SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported)
November 27, 1996
Bear Stearns Mortgage Securities Inc. (as Seller under a Pooling and
Servicing Agreement dated as of November 1, 1996 providing for the issuance of
the Mortgage Pass-Through Certificates, Series 1996-8)
BEAR STEARNS MORTGAGE SECURITIES INC.
(Exact name of registrant as specified in charter)
Delaware 333-13617 13-3633241
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
245 Park Avenue, New York, New York 10167
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 272-2000
Not Applicable
(Former name or former address, if changed since
last report.)
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits
Exhibit No.
1.1 Terms Agreement dated as of November 22, 1996 among the Registrant,
Bear, Stearns & Co. Inc. and
Donaldson, Lufkin & Jenrette Securities Corporation.
4.1 Pooling and Servicing Agreement dated as of November 1, 1996 among
the Registrant, Headlands Mortgage
Company, and The Bank of New York.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BEAR STEARNS MORTGAGE SECURITIES INC.
(Registrant)
Date: November 27, 1996 By: /s/ Joseph T. Jurkowski, Jr.
-----------------------------
Name: Joseph T. Jurkowski, Jr.
Title: Vice President
<PAGE>
EXHIBIT INDEX
Exhibit Number Description
1.1 Terms Agreement dated as of
November 22, 1996 between the
Registrant, Bear, Stearns & Co.
Inc. and Donaldson, Lufkin & Jenrette
Securities Corporation.
4.1 Pooling and Servicing Agreement
dated as of November 1, 1996 among
the Registrant, Headlands Mortgage Company and
The Bank of New York.
<PAGE>
Exhibit 1.1
<PAGE>
Exhibit 4.1
<PAGE>
BEAR STEARNS MORTGAGE SECURITIES INC.
Mortgage Pass-Through Certificates
TERMS AGREEMENT
Dated as of November 22, 1996
To: BEAR STEARNS MORTGAGE SECURITIES INC.
Re: Underwriting Agreement dated June 25, 1996 (the "Underwriting Agreement")
Underwriters: Bear, Stearns & Co. Inc. ("Bear Stearns") and Donaldson,
Lufkin & Jenrette Securities Corporation ("DLJ") (each of
Bear Stearns and DLJ,
an "Underwriter")
Series Designation: Series 1996-8
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:
Original Amount Amount
Principal Purchased by Purchased by
Class Amount Interest Rate Bear Stearns DLJ
A-1 $5,955,000 7.25% $2,977,500 $2,977,500
A-2 $14,560,000 6.40% $7,280,000 $7,280,000
A-3 $ 3,301,000 11.00% $1,650,500 $1,650,500
A-4 $ 8,618,000 7.25% $4,309,000 $4,309,000
A-5 $15,462,000 7.25% $7,731,000 $7,731,000
A-6 $13,481,000 7.25% $6,740,500 $6,740,500
A-7 $51,135,000 (1) $25,567,500 $25,567,500
A-8 (2) (2) $25,567,500 $25,567,500
A-9 $12,777,000 7.60% $6,388,500 $6,388,500
A-10 $10,936,800 8.00% $5,468,400 $5,468,400
A-11 $26,250,638 8.00% $13,125,319 $13,125,319
B-1 $ 5,735,000 8.00% $5,735,000 0
B-2 $ 3,088,000 8.00% $3,088,000 0
B-3 $ 2,383,000 8.00% $2,383,000 0
R-1 $100 8.00% $100 0
R-2 $100 8.00% $100 0
The original principal amount of each Class of Certificates is subject to
adjustment as provided in the related Prospectus Supplement. The Certificates
purchased by each Underwriter will be offered from time to time by such
Underwriter in 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 December 1996.
(1) The Class A-7 Certificates will bear interest at 5.875% per annum during
the first Interest Accrual Period (as defined in the applicable Pooling
and Servicing Agreement). During each Interest Accrual Period thereafter,
the Class A-7 Certificates will bear interest, subject to a maximum rate
of 9.00% per annum and a minimum rate of 0.50% per annum, at a rate per
annum equal to 0.50% in excess of the London interbank offered rate for
one-month U.S. dollar deposits ("LIBOR"), as more fully described in the
applicable Pooling and Servicing Agreement.
(2) The Class A-8 Certificates will to have a notional amount equal to the
Current Principal Amount (as defined in the applicable Pooling and
Servicing Agreement) of the Class A-7 Certificates. The Class A-8
Certificates will bear interest at 3.125% per annum during the first
Interest Accrual Period. During each Interest Accrual Period thereafter,
the Class A-8 Certificates will bear interest, subject to a maximum rate
of 8.50% per annum and a minimum rate of 0% per annum, at a rate per annum
equal to 8.50% - LIBOR.
Certificate Rating for the Certificates Being Purchased by the Underwriters:
Rating
-------------------------------------------------
Class Moody's 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
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 to the
related Prospectus Supplement.
PURCHASE PRICE: The aggregate purchase price payable by the Underwriters for the
Certificates covered by this Agreement will be 101.08% of the aggregate
principal amount of such Certificates, plus accrued interest thereon.
CREDIT ENHANCEMENT: None other than the subordination described in the related
Prospectus Supplement.
CLOSING DATE: November 27, 1996, 9:00 a.m., New York time.
Each Underwriter agrees, subject to the terms and provisions of the Underwriting
Agreement and the Master Agreement among Underwriters dated December 1, 1986, as
amended, between the Underwriters, which are incorporated herein in their
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, subject to any adjustment, as set forth
herein. The Company agrees, subject to the terms and provisions of the
Underwriting Agreement, to sell the respective principal amounts of such
Classes. The parties acknowledge that each Underwriter will be deemed an
Underwriter under the Underwriting Agreement and will have the rights and
obligations of an Underwriter thereunder.
<PAGE>
Each party below hereby acknowledges its agreement to the foregoing by its
signature below.
BEAR, STEARNS & CO. INC.
By: ________________________________
Name: Jeffrey Mayer
Title: Senior Managing Director
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: ________________________________
Name: Paul Najarian
Title: Vice President
Accepted:
BEAR STEARNS MORTGAGE SECURITIES INC.
By: ________________________________
Name: Joseph T. Jurkowski, Jr.
Title: Vice President
<PAGE>
BEAR STEARNS MORTGAGE SECURITIES INC.,
SELLER,
HEADLANDS MORTGAGE COMPANY,
MASTER SERVICER,
and
THE BANK OF NEW YORK,
TRUSTEE
---------------------------------
POOLING AND SERVICING AGREEMENT
Dated as of November 1, 1996
--------------------------------
Bear Stearns Mortgage Securities Inc.
Mortgage Pass-Through Certificates
Series 1996-8
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I.
Definitions
Definitions...................................................................2
ARTICLE II.
Conveyance of Mortgage Loans
Section 2.1 Conveyance of Mortgage Loans to Trustee.........................25
Section 2.2. Acceptance of Mortgage Loans by Trustee.........................26
Section 2.3. Representations, Warranties and Covenants of the Master
Servicer......................................................27
Section 2.4. Substitution of Mortgage Loans..................................29
Section 2.5. Representations and Warranties of the Trustee...................30
Section 2.6. Issuance of Certificates........................................31
Section 2.7. Representations and Warranties Concerning the Seller............31
ARTICLE III.
Administration and Servicing of Mortgage Loans
Section 3.1 Master Servicer to Assure Servicing.............................32
Section 3.2. Sub-Servicing Agreements Between Master Servicer and
Sub-Servicers.................................................33
Section 3.3 Successor Sub-Servicers.........................................34
Section 3.4. Liability of the Master Servicer................................34
Section 3.5. Assumption or Termination of Sub-Servicing Agreements by
Trustee............................34
Section 3.6. Collection of Mortgage Loan Payments............................35
Section 3.7. Collection of Taxes, Assessments and Similar Items;
Servicing Accounts............................................35
Section 3.8. Access to Certain Documentation and Information
Regarding the Mortgage Loans..................................36
Section 3.9. Maintenance of Primary Insurance Policies; Collection
Thereunder....................................................36
Section 3.10. Maintenance of Hazard Insurance and Fidelity
Coverage.....................................................36
Section 3.11. Due-on-Sale Clauses; Assumption Agreements.....................38
Section 3.12. Realization Upon Defaulted Mortgage Loans......................39
Section 3.13. Trustee to Cooperate; Release of Mortgage Files................40
Section 3.14. Servicing and Master Servicing Compensation....................41
Section 3.15. Annual Statement of Compliance.................................41
Section 3.16. Annual Independent Public Accountants' Servicing
Report.......................................................41
Section 3.17. REMIC-Related Covenants........................................42
Section 3.18. Additional Information.........................................42
ARTICLE IV.
Accounts
Section 4.1. Protected Accounts..............................................42
Section 4.2. Certificate Account.............................................43
Section 4.3. Permitted Withdrawals and Transfers from the Certificate
Account.......................................................45
Section 4.4. Custody Account.................................................47
ARTICLE V.
Certificates
Section 5.1. Certificates....................................................48
Section 5.2. Registration of Transfer and Exchange of Certificates...........52
Section 5.3. Mutilated, Destroyed, Lost or Stolen Certificates...............55
Section 5.4. Persons Deemed Owners...........................................56
Section 5.5. Transfer Restrictions on Residual Certificates..................56
Section 5.6. Restrictions on Transferability of Private Certificates.........57
Section 5.7. ERISA Restrictions..............................................57
Section 5.8. Rule 144A Information...........................................58
Section 5.9. Calculation of LIBOR............................................58
ARTICLE VI.
Payments to Certificateholders
Section 6.1. Distributions on the Certificates...............................60
Section 6.2. [Reserved]......................................................62
Section 6.3. Allocation of Losses............................................62
Section 6.4. [Reserved]......................................................64
Section 6.5. Payments........................................................64
Section 6.6. Statements to Certificateholders................................64
Section 6.7. Reports to the Trustee and the Master Servicer..................66
Section 6.8. Monthly Advances................................................68
Section 6.9. Compensating Interest Payments..................................68
Section 6.10. Reports of Foreclosures and Abandonment of Mortgaged
Property.....................................................68
ARTICLE VII.
The Master Servicer
Section 7.1. Liabilities of the Master Servicer..............................68
Section 7.2. Merger or Consolidation of the Master Servicer..................69
Section 7.3. Indemnification of the Trustee..................................69
Section 7.4. Limitation on Liability of the Master Servicer and Others.......69
Section 7.5. Master Servicer Not to Resign...................................70
Section 7.6. [Reserved]......................................................70
Section 7.7. Sale and Assignment of Master Servicing.........................70
ARTICLE VIII
Default
Section 8.1. Events of Default...............................................71
Section 8.2. Trustee to Act; Appointment of Successor........................72
Section 8.3. Notification to Certificateholders..............................73
Section 8.4. Waiver of Defaults..............................................73
Section 8.5. List of Certificateholders......................................73
ARTICLE IX.
