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)
JUNE 30, 1997
Bear Stearns Mortgage Securities Inc. (as Seller under a
Pooling and Servicing Agreement dated as of June 1, 1997
providing for the issuance of the Mortgage Pass-Through
Certificates, Series 1997-4)
BEAR STEARNS MORTGAGE SECURITIES INC.
(Exact name of registrant as specified in charter)
DELAWARE 333-13617 13-3633241
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
incorporation) No.)
245 PARK AVENUE, NEW YORK, NEW YORK 10167
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 272-2000
NOT APPLICABLE
(Former name or former address, if changed since last report.)
<PAGE>
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits
EXHIBIT NO.
1.1 Terms Agreement dated as of June 24, 1997 among
the Registrant and Bear, Stearns & Co. Inc.
4.1 Pooling and Servicing Agreement dated as of June 1, 1997
among the Registrant, EMC Mortgage Corporation, and State
Street Bank and Trust Company.
<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: July 14, 1997 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
June 24, 1997 between the
Registrant and Bear, Stearns & Co.
Inc.
4.1 Pooling and Servicing Agreement
dated as of June 1, 1997 among
the Registrant, EMC Mortgage
Corporation and State Street Bank and Trust
Company
EXHIBIT 1.1
BEAR STEARNS MORTGAGE SECURITIES INC.
Mortgage Pass-Through Certificates
TERMS AGREEMENT
Dated: as of June 24, 1997
To: BEAR STEARNS MORTGAGE SECURITIES INC.
Re: Underwriting Agreement dated June 25, 1996
Underwriter: Bear, Stearns & Co. Inc.
Series Designation: Series 1997-4
Class Designation Schedule of the Certificates: Class A-I,
A-II, A-III, A-IV, B-1, B-2, B-3, R-1 and R-2
TERMS OF THE CERTIFICATES TO BE PURCHASED BY THE UNDERWRITER:
<TABLE>
<CAPTION>
Original
Class Principal Amount Interest Rate
- ----- ---------------- -------------
<S> <C> <C>
A-I $ 23,736,100 (1)
A-II $ 124,749,900 (2)
A-III $ 49,988,600 (3)
A-IV $ 27,422,700 (4)
B-1 $ 6,679,700 (5)
B-2 $ 3,643,500 (5)
B-3 $ 1,821,700 (5)
R-1 $ 50 (2)
R-2 $ 50 (2)
- ------------------
(1) During each Interest Accrual Period the Class A-I Certificates will bear
interest at a variable Pass-Through Rate equal to the weighted average of the
Net Rates of the Group I Mortgage Loans.
(2) During each Interest Accrual Period, the Class A-II, Class R-1 and Class
R-2 Certificates will each bear interest at a variable Pass-Through Rate equal
to the weighted average of the Net Rates of the Group II Mortgage Loans.
(3) During each Interest Accrual Period, the Class A-III Certificates will bear
interest at a variable Pass-Through Rate equal to the weighted average of the
Net Rates of the Group III Mortgage Loans.
(4) During each Interest Accrual Period, the Class A-IV Certificates will bear
interest at a variable Pass-Through Rate equal to the weighted average of the
Net Rates of the Group IV Mortgage Loans.
(5) The Class B-1, Class B-2 and Class B-3 Certificates will each bear interest
at a variable Pass-Through Rate equal to the weighted average of the
Pass-Through Rates of all Classes of Senior Certificates weighted in proportion
to the results of subtracting from the principal balance of each Mortgage Loan
Group, the Current Principal Amount of the related Class or Classes of Senior
Certificates.
</TABLE>
The Certificates purchased by the Underwriter will be offered from time to time
by the Underwriter in negotiated transactions at varying prices to be determined
at the time of sale.
DEFINED TERMS: Terms not otherwise defined herein shall have the meanings given
to such terms in the Pooling and Servicing Agreement dated as of June 1, 1997,
among Bear Stearns Mortgage Securities Inc., as seller, EMC Mortgage
Corporation, as master servicer, and State Street Bank and Trust Company, as
trustee.
FORM OF CERTIFICATES BEING PURCHASED BY THE UNDERWRITER: Book Entry except for
the Class R-1 and Class R-2 Certificates which will be in certificated, fully
registered form.
DISTRIBUTION DATES: The 25th day of each month or, if such 25th day is not a
business day, the next succeeding business day commencing in July, 1997.
CERTIFICATE RATING FOR THE CERTIFICATES BEING PURCHASED BY THE UNDERWRITERS:
CLASS RATING
S&P FITCH
A-I................................... AAA AAA
A-II.................................. AAA AAA
A-III................................. AAA AAA
A-IV.................................. AAA AAA
B-1................................... AA AA
B-2................................... A A
B-3................................... BBB BBB
R-1................................... AAA AAA
R-2................................... AAA AAA
MORTGAGE ASSETS: The Mortgage Loans to be included in the Trust Fund are as
described in Annex A hereto.
PURCHASE PRICE: The aggregate purchase price payable by the Underwriter for the
Certificates covered by this Agreement will be $242,803,146.00 (plus
$1,421,681.19 in accrued interest).
CREDIT ENHANCEMENT: None other than the subordination described in the related
Prospectus Supplement.
CLOSING DATE: June 30, 1997, 9:00 a.m., New York time.
[Remainder of Page Intentionally Left Blank]
<PAGE>
The undersigned, as the Underwriter, agrees, subject to the terms and provisions
of the above-referenced Underwriting Agreement, which is incorporated herein in
its entirety and made a part hereof, to purchase the respective principal
amounts of the Classes of the above-referenced Series of Certificates as set
forth herein.
BEAR, STEARNS & CO. INC.
By: /S/ JEFFREY MAYER
Name: Jeffrey Mayer
Title: Senior Managing Director
Accepted:
BEAR STEARNS MORTGAGE SECURITIES INC.
By: /S/ JOSEPH T. JURKOWSKI, JR.
Name: Joseph T. Jurkowski, Jr.
Title: Vice President
<PAGE>
ANNEX A
Mortgage Loan Schedule
SEE EXHIBIT B OF THE POOLING AND SERVICING AGREEMENT
EXHIBIT 4.1
EXECUTION COPY
BEAR STEARNS MORTGAGE SECURITIES INC.,
SELLER,
EMC MORTGAGE CORPORATION,
MASTER SERVICER,
and
STATE STREET BANK AND TRUST COMPANY,
TRUSTEE
---------------------------------
POOLING AND SERVICING AGREEMENT
Dated as of June 1, 1997
--------------------------------
Bear Stearns Mortgage Securities Inc.
Mortgage Pass-Through Certificates
Series 1997-4
<PAGE>
TABLE OF CONTENTS
ARTICLE I
Definitions Page
Definitions................................................I-1
ARTICLE II
Conveyance of Mortgage Loans;
Original Issuance of Certificates
2.01. Conveyance of Mortgage Loans to Trustee......................II-1
2.02. Acceptance of Mortgage Loans by Trustee......................II-3
2.03. Representations, Warranties and Covenants
of the Master Servicer.......................................II-5
2.03A. Assignment of Interest in the Mortgage Loan
Purchase Agreement ..........................................II-6
2.04. Substitution of Mortgage Loans...............................II-8
2.05. Representations and Warranties of the Trustee................II-9
2.06. Issuance of Certificates....................................II-10
2.07. Representations and Warranties Concerning
the Seller..................................................II-11
2.08. Guaranty....................................................II-12
ARTICLE III
Administration and Servicing of Mortgage Loans
3.01. Master Servicer to Assure Servicing.........................III-1
3.02. Sub-Servicing Agreements Between Master
Servicer and Sub-Servicers..................................III-2
3.03. Successor Sub-Servicers.....................................III-3
3.04. Liability of the Master Servicer............................III-3
3.05. Assumption or Termination of Sub-Servicing
Agreements by Trustee.......................................III-4
3.06. Collection of Mortgage Loan Payments........................III-5
3.07. Collection of Taxes, Assessments and
Similar Items; Servicing Accounts...........................III-6
3.08. Access to Certain Documentation and Information
Regarding the Mortgage Loans................................III-7
3.09. Maintenance of Primary Mortgage Insurance
Policies; Collection Thereunder.............................III-7
3.10. Maintenance of Hazard Insurance and
Fidelity Coverage...........................................III-8
3.11. Due-on-Sale Clauses; Assumption Agreements..................III-10
3.12. Realization Upon Defaulted Mortgage Loans...................III-12
3.13. Trustee to Cooperate; Release of Mortgage
Files.......................................................III-13
3.14. Servicing and Master Servicing Compensation.................III-14
3.15. Annual Statement of Compliance..............................III-15
3.16. Annual Independent Public Accountants'
Servicing Report............................................III-16
3.17. REMIC-Related Covenants.....................................III-16
3.18. Additional Information......................................III-17
3.19. Optional Purchase of Defaulted Mortgage Loans...............III-17
ARTICLE IV
Accounts
4.01. Protected Accounts...........................................IV-1
4.02. Certificate Account..........................................IV-3
4.03. Permitted Withdrawals and Transfers from the
Certificate Account..........................................IV-5
4.04. Custody Account..............................................IV-9
ARTICLE V
Certificates
5.01. Certificates..................................................V-1
5.02. Registration of Transfer and Exchange of
Certificates..................................................V-7
5.03. Mutilated, Destroyed, Lost or Stolen
Certificates.................................................V-12
5.04. Persons Deemed Owners........................................V-13
5.05. Transfer Restrictions on Residual Certificates...............V-13
5.06. Restrictions on Transferability of Private
Certificates.................................................V-15
5.07. ERISA Restrictions...........................................V-16
5.08. Rule 144A Information........................................V-16
ARTICLE VI
Payments to Certificateholders
6.01. Distributions on the Certificates............................VI-1
6.02. Allocation of Deferred Interest..............................VI-5
6.03. Allocation of Losses.........................................VI-6
6.04. [Reserved]...................................................VI-8
6.05. Payments.....................................................VI-8
6.06. Statements to Certificateholders.............................VI-9
6.07. Reports to the Trustee and the Master Servicer...............VI-12
6.08. Monthly Advances.............................................VI-14
6.09. Compensating Interest Payments...............................VI-16
6.10. Reports of Foreclosures and Abandonment of
Mortgaged Property...........................................VI-16
ARTICLE VII
The Master Servicer
7.01. Liabilities of the Master Servicer...........................VII-1
7.02. Merger or Consolidation of the Master Servicer...............VII-1
7.03. Indemnification of the Trustee.............................. VII-1
7.04. Limitation on Liability of the Master Servicer
and Others...................................................VII-2
7.05. Master Servicer Not to Resign.............................. .VII-3
7.06. [Reserved].................................................. VII-3
7.07. Sale and Assignment of Master Servicing.................... .VII-3
ARTICLE VIII
Default
8.01. Events of Default...........................................VIII-1
8.02. Trustee to Act; Appointment of Successor....................VIII-3
8.03. Notification to Certificateholders...................... ...VIII-4
8.04. Waiver of Defaults..........................................VIII-4
8.05. List of Certificateholders..................................VIII-5
ARTICLE IX
Concerning the Trustee
9.01. Duties of Trustee............................................IX-1
9.02. Certain Matters Affecting the Trustee........................IX-3
9.03. Trustee Not Liable for Certificates or
Mortgage Loans...............................................IX-5
9.04. Trustee May Own Certificates.................................IX-6
9.05. Trustee's Fees and Expenses..................................IX-6
9.06. Eligibility Requirements for Trustee.........................IX-6
9.07. Insurance....................................................IX-7
9.08. Resignation and Removal of the Trustee.......................IX-7
9.09. Successor Trustee............................................IX-8
9.10. Merger or Consolidation of Trustee...........................IX-9
9.11. Appointment of Co-Trustee or Separate Trustee................IX-9
9.12. Master Servicer Shall Provide Information as
Reasonably Required.........................................IX-11
9.13. Federal Information Returns and Reports to
Certificateholders.........................................IX-11
ARTICLE X
Termination
10.01. Termination Upon Repurchase by the Seller or its
Designee or Liquidation of All Mortgage Loans..................X-1
10.02. Additional Termination Requirements............................X-4
ARTICLE XI
Miscellaneous Provisions
11.01. Intent of Parties.............................................XI-1
11.02. Amendment.....................................................XI-1
11.03. Recordation of Agreement......................................XI-2
11.04. Limitation on Rights of Certificateholders....................XI-2
11.05. Acts of Certificateholders....................................XI-3
11.06. [Reserved]....................................................XI-4
11.07. Governing Law.................................................XI-4
11.08. Notices.......................................................XI-5
11.09. Severability of Provisions....................................XI-5
11.10. Successors and Assigns........................................XI-5
11.11. Article and Section Headings..................................XI-5
11.12. Counterparts..................................................XI-6
11.13. Notice to Rating Agencies ....................................XI-6
EXHIBITS
Exhibit A-1 - Form of Face of Certificates
Exhibit A-2 - Form of Reverse of Certificates
Exhibit B - Mortgage Loan Schedule
Exhibit C - Representations and Warranties of BSMCC
Concerning the Mortgage Loans
Exhibit D - Form of Request for Release
Exhibit E - Form of Affidavit pursuant to Section 860E(e)(4)
Exhibit F-1 - Form of Investment Letter
Exhibit F-2 - Form of Rule 144A and Related Matters Certificate
Exhibit G - Form of Trustee's Initial Certification
Exhibit H - Form of Trustee's Final Certification
<PAGE>
POOLING AND SERVICING AGREEMENT
Pooling and Servicing Agreement dated as of June 1, 1997, among Bear
Stearns Mortgage Securities Inc., a Delaware corporation, as the seller (the
"Seller"), EMC Mortgage Corporation, a Delaware corporation ("EMC"), as master
servicer (the "Master Servicer"), and State Street Bank and Trust Company, a
Massachusetts trust company, as trustee (the "Trustee").
PRELIMINARY STATEMENT
On or prior to the Closing Date, the Seller has acquired the Mortgage
Loans from Bear Stearns Mortgage Capital Corporation ("BSMCC"). 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. EMC will be the Master
Servicer for the Mortgage Loans.
The Trustee shall make an election for the assets constituting REMIC
II to be treated for federal income tax purposes as a REMIC. On June 30, 1997
(the "Startup Day"), all the Classes of Regular Certificates will be designated
"regular interests" in such REMIC and the Class R-2 Certificate 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
Certificates will be designated "regular interests" in such REMIC and the Class
R-1 and Class R-2 Certificates will be designated the "residual interests" 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 $242,900,596.19. 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:
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 (including each
subaccount thereof), the Protected Accounts or the Servicing Accounts as the
context may require.
ACCRUED CERTIFICATE INTEREST: For any 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 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
Deferred Interest 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 Deferred Interest, Net Interest Shortfall and the
interest portion of any Realized Losses.
ADVANCING DATE: The Business Day preceding the related Distribution
Date.
AFFILIATE: As to any Person, any other Person controlling, controlled
by or under common control with such Person. "Control" means the power to direct
the management and policies of a Person, directly or indirectly, whether through
ownership of voting securities, by contract or otherwise. "Controlled" and
"Controlling" have meanings correlative to the foregoing. The Trustee may
conclusively presume that a Person is not an Affiliate of another Person unless
a Responsible Officer of the Trustee has actual knowledge to the contrary.
AGREEMENT: This Pooling and Servicing Agreement and all amendments
hereof and supplements hereto.
ALLOCABLE SHARE: With respect to each Class of Subordinate
Certificates:
(a) as to any Distribution Date and amounts
distributable pursuant to clauses (i) and (iii) of the
Subordinate Optimal Principal Amount, the fraction,
expressed as a percentage, the numerator of which is the
Current Principal Amount of such Class and the denominator of
which is the aggregate Current Principal Amount of all Classes
of the Subordinate Certificates; and
(b) as to any Distribution Date and amounts
distributable pursuant to clause (ii), (iv) and (v) of the
Subordinate Optimal Principal Amount, and as to each Class
of Subordinate Certificates for which (x) the related
Prepayment Distribution Trigger has been satisfied on such
Distribution Date, the fraction, expressed as a percentage,
the numerator of which is the Current Principal Amount of
such Class and the denominator of which is the aggregate
Current Principal Amount of all such Classes and (y) the
related Prepayment Distribution Trigger has not been
satisfied on such Distribution Date, 0%; provided that if on
a Distribution Date, the Current Principal Amount of any
Class of Subordinate Certificates for which the related
Prepayment Distribution Trigger was satisfied on such
Distribution Date is reduced to zero, any amounts
distributed pursuant to this clause (b), to the extent of
such Class's remaining Allocable Share, shall be distributed
to the remaining Classes of Subordinate Certificates in
reduction of their respective Current Principal Amounts in
the order of their numerical Class designations.
ANNIVERSARY DETERMINATION DATE: The Determination Date occurring in
July of each year that the Certificates are outstanding, commencing in July
1998.
APPLICABLE CREDIT RATING: A rating of AAA, in the case of S&P or Fitch
for any long-term deposit or security or a rating of A-1+, in the case of S&P,
or F-1+ in the case of Fitch, for any short-term deposit or security (or AAAm or
AAAm-G, in the case of S&P, for any Permitted Investment listed in clause (viii)
of the definition thereof).
APPLICABLE STATE LAW: For purposes of Section 9.13(d), the Applicable
State Law shall be (a) the law of the State of New York; and (b) the law of the
Commonwealth of Massachusetts, and (c) such other state law whose applicability
shall have been brought to the attention of the Trustee by either (i) an Opinion
of Counsel delivered to it, or (ii) written notice from the appropriate taxing
authority as to the applicability of such state law.
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, October 25, 2025.
AVAILABLE FUNDS: With respect to any Distribution Date, the sum of the
Group I Available Funds, the Group II Available Funds the Group III Available
Funds and the Group IV Available Funds for such Distribution Date.
BANKRUPTCY CODE: The United States Bankruptcy Code, as amended as
codified in 11 U.S.C. ss.ss.101-1330.
BANKRUPTCY LOSS: With respect to any Mortgage Loan, a Deficient
Valuation or Debt Service Reduction.
BENEFIT PLAN OPINION: The meaning specified in Section 5.07(a) hereof.
BOOK-ENTRY CERTIFICATES: Initially, all Classes of Certificates other
than the Class R-1, Class R-2, Class B-4, Class B-5 and Class B-6 Certificates
and if it is subsequently determined in accordance with Section 5.01(a) hereof
to cause one or more Classes of the Class B-4, Class B-5 or Class B-6
Certificates to be deposited with the Depository to provide for book entry
transfers, such Class or Classes to the extent provided in Section 5.02.
BSMCC: Bear Stearns Mortgage Capital Corporation.
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 Massachusetts 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 4.02, which shall be denominated "State Street
Bank and Trust Company, as Trustee f/b/o holders of Bear Stearns Mortgage
Securities Inc. Mortgage Pass-Through Certificates, Series 1997-4 - Certificate
Account" which shall have four subaccounts as provided in Section 4.02.
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 a
subaccount of the Certificate Account and used to make a distribution to
Certificateholders during such calendar month on account of Scheduled Payments
on the Mortgage Loans due on the Due Date for such month not being paid on or
before such Determination Date except insofar as such unpaid amounts are the
result of application of the Relief Act.
CERTIFICATE OWNER: Any Person who is the beneficial owner of a
Certificate registered in the name of the Depository or its nominee.
CERTIFICATE REGISTER: The register maintained pursuant to Section
5.02.
CERTIFICATEHOLDER: A Holder of a Certificate.
CLASS: With respect to the Certificates, A-I, A-II, A- III, A-IV, B-1,
B-2, B-3, B-4, B-5, B-6, R-1 and R-2.
CLASS A CERTIFICATES: Class A-I, Class A-II, Class A-III and Class
A-IV Certificates.
CLASS A-I SENIOR PERCENTAGE: Initially 93.00%. 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 Class A-I Certificates and the Residual Certificates immediately preceding
such Distribution Date by the aggregate Scheduled Principal Balances of all the
Group I Mortgage Loans immediately preceding such Distribution Date.
CLASS A-II SENIOR PERCENTAGE: Initially 93.00%. 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 Amount of the
Class A-II Certificates, the Class R-1 Certificate and the Class R-2 Certificate
immediately preceding such Distribution Date by the aggregate Scheduled
Principal Balances of all of the Group II Mortgage Loans immediately preceding
such Distribution Date.
CLASS A-III SENIOR PERCENTAGE: Initially 93.00%. 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 Amount of the
Class A-III Certificates immediately preceding such Distribution Date by the
aggregate Scheduled Principal Balances of all of the Group III Mortgage Loans
immediately preceding such Distribution Date.
CLASS A-IV SENIOR PERCENTAGE: Initially 93.00%. 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 Amount of the
Class A-IV Certificates immediately preceding such Distribution Date by the
aggregate Scheduled Principal Balances of all of the Group IV Mortgage Loans
immediately preceding such Distribution Date.
CLASS A-I SENIOR PREPAYMENT PERCENTAGE, CLASS A-II SENIOR PREPAYMENT
PERCENTAGE, CLASS A-III SENIOR PREPAYMENT PERCENTAGE or CLASS A-IV SENIOR
PREPAYMENT PERCENTAGE. On any Distribution Date occurring during the periods for
each Class of Class A Certificates as follows:
Period (dates inclusive) Senior Prepayment Percentage
- ------------------------------------ --------------------------------
July 25, 1997 100%
June 25, 2000
July 25, 2000 applicable Senior Percentage,
June 25, 2001 plus 75% of the applicable
Subordinate Percentage
July 25, 2001 applicable Senior Percentage,
June 25, 2002 plus 50% of the applicable
Subordinate Percentage
July 25, 2002 applicable Senior Percentage,
June 25, 2003 plus 25% of the applicable
Subordinate Percentage
July 25, 2003 and applicable Senior Percentage
thereafter
Notwithstanding the foregoing, if on any Distribution Date the Class A-I Senior
Percentage, the Class A-II Senior Percentage, the Class A-III Senior Percentage
or the Class A-IV Senior Percentage exceeds such respective Senior Percentage as
of the Cut-off Date, the Class A-I Senior Prepayment Percentage, the Class A-II
Senior Prepayment Percentage, the Class A-III Senior Percentage or the Class
A-IV Senior Percentage, respectively, for such Distribution Date will equal
100%. On the Distribution Date on which the aggregate of the Current Principal
Amounts of a Class of Class A Certificates (or the Residual Certificates) are
reduced to zero, such Class A Certificates' (or Residual Certificate's) Senior
Prepayment Percentage shall be the minimum percentage sufficient to effect such
reduction; provided that in the circumstances described in paragraph (vi) in
Section 6.01(a), prepayments resulting from Mortgage Loans in one Mortgage Loan
Group and otherwise distributable to the Subordinate Certificates will be
distributed to the Senior Certificates related to the other Mortgage Loan
Groups.
In addition, notwithstanding the foregoing, no reduction of a Senior Prepayment
Percentage shall occur on any Distribution Date unless, as of the last day of
the month preceding such Distribution Date either (a)(i) the aggregate
Outstanding Principal Balance of Mortgage Loans in all Mortgage Loan Group
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 as of such Distribution Date does not exceed 50% and
(ii) cumulative Realized Losses on the Mortgage Loans in all Mortgage Loan
Groups do not exceed (x) 40% of the Original Subordinate Principal Balance if
such Distribution Date occurs between and including July 2000 and June 2001, (y)
45% of the related Original Subordinate Principal Balance if such Distribution
Date occurs between and including July 2001 and June 2002 and (z) 50% of the
related Original Subordinate Principal Balance if such Distribution Date occurs
during or after July 2002 or (b)(i) the outstanding principal balance of the
Mortgage Loans in all Mortgage Loan Groups delinquent 60 days or more averaged
over the last six months, as a percentage of the aggregate outstanding principal
balance of all of the Mortgage Loans with respect to such Distribution Date does
not exceed 4% and (ii) Realized Losses on the Mortgage Loans in both Mortgage
Loan Groups to date for such Distribution Date are less than 10% of the Original
Subordinate Principal Balance.
CLASS B CURRENT PRINCIPAL AMOUNT: For any Distribution Date, the
aggregate Current Principal Amounts of the Class B Certificates as of such
Distribution Date.
CLOSING DATE: June 30, 1997.
CODE: The Internal Revenue Code of 1986, as amended.
COMPENSATING INTEREST PAYMENTS: As defined in Section 6.09.
CORPORATE TRUST OFFICE: The office of the Trustee at which at any
particular time its corporate trust business is administered, which office, at
the date of the execution of this Agreement, is located at Two International
Place, Boston, Massachusetts 02110, Attention: Corporate Trust Department, ref:
Bear Stearns/EMC 1997-4.
CORRESPONDING CLASS: As indicated in Section 5.01(c).
CROSS-OVER DATE: The first Distribution Date on which the aggregate
Current Principal Amount of the Subordinate Certificates has been reduced to
zero (giving effect to all distributions on such Distribution Date).
CURRENT PRINCIPAL AMOUNT: With respect to any Certificate as of any
Distribution Date, the initial principal amount of such Certificate increased by
any Deferred Interest previously allocated to such Certificate and 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 for previous
Distribution Dates. With respect to any Class of 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 each receive the distribution of the last dollar of their respective
original principal amounts shall be deemed to have Current Principal Amounts
equal to their respective Current Principal Amounts on the day immediately
preceding such Distribution Date.
CUSTODY ACCOUNT: A trust account created and maintained pursuant to
Section 4.04.
CUT-OFF DATE: June 1, 1997.
CUT-OFF DATE BALANCE: $242,900,596.19
DEBT SERVICE REDUCTION: Any reduction of the Scheduled Payments which
a Mortgagor is obligated to pay with respect to a Mortgage Loan as a result of
any proceeding under the Bankruptcy Code or any other similar state law or other
proceeding.
DEBTOR RELIEF LAWS: Any applicable liquidation, conservatorship,
receivership, bankruptcy, insolvency, rearrangement, moratorium, reorganization,
or similar debtor relief laws affecting the rights of creditors generally from
time to time in effect.
DEFAULTED MORTGAGE LOAN: Any Mortgage Loan as to which the Mortgagor
has failed to make unexcused payment in full of three or more consecutive
Scheduled Payments.
DEFERRED INTEREST: The excess of the amount of interest due on a
negatively amortizing Mortgage Loan over the Scheduled Payment due thereon which
is permitted under the terms of the related Mortgage Note to be added to the
principal of the Mortgage Note.
DEFICIENT VALUATION: With respect to any Mortgage Loan, a valuation of
the Mortgaged Property by a court of competent jurisdiction in an amount less
than the then outstanding indebtedness under the Mortgage Loan, which valuation
results from a proceeding initiated under the Bankruptcy Code or any other
similar state law or other proceeding.
DEFINITIVE CERTIFICATES: The meaning specified in Subsection 5.01(b)
hereof.
DEPOSITORY: The Depository Trust Company, the nominee of which is Cede
& Co., or any successor thereto.
DEPOSITORY AGREEMENT: The meaning specified in Subsection 5.01(a)
hereof.
DEPOSITORY PARTICIPANT: A broker, dealer, bank or other financial
institution or other Person for whom from time to time the Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
DESIGNATED DEPOSITORY INSTITUTION: A depository institution
(commercial bank, mutual savings bank or savings and loan association) or trust
company (which may include the Trustee), the deposits of which are fully insured
by the FDIC to the extent provided by law.
DETERMINATION DATE: The 18th day of the month of the Distribution
Date, or if such day is not a Business Day, the preceding Business Day.
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: State Street Bank and Trust Company, or its successors
in interest as custodian for the Depository.
DUE DATE: With respect to each Mortgage Loan, the date in each month
on which its Scheduled Payment is due if such due date is the first day of a
month and otherwise is deemed to be the first day of the following month.
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.
EMC: EMC Mortgage Corporation, a Delaware corporation, or its
successors in interest.
ERISA: The Employee Retirement Income Security Act of 1974, as
amended.
EVENT OF DEFAULT: An event described in Section 8.01.
EXCESS LIQUIDATION PROCEEDS: To the extent that such amount is not
required by law to be paid to the related Mortgagor, the amount, if any, by
which Liquidation Proceeds with respect to a Liquidated Mortgage Loan exceed the
sum of (i) the Outstanding Principal Balance of such Mortgage Loan and accrued
but unpaid interest at the related Mortgage Interest Rate through the last day
of the month in which the related Liquidation Date occurs, plus (ii) related
Liquidation Expenses.
FDIC: Federal Deposit Insurance Corporation or any successor thereto.
FHA: Federal Housing Authority or any successor thereto.
FHLMC: Federal Home Loan Mortgage Corporation or any successor
thereto.
FITCH: Fitch Investors Service, L.P. and its successors in interest.
FNMA: Federal National Mortgage Association or any successor thereto.
FRACTIONAL UNDIVIDED INTEREST: With respect to any Class of
Certificates, 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 Certificates in the aggregate, the fractional
undivided interest evidenced by each of the Class R-1 and R-2 Certificates will
be deemed to equal 1% multiplied by a fraction the numerator of which is the
Current Principal Amount of each such Certificate and the denominator of which
is the aggregate Current Principal Amount of each such Class and (ii) a
Certificate of any other Class will be deemed to equal 98% 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 LOSS: Any Realized Loss attributable to fraud in the origination
of the related Mortgage Loan.
FUNDS TRANSFER DATE: The Business Day prior to the related
Distribution Date in any month or if such day is not a Business Day, the
preceding Business Day.
GLOBAL CERTIFICATE: Any Private Certificate registered in the name of
the Depository or its nominee, beneficial interests in which are reflected on
the books of the Depository or on the books of a Person maintaining an account
with such Depository (directly or as an indirect participant in accordance with
the rules of such Depository). As of the Closing Date there will be no Global
Certificates.
GROSS MARGIN: The amount for each Mortgage Loan which is added to the
applicable Index to determine the Mortgage Interest Rate (subject to the
applicable, Periodic Rate Cap, Maximum Lifetime Mortgage Rate and Minimum
Lifetime Mortgage Rate) as of each Interest Adjustment Date.
GROUP AVAILABLE FUNDS: Reference to any one of the Group I Available
Funds, Group II Available Funds, Group III Available Funds or Group IV Available
Funds.
GROUP I AVAILABLE FUNDS, GROUP II AVAILABLE FUNDS, GROUP III AVAILABLE
FUNDS, or GROUP IV AVAILABLE FUNDS: With respect to any Distribution Date, an
amount equal to the aggregate of the following with respect to each Group
Available Funds, respectively: (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 (including any
amount required to be paid by the Master Servicer in respect of interest on
Simple Interest Loans), (b) any Monthly Advances (including Certificate Account
Advances) and Compensating Interest Payments by the Master Servicer with respect
to such Distribution Date and (c) any amount reimbursed by the Master Servicer
pursuant to Subsections 4.02(d) and 4.04(d) in connection with losses on
Permitted Investments, except:
(i)all payments that were due on or before the Cut-off Date,
except for the principal portion of payments on Simple
Interest Loans due before the Cut-off Date and received after
the Cut-off Date;
(ii)all Principal Prepayments and Liquidation Proceeds
received after the applicable Prepayment Period and all
related payments of interest and any scheduled principal
payments due in the related Due Period on Simple Interest
Loans but received after the related Prepayment Period;
(iii)all payments, other than Principal Prepayments, that
represent early receipt of Scheduled Payments due on a date or
dates subsequent to the related Due Date;
(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 4.03(a); and
(vii)amounts withdrawn by the Trustee pursuant to
Subsection 4.03(b) to pay the Trustee's Fee and expenses.
GROUP I MORTGAGE LOANS: The Mortgage Loans identified as such on the
Mortgage Loan Schedule.
GROUP II MORTGAGE LOANS: The Mortgage Loans identified as such on the
Mortgage Loan Schedule.
GROUP III MORTGAGE LOANS: The Mortgage Loans identified as such on the
Mortgage Loan Schedule.
GROUP IV MORTGAGE LOANS: The Mortgage Loans identified as such on the
Mortgage Loan Schedule.
GROUP I SENIOR OPTIMAL PRINCIPAL AMOUNT, GROUP II SENIOR OPTIMAL
PRINCIPAL AMOUNT GROUP III SENIOR OPTIMAL PRINCIPAL Amount or GROUP IV SENIOR
OPTIMAL PRINCIPAL AMOUNT: As to any Distribution Date, an amount equal to the
sum, without duplication, of:
(i) the Class A-I Senior Percentage, the Class A-II
Senior Percentage, the Class A-III Senior Percentage or the
Class A-IV Senior Percentage, respectively, of the sum of
(a) Scheduled Principal due on the related Due Date on each
Outstanding Mortgage Loan (other than a Simple Interest
Loan) in the related Mortgage Loan Group 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 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) and (b) actual payments of principal received
on each Simple Interest Loan in the related Mortgage Loan
Group during the related Prepayment Period;
(ii) the Class A-I Senior Prepayment Percentage, the
Class A-II Senior Prepayment Percentage, the Class A-III
Senior Prepayment Percentage or the Class A-IV Senior
Prepayment Percentage, respectively, of all Voluntary
Principal Prepayments in part on Mortgage Loans in the
Mortgage Group received during the related Prepayment
Period, together with the Class A-I Senior Prepayment
Percentage, the Class A-II Senior Prepayment Percentage, the
Class A-III Senior Prepayment Percentage or the Class A-IV
Senior Prepayment Percentage, respectively, of the Scheduled
Principal Balance of each Mortgage Loan in the related
Mortgage Loan Group which was the subject of a Voluntary
Principal Prepayment in full during the related Prepayment
Period;
(iii) the lesser of (x) the Class A-I Senior Prepayment
Percentage, the Class A-II Senior Prepayment Percentage, the
Class A-III Senior Prepayment Percentage or the Class A-IV
Senior Prepayment Percentage, respectively, of the sum of
(A) all Net Liquidation Proceeds allocable to principal
received in respect of each Mortgage Loan in the related
Mortgage Loan Group that became a Liquidated Mortgage Loan
during the related Prepayment Period (other than Mortgage
Loans in the related Mortgage Loan Group 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 Mortgage Insurance Policy; and (y) the Class A-I
Senior Prepayment Percentage, the Class A-II Senior
Prepayment Percentage, the Class A-III Senior Prepayment
Percentage or the Class A-IV Senior Prepayment Percentage,
respectively, of the sum of (A) the Scheduled Principal
Balance of each Mortgage Loan in the related Mortgage Loan
Group that became a Liquidated Mortgage Loan during the
related Prepayment Period (other than Mortgage Loans in the
related Mortgage Loan Group described in clause (B)) and (B)
the Scheduled Principal Balance of each such Mortgage Loan
that was purchased by an Insurer from the Trustee during the
related Prepayment Period pursuant to the related Primary
Mortgage Insurance Policy;
(iv) the Class A-I Senior Prepayment Percentage, the
Class A-II Senior Prepayment Percentage, the Class A-III
Senior Prepayment Percentage or the Class A-IV Senior
Prepayment Percentage, respectively, of the Scheduled
Principal Balance of each Mortgage Loan in the related
Mortgage Loan Group which was purchased on such Distribution
Date pursuant to Section 2.02, 2.03A(b) or 3.19; and
(v) the Class A-I Senior Prepayment Percentage, the
Class A-II Senior Prepayment Percentage, the Class A-III
Senior Prepayment Percentage or the Class A-IV Senior
Prepayment Percentage, respectively, of the difference, if
any, between the Scheduled Principal Balance of a Mortgage
Loan in the related Mortgage Loan Group that has been
replaced by the Master Servicer with a Substitute Mortgage
Loan pursuant to Section 2.04 during the month of such
Distribution Date and the Scheduled Principal Balance of
such Substitute Mortgage Loan.
GROUP I SUBORDINATE PERCENTAGE: On any Distribution Date, 100% minus
the applicable Class A-I Senior Percentage.
GROUP II SUBORDINATE PERCENTAGE: On any Distribution Date, 100% minus
the applicable Class A-II Senior Percentage.
GROUP III SUBORDINATE PERCENTAGE: On any Distribution Date, 100% minus
the applicable Class A-III Senior Percentage.
GROUP IV SUBORDINATE PERCENTAGE: On any Distribution Date, 100% minus
the applicable Class A-IV Senior Percentage.
GROUP I SUBORDINATE PREPAYMENT PERCENTAGE, GROUP II SUBORDINATE
PREPAYMENT PERCENTAGE, GROUP III SUBORDINATE PREPAYMENT PERCENTAGE or GROUP IV
SUBORDINATE PREPAYMENT PERCENTAGE: On any Distribution Date, 100% minus the
applicable Class A-I Senior Prepayment Percentage, Class A-II Senior Prepayment
Percentage, Class A-III Senior Prepayment Percentage or Class A-IV Senior
Prepayment Percentage, respectively, except that on any Distribution Date after
the Current Principal Amounts of the Class A-I Certificates, Class A-II
Certificates and Residual Certificates, Class A-III Certificates and Class A-IV
Certificates, respectively, have each been reduced to zero, the Group I
Subordinate Prepayment Percentage, Group II Subordinate Prepayment Percentage,
Group III Subordinate Prepayment Percentage or Group IV Subordinate Prepayment
Percentage, respectively, will equal 100%.
HOLDER: The Person in whose name a Certificate is registered in the
Certificate Register, except that, subject to Subsection 11.05(e), solely for
the purpose of giving any consent pursuant to this Agreement, any Certificate
registered in the name of the Seller, the Master Servicer, a Sub-Servicer or the
Trustee or any Affiliate thereof shall be deemed not to be outstanding and the
Fractional Undivided Interest evidenced thereby shall not be taken into account
in determining whether the requisite percentage of Fractional Undivided
Interests necessary to effect any such consent has been obtained.
INDEMNIFIED PERSONS: The Trustee, its officers, directors, agents and
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.
INDEX: The index, if any, specified in a Mortgage Note by reference to
which the related Mortgage Interest Rate will be adjusted from time to time.
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
Mortgage Insurance Policy, standard hazard insurance policy, flood insurance
policy or title insurance policy.
INSURANCE PROCEEDS: Amounts paid by the insurer under any Insurance
Policy covering any Mortgage Loan or Mortgaged Property other than amounts
required to be paid over to the Mortgagor pursuant to law or the related
Mortgage Note or Security Instrument and other than amounts used to repair or
restore the Mortgaged Property or to reimburse Insured Expenses.
INSURED EXPENSES: Expenses covered by any Insurance Policy.
INSURER: Any issuer of an Insurance Policy.
INTEREST ACCRUAL PERIOD: With respect to each Distribution Date, for
each Class of Certificates, the calendar month preceding the month in which the
Distribution Date occurs, commencing in June, 1997.
INTEREST ADJUSTMENT DATE: With respect to a Mortgage Loan, the date,
if any, specified in the related Mortgage Note on which the Mortgage Interest
Rate is subject to adjustment.
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
repayment;
(b) principal prepayments in full received during the
relevant Prepayment Period: The difference between (i) one
month's interest at the applicable Net Rate on the Scheduled
Principal Balance of such Mortgage Loan immediately prior to
such prepayment and (ii) the amount of interest for the
calendar month of such prepayment (adjusted to the
applicable Net Rate) received at the time of such
prepayment;
(c) Relief Act Mortgage Loans: As to any Relief Act
Mortgage Loan, the excess of (i) 30 days' interest (or, in
the case of a principal prepayment in full, interest to the
date of prepayment) on the Scheduled Principal Balance
thereof (or, in the case of a principal prepayment in part,
on the amount so prepaid) at the related Net Rate over (ii)
30 days' interest (or, in the case of a principal prepayment
in full, interest to the date of prepayment) on such
Scheduled Principal Balance (or, in the case of a Principal
Prepayment in part, on the amount so prepaid) at the Net
Rate required to be paid by the Mortgagor as limited by
application of the Relief Act.
INVESTMENT LETTER: The letter to be furnished by each Institutional
Accredited Investor which purchases Class B-4, Class B-5 and Class B-6
Certificates in connection with such purchase, substantially in the form set
forth as Exhibit F-1 hereto.
LIQUIDATED MORTGAGE LOAN: Any defaulted Mortgage Loan as to which the
Master Servicer has determined that all amounts it expects to recover from or on
account of such Mortgage Loan have been recovered.
LIQUIDATION DATE: With respect to any Liquidated Mortgage Loan, the
date on which the Master Servicer has certified that such Mortgage Loan has
become a Liquidated Mortgage Loan.
LIQUIDATION EXPENSES: With respect to a Mortgage Loan in liquidation,
unreimbursed expenses paid or incurred by or for the account of the Master
Servicer and not recovered by the Master Servicer under any Primary Mortgage
Insurance Policy for reasons other than the Master Servicer's failure to ensure
the maintenance of or compliance with a Primary Mortgage 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 6.07(b).
LOAN-TO-VALUE RATIO: The fraction, expressed as a percentage, the
numerator of which is the original principal balance of the related Mortgage
Loan and the denominator of which is the Original Value of the related Mortgaged
Property.
LOSS ALLOCATION LIMITATION: The meaning specified in Section 6.03(c)
hereof.
MASTER SERVICER: With respect to the Mortgage Loans, EMC, 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 0.375%.
MAXIMUM LIFETIME MORTGAGE RATE: The maximum level to which a Mortgage
Interest Rate can adjust in accordance with its terms, regardless of changes in
the applicable Index.
MINIMUM LIFETIME MORTGAGE RATE: The minimum level to which a Mortgage
Interest Rate can adjust in accordance with its terms, regardless of changes in
the applicable Index.
MONTHLY ADVANCE: The advance (including a Certificate Account Advance)
required to be made by the Master Servicer on the related Advancing Date
pursuant to Section 6.08.
MORTGAGE FILE: The mortgage documents listed in Section 2.01(b)
pertaining to a particular Mortgage Loan and any additional documents required
to be added to the Mortgage File pursuant to this Agreement.
MORTGAGE INTEREST RATE: The annual rate at which interest accrues from
time to time on any Mortgage Loan pursuant to the related Mortgage Note, which
rate is equal to the "Mortgage Interest Rate" set forth with respect thereto on
the Mortgage Loan Schedule.
MORTGAGE LOAN: A mortgage loan transferred and assigned to the Trustee
pursuant to Section 2.01 or Section 2.04 and held as a part of the Trust Fund,
as identified in the Mortgage Loan Schedule, including a mortgage loan the
property securing which has become an REO Property.
MORTGAGE LOAN GROUP: Any one of Mortgage Loan Group I, Mortgage Loan
Group II, Mortgage Loan Group III or Mortgage Loan Group IV.
MORTGAGE LOAN GROUP I: The group of Mortgage Loans which is composed
of the Group I Mortgage Loans.
MORTGAGE LOAN GROUP II: The group of Mortgage Loans which is composed
of the Group II Mortgage Loans.
MORTGAGE LOAN GROUP III: The group of Mortgage Loans which is composed
of the Group III Mortgage Loans.
MORTGAGE LOAN GROUP IV: The group of Mortgage Loans which is composed
of the Group IV Mortgage Loans.
MORTGAGE LOAN PURCHASE AGREEMENT: The Mortgage Loan Purchase Agreement
dated as of June 24, 1997, among BSMCC, as seller and Bear Stearns Mortgage
Securities Inc., as purchaser, and all amendments thereof and supplements
thereto.
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,
which shall separately identify the Group I Mortgage Loans, the Group II
Mortgage Loans, the Group III Mortgage Loans and the Group IV Mortgage Loans.
MORTGAGE NOTE: The originally executed note or other evidence of 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 and
the Trustee's Fees (expressed as a per annum rate).
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, as evidenced by an Officer's Certificate, 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 for which such advance was 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: The lesser of (i) the Appraised Value or (ii) sales
price of a Mortgaged Property at the time of origination of a Mortgage Loan,
except that in instances where either (i) or (ii) is unavailable, the other may
be used to determine Original Value, or if both (i) and (ii) are unavailable,
Original Value may be determined from other sources reasonably acceptable to the
Trustee.
OUTSTANDING MORTGAGE LOAN: With respect to any Due Date, a Mortgage
Loan which, prior to such Due Date, was not the subject of a Principal
Prepayment in full, did not become a Liquidated Mortgage Loan and was not
purchased pursuant to Sections 2.02, 2.03 or 3.19 or replaced pursuant to
Section 2.04.
OUTSTANDING PRINCIPAL BALANCE: As of the time of any determination,
the principal balance of a Mortgage Loan remaining to be paid by the Mortgagor,
or, in the case of an REO Property, the principal balance of the related
Mortgage Loan remaining to be paid by the Mortgagor at the time such property
was acquired by the Trust Fund less any Net Insurance Proceeds with respect
thereto to the extent applied to principal.
PASS-THROUGH RATE: As to each Class of Certificates, the rate of
interest set forth, or determined as provided with respect thereto, in Section
5.01. Any monthly calculation of interest at a stated rate shall be based upon
annual interest at such rate divided by twelve.
PERIODIC RATE CAP: With respect to each Mortgage Loan, the maximum
adjustment that can be made to the Mortgage Interest Rate on each Interest
Adjustment Date in accordance with its terms, regardless of changes in the
applicable Index.
PERMITTED INVESTMENTS: Any one or more of the following obligations or
securities:
(i) direct obligations of, and obligations fully
guaranteed by the United States of America or any agency
or instrumentality of the United States of America the
obligations of which are backed by the full faith and
credit of the United States of America;
(ii) (a) demand or time deposits, federal funds or
bankers' acceptances issued by any depository institution or
trust company incorporated under the laws of the United States
of America or any state thereof (including the Trustee acting
in its commercial banking capacity) and subject to supervision
and examination by federal and/or state banking authorities,
provided that the commercial paper and/or the short-term
deposit rating and/or the long-term unsecured debt obligations
or deposits of such depository institution or trust company at
the time of such investment or contractual commitment
providing for such investment have the Applicable Credit
Rating or better from each Rating Agency and (b) any other
demand or time deposit or certificate of deposit that is fully
insured by the Federal Deposit Insurance Corporation;
(iii) repurchase obligations with respect to (a) any
security described in clause (i) above or (b) any other
security issued or guaranteed by an agency or instrumentality
of the United States of America, the obligations of which are
backed by the full faith and credit of the United States of
America, in either case entered into with a depository
institution or trust company (acting as principal) described
in clause (ii)(a) above where the Trustee holds the security
therefor;
(iv) securities bearing interest or sold at a discount
issued by any corporation (including the Trustee) incorporated
under the laws of the United States of America or any state
thereof that have the Applicable Credit Rating or better from
each Rating Agency at the time of such investment or
contractual commitment providing for such investment;
PROVIDED, HOWEVER, that securities issued by any particular
corporation will not be Permitted Investments to the extent
that investments therein will cause the then outstanding
principal amount of securities issued by such corporation and
held as part of the Trust to exceed 10% of the aggregate
Outstanding Principal Balances and amounts of all the Mortgage
Loans and Permitted Investments held as part of the Trust;
(v) commercial paper (including both
noninterest-bearing discount obligations and interest-bearing
obligations payable on demand or on a specified date not
more than one year after the date of issuance thereof) having
the Applicable Credit Rating or better from each Rating Agency
at the time of such investment;
(vi) a Reinvestment Agreement issued by any bank,
insurance company or other corporation or entity;
(vii) any other demand, money market or time deposit,
obligation, security or investment as may be acceptable to
each Rating Agency; and
(viii) any money market funds (including, without
limitation, State Street's "Federated Money Market Account")
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 R-1, Class R-2, Class B-4, Class B-5
and Class B-6 Certificates; provided that as set forth in Section 5.01(a), if
one or more Classes of Class B-4, Class B-5 and/or Class B-6 Certificates have
become Book-Entry Certificates, then with respect to such Class or Classes, only
to the extent provided in Section 5.02.
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
related Due Date, equals or exceeds such percentage calculated as of the Closing
Date.
PREPAYMENT PERIOD: With respect to any Mortgage Loan and any
Distribution Date, the calendar month preceding the month of such Distribution
Date.
PRIMARY MORTGAGE INSURANCE POLICY: Any primary mortgage guaranty
insurance policy issued in connection with a Mortgage Loan which provides
compensation to a Mortgage Note holder in the event of default by the obligor
under such Mortgage Note or the related Security Instrument, or any replacement
policy therefor.
PRINCIPAL PREPAYMENT: Any payment (whether partial or full) or other
recovery of principal on a Mortgage Loan which is received in advance of its
scheduled Due Date to the extent that it is not accompanied by an amount as to
interest representing scheduled interest due on any date or dates in any month
or months subsequent to the month of prepayment, including Insurance Proceeds
and the purchase price in connection with any purchase of a Mortgage Loan, any
cash deposit in connection with the substitution of a Mortgage Loan, and the
principal portion of Net Liquidation Proceeds.
PRIVATE CERTIFICATE: Any Class B-4, Class B-5 or Class B-6
Certificate.
PROTECTED ACCOUNT: A trust account established and maintained by the
Master Servicer or any Sub-Servicer with respect to the Mortgage Loans and with
respect to REO Property in a Designated Depository Institution for receipt of
principal and interest and other amounts as described in Section 4.01.
QUALIFIED INSURER: Any insurance company duly qualified as such under
the laws of the state or states in which the related Mortgaged Property or
Mortgaged Properties is or are located, duly authorized and licensed in such
state or states to transact the type of insurance business in which it is
engaged and approved as an insurer by the Master Servicer, so long as the claims
paying ability of which is acceptable to the Rating Agencies for pass- through
certificates having the same rating as the Certificates rated by the Rating
Agencies as of the Closing Date.
RATING AGENCIES: S&P and Fitch.
RATING AGENCY ELIGIBLE ACCOUNT: An account, including one maintained
with the Trustee, which either (i) is a trust account maintained with the trust
department of a depository institution or trust company (including the Trustee)
organized under the laws of the United States of America or any one of the
states thereof or the District of Columbia or (ii) is maintained with an entity
which is an institution whose deposits are insured by the FDIC, the unsecured
and uncollateralized long-term debt obligations of which shall be rated "A" or
better by S&P and Fitch, or one of the two highest short-term ratings by S&P and
Fitch, and which is either (a) a federal savings association duly organized,
validly existing and in good standing under the federal banking laws, (b) an
institution duly organized, validly existing and in good standing under the
applicable banking laws of any state, (c) a national banking association under
the federal banking laws, or (d) a principal subsidiary of a bank holding
company.
REALIZED LOSS: Any (i) Deficient Valuation or (ii) as to any
Liquidated Mortgage Loan, (x) the Outstanding Principal Balance of such
Liquidated Mortgage Loan plus accrued and unpaid interest thereon at the
Mortgage Interest Rate through the last day of the month of such liquidation
LESS (y) the related Net Liquidation Proceeds.
RECORD DATE: With respect to any Distribution Date, the close of
business on the last Business Day of the month immediately preceding the month
of such Distribution Date.
REINVESTMENT AGREEMENTS: One or more reinvestment agreements,
acceptable to the Rating Agencies, from a bank, insurance company or other
corporation or entity (including the Trustee).
RELIEF ACT: The Soldiers' and Sailors' Civil Relief Act of 1940, as
amended.
RELIEF ACT MORTGAGE LOAN: Any Mortgage Loan as to which the Scheduled
Payment thereof has been reduced due to the application of the Relief Act.
REMIC: A real estate mortgage investment conduit, as defined in the
Code.
REMIC I: That group of assets contained in the Trust Fund designated
as a REMIC consisting of the REMIC II Regular Certificates.
REMIC II: That group of assets contained in the Trust Fund designated
as a REMIC consisting of (i) the Mortgage Loans, (ii) the Certificate Account,
(iii) any REO Property and (iv) any proceeds of the foregoing. Expenses and fees
of the Trust shall be paid by REMIC II.
REMIC II CERTIFICATES: The REMIC II Regular Certificates and the Class
R-2 Certificates.
REMIC II REGULAR CERTIFICATES: As defined in Section 5.01.
REMIC OPINION: An Opinion of Independent Counsel, to the effect that
the proposed action described therein would not, under the REMIC Provisions, (i)
cause the REMIC to fail to qualify as a REMIC while any regular interest in the
REMIC is outstanding, (ii) result in a tax on prohibited transactions or (iii)
constitute a taxable contribution after the Startup Day.
REMIC PROVISIONS: The provisions of the federal income tax law
relating to REMICs, which appear at Sections 860A through 860G of the Code, and
related provisions and regulations promulgated thereunder, as the foregoing may
be in effect from time to time.
REO PROPERTY: A Mortgaged Property acquired in the name of the
Trustee, for the benefit of Certificateholders, by foreclosure or deed-in-lieu
of foreclosure in connection with a defaulted Mortgage Loan.
REPURCHASE PRICE: With respect to any Mortgage Loan (or any property
acquired with respect thereto) required to be repurchased pursuant to Section
2.02 or 2.03 an amount equal to the sum of (i) 100% of the Outstanding Principal
Balance of such Mortgage Loan as of the date of repurchase (or if the related
Mortgaged Property was acquired with respect thereto, 100% of the Outstanding
Principal Balance at the date of the acquisition) plus (ii) accrued but unpaid
interest on the Outstanding Principal Balance at the related Mortgage Interest
Rate, through and including the last day of the month of repurchase reduced by
(ii) any portion of the Master Servicing Fee or advances payable to the
purchaser of the Mortgage Loan.
REQUEST FOR RELEASE: A request for release in the form attached hereto
as Exhibit D.
REQUIRED INSURANCE POLICY: With respect to any Mortgage Loan, any
insurance policy which is required to be maintained from time to time under this
Agreement with respect to such Mortgage Loan.
RESIDUAL CERTIFICATES: The Class R-1 and Class R-2 Certificates.
RESPONSIBLE OFFICER: Any officer assigned to the corporate trust
department or similar department of the Trustee (or any successor division or
department thereto), and also, with respect to a particular matter, any other
officer to whom such matter is referred because of such officer's knowledge of
and familiarity with the particular subject.
RULE 144A CERTIFICATE: The certificate to be furnished by each
purchaser of a Private Certificate which is a Qualified Institutional Buyer as
defined under Rule 144A promulgated under the Securities Act, substantially in
the form set forth as Exhibit F-2 hereto.
S&P: Standard and Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., and its successors in interest.
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, (i) (a) in the case of each Mortgage Loan other than a
Mortgage Loan that is a Simple Interest Loan, the unpaid principal balance of
such Mortgage Loan as of the close of business on the related Due 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) or (b) in the case of a Simple
Interest Loan, the actual principal balance of such Mortgage Loan as of the
Cut-off Date less the principal portion of all scheduled payments made thereon
during the related Prepayment Period plus (ii) in the case of each Mortgage Loan
which negatively amortizes, any Deferred Interest added to principal through
such Due Date and less (iii) any Principal Prepayments (including the principal
portion of Net Liquidation Proceeds) received during or prior to the related
Prepayment Period; provided that the Scheduled Principal Balance of a Liquidated
Mortgage Loan is zero.
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) (OR ANY ENTITY IN
WHICH ALL OF THE EQUITY HOLDERS COME WITHIN SUCH PARAGRAPHS) OF REGULATION D
UNDER THE SECURITIES ACT PURCHASING NOT FOR DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, SUBJECT TO (A) THE RECEIPT BY THE TRUSTEE OF A LETTER
SUBSTANTIALLY IN THE FORM PROVIDED IN THE AGREEMENT AND (B) AN OPINION OF
COUNSEL AS TO COMPLIANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE UNITED
STATES. THIS CERTIFICATE MAY NOT BE ACQUIRED DIRECTLY OR INDIRECTLY BY, OR ON
BEHALF OF, AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT WHICH IS
SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED, AND/OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED,
UNLESS THE PROPOSED TRANSFEREE PROVIDES A BENEFIT PLAN OPINION TO THE TRUSTEE TO
THE EFFECT THAT THE PROPOSED TRANSFER AND/OR HOLDING OF A CERTIFICATE AND THE
SERVICING, MANAGEMENT AND/OR OPERATION OF THE TRUST AND ITS ASSETS: (I) WILL NOT
RESULT IN ANY PROHIBITED TRANSACTION WHICH IS NOT COVERED UNDER AN INDIVIDUAL OR
CLASS PROHIBITED TRANSACTION EXEMPTION, INCLUDING, BUT NOT LIMITED TO,
PROHIBITED TRANSACTION EXEMPTION ("PTE") 84-14, PTE 91-38, PTE 90-1, PTE 95-60
OR PTE 96- 23 AND (II) WILL NOT GIVE RISE TO ANY ADDITIONAL FIDUCIARY DUTIES ON
THE PART OF THE MASTER SERVICER OR 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.
SENIOR CERTIFICATES: The Class A-I, Class A-II, Class A- III, Class
A-IV, Class R-1 and Class R-2 Certificates.
SENIOR PERCENTAGE: The Class A-I Senior Percentage, the Class A-II
Senior Percentage, the Class A-III Senior Percentage or the Class A-IV Senior
Percentage.
SENIOR PREPAYMENT PERCENTAGE: The Class A-I Senior Prepayment
Percentage, the Class A-II Senior Prepayment Percentage, the Class A-III Senior
Prepayment Percentage or the Class A-IV Senior Prepayment Percentage.
SERVICING ACCOUNT: The separate trust account(s) created and
maintained by the Master Servicer or each Sub-Servicer with respect to the
Mortgage Loans or with respect to REO Property in a Designated Depository
Institution for collection of taxes, assessments, insurance premiums and
comparable items as described in Section 3.07.
SERVICING ADVANCES: All reasonable and customary "out of pocket" costs
and expenses incurred in the performance by the Master Servicer of its servicing
obligations, including, but not limited to, the cost of (i) the preservation,
restoration and protection of the Mortgaged Property, (ii) any enforcement or
judicial proceedings, including foreclosures, (iii) the management and
liquidation of the REO Property, including reasonable fees paid to any
independent contractor in connection therewith, (iv) compliance with the
obligations under Section 3.07 or 3.10, and (v) in connection with the
liquidation of a Mortgage Loan, expenditures relating to the purchase or
maintenance of the first lien on the Mortgaged Property pursuant to Section
3.12, all of which reasonable and customary out-of-pocket costs and expenses are
reimbursable to the Servicer to the extent provided in Sections 4.02(b) and
4.03(b).
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.
SIMPLE INTEREST LOAN: A Mortgage Loan that provides for a daily
accrual of interest.
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.
STARTUP DAY: June 30, 1997.
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 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.
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 Group I Subordinate Percentage, the Group II Subordinate
Percentage, the Group III Subordinate Percentage or the Group IV
Subordinate Percentage, as applicable, of the sum of (a) Scheduled
Principal due on the related Due Date on each Outstanding Mortgage
Loan (other than Simple Interest Loans) in the related Mortgage Loan
Group as of such Due Date as specified in the amortization schedule at
the time applicable thereto (after adjustment for previous Principal
Prepayments, 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) and
(b) actual payments of principal received on each Simple Interest Loan
in the related Mortgage Loan Group during the related Prepayment
Period;
(ii) the Group I Subordinate Prepayment Percentage, the Group II
Subordinate Prepayment Percentage, the Group III Subordinate
Prepayment Percentage or the Group IV Subordinate Prepayment
Percentage, as applicable, of all Voluntary Principal Prepayments in
part on Mortgage Loans in the related Mortgage Group received during
the related Prepayment Period, and 100% of any Group I Senior Optimal
Principal Amount, Group II Senior Optimal Principal Amount, Group III
Senior Optimal Principal Amount or Group IV Senior Optimal Principal
Amount, as applicable, not distributed to the related Senior
Certificates on such Distribution Date, together with the Group I
Subordinate Prepayment Percentage, Group II Subordinate Prepayment
Percentage, Group III Subordinate Prepayment Percentage or Group IV
Subordinate Prepayment Percentage, as applicable, of the Scheduled
Principal Balance of each Mortgage Loan in the related Mortgage Loan
Group which was the subject of a Voluntary Principal Prepayment in
full during the related Prepayment Period;
(iii) the excess, if any, of (x) the sum of (A) all Net
Liquidation Proceeds allocable to principal on Mortgage Loans in the
related Mortgage Loan Group 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 in
the related Mortgage Loan Group that was purchased by an Insurer from
the Trustee during the related Prepayment Period pursuant to the
related Primary Mortgage Insurance Policy, over (y) the sum of the
amounts distributable pursuant to clause (iii) of the definitions of
Group I Senior Optimal Principal Amount, Group II Senior Optimal
Principal Amount, Group III Senior Optimal Principal Amount or Group
IV Senior Optimal Principal, respectively, on such Distribution Date;
(iv) the Group I Subordinate Prepayment Percentage, Group II
Subordinate Prepayment Percentage, Group III Subordinate Prepayment
Percentage or Group IV Subordinate Prepayment Percentage,
respectively, of the Scheduled Principal Balance of each Mortgage Loan
in the related Mortgage Loan Group which was purchased on such
Distribution Date pursuant to Section 2.02, 2.03A(b) or 3.19; and
(v) the Group I Subordinate Prepayment Percentage, Group II
Subordinate Prepayment Percentage, Group III Subordinate Prepayment
Percentage or Group IV Subordinate Prepayment Percentage,
respectively, of the difference, if any, between the Scheduled
Principal Balance of a Mortgage Loan in the related Mortgage Loan
Group that has been replaced by the Master Servicer with a Substitute
Mortgage Loan pursuant to Section 2.04 during the month of such
Distribution Date and the Scheduled Principal Balance of such
Substitute Mortgage Loan.
After the aggregate current Principal Amounts of the Subordinate Certificates
have been reduced to zero, the Group I Senior Optimal Principal Amount, Group II
Senior Optimal Principal Amount, Group III Senior Optimal Principal Amount and
Group IV Senior Optimal Principal Amount, shall each be zero.
SUBORDINATE PERCENTAGE: A Group I Subordinate Percentage, Group II
Subordinate Percentage, Group III Subordinate Percentage or Group IV Subordinate
Percentage.
SUBORDINATE PREPAYMENT PERCENTAGE: A Group I Subordinate Prepayment
Percentage, Group II Subordinate Prepayment Percentage, Group III Subordinate
Prepayment Percentage or Group IV Subordinate Prepayment Percentage.
SUB-SERVICER: Any Person with which the Master Servicer has entered
into a Sub-Servicing Agreement and which meets the qualifications of a
Sub-Servicer pursuant to Section 3.02.
SUB-SERVICING AGREEMENT: The written contract between the Master
Servicer and a Sub-Servicer and any successor Sub-Servicer relating to servicing
and administration of certain Mortgage Loans as provided in Section 3.02.
SUBSTITUTE MORTGAGE LOAN: A mortgage loan tendered to the Trustee
pursuant to Section 2.04, in each case, in the opinion of the Master Servicer,
(i) which has an Outstanding Principal Balance not materially greater nor
materially less than the Mortgage Loan for which it is to be substituted; (ii)
which has a Mortgage Interest Rate and Net Rate not less than, and not
materially greater than, such Mortgage Loan; (iii) which has a maturity date not
materially earlier or later than such Mortgage Loan and not later than the
latest maturity date of any Mortgage Loan; (iv) which is of the same property
type and occupancy type as such Mortgage Loan; (v) which has a Loan-to-Value
Ratio not greater than the Loan-to-Value Ratio of such Mortgage Loan; (vi) which
is current in payment of principal and interest as of the date of substitution;
(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; and (viii)
which has a Gross Margin, Periodic Rate Cap and Maximum Lifetime Mortgage Rate
no less than those of such Mortgage Loan, has the same Index and interval
between Interest Adjustment Dates as such Mortgage Loan, and a Minimum Lifetime
Mortgage Rate no lower than that of such Mortgage Loan. The opinion of the
Master Servicer shall be evidenced by an Officer's Certificate delivered to the
Trustee.
TAX MATTERS PERSON: For each of REMIC I and REMIC II, the Holder of
the greatest Fractional Undivided Interest in the related Class R-1 and Class
R-2 Certificates, respectively, as more particularly set forth in Section 9.13
hereof.
TRUST FUND or TRUST: The corpus of the trust created by this
Agreement, consisting of the Mortgage Loans and the other assets described in
Section 2.01(a).
TRUSTEE: State Street Bank and Trust Company, 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) 0.0125% 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 0.0125%.
UNINSURED CAUSE: Any cause of damage to a Mortgaged Property or REO
Property such that the complete restoration of such Mortgaged Property or REO
Property is not fully reimbursable by the hazard insurance policies required to
be maintained pursuant to Section 3.10, without regard to whether or not such
policy is maintained.
VOLUNTARY PRINCIPAL PREPAYMENT: With respect to any Distribution Date,
any Principal Prepayment received from the related Mortgagor on a Mortgage Loan.
<PAGE>
ARTICLE II
Conveyance of Mortgage Loans;
Original Issuance of Certificates
Section 2.01. CONVEYANCE OF MORTGAGE LOANS TO TRUSTEE. (a) The Seller
concurrently with the execution and delivery of this Agreement, sells, transfers
and assigns to the Trustee without recourse all its right, title and interest in
and to (i) the Mortgage Loans identified in the Mortgage Loan Schedule,
including all interest and principal due with respect to the Mortgage Loans
after the Cut-off Date, but excluding any payments of principal and interest due
on or prior to the Cut-off Date; (ii) such assets as shall from time to time be
credited or are required by the terms of this Agreement to be credited to the
Certificate Account (excluding any income to the Master Servicer from Permitted
Investments under Subsection 4.02(d)), (iii) such assets relating to the
Mortgage Loans as from time to time may be held by the Master Servicer or a
Sub-Servicer in Protected Accounts (excluding any income to the Master Servicer
or any Sub-Servicer from Permitted Investments under Subsection 4.01(a)), (iv)
such assets relating to the Mortgage Loans as from time to time may be held by
the Trustee in the Custody Account (excluding any income to the Master Servicer
from Permitted Investments under Section 4.04(d)), (v) any Servicing Accounts
(to the extent the mortgagee has a claim thereto and excluding any income to the
Master Servicer or Sub-Servicer or interest payable to Mortgagors pursuant to
applicable law), (vi) any REO Property, (vii) the Required Insurance Policies
and any amounts paid or payable by the insurer under any Insurance Policy (to
the extent the mortgagee has a claim thereto), (viii) the Mortgage Loan Purchase
Agreement to the extent provided in Subsection 2.03A(a), 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 applicable and only 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, and (vi) originals of all modification agreements,
if applicable and available; 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 Security Instrument or intervening
assignments thereof which have been delivered or are being delivered to
recording offices for recording and have not been returned to the Seller in time
to permit their delivery as specified above, the Seller may deliver a true copy
thereof with a certification by BSMCC, on the face of such copy, substantially
as follows: "Certified to be a true and correct copy of the original, which has
been transmitted for recording"; (y) in lieu of the Security Instrument,
assignment to the Trustee or intervening assignments thereof, if the applicable
jurisdiction retains the originals of such documents (as evidenced by a
certification from BSMCC to such effect) the Seller may deliver photocopies of
such documents containing an original certification by the judicial or other
governmental authority of the jurisdiction where such documents were recorded;
and (z) in lieu of the Mortgage Notes relating to the 80 Mortgage Loans, with an
aggregate Scheduled Principal Balance as of the Cut-off Date of approximately
$5,537,434.00, each as identified in the list delivered by the Seller to the
Trustee on the Closing Date, the Seller may deliver a lost note affidavit and,
if available, a copy of the original Mortgage Note; 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) to the Trustee
promptly after they are received. The Master Servicer shall cause, at its
expense, the Security Instrument and intervening assignments, if any, and the
assignment of the Security Instrument to the Trustee to be recorded not later
than 180 days after the Closing Date.
Section 2.02. ACCEPTANCE OF MORTGAGE LOANS BY TRUSTEE. (a) The Trustee
acknowledges receipt of, subject to its further review and the exceptions it
notes pursuant to the procedures described below, the documents (or certified
copies thereof) delivered to it pursuant to Section 2.01 and declares that it
holds and will continue to hold those documents and any amendments, replacements
or supplements thereto and all other assets of the Trust Fund delivered to it as
Trustee in trust for the use and benefit of all present and future Holders of
the Certificates. No later than 45 days after the Closing Date (or, with respect
to any Substitute Mortgage Loan, within 5 days after the receipt by the Trustee
thereof), the Trustee agrees, for the benefit of the Certificateholders, to
review each Mortgage File delivered to it and to execute and deliver, or cause
to be executed and delivered, to the Seller and the Master Servicer an Initial
Certification substantially in the form annexed hereto as Exhibit G. 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)(vi) of Section
2.01, the Trustee's obligations shall extend only to documents actually
delivered pursuant to such subsections). In performing any such review, the
Trustee may conclusively rely on the purported due execution and genuineness of
any such document and on the purported genuineness of any signature thereon. If
the Trustee finds any document constituting part of the Mortgage File not to
have been executed or received, or to be unrelated to the Mortgage Loans
identified in Exhibit B or to appear to be defective on its face, the Trustee
shall promptly notify BSMCC. BSMCC shall correct or cure any such defect within
60 days from the date of notice from the Trustee of the defect and if BSMCC
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, BSMCC, will, subject to Section 2.04, within 90 days from
the Trustee's notification purchase such Mortgage Loan at the Repurchase Price;
PROVIDED, HOWEVER, that if such defect relates solely to the inability of BSMCC
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, BSMCC shall not be
required to purchase such Mortgage Loan if BSMCC delivers such original
documents or certified copy promptly upon receipt, but in no event later than
360 days after the Closing Date.
(b) No later than 180 days after the Closing Date, the Trustee will
review, for the benefit of the Certificateholders, the Mortgage Files delivered
to it and will execute and deliver or cause to be executed and delivered to the
Seller and the Master Servicer, a Final Certification substantially in the form
annexed hereto as Exhibit H. In conducting such review, the Trustee will
ascertain whether 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. 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 BSMCC. BSMCC
shall correct or cure any such defect or shall deliver to the Trustee an Opinion
of Counsel to the effect that such defect does not materially or adversely
affect the interests of Certificateholders in such Mortgage Loan within 60 days
from the date of notice from the Trustee of the defect and if BSMCC 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,
BSMCC shall, subject to Section 2.04, within 90 days from the Trustee's
notification purchase such Mortgage Loan at the Repurchase Price; PROVIDED,
HOWEVER, that if such defect relates solely to the inability of BSMCC 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, BSMCC shall not be
required to purchase such Mortgage Loan, if BSMCC delivers such original
documents or certified copy promptly upon receipt, but in no event later than
360 days after the Closing Date.
(c) In the event that a Mortgage Loan is purchased by BSMCC in
accordance with Subsections 2.02(a) or (b) above or Section 3.19, BSMCC shall
cause the Repurchase Price to be deposited in the appropriate subaccount of 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 appropriate subaccount of the Certificate Account, the Trustee shall release
to BSMCC the related Mortgage File and shall execute and deliver all instruments
of transfer or assignment, without recourse, furnished to it by BSMCC as are
necessary to vest in BSMCC title to and rights under the Mortgage Loan. Such
purchase shall be deemed to have occurred on the date on which certification of
the deposit of the Repurchase Price in the Certificate Account was received by
the Trustee. The Trustee shall amend the Mortgage Loan Schedule to reflect such
repurchase and shall promptly notify the Master Servicer and the Rating Agencies
of such amendment. The obligation of BSMCC to repurchase any Mortgage Loan as to
which such a defect in a constituent document exists shall be the sole remedy
respecting such defect available to the Certificateholders or to the Trustee on
their behalf.
Section 2.03. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE MASTER
SERVICER. (a) EMC 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; and
(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.
Section 2.03A. ASSIGNMENT OF INTEREST IN THE MORTGAGE LOAN PURCHASE
AGREEMENT. (a) The Seller hereby assigns to the Trustee, on behalf of the
Certificateholders, all of its right, title and interest in the Mortgage Loan
Purchase Agreement (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 BSMCC; provided that the obligations of BSMCC 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.
(b) If the Seller, BSMCC, 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 Mortgage Loan Purchase Agreement, 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. BSMCC within 60
days of its discovery or receipt of notice that such breach has occurred
(whichever occurs earlier), shall cure the breach in all material respects or,
subject to Section 2.04, shall purchase the Mortgage Loan or any property
acquired with respect thereto from the Trustee; PROVIDED, HOWEVER, that if there
is a breach of any representation set forth in Exhibit C and the Mortgage Loan
or the related property acquired with respect thereto has been sold, then BSMCC
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
BSMCC to the extent not required by law to be paid to the borrower.) Any such
purchase by BSMCC shall be made by depositing an amount equal to the Repurchase
Price in the appropriate subaccount of 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 BSMCC the related Mortgage File and shall
execute and deliver all instruments of transfer or assignment furnished to it by
BSMCC, without recourse, as are necessary to vest in BSMCC 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 appropriate subaccount of 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 BSMCC to purchase (or substitute a Substitute Mortgage Loan for)
any Mortgage Loan or any property acquired with respect thereto (or pay the
Repurchase Price as set forth in the above proviso) as to which a breach has
occurred and is continuing shall constitute the sole remedy respecting such
breach available to the Certificateholders or the Trustee on their behalf.
Section 2.04. SUBSTITUTION OF MORTGAGE LOANS. Notwithstanding anything
to the contrary in this Agreement, in lieu of purchasing a Mortgage Loan
pursuant to Sections 2.02 or 2.03A, BSMCC may, no later than the date by which
such purchase by BSMCC would otherwise be required, tender to the Trustee a
Substitute Mortgage Loan accompanied by an Officer's Certificate of BSMCC that
such Substitute Mortgage Loan conforms to the requirements set forth in the
definition of "Substitute Mortgage Loan"; PROVIDED, HOWEVER, that substitution
pursuant to this Section 2.04 in lieu of purchase shall not be permitted after
the termination of the two-year period beginning on the Startup Day. The Trustee
shall examine the Mortgage File for any Substitute Mortgage Loan in the manner
set forth in Section 2.02(a) and shall notify the Master Servicer in writing,
within five Business Days after receipt, whether or not the documents relating
to the Substitute Mortgage Loan satisfy the requirements of the third sentence
of Subsection 2.02(a). Within two Business Days after such notification, BSMCC
shall deposit in the appropriate subaccount of 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 BSMCC
of the Repurchase Price for the purchase of a Mortgage Loan by BSMCC. After such
notification to BSMCC, 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 Group I Mortgage Loan, Group II Mortgage Loan, Group III Mortgage
Loan or Group IV Mortgage Loan, as applicable, 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 BSMCC. The
Scheduled Principal on a Substitute Mortgage Loan due on the Due Date in the
month of substitution shall be the property of BSMCC 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 BSMCC the related Mortgage File
related to any Mortgage Loan released pursuant to this Section 2.04 and shall
execute and deliver all instruments of transfer or assignment, without recourse,
in form as provided to it as are necessary to vest in BSMCC title to and rights
under any Mortgage Loan released pursuant to this Section 2.04. BSMCC shall
deliver the documents related to the Substitute Mortgage Loan in accordance with
the provisions of Subsections 2.01(b) and 2.02(b), with the date of acceptance
of the Substitute Mortgage Loan deemed to be the Closing Date for purposes of
the time periods set forth in those Subsections. The representations and
warranties set forth in Exhibit C shall be deemed to have been made by BSMCC
with respect to each Substitute Mortgage Loan as of the date of acceptance of
such Mortgage Loan by the Trustee. The Trustee shall amend the Mortgage Loan
Schedule to reflect such substitution and shall provide a copy of such amended
Mortgage Loan Schedule to the Master Servicer and the Rating Agencies.
Section 2.05. REPRESENTATIONS AND WARRANTIES OF THE TRUSTEE. The
Trustee hereby represents and warrants to the Seller and the Master Servicer, as
of the Closing Date (and in the case of paragraphs (v) and (vi) below throughout
the term of the Agreement), that:
(i) The Trustee is a trust company duly organized, validly
existing and in good standing under the laws of the Commonwealth
of Massachusetts with a principal place of business in Boston,
Massachusetts;
(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 Incorporation 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 a Massachusetts trust company. 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 2.06. ISSUANCE OF CERTIFICATES. The Trustee acknowledges the
assignment to it of the Mortgage Loans and the other assets comprising the Trust
Fund and, concurrently therewith, has signed, and countersigned and delivered to
the Seller, in exchange therefor, Certificates in such authorized denominations
representing such Fractional Undivided Interests as the Seller has requested.
The Trustee agrees that it will hold the Mortgage Loans and such other assets
segregated on the books of the Trustee in trust for the benefit of the
Certificateholders.
Section 2.07. REPRESENTATIONS AND WARRANTIES CONCERNING THE SELLER.
The Seller hereby represents and warrants to the Trustee and the Master Servicer
as follows:
(i) the Seller (a) is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware and (b) is qualified and in good standing as a foreign
corporation to do business in each jurisdiction where such
qualification is necessary, except where the failure so to
qualify would not reasonably be expected to have a material
adverse effect on the Seller's business as presently conducted or
on the Purchaser's ability to enter into this Agreement and to
consummate the transactions contemplated hereby;
(ii) the Seller has full corporate power to own its
property, to carry on its business as presently conducted and to
enter into and perform its obligations under this Agreement;
(iii) the execution and delivery by the Seller of this
Agreement have been duly authorized by all necessary corporate
action on the part of the Seller; and neither the execution and
delivery of this Agreement, nor the consummation of the
transactions herein contemplated, nor compliance with the
provisions hereof, will conflict with or result in a breach of,
or constitute a default under, any of the provisions of any law,
governmental rule, regulation, judgment, decree or order binding
on the Seller or its properties or the articles of incorporation
or by-laws of the Seller, except those conflicts, breaches or
defaults which would not reasonably be expected to have a
material adverse effect on the Seller's ability to enter into
this Agreement and to consummate the transactions contemplated
hereby;
(iv) the execution, delivery and performance by the Seller
of this Agreement and the consummation of the transactions
contemplated hereby do not require the consent or approval of,
the giving of notice to, the registration with, or the taking of
any other action in respect of, any state, federal or other
governmental authority or agency, except those consents,
approvals, notices, registrations or other actions as have
already been obtained, given or made;
(v) this Agreement has been duly executed and delivered by
the Seller and, assuming due authorization, execution and
delivery by the other parties hereto, constitutes a valid and
binding obligation of the Seller enforceable against it in
accordance with its terms (subject to applicable bankruptcy and
insolvency laws and other similar laws affecting the enforcement
of the rights of creditors generally); and
(vi) there are no actions, suits or proceedings pending or,
to the knowledge of the Seller, threatened against the Seller,
before or by any court, administrative agency, arbitrator or
governmental body (i) with respect to any of the transactions
contemplated by this Agreement or (ii) with respect to any other
matter which in the judgment of the Seller will be determined
adversely to the Seller and will if determined adversely to the
Seller materially and adversely affect the Seller's ability to
enter into this Agreement or perform its obligations under this
Agreement; and the Seller is not in default with respect to any
order of any court, administrative agency, arbitrator or
governmental body so as to materially and adversely affect the
transactions contemplated by this Agreement.
Section 2.08. GUARANTY (a) The Trustee will acknowledge receipt of
delivery to it, on the Closing Date, of that certain Guaranty, dated as of
June 30, 1997, made by The Bear Stearns Companies, Inc. ("BSCI"), an affiliate
of BSMCC, whereunder, pursuant to the Mortgage Loan Purchase Agreement, BSCI has
guaranteed certain of the obligations of BSMCC under the Mortgage Loan Purchase
Agreement concerning lost Mortgage Notes and representations and warranties by
BSMCC that all of the Mortgage Loans represent first liens encumbering the
Mortgaged Properties in instances where related Mortgage Files are lacking
evidence of title insurance (the "Guaranteed Obligations").
(b) In the event that the long term bond rating of BSCI, as measured
by either Rating Agency, drops below a rating of A- (a "Ratings Event"), BSMSI
shall, within 90 Business Days of receipt of notification from any source that a
Ratings Event has occurred:
(i) obtain either (A) a new guarantee of the Guaranteed
Obligations from another source, whose credit rating
shall be at least "A" as measured by either Rating Agency, or
(B) a letter of credit permitting draws thereunder by the
Trustee in the same instances in which
payment would have been required under the Guaranty from a
banking institution reasonably acceptable to each Rating
Agency;
(ii) with respect to the portion of the Guaranteed Obligations
relating to the Mortgage Loan Files that lack evidence of
title insurance, (A) perform a title search with respect to
any Mortgage File that lacks evidence of title insurance and
(B) for any such Mortgage Loan found not to be a first lien,
either (x) repurchase any such Mortgage Loan, (y) deliver
evidence of existing title insurance to the Trustee or (z)
cure the breach of warranty, purchase new title insurance and
deliver the policy with respect thereto to the Trustee; or
(iii) take whatever combination of (i) and (ii), or such other
actions as may be acceptable to the Trustee and both Rating
Agencies, as evidenced in writing to such effect by such
Persons.
<PAGE>
ARTICLE III
Administration and Servicing of Mortgage Loans
Section 3.01. MASTER SERVICER TO ASSURE SERVICING. (a) The Master
Servicer shall supervise, or take such actions as are necessary to ensure, the
servicing and administration of the Mortgage Loans and any REO Property in
accordance with this Agreement and its normal servicing practices (including
making any Servicing Advances), 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 Mortgage Insurance Policy and any other
matter pertaining to a delinquent Mortgage Loan. The authority of the Master
Servicer shall include, in addition, the power on behalf of the
Certificateholders, the Trustee or any of them to (i) execute and deliver
customary consents or waivers and other instruments and documents, (ii) consent
to transfers of any related Mortgaged Property and assumptions of the related
Mortgage Notes and Security Instruments (in the manner provided in this
Agreement) and (iii) collect any Insurance Proceeds and Liquidation Proceeds.
Without limiting the generality of the foregoing, the Master Servicer may, and
is hereby authorized, and empowered by the Trustee to, execute and deliver, on
behalf of itself, the Certificateholders, the Trustee, or any of them, any
instruments of satisfaction, cancellation, partial or full release, discharge
and all other comparable instruments, with respect to the related Mortgage
Loans, the Insurance Policies and the accounts related thereto, and the
Mortgaged Properties. The Master Servicer may exercise this power in its own
name or in the name of a Sub-Servicer.
(b) Notwithstanding the provisions of Subsection 3.01(a), the Master
Servicer shall not take any action inconsistent with the interest of the Trustee
or the Certificateholders in the Mortgage Loans or with the rights and interests
of the Trustee or the Certificateholders under this Agreement.
(c) The Trustee shall furnish the Master Servicer with any powers of
attorney and other documents in form as provided to it necessary or appropriate
to enable the Master Servicer to service and administer the related Mortgage
Loans and REO Property.
Section 3.02. SUB-SERVICING AGREEMENTS BETWEEN MASTER SERVICER AND
SUB-SERVICERS. (a) The Master Servicer may enter into Sub-Servicing Agreements
with Sub-Servicers for the servicing and administration of the Mortgage Loans
and for the performance of any and all other activities of the Master Service
hereunder. Each Sub-Servicer shall be either (i) an institution the accounts of
which are insured by the FDIC or (ii) another entity that engages in the
business of originating or servicing mortgage loans, and in either case shall be
authorized to transact business in the state or states in which the related
Mortgaged Properties it is to service are situated, if and to the extent
required by applicable law to enable the Sub-Servicer to perform its obligations
hereunder and under the Sub-Servicing Agreement, and in either case shall be a
FHLMC or FNMA approved mortgage servicer. Any Sub-Servicing Agreement entered
into by the Master Servicer shall include the provision that such Agreement may
be immediately terminated (x) with cause and without any termination fee by any
Master Servicer hereunder other than EMC or (y) without cause in which case the
Master Servicer shall be responsible for any termination fee or penalty
resulting therefrom. In addition, any 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 of all the Certificates in the aggregate.
(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 3.03. SUCCESSOR SUB-SERVICERS. The Master Servicer shall be
entitled to terminate any Sub-Servicing Agreement that may exist in accordance
with the terms and conditions of such Sub-Servicing Agreement and without any
limitation by virtue of this Agreement; PROVIDED, HOWEVER, that upon
termination, the Master Servicer shall either act as servicer of the related
Mortgage Loan or enter into an appropriate contract with a successor
Sub-Servicer pursuant to which such successor Sub- Servicer will be bound by all
relevant terms of the related Sub- Servicing Agreement pertaining to the
servicing of such Mortgage Loan.
Section 3.04. LIABILITY OF THE MASTER SERVICER. (a) Notwithstanding
any Sub-Servicing Agreement, any of the provisions of this Agreement relating to
agreements or arrangements between the Master Servicer and a Sub-Servicer or
reference to actions taken through a Sub-Servicer or otherwise, the Master
Servicer shall under all circumstances remain obligated and primarily liable to
the Trustee and the Certificateholders for the servicing and administering of
the Mortgage Loans and any REO Property in accordance with this Agreement. The
obligations and liability of the Master Servicer shall not be diminished by
virtue of Sub- Servicing Agreements or by virtue of indemnification of the
Master Servicer by any Sub-Servicer, or any other Person. The obligations and
liability of the Master Servicer shall remain of the same nature and under the
same terms and conditions as if the Master Servicer alone were servicing and
administering the related Mortgage Loans. The Master Servicer shall, however, be
entitled to enter into indemnification agreements with any Sub-Servicer or other
Person and nothing in this Agreement shall be deemed to limit or modify such
indemnification. For the purposes of this Agreement, the Master Servicer shall
be deemed to have received any payment on a Mortgage Loan on the date the
Sub-Servicer received such payment; PROVIDED, HOWEVER, that this sentence shall
not apply to the Trustee acting as the Master Servicer; PROVIDED, FURTHER,
however, that the foregoing provision shall not affect the obligation of the
Master Servicer if it is also the Trustee to advance amounts which are not
Nonrecoverable Advances.
(b) Any Sub-Servicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Sub-Servicer
in its capacity as such and not as an originator shall be deemed to be between
the Sub-Servicer and the Master Servicer alone, and the Trustee and
Certificateholders shall not be deemed parties thereto and shall have no claims,
rights, obligations, duties or liabilities with respect to the Sub-Servicer
except as set forth in Section 3.05.
Section 3.05. ASSUMPTION OR TERMINATION OF SUB-SERVICING AGREEMENTS BY
TRUSTEE. (a) If the Trustee or its designee shall assume the master servicing
obligations of the Master Servicer in accordance with Section 8.02, the Trustee,
to the extent necessary to permit the Trustee to carry out the provisions of
Section 8.02 with respect to the Mortgage Loans, shall succeed to all of the
rights and obligations of the Master Servicer under each of the Sub-Servicing
Agreements. In such event, the Trustee or its designee as the successor master
servicer shall be deemed to have assumed all of the Master Servicer's rights and
obligations therein and to have replaced the Master Servicer as a party to such
Sub- Servicing Agreements to the same extent as if such Sub-Servicing Agreements
had been assigned to the Trustee or its designee as a successor master servicer,
except that the Trustee or its designee as a successor master servicer shall not
be deemed to have assumed any obligations or liabilities of the Master Servicer
arising prior to such assumption and the Master Servicer shall not thereby be
relieved of any liability or obligations under such Sub-Servicing Agreements.
(b) In the event that the Trustee or its designee as successor master
servicer for the Trustee assumes the servicing obligations of the Master
Servicer under Section 8.02, upon the reasonable request of the Trustee or such
designee as successor master servicer, the Master Servicer shall at its own
expense deliver to the Trustee, or at its written request to such designee,
photocopies of all documents and records, electronic or otherwise, relating to
the Sub-Servicing Agreements and the related Mortgage Loans or REO Property then
being serviced and an accounting of amounts collected and held by it, if any,
and will otherwise cooperate and use its reasonable best efforts to effect the
orderly and efficient transfer of the Sub-Servicing Agreements, or
responsibilities hereunder to the Trustee, or at its written request to such
designee as successor master servicer.
Section 3.06. COLLECTION OF MORTGAGE LOAN PAYMENTS. (a) The Master
Servicer will coordinate and monitor remittances by Sub- Servicers to the
Trustee with respect to the Mortgage Loans in accordance with this Agreement.
(b) The Master Servicer shall make its reasonable best efforts to
collect or cause to be collected all payments required under the terms and
provisions of the Mortgage Loans and shall follow, and use its best efforts to
cause Sub-Servicers to follow, collection procedures comparable to the
collection procedures of prudent mortgage lenders servicing mortgage loans for
their own account to the extent such procedures shall be consistent with this
Agreement. Consistent with the foregoing, the Master Servicer may in its
discretion (i) waive or permit to be waived any late payment charge, prepayment
charge, assumption fee, or any penalty interest in connection with the
prepayment of a Mortgage Loan and (ii) suspend or reduce or permit to be
suspended or reduced regular monthly payments for a period of up to six months,
or arrange or permit an arrangement with a Mortgagor for a scheduled liquidation
of delinquencies. In the event the Master Servicer shall consent to the
deferment of the due dates for payments due on a Mortgage Note, the Master
Servicer shall nonetheless make a Monthly Advance or shall cause the related
Sub-Servicer to make an advance to the same extent as if such installment were
due, owing and delinquent and had not been deferred through liquidation of the
Mortgaged Property; PROVIDED, HOWEVER, that the obligation of the Master
Servicer to make a Monthly Advance shall apply only to the extent that the
Master Servicer believes, in good faith, that such advances are not
Nonrecoverable Advances.
(c) Notwithstanding anything in this Agreement to the contrary, the
Master Servicer may not make any future advances with respect to a Mortgage Loan
and the Master Servicer shall not (unless the Mortgagor is in default with
respect to the Mortgage Loan or such default is, in the judgment of the Master
Servicer, reasonably foreseeable) permit (i) any modification with respect to
any Mortgage Loan that would change the Mortgage Interest Rate, reduce or
increase the principal balance (except for reductions resulting from actual
payments of principal) or change the final maturity date on such Mortgage Loan
or (ii) any modification, waiver or amendment of any term of any Mortgage Loan
that would both (A) effect an exchange or reissuance of such Mortgage Loan under
Section 1001 of the Code (or final, temporary or proposed Treasury regulations
promulgated thereunder) and (B) cause the Trust Fund to fail to qualify as a
REMIC under the Code or the imposition of any tax on "prohibited transactions"
or "contributions after the startup date" under the REMIC Provisions. Any
extension of the final maturity date of any Mortgage Loan shall be calculated
such that the Mortgage Loan will be paid in full on the reset final maturity
date if the related Mortgagor continues to make its then-current Monthly
Scheduled Payments on a timely basis.
(d) Within five Business Days after the Master Servicer has determined
that all amounts which it expects to recover from or on account of a Mortgage
Loan have been recovered and that no further Liquidation Proceeds will be
received in connection therewith, the Master Servicer shall provide to the
Trustee a certificate of a Servicing Officer that such Mortgage Loan became a
Liquidated Mortgage Loan as of the date of such determination.
Section 3.07. COLLECTION OF TAXES, ASSESSMENTS AND SIMILAR ITEMS;
SERVICING ACCOUNTS. (a) The Master Servicer shall establish and maintain or
cause the Sub-Servicers to establish and maintain, in addition to the Protected
Accounts, one or more Servicing Accounts. The Master Servicer or a Sub-Servicer
will deposit and retain therein all otherwise unapplied collections from the
Mortgagors, including amounts collected 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 EMC (and
its successors and assigns) acting on its own behalf and for EMC 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 transfer previously
unapplied collections to a Protected Account, to reimburse the Master Servicer
or a Sub-Servicer for any advances made with respect to such items, to refund to
any Mortgagors any sums as may be determined to be overages, to pay interest, if
required, to Mortgagors on balances in the Servicing Accounts or to clear and
terminate the Servicing Accounts at or any time after the termination of this
Agreement in accordance with Section 10.01.
Section 3.08. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION
REGARDING THE MORTGAGE LOANS. The Master Servicer shall provide, and shall cause
any Sub-Servicer to provide, to the Trustee and the Seller access to the
documentation regarding the related Mortgage Loans and REO Property and to the
Certificateholders, the FDIC, and the supervisory agents and examiners of the
FDIC (to which the Trustee shall also provide) access to the documentation
regarding the related Mortgage Loans required by applicable regulations, such
access being afforded without charge but only upon reasonable prior written
request and during normal business hours at the offices of the Master Servicer,
the Sub-Servicers or the Trustee that are designated by these entities;
PROVIDED, HOWEVER, that, unless otherwise required by law, the Trustee, the
Master Servicer or the Sub-Servicer shall not be required to provide access to
such documentation if the provision thereof would violate the legal right to
privacy of any Mortgagor PROVIDED, FURTHER, HOWEVER, that the Trustee and the
Seller shall coordinate their requests for such access so as not to impose an
unreasonable burden on, or cause an interruption of, the business of the Master
Servicer or any Sub-Servicer. The Master Servicer, the Sub-Servicers and the
Trustee shall allow representatives of the above entities to photocopy any of
the documentation and shall provide equipment for that purpose at a charge that
covers their own actual out-of-pocket costs.
Section 3.09. MAINTENANCE OF PRIMARY MORTGAGE 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 Mortgage 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 Mortgage 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 Mortgage Insurance
Policy. The Master Servicer and the related Sub-Servicer shall have the power to
substitute for any Primary Mortgage 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 appropriate subaccount of the Certificate Account or Custody
Account, subject to withdrawal pursuant to Section 4.03.
(c) Any cost incurred by a Master Servicer or a Sub- Servicer in
maintaining any such hazard insurance policy shall not be added to the amount
owing under the Mortgage Loan for the purpose of calculating monthly
distributions to Certificateholders, notwithstanding that the terms of the
Mortgage Loan so permit. Such costs shall be recoverable by the Master Servicer
or a Sub- Servicer out of related late payments by the Mortgagor or out of
Insurance Proceeds or Liquidation Proceeds or by the Master Servicer from the
Repurchase Price, to the extent permitted by Section 4.03.
(d) No earthquake or other additional insurance is to be required of
any Mortgagor or maintained on property acquired with respect to a Security
Instrument other than pursuant to such applicable laws and regulations as shall
at any time be in force and shall require such additional insurance. Each year,
in accordance with standards and procedures required by FHLMC, the Master
Servicer shall perform a review of the Mortgage Loans to determine which, if
any, of the Mortgaged Properties are located in a federally designated special
flood hazard area and for each Mortgaged Property found to be 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, if it is a permitted claimant, 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 appropriate subaccount of 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 purchase 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 Mortgage 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 the REMIC to fail to qualify as a REMIC for federal
income tax purposes, as evidenced by a REMIC Opinion. If the interest rate on an
assumed Mortgage Loan is increased due to both (i) permitted increases upon
assumption under the terms of such Mortgage Loan and (ii) all applicable
restrictions hereunder being satisfied, the Master Servicer shall, as part of
the report to the Trustee and the Seller pursuant to Section 6.07(b) hereof,
provide therefor on a revised Mortgage Loan Schedule. 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, based on prudent servicing standards, 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 or would adversely
affect the Certificateholders.
Section 3.12. REALIZATION UPON DEFAULTED MORTGAGE Loans. (a) The
Master Servicer shall, or shall direct the related Sub- Servicer to, foreclose
upon or otherwise comparably convert the ownership of properties securing any
Mortgage Loans that come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments
pursuant to Section 3.06 except that the Master Servicer shall not, and shall
not direct the related Sub-Servicer, if any, to, foreclose upon or otherwise
comparably convert a Mortgaged Property if there is evidence of environmental
hazards or toxic waste thereon and the Master Servicer determines it would be
imprudent to do so or not in accordance with appropriate servicing standards.
The Master Servicer can conclusively rely on results of third party inspections
from parties it reasonably believes are qualified to conduct such inspections.
In connection with such foreclosure or other conversion, the Master Servicer in
conjunction with the related Sub-Servicer, if any, shall use its best reasonable
efforts to preserve REO Property and to realize upon defaulted Mortgage Loans in
such manner as to maximize the receipt of principal and interest by the
Certificateholders, taking into account, among other things, the timing of
foreclosure and the considerations set forth in Subsection 3.12(b). The
foregoing is subject to the proviso that the Master Servicer shall not be
required to expend its own funds in connection with any foreclosure or towards
the restoration of any property unless it determines in good faith (i) that such
restoration or foreclosure will increase the proceeds of liquidation of the
Mortgage Loan to Certificateholders after reimbursement to itself for such
expenses and (ii) that such expenses will be recoverable to it either through
Liquidation Proceeds (respecting which it shall have priority for purposes of
reimbursements from the Certificate Account pursuant to Section 4.03) or through
Insurance Proceeds (respecting which it shall have similar priority). The Master
Servicer shall be responsible for all other costs and expenses incurred by it in
any such proceedings; PROVIDED, HOWEVER, that it shall be entitled to
reimbursement thereof (as well as its normal servicing compensation), and in
respect of the Master Servicer only, to receive Excess Liquidation Proceeds as
additional servicing compensation to the extent that transfers or withdrawals
from the Certificate Account with respect thereto are permitted under Section
4.03. Any income from or other funds (net of any income taxes) generated by REO
Property shall be deemed for purposes of this Agreement to be Insurance
Proceeds.
(b) The Trust Fund shall not acquire any real property (or any
personal property incident to such real property) except in connection with a
default or imminent default of a Mortgage Loan. In the event that the Trust Fund
acquires any real property (or personal property incident to such real property)
in connection with a default or imminent default of a Mortgage Loan, such
property shall be disposed of by the Trust Fund within two years after its
acquisition by the Trust Fund unless the Trustee shall have received a REMIC
Opinion with respect to such longer retention or the Master Servicer applies for
and receives an extension of the two-year period under Section 856(e)(3) of the
Code, in which case such two year period will be extended by the period set
forth in such REMIC Opinion or approved application, as the case may be. The
Trustee shall have no obligation to pay for such REMIC Opinion.
(c) [Reserved]
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 a 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 a 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 appropriate subaccount of 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 Master Servicer shall
deliver the Request for Release with respect thereto to the Trustee upon deposit
of the related Liquidation Proceeds in the appropriate subaccount of the
Certificate Account.
(d) The Trustee shall execute and deliver to the Master Servicer any
court pleadings, requests for trustee's sale or other documents necessary to (i)
the foreclosure or trustee's sale with respect to a Mortgaged Property; (ii) any
legal action brought to obtain judgment against any Mortgagor on the Mortgage
Note or Security Instrument; (iii) obtain a deficiency judgment against the
Mortgagor; or (iv) enforce any other rights or remedies provided by the Mortgage
Note or Security Instrument or otherwise available at law or equity. Together
with such documents or pleadings the Master Servicer shall deliver to the
Trustee a certificate of a Servicing Officer in which it requests the Trustee to
execute the pleadings or documents. The certificate shall certify and explain
the reasons for which the pleadings or documents are required. It shall further
certify that the Trustee's execution and delivery of the pleadings or documents
will not invalidate any insurance coverage under the Required Insurance Policies
or invalidate or otherwise affect the lien of the Security Instrument, except
for the termination of such a lien upon completion of the foreclosure or
trustee's sale.
Section 3.14. SERVICING AND MASTER SERVICING COMPENSATION. (a) As
compensation for its activities hereunder, the Master Servicer shall be entitled
to receive the Master Servicing Fee from full payments of accrued interest on
each Mortgage Loan.
(b) The Master Servicer may retain additional servicing compensation
in the form of prepayment charges, if any, assumption fees, tax service fees,
fees for statement of account or payoff, late payment charges, interest on
amounts deposited in any Accounts or Permitted Investments of such amounts, or
otherwise, and with respect to any Due Date, any interest paid on Simple
Interest Loans in excess of 30 days of interest. The Master Servicer is also
entitled to receive Excess Liquidation Proceeds as additional servicing
compensation to the extent that transfers or withdrawals from the appropriate
subaccount of the Certificate Account with respect thereto are permitted under
Subsection 4.03(a)(xii). The Master Servicer shall be required to pay all
expenses it incurs in connection with servicing activities under this Agreement,
including fees and expenses to Sub-Servicers, and shall not be entitled to
reimbursement except as provided in this Agreement. Expenses to be paid by the
Master Servicer under this Subsection 3.14(b) shall include payment of the
expenses of the accountants retained pursuant to Section 3.16.
Section 3.15. ANNUAL STATEMENT OF COMPLIANCE. Within 120 days after
June 30th of each year, commencing June 1998, 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 or
applicable portion thereof 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, if any, during the Sub-Servicer's most recently ended fiscal year
on or prior to such June 30th 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 June 30th of each year, commencing June, 1998, the
Master Servicer, at its expense, shall cause a firm of Independent public
accountants who are members of the American Institute of Certified Public
Accountants to furnish a statement to the Master Servicer, which will be
provided to the Trustee and the Rating Agencies to the effect that, in
connection with the firm's examination of the Master Servicer's financial
statements as of the end of such fiscal year, nothing came to their attention
that indicated that the Master Servicer was not in compliance with Sections
3.07, 3.15, 4.01, 4.02, 4.03 and 4.04 except for (i) such exceptions as such
firm believes to be immaterial and (ii) such other exceptions as are set forth
in such statement. In connection with the engagement to deliver any such report
(or other accountants' report or certificate hereunder) the Trustee is
authorized and directed to enter into such agreed-upon- procedures or engagement
letter as such accountants may request and shall be indemnified hereunder in so
doing.
(b) Within 120 days after the last day of the fiscal year of each
Sub-Servicer or a Master Servicer other than EMC or the Trustee, commencing in
1997, 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
EMC 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 the REMIC shall
exist, the Master Servicer and the Trustee shall act in accordance herewith to
assure continuing treatment of the REMIC as a REMIC, and the Trustee shall
comply with any directions of the Master Servicer to assure such continuing
treatment. In particular, the Trustee shall not (a) sell or permit the sale of
all or any portion of the Mortgage Loans or of any Permitted Investment unless
such sale is as a result of a repurchase of the Mortgage Loans pursuant to this
Agreement or the Trustee has received a REMIC Opinion prepared at the expense of
the Trust Fund; and (b) other than with respect to a substitution pursuant to
Section 2.04, accept any contribution to the REMIC after the Startup Day without
receipt of a REMIC Opinion.
Section 3.18. ADDITIONAL INFORMATION. The Master Servicer agrees to
furnish the Seller from time to time upon reasonable request, such further
information, reports and financial statements as the Seller deems appropriate to
prepare and file all necessary reports with the Securities and Exchange
Commission.
Section 3.19. OPTIONAL PURCHASE OF DEFAULTED MORTGAGE LOANS. The
Master Servicer shall have the right, but not the obligation, to purchase any
Defaulted Mortgage Loan for a price equal to the Repurchase Price therefor. Any
such purchase shall be accomplished as provided in Subsection 2.02(c) hereof.
<PAGE>
ARTICLE IV
Accounts
Section 4.01. PROTECTED ACCOUNTS. (a) The Master Servicer shall
establish and maintain if it is servicing the Mortgage Loans and shall require
each Sub-Servicer to establish and maintain a Protected Account complying with
the requirements set forth in this Section 4.01, with records to be kept with
respect thereto on a Mortgage Loan by Mortgage Loan basis, into which accounts
shall be deposited within 24 hours of receipt all collections of principal and
interest on any Mortgage Loan and with respect to any REO Property received by
the Master Servicer, or a Sub-Servicer, including Principal Prepayments,
Insurance Proceeds, Liquidation Proceeds, and advances made from the
Sub-Servicer's own funds (less servicing compensation as permitted by Subsection
3.14(a)) and all other amounts to be deposited in the Protected Accounts. The
Master Servicer is hereby authorized to make withdrawals from and deposits to
the related Protected Accounts for purposes required or permitted by this
Agreement. All Protected Accounts shall be held in a Designated Depository
Institution and segregated on the books of such institution. The amount at any
time credited to a Protected Account shall be fully insured by the FDIC or, to
the extent that such balance exceeds the lesser of $100,000 or the limits of
such insurance, such excess must be transferred to the appropriate subaccount of
the Certificate Account or the related Custody Account or invested in Permitted
Investments.
Amounts on deposit in a Protected Account may be invested in Permitted
Investments, such Permitted Investments to mature, or to be subject to
redemption or withdrawal, no later than the date on which such funds are
required to be withdrawn for deposit in the Custody Account or Certificate
Account, and shall be held until required for such deposit. The income earned
from Permitted Investments made pursuant to this Section 4.01 shall be paid to
the Master Servicer or the related Sub-Servicer as additional compensation for
its obligations under this Agreement, and the risk of loss of moneys required to
be distributed to the Certificateholders resulting from such investments shall
be borne by and be the risk of the Master Servicer or the related Sub- Servicer.
The Master Servicer shall, itself, or 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 a 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
appropriate subaccount of 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 related Mortgage Loans
(other than Simple Interest Loans) received or any portion
thereof advanced by the Master Servicer or Sub- Servicers
which were due on or before the related Due Date (including
any amount required to be paid by the Master Servicer in
respect of interest on Simple Interest Loans) and actual
payments on Simple Interest Loans received during the related
Prepayment Period, net of the amount thereof comprising the
Master Servicing Fee due the Master Servicer;
(ii) Full Principal Prepayments and any Liquidation
Proceeds received by the Master Servicer or Sub-Servicers with
respect to such Mortgage Loans in the related Prepayment
Period, with interest to the date of prepayment or
liquidation, net of the amount thereof comprising the Master
Servicing Fee due the Master Servicer;
(iii) Partial prepayments of principal received by the
Master Servicer or Sub-Servicers for such Mortgage Loans in
the related Prepayment Period; and
(iv) Any amount to be used as a Certificate Account
Advance.
(c) Withdrawals may be made from a Protected Account only to make
remittances as provided in Subsections 4.01(b) or 4.03(c), or Section 4.04; to
reimburse the Master Servicer or a Sub-Servicer for advances of principal and
interest which have been recovered by subsequent collection from the related
Mortgagor; to remove amounts deposited in error; to remove fees, charges or
other such amounts deposited on a temporary basis; or to clear and terminate the
account at the termination of this Agreement in accordance with Section 10.01.
(d) The Master Servicer shall deliver to the Trustee on or prior to
the Determination Date in each month a statement from the institution at which
each Protected Account is maintained showing deposits and withdrawals during the
prior month.
Section 4.02. CERTIFICATE ACCOUNT. (a) The Trustee shall establish and
maintain in the name of the Trustee, for the benefit of the Certificateholders,
the Certificate Account as a segregated non-interest bearing trust account or
accounts. The Certificate Account shall have four separate subaccounts, one each
for all funds with respect to each Mortgage Loan Group. The Trustee will deposit
in the appropriate subaccount as identified by the Master Servicer, of 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 and any payments required to be made by the Master
Servicer with respect to Simple Interest Loans which were not
deposited in the Protected Account;
(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 BSMCC pursuant to Sections 2.02 or 2.03 or
by the Master Servicer pursuant to Section 3.19, any amounts
which are to be treated pursuant to Section 2.04 as the
payment of such a Repurchase Price, and all proceeds of any
Mortgage Loans or property acquired with respect thereto
repurchased by the Seller or its designee pursuant to
Section 10.01;
(v) Any amounts required to be deposited with respect to
losses on Permitted Investments pursuant to Subsection 4.02(d)
or Section 4.04(d) below; and
(vi) Any other amounts received by the Master
Servicer or the Trustee and required to be deposited in
such subaccount of 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 (i) prepayment or late payment charges or assumption, tax service,
statement account or payoff, substitution, satisfaction, release and other like
fees and charges and (ii) the items enumerated in subsections 4.03(a)(ii),
(iii), (iv), (v), (vii), (viii), (x) and (xii) 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, or shall deposit or cause to be deposited to a subaccount of the
Certificate Account any amount which should appropriately be credited to another
subaccount of the Certificate Account, 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 or to the appropriate other
subaccount of the Certificate Account, as applicable, any provision herein to
the contrary notwithstanding.
(c) The Certificate Account shall constitute a trust account of the
Trust Fund segregated on the books of the Trustee and held by the Trustee in
trust, and the Certificate Account and the funds deposited therein shall not be
subject to, and shall be protected from, all claims, liens, and encumbrances of
any creditors or depositors of the Trustee or the Master Servicer (whether made
directly, or indirectly through a liquidator or receiver of the Trustee or the
Master Servicer). The amount at any time credited to the Certificate Account
shall be (i) fully insured by the FDIC to the maximum coverage provided thereby,
(ii) at the written direction of the Master Servicer invested, in the name of
the Trustee, or its nominee, for the benefit of the Certificateholders, in such
Permitted Investments to be held by the Trustee as the Master Servicer may
direct (such direction to be confirmed in writing) and in the absence of such
direction, the Trustee shall invest funds in the Certificate Account in
Permitted Investments described in clause (viii) of the definition thereof, or
(iii) from the maturity of any Permitted Investment on the Business Day prior to
a Distribution Date through the distribution of such funds on such Distribution
Date or at such other time and in such amount as, in the judgment of the Master
Servicer, cannot reasonably be invested in accordance with items (i) or (ii) of
this sentence, held by the Trustee in such Certificate Account. All Permitted
Investments shall mature or be subject to redemption or withdrawal on or before,
and shall be held until, the next succeeding Distribution Date if the obligor
for such Permitted Investment is the Trustee or, if such obligor is any other
Person, the Business Day preceding such Distribution Date. With respect to the
Certificate Account and the funds deposited therein, the Trustee shall take such
action as may be necessary to ensure that the Certificateholders shall be
entitled to the priorities afforded to such a trust account (in addition to a
claim against the estate of the Trustee) as provided by 12 U.S.C. ss. 92a(e), if
applicable, or any applicable comparable state statute applicable to state
chartered banking corporations.
(d) The income earned from Permitted Investments made pursuant to this
Section 4.02 shall be paid to the Master Servicer, as additional compensation
for its obligations under this Agreement, and the risk of loss of moneys
required to be distributed to the Certificateholders resulting from such
investments shall be borne by and be the risk of the Master Servicer. The amount
of any such loss shall be remitted by the Master Servicer to the Trustee for
deposit in the Certificate Account within two Business Days of receipt of
notification of such loss but not later than the second Business Day prior to
the Distribution Date on which the moneys so invested are required to be
distributed to the Certificateholders.
Section 4.03. PERMITTED WITHDRAWALS AND TRANSFERS FROM THE CERTIFICATE
ACCOUNT. (a) The Trustee will, from time to time on demand of the Master
Servicer, make or cause to be made such withdrawals or transfers from the
appropriate subaccount of the Certificate Account as the Master Servicer has
designated for such transfer or withdrawal as specified in a certificate signed
by a Servicing Officer (upon which the Trustee may conclusively rely) for the
following purposes:
(i) [intentionally omitted];
(ii) to reimburse the Master Servicer or any Sub-
Servicer for any Monthly Advance of its own funds or any
advance of such Sub-Servicer's own funds, the right of the
Master Servicer or a Sub-Servicer to reimbursement pursuant to
this subclause (ii) being limited to amounts
received on a particular Mortgage Loan (including, for
this purpose, the Repurchase Price therefor, Insurance
Proceeds and Liquidation Proceeds) which represent late
payments or recoveries of the principal of or interest on such
Mortgage Loan respecting which such Monthly Advance or advance
was made;
(iii) to reimburse the Master Servicer or any Sub-
Servicer from Insurance Proceeds or Liquidation Proceeds
relating to a particular Mortgage Loan for amounts expended
by the Master Servicer or such Sub-Servicer pursuant to
Section 3.12 in good faith in connection with the restoration
of the related Mortgaged Property which was damaged by an
Uninsured Cause or in connection with the liquidation of such
Mortgage Loan;
(iv) to reimburse the Master Servicer or any Sub-Servicer
from Insurance Proceeds relating to a particular Mortgage Loan
for Insured Expenses incurred with respect to such Mortgage
Loan and to reimburse the Master Servicer or such Sub-Servicer
from Liquidation Proceeds from a particular Mortgage Loan for
Liquidation Expenses incurred with respect to such Mortgage
Loan; PROVIDED THAT the Master Servicer shall not be entitled
to reimbursement for Liquidation Expenses with respect to a
Mortgage Loan to the extent that (i) any amounts with respect
to such Mortgage Loan were paid as Excess Liquidation Proceeds
pursuant to clause (xii) of this Subsection 4.03(a) to the
Master Servicer; and (ii) such Liquidation Expenses were not
included in the computation of such Excess Liquidation
Proceeds;
(v) to pay the Master Servicer or any Sub-Servicer
(payment to any Sub-Servicer to be subject to prior
payment to the Master Servicer of an amount equal to the
Master Servicing Fee), as appropriate, from Liquidation
Proceeds or Insurance Proceeds received in connection
with the liquidation of any Mortgage Loan, the amount which it
or such Sub-Servicer would have been entitled to receive under
subclause (x) of this Subsection 4.03(a) as servicing
compensation on account of each defaulted scheduled payment on
such Mortgage Loan if paid in a timely manner by the related
Mortgagor, but only to the extent that the aggregate of
Liquidation Proceeds and Insurance Proceeds with respect to
such Mortgage Loan, after any reimbursement to the Master
Servicer or any Sub-Servicer, pursuant to subclauses (ii),
(iii), (iv) and (vii) of this Subsection 4.03(a), exceeds the
Outstanding Principal Balance of such Mortgage Loan plus
accrued and unpaid interest thereon at the related Mortgage
Interest Rate less the Master Servicing Fee Rate to but not
including the date of payment;
(vi) to pay the Master Servicer or any Sub-Servicer
(payment to any Sub-Servicer to be subject to prior
payment to the Master Servicer of the portion of the Master
Servicing Fee which the Master Servicer is entitled to retain
as evidenced in writing to the Trustee by the Master Servicer,
as appropriate, from the Repurchase Price for any Mortgage
Loan, the amount which it or such Sub-Servicer would have been
entitled to receive under subclause (x) of this Subsection
4.03(a) as servicing compensation, but only to the extent that
the Repurchase Price with respect to such Mortgage Loan after
any reimbursement to the related Master Servicer and Sub-
Servicer pursuant to subclauses (ii) and (vii) of this
Subsection 4.03(a) exceeds the Outstanding Principal Balance
of such Mortgage Loan plus accrued and unpaid interest thereon
at the related Mortgage Interest Rate less the Master
Servicing Fee Rate through the last day of the month of
repurchase;
(vii) to reimburse the Master Servicer or any Sub-Servicer
for advances of funds pursuant to Sections 3.07, 3.09 and
3.10, the right to reimbursement pursuant to this subclause
being limited to amounts received on the related Mortgage Loan
(including, for this purpose, the Repurchase Price therefor,
Insurance Proceeds and Liquidation Proceeds) which represent
late recoveries of the payments for which such advances were
made;
(viii) to pay the Master Servicer or any Sub-Servicer, as
the case may be, with respect to each Mortgage Loan that has
been purchased pursuant to Section 2.02, 2.03, 2.04, 3.19 or
10.01, all amounts received thereon, representing recoveries
of principal that reduce the Outstanding Principal Balance of
the related Mortgage Loan below the Outstanding Principal
Balance used in calculating the Repurchase Price or
representing interest included in the calculation of the
Repurchase Price or accrued after the end of the month during
which such repurchase occurs;
(ix) to reimburse the Master Servicer or any Sub-Servicer
for any Monthly Advance or advance, after a Realized Loss has
been allocated with respect to the related Mortgage Loan if
the Monthly Advance or advance
has not been reimbursed pursuant to clauses (ii) and (vii),
such reimbursement to come from the subaccount relating to the
Mortgage Loan Group of which the related
Mortgage Loan is a part;
(x) to pay the Master Servicer and any Sub-Servicer
servicing compensation as set forth in Section 3.14, including
amounts due to it with respect to excess interest received on
Simple Interest Loans;
(xi) to reimburse the Master Servicer for expenses,
costs and liabilities incurred by and reimbursable to
it pursuant to Subsection 7.04(d), which, if not specifically
allocable to a Mortgage Loan Group, shall be allocated between
the subaccounts, PRO RATA, based on the Scheduled Principal
Balances of the Group I Mortgage Loans, the Group II Mortgage
Loans, the Group III Mortgage Loans and the Group IV Mortgage
Loans, respectively;
(xii) to pay to the Master Servicer, as additional
servicing compensation, any Excess Liquidation Proceeds;
(xiii) to clear and terminate the Certificate Account
pursuant to Section 10.01; and
(xiv) to remove amounts deposited in error.
The Master Servicer shall keep and maintain separate accounting, on a
Mortgage Loan by Mortgage Loan basis, for the purpose of accounting for any
reimbursement from the Certificate Account pursuant to subclauses (i) through
(vii), inclusive, and (ix) or with respect to any such amounts which would have
been covered by such subclauses had the amounts not been retained by the Master
Servicer without being deposited in the Certificate Account under Section
4.02(b).
(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 and expenses shall
be paid to the Trustee; and
(ii) Second, the amount distributable to the Holders of
the Certificates shall be payable in accordance with Section
6.01.
(c) Notwithstanding the provisions of this Section 4.03, the Master
Servicer may, but is not required to, allow the Sub- Servicers to deduct from
amounts received by them or from the related Protected Account, prior to deposit
in the Certificate Account or the Custody Account, any portion to which such
Sub-Servicers are entitled as servicing compensation (including income on
Permitted Investments) or reimbursement of any reimbursable advances made by
such Sub-Servicers.
Section 4.04 CUSTODY ACCOUNT. (a) The Trustee shall establish and
maintain for the benefit of the Certificateholders the Custody Account as a
segregated non-interest bearing trust account in the corporate trust department
of a Designated Depository Institution. The Custody Account shall constitute a
trust account of the Trust Fund segregated on the books of the Designated
Depository Institution and held by the Designated Depository Institution in
trust, and such Account and the funds deposited therein shall not be subject to,
and shall be protected from, all claims, liens, and encumbrances of any
creditors or depositors of the Designated Depository Institution, the Trustee,
the Master Servicer, any Sub-Servicer (whether made directly, or indirectly
through a liquidator or receiver of the Designated Depository Institution, the
Trustee, any Master Servicer, or any Sub-Servicer). With respect to the Custody
Account maintained with the Trustee and the funds deposited therein, the Trustee
shall take such action as may be necessary to ensure that the 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 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, the Master Servicer 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
the Master Servicer.
(b) Within one Business Day after receipt, the Master Servicer shall
withdraw or shall cause to be withdrawn from each Protected Account and shall
immediately deposit or cause to be deposited in the Custody Account all amounts
in the Protected Account not otherwise invested in Permitted Investments
pursuant to Section 4.01 and exceeding the lesser of $100,000 or the FDIC
insurance limit (other than with respect to principal of or interest on the
Mortgage Loans due on or before the Cut-off Date).
(c) Withdrawals may be made from the Custody Account only to make
remittances as provided in Sections 4.01(b) or 4.04(d); to reimburse the Master
Servicer or any Sub-Servicer for advances of principal and interest which have
been recovered by subsequent collection from the related Mortgagor; to remove
amounts deposited in error; to remove fees, charges or other such amounts
deposited on a temporary basis; or to clear and terminate the account at the
termination of this Agreement in accordance with Section 10.01.
(d) Funds in the Custody Account may be invested at the written
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 (iii) or
clause (viii) of the definition thereof. Such Permitted Investments must mature,
or be subject to redemption or withdrawal, no later than the date on which such
funds are required to be withdrawn for deposit in the Certificate Account
pursuant to Section 4.01(b) and shall be held in such Account until required for
such deposit. The income earned from Permitted Investments made pursuant to this
Section 4.04 shall be paid to the Master Servicer as additional compensation for
its obligations under this Agreement, and the risk of loss of moneys required to
be distributed to the Certificateholders resulting from such investments shall
be borne by and be the risk of the Master Servicer. The amount of any such loss
shall be deposited by the Master Servicer in the Custody Account within two
Business Days of receipt of notification of such loss but not later than the
second Business Day prior to the Distribution Date on which the moneys so
invested are required to be distributed to the Certificateholders.
<PAGE>
ARTICLE V
Section 5.01. CERTIFICATES. (a) The Depository, the Seller and the
Trustee have entered into a Depository Agreement dated as of June 27, 1997 (the
"Depository Agreement"). Except for the Physical Certificates and as provided in
Subsection 5.01(b), the Certificates shall at all times remain registered in the
name of the Depository or its nominee and at all times: (i) registration of such
Certificates may not be transferred by the Trustee except to a successor to the
Depository; (ii) ownership and transfers of registration of such Certificates on
the books of the Depository shall be governed by applicable rules established by
the Depository; (iii) the Depository may collect its usual and customary fees,
charges and expenses from its Depository Participants; (iv) the Trustee shall
deal with the Depository as representative of such Certificate Owners of the
respective Class of Certificates for purposes of exercising the rights of
Certificateholders under this Agreement, and requests and directions for and
votes of such representative shall not be deemed to be inconsistent if they are
made with respect to different Certificate Owners; and (v) the Trustee may rely
and shall be fully protected in relying upon information furnished by the
Depository with respect to its Depository Participants.
The Class B-4, Class B-5 and Class B-6 Certificates are initially
Physical Certificates. If at any time this Holders of all of the Certificates of
one or more such Classes request that the Trustee cause such Class to become
Book-Entry Certificates, the Trustee and the Seller will take such action as may
be reasonably required to cause the Depository to accept such Class or Classes
for trading.
All transfers by Certificate Owners of such respective Classes of
Book-Entry 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
Certificate, which is hereby designated as the single "residual interest" in
REMIC II. Except as discussed below, principal and interest shall be payable to,
and shortfalls, losses and prepayments are allocable to, the REMIC II Regular
Certificates in the same order and priority as payments are to be made on, and
shortfalls, losses and prepayments are allocable to, the Corresponding Classes
of Certificates. To the extent principal and interest payments are to be made
on, and shortfalls, losses and prepayments are allocable to, the Class B
Certificates, such principal, interest, shortfalls, losses and prepayments shall
be payable or allocable to the Class IIB-1, Class IIB-2, Class IIB-3 and Class
IIB-4 REMIC II Certificates, in the same proportion that such principal,
interest, shortfalls, losses and prepayments are attributable to the Group I
Mortgage Loans, Group II Mortgage Loans, Group III Mortgage Loans and Group IV
Mortgage Loans, respectively. The REMIC II Regular Certificates and the Class
R-2 Certificate will have the following designations and pass-through rates, and
distributions of principal and interest thereon shall be allocated to the
Corresponding Class of Certificates in the following manner:
<TABLE>
<CAPTION>
Corresponding Classes
OF CERTIFICATES
Pass- Allocation Allocation
REMIC II Initial Through of of
Certificates Balance ($) Rate Principal Interest
- ------------ ----------- ------- --------- ---------
<S> <C> <C> <C> <C>
IIA-1 23,736,100.00 (1) A-I A-I
IIA-2 124,749,900.00 (2) A-II A-II
IIA-3 49,988,600.00 (3) A-III A-III
IIA-4 27,422,700.00 (4) A-IV A-IV
IIB-1 1,786,690.01 (1) (5) (5)
IIB-2 9,389,749.86 (2) (5) (5)
IIB-3 3,762,630.02 (3) (5) (5)
IIB-4 2,064,126.30 (4) (5) (5)
IIR-1 50.00 (2) R-1 R-1
R-2 50.00 (2) N/A N/A
- ---------------
(1) During each Interest Accrual Period the Class IIA-1 and Class IIB-1
Certificates will bear interest at a variable Pass-Through Rate equal to the
weighted average of the Net Rates of the Group I Mortgage Loans.
(2) During each Interest Accrual Period, the Class IIA-2, Class IIB-2, Class
IIR-1 and Class R-2 Certificates will bear interest at a variable Pass-Through
Rate equal to the weighted average of the Net Rates of the Group II Mortgage
Loans.
(3) During each Interest Accrual Period, the Class IIA-3 and Class IIB-3
Certificates will bear interest at a variable Pass-Through Rate equal to the
weighted average of the Net Rates of the Group III Mortgage Loans.
(4) During each Interest Accrual Period, the Class IIA-4 and Class IIB-4
Certificates will bear interest at a variable Pass-Through Rate equal to the
weighted average of the Net Rates of the Group IV Mortgage Loans.
(5) The corresponding Classes of Certificates for these REMIC II Certificates
are all the Class B Certificates. Principal and interest shall be allocable to
the Class B Certificates and shall be apportioned among such Certificates in the
same order and priority as payments are to be made on such Certificates.
</TABLE>
(d) The Classes of the Certificates shall have the following
designations, initial principal amounts and Pass-Through Rates:
<TABLE>
<CAPTION>
DESIGNATION INITIAL PRINCIPAL AMOUNT PASS-THROUGH RATE
<S> <C> <C>
A-I $ 23,736,100.00 (1)
A-II $124,749,900.00 (2)
A-III $ 49,988,600.00 (3)
A-IV $ 27,422,700.00 (4)
B-1 $ 6,679,700.00 (5)
B-2 $ 3,643,500.00 (5)
B-3 $ 1,821,700.00 (5)
B-4 $ 2,064,600.00 (5)
B-5 $ 1,335,900.00 (5)
B-6 $ 1,457,796.19 (5)
R-1 $ 50.00 (2)
R-2 $ 50.00 (2)
(1) During each Interest Accrual Period the Class A-I Certificates will bear
interest at a variable Pass-Through Rate equal to the weighted average of the
Net Rates of the Group I Mortgage Loans.
(2) During each Interest Accrual Period, the Class A-II, Class R- 1 and Class
R-2 Certificates will bear interest at a variable Pass-Through Rate equal to the
weighted average of the Net Rates of the Group II Mortgage Loans.
(3) During each Interest Accrual Period, the Class A-III Certificates will bear
interest at a variable Pass-Through Rate equal to the weighted average of the
Net Rates of the Group III Mortgage Loans.
(4) During each Interest Accrual Period, the Class A-IV Certificates will bear
interest at a variable Pass-Through Rate equal to the weighted average of the
Net Rates of the Group IV Mortgage Loans.
(5) The Class B-1, Class B-2, Class B-3, Class B-4, Class B-5 and Class B-6
Certificates will each bear interest at a variable Pass- Through Rate equal to
the weighted average of the Pass-Through Rates of the Class IIB-1, Class IIB-2,
Class IIB-3 and Class IIB-4 Certificates.
</TABLE>
(e) With respect to each Distribution Date, each Class of 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, on the basis of a 360-day year comprised of twelve 30-day months,
based upon the respective Pass-Through Rate set forth, or determined as
provided, above and the Current Principal Amount 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 and
in each case increments of $1.00 in excess thereof, except that one Certificate
of each such Class may be issued in a different amount so that the sum of the
denominations of all outstanding Certificates of such Class shall equal the
Current Principal Amount of such Class on the Closing Date. On the Closing Date,
the Trustee shall execute and countersign Physical Certificates all in an
aggregate principal amount that shall equal the Current Principal Amount of such
Class on the Closing Date. The Class B-4, Class B-5 and Class B-6 Certificates
will be issued in certificated fully-registered form in minimum denominations of
$25,000 and increments of $1.00 in excess thereof, except that one Certificate
of each such Class may be issued in a different amount so that the sum of the
denominations of all outstanding Certificates of such Class shall equal the
Current Principal Amount of such Class on the Closing Date. Each Class of Global
Certificates, if any, shall be issued in fully registered form in minimum dollar
denominations of $25,000 and integral multiples of $1.00 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) in the case of
each Class of Class A Certificates and the Class B-1, Class B-2 and Class B-3
Certificates, the Certificate in the entire principal amount of the Class and
(ii) in the case of the Class B-4, Class B-5 and Class B-6 Certificates,
Individual Certificates all in an aggregate principal amount that shall equal
the Current Principal Amount of each such Class on the Closing Date. The
Certificates referred to in clause (i) and if at any time there are to be Global
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 R- 1 and Class R-2 Certificates shall be issued in certificated
fully-registered form in the denomination of $50 each. The Trustee shall sign
them by facsimile or manual signature and countersign them by manual signature
on behalf of the Trustee by one or more authorized signatories, each of whom
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 manually executed 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
is October 25, 2025.
Section 5.02. REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES.
(a) The Trustee shall maintain at its Corporate Trust Office a Certificate
Register in which, subject to such reasonable regulations as it may prescribe,
the Trustee shall provide for the registration of Certificates and of transfers
and exchanges of Certificates as herein provided.
(b) Subject to Subsection 5.01(a) and, in the case of any Global
Certificate or Physical Certificate upon the satisfaction of the conditions set
forth below, upon surrender for registration of transfer of any Certificate at
any office or agency of the Trustee maintained for such purpose, the Trustee
shall sign, countersign and shall deliver, in the name of the designated
transferee or transferees, a new Certificate of a like Class and aggregate
Fractional Undivided Interest, but bearing a different number.
(c) By acceptance of an Individual Certificate, whether upon original
issuance or subsequent transfer, each holder of such a Certificate acknowledges
the restrictions on the transfer of such Certificate set forth in the Securities
Legend and agrees that it will transfer such a Certificate only as provided
herein. In addition to the provisions of Subsection 5.02(h), the following
restrictions shall apply with respect to the transfer and registration of
transfer of an Individual Certificate to a transferee that takes delivery in the
form of an Individual Certificate:
(i) The Trustee shall register the transfer of an Individual
Certificate if the requested transfer is being made to a
transferee who has provided the Trustee with a Rule 144A
Certificate.
(ii) The Trustee shall register the transfer of any Individual
Certificate if (x) the transferor has advised the Trustee in
writing that the Certificate is being transferred to an
Institutional Accredited Investor; and (y) prior to the
transfer the transferee furnishes to the Trustee an Investment
Letter (and the Trustee shall be fully protected in so doing),
provided that, if based upon an Opinion of Counsel to the
effect that the delivery of (x) and (y) above are not
sufficient to confirm that the proposed transfer is being made
pursuant to an exemption from, or in a transaction not subject
to, the registration requirements of the Securities Act and
other applicable laws, the Trustee shall as a condition of the
registration of any such transfer require the transferor to
furnish such other certifications, legal opinions or other
information prior to registering the transfer of an Individual
Certificate as shall be set forth in such Opinion of Counsel.
(d) Subject to Subsection 5.02(h), so long as a Global Certificate of
such Class is outstanding and is held by or on behalf of the Depository,
transfers of beneficial interests in such Global Certificate, or transfers by
holders of Individual Certificates of such Class to transferees that take
delivery in the form of beneficial interests in the Global Certificate, may be
made only in accordance with this Subsection 5.02(d) and in accordance with the
rules of the Depository:
(i) In the case of a beneficial interest in the Global
Certificate being transferred to an Institutional Accredited
Investor, such transferee shall be required to take delivery in
the form of an Individual Certificate or Certificates and the
Trustee shall register such transfer only upon compliance with
the provisions of Subsection 5.02(c)(ii).
(ii) In the case of a beneficial interest in a Class of
Global Certificates being transferred to a transferee that takes
delivery in the form of an Individual Certificate or Certificates
of such Class, except as set forth in clause (i) above, the
Trustee shall register such transfer only upon compliance with
the provisions of Subsection 5.02(c)(i).
(iii) In the case of an Individual Certificate of a Class
being transferred to a transferee that takes delivery in the form
of a beneficial interest in a Global Certificate of such Class,
the Trustee shall register such transfer if the transferee has
provided the Trustee with a Rule 144A Certificate.
(iv) No restrictions shall apply with respect to the
transfer or registration of transfer of a beneficial interest in
the Global Certificate of a Class to a transferee that takes
delivery in the form of a beneficial interest in the Global
Certificate of such Class.
(e) Subject to Subsection 5.02(h), an exchange of a beneficial
interest in a Global Certificate of a Class for an Individual Certificate or
Certificates of such Class, an exchange of an Individual Certificate 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 is outstanding and is held by or on behalf of the Depository)
may be made only in accordance with this Subsection 5.02(e) and in accordance
with the rules of the Depository:
(i) A holder of a beneficial interest in a Global
Certificate of a Class may at any time exchange such
beneficial interest for an Individual Certificate or
Certificates of such Class.
(ii) A holder of an Individual Certificate or Certificates
of a Class may exchange such Certificate or Certificates for a
beneficial interest in the Global Certificate of such Class if
such holder furnishes to the Trustee 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) or otherwise make in its books and records 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) or otherwise
make in its books and records an appropriate notation
evidencing the date of such exchange or transfer and a
decrease in the certificate balance of such Global
Certificate equal to the certificate balance of such
Individual Certificate issued in exchange therefor or upon
transfer thereof.
(g) The Securities Legend shall be placed on any Individual
Certificate issued in exchange for or upon transfer of another Individual
Certificate or of a beneficial interest in a Global Certificate.
(h) Subject to the restrictions on transfer and exchange set forth in
this Section 5.02, the holder of any Individual Certificate may transfer or
exchange the same in whole or in part (in an initial certificate balance equal
to the minimum authorized denomination or any integral multiple of $1.00 in
excess thereof) by surrendering such Certificate at the Corporate Trust Office,
or at the office of any transfer agent, together with an executed instrument of
assignment and transfer satisfactory in form and substance to the Trustee in the
case of transfer and a written request for exchange in the case of exchange. The
holder of a beneficial interest in a Global Certificate may, subject to the
rules and procedures of the Depository, cause the Depository (or its nominee) to
notify the Trustee in writing of a request for transfer or exchange of such
beneficial interest for an Individual Certificate or Certificates. Following a
proper request for transfer or exchange, the Trustee shall, within five Business
Days of such request made at such Corporate Trust Office, sign, countersign and
deliver at such Corporate Trust Office, to the transferee (in the case of
transfer) or holder (in the case of exchange) or send by first class mail at the
risk of the transferee (in the case of transfer) or holder (in the case of
exchange) to such address as the transferee or holder, as applicable, may
request, an Individual Certificate or Certificates, as the case may require, for
a like aggregate Fractional Undivided Interest and in such authorized
denomination or denominations as may be requested. The presentation for transfer
or exchange of any Individual Certificate shall not be valid unless made at the
Corporate Trust Office by the registered holder in person, or by a duly
authorized attorney-in-fact.
(i) At the option of the Certificateholders, Certificates may be
exchanged for other Certificates of authorized denominations of a like Class and
aggregate Fractional Undivided Interest, upon surrender of the Certificates to
be exchanged at any such office or agency; PROVIDED, HOWEVER, that no
Certificate may be exchanged for new Certificates unless the original Fractional
Undivided Interest represented by each such new Certificate (i) is at least
$25,000 with respect to the Certificates other than the Class R-1 and R-2
Certificates, which in each case shall be $50, 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 B-1, Class B-2,
Class B-3, Class B-4, Class B-5 and Class B-6 Certificates, whether upon
original issuance or upon issuance of any other Certificate of any such Class in
exchange therefor or upon transfer thereof:
THIS CERTIFICATE MAY NOT BE ACQUIRED DIRECTLY OR INDIRECTLY BY, OR ON
BEHALF OF, AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT WHICH IS
SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED, AND/OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED,
UNLESS THE PROPOSED TRANSFEREE PROVIDES A BENEFIT PLAN OPINION TO THE TRUSTEE TO
THE EFFECT THAT THE PROPOSED TRANSFER AND/OR HOLDING OF A CERTIFICATE AND THE
SERVICING, MANAGEMENT AND/OR OPERATION OF THE TRUST AND ITS ASSETS: (I) WILL NOT
RESULT IN ANY PROHIBITED TRANSACTION WHICH IS NOT COVERED UNDER AN INDIVIDUAL OR
CLASS PROHIBITED TRANSACTION EXEMPTION, INCLUDING, BUT NOT LIMITED TO,
PROHIBITED TRANSACTION EXEMPTION ("PTE") 84-14, PTE 91-38, PTE 90-1, PTE 95-60
OR PTE 96-23 AND (II) WILL NOT GIVE RISE TO ANY ADDITIONAL FIDUCIARY DUTIES ON
THE PART OF THE MASTER SERVICER OR THE TRUSTEE.
Section 5.03. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES. (a)
If (i) any mutilated Certificate is surrendered to the Trustee, or the Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any
Certificate, and (ii) there is delivered to the Trustee such security or
indemnity as it may require to save it harmless, and (iii) the Trustee has not
received notice that such Certificate has been acquired by a third Person, the
Trustee shall sign, countersign and deliver, in exchange for or in lieu of any
such mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
tenor and Fractional Undivided Interest but in each case bearing a different
number. The mutilated, destroyed, lost or stolen Certificate shall thereupon be
canceled of record by the Trustee and shall be of no further effect and evidence
no rights.
(b) Upon the issuance of any new Certificate under this Section 5.03,
the Trustee may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Any duplicate Certificate issued pursuant to this Section 5.03 shall constitute
complete and indefeasible evidence of ownership in the Trust Fund, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
Section 5.04. PERSONS DEEMED OWNERS. Prior to due presentation of a
Certificate for registration of transfer, the Seller, the Master Servicer, the
Trustee and any agent of the Seller, the Master Servicer or the Trustee may
treat the Person in whose name any Certificate is registered as the owner of
such Certificate for the purpose of receiving distributions pursuant to Section
6.01 and for all other purposes whatsoever. Neither the Seller, the Master
Servicer, the Trustee nor any agent of the Seller, the Master Servicer or the
Trustee shall be affected by notice to the contrary. No Certificate shall be
deemed duly presented for a transfer effective on any Record Date unless the
Certificate to be transferred is presented no later than the close of business
on the third Business Day preceding such Record Date.
Section 5.05. TRANSFER RESTRICTIONS ON RESIDUAL CERTIFICATES. (a)
Residual Certificates, or interests therein, may not be transferred without the
prior express written consent of the Tax Matters Person. As a prerequisite to
such consent, the proposed transferee must provide the Tax Matters Person and
the Trustee with an affidavit that the proposed transferee is not a Disqualified
Organization (as defined in Subsection 5.05(b)) (and, unless the Tax Matters
Person consents to the transfer to a person who is not a U.S. Person, an
affidavit that it is a U.S. Person) as provided in Subsection 5.05(b).
(b) No transfer, sale or other disposition of a Residual Certificate
(including a beneficial interest therein) may be made unless, prior to the
transfer, sale or other disposition of a Residual Certificate, the proposed
transferee (including the initial purchasers thereof) delivers to the Tax
Matters Person and the Trustee an affidavit in the form attached hereto as
Exhibit E stating, among other things, that as of the date of such transfer (i)
such transferee is not any of (A) the United States, any state or political
subdivision thereof, any foreign government, any international organization, or
any agency or instrumentality of any of the foregoing (other than an
instrumentality that is a corporation all of whose activities are subject to tax
under Chapter 1 of Subtitle A of the Code and (except in the case of FHLMC) a
majority of whose board of directors is not selected by the United States, or
any state or political subdivision thereof), (B) any organization that is exempt
from any tax imposed by Chapter 1 of Subtitle A of the Code, other than (x) a
tax-exempt farmers' cooperative within the meaning of Section 521 of the Code or
(y) an organization that is subject to the tax imposed by section 511 of the
Code on "unrelated business taxable income" or (C) a corporation operating on a
cooperative basis that is engaged in furnishing electric energy or providing
telephone service to persons in rural areas (within the meaning of Section
1381(a)(2)(C) of the Code) (any Person described in (A), (B), or (C) being
referred to herein as a "Disqualified Organization") and that (ii) such
transferee is not acquiring such Residual Certificate for the account of a
Disqualified Organization. The Tax Matters Person shall not consent to a
transfer of a Residual Certificate if it has actual knowledge that any statement
made in the affidavit issued pursuant to the preceding sentence is not true.
Notwithstanding any transfer, sale or other disposition of a Residual
Certificate to a Disqualified Organization, such transfer, sale or other
disposition shall be deemed to be of no legal force or effect whatsoever and
such Disqualified Organization shall not be deemed to be a Holder of a Residual
Certificate for any purpose hereunder, including, but not limited to, the
receipt of distributions thereon. If any purported transfer shall be in
violation of the provisions of this Subsection 5.05(b), then the prior Holder
thereof shall, upon discovery that the transfer of such Residual Certificate was
not in fact permitted by this Subsection 5.05(b), be restored to all rights as a
Holder thereof retroactive to the date of the purported transfer. The Trustee
and the Tax Matters Person shall be under no liability to any Person for any
registration or transfer of a Residual Certificate that is not permitted by this
Subsection 5.05(b) or for making payments due on such Residual Certificate to
the purported Holder thereof or taking any other action with respect to such
purported Holder under the provisions of this Agreement so long as the written
affidavit referred to above was received with respect to such transfer, and the
Tax Matters Person and the Trustee had no knowledge that it was untrue. The
prior Holder shall be entitled to recover from any purported Holder of a
Residual Certificate that was in fact not a permitted transferee under this
Subsection 5.05(b) at the time it became a Holder all payments made on such
Residual Certificate. Each Holder of a Residual Certificate, by acceptance
thereof, shall be deemed for all purposes to have consented to the provisions of
this Subsection 5.05(b) and to any amendment of this Agreement deemed necessary
(whether as a result of new legislation or otherwise) by counsel of the Tax
Matters Person or the Seller to ensure that the Residual Certificates are not
transferred to a Disqualified Organization and that any transfer of such
Residual Certificates will not cause the imposition of a tax upon the Trust or
cause 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 a "United States person,"
as such term is defined in Section 7701(a)(30) of the Code.
(d) By accepting a Residual Certificate, the purchaser thereof agrees
to be a Tax Matters Person, and appoints the Trustee to act as its agent with
respect to all matters concerning the tax obligations of the Trust.
Section 5.06. RESTRICTIONS ON TRANSFERABILITY OF PRIVATE CERTIFICATES.
(a) No offer, sale, transfer or other disposition (including pledge) of a
Private Certificate shall be made by any Holder thereof unless registered under
the Securities Act, or an exemption from the registration requirements of the
Securities Act and any applicable state securities or "Blue Sky" laws is
available and the prospective transferee (other than the Seller) of such
Certificate signs and delivers to the Trustee an Investment Letter, if the
transferee is an Institutional Accredited Investor, in the form set forth as
Exhibit F-1 hereto, or a Rule 144A Certificate, if the transferee is a Qualified
Institutional Buyer, in the form set forth as Exhibit F-2 hereto. In the case of
a proposed transfer of a Private Certificate to a transferee other than a
Qualified Institutional Buyer, the Trustee may require an Opinion of Counsel
that such transaction is exempt from the registration requirements of the
Securities Act. The cost of such opinion shall not be an expense of the Trustee
or the Trust Fund.
(b) Each Class B-4, Class B-5 and Class B-6 Certificate shall bear a
Securities Legend.
Section 5.07. ERISA RESTRICTIONS. (a) Subject to the provisions of
subsection (b), no Class B Certificates may be acquired directly or indirectly
by, or on behalf of, an employee benefit plan or other retirement arrangement
which is subject to Title I of ERISA and/or Section 4975 of the Code, 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 or will be covered under an individual or class prohibited transaction
exemption including but not limited to Department of Labor Prohibited
Transaction Exemption ("PTE") 84-14 (Class Exemption for Plan Asset Transactions
Determined by Independent Qualified Professional Asset Managers); PTE 91-38
(Class Exemption for Certain Transactions Involving Bank Collective Investment
Funds); PTE 90-1 (Class Exemption for Certain Transactions Involving Insurance
Company Pooled Separate Accounts), PTE 95-60 (Class Exemption for Certain
Transactions Involving Insurance Company General Accounts), and PTCE 96-23
(Class Exemption for Plan Asset Transactions Determined by In- House Asset
Managers or (ii) will give rise to any additional fiduciary duties under ERISA
on the part of the Master Servicer or the Trustee. A Benefit Plan Opinion shall
not be an expense of the Trustee or the Master Servicer.
(b) Any Person acquiring an interest in a Book-Entry Certificate which
represents one of the Classes referred to in Section 5.07(a), by acquisition of
such Certificate, shall be deemed to have represented to the Trustee that it is
either: (i) not acquiring an interest in such Certificate directly or indirectly
by, or on behalf of, an employee benefit plan or other retirement arrangement
which is subject to Title I of ERISA and/or section 4975 of the Code, or (ii)
such Person provides a benefit plan opinion to the Trustee to the effect that
the transfer and/or holding of an interest in such Certificate and the
servicing, management and/or operation of the Trust and its assets: (I) will not
result in any prohibited transaction which is not covered under an individual or
class prohibited transaction exemption, including, but not limited to, PTE
84-14, PTE 91-38, PTE 90-1, PTE 95-60 or PTE 96-23 and (II) will not give rise
to any additional fiduciary duties on the part of the Master Servicer or the
Trustee.
Section 5.08. RULE 144A INFORMATION. For so long as any Private
Certificates are outstanding and are "restricted securities" within the meaning
of Rule 144(a)(3) of the Securities Act, (1) the Master Servicer will provide or
cause to be provided to any holder of such Certificates and any prospective
purchaser thereof designated by such a holder, upon the request of such holder
or prospective purchaser, the information required to be provided to such holder
or prospective purchaser by Rule 144A(d)(4) under the Securities Act; and (2)
the Master Servicer shall update such information from time to time in order to
prevent such information from becoming false and misleading and will take such
other actions as are necessary to ensure that the safe harbor exemption from the
registration requirements of the Securities Act under Rule 144A is and will be
available for resales of such Certificates conducted in accordance with Rule
144A.
<PAGE>
ARTICLE VI
Payments to Certificateholders
Section 6.01. DISTRIBUTIONS ON THE CERTIFICATES. (a) Interest and
principal on the Certificates will be distributed by the Trustee monthly on each
Distribution Date, commencing in July 1997, in an aggregate amount equal to the
Available Funds for such Distribution Date as follows:
(i) On each Distribution Date on or prior to Cross-Over Date, an
amount equal to the Group I Available Funds will be distributed in the following
order of priority:
first, to the Class A-I Certificates, the Accrued Certificate
Interest on such Class for such Distribution Date;
second, to the Class A-I Certificates, any Accrued Certificate
Interest thereon remaining undistributed from previous Distribution
Dates, to the extent of remaining Group I Available Funds;
third, to the Class A-I Certificates in reduction of the Current
Principal Amounts thereof, the Group I Senior Optimal Principal Amount
for such Distribution Date to the extent of remaining Group I
Available Funds, until the Current Principal Amount of such Class has
been reduced to zero;
(ii) On each Distribution Date on or prior to the Cross-Over Date, an
amount equal to the Group II Available Funds will be distributed in the
following order of priority:
first, to the Class A-II, Class R-1 and Class R-2 Certificates, the
Accrued Certificate Interest on each such Class for such Distribution
Date, any shortfall in available amounts being allocated between such
Classes in proportion to the amount of Accrued Certificate Interest
otherwise distributable thereon;
second, to the Class A-II, Class R-1 and Class R-2 Certificates, any
Accrued Certificate Interest thereon remaining undistributed from
previous Distribution Dates, to the extent of remaining Group II
Available Funds, 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 for
such Distribution Date;
third, to the Class A-II, Class R-1 and Class R-2
Certificates in reduction of the Current Principal Amounts thereof, the
Group II Senior Optimal Principal Amount for such Distribution Date, to
the extent of remaining Group II Available Funds, in the following
order of priority:
(l) to the Class R-1 and R-2 Certificates, pro rata, until the
Current Principal Amount of each such Class has been reduced to zero;
and
(2) to the Class A-II Certificates, until the Current Principal
Amount of such Class has been reduced to zero;
(iii) On each Distribution Date on or prior to the Cross- Over Date,
an amount equal to the Group III Available Funds will be distributed in the
following order of priority:
first, to the Class A-III Certificates, the Accrued Certificate
Interest on such Class for such Distribution Date;
second, to the Class A-III Certificates, any Accrued Certificate
Interest thereon remaining undistributed from previous Distribution
Dates, to the extent of remaining Group III Available Funds;
third, to the Class A-III Certificates in reduction of the
Current Principal Amounts thereof, the Group III Senior Optimal
Principal Amount for such Distribution Date to the extent of remaining
Group III Available Funds, until the Current Principal Amount of such
Class has been reduced to zero;
(iv) On each Distribution Date on or prior to the Cross-Over Date, an
amount equal to the Group IV Available Funds will be distributed in the
following order of priority:
first, to the Class A-IV Certificates, the Accrued Certificate
Interest on such Class for such Distribution Date;
second, to the Class A-IV Certificates, any Accrued Certificate
Interest thereon remaining undistributed from previous Distribution
Dates, to the extent of remaining Group IV Available Funds;
third, to the Class A-IV Certificates in reduction of the Current
Principal Amounts thereof, the Group IV Senior Optimal Principal
Amount for such Distribution Date to the extent of remaining Group IV
Available Funds, until the Current Principal Amount of such Class has
been reduced to zero;
(v) On each Distribution Date on or prior to the Cross-Over Date, an
amount equal to any remaining Available Funds following the distributions in (i)
through (iv) above will be distributed sequentially, in the following order:
(1) 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, until the Current Principal Amount of such Class has
been reduced to zero;
(2) 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, until the Current Principal Amount of such Class has
been reduced to zero;
(3) 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, until the Current Principal Amount of such Class has
been reduced to zero;
(4) 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, until the Current Principal Amount of such Class has
been reduced to zero;
(5) 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, until the Current Principal Amount of such Class has
been reduced to zero; and
(6) 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, until the Current Principal Amount of such Class has
been reduced to zero.
(vi) On each Distribution Date prior to the occurrence of the
Cross-Over Date but after the reduction of the Current Principal Amount of any
Class of Class A Certificates to zero, the remaining Class or Classes of Class A
Certificates will be entitled to receive in reduction of their Current Principal
Amounts, pro rata based upon their Current Principal Amounts immediately prior
to such Distribution Date, in addition to any Principal Prepayments related to
such remaining Class A Certificates' respective Mortgage Loan Group allocated to
such Class A Certificates, 100% of the Principal Prepayments on any Mortgage
Loan in the Mortgage Loan Group relating to the fully repaid Class A
Certificates; provided, however, (a) if the Distribution Date is prior to the
Distribution Date occurring in July 2003 and the aggregate Current Principal
Amount of the Subordinate Certificates is more than 50% of the initial aggregate
principal amount of the Subordinate Certificates, or (b) if the Distribution
Date is on or after the Distribution Date occurring in July 2003 and the
aggregate Current Principal Amount of the Subordinate Certificates is more than
25% of the initial aggregate principal amount of the Subordinate Certificates,
no such diversion of amounts of Principal Prepayments otherwise due to the
Subordinate Certificates in accordance with (v) above will be required to be
made. In addition, if on any Distribution Date on which the aggregate Current
Principal Amount of any Class or Classes of Class A Certificates would be
greater than the aggregate Scheduled Principal Balance of the Mortgage Loans in
its related Mortgage Loan Group and any Class B Certificates are still
outstanding, in each case after giving effect to distributions to be made on
such Distribution Date, 100% of the Principal Prepayments otherwise allocable to
the Class B Certificates on the Mortgage Loans in the other Mortgage Loan Groups
will be distributed to such Class or Classes of Class A Certificates in
reduction of the Current Principal Amounts thereof, until the aggregate Current
Principal Amount of such Class or Classes of Class A Certificates is an amount
equal to the aggregate Scheduled Principal Balance of the Mortgage Loans in its
related Mortgage Loan Group.
(vii) On each Distribution Date, any Group Available Funds remaining
after payment of interest and principal to the Classes of Certificates entitled
thereto, as described above, will be distributed, pro rata, to the Residual
Certificates; provided that if on any Distribution Date there are any Group
Available Funds remaining after payment of interest and principal to a Class or
Classes of Certificates entitled thereto, such Group Available Funds will be
distributed to the other Classes of Class A Certificates, pro rata, based upon
their Current Principal Amounts, until all amounts due to all Classes of Class A
Certificates have been paid in full, before any such remaining Group Available
Funds are distributed to the Residual Certificates.
(b) On each Distribution Date, the funds available for distribution
shall be allocated to distributions on the REMIC II Regular Interests in an
amount sufficient to make the distributions on the respective Corresponding
Classes of Certificates on such Payment Date in accordance with the provisions
of subsection (a) of this Section 6.01.
(c) No Accrued Certificate Interest will be payable with respect to
any Class of Certificates after the Distribution Date on which the outstanding
principal balance of such Certificate has been reduced to zero.
Section 6.02. ALLOCATION OF DEFERRED INTEREST. (a) On or prior to each
Determination Date, the Trustee shall determine the amount of any Deferred
Interest in respect of each Mortgage Loan that occurred during the immediately
preceding calendar month.
(b) With respect to any Distribution Date, any Deferred Interest with
respect to a Mortgage Loan will be allocated to increase the Current Principal
Amount of each related Class of Certificates in the following manner:
first, to the Class or Classes of Senior Certificates
related to the Mortgage Loan Group containing such Mortgage
Loan (pro rata based on Current Principal Amount in the case of the
Class A-II, Class R-1 and Class R-2 Certificates) in an amount equal to
the amount of Deferred Interest with respect thereto times (x) the
aggregate Current Principal Amount of such Class or Classes of Senior
Certificates over (y) the aggregate principal balance of all Mortgage
Loans in the related Mortgage Loan Group; and
second, all remaining amounts of Deferred Interest, not allocated to
the related Class or Classes of Senior Certificates pursuant to
priority "first" above, to the Classes of Subordinate Certificates, pro
rata, based upon the Current Principal Amount of each such Class, and
if after the Cross-Over Date, to the Class or Classes of Senior
Certificates related to the Mortgage Loan Group containing such
Mortgage Loan (pro rata based on Current Principal Amount in the case
of the Class A-II, Class R-1 and Class R- 2 Certificates).
(c) On each Distribution Date on which the Current Principal Amount of
a Class of Certificates is increased by Deferred Interest in accordance with
Section 6.02(b) above, the interest payable on such Class shall be decreased by
an equivalent amount.
Section 6.03. ALLOCATION OF LOSSES. (a) On or prior to each
Determination 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 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, based upon the respective Current Principal Amounts
thereof.
(c) 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 all of the Mortgage Loans as of the first day of the month of such
Distribution Date (such limitation, the "Loss Allocation Limitation").
(d) Any Realized Losses allocated to a Class of Certificates pursuant
to Subsection 6.03(b) shall be allocated among the Certificates of such Class in
proportion to their respective Current Principal Amounts. Any allocation of
Realized Losses pursuant to this Subsection 6.03(d) shall be accomplished by
reducing the Current Principal Amount of the related Certificates on the related
Distribution Date in accordance with Subsection 6.03(e).
(e) Realized Losses allocated in accordance with this Section 6.03
shall be allocated on the Distribution Date in the month following the month in
which such loss was incurred and, in the case of the principal portion thereof,
after giving effect to distributions made on such Distribution Date.
(f) On each Distribution Date, the Trustee shall determine the
Subordinate Certificate Writedown Amount, if any. Any such Subordinate
Certificate Writedown Amount shall be allocated in reduction of the Current
Principal Amounts of the Classes of the Subordinate Certificates in the reverse
order of their numerical Class designations and from and after the CrossOver
Date, shall be allocated in reduction of the Current Principal Amounts of the
Classes of Senior Certificates, PRO RATA based on their respective Current
Principal Amounts, which reduction shall occur on such Distribution Date after
giving effect to distributions made on such Distribution Date.
(g) Any Net Interest Shortfall will be allocated among the Classes of
Certificates in proportion to the respective amounts of Accrued Certificate
Interest that would have been allocated thereto in the absence of such Net
Interest Shortfall and any Deferred Interest or the interest portion of any
Realized Loss for such Distribution Date. The interest portion of Realized
Losses with respect to all Mortgage Loans will be allocated first to the
Subordinate Certificates in reverse order of their numerical designations
commencing with the Class B-6 Certificates and following the Cross-Over Date,
the interest portion of Realized Losses will be allocated pro rata to the
Classes of Senior Certificates based on the respective amounts of Accrued
Certificate Interest that would have been allocated thereto in the absence of
any Net Interest Shortfall, Deferred Interest and the interest portion of
Realized Losses. The amount of any interest shortfalls with respect to the
related Mortgage Loan Group that are covered by subordination will constitute
unpaid Accrued Certificate Interest and will be distributable to holders of the
Certificates of the related Classes entitled to such amounts on subsequent
Distribution Dates, to the extent of applicable Group Available Funds after
interest distributions as required herein. Any such amount so carried forward
will not bear interest.
(h) With respect to any Distribution Date prior to the Cross-Over
Date, Realized Losses shall be allocated to the REMIC II Regular Certificates in
a manner similar to the allocation of Realized Losses to the REMIC I Regular
Certificates under this Section 6.03, except that any losses allocated to a
Class B Certificate shall be allocated to the REMIC II Class IIB-1, Class IIB-2,
Class IIB-3 or Class IIB-4 Certificates if the loss is attributable to a Group I
Mortgage Loan, Group II Mortgage Loan, Group III Mortgage Loan or Group IV
Mortgage Loan, respectively. With respect to any Distribution Date after the
Cross-Over Date, Realized Losses shall be allocated to the REMIC II Regular
Certificates in an amount such that distributions on the REMIC II Regular
Certificates are an amount sufficient to make the distributions on the
respective Corresponding Classes of Certificates on such Distribution Date in
accordance with the provisions of subsection (a) of Section 6.01.
Section 6.04. [Reserved]
Section 6.05. PAYMENTS. (a) No later than the Determination Date, the
Master Servicer shall provide to the Trustee and in such electronic format as
the Trustee may reasonably request any information with respect to the Mortgage
Loans required to enable the Trustee to make, or cause its agent to make,
distributions on the Certificates and prepare reports to Certificateholders.
(b) On each Distribution Date, other than the final Distribution Date,
the Trustee shall distribute to each Certificateholder of record on the directly
preceding Record Date the Certificateholder's pro rata share of its Class (based
on the aggregate Fractional Undivided Interest represented by such Holder's
Certificates) of all amounts required to be distributed on such Distribution
Date to such Class. The Trustee shall calculate such amounts based upon the
information provided by the Master Servicer pursuant to Subsection 6.05(a).
(c) Payment of the above amounts to each Certificateholder shall be
made (i) by check mailed to each Certificateholder entitled thereto at the
address appearing in the Certificate Register or (ii) upon receipt by the
Trustee on or before the fifth Business Day preceding the Record Date of written
instructions from a Certificateholder holding Certificates representing an
initial aggregate Current Principal Amount of not less than $1,000,000 by wire
transfer to a United States dollar account maintained by the payee at any United
States depository institution with appropriate facilities for receiving such a
wire transfer; PROVIDED, HOWEVER, that the final payment in respect of each
Class of Certificates will be made only upon presentation and surrender of such
respective Certificates at the office or agency of the Trustee specified in the
notice to Certificateholders of such final payment.
Section 6.06. STATEMENTS TO CERTIFICATEHOLDERS. (a) Concurrently with
each distribution to Certificateholders, the Trustee shall forward by
first-class mail to each Certificateholder, with a copy to the Seller, the
Master Servicer and the Rating Agencies, a statement setting forth the following
information, expressed with respect to clauses (i) through (vi) in the aggregate
and as a Fractional Undivided Interest representing an initial Current Principal
Amount of $1,000 or in the case of the Class R-1 or R-2 Certificates, an initial
Current Principal Amount of $50:
(i) the Current Principal Amount 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 during the related Interest Accrual Period;
(iv) the Net Interest Shortfall, Deferred Interest 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;
(v) the amount of the distribution allocable to
interest on each Class of Certificates;
(vi) the Pass-Through Rates for each Class of
Certificates with respect to such Distribution Date;
(vii) the Current Principal Amount of each Class of
Certificates after such Distribution Date;
(viii) the amount of any Monthly Advances and
Compensating Interest Payments by the Master Servicer
included in such distribution separately stated for each
Mortgage Loan Group;
(ix) the amount of any Realized Losses (listed
separately for each category of Realized Loss and for each
Mortgage Loan Group) 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 principal prepayments, Insurance
Proceeds, the purchase price in connection with the purchase
of Mortgage Loans, cash deposits in connection with
substitutions of Mortgage Loans and Net Liquidation
Proceeds) with respect to each Mortgage Loan Group;
(xi) the number of Mortgage Loans (excluding REO
Property) in each Mortgage Loan Group remaining in the Trust
Fund as of the end of the related Due Period;
(xii) information for each Mortgage Group 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) for each Mortgage Loan Group, 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) for each Mortgage Loan Group, 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 in each Mortgage Loan Group;
PROVIDED THAT, in the event that such information is not
available to the Master Servicer and the Trustee on the
Distribution Date, such information shall be furnished
promptly after it becomes available;
(xvi) the amount of Realized Losses allocated to each
Class of Certificates since the prior Distribution Date and
in the aggregate for all prior Distribution Dates; and
(xvii) the then applicable Senior Percentage, Senior
Prepayment Percentage, Subordinate Percentage and
Subordinate Prepayment Percentage.
The information set forth above shall be calculated, or reported, as
the case may be, by the Trustee based on data provided by the Master Servicer
pursuant to Subsection 6.05(a) and, with respect to prior periods, Section 6.06,
upon which the Trustee may conclusively rely. The information furnished by the
Master Servicer shall be sufficient for the Trustee to calculate any statements
it is required to make.
(b) By April 30 of each year beginning in 1998, the Trustee will
furnish a report to each Holder of the Certificates of record at any time during
the prior calendar year as to the aggregate of amounts reported pursuant to
subclauses (a)(ii) and (a)(v) above with respect to the Certificates, plus
information with respect to the amount of servicing compensation and such other
customary information as the Master Servicer determines and advises the Trustee
to be necessary and/or to be required by the Internal Revenue Service or by a
federal or state law or rules or regulations to enable such Holders to prepare
their tax returns for such calendar year. Copies of such report shall also be
furnished to the Master Servicer. Such obligations shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Trustee pursuant to the requirements of the Code.
The Master Servicer shall supply to the Trustee in a timely manner the
information required for the statements described above which, where
appropriate, shall be the information from which the Trustee can calculate the
statements it is required to make.
Section 6.07. REPORTS TO THE TRUSTEE AND THE MASTER SERVICER. (a) Not
later than 15 days after each Distribution Date, the Trustee shall forward to
the Master Servicer a statement setting forth the status of the Certificate
Account and the Custody Account as of the close of business on the last day of
the month of the Distribution Date and showing, for the month covered by such
statement, deposits in or withdrawals from the Certificate Account and the
Custody Account.
(b) On or before the Determination Date, the Master Servicer shall
provide to the Trustee (and with respect to the information contained in
subclause (xiv) hereof, the Seller), with respect to the Mortgage Loans and the
REO Property, respectively, a Loan Summary and Remittance Report in such
electronic format as the Trustee may reasonably request and in such hardcopy
format as the Master Servicer and the Trustee shall agree which, if there are
Sub-Servicers, shall be based upon reports from Sub-Servicers, if any, received
by the Master Servicer on or before the seventh 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 each
subaccount of the Certificate Account since the date of the
prior statement, stated separately for each category of
deposit specified in Section 4.02 and each category of
withdrawal specified in Section 4.03, indicating separately
the aggregate of amounts withdrawn which are not applicable to
a particular Mortgage Loan;
(ii) Amount of Group 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
(v) partial prepayments, (v) full
prepayments, (w) Net Liquidation Proceeds,
stating Liquidation Proceeds and Liquidation
Expenses separately), (x) Insurance
Proceeds, (y) the purchase price in
connection with the purchase of a Mortgage
Loan, and (z) any cash deposit in connection
with the substitution of a Mortgage Loan;
(C) interest on the Mortgage Loans;
(D) Monthly Advances made by the
Master Servicer;
(E) Certificate Account Advances;
(F) Compensating Interest Payments; and
(G) 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;
(v) [intentionally omitted];
(vi) [intentionally omitted];
(vii) Aggregate Scheduled Principal Balance of
the Mortgage Loans as of the related Due Date;
(viii) Book value of any collateral acquired by means of
foreclosure, grant of deed in lieu of foreclosure or otherwise
in respect of any Mortgage Loan;
(ix) Number and aggregate principal balance of Mortgage
Loans which are 30, 60, 90 and 120 days delinquent as
calculated by the Master Servicer, those which are in
foreclosure, those with respect to which the related
Mortgagor is bankrupt, and those which are REO Property;
(x) Interest Shortfall with respect to the related
Distribution Date and portion thereof resulting from Voluntary
Principal Prepayments in full or the provisions of the Relief
Act;
(xi) [intentionally omitted]
(xii) Amount, if any, by which the aggregate of payments
of scheduled principal and interest on the Mortgage Loans that
were due on the related Due Date and delinquent, other than as
a result of the Relief Act, as of the 18th day of such month
exceeds the sum of the Monthly Advances to be made by the
Master Servicer and Certificate Account Advances for such
Distribution Date;
(xiii) Aggregate Master Servicing Fee for the
related Due Period; and
(xiv) Such other information regarding each Mortgage Loan,
including, but not limited to, an updated schedule of the
Scheduled Principal Balances of the Mortgage Loans as of the
related Due Date, in such electronic format, as may be
reasonably requested by the Trustee and, if requested, in such
hardcopy format as the Master Servicer and the Trustee shall
agree.
(c) Not later than three Business Days after each Distribution Date,
the Trustee shall provide written confirmation to the Master Servicer that the
Trustee's books and records are in accordance with the updated schedule of the
Scheduled Principal Balances of the Mortgage Loans provided that month by the
Master Servicer, and if discrepancies exist, the Trustee shall list such
discrepancies on a schedule thereto with a copy to the Seller.
Section 6.08. MONTHLY ADVANCES. If the Scheduled Payment (together
with any advances from any Sub-Servicers) on a Mortgage Loan that was due on a
related Due 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
appropriate subaccount of the Certificate Account not later than the Advancing
Date immediately preceding the related Distribution Date an amount equal to such
deficiency or in the case of a Simple Interest Loan, such deficiency up to
30-days interest on the Outstanding Principal Balance thereof as of the
beginning of the related Prepayment Period, in each case 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 appropriate subaccount of the
Certificate Account on or before any future date on which and to the extent that
funds in the appropriate subaccount of the Certificate Account on such date are
less than the amount required to be transferred by the Master Servicer to such
subaccount of the Certificate Account. If applicable, on the fifth Business Day
preceding each Distribution Date, the Master Servicer shall present an Officer's
Certificate to the Trustee (i) stating that the Master Servicer elects not to
make a Monthly Advance in a stated amount and (ii) detailing the reason it deems
the advance to be nonrecoverable.
Section 6.09. COMPENSATING INTEREST PAYMENTS. The Master Servicer
shall deposit in the Certificate Account not later than the Advancing Date
immediately preceding the related Distribution Date an amount equal to the
lesser of (i) the aggregate amounts determined pursuant to subclauses (a) and
(b) of the definition of Interest Shortfall for the related Distribution Date
and (ii) the Master Servicing Fee for such Distribution Date (such amount, the
"Compensating Interest Payment"). The Master Servicer shall not be entitled to
any reimbursement of any Compensating Interest Payment.
Section 6.10. REPORTS OF FORECLOSURES AND ABANDONMENT OF MORTGAGED
PROPERTY. Each year the Master Servicer shall report or cause to be reported to
the Internal Revenue Service foreclosures and abandonments of any Mortgaged
Property as required by Section 6050J of the Code.
<PAGE>
ARTICLE VII
The Master Servicer
Section 7.01. LIABILITIES OF THE MASTER SERVICER. The Master Servicer
shall be liable in accordance herewith only to the extent of the obligations
specifically imposed upon and undertaken by it herein. Only the Master Servicer,
any successor Master Servicer or the Trustee acting as Master Servicer shall be
liable with respect to the servicing of the Mortgage Loans and the REO Property
for actions taken by any such person in contravention of the Master Servicer's
duties hereunder.
Section 7.02. MERGER OR CONSOLIDATION OF THE MASTER SERVICER. (a) The
Master Servicer will keep in full effect its existence, rights and franchises as
a corporation under the laws of the state of its incorporation, and will obtain
and preserve its qualification to do business as a foreign corporation in each
jurisdiction in which such qualification is or shall be necessary to protect the
validity and enforceability of this Agreement, the Certificates or any of the
Mortgage Loans and to perform its duties under this Agreement.
(b) Any Person into which the Master Servicer may be merged or
consolidated, or any corporation resulting from any merger or consolidation to
which the Master Servicer shall be a party, or any Person succeeding to the
business of the Master Servicer, shall be the successor of the Master Servicer
hereunder, without the execution or filing of any paper or further act on the
part of any of the parties hereto, anything herein to the contrary
notwithstanding.
Section 7.03. INDEMNIFICATION OF THE TRUSTEE. The Master Servicer
agrees to indemnify the Indemnified Persons for, and to hold them harmless
against, any loss, liability or expense incurred on their part, arising out of,
or in connection with, this Agreement, including the costs and expenses
(including reasonable legal fees and expenses) of defending themselves against
any such claim other than (i) any loss, liability or expense related to its
failure to perform its duties in compliance with this Agreement (except as any
such loss, liability or expense shall be otherwise reimbursable pursuant to this
Agreement and (ii) any loss, liability or expense incurred by reason of such
Person's willful misfeasance, bad faith or gross negligence in the performance
of duties hereunder or by reason of reckless disregard of obligations and duties
hereunder, provided that with respect to any such claim, the Trustee shall have
given the Master Servicer written notice thereof promptly after the Trustee
shall have with respect to such claim knowledge thereof. The Master Servicer
shall assume the defense of any claim for which an Indemnified Person is
entitled to indemnification pursuant to this Section 7.03, and the Master
Servicer shall pay all expenses in connection therewith, including reasonable
legal fees, and shall promptly pay, discharge and satisfy any judgment or decree
which may be rendered against an Indemnified Person in respect of such claim.
Section 7.04. LIMITATION ON LIABILITY OF THE MASTER SERVICER AND
OTHERS. Subject to the obligation of the Master Servicer to indemnify the
Indemnified Persons pursuant to Section 7.03:
(a) Neither the Master Servicer nor any of the directors, officers,
employees or agents of the Master Servicer shall be under any liability to the
Indemnified Persons, the Seller, the Trust Fund or the Certificateholders for
taking any action or for refraining from taking any action in good faith
pursuant to this Agreement, or for errors in judgment; PROVIDED, HOWEVER, that
this provision shall not protect the Master Servicer or any such Person against
any breach of warranties or representations made herein or any liability which
would otherwise be imposed by reason of such Person's willful misfeasance, bad
faith or gross negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder.
(b) The Master Servicer and any director, officer, employee or agent
of the Master Servicer may rely in good faith on any document of any kind PRIMA
FACIE properly executed and submitted by any Person respecting any matters
arising hereunder.
(c) The Master Servicer and any director, officer, employee or agent
of the Master Servicer shall be indemnified by the Trust and held harmless
thereby against any loss, liability or expense incurred in connection with any
legal proceedings relating to this Agreement or the Certificates (including
reasonable legal fees and disbursements of counsel), other than (i) any loss,
liability or expense related to its failure to perform its duties in compliance
with this Agreement (except as any such loss, liability or expense shall be
otherwise reimbursable pursuant to this Agreement) and (ii) any loss, liability
or expense incurred by reason of such Person's willful misfeasance, bad faith or
gross negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties hereunder.
(d) The Master Servicer shall not be under any obligation to appear
in, prosecute or defend any legal action that is not incidental to its duties
under this Agreement and that in its opinion may involve it in any expense or
liability; PROVIDED, HOWEVER, the Master Servicer may in its discretion
undertake any such action which it may deem necessary or desirable with respect
to this Agreement and the rights and duties of the parties hereto and the
interests of the Certificateholders hereunder. In such event, the legal expenses
and costs of such action and any liability resulting therefrom shall be
expenses, costs and liabilities of the Trust Fund, and the Master Servicer shall
be entitled to be reimbursed therefor out of the Certificate Account as provided
by Subsection 4.03(a). Nothing in this Subsection 7.04(d) shall affect the
Master Servicer's obligation to supervise, or to take such actions as are
necessary to ensure, the servicing and administration of the Mortgage Loans
pursuant to Subsection 3.01(a).
(e) In taking or recommending any course of action pursuant to this
Agreement, unless specifically required to do so pursuant to this Agreement, the
Master Servicer shall not be required to investigate or make recommendations
concerning potential liabilities which the Trust might incur as a result of such
course of action by reason of the condition of the Mortgaged Properties but
shall give notice to the Trustee if it has notice of such potential liabilities.
Section 7.05. MASTER SERVICER NOT TO RESIGN. Except as provided in
Section 7.07, the Master Servicer shall not resign from the obligations and
duties hereby imposed on it except upon a determination that any such duties
hereunder are no longer permissible under applicable law. Any such determination
permitting the resignation of the Master Servicer shall be evidenced by an
Opinion of Independent Counsel to such effect delivered to the Trustee. No such
resignation by the Master Servicer shall become effective until the Trustee or a
successor to the Master Servicer reasonably satisfactory to the Trustee shall
have assumed the responsibilities and obligations of the Master Servicer in
accordance with Section 8.02 hereof. The Trustee shall notify the Rating
Agencies of the resignation of the Master Servicer.
Section 7.06. [Reserved]
Section 7.07. SALE AND ASSIGNMENT OF MASTER SERVICING. The Master
Servicer may sell and assign its rights and delegate its duties and obligations
in their entirety as Master Servicer under this Agreement; PROVIDED, HOWEVER,
that: (i) the purchaser or transferee accepting such assignment and delegation
(a) shall be a Person which shall be qualified to service mortgage loans for
FNMA or FHLMC; (b) shall have a net worth of not less than $10,000,000 (unless
otherwise approved by each Rating Agency pursuant to clause (ii) below); (c)
shall be reasonably satisfactory to the Trustee (as evidenced in a writing
signed by the Trustee) as having a comparable servicing ability to that of the
Master Servicer on the Closing Date; (d) shall execute and deliver to the
Trustee an agreement, in form and substance reasonably satisfactory to the
Trustee, which contains an assumption by such Person of the due and punctual
performance and observance of each covenant and condition to be performed or
observed by it as master servicer under this Agreement, any custodial agreement
and any agreement substantially in the form of Exhibit G hereto from and after
the effective date of such agreement; (ii) each Rating Agency shall be given
prior written notice of the identity of the proposed successor to the Master
Servicer and each Rating Agency's rating of the Certificates in effect
immediately prior to such assignment, sale and delegation will not be downgraded
or withdrawn as a result of such assignment, sale and delegation, as evidenced
by a letter to such effect delivered to the Master Servicer and the Trustee; and
(iii) the Master Servicer assigning and selling the master servicing shall
deliver to the Trustee an Officer's Certificate and an Opinion of Independent
Counsel, each stating that all conditions precedent to such action under this
Agreement have been completed and such action is permitted by and complies with
the terms of this Agreement. No such assignment or delegation shall affect any
liability of the Master Servicer arising prior to the effective date thereof.
<PAGE>
ARTICLE VIII
Default
Section 8.01. EVENTS OF DEFAULT. "Event of Default," wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i) The Master Servicer fails to cause to be deposited
in the Certificate Account any amount so required to be
deposited pursuant to this Agreement, and such failure
continues unremedied for a period of two Business Days after
the date such deposit was required to be made; or
(ii) The Master Servicer fails to observe or perform in
any material respect any other covenants and agreements set
forth in the Certificates or this Agreement to be performed
by it, which covenants and agreements materially affect the
rights of Certificateholders, and such failure continues
unremedied for a period of 60 days after the date on which
written notice of such failure, properly requiring the same
to be remedied, shall have been given to the Master Servicer
by the Trustee or to the Master Servicer and the Trustee by
the Holders of Certificates evidencing Fractional Undivided
Interests aggregating not less than 25% of the Trust Fund;
or
(iii) There is entered against the Master Servicer a
decree or order by a court or agency or supervisory
authority having jurisdiction in the premises for the
appointment of a conservator, receiver or liquidator in any
insolvency, readjustment of debt, marshaling 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, marshaling of assets and liabilities
or similar proceedings of or relating to the Master Servicer
or substantially all of its property; or the Master Servicer
admits in writing its inability to pay its debts generally
as they become due, files a petition to take advantage of
any applicable insolvency or reorganization statute, makes
an assignment for the benefit of its creditors, or
voluntarily suspends payment of its obligations; or
(v) The Master Servicer assigns or delegates its duties
or rights under this Agreement in contravention of the
provisions permitting such assignment or delegation under
Sections 7.05 or 7.07.
In each and every such case, so long as such Event of Default with respect to
the Master Servicer shall not have been remedied, either the Trustee or the
Holders of Certificates evidencing Fractional Undivided Interests aggregating
not less than 51% of the principal of the Trust Fund, by notice in writing to
the Master Servicer (and to the Trustee if given by such Certificateholders),
with a copy to the Rating Agencies, may terminate all of the rights and
obligations (but not the liabilities) of the Master Servicer under this
Agreement and in and to the Mortgage Loans and/or the REO Property serviced by
the Master Servicer and the proceeds thereof. Upon the receipt by the Master
Servicer of the written notice, all authority and power of the Master Servicer
under this Agreement, whether with respect to the Certificates, the Mortgage
Loans, REO Property or under any other related agreements, including the
Sub-Servicing Agreements (but only to the extent that such other agreements
relate to the Mortgage Loans or REO Property) shall, subject to Section 8.02,
automatically and without further action pass to and be vested in the Trustee
pursuant to this Section 8.01; and, without limitation, the Trustee is hereby
authorized and empowered to execute and deliver, on behalf of the Master
Servicer as attorney-in-fact or otherwise, any and all documents and other
instruments and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Mortgage Loans and
related documents, or otherwise. The Master Servicer agrees to cooperate with
the Trustee in effecting the termination of the Master Servicer's rights and
obligations hereunder, including, without limitation, the transfer to the
Trustee of (i) the property and amounts which are then or should be part of the
Trust or which thereafter become part of the Trust; (ii) originals or copies of
all documents of the Master Servicer reasonably requested by the Trustee to
enable it to assume the Master Servicer's duties thereunder; and (iii) the
rights and obligations of the Master Servicer under the Sub-Servicing Agreements
with respect to the Mortgage Loans. In addition to any other amounts which are
then, or, notwithstanding the termination of its activities under this
Agreement, may become payable to the Master Servicer under this Agreement, the
Master Servicer shall be entitled to receive, out of any amount received on
account of a Mortgage Loan or REO Property, that portion of such payments which
it would have received as reimbursement pursuant to Section 3.14 if notice of
termination had not been given. The termination of the rights and obligations of
the Master Servicer shall not affect any obligations incurred by the Master
Servicer prior to such termination.
Section 8.02. TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR. (a) Upon the
receipt by the Master Servicer of a notice of termination pursuant to Section
8.01 or an Opinion of Independent Counsel pursuant to Section 7.05 to the effect
that the Master Servicer is legally unable to act or to delegate its duties to a
Person which is legally able to act, the Trustee shall automatically become the
successor in all respects to the Master Servicer in its capacity under this
Agreement and the transactions set forth or provided for herein and shall
thereafter be subject to all the responsibilities, duties, liabilities and
limitations on liabilities relating thereto placed on the Master Servicer by the
terms and provisions hereof; PROVIDED, HOWEVER, that the Trustee (i) shall be
under no obligation to purchase any Mortgage Loan pursuant to Section 10.01; and
(ii) shall have no obligation whatsoever with respect to any liability incurred
by the Master Servicer at or prior to the time of receipt by the Master Servicer
of such notice or by the Trustee of such Opinion of Independent Counsel. As
compensation therefor, the Trustee shall be entitled to all funds relating to
the Mortgage Loans which the Master Servicer would have been entitled to retain
if the Master Servicer had continued to act hereunder, except for those amounts
due the Master Servicer as reimbursement for advances previously made or
expenses previously incurred. Notwithstanding the above, the Trustee may, if it
shall be unwilling so to act, or shall, if it is legally unable so to act,
appoint or petition a court of competent jurisdiction to appoint, any
established housing and home finance institution which is a FNMA- or
FHLMC-approved servicer, and with respect to a successor to the Master Servicer
only, having a net worth of not less than $10,000,000, as the successor to the
Master Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Master Servicer hereunder.
Pending appointment of a successor to the Master Servicer hereunder, the Trustee
shall act in such capacity as hereinabove provided. In connection with such
appointment and assumption, the Trustee may make such arrangements for the
compensation of such successor out of payments on the Mortgage Loans as it and
such successor shall agree; PROVIDED, HOWEVER, that no such compensation shall
be in excess of that permitted the Trustee under this Subsection 8.02(a), and
that such successor shall undertake and assume the obligations of the Trustee to
pay compensation to any third Person acting as an agent or independent
contractor in the performance of master servicing responsibilities hereunder.
The Trustee and such successor shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession.
(b) If the Trustee shall succeed to any duties of the Master Servicer
respecting the Mortgage Loans as provided herein, it shall do so in a separate
capacity and not in its capacity as Trustee and, accordingly, the provisions of
Article IX shall be inapplicable to the Trustee in its duties as the successor
to the Master Servicer in the servicing of the Mortgage Loans (although such
provisions shall continue to apply to the Trustee in its capacity as Trustee);
the provisions of Article VII, however, shall apply to it in its capacity as
successor master servicer.
Section 8.03. NOTIFICATION TO CERTIFICATEHOLDERS. Upon any termination
or appointment of a successor to the Master Servicer, the Trustee shall give
prompt written notice thereof to Certificateholders at their respective
addresses appearing in the Certificate Register and to the Rating Agencies.
Section 8.04. WAIVER OF DEFAULTS. The Trustee shall transmit by mail
to all Certificateholders, within 60 days after the occurrence of any Event of
Default known to the Trustee, unless such Event of Default shall have been
cured, notice of each such Event of Default hereunder known to the Trustee. The
Holders of Certificates evidencing Fractional Undivided Interests aggregating
not less than 51% of the Trust Fund may, on behalf of all Certificateholders,
waive any default by the Master Servicer in the performance of its obligations
hereunder and the consequences thereof, except a default in the making of or the
causing to be made any required distribution on the Certificates. Upon any such
waiver of a past default, such default shall be deemed to cease to exist, and
any Event of Default arising therefrom shall be deemed to have been timely
remedied for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereon except to the
extent expressly so waived. The Master Servicer shall give notice of any such
waiver to the Rating Agencies.
Section 8.05. LIST OF CERTIFICATEHOLDERS. Upon written request of
three or more Certificateholders of record, for purposes of communicating with
other Certificateholders with respect to their rights under this Agreement, the
Trustee will afford such Certificateholders access during business hours to the
most recent list of Certificateholders held by the Trustee.
<PAGE>
ARTICLE IX
Concerning the Trustee
Section 9.01. DUTIES OF TRUSTEE. (a) The Trustee, prior to the
occurrence of an Event of Default and after the curing or waiver of all Events
of Default which may have occurred, undertakes to perform such duties and only
such duties as are specifically set forth in this Agreement as duties of the
Trustee. If an Event of Default has occurred and has not been cured or waived,
the Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in their exercise, as a
prudent person would exercise under the circumstances in the conduct of his own
affairs.
(b) Upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments which are specifically
required to be furnished to the Trustee pursuant to any provision of this
Agreement, the Trustee shall examine them to determine whether they are in the
form required by this Agreement; PROVIDED, HOWEVER, that the Trustee shall not
be responsible for the accuracy or content of any resolution, certificate,
statement, opinion, report, document, order or other instrument furnished by the
Master Servicer hereunder.
(c) The Trustee shall make monthly distributions and the final
distribution to the Certificateholders as provided in Sections 6.01 and 10.01
herein.
(d) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct; PROVIDED, HOWEVER, that:
(i) Prior to the occurrence of an Event of Default,
and after the curing or waiver of all such Events of Default
which may have occurred, the duties and obligations of the
Trustee shall be determined solely by the express provisions
of this Agreement, the Trustee shall not be liable except for
the performance of such duties and obligations as are
specifically set forth in this Agreement, no implied covenants
or obligations shall be read into this Agreement against the
Trustee and, in the absence of bad faith on the part of the
Trustee, the Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the
Trustee and conforming to the requirements of this Agreement;
(ii) The Trustee shall not be liable for an error
of judgment made in good faith by a Responsible
Officer or Responsible Officers of the Trustee, unless it
shall be proved that the Trustee was negligent in ascertaining
the pertinent facts;
(iii) The Trustee shall not be liable with respect
to any action taken, suffered or omitted to be taken
by it in good faith in accordance with the directions of the
Holders of Certificates evidencing Fractional Undivided
Interests aggregating not less than 25% of the Trust Fund, if
such action or non-action relates to the time, method and
place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or other power conferred
upon the Trustee, under this Agreement; and
(iv) The Trustee shall not be required to take
notice or be deemed to have notice or knowledge of any
default or Event of Default unless a Responsible Officer of
the Trustee's corporate trust department shall have actual
knowledge thereof. In the absence of such notice, the Trustee
may conclusively assume there is no such default or Event of
Default.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of, any
of the obligations of the Master Servicer under this Agreement, except during
such time, if any, as the Trustee shall be the successor to, and be vested with
the rights, duties, powers and privileges of, the Master Servicer in accordance
with the terms of this Agreement.
(e) All funds received by the Trustee and required to be deposited in
the Certificate Account and the Custody Account pursuant to this Agreement will
be promptly so deposited by the Trustee.
Section 9.02. CERTAIN MATTERS AFFECTING THE TRUSTEE. Except as
otherwise provided in Section 9.01:
(i) The Trustee may rely and shall be protected in acting or
refraining from acting in reliance on any resolution, Officer's
Certificate, certificate of a Servicing Officer, certificate of
auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal, bond
or other paper or document believed by it to be genuine and to
have been signed or presented by the proper party or parties;
(ii) The Trustee may consult with counsel and any Opinion of
Counsel shall be full and complete authorization and protection
with respect to any action taken or suffered or omitted by it
hereunder in good faith and in accordance with such Opinion of
Counsel;
(iii) The Trustee shall be under no obligation to exercise
any of the trusts or powers vested in it by this Agreement, other
than its obligation to give notices pursuant to this Agreement,
or to institute, conduct or defend any litigation hereunder or in
relation hereto at the request, order or direction of any of the
Certificateholders pursuant to the provisions of this Agreement,
unless such Certificateholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby. Nothing
contained herein shall, however, relieve the Trustee of the
obligation, upon the occurrence of an Event of Default of which a
Responsible Officer of the Trustee's corporate trust department
has actual knowledge (which has not been cured), to exercise such
of the rights and powers vested in it by this Agreement, and to
use the same degree of care and skill in their exercise, as a
prudent person would exercise under the circumstances in the
conduct of his own affairs;
(iv) The Trustee shall not be liable for any action taken,
suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred
upon it by this Agreement;
(v) Prior to the occurrence of an Event of Default hereunder
and after the curing or waiver of all Events of Default which may
have occurred, the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, 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 4.02(b) or Section 4.03, to be unclear, the Trustee
may require prior to such action that it be provided by the
Master Servicer with reasonable further instructions;
(viii) The right of the Trustee to perform any discretionary
act enumerated in this Agreement shall not be construed as a
duty, and the Trustee shall not be accountable for other than its
negligence or willful misconduct in the performance of any such
act;
(ix) The Trustee shall not be required to give any bond or
surety with respect to the execution of the trust created hereby
or the powers granted hereunder; and
(x) The Trustee shall have no duty to conduct any
affirmative investigation as to the occurrence of any condition
requiring the repurchase of any Mortgage Loan by BSMCC pursuant
to this Agreement or the eligibility of any Mortgage Loan for
purposes of this Agreement.
Section 9.03. TRUSTEE NOT LIABLE FOR CERTIFICATES OR MORTGAGE LOANS.
The recitals contained herein and in the Certificates (other than the signature
and countersignature of the Trustee on the Certificates) shall be taken as the
statements of the Seller, and the Trustee shall have no responsibility for their
correctness. The Trustee makes no representation as to the validity or
sufficiency of the Certificates (other than the signature and countersignature
of the Trustee on the Certificates) or of any Mortgage Loan except as expressly
provided in Sections 2.02 and 2.05 hereof. The Trustee's signature and
countersignature (or countersignature of its agent) on the Certificates shall be
solely in its capacity as Trustee and shall not constitute the Certificates an
obligation of the Trustee in any other capacity. The Trustee shall not be
accountable for the use or application by the Seller of any of the Certificates
or of the proceeds of such Certificates, or for the use or application of any
funds paid to the Seller with respect to the Mortgage Loans. Subject to the
provisions of Section 2.05, the Trustee shall not be responsible for the
legality or validity of this Agreement or any document or instrument relating to
this Agreement, the validity of the execution of this Agreement or of any
supplement hereto or instrument of further assurance, or the validity, priority,
perfection or sufficiency of the security for the Certificates issued hereunder
or intended to be issued hereunder. The Trustee shall at no time have any
responsibility or liability for or with respect to the legality, validity and
enforceability of any Mortgage or any Mortgage Loan, or the perfection and
priority of any Mortgage or the maintenance of any such perfection and priority,
or for or with respect to the sufficiency of the Trust Fund or its ability to
generate the payments to be distributed to Certificateholders, under this
Agreement. The Trustee shall have no responsibility for filing any financing or
continuation statement in any public office at any time or to otherwise perfect
or maintain the perfection of any security interest or lien granted to it
hereunder or to record this Agreement.
Section 9.04. TRUSTEE MAY OWN CERTIFICATES. The Trustee in its
individual capacity or in any capacity other than as Trustee hereunder may
become the owner or pledgee of any Certificates with the same rights it would
have if it were not Trustee, and may otherwise deal with the parties hereto.
Section 9.05. TRUSTEE'S FEES AND EXPENSES. The Master Servicer
covenants and agrees to pay to the Trustee the Trustee's Fees 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 Fees and expense shall be paid from
the Certificate Account, pursuant to Subsection 4.03(b). If the funds in the
Certificate Account are not sufficient to pay the Trustee's Fees and expenses,
the Master Servicer will be liable for payment thereof, including all reasonable
out-of-pocket expenses, disbursements and advances incurred or made by the
Trustee in the administration of the trusts hereunder as set forth in a fee
letter sent by the Trustee to the Master Servicer (including the reasonable
compensation, expenses and disbursements of its counsel) except any such
expense, disbursement or advance as may arise from its negligence or intentional
misconduct or which is the responsibility of the Certificateholders or the Trust
Fund hereunder. Such compensation and reimbursement obligation shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust.
Section 9.06. ELIGIBILITY REQUIREMENTS FOR TRUSTEE. The Trustee and
any successor Trustee shall during the entire duration of this Agreement be a
state bank or trust company or a national banking association organized and
doing business under the laws of such state or the United States of America,
authorized under such laws to exercise corporate trust powers, having a combined
capital and surplus and undivided profits of at least $40,000,000 or, in the
case of a successor Trustee, $50,000,000, subject to supervision or examination
by federal or state authority and, in the case of a successor Trustee other than
pursuant to Section 9.10, rated in one of the two highest long-term debt
categories of, or otherwise acceptable to, each of the Rating Agencies. The
Trustee shall not be an Affiliate of the Master Servicer, unless the Trustee
acts as successor Master Servicer hereunder. If the Trustee publishes reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section 9.06 the combined capital and surplus of such corporation shall be
deemed to be its total equity capital (combined capital and surplus) as set
forth in its most recent report of condition so published. In case at any time
the Trustee shall cease to be eligible in accordance with the provisions of this
Section 9.06, the Trustee shall resign immediately in the manner and with the
effect specified in Section 9.08.
Section 9.07. INSURANCE. The Trustee, at its own expense, shall at all
times maintain and keep in full force and effect: (i) fidelity insurance, (ii)
theft of documents insurance and (iii) forgery insurance (which may be
collectively satisfied by a "Financial Institution Bond" and/or a "Bankers'
Blanket Bond"). All such insurance shall be in amounts, with standard coverage
and subject to deductibles, as are customary for insurance typically maintained
by banks which act as custodians for investor-owned mortgage pools. A
certificate of an officer of the Trustee as to the Trustee's compliance with
this Section 9.07 shall be furnished to the Master Servicer or any
Certificateholder upon reasonable written request.
Section 9.08. RESIGNATION AND REMOVAL OF THE TRUSTEE. (a) The Trustee
may at any time resign and be discharged from the Trust hereby created by giving
written notice thereof to the Master Servicer, with a copy to the Rating
Agencies. Upon receiving such notice of resignation, the Master Servicer shall
promptly appoint a successor Trustee by written instrument, in triplicate, one
copy of which instrument shall be delivered to each of the resigning Trustee and
the successor Trustee. If no successor Trustee shall have been so appointed and
have accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 9.06 and shall fail to resign after
written request therefor by the Master Servicer or if at any time the Trustee
shall become incapable of acting, or shall be adjudged a bankrupt or insolvent,
or a receiver of the Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Master Servicer shall be entitled to remove the Trustee and appoint a successor
Trustee by written instrument, in triplicate, one copy of which instrument shall
be delivered to each of the Trustee so removed and the successor Trustee.
(c) The Holders of Certificates evidencing Fractional Undivided
Interests aggregating not less than 51% of the Trust Fund may at any time remove
the Trustee and appoint a successor Trustee by written instrument or
instruments, in triplicate, signed by such Holders or their attorneys-in-fact
duly authorized, one complete set of which instruments shall be delivered to
each of the Master Servicer, the Trustee so removed and the successor so
appointed.
(d) No resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 9.08 shall
become effective except upon appointment of and acceptance of such appointment
by the successor Trustee as provided in Section 9.09.
Section 9.09. SUCCESSOR TRUSTEE. (a) Any successor Trustee appointed
as provided in Section 9.08 shall execute, acknowledge and deliver to the Master
Servicer and to its 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 9.09 unless at the time of such acceptance such successor Trustee shall
be eligible under the provisions of Section 9.06.
(c) Upon acceptance of appointment by a successor Trustee as provided
in this Section 9.09, the successor Trustee shall mail notice of the succession
of such Trustee hereunder to all Certificateholders at their addresses as shown
in the Certificate Register and to the Rating Agencies. The Master Servicer
shall pay the cost of any mailing by the successor Trustee.
Section 9.10. MERGER OR CONSOLIDATION OF TRUSTEE. Any state bank or
trust company or national banking association into which the Trustee may be
merged or converted or with which it may be consolidated or any state bank or
trust company or national banking association resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any state
bank or trust company or national banking association succeeding to all or
substantially all of the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, provided such state bank or trust company or
national banking association shall be eligible under the provisions of Section
9.06. Such succession shall be valid without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
Section 9.11. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE. (a)
Notwithstanding any other provisions hereof, at any time, for the purpose of
meeting any legal requirements of any jurisdiction in which any part of the
Trust or property constituting the same may at the time be located, the Master
Servicer and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee and the Master Servicer to act as co-trustee or co-trustees, jointly
with the Trustee, or separate trustee or separate trustees, of all or any part
of the Trust, and to vest in such Person or Persons, in such capacity, such
title to the Trust, or any part thereof, and, subject to the other provisions of
this Section 9.11, such powers, duties, obligations, rights and trusts as the
Master Servicer and the Trustee may consider necessary or desirable.
(b) If the Master Servicer shall not have joined in such appointment
within 15 days after the receipt by it of a written request so to do, or in case
an Event of Default with respect to the Master Servicer shall have occurred and
be continuing, the Trustee shall have the power to make such appointment without
the Master Servicer.
(c) No co-trustee or separate trustee hereunder shall be required to
meet the terms of eligibility as a successor Trustee under Section 9.06
hereunder and no notice to Certificateholders of the appointment of
co-trustee(s) or separate trustee(s) shall be required under Section 9.08
hereof.
(d) In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 9.11, all rights, powers, duties and obligations
conferred or imposed upon the Trustee and required to be conferred on such
co-trustee shall be conferred or imposed upon and exercised or performed by the
Trustee and such separate trustee or co-trustee jointly, except to the extent
that under any law of any jurisdiction in which any particular act or acts are
to be performed (whether as Trustee hereunder or as successor to the Master
Servicer hereunder), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust or any portion thereof in any such
jurisdiction) shall be exercised and performed by such separate trustee or
co-trustee at the direction of the Trustee.
(e) Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article IX. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee or separately, as
may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee.
(f) To the extent not prohibited by law, any separate trustee or
co-trustee may, at any time, request the Trustee, its agent or attorney-in-fact,
with full power and authority, to do any lawful act under or with respect to
this Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all of
its estates, properties rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor Trustee.
(g) No trustee under this Agreement shall be personally liable by
reason of any act or omission of another trustee under this Agreement. The
Master Servicer and the Trustee acting jointly may at any time accept the
resignation of or remove any separate trustee or co-trustee, except that
following the occurrence of any Event of Default which has not been cured, the
Trustee acting alone may accept the resignation of or remove any separate
trustee or co-trustee.
Section 9.12. MASTER SERVICER SHALL PROVIDE INFORMATION AS REASONABLY
REQUIRED. The Master Servicer shall furnish to the Trustee, during the term of
this Agreement, such periodic, special, or other reports or information (and in
such electronic format) 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, 1997 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 Holder of the Class R-1 Certificate is hereby
designated as the "Tax Matters Person" (within the meaning of Treas. Reg. ss.ss.
1.860F-4(d)) for REMIC I, and the Holder of the Class R-2 Certificate is hereby
designated as "Tax Matters Person" for REMIC II. The Trustee is hereby
designated and appointed as the agent of each such Tax Matters Person. Any
Holder of a Residual Certificate will by acceptance thereof appoint the Trustee
as agent and attorney-in-fact for the purpose of acting as Tax Matters Person
for each of REMIC I and REMIC II during such time as the Trustee does not own
any such Residual Certificate. In the event that the Code or applicable Treasury
regulations prohibit the Trustee from signing tax or information returns or
other statements, or the Trustee from acting as Tax Matters Person (as an agent
or otherwise), the Trustee shall take whatever action that in its sole good
faith judgment is necessary for the proper filing of such information returns or
for the provision of a tax matters person, including designation of the Holder
of a Residual Certificate to sign such returns or act as tax matters person.
Each Holder of a Residual Certificate shall be bound by this Section.
(c) The Trustee shall provide upon request such information (which
shall be provided by the Master Servicer) as required in Section 860D(a)(6)(B)
of the Code to the Internal Revenue Service, to any Person purporting to
transfer a Residual Certificate to a Person other than a transferee permitted by
Section 5.05(b), and to any regulated investment company, real estate investment
trust, common trust fund, partnership, trust, estate, organization described in
Section 1381 of the Code, or nominee holding an interest in a pass-through
entity described in Section 860E(e)(6) of the Code, any record holder of which
is not a transferee permitted by Section 5.05(b) (or which is deemed by statute
to be an entity with a disqualified member).
(d) The Trustee shall prepare and file or cause to be filed any state
income tax returns required under Applicable State Law with respect to each of
REMIC I and REMIC II or the Trust Fund.
<PAGE>
ARTICLE X
Termination
Section 10.01. TERMINATION UPON REPURCHASE BY THE SELLER OR ITS
DESIGNEE OR LIQUIDATION OF ALL MORTGAGE LOANS. (a) Subject to Section 10.02, the
respective obligations and responsibilities of the Seller, the Master Servicer
and the Trustee created hereby, other than the obligation of the Trustee or the
Master Servicer to make payments to Certificateholders as hereinafter set forth
and to the Trustee, shall terminate upon:
(i) the repurchase by or at the direction of the Seller 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 Seller 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 Seller and the Trustee at the expense of the
Seller; 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 Seller or its designee to repurchase all Mortgage
Loans pursuant to Subsection 10.01(a)(i) above shall be exercisable only if (i)
the aggregate unpaid principal balance of such Mortgage Loans at the time of any
such repurchase is less than 5% of the Cut-off Date Balance or (ii) the Seller
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 Seller to repurchase or cause the repurchase
of all Mortgage Loans under Subsection 10.01(a)(i) above is exercised, the
Seller 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 holder of the
Class R-2 Certificate) 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 Certificateholder. 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 10.01(i).
(h) In the event that this Agreement is terminated by reason of the
payment or liquidation of all Mortgage Loans or the disposition of all property
acquired with respect to all Mortgage Loans under Subsection 10.01(a)(ii) above,
the Master Servicer shall deliver to the Trustee for deposit in the appropriate
subaccount of the Certificate Account all distributable amounts remaining in the
Custody Account and shall cause any Sub- Servicers to deliver to the Trustee for
deposit in the appropriate subaccount of 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 any
Sub- Servicers of such distributable amounts and delivery to the Trustee of an
Officer's Certificate from the Master Servicer certifying that such deposit has
been made, and following such final Distribution Date, the Trustee shall
promptly release to the Master Servicer the Mortgage Files for the remaining
Mortgage Loans, and the Accounts shall terminate, subject to the Trustee's
obligation to hold any amounts payable to the Certificateholders in trust
without interest pending final distributions pursuant to Subsection 10.01(i).
(i) If not all of the Certificateholders shall surrender their
Certificates for cancellation within six months after the time specified in the
above-mentioned written notice, the Trustee shall give a second written notice
to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
six months after the second notice, not all the Certificates shall have been
surrendered for cancellation, the Trustee may take appropriate steps, or appoint
any agent to take appropriate steps, to contact the remaining Certificateholders
concerning surrender of their Certificates, and the cost thereof shall be paid
out of the funds and other assets which remain subject to this Agreement.
Section 10.02 ADDITIONAL TERMINATION REQUIREMENTS. (a) If the option
of the Seller to repurchase all the Mortgage Loans under Subsection 10.01(a)(i)
above is exercised, the Trust and each of REMIC I and REMIC II shall be
terminated in accordance with the following additional requirements, unless the
Trustee has been furnished with an Opinion of Counsel to the effect that the
failure of the Trust to comply with the requirements of this Section 10.02 will
not (i) result in the imposition of taxes on "prohibited transactions" as
defined in Section 860F of the Code on each of REMIC I and REMIC II or (ii)
cause each of REMIC I and REMIC II to fail to qualify as a REMIC at any time
that any Regular Certificates are outstanding:
(i) within 90 days prior to the final Distribution
Date, at the written direction of the Master Servicer, the
Trustee, as agent for the respective Tax Matters Persons,
shall adopt a plan of complete liquidation of the Trust Fund
and each of REMIC I and 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 EMC;
(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
Holder of the Class R-2 Certificate, the Current Principal
Amount of the Certificates plus 30 days' interest thereon at
the applicable Pass-Through Rate, and (ii) to the Class R-2
Certificateholder, all cash on hand from the Certificate
Account (other than cash retained to meet claims); and the
Trust and each of REMIC I and REMIC II shall terminate at
such time.
(b) By their acceptance of the Residual Certificates, the Holders
thereof hereby (i) agree to adopt such a plan of complete liquidation upon the
written request of the Master Servicer and to take such action in connection
therewith as may be reasonably requested by the Master Servicer and (ii) appoint
the Master Servicer as their attorney-in-fact, with full power of substitution,
for purposes of adopting such a plan of complete liquidation. The Trustee shall
adopt such plan of liquidation by filing the appropriate statement on the final
tax return of REMIC I and REMIC II.
<PAGE>
ARTICLE XI
Miscellaneous Provisions
Section 11.01. INTENT OF PARTIES. The parties intend that each of
REMIC I and REMIC II shall be treated as a REMIC for federal income tax purposes
and that the provisions of this Agreement should be construed in furtherance of
this intent.
Section 11.02. AMENDMENT. (a) This Agreement may be amended from time
to time by the Seller, the Trustee and the Master Servicer, without notice to or
the consent of any of the Certificateholders, to cure any ambiguity, to correct
or supplement any provisions herein that may be defective or inconsistent with
any other provisions herein, to comply with any changes in the Code or to make
any other provisions with respect to matters or questions arising under this
Agreement which shall not be inconsistent with the provisions of this Agreement;
PROVIDED, HOWEVER, that such action shall not, as evidenced by an Opinion of
Independent Counsel, adversely affect in any material respect the interests of
any Certificateholder.
(b) This Agreement may also be amended from time to time by the
Seller, the Trustee and the Master Servicer, with the consent of the Holders of
Certificates evidencing Fractional Undivided Interests aggregating not less than
51% of the Trust Fund or of the applicable Class or Classes if such amendment
affects only such Class or Classes for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of this Agreement
or of modifying in any manner the rights of the Certificateholders; PROVIDED,
HOWEVER, that no such amendment shall (i) reduce in any manner the amount of, or
delay the timing of, payments received on Mortgage Loans which are required to
be distributed on any Certificate without the consent of the Holder of such
Certificate, (ii) reduce the aforesaid percentage of Certificates the Holders of
which are required to consent to any such amendment, without the consent of the
Holders of all Certificates then outstanding, or (iii) cause either REMIC I or
REMIC II to fail to qualify as a REMIC for federal income tax purposes, as
evidenced by an Opinion of Independent Counsel which shall be provided to the
Trustee other than at the Trustee's expense.
(c) Promptly after the execution of any such amendment, the Trustee
shall furnish a copy of such amendment or written notification of the substance
of such amendment to each Certificateholder, with a copy to the Rating Agencies.
(d) In the case of an amendment under Subsection 11.02(b) above, it
shall not be necessary for the Certificateholders to approve the particular form
of such an amendment. Rather, it shall be sufficient if the Certificateholders
approve the substance of the amendment. The manner of obtaining such consents
and of evidencing the authorization of the execution thereof by
Certificateholders shall be subject to such reasonable regulations as the
Trustee may prescribe.
Section 11.03. RECORDATION OF AGREEMENT. To the extent permitted by
applicable law, this Agreement is subject to recordation in all appropriate
public offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the Mortgaged Properties are situated, and
in any other appropriate public recording office or elsewhere. The Master
Servicer shall effect such recordation, at its expense upon the request in
writing of a Certificateholder, but only if such direction is accompanied by an
Opinion of Counsel (provided at the expense of the Certificateholder requesting
recordation) to the effect that such recordation would materially and
beneficially affect the interests of the Certificateholders or is required by
law.
Section 11.04. LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS. (a) The
death or incapacity of any Certificateholder shall not terminate this Agreement
or the Trust, nor entitle such Certificateholder's legal representatives or
heirs to claim an accounting or to take any action or proceeding in any court
for a partition or winding up of the Trust, nor otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them.
(b) Except as expressly provided in this Agreement, no
Certificateholders shall have any right to vote or in any manner otherwise
control the operation and management of the Trust, or the obligations of the
parties hereto, nor shall anything herein set forth, or contained in the terms
of the Certificates, be construed so as to establish the Certificateholders from
time to time as partners or members of an association; nor shall any
Certificateholders be under any liability to any third Person by reason of any
action taken by the parties to this Agreement pursuant to any provision hereof.
(c) No Certificateholder shall have any right by virtue of any
provision of this Agreement to institute any suit, action or proceeding in
equity or at law upon, under or with respect to this Agreement against the
Seller, the Master Servicer or any successor to any such parties unless (i) such
Certificateholder previously shall have given to the Trustee a written notice of
a continuing default, as herein provided, (ii) the Holders of Certificates
evidencing Fractional Undivided Interests aggregating not less than 51% of the
Trust Fund shall have made written request upon the Trustee to institute such
action, suit or proceeding in its own name as Trustee hereunder and shall have
offered to the Trustee such reasonable indemnity as it may require against the
costs and expenses and liabilities to be incurred therein or thereby, and (iii)
the Trustee, for 60 days after its receipt of such notice, request and offer of
indemnity, shall have neglected or refused to institute any such action, suit or
proceeding.
(d) No one or more Certificateholders shall have any right by virtue
of any provision of this Agreement to affect the rights of any other
Certificateholders or to obtain or seek to obtain priority or preference over
any other such Certificateholder, or to enforce any right under this Agreement,
except in the manner herein provided and for the equal, ratable and common
benefit of all Certificateholders. For the protection and enforcement of the
provisions of this Section 11.04, each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
Section 11.05. ACTS OF CERTIFICATEHOLDERS. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Agreement to be given or taken by Certificateholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Certificateholders in person or by an agent duly appointed in writing.
Except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee and,
where it is expressly required, to the Seller. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Agreement and conclusive in favor of the Trustee and the Seller,
if made in the manner provided in this Section 11.05.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his or her individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his or her authority. The fact and date of the execution of any such
instrument or writing, or the authority of the individual executing the same,
may also be proved in any other manner which the Trustee deems sufficient.
(c) The ownership of Certificates (notwithstanding any notation of
ownership or other writing on such Certificates, except an endorsement in
accordance with Section 5.02 made on a Certificate presented in accordance with
Section 5.04) shall be proved by the Certificate Register, and neither the
Trustee, the Seller, the Master Servicer nor any successor to any such parties
shall be affected by any notice to the contrary.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action of the holder of any Certificate shall bind every future
holder of the same Certificate and the holder of every Certificate issued upon
the registration of transfer or exchange thereof, if applicable, or in lieu
thereof with respect to anything done, omitted or suffered to be done by the
Trustee, the Seller, the Master Servicer or any successor to any such party in
reliance thereon, whether or not notation of such action is made upon such
Certificates.
(e) In determining whether the Holders of the requisite percentage of
Certificates evidencing Fractional Undivided Interests have given any request,
demand, authorization, direction, notice, consent or waiver hereunder,
Certificates owned by the Trustee, the Seller, the Master Servicer or any
Sub-Servicer or any Affiliate thereof shall be disregarded, except that, in
determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Certificates which the Trustee knows to be so owned shall be so disregarded.
Certificates which have been pledged in good faith to the Trustee, the Seller,
the Master Servicer or any Sub- Servicer or any Affiliate thereof may be
regarded as outstanding if the pledgor establishes to the satisfaction of the
Trustee the pledgor's right to act with respect to such Certificates and that
the pledgor is not an Affiliate of the Trustee, the Seller, the Master Servicer
or any Sub-Servicer, as the case may be.
Section 11.06. [Reserved]
Section 11.07. GOVERNING LAW. THIS AGREEMENT AND THE CERTIFICATES
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REFERENCE TO ITS CONFLICT OF LAWS RULES AND THE OBLIGATIONS, RIGHTS AND REMEDIES
OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 11.08. NOTICES. All demands and notices hereunder shall be in
writing and shall be deemed given when delivered at or mailed by registered
mail, return receipt requested, postage prepaid, or by recognized overnight
courier, to (i) in the case of the Seller, 245 Park Avenue, New York, New York
10167, Attention: Vice President-Servicing (but with respect to monthly reports
sent pursuant to Section 6.07(b), Attention: Lynn Lin), or to such other address
as may hereafter be furnished to the other parties hereto in writing; in the
case of EMC Mortgage Corporation, 222 West Las Colinas Blvd., Suite 600, Irving,
Texas 75039 Attention: Raleyne Ruyle or such other address as may hereafter be
furnished to the other parties hereto in writing; (iii) in the case of the
Trustee, at its Corporate Trust Office, or such other address as may hereafter
be furnished to the other parties hereto in writing; or (iv) in the case of the
Rating Agencies, S&P, 25 Broadway, New York, New York 10004 Attention:
Residential Mortgage Surveillance Group and Fitch, One State Street Plaza, New
York, New York 10004, Attention: Mortgage-Backed Surveillance. Any notice
delivered to the Seller, the Master Servicer or the Trustee under this Agreement
shall be effective only upon receipt. Any notice required or permitted to be
mailed to a Certificateholder, unless otherwise provided herein, shall be given
by first-class mail, postage prepaid, at the address of such Certificateholder
as shown in the Certificate Register. Any notice so mailed within the time
prescribed in this Agreement shall be conclusively presumed to have been duly
given, whether or not the Certificateholder receives such notice.
Section 11.09. SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severed from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the holders thereof.
Section 11.10. SUCCESSORS AND ASSIGNS. The provisions of this
Agreement shall be binding upon and inure to the benefit of the respective
successors and assigns of the parties hereto.
Section 11.11. ARTICLE AND SECTION HEADINGS. The article and section
headings herein are for convenience of reference only, and shall not limit or
otherwise affect the meaning hereof.
Section 11.12. COUNTERPARTS. This Agreement may be executed in two or
more counterparts each of which when so executed and delivered shall be an
original but all of which together shall constitute one and the same instrument.
Section 11.13 NOTICE TO RATING AGENCIES. The article and section
headings herein are for convenience of reference only, and shall not limited or
otherwise affect the meaning hereof. The Trustee shall use its best efforts to
promptly provide notice to each Rating Agency with respect to each of the
following of which it has actual knowledge:
1. Any material change or amendment to this Agreement;
2. The occurrence of any Event of Default that has not been
cured;
3. The resignation or termination of the Master Servicer or
the Trustee;
4. The repurchase or substitution of Mortgage Loans;
5. The final payment to Certificateholders; and
6. Any change in the location of the Custody Account or the
Certificate Account.
In addition, in accordance with Section 6.06 and Section 3.16, the
Trustee and the Master Servicer, respectively, shall promptly furnish to each
Rating Agency copies of the following:
1. Each report to Certificateholders described in Section
6.06; and
2. Each annual independent public accountants' servicing
report received as described in Section 3.16.
<PAGE>
IN WITNESS WHEREOF, the Seller, EMC 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, JR.
Name: Joseph T. Jurkowski, Jr.
Title: Vice President
EMC MORTGAGE CORPORATION,
as Master Servicer
By: /S/ RALENE RUYLE
Name: Ralene Ruyle
Title: Executive Vice President
STATE STREET BANK AND TRUST COMPANY
as Trustee
By: /S/ JAMES H. BYRNES
Name: James H. Byrnes
Title: Assistant Vice President
Accepted and Agreed as
to Sections 2.02, 2.03A and 2.04
BEAR STEARNS MORTGAGE CAPITAL
CORPORATION
By: /S/ JEFFREY MAYER
Name: Jeffrey Mayer
Title: Authorized Officer
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 30th day of June, 1997 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/ STEVE LEVITAN
Notary Public
[Notarial Seal]
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 30th day of June, 1997 before me, a notary public in and for
said State, personally appeared Jeffrey Mayer, known to me to be a Director and
Authorized Officer of Bear Stearns Mortgage Capital Corporation, the corporation
that executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/S/ STEVE LEVITAN
Notary Public
[Notarial Seal]
<PAGE>
STATE OF TEXAS )
) ss.:
COUNTY OF DALLAS )
On the 27th day of June, 1997 before me, a notary public in and for
said State, personally appeared Ralene Ruyle, known to me to be an Executive
Vice President of EMC Mortgage Corporation, the corporation that executed the
within instrument, and also known to me to be the person who executed it on
behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
my official seal the day and year in this certificate first above written.
/S/ DIANA J. DEPROSPO
Notary Public
[Notarial Seal]
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 30th day of June, 1997 before me, a notary public in and for
said State, personally appeared James H. Byrnes, known to me to be an Assistant
Vice President of State Street Bank and Trust Company, the Massachusetts trust
company that executed the within instrument, and also known to me to be the
person who executed it on behalf of said trust company and acknowledged to me
that such trust company executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/S/ STEVE LEVITAN
Notary Public
[Notarial Seal]
<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., EMC MORTGAGE CORPORATION OR THE
TRUSTEE REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE AFFILIATES AND IS NOT
GUARANTEED OR INSURED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THIS CERTIFICATE IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" (A "REMIC"), AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE").
THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DECREASED BY
THE PRINCIPAL PAYMENTS HEREON. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF
THE CERTIFICATES, THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE
DIFFERENT FROM THE DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE
MAY ASCERTAIN ITS CURRENT PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE NAMED
HEREIN.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE &
CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
MORTGAGE PASS-THROUGH CERTIFICATE,
NO. A- [CLASS DESIGNATION] SERIES 1997-4
EVIDENCING A BENEFICIAL INTEREST IN A TRUST
CONSISTING PRIMARILY OF CONVENTIONAL, FIRST LIEN MORTGAGE LOANS SOLD BY
BEAR STEARNS MORTGAGE SECURITIES INC.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
CUT-OFF DATE : JUNE 1, 1997 CLASS : A-
FIRST DISTRIBUTION DATE : JULY 25, 1997 INITIAL PRINCIPAL AMOUNT
ASSUMED FINAL DISTRIBUTION DATE : OCTOBER 25, 2025 OF THIS CERTIFICATE
("DENOMINATION") :
MASTER SERVICER : EMC MORTGAGE CORPORATION APPROXIMATE ORIGINAL CLASS
PASS-THROUGH RATE : VARIABLE PRINCIPAL AMOUNT :
</TABLE>
THIS CERTIFIES THAT CEDE & CO.
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") generally consisting of thirty year, first
lien, adjustable rate mortgages secured by one- to four- family residences,
individual condominium units, individual cooperative apartments and town houses
located primarily in California, Arizona and Florida (collectively, the
"Mortgage Loans") sold by Bear Stearns Mortgage Securities Inc. ("BSMSI"). The
Mortgage Loans were sold by Bear Stearns Mortgage Capital Corporation to BSMSI.
EMC Mortgage Corporation ("EMC") 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, EMC, as Master Servicer, and State
Street Bank and Trust Company, 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 a variable
Pass-Through Rate equal to the weighted average of the Net Rates of the Group __
Mortgage Loans. The Trustee will distribute on the 25th day of each month, or,
if such 25th day is not a Business Day, the immediately following Business Day
(each, a "Distribution Date"), commencing on the First Distribution Date
specified above, to the Person in whose name this Certificate is registered at
the close of business on the last Business Day of the calendar month preceding
the month of such Distribution Date, an amount equal to the product of the
Fractional Undivided interest evidenced by this Certificate and the amount
required to be distributed to Holders of Certificates of the same Class as this
Certificate. The Assumed Final Distribution Date is the first anniversary of the
Distribution Date immediately following the latest scheduled maturity date of
any Mortgage Loan and is not likely to be the date on which the Current
Principal Amount of this Class of Certificates will be reduced to zero.
Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Person entitled thereto as such name and address
shall appear on the Certificate Register or, if such Person so requests by
notifying the Trustee in writing as specified in the Agreement and if such
Person holds Certificates with an initial aggregate Current Principal Amount 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: JUNE 30, 1997
STATE STREET BANK AND TRUST COMPANY,
Countersigned: Not in its individual capacity but solely as
Trustee
By_____________________________________________ By_____________________________
Authorized signatory of State Street AUTHORIZED OFFICER
Bank and Trust Company, 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., EMC MORTGAGE CORPORATION OR THE TRUSTEE
REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE AFFILIATES AND IS NOT GUARANTEED OR
INSURED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY. THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" (A "REMIC"),
AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"). THE CURRENT PRINCIPAL
AMOUNT OF THIS CERTIFICATE WILL BE DECREASED BY THE PRINCIPAL PAYMENTS HEREON.
ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE CURRENT
PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DIFFERENT FROM THE DENOMINATION
SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CURRENT
PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE NAMED HEREIN. [UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.] [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) (OR ANY ENTITY IN WHICH ALL OF THE EQUITY HOLDERS
COME WITHIN SUCH PARAGRAPHS) OF REGULATION D UNDER THE SECURITIES ACT PURCHASING
NOT FOR DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, SUBJECT TO (A) THE
RECEIPT BY THE TRUSTEE OF A LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN THE
AGREEMENT AND (B) AN OPINION OF COUNSEL AS TO COMPLIANCE WITH ALL APPLICABLE
SECURITIES LAWS OF THE UNITED STATES.] THIS CERTIFICATE MAY NOT BE ACQUIRED
DIRECTLY OR INDIRECTLY BY, OR ON BEHALF OF, AN EMPLOYEE BENEFIT PLAN OR OTHER
RETIREMENT ARRANGEMENT WHICH IS SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED, AND/OR SECTION 4975 OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED, UNLESS THE PROPOSED TRANSFEREE PROVIDES A
BENEFIT PLAN OPINION TO THE TRUSTEE TO THE EFFECT THAT THE PROPOSED TRANSFER
AND/OR HOLDING OF A CERTIFICATE AND THE SERVICING, MANAGEMENT AND/OR OPERATION
OF THE TRUST AND ITS ASSETS: (I) WILL NOT RESULT IN ANY PROHIBITED TRANSACTION
WHICH IS NOT COVERED UNDER AN INDIVIDUAL OR CLASS PROHIBITED TRANSACTION
EXEMPTION, INCLUDING, BUT NOT LIMITED TO, PROHIBITED TRANSACTION EXEMPTION
("PTE") 84-14, PTE 91-38, PTE 90-1, PTE 95- 60 OR PTE 96-23 AND (II) WILL NOT
GIVE RISE TO ANY ADDITIONAL FIDUCIARY DUTIES ON THE PART OF THE MASTER SERVICER
OR THE TRUSTEE.
MORTGAGE PASS-THROUGH CERTIFICATE,
NO. B- [CLASS DESIGNATION] SERIES 1997-4
EVIDENCING A BENEFICIAL INTEREST IN A TRUST
CONSISTING PRIMARILY OF CONVENTIONAL, FIRST LIEN MORTGAGE LOANS SOLD BY
BEAR STEARNS MORTGAGE SECURITIES INC.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
CUT-OFF DATE : JUNE 1, 1997 CLASS : A-
FIRST DISTRIBUTION DATE : JULY 25, 1997 INITIAL PRINCIPAL AMOUNT
ASSUMED FINAL DISTRIBUTION DATE : OCTOBER 25, 2025 OF THIS CERTIFICATE
("DENOMINATION") :
MASTER SERVICER : EMC MORTGAGE CORPORATION APPROXIMATE ORIGINAL CLASS
PASS-THROUGH RATE : VARIABLE PRINCIPAL AMOUNT :
</TABLE>
THIS CERTIFIES THAT
[CEDE & CO.][NAME OF PURCHASER]
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") generally consisting of thirty year, first
lien, adjustable rate mortgages secured by one- to four- family residences,
individual condominium units, individual cooperative apartments and town houses
located primarily in California, Arizona and Florida (collectively, the
"Mortgage Loans") sold by Bear Stearns Mortgage Securities Inc. ("BSMSI"). The
Mortgage Loans were sold by Bear Stearns Mortgage Capital Corporation to BSMSI.
EMC Mortgage Corporation ("EMC") 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, EMC, as Master Servicer, and State
Street Bank and Trust Company, 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 a variable
Pass-Through Rate equal to the weighted average of the Pass Through Rates of all
Classes of Senior Certificates weighted in proportion to the results of
subtracting from the principal balance of each Mortgage Loan Group, the Current
Principal Amount of the related Class or Classes of Senior Certificates. 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 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: JUNE 30, 1997 STATE STREET BANK AND TRUST COMPANY,
Countersigned: Not in its individual capacity but solely as
Trustee
By__________________________________________ By_____________________________
Authorized signatory of State Street AUTHORIZED OFFICER
Bank and Trust Company, not in its
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 1997-4
This Certificate is one of a duly The Certificates are issuable
authorized issue of Certificates only as registered Certificates
designated as set forth on the face without coupons in the Classes
hereof (the "Certificates"), issued in and denominations specified in the
twelve Classes. The Certificates, in Agreement. As provided in the
the aggregate, evidence the entire Agreement and subject to certain
beneficial ownership interest in the limitations therein set forth, this
Trust formed pursuant to the Agreement. Certificate is exchangeable for one
The Certificateholder, by its or more new Certificates evidencing
acceptance of this Certificate, agrees the same Class and in the same
that it will look solely to the Trust aggregate Fractional Undivided
for payment hereunder and that the Interest, as requested by the
Trustee is not liable to the Holder surrendering the same.
Certificateholders for any amount
payable under this Certificate or the No service charge will be made to
Agreement or, except as expressly the Certificateholders for any such
provided in the Agreement, subject to registration of transfer, but the
any liability under the Agreement. Trustee may require payment of a
This Certificate does not purport sum sufficient to cover any tax or
to summarize the Agreement and other governmental charge payable in
reference is made to the Agreement for connection therewith. The Master
the interests, rights and limitations Servicer, the Trustee and any agent
of rights, benefits, obligations and of any of them may treat the Person
duties evidenced hereby, and the in whose name this Certificate is
rights, duties and immunities of the registered as the owner hereof for
Trustee. all purposes, and neither the Master
The Agreement permits, with Servicer, the Trustee nor any such
certain exceptions therein provided, agent shall be affected by notice to
the amendment thereof and the the contrary.
modification of the rights and
obligations of the Master Servicer and The obligations created by the
the rights of the Certificateholders Agreement and the Trust created
under the Agreement from time to time thereby (other than the obligations
by the Master Servicer and the Trustee to make payments to
with the consent of the Holders of Certificateholders with respect to
Certificates evidencing Fractional the termination of the Agreement)
Undivided Interests aggregating not shall terminate upon the earlier of
less than 66% (or in certain cases, (i) the later of the (A) final
Holders of Certificates of affected payment or other liquidation (or
Classes evidencing such percentage of Monthly Advance with respect
the Fractional Undivided Interests thereto) of the last Mortgage Loan
thereof). Any such consent by the remaining in the Trust and (B)
Holder of this Certificate shall be disposition of all property acquired
conclusive and binding on such Holder upon foreclosure or deed in lieu of
and upon all future Holders of this foreclosure of any Mortgage Loan
Certificate and of any Certificate and the remittance of all funds
issued upon the transfer hereof or in due under the Agreement, or (ii) the
lieu hereof whether or not notation of optional repurchase by the party named
such consent is made upon this in the Agreement of all the Mortgage
Certificate. The Agreement also Loans and other assets of the Trust in
permits the amendment thereof, in accordance with the terms of the
certain limited circumstances, without Agreement. Such optional repurchase
the consent of the Holders of any of may be made only on or after the
the Certificates. Distribution Date on which the
As provided in the Agreement and aggregate unpaid principal balance of
subject to certain limitations therein the Mortgage Loans is less than 5% of
set forth, the transfer of this the aggregate Scheduled Principal
Certificate is registrable with the Balance of the Mortgage Loans at the
Trustee upon surrender of this Cut-off Date. The exercise of such
Certificate for registration of right will effect the early retirement
transfer at the offices or agencies of the Certificates. The Trust also
maintained by the Trustee in the City may be terminated on any Distribution
of Boston, Commonwealth of Date upon the determination, based
Massachusetts, duly endorsed by, or upon an opinion of counsel, that the
accompanied by a written instrument of REMIC status of REMIC I or REMIC II
transfer in form satisfactory to the has been lost or that a substantial
Trustee duly executed by the Holder risk exists that such status will be
hereof or such Holder's attorney duly lost for the then current year. In
authorized in writing, and thereupon no event, however, will the Trust
one or more new Certificates in created by the Agreement continue
authorized denominations representing beyond the expiration of 21 years
a like aggregate Fractional Undivided after the death of certain persons
Interest will be issued to the identified in the Agreement.
designated transferee.
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.
I (We) further direct the Trustee 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 B
MORTGAGE LOAN SCHEDULE
(Available upon request)
<PAGE>
EXHIBIT C
REPRESENTATIONS AND WARRANTIES OF EMC
CONCERNING THE MORTGAGE LOANS
Capitalized terms used herein shall have the meanings set forth in the
Mortgage Loan Purchase Agreement and not in the Pooling and Servicing Agreement.
(a) the information set forth and to be set forth in the Final
Mortgage Loan Schedules hereto was and will be true and correct in all
material respects at the date or dates respecting which such
information is furnished;
(b) immediately prior to the transfer to the Purchaser, the
Seller was the sole owner of beneficial title and holder of each
Mortgage and Mortgage Note relating to the Mortgage Loans and is
conveying the same free and clear of any and all liens, claims,
encumbrances, participation interests, equities, pledges, charges or
security interests of any nature and the Seller has full right and
authority to sell or assign the same pursuant to this Agreement;
(c) each Mortgage is a valid and enforceable first lien on the
property securing the related Mortgage Note and each Mortgaged Property
is owned by the Mortgagor in fee simple (except with respect to common
areas in the case of condominiums, PUDs and DE MINIMIS PUDs) or by
leasehold for a term longer than the term of the related Mortgage,
subject only to (i) the lien of current real property taxes and
assessments, (ii) covenants, conditions and restrictions, rights of
way, easements and other matters of public record as of the date of
recording of such Mortgage, such exceptions being acceptable to
mortgage lending institutions generally or specifically reflected in
the appraisal obtained in connection with the origination of the
related Mortgage Loan or referred to in the lender's title insurance
policy delivered to the originator of the related Mortgage Loan and
(iii) other matters to which like properties are commonly subject which
do not materially interfere with the benefits of the security intended
to be provided by such Mortgage;
(d) as of the Cut-off Date, no payment of principal of
or interest on or in respect of any Mortgage Loan is 60 or
more days past due;
(e) there is no mechanics' lien or claim for work, labor or
material affecting the premises subject to any Mortgage which is or may
be a lien prior to, or equal with, the lien of such Mortgage except
those which are insured against by title insurance;
(f) there is no valid offset, defense or counterclaim to any
Mortgage Note or Mortgage, including the obligation of the Mortgagor to
pay the unpaid principal and interest on such Mortgage Note;
(g) except to the extent insurance is in place which will
cover such damage, the physical property subject to any Mortgage is
free of material damage and is in good repair and there is no
proceeding pending or threatened for the total or partial condemnation
of any Mortgaged Property;
(h) each Mortgage Loan at the time it was made complied in all
material respects with applicable state and federal laws, including,
without limitation, usury, equal credit opportunity and disclosure
laws;
(i) neither the Seller nor any servicer of the related
Mortgage Loans has advanced funds or knowingly received any advance of
funds by a party other than the Mortgagor, directly or indirectly, for
the payment of any amount required by the Mortgage, except for interest
accruing from the date of the related Mortgage Note or date of
disbursement of the Mortgage Loan proceeds, whichever is later, to the
date which precedes by 30 days the first Due Date under the related
Mortgage Note;
(j) each Mortgage Note, the related Mortgage and other
agreements executed in connection therewith are genuine, and each is
the legal, valid and binding obligation of the maker thereof,
enforceable in accordance with its terms except as such enforcement may
be limited by bankruptcy, insolvency, reorganization or other similar
laws affecting the enforcement of creditors' rights generally and by
general equity principles (regardless of whether such enforcement is
considered in a proceeding in equity or at law); and, to the best of
Seller's knowledge, all parties to each Mortgage Note and the Mortgage
had legal capacity to execute the Mortgage Note and the Mortgage and
each Mortgage Note and Mortgage has been duly and properly executed by
the Mortgagor;
(k) the related Mortgage Note and Mortgage contain customary
and enforceable provisions such as to render the rights and remedies of
the holder adequate for the realization against the Mortgaged Property
of the benefits of the security, including realization by judicial, or,
if applicable, non-judicial foreclosure, and there is no homestead or
other exemption available to the Mortgagor which would interfere with
such right to foreclosure;
(l) the proceeds of the Mortgage Loans have been fully
disbursed, there is no requirement for future advances thereunder and
any and all requirements as to completion of any on-site or off-site
improvements and as to disbursements of any escrow funds therefor have
been complied with; and all costs, fees and expenses incurred in
making, closing or recording the Mortgage Loan have been paid, except
recording fees with respect to Mortgages not recorded as of the Closing
Date;
(m) either (i) each Mortgage Loan obligates the Mortgagor
thereunder to maintain a hazard insurance policy with a standard
mortgagee clause in an amount not less than the outstanding principal
balance of the Mortgage Loan and, if it was in place at origination of
the Mortgage Loan, flood insurance in an amount not less than the
outstanding principal balance of the Mortgage Loan, at the borrower's
cost and expense and such insurance is in place or (ii) with respect to
any Mortgage Loan for which such insurance is not in place, the Master
Servicer has in place a blanket insurance policy covering hazards and
floods in an amount not less than the outstanding principal balance of
the Mortgage Loan;
(n) except for 211 Mortgage Loans with, as of the Cutoff date,
an aggregate unpaid principal balance of $15,190,857 which are between
30 and 59 days delinquent, there is no material monetary default
existing under any Mortgage or the related Mortgage Note and there is
no material event which, with the passage of time or with notice and
the expiration of any grace or cure period, would constitute a default,
breach or event of acceleration; and neither the Seller nor any of its
affiliates has taken any action to waive any default, breach or event
of acceleration; no foreclosure action is threatened or has been
commenced with respect to the Mortgage Loan;
(o) except for 13 Mortgage Loans with an aggregate unpaid
principal balance of $939,291 none of which, as of the Cut-off Date, is
a delinquent Mortgage Loan, no Mortgagor, at the time of origination of
the applicable Mortgage, was a debtor in any state or federal
bankruptcy or insolvency proceeding;
(p) each Mortgage Loan was originated by a savings and loan
association, savings bank, commercial bank, credit union, insurance
company or similar institution which is supervised and examined by a
federal or State authority, or by a mortgagee approved by the Secretary
of Housing and Urban Development pursuant to Sections 203 and 211 of
the National Housing Act;
(q) each of the Mortgaged Properties consists of a single
parcel of real property with a detached single-family residence erected
thereon, or a two- to four-family dwelling, or a townhouse, or an
individual condominium unit in a condominium project or an individual
unit in a planned unit development;
(r) as of the Cut-off Date, (A) the Net Rate of each Mortgage
Loan was not more than 15.613% per annum and not less than 4.186% per
annum, and the weighted average Net Rate of the Mortgage Loans was
approximately 7.414% per annum;
(s) as of the Cut-off Date, (A) the remaining term of each
Mortgage Loan is not more than 329 months and not less than 3 months,
and the weighted average remaining term of each Mortgage Loan is 236
months, weighted by unpaid principal balance;
(t) as of the Cut-off Date, no more than 41.56%, 28.51%, and
10.01% of the Mortgage Loans (by unpaid principal balance) secured by
properties located in the states of California, Arizona and Florida,
respectively, and no more than 5% of the Mortgage Loans (by unpaid
principal balance) are located in any other state;
(u) as of the Cut-off Date, the maximum unpaid principal
balance of the Mortgage Loans is $715,921, the minimum unpaid principal
balance is $399 and the average unpaid principal balance is $70,345;
(v) to the best of Seller's knowledge, there is no delinquent
tax, government assessment, insurance premium, municipal charge or
assessment lien which may be due and owing against any Property and all
such charges have been paid when due, except for 4 Mortgage Loans with
an aggregate principal balance of $255,047 (and the Seller shall cause
such delinquency to be paid within 180 days of the Closing Date).
<PAGE>
EXHIBIT D
REQUEST FOR RELEASE
(for Trustee)
LOAN INFORMATION
Name of Mortgagor: _____________________________
Loan No.: ____________________________
TRUSTEE
Name: State Street Bank and Trust Company
Address: Two International Place,
Boston, MA 02110
Attention: Corporate Trust Department,
ref: Bear Stearns/EMC 1997-4
Trustee Mortgage
File No.: _____________________________
MASTER SERVICER
Name: EMC Mortgage Corporation
Address: 222 West Las Colinas Blvd.; Suite 600
Irving, TX 75039
Certificates: Mortgage Pass-Through Certificates,
Series 1997-4
The undersigned hereby acknowledges that it has received from State
Street Bank and Trust Company, as Trustee for the holders of Bear Stearns
Mortgage Securities Inc. Mortgage Pass-Through Certificates, Series 1997-4, the
documents referred to below (the "Documents"). All capitalized terms not
otherwise defined in this Request for Release shall have the meanings given them
in the Pooling and Servicing Agreement dated as of June 1, 1997 (the "Pooling
and Servicing Agreement") among the Trustee, EMC 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__
EMC MORTGAGE CORPORATION
By: _______________________________________
Name:
Title:
<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 [Closing Date] [date of
purchase]; (ii) it is not acquiring the Bear Stearns Mortgage Securities Inc.
Mortgage Pass-Through Certificates, Series 1997-4, 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]
State Street Bank and Trust Company,
as Trustee
Two International Place
Boston, Massachusetts 02110
Attention: Attention: Corporate Trust Department,
ref: Bear Stearns/EMC 1997-4
Bear Stearns Mortgage Securities Inc.
245 Park Avenue
New York, New York 10167
Re: BSMSI Series 1997-4 Mortgage Pass-Through
Certificates (the "Certificates"), including the Class B-4,
Class B-5 and Class B-6 Certificates (the "Privately Offered
CERTIFICATES")
Dear Ladies and Gentlemen:
In connection with our purchase of Privately Offered Certificates, we
confirm that:
(i) we understand that the Privately Offered
Certificates are not being registered under the
Securities Act of 1933, as amended (the "Act") or
any applicable state securities or "Blue Sky"
laws, and are being sold to us in a transaction
that is exempt from the registration requirements
of such laws;
(ii) any information we desired concerning
the Certificates, including the Privately Offered
Certificates, the trust in which the Certificates
represent the entire beneficial ownership interest
(the "Trust") or any other matter we deemed
relevant to our decision to purchase Privately
Offered Certificates has been made available to
us;
(iii) we are able to bear the economic risk of
investment in Privately Offered Certificates; we
are an institutional "accredited investor" as
defined in Section 501(a) of Regulation D
promulgated under the Act and a sophisticated
institutional investor;
(iv) we are acquiring Privately Offered
Certificates for our own account, not as nominee
for any other person, and not with a present view
to any distribution or other disposition of the
Privately Offered Certificates;
(v) we agree the Privately Offered
Certificates must be held indefinitely by us (and
may not be sold, pledged, hypothecated or in any
way disposed of) unless subsequently registered
under the Act and any applicable state securities
or "Blue Sky" laws or an exemption from the
registration requirements of the Act and any
applicable state securities or "Blue Sky" laws is
available;
(vi) we agree that in the event that at some
future time we wish to dispose of or exchange any
of the Privately Offered Certificates (such
disposition or exchange not being currently
foreseen or contemplated), we will not transfer or
exchange any of the Privately Offered Certificates
unless:
(A) (1) the sale is to an Eligible
Purchaser (as defined below), (2) a letter
to substantially the same effect as either
this letter or, if the Eligible Purchaser is
a Qualified Institutional Buyer as defined
under Rule 144A of the Act, the Rule 144A
and Related Matters Certificate in the form
attached to the Pooling and Servicing
Agreement (as defined below) is executed
promptly by the purchaser and delivered to
the addressees hereof and (3) all offers or
solicitations in connection with the sale,
whether directly or through any agent acting
on our behalf, are limited only to Eligible
Purchasers and are not made by means of any
form of general solicitation or general
advertising whatsoever; and
(B) if the Privately Offered
Certificate is not registered under the Act
(as to which we acknowledge you have no
obligation), the Privately Offered
Certificate is sold in a transaction that
does not require registration under the Act
and any applicable state securities or "blue
sky" laws and, if State Street Bank and
Trust Company (the "Trustee") so requests, a
satisfactory Opinion of Counsel is furnished
to such effect, which Opinion of Counsel
shall be an expense of the transferor or the
transferee;
(vii) we agree to be bound by all of the terms
(including those relating to restrictions on
transfer) of the Pooling and Servicing (as defined
below), pursuant to which the Trust was formed; we
have reviewed carefully and understand the terms
of the Pooling and Servicing Agreement;
(viii) we either: (i) are not acquiring the
Privately Offered Certificate directly or
indirectly by, or on behalf of, an employee
benefit plan or other retirement arrangement which
is subject to Title I of the Employee Retirement
Income Security Act of 1974, as amended, and/or
section 4975 of the Internal Revenue Code of 1986,
as amended, or (ii) are providing a benefit
plan opinion to the Trustee to the effect that the
proposed transfer and/or holding of a Privately
Offered Certificate and the servicing, management
and/or operation of the Trust and its assets: (I)
will not result in any prohibited transaction
which is not covered under an individual or class
prohibited transaction exemption, including, but
not limited to, Prohibited Transaction Exemption
("PTE") 84-14, PTE 91-38, PTE 90-1, PTE 95-60 or
PTE 96-23 and (II) will not give rise to any
additional fiduciary duties on the part of the
Master Servicer or the Trustee.
(ix) We understand that each of the Class B-4, B-5 and B-6
Certificates bears, and will continue to bear, a legend to substantiate the
following effect: THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER ANY STATE
SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE, AGREES THAT
THIS CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY
IN COMPLIANCE WITH THE ACT AND OTHER APPLICABLE LAWS AND ONLY (1) PURSUANT TO
RULE 144A UNDER THE ACT ("RULE 144A") TO A PERSON THAT THE HOLDER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A
"QIB"), PURCHASING FOR ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF A
QIB, WHOM THE HOLDER HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE,
PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (2) PURSUANT TO
AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE ACT (IF AVAILABLE)
OR (3) IN CERTIFICATED FORM TO AN "INSTITUTIONAL ACCREDITED INVESTOR" WITHIN THE
MEANING THEREOF IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE ACT
PURCHASING NOT FOR DISTRIBUTION IN VIOLATION OF THE ACT, SUBJECT TO (A) THE
RECEIPT BY THE TRUSTEE OF A LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN THE
AGREEMENT AND (B) THE RECEIPT BY THE TRUSTEE OF AN OPINION OF COUNSEL AS TO
COMPLIANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE UNITED STATES. THIS
CERTIFICATE MAY NOT BE ACQUIRED DIRECTLY OR INDIRECTLY BY, OR ON BEHALF OF, AN
EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT WHICH IS SUBJECT TO TITLE
I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, AND/OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, UNLESS THE
PROPOSED TRANSFEREE PROVIDES A BENEFIT PLAN OPINION TO THE TRUSTEE TO THE EFFECT
THAT THE PROPOSED TRANSFER AND/OR HOLDING OF A CERTIFICATE AND THE SERVICING,
MANAGEMENT AND/OR OPERATION OF THE TRUST AND ITS ASSETS: (I) WILL NOT RESULT IN
ANY PROHIBITED TRANSACTION WHICH IS NOT COVERED UNDER AN INDIVIDUAL OR CLASS
PROHIBITED TRANSACTION EXEMPTION, INCLUDING, BUT NOT LIMITED TO, PROHIBITED
TRANSACTION EXEMPTION ("PTE") 84-14, PTE 91-38, PTE 90-1, PTE 95-60 OR PTE 96-23
AND (II) WILL NOT GIVE RISE TO ANY ADDITIONAL FIDUCIARY DUTIES ON THE PART OF
THE MASTER SERVICER OR THE TRUSTEE.
<PAGE>
"ELIGIBLE PURCHASER" means a corporation, partnership or other entity
which we have reasonable grounds to believe and do believe (i) can make
representations with respect to itself to substantially the same effect as the
representations set forth herein, and (ii) is either a Qualified Institutional
Buyer as defined under Rule 144A of the Act or an institutional "Accredited
Investor" as defined under Rule 501 of the Act.
Terms not otherwise defined herein shall have the meanings assigned to
them in the Pooling and Servicing Agreement dated as of June 1, 1997 among Bear
Stearns Mortgage Securities Inc., EMC Mortgage Corporation and State Street Bank
and Trust Company, as Trustee (the "Pooling and Servicing Agreement").
If the Purchaser proposes that its Certificates be registered in the
name of a nominee on its behalf, the Purchaser has identified such nominee
below, and has caused such nominee to complete the Nominee Acknowledgment at the
end of this letter.
Name of Nominee (if any):___________________
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>
- ------------------------------------------------------------------------------
Nominee Acknowledgment
The undersigned hereby acknowledges and agrees that as to the
Certificates being registered in its name, the sole beneficial owner thereof is
and shall be the Purchaser identified above, for whom the undersigned is acting
as nominee.
[NAME OF NOMINEE]
By:__________________________
(Authorized Officer)
[By:__________________________
Attorney-in-fact]
<PAGE>
EXHIBIT F-2
FORM OF RULE 144A AND RELATED MATTERS CERTIFICATE
[Date]
[SELLER]
State Street Bank and Trust Company,
as Trustee
Two International Place
Boston, Massachusetts 02110
Attention: Attention: Corporate Trust Department,
ref: Bear Stearns/EMC 1997-4
Bear Stearns Mortgage Securities Inc.
245 Park Avenue
New York, New York 10167
Re: BSMSI Series 1997-4 Mortgage Pass-Through
Certificates, Class B-4, Class B-5,
and Class B-6 Certificates (the "Privately
OFFERED CERTIFICATES")
Dear Ladies and Gentlemen:
In connection with our purchase of Privately Offered
Certificates, the undersigned certifies to each of the parties to whom this
letter is addressed that it is a qualified institutional buyer (as defined in
Rule 144A under the Securities Act of 1933, as amended (the "Act")) as follows:
1. It owned and/or invested on a discretionary basis eligible securities
(excluding affiliate's securities, bank deposit notes and CD's, loan
participations, repurchase agreements, securities owned but subject to
a repurchase agreement and swaps), as described below:
Date: _____________, 19__ (must be on or after the close of
its most recent fiscal year)
Amount: $_________________; and
2. The dollar amount set forth above is:
a. greater than $100 million and the undersigned is one of
the following entities:
(1) |_| an insurance company as defined in
Section 2(13) of the Act; or1
(2) |_| an investment company registered under
the Investment Company Act or any
business development company as defined
in Section 2(a)(48) of the Investment
Company Act of 1940; or
(3) |_| a Small Business Investment Company
licensed by the U.S. Small Business
Administration under Section 301(c) or
(d) of the Small Business Investment
Act of 1958; or
(4) |_| a plan (i) established and maintained
by a state, its political
subdivisions, or any agency or
instrumentality of a state or its
political subdivisions, the laws of
which permit the purchase of
securities of this type, for the
benefit of its employees and (ii) the
governing investment guidelines of
which permit the purchase of
securities of this type; or
(5) |_| a business development company as
defined in Section 202(a)(22) of the
Investment Advisers Act of 1940; or
(6) |_| a corporation (other than a U.S.
bank, savings and loan association or
equivalent foreign institution),
partnership, Massachusetts or similar
business trust, or an organization
described in Section 501(c)(3) of the
Internal Revenue Code; or
(7) |_| a U.S. bank, savings and loan
association or equivalent foreign
institution, which has an audited net
worth of at least $25 million as
demonstrated in its latest annual
financial statements; or
(8) |_| an investment adviser registered
under the Investment Advisers Act; or
b. |_| greater than $10 million, and the undersigned is
a broker-dealer registered with the SEC; or
c. |_| less than $10 million, and the undersigned is a
broker-dealer registered with the SEC and will
only purchase Rule 144A securities in
transactions in which it acts as a riskless
principal (as defined in Rule 144A); or
d. |_| less than $100 million, and the undersigned is an
investment company registered under the
Investment Company Act of 1940, which, together with
one or more registered investment companies having
the same or an affiliated investment adviser, owns at
least $100 million of eligible securities; or
e. |_| less than $100 million, and the undersigned is an
entity, all the equity owners of which are
qualified institutional buyers.
The undersigned further certifies that it is purchasing a Privately
Offered Certificate for its own account or for the account of others that
independently qualify as "Qualified Institutional Buyers" as defined in Rule
144A. It is aware that the sale of the Privately Offered Certificates is being
made in reliance on its continued compliance with Rule 144A. It is aware that
the transferor may rely on the exemption from the provisions of Section 5 of the
Act provided by Rule 144A. The undersigned understands that the Privately
Offered Certificates may be resold, pledged or transferred only to (i) a person
reasonably believed to be a Qualified Institutional Buyer that purchases for its
own account or for the account of a Qualified Institutional Buyer to whom notice
is given that the resale, pledge or transfer is being made in reliance in Rule
144A, or (ii) an institutional "accredited investor," as such term is defined
under Rule 501 of the Act in a transaction that otherwise does not constitute a
public offering.
The undersigned agrees that if at some future time it wishes to
dispose of or exchange any of the Privately Offered Certificates, it will not
transfer or exchange any of the Privately Offered Certificates to a Qualified
Institutional Buyer without first obtaining a Rule 144A and Related Matters
Certificate in the form hereof from the transferee and delivering such
certificate to the addressees hereof. Prior to making any transfer of Privately
Offered Certificates, if the proposed Transferee is an institutional "accredited
investor," the transferor shall obtain from the transferee and deliver to the
addressees hereof an Investment Letter in the form attached to the Pooling and
Servicing Agreement dated as of June 1, 1997 among Bear Stearns Mortgage
Securities Inc., as Seller, EMC Mortgage Corporation as Master Servicer, and
State Street Bank and Trust Company, as Trustee, pursuant to which the
Certificates were issued.
The undersigned certifies that it either: (i) is not acquiring the
Privately Offered Certificate directly or indirectly by, or on behalf of, an
employee benefit plan or other retirement arrangement which is subject to Title
I of the Employee Retirement Income Security Act of 1974, as amended, and/or
section 4975 of the Internal Revenue Code of 1986, as amended, or (ii) is
providing a benefit plan opinion to the Trustee to the effect that the proposed
transfer and/or holding of a Privately Offered Certificate and the servicing,
management and/or operation of the Trust and its assets: (I) will not result in
any prohibited transaction which is not covered under an individual or class
prohibited transaction exemption, including, but not limited to, Prohibited
Transaction Exemption ("PTE") 84-14, PTE 91-38, PTE 90-1, PTE 95-60 or PTE 96-23
and (II) will not give rise to any additional fiduciary duties on the part of
the Master Servicer or the Trustee.
If the Purchaser proposes that its Certificates be registered in the
name of a nominee on its behalf, the Purchaser has identified such nominee
below, and has caused such nominee to complete the Nominee Acknowledgment at the
end of this letter.
Name of Nominee (if any):___________________
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]
- ------------------------------------------------------------------------------
Nominee Acknowledgment
The undersigned hereby acknowledges and agrees that as to the
Certificates being registered in its name, the sole beneficial owner thereof is
and shall be the Purchaser identified above, for whom the undersigned is acting
as nominee.
[NAME OF NOMINEE]
By:__________________________
(Authorized Officer)
[By:__________________________
Attorney-in-fact]
- --------
1 A purchase by an insurance company for one or more of its separate
accounts, as defined by Section 2(a)(37) of the Investment Company Act of 1940,
which are neither registered nor required to be registered thereunder, shall be
deemed to be a purchase for the account of such insurance company.
<PAGE>
EXHIBIT G
FORM OF INITIAL CERTIFICATION
[Seller]
[Master Servicer]
Re: Pooling and Servicing Agreement dated as of June
1, 1997, among Bear Stearns Mortgage Securities
Inc., as seller, EMC Mortgage Corporation, as
master servicer, and State Street Bank and Trust
Company, as trustee
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1997-4
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that, except
as otherwise noted on the attached exception report, that as to each Mortgage
Loan listed on the Mortgage Loan Schedule (other than any Mortgage Loan paid in
full or listed on the attachment hereto) it has reviewed the Mortgage File and
the Mortgage Loan Schedule and has determined that: (i) all documents required
to be included in the Mortgage File pursuant to the Pooling and Servicing
Agreement are in its possession; (ii) such documents have been reviewed by it
and appear regular on their face, have, where applicable, been executed and
relate to such Mortgage Loan; and (iii) based on examination by it, and only as
to such documents, the information set forth in the Mortgage Loan Schedule as to
Mortgagor Name, original principal balance and loan number respecting such
Mortgage Loan is correct and accurately reflects the information in the Mortgage
Loan File.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The Trustee makes no
representation that any documents specified in subclauses (iv), (v) and (vii) of
Section 2.01(b) should be included in any Mortgage File. The Trustee makes no
representations as to: (i) the validity, legality, enforceability or genuineness
of any of the documents contained in each Mortgage File of any of the Mortgage
Loans identified on the Mortgage Loan Schedule or (ii) the collectability,
insurability, effectiveness or suitability of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
STATE STREET BANK AND
TRUST COMPANY, as Trustee
By:_______________________
Name:
Title:
<PAGE>
EXHIBIT H
FORM OF FINAL CERTIFICATION
Bear Stearns Mortgage Securities Inc.
245 Park Avenue
New York, New York 10167
EMC Mortgage Corporation
222 West Las Colinas Blvd.; Suite 600
Irving, TX 75039
Re: Pooling and Servicing Agreement dated as of
June 1, 1997, among Bear Stearns Mortgage Securities
Inc., as seller, EMC Mortgage Corporation, as
master servicer, and State Street Bank and Trust
Company, as trustee
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1997-4
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that, except
as otherwise noted on the attached exception report, that as to each Mortgage
Loan listed on the Mortgage Loan Schedule (other than any Mortgage Loan paid in
full or listed on the attachment hereto) it has received the documents set forth
in Section 2.01 and has determined that (i) all documents required to be
included in the Mortgage File pursuant to the Pooling and Servicing Agreement
are in its possession; (ii) such documents have been reviewed by it and appear
regular on their face, have, where applicable, been executed and relate to such
Mortgage Loan; and (iii) based on examination by it, and only as to such
documents, the information set forth in the Mortgage Loan Schedule as to
Mortgagor name, original principal balance and loan number respecting such
Mortgage Loan is correct and accurately reflects the information in the Mortgage
Loan File.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The Trustee makes no
representation that any documents specified in subclauses (iv), (v) and (vii) of
Section 2.01(b) should be included in any Mortgage File. The Trustee makes no
representations as to: (i) the validity, legality, enforceability or genuineness
of any of the documents contained in each Mortgage File of any of the Mortgage
Loans identified on the Mortgage Loan Schedule or (ii) the collectability,
insurability, effectiveness or suitability of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:_______________________
Name:
Title:
