at a per annum rate equal to the Pass-Through
Rate. The Trustee will distribute on the 25th day of each month, or, if such
25th day is not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on the last Business Day of the calendar month preceding the month of
such Distribution Date, an amount equal to the product of the Fractional
Undivided interest evidenced by this Certificate and the amount required to be
distributed to Holders of Certificates of the same Class as this Certificate.
The Assumed Final Distribution Date is the first anniversary of the Distribution
Date immediately following the latest scheduled maturity date of any Mortgage
Loan and is not likely to be the date on which the Current Principal Amount of
this Class of Certificates will be reduced to zero.
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 Current Principal Amount
and/or initial aggregate notional amount of not less than $1,000,000, in
immediately available funds (by wire transfer or otherwise) 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.
FORM OF CLASS A-10 CERTIFICATES
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
BEAR STEARNS MORTGAGE SECURITIES INC., ICI FUNDING CORPORATION OR THE TRUSTEE
REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE AFFILIATES AND IS NOT GUARANTEED OR
INSURED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THIS CERTIFICATE IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" (A "REMIC"), AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE").
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.
MORTGAGE PASS-THROUGH CERTIFICATE,
No. A-11-1 SERIES 1996-3
evidencing a beneficial interest in a Trust
consisting primarily of conventional, first lien mortgage loans sold by
BEAR STEARNS MORTGAGE SECURITIES INC.
CUSIP No. 073914 PR 8
Cut-Off Date : June 1, 1996 Class : A-11
First Distribution Date : July 25, 1996 Initial Principal Amount
Assumed Final of this Certificate
Distribution Date : June 25, 2027 ("Denomination") :
Master Servicer : ICI Funding Corporation Approximate Original Class
Pass-Through Rate : 7.75% Principal Amount:$2,500,000
THIS CERTIFIES THAT
is the registered owner of the Fractional Undivided 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 conventional one-
to four-family, fully amortizing, first lien mortgage loans (collectively, the
"Mortgage Loans") sold by Bear Stearns Mortgage Securities Inc. ("BSMSI"). The
Mortgage Loans were sold by ICI Funding Corporation to BSMSI. ICI will act as
master servicer of the Mortgage Loans (the "Master Servicer," which term
includes any successors thereto under the Agreement referred to below). The
Trust was created pursuant to the Pooling and Servicing Agreement dated as of
the Cutoff Date specified above (the "Agreement"), by and among BSMSI, as
seller, ICI, as Master Servicer, and Bankers Trust Company of California, N.A.,
as trustee (the "Trustee"), a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, 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 the month prior to the
month in which a Distribution Date (as hereinafter defined) occurs on the
Current Principal Amount hereof at a per annum rate equal to the Pass-Through
Rate. The Trustee will distribute on the 25th day of each month, or, if such
25th day is not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on the last Business Day of the calendar month preceding the month of
such Distribution Date, an amount equal to the product of the Fractional
Undivided interest evidenced by this Certificate and the amount required to be
distributed to Holders of Certificates of the same Class as this Certificate.
The Assumed Final Distribution Date is the first anniversary of the Distribution
Date immediately following the latest scheduled maturity date of any Mortgage
Loan and is not likely to be the date on which the Current Principal Amount of
this Class of Certificates will be reduced to zero.
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 Current Principal Amount
and/or initial aggregate notional amount of not less than $1,000,000, in
immediately available funds (by wire transfer or otherwise) 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.
FORM OF CLASS A-11 CERTIFICATES
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
BEAR STEARNS MORTGAGE SECURITIES INC., ICI FUNDING CORPORATION OR THE TRUSTEE
REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE AFFILIATES AND IS NOT GUARANTEED OR
INSURED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THIS CERTIFICATE IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" (A "REMIC"), AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE").
UNDER TREASURY REGULATIONS RELATING TO ORIGINAL ISSUE DISCOUNT ("OID"),
TAXPAYERS MAY RELY ON THIS INFORMATION. THIS CERTIFICATE WAS ISSUED ON JUNE 28,
1996 AT A PRICE (EXCLUSIVE OF ACCRUED INTEREST) EQUAL TO 96.14% OF ITS ORIGINAL
PRINCIPAL AMOUNT. BASED ON THIS ISSUE PRICE, THIS CERTIFICATE WAS ISSUED WITH
OID FOR FEDERAL INCOME TAX PURPOSES IN AN AMOUNT EQUAL TO 3.34% OF ITS ORIGINAL
PRINCIPAL AMOUNT. THE MONTHLY YIELD TO MATURITY OF THIS CERTIFICATE EXPRESSED ON
AN ANNUAL BASIS IS APPROXIMATELY 8.24%, AND THE AMOUNT OF OID ALLOCABLE TO THE
SHORT FIRST ACCRUAL PERIOD (JUNE 28, 1996 THROUGH JULY 25, 1996) AS A PERCENTAGE
OF THE ORIGINAL PRINCIPAL AMOUNT OF THE CERTIFICATE IS APPROXIMATELY 0.02%. THE
COMPUTATION OF THE MONTHLY YIELD TO MATURITY AND THE OID AMOUNTS, INCLUDING THE
AMOUNT OF OID ALLOCABLE TO THE SHORT PERIOD, SPECIFIED ABOVE WAS BASED ON: (I)
THE EXACT METHOD AND (II) A PREPAYMENT ASSUMPTION OF 100% SPA (AS DEFINED IN THE
PROSPECTUS SUPPLEMENT). THE ACTUAL YIELD TO MATURITY, PREPAYMENT ASSUMPTION, AND
OID AMOUNTS MAY DIFFER FROM THOSE SET FORTH ABOVE.
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.
MORTGAGE PASS-THROUGH CERTIFICATE,
No. B-1-1 SERIES 1996-3
evidencing a beneficial interest in a Trust
consisting primarily of conventional, first lien mortgage loans sold by
BEAR STEARNS MORTGAGE SECURITIES INC.
CUSIP No. 073914 PU 1
Cut-Off Date : June 1, 1996 Class : B-1
First Distribution Date: July 25, 1996 Initial Principal Amount
Assumed Final of this Certificate
Distribution Date : June 25, 2027 ("Denomination") :
Master Servicer : ICI Funding Corporation Approximate Original Class
Pass-Through Rate : 7.75% Principal Amount:$7,608,134
THIS CERTIFIES THAT
is the registered owner of the Fractional Undivided 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 conventional one-
to four-family, fully amortizing, first lien mortgage loans (collectively, the
"Mortgage Loans") sold by Bear Stearns Mortgage Securities Inc. ("BSMSI"). The
Mortgage Loans were sold by ICI Funding Corporation to BSMSI. ICI will act as
master servicer of the Mortgage Loans (the "Master Servicer," which term
includes any successors thereto under the Agreement referred to below). The
Trust was created pursuant to the Pooling and Servicing Agreement dated as of
the Cutoff Date specified above (the "Agreement"), by and among BSMSI, as
seller, ICI, as Master Servicer, and Bankers Trust Company of California, N.A.,
as trustee (the "Trustee"), a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, 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 the month prior to the
month in which a Distribution Date (as hereinafter defined) occurs on the
Current Principal Amount hereof at a per annum rate equal to the Pass-Through
Rate. The Trustee will distribute on the 25th day of each month, or, if such
25th day is not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on the last Business Day of the calendar month preceding the month of
such Distribution Date, an amount equal to the product of the Fractional
Undivided interest evidenced by this Certificate and the amount required to be
distributed to Holders of Certificates of the same Class as this Certificate.
The Assumed Final Distribution Date is the first anniversary of the Distribution
Date immediately following the latest scheduled maturity date of any Mortgage
Loan and is not likely to be the date on which the Current Principal Amount of
this Class of Certificates will be reduced to zero.
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 Current Principal Amount
and/or initial aggregate notional amount of not less than $1,000,000, in
immediately available funds (by wire transfer or otherwise) 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.
FORM OF CLASS B-1 CERTIFICATES
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
BEAR STEARNS MORTGAGE SECURITIES INC., ICI FUNDING CORPORATION OR THE TRUSTEE
REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE AFFILIATES AND IS NOT GUARANTEED OR
INSURED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THIS CERTIFICATE IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" (A "REMIC"), AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE").
UNDER TREASURY REGULATIONS RELATING TO ORIGINAL ISSUE DISCOUNT ("OID"),
TAXPAYERS MAY RELY ON THIS INFORMATION. THIS CERTIFICATE WAS ISSUED ON JUNE 28,
1996 AT A PRICE (EXCLUSIVE OF ACCRUED INTEREST) EQUAL TO 93.64% OF ITS ORIGINAL
PRINCIPAL AMOUNT. BASED ON THIS ISSUE PRICE, THIS CERTIFICATE WAS ISSUED WITH
OID FOR FEDERAL INCOME TAX PURPOSES IN AN AMOUNT EQUAL TO 5.84% OF ITS ORIGINAL
PRINCIPAL AMOUNT. THE MONTHLY YIELD TO MATURITY OF THIS CERTIFICATE EXPRESSED ON
AN ANNUAL BASIS IS APPROXIMATELY 8.62%, AND THE AMOUNT OF OID ALLOCABLE TO THE
SHORT FIRST ACCRUAL PERIOD (JUNE 28, 1996 THROUGH JULY 25, 1996) AS A PERCENTAGE
OF THE ORIGINAL PRINCIPAL AMOUNT OF THE CERTIFICATE IS APPROXIMATELY 0.03%. THE
COMPUTATION OF THE MONTHLY YIELD TO MATURITY AND THE OID AMOUNTS, INCLUDING THE
AMOUNT OF OID ALLOCABLE TO THE SHORT PERIOD, SPECIFIED ABOVE WAS BASED ON: (I)
THE EXACT METHOD AND (II) A PREPAYMENT ASSUMPTION OF 100% SPA (AS DEFINED IN THE
PROSPECTUS SUPPLEMENT). THE ACTUAL YIELD TO MATURITY, PREPAYMENT ASSUMPTION, AND
OID AMOUNTS MAY DIFFER FROM THOSE SET FORTH ABOVE.
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.
MORTGAGE PASS-THROUGH CERTIFICATE,
No. B-2-1 SERIES 1996-3
evidencing a beneficial interest in a Trust
consisting primarily of conventional, first lien mortgage loans sold by
BEAR STEARNS MORTGAGE SECURITIES INC.
CUSIP No. 073914 PV 9
Cut-Off Date : June 1, 1996 Class : B-2
First Distribution Date : July 25, 1996 Initial Principal Amount
Assumed Final of this Certificate
Distribution Date : June 25, 2027 ("Denomination") :
Master Servicer : ICI Funding Corporation Approximate Original Class
Pass-Through Rate : 7.75% Principal Amount: $4,890,943
THIS CERTIFIES THAT
is the registered owner of the Fractional Undivided 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 conventional one-
to four-family, fully amortizing, first lien mortgage loans (collectively, the
"Mortgage Loans") sold by Bear Stearns Mortgage Securities Inc. ("BSMSI"). The
Mortgage Loans were sold by ICI Funding Corporation to BSMSI. ICI will act as
master servicer of the Mortgage Loans (the "Master Servicer," which term
includes any successors thereto under the Agreement referred to below). The
Trust was created pursuant to the Pooling and Servicing Agreement dated as of
the Cutoff Date specified above (the "Agreement"), by and among BSMSI, as
seller, ICI, as Master Servicer, and Bankers Trust Company of California, N.A.,
as trustee (the "Trustee"), a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, 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 the month prior to the
month in which a Distribution Date (as hereinafter defined) occurs on the
Current Principal Amount hereof at a per annum rate equal to the Pass-Through
Rate. The Trustee will distribute on the 25th day of each month, or, if such
25th day is not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on the last Business Day of the calendar month preceding the month of
such Distribution Date, an amount equal to the product of the Fractional
Undivided interest evidenced by this Certificate and the amount required to be
distributed to Holders of Certificates of the same Class as this Certificate.
The Assumed Final Distribution Date is the first anniversary of the Distribution
Date immediately following the latest scheduled maturity date of any Mortgage
Loan and is not likely to be the date on which the Current Principal Amount of
this Class of Certificates will be reduced to zero.
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 Current Principal Amount
and/or initial aggregate notional amount of not less than $1,000,000, in
immediately available funds (by wire transfer or otherwise) 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.
FORM OF CLASS B-2 CERTIFICATES
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
BEAR STEARNS MORTGAGE SECURITIES INC., ICI FUNDING CORPORATION OR THE TRUSTEE
REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE AFFILIATES AND IS NOT GUARANTEED OR
INSURED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THIS CERTIFICATE IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" (A "REMIC"), AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE").
UNDER TREASURY REGULATIONS RELATING TO ORIGINAL ISSUE DISCOUNT ("OID"),
TAXPAYERS MAY RELY ON THIS INFORMATION. THIS CERTIFICATE WAS ISSUED ON JUNE 28,
1996 AT A PRICE (EXCLUSIVE OF ACCRUED INTEREST) EQUAL TO 90.91% OF ITS ORIGINAL
PRINCIPAL AMOUNT. BASED ON THIS ISSUE PRICE, THIS CERTIFICATE WAS ISSUED WITH
OID FOR FEDERAL INCOME TAX PURPOSES IN AN AMOUNT EQUAL TO 8.58% OF ITS ORIGINAL
PRINCIPAL AMOUNT. THE MONTHLY YIELD TO MATURITY OF THIS CERTIFICATE EXPRESSED ON
AN ANNUAL BASIS IS APPROXIMATELY 9.05%, AND THE AMOUNT OF OID ALLOCABLE TO THE
SHORT FIRST ACCRUAL PERIOD (JUNE 28, 1996 THROUGH JULY 25, 1996) AS A PERCENTAGE
OF THE ORIGINAL PRINCIPAL AMOUNT OF THE CERTIFICATE IS APPROXIMATELY 0.04%. THE
COMPUTATION OF THE MONTHLY YIELD TO MATURITY AND THE OID AMOUNTS, INCLUDING THE
AMOUNT OF OID ALLOCABLE TO THE SHORT PERIOD, SPECIFIED ABOVE WAS BASED ON: (I)
THE EXACT METHOD AND (II) A PREPAYMENT ASSUMPTION OF 100% SPA (AS DEFINED IN THE
PROSPECTUS SUPPLEMENT). THE ACTUAL YIELD TO MATURITY, PREPAYMENT ASSUMPTION, AND
OID AMOUNTS MAY DIFFER FROM THOSE SET FORTH ABOVE.
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.
MORTGAGE PASS-THROUGH CERTIFICATE,
No. B-3-1 SERIES 1996-3
evidencing a beneficial interest in a Trust
consisting primarily of conventional, first lien mortgage loans sold by
BEAR STEARNS MORTGAGE SECURITIES INC.
CUSIP No. 073914 PW 7
Cut-Off Date : June 1, 1996 Class : B-3
First Distribution Date : July 25, 1996 Initial Principal Amount
Assumed Final of this Certificate
Distribution Date : June 25, 2027 ("Denomination") :
Master Servicer : ICI Funding Corporation Approximate Original Class
Pass-Through Rate : 7.75% Principal Amount:$2,717,190
THIS CERTIFIES THAT
is the registered owner of the Fractional Undivided 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 conventional one-
to four-family, fully amortizing, first lien mortgage loans (collectively, the
"Mortgage Loans") sold by Bear Stearns Mortgage Securities Inc. ("BSMSI"). The
Mortgage Loans were sold by ICI Funding Corporation to BSMSI. ICI will act as
master servicer of the Mortgage Loans (the "Master Servicer," which term
includes any successors thereto under the Agreement referred to below). The
Trust was created pursuant to the Pooling and Servicing Agreement dated as of
the Cutoff Date specified above (the "Agreement"), by and among BSMSI, as
seller, ICI, as Master Servicer, and Bankers Trust Company of California, N.A.,
as trustee (the "Trustee"), a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, 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 the month prior to the
month in which a Distribution Date (as hereinafter defined) occurs on the
Current Principal Amount hereof at a per annum rate equal to the Pass-Through
Rate. The Trustee will distribute on the 25th day of each month, or, if such
25th day is not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on the last Business Day of the calendar month preceding the month of
such Distribution Date, an amount equal to the product of the Fractional
Undivided interest evidenced by this Certificate and the amount required to be
distributed to Holders of Certificates of the same Class as this Certificate.