Concerning the Trustee
Section 9.1. Duties of Trustee...............................................74
Section 9.2. Certain Matters Affecting the Trustee...........................75
Section 9.3. Trustee Not Liable for Certificates or Mortgage Loans...........76
Section 9.4. Trustee May Own Certificates....................................77
Section 9.5. Trustee's Fees and Expenses.....................................77
Section 9.6. Eligibility Requirements for Trustee............................77
Section 9.7. Insurance.......................................................77
Section 9.8. Resignation and Removal of the Trustee..........................78
Section 9.9. Successor Trustee...............................................78
Section 9.10 Merger or Consolidation of Trustee..............................79
Section 9.11 Appointment of Co-Trustee or Separate Trustee...................79
Section 9.12. Master Servicer Shall Provide Information as Reasonably
Required.....................................................80
Section 9.13. Federal Information Returns and Reports to
Certificateholders...........................................80
ARTICLE X.
Termination
Section 10.1. Termination Upon Repurchase by Headlands or its Designee
or Liquidation of All Mortgage Loans.........................81
Section 10.2. Additional Termination Requirements............................83
ARTICLE XI.
Miscellaneous Provisions
Section 11.1. Intent of Parties.............................................84
Section 11.2. Amendment.....................................................84
Section 11.3. Recordation of Agreement......................................84
Section 11.4. Limitation on Rights of Certificateholders....................85
Section 11.5. Acts of Certificateholders....................................85
Section 11.6. [Reserved]....................................................86
Section 11.7. Governing Law.................................................86
Section 11.8. Notices.......................................................86
Section 11.9. Severability of Provisions....................................87
Section 11.10. Successors and Assigns........................................87
Section 11.11. Article and Section Headings..................................87
Section 11.12. Counterparts..................................................87
Section 11.13. Notice to Rating Agencies.....................................87
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 Headlands Mortgage Company
Concerning the Mortgage Loans
Exhibit D - Request for Release
Exhibit E - Form of Affidavit pursuant to Section 860(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 Initial Certification
Exhibit I - Form of Final Certification
<PAGE>
POOLING AND SERVICING AGREEMENT
Pooling and Servicing Agreement dated as of November 1, 1996, among Bear
Stearns Mortgage Securities Inc., a Delaware corporation, as the seller (the
"Seller"), Headlands Mortgage Company, a California corporation ("Headlands"),
as master servicer (the "Master Servicer"), and The Bank of New York, a banking
corporation organized under the laws of New York, as trustee (the "Trustee").
PRELIMINARY STATEMENT
On or prior to the Closing Date, the Seller has acquired the
Mortgage Loans from Headlands. 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. Headlands will be the Master Servicer for the
Mortgage Loans.
The Trustee shall make an election for the assets constituting
REMIC TRUST II to be treated for federal income tax purposes as a REMIC. On
November 27, 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 and Class R-2 will
be designated "regular interests" in such REMIC and the Class R-1 Certificates
will be designated the "residual interest" in such REMIC.
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 $176,477,377. 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 A-8 Certificate, the Class
A-8 Notional Amount and, in the case of a Class X Certificate, the Class X
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 December of each year that the Certificates are outstanding, commencing in
December 1997.
APPLICABLE CREDIT RATING: A rating of Aaa or AAA, in the case of
Moody's or Fitch, respectively, for any long-term deposit or security or a
rating of P-1, in the case of Moody's, or F-1+ in the case of Fitch, for any
short-term deposit or security.
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, November 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 4.2(d) and 4.4(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 after the related
Prepayment Period 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 Nonrecoverable Advances;
(vi) amounts permitted to be withdrawn from the
Certificate Account pursuant to
Subsection 4.3(a); and
(vii) amounts withdrawn by the Trustee pursuant to
Subsection 4.3(b) to pay the
Trustee's Fee.
BANKRUPTCY CODE: The United States Bankruptcy Code, as amended,
as codified in 11 U.S.C.ss.ss. --------------- 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 FORMULA AMOUNT: As to each Anniversary Determination
Date, the greater of (i) $125,000 and (ii) the sum of (x) 0.25% of the Scheduled
Principal Balance of each Second Home Mortgage Loan and each Investor Mortgage
Loan remaining in the Trust with a Loan-to-Value Ratio greater than 80% and less
than or equal to 90%, (y) 0.50% of the Scheduled Principal Balance of each
Second Home Mortgage Loan and each Investor Mortgage Loan remaining in the Trust
with a Loan-to-Value Ratio greater than 90% and less than or equal to 95%, and
(z) 0.75% of the Scheduled Principal Balance of each Second Home Mortgage Loan
and each Investor Mortgage Loan remaining in the Trust with a Loan-to-Value
Ratio greater than 95%.
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
$125,000, 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 Bankruptcy Formula Amount for such Anniversary Determination Date.
The Bankruptcy Loss Amount may be further reduced by Headlands
(including accelerating the manner in which such coverage is reduced) provided
that prior to any such reduction, Headlands 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 5.7(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 5.2, 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 appropriately completed.
CERTIFICATE ACCOUNT: The trust account or accounts created and
maintained pursuant to Section 4.2, which shall be denominated "The Bank of New
York, as Trustee f/b/o holders of Bear Stearns Mortgage Securities Inc. Mortgage
Pass-Through Certificates, Series 1996-8 - 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
5.2.
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 Regular
Certificate.
CLASS A-8 NOTIONAL AMOUNT: On any Distribution Date, with respect
to the Class A-8 Certificates, an amount equal to the Current Principal Amount
of the Class A-7 Certificates as of the Due Date on the month prior to the month
of the Distribution Date.
CLASS A-11 OPTIMAL PRINCIPAL AMOUNT: With respect to any
Distribution Date occurring within the first five years after the Closing Date
1(i.e., prior to the Distribution Date in November 2001) zero. The Class 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 Closing Date, 50% of the Class A-11 Pro Rata Optimal Principal Amount for
such Distribution Date and, for any Distribution Date thereafter, 100% of the
Class 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-11 and Class
PO Certificates) has been reduced to zero, the Class 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-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 Current Principal Amount of the 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 X 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.
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: November 27, 1996.
CODE: The Internal Revenue Code of 1986, as amended.
COMPENSATING INTEREST PAYMENTS: As defined in Section 6.9.
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 101 Barclay Street,
12E, New York, New York 10286, Attention: Bear Stearns/Headlands 1996-8.
CORRESPONDING CLASS: As indicated in Section 5.1(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 A-8 Certificate or 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 A-8 Certificates and 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 4.4.
CUT-OFF DATE: November 1, 1996.
CUT-OFF DATE BALANCE: $176,477,377.
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.
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
5.1(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 5.1(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 15th 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 8.000% 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: The Bank Of New York, 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 8.1.
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 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.
FLOATING RATE CERTIFICATES: The Class A-7 Certificates and A-8
Certificates.
FNMA: Federal National Mortgage Association or any successor
thereto.
FRACTIONAL UNDIVIDED INTEREST: With respect to any Class of
Certificates other than the Class A-8 Certificates and 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 A-8 Certificates, the fractional undivided interest
evidenced by any Certificate of such Class, the numerator of which is the Class
X Notional Amount of such certificate and the denominator of which is the Class
X Notional Amount. With respect to the Class X Certificates, the fractional
undivided interest evidenced by any Certificate of such Class, the numerator of
which is the Class X Notional Amount of such Certificate and the denominator of
which is the Class X Notional Amount. With respect to the Certificates in the
aggregate, the fractional undivided interest evidenced by (i) a Class A-8
Certificate or a Class X Certificate will be deemed to equal 1% multiplied by a
fraction, the numerator of which is the Class A-8 Notional Amount or the Class X
Notional Amount, as the case may be, of such Certificate and the denominator of
which is the sum of the Class A-8 Notional Amount and the Class X Notional
Amount and (ii) a Certificate of any other Class will be deemed to equal 99%
(plus an additional 1% if and when the Class A-8 and 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
$5,294,321 minus the aggregate amount of Fraud Losses that would have been
allocated to the Subordinate Certificates in accordance with Section 6.3 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) 2.00% on the first anniversary and 1% on the second,
third or fourth anniversary of the Cut-Off Date of the aggregate Outstanding
Principal Balance of all of the Mortgage Loans as of the respective anniversary
minus (2) the Fraud Losses that would have been allocated to the Subordinate
Certificates in accordance with Section 6.3 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).
HEADLANDS: Headlands Mortgage Company, a California corporation,
or its successors in interest.
HOLDER: The Person in whose name a Certificate is registered in
the Certificate Register, except that, subject to Subsection 11.5(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.
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,
(i) for each Class of REMIC II Certificates and for each Class of Certificates,
other than the Floating Rate Certificates, the calendar month preceding the
month in which the Distribution Date occurs, commencing in November 1996 and
(ii) for the Floating Rate Certificates, the period commencing on the 25th day
of the month preceding such Distribution Date and ending on the 24th day of the
month of such Distribution Date commencing in November 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: The difference
between (i) one month's interest at the applicable Net Rate on
the amount of 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;
(b) principal prepayments in full received from the
16th day (or, in the case of the first Distribution Date, from
the Cut-Off Date) through the last day of the month preceding
such Distribution Date: 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.
INVESTOR MORTGAGE LOAN: Any Mortgage Loan secured by a non-owner
occupied property.
LIBOR: The London interbank offered rate for one-month United
States dollar deposits established on each LIBOR Determination Date pursuant to
Section 5.9.
LIBOR DETERMINATION DATE: December 23, 1996 and, with respect to
each month thereafter until the Current Principal Amount of the Class A-7
Certificates and the Class A-8 Notional Amount have been reduced to zero, the
second business day prior to the first day of the related Interest Accrual
Period for such Certificates. For purposes of this definition, "business day"
means a day on which banks are open for dealing in foreign currency and exchange
in London and New York City.
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 Subsection 6.7(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
6.3(d) hereof.
MASTER SERVICER: With respect to the Mortgage Loans, Headlands,
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 6.8.
MOODY'S: Moody's Investors Service, Inc. and its successors in
interest.
MORTGAGE FILE: The mortgage documents listed in Section 2.1(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 2.1 or Section 2.4 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 8.00%.
NON-PO PERCENTAGE: (i) with respect to any Discount Mortgage
Loan, the Net Rate thereof divided by 8.00%, 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 the Mortgage Loan
with respect to which the advance would be made.
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 2.2, 2.3 or 3.19 or replaced pursuant to Section
2.4.
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
5.1. 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 as evidenced in a written notice delivered
to the Trustee by the Master Servicer with a copy to the
Depositor and 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 R1 and Class R-2
Certificates and, to the extent provided in Section 5.2, 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 8.00% minus the Net Rate
thereof divided by 8.00%, 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, (i)
from the 16th day of the month preceding such Distribution Date (or, in the case
of the first Distribution Date, the Cut-off Date) through the 15th day of the
month of such Distribution Date with respect to any Mortgage Loan that was the
subject of a voluntary prepayment in full or (ii) from the first day through the
last day of the month preceding the month of such Distribution Date with respect
to any other unscheduled prepayment of principal.
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 4.1.
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: Moody's 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-1" or
better by Moody's and "A" or better by Fitch, or the highest short-term rating
by Moody's or one of the two highest short-term ratings by 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.
REFERENCE BANKS: At any time, one of the Banks acting as a
Reference Bank pursuant to Section --------------- 5.9.
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 5.1.
REMIC OPINION: An Opinion of Independent Counsel, to the effect
that the proposed action described therein would not, under the REMIC
Provisions, (i) cause REMIC I or REMIC II to fail to qualify as a REMIC while
any regular interest in REMIC I or REMIC II Trust 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 2.2 or 2.3 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 applicable Prepayment Period; provided that the
Scheduled Principal Balance of a Liquidated Mortgage Loan is zero.
SECOND HOME MORTGAGE LOAN: Any Mortgage Loan secured by an owner
occupied property which is not such owner's primary residence.
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 EXCEPT FOR A PLEDGE OR
REPURCHASE AGREEMENT AS 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.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
November 22, 1996, among Headlands, as seller, 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 2.2, 2.3(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 2.4 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 inclusive) Senior Prepayment Percentage
- --------------------------------------- ----------------------------------------
December 25, 1996 - November 25, 2001 100%
December 25, 2001 - November 25, 2002 Applicable Senior Percentage plus 70%
of the applicable Subordinate Percentage
December 25, 2002 - November 25, 2003 Applicable Senior Percentage plus 60%
of the applicable Subordinate Percentage
December 25, 2003 - November 25, 2004 Applicable Senior Percentage plus 40%
of the applicable Subordinate Percentage
December 25, 2004 - November 25, 2005 Applicable Senior Percentage plus 20%
of the applicable Subordinate Percentage
December 25, 2005 and thereafter Applicable Senior Percentage
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, 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 December 2001 and November 2002, (b) 35% of the related Original
Subordinate Principal Balance if such Distribution Date occurs between and
including December 2002 and November 2003, (c) 40% of the related Original
Subordinate Principal Balance if such Distribution Date occurs between and
including December 2003 and November 2004, (d) 45% of the related Original
Subordinate Principal Balance if such Distribution Date occurs between and
including December 2004 and November 2005, and (e) 50% of the related Original
Subordinate Principal Balance if such Distribution Date occurs during or after
December 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 3.7.
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.
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 $1,990,000 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 6.3 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: November 27, 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 2.2, 2.3(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 2.4 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 3.2.
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 3.2.
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: The Bank of New York, 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 2.1(a).
TRUSTEE: The Bank of New York, 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) 0.01% 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 0.01%.
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.
ARTICLE II.
Conveyance of Mortgage Loans;
Original Issuance of Certificates
Section 2.1 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 4.2(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
4.1(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 4.4(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 2.3(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: (x) 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; (y) in lieu of the original Security Instrument or
intervening assignments thereof or assumption or modification agreements 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 Headlands 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"; and (z)
in lieu of the Security Instrument, assignment to the Trustee or intervening
assignments thereof or assumption or modification agreements, if the original
has been lost or the applicable jurisdiction retains the originals of such
documents (as evidenced by a certification from Headlands 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 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 270 days after the Closing Date.
Section 2.2. 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 2.1 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 2.1, 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 Headlands.
Headlands shall correct or cure any such defect within 60 days from the date of
notice from the Trustee of the defect and if Headlands 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, Headlands,
will, subject to Section 2.4, 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 Headlands to deliver the original
Security Instrument or intervening assignments thereof or assumption or
modification agreement, or a certified copy because the originals of such
documents, or a certified copy have not been returned by the applicable
jurisdiction, Headlands shall not be required to purchase such Mortgage Loan if
Headlands delivers such original documents or certified copy promptly upon
receipt, but in no event later than 270 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 Headlands. Headlands shall correct or cure any such defect
within 60 days from the date of notice from the Trustee of the defect and if
Headlands 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, Headlands shall, subject to Section 2.4, 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
Headlands 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, Headlands
shall not be required to purchase such Mortgage Loan, if Headlands delivers such
original documents or certified copy promptly upon receipt, but in no event
later than 270 days after the Closing Date.
(c) In the event that a Mortgage Loan is purchased by
Headlands in accordance with Subsections 2.2(a) or (b) above, Headlands 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 Headlands the related Mortgage File and shall execute
and deliver all instruments of transfer or assignment, without recourse,
furnished to it by Headlands as are necessary to vest in Headlands 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 forward to
the Rating Agencies the Loan Summary and Remittance Report which reflects the
change to the Mortgage Loan Schedule. The obligation of Headlands 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 2.3. Representations, Warranties and Covenants of the
Master Servicer. (a) Headlands 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
contemplated 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
Headlands); provided that the obligations of Headlands 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, Headlands, 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. Headlands 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 2.4, 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
Headlands 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 Headlands to the extent not required by law to be paid to the borrower.)
Any such purchase by Headlands 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 Headlands the related Mortgage File and shall execute
and deliver all instruments of transfer or assignment furnished to it by
Headlands, without recourse, as are necessary to vest in Headlands 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 Headlands 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 2.4. Substitution of Mortgage Loans. Notwithstanding
anything to the contrary in this Agreement, in lieu of purchasing a Mortgage
Loan pursuant to Sections 2.2 or 2.3, Headlands may, no later than the date by
which such purchase by Headlands would otherwise be required, tender to the
Trustee a Substitute Mortgage Loan accompanied by an Officer's Certificate of
Headlands 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 2.4 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 2.2(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, Headlands 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 Headlands of the
Repurchase Price for the purchase of a Mortgage Loan by Headlands. After such
notification to Headlands 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 Headlands.
The Scheduled Principal on a Substitute Mortgage Loan due on the Due Date in the
month of substitution shall be the property of Headlands 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 Headlands the related
Mortgage File related to any Mortgage Loan released pursuant to this Section 2.4
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 Headlands title
to and rights under any Mortgage Loan released pursuant to this Section 2.4.
Headlands shall deliver the documents related to the Substitute Mortgage Loan in
accordance with the provisions of Subsections 2.1(b) and 2.2(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
Headlands 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 2.5. 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 corporation duly
organized, validly existing and in good standing under the
laws of the States of New York with a principal place of
business in New York, New York;
(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 By-Laws 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, when executed and
delivered, will constitute the valid, legal and binding
obligation of the Trustee, enforceable against the Trustee in
accordance with its 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 2.6. 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 2.7. 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.
ARTICLE III.
Administration and Servicing of Mortgage Loans
Section 3.1 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 3.1(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 Master Servicer shall prepare and the Trustee shall
execute 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 3.2. 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 Headlands 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.
(b) As part of its servicing activities hereunder, the Master
Servicer, for the benefit of the Trustee and the Certificateholders, 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 3.3. 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 3.4. 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 3.5.
Section 3.5. 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
8.2, the Trustee, to the extent necessary to permit the Trustee to carry out the
provisions of Section 8.2 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 8.2, 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 3.6. 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 3.7. 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 Headlands
(and its successors and assigns) acting on its own behalf and for Headlands 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 10.1.
Section 3.8. 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 3.9. 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 4.3.
(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 4.3.
(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 3.6 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 4.3) 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) to the extent that transfers or withdrawals from
the Certificate Account with respect thereto are permitted under Section 4.3.
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 2.2(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, affect the REMIC status of the Trust 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 may retain, as additional servicing
compensation, amounts in respect of interest paid by borrowers in connection
with any principal prepayment in full received by the Master Servicer from the
first day through the 15th day of each month, other than the month of the
Cut-off Date. 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 3.7,
3.15, 4.1, 4.2, 4.3 and 4.4 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 Headlands 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 a
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 2.4, accept any contribution to
REMIC I and 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.
ARTICLE IV.
Accounts
Section 4.1. 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 4.1, 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, Net 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 4.1 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 4.1(b) or 4.3(c), or Section 4.4; 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 10.1.
(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 4.2. 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 Headlands pursuant to Sections 2.2
or 2.3 or by the Master Servicer pursuant to Section 3.19, any
amounts which are to be treated pursuant to Section 2.4 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 10.1 which were not deposited in a Protected Account
or the Custody Account;
(v) Any amounts required to be deposited with
respect to losses on Permitted
Investments pursuant to Subsection 4.2(d) or Section 4.4(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) 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 4.2 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 4.3. 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;
(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 4.3(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 4.3(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
4.3(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 4.3(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 3.7,
3.9 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 2.2,
2.3, 2.4, 3.19 or 10.1, 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 7.4(d);
(xii) to clear and terminate the Certificate
Account pursuant to Section 10.1; and
(xiii) 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 6.1.
(c) Notwithstanding the provisions of this Section 4.3, 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 4.4. 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 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. The Custody Account shall be
an outside reserve fund of the 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, 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
Headlands.
(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 4.1(b) or 4.4(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 10.1.
(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 4.1(b) and shall be held in such Account until required for such
deposit. The income earned from Permitted Investments made pursuant to this
Section 4.4 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.
ARTICLE V.
Certificates
Section 5.1. Certificates. (a) The Depository, the Seller and the
Trustee have entered into a Depository Agreement dated as of November 27, 1996
(the "Depository Agreement"). Except for the Physical Certificates, the
Individual Certificates and as provided in Subsection 5.1(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:
Corresponding Class of
Certificates (1)
Allocation Allocation Allocation
REMIC II Initial Pass-Through of of
Certificates Balance Rate Principal Interest
II-A-1 $ 5,955,000 7.25% A-1 A-1
II-A-2 $14,560,000 6.40% A-2 A-2
II-A-3 $ 3,301,000 11.00% A-3 A-3
II-A-4 $ 8,618,000 7.25% A-4 A-4
II-A-5 $15,462,000 7.25% A-5 A-5
II-A-6 $13,481,000 7.25% A-6 A-6
II-A-7 $51,135,000 9.00% A-7 (2)
II-A-8 $12,277,000 7.60% A-9 A-9
II-A-9 $10,936,800 8.00% A-10 A-10
II-A-10 $26,250,638 8.00% A-11 A-11
II-PO $ 323,739 (3) PO N/A
II-B-1 $ 5,735,000 8.00% B-1 B-1
II-B-2 $ 3,088,000 8.00% B-2 B-2
II-B-3 $ 2,383,000 8.00% B-3 B-3
II-B-4 $ 1,235,000 8.00% B-4 B-4
II-B-5 $ 353,000 8.00% B-5 B-5
II-B-6 $ 883,000 8.00% B-6 B-6
II-X N/A (4) N/A X
II-R-1 $ 100 8.00% R-1 R-1
R-2 $ 100 8.00% N/A N/A(5)
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(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) Interest in excess of the Pass-Through Rate for Class A-7 will be
allocated to the Class A-8 Certificates. All remaining interest will be
allocated to the Class A-7 Certificates.
