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)
DECEMBER 30, 1996
Bear Stearns Mortgage Securities Inc. (as Seller under a
Pooling and Servicing Agreement dated as of December 1, 1996
providing for the issuance of Mortgage Pass-Through Certificates, Series
1996-6)
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 December 23, 1996
between the Registrant and Bear, Stearns & Co. Inc.
4.1 Pooling and Servicing Agreement dated as of December 1, 1996
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: January 10, 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 December 23, 1996 between
the Registrant and Bear, Stearns & Co. Inc.
4.1 Pooling and Servicing Agreement dated as of December 1,
1996 among the Registrant, EMC Mortgage Corporation
and State Street Bank and Trust Company
<PAGE>
EXHIBIT 1.1
<PAGE>
BEAR STEARNS MORTGAGE SECURITIES INC.
Mortgage Pass-Through Certificates
TERMS AGREEMENT
Dated: December 23, 1996
To: BEAR STEARNS AND BEAR STEARNS
MORTGAGE SECURITIES INC.
Re: Underwriting Agreement dated June 25, l996
Underwriter: Bear, Stearns & Co. Inc.
Series Designation: Series 1996 - 6
Class Designation Schedule of the Certificates: Class A-1, A-2,
A-3, A-4, A-5, A-WAC, PO, X-1, B-1, B-2, B-3, B-4, B-5, B-6, X-2,
R-1 and R-2
TERMS OF THE CERTIFICATES TO BE PURCHASED THE UNDERWRITER:
Original
Principal
CLASS AMOUNT INTEREST RATE
A-1 $17,101,000 6.65%
A-2 $31,486,000 7.00%
A-3 $10,355,000 7.50%
A-4 $ 5,525,000 7.85%
A-5 $10,000,000 7.25%
A-WAC $20,473,000 (1)
PO $ 649,052 (2)
X-1 (3) 0.18%
B-1 $ 4,523,000 7.75%
B-2 $ 6,935,000 8.00%
B-3 $ 5,427,000 8.00%
R-1 $ 100 8.00%
R-2 $ 100 8.00%
(1) The Class A-WAC Certificates will have both a principal
amount and a notional principal amount. The principal
amount of the Class A-WAC Certificates (the "A-WAC Current
Principal Amount") initially will be the amount shown above
which is equal to the Cut-Off Date Pool Arrearage other
than the portion thereof (equal to 2.75% thereof) which is
available to pay a successor servicer in the event the
Master Servicer is replaced. The A-WAC Current Principal
Amount will not bear interest. The notional principal
amount ("Notional Amount") of the Class A-WAC Certificates
will be equal to the aggregate Unpaid Principal Balance
from time to time of the Mortgage Loans (initially
$100,144,473). Interest will be paid to the holders of the
A-WAC Certificates on the Notional Amount at a variable
Pass-Through Rate. The initial Pass- Through Rate will equal
approximately 1.09% per annum on the Notional Amount as
described in the Prospectus Supplement.
(2) The Class PO Certificates are principal only Certificates and will
receive no interest.
(3) The Class X-1 Certificates will bear interest at the rate stated above
on the Notional Amount.
<PAGE>
The Certificates will be offered from time to time by the Underwriter in
negotiated transactions at varying prices to be determined at the time of sale.
DEFINED TERMS: Terms not otherwise defined herein shall have the meanings given
to such terms in the Pooling and Servicing Agreement dated as of December 1,
1996, among Bear Stearns Mortgage Securities Inc., as Seller, EMC Mortgage
Corporation, as master servicer, and State Street Bank and Trust Company as
trustee.
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 January 1997.
CERTIFICATE RATING SET FORTH BELOW FROM MOODY'S INVESTORS SERVICE INC.
("MOODY'S") AND DUFF & PHELPS CREDIT RATING CO. ("DUFF & PHELPS"):
RATING
CLASS Moody's Duff & Phelps
Class A-1 Aaa AAA
Class A-2 Aaa AAA
Class A-3 Aaa AAA
Class A-4 Aaa AAA
Class A-5 Aaa AAA
Class A-WAC Aaa AAA
Class PO Aaa AAA
Class X-1 Aaa AAA
Class B-1 Aa2 AA
Class B-2 A2 A
Class B-3 Baa2 BBB
Class R-1 Aaa AAA
Class R-2 Aaa AAA
MORTGAGE ASSETS: The Mortgage Loans to be included in the Trust Fund are as
described, in Annex A hereto.
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.
PURCHASE PRICE: The aggregate purchase price payable by the Underwriter for the
Certificates covered by this Agreement will be $113,349,974.77 (plus $675,884.74
in accrued interest).
CREDIT ENHANCEMENT: The use of up to 1.00% of the interest paid on the Mortgage
Loans to pay down the Current Principal Amounts of the Certificates to achieve
and maintain the Over- Collateralization Limit, the Letter of Credit and
subordination described in the Prospectus Supplement.
CLOSING DATE: December 30, 1996, 9:00 a.m., N.Y. Time
The undersigned, agrees, subject to the terms and provisions of the
above-referenced Underwriting Agreement, which is incorporated herein in its
entirety and made a part hereof, to purchase the respective principal amounts of
the Classes of the above- referenced Series of Certificates set forth herein.
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
<PAGE>
EXHIBIT 4.1
<PAGE>
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 December 1, 1996
--------------------------------
Bear Stearns Mortgage Securities Inc.
Mortgage Pass-Through Certificates
Series 1996-6
<PAGE>
TABLE OF CONTENTS
ARTICLE I
Definitions
Page
Definitions............................................................I-1
ARTICLE II
Conveyance of Mortgage Loans;
Original Issuance of Certificates
2.01. Conveyance of Mortgage Loans to Trustee...................II-1
2.02. Acceptance of Mortgage Loans by Trustee...................II-3
2.03. Representations, Warranties and Covenants of the
Master Servicer...........................................II-5
2.04. Substitution of Mortgage Loans............................II-7
2.05. Representations and Warranties of the Trustee.............II-8
2.06. Issuance of Certificates..................................II-10
2.07. Representations and Warranties Concerning the
Seller....................................................II-10
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. [Reserved]...............................................III-7
3.10. Maintenance of Hazard Insurance and Fidelity
Coverage.................................................III-7
3.11. Due-on-Sale Clauses; Assumption Agreements...............III-9
3.12. Realization Upon Defaulted Mortgage Loans................III-10
3.13. Trustee to Cooperate; Release of Mortgage Files..........III-12
3.14. Servicing and Master Servicing Compensation..............III-14
3.15. Annual Statement of Compliance...........................III-14
3.16. Annual Independent Public Accountants' Servicing
Report...................................................III-15
3.17. REMIC-Related Covenants..................................III-15
3.18. Additional Information...................................III-16
3.19. Optional Purchase of Defaulted Mortgage Loans............III-16
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-8
4.05. Credit Support Fee Account................................IV-9
ARTICLE V
Certificates
5.01. Certificates..............................................V-1
5.02. Registration of Transfer and Exchange of
Certificates..............................................V-11
5.03. Mutilated, Destroyed, Lost or Stolen Certificates.........V-14
5.04. Persons Deemed Owners.....................................V-14
5.05. Transfer Restrictions on Residual Certificates............V-14
5.06. Restrictions on Transferability of Private
Certificates..............................................V-16
5.07. ERISA Restrictions........................................V-17
5.08. Rule 144A Information.....................................V-17
ARTICLE VI
Payments to Certificateholders
6.01. Distributions on the Certificates.........................VI-1
6.02. Maintenance of Letter of Credit; Draws Thereunder.........VI-5
6.03. Allocation of Losses......................................VI-8
6.05. Payments..................................................VI-12
6.06. Statements to Certificateholders..........................VI-12
6.07. Reports to the Trustee and the Master Servicer............VI-15
6.08. Monthly Advances..........................................VI-18
6.09. Compensating Interest Payments............................VI-18
6.10. Reports of Foreclosures and Abandonment of
Mortgaged Property........................................VI-19
ARTICLE VII
The Master Servicer
7.01. Liabilities of the Master Servicer........................VII-1
7.02. Merger or Consolidation of the Master Servicer............VII-1
7.03. Indemnification of the Trustee............................VII-1
7.04. Limitation on Liability of the Master Servicer
and Others................................................VII-2
7.05. Master Servicer Not to Resign.............................VII-3
7.06. [Reserved]................................................VII-3
7.07. Sale and Assignment of Master Servicing...................VII-3
ARTICLE VIII
Default
8.01. Events of Default.........................................VIII-1
8.02. Trustee to Act; Appointment of Successor..................VIII-3
8.03. Notification to Certificateholders........................VIII-4
8.04. Waiver of Defaults........................................VIII-4
8.05. List of Certificateholders................................VIII-4
ARTICLE IX
Concerning the Trustee
9.01. Duties of Trustee.........................................IX-1
9.02. Certain Matters Affecting the Trustee.....................IX-2
9.03. Trustee Not Liable for Certificates or Mortgage
Loans.....................................................IX-4
9.04. Trustee May Own Certificates..............................IX-5
9.05. Trustee's Fees and Expenses...............................IX-5
9.06. Eligibility Requirements for Trustee......................IX-6
9.07. Insurance.................................................IX-6
9.08. Resignation and Removal of the Trustee....................IX-6
9.09. Successor Trustee.........................................IX-7
9.10. Merger or Consolidation of Trustee........................IX-8
9.11. Appointment of Co-Trustee or Separate Trustee.............IX-8
9.12. Master Servicer Shall Provide Information as
Reasonably Required.......................................IX-10
9.13. Federal Information Returns and Reports to
Certificateholders........................................IX-10
ARTICLE X
Termination
10.01. Termination Upon Repurchase by ICI Funding or its
Designee or Liquidation of All Mortgage Loans............X-1
10.02. Additional Termination Requirements.......................X-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-4
11.09. Severability of Provisions................................XI-5
11.10. Successors and Assigns....................................XI-5
11.11. Article and Section Headings..............................XI-5
11.12. Counterparts..............................................XI-5
11.13. Notice to Rating Agencies ................................XI-5
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 EMC Concerning the
Mortgage Loans
Exhibit D - Form of Request for Release
Exhibit E - Form of Affidavit pursuant to Section 860E(e)(4)
Exhibit F-1 - Form of Investment Letter
Exhibit F-2 - Form of Rule 144A and Related Matters Certificate
Exhibit G - Form of Special Servicing and Collateral Fund Agreement
Exhibit H - Form of Trustee's Initial Certification
Exhibit I - Form of Trustee's Final Certification
Exhibit J - Form of Letter of Credit
Exhibit K - Schedule of Mortgage Loans with Lost Notes
Exhibit L - Reporting Schedule
<PAGE>
POOLING AND SERVICING AGREEMENT
Pooling and Servicing Agreement dated as of December 1, 1996, 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 EMC. 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
IV to be treated for federal income tax purposes as a REMIC. On December 30,
1996 (the "Startup Day"), all the Classes of REMIC IV Regular Certificates will
be designated "regular interests" in such REMIC and the Class R-4 Certificates
will be designated the "residual interest" in such REMIC.
The Trustee shall make an election for the assets constituting REMIC
III to be treated for federal income tax purposes as a REMIC. On the Startup
Day, all the Classes of REMIC III Regular Certificates will be designated
"regular interests" in such REMIC and the Class R-3 Certificates will be
designated the "residual interest" in such REMIC.
The Trustee shall make an election for the assets constituting REMIC
II to be treated for federal income tax purposes as a REMIC. On the Startup
Date, all the Classes of REMIC II Regular Certificates will be designated
"regular interests" in such REMIC and the Class RR-2 Certificates will be
designated the "residual interest" in such REMIC.
The Trustee shall make an election for the assets constituting REMIC I
to be treated for federal income tax purposes as a REMIC. On the Startup Day,
all the Classes of Certificates except for the Class R-1, Class R-2 and Class
A-WAC and Class X-2 Certificates will be designated "regular interests" in such
REMIC and the Class R-1 Certificates will be designated the "residual interest"
in such REMIC. Each component of the Class A- WAC and Class X-2 Certificates as
described in Section 5.01 (each, a "Separate Component") will be designated as a
"regular interest" in REMIC I.
The Mortgage Loans will have an Unpaid Principal Balance as of the
Cut-Off Date, after deducting all Scheduled Principal due on or before the
Cut-Off Date, of $100,144,472.86 and an aggregate Arrearage as of the Cut-Off
Date, after deducting all payments received with respect to Arrearages on or
before the Cut-Off Date, of $21,052,704.56. The initial principal amount of the
Certificates will not exceed the Legal 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, the Protected
Accounts or the Servicing Accounts as the context may require.
Accelerated Arrearage Payment Amount: With respect to each
Distribution Date, an amount equal to one-twelfth of the product of the
Accelerated Arrearage Percentage and the Unpaid Principal Balance of the
Mortgage Loans as of the first day of the month preceding the month of the
Distribution Date.
Accelerated Arrearage Percentage: The lesser of (a) 0.30% per annum
and (b) the excess of (x) the weighted average Net Rate of the Mortgage Loans
over (y) the sum of the weighted average Pass-Through Rate of the P&I
Certificates and the Credit Enhancement Percentage.
Accrued Certificate Interest: For any Certificate (other than a Class
PO Certificate) for any Distribution Date, the interest accrued during the
related Interest Accrual Period at the applicable Pass-Through Rate on the
Current Principal Amount (or, in the case of a Class A-WAC or Class X-1
Certificate, the Notional Amount) of such Certificate immediately prior to such
Distribution Date, calculated on the basis of a 360-day year consisting of
twelve 30-day months, less (i) in the case of a Senior Certificate, such
Certificate's share of any Net Interest Shortfall and the interest portion of
Excess Losses and, after the Cross-Over Date, the interest portion of any
Realized Losses and (ii) in the case of a Subordinate Certificate, such
Certificate's share of any Net Interest Shortfall and the interest portion of
any Realized Losses.
Advancing Date: The fourth Business Day preceding the related
Distribution Date.
Affiliate: As to any Person, any other Person controlling, controlled
by or under common control with such Person. "Control" means the power to direct
the management and policies of a Person, directly or indirectly, whether through
ownership of voting securities, by contract or otherwise. "Controlled" and
"Controlling" have meanings correlative to the foregoing. The Trustee may
conclusively presume that a Person is not an Affiliate of another Person unless
a Responsible Officer of the Trustee has actual knowledge to the contrary.
Agreement: This Pooling and Servicing Agreement and all amendments
hereof and supplements hereto.
Allocable Share: With respect to each Class of Subordinate
Certificates:
(a) as to any Distribution Date and amounts
distributable pursuant to clauses (i) and (iii) of the
Subordinate Optimal Principal Amount, the fraction, expressed
as a percentage, the numerator of which is the
Current Principal Amount of such Class and the denominator of
which is the aggregate Current Principal Amount of all Classes
of the Subordinate Certificates; and
(b) as to any Distribution Date and amounts
distributable pursuant to clause (ii), (iv) and (v) of
the Subordinate Optimal Principal Amount, and as to each
Class of Subordinate Certificates for which (x) the related
Prepayment Distribution Trigger has been satisfied on such
Distribution Date, the fraction, expressed as a percentage,
the numerator of which is the
Current Principal Amount of such Class and the denominator of
which is the aggregate Current Principal Amount of all such
Classes or (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.
Applicable Credit Rating: A rating of Aaa, in the case of Moody's or
AAA, in the case of DCR, respectively, for any long-term deposit or security or
a rating of P-1+, in the case of Moody's, or D-1+ in the case of DCR, for any
short-term deposit or security.
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.
Arrearage: With respect to any Mortgage Loan on any Distribution Date,
the amount of the Arrearage, if any, as set forth in the Mortgage Loan Schedule
as of the Cut-Off Date, as reduced by all amounts applied in respect of the
Arrearage by the Master Servicer through the Due Period related to such
Distribution Date.
Arrearage Component: That portion of a Modified Scheduled Payment
allocable to the unpaid Arrearage of the related Mortgage Loan.
Assumed Final Distribution Date: With respect to each Class of
Certificates, November 25, 2029.
Available Funds: With respect to any Distribution Date, an amount
equal to the aggregate of the following amounts with respect to the Mortgage
Loans: (a) all previously undistributed payments on account of principal
(including the Unpaid Principal Balance portion of Modified 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, in each case
with respect to the Unpaid Principal Balance of the Mortgage Loans, (b) all
previously undistributed payments on account of Arrearages (including the
Arrearage Component of Modified Scheduled Payments, Principal Prepayments
allocable to Arrearages and the principal portion of Net Liquidation Proceeds
allocable to Arrearages), (c) any Monthly Advances (including Certificate
Account Advances) and Compensating Interest Payments by the Master Servicer with
respect to such Distribution Date and (d) any amount reimbursed by the Master
Servicer pursuant to Subsections 4.02(d) and 4.04(d) in connection with losses
on Permitted Investments, except:
(i) all payments that were due on or before the
Cut-Off Date;
(ii) all Principal Prepayments and Liquidation
Proceeds received during the month in which such Distribution
Date occurs and all related payments of interest;
(iii) all payments, other than Principal Prepayments, that
represent early receipt of Scheduled Payments due on a date or
dates subsequent to the Due Date in the month in which such
Distribution Date occurs;
(iv) amounts received on particular Mortgage Loans
as late payments of principal or interest and
respecting which, and to the extent that, there are any
unreimbursed Monthly Advances (including Certificate
Account Advances);
(v) amounts of Monthly Advances (including
Certificate Account Advances) determined to be
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.
A-WAC Liquidation Proceeds: For any Distribution Date with respect to
those Mortgage Loans which became Liquidated Mortgage Loans during a Prepayment
Period, the portion of Net Liquidation Proceeds allocable to the Class A-WAC
Certificates pursuant to Section 6.04.
A-WAC Loss Allocation Limitation: The meaning specified in Section
6.03(d) hereof.
A-WAC Realized Losses: For any Distribution Date with respect to those
Mortgage Loans which became Liquidated Mortgage Loans during a Prepayment
Period, the portion of Realized Losses allocable to the Class A-WAC Certificates
pursuant to Section 6.03(a) and (b).
Bankruptcy Code: The United States Bankruptcy Code, as amended, as
codified in 11 U.S.C. Sections 101-1330.
Bankruptcy Coverage Termination Date: The Distribution Date upon which
the Bankruptcy Loss Amount has been reduced to zero or a negative number (or the
Cross-Over Date, if earlier).
Bankruptcy Loss: With respect to any Mortgage Loan, a Deficient
Valuation or Debt Service Reduction.
Bankruptcy Loss Amount: As of any Determination Date prior to the
first Anniversary Determination Date, the Bankruptcy Loss Amount shall equal
$50,000, as reduced by the aggregate amount of Bankruptcy Losses since the
Cut-off Date. The Bankruptcy Loss Amount may be further reduced by EMC
(including accelerating the manner in which such coverage is reduced) provided
that prior to any such reduction, EMC shall obtain written confirmation from
each Rating Agency that such reduction shall not adversely affect the
then-current rating assigned to the Certificates by such Rating Agency and shall
provide a copy of such written confirmation to the Trustee.
Benefit Plan Opinion: The meaning specified in Section 5.07(a) hereof.
Book-Entry Certificates: All Classes of Certificates other than the
Class R-1, Class R-2, Class B-4, Class B-5, Class B- 6 and Class X-2
Certificates.
BPO: With respect to each Mortgaged Property relating to a Mortgage
Loan, (i) a drive-by valuation (i.e. the interior of the property is generally
not inspected) prepared by a real estate broker in the community in which such
Mortgaged Property is located who is independent of the Seller, Master Servicer
and their Affiliates, which valuation indicates the expected proceeds of a sale
of such Mortgaged Property on an "as is" basis based upon a normal marketing
time for similar types of Mortgaged Properties in similar areas, and includes
certain assumptions, including those as to the condition of the interior of the
applicable Mortgaged Property, and/or (ii) a statistical market valuation which
takes into account regional market data such as historical trends, recent sales
prices, property types and market conditions in determining the value of the
Mortgaged Property.
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, Texas 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 1996-6 - Certificate
Account."
Certificate Account Advance: As of any Determination Date, the amount
on deposit in a Protected Account or Custody Account which is not required to be
transferred to the Certificate Account for distribution during the calendar
month in which such Determination Date occurs but which is deposited in the
Certificate Account and used to make a distribution to Certificateholders during
such calendar month on account of the Unpaid Principal Balance portion of
Modified Scheduled Payments on the Mortgage Loans due on the Due Date for such
month not being paid on or before such Determination Date except insofar as such
unpaid amounts are the result of application of the Relief Act.
Certificate Owner: Any Person who is the beneficial owner of a
Certificate registered in the name of the Depository or its nominee.
Certificate Register: The register maintained pursuant to Section
5.02.
Certificateholder: A Holder of a Certificate.
Class: With respect to the Certificates, A-1, A-2, A-3, A-4, A-5,
A-WAC, PO, X-1, X-2, B-1, B-2, B-3, B-4, B-5, B-6, R-1 and R-2. With respect to
the REMIC II, REMIC III or REMIC IV Regular Certificates, each such REMIC II,
III or IV Regular Certificate as set forth in Section 5.01(c).
Class A-5 Optimal Principal Amount: With respect to any Distribution
Date occurring within the first five years after the Closing Date (i.e., prior
to the Distribution Date in January 2002), zero. The Class A-5 Optimal Principal
Amount for any Distribution Date occurring thereafter will be as follows: for
any Distribution Date during the sixth, seventh, eighth and ninth years after
the Cut-Off Date, 30%, 40%, 60% and 80%, respectively, of the Class A-5 Pro Rata
Optimal Principal Amount for such Distribution Date and, for any Distribution
Date thereafter, 100% of the Class A-5 Pro Rata Optimal Distribution Amount for
such Distribution Date. Notwithstanding the foregoing, if on any Distribution
Date the Current Principal Amount of each Class of Senior Certificates (other
than the Class A-5, Class A-WAC and Class PO Certificates) has been reduced to
zero, the Class A-5 Optimal Principal Amount shall equal the Senior P&I Optimal
Principal Amount to the extent not distributed on such Distribution Date to the
other Classes of Senior Certificates.
Class A-5 Pro Rata Optimal Principal Amount: With respect to any
Distribution Date, an amount equal to the product of (x) the sum of the Senior
P&I Optimal Principal Amount and the Subordinate Optimal Principal Amount for
such Distribution Date and (y) a fraction, the numerator of which is the Current
Principal Amount of the Class A-5 Certificates immediately prior to such
Distribution Date and the denominator of which is the aggregate Unpaid Principal
Balance of all of the Mortgage Loans less the PO Percentage of the Unpaid
Principal Balance of the Discount Mortgage Loans, in each case as of the Due
Date in the month prior to the month in which the Distribution Date occurs and
without giving effect to payments on the Mortgage Loans on such Due Date.
Class A-WAC Cash Shortfall: With respect to a Distribution Date, the
difference between the Class A-WAC Principal Distribution Amount for such
Distribution Date and the actual amount distributed to holders of the Class
A-WAC Certificates on such Distribution Date in the instance where Available
Funds are insufficient to make the full amount of the distribution required to
be made to Holders of the Class A-WAC Certificates.
Class A-WAC Deferred Amount: With respect to each Distribution Date
through the Cross-Over Date, the aggregate of all amounts allocable on such
Distribution Date to the Class A-WAC Certificates in respect of Realized Losses
(other than Excess Losses) and Class A-WAC Cash Shortfall and all amounts
previously allocated in respect of such losses and Class A-WAC Cash Shortfall to
the Class A-WAC Certificates and not distributed on prior Distribution Dates.
Class A-WAC Deferred Payment Writedown Amount: With respect to any
Distribution Date, the amount, if any, distributed on such date in respect of
the Class A-WAC Deferred Amount pursuant to Section 6.01(a)(v).
Class A-WAC Principal Distribution Amount: With respect to each
Distribution Date, an amount, without duplication, equal to the sum of:
(i) the Arrearage Component of the Modified Scheduled
Payment received on each Mortgage Loan during the related Due
Period other than the Contingent Servicing Fee if EMC is not
the Master Servicer;
(ii) the Arrearage owing on each Mortgage Loan which was the
subject of a Voluntary Principal Prepayment in full received by the
Master Servicer during the applicable Prepayment Period;
(iii) all prepayments in part received during the applicable
Prepayment Period on each Mortgage Loan which had an Arrearage during
such Prepayment Period up to the amount necessary to reduce the related
Arrearage to zero;
(iv) the A-WAC Liquidation Proceeds received with respect to
Mortgage Loans which became Liquidated Mortgage Loans during the
related Prepayment Period;
(v) the sum of (a) the Arrearage of each Mortgage Loan which
was repurchased on such Distribution Date pursuant to Section 2.02,
2.03(d) or 3.19 and (b) the excess, if any, of the Arrearage of each
Mortgage Loan that has been replaced by
the Master Servicer with a Substitute Mortgage Loan pursuant to
Section 2.04 on such Distribution Date over the Arrearage of such
substitute Mortgage Loan; and
(vi) one-twelfth of the product of (x) the Unpaid Principal
Balance of the Mortgage Loans as of the first day of the month
preceding the month of the Distribution Date and (y) the Accelerated
Arrearage Percentage.
Class A-WAC Residual Distribution Amount: With respect to each
Distribution Date, an amount, without duplication, equal to the sum of:
(i) the Arrearage Component of the Modified Scheduled Payment received
on each Mortgage Loan during the related Due Period other than the Contingent
Servicing Fee if EMC is not the Master Servicer;
(ii) the Arrearage owing on each Mortgage Loan which was the subject
of a Voluntary Principal Prepayment in full received by the Master Servicer
during the applicable Prepayment Period;
(iii) all prepayments in part received during the applicable
Prepayment Period on each Mortgage Loan which had an Arrearage during such
Prepayment Period up to the amount necessary to reduce the related Arrearage to
zero;
(iv) the Net Liquidation Proceeds received with respect to Mortgage
Loans which became Liquidated Mortgage Loans during the related Prepayment
Period after satisfaction of the Unpaid Principal Balances of such Mortgage
Loans;
(v) the sum of (a) the Arrearage of each Mortgage Loan which was
repurchased on such Distribution Date pursuant to Section 2.02, 2.03(d) or 3.19
and (b) the difference, if any, between the Arrearage of a Mortgage Loan that
has been replaced by the Master Servicer with a Substitute Mortgage Loan
pursuant to Section 2.04 during the month of such Distribution Date and the
Arrearage of such substitute Mortgage Loan; and
(vi) one-twelfth of the product of (x) the Unpaid Principal Balance of
the Mortgage Loans as of the first day of the month preceding the month of the
distribution Date and (y) the Accelerated Arrearage Percentage.
Class PO Cash Shortfall: With respect to a Distribution Date, the
difference between the Class PO Principal Distribution Amount for such
Distribution Date and the actual amount distributed to holders of the Class PO
Certificates on such Distribution Date in the instance where Available Funds are
insufficient to make the full amount of the distribution required to be made to
holders of the Class PO Certificates.
Class PO Deferred Amount: With respect to each Distribution Date
through the Cross-Over Date, the aggregate of all amounts allocable on such
Distribution Date to the Class PO Certificates in respect of the principal
portion of Realized Losses (other than Excess Losses) and Class PO Cash
Shortfall and all amounts previously allocated in respect of such losses and
Class PO Cash Shortfall to the Class PO Certificates and not distributed on
prior Distribution Dates.
Class PO Deferred Payment Writedown Amount: With respect to any
Distribution Date, the amount if any, distributed on such date in respect of the
Class PO Deferred Amount pursuant to Section 6.01(a)(iv).
Class PO Principal Distribution Amount: With respect to each
Distribution Date, an amount, without duplication, equal to the sum of:
(i) the applicable PO Percentage of all Modified Scheduled
Payments allocated to the Unpaid Principal Balance due on each Discount
Mortgage Loan on the first day of the month in which the Distribution
Date occurs, as specified in the amortization schedule at the time
applicable thereto (after adjustment for previous principal prepayments
and the principal portion of Debt Service Reductions after the
Bankruptcy Coverage Termination Date, but before any adjustment to such
amortization schedule by reason of any other bankruptcy or similar
proceeding or any moratorium or similar waiver or grace period);
(ii) the applicable PO Percentage of the Unpaid Principal
Balance of each Discount Mortgage Loan which was the subject of a
Voluntary Principal Prepayment in full received by the Master Servicer
during the applicable Prepayment Period;
(iii) the applicable PO Percentage of all Voluntary
Principal Prepayments in part for each Mortgage Loan which no
longer has an Arrearage received during the applicable
Prepayment Period;
(iv) the lesser of (a) the applicable PO Percentage of the net
liquidation proceeds allocable to principal on each Discount Mortgage
Loan which became a Liquidated Mortgage Loan during the related
Prepayment Period, and (b) the applicable PO Percentage of the Unpaid
Principal Balance of each Discount Mortgage Loan which became a
Liquidated Mortgage Loan during the related Prepayment Period less, in
the case of clause (b), the applicable PO Percentage of the principal
portion of Excess Losses (other than Debt Service Reductions) incurred
during the related Prepayment Period; and
(v) the applicable PO Percentage of the sum of (a) the
Unpaid Principal Balance of each Discount Mortgage Loan which
was repurchased by the Master Servicer on such Distribution Date
pursuant to Section 2.,02, 2.03(d) or 3.19 and (b) the excess, if any,
of the Principal Balance of a Discount Mortgage Loan that has been
replaced by the Master Servicer with a Substitute Discount Mortgage
Loan pursuant to Section 2.04 on such Distribution Date over the PO
Percentage of the Unpaid Principal Balance of such Substitute Discount
Mortgage Loan.
Class 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, plus the
Overcollateralization Amount and the denominator of which is the Legal Balance
of all of the Mortgage Loans as of the Due Date in the month next preceding such
Distribution Date less 2.75% of the remaining Arrearages, equals or exceeds such
percentage calculated as of the Closing Date.
Closing Date: December 30, 1996.
Code: The Internal Revenue Code of 1986, as amended.
Compensating Interest Payments: As defined in Section 6.09.
Contingent Servicing Fee: With respect to any Distribution Date, 2.75%
of all Arrearages collected during the related Due Period.
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:
BSMSI/EMC 1996-6.
Corresponding Class: As indicated in Section 5.01(c).
Credit Enhancement Payment Amount: With respect to each Distribution
Date, an amount equal to one-twelfth of the product of the Credit Enhancement
Percentage and the Unpaid Principal Balance of the Mortgage Loans as of the
first day of the month preceding the month of the Distribution Date.
Credit Enhancement Percentage : 1.00% per annum.
Credit Support Fee: The annual fee payable to the Letter of Credit
Issuer, as set forth on a schedule to be delivered by the Manager to the Trustee
on the Closing Date.
Credit Support Fee Account: The account created and maintained
pursuant to Section 4.05.
Cross-Over Date: The first Distribution Date on which the aggregate
Current Principal Amount of the Subordinate Certificates has been reduced to
zero (giving effect to all distributions on such Distribution Date).
Current Principal Amount: With respect to any Certificate (other than
a Class X-1 and Class X-2 Certificate) as of any Distribution Date, the initial
principal amount of such Certificate reduced by (A) the sum of (i) all amounts
distributed on previous Distribution Dates on such Certificate with respect to
principal, (ii) the principal portion of all Realized Losses allocated prior to
such Distribution Date to such Certificate, taking account of the Loss
Allocation Limitation and the A-WAC Loss Allocation Limitation, and (iii) in the
case of a Subordinate Certificate, such Certificate's pro rata share, if any, of
the Subordinate Certificate Writedown Amount, the Class PO Deferred Payment
Writedown Amount and the Class A-WAC Deferred Payment Writedown Amount for
previous Distribution Dates. With respect to any Class of Certificates (other
than the Class X-1 and Class X-2 Certificates), the Current Principal Amount
thereof will equal the sum of the Current Principal Amounts of all Certificates
in such Class. Notwithstanding the foregoing, solely for purposes of giving
consents, directions, waivers, approvals, requests and notices, the Class R-1
and Class R-2 Certificates after the Distribution Date on which they receive the
distribution of the last dollar of their original principal amount shall be
deemed to have a Current Principal Amount equal to their Current Principal
Amount on the day immediately preceding such Distribution Date.
Custody Account: A trust account created and maintained pursuant to
Section 4.04.
Cut-Off Date: December 1, 1996, with respect to the Unpaid Principal
Balance of the Mortgage Loans and November 30, 1996 with respect to the
Arrearage.
Cut-Off Date Arrearage: $21,052,704.
Cut-Off Date Unpaid Principal Balance: $100,144,473.
DCR: Duff & Phelps Credit Rating Co., or its successors in interest.
Debt Service Reduction: Any reduction of the Original 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
Original Scheduled Payments.
Deficient Valuation: With respect to any Mortgage Loan, a valuation of
the Mortgaged Property by a court of competent jurisdiction in an amount less
than the then outstanding indebtedness under the Mortgage Loan, which valuation
results from a proceeding initiated under the Bankruptcy Code or any other
similar state law or other proceeding.
Definitive Certificates: The meaning specified in Subsection 5.01(b)
hereof.
Depository: The Depository Trust Company, the nominee of which is Cede
& Co., or any successor thereto.
Depository Agreement: The meaning specified in Subsection 5.01(a)
hereof.
Depository Participant: A broker, dealer, bank or other financial
institution or other Person for whom from time to time the Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Designated Depository Institution: A depository institution
(commercial bank, mutual savings bank or savings and loan association) or trust
company (which may include the Trustee), the deposits of which are fully insured
by the FDIC to the extent provided by law.
Determination Date: The 18th day of the month of the Distribution
Date, or if such day is not a Business Day, the preceding Business Day.
Discount Mortgage Loan: Any Mortgage Loan with a Net Rate less than
8.00% per annum.
Distribution Date: The 25th day of any month, beginning in the month
immediately following the month of the initial issuance of the Certificates, or,
if such 25th day is not a Business Day, the Business Day immediately following.
Double Prime Classes: Class A-1", Class A-2", Class A- 3", Class A-4",
Class A-5", Class B-1", Class B-2", Class B-3", Class B-4", Class B-5" and Class
B-6" Certificates.
DTC Custodian: State Street Bank and Trust Company, or its successors
in interest.
Due Date: With respect to each Mortgage Loan, the first day of each
month, on which its Original Scheduled Payment is due.
Due Period: With respect to any Distribution Date, the period
commencing on the second day of the month preceding the month in which the
Distribution Date occurs and ending at the close of business on the first day of
the month in which the Distribution Date occurs.
EMC: EMC Mortgage Corporation, a Delaware corporation, or its
successors in interest.
ERISA: Employee Retirement Income Security Act of 1974, as amended.
Event of Default: An event described in Section 8.01.
Excess Bankruptcy Loss: Any Bankruptcy Loss, or portion thereof, (i)
occurring after the Bankruptcy Coverage Termination Date or (ii) if on such
date, in excess of the then-applicable Bankruptcy Loss Amount.
Excess Fraud Loss: Any Fraud Loss, or portion thereof, (i) occurring
after the Fraud Coverage Termination Date or (ii) if on such date, in excess of
the then-applicable Fraud Loss Amount.
Excess Liquidation Proceeds: To the extent that such amount is not
required by law to be paid to the related Mortgagor, the amount, if any, by
which Liquidation Proceeds with respect to a Liquidated Mortgage Loan exceed the
sum of (i) the Legal Balance of such Mortgage Loan and accrued but unpaid
interest on the Unpaid Principal Balance of such Mortgage Loan at the related
Mortgage Interest Rate through the last day of the month in which the related
Liquidation Date occurs, plus (ii) related Liquidation Expenses.
Excess Losses: The sum of any Excess Bankruptcy Losses, Excess Fraud
Losses and Excess Special Fraud Losses.
Excess Special Hazard Loss: Any Special Hazard Loss, or portion
thereof, (i) occurring after the Special Hazard Termination Date or (ii) if on
such date, in excess of the then-applicable Special Hazard Loss Amount.
FDIC: Federal Deposit Insurance Corporation or any successor thereto.
FHLMC: Federal Home Loan Mortgage Corporation or any successor
thereto.
FNMA: Federal National Mortgage Association or any successor thereto.
Forebearance Plan: The annual payment plan pursuant to which a
Mortgagor of a Mortgage Loan with a Arrearage is obligated to pay interest,
principal, the related Arrearage to the extent agreed to by EMC and certain
other amounts in satisfaction of the related Mortgage Loan.
Fractional Undivided Interest: With respect to any Class of
Certificates other than the Class X-1 and Class X-2 Certificates and the portion
of the Class A-WAC Certificates relating to their Notional Amount, the
fractional undivided interest evidenced by any Certificate of such Class, the
numerator of which is the Current Principal Amount of such Certificate and the
denominator of which is the Current Principal Amount of such Class. With respect
to the Class X-1 Certificates and the portion of the Class A-WAC Certificates
relating to their Notional Amount, the fractional undivided interest evidenced
by any Certificate of such Class, the numerator of which is the Notional Amount
of such Certificate and the denominator of which is the Notional Amount of such
Class. With respect to the Class X-2 Certificates, the numerator of which is the
percentage interest of such Certificate and the denominator is 100%. With
respect to the Certificates in the aggregate, the fractional undivided interest
evidenced by (i) a Class X-1 or Class X-2 Certificate will be deemed to equal 1%
multiplied by a fraction, the numerator of which in the case of the Class X-1
Certificates is the Notional Amount of such Certificate and the denominator of
which is the Notional Amount of such Class and in the case of the Class X-2
Certificates the numerator of which is the percentage interest of such
Certificate and the denominator is 100%, (ii) a Class R-1 or Class R-2
Certificate will be deemed to equal 1% multiplied by a fraction the numerator of
which is the Current Principal Amount of such Certificate and the denominator of
which is the aggregate Current Principal Amount of such Classes and (iii) a
Certificate of any other Class will be deemed to equal 97% (plus an additional
2% if and when the Class X-1 and Class X-2 Certificates have been paid in full
prior to the date of determination) multiplied by a fraction, the numerator of
which is the Current Principal Amount of such Certificate and the denominator of
which is the Current Principal Amount of all the Certificates.
Fraud Coverage Termination Date: The Distribution Date upon which the
related Fraud Loss Amount has been reduced to zero or a negative number (or the
Cross-Over Date, if earlier).
Fraud Loss: Any Realized Loss attributable to fraud in the origination
of the related Mortgage Loan.
Fraud Loss Amount: As of any Distribution Date after the Cut-Off Date,
(x) prior to the first anniversary of the Cut-Off Date, an amount equal to
$2,423,944 minus the aggregate amount of Fraud Losses that would have been
allocated to the Subordinate Certificates in accordance with Section 6.03 in the
absence of the Loss Allocation Limitation and A-WAC Loss Allocation Limitation
since the Cut-Off Date, and (y) from the first through the fifth anniversary of
the Cut-Off Date, an amount equal to (1) the lesser of (a) the Fraud Loss Amount
as of the most recent anniversary of the Cut-Off Date and (b) 1.00% of the
aggregate Legal Balance of all of the Mortgage Loans as of the most recent
anniversary of the Cut-Off Date minus (2) the Fraud Losses that would have been
allocated to the Subordinate Certificates in accordance with Section 6.03 in the
absence of the Loss Allocation Limitation and A-WAC Loss Allocation Limitation
since the most recent anniversary of the Cut-Off Date. After the fifth
anniversary of the Cut-Off Date the Fraud Loss Amount shall be zero.
Funds Transfer Date: The 21st day of the month of the Distribution
Date, or if such day is not a Business Day, the preceding Business Day (but in
no event less than two Business Days prior to the related Distribution Date).
Guarantor: The Bear Stearns Companies Inc.
Guaranty: The guaranty of the fees payable to the Letter of Credit
Issuer which may be delivered by the Guarantor in accordance with Section 4.05.
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 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.
HUD: The United States Department of Housing and Urban Development and
any successor thereto.
Indemnified Persons: The Trustee, its officers, directors, agents and
employees and any separate co-trustee and officers, directors, agents and
employees.
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.
Institutional Accredited Investor: Any Person meeting the requirements
of Rule 501 (a)(1), (2), (3) or (7) of Regulation D under the Securities Act or
any entity all the equity holders in which come within such paragraphs.
Insurance Policy: With respect to any Mortgage Loan, any standard
hazard insurance policy, flood insurance policy or title insurance policy.
Insurance Proceeds: Amounts paid by the insurer under any Insurance
Policy covering any Mortgage Loan or Mortgaged Property other than amounts
required to be paid over to the Mortgagor pursuant to law or the related
Mortgage Note or Security Instrument and other than amounts used to repair or
restore the Mortgaged Property or to reimburse Insured Expenses.
Insured Expenses: Expenses covered by any Insurance Policy.
Insurer: Any issuer of an Insurance Policy.
Interest Accrual Period: With respect to each Distribution Date, for
each Class of REMIC II, REMIC III and REMIC IV Certificates and each Class of
Certificates, the calendar month preceding the month in which the Distribution
Date occurs, commencing in December 1996.
Interest Shortfall: With respect to any Distribution Date and each
Mortgage Loan that during the related Prepayment Period was the subject of a
Voluntary Principal Prepayment, or constitutes a Relief Act Mortgage Loan, an
amount determined as follows:
(a) partial principal prepayments: one month's
interest at the applicable Net Rate on the amount of
such prepayment;
(b) principal prepayments in full: the difference
between (i) one month's interest at the applicable Net
Rate on the Unpaid 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 Unpaid 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 Unpaid 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, Class B-6 and Class
X-2 Certificates in connection with such purchase, substantially in the form set
forth as Exhibit F-1 hereto.
Legal Balance: With respect to any Mortgage Loan on any Distribution
Date, the sum of (i) the Unpaid Principal Balance thereof plus (ii) the related
Arrearage.