The Assumed Final Distribution Date is the first anniversary of the Distribution
Date immediately following the latest scheduled maturity date of any Mortgage
Loan and is not likely to be the date on which the Current Principal Amount of
this Class of Certificates will be reduced to zero.
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 Current Principal Amount
and/or initial aggregate notional amount of not less than $1,000,000, in
immediately available funds (by wire transfer or otherwise) 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.
FORM OF CLASS B-3 CERTIFICATES
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
BEAR STEARNS MORTGAGE SECURITIES INC., ICI FUNDING CORPORATION OR THE TRUSTEE
REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE AFFILIATES AND IS NOT GUARANTEED OR
INSURED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THIS CERTIFICATE MAY NOT BE TRANSFERRED TO "BENEFIT PLAN INVESTORS" AS SUCH
TERM IS DEFINED IN 29 C.F.R. ss. 2510.3-101 UNLESS THE TRANSFEREE PROVIDES A
BENEFIT PLAN OPINION TO THE TRUSTEE; PROVIDED THAT THIS CERTIFICATE MAY BE
TRANSFERRED TO A BENEFIT PLAN INVESTOR WITHOUT DELIVER OF A BENEFIT PLAN OPTION
IF THIS CERTIFICATE IS MADE AVAILABLE FOR PURCHASE IN THE SECONDARY MARKET
THROUGH AN UNDERWRITING OR SALE OR PLACEMENT BY AN ENTITY WHICH HAS BEEN GRANTED
AN UNDERWRITER'S PROHIBITED TRANSACTION EXEMPTION SIMILAR TO PTE 90-30 OR 90-24.
THIS CERTIFICATE REPRESENTS THE SEPARATE COMPONENTS EACH OF WHICH IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" (A "REMIC"),
AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE").
UNDER TREASURY REGULATIONS RELATING TO ORIGINAL ISSUE DISCOUNT ("OID"),
TAXPAYERS MAY RELY ON THIS INFORMATION. THIS CERTIFICATE WAS ISSUED ON JUNE 28,
1996 WITH AN ISSUE PRICE (EXCLUSIVE OF ACCRUED INTEREST) EQUAL TO 3.13% OF ITS
ORIGINAL NOTIONAL PRINCIPAL AMOUNT. BASED ON THIS ISSUE PRICE, THIS CERTIFICATE
WAS ISSUED WITH OID FOR FEDERAL INCOME TAX PURPOSES IN AN AMOUNT EQUAL TO 2.05%
OF ITS ORIGINAL NOTIONAL PRINCIPAL AMOUNT. THE MONTHLY YIELD TO MATURITY OF THIS
CERTIFICATE EXPRESSED ON AN ANNUAL BASIS IS APPROXIMATELY 13.74%, AND THE AMOUNT
OF OID ALLOCABLE TO THE SHORT FIRST ACCRUAL PERIOD (JUNE 28, 1996 THROUGH JULY
25, 1996) AS A PERCENTAGE OF THE ORIGINAL NOTIONAL PRINCIPAL AMOUNT OF THE
CERTIFICATE IS APPROXIMATELY 0.03%. THE COMPUTATION OF THE MONTHLY YIELD TO
MATURITY AND THE OID AMOUNTS, INCLUDING THE AMOUNT OF OID ALLOCABLE TO THE SHORT
PERIOD, SPECIFIED ABOVE WAS BASED ON: (I) THE EXACT METHOD AND (II) A PREPAYMENT
ASSUMPTION OF 100% SPA (AS DEFINED IN THE PROSPECTUS SUPPLEMENT AND BY APPLYING
SUCH PREPAYMENT ASSUMPTION PRO-RATA TO EACH MORTGAGE). THE ACTUAL YIELD TO
MATURITY, PREPAYMENT ASSUMPTION, AND OID AMOUNTS MAY DIFFER FROM THOSE SET FORTH
ABOVE.
THE NOTIONAL AMOUNT OF THIS CERTIFICATE WILL DECREASE AS THE AGGREGATE
PRINCIPAL AMOUNT OF THE MORTGAGE LOANS DECREASES. ACCORDINGLY, FOLLOWING THE
INITIAL ISSUANCE OF THE CERTIFICATES, THE NOTIONAL AMOUNT OF THIS CERTIFICATE
WILL BE DIFFERENT FROM THE DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS
CERTIFICATE MAY ASCERTAIN ITS THEN NOTIONAL AMOUNT BY INQUIRY OF THE TRUSTEE
NAMED HEREIN. THE YIELD TO THE HOLDER OF THIS CERTIFIATE WILL BE EXTREMELY
SENSITIVE TO THE RATE OF PRINCIPAL PAYMENTS ON THE MORTGAGE LOANS.
MORTGAGE PASS-THROUGH CERTIFICATE,
No. X-1 SERIES 1996-3
evidencing a beneficial interest in a Trust
consisting primarily of conventional, first lien mortgage loans sold by
BEAR STEARNS MORTGAGE SECURITIES INC.
CUSIP No. 073914 PT 4
Cut-Off Date : June 1, 1996 Class : X
First Distribution Date : July 25, 1996 Initial Notional Amount
Assumed Final of this Certificate
Distribution Date : June 25, 2027 ("Denomination") :
Master Servicer : ICI Funding Corporation Approximate Original Class
Pass-Through Rate : Variable Notional Amount:$217,375,265
THIS CERTIFIES THAT
is the registered owner of the Fractional Undivided 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 conventional one-
to four-family, fully amortizing, first lien mortgage loans (collectively, the
"Mortgage Loans") sold by Bear Stearns Mortgage Securities Inc. ("BSMSI"). The
Mortgage Loans were sold by ICI Funding Corporation to BSMSI. ICI will act as
master servicer of the Mortgage Loans (the "Master Servicer," which term
includes any successors thereto under the Agreement referred to below). The
Trust was created pursuant to the Pooling and Servicing Agreement dated as of
the Cutoff Date specified above (the "Agreement"), by and among BSMSI, as
seller, ICI, as Master Servicer, and Bankers Trust Company of California, N.A.,
as trustee (the "Trustee"), a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, 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.
The Class X Certificates will not be entitled to any distributions of
principal. The Class X Certificates will be deemed to have a notional principal
amount equal to the Scheduled Principal Balances of the Mortgage Loans and will
bear interest on their Notional Amount at a variable Pass-Through Rate equal to
the excess of (a) the weighted average of the Net Rates of the Mortgage Loans
over (b) the weighted average of the Pass-Through Rates of all the Certificates
(other than the Class X Certificates). The Pass-Through Rate applicable to the
Class X Certificates for the first Interest Accrual Period is approximately
1.18% per annum.
The Trustee will distribute on the 25th day of each month, or, if such 25th
day is not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on the last Business Day of the calendar month preceding the month of
such Distribution Date, an amount equal to the product of the Fractional
Undivided interest evidenced by this Certificate and the amount required to be
distributed to Holders of Certificates of the same Class as this Certificate.
The Assumed Final Distribution Date is the first anniversary of the Distribution
Date immediately following the latest scheduled maturity date of any Mortgage
Loan and is not likely to be the date on which the Current Principal Amount of
this Class of Certificates will be reduced to zero. 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 Current Principal Amount and/or initial aggregate notional amount of
not less than $1,000,000, in immediately available funds (by wire transfer or
otherwise) 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.
FORM OF CLASS X CERTIFICATES
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
BEAR STEARNS MORTGAGE SECURITIES INC., ICI FUNDING CORPORATION OR THE TRUSTEE
REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE AFFILIATES AND IS NOT GUARANTEED OR
INSURED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THIS CERTIFICATE IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" (A "REMIC"), AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE").
UNDER TREASURY REGULATIONS RELATING TO ORIGINAL ISSUE DISCOUNT ("OID"),
TAXPAYERS MAY RELY ON THIS INFORMATION. THIS CERTIFICATE WAS ISSUED ON JUNE 28,
1996 AT A PRICE EQUAL TO 57.00% OF ITS ORIGINAL PRINCIPAL AMOUNT. UNDER TREASURY
REGULATIONS RELATING TO OID, ALL PAYMENTS TO BE RECEIVED ON THIS CERTIFICATE ARE
TREATED AS PART OF THIS CERTIFICATE'S STATED REDEMPTION PRICE AT MATURITY.
ACCORDINGLY, THIS CERTIFICATE WAS ISSUED WITH OID FOR FEDERAL INCOME TAX
PURPOSES IN AN AMOUNT EQUAL TO 43.00% OF ITS ORIGINAL PRINCIPAL AMOUNT. THE
MONTHLY YIELD TO MATURITY OF THIS CERTIFICATE EXPRESSED ON AN ANNUAL BASIS IS
APPROXIMATELY 13.51%, AND THE AMOUNT OF OID ALLOCABLE TO THE SHORT FIRST ACCRUAL
PERIOD (JUNE 28, 1996 THROUGH JULY 25, 1996) AS A PERCENTAGE OF THE ORIGINAL
PRINCIPAL AMOUNT OF THE CERTIFICATE IS APPROXIMATELY 0.58%. THE COMPUTATION OF
THE MONTHLY YIELD TO MATURITY AND THE OID AMOUNTS, INCLUDING THE AMOUNT OF OID
ALLOCABLE TO THE SHORT PERIOD, SPECIFIED ABOVE WAS BASED ON: (I) THE EXACT
METHOD AND (II) A PREPAYMENT ASSUMPTION OF 100% SPA (AS DEFINED IN THE
PROSPECTUS SUPPLEMENT). THE ACTUAL YIELD TO MATURITY, PREPAYMENT ASSUMPTION, AND
OID AMOUNTS MAY DIFFER FROM THOSE SET FORTH ABOVE.
THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL DECREASE 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 THEN CURRENT PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE NAMED
HEREIN.
THE YIELD TO THE HOLDER OF THIS CERTIFIATE WILL BE SENSITIVE TO THE RATE OF
PRINCIPAL PAYMENTS ON THE MORTGAGE LOANS. 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.
MORTGAGE PASS-THROUGH CERTIFICATE,
No. PO-1 SERIES 1996-3
evidencing a beneficial interest in a Trust
consisting primarily of conventional, first lien mortgage loans sold by
BEAR STEARNS MORTGAGE SECURITIES INC.
CUSIP No. 073914 PS 6
Cut-Off Date : June 1, 1996 Class : PO
First Distribution Date: July 25, 1996 Initial Principal Amount
Assumed Final of this Certificate
Distribution Date : June 25, 2027 ("Denomination") :
Master Servicer : ICI Funding Corporation Approximate Original Class
Pass-Through Rate : N/A Principal Amount: $165,945
THIS CERTIFIES THAT
is the registered owner of the Fractional Undivided 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 conventional one-
to four-family, fully amortizing, first lien mortgage loans (collectively, the
"Mortgage Loans") sold by Bear Stearns Mortgage Securities Inc. ("BSMSI"). The
Mortgage Loans were sold by ICI Funding Corporation to BSMSI. ICI will act as
master servicer of the Mortgage Loans (the "Master Servicer," which term
includes any successors thereto under the Agreement referred to below). The
Trust was created pursuant to the Pooling and Servicing Agreement dated as of
the Cutoff Date specified above (the "Agreement"), by and among BSMSI, as
seller, ICI, as Master Servicer, and Bankers Trust Company of California, N.A.,
as trustee (the "Trustee"), a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, 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.
The Class PO certificates are principal only Certificates and will receive
no interest. The Trustee will distribute on the 25th day of each month, or, if
such 25th day is not a Business Day, the immediately following Business Day
(each, a "Distribution Date"), commencing on the First Distribution Date
specified above, to the Person in whose name this Certificate is registered at
the close of business on the last Business Day of the calendar month preceding
the month of such Distribution Date, an amount equal to the product of the
Fractional Undivided interest evidenced by this Certificate and the amount
required to be distributed to Holders of Certificates of the same Class as this
Certificate. The Assumed Final Distribution Date is the first anniversary of the
Distribution Date immediately following the latest scheduled maturity date of
any Mortgage Loan and is not likely to be the date on which the Current
Principal Amount of this Class of Certificates will be reduced to zero.
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 Current Principal Amount
and/or initial aggregate notional amount of not less than $1,000,000, in
immediately available funds (by wire transfer or otherwise) 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.
FORM OF CLASS PO CERTIFICATES
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
BEAR STEARNS MORTGAGE SECURITIES INC., ICI FUNDING CORPORATION OR THE TRUSTEE
REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE AFFILIATES AND IS NOT GUARANTEED OR
INSURED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN "REMIC I" AS DEFINED IN THE AGREEMENT REFERRED TO BELOW, WHICH IS A
"REAL ESTATE MORTGAGE INVESTMENT CONDUIT" (A "REMIC") AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE"), AND IS NOT TREATED AS INDEBTEDNESS OF THE TRUST
REFERRED TO BELOW. EACH PURCHASER OF THE INTEREST REPRESENTED BY THIS
CERTIFICATE WILL BE REQUIRED TO REPRESENT IN AN AFFIDAVIT THAT IT IS NOT A
"DISQUALIFIED ORGANIZATION" AND WILL NOT TRANSFER THIS CERTIFICATE TO A
"DISQUALIFIED ORGANIZATION." THE TERM "DISQUALIFIED ORGANIZATION" IS DEFINED IN
SECTION 860E(e)(5) OF THE CODE AND IN THE AGREEMENT. EACH PURCHASER WILL ALSO BE
REQUIRED TO REPRESENT IN SUCH AFFIDAVIT THAT (A) IT IS NOT ACQUIRING
CERTIFICATES FOR THE ACCOUNT OF A DISQUALIFIED ORGANIZATION AND (B) IT WILL NOT
TRANSFER THIS CERTIFICATE UNLESS (1) IT HAS RECEIVED A SIMILAR AFFIDAVIT FROM
THE PROPOSED TRANSFEREE AND (2) AS OF THE TIME OF THE TRANSFER, IT DOES NOT HAVE
ACTUAL KNOWLEDGE THAT THE AFFIDAVIT OF THE PROPOSED TRANSFEREE IS FALSE. IN THE
EVENT THAT LEGISLATION IS ENACTED WHICH WOULD SUBJECT THE TRUST REFERRED TO
BELOW TO TAX (OR DISQUALIFY THE TRUST REFERRED TO BELOW) ON THE TRANSFER OF AN
INTEREST REPRESENTED BY THIS CERTIFICATE TO ANY OTHER PERSON OR PERSONS, BEAR
STEARNS MORTGAGE SECURITIES INC. SHALL, WITHOUT FURTHER ACTION ON THE PART OF
THE HOLDERS OF THE CLASS R CERTIFICATES BE EMPOWERED, TO THE FULLEST EXTENT
POSSIBLE AND AS IF THEY HAD SO VOTED, TO AMEND THE AGREEMENT REFERRED TO BELOW
TO RESTRICT OR PROHIBIT PROSPECTIVELY SUCH TRANSFER. THIS CERTIFICATE MAY NOT BE
TRANSFERRED TO A NON-U.S. PERSON AS DESCRIBED IN SECTION 5.05(c) OF THE
AGREEMENT REFERRED TO BELOW WITHOUT THE PRIOR WRITTEN CONSENT OF BANKERS TRUST
COMPANY OF CALIFORNIA, N.A., AS TAX MATTERS PERSON.
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.
MORTGAGE PASS-THROUGH CERTIFICATE,
No. R-1-1 SERIES 1996-3
evidencing a beneficial interest in a Trust
consisting primarily of conventional, first lien mortgage loans sold by
BEAR STEARNS MORTGAGE SECURITIES INC.
CUSIP No. 073914 PX 5
Cut-Off Date : June 1, 1996 Class : R-1
First Distribution Date: July 25, 1996 Initial Principal Amount
Assumed Final of this Certificate
Distribution Date : June 25, 2027 ("Denomination") :
Master Servicer : ICI Funding Corporation Approximate Original Class
Pass-Through Rate : 7.75% Principal Amount : $ 100.00
THIS CERTIFIES THAT
is the registered owner of the Fractional Undivided 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 conventional one-
to four-family, fully amortizing, first lien mortgage loans (collectively, the
"Mortgage Loans") sold by Bear Stearns Mortgage Securities Inc. ("BSMSI"). The
Mortgage Loans were sold by ICI Funding Corporation to BSMSI. ICI will act as
master servicer of the Mortgage Loans (the "Master Servicer," which term
includes any successors thereto under the Agreement referred to below). The
Trust was created pursuant to the Pooling and Servicing Agreement dated as of
the Cutoff Date specified above (the "Agreement"), by and among BSMSI, as
seller, ICI, as Master Servicer, and Bankers Trust Company of California, N.A.,
as trustee (the "Trustee"), a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, 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 the month prior to the
month in which a Distribution Date (as hereinafter defined) occurs on the
Current Principal Amount hereof at a per annum rate equal to the Pass-Through
Rate. The Trustee will distribute on the 25th day of each month, or, if such
25th day is not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on the last Business Day of the calendar month preceding the month of
such Distribution Date, an amount equal to the product of the Fractional
Undivided interest evidenced by this Certificate and the amount required to be
distributed to Holders of Certificates of the same Class as this Certificate.
The Assumed Final Distribution Date is the first anniversary of the Distribution
Date immediately following the latest scheduled maturity date of any Mortgage
Loan and is not likely to be the date on which the Current Principal Amount of
this Class of Certificates will be reduced to zero.
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 Current Principal Amount
and/or initial aggregate notional amount of not less than $1,000,000, in
immediately available funds (by wire transfer or otherwise) 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.
FORM OF CLASS R-1 CERTIFICATES
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
BEAR STEARNS MORTGAGE SECURITIES INC., ICI FUNDING CORPORATION OR THE TRUSTEE
REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE AFFILIATES AND IS NOT GUARANTEED OR
INSURED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN "REMIC II" AS DEFINED IN THE AGREEMENT REFERRED TO BELOW, WHICH IS
A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" (A "REMIC") AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE"), AND IS NOT TREATED AS INDEBTEDNESS OF THE TRUST
REFERRED TO BELOW. EACH PURCHASER OF THE INTEREST REPRESENTED BY THIS
CERTIFICATE WILL BE REQUIRED TO REPRESENT IN AN AFFIDAVIT THAT IT IS NOT A
"DISQUALIFIED ORGANIZATION" AND WILL NOT TRANSFER THIS CERTIFICATE TO A
"DISQUALIFIED ORGANIZATION." THE TERM "DISQUALIFIED ORGANIZATION" IS DEFINED IN
SECTION 860E(e)(5) OF THE CODE AND IN THE AGREEMENT. EACH PURCHASER WILL ALSO BE
REQUIRED TO REPRESENT IN SUCH AFFIDAVIT THAT (A) IT IS NOT ACQUIRING
CERTIFICATES FOR THE ACCOUNT OF A DISQUALIFIED ORGANIZATION AND (B) IT WILL NOT
TRANSFER THIS CERTIFICATE UNLESS (1) IT HAS RECEIVED A SIMILAR AFFIDAVIT FROM
THE PROPOSED TRANSFEREE AND (2) AS OF THE TIME OF THE TRANSFER, IT DOES NOT HAVE
ACTUAL KNOWLEDGE THAT THE AFFIDAVIT OF THE PROPOSED TRANSFEREE IS FALSE. IN THE
EVENT THAT LEGISLATION IS ENACTED WHICH WOULD SUBJECT THE TRUST REFERRED TO
BELOW TO TAX (OR DISQUALIFY THE TRUST REFERRED TO BELOW) ON THE TRANSFER OF AN
INTEREST REPRESENTED BY THIS CERTIFICATE TO ANY OTHER PERSON OR PERSONS, BEAR
STEARNS MORTGAGE SECURITIES INC. SHALL, WITHOUT FURTHER ACTION ON THE PART OF
THE HOLDERS OF THE CLASS R CERTIFICATES BE EMPOWERED, TO THE FULLEST EXTENT
POSSIBLE AND AS IF THEY HAD SO VOTED, TO AMEND THE AGREEMENT REFERRED TO BELOW
TO RESTRICT OR PROHIBIT PROSPECTIVELY SUCH TRANSFER. THIS CERTIFICATE MAY NOT BE
TRANSFERRED TO A NON-U.S. PERSON AS DESCRIBED IN SECTION 5.05(c) OF THE
AGREEMENT REFERRED TO BELOW WITHOUT THE PRIOR WRITTEN CONSENT OF BANKERS TRUST
COMPANY OF CALIFORNIA, N.A., AS TAX MATTERS PERSON.
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.
MORTGAGE PASS-THROUGH CERTIFICATE,
No. R-2-1 SERIES 1996-3
evidencing a beneficial interest in a Trust
consisting primarily of conventional, first lien mortgage loans sold by
BEAR STEARNS MORTGAGE SECURITIES INC.
CUSIP No. 073914 PY 3
Cut-Off Date : June 1, 1996 Class : R-2
First Distribution Date : July 25, 1996 Initial Principal Amount
Assumed Final of this Certificate
Distribution Date : June 25, 2027 ("Denomination") :
Master Servicer : ICI Funding Corporation Approximate Original Class
Pass-Through Rate : Variable Principal Amount: $ 100.00
THIS CERTIFIES THAT
is the registered owner of the Fractional Undivided 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 conventional one-
to four-family, fully amortizing, first lien mortgage loans (collectively, the
"Mortgage Loans") sold by Bear Stearns Mortgage Securities Inc. ("BSMSI"). The
Mortgage Loans were sold by ICI Funding Corporation to BSMSI. ICI will act as
master servicer of the Mortgage Loans (the "Master Servicer," which term
includes any successors thereto under the Agreement referred to below). The
Trust was created pursuant to the Pooling and Servicing Agreement dated as of
the Cutoff Date specified above (the "Agreement"), by and among BSMSI, as
seller, ICI, as Master Servicer, and Bankers Trust Company of California, N.A.,
as trustee (the "Trustee"), a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, 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 the month prior to the
month in which a Distribution Date (as hereinafter defined) occurs on the
Current Principal Amount hereof at a variable per annum rate equal to the
weighted average of the Net Rates of the Mortgage Loans. The Trustee will
distribute on the 25th day of each month, or, if such 25th day is not a Business
Day, the immediately following Business Day (each, a "Distribution Date"),
commencing on the First Distribution Date specified above, to the Person in
whose name this Certificate is registered at the close of business on the last
Business Day of the calendar month preceding the month of such Distribution
Date, an amount equal to the product of the Fractional Undivided interest
evidenced by this Certificate and the amount required to be distributed to
Holders of Certificates of the same Class as this Certificate. The Assumed Final
Distribution Date is the first anniversary of the Distribution Date immediately
following the latest scheduled maturity date of any Mortgage Loan and is not
likely to be the date on which the Current Principal Amount of this Class of
Certificates will be reduced to zero.
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 Current Principal Amount
and/or initial aggregate notional amount of not less than $1,000,000, in
immediately available funds (by wire transfer or otherwise) 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.
FORM OF CLASS R-2 CERTIFICATES
<PAGE>
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER ANY STATE SECURITIES OR
BLUE SKY LAW OF ANY STATE. THE HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE,
AGREES THAT THIS CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED ONLY IN COMPLIANCE WITH THE ACT AND OTHER APPLICABLE LAWS AND ONLY
(1) PURSUANT TO RULE 144A UNDER THE ACT ("RULE 144A") TO A PERSON THAT THE
HOLDER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING
OF RULE 144A (A "QIB"), PURCHASING FOR ITS OWN ACCOUNT OR A QIB PURCHASING FOR
THE ACCOUNT OF A QIB, WHOM THE HOLDER HAS INFORMED, IN EACH CASE, THAT THE
REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A, (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER
THE ACT (IF AVAILABLE) OR (3) IN CERTIFICATED FORM TO AN "INSTITUTIONAL
ACCREDITED INVESTOR" WITHIN THE MEANING THEREOF IN RULE 501(a)(1), (2), (3) OR
(7) OF REGULATION D UNDER THE ACT PURCHASING NOT FOR DISTRIBUTION IN VIOLATION
OF THE ACT, SUBJECT TO (A) THE RECEIPT BY THE TRUSTEE OF A LETTER SUBSTANTIALLY
IN THE FORM PROVIDED IN THE AGREEMENT AND (B) AN OPINION OF COUNSEL AS TO
COMPLIANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE UNITED STATES. THIS
CERTIFICATE MAY NOT BE TRANSFERRED TO "BENEFIT PLAN INVESTORS," AS SUCH TERM IS
DEFINED IN 29 C.F.R. ss. 2510.3-101, UNLESS THE PROPOSED TRANSFEREE PROVIDES A
BENEFIT PLAN OPINION TO THE TRUSTEE.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
BEAR STEARNS MORTGAGE SECURITIES INC., ICI FUNDING CORPORATION OR THE TRUSTEE
REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE AFFILIATES AND IS NOT GUARANTEED OR
INSURED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THIS CERTIFICATE IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" (A "REMIC"), AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE").
UNDER TREASURY REGULATIONS RELATING TO ORIGINAL ISSUE DISCOUNT ("OID"),
TAXPAYERS MAY RELY ON THIS INFORMATION. THIS CERTIFICATE WAS ISSUED ON JUNE 28,
1996 WITH AN ISSUE PRICE (EXCLUSIVE OF ACCRUED INTEREST) EQUAL TO 71.77% OF ITS
ORIGINAL PRINCIPAL AMOUNT. BASED ON THIS ISSUE PRICE, THIS CERTIFICATE WAS
ISSUED WITH OID FOR FEDERAL INCOME TAX PURPOSES IN AN AMOUNT EQUAL TO 27.72% OF
ITS ORIGINAL PRINCIPAL AMOUNT. THE MONTHLY YIELD TO MATURITY OF THIS CERTIFICATE
EXPRESSED ON AN ANNUAL BASIS IS APPROXIMATELY 12.72%, AND THE AMOUNT OF OID
ALLOCABLE TO THE SHORT FIRST ACCRUAL PERIOD (JUNE 28, 1996 THROUGH JULY 25,
1996) AS A PERCENTAGE OF THE ORIGINAL PRINCIPAL AMOUNT OF THE CERTIFICATE IS
APPROXIMATELY 0.11%. THE COMPUTATION OF THE MONTHLY YIELD TO MATURITY AND THE
OID AMOUNTS, INCLUDING THE AMOUNT OF OID ALLOCABLE TO THE SHORT PERIOD,
SPECIFIED ABOVE WAS BASED ON: (I) THE EXACT METHOD AND (II) A PREPAYMENT
ASSUMPTION OF 100% SPA (AS DEFINED IN THE PROSPECTUS SUPPLEMENT). THE ACTUAL
YIELD TO MATURITY, PREPAYMENT ASSUMPTION, AND OID AMOUNTS MAY DIFFER FROM THOSE
SET FORTH ABOVE.
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.
MORTGAGE PASS-THROUGH CERTIFICATE,
No. B-4-1 SRIES 1996-3
evidencing a beneficial interest in a Trust
consisting primarily of conventional, first lien mortgage loans sold by
BEAR STEARNS MORTGAGE SECURITIES INC.
Cut-Off Date : June 1, 1996 Class : B-4
First Distribution Date : July 25, 1996 Initial Principal Amount
Assumed Final of this Certificate
Distribution Date : June 25, 2027 ("Denomination") :
Master Servicer : ICI Funding Corporation Approximate Original Class
Pass-Through Rate : 7.75% Principal Amount: $1,412,939
THIS CERTIFIES THAT
is the registered owner of the Fractional Undivided 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 conventional one-
to four-family, fully amortizing, first lien mortgage loans (collectively, the
"Mortgage Loans") sold by Bear Stearns Mortgage Securities Inc. ("BSMSI"). The
Mortgage Loans were originated by ICI Funding Corporation and subsequently sold
to BSMSI. ICI will act as master servicer of the Mortgage Loans (the "Master
Servicer," which term includes any successors thereto under the Agreement
referred to below). The Trust was created pursuant to the Pooling and Servicing
Agreement dated as of the Cut-off Date specified above (the "Agreement"), by and
among BSMSI, as seller, ICI, as Master Servicer, and Bankers Trust Company of
California, N.A., as trustee (the "Trustee"), a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, 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 the month prior to the
month in which a Distribution Date (as hereinafter defined) occurs on the
Current Principal Amount hereof at a per annum rate equal to the Pass-Through
Rate. The Trustee will distribute on the 25th day of each month, or, if such
25th day is not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on the last Business Day of the calendar month preceding the month of
such Distribution Date, an amount equal to the product of the Fractional
Undivided interest evidenced by this Certificate and the amount required to be
distributed to Holders of Certificates of the same Class as this Certificate.
The Assumed Final Distribution Date is the first anniversary of the Distribution
Date immediately following the latest scheduled maturity date of any Mortgage
Loan and is not likely to be the date on which the Current Principal Amount of
this Class of Certificates will be reduced to zero.
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 Current Principal Amount
and/or initial aggregate notional amount of not less than $1,000,000, in
immediately available funds (by wire transfer or otherwise) 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.
FORM OF CLASS B-4 CERTIFICATES
<PAGE>
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER ANY STATE SECURITIES OR
BLUE SKY LAW OF ANY STATE. THE HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE,
AGREES THAT THIS CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED ONLY IN COMPLIANCE WITH THE ACT AND OTHER APPLICABLE LAWS AND ONLY
(1) PURSUANT TO RULE 144A UNDER THE ACT ("RULE 144A") TO A PERSON THAT THE
HOLDER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING
OF RULE 144A (A "QIB"), PURCHASING FOR ITS OWN ACCOUNT OR A QIB PURCHASING FOR
THE ACCOUNT OF A QIB, WHOM THE HOLDER HAS INFORMED, IN EACH CASE, THAT THE
REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A, (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER
THE ACT (IF AVAILABLE) OR (3) IN CERTIFICATED FORM TO AN "INSTITUTIONAL
ACCREDITED INVESTOR" WITHIN THE MEANING THEREOF IN RULE 501(a)(1), (2), (3) OR
(7) OF REGULATION D UNDER THE ACT PURCHASING NOT FOR DISTRIBUTION IN VIOLATION
OF THE ACT, SUBJECT TO (A) THE RECEIPT BY THE TRUSTEE OF A LETTER SUBSTANTIALLY
IN THE FORM PROVIDED IN THE AGREEMENT AND (B) AN OPINION OF COUNSEL AS TO
COMPLIANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE UNITED STATES. THIS
CERTIFICATE MAY NOT BE TRANSFERRED TO "BENEFIT PLAN INVESTORS," AS SUCH TERM IS
DEFINED IN 29 C.F.R. ss. 2510.3-101, UNLESS THE PROPOSED TRANSFEREE PROVIDES A
BENEFIT PLAN OPINION TO THE TRUSTEE.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
BEAR STEARNS MORTGAGE SECURITIES INC., ICI FUNDING CORPORATION OR THE TRUSTEE
REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE AFFILIATES AND IS NOT GUARANTEED OR
INSURED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THIS CERTIFICATE IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" (A "REMIC"), AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE").