(3) The Class II-PO Certificate will be a principal only Certificate and
will not bear interest.
(4) The Class II-X will be entitled to receive all interest on the
Mortgage Loans in excess of 8.00%
(5) 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:
Initial Principal Pass-Through
Designation Amount Rate
A-1 $ 5,955,000 7.25%
A-2 $14,560,000 6.40%
A-3 $ 3,301,000 11.00%
A-4 $ 8,618,000 7.25%
A-5 $15,462,000 7.25%
A-6 $13,481,000 7.25%
A-7 $51,135,000 (1)
A-8 (2) (2)
A-9 $12,777,000 7.60%
A-10 $10,936,800 8.00%
A-11 $26,250,638 8.00%
PO $ 323,739 (3)
X (4) (4)
B-1 $ 5,735,000 8.00%
B-2 $ 3,088,000 8.00%
B-3 $ 2,383,000 8.00%
B-4 $ 1,235,000 8.00%
B-5 $ 353,000 8.00%
B-6 $ 883,000 8.00%
R-1 $ 100 8.00%
R-2 $ 100 .8.00%
* Original Notional Amount
(1) The Class A-7 Certificates will bear interest at 5.875% per annum
during the first Interest Accrual Period. During each Interest Accrual
Period thereafter, the Class A-7 Certificates will bear interest,
subject to a maximum rate of 9.00% per annum and a minimum rate of
0.50% per annum, at a rate per annum equal to 0.50% in excess of LIBOR.
(2) The Class A-8 Certificates will bear interest at 3.125% per annum
during the first Interest Accrual Period. During each Interest Accrual
Period thereafter, the Class A-8 Certificates will bear interest,
subject to a maximum rate of 8.50% per annum and a minimum rate of 0%
per annum, at a rate per annum equal to 8.50% - LIBOR.
(3) The Class PO Certificates are principal only Certificates and will not
bear interest.
(4) The Class X Certificates will bear interest on the Class X Notional
Amount at a variable Pass-Through Rate equal to a fraction, the
numerator of which is equal to the product of (a) the Scheduled
Principal Balances of the Non-Discount Mortgage Loans and (b) the
excess of (x) the weighted average of the Net Rates of the Non-Discount
Mortgage Loans over (y) 8. 00% per annum and the denominator of which
is equal to the Scheduled Principal Balances of the Mortgage Loans.
(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, Class A-8 Notional Amount or Class X 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
Definitive 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, in
the caseof all Book-Entity Certificates except Class A-8 Certificates, and
minimum notional denomination of $500,000, in the case of Class A-8 Certificates
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 (or Class A-8 Notional Amount in the case of the Class A-8
Certificates) 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 (or Class
A-8 Notional Amount in the case of the Class A-8 Certificates). 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 Certificates and
the Class B-4, Class B-5 and Class B-6 Certificates will be issued in
certificated fully-registered form in minimum denominations of $1,000,000 and
$25,000, respectively, 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 Class X Notional Amount in the case of
the Class X Certificates) of such Class on the Closing Date. The Class R
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 November 25, 2027.
Section 5.2. 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 5.1(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 5.2(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 5.2(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 5.2(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 5.2(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.(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 5.2(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 5.2(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 5.2, 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 (A) the Class A-8
Certificates, which shall be at least $500,000 and (B) 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 PO and
Class X Certificate, whether upon original issuance or upon issuance of any
other Class PO or 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 B
Certificate, 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 5.2, (j), (k)
and (m), the Class PO and Class X Certificates may be transferred without
provision of any additional documents to the Trustee.
Section 5.3. 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 5.3, 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 5.3 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 5.4. 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
6.1 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 5.5. 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 5.5(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 5.5(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 5.5(b), then the prior Holder
thereof shall, upon discovery that the transfer of such Residual Certificate was
not in fact permitted by this Subsection 5.5(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 5.5(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 5.5(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 5.5(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 REMIC I or REMIC II 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 5.6. Restrictions on Transferability of Private
Certificates. (a) No offer, sale, transfer or other disposition 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 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. Notwithstanding the
foregoing, the requirement of an Investment Letter, Rule 144A Certificate or
Opinion of Counsel shall not be applicable in the case of a pledge to, or
repurchase agreement with, an Institutional Accredited Investor or Qualified
Institutional Buyer or Affiliate thereof unless such Institutional Accredited
Investor or Qualified Institutional Buyer or Affiliate thereof forecloses on the
applicable Private Certificate or requests registration of the applicable
Private Certificate of its name or the name of its nominee.
(b) Each Class B-4, Class B-5 and Class B-6 Certificate
shall bear a Securities Legend.
Section 5.7. ERISA Restrictions. (a) Subject to the provisions of
subsection (b), no Class PO, Class X 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. ' 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 (i) will result in a prohibited transaction under Section 406 of ERISA
or Section 4975 of the Code which is not 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 or (ii) 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 PO or 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 PO or Class X Certificates,
respectively, 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 5.7(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 5.8. 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.
Section.5.9. Calculation of LIBORSection 5.9. Calculation of
LIBOR. On each LIBOR Determination Date, until the Current Principal Amount of
the Class A-7 Certificates and the Class A-8 Notional Amount have been reduced
to zero, the Trustee will either (i) request each Reference Bank to inform the
Trustee of the quotation offered by its principal London office for making
one-month United States dollar deposits in leading banks in the London interbank
market as of 11:00 a.m. (London time) on such LIBOR Determination Date, or (ii)
in lieu of making a request of the Reference Banks, the Trustee may rely on the
quotations for those Reference Banks that appear at such time on the page (the
"Relevant Screen Page") whatever its designation on which LIBOR is for the time
being displayed on the Reuters Monitor Money Rate Service on the appropriate
Association Press-Dow Jones Telerate Service, to the extent available.
LIBOR for the next Interest Accrual Period will be established by the
Trustee on each LIBOR Determination Date as follows:
(a) If on any LIBOR Determination Date two or more Reference
Banks provide such offered quotations, LIBOR for the next Interest Accrual
Period shall be the arithmetic mean of such offered quotations (rounded upwards
if necessary to the nearest whole multiple of 1/32%).
(b) If on any LIBOR Determination Date only one or more of the
Reference Banks provides such offered quotations, LIBOR for the next Interest
Accrual Period shall be whichever is the higher of (i) LIBOR as determined on
the previous LIBOR Determination Date or (ii) the Reserve Interest Rate. The
"Reserve Interest Rate" shall be the rate per annum which the Trustee determines
to be either (i) the arithmetic mean (rounded upwards if necessary to the
nearest whole multiple of 1/32%) of the one-month United States dollar lending
rates that New York City banks selected by BSMSI are quoting, on the relevant
LIBOR Determination Date, to the principal London of at least two of the
Reference Banks to which such quotations are, in the opinion of the Trustee,
being so made, or (ii) in the event that the Trustee can determine no such
arithmetic mean, the lowest one-month United States dollar lending rate which
New York City banks selected by BSMSI are quoting on such LIBOR Determination
Date to leading European banks.
(c) If on the December 23, 1996 LIBOR Determination Date, the
Trustee is required but is unable to determine the Reserve Interest Rate in the
manner provided in paragraph (b) above, LIBOR shall be 5.375%.
Until all of the Floating Rate Certificates are paid in full, BSMSI
will at all times retain at least four Reference Banks for the purpose of
determining LIBOR with respect to each LIBOR Determination Date and shall inform
the Trustee of which Reference Banks they have retained. Each Reference Bank
shall (i) be a lending bank engaged in transactions in Eurodollar deposits in
the international Eurocurrency market, (ii) not control, be controlled by, or be
under common control with BSMSI, and (iii) have an established place of business
in London. If any such Reference Bank should be unwilling or unable to act as
such or if BSMSI should terminate the appointment of any such Reference Bank,
BSMSI will promptly appoint another leading bank meeting the criteria specified
above. Neither BSMSI nor the Trustee shall have any liability or responsibility
to any Person for (i) the selection of any Reference Bank for purposes of
determining LIBOR or (ii) any liability to retain at least four Reference Banks
which is caused by circumstances beyond their reasonable control.
The Pass-Through Rates on the Floating Rate Certificates for each
Interest Accrual Period shall be determined by the Trustee on each LIBOR
Determination Date so long as such Floating Rate Certificates are outstanding on
the basis of LIBOR and the respective formulae appearing in footnotes (1) and
(2) to the tables in Section 5.1(c).
In determining LIBOR and any Pass-Through Rate for the Floating Rate
Certificates, the Trustee may conclusively and shall be protected in relying
upon the offered quotations (whether written, oral or on the Relevant Screen
Page) from the Reference Banks or the New York City banks as to LIBOR or the
Reserve Interest Rate, as appropriate, in effect from time to time. Neither
BSMSI nor the Trustee shall have any liability or responsibility to any Person
for (i) BSMSI's selection of New York City banks for purposes of determining any
Reserve Interest Rate or (ii) the Trustee's liability, following a good-faith
reasonable effort, to obtain such quotations from the Reference Banks or the New
York City banks or to determine such arithmetic mean, all as provided for in
this Section 5.9.
The establishment of LIBOR and each Pass-through Rate for the Floating
Rate Certificates by the Trustee shall (in the absence of manifest error) be
final, conclusive and binding upon such Holder of a Certificate and BSMSI and
their successors and assigns.
ARTICLE VI.
Payments to Certificateholders
Section 6.1. Distributions on the Certificates. ertificates
(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;
(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 A-8 Certificates and the Class X Certificates) in
reduction of the Current Principal Amounts thereof;
(a) the Senior Optimal Principal Amount, in the following order
of priority:
(i) to the Class A-11 Certificates up to the Class
A-11 Optimal Principal Amount for such Distribution Date,
until the Current Principal Amount of the Class A-11
Certificates have been reduced to zero;
(ii) concurrently, to the Class R-1 and Class R-2
Certificates, pro rata, based upon their Current Principal
Amount, until the Current Principal Amount of the Class R-1
and Class R-2 Certificates have been reduced to zero;
(iii) concurrently, 14.28948505% to the Class A-1
Certificates, 34.93785094% to the Class A-2 Certificates,
7.9210059% to the Class A-3 Certificates and 42.85165811% to
the Class A-7 Certificates, until the Current Principal
Amounts of the Class A-1, Class A-2 and Class A-3 Certificates
have been reduced to zero;
(iv) concurrently, 57.14854111% to the Class A-4
Certificates and 42.85145889% to the Class A-7 Certificates,
until the Current Principal Amount of the Class A-4
Certificates has been reduced to zero;
(v) concurrently, 57.14602506% to the Class A-5
Certificates and 42.85397494% to the Class A-7 Certificates,
until the Current Principal Amount of the Class A-4
Certificates has been reduced to zero;
(vi) concurrently, 57.14467382% to the Class A-6
Certificates and 42.85532618% to the Class A-7 Certificates,
until the Current Principal Amount of the Class A-5
Certificates has been reduced to zero;
(vii) concurrently, 71.43176609% to the Class A-9
Certificates and 28.56823391% to the Class A-7 Certificates,
until the Current Principal Amounts thereof have been reduced
to zero;
(viii) to the Class A-10 Certificates until the
Current Principal Amount thereof has been
reduced to zero; and
(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 the REMIC Trust after payment of interest and principal, as
described above, will be distributed to the Class R-2 Certificate.
(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 A-8,
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 6.1(a).
(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 6.1
(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 Class A Notional Amount or Class X Notional
Amount) of such Certificate has been reduced to zero.
Section 6.2. [Reserved]
Section 6.3. Allocation of Losses. n o(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.
(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 6.3(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 6.3(e) shall be
accomplished by reducing the Current Principal Amount of the related
Certificates on the related Distribution Date in accordance with Subsection
6.3(f).
(f) Realized Losses allocated in accordance with this Section
6.3 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 Cross-Over
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 6.4. [Reserved]
Section 6.5. 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 6.5(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 Class A-8 Notional Amount or
Class X 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 6.6. 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 A-8 Certificate, a Class A-8
Notional Amount of $1,000, or, in the case of Class X Certificates, a Class X
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 A-7, A-8 and X Pass-Through Rates
with respect to such Distribution
Date;
(vii) the Current Principal Amount and/or Class A-8
Notional Amount or Class X 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 6.5(a) and, with respect to prior
periods, Section 6.6, 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 6.7. 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 4.2 and each category of withdrawal specified in
Section 4.3, 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) Aggregate Scheduled Principal Balance of
the Mortgage Loans as of the related
Due Date;
(vi) 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;
(vii) 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;
(viii) Interest Shortfall with respect to the related
Distribution Date and portion thereof resulting from the
provisions of the Relief Act;
(ix) 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;
(x) Aggregate Master Servicing Fee for the
related Due Period; and
(xi) 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) 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 6.8. 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 6.9. 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 least
of (i) the aggregate amounts determined pursuant to subclauses (a) and (b) of
the definition of Interest Shortfall for the related Distribution Date, (ii) the
Master Servicing Fee for such Distribution Date and (iii) 1/12 of 0.125% of the
Scheduled Principal Balances of the Mortgage Loans 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.
ARTICLE VII.
The Master Servicer
Section 7.1. 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 7.2. 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 7.3. 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 any loss, liability or expense incurred by reason of
such Person's willful misfeasance, bad faith or 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 7.3, 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 7.4. 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 7.3:
(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 4.3(a). Nothing in this Subsection 7.4(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 3.1(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 7.5. Master Servicer Not to Resign. Except as provided in
Section 7.7, 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 8.2 hereof. The
Trustee shall notify the Rating Agencies of the resignation of the Master
Servicer.
Section 7.6. [Reserved]
Section 7.7. 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.
ARTICLE VIII.
Default
Section 8.1. 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 7.5 or 7.7.
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 8.2,
automatically and without further action pass to and be vested in the Trustee
pursuant to this Section 8.1; 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 8.2. Trustee to Act; Appointment of Successor. (a) Upon
the receipt by the Master Servicer of a notice of termination pursuant to
Section 8.1 or an Opinion of Independent Counsel pursuant to Section 7.5 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. 1; 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 8.2(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 8.3. 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 8.4. 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 8.5. 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 send to such Certificateholders a list of all Certificateholders on
its register.
ARTICLE IX.
Concerning the Trustee
Section 9.1. 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 6.1 and 10.1
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 9.2. 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, instrument,
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 4.2(b) or Section 4.3, 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
Headlands pursuant to this Agreement or the eligibility of any
Mortgage Loan for purposes of this Agreement.
Section 9.3. 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 2.2 and 2.5 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 2.5, 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 9.4. 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 9.5. 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 4.3(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 9.6. 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 New York 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 9.6
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 9.6, the Trustee shall resign
immediately in the manner and with the effect specified in Section 9.8.
Section 9.7. 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 9.7 shall be
furnished to the Master Servicer or any Certificateholder upon request.
Section 9.8. 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 9.8
shall become effective except upon appointment of and acceptance of such
appointment by the successor Trustee as provided in Section 9.9.
Section 9.9. Successor Trustee. (a) Any successor Trustee
appointed as provided in Section 9.8 shall execute, acknowledge and deliver to
the Master Servicer and to its predecessor 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 9.9 unless at the time of such acceptance such successor Trustee
shall be eligible under the provisions of Section 9.6.
(c) Upon acceptance of appointment by a successor Trustee as
provided in this Section 9.9, 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
9.6. 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
9.6 hereunder and no notice to Certificateholders of the appointment of
co-trustee(s) or separate trustee(s) shall be required under Section 9.8 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 Required67. 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.
' 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 5.5(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 5.5(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.
ARTICLE X.
Termination
Section 10.1. Termination Upon Repurchase by Headlands or its
Designee or Liquidation of All Section 10.1.s Termination Upon Repurchase by
Headlands or its Designee or Liquidation of All Mortgage Loans. (a) Subject to
Section 10.2, 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 10.1(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 preceding 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 10.1(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 Certificateholders 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 Certificateholders in trust without interest pending final
distributions pursuant to Subsection 10.1(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
10.1(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 10.1(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 10.2. Additional Termination Requirements. (a) If the
option of the Master Servicer to repurchase all the Mortgage Loans under
Subsection 10.1(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 10.2 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 Headlands;
(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 each of REMIC I and REMIC II.
ARTICLE XI.
Miscellaneous Provisions
Section 11.1. 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 11.2. 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 11.2(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 11.3. 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 11.4. 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 11.4, each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
Section 11.5. 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 11.5.
(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 5.2 made on a Certificate presented in
accordance with Section 5.4) 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 11.6. [Reserved].
Section 11.7. 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 11.8. 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 Headlands, 700 Larkspur Landing Circle, Suite 250, Larkspur, California 94939
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, Moody's, 99 Church Street,
New York, New York 10007 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 11.9. 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:
<PAGE>
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 6.6 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 6.6; and
2. Each annual independent public accountants' servicing report
received as described in Section 3.16.
IN WITNESS WHEREOF, the Seller, Headlands 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
By: /s/ Joseph T. Jurkowski
Name: Joseph T. Jurkowski
Title: Vice President
HEADLANDS MORTGAGE COMPANY,
as Master Servicer
By: /s/ Becky S. Poisson
Name: Becky S. Poisson
Title: Executive Vice President
THE BANK OF NEW YORK
as Trustee
By: /s/ Franklin Austin
Name: Franklin Austin
Title: Assistant Treasurer
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 27th day of November, 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
[Notarial Seal]
<PAGE>
STATE OF CALIFORNIA )
) ss.:
COUNTY OF MARIN )
On the 27th day of November, 1996 before me, a notary public
in and for said State, personally appeared Becky S. Poisson an Executive Vice
President of Headlands Mortgage Company, 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/ L. J. Workman
Notary Public
[Notarial Seal]
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 27th day of November, 1996 before me, a notary public
in and for said State, personally appeared , known to me to be of The Bank of
New York, the 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
[Notarial Seal]
<PAGE>
EXHIBIT A-1
FORM OF FACE OF CERTIFICATES
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
BEAR STEARNS MORTGAGE SECURITIES INC., HEADLANDS MORTGAGE COMPANY 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 1996-8
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 SL 8
Cut-Off Date : November 1, 1996 Class :A-1
First Distribution Date : December 25, 1996 Initial Principal
Assumed Final Amount of this
Distribution Date : November 25, 2027 Certificate ("Denomination"):
Master Servicer : Headlands Mortgage Approximate Original
Company Class Principal
Pass-Through Rate : 7.25% Amount :$5,955,000
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 Headlands Mortgage Company to BSMSI. Headlands 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, Headlands, as Master Servicer, and The Bank of New York, 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.
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:
THE BANK OF NEW YORK,
Countersigned: Not in its individual capacity but
solely as Trustee
By
By_________________________________
Authorized signatory of The Bank
of New York, not in its AUTHORIZED OFFICER
individual capacity but solely as
Trustee
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
BEAR STEARNS MORTGAGE SECURITIES INC., HEADLANDS MORTGAGE COMPANY 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 1996-8
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 SM 6
Cut-Off Date : November 1, 1996 Class :A-2
First Distribution Date : December 25, 1996 Initial Principal
Assumed Final Amount of this
Distribution Date : November 25, 2027 Certificate ("Denomination"):
Master Servicer : Headlands Mortgage Approximate Original
Company Class Principal
Pass-Through Rate : 6.40% Amount : $14,560,000
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 Headlands Mortgage Company to BSMSI. Headlands 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, Headlands, as Master Servicer, and The Bank of New York, 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.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
DATED: THE BANK OF NEW YORK,
Countersigned: Not in its individual capacity but
solely as Trustee
By____________________________________ By
Authorized signatory of The Bank of AUTHORIZED OFFICER
New York, not in its individual
capacity but solely as Trustee
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
BEAR STEARNS MORTGAGE SECURITIES INC., HEADLANDS MORTGAGE COMPANY 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 1996-8
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 SN 4
Cut-Off Date : November 1, 1996 Class :A-3
First Distribution Date : December 25, 1996 Initial Principal
Assumed Final Amount of this
Distribution Date : November 25, 2027 Certificate ("Denomination"):
Master Servicer : Headlands Mortgage Approximate Original
Company Class Principal
Pass-Through Rate : 11.00% Amount : $3,301,000
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 Headlands Mortgage Company to BSMSI. Headlands 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, Headlands, as Master Servicer, and The Bank of New York, 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.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
THE BANK OF NEW YORK,
Countersigned: Not in its individual capacity but solely
as Trustee
By
By__________________________
Authorized signatory of The
Bank of New York, not in its AUTHORIZED OFFICER
individual capacity but solely
as Trustee
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
BEAR STEARNS MORTGAGE SECURITIES INC., HEADLANDS MORTGAGE COMPANY 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 1996-8
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 SP 9
Cut-Off Date : November 1, 1996 Class :A-4
First Distribution Date : December 25, 1996 Initial Principal
Assumed Final Amount of this
Distribution Date : November 25, 2027 Certificate ("Denomination"):
Master Servicer : Headlands Mortgage Approximate Original
Company Class Principal
Pass-Through Rate : 7.25% Amount : $8,618,000
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 Headlands Mortgage Company to BSMSI. Headlands 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, Headlands, as Master Servicer, and The Bank of New York, 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.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
THE BANK OF NEW YORK,
Countersigned: Not in its individual capacity but solely
as Trustee
By
By______________________________
Authorized signatory of The
Bank of New York, not in its AUTHORIZED OFFICER
individual capacity but solely
as Trustee
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
BEAR STEARNS MORTGAGE SECURITIES INC., HEADLANDS MORTGAGE COMPANY 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 1996-8
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 SQ 7
Cut-Off Date : November 1, 1996 Class :A-5
First Distribution Date : December 25, 1996 Initial Principal
Assumed Final Amount of this
Distribution Date : November 25, 2027 Certificate ("Denomination"):
Master Servicer : Headlands Mortgage Approximate Original
Company Class Principal
Pass-Through Rate : 7.25% Amount : $15,462,000
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 Headlands Mortgage Company to BSMSI. Headlands 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, Headlands, as Master Servicer, and The Bank of New York, 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.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
THE BANK OF NEW YORK,
Countersigned: Not in its individual capacity but solely
as Trustee
By
By_____________________________
Authorized signatory of The
Bank of New York, not in its AUTHORIZED OFFICER
individual capacity but solely
as Trustee
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
BEAR STEARNS MORTGAGE SECURITIES INC., HEADLANDS MORTGAGE COMPANY 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-6-1 SERIES 1996-8
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 SR 5
Cut-Off Date : November 1, 1996 Class :A-6
First Distribution Date : December 25, 1996 Initial Principal
Assumed Final Amount of this
Distribution Date : November 25, 2027 Certificate ("Denomination"):
Master Servicer : Headlands Mortgage Approximate Original
Company Class Principal
Pass-Through Rate : 7.250% Amount : $13,481,000
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 Headlands Mortgage Company to BSMSI. Headlands 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, Headlands, as Master Servicer, and The Bank of New York, 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.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
THE BANK OF NEW YORK,
Countersigned: Not in its individual capacity but solely
as Trustee
By
By______________________________
Authorized signatory of The
Bank of New York, not in its AUTHORIZED OFFICER
individual capacity but solely
as Trustee
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
BEAR STEARNS MORTGAGE SECURITIES INC., HEADLANDS MORTGAGE COMPANY 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 1996-8
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 SS 3
Cut-Off Date : November 1, 1996 Class :A-7
First Distribution Date : December 25, 1996 Initial Principal
Assumed Final Amount of this
Distribution Date : November 25, 2027 Certificate ("Denomination"):
Master Servicer : Headlands Mortgage Approximate Original
Company Class Principal
Pass-Through Rate : Floating Rate Amount : $51,135,000
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 Headlands Mortgage Company to BSMSI. Headlands 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, Headlands, as Master Servicer, and The Bank of New York, 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. During the first Interest Accrual Period this Class A-7 Certificate will
bear interest at a rate of 5.875% per annum. During each Interest Accrual Period
thereafter, it will bear interest, subject to a maximum rate of 9.0% per annum
and a minimum rate of 0.50% per annum, at a rate equal to 0.50% in excess of the
London interbank offered rate for one month U.S. dollar deposits, as more fully
described in the Agreement. 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.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
THE BANK OF NEW YORK,
Countersigned: Not in its individual capacity but solely
as Trustee
By
By___________________________
Authorized signatory of The
Bank of New York, not in its AUTHORIZED OFFICER
individual capacity but solely
as Trustee
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
BEAR STEARNS MORTGAGE SECURITIES INC., HEADLANDS MORTGAGE COMPANY 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 NOVEMBER
27, 1996 AT A PRICE EQUAL TO 4.50% OF ITS ORIGINAL NOTIONAL BALANCE. 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 $47.56 PER $1,000,000 OF ITS ORIGINAL
NOTIONAL BALANCE. THE MONTHLY YIELD TO MATURITY OF THIS CERTIFICATE EXPRESSED ON
AN ANNUAL BASIS IS APPROXIMATELY 43.36%, AND THE AMOUNT OF OID ALLOCABLE TO THE
SHORT FIRST ACCRUAL PERIOD (NOVEMBER 27, 1996 THROUGH DECEMBER 25, 1996) IS
$1.52 PER $1,000,000 OF ITS ORIGINAL NOTIONAL BALANCE. 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 NOTIONAL AMOUNT OF THIS CERTIFICATE WILL DECREASE BY THE PRINCIPAL
AMOUNT OF THE MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1996-8, CLASS A-7
ISSUED PURSUANT TO THE AGREEMENT REFERRED TO BELOW DECLINES. ACCORDINGLY,
FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE CURRENT NOTIONAL AMOUNT
OF THIS CERTIFICATE WILL BE DIFFERENT FROM THE DENOMINATION SHOWN BELOW. ANYONE
ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CURRENT NOTIONAL 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.
THE YIELD TO THE HOLDER OF THIS CERTIFICATE WILL BE EXTREMELY SENSITIVE TO
THE RATE OF PRINCIPAL PAYMENTS ON THE MORTGAGE LOANS AND TO THE LEVEL OF LIBOR
(AS DEFINED BELOW).
MORTGAGE PASS-THROUGH CERTIFICATE,
No. A-8-1 SERIES 1996-8
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 ST 1
Cut-Off Date : November 1, 1996 Class :A-8
First Distribution Date : December 25, 1996 Initial Principal
Assumed Final Amount of this
Distribution Date : November 25, 2027 Certificate ("Denomination"):
Master Servicer : Headlands Mortgage Approximate Original
Company Class Principal
Pass-Through Rate : Floating Rate Amount : $51,135,000
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 Headlands Mortgage Company to BSMSI. Headlands 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, Headlands, as Master Servicer, and The Bank of New York, 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 Notional Amount hereof at a per annum rate equal to the Pass-Through
Rate. During the first Interest Accrual Period this Class A-8 Certificate will
bear interest at a rate of 3.125% per annum. During each Interest Accrual Period
thereafter, it will bear interest, subject to a maximum rate of 8.50% per annum
and a minimum rate of 0% per annum, at a rate equal to 8.50% - LIBOR. LIBOR
shall mean the London interbank offered rate for one-month U.S. dollar deposits
as more fully described in the Agreement. 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 Notional 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.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated:
THE BANK OF NEW YORK,
Countersigned: Not in its individual capacity but solely
as Trustee
By
By________________________________
Authorized signatory of The
Bank of New York, not in its AUTHORIZED OFFICER
individual capacity but solely
as Trustee
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
BEAR STEARNS MORTGAGE SECURITIES INC., HEADLANDS MORTGAGE COMPANY 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 1996-8
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 SU 8
Cut-Off Date : November 1, 1996 Class :A-9
First Distribution Date : December 25, 1996 Initial Principal
Assumed Final Amount of this
Distribution Date : November 25, 2027 Certificate ("Denomination"):
Master Servicer : Headlands Mortgage Approximate Original
Company Class Principal
Pass-Through Rate : 7.60% Amount : $12,777,000
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 Headlands Mortgage Company to BSMSI. Headlands 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, Headlands, as Master Servicer, and The Bank of New York, 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.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
THE BANK OF NEW YORK,
Countersigned: Not in its individual capacity but solely
as Trustee
By
By____________________________
Authorized signatory of The
Bank of New York, not in its AUTHORIZED OFFICER
individual capacity but solely
as Trustee
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
BEAR STEARNS MORTGAGE SECURITIES INC., HEADLANDS MORTGAGE COMPANY 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 1996-8
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 SV 6
Cut-Off Date : November 1, 1996 Class :A-10
First Distribution Date : December 25, 1996 Initial Principal
Assumed Final Amount of this
Distribution Date : November 25, 2027 Certificate ("Denomination"):
Master Servicer : Headlands Mortgage Approximate Original
Company Class Principal
Pass-Through Rate : 8.00% Amount : $10,936,000
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 Headlands Mortgage Company to BSMSI. Headlands 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, Headlands, as Master Servicer, and The Bank of New York, 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.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
THE BANK OF NEW YORK,
Countersigned: Not in its individual capacity but solely
as Trustee
By
By___________________________
Authorized signatory of The
Bank of New York, not in its AUTHORIZED OFFICER
individual capacity but solely
as Trustee
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
BEAR STEARNS MORTGAGE SECURITIES INC., HEADLANDS MORTGAGE COMPANY 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 1996-8
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 SW 4
Cut-Off Date : November 1, 1996 Class :A-11
First Distribution Date : December 25, 1996 Initial Principal
Assumed Final Amount of this
Distribution Date : November 25, 2027 Certificate ("Denomination"):
Master Servicer : Headlands Mortgage Approximate Original
Company Class Principal
Pass-Through Rate : 8.00% Amount : $26,250,638
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 Headlands Mortgage Company to BSMSI. Headlands 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, Headlands, as Master Servicer, and The Bank of New York, 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.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
THE BANK OF NEW YORK,
Countersigned: Not in its individual capacity but solely
as Trustee
By
By___________________________
Authorized signatory of The
Bank of New York, not in its AUTHORIZED OFFICER
individual capacity but solely
as Trustee
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
BEAR STEARNS MORTGAGE SECURITIES INC., HEADLANDS MORTGAGE COMPANY 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. ' 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 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 NOVEMBER
27, 1996 AT A PRICE EQUAL TO 56.00% 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 $440.00 PER $1,000,000 OF ITS ORIGINAL
PRINCIPAL BALANCE. THE MONTHLY YIELD TO MATURITY OF THIS CERTIFICATE EXPRESSED
ON AN ANNUAL BASIS IS APPROXIMATELY 14.41%, AND THE AMOUNT OF OID ALLOCABLE TO
THE SHORT FIRST ACCRUAL PERIOD (NOVEMBER 27, 1996 THROUGH DECEMBER 25, 1996) IS
$6.27 PER $1,000,000 OF ITS ORIGINAL PRINCIPAL BALANCE. 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 CERTIFICATE 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 1996-8
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 SX 2
Cut-Off Date : November 1, 1996 Class :PO
First Distribution Date : December 25, 1996 Initial Principal
Assumed Final Amount of this
Distribution Date : November 25, 2027 Certificate ("Denomination"):
Master Servicer : Headlands Mortgage Approximate Original
Company Class Principal
Pass-Through Rate : N/A Amount : $ 323,739
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 Headlands Mortgage Company to BSMSI. Headlands 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, Headlands, as Master Servicer, and The Bank of New York, 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.
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:
THE BANK OF NEW YORK,
Countersigned: Not in its individual capacity but solely
as Trustee
By
By___________________________
Authorized signatory of The
Bank of New York, not in its AUTHORIZED OFFICER
individual capacity but solely
as Trustee
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
BEAR STEARNS MORTGAGE SECURITIES INC., HEADLANDS MORTGAGE COMPANY 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 CONDUCT" (A "REMIC"), AS THOSE TERMS ARE DEFINED, RESPECTIVELY IN
SECTION 860G AND 860D OF THE INTERNAL REVENUE CODE, 1986, AS AMENDED.
THIS CERTIFICATE MAY NOT BE TRANSFERRED TO "BENEFIT PLAN INVESTORS" AS SUCH
TERM IS DEFINED IN 29 C.F.R. ' 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.
UNDER TREASURY REGULATIONS RELATING TO ORIGINAL ISSUE DISCOUNT ("OID"),
TAXPAYERS MAY RELY ON THIS INFORMATION. THIS CERTIFICATE WAS ISSUED ON NOVEMBER
27, 1996 WITH AN ISSUE PRICE EQUAL TO 1.75% 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 $14.65 PER $1,000,000 OF ITS
ORIGINAL NOTIONAL PRINCIPAL BALANCE. THE MONTHLY YIELD TO MATURITY OF THIS
CERTIFICATE EXPRESSED ON AN ANNUAL BASIS IS APPROXIMATELY 15.75%, AND THE AMOUNT
OF OID ALLOCABLE TO THE SHORT FIRST ACCRUAL PERIOD (NOVEMBER 27, 1996 THROUGH
DECEMBER 25, 1996) IS $0.21 PER $1,000,000 OF ITS ORIGINAL NOTIONAL PRINCIPAL
BALANCE. 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 CERTIFICATE WILL BE EXTREMELY SENSITIVE TO
THE RATE OF PRINCIPAL PAYMENTS ON THE MORTGAGE LOANS.
MORTGAGE PASS-THROUGH CERTIFICATE,
No. X-1 SERIES 1996-8
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 SY 0
Cut-Off Date : November 1, 1996 Class : X
First Distribution Date : December 25, 1996 Initial Principal
Assumed Final Amount of this
Distribution Date : November 25, 2027 Certificate ("Denomination"):
Master Servicer : Headlands Mortgage Approximate Original
Company Class Principal
Pass-Through Rate : Variable Amount : $176,477,377
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 Headlands Mortgage Company to BSMSI. Headlands 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, Headlands, as Master Servicer, and The Bank of New York, 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 Notional 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.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
THE BANK OF NEW YORK,
Countersigned: Not in its individual capacity but solely
as Trustee
By
By___________________________
Authorized signatory of The
Bank of New York, not in its AUTHORIZED OFFICER
individual capacity but solely
as Trustee
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
BEAR STEARNS MORTGAGE SECURITIES INC., HEADLANDS MORTGAGE COMPANY 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. ' 2510.3-101, UNLESS THE PROPOSED TRANSFEREE
PROVIDES A BENEFIT
PLAN OPINION TO THE TRUSTEE.
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. B-1-1 SERIES 1996-8
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 SZ 7
Cut-Off Date : November 1, 1996 Class :B-1
First Distribution Date : December 25, 1996 Initial Principal
Assumed Final Amount of this
Distribution Date : November 25, 2027 Certificate ("Denomination"):
Master Servicer : Headlands Mortgage Approximate Original
Company Class Principal
Pass-Through Rate : 8.00% Amount : $5,735,000
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 Headlands Mortgage Company to BSMSI. Headlands 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, Headlands, as Master Servicer, and The Bank of New York, 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.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
THE BANK OF NEW YORK,
Countersigned: Not in its individual capacity but solely
as Trustee
By
By___________________________
Authorized signatory of The
Bank of New York, not in its AUTHORIZED OFFICER
individual capacity but solely
as Trustee
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
BEAR STEARNS MORTGAGE SECURITIES INC., HEADLANDS MORTGAGE COMPANY 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. ' 2510.3-101, UNLESS THE PROPOSED TRANSFEREE
PROVIDES A BENEFIT
PLAN OPINION TO THE TRUSTEE.
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. B-2-1 SERIES 1996-8
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 TA 1
Cut-Off Date : November 1, 1996 Class :B-2
First Distribution Date : December 25, 1996 Initial Principal
Assumed Final Amount of this
Distribution Date : November 25, 2027 Certificate ("Denomination"):
Master Servicer : Headlands Mortgage Approximate Original
Company Class Principal
Pass-Through Rate : 8.00% Amount : $3,088,000
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 Headlands Mortgage Company to BSMSI. Headlands 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, Headlands, as Master Servicer, and The Bank of New York, 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.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
THE BANK OF NEW YORK,
Countersigned: Not in its individual capacity but solely
as Trustee
By
By___________________________
Authorized signatory of The
Bank of New York, not in its AUTHORIZED OFFICER
individual capacity but solely
as Trustee
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
BEAR STEARNS MORTGAGE SECURITIES INC., HEADLANDS MORTGAGE COMPANY 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. ' 2510.3-101, UNLESS THE PROPOSED TRANSFEREE
PROVIDES A BENEFIT
PLAN OPINION TO THE TRUSTEE.
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. B-3-1 SERIES 1996-8
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 TB 9
Cut-Off Date : November 1, 1996 Class : B-3
First Distribution Date : December 25, 1996 Initial Principal
Assumed Final Amount of this
Distribution Date : November 25, 2027 Certificate ("Denomination"):
Master Servicer : Headlands Mortgage Approximate Original
Company Class Principal
Pass-Through Rate : 8.000% Amount : $2,383,000
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 Headlands Mortgage Company to BSMSI. Headlands 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, Headlands, as Master Servicer, and The Bank of New York, 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.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
THE BANK OF NEW YORK,
Countersigned: Not in its individual capacity but solely
as Trustee
By
By______________________________
Authorized signatory of The
Bank of New York, not in its AUTHORIZED OFFICER
individual capacity but solely
as Trustee
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
BEAR STEARNS MORTGAGE SECURITIES INC., HEADLANDS MORTGAGE COMPANY 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. ' 2510.3-101, UNLESS THE PROPOSED TRANSFEREE
PROVIDES A BENEFIT PLAN OPINION TO THE TRUSTEE.
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 EXCEPT FOR A PLEDGE OR REPURCHASE
AGREEMENT AS PROVIDED IN THE AGREEMENT AND (B) AN OPINION OF COUNSEL AS TO
COMPLIANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE UNITED STATES.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
BEAR STEARNS MORTGAGE SECURITIES INC., HEADLANDS MORTGAGE COMPANY 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 NOVEMBER
27, 1996 WITH AN ISSUE PRICE EQUAL TO 76.57% 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 $228.88 PER $1,000,000 OF ITS ORIGINAL
PRINCIPAL BALANCE. THE MONTHLY YIELD TO MATURITY OF THIS CERTIFICATE EXPRESSED
ON AN ANNUAL BASIS IS APPROXIMATELY 8.04%, AND THE AMOUNT OF OID ALLOCABLE TO
THE SHORT FIRST ACCRUAL PERIOD (NOVEMBER 27, 1996 THROUGH DECEMBER 25, 1996) IS
$0.97 PER $ 1,000,000 OF ITS ORIGINAL PRINCIPAL BALANCE. 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 SERIES 1996-8
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 : November 1, 1996 Class : B-4
First Distribution Date : December 25, 1996 Initial Principal
Assumed Final Amount of this
Distribution Date : November 25, 2027 Certificate ("Denomination"):
Master Servicer : Headlands Mortgage Approximate Original
Company Class Principal
Pass-Through Rate : 8.00% Amount : $1,235,000
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 originated by Headlands Mortgage Company and subsequently
sold to BSMSI. Headlands 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, Headlands, as Master Servicer, and
The Bank of New York, 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.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed. Dated:
THE BANK OF NEW YORK,
Countersigned: Not in its individual capacity but solely
as Trustee
By
By___________________________
Authorized signatory of The
Bank of New York, not in its AUTHORIZED OFFICER
individual capacity but solely
as Trustee
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
BEAR STEARNS MORTGAGE SECURITIES INC., HEADLANDS MORTGAGE COMPANY 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. ' 2510.3-101, UNLESS THE PROPOSED TRANSFEREE
PROVIDES A BENEFIT PLAN OPINION TO THE TRUSTEE.
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 EXCEPT FOR A PLEDGE OR REPURCHASE
AGREEMENT AS PROVIDED IN THE AGREEMENT AND (B) AN OPINION OF COUNSEL AS TO
COMPLIANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE UNITED STATES.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
BEAR STEARNS MORTGAGE SECURITIES INC., HEADLANDS MORTGAGE COMPANY 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 NOVEMBER
27, 1996 WITH AN ISSUE PRICE (EXCLUSIVE OF ACCRUED INTEREST) EQUAL TO 55.97% 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 $444.97
PER $1,000,000 OF ITS ORIGINAL PRINCIPAL BALANCE. THE MONTHLY YIELD TO MATURITY
OF THIS CERTIFICATE EXPRESSED ON AN ANNUAL BASIS IS APPROXIMATELY 17.87%, AND
THE AMOUNT OF OID ALLOCABLE TO THE SHORT FIRST ACCRUAL PERIOD (NOVEMBER 27, 1996
THROUGH DECEMBER 25, 1996) IS $1.49 PER $1,000,000 OF ITS ORIGINAL PRINCIPAL
BALANCE. 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 1996-8
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 : November 1, 1996 Class : B-5
First Distribution Date : December 25, 1996 Initial Principal
Assumed Final Amount of this
Distribution Date : November 25, 2027 Certificate ("Denomination"):
Master Servicer : Headlands Mortgage Approximate Original
Company Class Principal
Pass-Through Rate : 8.00% Amount : $353,000
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 originated by Headlands Mortgage Company and subsequently
sold to BSMSI. Headlands 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, Headlands, as Master Servicer, and
The Bank of New York, 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.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: THE BANK OF NEW YORK,
Countersigned: Not in its individual capacity but solely
as Trustee
By
By____________________________
Authorized signatory of The
Bank of New York, not in its AUTHORIZED OFFICER
individual capacity but solely
as Trustee
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
BEAR STEARNS MORTGAGE SECURITIES INC., HEADLANDS MORTGAGE COMPANY 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. ' 2510.3-101, UNLESS THE PROPOSED TRANSFEREE
PROVIDES A BENEFIT PLAN OPINION TO THE TRUSTEE.