Letter of Credit: The irrevocable standby Letter of Credit issued by a
Qualified Letter of Credit Issuer in favor of the Trustee, described in Section
6.02 and in substantially the form set forth as Exhibit J hereto.
Letter of Credit Issuer: The issuer of a Letter of Credit and its
successors and assigns.
Letter of Credit Payment: Any payment to the Trustee pursuant to a
draw under a Letter of Credit.
Letter of Credit Replacement Account: The meaning specified in Section
6.02 hereof.
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 or a Sub-servicer, if any,
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 Legal Balance of the related Mortgage Loan and the
denominator of which is the Value of the related Mortgaged Property.
Loss Allocation Limitation: The meaning specified in Section 6.03(d)
hereof.
Lost Notes: The original Mortgage Notes that are reported by the
Depositor as being lost, as indicated on Exhibit K hereto.
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 Unpaid Principal Balance of such
Mortgage Loan as of the Due Date in the preceding calendar month and (ii) the
Master Servicing Fee Rate; provided that if EMC has been replaced as Master
Servicer, the Master Servicing Fee may include some or all of the Contingent
Servicing Fee as may be agreed to by the Trustee and/or any successor Master
Servicer.
Master Servicing Fee Rate: With respect to each Mortgage Loan, the per
annum rate of 0.50%.
Modified Scheduled Payment: With respect to any Mortgage Loan, the
scheduled monthly payment of principal, interest and Arrearage on such Mortgage
Loan which is payable by the related Mortgagor from time to time under the
related Mortgage Note as modified by any payment plan agreement, determined: (a)
after giving effect to (i) any Deficient Valuation and/or Debt Service Reduction
with respect to such Mortgage Loan and (ii) any reduction in the amount of
interest collectible from the related Mortgagor pursuant to the Relief Act; (b)
without giving effect to any extension granted or agreed to by the Master
Servicer pursuant to Section 3.06; and (c) on the assumption that all other
amounts, if any, due under such Mortgage Loan are paid when due.
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.
Moody's: Moody's Investors Service, Inc. and its successors in
interest.
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 the Unpaid Principal Balance of any Mortgage Loan pursuant to
the related Mortgage Note, which rate is equal to the "Mortgage Interest Rate"
set forth with respect thereto on the Mortgage Loan Schedule.
Mortgage Loan: A mortgage loan transferred and assigned to the Trustee
pursuant to Section 2.01 or Section 2.04 and held as a part of the Trust Fund,
as identified in the Mortgage Loan Schedule, including a mortgage loan the
property securing which has become an REO Property.
Mortgage Loan Schedule: The schedule, attached hereto as Exhibit B
with respect to the Mortgage Loans and as amended from time to time to reflect
the repurchase or substitution of Mortgage Loans pursuant to this Agreement.
Mortgage Note: The originally executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under the related
Mortgage Loan.
Mortgaged Property: Land and improvements securing the indebtedness of
a Mortgagor under the related Mortgage Loan or, in the case of REO Property,
such REO Property.
Mortgagor: The obligor on a Mortgage Note.
Net Interest Shortfall: With respect to any Distribution Date, the
Interest Shortfall, if any, for such Distribution Date net of Compensating
Interest Payments made with respect to such Distribution Date.
Net Liquidation Proceeds: As to any Liquidated Mortgage Loan,
Liquidation Proceeds net of (i) Liquidation Expenses which are payable therefrom
to the Master Servicer in accordance with this Agreement and (ii) unreimbursed
advances by the Master Servicer or a Sub-Servicer and Monthly Advances including
Certificate Account Advances.
Net Rate: With respect to each Mortgage Loan, the Mortgage Interest
Rate in effect from time to time less the sum of the Master Servicing Fee Rate
and the Trustee's Fee (expressed as a per annum rate), each such fee being
expressed as a per annum rate.
Non-Discount Mortgage Loan: Any Mortgage Loan with a Net Rate equal to
or greater than 8.00%.
Non-PO Percentage: (i) with respect to any Discount Mortgage Loan, the
Net Rate thereof divided by 8.00%, and (ii) with respect to any Non-Discount
Mortgage Loan, 100%.
Non-PO Realized Losses: With respect to any Distribution Date, the sum
of the A-WAC Realized Losses and the P&I Realized Losses.
Nonrecoverable Advance: Any advance (i) which was previously made or
is proposed to be made by the Master Servicer and (ii) which, in the good faith
judgment of the Master Servicer, will not or, in the case of a proposed advance,
would not, be ultimately recoverable by the Master Servicer from Liquidation
Proceeds, Insurance Proceeds or future payments on any Mortgage Loan.
Notional Amount: On any Distribution Date, with respect to the Class
A-WAC and Class X-1 Certificates, an amount equal to the Unpaid Principal
Balances of the Mortgage Loans as of the Due Date in the month prior to the
month of the Distribution Date.
Officer's Certificate: A certificate signed by the Chairman of the
Board, the Vice Chairman of the Board, the President or a Vice President or
Assistant Vice President of the Master Servicer and delivered to the Trustee, as
required by this Agreement.
Opinion of Counsel: A written opinion of counsel who is or are
acceptable to the Trustee and who, unless required to be Independent (an
"Opinion of Independent Counsel"), may be internal counsel for the Master
Servicer.
Original Scheduled Payment: With respect to any Mortgage Loan and any
month, the original 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, as determined
pursuant to the amortization schedule created in connection with origination of
the related Mortgage Note.
Original Subordinate Principal Balance: The sum of the aggregate
Current Principal Amounts of each Class of Subordinate Certificates as of the
Cut-Off Date.
Outstanding Balance: As of the time of any determination, the
principal balance of a Mortgage Loan plus the related Arrearage remaining to be
paid by the Mortgagor, or, in the case of an REO Property, the principal balance
of the related Mortgage Loan plus the related Arrearage remaining to be paid by
the Mortgagor at the time such property was acquired by the Trust Fund.
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.
Overcollateralization Amount: As of any date of determination, the
amount by which the aggregate Unpaid Principal Balance of the Mortgage Loans
exceeds the aggregate Current Principal Amount of the outstanding Certificates
(other than the Class A-WAC Certificates).
Overcollateralization Limit: $2,231,423
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(d). Any monthly calculation of interest at a stated rate shall be based
upon annual interest at such rate divided by twelve.
P&I Certificates: The Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5, Class R-1, Class R-2, Class B-1, Class B-2, Class B-3, Class B-4,
Class B-5 and B-Class 6 Certificates.
P&I Realized Losses: For any Distribution Date with respect to those
Mortgage Loans which became Liquidated Mortgage Loans during a Prepayment
Period, the portion of Realized Losses allocable to the P&I Certificates
pursuant to Section 6.03(a) and (b).
P&I Liquidation Proceeds: For any Distribution Date with respect to
those Mortgage Loans which became Liquidated Mortgage Loans during a Prepayment
Period, the portion of Net Liquidation Proceeds allocable to the P&I
Certificates pursuant to Section 6.04.
Permitted Investments: Any one or more of the following obligations or
securities:
(i) direct obligations of, and obligations fully
guaranteed by the United States of America or any agency
or instrumentality of the United States of America the
obligations of which are backed by the full faith and
credit of the United States of America;
(ii) (a) demand or time deposits, federal funds or
bankers' acceptances issued by any depository
institution or trust company incorporated under the laws of
the United States of America or any state thereof (including
the Trustee acting in its commercial banking capacity) and
subject to supervision and examination by federal and/or state
banking authorities, provided that the commercial paper and/or
the short-term deposit rating and/or the long-term unsecured
debt obligations or deposits of such depository institution or
trust company at the time of such investment or contractual
commitment providing for such investment have the Applicable
Credit Rating or better from each Rating Agency and (b) any
other demand or time deposit or certificate of deposit that is
fully insured by the Federal Deposit Insurance Corporation;
(iii) repurchase obligations with respect to (a) any
security described in clause (i) above or (b) any other
security issued or guaranteed by an agency or instrumentality
of the United States of America, the obligations of which are
backed by the full faith and credit of the United States of
America, in either case entered into with a depository
institution or trust company (acting as principal) described
in clause (ii)(a) above where the Trustee holds the security
therefor;
(iv) securities bearing interest or sold at a
discount issued by any corporation (including the Trustee)
incorporated under the laws of the United States of America or
any state thereof that have the Applicable Credit Rating or
better from each Rating Agency at the time of such investment
or contractual commitment providing for such investment;
provided, however, that securities issued by any particular
corporation will not be Permitted Investments to the extent
that investments therein will cause the then outstanding
principal amount of securities issued by such corporation and
held as part of the Trust to exceed 10% of the aggregate
Outstanding Principal Balances and amounts of all the Mortgage
Loans and Permitted Investments held as part of the Trust;
(v) commercial paper (including both noninterest-
bearing discount obligations and interest-bearing obligations
payable on demand or on a specified date not
more than one year after the date of issuance thereof) having
the Applicable Credit Rating or better from each Rating Agency
at the time of such investment;
(vi) a Reinvestment Agreement issued by any bank,
insurance company or other corporation or entity;
(vii) any other demand, money market or time deposit,
obligation, security or investment as may be acceptable to
each Rating Agency; and
(viii) any money market funds the collateral of which
consists of obligations fully guaranteed by the United States
of America or any agency or instrumentality of the United
States of America the obligations of which are backed by the
full faith and credit of the United States of America (which
may include repurchase obligations secured by collateral
described in clause (i)) and having the Applicable Credit
Rating or better from each Rating Agency which rates the
applicable fund, and any Rating Agency which does not rate
such fund gives its prior written consent;
provided, however, that no instrument or security shall be a Permitted
Investment if such instrument or security evidences a right to receive only
interest payments with respect to the obligations underlying such instrument or
if such security provides for payment of both principal and interest with a
yield to maturity in excess of 120% of the yield to maturity at par.
Person: Any individual, corporation, partnership, joint venture,
association, limited liability company, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
Physical Certificates: The Class X-2, Class R-1, Class R-2, Class B-4,
Class B-5 and Class B-6 Certificates.
Plan: An employee benefit plan subject to Title I of ERISA or other
retirement arrangement not subject to ERISA, but which is subject to Section
4975 of the Code (such as an individual retirement account or Keogh plan
covering only a sole proprietor, or partners), or any entity whose underlying
assets include plan assets by reason of such plan, arrangement or account
investing in such entity, including an insurance company general account.
PO Percentage: (i) With respect to any Discount Mortgage Loan, the
fraction, expressed as a percentage, equal to 8.00% minus the Net Rate thereof
divided by 8.00%, and (ii) with respect to any Non-Discount Mortgage Loan, 0%.
Prepayment Period: With respect to any Distribution Date, the calendar
month preceding the month of the Distribution Date.
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, Class B-6 or Class X-2
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.
Qualified Letter of Credit Issuer: Republic National Bank of New York,
and any issuer of a Letter of Credit that would not cause the Rating Agencies,
at the time of issuance by such issuer of a Letter of Credit, to withdraw or
downgrade the then current ratings of the Certificates; provided that any such
entity will not remain a Qualified Letter of Credit Issuer if subsequent to
issuance of such Letter of Credit, (i) DCR downgrades its rating of such Letter
of Credit Issuer's short term securities below D-1+, or (ii) if Moody's rates
such entity's short term securities, such rating is below [P-1+], unless DCR or
Moody's, as the case may be, otherwise consents in writing that such entity
shall remain a Qualified Letter of Credit Issuer after such downgrading or
rating.
Quick Sale Value: With respect to a Mortgaged Property, the related
BPO, or if the BPO provides a range of values, the lowest value provided.
Rating Agencies: Moody's and DCR.
Rating Agency Eligible Account: An account, including one maintained
with the Trustee, which either (i) is a trust account maintained with the trust
department of a depository institution or trust company organized under the laws
of the United States of America or any one of the states thereof or the District
of Columbia or (ii) is maintained with an entity which is an institution whose
deposits are insured by the FDIC, the unsecured and uncollateralized long-term
debt obligations of which shall be rated "A" or better by Moody's and DCR, or
one of the two highest short-term ratings by Moody's and DCR, 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 Legal Balance of such Liquidated Mortgage Loan
plus accrued and unpaid interest on the Unpaid Principal Balance thereof 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 I Corresponding Class: Each Class of REMIC II
Certificates, REMIC III Certificates and REMIC IV Certificates will have the
following REMIC I Corresponding Class:
REMIC I
CLASS OF CERTIFICATES CORRESPONDING CLASS
IV-A-1, IV-A-1', IV-A-1", III A-1 and II-A-1 A-1
IV-A-1, IV-A-2', IV-A-2", III-A-2 and II-A-2 A-2
IV-A-1, IV-A-3', IV-A-3", III-A-3 and II-A-3 A-3
IV-A-1, IV-A-4', IV-A-4", III-A-4 and II-A-4 A-4
IV-A-1, IV-A-5', IV-A-5", III-A-5 and II-A-5 A-5
IV-A-1, IV-B-1', IV-B-1", III-B-1 and II-B-1 B-1
IV-A-1, IV-B-2', IV-B-2", III-B-2 and II-B-2 B-2
IV-A-1, IV-B-2', IV-B-2", III-B-2 and II-B-3 B-3
IV-A-1, IV-B-4', IV-B-4", III-B-4 and II-B-4 B-4
IV-A-1, IV-B-5', IV-B-5", III-B-5 and II-B-5 B-5
IV-A-1, IV-B-6', IV-B-6", III-B-6 and II-B-6 B-6
IV-PO, III-PO and II-PO PO
IV-PO-X2, III-PO-X2 and II-PO-X2 X-2
II-X-I X-1
REMIC II: That group of assets contained in the Trust Fund designated
as a REMIC consisting of the REMIC III Regular Certificates.
REMIC III: That group of assets contained in the Trust Fund designated
as a REMIC consisting of the REMIC IV Regular Certificates.
REMIC IV: 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 IV.
REMIC II Certificates: The REMIC II Regular Certificates and the Class
RR-2 Certificates which are initially represented by the Class R-2 Certificates.
REMIC II Regular Certificates: As defined in Section 5.01.
REMIC III Certificates: The REMIC III Regular Certificates and the
Class R-3 Certificates which are initially represented by the Class R-2
Certificates.
REMIC III Regular Certificates: As defined in Section 5.01.
REMIC IV Certificates: The REMIC IV Regular Certificates and the Class
R-4 Certificates which are initially represented by the Class R-2 Certificates.
REMIC IV 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 any of REMIC I, REMIC II, REMIC III or REMIC IV to fail to qualify as a
REMIC while any regular interest in REMIC I, REMIC II, REMIC III or REMIC IV 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.
Reporting Date: The 18th day of each month or if not a Business Day,
the next succeeding Business Day.
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 Legal 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 Legal Balance at the date of the
acquisition) plus (ii) accrued but unpaid interest on the Unpaid Principal
Balance at the related Mortgage Interest Rate, through and including the last
day of the month of repurchase reduced by (iii) 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 Certificate and the Class R-2
Certificate (which represents the Class RR-2, Class R-3 and Class R-4
Certificates) and if the Class R-2 Certificates are divided as provided in
Section 5.01(m), then the Class R-1, Class RR-2, Class R-3 and Class R-4
Certificates.
Responsible Officer: Any officer assigned to the corporate trust
department or similar department of the Trustee (or any successor division or
department thereto), and also, with respect to a particular matter, any other
officer to whom such matter is referred because of such officer's knowledge of
and familiarity with the particular subject.
Rule 144A Certificate: The certificate to be furnished by each
purchaser of a Private Certificate which is a Qualified Institutional Buyer as
defined under Rule 144A promulgated under the Securities Act, substantially in
the form set forth as Exhibit F-2 hereto.
Scheduled Principal: The principal portion of any Original Scheduled
Payment.
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 "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 OR ANY ENTITY IN WHICH ALL THE EQUITY HOLDERS
COME WITHIN SUCH PARAGRAPHS 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 SUCH OTHER
EVIDENCE ACCEPTABLE TO THE TRUSTEE THAT SUCH REOFFER, RESALE, PLEDGE OR TRANSFER
IS IN COMPLIANCE WITH THE ACT. THIS CERTIFICATE MAY NOT BE ACQUIRED FOR, OR ON
BEHALF OF, AN EMPLOYEE BENEFIT PLAN SUBJECT TO TITLE I OF ERISA OR OTHER
RETIREMENT ARRANGEMENT NOT SUBJECT TO ERISA, BUT WHICH IS SUBJECT TO SECTION
4975 OF THE CODE (SUCH AS AN INDIVIDUAL RETIREMENT ACCOUNT OR KEOGH PLAN
COVERING ONLY A SOLE PROPRIETOR, OR PARTNERS), OR ANY ENTITY WHOSE UNDERLYING
ASSETS INCLUDE PLAN ASSETS BY REASON OF SUCH PLAN, ARRANGEMENT OR ACCOUNT
INVESTING IN SUCH ENTITY, INCLUDING AN INSURANCE COMPANY GENERAL ACCOUNT
(COLLECTIVELY, "PLAN(S)") UNLESS THE PROPOSED TRANSFEREE PROVIDES A BENEFIT PLAN
OPINION TO THE TRUSTEE."
Security Instrument: A written instrument creating a valid first lien
on a Mortgaged Property securing a Mortgage Note, which may be any applicable
form of mortgage, deed of trust, deed to secure debt or security deed, including
any riders or addenda thereto.
Seller: Bear Stearns Mortgage Securities Inc., a Delaware corporation,
or its successors in interest.
Seller Contract: The Mortgage Loan Purchase Agreement dated as of
December 23, 1996, between EMC, as seller, and Bear Stearns Mortgage Securities
Inc., as purchaser, and all amendments thereof and supplements thereto.
Senior Certificates: The Class A-1, Class A-2, Class A- 3, Class A-4,
Class A-5, Class A-WAC, Class PO, Class X-1, Class R- 1 and Class R-2
Certificates.
Senior P&I Optimal Principal Amount: As to any Distribution Date, an
amount equal to the sum, without duplication, of:
(i) the Senior Percentage of the applicable Non-PO
Percentage of all Modified Scheduled Payments allocated to
Unpaid Principal Balance due on the related Due Date on each
Outstanding Mortgage Loan as of such Due Date
as specified in the amortization schedule at the time
applicable thereto (after adjustments for previous Principal
Prepayments and the principal portion of Debt Service
Reductions subsequent to the Bankruptcy Coverage
Termination Date but before any adjustment to such
amortization schedule by reason of any bankruptcy (except as
aforesaid) or similar proceeding or any moratorium or similar
waiver or grace period);
(ii) with respect to each Mortgage Loan which did not have
an Arrearage or as to which the Arrearage has theretofore been
paid in full, the Senior Prepayment Percentage of the
applicable Non-PO Percentage of all Voluntary Principal
Prepayments in part received during the related Prepayment
Period, together with the Senior Prepayment Percentage of the
applicable Non-PO Percentage of the Unpaid Principal Balance
of each Mortgage Loan which was the subject of a Voluntary
Principal Prepayment in full during the related Prepayment
Period and with respect to each Mortgage Loan which had an
Arrearage outstanding during the applicable Prepayment Period,
the Senior Prepayment Percentage of the applicable Non-PO
Percentage of the excess, if any, of (i) all Voluntary
Principal Prepayments in part received during the applicable
Prepayment Period over (ii) the portion thereof required to
reduce the Arrearage to zero;
(iii) the lesser of (x) the Senior Prepayment Percentage of
the P&I Liquidation Proceeds received in respect of the
Mortgage Loans that became Liquidated Mortgage Loans during
the related Prepayment Period and (y) the Senior Percentage of
the applicable Non-PO Percentage of the aggregate Unpaid
Principal Balance of the Mortgage Loans that became Liquidated
Mortgage Loans during the related Prepayment Period as reduced
in the case of clause (y) by the Senior Percentage of the P&I
Realized Losses attributable to Excess Bankruptcy Losses
(other than those attributable to Debt Service
Reductions), Excess Fraud Losses and Excess Special
Hazard Losses;
(iv) the Senior Prepayment Percentage of the applicable
Non-PO Percentage of the Unpaid Principal Balance of each
Mortgage Loan which was purchased on such Distribution Date
pursuant to Section 2.02, 2.03(d) or 3.19; and
(v) the Senior Prepayment Percentage of the
applicable Non-PO Percentage of the excess, if any, of
the Unpaid Principal Balance of a Mortgage Loan that has
been replaced by the Master Servicer with a Substitute
Mortgage Loan pursuant to Section 2.04 on such Distribution
Date over the Unpaid Principal Balance of such Substitute
Mortgage Loan.
Senior P&I Certificates: The Class A-1, Class A-2, Class A-3, Class
A-4, Class and Class A-5 Certificates.
Senior Percentage: On any Distribution Date, the lesser of (i) 100%
and (ii) the percentage obtained by dividing the aggregate Current Principal
Amounts of all the Senior P&I Certificates immediately preceding such
Distribution Date by the aggregate Current Principal Amounts of all the P&I
Certificates immediately preceding such Distribution Date.
Senior Prepayment Percentage: On any Distribution Date occurring
during the periods set forth below, as follows:
Period (dates inclusive) Senior Prepayment Percentage
- --------------------------- ----------------------------------
January 25, 1997 - December 25, 2001 100%
January 25, 2002 - December 25, 2001 Applicable Senior
Percentage plus 70% of
the applicable
Subordinate Percentage
January 25, 2003 - December 25, 2003 Applicable Senior
Percentage plus 60% of
the applicable
Subordinate Percentage
January 25, 2004 - December 25, 2004 Applicable Senior
Percentage plus 40% of
the applicable
Subordinate Percentage
January 25, 2005 - December 25, 2005 Applicable Senior
Percentage plus 20% of
the applicable
Subordinate Percentage
January 25, 2006 and thereafter Applicable Senior
Percentage
Notwithstanding the foregoing, if on any Distribution Date the Senior
Percentage exceeds the Senior Percentage as of the Cut-Off Date, the Senior
Prepayment Percentage for such Distribution Date will equal 100%. On the
Distribution Date after which the Current Principal Amounts of the Senior P&I
Certificates is zero, the Senior Prepayment Percentage shall be the minimum
percentage sufficient to effect such reduction.
In addition, notwithstanding the foregoing, no reduction of the Senior
Prepayment Percentage shall occur on any Distribution Date unless, as of the
last day of the month preceding such Distribution Date:
(i) the aggregate Legal Balance of Mortgage Loans delinquent (as
calculated by EMC without regard to the timing of receipt of payments
or the payment history of such Mortgage Loans prior to January 1996) 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 sum of the aggregate
Current Principal Amount of the Subordinate Certificates plus the
Overcollateralization Amount averaged over the last six months, does
not exceed 50% and (ii) cumulative Realized Losses do not exceed (a)
30% of the Original Subordinate Principal Balance if such Distribution
Date occurs between and including January 2002 and December 2002, (b)
35% of the related Original Subordinate Principal Balance if such
Distribution Date occurs between and including January 2003 and
December 2003, (c) 40% of the related Original Subordinate Principal
Balance if such Distribution Date occurs between and including January
2004 and December 2004, (d) 45% of the related Original Subordinate
Principal Balance if such Distribution Date occurs between and
including January 2005 and December 2005, and (e) 50% of the related
Original Subordinate Principal Balance if such Distribution Date occurs
during or after January 2006.
Separate Carryovers: As defined in Section 5.01(c).
Servicing Account: A separate trust account created and maintained by
the Master Servicer or a 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 or a
Sub-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.
Single Prime Classes: Class A-1', Class A-2', Class A- 3', Class A-4',
Class A-5', Class B-1', Class B-2', Class B-3', Class B-4', Class B-5' and Class
B-6' Certificates.
Special Hazard Loss: (i) A Realized Loss suffered by a Mortgaged
Property on account of direct physical loss, exclusive of (a) any loss covered
by a hazard policy or a flood insurance policy required to be maintained in
respect of such Mortgaged Property under Section 3.10 and (b) any loss caused by
or resulting from:
(1) normal wear and tear;
(2) conversion or other dishonest act on the part of
the Trustee, the Master Servicer or any of their
agents or employees; or
(3) errors in design, faulty workmanship or faulty
materials, unless the collapse of the property or a
part thereof ensues;
or (ii) any Realized Loss suffered by the Trust Fund arising from or
related to the presence or suspected presence of hazardous wastes or hazardous
substances on a Mortgaged Property unless such loss to a Mortgaged Property is
covered by a hazard policy or a flood insurance policy required to be maintained
in respect of such Mortgaged Property under Section 3.10.
Special Hazard Loss Amount: As of any Distribution Date, an amount
equal to $1,435,000 minus the sum of (i) the aggregate amount of Special Hazard
Losses that would have been allocated to the Subordinate Certificates in
accordance with Section 6.03 in the absence of the Loss Allocation Limitation
and A-WAC Loss Allocation Limitation and (ii) the Adjustment Amount (as defined
below) as most recently calculated. On each anniversary of the Cut-Off Date, the
"Adjustment Amount" shall be equal to the amount, if any, by which the amount
calculated in accordance with the preceding sentence (without giving effect to
the deduction of the Adjustment Amount for such anniversary) exceeds the lesser
of (x) the greater of (A) the product of the Special Hazard Percentage for such
anniversary multiplied by the Legal Balance of all the Mortgage Loans on the
Distribution Date immediately preceding such anniversary and (B) twice the Legal
Balance of the Mortgage Loan which has the largest Legal Balance on the
Distribution Date immediately preceding such anniversary, and (y) an amount
calculated by the Master Servicer and approved by each Rating Agency, which
amount shall not be less than $500,000.
Special Hazard Percentage: As of each anniversary of the Cut-Off Date,
the greater of (i) 1.00% and (ii) the largest percentage obtained by dividing
(x) the aggregate Legal Balance (as of the immediately preceding Distribution
Date) of the Mortgage Loans secured by Mortgaged Properties located in a single,
five- digit zip code area in the State of California by (y) the Legal Balance of
all the Mortgage Loans as of the immediately preceding Distribution Date.
Special Hazard Termination Date: The Distribution Date upon which the
Special Hazard Loss Amount has been reduced to zero or a negative number (or the
Cross-Over Date, if earlier).
Startup Day: December 30, 1996.
Subordinate Certificate Writedown Amount: As to any Distribution Date,
the amount by which (a) the sum of the Current Principal Amounts of all the
Certificates other than the Class A-WAC Certificates (after giving effect to the
distribution of principal and the allocation of Realized Losses, the Class PO
Deferred Payment Writedown Amount and the Class A-WAC Writedown Amount in
reduction of the Current Principal Amounts of the Certificates on such
Distribution Date) exceeds (b) the aggregate Unpaid Principal Balances of the
Mortgage Loans on the first day of the month of such Distribution Date, less any
Deficient Valuation occurring on or prior to the Bankruptcy Coverage Termination
Date.
Subordinate Certificates: Class B-1, Class B-2, Class B- 3, Class B-4,
Class B-5 and Class B-6 Certificates.
Subordinate Optimal Principal Distribution Amount: As to any
Distribution Date, an amount equal to the sum, without duplication, of the
following (but in no event greater than the aggregate Current Principal Amounts
of the Subordinate Certificates immediately prior to such Distribution Date):
(i) the Subordinate Percentage of the applicable Non-PO Percentage of
all Modified Scheduled Payments allocated to Unpaid Principal Balance
due on the related Due Date on each Outstanding Mortgage Loan as of
such Due Date as specified in
the amortization schedule at the time applicable thereto (after
adjustment for previous Principal Prepayments and the principal portion
of Debt Service Reductions subsequent to the Bankruptcy Coverage
Termination Date but before any adjustment to such amortization
schedule by reason of any bankruptcy (other than as aforesaid) or
similar proceeding or any moratorium or similar waiver or grace
period);
(ii) with respect to each Mortgage Loan which did not have an
Arrearage or as to which the Arrearage had theretofore been paid in
full, the Subordinate Prepayment Percentage of the applicable Non-PO
Percentage of all Voluntary Principal Prepayments in part received
during the related Prepayment Period, and 100% of any Senior P&I
Optimal Principal Amount not distributed to the Senior P&I
Certificates on such Distribution Date (and with respect to each
Mortgage Loan which had an Arrearage outstanding during the applicable
Prepayment Period, the Subordinate Prepayment Percentage of the
applicable Non-PO Percentage of the excess, if any, of (i) all
Voluntary Principal Prepayments in part received during the applicable
Prepayment Period over (ii) the portion thereof required to reduce the
related Arrearage to zero), together with the Subordinate Prepayment
Percentage of the applicable Non-PO Percentage of the Unpaid Principal
Balance of each Mortgage Loan which was the subject of a Voluntary
Principal Prepayment in full during the related Prepayment Period;
(iii) the excess, if any, of the applicable Non-PO Percentage of (x)
all Net Liquidation Proceeds allocable to principal received during
the related Prepayment Period (other than in respect of each
Liquidated Mortgage Loans over (y) the sum of the amounts
distributable pursuant to clause (iii) of the definition of Senior P&I
Optimal Principal Amount and clause (IV) of the definition of each of
Class A-WAC Principal Distribution Amount and Class PO Principal
Distribution Amount on such Distribution Date;
(iv) the Subordinate Prepayment Percentage of the applicable Non-PO
Percentage of the Unpaid Principal Balance of each Mortgage Loan which
was purchased on such Distribution Date pursuant to Section 2.02,
2.03(d) or 3.19; and
(v) the Subordinate Prepayment Percentage of the applicable Non-PO
Percentage of the excess, if any, of the Unpaid Principal Balance of a
Mortgage Loan that has been replaced by the Master Servicer with a
Substitute Mortgage Loan pursuant to Section 2.04 on such Distribution
Date and the Unpaid Principal Balance of such Substitute Mortgage
Loan.
After the aggregate current Principal Amounts of the Subordinate Certificates
have been reduced to zero, the Subordinate Optimal Principal Amount shall be
zero.
Subordinate Percentage: On any Distribution Date, 100% minus the
applicable Senior Percentage.
Subordinate Prepayment Percentage: On any Distribution Date, 100%
minus the applicable Senior Prepayment Percentage, except that on any
Distribution Date after the Current Principal Amounts of the Senior Certificates
(other than the Class PO Certificates) have each been reduced to zero, the
Subordinate Prepayment Percentage will equal 100%.
Sub-Servicer: Any Person with which the Master Servicer has entered
into a Sub-Servicing Agreement and which meets the qualifications of a
Sub-Servicer pursuant to Section 3.02.
Sub-Servicing Agreement: The written contract between the Master
Servicer and a Sub-Servicer and any successor Sub- Servicer relating to
servicing and administration of certain Mortgage Loans as provided in Section
3.02.
Substitute Mortgage Loan: A mortgage loan tendered to the Trustee
pursuant to Section 2.04, in each case, in the opinion of the Master Servicer,
which will, on the date of substitution, (i) have an Unpaid Principal Balance,
after deduction of all scheduled payments due in the month of substitution, not
in excess of (and not more than $10,000 less than) the Unpaid Principal Balance,
after deduction of all unpaid scheduled payments due as of the date of
substitution, of the Deleted Mortgage Loan, (ii) have an Arrearage, after
deduction of all payments with respect to Arrearages collected up to the date of
substitution, not in excess of (and not more than $2,500 less than) the
remaining Arrearage of the Deleted Mortgage Loan, (iii) have a Mortgage Rate not
less than (and not more than 1% greater than) the Mortgage Rate of the Deleted
Mortgage Loan, (iv) have a Net Mortgage Rate not less than (and not more than 1%
greater than) the Net Mortgage Rate of the Deleted Mortgage Loan, (v) have a
remaining term to calculated maturity not greater than (and not more than one
year less than) that of the Deleted Mortgage Loan, (vi) pays the same or a
greater percentage of its Original Scheduled Payment and (vii) comply with all
of the representations and warranties set forth in the Agreement as of the date
of substitution. The opinion of the Master Servicer shall be evidenced by an
Officer's Certificate delivered to the Trustee.
Tax Administration and Tax Matters Person: State Street Bank and Trust
Company, or any successor thereto or assignee thereof shall serve as tax
administrator hereunder and as agent for the Tax Matters Person. The Holder of
the largest outstanding percentage interest in a class of Residual Certificates
shall be the Tax Matters Person for the related REMIC.
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) 0.02% 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 Unpaid 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 0.02%.
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.
Unpaid Principal Balance: With respect to any Mortgage Loan on any
Distribution Date, (A) the unpaid principal balance of such Mortgage Loan as of
the close of business on the Due Date in the month preceding the month of such
Distribution Date (i.e., taking account of the principal payment to be made on
such Due Date and irrespective of any delinquency in its payment), as specified
in the amortization schedule at the time relating thereto (before any adjustment
to such amortization schedule by reason of any bankruptcy or similar proceeding
occurring after the Cut-Off Date (other than a Deficient Valuation) or any
moratorium or similar waiver or grace period) less (B) any Principal Prepayments
(including the principal portion of Net Liquidation Proceeds) received during or
prior to the month preceding the month in which such Distribution Date occurs.
Value: With respect to any Mortgaged Property, the value thereof as
determined by a BPO obtained by EMC.
Voluntary Principal Prepayment: With respect to any Distribution Date,
any Principal Prepayment received from the related Mortgagor on a Mortgage Loan.
ARTICLE II
Conveyance of Mortgage Loans;
Original Issuance of Certificates
Section 2.01. 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 (A) 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 and (B) all Arrearages owing on the Mortgage
Loans after 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 in
Protected Accounts (excluding any income to the Master 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 interest
payable to Mortgagors pursuant to applicable law), (vi) any REO Property, (vii)
the Required Insurance Policies and any amounts paid or payable by the insurer
under any Insurance Policy (to the extent the mortgagee has a claim thereto),
(viii) the Seller Contract to the extent provided in Subsection 2.03(b), and
(ix) any proceeds of the foregoing. Although it is the intent of the parties to
this Agreement that the conveyance of the Seller's right, title and interest in
and to the Mortgage Loans and other assets in the Trust Fund pursuant to this
Agreement shall constitute a purchase and sale and not a loan, in the event that
such conveyance is deemed to be a loan, it is the intent of the parties to this
Agreement that the Seller shall be deemed to have granted to the Trustee a first
priority perfected security interest in all of the Seller's right, title and
interest in, to and under the Mortgage Loans and other assets in the Trust Fund,
and that this Agreement shall constitute a security agreement under applicable
law.
(b) In connection with the above transfer and assignment, the Seller
hereby deposits with the Trustee, with respect to each Mortgage Loan, (i) the
original Mortgage Note, endorsed without recourse to the order of the Trustee
and showing an unbroken chain of endorsements from the original payee thereof to
the Person endorsing it to the Trustee, (ii) the original Security Instrument,
which shall have been recorded, with evidence of such recording indicated
thereon, (iii) the assignment (which may be in the form of a blanket assignment
if permitted in the jurisdiction in which the Mortgaged Property is located) to
the Trustee of the Security Instrument, with evidence of recording with respect
to each Mortgage Loan in the name of the Trustee thereon, (iv) all intervening
assignments of the Security Instrument, if any, to the extent available to the
Seller with evidence of recording thereon, (v) the original policy of title
insurance or mortgagee's certificate of title insurance or commitment or binder
for title insurance and (vi) originals of all modification agreements, if any;
provided, however, that in lieu of the foregoing, the Seller may deliver the
following documents, under the circumstances set forth below: (w) in lieu of the
original policy of title insurance, the Seller may deliver a current binder or
commitment therefor, or, in California, a preliminary title report, or, in Iowa,
an attorney's certificate; (x) in lieu of the original Security Instrument or
intervening assignments thereof which have been delivered or are being delivered
to recording offices for recording and have not been returned to the Seller in
time to permit their delivery as specified above, the Seller may deliver a true
copy thereof with a certification by EMC or the title company issuing the
commitment for title insurance, on the face of such copy, substantially as
follows: "Certified to be a true and correct copy of the original, which has
been transmitted for recording"; (y) in lieu of the Security Instrument,
assignment to the Trustee or intervening assignments thereof, if the applicable
jurisdiction retains the originals of such documents (as evidenced by a
certification from EMC 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 288 Mortgage Loans
identified in the list set forth on Exhibit K, the Seller may deliver a lost
note affidavit, a copy of the original note, if available, and the Letter of
Credit; 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 in such case
shall deposit all amounts paid in respect of such Mortgage Loans in the
Certificate Account on the Closing Date. The Seller shall deliver such original
documents (including any original documents as to which certified copies had
previously been delivered) or such certified copies together with the original
title insurance policy (or, if a master title policy has been issued by the
title insurer, a mortgagee's certificate of title insurance) if a title
insurance binder or commitment or other assurance of title was originally
deposited, to the Trustee promptly after they are received. The Master Servicer
shall cause, at its expense, the Security Instrument and intervening
assignments, if any, and the assignment of the Security Instrument to the
Trustee to be recorded not later than 180 days after the Closing Date.
Section 2.02. Acceptance of Mortgage Loans by Trustee. (a) The Trustee
acknowledges receipt of, subject to the 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 H. In
conducting such review, the Trustee will ascertain whether all required
documents have been executed and received and whether those documents relate,
determined on the basis of the Mortgagor name, original principal balance and
loan number, to the Mortgage Loans it has received, as identified in Exhibit B
to this Agreement, as supplemented (provided, however, that with respect to
those documents described in subclauses (b)(iv) 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 EMC. EMC shall correct or cure any such defect within 60 days
from the date of notice from the Trustee of the defect and if EMC 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, EMC 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 EMC 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, EMC shall not be required
to purchase such Mortgage Loan if EMC delivers such original documents or
certified copy promptly upon receipt, but in no event later than 360 days after
the Closing Date.
(b) No later than 180 days after the Closing Date, the Trustee will
review, for the benefit of the Certificateholders, the Mortgage Files and will
execute and deliver or cause to be executed and delivered to the Seller and the
Master Servicer, a Final Certification substantially in the form annexed hereto
as Exhibit I. In conducting such review, the Trustee will ascertain whether (i)
an original of each document required to be recorded has been returned from the
recording office with evidence of recording thereon or a certified copy has been
obtained from the recording office; and (ii) an original title insurance policy
(or if a master title policy has been issued by the title insurer, a mortgagee's
certificate of title insurance) has been delivered whenever the original title
insurance binder or commitment or other assurance of title was originally
deposited (as opposed to those Mortgage Loans as to which a current binder or
commitment has been delivered). 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 EMC. EMC shall correct or cure any such
defect within 60 days from the date of notice from the Trustee of the defect and
if EMC 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, EMC 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 EMC 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, EMC shall not be required
to purchase such Mortgage Loan, if EMC 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 EMC in
accordance with Subsections 2.02(a) or (b) above or Section 3.19, EMC shall
cause the Repurchase Price to be deposited in the Certificate Account and shall
provide written notification of such deposit (which notification shall detail
the components of the Repurchase Price), signed by a Servicing Officer, to the
Trustee. Upon deposit of the Repurchase Price in the Certificate Account, the
Trustee shall release to EMC the related Mortgage File and shall execute and
deliver all instruments of transfer or assignment, without recourse, furnished
to it by EMC as are necessary to vest in EMC 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 EMC 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;
(viii) No litigation is pending or, to its best
knowledge, threatened against it, which could be reasonably
expected to materially and adversely affect its entering into
this Agreement or performing its obligations under this
Agreement or which would have a material adverse effect on its
financial condition; and
(ix) As to each Mortgage Loan, the Seller Contract is
in full force and effect.
(b) The Seller hereby assigns to the Trustee, on behalf of the
Certificateholders, all of its right, title and interest in the Seller Contract
(but none of its obligations) insofar as such contract relates to the
representations and warranties set forth in Exhibit C hereto regarding the
Mortgage Loans (including the substitution and repurchase obligations of EMC);
provided that the obligations of EMC to substitute or repurchase a Mortgage Loan
shall be the Trustee's and the Certificateholder's sole remedy for any breach
thereof. At the request of the Trustee, the Seller shall take such actions as
may be necessary to enforce the above right, title and interest on behalf of the
Trustee and the Certificateholders or shall execute such further documents as
the Trustee may reasonably require in order to enable the Trustee to carry out
such enforcement.
(c) [Intentionally omitted.]
(d) If the Seller, EMC, the Master Servicer or the Trustee discovers a
breach of any of the representations and warranties set forth in Exhibit C or
Section 7 of the Seller Contract, and such breach existed on the date the
representation and warranty was made, which breach materially and adversely
affects the value of the interests of Certificateholders or the Trustee in the
related Mortgage Loan, the party discovering the breach shall give prompt
written notice of the breach to the other parties. EMC, 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 EMC 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 EMC to the extent not
required by law to be paid to the borrower.) Any such purchase by EMC shall be
made by depositing an amount equal to the Repurchase Price in the Certificate
Account and the Trustee, upon receipt of the Repurchase Price and of written
notification of such deposit by a Servicing Officer (which notification shall
detail the components of such Repurchase Price), shall release to EMC the
related Mortgage File and shall execute and deliver all instruments of transfer
or assignment furnished to it by EMC, without recourse, as are necessary to vest
in EMC title to and rights under the Mortgage Loan or any property acquired with
respect thereto. Such purchase shall be deemed to have occurred on the date on
which certification of the deposit of the Repurchase Price in the Certificate
Account was received by the Trustee. The Trustee shall amend the Mortgage Loan
Schedule to reflect such repurchase and shall promptly notify the Master
Servicer and the Rating Agencies of such amendment. Enforcement of the
obligation of EMC to purchase (or substitute a Substitute Mortgage Loan for) any
Mortgage Loan or any property acquired with respect thereto (or pay the
Repurchase Price as set forth in the above proviso) as to which a breach has
occurred and is continuing shall constitute the sole remedy respecting such
breach available to the Certificateholders or the Trustee on their behalf.
Section 2.04. Substitution of Mortgage Loans. Notwithstanding anything
to the contrary in this Agreement, in lieu of purchasing a Mortgage Loan
pursuant to Sections 2.02 or 2.03, EMC may, no later than the date by which such
purchase by EMC would otherwise be required, tender to the Trustee a Substitute
Mortgage Loan accompanied by an Officer's Certificate of EMC 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, EMC
shall deposit in the Certificate Account the amount, if any, by which the Legal
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 Legal Balance as of such date of the Substitute Mortgage
Loan, after giving effect to Scheduled Principal and Arrearage due on such date,
which amount shall be treated for the purposes of this Agreement as if it were
the payment by EMC of the Repurchase Price for the purchase of a Mortgage Loan
by EMC. After such notification to EMC, and, if any such excess exists, upon
receipt of such deposit and of written notification thereof signed by a
Servicing Officer, the Trustee shall accept such Substitute Mortgage Loan, which
shall thereafter be deemed to be a Mortgage Loan hereunder. In the event of such
a substitution, accrued interest on the Substitute Mortgage Loan for the month
in which the substitution occurs and any Principal Prepayments made thereon
during such month shall be the property of the Trust Fund and accrued interest
for such month on the Mortgage Loan for which the substitution is made and any
Principal Prepayments made thereon during such month shall be the property of
EMC. The Scheduled Principal and Arrearage Component on a Substitute Mortgage
Loan due on the Due Date in the month of substitution shall be the property of
EMC and the Scheduled Principal and Arrearage Component 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 EMC 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 EMC title to and rights under any Mortgage Loan released
pursuant to this Section 2.04. EMC 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 EMC 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 and the Certificates, when
executed and delivered, will constitute the valid, legal and
binding obligations of the Trustee, enforceable against the
Trustee in accordance with their terms, except as the
enforcement thereof may be limited by applicable Debtor Relief
Laws and that certain equitable remedies may not be available
regardless of whether enforcement is sought in equity
or at law; and
(v) All funds received by the Trustee and required to be
deposited in the Certificate Account and the Custody Account
pursuant to this Agreement will be promptly so deposited.
Section 2.06. Issuance of Certificates. The Trustee acknowledges the
assignment to it of the Mortgage Loans and the other assets comprising the Trust
Fund and, concurrently therewith, has signed, and countersigned and delivered to
the Seller, in exchange therefor, Certificates in such authorized denominations
representing such Fractional Undivided Interests as the Seller has requested.
The Trustee agrees that it will hold the Mortgage Loans and such other assets
segregated on the books of the Trustee in trust for the benefit of the
Certificateholders.
Section 2.07. Representations and Warranties Concerning the Seller.
The Seller hereby represents and warrants to the Trustee and the Master Servicer
as follows:
(i) the Seller (a) is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware
and (b) is qualified and in good standing as a foreign corporation to do
business in each jurisdiction where such qualification is necessary, except
where the failure so to qualify would not reasonably be expected to have a
material adverse effect on the Seller's business as presently conducted or on
the Purchaser's ability to enter into this Agreement and to consummate the
transactions contemplated hereby;
(ii) the Seller has full corporate power to own its property, to
carry on its business as presently conducted and to enter into and
perform its obligations under this Agreement;
(iii) the execution and delivery by the Seller of
this Agreement have been duly authorized by all necessary corporate
action on the part of the Seller; and neither the execution and delivery of this
Agreement, nor the consummation of the transactions herein contemplated, nor
compliance with the provisions hereof, will conflict with or result in a breach
of, or constitute a default under, any of the provisions of any law,
governmental rule, regulation, judgment, decree or order binding on the Seller
or its properties or the articles of incorporation or by-laws of the Seller,
except those conflicts, breaches or defaults which would not reasonably be
expected to have a material adverse effect on the Seller's ability to enter into
this Agreement and to consummate the transactions contemplated hereby;
(iv) the execution, delivery and performance by
the Seller of this Agreement and the consummation of the transactions
contemplated hereby do not require the consent or approval of, the giving of
notice to, the registration with, or the taking of any other action in respect
of, any state, federal or other governmental authority or agency, except those
consents, approvals, notices, registrations or other actions as have already
been obtained, given or made;
(v) this Agreement has been duly executed and
delivered by the Seller and, assuming due authorization, execution and
delivery by the other parties hereto, constitutes a valid and binding obligation
of the Seller enforceable against it in accordance with its terms (subject to
applicable bankruptcy and insolvency laws and other similar laws affecting the
enforcement of the rights of creditors generally); and
(vi) there are no actions, suits or proceedings
pending or, to the knowledge of the Seller, threatened against the
Seller, before or by any court, administrative agency, arbitrator or
governmental body (i) with respect to any of the transactions contemplated by
this Agreement or (ii) with respect to any other matter which in the judgment of
the Seller will be determined adversely to the Seller and will if determined
adversely to the Seller materially and adversely affect the Seller's ability to
enter into this Agreement or perform its obligations under this Agreement; and
the Seller is not in default with respect to any order of any court,
administrative agency, arbitrator or governmental body so as to materially and
adversely affect the transactions contemplated by this Agreement.
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 and
any other matter pertaining to a delinquent Mortgage Loan. The Master Servicer
shall follow any applicable HUD or FHA requirements and/or regulations regarding
the servicing of the Mortgage Loans, including but not limited to any
limitations on the ability to institute foreclosure proceedings upon the
occurrence of a default in the payment of the Modified Scheduled Payments. The
Master Servicer will not foreclose on any Mortgage Loan based on the delinquency
status in existence on the Closing Date. 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 approved mortgage servicer and a HUD approved mortgagee. 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.
(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, (ii) amend a Forebearance Plan to enable the
Mortgagor to satisfy its obligations under the related Mortgage Loan and (iii)
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 of an EMC Modified Mortgage Loan 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
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 (other than as required pursuant to HUD regulations regarding an
"Additional Extension Period," as defined in the HUD servicing regulations) 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. [Reserved].
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 Unpaid 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 shall be no more than $1000 or 1% of the Unpaid Principal
Balance of a Mortgage Loan. In the case of a condominium unit or a unit in a
planned unit development, the required hazard insurance shall take the form of a
multiperil policy covering the entire condominium project or planned unit
development, in an amount equal to at least 100% of the insurable value based on
replacement cost.
(b) Any amounts collected by the Master Servicer or a
Sub-Servicer under any such hazard insurance policy (other than
amounts to be applied to the restoration or repair of the Mortgaged Property or
amounts released to the Mortgagor in accordance with the Master Servicer's or a
Sub-Servicer's normal servicing procedures, the terms of the Mortgage Note, the
Security Instrument or applicable law) shall be deposited initially in a
Protected Account, for transmittal to the Certificate Account or Custody
Account, subject to withdrawal pursuant to Section 4.03.
(c) Any cost incurred by a Master Servicer or a Sub-
Servicer in maintaining any such hazard insurance policy shall not be
added to the amount owing under the Mortgage Loan for the purpose of calculating
monthly distributions to Certificateholders, notwithstanding that the terms of
the Mortgage Loan so permit. Such costs shall be recoverable by the Master
Servicer or a Sub- Servicer out of related late payments by the Mortgagor or out
of Insurance Proceeds or Liquidation Proceeds or by the Master Servicer from the
Repurchase Price, to the extent permitted by Section 4.03.
(d) No earthquake or other additional insurance is to be
required of any Mortgagor or maintained on property acquired with
respect to a Security Instrument other than pursuant to such applicable laws and
regulations as shall at any time be in force and shall require such additional
insurance. When, at the time of origination of the Mortgage Loan, the Mortgaged
Property is located in a federally designated special flood hazard area, the
Master Servicer shall use its best reasonable efforts to cause with respect to
the Mortgage Loans and each REO Property, flood insurance (to the extent
available and in accordance with mortgage servicing industry practice) to be
maintained. Such flood insurance shall cover the Mortgaged Property, including
all items taken into account in arriving at the Appraised Value on which the
Mortgage Loan was based, and shall be in an amount equal to the lesser of (i)
the Unpaid 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 shall be no more than $1,000 or 1% of the
Unpaid Principal Balance of a Mortgage Loan.
(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 Certificate Account to the extent that
such amounts have not previously been paid to such account.
Section 3.11. Due-on-Sale Clauses; Assumption Agreements. (a) In any
case in which the Master Servicer is notified by any Mortgagor or Sub-Servicer
that a Mortgaged Property relating to a Mortgage Loan has been or is about to be
conveyed by the Mortgagor, the Master Servicer shall enforce, or shall instruct
such Sub-Servicer to enforce, any due-on-sale clause contained in the related
Security Instrument to the extent permitted under the terms of the related
Mortgage Note and by applicable law unless the Master Servicer reasonably
believes such enforcement is likely to result in legal action by the Mortgagor.
The Master Servicer or the related Sub-Servicer may repurchase a Mortgage Loan
at the Repurchase Price when the Master Servicer requires acceleration of the
Mortgage Loan, but only if the Master Servicer is satisfied, as evidenced by an
Officer's Certificate delivered to the Trustee, that either (i) such Mortgage
Loan is in default or default is reasonably foreseeable or (ii) if such Mortgage
Loan is not in default or default is not reasonably foreseeable, such repurchase
will have no adverse tax consequences for the Trust Fund or any
Certificateholder. If the Master Servicer reasonably believes that such
due-on-sale clause cannot be enforced under applicable law or if the Mortgage
Loan does not contain a due-on-sale clause, the Master Servicer is authorized,
and may authorize any Sub-Servicer, to consent to a conveyance subject to the
lien of the Mortgage, and to take or enter into an assumption agreement from or
with the Person to whom such property has been or is about to be conveyed,
pursuant to which such Person becomes liable under the related Mortgage Note and
unless prohibited by applicable state law, such Mortgagor remains liable
thereon. 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 any of REMIC I, REMIC II,
REMIC III or REMIC IV to fail to qualify as a REMIC for federal income tax
purposes, as evidenced by a REMIC Opinion. Any fee or additional interest
collected by the Master Servicer or Sub- Servicer for consenting to any such
conveyance or entering into any such assumption agreement may be retained by the
Master Servicer or the related Sub-Servicer as additional servicing
compensation.
(b) Notwithstanding the foregoing paragraph or any other
provision of this Agreement, the Master Servicer shall not be deemed
to be in default, breach or any other violation of its obligations hereunder by
reason of any assumption of a Mortgage Loan by operation of law or any
conveyance by the Mortgagor of the related Mortgaged Property or assumption of a
Mortgage Loan which the Master Servicer reasonably believes, 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 otherwise 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 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 Arrearage, principal and interest by
the Certificateholders, taking into account, among other things, the timing of
foreclosure and the considerations set forth in Subsection 3.12(b). The
foregoing is subject to the proviso that the Master Servicer shall not be
required to expend its own funds in connection with any foreclosure or towards
the restoration of any property unless it determines in good faith (i) that such
restoration or foreclosure will increase the proceeds of liquidation of the
Mortgage Loan to Certificateholders after reimbursement to itself for such
expenses and (ii) that such expenses will be recoverable to it either through
Liquidation Proceeds (respecting which it shall have priority for purposes of
reimbursements from the Certificate Account pursuant to Section 4.03) or through
Insurance Proceeds (respecting which it shall have similar priority). The Master
Servicer shall be responsible for all other costs and expenses incurred by it in
any such proceedings; provided, however, that it shall be entitled to
reimbursement thereof (as well as its normal servicing compensation), and in
respect of the Master Servicer only, to receive Excess Liquidation Proceeds as
additional servicing compensation to the extent that transfers or withdrawals
from the Certificate Account with respect thereto are permitted under Section
4.03. Any income from or other funds (net of any income taxes) generated by REO
Property shall be deemed for purposes of this Agreement to be Insurance
Proceeds.
(b) The Trust Fund shall not acquire any real property (or any
personal property incident to such real property) except in connection
with a default or imminent default of a Mortgage Loan. In the event that the
Trust Fund acquires any real property (or personal property incident to such
real property) in connection with a default or imminent default of a Mortgage
Loan, such property shall be disposed of by the Trust Fund within two years
after its acquisition by the Trust Fund unless the Trustee shall have received a
REMIC Opinion with respect to such longer retention or the Master Servicer
applies for and receives an extension of the two-year period under Section
856(e)(3) of the Code, in which case such two year period will be extended by
the period set forth in such REMIC Opinion or approved application, as the case
may be. The Trustee shall have no obligation to pay for such REMIC Opinion.
(c) Notwithstanding anything to the contrary contained herein,
the Master Servicer shall have the right, at its sole option, to enter
into an agreement substantially in the form of Exhibit G hereto with a Holder of
the Class B-6 Certificates (provided that such form may be revised to
incorporate an option on the part of such Person to purchase a defaulted
Mortgage Loan at the end of the six-month period referred to in Subsection
2.02(f) thereof). It is understood that the right of the Master Servicer to be
reimbursed for Monthly Advances and Nonrecoverable Advances under this Agreement
shall not be affected in any way by the provisions of any such agreement. The
Trustee, not individually but solely as Trustee, is authorized and directed, and
hereby agrees, to perform such obligations as may be required of it pursuant to
the provisions of such agreement. The Master Servicer agrees to provide the
Trustee with such information as may be necessary, or as the Trustee may
reasonably request, for the Trustee to perform such obligations.
Section 3.13. Trustee to Cooperate; Release of Mortgage Files. (a)
Upon payment in full of any Mortgage Loan or the receipt by the Master Servicer
of a notification that payment in full will be escrowed in a manner customary
for such purposes, the Master Servicer will immediately notify the Trustee by a
certification signed by a Servicing Officer in the Form of Exhibit D (which
certification shall include a statement to the effect that all amounts received
or to be received in connection with such payment which are required to be
deposited in the Certificate Account have been or will be so deposited in the
appropriate subaccount thereof) and shall request delivery to the Master
Servicer or 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 Certificate Account or
such Mortgage File is being used to pursue foreclosure or other legal
proceedings. Prior to return of a Mortgage File or any document to the Trustee,
the Master Servicer, the related Insurer or Sub- Servicer to whom such file or
document was delivered shall retain such file or document in its respective
control unless the Mortgage File or such document has been delivered to an
attorney, or to a public trustee or other public official as required by law, to
initiate or pursue legal action or other proceedings for the foreclosure of the
Mortgaged Property either judicially or non- judicially, and the Master Servicer
has delivered to the Trustee a certificate of a Servicing Officer certifying as
to the name and address of the Person to which such Mortgage File or such
document was delivered and the purpose or purposes of such delivery. If a
Mortgage Loan becomes a Liquidated Mortgage Loan, the Trustee shall deliver the
Request for Release with respect thereto to the Master Servicer upon deposit of
the related Liquidation Proceeds in the Certificate Account.
(d) The Trustee shall execute and deliver to the Master
Servicer any court pleadings, requests for trustee's sale or other
documents necessary to (i) the foreclosure or trustee's sale with respect to a
Mortgaged Property; (ii) any legal action brought to obtain judgment against any
Mortgagor on the Mortgage Note or Security Instrument; (iii) obtain a deficiency
judgment against the Mortgagor; or (iv) enforce any other rights or remedies
provided by the Mortgage Note or Security Instrument or otherwise available at
law or equity. Together with such documents or pleadings the Master Servicer
shall deliver to the Trustee a certificate of a Servicing Officer in which it
requests the Trustee to execute the pleadings or documents. The certificate
shall certify and explain the reasons for which the pleadings or documents are
required. It shall further certify that the Trustee's execution and delivery of
the pleadings or documents will not invalidate any insurance coverage under the
Required Insurance Policies or invalidate or otherwise affect the lien of the
Security Instrument, except for the termination of such a lien upon completion
of the foreclosure or trustee's sale.
Section 3.14. Servicing and Master Servicing Compensation. (a) As
compensation for its activities hereunder, the Master Servicer shall be entitled
to receive the Master Servicing Fee from full payments of accrued interest on
each Mortgage Loan.
(b) The Master Servicer may retain additional servicing
compensation in the form of prepayment charges, if any, assumption
fees, tax service fees, fees for statement of account or payoff, late payment
charges, interest on amounts deposited in any Accounts or Permitted Investments
of such amounts, or otherwise. The Master Servicer is also entitled to receive
Excess Liquidation Proceeds as additional servicing compensation to the extent
that transfers or withdrawals from the Certificate Account with respect thereto
are permitted under Subsection 4.03(a)(xii). The Master Servicer shall be
required to pay all expenses it incurs in connection with servicing activities
under this Agreement, including fees and expenses to Sub-Servicers, and shall
not be entitled to reimbursement except as provided in this Agreement. Expenses
to be paid by the Master Servicer under this Subsection 3.14(b) shall include
payment of the expenses of the accountants retained pursuant to Section 3.16.
Section 3.15. Annual Statement of Compliance. Within 120 days after
June 30 of each year, commencing June 1997, the Master Servicer at its own
expense, shall deliver to the Trustee, with a copy to the Rating Agencies, an
Officer's Certificate stating, as to the signer thereof, that (i) a review of
the activities of the Master Servicer during the preceding fiscal year and of
performance under this Agreement has been made under such officer's supervision,
(ii) to the best of such officer's knowledge, based on such review, the Master
Servicer has fulfilled all its obligations under this Agreement for such year,
or, if there has been a default in the fulfillment of any such obligation,
specifying each such default known to such officer and the nature and status
thereof including the steps being taken by the Master Servicer to remedy such
default; (iii) a review of the activities of each Sub-Servicer, if any, during
the Sub-Servicer's most recently ended fiscal year on or prior to such December
31 and its performance under its Sub-Servicing Agreement has been made under
such Officer's supervision; and (iv) to the best of the Servicing Officer's
knowledge, based on his review and the certification of an officer of the
Sub-Servicer (unless the Servicing Officer has reason to believe that reliance
on such certification is not justified), either each Sub-Servicer has performed
and fulfilled its duties, responsibilities and obligations under this Agreement
and its Sub-Servicing Agreement in all material respects throughout the year,
or, if there has been a default in performance or fulfillment of any such
duties, responsibilities or obligations, specifying the nature and status of
each such default known to the Servicing Officer. Copies of such statements
shall be provided by the Master Servicer to the Certificateholders upon request
or by the Trustee at the expense of the Master Servicer should the Master
Servicer fail to provide such copies.
Section 3.16. Annual Independent Public Accountants' Servicing Report.
(a) Within 120 days after June 30 of each year, commencing June, 1997, 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, or such other
program as may be certified as being comparable by such accountants.
Section 3.17. REMIC-Related Covenants. For as long as REMIC I, REMIC
II, REMIC III or REMIC IV shall exist, the Master Servicer and the Trustee
shall, subject to Article IX, act in accordance herewith to assure continuing
treatment of REMIC I, REMIC II, REMIC III and REMIC IV as REMICs, and the
Trustee shall comply with any directions of the Master Servicer to assure such
continuing treatment. In particular, the Trustee shall not (a) sell or permit
the sale of all or any portion of the Mortgage Loans or of any Permitted
Investment unless such sale is as a result of a repurchase of the Mortgage Loans
pursuant to this Agreement or the Trustee has received a REMIC Opinion prepared
at the expense of the Trust Fund; and (b) other than with respect to a
substitution pursuant to Section 2.04, accept any contribution to REMIC I, REMIC
II, REMIC III or REMIC IV 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.
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 and any Subservicer shall deposit into a Protected Account
within 48 hours of receipt all collections of Arrearages. 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 shall cause the related Sub-Servicer to,
deposit the amount of any such loss in the related Protected Account within two
Business Days of receipt of notification of such loss but not later than the
second Business Day prior to the Distribution Date on which the moneys so
invested are required to be distributed to the Certificateholders. The Master
Servicer may, and the Master Servicer may permit 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 Certificate Account amounts representing the following
collections and payments (other than with respect to principal or Arrearage of
or interest on the Mortgage Loans due on or before the Cut-Off Date):
(i) Modified Scheduled Payments on the Mortgage Loans
received or any portion thereof advanced by the Master
Servicer or Sub-Servicers which were due on or before the
related Due Date, net of the amount thereof comprising the
Master Servicing Fee due the Master Servicer;
(ii) Full Principal Prepayments and any Liquidation
Proceeds received by the Master Servicer or
Sub-Servicers with respect to such Mortgage Loans in the
related Prepayment Period, with interest to the date of
prepayment or liquidation, net of the amount thereof
comprising the Master Servicing Fee due the Master
Servicer;
(iii) Partial prepayments of principal and payments of
Arrearages 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, interest and Arrearages which have been recovered by subsequent
collection from the related Mortgagor; to remove amounts deposited in error; to
remove fees, charges or other such amounts deposited on a temporary basis; or to
clear and terminate the account at the termination of this Agreement in
accordance with Section 10.01.
(d) The Master Servicer shall deliver to the Trustee on
or prior to the Determination Date in each month a statement from the
institution at which each Protected Account is maintained showing deposits and
withdrawals during the prior month.
Section 4.02. Certificate Account. (a) The Trustee shall establish and
maintain in the name of the Trustee, for the benefit of the Certificateholders,
the Certificate Account as a segregated non-interest bearing trust account or
accounts. The Trustee will deposit in the Certificate Account as received the
following amounts:
(i) Any amounts withdrawn from a Protected Account
pursuant to Subsection 4.01(b) or the Custody Account pursuant to
Section 4.04;
(ii) Any Monthly Advance and any Compensating
Interest Payments;
(iii) Any Insurance Proceeds or Liquidation Proceeds
received by the Master Servicer which were not
deposited in a Protected Account or the Custody Account;
(iv) The Repurchase Price with respect to any Mortgage
Loans purchased by EMC pursuant to Sections 2.02 or 2.03 or by
the Master Servicer pursuant to Section 3.19, any amounts
which are to be treated pursuant to Section 2.04 as the
payment of such a Repurchase Price, and all proceeds of any
Mortgage Loans or property acquired with respect thereto
repurchased by the Master Servicer or its designee pursuant to
Section 10.01;
(v) Any amounts required to be deposited with respect to
losses on Permitted Investments pursuant to Subsection 4.02(d)
or Section 4.04(d) below; and
(vi) Any other amounts received by the Master Servicer or
the Trustee and required to be deposited in the Certificate
Account pursuant to this Agreement.
(b) All amounts deposited to the Certificate Account shall be
held by the Trustee in the name of the Trustee in trust for the
benefit of the Certificateholders and 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. In the event that the Master Servicer shall deposit or
cause to be deposited to the Certificate Account any amount not required to be
credited thereto, the Trustee, upon receipt of a written request therefor signed
by a Servicing Officer of the Master Servicer, shall promptly transfer such
amount to the Master Servicer, any provision herein to the contrary
notwithstanding.
(c) The Certificate Account shall constitute a trust account
of the Trust Fund segregated on the books of the Trustee and held by
the Trustee in trust, and the Certificate Account and the funds deposited
therein shall not be subject to, and shall be protected from, all claims, liens,
and encumbrances of any creditors or depositors of the Trustee or the Master
Servicer (whether made directly, or indirectly through a liquidator or receiver
of the Trustee or the Master Servicer). The amount at any time credited to the
Certificate Account shall be (i) fully insured by the FDIC to the maximum
coverage provided thereby, (ii) at the written direction of the Master Servicer
invested, in the name of the Trustee, or its nominee, for the benefit of the
Certificateholders, in such Permitted Investments to be held by the Trustee as
the Master Servicer may direct (such direction to be confirmed in writing) and
in the absence of such direction, the Trustee shall invest funds in the
Certificate Account in Permitted Investments described in clause (viii) of the
definition thereof, or (iii) from the maturity of any Permitted Investment on
the Business Day prior to a Distribution Date through the distribution of such
funds on such Distribution Date or at such other time and in such amount as, in
the judgment of the Master Servicer, cannot reasonably be invested in accordance
with items (i) or (ii) of this sentence, held by the Trustee in such Certificate
Account. All Permitted Investments shall mature or be subject to redemption or
withdrawal on or before, and shall be held until, the next succeeding
Distribution Date if the obligor for such Permitted Investment is the Trustee
or, if such obligor is any other Person, the Business Day preceding such
Distribution Date. With respect to the Certificate Account and the funds
deposited therein, the Trustee shall take such action as may be necessary to
ensure that the Certificateholders shall be entitled to the priorities afforded
to such a trust account (in addition to a claim against the estate of the
Trustee) as provided by 12 U.S.C. Section 92a(e), if applicable, or any
applicable comparable state statute applicable to state chartered banking
corporations.
(d) The income earned from Permitted Investments made pursuant
to this Section 4.02 shall be paid to the Master Servicer, as
additional compensation for its obligations under this Agreement, and the risk
of loss of moneys required to be distributed to the Certificateholders resulting
from such investments shall be borne by and be the risk of the Master Servicer.
The amount of any such loss shall be remitted by the Master Servicer to the
Trustee for deposit in the Certificate Account within two Business Days of
receipt of notification of such loss but not later than the second Business Day
prior to the Distribution Date on which the moneys so invested are required to
be distributed to the Certificateholders.
Section 4.03. Permitted Withdrawals and Transfers from the Certificate
Account. (a) The Trustee will, from time to time on demand of the Master
Servicer, make or cause to be made such withdrawals or transfers from the
Certificate Account as the Master Servicer has designated for such transfer or
withdrawal as specified in a certificate signed by a Servicing Officer (upon
which the Trustee may conclusively rely) for the following purposes:
(i) [intentionally omitted];
(ii) to reimburse the Master Servicer or any Sub-
Servicer for any Monthly Advance of its own funds or any
advance of such Sub-Servicer's own funds, the right of the
Master Servicer or a Sub-Servicer to reimbursement pursuant to
this subclause (ii) being limited to amounts
received on a particular Mortgage Loan (including, for this
purpose, the Repurchase Price therefor, Insurance Proceeds and
Liquidation Proceeds) which represent late payments or
recoveries of the principal of, interest on or Arrearage of
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
Legal Balance of such Mortgage Loan plus accrued and unpaid
interest on the Unpaid Principal Balance thereof 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 Legal Balance of such Mortgage
Loan plus accrued and unpaid interest on the Unpaid Principal
Balance thereof 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 Legal Balance of the related
Mortgage Loan below the Legal Balance used in calculating the
Repurchase Price or representing interest included in the
calculation of the Repurchase Price or accrued after the end
of the month during which such repurchase occurs;
(ix) to reimburse the Master Servicer or any Sub- Servicer
for any Monthly Advance or advance, after a Realized Loss has
been allocated with respect to the related Mortgage Loan if
the Monthly Advance or advance has not been reimbursed
pursuant to clauses (ii) and (vii);
(x) to pay the Master Servicer and any
Sub-Servicer servicing compensation as set forth in Section
3.14;
(xi) to reimburse the Master Servicer for expenses,
costs and liabilities incurred by and reimbursable to
it pursuant to Subsection 7.04(d);
(xii) to pay to the Master Servicer, as additional
servicing compensation, any Excess Liquidation Proceeds;
(xiii) to clear and terminate the Certificate Account
pursuant to Section 10.01; and
(xiv) to remove amounts deposited in error.
The Master Servicer shall keep and maintain separate accounting, on a
Mortgage Loan by Mortgage Loan basis, for the purpose of accounting for any
reimbursement from the Certificate Account pursuant to subclauses (i) through
(vii), inclusive, and (ix) 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.
Section 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 IV and shall not constitute a part of REMIC IV
(or REMIC I, REMIC II or REMIC III). The Master Servicer 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 IV to the Custody Account shall
be treated as amounts distributed by REMIC IV 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 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.
Section 4.05 Credit Support Fee Account. (a) The Trustee shall
establish and maintain, in the name of the Trustee for the benefit of the
Certificateholders, in a separate trust account in the corporate trust
department of the Trustee, the Credit Support Fee Account, into which shall be
deposited by the Master Servicer on the Closing Date $275,000. Amounts in the
Credit Support Fee Account shall be used to pay fees relating to the Letter of
Credit. All monies received by the Trustee pursuant to this Section 4.05
together with Permitted Investments in which such monies may be invested at the
direction (to be confirmed in writing) of the Master Servicer and any income or
other gains realized from such Investment shall be held by the Trustee but shall
not constitute a part of the Trust Fund.
(b) All amounts on deposit in the Credit Support Fee Account shall be
released to the Master Servicer upon its delivery to the Trustee of the Guaranty
in a form acceptable to the Rating Agencies. Notwithstanding the foregoing,
should the Guarantor's rating be downgraded below A3 by Moody's or below A- by
Standard & Poor's Credit Rating Service or any other nationally recognized
statistical rating service, the Master Servicer shall, on the first Funds
Transfer Date following such a downgrade, deliver to the Trustee for deposit in
the Credit Support Fee Account an amount equal to the product of (x) the lesser
of nine and the number of years remaining until the Assumed Final Distribution
Date, (y) the Legal Balance of the Mortgage Loans remaining unpaid as of the
immediately preceding Due Date, and (z) 0.005. Following any such deposit,
should aggregate losses on Permitted Investments made with funds on deposit in
the Credit Support Fee Account exceed 5% of the amount of such deposit, the EMC
shall on the next Funds Transfer Date deliver to the Trustee the amount of any
such losses.
(c) Upon written request of EMC, all or a portion of the Credit
Support Fee Account shall be invested and reinvested in one or more Permitted
Investments; provided, however, no investment shall be for a period longer than
180 days and sufficient investments shall mature on or prior to each date on
which a payment is required to be made therefrom without liquidation of
investments. All income or other gain from such investments shall be credited to
the Credit Support Fee Account and any loss resulting from such investments
shall be charged thereto. EMC shall report for income tax purposes any income or
loss in the Credit Support Fee Account on its income tax returns. The Trustee
shall not in any way be held liable by reason of any insufficiency in the Credit
Support Fee Account resulting from any loss of investment in any Permitted
Investment, including as the result of any sale pursuant to the following
sentence. If any amounts invested as provided above shall be needed for
disbursement from the Credit Support Fee Account as set forth in the next
paragraph, the Trustee shall cause a sufficient amount of investments to be sold
or otherwise converted to cash to the credit of the Credit Support Fee Account.
(d) Except as provided below, so long as the Guaranty has not been
delivered to the Trustee or, if delivered, following any deposit required in
accordance with subsection (b) above, the Trustee shall withdraw from the Credit
Support Fee Account to pay on a timely basis the Credit Support Fee to the
Letter of Credit Issuer. Notwithstanding the foregoing, payments to the Letter
of Credit Issuer shall cease if the Trust has been terminated, and the amount of
any payments made by the Trustee may be changed at any time pursuant to written
instructions from EMC if the fees for the Letter of Credit have been reduced. If
amounts on deposit in the Credit Support Fee Account are insufficient to make
any required payment as provided herein, EMC shall deposit the amount of such
shortfall into the Credit Support Fee Account on or before the date such payment
is due.
(e) The Credit Support Fee Account will terminate upon the termination
of this Agreement pursuant to Article X or if earlier, the termination of the
Letter of Credit and payment of all fees in connection therewith. Upon such
termination, any amounts remaining in the Credit Support Fee Account shall be
paid to EMC.
ARTICLE V
Certificates
Section 5.01. Certificates. (a) The Depository, the Seller and the
Trustee have entered into a Depository Agreement dated as of December 27 (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.
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 IV will be evidenced by (x) the Class IV-A-1, Class IV-A-1',
Class IV-A-1", Class IV-A-2', Class IV-A-2", Class IV-A-3', Class IV-A-3", Class
IV-A-4', Class IV-A-4", Class IV-A- 5', Class IV-A-5", Class IV-B-1', Class
IV-B-1", Class IV-B-2', Class IV-B-2", Class IV-B-3', Class IV-B-3", Class
IV-B-4', Class IV-B-4", Class IV-B-5', Class IV-B-5", Class IV-B-6', Class IV-B-
6", Class IV-A-WAC, Class IV-PO, Class IV-PO-X2, Class IV-R-1 Certificates (the
"REMIC IV Regular Certificates"), which will be uncertificated and
non-transferable and are hereby designated as the "regular interests" in REMIC
IV and (y) the Class R-4 Certificates, which are hereby designated as the single
"residual interest" in REMIC 4. Except as discussed below, principal and
interest shall be paid on the REMIC IV Regular Certificates in the same order
and priority as payments are to be made on the REMIC I Corresponding Classes of
Certificates (disregarding the interest payments on the Class A-WAC and Class
X-1 Certificates and all payments other than the Contingent Servicing Fee
payable to the Class X-2 Certificates). However, a Credit Enhancement Payment
Amount that is paid pursuant to subsection (xii) of Section 6.01 will not paid
to the REMIC IV Regular Certificates, but up to 100 basis points of the interest
payable on each of the Single Prime Classes will be payable to a Double Prime
Class in the same manner in which a Credit Enhancement Payment Amount is paid to
the REMIC I Corresponding Class (and will be accrued and added to principal on
the corresponding Single Prime Class). Principal payments in an amount equal to
the principal payment to be made on the REMIC I Corresponding Classes will be
allocated to the Class IV-A-1 Certificates and any Single Prime and Double Prime
Classes corresponding to a REMIC I Corresponding Class in the ratio that 98% of
the principal balance of the REMIC I Corresponding Class bears to the aggregate
principal balance of the Single Prime and Double Prime Classes. Principal
payments will be allocated between such Single Prime and Double Prime Classes
pro rate based on principal. The REMIC IV Regular Certificates and the Class R-4
Certificates will have the following designations and pass-through rates, and
distributions of principal and interest thereon shall be allocated to the
Corresponding Class of Certificates in the following manner:
Corresponding Class of
Certificates (1)
Pass- Allocation Allocation
REMIC IV Initial Through of of
Certificates Balance Rate Principal Interest
IV-A-1 $98,500,267.80 (2) III-A-1(3) III-A-1 (4)
IV-A-1' $ 171,010.00 (2) III-A-1 III-A-1 (5)
IV-A-1" $ 171,010.00 (2) III-A-1 III-A-1 (5)
IV-A-2' $ 314,860.00 (2) III-A-2 III-A-2 (5)
IV-A-2" $ 314,860.00 (2) III-A-2 III-A-2 (5)
IV-A-3' $ 103,550.00 (2) III-A-3 III-A-3 (5)
IV-A-3" $ 103,550.00 (2) III-A-3 III-A-3 (5)
IV-A-4' $ 55,250.00 (2) III-A-4 III-A-4 (5)
IV-A-4" $ 55,250.00 (2) III-A-4 III-A-4 (4)
IV-A-5' $ 100,000.00 (2) III-A-5 III-A-5 (5)
IV-A-5" $ 100,000.00 (2) III-A-5 III-A-5 (5)
IV-A-WAC $ 20,473,000 (6) III-A-WAC(7) N/A
IV-PO $ 649,052 (6) III-PO N/A
IV-PO-X2 $ 578,949 (6) III-PO-X2 (8) N/A
IV-B-1' $ 45,230.00 (2) III-B-1 III-B-1 (5)
IV-B-1" $ 45,230.00 (2) III-B-1 III-B-1 (5)
IV-B-2' $ 69,350.00 (2) III-B-2 III-B-2 (5)
IV-B-2" $ 69,350.00 (2) III-B-2 III-B-2 (5)
IV-B-3' $ 54,270.00 (2) III-B-3 III-B-3 (5)
IV-B-3" $ 54,270.00 (2) III-B-3 III-B-3 (5)
IV-B-4' $ 48,240.00 (2) III-B-4 III-B-4 (5)
IV-B-4" $ 48,240.00 (2) III-B-4 III-B-4 (5)
IV-B-5' $ 18,090.00 (2) III-B-5 III-B-5 (5)
IV-B-5" $ 18,090.00 (2) III-B-5 III-B-5 (5)
IV-B-6' $ 15,102.00 (2) III-B-6 III-B-6 (5)
IV-B-6" $ 15,102.00 (2) III-B-6 III-B-6 (5)
IV-R-1 $ 166.66 (2) III-R-1, R-3 III-R-1 (5)
R-4 $ 33.33 8.00% N/A N/A (9)
- -----------------
(1) Except as otherwise indicated, the amount of principal and interest
allocable from a REMIC IV Certificate to its Corresponding Class of
Certificates on any Distribution Date shall be 100%. Principal payments
will be made on the Class R-4 Certificate pro-rata with principal
payments on the Class
IV-R-1 Certificate.
(2) The pass-through rate on these REMIC IV Certificates for any
Distribution Date shall equal the rate computed by (a)
dividing (i) the sum of the amounts computed for each
Mortgage Loan determined by multiplying the Unpaid Principal
Balance of each Mortgage Loan by the Net Rate of the
Mortgage Loan by (ii) the sum of the amounts computed for
each Mortgage Loan determined by multiplying the Non-PO
Percentage with respect to each Mortgage Loan by the Unpaid
Principal Balance of the Mortgage Loan.
(3) Principal will be allocated to the Class III-A-1, Class III-A- 2, Class
III-A-3, Class III-A-4, Class III-A-5, Class III-B-1, Class III-B-2,
Class III-B-3, Class III-B-4, Class III-B-5 and Class III-B-6 in an
amount equal to 98% of the payment to each of such Class III REMIC
Regular Certificates's REMIC I Corresponding Class.
(4) Interest in excess of the weighted average coupon of the
Single Prime and Double Prime Classes, where each Double
Prime Class is first subject to a cap and floor equal to the
Pass- Through Rate of its REMIC I corresponding class and
Single Prime Class is subject to a cap equal to 0%,
multiplied by the principal balance of the IV-A-1, will be
allocated to the Class III-C Certificates as a Separate
Component.
(5) Interest in excess of the Pass-Through Rate for the
corresponding Class will be allocated to the Class III-C
Certificate as a Separate Component.
(6) This Class of Certificates will be a principal only
Certificate and will not bear interest.
(7) The principal will be allocated to the Class III-A-WAC
Certificates as a Separate Component.
(8) The principal will be allocated to the Class III-PO-X2 Certificate as a
Separate Component having a principal balance of $578,949 for purposes
of Treasury Regulation ss. 1.860G- 1(a)(4)(i).
(9) On each Distribution Date, available funds, if any, remaining
in REMIC IV after payment of interest and principal, as
designated above, will be distributed to the Class R-4 Certificate
(which, so long as the Class R-4 Certificate is represented by the
Class R-2 Certificate, shall be paid to the Class R-2 Certificate).
REMIC III will be evidenced by (x) the Class III-A-1, Class III-A-2,
Class III-A-3, Class III-A-4, Class III-A-5, Class III-B-1, Class III- B-2,
Class III-B-3, Class III-B-4, Class III-B-5, Class III-B-6, Class III-A-WAC,
Class III-PO, Class III-PO-X2, Class III-R-1, and Class III- C Certificates
(the" REMIC III Regular Certificates"), which will be uncertificated and
non-transferable and are hereby designated as the "regular interests" in REMIC
III and (y) the Class R-3 Certificates, which are hereby designated as the
single "residual interest" in REMIC III. Except as discussed below, principal
and interest shall be paid on the REMIC III Regular Certificates in the same
order and priority as payments are to be made on the REMIC I Corresponding
Classes of Certificates (disregarding the interest payments on the Class A-WAC
and Class X-1 Certificates, and all payments other than the Contingent Surviving
Fee payable to the Class X-2 Certificates). The REMIC III Regular Certificates
and the Class R-3 Certificates will have the following designations and
pass-through rates, and distributions of principal and interest thereon shall be
allocated to the Corresponding Class of Certificates in the following manner:
Corresponding Class of
Certificates (1)
Pass- Allocation Allocation
REMIC III Initial Through of of
Certificates Balance Rate Principal Interest
III-A-1 $ 17,101,000 6.65% II-A-1 II-A-1
III-A-2 $ 31,486,000 7.00% II-A-2 II-A-2
III-A-3 $ 10,355,000 7.50 II-A-3 II-A-3
III-A-4 $ 5,525,000 7.85% II-A-4 II-A-4
III-A-5 $ 10,000,000 7.25% II-A-5 II-A-5
III-A-WAC $ 20,473,000 (2) II-A-WAC(3) N/A
III-PO $ 649,052 (2) II-PO N/A
III-PO-X2 $ 578,949 (2) II-PO-X2(4) N/A
III-B-1 $ 4,523,000 7.75% II-B-1 II-B-1
III-B-2 $ 6,935,000 8.00% II-B-2 II-B-2
III-B-3 $ 5,427,000 8.00% II-B-3 II-B-3
III-B-4 $ 4,824,000 8.00% II-B-4 II-B-4
III-B-5 $ 1,809,000 8.00% II-B-5 II-B-5
III-B-6 $ 1,510,320 8.00% II-B-6 II-B-6
III-C $ (5) (6) N/A II-X-1,II-C (7)
III-R-1 $ 133.33 (2) II-R-1,RR-2 II-R-1
R-3 $ 33.33 8.00% N/A N/A (8)
- -----------------
(1) Except as otherwise indicated, the amount of principal and interest
allocable from a REMIC IV Certificate to its Corresponding Class of
Certificates on any Distribution Date shall be 100%. Principal payments
will be made on the Class R-3 Certificates pro-rata with principal
payments on the Class III-R-1 Certificates.
(2) This Class of Certificates will be a principal only
Certificate and will not bear interest.
(3) The principal will be allocated to the Class II-A-WAC
Certificates as a Separate Component.
(4) The principal will be allocated to the Class II-X-2 Certificate as a
Separate Component having a principal balance of $578,949 for purposes
of Treasury Regulation ss. 1.860G- 1(a)(4)(i).
(5) This Class of Certificates will be an interest only Certificate and
will not receive principal and will have a notional amount equal to the
Notional Amount of the Class A-WAC Certificate.
(6) This Class of Certificates will be entitled to all interest described
in footnotes 4 and 5 of the discussion above of the
Class IV Certificates.
(7) The first eighteen basis points of interest paid to the Class
III-C Certificates will be allocated to the Class II-X-1
Certificate and the remainder will be allocated to the Class II-C
Certificate.
(8) On each Distribution Date, available funds, if any, remaining in REMIC
III after payment of interest and principal, as designated above, will
be distributed to the Class R-3 Certificate (which, so long as the
Class R-3 Certificate is represented by the Class R-2 Certificate,
shall be paid to the Class R-2 Certificate).
REMIC II will be evidenced by (x) the Class II-A-1, Class II-A-2, Class II-A-3,
Class II-A-4, Class II-A-5, Class II-B-1, Class II-B-2, Class II-B-3, Class
II-B-4, Class II-B-5, Class II-B-6, Class II-A-WAC, Class II-PO, Class
II-PO-X-2, Class II-R-1, Class II-X-1,and Class II-C Certificates (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
RR-2 Certificates, which are hereby designated as the single "residual interest"
in REMIC II. Except as discussed below, principal and interest shall be paid on
the REMIC II Regular Certificates in the same order and priority as payments are
to be made on the REMIC I Corresponding Classes of Certificates (disregarding
the interest payments on the Class A-WAC Certificates and all payments other
than the Contingent Servicing Fee payable to the Class X-2 Certificates). The
REMIC II Regular Certificates and the Class RR-2 Certificates will have the
following designations and pass-through rates, and distributions of principal
and interest thereon shall be allocated to the Corresponding Class of
Certificates in the following manner:
Corresponding Class of
Certificates (1)
Pass- Allocation Allocation
REMIC II Initial Through of of
Certificates Balance Rate Principal Interest
II-A-1 $ 17,101,000 6.65% A-1
A-1
II-A-2 $ 31,486,000 7.00% A-2 A-2
II-A-3 $ 10,355,000 7.50 A-3 A-3
II-A-4 $ 5,525,000 7.85% A-4 A-4
II-A-5 $ 10,000,000 7.25% A-5 A-5
II-A-WAC $ 20,473,000 (2) A-WAC (3) N/A
II-PO $ 649,052 (2) PO N/A
II-PO-X2 $ 578,949 (2) X2(4) N/A
II-B-1 $ 4,523,000 7.75% B-1 B-1
II-B-2 $ 6,935,000 8.00% B-2 B-2
II-B-3 $ 5,427,000 8.00% B-3 B-3
II-B-4 $ 4,824,000 8.00% B-4 B-4
II-B-5 $ 1,809,000 8.00% B-5 B-5
II-B-6 $ 1,510,320 8.00% B-6 B-6
II-X-1 $ (5) 0.18 N/A X-1
II-C $ (5) (6) N/A X-2,A-WAC (7)
II-R-1 $ 100 (2) R-1 R-1
RR-2 $ 33.33 8.00% N/A N/A (8)
- -----------------
(1) Except as otherwise indicated, the amount of principal and interest
allocable from a REMIC II Certificate to its Corresponding Class of
Certificates on any Distribution Date shall be 100%. Principal payments
will be made on the Class RR-2 Certificates pro-rata with principal
payments on the Class II-R-1 Certificates.
(2) This Class of Certificates will be a principal only
Certificate and will not bear interest.
(3) The principal will be allocated to the Class A-WAC
Certificates as a Separate Component.
(4) The principal will be allocated to the Class X-2 Certificate as a
Separate Component having a principal balance of $578,949 for purposes
of Treasury Regulation ss. 1.860G-1(a)(4)(i).
(5) This Class of Certificates will be an interest only Certificate and
will not receive principal and will have a notional amount equal to the
Notional Amount of the Class A-WAC Certificate.
(6) This Class of Certificates will be entitled to all interest paid on the
Class III-C Certificate other than the interest allocated to the Class
II-X-1 Certificate.
(7) The first 130 basis points of interest paid to the Class II-C
Certificates will be allocated to the Class X-2 Certificate and the
remainder will be allocated to the Class A-WAC Certificate as a
Separate Component.
(8) On each Distribution Date, available funds, if any, remaining
in REMIC II after payment of interest and principal, as
designated above, will be distributed to the Class RR-2 Certificate
(which, so long as the Class RR-2 Certificate is represented by the
Class R-2 Certificate, shall be paid to the Class R-2 Certificate).
<PAGE>
(d) The Classes of the Certificates shall have the following
designations, initial principal amounts and Pass-Through Rates:
Initial Principal Pass-Through
Designation Amount Rate
A-1 $ 17,101,000 6.65%
A-2 $ 31,486,000 7.00%
A-3 $ 10,355,000 7.50%
A-4 $ 5,525,000 7.85%
A-5 $ 10,000,000 7.25%
A-WAC $ 20,473,000 (1)
PO $ 649,052 (2)
X-1 $ 100,144,475* (3)
X-2 $ (4) (4)
B-1 $ 4,523,000 7.75%
B-2 $ 6,935,000 8.00%
B-3 $ 5,427,000 8.00%
B-4 $ 4,824,000 8.00%
B-5 $ 1,809,000 8.00%
B-6 $ 1,510,220 8.00%
R-1 $ 100 8.00%
R-2 $ 100 8.00%
* Original Notional Amount
(1) The Class A-WAC Certificates will have both a Current Principal
Amount and a notional amount equal to the Notional Amount. The Current
Principal Amount will not bear interest. The Class A-WAC Certificates
bear interest on the Notional Amount on each Distribution Date at a
variable Pass-Through Rate equal to the greater of (a) zero and (b)
the weighted average Net Rate less (i) the weighted average
Pass-Through Rate of the P&I Certificates, (ii) the Credit Enhancement
Percentage, (iii) the Accelerated Arrearage Percentage and (iv) the
Pass-Through Rate of the Class X-1 Certificates. The initial
Pass-Through Rate of the Class A-WAC Certificates will equal 1.09% per
annum on the Notional Amount. Interest will continue to be paid on the
Notional Amount after the Class A- WAC Current Principal Amount has
been reduced to zero.
(2) The Class PO Certificates are principal only Certificates and will
not bear interest.
(3) The Class X-1 Certificate will bear interest on the Notional Amount on
each Distribution Date at a variable rate equal to the lesser of (a)
0.18% and (b) the excess of (x) the weighted average Net Rate less (y)
the sum of (i) the weighted average Pass-Through Rate of the P&I
Certificates, (ii) the Credit Enhancement Percentage and (iii) the
Accelerated Arrearage Percentage; provided however that the interest
rate on the Class X-1 Certificates shall never be less than zero.
(4) The Class X-2 Certificates will be entitled to receive on
each Distribution Date (i) an amount equal to any remaining
portion of the Credit Enhancement Payment Amount to the
extent not required to be paid to the other Certificates to
achieve or maintain the Overcollateralization Limit, (ii)
following payment in full of all P&I Certificates, any
remaining Unpaid Principal Balance of the Mortgage Loans
other than the PO Percentage of the Unpaid Principal Balance
of the Discount Mortgage Loans and (iii) so long as an
Arrearage is outstanding but after the Class A-WAC Current
Principal Amount has been paid in full, collections of such
Arrearage, less any Contingent Servicing Fee needed to pay a
successor servicer, if any, together with the Accelerated
Arrearage Payment Amount.
(e) With respect to each Distribution Date, each Class of Certificates
(other than the Class PO and Class X-2 Certificates) shall accrue interest
during the related Interest Accrual Period. With respect to each Distribution
Date and each such Class of Certificates, interest shall be calculated based
upon the respective Pass-Through Rate set forth, or determined as provided,
above and the Current Principal Amount or Notional Amount, as the case may be,
of such Class applicable to such Distribution Date.
(f) The Certificates shall be substantially in the forms set forth in
Exhibit A-1 and A-2. On original issuance, the Trustee shall sign, countersign
and shall deliver them at the direction of the Seller. Pending the preparation
of definitive Certificates of any Class, the Trustee may sign and countersign
temporary Certificates that are printed, lithographed or typewritten, in
authorized denominations for Certificates of such Class, substantially of the
tenor of the definitive Certificates in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the officers or authorized signatories executing such Certificates may
determine, as evidenced by their execution of such Certificates. If temporary
Certificates are issued, the Seller will cause Definitive Certificates to be
prepared without unreasonable delay. After the preparation of Definitive
Certificates, the temporary Certificates shall be exchangeable for Definitive
Certificates upon surrender of the temporary Certificates at the office of the
Trustee, without charge to the Holder. Upon surrender for cancellation of any
one or more temporary Certificates, the Trustee shall sign and countersign and
deliver in exchange therefor a like aggregate principal amount, in authorized
denominations for such Class, of definitive Certificates of the same Class.
Until so exchanged, such temporary Certificates shall in all respects be
entitled to the same benefits as 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
increments of $1 in excess thereof, except that one Certificate of each such
Class may be issued in a different amount so that the sum of the denominations
of all outstanding Certificates of such Class shall equal the Current Principal
Amount (or in the case of the Class X-1 Certificates, the Notional Amount) of
such Class on the Closing Date. Each Class of Physical Certificates (other than
the Class R-1, Class R-2 and Class X-2) shall be issued in fully registered form
in minimum dollar denominations of $25,000 and integral multiples of $1 in
excess thereof, except that one Certificate of each Class may be in a different
denomination so that the sum of the denominations of all outstanding
Certificates of such Class shall equal the Current Principal Amount of such
Class on the Closing Date. The Class R-1 and Class R-2 Certificates shall be
issued in certificated fully-registered form in the denomination of $100 each.
The Class X-2 shall be issued in certificated fully registered form in
percentage interests of 20%. On the Closing Date, the Trustee shall execute and
countersign (i) one or more Book-Entry Certificates of each Class and/or (ii)
Physical Certificates all in an aggregate principal amount or Notional Amount or
Percentage Interest that shall equal the Current Principal Amount, Notional
Amount or Percentage Interest of such Class on the Closing Date. The Book-Entry
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 Trustee shall sign the
Certificates by facsimile or manual signature and countersign them by manual
signature on behalf of the Trustee by authorized signatories, who shall be
Responsible Officers of the Trustee or its agent. A Certificate bearing the
manual and facsimile signatures of individuals who were the authorized
signatories of the Trustee or its agent at the time of issuance shall bind the
Trustee, notwithstanding that such individuals or any of them have ceased to
hold such positions prior to the delivery of such Certificate.
(h) No Certificate shall be entitled to any benefit under this
Agreement, or be valid for any purpose, unless there appears on such Certificate
the countersignature of the Trustee or its agent, and such countersignature upon
any Certificate shall be conclusive evidence, and the only evidence, that such
Certificate has been duly executed and delivered hereunder. All Certificates
issued on the Closing Date shall be dated the Closing Date. All Certificates
issued thereafter shall be dated the date of their countersignature.
(i) The Closing Date is hereby designated as the "startup" day of each
REMIC within the meaning of Section 860G(a)(9) of the Code.
(j) For federal income tax purposes, each REMIC shall have a tax year
that is a calendar year and shall report income on an accrual basis.
(k) The Trustee shall cause each REMIC to elect to be treated as a
REMIC under Section 860D of the Code. Any inconsistencies or ambiguities in this
Agreement or in the administration of any Trust established hereby shall be
resolved in a manner that preserves the validity of such elections.
(l) The Assumed Final Distribution Date for each Class of Certificates
and REMIC II, REMIC III and REMIC IV Certificates is November 25, 2029.
(m) The Class R-2 Certificate may, at the request of the Holder
thereof, be separated into the three separate residual interests in REMIC II,
REMIC III and REMIC IV, respectively, and the Trustee shall issue separate
Certificates representing such interests. Each such separate Certificate shall
have one-third of the voting rights and remaining Current Principal Amount, if
any, of the Class R-2 Certificate prior to such separation.
Section 5.02. Registration of Transfer and Exchange of Certificates.
(a) The Trustee shall maintain at an office or agency a Certificate Register in
which, subject to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and of transfers and
exchanges of Certificates as herein provided.
(b) Subject to Subsection 5.01(a) and, in the case of each Class of
Physical Certificates upon the satisfaction of the conditions set forth below,
upon surrender for registration of transfer of any Certificate at any office or
agency of the Trustee maintained for such purpose, the Trustee shall sign,
countersign and shall deliver, in the name of the designated transferee or
transferees, a new Certificate of a like Class and aggregate Fractional
Undivided Interest, but bearing a different number.
(c) By acceptance of a Private 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(e), the following
restrictions shall apply with respect to the transfer and registration of
transfer of a Private Certificate after the original issuance thereof:
(i) The Trustee shall register the transfer of a Private
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 Private
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 a Private Certificate as shall be set
forth in such Opinion of Counsel.
(d) The Securities Legend shall be placed on any Private Certificate
issued in exchange for or upon transfer of another Private Certificate.
(e) Subject to the restrictions on transfer and exchange set forth in
this Section 5.02, the holder of any Individual Certificate may transfer or
exchange the same in whole or in part (in an initial certificate balance equal
to the minimum authorized denomination or any integral multiple of $1 in excess
thereof) by surrendering such Certificate at the Corporate Trust Office, or at
the office of any transfer agent, together with an executed instrument of
assignment and transfer satisfactory in form and substance to the Trustee in the
case of transfer and a written request for exchange in the case of exchange.
(f) 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 or Class R-2
Certificates, which shall each be $100, or the Class X-2 Certificates which
shall be 20%, 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.
(g) 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.
(h) 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.
(i) 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.
(j) The following legend shall be placed on each Class of Certificates
(other than the Class B-4, Class B-5, Class B-6 and Class X-2 Certificates),
whether upon original issuance or upon issuance of any other Certificate of any
such Class in exchange therefor or upon transfer thereof:
The acquisition of this Certificate by a purchaser
for, or on behalf of, a Plan will be deemed a representation
by such purchaser 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, 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.
(k) The following legend shall be placed on each Class B-4, Class B-5
and Class B-6 and Class X-2 Certificate, whether upon original issuance or upon
issuance of any other Certificate of any such Class in exchange therefor or upon
transfer thereof:
This Certificate may not be transferred to a Plan
unless the transferee provides a Benefit Plan Opinion to
the Trustee.
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates. (a)
If (i) any mutilated Certificate is surrendered to the Trustee, or the Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any
Certificate, and (ii) there is delivered to the Trustee such security or
indemnity as it may require to save it harmless, and (iii) the Trustee has not
received notice that such Certificate has been acquired by a third Person, the
Trustee shall sign, countersign and deliver, in exchange for or in lieu of any
such mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
tenor and Fractional Undivided Interest but in each case bearing a different
number. The mutilated, destroyed, lost or stolen Certificate shall thereupon be
canceled of record by the Trustee and shall be of no further effect and evidence
no rights.
(b) Upon the issuance of any new Certificate under this Section 5.03,
the Trustee may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Any duplicate Certificate issued pursuant to this Section 5.03 shall constitute
complete and indefeasible evidence of ownership in the Trust Fund, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
Section 5.04. Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, the Seller, the Master Servicer, the
Trustee and any agent of the Seller, the Master Servicer or the Trustee may
treat the Person in whose name any Certificate is registered as the owner of
such Certificate for the purpose of receiving distributions pursuant to Section
6.01 and for all other purposes whatsoever. Neither the Seller, the Master
Servicer, the Trustee nor any agent of the Seller, the Master Servicer or the
Trustee shall be affected by notice to the contrary. No Certificate shall be
deemed duly presented for a transfer effective on any Record Date unless the
Certificate to be transferred is presented no later than the close of business
on the third Business Day preceding such Record Date.
Section 5.05. Transfer Restrictions on Residual Certificates;
Designation of Tax Matters Person. (a) Residual Certificates, or interests
therein, may not be transferred without the prior express written consent of the
Trustee acting as the Agent of the Tax Matters Person. As a prerequisite to such
consent, the proposed transferee must provide the Trustee with an affidavit that
the proposed transferee is not a Disqualified Organization (as defined in
Subsection 5.05(b)) (and, unless the Trustee acting as the Agent of the Tax
Matters Person consents to the transfer to a person who is not a U.S. Person, an
affidavit that it is a U.S. Person) as provided in Subsection 5.05(b).
(b) No transfer, sale or other disposition of a Residual Certificate
(including a beneficial interest therein) may be made unless, prior to the
transfer, sale or other disposition of the Residual Certificate, the proposed
transferee (including the initial purchasers thereof) delivers to the Trustee
acting as the Agent of 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 Trustee on
behalf of 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 in any capacity 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 Trustee as its agent) 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, REMIC
II, REMIC III or REMIC IV to fail to qualify as a REMIC.
(c) Unless the Trustee as agent of the Tax Matters Person shall have
consented in writing (which consent may be withheld in such agent's sole
discretion), the Residual Certificates (including a beneficial interest therein)
may not be purchased by or transferred to any person who is not (i) a citizen or
resident of the United States, (ii) a corporation, partnership or other entity
created or organized in or under the laws of the United States or any political
subdivision thereof or (iii) an estate or trust that is subject to U.S. federal
income tax regardless of the source of its income.
(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 X-2, Class B-4, Class B-5 and Class B-6 Certificate
shall bear a Securities Legend.
Section 5.07. ERISA Restrictions. (a) No Class X-2, Class B-4, Class
B-5, or Class B-6 Certificates may be acquired for, or on behalf of, a Plan
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 the proposed transfer and/or holding of a
Certificate and the servicing, management and operation of the Trust and its
assets: (i) will not result in a prohibited transaction under Section 406 of
ERISA or Section 4975 of the Code which is not covered under an individual or
class prohibited transaction exemption including but not limited to Department
of Labor Prohibited Transaction Exemption ("PTE") 84-14 (Class Exemption for
Plan Asset Transactions Determined by Independent Qualified Professional Asset
Managers); PTE 91-38 (Class Exemption for Certain Transactions Involving Bank
Collective Investment Funds); PTE 90-1 (Class Exemption for Certain Transactions
Involving Insurance Company Pooled Separate Accounts), PTE 95-60 (Class
Exemption for Certain Transactions Involving Insurance Company General
Accounts), and PTCE 96-23 (Class Exemption for Plan Asset Transactions
Determined by In-House Asset Managers and (ii) will not 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 any Class of Certificates (other than a Class
B-4, Class B-5, Class B-6 or Class X-2 Certificate) for, or on behalf of a Plan
shall be deemed to have represented that the proposed transfer and/or holding of
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 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.
ARTICLE VI
Payments to Certificateholders
Section 6.01. Distributions on the Certificates.
(a) On each Distribution Date, the Trustee shall
withdraw the Available Funds from the Certificate Account and distribute them in
the following order of priority:
(i) to each Class of interest-bearing Senior
Certificates, the Accrued Certificate Interest on each such
Class for such Distribution Date, any Net Interest Shortfall
and the interest portion of Realized Losses allocable to the
interest-bearing Senior Certificates being allocated among
such Classes in proportion to the amount of Accrued
Certificate Interest otherwise distributable thereon;
(ii) to each Class of interest-bearing Senior
Certificates, any Accrued Certificate Interest thereon
remaining undistributed from previous Distribution Dates, any
shortfall in available amounts being allocated among such
Classes in proportion to the amount of such Accrued
Certificate Interest remaining undistributed for each such
Class on such Distribution Date (no interest shall be paid on
such undistributed amounts);
(iii) to the Senior Certificates (other than the
Class X-1 Certificates) in reduction of the Current
Principal Amounts thereof;
(a) the Senior P&I Optimal Principal Amount, in the
following order of priority:
(i) to the Class A-5 Certificates based upon
their Current Principal Amount up to the Class
A-5 Optimal Principal Amount for such
Distribution Date, until their Current Principal
Amount has been reduced to zero; and
(ii) first, concurrently, to the Class R-1 and
Class R-2 Certificates, pro rata, based upon
their Current Principal Amounts, and then
sequentially to the Class A-1, Class A-2, Class
A-3 and Class A-4 Certificates, in that order,
until the respective Current Principal Amounts
thereof have been reduced to zero;
(b) the Class PO Principal Distribution Amount for
such Distribution Date, to the Class PO
Certificates, until the Current Principal
Amount thereof has been reduced to zero; and
(c) the Class A-WAC Principal Distribution Amount
for such Distribution Date, to the Class A-WAC
Certificates, first, until the Class A-WAC
Current Principal Amount has been reduced to
zero, and then, until the Class A-WAC Deferred
Amount has been reduced to zero, and then to
the Class X-2 Certificates the Class A-WAC
Residual Distribution Amount until the
aggregate Arrearage has been reduced to zero;
(iv) the Class PO Deferred Amount for such
Distribution Date, to the Class PO Certificates; provided,
that (i) on any Distribution Date, distributions pursuant to
this priority (iv) shall not exceed the excess, if any, of (x)
the Available Funds remaining after giving effect to
distributions pursuant to clauses (i) through (iii) above over
(y) the sum of the amount of Accrued Certificate Interest for
such Distribution Date and Accrued Certificate Interest
remaining undistributed from previous Distribution Dates
on all Classes of Subordinate Certificates then outstanding
and the Credit Enhancement Payment Amount, (ii) such
distributions shall not reduce the Current Principal Amount of
the Class PO Certificates and (iii) no distribution will be
made in respect of the Class PO Deferred Amount after the
Cross-Over Date;
(v) the Class A-WAC Deferred Amount for such
Distribution Date, to the Class A-WAC Certificates; provided,
that (i) on any Distribution Date, distributions pursuant to
this priority (v) shall not exceed the excess, if any, of (x)
the Available Funds remaining after giving effect to
distributions pursuant to clauses (i) through (iv) above over
(y) the sum of the amount of Accrued Certificate Interest for
such Distribution Date and Accrued Certificate Interest
remaining undistributed from previous Distribution Dates
on all Classes of Subordinate Certificates then outstanding,
and the Credit Enhancement Payment Amount, (ii) such
distributions shall not reduce the Class A-WAC
Current Principal Amount and (iii) no distribution will be
made in respect of the Class A-WAC Deferred Amount
after the Cross-Over Date;
(vi) 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;
(vii) 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;
(viii) 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;
(ix) 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;
(x) 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;
(xi) 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; and
(xii) first to the Senior P&I Certificates sequentially, in
numerical order, commencing with the Class A-1 Certificates,
second to the Class PO Certificates in reduction of the Class
PO Deferred Amount, third to the Class A-WAC Certificates in
reduction of the Class A-WAC Deferred Amount, and fourth
to the Subordinate Certificates sequentially in numerical
order, commencing with the Class B-1 Certificates, the Credit
Enhancement Payment Amount until (i) the aggregate Unpaid
Principal Balance of all of the Mortgage Loans as of the Due
Date in the month of the Distribution Date exceeds (ii) the
Current Principal Amount of all the Certificates other than
the Class A-WAC Certificates by the Overcollateralization
Limit, and the remainder of the Credit Enhancement Payment
Amount to the Class X-2 Certificates.
If, on any Distribution Date, after distributions have been made
pursuant to clauses (i) and (ii) above on any Distribution Date, remaining
Available Funds are less than the sum of the Senior P&I Optimal Principal
Amount, the Class PO Principal Distribution Amount and the Class A-WAC Principal
Distribution Amount for such Distribution Date, such Amounts shall be
proportionately reduced, and such remaining Available Funds will be distributed
on the Senior Certificates (other than the Class X-1 Certificates) in accordance
with clauses (iii)(a), (iii)(b) and (iii) (c) above on the basis of such reduced
amounts. Notwithstanding any reduction in principal distributable to the Class
PO Certificates pursuant to this paragraph, the principal balance of the Class
PO Certificates shall be reduced not only by principal so distributed but also
by the Class PO Shortfall for such Distribution Date. Notwithstanding any
reduction in principal distributable to the Class A-WAC Certificates pursuant to
this paragraph, the principal balance of the Class A-WAC Certificates shall be
reduced not only by principal so distributed but also by the Class A-WAC
Shortfall for such Distribution Date. Any Class PO Cash Shortfall and Class
A-WAC Cash Shortfall with respect to a Distribution Date will be added to the
Class PO Deferred Amount and Class A-WAC Deferred Amount, respectively.
(b) On each Distribution Date, Available Funds, if any, remaining in
REMIC-I after payment of interest and principal, as described above, will be
distributed to the Class R-1 Certificates.
(c) If on any Distribution Date the Current Principal Amounts of the
Subordinate Certificates have each been reduced to zero, the amount
distributable as principal to the Senior Certificates (other than the Class PO,
Class A-WAC and Class X-1) for such Distribution Date and each succeeding
Distribution Date shall be allocated among all such Classes of Senior
Certificates, pro rata, on the basis of their respective Current Principal
Amounts immediately prior to such Distribution Date, regardless of the
priorities and amounts set forth in Subsection 6.01(a).
(d) On each Distribution Date, the funds available for distribution
shall be applied to distributions on the REMIC II Regular Interests in an amount
sufficient to make the distributions on the respective Corresponding Classes of
Certificates on such Payment Date in accordance with the provisions of
subsection (a) of this Section 6.01.
(e) No Accrued Certificate Interest will be payable with respect to
any class of Certificates after the Distribution Date on which the outstanding
principal balance (or Notional Amount) of such Certificate has been reduced to
zero.
Section 6.02. Maintenance of Letter of Credit; Draws Thereunder. (a)
EMC shall maintain and keep, or cause to be maintained and kept, a Letter of
Credit issued by a Qualified Letter of Credit Issuer in full force and effect
throughout the term hereof; provided, that EMC need not cause the reinstatement
of amounts drawn under the Letter of Credit except to the extent provided below.
The Letter of Credit shall be in substantially the form attached hereto as
Exhibit J. Such Letter of Credit shall be held by the Trustee in trust for the
benefit of the Certificate- holders as an asset of the Trust Fund.
(b) If the Master Servicer is unable to enforce or foreclose a
Mortgage Loan listed on the Schedule of Lost Notes attached hereto as Schedule K
due to the Master Servicer not having the original Mortgage Note, the Master
Servicer shall give the Trustee prompt written notice to such effect and
instruct the Trustee in writing to make, on the next Business Day, a drawing
under the Letter of Credit or from the Letter of Credit Replacement Account in
an amount equal to the Repurchase Price of such Mortgage Loan. All such amounts
shall be deposited in the Collection Account and be available for use in
accordance with Section 6.01 on such Distribution Date.
The original stated amount of the Lost Notes Letter of Credit will
equal $6,468,941. As of any date of determination until the expiration of the
Letter of Credit, the maximum amount available to be drawn thereunder will equal
the initial amount thereof less the sum of (i) any amounts drawn thereunder
since the Closing Date and (ii) following the recovery of a Lost Note or the
sale or other liquidation of a Mortgage Loan having a Lost Note, 50% of the
Legal Balance as of the Cut-off Date of the related Mortgage Loan.
Notwithstanding the foregoing, the amount of the Letter of Credit or the Letter
of Credit Replacement Account at any time shall not exceed the amount required
by the Rating Agencies, as evidenced in writing therefrom delivered to the
Trustee, to maintain the credit ratings of each Class of Certificate and will
not be reinstated once reduced, and no draw may exceed the stated amount of the
Letter of Credit at the time of such draw.
(c) Within two Business Days after each Distribution Date until the
final expiration of the Letter of Credit, the Trustee shall calculate the amount
remaining available under the Letter of Credit and shall confirm such amounts
with the Letter of Credit Issuer. On each anniversary of the Closing Date or on
such other date on which fees are payable and as to which the Master Servicer
has given the Trustee written notice, the Trustee shall withdraw funds or cause
funds to be withdrawn from the Credit Support Fee Account, to the extent funds
are on deposit in such account, to pay the fees for the Letter of Credit on a
timely basis; provided however, that if EMC has delivered the Guaranty to the
Trustee, so long as any of the Guarantor's ratings have not been downgraded
below the level set forth in Section 4.05(d), EMC shall pay all fees for the
Letter of Credit directly to the Letter of Credit Issuers.
(d) Unless drawn in full before such date, the initial stated
expiration date of the Letter of Credit will be June 30, 1997, and the Letter of
Credit may be renewed at the option of the Letter of Credit Issuer, to the
extent funds are available thereunder, for periods of six months through
November 25, 2029. If the Letter of Credit Issuer elects to renew a Letter of
Credit, it will provide to the Trustee 60 days' prior notice to such effect. The
Letter of Credit Issuer may terminate the Letter of Credit prior to its stated
maturity upon not less than 60 days' prior notice.
(e) If the then existing Letter of Credit is not renewed for
successive periods until November 25, 2029, or is terminated for any reason
(other than the exhaustion thereof) prior to November 25, 2029 the Trustee
shall, 30 days prior to the then stated expiration or the effective date of the
termination of the Letter of Credit, draw the entire amount then available under
the Letter of Credit in accordance with the terms thereof, unless there is
delivered to the Trustee a replacement Letter of Credit therefor or alternative
credit support which does not result in a reduction or withdrawal of the
existing ratings on each Class of Certificates as evidenced in writing by the
Rating Agencies. In addition, if at any time the Letter of Credit Issuer has
ceased to be a Qualified Letter of Credit Issuer, the Trustee shall draw the
entire amount then available to be drawn under the Letter of Credit which draw,
if such issuer is no longer a Qualified Letter of Credit Issuer as a result of
DCR lowering its rating of the short-term securities of such issuer below D-1+,
but not below D-1, or as a result of Moody rating the short-term securities of
such issuer below P-1+, but not below P-1, must be made within 30 days of the
Trustee's receipt of written notice from the Master Servicer to such effect but
in any event prior to the stated expiration date of the then existing Letter of
Credit; provided, however, that if, at any time, the Trustee receives such a
notice stating that DCR or Moody's has lowered its rating of the short-term
securities of such issuer below D-1 or P-1, respectively, such draw must be made
within three Business Days of the Trustee's receipt of such notice, unless in
each case, there is delivered to the Trustee a replacement Letter of Credit or
alternative credit support which does not result in a reduction or withdrawal of
the existing ratings of the Certificates as evidenced in writing by the Rating
Agencies. The Master Servicer shall notify the Trustee promptly after an
Authorized Officer of the Master Servicer obtains knowledge that the Letter of
Credit Issuer has ceased to be a Qualified Letter of Credit Issuer. The amount
so drawn shall be deposited in the Letter of Credit Replacement Account.
(f) The Trustee shall give prompt notice to the Master Servicer of the
amount and nature of any draws under the Letter of Credit, which requirement
shall be satisfied by delivery of copies of the sight draft and the drawing
certificate relating to each draw.
(g) The Trustee shall establish and maintain in the name of the
Trustee for the benefit of the Certificateholders a segregated trust account in
the corporate trust department of the Trustee (the "Letter of Credit Replacement
Account"). All amounts received by the Trustee pursuant to this Section 6.02,
shall be held by the Trustee as part of the Trust Fund. Amounts shall be
deposited into and withdrawn from the Letter of Credit Replacement Account in
accordance with this Section 6.02.
All cash constituting a replacement of the Letter of Credit in
accordance with the provisions of this Section 6.02 shall be deposited into the
Letter of Credit Replacement Account and held therein uninvested. Upon any such
deposit, such cash shall constitute the available amount under the Letter of
Credit for all purposes under this Agreement, and the Trustee shall withdraw
amounts therefrom in the same manner as provided in this Section 6.02 with
respect to draws under the Letter of Credit. Any such withdrawals from the
Letter of Credit Replacement Account shall be treated as draws under the Letter
of Credit for purposes of this Agreement.
If the available amount under the Letter of Credit would be reduced in
accordance with the provisions of this Section 6.02 other than as a result of a
draw and consequently the balance of the Letter of Credit Replacement Account is
to be reduced in accordance with the preceding paragraph, cash equal to the
amount of such reduction shall be withdrawn from the Letter of Credit
Replacement Account on the next succeeding Distribution Date and paid by the
Trustee to the Letter of Credit Issuer or its designee. If there shall have been
obtained by the Master Servicer from a Qualified Letter of Credit Issuer a
substitute for the Letter of Credit hereunder in accordance with the provisions
of this Section 6.02, all cash credited to the Letter of Credit Replacement
Account with respect to the Letter of Credit shall be withdrawn from the Letter
of Credit Replacement Account and paid by the Trustee to the original Letter of
Credit Issuer on the first Distribution Date after receipt by the Trustee of an
Opinion of Counsel that such payment will not have an adverse impact on the tax
treatment of the Trustee. Any amounts to be paid to the Letter of Credit Issuer
pursuant to this paragraph shall not be payable to, nor be subject to the claims
or rights of, the holders of Certificates, the holders of Trust Certificates,
the Master Servicer or the Trustee.
The Letter of Credit Replacement Account will terminate upon
termination of this Agreement pursuant to Article X. Upon termination, all
amounts remaining in the Letter of Credit Replacement Account shall be
distributed by the Trustee to the Letter of Credit Issuer and such amounts shall
not be payable to, nor be subject to any claims or rights of, the holders of any
Certificates, the Master Servicer or the Trustee.
Section 6.03. Allocation of Losses. (a) On or prior to each Reporting
Date, the Master Servicer shall determine the amount of any Realized Loss in
respect of each Mortgage Loan that occurred during the immediately preceding
calendar month. The Trustee shall then allocate (i) Realized Losses on a pro
rata basis between the PO Percentage of the Unpaid Principal Balance of a
Mortgage Loan which suffered a Realized Loss and the Non-PO Percentage of the
Unpaid Principal Balance of such Mortgage Loan as through the related Mortgage
Loan did not have any Arrearage, whether or not that is in fact the case and
then (ii) allocate the aggregate amount of Realized Losses allocated to the
Non-PO Percentages of the Unpaid Principal Balance of all Mortgage Loans which
suffered Realized Losses during the related Due Period, between the aggregate
Non-PO Percentages of the Unpaid Principal Balances of such Mortgage Loans, on
the one hand and the aggregate Arrearage, on the other hand, to determine the
portion of such Realized Losses allocated to the P&I Certificates, on the one
hand (the "P&I Realized Losses"), and the Class A-WAC Certificates on the other
(the "A-WAC Realized Losses"); provided that the amount allocated to A-WAC
Realized Losses shall not exceed the lesser of (a) the Current Principal Amount
of the Class A-WAC Certificates then Outstanding and (b) the aggregate of the
Arrearages owing on such Mortgage Loans.
(b) With respect to any Distribution Date, the principal portion of
each Realized Loss (other than any Excess Special Hazard Loss, Excess Fraud Loss
and Excess Bankruptcy Loss) shall be allocated as follows:
(i) the applicable PO Percentage of any such Realized
Loss shall be allocated to the Class PO Certificates; and
(ii) P&I Realized Losses 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;
seventh, to the Classes of Senior Certificates (other
than the Class A-WAC, Class PO, Class X-1 and Class X-2
Certificates), pro rata, in accordance with their Current
Principal Amounts; and
(iii) the A-WAC Realized Losses shall be allocated to
the Class A-WAC Certificates.
(c) With respect to any Distribution Date, the principal
portion of any Excess Loss (other than those attributable to Debt Service
Reductions) shall be allocated as follows:
(i) the applicable PO Percentage of any such
Excess Loss shall be allocated to the Class PO
Certificates;
(ii) the P&I Realized Losses resulting from such
Excess Losses shall be allocated among all Classes of
Certificates (other than the Class PO, Class A-WAC, Class X-1
and Class X-2 Certificates), pro rata, based on the respective
Current Principal Amounts thereof; and
(iii) the A-WAC Realized Losses resulting from such
Excess Losses shall be allocated to the Class A-WAC
Certificates
(d) (i) Notwithstanding the foregoing, no such allocation of any
Realized Loss shall be made on a Distribution Date to a Class of P&I
Certificates or Class PO Certificates to the extent that such allocation would
result in the reduction of the aggregate Current Principal Amounts of all the
P&I Certificates and Class PO 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 Unpaid Principal Balance of the
Mortgage Loans as of the first day of the month of such Distribution Date, less
any Deficient Valuations occurring on or prior to the Bankruptcy Coverage
Termination Date (such limitation, the "Loss Allocation Limitation").
(ii) Notwithstanding the foregoing, no such allocation of any
Realized Loss shall be made on a Distribution Date to the Class A-WAC
Certificates to the extent that such allocation would result in the reduction of
the aggregate Current Principal Amount of the Class A-WAC 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 97.25% of
the aggregate Arrearages owing on the Mortgage Loans as of the first day of the
month of such Distribution Date, less any Deficient Valuations occurring on or
prior to the Bankruptcy Coverage Termination Date (such limitation, the "A-WAC
Loss Allocation Limitation").
(e) Any Realized Losses allocated to a Class of Certificates pursuant
to Subsections 6.03(b) or (c) shall be allocated among the Certificates of such
Class in proportion to their respective Current Principal Amounts. Any
allocation of Realized Losses pursuant to this Subsection 6.03(e) shall be
accomplished by reducing the Current Principal Amount of the related
Certificates on the related Distribution Date in accordance with Subsection
6.03(f).
(f) Realized Losses allocated in accordance with this Section 6.03
shall be allocated on the Distribution Date in the month following the month in
which such loss was incurred and, in the case of the principal portion thereof,
after giving effect to distributions made on such Distribution Date, except that
the aggregate amount of Realized Losses to be allocated to the Class PO and
Class A-WAC Certificates on such Distribution Date will be taken into account in
determining distributions in respect of the Class PO Deferred Amount and Class
A-WAC Deferred Amount, respectively.
(g) On each Distribution Date, the Trustee shall determine the
Subordinate Certificate Writedown Amount, if any. Any such Certificate Writedown
Amount shall effect a corresponding reduction in the Current Principal Amount of
(i) if prior to the Cross-Over Date, the Subordinate Certificates in the reverse
order of their numerical Class designations and (ii) after the Cross-Over Date,
the Senior Certificates pro rata based in their respective Current Principal
Amounts, which reduction shall occur on such Distribution Date after giving
effect to distributions made on such Distribution Date.
(h) On each Distribution Date, on or prior to the Cross- Over Date,
the Trustee shall determine the Class PO Deferred Payment Amount Writedown
Amount and Class A-WAC Deferred Payment Writedown Amount, if any. Any such Class
PO Deferred Payment Writedown Amount and Class A-WAC Deferred Payment Writedown
Amount shall effect a corresponding reduction in the Current Principal Amount of
the Subordinate Certificates in the reverse order of their numerical Class
designations.
(i) The interest portion of any Realized Losses occurring prior to the
Cross-Over Date will not be allocated among any Certificates, but will reduce
the amount of Available Funds on the related Distribution Date. As a result of
the subordination of the Subordinate Certificates in right of distribution, such
Realized Losses on the Mortgage Loans will be borne first by the Subordinate
Certificates in inverse order of their numerical Class designations.
(j) The principal portion of Debt Service Reductions will not be
allocated in reduction of the Current Principal Amount of any Certificate.
However, after the Bankruptcy Coverage Termination Date, the amount
distributable under clause (i) of each of the definitions of Senior P&I Optimal
Principal Amount, Class PO Principal Distribution Amount, Class A-WAC Principal
Distribution Amount and Subordinate Optimal Principal Amount will be reduced by
the amount of any Debt Service Reductions. Regardless of when they occur, Debt
Service Reductions may reduce the amount of Available Funds otherwise available
for distribution on a Distribution Date. As a result of the subordination of the
Subordinate Certificates in right of distribution, any Debt Service Reductions
prior to the Bankruptcy Coverage Termination Date will be borne by the
Subordinate Certificates (to the extent then outstanding) in inverse order of
priority.
Section 6.04. Allocation of Liquidation Proceeds. Liquidation Proceeds
received with respect to a Liquidated Mortgage Loan during any Due Period will
be allocated by the Trustee first on a pro rata basis between the PO Percentage
of the Unpaid Balance of such Mortgage Loan and the Non-PO Percentage of such
Unpaid Principal Balance as though the related Mortgage Loan did not have any
Arrearage, whether or not that is in fact the case. The amount of such
Liquidation Proceeds allocated to the Non-PO Percentage of the Unpaid Principal
Balance of a Mortgage Loan will then be aggregated with the portion of
Liquidation Proceeds allocated to the Non-PO Percentage of the Unpaid Principal
Balance of each other Liquidated Mortgage Loan with respect to which Liquidation
Proceeds were obtained during the related Prepayment Period, and the aggregate
of such amounts will then be allocated on a pro rata basis, between the
aggregate Non-PO Percentages of the Unpaid Principal Balances of such Mortgage
Loans, on the one hand, and the aggregate Arrearage, on the other hand, to
determine the portion of such Liquidation Proceeds allocable to the P&I
Certificates, on the one hand (the "P&I Liquidation Proceeds"), and the Class
A-WAC Certificates on the other hand (the "A-WAC Liquidation Proceeds" and, with
the P&I Liquidation Proceeds, the "Non-PO Liquidation Proceeds"); provided that
such allocation to Arrearages shall not exceed the lesser of (x) the aggregate
Arrearages owing on such Liquidated Mortgage Loans and (y) the remaining Class
A-WAC Current Principal Amount.
Section 6.05. Payments. (a) No later than the Determination Date, the
Master Servicer shall provide to the Trustee any information with respect to the
Mortgage Loans required to enable the Trustee to make, or cause its agent to
make, distributions on the Certificates and prepare reports to
Certificateholders.
(b) On each Distribution Date, other than the final Distribution Date,
the Trustee shall distribute to each Certificateholder of record on the directly
preceding Record Date the Certificateholder's pro rata share of its Class (based
on the aggregate Fractional Undivided Interest represented by such Holder's
Certificates) of all amounts required to be distributed on such Distribution
Date to such Class. The Trustee shall calculate such amounts based upon the
information provided by the Master Servicer pursuant to Subsection 6.05(a).
(c) Payment of the above amounts to each Certificateholder shall be
made (i) by check mailed to each Certificateholder entitled thereto at the
address appearing in the Certificate Register or (ii) upon receipt by the
Trustee on or before the fifth Business Day preceding the Record Date of written
instructions from a Certificateholder holding Certificates representing an
initial aggregate Current Principal Amount and/or Notional Amount of not less
than $1,000,000 or percentage interest in the case of the Class X-2 Certificates
of 20% 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 containing the charts
attached hereto as Exhibit L, duly completed for the relevant time periods, and
setting forth the following information, expressed with respect to clauses (i)
through (vi) in the aggregate and as a Fractional Undivided Interest
representing an initial Current Principal Amount of $1,000, or, in the case of
the Class A-WAC or Class X-1 Certificates, a Notional Amount of $1,000, or, in
the case of the Class X-2 Certificates a percentage interest of 20% or, in the
case of the Class R-1 or R-2 Certificates, an initial Current Principal Amount
of $100:
(i) the Current Principal Amount (or Notional Amount
in the case of the Class A-WAC and Class X-1 Certificates) of
each Class of Certificates immediately prior to such
Distribution Date;
(ii) the amount of the distribution allocable to
principal on each applicable Class of Certificates;
(iii) the aggregate amount of interest accrued at the
related Pass-Through Rate with respect to each Class of
Certificates (other than the Class PO and Class X-2
Certificates) during the related Interest Accrual Period;
(iv) the Interest Shortfall and any other
adjustments to interest at the related Pass-Through Rate
necessary to account for any difference between interest
accrued and aggregate interest distributed with respect to
each Class of Certificates (other than the Class PO and Class
X-2 Certificates);
(v) the amount of the distribution allocable to
interest on each Class of Certificates (other than the Class
PO and Class X-2 Certificates);
(vi) the amount of principal distribution on the Class
A-WAC Certificates resulting from interest payments on the
Mortgage Loans with respect to such Distribution Date;
(vii) the Class X-1 and Class A-WAC Pass-Through Rates and
the amounts payable to the Class X-2 Certificates with respect
to such Distribution Date;
(viii) the Current Principal Amount and/or Notional Amount
of each applicable Class of Certificates after such
Distribution Date, the Class PO Deferred Amount and
the Class A-WAC Deferred Amount;
(ix) the amount of any Monthly Advances and
Compensating Interest Payments by the Master Servicer
included in such distribution;
(x) the amount of any Realized Losses (listed separately
for each category of Realized Loss) during the related
Prepayment Period and the amount and source
(separately identified) of any distribution in respect
thereof included in such distribution;
(xi) the amount of Arrearage, Scheduled Principal and
Principal Prepayments (including but separately identifying
the principal amount of Net Liquidation Proceeds);
(xii) the number of Mortgage Loans (excluding REO
Property) remaining in the Trust Fund as of the end of
the related Due Period;
(xiii) information regarding any Mortgage Loan delinquencies
as of the end of the related Due Period, including the
aggregate number, Arrearage, Unpaid Principal Balance and
Legal Balance of Mortgage Loans delinquent one month, two
months and three months or more;
(xiv) the aggregate Arrearage due on the related Due
Date;
(xv) the number of Mortgage Loans in the foreclosure
process as of the end of the related Due Period and the
aggregate Unpaid Principal Balance, Arrearage and Legal
Balance of such Mortgage Loans together with the percentage
each represents of the total Unpaid Principal Balance,
Arrearage and Legal Balance then owing;
(xvi) the number of Mortgage Loans with respect to which the
related Mortgagor was bankrupt as of the end of the related
Due Period and the aggregate Unpaid Principal Balance,
Arrearage and Legal Balance of such Mortgage Loans together
with the percentage each represents of the total Unpaid
Principal Balance, Arrearage and Legal Balance then owing;
(xvii) the number and aggregate Outstanding Balance,
Arrearage and Legal Balance of all Mortgage Loans which were
REO Property as of the end of the related Due Period together
with the percentage each represents of the total Outstanding
Balance, Arrearage and Legal Balance then owing;
(xviii) the book value (the sum of (A) the Outstanding
Balance of the Mortgage Loan and (B) accrued interest
on the Unpaid Principal Balance through the date of
foreclosure and (C) foreclosure expenses) of any REO Property;
provided that, in the event that such information is not
available to the Master Servicer and the Trustee on the
Distribution Date, such information shall be furnished
promptly after it becomes available;
(xviii) 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;
(xix) the then applicable Senior Percentage, Senior
Prepayment Percentage, Subordinate Percentage and
Subordinate Prepayment Percentage; and
(xx) the ratio based on the aggregate Legal Balance
divided by the most recent Quick Sale Value as of the
end of the related Due Period for each Mortgage Loan in the
Foreclosure process and each Mortgage Loan which is REO
Property.
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 prior calendar year. Copies of such report shall also
be furnished to the Master Servicer. Such obligations shall be deemed to have
been satisfied to the extent that substantially comparable information shall be
provided by the Trustee pursuant to the requirements of the Code.
The Master Servicer shall supply to the Trustee in a timely manner the
information required for the statements described above which, where
appropriate, shall be the information from which the Trustee can calculate the
statements it is required to make.
Section 6.07. Reports to the Trustee and the Master Servicer. (a) Not
later than 15 days after each Distribution Date, the Trustee shall forward to
the Master Servicer a statement setting forth the status of the Certificate
Account and the Custody Account as of the close of business on the last day of
the month of the Distribution Date and showing, for the month covered by such
statement, deposits in or withdrawals from the Certificate Account and the
Custody Account.
(b) On or before the Reporting Date, the Master Servicer shall provide
to the Trustee and the Rating Agencies, with respect to the Mortgage Loans and
the REO Property, respectively, a Loan Summary and Remittance Report 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 7th Business Day of such month
with respect to the Mortgage Loans and REO Property and containing the following
information (in respect of the REO Property, only such information which is
applicable):
(i) Aggregate deposits to and withdrawals from
the Certificate Account since the date of the prior statement,
stated separately for each category of deposit specified in
Section 4.02 and each category of withdrawal specified in
Section 4.03, indicating separately the aggregate of amounts
withdrawn which are not applicable to a particular Mortgage
Loan;
(ii) Amount of Available Funds expected for the related
Distribution Date and attributable to each of the following
categories:
(A) regularly scheduled principal;
(B) regularly scheduled Arrearage;
(C) Principal Prepayments (stated separately for
partial and full prepayments and Net
Liquidation Proceeds, stating Liquidation
Proceeds and Liquidation Expenses
separately);
(D) Insurance Proceeds;
(E) interest on the Mortgage Loans;
(F) Monthly Advances made by the Master Servicer;
(G) Certificate Account Advances;
(H) Compensating Interest Payments; and
(I) reimbursements in connection with losses on
Permitted Investments.
(iii) Aggregate Outstanding Balances of the Mortgage Loans
as of the related Due Date, without giving effect to payments
due on such date;
(iv) Aggregate Arrearage of the Mortgage Loans as of the
related Due Date, without giving effect to payments due on
such date;
(v) Realized Losses for the prior month and, in
the aggregate, from the Closing Date;
(vi) the most recent Quick Sale Value as of the end of
the related Due Period for each Mortgage Loan in the
foreclosure process and each Mortgage Loan which is REO
Property;
(vii) Aggregate Unpaid 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 the
provisions of the Relief Act;
(xi) Amount drawn under the Letter of Credit;
(xii) Remaining amount available to be drawn under
the Letter of Credit;
(xiii) 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;
(xiv) Aggregate Master Servicing Fee for the
related Due Period; and
(xv) Such other information regarding each Mortgage Loan,
including an updated Mortgage Loan Schedule in magnetic tape
format, as may be reasonably requested by the Trustee.
Section 6.08. Monthly Advances. (a) If the Original Scheduled Payment
(together with any advances from the Sub-Servicers) on a Mortgage Loan that was
due on the Due Date in the month of a Distribution Date and is delinquent other
than as a result of application of the Relief Act exceeds the amount deposited
in the Custody Account or the Certificate Account which will be used for a
Certificate Account Advance with respect to such Mortgage Loan, the Master
Servicer will deposit in the Certificate Account not later than the Advancing
Date immediately preceding the related Distribution Date an amount equal to such
deficiency net of the related Master Servicing Fee for such Mortgage Loan except
to the extent the Master Servicer determines any such advance to be
nonrecoverable from Liquidation Proceeds, Insurance Proceeds or future payments
on the Mortgage Loan for which such Monthly Advance was made. Subject to the
foregoing, the Master Servicer shall continue to make such advances through the
date that the related Mortgaged Property has, in the judgment of the Master
Servicer, been completely liquidated. Any amount used as a Certificate Account
Advance shall be replaced by the Master Servicer by deposit in the Certificate
Account on or before any future date on which and to the extent that funds in
the Certificate Account on such date are less than the amount required to be
transferred by the Master Servicer to the Certificate Account. If applicable, on
the fifth Business Day preceding each Distribution Date, the Master Servicer
shall present an Officer's Certificate to the Trustee (i) stating that the
Master Servicer elects not to make a Monthly Advance in a stated amount and (ii)
detailing the reason it deems the advance to be nonrecoverable.
(b) No Monthly Advance or Certificate Account Advance with respect to
a Mortgage Loan will exceed the related Original Scheduled Payment; such
Advances will cover delinquencies on Arrearage payments only after the Unpaid
Principal Balance on the related Mortgage Loan has been reduced to zero, and
will only be made with respect to a given Mortgage Loan in an amount up to the
Original Scheduled Payment for such Mortgage Loan.
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.
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 and an approved HUD mortgagee; (b) shall, in the case of successor
master servicers only, have a net worth of not less than $10,000,000 (unless
otherwise approved by each Rating Agency pursuant to clause (ii) below); (c)
shall be reasonably satisfactory to the Trustee (as evidenced in a writing
signed by the Trustee) as having a comparable servicing ability to that of the
Master Servicer on the Closing Date; (d) shall execute and deliver to the
Trustee an agreement, in form and substance reasonably satisfactory to the
Trustee, which contains an assumption by such Person of the due and punctual
performance and observance of each covenant and condition to be performed or
observed by it as master servicer under this Agreement, any custodial agreement
and any agreement substantially in the form of Exhibit G hereto from and after
the effective date of such agreement; (ii) each Rating Agency shall be given
prior written notice of the identity of the proposed successor to the Master
Servicer and each Rating Agency's rating of the Certificates in effect
immediately prior to such assignment, sale and delegation will not be downgraded
or withdrawn as a result of such assignment, sale and delegation, as evidenced
by a letter to such effect delivered to the Master Servicer and the Trustee; and
(iii) the Master Servicer assigning and selling the master servicing shall
deliver to the Trustee an Officer's Certificate and an Opinion of Independent
Counsel, each stating that all conditions precedent to such action under this
Agreement have been completed and such action is permitted by and complies with
the terms of this Agreement. No such assignment or delegation shall affect any
liability of the Master Servicer arising prior to the effective date thereof.
ARTICLE VIII
Default
Section 8.01. 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 a HUD approved mortgagee, and with respect to a
successor to the Master Servicer only, having a net worth of not less than
$10,000,000, as the successor to the Master Servicer hereunder in the assumption
of all or any part of the responsibilities, duties or liabilities of the Master
Servicer hereunder. Pending appointment of a successor to the Master Servicer
hereunder, the Trustee shall act in such capacity as hereinabove provided. In
connection with such appointment and assumption, the Trustee may make such
arrangements for the compensation of such successor out of payments on the
Mortgage Loans as it and such successor shall agree; provided, however, that no
such compensation shall be in excess of that permitted the Trustee under this
Subsection 8.02(a), and that such successor shall undertake and assume the
obligations of the Trustee to pay compensation to any third Person acting as an
agent or independent contractor in the performance of master servicing
responsibilities hereunder. The Trustee and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession.
(b) If the Trustee shall succeed to any duties of either the Master
Servicer respecting the Mortgage Loans as provided herein, it shall do so in a
separate capacity and not in its capacity as Trustee and, accordingly, the
provisions of Article IX shall be inapplicable to the Trustee in its duties as
the successor to the Master Servicer in the servicing of the Mortgage Loans
(although such provisions shall continue to apply to the Trustee in its capacity
as Trustee); the provisions of Article VII, however, shall apply to it in its
capacity as successor master servicer.
Section 8.03. Notification to Certificateholders. Upon any termination
or appointment of a successor to the Master Servicer, the Trustee shall give
prompt written notice thereof to Certificateholders at their respective
addresses appearing in the Certificate Register and to the Rating Agencies.
Section 8.04. Waiver of Defaults. The Trustee shall transmit by mail
to all Certificateholders, within 60 days after the occurrence of any Event of
Default known to the Trustee, unless such Event of Default shall have been
cured, notice of each such Event of Default hereunder known to the Trustee. The
Holders of Certificates evidencing Fractional Undivided Interests aggregating
not less than 51% of the Trust Fund may, on behalf of all Certificateholders,
waive any default by the Master Servicer in the performance of its obligations
hereunder and the consequences thereof, except a default in the making of or the
causing to be made any required distribution on the Certificates. Upon any such
waiver of a past default, such default shall be deemed to cease to exist, and
any Event of Default arising therefrom shall be deemed to have been timely
remedied for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereon except to the
extent expressly so waived. The Master Servicer shall give notice of any such
waiver to the Rating Agencies.
Section 8.05. List of Certificateholders. Upon written request of
three or more Certificateholders of record, for purposes of communicating with
other Certificateholders with respect to their rights under this Agreement, the
Trustee will afford such Certificateholders access during business hours to the
most recent list of Certificateholders held by the Trustee.
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 EMC
pursuant to this Agreement or the eligibility of any Mortgage
Loan for purposes of this Agreement.
Section 9.03. Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates (other than the signature
and countersignature of the Trustee on the Certificates) shall be taken as the
statements of the Seller, and the Trustee shall have no responsibility for their
correctness. The Trustee makes no representation as to the validity or
sufficiency of the Certificates (other than the signature and countersignature
of the Trustee on the Certificates) or of any Mortgage Loan except as expressly
provided in Sections 2.02 and 2.05 hereof. The Trustee's signature and
countersignature (or countersignature of its agent) on the Certificates shall be
solely in its capacity as Trustee and shall not constitute the Certificates an
obligation of the Trustee in any other capacity. The Trustee shall not be
accountable for the use or application by the Seller of any of the Certificates
or of the proceeds of such Certificates, or for the use or application of any
funds paid to the Seller with respect to the Mortgage Loans. Subject to the
provisions of Section 2.05, the Trustee shall not be responsible for the
legality or validity of this Agreement or any document or instrument relating to
this Agreement, the validity of the execution of this Agreement or of any
supplement hereto or instrument of further assurance, or the validity, priority,
perfection or sufficiency of the security for the Certificates issued hereunder
or intended to be issued hereunder. The Trustee shall at no time have any
responsibility or liability for or with respect to the legality, validity and
enforceability of any Mortgage or any Mortgage Loan, or the perfection and
priority of any Mortgage or the maintenance of any such perfection and priority,
or for or with respect to the sufficiency of the Trust Fund or its ability to
generate the payments to be distributed to Certificateholders, under this
Agreement. The Trustee shall have no responsibility for filing any financing or
continuation statement in any public office at any time or to otherwise perfect
or maintain the perfection of any security interest or lien granted to it
hereunder or to record this Agreement.
Section 9.04. Trustee May Own Certificates. The Trustee in its
individual capacity or in any capacity other than as Trustee hereunder may
become the owner or pledgee of any Certificates with the same rights it would
have if it were not Trustee, and may otherwise deal with the parties hereto.
Section 9.05. Trustee's Fees and Expenses. The Master Servicer
covenants and agrees to pay to the Trustee the Trustee's Fee with respect to the
calendar month in which the Closing Date occurs. With respect to the calendar
month following the month in which the Closing Date occurs and all subsequent
calendar months, the Trustee's Fee shall be paid from the Certificate Account,
pursuant to Subsection 4.03(b). If the funds in the Certificate Account are not
sufficient to pay the Trustee's Fees, the Master Servicer will be liable for
payment of the Trustee's Fees. The Master Servicer further covenants and agrees
to pay or reimburse the Trustee from time to time upon request for all
reasonable out-of-pocket expenses, disbursements and advances incurred or made
by the Trustee in the administration of the trusts hereunder as set forth in a
fee letter sent by the Trustee to the Master Servicer (including the reasonable
compensation, expenses and disbursements of its counsel) except any such
expense, disbursement or advance as may arise from its negligence or intentional
misconduct or which is the responsibility of the Certificateholders or the Trust
Fund hereunder. Such compensation and reimbursement obligation shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust.
Section 9.06. Eligibility Requirements for Trustee. The Trustee and
any successor Trustee shall during the entire duration of this Agreement be a
state bank or trust company or a national banking association and organized and
doing business under the laws of such state or the United States of America,
authorized under such laws to exercise corporate trust powers, having a combined
capital and surplus and undivided profits of at least $40,000,000 or, in the
case of a successor Trustee, $50,000,000, subject to supervision or examination
by federal or state authority and, in the case of a successor Trustee other than
pursuant to Section 9.10, rated in one of the two highest long-term debt
categories of, or otherwise acceptable to, each of the Rating Agencies. The
Trustee shall not be an Affiliate of the Master Servicer, unless the Trustee
acts as successor Master Servicer hereunder. If the Trustee publishes reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section 9.06 the combined capital and surplus of such corporation shall be
deemed to be its 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 and
(ii) theft of documents insurance. All such insurance shall be in amounts, with
standard coverage and subject to deductibles, as are customary for insurance
typically maintained by banks which act as custodians for investor- owned
mortgage pools. A certificate of an officer of the Trustee as to the Trustee's
compliance with this Section 9.07 shall be furnished to the Master Servicer or
any Certificateholder upon 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 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, REMIC II, REMIC III and REMIC IV shall be a calendar year and
the Trustee shall maintain or cause the maintenance of the books of each of
REMIC I, REMIC II, REMIC III and REMIC IV 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, REMIC II, REMIC III and REMIC IV 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, REMIC II, REMIC III and REMIC IV (the
"REMIC Reporting Agent") as required by IRS Form 8811. The Trustee shall make
the elections to treat each of REMIC I, REMIC II, REMIC III and REMIC IV as a
REMIC (which election shall apply to the taxable period ending December 31, 1996
and each calendar year thereafter) in such manner as the Code or applicable
Treasury regulations may prescribe. The Trustee shall sign all tax information
returns filed pursuant to this Section and any other returns as may be required
by the Code, and in doing so shall rely entirely upon, and shall have no
liability for information provided by, or calculations provided by, the Seller
or the Master Servicer. The Holder of the Class R-1 Certificate is hereby
designated as the "Tax Matters Person" (within the meaning of Treas. Reg.
Section 1.860F-4(d)) for REMIC I, and the Holder of the Class R-2 Certificate
is hereby designated as "Tax Matters Person" for each of REMIC II, REMIC III and
REMIC IV; provided that following any separation of the Class RR-2, Class R-3
and Class R-4 Certificates, the Holder of the Class RR-2, Class R-3 and Class
R-4 Certificates will be the Tax Matters Person for REMIC II, REMIC III and
REMIC IV, respectively. 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
Tax Matters Person for each of REMIC I, REMIC II, REMIC III and REMIC IV 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 other
income tax returns required under Applicable State Law with respect to each of
REMIC I, REMIC II, REMIC III and REMIC IV or the Trust Fund.
ARTICLE X
Termination
Section 10.01. Termination Upon Repurchase by EMC 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 EMC
or its designee of all Mortgage Loans and all property
remaining in the Trust at a price equal to (a) 100% of the
Legal 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 on the
Unpaid Principal Balance thereof, (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 the Unpaid
Principal Balance portion thereof but unpaid through and
including the last day of the month of repurchase), less the
good faith estimate of the Master Servicer of liquidation
expenses to be incurred in connection with its disposal
thereof, such appraisal to be calculated by an appraiser
mutually agreed upon by the Master Servicer and the Trustee at
the expense of the Master Servicer; or
(ii) the later of the making of the final payment or other
liquidation, or any advance with respect thereto, of the last
Mortgage Loan remaining in the Trust Fund or the disposition
of all property acquired with respect to any Mortgage Loan;
provided, however, that in the event that an advance has been
made, but not yet recovered, at the time of such termination,
the Person having made such advance shall be entitled to
receive, notwithstanding such termination, any payments
received subsequent thereto with respect to which such advance
was made.
(b) In no event, however, shall the Trust created hereby continue
beyond the expiration of 21 years from the death of the last survivor of the
descendants of Joseph P. Kennedy, the late Ambassador of the United States to
the Court of St. James, living on the date of this Agreement.
(c) [Intentionally omitted.]
(d) The right of EMC or its designee to repurchase all Mortgage Loans
pursuant to Subsection 10.01(a)(i) above shall be exercisable only if (i) the
aggregate Current Principal Amount of the Certificates at the time of any such
repurchase is less than 10% of the initial Current Principal Amount of the
Certificates or (ii) the Master Servicer based upon an Opinion of Counsel, has
determined that the REMIC status of any of REMIC I, REMIC II, REMIC III or REMIC
IV 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 EMC to repurchase or cause the repurchase of all
Mortgage Loans under Subsection 10.01(a)(i) above is exercised, EMC and/or its
designee, as the case may be, shall deliver to the Trustee for deposit in the
Certificate Account, by the Business Day prior to the applicable Distribution
Date, an amount equal to the repurchase price for the Mortgage Loans being
purchased by it and all property acquired with respect to such Mortgage Loans
remaining in the Trust. Upon the presentation and surrender of the Certificates,
the Trustee shall distribute an amount equal to (i) the amount otherwise
distributable to the Certificateholders (other than the holders of the Residual
Certificates) on such Distribution Date but for such repurchase, (ii) the
Current Principal Amount (with respect to the Subordinate Certificates, as
adjusted, if necessary, following the distribution described in clause (iii)
below) and any accrued but unpaid interest at the Pass-Through Rate to the
Certificateholders of each Class, (iii) to the extent of the sum of (a) the
Overcollateral- ization Amount, (b) the outstanding principal amount of the
Subordinated Certificates and (c) the excess of the aggregate Arrearages then
owing on the Mortgage Loans over the Current Principal Amount of the Class A-WAC
Certificates, to the Holders of the Class PO Certificates, the PO Deferred
Amount and then to the Holders of the Class A-WAC Certificates, the A-WAC
Deferred Amount, and the remainder to the Holders of the Class R-_ Certificates
and (iv) the remainder to the Class R-1 Certificateholders. Upon deposit of the
required repurchase price and delivery to the Trustee of an Officer's
Certificate from the Master Servicer certifying that such deposit in the
Certificate Account has been made, and following such final Distribution Date,
the Trustee shall promptly release to the Master Servicer and/or its designee,
as the case may be, the Mortgage Files for the remaining Mortgage Loans, and the
Accounts shall terminate, subject to the Trustee's obligation to hold any
amounts payable to Certificateholders in trust without interest pending final
distributions pursuant to Subsection 10.01(i).
(h) In the event that this Agreement is terminated by reason of the
payment or liquidation of all Mortgage Loans or the disposition of all property
acquired with respect to all Mortgage Loans under Subsection 10.01(a)(ii) above,
the Master Servicer shall deliver to the Trustee for deposit in the Certificate
Account all distributable amounts remaining in the Custody Account and shall
cause any Sub-Servicers to deliver to the Trustee for deposit in the Certificate
Account all distributable amounts remaining in their Protected Accounts. Upon
the presentation and surrender of the Certificates, the Trustee shall distribute
to the Certificateholders, in accordance with their respective interests, all
distributable amounts remaining in the Certificate Account. Upon deposit by 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 EMC to repurchase all the Mortgage Loans under Subsection 10.01(a)(i) above
is exercised, the Trust and each of REMIC I, REMIC II, REMIC III and REMIC IV
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, REMIC
II, REMIC III and REMIC IV or (ii) cause each of REMIC I, REMIC II, REMIC III
and REMIC IV to fail to qualify as a REMIC at any time that any Regular
Certificates are outstanding:
(i) within 90 days prior to the final Distribution
Date, at the written direction of the Master Servicer,
the Trustee shall adopt a plan of complete liquidation of the
Trust Fund and each of REMIC I, REMIC II, REMIC III and REMIC
IV 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 Holders
of the Class X-1 and Class X-2 Certificates, the Current
Principal Amount of the Certificates plus (except with respect
to the Class PO Certificates and the Current Principal Amount
of the Class A-WAC Certificates) 30 days' interest thereon at
the applicable Pass-Through Rate, (ii) to the Holders of the
Class A-WAC and Class X-1 Certificates, 30 days' interest on
the Notional Amount thereof at the applicable Pass-Through
Rate (iii) to the Holders of the Class X-2 Certificates an
amount equal to the Arrearage in excess of the Current
Principal Amount of the Class A-WAC Certificates, and (iv) to
the Class R-1 Certificateholders, any remaining cash on hand
from the Certificate Account (other than cash retained to meet
claims); and the Trust and each of REMIC I, REMIC II, REMIC
III and REMIC IV 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, REMIC II, REMIC III and REMIC IV.
ARTICLE XI
Miscellaneous Provisions
Section 11.01. Intent of Parties. The parties intend that each of
REMIC I, REMIC II, REMIC III and REMIC IV 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 any of REMIC I,
REMIC II, REMIC III or REMIC IV to fail to qualify as a REMIC for federal income
tax purposes, as evidenced by an Opinion of Independent Counsel which shall be
provided to the Trustee other than at the Trustee's expense.
(c) Promptly after the execution of any such amendment, the Trustee
shall furnish a copy of such amendment or written notification of the substance
of such amendment to each Certificateholder, with a copy to the Rating Agencies.
(d) In the case of an amendment under Subsection 11.02(b) above, it
shall not be necessary for the Certificateholders to approve the particular form
of such an amendment. Rather, it shall be sufficient if the Certificateholders
approve the substance of the amendment. The manner of obtaining such consents
and of evidencing the authorization of the execution thereof by
Certificateholders shall be subject to such reasonable regulations as the
Trustee may prescribe.
Section 11.03. Recordation of Agreement. To the extent permitted by
applicable law, this Agreement is subject to recordation in all appropriate
public offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the Mortgaged Properties are situated, and
in any other appropriate public recording office or elsewhere. The Master
Servicer shall effect such recordation, at its expense upon the request in
writing of a Certificateholder, but only if such direction is accompanied by an
Opinion of Counsel (provided at the expense of the Certificateholder requesting
recordation) to the effect that such recordation would materially and
beneficially affect the interests of the Certificateholders or is required by
law.
Section 11.04. Limitation on Rights of Certificateholders. (a) The
death or incapacity of any Certificateholder shall not terminate this Agreement
or the Trust, nor entitle such Certificateholder's legal representatives or
heirs to claim an accounting or to take any action or proceeding in any court
for a partition or winding up of the Trust, nor otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them.
(b) Except as expressly provided in this Agreement, no
Certificateholders shall have any right to vote or in any manner otherwise
control the operation and management of the Trust, or the obligations of the
parties hereto, nor shall anything herein set forth, or contained in the terms
of the Certificates, be construed so as to establish the Certificateholders from
time to time as partners or members of an association; nor shall any
Certificateholders be under any liability to any third Person by reason of any
action taken by the parties to this Agreement pursuant to any provision hereof.
(c) No Certificateholder shall have any right by virtue of any
provision of this Agreement to institute any suit, action or proceeding in
equity or at law upon, under or with respect to this Agreement against the
Seller, the Master Servicer or any successor to any such parties unless (i) such
Certificateholder previously shall have given to the Trustee a written notice of
a continuing default, as herein provided, (ii) the Holders of Certificates
evidencing Fractional Undivided Interests aggregating not less than 51% of the
Trust Fund shall have made written request upon the Trustee to institute such
action, suit or proceeding in its own name as Trustee hereunder and shall have
offered to the Trustee such reasonable indemnity as it may require against the
costs and expenses and liabilities to be incurred therein or thereby, and (iii)
the Trustee, for 60 days after its receipt of such notice, request and offer of
indemnity, shall have neglected or refused to institute any such action, suit or
proceeding.
(d) No one or more Certificateholders shall have any right by virtue
of any provision of this Agreement to affect the rights of any other
Certificateholders or to obtain or seek to obtain priority or preference over
any other such Certificateholder, or to enforce any right under this Agreement,
except in the manner herein provided and for the equal, ratable and common
benefit of all Certificateholders. For the protection and enforcement of the
provisions of this Section 11.04, each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
Section 11.05. Acts of Certificateholders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Agreement to be given or taken by Certificateholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Certificateholders in person or by an agent duly appointed in writing.
Except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee and,
where it is expressly required, to the Seller. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Agreement and conclusive in favor of the Trustee and the Seller,
if made in the manner provided in this Section 11.05.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his or her individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his or her authority. The fact and date of the execution of any such
instrument or writing, or the authority of the individual executing the same,
may also be proved in any other manner which the Trustee deems sufficient.
(c) The ownership of Certificates (notwithstanding any notation of
ownership or other writing on such Certificates, except an endorsement in
accordance with Section 5.02 made on a Certificate presented in accordance with
Section 5.04) shall be proved by the Certificate Register, and neither the
Trustee, the Seller, the Master Servicer nor any successor to any such parties
shall be affected by any notice to the contrary.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action of the holder of any Certificate shall bind every future
holder of the same Certificate and the holder of every Certificate issued upon
the registration of transfer or exchange thereof, if applicable, or in lieu
thereof with respect to anything done, omitted or suffered to be done by the
Trustee, the Seller, the Master Servicer or any successor to any such party in
reliance thereon, whether or not notation of such action is made upon such
Certificates.
(e) In determining whether the Holders of the requisite percentage of
Certificates evidencing Fractional Undivided Interests have given any request,
demand, authorization, direction, notice, consent or waiver hereunder,
Certificates owned by the Trustee, the Seller, the Master Servicer or any
Sub-Servicer or any Affiliate thereof shall be disregarded, except that, in
determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Certificates which the Trustee knows to be so owned shall be so disregarded.
Certificates which have been pledged in good faith to the Trustee, the Seller,
the Master Servicer or any Sub-Servicer or any Affiliate thereof may be regarded
as outstanding if the pledgor establishes to the satisfaction of the Trustee the
pledgor's right to act with respect to such Certificates and that the pledgor is
not an Affiliate of the Trustee, the Seller, the Master Servicer or any
Sub-Servicer, as the case may be.
Section 11.06. [Reserved]
Section 11.07. Governing Law. THIS AGREEMENT AND THE CERTIFICATES
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REFERENCE TO ITS CONFLICT OF LAWS RULES AND THE OBLIGATIONS, RIGHTS AND REMEDIES
OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 11.08. Notices. All demands and notices hereunder shall be in
writing and shall be deemed given when delivered at or mailed by registered
mail, return receipt requested, postage prepaid, or by recognized overnight
courier, to (i) in the case of the Seller, 245 Park Avenue, New York, New York
10167, Attention: Vice President-Servicing, or such other address as may
hereafter be furnished to the other parties hereto in writing; (ii) in the case
of 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, Moody's, 99 Church Street, New York, New York 10007 Attention:
Residential Mortgage Surveillance Group and Duff & Phelps Credit Rating Co., 55
E. Monroe Street, Chicago, Illinois 60603, Attention: MBS Monitoring. 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;
6. Any change in the location of the Custody Account
or the Certificate Account; and
7. Any change in a rating of the Guarantor.
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/ Sue Stepanek
Name: Sue Stepanek
Title: Senior Vice President
STATE STREET BANK AND TRUST COMPANY
as Trustee
By: /s/ Karen R. Beard
Name: Karen R. Beard
Title: Assistant Vice President
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 28th day of June, 1996 before me, a notary public in and for
said State, personally appeared Joseph T. Jurkowski, Jr., known to me to be a
Vice President of Bear Stearns Mortgage Securities Inc., the corporation that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ Maria K. Montgomery
Notary Public Maria K. Montgomery
[Notarial Seal]
<PAGE>
STATE OF TEXAS )
) ss.:
COUNTY OF )
On the 30th day of December, 1996 before me, a notary public in and
for said State, personally appeared Sue Stepanek, known to me to be a Senior
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/ Ann Lucke
Notary Public Ann Lucke
[Notarial Seal]
<PAGE>
COMMONWEALTH OF MASSACHUSETTS)
) ss.:
COUNTY OF )
On the 30th day of December, 1996 before me, a notary public in and
for said State, personally appeared Karen R. Beard, 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 bank and acknowledged
to me that such bank executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ Vanetta Bernard
Notary Public Vanetta Bernard
[Notarial Seal]
<PAGE>
EXHIBIT A-1
FORM OF FACE OF CERTIFICATES
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN, BEAR
STEARNS MORTGAGE SECURITIES INC., 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 ACQUISITION OF THIS CERTIFICATE BY A PURCHASER FOR, OR ON BEHALF OF, A
PLAN WILL BE DEEMED A REPRESENTATION BY SUCH PURCHASER 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, 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.
THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DECREASED BY THE
PRINCIPAL PAYMENTS HEREON. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE
CERTIFICATES, THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DIFFERENT
FROM THE DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY
ASCERTAIN ITS CURRENT PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE NAMED HEREIN.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE &
CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
MORTGAGE PASS-THROUGH CERTIFICATE,
No. A-1-1 SERIES 1996-6
evidencing a beneficial interest in a Trust
consisting primarily of conventional, first lien mortgage loans sold by
BEAR STEARNS MORTGAGE SECURITIES INC.
CUSIP No. 073914 TH 6
Cut-Off Date : December 1, 1996 Class : A-1
First Distribution Date : January 25, 1997 Initial Principal Amount
Assumed Final
Distribution Date : November 25, 2029 of this Certificate
("Denomination") :
Master Servicer : EMC Mortgage Corporation Approximate Original Class
Pass-Through Rate : 6.65% Principal Amount :$17,101,000
THIS CERTIFIES THAT
is the registered owner of the Fractional Undivided Interest evidenced hereby in
the beneficial ownership interest of Certificates of the same Class as this
Certificate in a trust (the "Trust") consisting primarily of conventional one-
to four-family, first lien mortgage loans (collectively, the "Mortgage Loans")
sold by Bear Stearns Mortgage Securities Inc. ("BSMSI"). The Mortgage Loans were
sold by EMC Mortgage Corporation to BSMSI. 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 the Pass-Through
Rate. The Trustee will distribute on the 25th day of each month, or, if such
25th day is not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on the last Business Day of the calendar month preceding the month of
such Distribution Date, an amount equal to the product of the Fractional
Undivided Interest evidenced by this Certificate and the amount required to be
distributed to Holders of Certificates of the same Class as this Certificate.
The Assumed Final Distribution Date is the third anniversary of the Distribution
Date immediately following the latest scheduled maturity date of any Mortgage
Loan and is not likely to be the date on which the Current Principal Amount of
this Class of Certificates will be reduced to zero.
Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Person entitled thereto as such name and address
shall appear on the Certificate Register or, if such Person so requests by
notifying the Trustee in writing as specified in the Agreement and if such
Person holds Certificates with an initial aggregate Current Principal Amount
and/or initial aggregate Notional Amount of not less than $1,000,000, in
immediately available funds (by wire transfer or otherwise) to the account
specified in writing by such Person to the Trustee. Notwithstanding the above,
the final distribution on this Certificate will be made after due notice by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency appointed by the Trustee
for that purpose and designated in such notice. Unless this Certificate has been
countersigned by an authorized signatory of the Trustee by manual signature,
this Certificate shall not be entitled to any benefit under the Agreement, or be
valid for any purpose.
FORM OF CLASS A-1 CERTIFICATES
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN, BEAR
STEARNS MORTGAGE SECURITIES INC., 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 ACQUISITION OF THIS CERTIFICATE BY A PURCHASER FOR, OR ON BEHALF OF, A
PLAN WILL BE DEEMED A REPRESENTATION BY SUCH PURCHASER 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, 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.
THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DECREASED BY THE
PRINCIPAL PAYMENTS HEREON. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE
CERTIFICATES, THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DIFFERENT
FROM THE DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY
ASCERTAIN ITS CURRENT PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE NAMED HEREIN.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE &
CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
MORTGAGE PASS-THROUGH CERTIFICATE,
No. A-2-1 SERIES 1996-6
evidencing a beneficial interest in a Trust
consisting primarily of conventional, first lien mortgage loans sold by
BEAR STEARNS MORTGAGE SECURITIES INC.
CUSIP No. 073914 TJ 2
Cut-Off Date : December 1, 1996 Class : A-2
First Distribution Date : January 25, 1997 Initial Principal Amount
Assumed Final
Distribution Date : November 25, 2029 of this Certificate
("Denomination") :
Master Servicer : EMC Mortgage Corporation Approximate Original Class
Pass-Through Rate : 7.00% Principal Amount:$31,486,000
THIS CERTIFIES THAT
is the registered owner of the Fractional Undivided Interest evidenced hereby in
the beneficial ownership interest of Certificates of the same Class as this
Certificate in a trust (the "Trust") consisting primarily of conventional one-
to four-family, first lien mortgage loans (collectively, the "Mortgage Loans")
sold by Bear Stearns Mortgage Securities Inc. ("BSMSI"). The Mortgage Loans were
sold by EMC Mortgage Corporation to BSMSI. 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 the Pass-Through
Rate. The Trustee will distribute on the 25th day of each month, or, if such
25th day is not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on the last Business Day of the calendar month preceding the month of
such Distribution Date, an amount equal to the product of the Fractional
Undivided Interest evidenced by this Certificate and the amount required to be
distributed to Holders of Certificates of the same Class as this Certificate.
The Assumed Final Distribution Date is the third anniversary of the Distribution
Date immediately following the latest scheduled maturity date of any Mortgage
Loan and is not likely to be the date on which the Current Principal Amount of
this Class of Certificates will be reduced to zero.
Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Person entitled thereto as such name and address
shall appear on the Certificate Register or, if such Person so requests by
notifying the Trustee in writing as specified in the Agreement and if such
Person holds Certificates with an initial aggregate Current Principal Amount
and/or initial aggregate Notional Amount of not less than $1,000,000, in
immediately available funds (by wire transfer or otherwise) to the account
specified in writing by such Person to the Trustee. Notwithstanding the above,
the final distribution on this Certificate will be made after due notice by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency appointed by the Trustee
for that purpose and designated in such notice.
FORM OF CLASS A-2 CERTIFICATES
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN, BEAR
STEARNS MORTGAGE SECURITIES INC., 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 ACQUISITION OF THIS CERTIFICATE BY A PURCHASER FOR, OR ON BEHALF OF, A
PLAN WILL BE DEEMED A REPRESENTATION BY SUCH PURCHASER 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, 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.
THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DECREASED BY THE
PRINCIPAL PAYMENTS HEREON. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE
CERTIFICATES, THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DIFFERENT
FROM THE DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY
ASCERTAIN ITS CURRENT PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE NAMED HEREIN.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE &
CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
MORTGAGE PASS-THROUGH CERTIFICATE,
No. A-3-1 SERIES 1996-6
evidencing a beneficial interest in a Trust
consisting primarily of conventional, first lien mortgage loans sold by
BEAR STEARNS MORTGAGE SECURITIES INC.
CUSIP No. 073914 TK 9
Cut-Off Date : December 1, 1996 Class : A-3
First Distribution Date : January 25, 1997 Initial Principal Amount
Assumed Final Distribution Date : November 25, 2029 of this Certificate
("Denomination") :
Master Servicer : EMC Mortgage Corporation Approximate Original Class
Pass-Through Rate : 7.50% Principal Amount : $10,355,000
THIS CERTIFIES THAT
is the registered owner of the Fractional Undivided Interest evidenced hereby in
the beneficial ownership interest of Certificates of the same Class as this
Certificate in a trust (the "Trust") consisting primarily of conventional one-
to four-family, first lien mortgage loans (collectively, the "Mortgage Loans")
sold by Bear Stearns Mortgage Securities Inc. ("BSMSI"). The Mortgage Loans were
sold by EMC Mortgage Corporation to BSMSI. 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 the Pass-Through
Rate. The Trustee will distribute on the 25th day of each month, or, if such
25th day is not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on the last Business Day of the calendar month preceding the month of
such Distribution Date, an amount equal to the product of the Fractional
Undivided Interest evidenced by this Certificate and the amount required to be
distributed to Holders of Certificates of the same Class as this Certificate.
The Assumed Final Distribution Date is the third anniversary of the Distribution
Date immediately following the latest scheduled maturity date of any Mortgage
Loan and is not likely to be the date on which the Current Principal Amount of
this Class of Certificates will be reduced to zero.
Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Person entitled thereto as such name and address
shall appear on the Certificate Register or, if such Person so requests by
notifying the Trustee in writing as specified in the Agreement and if such
Person holds Certificates with an initial aggregate Current Principal Amount
and/or initial aggregate Notional Amount of not less than $1,000,000, in
immediately available funds (by wire transfer or otherwise) to the account
specified in writing by such Person to the Trustee. Notwithstanding the above,
the final distribution on this Certificate will be made after due notice by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency appointed by the Trustee
for that purpose and designated in such notice.
FORM OF CLASS A-3 CERTIFICATES
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN, BEAR
STEARNS MORTGAGE SECURITIES INC., 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 ACQUISITION OF THIS CERTIFICATE BY A PURCHASER FOR, OR ON BEHALF OF, A
PLAN WILL BE DEEMED A REPRESENTATION BY SUCH PURCHASER 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, 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.
THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DECREASED BY THE
PRINCIPAL PAYMENTS HEREON. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE
CERTIFICATES, THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DIFFERENT
FROM THE DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY
ASCERTAIN ITS CURRENT PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE NAMED HEREIN.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE &
CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
MORTGAGE PASS-THROUGH CERTIFICATE,
No. A-4-1 SERIES 1996-6
evidencing a beneficial interest in a Trust
consisting primarily of conventional, first lien mortgage loans sold by
BEAR STEARNS MORTGAGE SECURITIES INC.
CUSIP No. 073914 TL 7
Cut-Off Date : December 1, 1996 Class : A-4
First Distribution Date : January 25, 1997 Initial Principal Amount
Assumed Final Distribution Date : November 25, 2029 of this Certificate
("Denomination") :
Master Servicer : EMC Mortgage Corporation Approximate Original Class
Pass-Through Rate : 7.85% Principal Amount : $5,525,000
THIS CERTIFIES THAT
is the registered owner of the Fractional Undivided Interest evidenced hereby in
the beneficial ownership interest of Certificates of the same Class as this
Certificate in a trust (the "Trust") consisting primarily of conventional one-
to four-family, first lien mortgage loans (collectively, the "Mortgage Loans")
sold by Bear Stearns Mortgage Securities Inc. ("BSMSI"). The Mortgage Loans were
sold by EMC Mortgage Corporation to BSMSI. 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 the Pass-Through
Rate. The Trustee will distribute on the 25th day of each month, or, if such
25th day is not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on the last Business Day of the calendar month preceding the month of
such Distribution Date, an amount equal to the product of the Fractional
Undivided Interest evidenced by this Certificate and the amount required to be
distributed to Holders of Certificates of the same Class as this Certificate.
The Assumed Final Distribution Date is the third anniversary of the Distribution
Date immediately following the latest scheduled maturity date of any Mortgage
Loan and is not likely to be the date on which the Current Principal Amount of
this Class of Certificates will be reduced to zero.
Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Person entitled thereto as such name and address
shall appear on the Certificate Register or, if such Person so requests by
notifying the Trustee in writing as specified in the Agreement and if such
Person holds Certificates with an initial aggregate Current Principal Amount
and/or initial aggregate Notional Amount of not less than $1,000,000, in
immediately available funds (by wire transfer or otherwise) to the account
specified in writing by such Person to the Trustee. Notwithstanding the above,
the final distribution on this Certificate will be made after due notice by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency appointed by the Trustee
for that purpose and designated in such notice.
FORM OF CLASS A-4 CERTIFICATES
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN, BEAR
STEARNS MORTGAGE SECURITIES INC., 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 ACQUISITION OF THIS CERTIFICATE BY A PURCHASER FOR, OR ON BEHALF OF, A
PLAN WILL BE DEEMED A REPRESENTATION BY SUCH PURCHASER 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, 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.
THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DECREASED BY THE
PRINCIPAL PAYMENTS HEREON. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE
CERTIFICATES, THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DIFFERENT
FROM THE DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY
ASCERTAIN ITS CURRENT PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE NAMED HEREIN.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE &
CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
MORTGAGE PASS-THROUGH CERTIFICATE,
No. A-5-1 SERIES 1996-6
evidencing a beneficial interest in a Trust
consisting primarily of conventional, first lien mortgage loans sold by
BEAR STEARNS MORTGAGE SECURITIES INC.
CUSIP No. 073914 TM 5
Cut-Off Date : December 1, 1996 Class : A-5
First Distribution Date : January 25, 1997 Initial Principal Amount
Assumed Final Distribution Date : November 25, 2029 of this Certificate
("Denomination") :
Master Servicer : EMC Mortgage Corporation Approximate Original Class
Pass-Through Rate : 7.25% Principal Amount : $10,000,000
THIS CERTIFIES THAT
is the registered owner of the Fractional Undivided Interest evidenced hereby in
the beneficial ownership interest of Certificates of the same Class as this
Certificate in a trust (the "Trust") consisting primarily of conventional one-
to four-family, first lien mortgage loans (collectively, the "Mortgage Loans")
sold by Bear Stearns Mortgage Securities Inc. ("BSMSI"). The Mortgage Loans were
sold by EMC Mortgage Corporation to BSMSI. 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 the Pass-Through
Rate. The Trustee will distribute on the 25th day of each month, or, if such
25th day is not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on the last Business Day of the calendar month preceding the month of
such Distribution Date, an amount equal to the product of the Fractional
Undivided Interest evidenced by this Certificate and the amount required to be
distributed to Holders of Certificates of the same Class as this Certificate.
The Assumed Final Distribution Date is the third anniversary of the Distribution
Date immediately following the latest scheduled maturity date of any Mortgage
Loan and is not likely to be the date on which the Current Principal Amount of
this Class of Certificates will be reduced to zero.
Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Person entitled thereto as such name and address
shall appear on the Certificate Register or, if such Person so requests by
notifying the Trustee in writing as specified in the Agreement and if such
Person holds Certificates with an initial aggregate Current Principal Amount
and/or initial aggregate Notional Amount of not less than $1,000,000, in
immediately available funds (by wire transfer or otherwise) to the account
specified in writing by such Person to the Trustee. Notwithstanding the above,
the final distribution on this Certificate will be made after due notice by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency appointed by the Trustee
for that purpose and designated in such notice.
FORM OF CLASS A-5 CERTIFICATES
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN, BEAR
STEARNS MORTGAGE SECURITIES INC., 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 REPRESENTS THE SEPARATE COMPONENTS EACH OF WHICH IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" (A "REMIC"),
AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE").
THE ACQUISITION OF THIS CERTIFICATE BY A PURCHASER FOR, OR ON BEHALF OF, A
PLAN WILL BE DEEMED A REPRESENTATION BY SUCH PURCHASER 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, 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.
THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DECREASED BY THE
PRINCIPAL PAYMENTS HEREON AND THE NOTIONAL AMOUNT OF THIS CERTIFICATE WILL
DECREASE OR THE AGGREGATE PRINCIPAL AMOUNT OF THE MORTGAGE LOANS DECREASES.
ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE CURRENT
PRINCIPAL AMOUNT AND NOTIONAL AMOUNT OF THIS CERTIFICATE WILL BE DIFFERENT FROM
THE RESPECTIVE 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.
THE YIELD TO THE HOLDER OF THIS CERTIFICATE WILL BE EXTREMELY
SENSITIVE TO THIS RATE OF PAYMENT OF THE ARREARGE COMPONENTS OF
THE MORTGAGE LOANS.
MORTGAGE PASS-THROUGH CERTIFICATE,
No. A-WAC-1 SERIES 1996-6
evidencing a beneficial interest in a Trust
consisting primarily of conventional, first lien mortgage loans sold by
BEAR STEARNS MORTGAGE SECURITIES INC.
CUSIP No. 073914 TN 3
Cut-Off Date : December 1, 1996 Class : A-WAC
First Distribution Date : January 25, 1997 Initial Principal Amount of this
Certificate ("Denomination") :
Assumed Final Distribution Initial Notional Amount of this
Date : November 25, 2029 Certificate ("Denomination") :
Master Servicer : EMC Mortgage Approximate Original Class
Corporation
Pass-Through Rate with Principal Amount : $20,473,000
Respect to Principal Amount : N/A
Pass-Through Rate with Notional Amount : $100,144,473
Respect to Notional Amount : Variable
THIS CERTIFIES THAT
is the registered owner of the Fractional Undivided Interest evidenced hereby in
the beneficial ownership interest of Certificates of the same Class as this
Certificate in a trust (the "Trust") consisting primarily of conventional one-
to four-family, first lien mortgage loans (collectively, the "Mortgage Loans")
sold by Bear Stearns Mortgage Securities Inc. ("BSMSI"). The Mortgage Loans were
sold by EMC Mortgage Corporation to BSMSI. 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.
The Class A-WAC Certificates will not bear interest on the Class A-WAC
Current Principal Amount. The Class A-WAC Certificates will be deemed to have a
notional principal amount equal to the aggregate Unpaid Principal Balance from
time to time of the Mortgage Loans. Interest will be paid on the Notional Amount
on each Distribution Date ( as hereinafter defined ) at a variable rate equal to
the greater of (a) zero and (b) the weighted average Net Rate less (i) the
weighted average Pass-Through Rate of the P&I Certificates, (ii) the Credit
Enhancement Percentage, (iii) the Accelerated Arrearage Percentage and (iv) the
Pass-Through Rate of the Class X-1 Certificates. The initial Pass-Through Rate
of the Class A-WAC Certificates will equal approximately 1.09% per annum on
their Notional Amount. Interest will continue to be paid on the Notional Amount
after the Class A-WAC Current Principal Amount has been reduced to zero.
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 third 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 or
Notional Amount of this Class of Certificates will be reduced to zero.
Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Person entitled thereto as such name and address
shall appear on the Certificate Register or, if such Person so requests by
notifying the Trustee in writing as specified in the Agreement and if such
Person holds Certificates with an initial aggregate Current Principal Amount
and/or initial aggregate Notional Amount of not less than $1,000,000, in
immediately available funds (by wire transfer or otherwise) to the account
specified in writing by such Person to the Trustee. Notwithstanding the above,
the final distribution on this Certificate will be made after due notice by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency appointed by the Trustee
for that purpose and designated in such notice.
FORM OF CLASS A-WAC 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. B-1-1 SERIES 1996-6
evidencing a beneficial interest in a Trust
consisting primarily of conventional, first lien mortgage loans sold by
BEAR STEARNS MORTGAGE SECURITIES INC.
CUSIP No. 073914 TR 4
Cut-Off Date : December 1, 1996 Class : B-1
First Distribution Date : January 25, 1997 Initial Principal Amount
Assumed Final Distribution Date : November 25, 2029 of this Certificate
("Denomination") :
Master Servicer : EMC Mortgage Corporation Approximate Original Class
Pass-Through Rate : 7.75% Principal Amount : $4,523,000
THIS CERTIFIES THAT
is the registered owner of the Fractional Undivided Interest evidenced hereby in
the beneficial ownership interest of Certificates of the same Class as this
Certificate in a trust (the "Trust") consisting primarily of conventional one-
to four-family, first lien mortgage loans (collectively, the "Mortgage Loans")
sold by Bear Stearns Mortgage Securities Inc. ("BSMSI"). The Mortgage Loans were
sold by EMC Mortgage Corporation to BSMSI. 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 the Pass-Through
Rate. The Trustee will distribute on the 25th day of each month, or, if such
25th day is not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on the last Business Day of the calendar month preceding the month of
such Distribution Date, an amount equal to the product of the Fractional
Undivided Interest evidenced by this Certificate and the amount required to be
distributed to Holders of Certificates of the same Class as this Certificate.
The Assumed Final Distribution Date is the third anniversary of the Distribution
Date immediately following the latest scheduled maturity date of any Mortgage
Loan and is not likely to be the date on which the Current Principal Amount of
this Class of Certificates will be reduced to zero.
Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Person entitled thereto as such name and address
shall appear on the Certificate Register or, if such Person so requests by
notifying the Trustee in writing as specified in the Agreement and if such
Person holds Certificates with an initial aggregate Current Principal Amount
and/or initial aggregate Notional Amount of not less than $1,000,000, in
immediately available funds (by wire transfer or otherwise) to the account
specified in writing by such Person to the Trustee. Notwithstanding the above,
the final distribution on this Certificate will be made after due notice by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency appointed by the Trustee
for that purpose and designated in such notice.
FORM OF CLASS B-1 CERTIFICATES
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN, BEAR
STEARNS MORTGAGE SECURITIES INC., 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. B-2-1 SERIES 1996-6
evidencing a beneficial interest in a Trust
consisting primarily of conventional, first lien mortgage loans sold by
BEAR STEARNS MORTGAGE SECURITIES INC.
CUSIP No. 073914 TS 2
Cut-Off Date : December 1, 1996 Class : B-2
First Distribution Date : January 25, 1997 Initial Principal Amount
Assumed Final Distribution Date : November 25, 2029 of this Certificate
("Denomination") :
Master Servicer : EMC Mortgage Corporation Approximate Original Class
Pass-Through Rate : 8.00% Principal Amount : $6,935,000
THIS CERTIFIES THAT
is the registered owner of the Fractional Undivided Interest evidenced hereby in
the beneficial ownership interest of Certificates of the same Class as this
Certificate in a trust (the "Trust") consisting primarily of conventional one-
to four-family, first lien mortgage loans (collectively, the "Mortgage Loans")
sold by Bear Stearns Mortgage Securities Inc. ("BSMSI"). The Mortgage Loans were
sold by EMC Mortgage Corporation to BSMSI. 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 the Pass-Through
Rate. The Trustee will distribute on the 25th day of each month, or, if such
25th day is not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on the last Business Day of the calendar month preceding the month of
such Distribution Date, an amount equal to the product of the Fractional
Undivided Interest evidenced by this Certificate and the amount required to be
distributed to Holders of Certificates of the same Class as this Certificate.
The Assumed Final Distribution Date is the third anniversary of the Distribution
Date immediately following the latest scheduled maturity date of any Mortgage
Loan and is not likely to be the date on which the Current Principal Amount of
this Class of Certificates will be reduced to zero.
Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Person entitled thereto as such name and address
shall appear on the Certificate Register or, if such Person so requests by
notifying the Trustee in writing as specified in the Agreement and if such
Person holds Certificates with an initial aggregate Current Principal Amount
and/or initial aggregate Notional Amount of not less than $1,000,000, in
immediately available funds (by wire transfer or otherwise) to the account
specified in writing by such Person to the Trustee. Notwithstanding the above,
the final distribution on this Certificate will be made after due notice by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency appointed by the Trustee
for that purpose and designated in such notice.
FORM OF CLASS B-2 CERTIFICATES
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN, BEAR
STEARNS MORTGAGE SECURITIES INC., 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").
UNDER TREASURY REGULATIONS RELATING TO ORIGINAL ISSUE DISCOUNT ("OID"),
TAXPAYERS MAY RELY ON THIS INFORMATION. THIS CERTIFICATE WAS ISSUED ON DECEMBER
30, 1996 AT A PRICE (EXCLUSIVE OF ACCRUED INTEREST) EQUAL TO 94.32% OF ITS
ORIGINAL PRINCIPAL AMOUNT. BASED ON THIS ISSUE PRICE, THIS CERTIFICATE WAS
ISSUED WITH OID FOR FEDERAL INCOME TAX PURPOSES IN AN AMOUNT EQUAL TO $51.44 PER
MILLION DOLLAR PRINCIPAL BALANCE. THE MONTHLY YIELD TO MATURITY OF THIS
CERTIFICATE EXPRESSED ON AN ANNUAL BASIS IS APPROXIMATELY 8.77%, AND THE AMOUNT
OF OID ALLOCABLE TO THE SHORT FIRST ACCRUAL PERIOD (DECEMBER 30, 1996 THROUGH
JANUARY 25, 1997) IS $0.22 PER MILLION DOLLAR PRINCIPAL BALANCE. THE COMPUTATION
OF THE MONTHLY YIELD TO MATURITY AND THE OID AMOUNTS, INCLUDING THE AMOUNT OF
OID ALLOCABLE TO THE SHORT PERIOD, SPECIFIED ABOVE WAS BASED ON: (I) THE EXACT
METHOD AND (II) A PREPAYMENT ASSUMPTION OF 10% CPR (AS DEFINED IN THE PROSPECTUS
SUPPLEMENT). THE ACTUAL YIELD TO MATURITY, PREPAYMENT ASSUMPTION, AND OID
AMOUNTS MAY DIFFER FROM THOSE SET FORTH ABOVE.
THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DECREASED BY THE
PRINCIPAL PAYMENTS HEREON. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE
CERTIFICATES, THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DIFFERENT
FROM THE DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY
ASCERTAIN ITS CURRENT PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE NAMED HEREIN.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE &
CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
MORTGAGE PASS-THROUGH CERTIFICATE,
No. B-3-1 SERIES 1996-6
evidencing a beneficial interest in a Trust
consisting primarily of conventional, first lien mortgage loans sold by
BEAR STEARNS MORTGAGE SECURITIES INC.
CUSIP No. 073914 TT 0
Cut-Off Date : December 1, 1996 Class : B-3
First Distribution Date : January 25, 1997 Initial Principal Amount
Assumed Final Distribution Date : November 25, 2029 of this Certificate
("Denomination") :
Master Servicer : EMC Mortgage Corporation Approximate Original Class
Pass-Through Rate : 8.00% Principal Amount : $5,427,000
THIS CERTIFIES THAT
is the registered owner of the Fractional Undivided Interest evidenced hereby in
the beneficial ownership interest of Certificates of the same Class as this
Certificate in a trust (the "Trust") consisting primarily of conventional one-
to four-family, first lien mortgage loans (collectively, the "Mortgage Loans")
sold by Bear Stearns Mortgage Securities Inc. ("BSMSI"). The Mortgage Loans were
sold by EMC Mortgage Corporation to BSMSI. 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 the Pass-Through
Rate. The Trustee will distribute on the 25th day of each month, or, if such
25th day is not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on the last Business Day of the calendar month preceding the month of
such Distribution Date, an amount equal to the product of the Fractional
Undivided Interest evidenced by this Certificate and the amount required to be
distributed to Holders of Certificates of the same Class as this Certificate.
The Assumed Final Distribution Date is the third anniversary of the Distribution
Date immediately following the latest scheduled maturity date of any Mortgage
Loan and is not likely to be the date on which the Current Principal Amount of
this Class of Certificates will be reduced to zero.
Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Person entitled thereto as such name and address
shall appear on the Certificate Register or, if such Person so requests by
notifying the Trustee in writing as specified in the Agreement and if such
Person holds Certificates with an initial aggregate Current Principal Amount
and/or initial aggregate Notional Amount of not less than $1,000,000, in
immediately available funds (by wire transfer or otherwise) to the account
specified in writing by such Person to the Trustee. Notwithstanding the above,
the final distribution on this Certificate will be made after due notice by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency appointed by the Trustee
for that purpose and designated in such notice.
FORM OF CLASS B-3 CERTIFICATES
<PAGE>
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER ANY STATE SECURITIES OR BLUE SKY
LAW OF ANY STATE. THE HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE, AGREES THAT
THIS CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY
IN COMPLIANCE WITH THE ACT AND OTHER APPLICABLE LAWS AND ONLY (1) PURSUANT TO
RULE 144A UNDER THE ACT ("RULE 144A") TO A PERSON THAT THE HOLDER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A
"QIB"), PURCHASING FOR ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF A
QIB, WHOM THE HOLDER HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE,
PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (2) PURSUANT TO
AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE ACT (IF AVAILABLE)
OR (3) IN CERTIFICATED FORM TO AN "INSTITUTIONAL ACCREDITED INVESTOR" WITHIN THE
MEANING THEREOF IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE ACT
OR ANY ENTITY IN WHICH ALL THE EQUITY HOLDERS COME WITHIN SUCH PARAGRAPHS
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 SUCH OTHER EVIDENCE ACCEPTABLE
TO THE TRUSTEE THAT SUCH REOFFER, RESALE, PLEDGE OR TRANSFER IS IN COMPLIANCE
WITH THE ACT. THIS CERTIFICATE MAY NOT BE ACQUIRED FOR, OR ON BEHALF OF, A PLAN,
UNLESS THE PROPOSED TRANSFEREE PROVIDES A BENEFIT PLAN OPINION TO THE TRUSTEE.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN, BEAR
STEARNS MORTGAGE SECURITIES INC., 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").
UNDER TREASURY REGULATIONS RELATING TO ORIGINAL ISSUE DISCOUNT ("OID"),
TAXPAYERS MAY RELY ON THIS INFORMATION. THIS CERTIFICATE WAS ISSUED ON DECEMBER
30, 1996 WITH AN ISSUE PRICE (EXCLUSIVE OF ACCRUED INTEREST) EQUAL TO 61.87% OF
ITS ORIGINAL PRINCIPAL AMOUNT. BASED ON THIS ISSUE PRICE, THIS CERTIFICATE WAS
ISSUED WITH OID FOR FEDERAL INCOME TAX PURPOSES IN AN AMOUNT EQUAL TO $375.89
PER MILLION DOLLAR PRINCIPAL BALANCE. THE MONTHLY YIELD TO MATURITY OF THIS
CERTIFICATE EXPRESSED ON AN ANNUAL BASIS IS APPROXIMATELY 15.66%, AND THE AMOUNT
OF OID ALLOCABLE TO THE SHORT FIRST ACCRUAL PERIOD (DECEMBER 25, 1996 THROUGH
JANUARY 25, 1997) IS $1.24 PER MILLION DOLLAR PRINCIPAL BALANCE. THE COMPUTATION
OF THE MONTHLY YIELD TO MATURITY AND THE OID AMOUNTS, INCLUDING THE AMOUNT OF
OID ALLOCABLE TO THE SHORT PERIOD, SPECIFIED ABOVE WAS BASED ON: (I) THE EXACT
METHOD AND (II) A PREPAYMENT ASSUMPTION OF 10% CPR (AS DEFINED IN THE PROSPECTUS
SUPPLEMENT). THE ACTUAL YIELD TO MATURITY, PREPAYMENT ASSUMPTION, AND OID
AMOUNTS MAY DIFFER FROM THOSE SET FORTH ABOVE.
THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DECREASED BY THE
PRINCIPAL PAYMENTS HEREON. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE
CERTIFICATES, THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DIFFERENT
FROM THE DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY
ASCERTAIN ITS CURRENT PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE NAMED HEREIN.
MORTGAGE PASS-THROUGH CERTIFICATE,
No. B-4-1 SERIES 1996-6
evidencing a beneficial interest in a Trust
consisting primarily of conventional, first lien mortgage loans sold by
BEAR STEARNS MORTGAGE SECURITIES INC.
CUSIP No. 073914 UV3
Cut-Off Date : December 1, 1996 Class : B-4
First Distribution Date : January 25, 1997 Initial Principal Amount
Assumed Final Distribution Date : November 25, 2029 of this Certificate
("Denomination") :
Master Servicer : EMC Mortgage Corporation Approximate Original Class
Pass-Through Rate : 8.00% Principal Amount : $4,824,000
THIS CERTIFIES THAT
is the registered owner of the Fractional Undivided Interest evidenced hereby in
the beneficial ownership interest of Certificates of the same Class as this
Certificate in a trust (the "Trust") consisting primarily of conventional one-
to four-family, first lien mortgage loans (collectively, the "Mortgage Loans")
sold by Bear Stearns Mortgage Securities Inc. ("BSMSI"). The Mortgage Loans were
originated by EMC Mortgage Corporation and subsequently sold to BSMSI. 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 the Pass-Through
Rate. The Trustee will distribute on the 25th day of each month, or, if such
25th day is not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on the last Business Day of the calendar month preceding the month of
such Distribution Date, an amount equal to the product of the Fractional
Undivided Interest evidenced by this Certificate and the amount required to be
distributed to Holders of Certificates of the same Class as this Certificate.
The Assumed Final Distribution Date is the third anniversary of the Distribution
Date immediately following the latest scheduled maturity date of any Mortgage
Loan and is not likely to be the date on which the Current Principal Amount of
this Class of Certificates will be reduced to zero.
Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Person entitled thereto as such name and address
shall appear on the Certificate Register or, if such Person so requests by
notifying the Trustee in writing as specified in the Agreement and if such
Person holds Certificates with an initial aggregate Current Principal Amount
and/or initial aggregate Notional Amount of not less than $1,000,000, in
immediately available funds (by wire transfer or otherwise) to the account
specified in writing by such Person to the Trustee. Notwithstanding the above,
the final distribution on this Certificate will be made after due notice by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency appointed by the Trustee
for that purpose and designated in such notice.
FORM OF CLASS B-4 CERTIFICATES
<PAGE>
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER ANY STATE SECURITIES OR BLUE SKY
LAW OF ANY STATE. THE HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE, AGREES THAT
THIS CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY
IN COMPLIANCE WITH THE ACT AND OTHER APPLICABLE LAWS AND ONLY (1) PURSUANT TO
RULE 144A UNDER THE ACT ("RULE 144A") TO A PERSON THAT THE HOLDER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A
"QIB"), PURCHASING FOR ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF A
QIB, WHOM THE HOLDER HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE,
PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (2) PURSUANT TO
AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE ACT (IF AVAILABLE)
OR (3) IN CERTIFICATED FORM TO AN "INSTITUTIONAL ACCREDITED INVESTOR" WITHIN THE
MEANING THEREOF IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE ACT
PURCHASING NOT FOR DISTRIBUTION IN VIOLATION OF THE ACT, SUBJECT TO (A) THE
RECEIPT BY THE TRUSTEE OF A LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN THE
AGREEMENT AND (B) AN OPINION OF COUNSEL AS TO COMPLIANCE WITH ALL APPLICABLE
SECURITIES LAWS OF THE UNITED STATES. THIS CERTIFICATE MAY NOT BE TRANSFERRED TO
"BENEFIT PLAN INVESTORS," AS SUCH TERM IS DEFINED IN 29 C.F.R. ' 2510.3-101,
UNLESS THE PROPOSED TRANSFEREE PROVIDES A BENEFIT PLAN OPINION TO THE TRUSTEE.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN, BEAR
STEARNS MORTGAGE SECURITIES INC., 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").
UNDER TREASURY REGULATIONS RELATING TO ORIGINAL ISSUE DISCOUNT ("OID"),
TAXPAYERS MAY RELY ON THIS INFORMATION. THIS CERTIFICATE WAS ISSUED ON DECEMBER
30, 1996 WITH AN ISSUE PRICE (EXCLUSIVE OF ACCRUED INTEREST) EQUAL TO 33.69% OF
ITS ORIGINAL PRINCIPAL AMOUNT. BASED ON THIS ISSUE PRICE, THIS CERTIFICATE WAS
ISSUED WITH OID FOR FEDERAL INCOME TAX PURPOSES IN AN AMOUNT EQUAL TO $657.72
PER MILLION DOLLAR PRINCIPAL BALANCE. THE MONTHLY YIELD TO MATURITY OF THIS
CERTIFICATE EXPRESSED ON AN ANNUAL BASIS IS APPROXIMATELY 29.32%, AND THE AMOUNT
OF OID ALLOCABLE TO THE SHORT FIRST ACCRUAL PERIOD (DECEMBER 30, 1996 THROUGH
JANUARY 25, 1997) IS $1.42 PER MILLION DOLLAR PRINCIPAL BALANCE. THE COMPUTATION
OF THE MONTHLY YIELD TO MATURITY AND THE OID AMOUNTS, INCLUDING THE AMOUNT OF
OID ALLOCABLE TO THE SHORT PERIOD, SPECIFIED ABOVE WAS BASED ON: (I) THE EXACT
METHOD AND (II) A PREPAYMENT ASSUMPTION OF 10% CPR (AS DEFINED IN THE PROSPECTUS
SUPPLEMENT). THE ACTUAL YIELD TO MATURITY, PREPAYMENT ASSUMPTION, AND OID
AMOUNTS MAY DIFFER FROM THOSE SET FORTH ABOVE.
THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DECREASED BY THE
PRINCIPAL PAYMENTS HEREON. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE
CERTIFICATES, THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DIFFERENT
FROM THE DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY
ASCERTAIN ITS CURRENT PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE NAMED HEREIN.
MORTGAGE PASS-THROUGH CERTIFICATE,
No. B-5-1 SERIES 1996-6
evidencing a beneficial interest in a Trust
consisting primarily of conventional, first lien mortgage loans sold by
BEAR STEARNS MORTGAGE SECURITIES INC.
CUSIP No. 073914 UW1
Cut-Off Date : December 1, 1996 Class : B-5
First Distribution Date : January 25, 1997 Initial Principal Amount
Assumed Final Distribution Date : November 25, 2029 of this Certificate
("Denomination") :
Master Servicer : EMC Mortgage Corporation Approximate Original Class
Pass-Through Rate : 8.00% Principal Amount : $1,809,000
THIS CERTIFIES THAT
is the registered owner of the Fractional Undivided Interest evidenced hereby in
the beneficial ownership interest of Certificates of the same Class as this
Certificate in a trust (the "Trust") consisting primarily of conventional one-
to four-family, first lien mortgage loans (collectively, the "Mortgage Loans")
sold by Bear Stearns Mortgage Securities Inc. ("BSMSI"). The Mortgage Loans were
originated by EMC Mortgage Corporation and subsequently sold to BSMSI. 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 the Pass-Through
Rate. The Trustee will distribute on the 25th day of each month, or, if such
25th day is not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on the last Business Day of the calendar month preceding the month of
such Distribution Date, an amount equal to the product of the Fractional
Undivided Interest evidenced by this Certificate and the amount required to be
distributed to Holders of Certificates of the same Class as this Certificate.
The Assumed Final Distribution Date is the first anniversary of the Distribution
Date immediately following the latest scheduled maturity date of any Mortgage
Loan and is not likely to be the date on which the Current Principal Amount of
this Class of Certificates will be reduced to zero.
Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Person entitled thereto as such name and address
shall appear on the Certificate Register or, if such Person so requests by
notifying the Trustee in writing as specified in the Agreement and if such
Person holds Certificates with an initial aggregate Current Principal Amount
and/or initial aggregate Notional Amount of not less than $1,000,000, in
immediately available funds (by wire transfer or otherwise) to the account
specified in writing by such Person to the Trustee. Notwithstanding the above,
the final distribution on this Certificate will be made after due notice by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency appointed by the Trustee
for that purpose and designated in such notice.
FORM OF CLASS B-5 CERTIFICATES
<PAGE>
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER ANY STATE SECURITIES OR BLUE SKY
LAW OF ANY STATE. THE HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE, AGREES THAT
THIS CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY
IN COMPLIANCE WITH THE ACT AND OTHER APPLICABLE LAWS AND ONLY (1) PURSUANT TO
RULE 144A UNDER THE ACT ("RULE 144A") TO A PERSON THAT THE HOLDER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A
"QIB"), PURCHASING FOR ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF A
QIB, WHOM THE HOLDER HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE,
PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (2) PURSUANT TO
AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE ACT (IF AVAILABLE)
OR (3) IN CERTIFICATED FORM TO AN "INSTITUTIONAL ACCREDITED INVESTOR" WITHIN THE
MEANING THEREOF IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE ACT
PURCHASING NOT FOR DISTRIBUTION IN VIOLATION OF THE ACT, SUBJECT TO (A) THE
RECEIPT BY THE TRUSTEE OF A LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN THE
AGREEMENT AND (B) AN OPINION OF COUNSEL AS TO COMPLIANCE WITH ALL APPLICABLE
SECURITIES LAWS OF THE UNITED STATES. THIS CERTIFICATE MAY NOT BE TRANSFERRED TO
"BENEFIT PLAN INVESTORS," AS SUCH TERM IS DEFINED IN 29 C.F.R. ' 2510.3-101,
UNLESS THE PROPOSED TRANSFEREE PROVIDES A BENEFIT PLAN OPINION TO THE TRUSTEE.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
BEAR STEARNS MORTGAGE SECURITIES INC., 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").
UNDER TREASURY REGULATIONS RELATING TO ORIGINAL ISSUE DISCOUNT ("OID"),
TAXPAYERS MAY RELY ON THIS INFORMATION. THIS CERTIFICATE WAS ISSUED ON DECEMBER
30, 1996 WITH AN ISSUE PRICE (EXCLUSIVE OF ACCRUED INTEREST) EQUAL TO 16.00% OF
ITS ORIGINAL PRINCIPAL AMOUNT. BASED ON THIS ISSUE PRICE, THIS CERTIFICATE WAS
ISSUED WITH OID FOR FEDERAL INCOME TAX PURPOSES IN AN AMOUNT EQUAL TO $834.67
PER MILLION DOLLAR PRINCIPAL BALANCE. THE MONTHLY YIELD TO MATURITY OF THIS
CERTIFICATE EXPRESSED ON AN ANNUAL BASIS IS APPROXIMATELY 58.14%, AND THE AMOUNT
OF OID ALLOCABLE TO THE SHORT FIRST ACCRUAL PERIOD (DECEMBER 30, 1996 THROUGH
JANUARY 25, 1997) IS $1.14 PER MILLION DOLLAR BALANCE. THE COMPUTATION OF THE
MONTHLY YIELD TO MATURITY AND THE OID AMOUNTS, INCLUDING THE AMOUNT OF OID
ALLOCABLE TO THE SHORT PERIOD, SPECIFIED ABOVE WAS BASED ON: (I) THE EXACT
METHOD AND (II) A PREPAYMENT ASSUMPTION OF 10% CPR (AS DEFINED IN THE PROSPECTUS
SUPPLEMENT). THE ACTUAL YIELD TO MATURITY, PREPAYMENT ASSUMPTION, AND OID
AMOUNTS MAY DIFFER FROM THOSE SET FORTH ABOVE.
THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DECREASED BY THE
PRINCIPAL PAYMENTS HEREON. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE
CERTIFICATES, THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DIFFERENT
FROM THE DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY
ASCERTAIN ITS CURRENT PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE NAMED HEREIN.
MORTGAGE PASS-THROUGH CERTIFICATE,
No. B-6-1 SERIES 1996-6
evidencing a beneficial interest in a Trust
consisting primarily of conventional, first lien mortgage loans sold by
BEAR STEARNS MORTGAGE SECURITIES INC.
CUSIP No. 073914 UX9
Cut-Off Date : December 1, 1996 Class : B-6
First Distribution Date : January 25, 1997 Initial Principal Amount
Assumed Final Distribution Date : November 25, 2029 of this Certificate
("Denomination") :
Master Servicer : EMC Mortgage Corporation Approximate Original Class
Pass-Through Rate : 8.00% Principal Amount : $1,510,220
THIS CERTIFIES THAT
is the registered owner of the Fractional Undivided Interest evidenced hereby in
the beneficial ownership interest of Certificates of the same Class as this
Certificate in a trust (the "Trust") consisting primarily of conventional one-
to four-family, fully amortizing, first lien mortgage loans (collectively, the
"Mortgage Loans") sold by Bear Stearns Mortgage Securities Inc. ("BSMSI"). The
Mortgage Loans were originated by EMC Mortgage Corporation and subsequently sold
to BSMSI. 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 the Pass-Through
Rate. The Trustee will distribute on the 25th day of each month, or, if such
25th day is not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on the last Business Day of the calendar month preceding the month of
such Distribution Date, an amount equal to the product of the Fractional
Undivided Interest evidenced by this Certificate and the amount required to be
distributed to Holders of Certificates of the same Class as this Certificate.
The Assumed Final Distribution Date is the first anniversary of the Distribution
Date immediately following the latest scheduled maturity date of any Mortgage
Loan and is not likely to be the date on which the Current Principal Amount of
this Class of Certificates will be reduced to zero.
Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Person entitled thereto as such name and address
shall appear on the Certificate Register or, if such Person so requests by
notifying the Trustee in writing as specified in the Agreement and if such
Person holds Certificates with an initial aggregate Current Principal Amount
and/or initial aggregate Notional Amount of not less than $1,000,000, in
immediately available funds (by wire transfer or otherwise) to the account
specified in writing by such Person to the Trustee. Notwithstanding the above,
the final distribution on this Certificate will be made after due notice by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency appointed by the Trustee
for that purpose and designated in such notice.
FORM OF CLASS B-6 CERTIFICATES
<PAGE>
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.
THE ACQUISITION OF THIS CERTIFICATE BY A PURCHASER FOR, OR ON BEHALF OF, A
PLAN WILL BE DEEMED A REPRESENTATION BY SUCH PURCHASER 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, 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.
THIS CERTIFICATE IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" (A "REMIC"), AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE").
UNDER TREASURY REGULATIONS RELATING TO ORIGINAL ISSUE DISCOUNT ("OID"),
TAXPAYERS MAY RELY ON THIS INFORMATION. THIS CERTIFICATE WAS ISSUED ON DECEMBER
30, 1996 WITH AN ISSUE PRICE (EXCLUSIVE OF ACCRUED INTEREST) EQUAL TO 0.72% OF
ITS ORIGINAL NOTIONAL PRINCIPAL AMOUNT. BASED ON THIS ISSUE PRICE, THIS
CERTIFICATE WAS ISSUED WITH OID FOR FEDERAL INCOME TAX PURPOSES IN AN AMOUNT
EQUAL TO $5.68 PER MILLION DOLLAR OF THE NOTIONAL PRINCIPAL AMOUNT. THE MONTHLY
YIELD TO MATURITY OF THIS CERTIFICATE EXPRESSED ON AN ANNUAL BASIS IS
APPROXIMATELY 11.71%, AND THE AMOUNT OF OID ALLOCABLE TO THE SHORT FIRST ACCRUAL
PERIOD (DECEMBER 30, 1996 THROUGH JANUARY 25, 1997) IS $0.06 PER MILLION DOLLAR
OF NOTIONAL PRINCIPAL AMOUNT. THE COMPUTATION OF THE MONTHLY YIELD TO MATURITY
AND THE OID AMOUNTS, INCLUDING THE AMOUNT OF OID ALLOCABLE TO THE SHORT PERIOD,
SPECIFIED ABOVE WAS BASED ON: (I) THE EXACT METHOD AND (II) A PREPAYMENT
ASSUMPTION OF 10% CPR (AS DEFINED IN THE PROSPECTUS SUPPLEMENT AND BY APPLYING
SUCH PREPAYMENT ASSUMPTION PRO-RATA TO EACH MORTGAGE). THE ACTUAL
YIELD TO MATURITY, PREPAYMENT ASSUMPTION, AND OID AMOUNTS MAY DIFFER FROM THOSE
SET FORTH ABOVE.
THE NOTIONAL AMOUNT OF THIS CERTIFICATE WILL DECREASE AS THE AGGREGATE
UNPAID PRINCIPAL AMOUNT OF THE MORTGAGE LOANS DECREASES. ACCORDINGLY, FOLLOWING
THE INITIAL ISSUANCE OF THE CERTIFICATES, THE NOTIONAL AMOUNT OF THIS
CERTIFICATE WILL BE DIFFERENT FROM THE DENOMINATION SHOWN BELOW. ANYONE
ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS THEN NOTIONAL AMOUNT BY INQUIRY OF
THE TRUSTEE NAMED HEREIN.
THE YIELD TO THE HOLDER OF THIS CERTIFICATE WILL BE EXTREMELY SENSITIVE TO
THE RATE OF PRINCIPAL PAYMENTS ON THE MORTGAGE LOANS.
MORTGAGE PASS-THROUGH CERTIFICATE,
No. X-1-1 SERIES 1996-6
evidencing a beneficial interest in a Trust
consisting primarily of conventional, first lien mortgage loans sold by
BEAR STEARNS MORTGAGE SECURITIES INC.
CUSIP No. 073914TQ6
Cut-Off Date : December 1, 1996 Class : X-1
First Distribution Date : January 25, 1997 Initial Notional Amount
Assumed Final Distribution Date : November 25, 2029 of this Certificate
("Denomination") :
Master Servicer : EMC Mortgage Corporation Approximate Original Class
Pass-Through Rate : 0.18% Notional Amount : $100,144,473
THIS CERTIFIES THAT
is the registered owner of the Fractional Undivided Interest evidenced hereby in
the beneficial ownership interest of Certificates of the same Class as this
Certificate in a trust (the "Trust") consisting primarily of conventional one-
to four-family, first lien mortgage loans (collectively, the "Mortgage Loans")
sold by Bear Stearns Mortgage Securities Inc. ("BSMSI"). The Mortgage Loans were
sold by EMC Mortgage Corporation to BSMSI. 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.
The Class X-1 Certificates will not be entitled to any distributions of
principal. The Class X-1 Certificates will be deemed to have a notional
principal amount equal to the aggregate Unpaid Principal Balances from time to
time of the Mortgage Loans and will bear interest on their Notional Amount at a
variable Pass- Through Rate equal to the lesser of (a) 0.18% per annum and (b)
the excess of (x) the weighted average Net Rate of the Mortgage loans over (y)
the sum of (i) the weighted average Pass-Through Rate of the P&I Certificates,
(ii) the Credit Enhancement Percentage and (iii) the Accelerated Arrearage
Percentage. The Pass- Through Rate applicable to the Class X-1 Certificates for
the first Interest Accrual Period will equal 0.18% per annum.
The Trustee will distribute on the 25th day of each month, or, if
such 25th day is not a Business Day, the immediately following Business Day
(each, a "Distribution Date"), commencing on the First Distribution Date
specified above, to the Person in whose name this Certificate is registered at
the close of business on the last Business Day of the calendar month preceding
the month of such Distribution Date, an amount equal to the product of the
Fractional Undivided Interest evidenced by this Certificate and the amount
required to be distributed to Holders of Certificates of the same Class as this
Certificate. The Assumed Final Distribution Date is the third anniversary of the
Distribution Date immediately following the latest scheduled maturity date of
any Mortgage Loan and is not likely to be the date on which the Notional Amount
of this Class of Certificates will be reduced to zero.
Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Person entitled thereto as such name and address
shall appear on the Certificate Register or, if such Person so requests by
notifying the Trustee in writing as specified in the Agreement and if such
Person holds Certificates with an initial aggregate Current Principal Amount
and/or initial aggregate Notional Amount of not less than $1,000,000, in
immediately available funds (by wire transfer or otherwise) to the account
specified in writing by such Person to the Trustee. Notwithstanding the above,
the final distribution on this Certificate will be made after due notice by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency appointed by the Trustee
for that purpose and designated in such notice.
FORM OF CLASS X-1 CERTIFICATE
<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 ACQUISITION OF THIS CERTIFICATE BY A PURCHASER FOR, OR ON BEHALF OF, A
PLAN WILL BE DEEMED A REPRESENTATION BY SUCH PURCHASER 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, 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. UNDER
TREASURY REGULATIONS RELATING TO ORIGINAL ISSUE DISCOUNT ("OID"), TAXPAYERS MAY
RELY ON THIS INFORMATION. THIS CERTIFICATE WAS ISSUED ON DECEMBER 30, 1996 AT A
PRICE EQUAL TO 55.00% OF ITS ORIGINAL PRINCIPAL AMOUNT. UNDER TREASURY
REGULATIONS RELATING TO OID, ALL PAYMENTS TO BE RECEIVED ON THIS CERTIFICATE ARE
TREATED AS PART OF THIS CERTIFICATE'S STATED REDEMPTION PRICE AT MATURITY.
ACCORDINGLY, THIS CERTIFICATE WAS ISSUED WITH OID FOR FEDERAL INCOME TAX
PURPOSES IN AN AMOUNT EQUAL TO $450.00 PER MILLION DOLLAR PRINCIPAL BALANCE. THE
MONTHLY YIELD TO MATURITY OF THIS CERTIFICATE EXPRESSED ON AN ANNUAL BASIS IS
APPROXIMATELY 13.11%, AND THE AMOUNT OF OID ALLOCABLE TO THE SHORT FIRST ACCRUAL
PERIOD (DECEMBER 30, 1996 THROUGH JANUARY 25, 1997) IS $5.00 PER MILLION DOLLAR
PRINCIPAL BALANCE. THE COMPUTATION OF THE MONTHLY YIELD TO MATURITY AND THE OID
AMOUNTS, INCLUDING THE AMOUNT OF OID ALLOCABLE TO THE SHORT PERIOD, SPECIFIED
ABOVE WAS BASED ON: (I) THE EXACT METHOD AND (II) A PREPAYMENT ASSUMPTION OF 10%
CPR (AS DEFINED IN THE PROSPECTUS SUPPLEMENT). THE ACTUAL YIELD TO MATURITY,
PREPAYMENT ASSUMPTION, AND OID AMOUNTS MAY DIFFER FROM THOSE SET FORTH ABOVE.
THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL DECREASE BY THE
PRINCIPAL PAYMENTS HEREON. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE
CERTIFICATES, THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DIFFERENT
FROM THE DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY
ASCERTAIN ITS THEN CURRENT PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE NAMED
HEREIN.
THE YIELD TO THE HOLDER OF THIS CERTIFICATE WILL BE SENSITIVE TO THE RATE
OF PRINCIPAL PAYMENTS ON THE DISCOUNT MORTGAGE LOANS.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE &
CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
MORTGAGE PASS-THROUGH CERTIFICATE,
No. PO-1 SERIES 1996-6
evidencing a beneficial interest in a Trust
consisting primarily of conventional, first lien mortgage loans sold by
BEAR STEARNS MORTGAGE SECURITIES INC.
CUSIP No. 073914 TP 8
Cut-Off Date : December 1, 1996 Class : PO
First Distribution Date : January 25, 1997 Initial Principal Amount
Assumed Final Distribution Date : November 25, 2029 of this Certificate
("Denomination") :
Master Servicer : EMC Mortgage Corporation Approximate Original Class
Pass-Through Rate : N/A Principal Amount : $649,052
THIS CERTIFIES THAT
is the registered owner of the Fractional Undivided Interest evidenced hereby in
the beneficial ownership interest of Certificates of the same Class as this
Certificate in a trust (the "Trust") consisting primarily of conventional one-
to four-family, first lien mortgage loans (collectively, the "Mortgage Loans")
sold by Bear Stearns Mortgage Securities Inc. ("BSMSI"). The Mortgage Loans were
sold by EMC Mortgage Corporation to BSMSI. 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.
The Class PO certificates are principal only Certificates and will
receive no interest. The Trustee will distribute on the 25th day of each month,
or, if such 25th day is not a Business Day, the immediately following Business
Day (each, a "Distribution Date"), commencing on the First Distribution Date
specified above, to the Person in whose name this Certificate is registered at
the close of business on the last Business Day of the calendar month preceding
the month of such Distribution Date, an amount equal to the product of the
Fractional Undivided Interest evidenced by this Certificate and the amount
required to be distributed to Holders of Certificates of the same Class as this
Certificate. The Assumed Final Distribution Date is the third anniversary of the
Distribution Date immediately following the latest scheduled maturity date of
any Mortgage Loan and is not likely to be the date on which the Current
Principal Amount of this Class of Certificates will be reduced to zero.
Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Person entitled thereto as such name and address
shall appear on the Certificate Register or, if such Person so requests by
notifying the Trustee in writing as specified in the Agreement and if such
Person holds Certificates with an initial aggregate Current Principal Amount
and/or initial aggregate Notional Amount of not less than $1,000,000, in
immediately available funds (by wire transfer or otherwise) to the account
specified in writing by such Person to the Trustee. Notwithstanding the above,
the final distribution on this Certificate will be made after due notice by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency appointed by the Trustee
for that purpose and designated in such notice.
FORM OF CLASS PO CERTIFICATES
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN, BEAR
STEARNS MORTGAGE SECURITIES INC., 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.
FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN "REMIC I" AS DEFINED IN THE AGREEMENT REFERRED TO BELOW, WHICH IS A
"REAL ESTATE MORTGAGE INVESTMENT CONDUIT" (A "REMIC") AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE"), AND IS NOT TREATED AS INDEBTEDNESS OF THE TRUST
REFERRED TO BELOW. EACH PURCHASER OF THE INTEREST REPRESENTED BY THIS
CERTIFICATE WILL BE REQUIRED TO REPRESENT IN AN AFFIDAVIT THAT IT IS NOT A
"DISQUALIFIED ORGANIZATION" AND WILL NOT TRANSFER THIS CERTIFICATE TO A
"DISQUALIFIED ORGANIZATION." THE TERM "DISQUALIFIED ORGANIZATION" IS DEFINED IN
SECTION 860E(e)(5) OF THE CODE AND IN THE AGREEMENT. EACH PURCHASER WILL ALSO BE
REQUIRED TO REPRESENT IN SUCH AFFIDAVIT THAT (A) IT IS NOT ACQUIRING
CERTIFICATES FOR THE ACCOUNT OF A DISQUALIFIED ORGANIZATION AND (B) IT WILL NOT
TRANSFER THIS CERTIFICATE UNLESS (1) IT HAS RECEIVED A SIMILAR AFFIDAVIT FROM
THE PROPOSED TRANSFEREE AND (2) AS OF THE TIME OF THE TRANSFER, IT DOES NOT HAVE
ACTUAL KNOWLEDGE THAT THE AFFIDAVIT OF THE PROPOSED TRANSFEREE IS FALSE. IN THE
EVENT THAT LEGISLATION IS ENACTED WHICH WOULD SUBJECT THE TRUST REFERRED TO
BELOW TO TAX (OR DISQUALIFY THE TRUST REFERRED TO BELOW) ON THE TRANSFER OF AN
INTEREST REPRESENTED BY THIS CERTIFICATE TO ANY OTHER PERSON OR PERSONS, BEAR
STEARNS MORTGAGE SECURITIES INC. SHALL, WITHOUT FURTHER ACTION ON THE PART OF
THE HOLDERS OF THE CLASS R CERTIFICATES BE EMPOWERED, TO THE FULLEST EXTENT
POSSIBLE AND AS IF THEY HAD SO VOTED, TO AMEND THE AGREEMENT REFERRED TO BELOW
TO RESTRICT OR PROHIBIT PROSPECTIVELY SUCH TRANSFER. THIS CERTIFICATE MAY NOT BE
TRANSFERRED TO A NON-U.S. PERSON AS DESCRIBED IN SECTION 5.05(c) OF THE
AGREEMENT REFERRED TO BELOW WITHOUT THE PRIOR WRITTEN CONSENT OF STATE STREET
BANK AND TRUST COMPANY, AS TAX MATTERS PERSON.
THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DECREASED BY THE
PRINCIPAL PAYMENTS HEREON. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE
CERTIFICATES, THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DIFFERENT
FROM THE DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY
ASCERTAIN ITS CURRENT PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE NAMED HEREIN.
MORTGAGE PASS-THROUGH CERTIFICATE,
No. R-1-1 SERIES 1996-6
evidencing a beneficial interest in a Trust
consisting primarily of conventional, first lien mortgage loans sold by
BEAR STEARNS MORTGAGE SECURITIES INC.
CUSIP No. 073914 TU 7
Cut-Off Date : December 1, 1996 Class : R-1
First Distribution Date : January 25, 1997 Initial Principal Amount
Assumed Final Distribution Date : November 25, 2029 of this Certificate
("Denomination") :$100.00
Master Servicer : EMC Mortgage Corporation Approximate Original Class
Pass-Through Rate : 8.00% Principal Amount : $ 100.00
THIS CERTIFIES THAT
is the registered owner of the Fractional Undivided Interest evidenced hereby in
the beneficial ownership interest of Certificates of the same Class as this
Certificate in a trust (the "Trust") consisting primarily of conventional one-
to four-family, first lien mortgage loans (collectively, the "Mortgage Loans")
sold by Bear Stearns Mortgage Securities Inc. ("BSMSI"). The Mortgage Loans were
sold by EMC Mortgage Corporation to BSMSI. 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 the Pass-Through
Rate. The Trustee will distribute on the 25th day of each month, or, if such
25th day is not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on the last Business Day of the calendar month preceding the month of
such Distribution Date, an amount equal to the product of the Fractional
Undivided Interest evidenced by this Certificate and the amount required to be
distributed to Holders of Certificates of the same Class as this Certificate.
The Assumed Final Distribution Date is the third anniversary of the Distribution
Date immediately following the latest scheduled maturity date of any Mortgage
Loan and is not likely to be the date on which the Current Principal Amount of
this Class of Certificates will be reduced to zero.
Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Person entitled thereto as such name and address
shall appear on the Certificate Register or, if such Person so requests by
notifying the Trustee in writing as specified in the Agreement and if such
Person holds Certificates with an initial aggregate Current Principal Amount
and/or initial aggregate Notional Amount of not less than $1,000,000, in
immediately available funds (by wire transfer or otherwise) to the account
specified in writing by such Person to the Trustee. Notwithstanding the above,
the final distribution on this Certificate will be made after due notice by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency appointed by the Trustee
for that purpose and designated in such notice.
FORM OF CLASS R-1 CERTIFICATES
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN, BEAR
STEARNS MORTGAGE SECURITIES INC., 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.
FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS THE
RESIDUAL INTERESTS IN REMIC II, REMIC III AND REMIC IV, AS DEFINED IN THE
AGREEMENT REFERRED TO BELOW, WHICH ARE EACH A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT" (A "REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G
AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), AND IS
NOT TREATED AS INDEBTEDNESS OF THE TRUST REFERRED TO BELOW. A HOLDER MAY REQUEST
THAT THIS CERTIFICATE BE SEPARATED INTO THE THREE SEPARATE RESIDUAL INTERESTS IN
REMIC II, REMIC III OR REMIC IV. EACH PURCHASER OF AN INTEREST REPRESENTED BY
THIS CERTIFICATE WILL BE REQUIRED TO REPRESENT IN AN AFFIDAVIT THAT IT IS NOT A
"DISQUALIFIED ORGANIZATION" AND WILL NOT TRANSFER THIS CERTIFICATE
(OR AN INTEREST THEREIN) TO A "DISQUALIFIED ORGANIZATION." THE TERM
"DISQUALIFIED ORGANIZATION" IS DEFINED IN SECTION 860E(e)(5) OF THE CODE AND IN
THE AGREEMENT. EACH PURCHASER WILL ALSO BE REQUIRED TO REPRESENT IN SUCH
AFFIDAVIT THAT (A) IT IS NOT ACQUIRING CERTIFICATES (OR AN INTEREST THEREIN) FOR
THE ACCOUNT OF A DISQUALIFIED ORGANIZATION AND (B) IT WILL NOT TRANSFER THIS
CERTIFICATE (OR AN INTEREST THEREIN) UNLESS (1) IT HAS RECEIVED A SIMILAR
AFFIDAVIT FROM THE PROPOSED TRANSFEREE AND (2) AS OF THE TIME OF THE TRANSFER,
IT DOES NOT HAVE ACTUAL KNOWLEDGE THAT THE AFFIDAVIT OF THE PROPOSED TRANSFEREE
IS FALSE. IN THE EVENT THAT LEGISLATION IS ENACTED WHICH WOULD SUBJECT THE TRUST
REFERRED TO BELOW TO TAX (OR DISQUALIFY THE TRUST REFERRED TO BELOW) ON THE
TRANSFER OF AN INTEREST REPRESENTED BY THIS CERTIFICATE TO ANY OTHER PERSON OR
PERSONS, BEAR STEARNS MORTGAGE SECURITIES INC. SHALL, WITHOUT FURTHER ACTION ON
THE PART OF THE HOLDERS OF THE CLASS R CERTIFICATES BE EMPOWERED, TO THE FULLEST
EXTENT POSSIBLE AND AS IF THEY HAD SO VOTED, TO AMEND THE AGREEMENT REFERRED TO
BELOW TO RESTRICT OR PROHIBIT PROSPECTIVELY SUCH TRANSFER. THIS CERTIFICATE (OR
AN INTEREST THEREIN) MAY NOT BE TRANSFERRED TO A NON-U.S. PERSON AS DESCRIBED IN
SECTION 5.05(c) OF THE AGREEMENT REFERRED TO BELOW WITHOUT THE PRIOR WRITTEN
CONSENT OF STATE STREET BANK AND TRUST COMPANY, AS TAX MATTERS PERSON.
THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DECREASED BY THE
PRINCIPAL PAYMENTS HEREON. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE
CERTIFICATES, THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DIFFERENT
FROM THE DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY
ASCERTAIN ITS CURRENT PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE NAMED HEREIN.
MORTGAGE PASS-THROUGH CERTIFICATE,
No. R-2-1 SERIES 1996-6
evidencing a beneficial interest in a Trust
consisting primarily of conventional, first lien mortgage loans sold by
BEAR STEARNS MORTGAGE SECURITIES INC.
CUSIP No. 073914 TV 5
Cut-Off Date : December 1, 1996 Class : R-2
First Distribution Date : January 25, 1997 Initial Principal Amount
Assumed Final Distribution Date : November 25, 2029 of this Certificate
("Denomination") : $100.00
Master Servicer : EMC Mortgage Corporation Approximate Original Class
Pass-Through Rate : 8.00% Principal Amount : $100.00
THIS CERTIFIES THAT
is the registered owner of the Fractional Undivided Interest evidenced hereby in
the beneficial ownership interest of Certificates of the same Class as this
Certificate in a trust (the "Trust") consisting primarily of conventional one-
to four-family, first lien mortgage loans (collectively, the "Mortgage Loans")
sold by Bear Stearns Mortgage Securities Inc. ("BSMSI"). The Mortgage Loans were
sold by EMC Mortgage Corporation to BSMSI. 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 the Pass-Through
Rate. The Trustee will distribute on the 25th day of each month, or, if such
25th day is not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on the last Business Day of the calendar month preceding the month of
such Distribution Date, an amount equal to the product of the Fractional
Undivided Interest evidenced by this Certificate and the amount required to be
distributed to Holders of Certificates of the same Class as this Certificate.
The Assumed Final Distribution Date is the third anniversary of the Distribution
Date immediately following the latest scheduled maturity date of any Mortgage
Loan and is not likely to be the date on which the Current Principal Amount of
this Class of Certificates will be reduced to zero.
Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Person entitled thereto as such name and address
shall appear on the Certificate Register or, if such Person so requests by
notifying the Trustee in writing as specified in the Agreement and if such
Person holds Certificates with an initial aggregate Current Principal Amount
and/or initial aggregate Notional Amount of not less than $1,000,000, in
immediately available funds (by wire transfer or otherwise) to the account
specified in writing by such Person to the Trustee. Notwithstanding the above,
the final distribution on this Certificate will be made after due notice by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency appointed by the Trustee
for that purpose and designated in such notice.
FORM OF CLASS R-2 CERTIFICATES
<PAGE>
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER ANY STATE SECURITIES OR BLUE SKY
LAW OF ANY STATE. THE HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE, AGREES THAT
THIS CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY
IN COMPLIANCE WITH THE ACT AND OTHER APPLICABLE LAWS AND ONLY (1) PURSUANT TO
RULE 144A UNDER THE ACT ("RULE 144A") TO A PERSON THAT THE HOLDER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A
"QIB"), PURCHASING FOR ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF A
QIB, WHOM THE HOLDER HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE,
PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (2) PURSUANT TO
AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE ACT (IF AVAILABLE)
OR (3) IN CERTIFICATED FORM TO AN "INSTITUTIONAL ACCREDITED INVESTOR" WITHIN THE
MEANING THEREOF IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE ACT
PURCHASING NOT FOR DISTRIBUTION IN VIOLATION OF THE ACT, SUBJECT TO (A) THE
RECEIPT BY THE TRUSTEE OF A LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN THE
AGREEMENT AND (B) AN OPINION OF COUNSEL AS TO COMPLIANCE WITH ALL APPLICABLE
SECURITIES LAWS OF THE UNITED STATES. THIS CERTIFICATE MAY NOT BE ACQUIRED FOR,
OR ON BEHALF OF, A PLAN UNLESS THE PROPOSED TRANSFEREE PROVIDES A BENEFIT PLAN
OPINION TO THE TRUSTEE.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN,
BEAR STEARNS MORTGAGE SECURITIES INC., 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 REPRESENTS THE SEPARATE COMPONENTS EACH OF WHICH IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" (A "REMIC"),
AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE").
UNDER TREASURY REGULATIONS RELATING TO ORIGINAL ISSUE DISCOUNT ("OID"),
TAXPAYERS MAY RELY ON THIS INFORMATION. THIS CERTIFICATE WAS ISSUED ON DECEMBER
30, 1996 WITH AN ISSUE PRICE (EXCLUSIVE OF ACCRUED INTEREST) EQUAL TO 1.14% OF
ITS ORIGINAL NOTIONAL PRINCIPAL AMOUNT. BASED ON THIS ISSUE PRICE, THIS
CERTIFICATE WAS ISSUED WITH OID FOR FEDERAL INCOME TAX PURPOSES IN AN AMOUNT
EQUAL TO $82.88 PER MILLION DOLLAR OF NOTIONAL PRINCIPAL AMOUNT. THE MONTHLY
YIELD TO MATURITY OF THIS CERTIFICATE EXPRESSED ON AN ANNUAL BASIS IS
APPROXIMATELY 23.79%, AND THE AMOUNT OF OID ALLOCABLE TO THE SHORT FIRST ACCRUAL
PERIOD (DECEMBER 30, 1996 THROUGH JANUARY 25, 1997) IS $0.19 PER MILLION DOLLAR
OF NOTIONAL PRINCIPAL AMOUNT. THE COMPUTATION OF THE MONTHLY YIELD TO MATURITY
AND THE OID AMOUNTS, INCLUDING THE AMOUNT OF OID ALLOCABLE TO THE SHORT PERIOD,
SPECIFIED ABOVE WAS BASED ON: (I) THE EXACT METHOD AND (II) A PREPAYMENT
ASSUMPTION OF 10% CPR (AS DEFINED IN THE PROSPECTUS SUPPLEMENT AND BY APPLYING
SUCH PREPAYMENT ASSUMPTION PRO-RATA TO EACH MORTGAGE). THE ACTUAL YIELD TO
MATURITY, PREPAYMENT ASSUMPTION, AND OID AMOUNTS MAY DIFFER FROM THOSE SET FORTH
ABOVE.
THE YIELD TO THE HOLDER OF THIS CERTIFICATE WILL BE EXTREMELY
SENSITIVE TO THE RATE OF PRINCIPAL PAYMENTS AND PAYMENTS OF
ARREARAGES ON THE MORTGAGE LOANS.
MORTGAGE PASS-THROUGH CERTIFICATE,
No. X-2-1 SERIES 1996-6
evidencing a beneficial interest in a Trust
consisting primarily of conventional, first lien mortgage loans sold by
BEAR STEARNS MORTGAGE SECURITIES INC.
Cut-Off Date : December 1, 1996 Class : X-2
First Distribution Date : January 25, 1997 Initial Fractional
Undivided Interest
Assumed Final Distribution Date : November 25, 2029 of this Certificate
("Denomination") :
Master Servicer : EMC Mortgage Corporation Original Class
Pass-Through Rate : N/A Fractional Undivided Interest :100%
THIS CERTIFIES THAT
is the registered owner of the Fractional Undivided Interest evidenced hereby in
the beneficial ownership interest of Certificates of the same Class as this
Certificate in a trust (the "Trust") consisting primarily of conventional one-
to four-family, first lien mortgage loans (collectively, the "Mortgage Loans")
sold by Bear Stearns Mortgage Securities Inc. ("BSMSI"). The Mortgage Loans were
sold by EMC Mortgage Corporation to BSMSI. 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.
The Class X-2 Certificates do not have a principal amount or bear
interest, but they will be entitled to receive on each Distribution Date (i) an
amount derived from the interest payable on the Mortgage Loans to the extent not
required to be paid to the other classes of Certificates to achieve or maintain
the Overcollateralization Limit, (ii) in certain cases after the Class A-WAC
Current Principal Amount has been paid in full, an amount equal to the sum of
the Contingent Servicing Fee, if available, any remaining Arrearage and the
Accelerated Arrearage Payment Amount, and (iii) any Unpaid Principal Balance of
the Mortgage Loans other than the PO Percentage of the Unpaid Principal Balance
of the Discount Mortgage Loans after the P&I Certificates are paid in full.
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 third 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 this Class of Certificates will
be paid in full.
Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Person entitled thereto as such name and address
shall appear on the Certificate Register or, if such Person so requests by
notifying the Trustee in writing as specified in the Agreement and if such
Person holds Certificates with an initial aggregate Current Principal Amount
and/or initial aggregate Notional Amount of not less than $1,000,000, or 100% of
the Fractional Undivided Interest of the Class X-2 Certificates, in immediately
available funds (by wire transfer or otherwise) to the account specified in
writing by such Person to the Trustee. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Trustee of
the pendency of such distribution and only upon presentation and surrender of
this Certificate at the office or agency appointed by the Trustee for that
purpose and designated in such notice.
FORM OF CLASS X-2 CERTIFICATES
<PAGE>
Unless this Certificate has been countersigned by an authorized signatory of the
Trustee by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement, or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: December 30, 1996
STATE STREET BANK AND TRUST COMPANY,
Countersigned: Not in its individual capacity but solely
By___________________________ as Trustee
Authorized signatory of
State Street Bank By ______________________________________
and Trust Company, not AUTHORIZED OFFICER
in its individual
<PAGE>
EXHIBIT A-2
FORM OF REVERSE OF CERTIFICATES
BEAR STEARNS MORTGAGE SECURITIES INC.
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1996-6
This Certificate is one of a duly authorized issue of Certificates
designated as set forth on the face hereof (the "Certificates"), issued in
seventeen Classes. The Certificates, in the aggregate, evidence the entire
beneficial ownership interest in the Trust formed pursuant to the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the Trust for payment hereunder and that the Trustee
is not liable to the Certificateholders for any amount payable under this
Certificate or the Agreement or, except as expressly provided in the Agreement,
subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Master Servicer and the rights of the Certificateholders under the Agreement
from time to time by the Master Servicer and the Trustee with the consent of the
Holders of Certificates evidencing Fractional Undivided Interests aggregating
not less than 66% (or in certain cases, Holders of Certificates of affected
Classes evidencing such percentage of the Fractional Undivided Interests
thereof). Any such consent by the Holder of this Certificate shall be conclusive
and binding on such Holder and upon all future Holders of this Certificate and
of any Certificate issued upon the transfer hereof or in lieu hereof whether or
not notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable with the Trustee upon
surrender of this Certificate for registration of transfer at the offices or
agencies maintained by the Trustee in the City of Boston, State of
Massachusetts, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Trustee duly executed by the Holder hereof
or such Holder's attorney duly authorized in writing, and thereupon one or more
new Certificates in authorized denominations representing a like aggregate
Fractional Undivided Interest will be issued to the designated transferee. In
the case of classes of Certificates not registered under the Securities Act of
1933, as amended, additional documentation will be registered to be provided to
the Trustee prior to the effectiveness of a transfer.
The Certificates are issuable only as registered Certificates without
coupons in the Classes and denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth, this
Certificate is exchangeable for one or more new Certificates evidencing the same
Class and in the same aggregate Fractional Undivided Interest, as requested by
the Holder surrendering the same.
No service charge will be made to the Certificateholders for any such
registration of transfer, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. The Master Servicer, the Trustee and any agent of any of them may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Master Servicer, the Trustee nor any
such agent shall be affected by notice to the contrary.
The obligations created by the Agreement and the Trust created thereby
(other than the obligations to make payments to Certificateholders with respect
to the termination of the Agreement) shall terminate upon the earlier of (i) the
later of the (A) final payment or other liquidation (or Monthly Advance with
respect thereto) of the last Mortgage Loan remaining in the Trust and (B)
disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan and the remittance of all funds due under the
Agreement, or (ii) the optional repurchase by the party named in the Agreement
of all the Mortgage Loans and other assets of the Trust in accordance with the
terms of the Agreement. Such optional repurchase may be made only on or after
the Distribution Date on which the aggregate Current Principal Amount of the
Certificates is less than 10% of the aggregate initial Current Principal Amount
of the Certificates. The exercise of such right will effect the early retirement
of the Certificates. The Trust also may be terminated on any Distribution Date
upon the determination, based upon an opinion of counsel, that REMIC status of
REMIC I, REMIC II, REMIC III or REMIC IV has been lost or that a substantial
risk exists that such status will be lost for the then current year. In no
event, however, will the Trust created by the Agreement continue beyond the
expiration of 21 years after the death of certain persons identified in the
Agreement.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ------------------------------------------------------------
- -----------------------------------------------------------------------------
(Please print or typewrite name and address including postal zip code assignee)
the within Certificate and hereby authorizes the transfer of registration of
such interest to the assignee on the Certificate Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new Certificate of a
like denomination and Class, to the above named assignee and deliver such
Certificate to the following address: Dated:
----------------------------------------
Signature by or on behalf of assignor
----------------------------------------
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to ............................................................
...............................................................................
for the account of ...........................................................
account number ______________, or, if mailed by check to ......................
...............................................................................
Applicable statements should be mailed to......................................
...............................................................................
This information is provided by ..............................................,
the assignee named above, or .................................................,
as its agent.
<PAGE>
EXHIBIT B
MORTGAGE LOAN SCHEDULE
Omitted
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.
(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, and the Seller's Information (as defined in Section 14(a)
hereof) does not include any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements made, in
light of the circumstances under which they were made, not misleading;
(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 (other than as Arrearage) is
60 or more days past due after giving effect to any applicable Forbearance
Plan or modification by Seller as a result of which an arrearage was added
to the outstanding Unpaid Principal Balance and a new payment schedule
agreed to resulting in an "EMC Modified Mortgage Loan", as calculated by
the Seller (regardless of either the timing of receipt of such payments or
the payment history of such Mortgage Loans prior to January, 1996;
(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 the title insurance policy referred to in (i)
below;
(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;
each Mortgage Loan is being serviced in all material respects in accordance
with applicable state and federal laws, including, without limitation,
usury, equal credit opportunity and disclosure laws;
(i) a lender's title insurance policy (on an ALTA or CLTA form)
or binder, or other assurance of title customary in the relevant
jurisdiction therefor, was issued on the date of the origination of each
related Mortgage Loan, or, if none is available, a current commitment or
binder has been issued, in each case by a title insurance company qualified
to do business in the jurisdiction where the related Mortgaged Property is
located, insuring the Seller and its successors and assigns that the
Mortgage is a first priority lien on the related Mortgaged Property in the
original principal amount of the Mortgage Loan. Seller is the sole insured
under such lender's title insurance policy, and such policy, commitment,
binder or assurance is valid and remains in full force and effect, and each
such policy, commitment, binder or assurance shall contain all applicable
endorsements including a negative amortization endorsement, if applicable;
(j) 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 customary advances for
insurance and taxes;
(k) 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 the 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;
(l) 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;
(m) 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;
(n) as of the Closing Date, the improvements on each Mortgaged
Property securing a Mortgage Loan are insured by an insurer which is
acceptable to the Seller or by its blanket insurance policy against loss by
fire and such hazards as are covered under a standard extended coverage
endorsement in the locale in which the Mortgaged Property is located, in an
amount which is not less than the lesser of the maximum insurable value of
the improvements securing such Mortgage Loan and the outstanding principal
balance of the Mortgage Loan, but in no event in an amount less than an
amount that is required to prevent the Mortgagor from being deemed to be a
co-insurer thereunder; if the improvement on the Mortgaged Property is a
condominium unit, it is included under the coverage afforded by a blanket
policy for the condominium project; if upon origination of the related
Mortgage Loan, the improvements on the Mortgaged Property were in an area
identified as a federally designated flood area, a flood insurance policy
is in effect in an amount representing coverage not less than the least of
(i) the outstanding principal balance of the Mortgage Loan, (ii) the
restorable cost of improvements located on such Mortgaged Property and
(iii) the maximum coverage available under federal law; and each Mortgage
obligates the Mortgagor thereunder to maintain the insurance referred to in
the Mortgage at the Mortgagor's cost and expense;
(o) except for 218 Mortgage Loans with, as of the Cut-Off Date,
an aggregate Unpaid Principal Balance of approximately $7,681,624 and a
related Arrearage of approximately $2,115,331 which are no more than 59
days delinquent (as calculated by the Seller) and after giving effect to
any Forbearance Plan, 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 except for any Forbearance Plan or any EMC Modified
Mortgage Loan, 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;
(p) no Mortgagor, at the Cut-Off Date, was a debtor in any state
or federal bankruptcy or insolvency proceeding;
(q) each Mortgage Loan was (i) originated by a HUD approved
Mortgagee, (ii) purchased by the Seller from HUD and (iii) serviced by the
Seller in accordance with applicable federal, state and local laws and
regulations;
(r) to the best of the Seller's knowledge, all inspections,
licenses and certificates required to be made or issued with respect to all
occupied portions of the Mortgaged Property and, with respect to the use
and occupancy of the same, including, but not limited to, certificates of
occupancy and fire underwriting certificates, have been made or obtained
from the appropriate authorities;
(s) the Mortgaged Property and all improvements thereon comply
with all requirements of any applicable zoning and subdivision laws and
ordinances;
(t) each of the Mortgaged Properties consists of a single parcel
of real property with a detached single- family residence erected thereon,
or a two- to four-family dwelling, or a townhouse, or an individual
condominium unit in a condominium project or an individual unit in a
planned unit development. No Mortgaged Property consists of a single parcel
of real property with a cooperative housing development erected thereon;
(u) as of the Cut-Off Date, the Net Rate of each Mortgage Loan
was not more than 16.980% per annum and not less than 4.730% per annum, and
the weighted average Net Rate of the Mortgage Loans was approximately
9.823% per annum, weighted by Unpaid Principal Balance;
(v) the Mortgage Loans were not selected from mortgage loans
owned by the Seller in a manner to affect adversely the interests of the
Purchaser or the holders of the Certificates;
(w) as of the Cut-Off Date, the remaining term of each Mortgage
Loan is not more than 359 months, and not less than 66 months and the
weighted average remaining term of each Mortgage Loan is 223 months,
weighted by Unpaid Principal Balance;
(x) as of the Cut-Off Date, no more than 20.92%, 18.72%, 10.77%,
8.72%, and 7.21% of the Mortgage Loans (by Unpaid Principal Balance) are
secured by properties located in the states of Arizona, Florida, Oklahoma,
Pennsylvania and Illinois respectively, and no more than 5% of the Mortgage
Loans (by Unpaid Principal Balance) are located in any other state;
(y) as of the Cut-Off Date the Maximum Unpaid Principal Balances
of the Mortgage Loans is $116,457, and the Minimum Unpaid Principal Balance
is $279; and the average Unpaid Principal Balance is $39,458 . The maximum
ARREARGE of any Mortgage Loan as of the Cut-off Date was approximately
$61,173, the minimum Arrearage was $1 and the average outstanding Arrearage
was approximately $11,204; and
(z) generally, each of the Mortgage Loans was originated under
HUD's Section 203(b), 221, 234 or 245 mortgage insurance programs;
<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
Trustee Mortgage
File No.:
-----------------------------
Master Servicer
Name:
EMC Mortgage Corporation
Address:
222 West Las Colinas Boulevard, Suite 600
Irving, TX 75039
Certificates: Mortgage Pass-Through Certificates,
Series 1996-6
The undersigned hereby acknowledges that it has received from
_________________, as Trustee for the holders of Bear Stearns Mortgage
Securities Inc. Mortgage Pass-Through Certificates, Series 1996-6, 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 December 1, 1996 (the "Pooling and Servicing
Agreement") among the Trustee, EMC Mortgage Corporation 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__
STATE STREET BANK AND TRUST COMPANY
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 NEW YORK )
) ss:
COUNTY OF NEW YORK )
________________, being first duly sworn, deposes and says:
1. That (s)he is a ____ _________ of ________________. (the
"Investor"), a corporation duly organized and existing under the laws of the
State of Delaware, 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 December 30, 1996 (ii) it is
not acquiring the Bear Stearns Mortgage Securities Inc. Mortgage Pass-Through
Certificates, Series 1996-6, Class R-1 and Class R-2 Certificates (the "Residual
Certificates") for the account of a disqualified organization; (iii) it agrees
to amend the Pooling and Servicing Agreement shall it be deemed necessary (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 the 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 the authority of its __________, by its
__________, this __ day of ________, ____.
By: _______________________________
Address of Investor for
receipt of tax
information:
Personally appeared before me the above-named _________________, known
or proved to me to be the same person who executed the foregoing instrument and
to be a Vice President 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 ______, ____.
NOTARY PUBLIC
COUNTY OF NEW YORK
STATE OF NEW YORK
My commission expires the day of , 19 .
[SEAL]
<PAGE>
EXHIBIT F-1
FORM OF INVESTMENT LETTER
[Date]
[SELLER]
State Street Bank and Trust Company
Two International Place
Boston, Massachusetts 02110
Attention: BSMSI/EMC 1996-6
Bear Stearns Mortgage Securities Inc.
245 Park Avenue
New York, New York 10167
Attention:
Re: BSMSI Series 1996-6 Mortgage Pass-Through
Certificates (the "Certificates"), including
the Class B-4, Class B-5 and Class B-6 Certificates
(the "Privately Offered Certificates")
Dear Sirs:
In connection with our purchase of Privately Offered Certificates, we
confirm that:
(i) we understand that the Privately Offered Certificates are
not being registered under the Securities Act of 1933, as
amended (the "Act") or any applicable state securities or
"Blue Sky" laws, and are being sold to us in a transaction
that is exempt from the registration requirements of such
laws;
(ii) any information we desired concerning the Certificates,
including the Privately Offered Certificates, the trust in
which the Certificates represent the entire beneficial
ownership interest (the "Trust") or any other matter we
deemed relevant to our decision to purchase Privately
Offered Certificates has been made available to us;
(iii) we are able to bear the economic risk of invest ment 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 Agreement (as defined below), pursuant to which
the Trust was formed; we have reviewed carefully and
understand the terms of the Pooling and Servicing Agreement;
(viii) we are not acquiring the Privately Offered Certificate for,
or on behalf of, an employee benefit plan subject to Title I
to ERISA or other retirement arrangement not subject to
ERISA, but which is subject to Section 4975 of the Code
(such as an individual retirement account or Keogh plan
covering only a sole proprietor, or partners), or any entity
whose underlying assets include plan assets by reason of
such plan, arrangement or account investing in such entity,
including an insurance company general account
(collectively, "Plan(s)");
(ix) We understand that each of the Class _____, 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 OR
ANY ENTITY IN WHICH ALL THE EQUITY HOLDERS COME WITHIN SUCH
PARAGRAPHS 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 SUCH OTHER EVIDENCE
ACCEPTABLE TO THE TRUSTEE THAT SUCH REOFFER, RESALE, PLEDGE
OR TRANSFER IS IN COMPLIANCE WITH THE ACT. THIS CERTIFICATE
MAY NOT BE ACQUIRED FOR, OR ON BEHALF OF, AN EMPLOYEE
BENEFIT PLAN SUBJECT TO TITLE I OF ERISA OR OTHER RETIREMENT
ARRANGEMENT NOT SUBJECT TO ERISA, BUT WHICH IS SUBJECT TO
SECTION 4975 OF THE CODE (SUCH AS AN INDIVIDUAL RETIREMENT
ACCOUNT OR KEOGH PLAN COVERING ONLY A SOLE PROPRIETOR, OR
PARTNERS), OR ANY ENTITY WHOSE UNDERLYING ASSETS INCLUDE
PLAN ASSETS BY REASON OF SUCH PLAN, ARRANGEMENT OR ACCOUNT
INVESTING IN SUCH ENTITY, INCLUDING AN INSURANCE COMPANY
GENERAL ACCOUNT (COLLECTIVELY, "PLAN(S)") UNLESS THE
PROPOSED TRANSFEREE PROVIDES A BENEFIT PLAN OPINION TO THE
TRUSTEE."
"Eligible Purchaser" means a corporation, partnership or other entity
which we have reasonable grounds to believe and do believe (i) can make
representations with respect to itself to substantially the same effect as the
representations set forth herein, and (ii) is either a Qualified Institutional
Buyer as defined under Rule 144A of the Act or an institutional "Accredited
Investor" as defined under Rule 501 of the Act.
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):___________________
Terms not otherwise defined herein shall have the meanings assigned to
them in the Pooling and Servicing Agreement dated as of September 1, 1996 among
Bear Stearns Mortgage Securities Inc., EMC Mortgage Company and State Street
Bank and Trust Company (the "Pooling and Servicing
Agreement").
IN WITNESS WHEREOF, this document has been executed by the undersigned
who is duly authorized to do so on behalf of the undersigned Eligible Purchaser
on the ____ day of _____________, 19__.
Very truly yours,
[PURCHASER]
By:__________________________
(Authorized Officer)
By:__________________________
Attorney-in-fact
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.
By:___________________________
Duly Authorized
<PAGE>
EXHIBIT F-2
FORM OF RULE 144A AND RELATED MATTERS CERTIFICATE
[Date]
[SELLER]
State Street Bank and Trust Company
Two International Place
Boston, Massachusetts 02110
Attention: BSMSI/EMC 1996-6
Bear Stearns Securities Administration
Corporation
245 Park Avenue
New York, New York 10167
Attention: President
Re: BSMSI Series 1996-6 Mortgage Pass-Through
Certificates, Class B-4, Class B-5 and
Class B-6 Certificates (the "Privately
Offered Certificates")
Dear Sirs:
In connection with our purchase of Privately Offered
Certificates, the undersigned certifies to each of the parties to whom this
letter is addressed that it is a qualified institutional buyer (as defined in
Rule 144A under the Securities Act of 1933, as amended (the "Act")) as follows:
I. 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
II. The dollar amount set forth above is:
A. greater than $100 million and the undersigned is one
of the following entities:
(1) an insurance company as defined in Section
2(13) of the Act; or
(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 December 1, 1996 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 is not acquiring the Privately
Offered Certificates for, or on behalf of, an employee benefit plan subject to
Title I to ERISA or other retirement arrangement not subject to ERISA, but which
is subject to Section 4975 of the Code (such as an individual retirement account
or Keogh plan covering only a sole proprietor, or partners), or any entity whose
underlying assets include plan assets by reason of such plan, arrangement or
account investing in such entity, including an insurance company general account
(collectively, "Plan(s)").
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):_____________________
<PAGE>
IN WITNESS WHEREOF, this document has been executed by the undersigned
who is duly authorized to do so on behalf of the undersigned Qualified
Institutional Buyer on the ____ day of ____________, 19__.
Name of Institution
-----------------------------------
Signature
-----------------------------------
Name
-----------------------------------
Title
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.
By:___________________________
Duly Authorized
<PAGE>
EXHIBIT G
FORM OF SPECIAL SERVICING AND COLLATERAL FUND AGREEMENT
This SPECIAL SERVICING AND COLLATERAL FUND AGREEMENT (the "Agreement")
is made and entered into as of December 1, 1996, between EMC Mortgage
Corporation (the "Company") and [ ] (the "Purchaser").
PRELIMINARY STATEMENT
_______________________________ is the holder of the entire interest
in The Mortgage Pass-Through Certificates, Series 1996-6, Class B-6 Certificates
_________ (the " Certificates"). The Certificates were issued pursuant to a
Pooling and Servicing Agreement (the "Pooling and Servicing Agreement") dated as
of December 1, 1996 between the Company (in its capacity as master servicer
thereunder, the "Master Servicer"), Bear Stearns Mortgage Securities Inc. and
State Street Bank and Trust Company, as Trustee.
[ ] intends to resell all of the Certificates directly to __________
on or promptly after the date hereof.
In connection with such sale, the parties hereto have agreed that the
Company, as Master Servicer, will engage in certain special servicing procedures
relating to foreclosures for the benefit of the Purchaser, and that the
Purchaser will deposit funds in a collateral fund to cover any losses
attributable to such procedures as well as all advances and costs in connection
therewith, as set forth herein.
In consideration of the mutual agreements herein contained, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Purchaser agree that the following provisions shall become effective and shall
be binding on and enforceable by the Company and the Purchaser upon the
acquisition by the Purchaser of the Certificates.
ARTICLE I
DEFINITIONS
Section 1.01. DEFINED TERMS.
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
BUSINESS DAY: Any day other than (i) a Saturday or a Sunday or (ii) a
day on which banking institutions in New York City are required or authorized by
law or executive order to be closed.
COLLATERAL FUND: The fund established and maintained pursuant to
Section 3.01 hereof.
COLLATERAL FUND PERMITTED INVESTMENTS: Either (i) obligations of, or
obligations fully guaranteed as to principal and interest by, the United States,
or any agency or instrumentality thereof, provided such obligations are backed
by the full faith and credit of the United States, (ii) repurchase agreements on
obligations specified in clause (i) provided that the unsecured obligations of
the party agreeing to repurchase such obligations are at the time rated by each
Rating Agency in the highest long-term rating category, (iii) federal funds,
certificates of deposit, time deposits and banker's acceptances of any U.S.
depository institution or trust company incorporated under the laws of the
United States or any state provided that the debt obligations of such depository
institution or trust company at the date of acquisition thereof have been rated
by each Rating Agency in the highest short-term rating category, (iv) commercial
paper of any corporation incorporated under the laws of the United States or any
state thereof which on the date of acquisition has the highest short term rating
of each Rating Agency, and (v) other obligations or securities that are
acceptable to each Rating Agency as a Collateral Fund Permitted Investment
hereunder and will not, as evidenced in writing, result in a reduction or
withdrawal in the then current rating of the Certificates and, for each of the
preceding clauses, the maturity thereof shall be not later than the earlier to
occur of (A) 30 days from the date of the related investment and (B) the
Business Day preceding the next succeeding Distribution Date.
COMMENCEMENT OF FORECLOSURE: The first official action required under
local law in order to commence foreclosure proceedings or to schedule a
trustee's sale under a deed of trust, including (i) in the case of a mortgage,
any filing or service of process necessary to commence an action to foreclose or
(ii) in the case of a deed of trust, the posting, publishing, filing or delivery
of a notice of sale, but not including in either case (x) any notice of default,
notice of intent to foreclose or sell or any other action prerequisite to the
actions specified in (i) or (ii) above and, upon the consent of the Purchaser
which will be deemed given unless expressly withheld within two Business Days of
notification, (y) the acceptance of a deed-in- lieu of foreclosure (whether in
connection with a sale of the related property or otherwise) or (z) initiation
and completion of a short pay-off.
CURRENT APPRAISAL: With respect to any Mortgage Loan as to which the
Purchaser has made an Election to Delay Foreclosure, an appraisal of the related
Mortgaged Property obtained by the Purchaser as nearly contemporaneously as
practicable to the time of the Purchaser's election, prepared based on the
Company's customary requirements for such appraisals.
ELECTION TO DELAY FORECLOSURE: Any election by the Purchaser to delay
the Commencement of Foreclosure, made in accordance with Section 2.02(b).
ELECTION TO FORECLOSURE: Any election by the Purchaser to proceed with
the Commencement of Foreclosure, made in accordance with Section 2.03(a).
REQUIRED COLLATERAL FUND BALANCE: As of any date of determination, an
amount equal to the aggregate of all amounts previously required to be deposited
in the Collateral Fund pursuant to Section 2.02(d) (after adjustments for all
withdrawals and deposits prior to such date pursuant to Section 2.02(e)) and
Section 2.03(b) (after adjustment for all withdrawals and deposits prior to such
date pursuant to Section 2.03(c)) and Section 3.02, reduced by all withdrawals
therefrom prior to such date pursuant to Section 2.02(g) and Section 2.03(d).
Section 1.02. DEFINITIONS INCORPORATED BY REFERENCE.
All capitalized terms not otherwise defined in this Agreement shall
have the meanings assigned in the Pooling and Servicing Agreement.
ARTICLE II
SPECIAL SERVICING PROCEDURES
Section 2.01. REPORTS AND NOTICES.
(a) In connection with the performance of its duties under the Pooling
and Servicing Agreement relating to the realization upon defaulted Mortgage
Loans, the Company as Master Servicer shall provide to the Purchaser the
following notices and reports:
i) Within five Business Days after each Distribution Date (or included
in or with the monthly statements to Certificateholders pursuant to the Pooling
and Servicing Agreement), the Company, as Master Servicer, shall provide to the
Purchaser a report, using the same methodology and calculations in its standard
servicing reports, indicating for the Trust Fund the number of Mortgage Loans
that are (A) thirty days, (B) sixty days, (C) ninety days or more delinquent or
(D) in foreclosure, and indicating for each such Mortgage Loan the loan number
and outstanding principal balance.
ii) Prior to the Commencement of Foreclosure in connection with any
Mortgage Loan, the Company shall provide the Purchaser with a notice (sent by
facsimile transmission) of such proposed and imminent foreclosure, stating the
loan number and the aggregate amount owing under the Mortgage Loan. Such notice
may be provided to the Purchaser in the form of a copy of a referral letter from
the Company to an attorney requesting the institution of foreclosure or a copy
of a request to foreclose received by the Company from the related primary
servicer which has been approved by the Company.
(b) If requested by the Purchaser, the Company shall make its
servicing personnel available (during their normal business hours) to respond to
reasonable inquiries, in writing by facsimile transmission, by the Purchaser in
connection with any Mortgage Loan identified in a report under subsection (a)(i)
or (a)(ii) which has been given to the Purchaser, provided, that (1) the Company
shall only be required to provide information that is readily accessible to its
servicing personnel and is non-confidential and (2) the Company shall respond
within five Business Days orally or in writing by facsimile transmission.
(c) In addition to the foregoing, the Company shall provide to the
Purchaser such information as the Purchaser may reasonably request concerning
each Mortgage Loan that is at least sixty days delinquent and each Mortgage Loan
which has become real estate owned, through the final liquidation thereof,
provided, that the Company shall only be required to provide information that is
readily accessible to its servicing personnel and is non-confidential.
Section 2.02. PURCHASER'S ELECTION TO DELAY FORECLOSURE PROCEEDINGS.
(a) The Purchaser shall be deemed to direct the Company that in the
event that the Company does not receive written notice of the Purchaser's
election pursuant to subsection (b) below within 24 hours (exclusive of any
intervening non-Business Days) of transmission of the notice provided by the
Company under Section 2.01(a)(ii) subject to extension as set forth in Section
2.02(b), the Company may proceed with the Commencement of Foreclosure in respect
of such Mortgage Loan in accordance with its normal foreclosure policies without
further notice to the Purchaser. Any foreclosure that has been initiated may be
discontinued (i) without notice to the Purchaser if the Mortgage Loan has been
brought current or if a refinancing or prepayment occurs with respect to the
Mortgage Loan (including by means of a short payoff approved by the Company) or
(ii) with notice to the Purchaser if the Company has reached the terms of a
forbearance agreement with the borrower. In such latter case the Company may
complete such forbearance agreement unless instructed otherwise by the Purchaser
within two Business Days of notification.
(b) In connection with any Mortgage Loan with respect to which a
notice under Section 2.01(a)(ii) has been given to the Purchaser, the Purchaser
may elect to request that the Company delay the Commencement of Foreclosure
until such time as the Purchaser determines that the Company may proceed with
the Commencement of Foreclosure. Such election must be evidenced by written
notice received within 24 hours (exclusive of any intervening non-Business Days)
of transmission of the notice provided by the Company under Section 2.01(a)(ii).
The Purchaser shall send a copy of such notice of election to each Rating Agency
as soon as practicable thereafter. Such 24 hour period shall be extended for no
longer than an additional four Business Days after the receipt of the
information if the Purchaser requests additional information related to such
foreclosure within such 24 hour period; provided, however, that the Purchaser
will have at least one Business Day to make such election following its receipt
of any requested additional information. Any such additional information shall
(i) not be confidential in nature and (ii) be obtainable by the Company from
existing reports, certificates or statements or otherwise be readily accessible
to its servicing personnel. The Purchaser agrees that it has no right to deal
with the mortgagor. However, if the Company's normal foreclosure policies
include acceptance of a deed-in-lieu of foreclosure or short payoff, the
Purchaser will be notified and given two Business Days to respond. The Company
shall have the right to reject the notice of election by written notice to the
Purchaser within 24 hours of receipt of such notice of election, in which event
the Company may proceed with the Commencement of Foreclosure.
(c) With respect to any Mortgage Loan as to which the Purchaser has
made an Election to Delay Foreclosure which has not been rejected, the Purchaser
shall obtain a Current Appraisal as soon as practicable, and shall provide the
Company with a copy of such Current Appraisal.
(d) Within two Business Days of making any Election to Delay
Foreclosure which has not been rejected, the Purchaser shall remit by wire
transfer to the Trustee, for deposit in the Collateral Fund, an amount, as
calculated by the Company, equal to the sum of (i) 125% of the greater of the
Scheduled Principal Balance of the Mortgage Loan and the value shown in the
Current Appraisal referred to in subsection (c) above (or, if such Current
Appraisal has not yet been obtained, the Company's estimate thereof, in which
case the required deposit under this subsection shall be adjusted upon obtaining
such Current Appraisal), and (ii) three months' interest on the Mortgage Loan at
the applicable Mortgage Interest Rate. If any Election to Delay Foreclosure
which has not been rejected extends for a period in excess of three months (such
excess period being referred to herein as the "Excess Period"), the Purchaser
shall remit by wire transfer in advance to the Trustee for deposit in the
Collateral Fund the amount of each additional month's interest, as calculated by
the Company, equal to interest on the Mortgage Loan at the applicable Mortgage
Interest Rate for the Excess Period. The terms of this Agreement will no longer
apply to the servicing of any Mortgage Loan upon the failure of the Purchaser to
deposit the above amounts relating to the Mortgage Loan within two Business Days
of (i) the Election to Delay Foreclosure which has not been rejected or (ii) the
beginning of the related Excess Period, as the case may be.
(e) With respect to any Mortgage Loan as to which the Purchaser has
made an Election to Delay Foreclosure which has not been rejected, the Company
or the Trustee may withdraw from the Collateral Fund from time to time amounts
necessary to reimburse the Company for all related Monthly Advances and
Liquidation Expenses thereafter made by the Company as Master Servicer in
accordance with the Pooling and Servicing Agreement. To the extent that the
amount of any such Liquidation Expense is determined by the Company based on
estimated costs, and the actual costs are subsequently determined to be higher,
the Company may, or the Trustee shall at the Company's direction, withdraw the
additional amount from the Collateral Fund to reimburse the Company. In the
event that the Mortgage Loan is brought current by the mortgagor, the amounts so
withdrawn from the Collateral Fund shall be redeposited therein as and to the
extent that reimbursement therefor from amounts paid by the mortgagor is not
prohibited pursuant to the Pooling and Servicing Agreement as of the date
hereof. Except as provided in the preceding sentence, amounts withdrawn from the
Collateral Fund to cover Monthly Advances and Liquidation Expenses shall not be
redeposited therein or otherwise reimbursed to the Purchaser. If and when any
such Mortgage Loan is brought current by the mortgagor, all amounts remaining in
the Collateral Fund in respect of such Mortgage Loan (after adjustment for all
previous withdrawals and deposits pursuant to this subsection and after
reimbursement to the Master Servicer for all related Monthly Advances) shall be
released to the Purchaser.
(f) With respect to any Mortgage Loan as to which the Purchaser has
made an Election to Delay Foreclosure which has not been rejected, the Company
shall continue to service the Mortgage Loan in accordance with its customary
procedures (other than the delay in Commencement of Foreclosure as provided
herein). If and when, following such election, the Purchaser shall notify the
Company that it believes that it is appropriate to do so, the Company shall
proceed with the Commencement of Foreclosure; provided that, in any event, if
the Mortgage Loan is not brought current by the Mortgagor by the time the
Mortgage Loan becomes 6 months delinquent, the Purchaser's election shall no
longer be effective and the Company shall be entitled to proceed with the
Commencement of Foreclosure.
(g) Upon the occurrence of a liquidation with respect to any Mortgage
Loan as to which the Purchaser made an Election to Delay Foreclosure which has
not been rejected and as to which the Company proceeded with the Commencement of
Foreclosure in accordance with subsection (f) above, the Company shall calculate
the amount, if any, by which the value shown on the Current Appraisal obtained
under subsection (c) exceeds the actual sales price obtained for the related
Mortgaged Property (net of Liquidation Expenses and unreimbursed Monthly
Advances related to the extended foreclosure period), and the Company shall, or
the Trustee shall at the direction of the Company, withdraw the amount of such
excess from the Collateral Fund and shall remit the same to the Trust Fund for
application as additional Liquidation Proceeds pursuant to the Pooling and
Servicing Agreement. After making such withdrawal, all amounts remaining in the
Collateral Fund in respect of such Mortgage Loan (after adjustment for all
withdrawals and deposits pursuant to subsection (e) and after reimbursement to
the Master Servicer for all related Monthly Advances) shall be released to the
Purchaser.
Section 2.03. PURCHASER'S ELECTION TO COMMENCE FORECLOSURE
PROCEEDINGS.
(a) In connection with any Mortgage Loan identified in a report under
Section 2.01(a)(i)(B), the Purchaser may elect to instruct the Company to
proceed with the Commencement of Foreclosure as soon as practicable. Such
election must be evidenced by written notice received by the Company by 5:00
p.m., New York City time, on the third Business Day following the delivery of
such report under Section 2.01(a)(i). The Company shall have the right to reject
the notice of election by written notice to the Purchaser within 24 hours of
receipt of such notice of election, in which event, the Company may delay the
Commencement of Foreclosure.
(b) Within two Business Days of making any Election to Foreclose which
has not been rejected, the Purchaser shall remit to the Trustee, for deposit in
the Collateral Fund, an amount, as calculated by the Company, equal to 125% of
the current Scheduled Principal Balance of the Mortgage Loan and three months'
interest on the Mortgage Loan at the applicable Mortgage Rate. If and when any
such Mortgage Loan is brought current by the mortgagor, all amounts in the
Collateral Fund in respect of such Mortgage Loan (after adjustment for all
withdrawals and deposits pursuant to subsection (c) below) shall be released to
the Purchaser. The terms of this Agreement will no longer apply to the servicing
of any Mortgage Loan upon the failure of the Purchaser to deposit the above
amounts relating to the Mortgage Loan within two Business Days of the Election
to Foreclose.
(c) With respect to any Mortgage Loan as to which the Purchaser has
made an Election to Foreclose which has not been rejected, the Company shall
continue to service the Mortgage Loan in accordance with its customary
procedures. In connection therewith, the Company shall have the same rights to
make withdrawals for Monthly Advances and Liquidations Expenses from the
Collateral Fund as are provided under Section 2.02(e), and the Company shall
make reimbursements thereto to the limited extent provided under such
subsection. The Company shall not be required to proceed with the Commencement
of Foreclosure which has not been rejected if (i) the same is stayed as a result
of the mortgagor's bankruptcy or is otherwise barred by applicable law, or to
the extent that all legal conditions precedent thereto have not yet been
complied with, or (ii) the Company believes there is a breach of representations
or warranties by the Company, which may result in a repurchase or substitution
of such Mortgage Loan, or (iii) the Company has or expects to have the right
under the Pooling and Servicing Agreement to purchase the defaulted Mortgage
Loan and intends to exercise such right or (iv) the Company reasonably believes
the Mortgaged Property may be contaminated with or affected by hazardous wastes
or hazardous substances (and the Company supplies the Purchaser with information
supporting such belief) or (v) the same is prohibited by or is otherwise
inconsistent with the provisions of the Pooling and Servicing Agreement. Any
foreclosure that has been initiated may be discontinued (i) without notice to
the Purchaser if the Mortgage Loan has been brought current or if a refinancing
or prepayment occurs with respect to the Mortgage Loan (including by means of a
short payoff approved by the Purchaser) or (ii) with notice to the Purchaser if
the Company has reached the terms of a forbearance agreement unless instructed
otherwise by the Purchaser within two Business Days of notification.
(d) Upon the occurrence of a liquidation with respect to any Mortgage
Loan as to which the Purchaser made an Election to Foreclose which has not been
rejected and as to which the Company proceeded with the Commencement of
Foreclosure in accordance with subsection (c) above, the Company shall calculate
the amount, if any, by which the Scheduled Principal Balance of the Mortgage
Loan at the time of liquidation (plus all unreimbursed Monthly Advances and
Liquidation Expenses in connection therewith other than those previously paid
from the Collateral Fund) exceeds the actual sales price obtained for the
related Mortgaged Property, and the Company shall, or the Trustee shall at the
direction of the Company, withdraw the amount of such excess from the Collateral
Fund and shall remit the same to the Trust Fund for application as additional
Liquidation Proceeds pursuant to the Pooling and Servicing Agreement. After
making such withdrawal, all amounts remaining in the Collateral Fund (after
adjustment for all withdrawals and deposits pursuant to subsection (c) above and
after reimbursement to the Master Servicer for all related Monthly Advances) in
respect of such Mortgage Loan shall be released to the Purchaser.
Section 2.04. TERMINATION.
(a) With respect to all Mortgage Loans included in the Trust Fund, the
Purchaser's right to make any Election to Delay Foreclosure or any Election to
Foreclose and the Company's obligations under Section 2.01 shall terminate on
the earliest to occur of the following: (i) at such time as the Current
Principal Amount of the Certificates has been reduced to zero, (ii) if the
greater of (x) [43%] (or such lower or higher percentage that represents the
Company's actual loss experience with respect to the Mortgage Loans) of the
aggregate principal balance of all Mortgage Loans that are in foreclosure or are
more than 90 days delinquent on a contractual basis and the aggregate book value
of REO Properties or (y) the aggregate amount that the Company estimates through
its normal servicing practices will be required to be withdrawn from the
Collateral Fund with respect to Mortgage Loans as to which the Purchaser has
made an Election to Delay Foreclosure or an Election to Foreclose which has not
been rejected exceeds (z) the then-current Current Principal Amount of the
Certificates, or (iii) upon any transfer by the Purchaser of any interest (other
than a minority interest therein, but only if the transferee provides written
acknowledgment to the Company of the Purchaser's right hereunder and that such
transferee will have no rights hereunder) in the Certificates (whether or not
such transfer is registered under the Pooling and Servicing Agreement),
including any such transfer in connection with a termination of the Trust Fund.
Unless earlier terminated as set forth herein, this Agreement and the respective
rights, obligations and responsibilities of the Purchaser and the Company
hereunder shall terminate upon the later to occur of (i) the final liquidation
of the last Mortgage Loan as to which the Purchaser made any Election to Delay
Foreclosure or any Election to Foreclose and the withdrawal of all remaining
amounts in the Collateral Fund as provided herein and (ii) ten (10) Business
Days' notice.
(b) The Purchaser's rights pursuant to Section 2.02 or 2.03 of this
Agreement shall terminate with respect to a Mortgage Loan as to which the
Purchaser has exercised its rights under Section 2.02 or 2.03 hereof (so long as
such exercise has not been rejected), upon Purchaser's failure to deposit any
amounts required pursuant to Section 2.02(d) or 2.03(b) after one Business Day's
notice of such failure.
ARTICLE III
COLLATERAL FUND; SECURITY INTEREST
Section 3.01. COLLATERAL FUND.
Upon payment by the Purchaser of the initial amount required to be
deposited in the Collateral Fund pursuant to Article II, the Company shall
request the Trustee to establish and maintain with the Trustee a segregated
account entitled "Bear Stearns Mortgage Securities Inc. Mortgage Pass-Through
Certificates, Series 1996-6 Collateral Fund, for the benefit of EMC Mortgage
Corporation and State Street Bank and Trust Company on behalf of
Certificateholders, as secured parties" (the "Collateral Fund"). Amounts held in
the Collateral Fund shall continue to be the property of the Purchaser, subject
to the first priority security interest granted hereunder for the benefit of
such secured parties, until withdrawn from the Collateral Fund pursuant to the
Section 2.02 or 2.03 hereof.
Upon the termination of this Agreement and the liquidation of all
Mortgage Loans as to which the Purchaser has made any Election to Delay
Foreclosure or any Election to Foreclose pursuant to Section 2.04 hereof, the
Company shall distribute to the Purchaser all amounts remaining in the
Collateral Fund together with any investment earnings thereon (after giving
effect to all withdrawals therefrom permitted under this Agreement).
The Purchaser shall not take or direct the Company or the Trustee to
take any action contrary to any provision of the Pooling and Servicing
Agreement. In no event shall the Purchaser (i) take or cause the Trustee or the
Company to take any action that could cause the Trust Fund to fail to qualify as
a REMIC or cause the imposition on the Trust Fund of any "prohibited
transaction" or "prohibited contribution" taxes or (ii) cause the Trustee or the
Company to fail to take any action necessary to maintain the status of the Trust
Fund as a REMIC.
Section 3.02. COLLATERAL FUND PERMITTED INVESTMENTS.
The Company shall, at the written direction of the Purchaser, direct
the Trustee to invest the funds in the Collateral Fund in the name of the
Trustee in Collateral Fund Permitted Investments. Such direction shall not be
changed more frequently then quarterly. In the absence of any direction, the
Trustee shall invest such funds in investments permitted pursuant to clause
(iii) of the definition of Collateral Fund Permitted Investments herein.
All income and gain realized from any investment as well as any
interest earned on deposits in the Collateral Fund (net of any losses on such
investments) and any payments of principal made in respect of any Collateral
Fund Permitted Investment shall be deposited in the Collateral Fund upon
receipt. All costs and realized losses associated with the purchase and sale of
Collateral Fund Permitted Investments shall be borne by the Purchaser and the
amount of net realized losses shall be promptly deposited by the Purchaser in
the Collateral Fund. The Company shall periodically (but not more frequently
than monthly) direct the Trustee to distribute to the Purchaser upon request an
amount of cash, to the extent cash is available therefor in the Collateral Fund,
equal to the amount by which the balance of the Collateral Fund, after giving
effect to all other distributions to be made from the Collateral Fund on such
date, exceeds the Required Collateral Fund Balance. Any amounts so distributed
shall be released from the lien and security interest of this Agreement.
Section 3.03. GRANT OF SECURITY INTEREST.
In order to secure the obligations of the Purchaser hereunder to the
Company and the Trustee for the benefit of Certificateholders (other than its
obligations under Section 4.10), the Purchaser hereby grants to the Company and
to the Trustee for the benefit of the Certificateholders a security interest in
and lien on all of the Purchaser's right, title and interest, whether now owned
or hereafter acquired, in and to: (1) the Collateral Fund, (2) all amounts
deposited in the Collateral Fund and Collateral Fund Permitted Investments in
which such amounts are invested (and the distributions and proceeds of such
investments) and (3) all cash and non-cash proceeds of any of the foregoing,
including proceeds of the voluntary or involuntary conversion thereof (all of
the foregoing collectively, the "Collateral").
The Purchaser acknowledges the lien on and security interest in the
Collateral for the benefit of the Company and the Trustee on behalf of the
Certificateholders. The Purchaser shall take all actions requested by the
Company as may be reasonably necessary to perfect the security interest created
under this Agreement in the Collateral and cause it to be prior to all other
security interests and liens, including the execution and delivery to the
Company or at its direction the Trustee for filing of appropriate financing
statements in accordance with applicable law.
Section 3.04. COLLATERAL SHORTFALLS.
In the event that amounts on deposit in the Collateral Fund at any
time are insufficient to cover any withdrawals therefrom that the Company or the
Trustee is then entitled to make hereunder, the Purchaser shall be obligated to
pay such amounts to the Company or the Trustee immediately upon demand.
Such obligation shall constitute a general corporate obligation of the
Purchaser. The failure to pay such amounts within two Business Days of such
demand (except for amounts to cover interest on a Mortgage Loan pursuant to
Sections 2.02(d) and 2.03(b)), shall cause an immediate termination of the
Purchaser's right to make any Election to Delay Foreclosure or Election to
Foreclose and the Company's obligations under this Agreement with respect to all
Mortgage Loans to which such insufficiencies relate, without the necessity of
any further notice or demand on the part of the Company.
ARTICLE IV
MISCELLANEOUS PROVISIONS
Section 4.01. AMENDMENT.
This Agreement may be amended from time to time by the Company and the
Purchaser by written agreement signed by the Company and the Purchaser provided
that no such amendment shall have a material adverse effect on the holders of
other Classes of Certificates.
Section 4.02. COUNTERPARTS.
This Agreement may be executed simultaneously in any number of
counterparts, each of which counterparts shall be deemed to be an original, and
such counterparts shall constitute but one and the same instrument.
Section 4.03. GOVERNING LAW.
This Agreement shall be construed in accordance with the laws of the
State of New York and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws.
Section 4.04. NOTICES.
All demands, notices and direction hereunder shall be in writing or by
telecopy and shall be deemed effective upon receipt to:
(a) in the case of the Company,
EMC Mortgage Corporation
222 West Las Colinas Boulevard, Suite 600
Irving, Texas 75039
or such other address as may hereafter be furnished in writing by the
Company, or
(a) in the case of the Purchaser,
================================
--------------------------------
Attention: ____________________
Phone: ________________________
Fax: __________________________.
Section 4.05. SEVERABILITY OF PROVISIONS.
If any one or more of the covenants, agreements, provisions or terms
of this Agreement shall be for any reason whatsoever, including regulatory, held
invalid, then such covenants, agreements, provisions or terms shall be deemed
severable from the remaining covenants, agreements, provisions or terms of this
Agreement and shall in no way affect the validity or enforceability of the other
provisions of this Agreement.
Section 4.06. SUCCESSOR AND ASSIGNS.
The provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and the respective successors and assigns of
the parties hereto; provided, however, that the rights under this Agreement
cannot be assigned by the Purchaser without the consent of the Company.
Section 4.07. ARTICLE AND SECTION HEADINGS.
The article and section headings herein are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
Section 4.08. THIRD PARTY BENEFICIARIES.
The Trustee on behalf of Certificateholders is the intended third
party beneficiary of this Agreement.
Section 4.09. CONFIDENTIALITY.
The Purchaser agrees that all information supplied by or on behalf of
the Company pursuant to Sections 2.01 or 2.02, including individual account
information, is the property of the Company and the Purchaser agrees to use such
information solely for the purposes set forth in this Agreement and to hold such
information confidential and not to disclose such information.
Section 4.10. INDEMNIFICATION.
The Purchaser agrees to indemnify and hold harmless the Company and
the Trustee against any and all losses, claims, damages or liabilities to which
it may be subject, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon actions taken by the
Company in accordance with the provisions of this Agreement and which actions
conflict or are alleged to conflict with the Company's or the Trustee's
obligations under the Pooling and Servicing Agreement. The Purchaser hereby
agrees to reimburse the Company and the Trustee on demand for the reasonable
legal or other expenses incurred by it in connection with investigating or
defending any such loss, claim, damage, liability or action.
Section 4.11. REPRESENTATIONS AND WARRANTY
The Purchaser represents and warrants that it is not an "affiliate"
(as defined in the Securities Act of 1933, as amended) of EMC Mortgage
Corporation.
Section 4.12. EXPENSES OF TRUSTEE. The Purchaser shall pay the
reasonable fees and expenses of the Trustee in connection with the Trustee's
duties under this Agreement.
IN WITNESS WHEREOF, the Company and the Purchaser have caused their
names to be signed hereto by their respective officers thereunto duly
authorized, all as of the day and year first above written.
EMC MORTGAGE CORPORATION
By:________________________
Name:
Title:
[PURCHASER]
By:_______________________
Name:
Title:
<PAGE>
EXHIBIT H
FORM OF INITIAL CERTIFICATION
[Seller]
[Master Servicer]
Re: Pooling and Servicing Agreement dated as of
December 1, 1996, 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 1996-6
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
By:_______________________
Name:
Title:
<PAGE>
EXHIBIT I
FORM OF FINAL CERTIFICATION
[Seller]
[Master Servicer]
Re: Pooling and Servicing Agreement dated as of
December 1, 1996, 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 1996-6
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
By:_______________________
Name:
Title:
<PAGE>
EXHIBIT J
December 30, 1996
Irrevocable Letter of Credit No. S132830
State Street Bank and Trust Company
as Trustee under a Pooling and Servicing
Agreement dated as of December 1, 1996
Two International Place
Boston, Massachusetts 02110
Dear Sirs:
At the request and for the account of The Bear Stearns Companies Inc.
we hereby establish this Irrevocable Letter of Credit in your favor, as Trustee
under a Pooling and Servicing Agreement dated as of December 1, 1996 ("PSA")
among Bear Stearns Mortgage Securities Inc. ("BSMSI"), as Seller, you, as
Trustee, and EMC Mortgage Corporation, as Master Servicer, pursuant to which
BSMSI's Mortgage Pass-Through Certificates, Series 1996-6 (the "Certificates")
are being issued.
We hereby irrevocably authorize you to draw on us in accordance with
the terms and conditions hereinafter set forth, in one or more drawings, an
aggregate amount not exceeding U.S.$6,468,941 (Six Million, Four Hundred
Sixty-Eight Thousand, Nine Hundred and Forty-one Dollars) (as reduced from time
to time in accordance with the provisions hereof, the "Stated Amount").
Subject to the foregoing and the further provisions of this Letter of
Credit, a demand for payment may be made by you by presentation to us in the
manner described below at 452 Fifth Avenue, New York, New York 10018, 10th Floor
(Attention: James Powers) of your sight draft(s), accompanied by your drawing
certificate in the form of Annex A or Annex B attached hereto.
The aforesaid certificates, which form an integral part of this Letter
of Credit, shall have all blanks appropriately filled in and shall be signed by
your authorized officer, and the aforesaid certificate shall be in the form of a
letter on your letterhead or a communication by telecopy delivered to us. Any
telecopy pursuant to which a drawing is made hereunder shall be promptly
confirmed to us in writing.
Each sight draft drawn under this credit must bear on its face the
clause "Drawn under Republic National Bank of New York Letter of Credit No.
S132830".
Demand for payment may be made by you under this Letter of Credit
prior to the expiration hereof at any time during the Bank's business hours at
its aforesaid address, on a Business Day (as hereinafter defined). As used
herein the term "Business Day" means a day on which the Bank (at its above
address) is open for the purpose of conducting a commercial banking business. If
demand for payment is made by you hereunder at or prior to 11:00 A.M., New York
City time, on a Business Day, and provided that such demand for payment and the
documents presented in connection therewith conform to the terms and conditions
hereof, payment shall be made to you of the amount demanded, in immediately
available funds, not later than our close of business, New York City time, on
the same Business Day. If demand for payment is made by you hereunder after
11:00 A.M., New York City time, on a Business Day, and provided that such demand
for payment and the documents presented in connection therewith conform to the
terms hereof, payment shall be made to you of the amount demanded, in
immediately available funds, on the next succeeding Business Day in accordance
with your payment instructions.
The demand for payment hereunder shall not exceed the Stated Amount.
The Stated Amount shall be reduced by delivery to us of your certificate in the
form of Annex C in the amount specified in such certificate. The Stated Amount
shall also be reduced by the amount of any drawing hereunder.
This Letter of Credit shall expire at our close of business at our
aforesaid address on the earlier to occur of (i) the Expiration Date and (ii) 60
days after we shall have given you written notice at your address stated above
that this Letter of Credit is being terminated by us. This Letter of Credit
shall be promptly surrendered to us by you upon such expiration. The Expiration
Date shall initially be June 30, 1997 and may be extended by us in our
discretion at any time or from time to time by our giving you written notice
specifying a new Expiration Date.
This Letter of Credit sets forth in full the terms of our undertaking,
and this undertaking shall not in any way be modified, amended, amplified or
limited by reference to any document, instrument or agreement referred to herein
or in which this Letter of Credit is referred to or to which this Letter of
Credit relates, and any such reference shall not be deemed to incorporate herein
by reference any document, instrument or agreement.
This Letter of Credit is transferable in its entirety (but not in
part) to any transferee who has succeeded you as Trustee under the PSA and may
be successively transferred. Transfer of this Letter of Credit to such
transferee shall be effected by the presentation to us of this Letter of Credit
accompanied by a certificate in the form of Annex D attached hereto.
Only you may make drawings under this Letter of Credit. Upon the
payment to you or your account of the amount specified in a sight draft drawn
hereunder, we shall be fully discharged of our obligation under this Letter of
Credit with respect to such draft, and we shall not thereafter be obligated to
make any further payments under this Letter of Credit in respect of such draft
to you or to any other person who may have made to you or who makes to you a
demand for payment of any Certificates.
Except as otherwise stated, this Letter of Credit is subject to the
Uniform Customs and Practice for Documentary Credits (1993 Revision),
International Chamber of Commerce Publication No. 500 and, to the extent the
same are not dispositive, this Letter of Credit shall be governed by, and
construed in accordance with, New York law.
Communications with respect to this Letter of Credit shall be in
writing and be addressed to us at 452 Fifth Avenue, New York, New York 10018,
10th Floor (Attention: James Powers) specifically referring to the number of
this Letter of Credit.
Very truly yours,
REPUBLIC NATIONAL BANK
OF NEW YORK
By: ___________________________
Title: JEAN-PIERRE F. DIELS
Executive Vice President
By: ___________________________
Title:
<PAGE>
ANNEX A
TO LETTER OF CREDIT
TRUSTEE'S DRAWING CERTIFICATE
Attention: [Name]
Letter of Credit Department
Gentlemen:
State Street Bank and Trust Company, as trustee (the "Trustee"),
hereby certifies to the Republic National Bank of New York (the "Bank") with
reference to Irrevocable Letter of Credit No. ________ (the "Letter of Credit";
the terms "PSA" and "Stated Amount" as used herein having their respective
meanings set forth in the Letter of Credit; and the capitalized terms used in
paragraphs 4 and 5 below having their respective meanings set forth in the PSA)
that:
1. The Trustee is the Trustee or a successor trustee under the PSA.
2. The Trustee is making a demand for payment under the Letter of
Credit of the sum of $_____________
3. The amount of this demand for payment was computed in accordance
with the terms and conditions of the PSA and is made in accordance with Section
6.02 thereof.
4. The Master Servicer has been unable to enforce or foreclose a
Mortgage Loan listed on the Schedule of Lost Notes attached as Exhibit K to the
PSA due to the Master Servicer not having the original Mortgage Note.
5. The amount hereby demanded is equal to the Legal Balance of the
Mortgage Loan plus accrued and unpaid interest on the Unpaid Principal Balance
thereof through and including the last day of the month of the draw and does not
exceed the Stated Amount available to be drawn under the Letter of Credit.
6. After this drawing the balance of the Letter of Credit shall be
$______
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the ____ day of ___________________, 19__.
STATE STREET BANK AND
TRUST COMPANY,
as Trustee
By: __________________
<PAGE>
ANNEX B
TO LETTER OF CREDIT
Attention: [Name]
Letter of Credit Department
Gentlemen:
State Street Bank and Trust Company, as trustee (the "Trustee"),
hereby certifies to the Republic National Bank of New York (the "Bank") with
reference to Irrevocable Letter of Credit No. ________ (the "Letter of Credit";
the terms "PSA" and "Stated Amount" as used herein having their respective
meanings set forth in the Letter of Credit) that:
1. The Trustee is the Trustee or a successor trustee under the PSA.
2. [The Letter of Credit will terminate within 60 days after the date
of this Drawing Certificate] [You no longer constitute a Qualified Letter of
Credit Issuer (as defined in the PSA)] and the Trustee has not received a
replacement Letter of Credit or alternative credit support as provided in
Section 6.02 of the PSA.
3. The Trustee is making a demand for payment under the Letter of
Credit of the sum of $_____________ which is the amount permitted to be drawn
under Section 6.02 of the PSA which is equal to or less than the Stated Amount
of the Letter of Credit on the date hereof and the amount of the sight draft
accompanying this Certificate.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the ____ day of _______________, 19__.
STATE STREET BANK AND
TRUST COMPANY,
as Trustee
By: ____________________
<PAGE>
ANNEX C
TO LETTER OF CREDIT
Attention: [Name]
Letter of Credit Department
Gentlemen:
State Street Bank and Trust Company, as trustee under the Indenture
(as defined in the below-referenced Letter of Credit) (the "Trustee"), hereby
certifies to the Republic National Bank of New York (the "Bank"), with respect
to Letter of Credit No. _________ (the "Letter of Credit") that:
[State relevant circumstances]
The Stated Amount of the Letter of Credit is reduced to
$_______________
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate this __ day of ________________, 19
STATE STREET BANK AND
TRUST COMPANY,
as Trustee
By: ____________________
<PAGE>
ANNEX D
TO LETTER OF CREDIT
[Date]
Dear Sirs:
We refer to Letter of Credit No. ________, issued in favor of State
Street Bank and Trust Company, as Trustee, in the amount of $__________________
For value received we hereby irrevocable transfer to
_______________________________, hereinafter referred to as the transferee, who
has succeeded the undersigned as Trustee under the Pooling and Servicing
Agreement dated as of December 1, 1996 referred to in the Letter of Credit, all
rights of the undersigned to draw under the above Letter of Credit in its
entirety.
By this transfer, all rights of the undersigned in such Letter of
Credit are transferred to the transferee and the transferee shall have the sole
rights relating to any amendments whether increases or extensions or other
amendments and whether now existing or hereafter made. All amendments are to be
advised direct to the transferee without necessity of any consent of or notice
to the undersigned.
The Letter of Credit is returned herewith.
Please notify the transferee of this transfer and the conditions of
the Letter of Credit.
Very truly yours,
(Signature of Transferor)
<PAGE>
ANNEX D
TO LETTER OF CREDIT
Date
Republic National Bank of New York
425 Fifth Avenue
New York, NY 10018
Re: Letter of Credit No. ________ issued in favor
of State Street Bank and Trust Company, as Trustee,
under the Pooling and Servicing Agreement dated as
of December l, 1996 referred to in the Letter of
Credit issued by
Your Advice No. _________
Gentlemen:
For value received, the undersigned beneficiary hereby irrevocably transfers to:
- ------------------------------------- -----------------------
(Name of Transferee) (Address)
all rights of the undersigned beneficiary, who has succeeded the undersigned as
Trustee under the Pooling and Servicing Agreement dated as of December 1, 1996
referred to in the Letter of Credit, to draw under the above Letter of Credit in
its entirety.
By this transfer, all rights of the undersigned beneficiary in such Letter of
Credit are transferred to the transferee and the transferee shall have the sole
rights as beneficiary thereof, including sole rights relating to any amendments
whether increases or extensions or other amendments and whether now existing or
hereafter made. All amendments are to be advised direct to the transferee
without necessity of any consent of or notice to the undersigned beneficiary.
The advice of such Letter of Credit is returned herewith together with any and
all amendments, and we ask you to endorse the transfer on the reverse of the
advice, and forward it direct to the transferee with your customary notice of
transfer.
We agree to pay to you on demand any telex/courier charges and any other
expenses which may be incurred by you in connection with this transfer.
SIGNATURE AUTHENTICATED Yours very truly,
- -------------------------------- ---------------------------
(Bank) (Signature of Beneficiary)
- -------------------------------- ---------------------------
(Authorized Signature)
<PAGE>
EXHIBIT K
SCHEDULE OF MORTGAGE LOANS WITH LOST NOTES
Omitted
Available Upon Request
<PAGE>
EXHIBIT L
REPORTING SCHEDULES
Bear Stearns Mortgage Securities Inc. 1996-6
LTV Status of Foreclosure/REO Loans
ActualE ActualE Cert-& P Date Current
LoanE Current Current Legal Balance/ Legal Balance/
Number UPB Arrearage Quick Sale Quick Sale
Value Ratio* Value Ratio**
E - raw data provided by EMC to Trustee on investor reporting tape.
S - plugged by Trustee from set-up file. Trustee generates the table.
X - Quick Sale Value as of the Cut-Off Date
XX - Most recent Quick Sale Value
<PAGE>
<TABLE>
<CAPTION>
Bear Stearns Mortgage Securities Inc. 1996-6
Credit Support Status
Subordination Support
OriginalS CurrentS **
Class OriginalS Support % Current $S Support %
<S> <C> <C> <C> <C>
Seniors
B-1
B-2
B-3
B-4
B-5
B-6
Overcollateralization Support - UBP
CurrentE CurrentS CurrentS CurrentS OCS
UBP P&E Certificate OC $ OC % Cap %
<S> <C> <C> <C> <C>
1.85%
(1) (UBP LESS CERT. BALANCE)
(2) (UPB LESS CERT. BALANCE / UPB)
OC Support - Arrearage
CurrentS
CurrentE Arrearage CurrentS CurrentS
Arrearage Class $ OC $ OC %
<S> <C> <C> <C>
- -------------
** Includes amount of credit enhancement provided by OC Support - UPB
E raw data provided by EMC to Trustee on investor reporting tape.
S calculated by Trustee or plugged from set-up file. Trustee generates the table.
(1) (ARREARAGE BALANCE LESS ARREARAGE CLASS BALANCE)
(2) (ARREARAGE BALANCE LESS ARREARAGE CLASS BALANCE / ARREARAGE BALANCE)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Bear Stearns Mortgage Securities Inc. 1996-6
Coupon Allocation Status
Current Period Coupon Allocation
CouponS
Pass-ThruS CouponS Allocated CouponS CouponS CouponS
Wtd. Avg.E Rate P&I Servicer,S Allocated to prepay Allocated Allocated to Allocated
Gross Coupon Certificates Trustee Fee to OC Arrearage Class to Class X Arrearage Class to Class R
<S> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------
E raw data provided by EMC to trustee on investor reporting tape.
S calculated by Trustee or plugged from set-up file. Trustee generates the table.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Bear Stearns Mortgage Securities Inc. 1996-6
Arrearage Class Status
ArrearageE (Shortfall)/S(2) Excess Coupon CurrentS ArrearageS
Distribution ArrearageE Amount (Shortfall)/S(1) Applied to Applied to Arrearage Deferred
Date Payment Due Collected Overage $ Arrearage Arrearage Factor Amount
<S> <C> <C> <C> <C> <C> <C>
E raw data provided by EMC to trustee on investor reporting tape.
S calculated by Trustee or plugged from set-up file. Trustee
generates the table.
(1) (AMOUNT COLLECTED LESS AMOUNT DUE))
(2) (AMOUNT COLLECTED LESS AMOUNT DUE / AMOUNT DUE)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Bear Stearns Mortgage Securities Inc. 1996-6
Delinquency Status
30-59 DAYS 60-89 DAYS 90+ DAYS Foreclosure/Bankruptcy REO
Distri
bution
Date Arrear- Legal Arrear- Legal Arrear- Legal Arrear- Legal Arrear- Legal
# UPB age Balance # UPB age Balance # UPB age Balance # UPB age Balance # UPB age Balance
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
% % % % % % % % % % % % % % % % % % % %
(note: raw data provided by EMC - loans in the Foreclosure/Bankruptcy and REO categories will be flagged on
the monthly investor reporting tape provided to the Trustee. Trustee will be responsible for constructing the table based on the
raw data provided.
</TABLE>