UNDER TREASURY REGULATIONS RELATING TO ORIGINAL ISSUE DISCOUNT ("OID"),
TAXPAYERS MAY RELY ON THIS INFORMATION. THIS CERTIFICATE WAS ISSUED ON JUNE 28,
1996 WITH AN ISSUE PRICE (EXCLUSIVE OF ACCRUED INTEREST) EQUAL TO 51.08% OF ITS
ORIGINAL PRINCIPAL AMOUNT. BASED ON THIS ISSUE PRICE, THIS CERTIFICATE WAS
ISSUED WITH OID FOR FEDERAL INCOME TAX PURPOSES IN AN AMOUNT EQUAL TO 48.40% OF
ITS ORIGINAL PRINCIPAL AMOUNT. THE MONTHLY YIELD TO MATURITY OF THIS CERTIFICATE
EXPRESSED ON AN ANNUAL BASIS IS APPROXIMATELY 18.84%, AND THE AMOUNT OF OID
ALLOCABLE TO THE SHORT FIRST ACCRUAL PERIOD (JUNE 28, 1996 THROUGH JULY 25,
1996) AS A PERCENTAGE OF THE ORIGINAL PRINCIPAL AMOUNT OF THE CERTIFICATE IS
APPROXIMATELY 0.15%. THE COMPUTATION OF THE MONTHLY YIELD TO MATURITY AND THE
OID AMOUNTS, INCLUDING THE AMOUNT OF OID ALLOCABLE TO THE SHORT PERIOD,
SPECIFIED ABOVE WAS BASED ON: (I) THE EXACT METHOD AND (II) A PREPAYMENT
ASSUMPTION OF 100% SPA (AS DEFINED IN THE PROSPECTUS SUPPLEMENT). THE ACTUAL
YIELD TO MATURITY, PREPAYMENT ASSUMPTION, AND OID AMOUNTS MAY DIFFER FROM THOSE
SET FORTH ABOVE.
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.
MORTGAGE PASS-THROUGH CERTIFICATE,
No. B-5-1 SERIES 1996-3
evidencing a beneficial interest in a Trust
consisting primarily of conventional, first lien mortgage loans sold by
BEAR STEARNS MORTGAGE SECURITIES INC.
Cut-Off Date : June 1, 1996 Class : B-5
First Distribution Date: July 25, 1996 Initial Principal Amount
Assumed Final of this Certificate
Distribution Date : June 25, 2027 ("Denomination") :
Master Servicer : ICI Funding Corporation Approximate Original Class
Pass-Through Rate : 7.75% Principal Amount: $978,188
THIS CERTIFIES THAT
is the registered owner of the Fractional Undivided 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 conventional one-
to four-family, fully amortizing, first lien mortgage loans (collectively, the
"Mortgage Loans") sold by Bear Stearns Mortgage Securities Inc. ("BSMSI"). The
Mortgage Loans were originated by ICI Funding Corporation and subsequently sold
to BSMSI. ICI will act as master servicer of the Mortgage Loans (the "Master
Servicer," which term includes any successors thereto under the Agreement
referred to below). The Trust was created pursuant to the Pooling and Servicing
Agreement dated as of the Cut-off Date specified above (the "Agreement"), by and
among BSMSI, as seller, ICI, as Master Servicer, and Bankers Trust Company of
California, N.A., as trustee (the "Trustee"), a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, 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 the month prior to the
month in which a Distribution Date (as hereinafter defined) occurs on the
Current Principal Amount hereof at a per annum rate equal to the Pass-Through
Rate. The Trustee will distribute on the 25th day of each month, or, if such
25th day is not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on the last Business Day of the calendar month preceding the month of
such Distribution Date, an amount equal to the product of the Fractional
Undivided interest evidenced by this Certificate and the amount required to be
distributed to Holders of Certificates of the same Class as this Certificate.
The Assumed Final Distribution Date is the first anniversary of the Distribution
Date immediately following the latest scheduled maturity date of any Mortgage
Loan and is not likely to be the date on which the Current Principal Amount of
this Class of Certificates will be reduced to zero.
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 Current Principal Amount
and/or initial aggregate notional amount of not less than $1,000,000, in
immediately available funds (by wire transfer or otherwise) 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.
FORM OF CLASS B-5 CERTIFICATES
<PAGE>
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER ANY STATE SECURITIES OR
BLUE SKY LAW OF ANY STATE. THE HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE,
AGREES THAT THIS CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED ONLY IN COMPLIANCE WITH THE ACT AND OTHER APPLICABLE LAWS AND ONLY
(1) PURSUANT TO RULE 144A UNDER THE ACT ("RULE 144A") TO A PERSON THAT THE
HOLDER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING
OF RULE 144A (A "QIB"), PURCHASING FOR ITS OWN ACCOUNT OR A QIB PURCHASING FOR
THE ACCOUNT OF A QIB, WHOM THE HOLDER HAS INFORMED, IN EACH CASE, THAT THE
REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A, (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER
THE ACT (IF AVAILABLE) OR (3) IN CERTIFICATED FORM TO AN "INSTITUTIONAL
ACCREDITED INVESTOR" WITHIN THE MEANING THEREOF IN RULE 501(a)(1), (2), (3) OR
(7) OF REGULATION D UNDER THE ACT PURCHASING NOT FOR DISTRIBUTION IN VIOLATION
OF THE ACT, SUBJECT TO (A) THE RECEIPT BY THE TRUSTEE OF A LETTER SUBSTANTIALLY
IN THE FORM PROVIDED IN THE AGREEMENT AND (B) AN OPINION OF COUNSEL AS TO
COMPLIANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE UNITED STATES. THIS
CERTIFICATE MAY NOT BE TRANSFERRED TO "BENEFIT PLAN INVESTORS," AS SUCH TERM IS
DEFINED IN 29 C.F.R. ss. 2510.3-101, UNLESS THE PROPOSED TRANSFEREE PROVIDES A
BENEFIT PLAN OPINION TO THE TRUSTEE.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
BEAR STEARNS MORTGAGE SECURITIES INC., ICI FUNDING CORPORATION OR THE TRUSTEE
REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE AFFILIATES AND IS NOT GUARANTEED OR
INSURED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THIS CERTIFICATE IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" (A "REMIC"), AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE").
UNDER TREASURY REGULATIONS RELATING TO ORIGINAL ISSUE DISCOUNT ("OID"),
TAXPAYERS MAY RELY ON THIS INFORMATION. THIS CERTIFICATE WAS ISSUED ON JUNE 28,
1996 WITH AN ISSUE PRICE (EXCLUSIVE OF ACCRUED INTEREST) EQUAL TO 21.00% OF ITS
ORIGINAL PRINCIPAL AMOUNT. BASED ON THIS ISSUE PRICE, THIS CERTIFICATE WAS
ISSUED WITH OID FOR FEDERAL INCOME TAX PURPOSES IN AN AMOUNT EQUAL TO 78.48% OF
ITS ORIGINAL PRINCIPAL AMOUNT. THE MONTHLY YIELD TO MATURITY OF THIS CERTIFICATE
EXPRESSED ON AN ANNUAL BASIS IS APPROXIMATELY 42.71%, AND THE AMOUNT OF OID
ALLOCABLE TO THE SHORT FIRST ACCRUAL PERIOD (JUNE 28, 1996 THROUGH JULY 25,
1996) AS A PERCENTAGE OF THE ORIGINAL PRINCIPAL AMOUNT OF THE CERTIFICATE IS
APPROXIMATELY 0.11%. THE COMPUTATION OF THE MONTHLY YIELD TO MATURITY AND THE
OID AMOUNTS, INCLUDING THE AMOUNT OF OID ALLOCABLE TO THE SHORT PERIOD,
SPECIFIED ABOVE WAS BASED ON: (I) THE EXACT METHOD AND (II) A PREPAYMENT
ASSUMPTION OF 100% SPA (AS DEFINED IN THE PROSPECTUS SUPPLEMENT). THE ACTUAL
YIELD TO MATURITY, PREPAYMENT ASSUMPTION, AND OID AMOUNTS MAY DIFFER FROM THOSE
SET FORTH ABOVE.
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.
MORTGAGE PASS-THROUGH CERTIFICATE,
No. B-6-1 SERIES 1996-3
evidencing a beneficial interest in a Trust
consisting primarily of conventional, first lien mortgage loans sold by
BEAR STEARNS MORTGAGE SECURITIES INC.
Cut-Off Date : June 1, 1996 Class : B-6
First Distribution Date : July 25, 1996 Initial Principal Amount
Assumed Final of this Certificate
Distribution Date : June 25, 2027 ("Denomination") :
Master Servicer : ICI Funding Corporation Approximate Original Class
Pass-Through Rate : 7.75% Principal Amount:$1,956,379.87
THIS CERTIFIES THAT
is the registered owner of the Fractional Undivided 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 conventional one-
to four-family, fully amortizing, first lien mortgage loans (collectively, the
"Mortgage Loans") sold by Bear Stearns Mortgage Securities Inc. ("BSMSI"). The
Mortgage Loans were originated by ICI Funding Corporation and subsequently sold
to BSMSI. ICI will act as master servicer of the Mortgage Loans (the "Master
Servicer," which term includes any successors thereto under the Agreement
referred to below). The Trust was created pursuant to the Pooling and Servicing
Agreement dated as of the Cut-off Date specified above (the "Agreement"), by and
among BSMSI, as seller, ICI, as Master Servicer, and Bankers Trust Company of
California, N.A., as trustee (the "Trustee"), a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, 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 the month prior to the
month in which a Distribution Date (as hereinafter defined) occurs on the
Current Principal Amount hereof at a per annum rate equal to the Pass-Through
Rate. The Trustee will distribute on the 25th day of each month, or, if such
25th day is not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on the last Business Day of the calendar month preceding the month of
such Distribution Date, an amount equal to the product of the Fractional
Undivided interest evidenced by this Certificate and the amount required to be
distributed to Holders of Certificates of the same Class as this Certificate.
The Assumed Final Distribution Date is the first anniversary of the Distribution
Date immediately following the latest scheduled maturity date of any Mortgage
Loan and is not likely to be the date on which the Current Principal Amount of
this Class of Certificates will be reduced to zero.
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 Current Principal Amount
and/or initial aggregate notional amount of not less than $1,000,000, in
immediately available funds (by wire transfer or otherwise) 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.
FORM OF CLASS B-6 CERTIFICATES
<PAGE>
EXHIBIT A-2
FORM OF REVERSE OF CERTIFICATES
BEAR STEARNS MORTGAGE SECURITIES INC.
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1996-3
This Certificate is one of a duly authorized issue of Certificates
designated as set forth on the face hereof (the "Certificates"), issued in
twenty-one Classes. 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 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 and obligations of the
Master Servicer and the rights of the Certificateholders under the Agreement
from time to time by the Master Servicer and the Trustee with the consent of the
Holders of Certificates evidencing Fractional Undivided Interests aggregating
not less than 66% (or in certain cases, Holders of Certificates of affected
Classes evidencing such percentage of the Fractional Undivided Interests
thereof). 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[B 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 Irvine, State of California,
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 Fractional Undivided
Interest will be issued to the designated transferee.
The Certificates are issuable only as registered Certificates without
coupons in the Classes 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 Fractional Undivided Interest, 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 Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. The Master Servicer, 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 Master Servicer, 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 payments to Certificateholders with respect
to the termination of the Agreement) shall terminate upon the earlier of (i) the
later of the (A) final payment or other liquidation (or Monthly Advance with
respect thereto) of the last Mortgage Loan remaining in the Trust and (B)
disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan and the remittance of all funds due under the
Agreement, or (ii) the optional repurchase by the party named in the Agreement
of all the Mortgage Loans and other assets of the Trust in accordance with the
terms of the Agreement. Such optional repurchase may be made only on or after
the Distribution Date on which the aggregate Scheduled Principal Balance of the
Mortgage Loans is less than 10% of the aggregate Scheduled Principal Balance of
the Mortgage Loans at the Cut-Off Date. The exercise of such right will effect
the early retirement of the Certificates. The Trust also may be terminated on
any Distribution Date upon the determination, based upon an opinion of counsel,
that REMIC status of REMIC I or REMIC II has been lost or that a substantial
risk exists that such status will be lost for the then current year. 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>
Unless this Certificate has been countersigned by an authorized signatory
of the Trustee by manual signature, this Certificate shall not be entitled to
any benefit under the Agreement, or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: June 28, 1996
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A.,
Countersigned: Not in its individual capacity
but solely as Trustee
By
By-------------------------------------
Authorized signatory of Bankers Trust
Company of California, N.A., not in its AUTHORIZED OFFICER
individual capacity but solely as Trustee
<PAGE>
EXHIBIT B
MORTGAGE LOAN SCHEDULE
[See Trustee's Certificate]
<PAGE>
EXHIBIT C
REPRESENTATIONS AND WARRANTIES OF ICI FUNDING
CONCERNING THE MORTGAGE LOANS
Capitalized terms used herein shall have the meanings set forth in the
Seller Contract and not in the Pooling and Servicing Agreement.
(1) the information set forth and to be set forth in the Final
Mortgage Loan Schedules hereto was and will be true and correct in all
material respects at the date or dates respecting which such information is
furnished, and the Seller's Information (as defined in Section 14(a) of the
Seller Contract) does not include any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
made, in light of the circumstances under which they were made, not
misleading (provided, however, that no representation or warranty is made
with respect to the portion of the Seller's Information included in the
Prospectus Supplement under the headings "ICI Funding--General" and "ICI
Funding--The Master Servicer; the Sub-Servicers");
(2) the terms of the Mortgage Note and the Mortgage have not been
impaired, waived, altered or modified in any respect, except by written
instruments, if required by law in the jurisdiction where the Mortgaged
Property is located;
(3) except as otherwise set forth in the Preliminary Mortgage Loan
Schedule or the Final Mortgage Loan Schedule, the Mortgage File for each
Mortgage Loan contains a true, accurate and complete copy of each of the
documents contained in such Mortgage File, including all amendments,
modifications and, if applicable, waivers and assumptions that have been
executed in connection with such Mortgage Loan;
(4) immediately prior to the transfer to the Purchaser, the Seller was
the sole owner of beneficial title and holder of each Mortgage and Mortgage
Note relating to the Mortgage Loans and is conveying the same free and
clear of any and all liens, claims, encumbrances, participation interests,
equities, pledges, charges or security interests of any nature and the
Seller has full right and authority to sell or assign the same pursuant to
this Agreement;
(5) each Mortgage is a valid and enforceable first lien on the
property securing the related Mortgage Note and each Mortgaged Property is
owned by the Mortgagor in fee simple (except with respect to common areas
in the case of condominiums, PUDs and DE MINIMIS PUDs) or by leasehold for
a term longer than the term of the related Mortgage, subject only to (i)
the lien of current real property taxes and assessments, (ii) covenants,
conditions and restrictions, rights of way, easements and other matters of
public record as of the date of recording of such Mortgage, such exceptions
being acceptable to mortgage lending institutions generally or specifically
reflected in the appraisal obtained in connection with the origination of
the related Mortgage Loan or referred to in the lender's title insurance
policy delivered to the originator of the related Mortgage Loan and (iii)
other matters to which like properties are commonly subject which do not
materially interfere with the benefits of the security intended to be
provided by such Mortgage;
(6) as of the Cut-Off Date, no payment of principal of or interest on
or in respect of any Mortgage Loan was 30 or more days past due;
(7) there is no mechanics' lien or claim for work, labor or material
affecting the premises subject to any Mortgage which is or may be a lien
prior to, or equal with, the lien of such Mortgage except those which are
insured against by the title insurance policy referred to in (12) below;
(8) as of the Cut-Off Date, (i) no Mortgage Loan had been 30 days or
more delinquent more than once during the preceding 12 months, (ii) no
Mortgage Loan had been delinquent for 60 days or more during the preceding
12 months and (iii) there was no delinquent tax or assessment lien against
the property subject to any Mortgage, except where such lien was being
contested in good faith and a stay had been granted against levying on the
property;
(9) there is no valid offset, defense or counterclaim to any Mortgage
Note or Mortgage, including the obligation of the Mortgagor to pay the
unpaid principal and interest on such Mortgage Note;
(10) except to the extent insurance is in place which will cover such
damage, the physical property subject to any Mortgage is free of material
damage and is in good repair and there is no proceeding pending or
threatened for the total or partial condemnation of any Mortgaged Property;
(11) each Mortgage Loan at the time it was made complied in all
material respects with applicable state and federal laws, including,
without limitation, usury, equal credit opportunity and disclosure laws;
each Mortgage Loan is being serviced in all material respects in accordance
with applicable state and federal laws, including, without limitation,
usury, equal credit opportunity and disclosure laws;
(12) a lender's title insurance policy (on an ALTA or CLTA form) or
binder, or other assurance of title customary in the relevant jurisdiction
therefor in a form acceptable to FNMA or FHLMC, was issued on the date of
the origination of each related Mortgage Loan by a title insurance company
qualified to do business in the jurisdiction where the related Mortgaged
Property is located, insuring the Seller and its successors and assigns
that the Mortgage is a first priority lien on the related Mortgaged
Property in the original principal amount of the Mortgage Loan. Seller is
the sole insured under such lender's title insurance policy, and such
policy, binder or assurance is valid and remains in full force and effect,
and each such policy, binder or assurance shall contain all applicable
endorsements including a negative amortization endorsement, if applicable;
(13) in the event the Mortgage constitutes a deed of trust, either a
trustee, duly qualified under applicable law to serve as such, has been
properly designated and currently so serves and is named in the Mortgage or
if no duly qualified trustee has been properly designated and so serves,
the Mortgage contains satisfactory provisions for the appointment of such
trustee by the holder of the Mortgage at no cost or expense to such holder,
and no fees or expenses are or will become payable by Purchaser to the
trustee under the deed of trust, except in connection with a trustee's sale
after default by the mortgagor;
(14) the original principal amount of each Mortgage Loan is not more
than 95% of the Original Value; with the exception of 31 Mortgage Loans
with a Cut-Off Date Scheduled Principal Balance of approximately
$4,753,770, each Mortgage Loan for which the outstanding principal as of
the Cut-Off Date of the related Mortgage Note exceeded 80% of the Original
Value is covered by a Primary Mortgage Insurance Policy issued by a private
mortgage insurer insuring against default under the Mortgage Note in an
amount at least equal to the excess of such outstanding principal amount
over 75% of such Original Value until the principal balance of such
Mortgage Loan is reduced below 80% of the Original Value or, based upon a
new appraisal, the principal balance of such Mortgage Loan represents less
than 80% of the new appraised value; all of the insurers which have Primary
Mortgage Insurance Policies with respect to the Mortgage Loans meet FNMA's,
FHLMC's and the Rating Agencies' standards. The weighted average
Loan-to-Value Ratio of the Mortgage Loans does not exceed 71.41% and the
percentage (by aggregate principal balance) of Mortgage Loans having
Loan-to-Value Ratios in excess of 80% does not exceed 8.75%;
(15) [Intentionally omitted];
(16) at the time of origination, each Mortgaged Property was the
subject of an appraisal which conforms to the Seller's underwriting
requirements, and a true, accurate and complete copy of such appraisal is
contained in the Mortgage File;
(17) on the basis of a representation by the borrower at the time of
origination of the Mortgage Loans, at least 91.11% of the Mortgage Loans
(by aggregate principal balance) will be secured by Mortgages on
owner-occupied primary residence properties;
(18) neither the Seller nor any servicer of the related Mortgage Loans
has advanced funds or knowingly received any advance of funds by a party
other than the Mortgagor, directly or indirectly, for the payment of any
amount required by the Mortgage, except for (i) interest accruing from the
date of the related Mortgage Note or date of disbursement of the Mortgage
Loan proceeds, whichever is later, to the date which precedes by 30 days
the first Due Date under the related Mortgage Note, and (ii) customary
advances for insurance and taxes;
(19) each Mortgage Note, the related Mortgage and other agreements
executed in connection therewith are genuine, and each is the legal, valid
and binding obligation of the maker thereof, enforceable in accordance with
its terms except as such enforcement may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement
of creditors' rights generally and by general equity principles (regardless
of whether such enforcement is considered in a proceeding in equity or at
law); and all parties to each Mortgage Note and the Mortgage had legal
capacity to execute the Mortgage Note and the Mortgage and each Mortgage
Note and Mortgage has been duly and properly executed by the Mortgagor;
(20) to the extent required under applicable law, each originator and
subsequent mortgagee or servicer of the Mortgage Loans was authorized to
transact and do business in the jurisdiction in which the related Mortgaged
Property is located at all times when it held or serviced the Mortgage
Loan; and any obligations of the holder of the related Mortgage Note,
Mortgage and other loan documents have been complied with in all material
respects; servicing of each Mortgage Loan has been in accordance with
Seller's servicing requirements and the terms of the Mortgage Notes, the
Mortgage and other loan documents, whether such origination and servicing
was done by the Seller, its affiliates, or any third party which originated
the Mortgage Loan on behalf of, or sold the Mortgage Loan to, any of them,
or any servicing agent of any of the foregoing;
(21) the related Mortgage Note and Mortgage contain customary and
enforceable provisions such as to render the rights and remedies of the
holder adequate for the realization against the Mortgaged Property of the
benefits of the security, including realization by judicial, or, if
applicable, non-judicial foreclosure, and there is no homestead or other
exemption available to the Mortgagor which would interfere with such right
to foreclosure;
(22) the proceeds of the Mortgage Loans have been fully disbursed,
there is no requirement for future advances thereunder and any and all
requirements as to completion of any on-site or off-site improvements and
as to disbursements of any escrow funds therefor have been complied with;
and all costs, fees and expenses incurred in making, closing or recording
the Mortgage Loan have been paid, except recording fees with respect to
Mortgages not recorded as of the Closing Date;
(23) as of the Closing Date, the improvements on each Mortgaged
Property securing a Mortgage Loan is insured (by an insurer which is
acceptable to the Seller) against loss by fire and such hazards as are
covered under a standard extended coverage endorsement in the locale in
which the Mortgaged Property is located, in an amount which is not less
than the lesser of the maximum insurable value of the improvements securing
such Mortgage Loan and the outstanding principal balance of the Mortgage
Loan, but in no event in an amount less than an amount that is required to
prevent the Mortgagor from being deemed to be a co-insurer thereunder; if
the improvement on the Mortgaged Property is a condominium unit, it is
included under the coverage afforded by a blanket policy for the
condominium project; if upon origination of the related Mortgage Loan, the
improvements on the Mortgaged Property were in an area identified as a
federally designated flood area, a flood insurance policy is in effect in
an amount representing coverage not less than the lesser of (i) the
outstanding principal balance of the Mortgage Loan, (ii) the restorable
cost of improvements located on such Mortgaged Property and (iii) the
maximum coverage available under federal law; and each Mortgage obligates
the Mortgagor thereunder to maintain the insurance referred to in the
Mortgage at the Mortgagor's cost and expense;
(24) there is no material monetary default existing under any Mortgage
or the related Mortgage Note and there is no material event which, with the
passage of time or with notice and the expiration of any grace or cure
period, would constitute a default, breach or event of acceleration; and
neither the Seller, any of its affiliates nor any servicer of any related
Mortgage Loan has taken any action to waive any default, breach or event of
acceleration; no foreclosure action is threatened or has been commenced
with respect to the Mortgage Loan;
(25) no Mortgagor, at the time of origination of the applicable
Mortgage, was a debtor in any state or federal bankruptcy or insolvency
proceeding;
(26) each Mortgage Loan was originated by a savings and loan
association, savings bank, commercial bank, credit union, insurance company
or similar institution which is supervised and examined by a federal or
State authority, or by a mortgagee approved by the Secretary of Housing and
Urban Development pursuant to Sections 203 and 211 of the National Housing
Act;
(27) all inspections, licenses and certificates required to be made or
issued with respect to all occupied portions of the Mortgaged Property and,
with respect to the use and occupancy of the same, including, but not
limited to, certificates of occupancy and fire underwriting certificates,
have been made or obtained from the appropriate authorities;
(28) the Mortgaged Property and all improvements thereon comply with
all requirements of any applicable zoning and subdivision laws and
ordinances;
(29) no instrument of release or waiver has been executed in
connection with the Mortgage Loans, and no Mortgagor has been released, in
whole or in part, except in connection with an assumption agreement which
has been approved by the primary mortgage guaranty insurer, if any, and
which has been delivered to the Trustee;
(30) except as otherwise provided in the Preliminary Mortgage Loan
Schedule or the Final Mortgage Loan Schedule, no Mortgage Loan provides for
a balloon payment and each Mortgage Note contains provisions providing for
its full amortization by the end of its original term and is payable on the
first day of each month in monthly installments of principal and interest,
with interest payable in arrears, over an original term of not more than 15
years in the case of the 15-Year Mortgage Loans or 30 years in the case of
the 30-Year Mortgage Loans;
(31) no Mortgage Loan was originated based on an appraisal of the
related Mortgaged Property made prior to completion of construction of the
improvements thereon unless a certificate of completion was obtained prior
to closing of the Mortgage Loan;
(32) each of the Mortgaged Properties consists of a single parcel of
real property with a detached single-family residence erected thereon, or a
two- to four-family dwelling, or a townhouse, or an individual condominium
unit in a condominium project or an individual unit in a planned unit
development. No Mortgaged Property consists of a single parcel of real
property with a cooperative housing development erected thereon. Any
condominium unit or planned unit development either conforms with
applicable FNMA or FHLMC requirements regarding such dwellings or is
covered by a waiver confirming that such condominium unit or planned unit
development is acceptable to FNMA or FHLMC. Measured by principal balance,
no more than 3.92% of the Mortgage Loans are secured by an individual unit
in a low-rise or high-rise condominium project, none are secured by real
property with a townhouse erected thereon, and at least 87.79% are secured
by real property with a detached single-family residence erected thereon.
With the exception of seven Mortgaged Properties, no such residence is a
mobile home or manufactured dwelling;
(33) none of the Mortgage Loans is a buydown Mortgage Loan;
(34) as of the Cut-Off Date, the Net Rate of each Mortgage Loan was
not more than 13.735% per annum and not less than 7.110% per annum, and the
weighted average Net Rate of the Mortgage Loans was approximately 8.60% per
annum;
(35) the Mortgage Loans were not selected from mortgage loans owned by
the Seller in a manner to affect adversely the interests of the Purchaser
or the holders of the Certificates;
(36) as of the Cut-Off Date, the weighted average remaining term of
each 30-Year Mortgage Loan is not more than 360 months and not less than
236 months and the weighted average remaining term of each 15-Year Mortgage
Loan is not more than 180 months and not less than 144 months;
(37) as of the Cut-Off Date, no more than 35.75% (by principal
balance) of the Mortgage Loans are cash-out refinances;
(38) as of the Cut-Off Date, no more than 21.78% (by principal
balance) of the Mortgage Loans are rate and term refinances;
(39) as of the Cut-Off Date, no fewer than 42.48% (by principal
balance) of the Mortgage Loans are purchase money loans;
(40) as of the Cut-Off Date, no more than 48.83%, 11.85%, 9.95% and
5.71% of the Mortgage Loans (by principal balance) are secured by
properties located in the states of California, Florida, New Jersey and New
York, respectively, and no more than 5% of the Mortgage Loans (by principal
balance) are located in any other state;
(41) the original principal balances of the Mortgage Loans ranged from
approximately $20,000 to approximately $750,000. The maximum outstanding
principal balance of any Mortgage Loan as of the Cut-off Date was
approximately $749,677 and the average outstanding principal balance was
approximately $151,481;
(42) with respect to Mortgaged Properties at the time of origination
of the related Mortgage Loan, measured by aggregate unpaid principal
balance as of the Cut-off Date, at least 91.11% of the Mortgaged Properties
are owner occupied primary residences, no more than 2.91% of the Mortgaged
Properties are second homes and approximately 5.98% of the Mortgaged
Properties are investor owned properties. Each Mortgaged Property is
lawfully occupied under applicable law;
(43) as of the Cut-off Date, approximately 96.04% (by principal
balance) of the Mortgage Loans are 30-Year Mortgage Loans and approximately
3.96% (by principal balance) of the Mortgage Loans are 15-Year Mortgage
Loans;
(44) as of the Cut-off Date, approximately 84.13% (by principal
balance) of the Mortgage Loans were originated under, or in accordance with
the standards of, Series I of the Progressive Loan Series Program;
(45) as of the Cut-off Date, approximately 4.66% (by principal
balance) of the Mortgage Loans were originated under, or in accordance with
the standards of, Series II of the Progressive Loan Series Program;
(46) as of the Cut-off Date, approximately 4.61% (by principal
balance) of the Mortgage Loans were originated under, or in accordance with
the standards of, Series III of the Progressive Loan Series Program;
(47) as of the Cut-off Date, approximately 4.07% (by principal
balance) of the Mortgage Loans were originated under, or in accordance with
the standards of, Series III+ of the Progressive Loan Series Program;
(48) as of the Cut-off Date, approximately 1.69% (by principal
balance) of the Mortgage Loans were originated under, or in accordance with
the standards of, Series IV of the Progressive Loan Series Program; and
(49) as of the Cut-off Date, approximately 0.84% (by principal
balance) of the Mortgage Loans were originated under, or in accordance with
the standards of, Series V of the Progressive Loan Series Program.
<PAGE>
EXHIBIT D
REQUEST FOR RELEASE
(for Trustee)
LOAN INFORMATION
Name of Mortgagor: _____________________________
Loan No.: ____________________________
TRUSTEE
Name: ____________________________
Address: ____________________________
Trustee Mortgage
File No.: _____________________________
MASTER SERVICER
Name: _____________________________
Address: _____________________________
Certificates: Mortgage Pass-Through Certificates,
Series 1996-3
The undersigned hereby acknowledges that it has received from
_______________________, as Trustee for the holders of Bear Stearns Mortgage
Securities Inc. Mortgage Pass-Through Certificates, Series 1996-3, the documents
referred to below (the "Documents"). All capitalized terms not otherwise defined
in this Request for Release shall have the meanings given them in the Pooling
and Servicing Agreement dated as of June 1, 1996 (the "Pooling and Servicing
Agreement") among the Trustee, ICI Funding and Bear Stearns Mortgage Securities
Inc.
( ) Mortgage Note dated ________, 19__, in the original
principal sum of $____________, made by _____________,
payable to, or endorsed to the order of, the Trustee.
( ) Mortgage recorded on _____________ as instrument
no. _____________ in the County Recorder's Office of the
County of _______________, State of ____________ in book/reel/docket
_______________ of official records at page/image ________.
( ) Deed of Trust recorded on _______________ as instrument no.
_________ in the County Recorder's Office of the County of
_______________, State of _______________ in book/reel/docket
__________ of official records at page/image
___________________.
( ) Assignment of Mortgage or Deed of Trust to the Trustee,
recorded on ______________ as instrument no. ______ in the
County Recorder's Office of the County of _______________,
State of _______________ in book/reel/docket __________ of
official records at page/image ________________.
( ) Other documents, including any amendments, assignments or
other assumptions of the Mortgage Note or Mortgage:
( ) ___________________________________________________________
( ) ___________________________________________________________
( ) ___________________________________________________________
( ) ___________________________________________________________
The undersigned hereby acknowledges and agrees as follows:
(1) The Master Servicer shall, and if the Master Servicer
releases the Documents to a Sub-Servicer or related Insurer the Master
Servicer shall cause such Sub-Servicer or related Insurer to, hold and
retain possession of the Documents in trust for the benefit of the
Trustee, solely for the purposes provided in the Agreement.
(2) The Master Servicer shall not cause or permit the
Documents to become subject to, or encumbered by, any claim, liens,
security interest, charges, writs of attachment or other impositions
nor shall the Master Servicer assert or seek to assert any claims or
rights of setoff to or against the Documents or any proceeds thereof.
(3) The Master Servicer shall return the Documents to the
Trustee when the need therefor no longer exists, and in any event
within 21 days of the Master Servicer's receipt thereof, unless the
Mortgage Loan relating to the Documents has been liquidated and the
proceeds thereof have been remitted to the Certificate Account or the
Documents are being used to pursue foreclosure or other legal
proceedings and except as expressly provided in the Agreement.
(4) Prior to the return of the Documents to the Trustee, the
Master Servicer shall, and if the Master Servicer releases such
Documents to a Sub-Servicer or related Insurer, the Master Servicer
shall cause such Sub-Servicer or related Insurer to, retain the
Documents in its control unless the Documents have been delivered to an
attorney, or to a public trustee or other public official as required
by law, to initiate or pursue legal action or other proceedings for the
foreclosure of the Mortgaged Property either judicially or
nonjudicially, and the Master Servicer has delivered to the Trustee a
certificate of a Servicing Officer certifying as to the name and
address of the Person to which the Documents were delivered and the
purpose or purposes of such delivery.
(5) The Documents and any proceeds thereof, including any
proceeds of proceeds, coming into the possession or control of the
Master Servicer shall at all times be earmarked for the account of the
Trustee, and the Master Servicer shall keep the Documents and any
proceeds separate and distinct from all other property in the
possession, custody or control of the Master Servicer.
Date: ______________________, 19__
_______________________________________
[Name of Master Servicer]
By: _______________________________________
Its: ______________________________________
<PAGE>
EXHIBIT E
Affidavit pursuant to Section 860E(e)(4) of the Internal Revenue Code
of 1986, as amended, and for other purposes
STATE OF )
) ss:
COUNTY OF )
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That he is [Title of Officer] of [Name of Investor] (the
"Investor"), a [savings institution] [corporation] duly organized and existing
under the laws of [the State of ____________] [the United States], on behalf of
which he makes this affidavit.
2. That (i) the Investor is not a "disqualified organization" as
defined in Section 860E(e)(5) of the Internal Revenue Code of 1986, as amended,
and will not be a disqualified organization as of June 28, 1996; (ii) it is not
acquiring the Bear Stearns Mortgage Securities Inc. Mortgage Pass-Through
Certificates, Series 1996-3, Class R-1 or Class R-2 Certificates (the "Residual
Certificates") for the account of a disqualified organization; (iii) it consents
to any amendment of the Pooling and Servicing Agreement that shall be deemed
necessary by Bear Stearns Mortgage Securities Inc. (upon advice of counsel) to
constitute a reasonable arrangement to ensure that the Residual Certificates
will not be owned directly or indirectly by a disqualified organization; and
(iv) it will not transfer such Residual Certificates unless (a) it has received
from the transferee an affidavit in substantially the same form as this
affidavit containing these same four representations and (b) as of the time of
the transfer, it does not have actual knowledge that such affidavit is false.
3. That the Investor is one of the following: (i) a citizen or
resident of the United States, (ii) a corporation, partnership or other entity
created or organized in or under the laws of the United States or any political
subdivision thereof or (iii) an estate or trust that is subject to U.S. federal
income tax regardless of the source of its income.
4. That the Investor's taxpayer identification number is ___________.
5. That no purpose of the acquisition of the Residual Certificates is
to avoid or impede the assessment or collection of tax.
6. That the Investor understands that, as the holder of the Residual
Certificates, the Investor may incur tax liabilities in excess of any cash flows
generated by such Residual Certificates.
7. That the Investor intends to pay taxes associated with holding the
Residual Certificates as they become due.
IN WITNESS WHEREOF, the Investor has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
[Title of Officer] this _______ day of __________________, 199_.
[NAME OF INVESTOR]
By:_________________________
[Name of Officer]
[Title of Officer]
[Address of Investor for
receipt of distributions]
Address of
Investor for
receipt of tax
information:
____________________________
____________________________
<PAGE>
Personally appeared before me the above-named [Name of Officer], known
or proved to me to be the same person who executed the foregoing instrument and
to be the [Title of Officer] of the Investor, and acknowledged to me that he
executed the same as his free act and deed and the free act and deed of the
Investor.
Subscribed and sworn before me this _____ day of ____________, 199_.
__________________________
NOTARY PUBLIC
COUNTY OF ________________
STATE OF _________________
My commission expires the ____ day of _____________, 19__.
<PAGE>
EXHIBIT F-1
FORM OF INVESTMENT LETTER
[Date]
[SELLER]
Bankers Trust Company of
California, N.A. as Trustee
3 Park Plaza, 16th Floor
Irvine, California 92714
Attention: Bear Stearns/ICI 1996-1
Re: BSMSI Series 1996-3 Mortgage Pass-Through
Certificates (the "Certificates"), including the Class B-4,
Class B-5 and Class B-6 Certificates (the "Privately Offered
CERTIFICATES")
Dear Sirs:
In connection with our purchase of Privately Offered Certificates, we
confirm that:
(i) we understand that the Privately Offered Certificates are not
being registered under the Securities Act of 1933, as amended
(the "Act") or any applicable state securities or "Blue Sky"
laws, and are being sold to us in a transaction that is exempt
from the registration requirements of such laws;
(ii) any information we desired concerning the Certificates,
including the Privately Offered Certificates, the trust in
which the Certificates represent the entire beneficial
ownership interest (the "Trust") or any other matter we deemed
relevant to our decision to purchase Privately Offered
Certificates has been made available to us;
(iii) we are able to bear the economic risk of investment in
Privately Offered Certificates; we are an institutional
"accredited investor" as defined in Section 501(a) of
Regulation D promulgated under the Act and a sophisticated
institutional investor;
(iv) we are acquiring Privately Offered Certificates for our own
account, not as nominee for any other person, and not with a
present view to any distribution or other disposition of the
Privately Offered Certificates;
(v) we agree the Privately Offered Certificates must be held
indefinitely by us (and may not be sold, pledged, hypothecated
or in any way disposed of) unless subsequently registered
under the Act and any applicable state securities or "Blue
Sky" laws or an exemption from the registration requirements
of the Act and any applicable state securities or "Blue Sky"
laws is available;
(vi) we agree that in the event that at some future time we wish to
dispose of or exchange any of the Privately Offered
Certificates (such disposition or exchange not being currently
foreseen or contemplated), we will not transfer or exchange
any of the Privately Offered Certificates unless:
(A) (1) the sale is to an Eligible Purchaser (as defined below),
(2) a letter to substantially the same effect as either this
letter or, if the Eligible Purchaser is a Qualified
Institutional Buyer as defined under Rule 144A of the Act, the
Rule 144A and Related Matters Certificate in the form attached
to the Pooling and Servicing Agreement (as defined below) is
executed promptly by the purchaser and delivered to the
addressees hereof and (3) all offers or solicitations in
connection with the sale, whether directly or through any
agent acting on our behalf, are limited only to Eligible
Purchasers and are not made by means of any form of general
solicitation or general advertising whatsoever; and
(B) if the Privately Offered Certificate is not registered under
the Act (as to which we acknowledge you have no obligation),
the Privately Offered Certificate is sold in a transaction
that does not require registration under the Act and any
applicable state securities or "blue sky" laws and, if State
Street Bank and Trust Company (the "Trustee") so requests, a
satisfactory Opinion of Counsel is furnished to such effect,
which Opinion of Counsel shall be an expense of the transferor
or the transferee;
(vii) we agree to be bound by all of the terms (including those
relating to restrictions on transfer) of the Pooling and
Servicing (as defined below), pursuant to which the Trust was
formed; we have reviewed carefully and understand the terms of
the Pooling and Servicing Agreement;
(viii) we are not "benefit plan investors," as such term is defined
in 29 C.F.R. ss. 2510.3-101, nor a trustee, fiduciary or other
party acting on behalf of any such "benefit plan investors;"
(ix) We understand that each of the Class [B-4] [B-5] [B-6]
Certificates bears, and will continue to bear, a legend to
substantiate the following effect: "THIS CERTIFICATE HAS NOT
BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR UNDER ANY STATE SECURITIES
LAWS. THE HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE,
AGREES THAT THIS CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED
OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE ACT AND
OTHER APPLICABLE LAWS AND ONLY (1) PURSUANT TO RULE 144A UNDER
THE ACT ("RULE 144A") TO A PERSON THAT THE HOLDER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING
OF RULE 144A (A "QIB"), PURCHASING FOR ITS OWN ACCOUNT OR A
QIB PURCHASING FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER HAS
INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE, PLEDGE OR
OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (2)
PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE
144 UNDER THE ACT (IF AVAILABLE) OR (3) IN CERTIFICATED FORM
TO AN "INSTITUTIONAL ACCREDITED INVESTOR" WITHIN THE MEANING
THEREOF IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D
UNDER THE ACT PURCHASING NOT FOR DISTRIBUTION IN VIOLATION OF
THE ACT, SUBJECT TO (A) THE RECEIPT BY THE TRUSTEE OF A LETTER
SUBSTANTIALLY IN THE FORM PROVIDED IN THE AGREEMENT AND (B)
THE RECEIPT BY THE TRUSTEE OF AN OPINION OF COUNSEL AS TO
COMPLIANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE UNITED
STATES. THIS CERTIFICATE MAY NOT BE TRANSFERRED TO "BENEFIT
PLAN INVESTORS," AS SUCH TERM IS DEFINED IN 29 C.F.R. SS.
2510.3-101., UNLESS THE PROPOSED TRANSFEREE PROVIDES A BENEFIT
PLAN OPINION TO THE TRUSTEE."
"ELIGIBLE PURCHASER" means a corporation, partnership or other entity
which we have reasonable grounds to believe and do believe (i) can make
representations with respect to itself to substantially the same effect as the
representations set forth herein, and (ii) is either a Qualified Institutional
Buyer as defined under Rule 144A of the Act or an institutional "Accredited
Investor" as defined under Rule 501 of the Act.
Terms not otherwise defined herein shall have the meanings assigned to
them in the Pooling and Servicing Agreement dated as of June 1, 1996 among Bear
Stearns Mortgage Securities Inc., ICI Funding Corporation and Bankers Trust
Company of California, N.A.(the "Pooling and Servicing Agreement").
IN WITNESS WHEREOF, this document has been executed by the undersigned
who is duly authorized to do so on behalf of the undersigned Eligible Purchaser
on the ____ day of ________, 19__.
Very truly yours,
[PURCHASER]
By:__________________________
(Authorized Officer)
By:__________________________
Attorney-in-fact
<PAGE>
EXHIBIT F-2
FORM OF RULE 144A AND RELATED MATTERS CERTIFICATE
[Date]
[SELLER]
Bankers Trust Company of
California, N.A., as Trustee
3 Park Plaza, 16th Floor
Irvine, California 92714
Attention: Corporate Trust Office
Re: BSMSI Series 1996-3 Mortgage Pass-Through
Certificates, Class B-4, Class B-5,
and Class B-6 Certificates (the "Privately
OFFERED CERTIFICATES")
Dear Sirs:
In connection with our purchase of Privately Offered
Certificates, the undersigned certifies to each of the parties to whom this
letter is addressed that it is a qualified institutional buyer (as defined in
Rule 144A under the Securities Act of 1933, as amended (the "Act")) as follows:
1. It owned and/or invested on a discretionary basis eligible securities
(excluding affiliate's securities, bank deposit notes and CD's, loan
participations, repurchase agreements, securities owned but subject to
a repurchase agreement and swaps), as described below:
Date:_____________, 19__ (must be on or after the close of its most
recent fiscal year)
Amount: $_________________; and
2. The dollar amount set forth above is:
a. greater than $100 million and the undersigned is one of the
following entities:
(1) an insurance company as defined in Section 2(13) of the Act;
or1
- ------------
1 A purchase by an insurance company for one or more of its separate
accounts, as defined by section 2(a)(37) of the Investment Company Act of
1940, which are neither registered nor required to be registered
thereunder, shall be deemed to be a purchase for the account of such
insurance company.
(2) an investment company registered under the Investment Company Act
or any business development company as defined in Section
2(a)(48) of the Investment Company Act of 1940; or
(3) a Small Business Investment Company licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the Small
Business Investment Act of 1958; or
(4) a plan (i) established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its
political subdivisions, the laws of which permit the purchase of
securities of this type, for the benefit of its employees and
(ii) the governing investment guidelines of which permit the
purchase of securities of this type; or
(5) a business development company as defined in Section 202(a)(22)
of the Investment Advisers Act of 1940; or
(6) a corporation (other than a U.S. bank, savings and loan
association or equivalent foreign institution), partnership,
Massachusetts or similar business trust, or an organization
described in Section 501(c)(3) of the Internal Revenue Code; or
(7) a U.S. bank, savings and loan association or equivalent foreign
institution, which has an audited net worth of at least $25
million as demonstrated in its latest annual financial
statements; or
(8) an investment adviser registered under the Investment Advisers
Act; or
b. greater than $10 million, and the undersigned is a broker-dealer
registered with the SEC; or
c. less than $10 million, and the undersigned is a broker-dealer
registered with the SEC and will only purchase Rule 144A
securities in transactions in which it acts as a riskless
principal (as defined in Rule 144A); or
d. less than $100 million, and the undersigned is an investment
company registered under the Investment Company Act of 1940,
which, together with one or more registered investment companies
having the same or an affiliated investment adviser, owns at
least $100 million of eligible securities; or
e. less than $100 million, and the undersigned is an entity, all the
equity owners of which are qualified institutional buyers.
The undersigned further certifies that it is purchasing a Privately
Offered Certificate for its own account or for the account of others that
independently qualify as "Qualified Institutional Buyers" as defined in Rule
144A. It is aware that the sale of the Privately Offered Certificates is being
made in reliance on its continued compliance with Rule 144A. It is aware that
the transferor may rely on the exemption from the provisions of Section 5 of the
Act provided by Rule 144A. The undersigned understands that the Privately
Offered Certificates may be resold, pledged or transferred only to (i) a person
reasonably believed to be a Qualified Institutional Buyer that purchases for its
own account or for the account of a Qualified Institutional Buyer to whom notice
is given that the resale, pledge or transfer is being made in reliance in Rule
144A, or (ii) an institutional "accredited investor," as such term is defined
under Rule 501 of the Act in a transaction that otherwise does not constitute a
public offering.
The undersigned agrees that if at some future time it wishes to
dispose of or exchange any of the Privately Offered Certificates, it will not
transfer or exchange any of the Privately Offered Certificates to a Qualified
Institutional Buyer without first obtaining a Rule 144A and Related Matters
Certificate in the form hereof from the transferee and delivering such
certificate to the addressees hereof. Prior to making any transfer of Privately
Offered Certificates, if the proposed Transferee is an institutional "accredited
investor," the transferor shall obtain from the transferee and deliver to the
addressees hereof an Investment Letter in the form attached to the Pooling and
Servicing Agreement dated as of June 1, 1996 among Bear Stearns Mortgage
Securities Inc., as Seller, ICI Funding Corporation as Master Servicer, and
Bankers Trust Company of California, N.A., as Trustee, pursuant to which the
Certificates were issued.
The undersigned certifies that it is not a "benefit plan investor," as
such term is defined in 29 C.F.R. ss. 2510.3- 101, nor a trustee, fiduciary or
other party who is acquiring a Privately Offered Certificate directly or
indirectly for or on behalf of "benefit plan investors."
IN WITNESS WHEREOF, this document has been executed by the undersigned
who is duly authorized to do so on behalf of the undersigned Qualified
Institutional Buyer on the ____ day of _______, 19__.
___________________________
Name of Institution
___________________________
Signature
___________________________
Name
___________________________
Title2
- --------
2 Must be President, Chief Financial Officer, or other
executive officer.
<PAGE>
EXHIBIT G
FORM OF SPECIAL SERVICING AND COLLATERAL FUND AGREEMENT
This SPECIAL SERVICING AND COLLATERAL FUND AGREEMENT (the "Agreement")
is made and entered into as of __________________, 1996, between ICI Funding
Corporation (the "Company") and [ ] (the "Purchaser").
PRELIMINARY STATEMENT
_______________________________ is the holder of the entire interest
in The Mortgage Pass-Through Certificates, Series 1996-3, Class B-6 Certificates
(the "Class B-6 Certificates"). The Class B-6 Certificates were issued pursuant
to a Pooling and Servicing Agreement (the "Pooling and Servicing Agreement")
dated as of June 1, 1996 between the Company (in its capacity as master servicer
thereunder, the "Master Servicer"), Bear Stearns Mortgage Securities Inc. and
Bankers Trust Company of California, N.A., as Trustee.
[ ] intends to resell all of the Class N-6 Certificates directly to
the Purchaser on or promptly after the date hereof.
In connection with such sale, the parties hereto have agreed that the
Company, as Master Servicer, will engage in certain special servicing procedures
relating to foreclosures for the benefit of the Purchaser, and that the
Purchaser will deposit funds in a collateral fund to cover any losses
attributable to such procedures as well as all advances and costs in connection
therewith, as set forth herein.
In consideration of the mutual agreements herein contained, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Purchaser agree that the following provisions shall become effective and shall
be binding on and enforceable by the Company and the Purchaser upon the
acquisition by the Purchaser of the Class B-6 Certificates.
ARTICLE I
DEFINITIONS
Section 1.01. DEFINED TERMS.
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
BUSINESS DAY: Any day other than (i) a Saturday or a Sunday or (ii) a
day on which banking institutions in New York City or Irvine, California are
required or authorized by law or executive order to be closed.
COLLATERAL FUND: The fund established and maintained pursuant to
Section 3.01 hereof.
COLLATERAL FUND PERMITTED INVESTMENTS: Either (i) obligations of, or
obligations fully guaranteed as to 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) repurchase agreements on
obligations specified in clause (i) provided that the unsecured obligations of
the party agreeing to repurchase such obligations are at the time rated by each
Rating Agency in the highest long-term rating category, (iii) federal funds,
certificates of deposit, time deposits and banker's acceptances of any U.S.
depository institution or trust company incorporated under the laws of the
United States or any state provided that the debt obligations of such depository
institution or trust company at the date of acquisition thereof have been rated
by each Rating Agency in the highest short-term rating category, (iv) commercial
paper of any corporation incorporated under the laws of the United States or any
state thereof which on the date of acquisition has the highest short term rating
of each Rating Agency, and (v) other obligations or securities that are
acceptable to each Rating Agency as a Collateral Fund Permitted Investment
hereunder and will not, as evidenced in writing, result in a reduction or
withdrawal in the then current rating of the Certificates and, for each of the
preceding clauses, the maturity thereof shall be not later than the earlier to
occur of (A) 30 days from the date of the related investment and (B) the
Business Day preceding the next succeeding Distribution Date.
COMMENCEMENT OF FORECLOSURE: The first official action required under
local law in order to commence foreclosure proceedings or to schedule a
trustee's sale under a deed of trust, including (i) in the case of a mortgage,
any filing or service of process necessary to commence an action to foreclose or
(ii) in the case of a deed of trust, the posting, publishing, filing or delivery
of a notice of sale, but not including in either case (x) any notice of default,
notice of intent to foreclose or sell or any other action prerequisite to the
actions specified in (i) or (ii) above and, upon the consent of the Purchaser
which will be deemed given unless expressly withheld within two Business Days of
notification, (y) the acceptance of a deed-in-lieu of foreclosure (whether in
connection with a sale of the related property or otherwise) or (z) initiation
and completion of a short pay-off.
CURRENT APPRAISAL: With respect to any Mortgage Loan as to which the
Purchaser has made an Election to Delay Foreclosure, an appraisal of the related
Mortgaged Property obtained by the Purchaser as nearly contemporaneously as
practicable to the time of the Purchaser's election, prepared based on the
Company's customary requirements for such appraisals.
ELECTION TO DELAY FORECLOSURE: Any election by the Purchaser to delay
the Commencement of Foreclosure, made in accordance with Section 2.02(b).
ELECTION TO FORECLOSURE: Any election by the Purchaser to proceed with
the Commencement of Foreclosure, made in accordance with Section 2.03(a).
REQUIRED COLLATERAL FUND BALANCE: As of any date of determination, an
amount equal to the aggregate of all amounts previously required to be deposited
in the Collateral Fund pursuant to Section 2.02(d) (after adjustments for all
withdrawals and deposits prior to such date pursuant to Section 2.02(e)) and
Section 2.03(b) (after adjustment for all withdrawals and deposits prior to such
date pursuant to Section 2.03(c)) and Section 3.02, reduced by all withdrawals
therefrom prior to such date pursuant to Section 2.02(g) and Section 2.03(d).
Section 1.02. DEFINITIONS INCORPORATED BY REFERENCE.
All capitalized terms not otherwise defined in this Agreement shall
have the meanings assigned in the Pooling and Servicing Agreement.
ARTICLE II
SPECIAL SERVICING PROCEDURES
Section 2.01. REPORTS AND NOTICES.
(a) In connection with the performance of its duties under the Pooling
and Servicing Agreement relating to the realization upon defaulted Mortgage
Loans, the Company as Master Servicer shall provide to the Purchaser the
following notices and reports:
i) Within five Business Days after each Distribution Date (or
included in or with the monthly statements to Certificateholders
pursuant to the Pooling and Servicing Agreement), the Company, as
Master Servicer, shall provide to the Purchaser a report, using the
same methodology and calculations in its standard servicing reports,
indicating for the Trust Fund the number of Mortgage Loans that are
(A) thirty days, (B) sixty days, (C) ninety days or more delinquent or
(D) in foreclosure, and indicating for each such Mortgage Loan the
loan number and outstanding principal balance.
ii) Prior to the Commencement of Foreclosure in connection with
any Mortgage Loan, the Company shall provide the Purchaser with a
notice (sent by facsimile transmission) of such proposed and imminent
foreclosure, stating the loan number and the aggregate amount owing
under the Mortgage Loan. Such notice may be provided to the Purchaser
in the form of a copy of a referral letter from the Company to an
attorney requesting the institution of foreclosure or a copy of a
request to foreclose received by the Company from the related primary
servicer which has been approved by the Company.
(b) If requested by the Purchaser, the Company shall make its
servicing personnel available (during their normal business hours) to respond to
reasonable inquiries, in writing by facsimile transmission, by the Purchaser in
connection with any Mortgage Loan identified in a report under subsection (a)(i)
or (a)(ii) which has been given to the Purchaser, provided, that (1) the Company
shall only be required to provide information that is readily accessible to its
servicing personnel and is non-confidential and (2) the Company shall respond
within five Business Days orally or in writing by facsimile transmission.
(c) In addition to the foregoing, the Company shall provide to the
Purchaser such information as the Purchaser may reasonably request concerning
each Mortgage Loan that is at least sixty days delinquent and each Mortgage Loan
which has become real estate owned, through the final liquidation thereof,
provided, that the Company shall only be required to provide information that is
readily accessible to its servicing personnel and is non-confidential.
Section 2.02. Purchaser's Election to Delay
FORECLOSURE PROCEEDINGS.
(a) The Purchaser shall be deemed to direct the Company that in the
event that the Company does not receive written notice of the Purchaser's
election pursuant to subsection (b) below within 24 hours (exclusive of any
intervening non-Business Days) of transmission of the notice provided by the
Company under Section 2.01(a)(ii) subject to extension as set forth in Section
2.02(b), the Company may proceed with the Commencement of Foreclosure in respect
of such Mortgage Loan in accordance with its normal foreclosure policies without
further notice to the Purchaser. Any foreclosure that has been initiated may be
discontinued (i) without notice to the Purchaser if the Mortgage Loan has been
brought current or if a refinancing or prepayment occurs with respect to the
Mortgage Loan (including by means of a short payoff approved by the Company) or
(ii) with notice to the Purchaser if the Company has reached the terms of a
forbearance agreement with the borrower. In such latter case the Company may
complete such forbearance agreement unless instructed otherwise by the Purchaser
within two Business Days of notification.
(b) In connection with any Mortgage Loan with respect to which a
notice under Section 2.01(a)(ii) has been given to the Purchaser, the Purchaser
may elect to request that the Company delay the Commencement of Foreclosure
until such time as the Purchaser determines that the Company may proceed with
the Commencement of Foreclosure. Such election must be evidenced by written
notice received within 24 hours (exclusive of any intervening non-Business Days)
of transmission of the notice provided by the Company under Section 2.01(a)(ii).
The Purchaser shall send a copy of such notice of election to each Rating Agency
as soon as practicable thereafter. Such 24 hour period shall be extended for no
longer than an additional four Business Days after the receipt of the
information if the Purchaser requests additional information related to such
foreclosure within such 24 hour period; PROVIDED, HOWEVER, that the Purchaser
will have at least one Business Day to make such election following its receipt
of any requested additional information. Any such additional information shall
(i) not be confidential in nature and (ii) be obtainable by the Company from
existing reports, certificates or statements or otherwise be readily accessible
to its servicing personnel. The Purchaser agrees that it has no right to deal
with the mortgagor. However, if the Company's normal foreclosure policies
include acceptance of a deed-in-lieu of foreclosure or short payoff, the
Purchaser will be notified and given two Business Days to respond. The Company
shall have the right to reject the notice of election by written notice to the
Purchaser within 24 hours of receipt of such notice of election, in which event
the Company may proceed with the Commencement of Foreclosure.
(c) With respect to any Mortgage Loan as to which the Purchaser has
made an Election to Delay Foreclosure which has not been rejected, the Purchaser
shall obtain a Current Appraisal as soon as practicable, and shall provide the
Company with a copy of such Current Appraisal.
(d) Within two Business Days of making any Election to Delay
Foreclosure which has not been rejected, the Purchaser shall remit by wire
transfer to the Trustee, for deposit in the Collateral Fund, an amount, as
calculated by the Company, equal to the sum of (i) 125% of the greater of the
Scheduled Principal Balance of the Mortgage Loan and the value shown in the
Current Appraisal referred to in subsection (c) above (or, if such Current
Appraisal has not yet been obtained, the Company's estimate thereof, in which
case the required deposit under this subsection shall be adjusted upon obtaining
such Current Appraisal), and (ii) three months' interest on the Mortgage Loan at
the applicable Mortgage Interest Rate. If any Election to Delay Foreclosure
which has not been rejected extends for a period in excess of three months (such
excess period being referred to herein as the "Excess Period"), the Purchaser
shall remit by wire transfer in advance to the Trustee for deposit in the
Collateral Fund the amount of each additional month's interest, as calculated by
the Company, equal to interest on the Mortgage Loan at the applicable Mortgage
Interest Rate for the Excess Period. The terms of this Agreement will no longer
apply to the servicing of any Mortgage Loan upon the failure of the Purchaser to
deposit the above amounts relating to the Mortgage Loan within two Business Days
of (i) the Election to Delay Foreclosure which has not been rejected or (ii) the
beginning of the related Excess Period, as the case may be.
(e) With respect to any Mortgage Loan as to which the Purchaser has
made an Election to Delay Foreclosure which has not been rejected, the Company
or the Trustee may withdraw from the Collateral Fund from time to time amounts
necessary to reimburse the Company for all related Monthly Advances and
Liquidation Expenses thereafter made by the Company as Master Servicer in
accordance with the Pooling and Servicing Agreement. To the extent that the
amount of any such Liquidation Expense is determined by the Company based on
estimated costs, and the actual costs are subsequently determined to be higher,
the Company may, or the Trustee shall at the Company's direction, withdraw the
additional amount from the Collateral Fund to reimburse the Company. In the
event that the Mortgage Loan is brought current by the mortgagor, the amounts so
withdrawn from the Collateral Fund shall be redeposited therein as and to the
extent that reimbursement therefor from amounts paid by the mortgagor is not
prohibited pursuant to the Pooling and Servicing Agreement as of the date
hereof. Except as provided in the preceding sentence, amounts withdrawn from the
Collateral Fund to cover Monthly Advances and Liquidation Expenses shall not be
redeposited therein or otherwise reimbursed to the Purchaser. If and when any
such Mortgage Loan is brought current by the mortgagor, all amounts remaining in
the Collateral Fund in respect of such Mortgage Loan (after adjustment for all
previous withdrawals and deposits pursuant to this subsection and after
reimbursement to the Master Servicer for all related Monthly Advances) shall be
released to the Purchaser.
(f) With respect to any Mortgage Loan as to which the Purchaser has
made an Election to Delay Foreclosure which has not been rejected, the Company
shall continue to service the Mortgage Loan in accordance with its customary
procedures (other than the delay in Commencement of Foreclosure as provided
herein). If and when, following such election, the Purchaser shall notify the
Company that it believes that it is appropriate to do so, the Company shall
proceed with the Commencement of Foreclosure; provided that, in any event, if
the Mortgage Loan is not brought current by the Mortgagor by the time the
Mortgage Loan becomes 6 months delinquent, the Purchaser's election shall no
longer be effective and the Company shall be entitled to proceed with the
Commencement of Foreclosure.
(g) Upon the occurrence of a liquidation with respect to any Mortgage
Loan as to which the Purchaser made an Election to Delay Foreclosure which has
not been rejected and as to which the Company proceeded with the Commencement of
Foreclosure in accordance with subsection (f) above, the Company shall calculate
the amount, if any, by which the value shown on the Current Appraisal obtained
under subsection (c) exceeds the actual sales price obtained for the related
Mortgaged Property (net of Liquidation Expenses and unreimbursed Monthly
Advances related to the extended foreclosure period), and the Company shall, or
the Trustee shall at the direction of the Company, withdraw the amount of such
excess from the Collateral Fund and shall remit the same to the Trust Fund for
application as additional Liquidation Proceeds pursuant to the Pooling and
Servicing Agreement. After making such withdrawal, all amounts remaining in the
Collateral Fund in respect of such Mortgage Loan (after adjustment for all
withdrawals and deposits pursuant to subsection (e) and after reimbursement to
the Master Servicer for all related Monthly Advances) shall be released to the
Purchaser.
Section 2.03. Purchaser's Election to Commence
FORECLOSURE PROCEEDINGS.
(a) In connection with any Mortgage Loan identified in a report under
Section 2.01(a)(i)(B), the Purchaser may elect to instruct the Company to
proceed with the Commencement of Foreclosure as soon as practicable. Such
election must be evidenced by written notice received by the Company by 5:00
p.m., New York City time, on the third Business Day following the delivery of
such report under Section 2.01(a)(i). The Company shall have the right to reject
the notice of election by written notice to the Purchaser within 24 hours of
receipt of such notice of election, in which event, the Company may delay the
Commencement of Foreclosure.
(b) Within two Business Days of making any Election to Foreclose which
has not been rejected, the Purchaser shall remit to the Trustee, for deposit in
the Collateral Fund, an amount, as calculated by the Company, equal to 125% of
the current Scheduled Principal Balance of the Mortgage Loan and three months'
interest on the Mortgage Loan at the applicable Mortgage Rate. If and when any
such Mortgage Loan is brought current by the mortgagor, all amounts in the
Collateral Fund in respect of such Mortgage Loan (after adjustment for all
withdrawals and deposits pursuant to subsection (c) below) shall be released to
the Purchaser. The terms of this Agreement will no longer apply to the servicing
of any Mortgage Loan upon the failure of the Purchaser to deposit the above
amounts relating to the Mortgage Loan within two Business Days of the Election
to Foreclose.
(c) With respect to any Mortgage Loan as to which the Purchaser has
made an Election to Foreclose which has not been rejected, the Company shall
continue to service the Mortgage Loan in accordance with its customary
procedures. In connection therewith, the Company shall have the same rights to
make withdrawals for Monthly Advances and Liquidations Expenses from the
Collateral Fund as are provided under Section 2.02(e), and the Company shall
make reimbursements thereto to the limited extent provided under such
subsection. The Company shall not be required to proceed with the Commencement
of Foreclosure which has not been rejected if (i) the same is stayed as a result
of the mortgagor's bankruptcy or is otherwise barred by applicable law, or to
the extent that all legal conditions precedent thereto have not yet been
complied with, or (ii) the Company believes there is a breach of representations
or warranties by the Company, which may result in a repurchase or substitution
of such Mortgage Loan, or (iii) the Company has or expects to have the right
under the Pooling and Servicing Agreement to purchase the defaulted Mortgage
Loan and intends to exercise such right or (iv) the Company reasonably believes
the Mortgaged Property may be contaminated with or affected by hazardous wastes
or hazardous substances (and the Company supplies the Purchaser with information
supporting such belief) or (v) the same is prohibited by or is otherwise
inconsistent with the provisions of the Pooling and Servicing Agreement. Any
foreclosure that has been initiated may be discontinued (i) without notice to
the Purchaser if the Mortgage Loan has been brought current or if a refinancing
or prepayment occurs with respect to the Mortgage Loan (including by means of a
short payoff approved by the Purchaser) or (ii) with notice to the Purchaser if
the Company has reached the terms of a forbearance agreement unless instructed
otherwise by the Purchaser within two Business Days of notification.
(d) Upon the occurrence of a liquidation with respect to any Mortgage
Loan as to which the Purchaser made an Election to Foreclose which has not been
rejected and as to which the Company proceeded with the Commencement of
Foreclosure in accordance with subsection (c) above, the Company shall calculate
the amount, if any, by which the Scheduled Principal Balance of the Mortgage
Loan at the time of liquidation (plus all unreimbursed Monthly Advances and
Liquidation Expenses in connection therewith other than those previously paid
from the Collateral Fund) exceeds the actual sales price obtained for the
related Mortgaged Property, and the Company shall, or the Trustee shall at the
direction of the Company, withdraw the amount of such excess from the Collateral
Fund and shall remit the same to the Trust Fund for application as additional
Liquidation Proceeds pursuant to the Pooling and Servicing Agreement. After
making such withdrawal, all amounts remaining in the Collateral Fund (after
adjustment for all withdrawals and deposits pursuant to subsection (c) above and
after reimbursement to the Master Servicer for all related Monthly Advances) in
respect of such Mortgage Loan shall be released to the Purchaser.
Section 2.04. TERMINATION.
(a) With respect to all Mortgage Loans included in the Trust Fund, the
Purchaser's right to make any Election to Delay Foreclosure or any Election to
Foreclose and the Company's obligations under Section 2.01 shall terminate on
the earliest to occur of the following: (i) at such time as the Current
Principal Amount of the Class B-6 Certificates has been reduced to zero, (ii) if
the greater of (x) [43%] (or such lower or higher percentage that represents the
Company's actual loss experience with respect to the Mortgage Loans) of the
aggregate principal balance of all Mortgage Loans that are in foreclosure or are
more than 90 days delinquent on a contractual basis and the aggregate book value
of REO Properties or (y) the aggregate amount that the Company estimates through
its normal servicing practices will be required to be withdrawn from the
Collateral Fund with respect to Mortgage Loans as to which the Purchaser has
made an Election to Delay Foreclosure or an Election to Foreclose which has not
been rejected exceeds (z) the then-current Current Principal Amount of the Class
B-6 Certificates, or (iii) upon any transfer by the Purchaser of any interest
(other than a minority interest therein, but only if the transferee provides
written acknowledgment to the Company of the Purchaser's right hereunder and
that such transferee will have no rights hereunder) in the Class B-6
Certificates (whether or not such transfer is registered under the Pooling and
Servicing Agreement), including any such transfer in connection with a
termination of the Trust Fund. Unless earlier terminated as set forth herein,
this Agreement and the respective rights, obligations and responsibilities of
the Purchaser and the Company hereunder shall terminate upon the later to occur
of (i) the final liquidation of the last Mortgage Loan as to which the Purchaser
made any Election to Delay Foreclosure or any Election to Foreclose and the
withdrawal of all remaining amounts in the Collateral Fund as provided herein
and (ii) ten (10) Business Days' notice.
(b) The Purchaser's rights pursuant to Section 2.02 or 2.03 of this
Agreement shall terminate with respect to a Mortgage Loan as to which the
Purchaser has exercised its rights under Section 2.02 or 2.03 hereof (so long as
such exercise has not been rejected), upon Purchaser's failure to deposit any
amounts required pursuant to Section 2.02(d) or 2.03(b) after one Business Day's
notice of such failure.
ARTICLE III
COLLATERAL FUND; SECURITY INTEREST
Section 3.01. COLLATERAL FUND.
Upon payment by the Purchaser of the initial amount required to be
deposited in the Collateral Fund pursuant to Article II, the Company shall
request the Trustee to establish and maintain with the Trustee a segregated
account entitled "Bear Stearns Mortgage Securities Inc. Mortgage Pass-Through
Certificates, Series 1996-1 Collateral Fund, for the benefit of ICI Funding
Corporation and Bankers Trust Company of California, N.A. on behalf of
Certificateholders, as secured parties" (the "Collateral Fund"). Amounts held in
the Collateral Fund shall continue to be the property of the Purchaser, subject
to the first priority security interest granted hereunder for the benefit of
such secured parties, until withdrawn from the Collateral Fund pursuant to the
Section 2.02 or 2.03 hereof.
Upon the termination of this Agreement and the liquidation of all
Mortgage Loans as to which the Purchaser has made any Election to Delay
Foreclosure or any Election to Foreclose pursuant to Section 2.04 hereof, the
Company shall distribute to the Purchaser all amounts remaining in the
Collateral Fund together with any investment earnings thereon (after giving
effect to all withdrawals therefrom permitted under this Agreement).
The Purchaser shall not take or direct the Company or the Trustee to
take any action contrary to any provision of the Pooling and Servicing
Agreement. In no event shall the Purchaser (i) take or cause the Trustee or the
Company to take any action that could cause the Trust Fund to fail to qualify as
a REMIC or cause the imposition on the Trust Fund of any "prohibited
transaction" or "prohibited contribution" taxes or (ii) cause the Trustee or the
Company to fail to take any action necessary to maintain the status of the Trust
Fund as a REMIC.
Section 3.02. COLLATERAL FUND PERMITTED INVESTMENTS.
The Company shall, at the written direction of the Purchaser, direct
the Trustee to invest the funds in the Collateral Fund in the name of the
Trustee in Collateral Fund Permitted Investments. Such direction shall not be
changed more frequently then quarterly. In the absence of any direction, the
Trustee shall invest such funds in investments permitted pursuant to clause
(iii) of the definition of Collateral Fund Permitted Investments herein.
All income and gain realized from any investment as well as any
interest earned on deposits in the Collateral Fund (net of any losses on such
investments) and any payments of principal made in respect of any Collateral
Fund Permitted Investment shall be deposited in the Collateral Fund upon
receipt. All costs and realized losses associated with the purchase and sale of
Collateral Fund Permitted Investments shall be borne by the Purchaser and the
amount of net realized losses shall be promptly deposited by the Purchaser in
the Collateral Fund. The Company shall periodically (but not more frequently
than monthly) direct the Trustee to distribute to the Purchaser upon request an
amount of cash, to the extent cash is available therefor in the Collateral Fund,
equal to the amount by which the balance of the Collateral Fund, after giving
effect to all other distributions to be made from the Collateral Fund on such
date, exceeds the Required Collateral Fund Balance. Any amounts so distributed
shall be released from the lien and security interest of this Agreement.
Section 3.03. GRANT OF SECURITY INTEREST.
In order to secure the obligations of the Purchaser hereunder to the
Company and the Trustee for the benefit of Certificateholders (other than its
obligations under Section 4.10), the Purchaser hereby grants to the Company and
to the Trustee for the benefit of the Certificateholders a security interest in
and lien on all of the Purchaser's right, title and interest, whether now owned
or hereafter acquired, in and to: (1) the Collateral Fund, (2) all amounts
deposited in the Collateral Fund and Collateral Fund Permitted Investments in
which such amounts are invested (and the distributions and proceeds of such
investments) and (3) all cash and non-cash proceeds of any of the foregoing,
including proceeds of the voluntary or involuntary conversion thereof (all of
the foregoing collectively, the "Collateral").
The Purchaser acknowledges the lien on and security interest in the
Collateral for the benefit of the Company and the Trustee on behalf of the
Certificateholders. The Purchaser shall take all actions requested by the
Company as may be reasonably necessary to perfect the security interest created
under this Agreement in the Collateral and cause it to be prior to all other
security interests and liens, including the execution and delivery to the
Company or at its direction the Trustee for filing of appropriate financing
statements in accordance with applicable law.
Section 3.04. COLLATERAL SHORTFALLS.
In the event that amounts on deposit in the Collateral Fund at any
time are insufficient to cover any withdrawals therefrom that the Company or the
Trustee is then entitled to make hereunder, the Purchaser shall be obligated to
pay such amounts to the Company or the Trustee immediately upon demand. Such
obligation shall constitute a general corporate obligation of the Purchaser. The
failure to pay such amounts within two Business Days of such demand (except for
amounts to cover interest on a Mortgage Loan pursuant to Sections 2.02(d) and
2.03(b)), shall cause an immediate termination of the Purchaser's right to make
any Election to Delay Foreclosure or Election to Foreclose and the Company's
obligations under this Agreement with respect to all Mortgage Loans to which
such insufficiencies relate, without the necessity of any further notice or
demand on the part of the Company.
ARTICLE IV
MISCELLANEOUS PROVISIONS
Section 4.01. AMENDMENT.
This Agreement may be amended from time to time by the Company and the
Purchaser by written agreement signed by the Company and the Purchaser provided
that no such amendment shall have a material adverse effect on the holders of
other Classes of Certificates.
Section 4.02. 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 4.03. GOVERNING LAW.
This Agreement shall be construed in accordance with the laws of the
State of New York and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws.
Section 4.04. NOTICES.
All demands, notices and direction hereunder shall be in writing or by
telecopy and shall be deemed effective upon receipt to:
(a) in the case of the Company,
--------------------------------
--------------------------------
--------------------------------
or such other address as may hereafter be furnished in writing
by the Company, or
(a) in the case of the Purchaser,
--------------------------------
--------------------------------
--------------------------------
Attention: ____________________
Phone: ________________________
Fax: __________________________.
Section 4.05. SEVERABILITY OF PROVISIONS.
If any one or more of the covenants, agreements, provisions or terms
of this Agreement shall be for any reason whatsoever, including regulatory, 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.
Section 4.06. SUCCESSOR AND ASSIGNS.
The provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and the respective successors and assigns of
the parties hereto; provided, however, that the rights under this Agreement
cannot be assigned by the Purchaser without the consent of the Company.
Section 4.07. 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 4.08. THIRD PARTY BENEFICIARIES.
The Trustee on behalf of Certificateholders is the intended third
party beneficiary of this Agreement.
Section 4.09. CONFIDENTIALITY.
The Purchaser agrees that all information supplied by or on behalf of
the Company pursuant to Sections 2.01 or 2.02, including individual account
information, is the property of the Company and the Purchaser agrees to use such
information solely for the purposes set forth in this Agreement and to hold such
information confidential and not to disclose such information.
Section 4.10. INDEMNIFICATION.
The Purchaser agrees to indemnify and hold harmless the Company and
the Trustee against any and all losses, claims, damages or liabilities to which
it may be subject, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon actions taken by the
Company in accordance with the provisions of this Agreement and which actions
conflict or are alleged to conflict with the Company's or the Trustee's
obligations under the Pooling and Servicing Agreement. The Purchaser hereby
agrees to reimburse the Company and the Trustee on demand for the reasonable
legal or other expenses incurred by it in connection with investigating or
defending any such loss, claim, damage, liability or action.
Section 4.11. REPRESENTATIONS AND WARRANTY
The Purchaser represents and warrants that it is not an "affiliate"
(as defined in the Securities Act of 1933, as amended) of ICI Funding
Corporation.
Section 4.12. EXPENSES OF TRUSTEE. The Purchaser shall pay the
reasonable fees and expenses of the Trustee in conection with the Trustee's
duties under this Agreement.
IN WITNESS WHEREOF, the Company and the Purchaser have caused their
names to be signed hereto by their respective officers thereunto duly
authorized, all as of the day and year first above written.
ICI FUNDING CORPORATION
By:________________________
Name:
Title:
[PURCHASER]
By:_______________________
Name:
Title:
<PAGE>
EXHIBIT H
FORM OF INITIAL CERTIFICATION
[Seller]
[Master Servicer]
Re: Pooling and Servicing Agreement dated as of June 1,
1996, among Bear Stearns Mortgage Securities Inc., as
seller, ICI Funding Corporation, as master servicer,
and Bankers Trust Company of California, N.A., as
trustee MORTGAGE PASS-THROUGH CERTIFICATES, SERIES
1996-3
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that, except
as otherwise noted on the attached exception report, that as to each Mortgage
Loan listed on the Mortgage Loan Schedule (other than any Mortgage Loan paid in
full or listed on the attachment hereto) it has reviewed the Mortgage File and
the Mortgage Loan Schedule and has determined that: (i) all documents required
to be included in the Mortgage File pursuant to the Pooling and Servicing
Agreement are in its possession; (ii) such documents have been reviewed by it
and appear regular on their face, have, where applicable, been executed and
relate to such Mortgage Loan; and (iii) based on examination by it, and only as
to such documents, the information set forth in the Mortgage Loan Schedule as to
Mortgagor Name, original principal balance and loan number respecting such
Mortgage Loan is correct and accurately reflects the information in the Mortgage
Loan File.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The Trustee makes no
representation that any documents specified in subclauses (iv), (v) and (vii) of
Section 2.01(b) should be included in any Mortgage File. The Trustee makes no
representations as to: (i) the validity, legality, enforceability or genuineness
of any of the documents contained in each Mortgage File of any of the Mortgage
Loans identified on the Mortgage Loan Schedule or (ii) the collectability,
insurability, effectiveness or suitability of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.
By:_______________________
Name:
Title:
<PAGE>
EXHIBIT I
FORM OF FINAL CERTIFICATION
[Seller]
[Master Servicer]
Re: Pooling and Servicing Agreement dated as of June 1,
1996, among Bear Stearns Mortgage Securities Inc., as
seller, ICI Funding Corporation, as master servicer,
and Bankers Trust Company of California, N.A., as
trustee MORTGAGE PASS-THROUGH CERTIFICATES, SERIES
1996-3
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that, except
as otherwise noted on the attached exception report, that as to each Mortgage
Loan listed on the Mortgage Loan Schedule (other than any Mortgage Loan paid in
full or listed on the attachment hereto) it has received the documents set forth
in Section 2.01 and has determined that (i) all documents required to be
included in the Mortgage File pursuant to the Pooling and Servicing Agreement
are in its possession; (ii) such documents have been reviewed by it and appear
regular on their face, have, where applicable, been executed and relate to such
Mortgage Loan; and (iii) based on examination by it, and only as to such
documents, the information set forth in the Mortgage Loan Schedule as to
Mortgagor name, original principal balance and loan number respecting such
Mortgage Loan is correct and accurately reflects the information in the Mortgage
Loan File.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The Trustee makes no
representation that any documents specified in subclauses (iv), (v) and (vii) of
Section 2.01(b) should be included in any Mortgage File. The Trustee makes no
representations as to: (i) the validity, legality, enforceability or genuineness
of any of the documents contained in each Mortgage File of any of the Mortgage
Loans identified on the Mortgage Loan Schedule or (ii) the collectability,
insurability, effectiveness or suitability of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.
By:_______________________
Name:
Title:
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