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 EXCEPT FOR A PLEDGE OR REPURCHASE
AGREEMENT AS PROVIDED IN THE AGREEMENT AND (B) AN OPINION OF COUNSEL AS TO
COMPLIANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE UNITED STATES.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
BEAR STEARNS MORTGAGE SECURITIES INC., HEADLANDS MORTGAGE COMPANY 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 NOVEMBER
27, 1996 WITH AN ISSUE PRICE (EXCLUSIVE OF ACCRUED INTEREST) EQUAL TO 20.00% 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 $794.66
PER $1,000,000 OF ITS ORIGINAL PRINCIPAL BALNCE. THE MONTHLY YIELD TO MATURITY
OF THIS CERTIFICATE EXPRESSED ON AN ANNUAL BASIS IS APPROXIMATELY 45.84%, AND
THE AMOUNT OF OID ALLOCABLE TO THE SHORT FIRST ACCRUAL PERIOD (NOVEMBER 27, 1996
THROUGH DECEMBER 25, 1996) IS $1.10 PER $1,000,000 OF ITS ORIGINAL PRINCIPAL
BALANCE. 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 1996-8
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 : November 1, 1996 Class : B-6
First Distribution Date : December 25, 1996 Initial Principal
Assumed Final Amount of this
Distribution Date : November 25, 2027 Certificate ("Denomination"):
Master Servicer : Headlands Mortgage Approximate Original
Company Class Principal
Pass-Through Rate : 8.00% Amount : $883,000
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 originated by Headlands Mortgage Company and subsequently
sold to BSMSI. Headlands 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, Headlands, as Master Servicer, and
The Bank of New York, 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.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed. Dated:
THE BANK OF NEW YORK,
Countersigned: Not in its individual capacity but solely
as Trustee
By
By____________________________
Authorized signatory of The
Bank of New York, not in its AUTHORIZED OFFICER
individual capacity but solely
as Trustee
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
BEAR STEARNS MORTGAGE SECURITIES INC., HEADLANDS MORTGAGE COMPANY 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 THE "REMIC TRUST" 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 THE BANK OF NEW
YORK, 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 1996-8
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 TC 7
Cut-Off Date : November 1, 1996 Class :R-1
First Distribution Date : December 25, 1996 Initial Principal
Assumed Final Amount of this
Distribution Date : November 25, 2027 Certificate ("Denomination"):$100
Master Servicer : Headlands Mortgage Approximate Original
Company Class Principal
Pass-Through Rate : 8.00% Amount : $100
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 Headlands Mortgage Company to BSMSI. Headlands 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, Headlands, as Master Servicer, and The Bank of New York, 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.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
THE BANK OF NEW YORK,
Countersigned: Not in its individual capacity but solely
as Trustee
By
By___________________________
Authorized signatory of The
Bank of New York, not in its AUTHORIZED OFFICER
individual capacity but solely
as Trustee
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN, BEAR
STEARNS MORTGAGE SECURITIES INC., HEADLANDS MORTGAGE COMPANY 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 THE "REMIC TRUST" 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 THE BANK OF NEW
YORK, 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 1996-8
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 TD 5
Cut-Off Date : November 1, 1996 Class :R-2
First Distribution Date : December 25, 1996 Initial Principal
Assumed Final Amount of this
Distribution Date : November 25, 2027 Certificate ("Denomination"):$100
Master Servicer : Headlands Mortgage Approximate Original
Company Class Principal
Pass-Through Rate : 8.00% Amount : $100
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 Headlands Mortgage Company to BSMSI. Headlands 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, Headlands, as Master Servicer, and The Bank of New York, 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.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
THE BANK OF NEW YORK,
Countersigned: Not in its individual capacity but solely
as Trustee
By
By___________________________
Authorized signatory of The
Bank of New York, not in its AUTHORIZED OFFICER
individual capacity but solely
as Trustee
<PAGE>
EXHIBIT A-2
FORM OF REVERSE OF CERTIFICATES
<PAGE>
BEAR STEARNS MORTGAGE SECURITIES INC.
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1996-8
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 51%. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in 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 New York, State of New York,
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>
EXHIBIT A-2
FORM OF REVERSE OF CERTIFICATES
<PAGE>
EXHIBIT B
MORTGAGE LOAN SCHEDULE
[intentionally ommitted]
<PAGE>
EXHIBIT C
Representations and Warranties of Headlands Mortgage Company
Concerning the Mortgage Loans
The representations are set forth in Section 7 of the Seller Contract
and are available upon request.
<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 1996-8
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 1996-8, 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 November 1, 1996 (the "Pooling and Servicing
Agreement") among the Trustee, Headlands Mortgage Company 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 November 27, 1996; (ii) it is
not acquiring the Bear Stearns Mortgage Securities Inc. Mortgage Pass-Through
Certificates, Series 1996-8, 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]
The Bank of New York, as Trustee
101 Barclay Street
New York, New York 10286
Attention: Bear Stearns/Headlands 1996-8
Re: BSMSI Series 1996-8 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, 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 The
Bank of New York (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. ' 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 EXCEPT FOR A PLEDGE OR REPURCHASE AGREEMENT AS
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. '
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 September 1, 1996 among
Bear Stearns Mortgage Securities Inc., Headlands Mortgage Company and The Bank
of New York (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]
The Bank of New York, as Trustee
101 Barclay Street
New York, New York 10286
Attention: Corporate Trust Office
Re: BSMSI Series 1996-8 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; or(1)
(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 Acct 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 November 1, 1996 among Bear Stearns Mortgage
Securities Inc., as Seller, Headlands Corporation as Master Servicer, and The
Bank of New York, 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. ' 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."
<PAGE>
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
Headlands Mortgage Company (the "Company") and [ ] (the "Purchaser").
PRELIMINARY STATEMENT
_______________________________ is the holder of the entire
interest in The Mortgage Pass-Through Certificates, Series 1996-8, 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 November 1, 1996 between the Company (in its capacity as
master servicer thereunder, the "Master Servicer"), Bear Stearns Mortgage
Securities Inc. and The Bank of New York, as Trustee.
[ ] intends to resell all of the Class B-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.
<PAGE>
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:
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 A-8 Certificate, the Class
A-8 Notional Amount, or, in the case of a Class X Certificate, the Class X
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
October of each year that the Certificates are outstanding, commencing in
December 1997.
Applicable Credit Rating: A rating of Aaa or AAA, in the case of
Moody's or Fitch, respectively, for any long-term deposit or security or a
rating of P-1, in the case of Moody's, or F-1+, in the case of Fitch, for any
short-term deposit or security.
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, 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 4.2(d) and 4.4(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 Nonrecoverable Advances;
(vi) amounts permitted to be withdrawn from the
Certificate Account pursuant to
Subsection 4.3(a); and
(vii) amounts withdrawn by the Trustee pursuant to
Subsection 4.3(b) to pay the
Trustee's Fee.
Bankruptcy Code: The United States Bankruptcy Code, as amended, as
codified in 11 U.S.C. 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 Formula Amount: As to each Anniversary Determination Date,
the greater of (i) $125,000 and (ii) the sum of (x) 0.25% of the Scheduled
Principal Balance of each Second Home Mortgage Loan and each Investor Mortgage
Loan remaining in the Trust with a Loan-to-Value Ratio greater than 80% and less
than or equal to 90%, (y) 0.50% of the Scheduled Principal Balance of each
Second Home Mortgage Loan and each Investor Mortgage Loan remaining in the Trust
with a Loan-to-Value Ratio greater than 90% and less than or equal to 95%, and
(z) 0.75% of the Scheduled Principal Balance of each Second Home Mortgage Loan
and each Investor Mortgage Loan remaining in the Trust with a Loan-to-Value
Ratio greater than 95%.
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
$125,000, 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 Bankruptcy Formula Amount for such Anniversary Determination Date.
The Bankruptcy Loss Amount may be further reduced by Headlands
(including accelerating the manner in which such coverage is reduced) provided
that prior to any such reduction, Headlands 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 5.7(a) hereof.
Book-Entry Certificates: All Classes of Certificates other than the
Class X and Class R Certificates and, to the extent provided in Section 5.2, 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 banking institutions in New York City are required or authorized by
law or executive order to be closed.
Collateral Fund: The fund established and maintained pursuant to
Section 3.1 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 2.2(b).
Election to Foreclosure: Any election by the Purchaser to proceed with
the Commencement of Foreclosure, made in accordance with Section 2.3(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 2.2(d) (after adjustments for all
withdrawals and deposits prior to such date pursuant to Section 2.2(e)) and
Section 2.3(b) (after adjustment for all withdrawals and deposits prior to such
date pursuant to Section 2.3(c)) and Section 3.2, reduced by all withdrawals
therefrom prior to such date pursuant to Section 2.2(g) and Section 2.3(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.
<PAGE>
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 2.1(a)(ii) subject to extension as set forth in Section
2.2(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 2.1(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 2.1(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 2.1(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 2.1(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 2.2(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 2.1 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) [ %] (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 2.2 or 2.3 of
this Agreement shall terminate with respect to a Mortgage Loan as to which the
Purchaser has exercised its rights under Section 2.2 or 2.3 hereof (so long as
such exercise has not been rejected), upon Purchaser's failure to deposit any
amounts required pursuant to Section 2.2(d) or 2.3(b) after one Business Day's
notice of such failure.
<PAGE>
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 1996-8 Collateral Fund, for the benefit of Headlands
Mortgage Company and The Bank of New York 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 2.2 or
2.3 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 2.4 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 2.2(d) and
2.3(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.
<PAGE>
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 2.1 or 2.2, 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 or Trustee 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. The Company agrees to indemnify the Trustee against any
losses, claims, damages or liabilities to which it may be subject which arise
out of or relate to this Agreement except for any losses, claims, damages or
liabilities resulting from the Trustee's willful misfeasance, bad faith or
negligence.
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 Headlands
Mortgage Company.
Section 4.12. Expenses of Trustee. The Purchaser shall pay the
reasonable fees and expenses of the Trustee in connection with the Trustee's
duties under this Agreement.
<PAGE>
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.
HEADLANDS MORTGAGE COMPANY
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 November 1, 1996, among
Bear Stearns
Mortgage Securities Inc., as seller, Headlands Mortgage Company, as
master servicer,
and The Bank of New York, as trustee
Mortgage Pass-Through Certificates, Series 1996-8
Ladies and Gentlemen:
In accordance with Section 2.2 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 2.1(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.
THE BANK OF NEW YORK
By:_______________________
Name:
Title:
<PAGE>
EXHIBIT I
FORM OF FINAL CERTIFICATION
[Seller]
[Master Servicer]
Re: Pooling and Servicing Agreement dated as of November 1, 1996,
among Bear Stearns
Mortgage Securities Inc., as seller, Headlands Mortgage Company,
as master servicer,
and The Bank of New York, as trustee
Mortgage Pass-Through Certificates, Series 1996-8
Ladies and Gentlemen:
In accordance with Section 2.2 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 2.1 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 2.1(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.
THE BANK OF NEW YORK
By:_______________________
Name:
Title:
